Robinson v. FTAS Legacy XI LLC

• Court: District Court, D. Arizona
• Decided: July 21, 2025
• Docket: 2:24-cv-02483
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 David Rulon Robinson, No. CV-24-02483-PHX-DJH

10 Appellant, ORDER

11 v.

12 FTAS Legacy XI LLC,

13 Appellee. 14 15 Appellant David R. Robinson (“Robinson”) appeals from a decision of the United 16 States Bankruptcy Court (the “Bankruptcy Court”) (Doc. 5-1 at 104–105), granting FTAS 17 Legacy XI LLC’s (“FTAS”) motion to dismiss. (Doc. 5). Robinson argues that the 18 Bankruptcy Court erred when it did not conduct an evidentiary hearing as to: (1) whether 19 the notice of default was properly noticed to Robinson, (2) whether the notice of hearing 20 was properly noticed, and (3) whether dismissal was appropriate under 11 U.S.C. 21 § 1112(b)(1). (Id. at 9–19). The matter is ripe for review. (Docs. 6 & 9). The Court 22 affirms the Bankruptcy Court’s decision for the reasons that follow. 23 I. Background 24 Robinson filed an individual Chapter 11 bankruptcy in May 2016. (Doc. 5-1 at 31). 25 He filed his Plan of Reorganization (the “Plan”) in December 2016. (Id. at 28). In 26 September 2017, Robinson and FTAS stipulated to bifurcate FTAS’s claim under the Plan 27 into a $100,000 secured claim and a $468,106.36 unsecured claim (the “Stipulation”). 28 (Id. at 30–32). Robinson was to pay the secured claim in sixty monthly installments of 1 $635.00, followed by a balloon payment1 on the sixty-first month. (Id. at 31). 2 In the event of a default, the Plan requires a creditor to provide notice via certified 3 mail giving Robinson a 30-day period to cure the default. (Id. at 23–24). The Stipulation, 4 however, only requires a 30-day notice and makes no mention of certified mail. (Id. at 31). 5 According to the Plan, the terms of the Stipulation control, but only “to the degree an issue 6 is addressed.” (Id. at 17). The Bankruptcy Court entered an Order confirming the Plan in 7 December 2018. (Id. at 11–12). 8 From July 2023 through December 2023, FTAS claims that Robinson failed to make 9 the required monthly payments to FTAS, as well as the final balloon payment in January 10 2024. (Doc. 6 at 5). FTAS then sent Robinson notice of default (the “Notice of Default”) 11 (Doc. 5-1 at 55–56), although Robinson contests whether the notice was sent via certified 12 mail. (Doc. 5 at 12–13). FTAS claims that Robinson did not respond, so all outstanding 13 amounts became immediately due and payable to FTAS in February 2024. (Doc. 6 at 6). 14 In April, the United States Trustee (the “U.S. Trustee”) filed a Notice of Non-Compliance, 15 claiming that Robinson had not paid required quarterly fees or submitted required quarterly 16 reports for five years after the confirmation of the Plan. (Id.) 17 FTAS moved to dismiss the bankruptcy case in July, citing Robinson’s material 18 default and failure to cure within the 30-day period. (Doc. 5-1 at 44–57). Robinson filed 19 the following four-sentence response/objection to the motion to dismiss in August: 20 1. Debtor admits there is a failure to pay the balance owed under the Plan to Creditor. 21 2. Dismissing this case is not in the best interest of the Creditors and is a 22 way for a crammed-down creditor to seek full payment of its general 23 unsecured debt. 3. Debtor has obtained almost all the amounts due to the Creditor under 24

25 1 A balloon payment is a “large, one-time payment at the end of the loan term.” What is a balloon payment? When is one allowed?, CONSUMER FINANCIAL PROTECTION BUREAU, 26 https://www.consumerfinance.gov/ask-cfpb/what-is-a-balloon-payment-when-is-one- allowed-en-104/ (last updated Jan. 2, 2025); see also Carol M. Kopp, Balloon Payment: 27 What It Is, How It Works, Examples, Pros and Cons, INVESTOPEDIA, https://www.investopedia.com/terms/b/balloon-payment.asp (last updated June 29, 2023) 28 (“A balloon payment is the final amount due on a loan that is structured as a series of small monthly payments followed by a single much larger sum at the end of the loan period.”). 1 the Plan. 2 4. Debtor believes he can have the full amount paid by the time of the hearing set on August 22, 2024. 3 4 (Id. at 68–69). The Bankruptcy Court held a hearing on the motion on August 22, 2024 5 (the “Hearing”), which Robinson attended. (Id. at 108–114). FTAS had previously sent 6 notice of hearing to Robinson (the “Notice of Hearing”). (Doc. 5-1 at 59–60). 7 At the Hearing, the Bankruptcy Court inquired whether Robinson was in default 8 through the following exchanges: 9 THE COURT: Does the Debtor challenge the accuracy of the statements made in support of the motion? 10 [Robinson’s Counsel]: The factual basis, meaning the payments that were 11 not made, there's no dispute there. . . . 12 . . . . 13 THE COURT: . . . . Do you dispute the U.S. Trustee's allegation that the Debtor has not paid any quarterly fees since confirmation? 14 [Robinson’s Counsel]: No. 15 THE COURT: Okay. Why not? 16 [Robinson’s Counsel]: I can’t—I mean, I could try to give you an answer. 17 I can tell you that it’s not going to be an adequate response as to what’s going on. 18 THE COURT: Okay. And do you do you [sic] agree that with the FTAS 19 allegations [sic] with respect to failure to make payments? 20 [Robinson’s Counsel]: Yes. 21 THE COURT: Okay. Well, help me out. Why haven’t they shown cause for dismissal? 22 [Robinson’s Counsel]: . . . [T]he only real defense the Debtor would have 23 is that it actually is better for the creditors for him to stay in 24 bankruptcy. . . . 25 (Id. at 108–111). 26 Robinson’s counsel mentioned that there was a question about whether the 27 Robinson was in default, because of a provision in the Plan requiring certified mail for the 28 Notice of Default: 1 [Robinson’s Counsel]: The only question would really be whether they're in default. 2 The [P]lan in paragraph 8 has a provision regarding certified mails 3 required for notice. . . . [T]hat would be the main defense the Debtor 4 would have as to the motion as to whether he's in default. 5 (Id. at 110). 6 Finally, Robinson’s counsel asked the Bankruptcy Court if it would deny dismissal 7 if Robinson paid the secured claim to FTAS. (Id. at 112–13). He explained that Robinson 8 was ready to pay the amount of the secured claim, but FTAS had rejected the offer because 9 Robinson could not pay the full amount owed, i.e., both the secured and unsecured claims: 10 [Robinson’s Counsel]: . . . [Robinson] wanted me to ask if he could pay 11 the amount due under the [P]lan today, if that would change your ruling. THE COURT: Well, why didn't he do it yesterday? 12 [Robinson’s Counsel]: He actually tried to do it yesterday and they said 13 that he has to pay, not the amount due under the [P]lan, but the full 14 amount . . . . 15 THE COURT: Well, that tells me that if I said yes to that, then you would be tendering a payment that the other side does not agree does what he 16 said, which is the full amount owed. . . . 17 . . . . Tell me the number, the Arabic number that you would propose to pay. 18 [Robinson’s Counsel]: Well under the [P]lan, with the interest as it’s 19 calculated, it would be approximately 110,000 and some change. And so 20 that was the amount that he was trying to pay. 21 Now there is—there is—because this is a cramdown, there is a balance that's owed to an unsecured part, which if this gets dismissed, of 22 course, gets reinstated and then becomes a lien against the property. 23 (Id. at 112–14). 24 After determining that cause for dismissal existed, the Bankruptcy Court entered an 25 Order granting the motion. (Id. at 104–105). Believing the Bankruptcy Court erred, 26 Robinson now appeals its Order to this Court. 27 II. Legal Standard 28 A district court has jurisdiction to hear an appeal of a decision of a bankruptcy court. 1 28 U.S.C. § 158(a). When evaluating a bankruptcy court’s final order, a district court 2 reviews the bankruptcy court’s finding of fact for clear error and its conclusions of law de 3 novo. In re JTS Corp., 617 F.3d 1102, 1109 (9th Cir. 2010) (citing In re Strand, 375 F.3d 4 854, 857 (9th Cir. 2004)). “Clear error exists if the finding is ‘illogical, implausible, and 5 without support in inferences that may be drawn from the record.’ ” Doe v. Snyder, 28 6 F.4th 103, 106 (9th Cir. 2022) (quoting Edmo v. Corizon, Inc., 935 F.3d 757, 784–85 (9th 7 Cir. 2019)). In other words, the court “must accept the bankruptcy court’s findings of fact, 8 unless ‘the court is left with the definite and firm conviction that a mistake has been 9 committed.’” In re JTS Corp., 617 F.3d at 1109 (quoting In re Greene, 583 F.3d 614, 618 10 (9th Cir. 2009)). “Mixed questions of law and fact are reviewed de novo.” Id. (quoting In 11 re Chang, 163 F.3d 1138, 1140 (9th Cir. 1998)). 12 III. Discussion 13 Robinson argues that the Bankruptcy Court committed clear error in three ways: 14 (1) finding that notice of default was proper, (2) finding that notice of hearing was proper, 15 and (3) finding dismissal appropriate under 11 U.S.C. § 1112(b)(1). (Doc. 5 at 9–19). The 16 Court will address the third argument first. 17 A. Appropriateness of Dismissal Under 11 U.S.C. § 1112(b)(1) 18 Robinson contends that the Bankruptcy Court committed clear error (1) when it 19 found that there was cause to dismiss, (2) when it found that dismissal was in the best 20 interests of the creditors and the estate, and (3) when it failed to inquire whether conversion 21 or the appointment of a trustee or examiner was in the best interests rather than dismissal. 22 (Doc. 5 at 11–12, 17–18). The Court disagrees. 23 The party seeking dismissal under Section 1112(b)(1) bears “the initial burden of 24 persuasion to establish that cause exists for granting such relief.” In re Baroni, 36 F.4th 25 958, 966 (9th Cir. 2022). The definition of cause includes “a material default by the debtor 26 with respect to a confirmed plan.” 11 U.S.C. § 1112(b)(4)(N). In the Ninth Circuit, “failing 27 to make required plan payments can be a material default of the plan.” In re Baroni, 36 28 F.4th at 967 (citations omitted). However, not every missed payment is a material default. 1 Id. Some factors relevant to show that missed payments are a material default include “the 2 number of missed payments, the number of aggrieved creditors, and how long the default 3 occurred.” Id. 4 “If cause is established, the decision whether to convert or dismiss the case falls 5 within the sound discretion of the court.” In re Sullivan, 522 B.R. 604, 612 (B.A.P. 9th 6 Cir. 2014). If a bankruptcy court finds cause, it must then investigate any unusual 7 circumstances that may “establish that dismissal or conversion is not in the best interests 8 of creditors and the estate” and decide which of dismissal, conversion, or the appointment 9 of a trustee or examiner is in the best interests. Id. (citing § 1112(b)(1), (b)(2); In re Owens, 10 552 F.3d 958, 961 (9th Cir. 2009)). There are thus three inquiries for the court to decide: 11 “(1) whether cause exists for granting relief under Section 1112(b)(1); (2) whether granting 12 relief is in the creditors’ and the estate’s best interests; and (3) if so, which form of relief 13 best serves the creditors’ and the estate’s interests.” In re Baroni, 36 F.4th at 965. 14 1. Cause 15 Robinson argues that the Bankruptcy Court erred when it found cause existed 16 because “more information was required to find a default under the Plan.” (Doc. 5 at 13). 17 FTAS argues that cause exists because of Robinson’s material defaults under the Plan by 18 failing to make multiple required payments to FTAS. (Doc. 6 at 8). The record supports 19 FTAS. 20 The Bankruptcy Court confirmed the Plan in December 2018. (Doc. 5-1 at 11–12). 21 From July 2023 through December 2023, Robinson failed to make the required monthly 22 payments to FTAS, including the final ballon payment due in January 2024. (Id. at 109– 23 111). FTAS alleges that it sent Robinson written notice of default via certified mail, 24 providing him with 30 days to pay the outstanding amount before all outstanding amounts 25 became immediately due, but no payment was made in February. (Doc. 6 at 5–6). In April 26 2024, the U.S. Trustee filed a Notice of Non-Compliance, alleging that Robinson had not 27 paid quarterly fees for five years after the confirmation and had filed no reports. (Id. at 3). 28 Robinson did not dispute the allegations of missed payments before the Bankruptcy 1 Court. (Doc. 5-1 at 109–111). At the Hearing, Robinson’s counsel stated that “[t]he 2 factual basis, meaning the payments that were not made, there’s no dispute there.” 3 (Id. at 110). When the Bankruptcy Court asked him whether he agreed with FTAS’s 4 allegations about failure to make payments, Robinson’s counsel said that he did. 5 (Id. at 111). He added, “there’s definitely been terms of the plan that were not abided by. 6 There’s definitely been issues in regards to [sic] reporting requirements as well as paying 7 the United States Trustee, which were not complied with.” (Id.) In essence, Robinson 8 conceded his breach. 9 The Bankruptcy Court did not commit clear error in finding cause to dismiss here. 10 See In re JTS Corp., 617 F.3d at 1109 (a court must accept a bankruptcy court’s finding of 11 fact unless it is firmly convinced there is a mistake). Robinson missed all his monthly 12 payments to FTAS for six months, as well as the final balloon payment, and missed all 13 required quarterly payments to the U.S. Trustee. (Doc. 5-1 at 110–111). Moreover, the 14 default continued at least until the time of the Hearing in August 2024, more than a year 15 after the first missed payment to FTAS. (Doc. 5 at 8). The Bankruptcy Court did not 16 commit clear error by concluding that both the number of missed payments and the length 17 of the default supported a finding of cause. See In re Baroni, 36 F.4th at 967 (number of 18 missed payments and how long the default occurred are factors relevant to showing 19 material default). 20 2. Best Interests 21 Next, Robinson argues that the Bankruptcy Court did not consider potential unusual 22 circumstances that could have shown that dismissal was not in the best interests of creditors 23 and the estate. (Doc. 5 at 17–18). He provides two such unusual circumstances: the 24 COVID-19 pandemic and that he was prepared to make a cure payment to FTAS on or 25 before the date of the Hearing. (Id. at 18). 26 The decision to dismiss the case falls within the discretion of a bankruptcy court. In 27 re Sullivan, 522 B.R. at 612. However, a court may not dismiss a Chapter 11 case if three 28 conditions are met: (1) the court specifically identifies unusual circumstances establishing 1 that converting or dismissing the case is not in the best interests of creditors and the estate, 2 (2) there is a reasonable likelihood that a plan will be confirmed within an appropriate 3 timeframe, and (3) the grounds for dismissing the case include an act or omission for which 4 there is a reasonable justification, and which will be cured within a reasonable period of 5 time. 11 U.S.C. § 1112(b)(2). 6 “[T]he term ‘unusual circumstance’ ‘contemplates conditions that are not common 7 in chapter 11 cases.’” In re Baroni, 36 F.4th at 968 (quoting In re Mahmood, 2017 WL 8 1032569, at *8 (B.A.P. 9th Cir. Mar. 17, 2017) (unpublished)). Circumstances common in 9 bankruptcy, such as “difficulty making plan payments, disputes regarding the validity and 10 amounts of claims, and other similar issues are not ‘unusual circumstances.’ ” In re Baroni, 11 36 F.4th at 968 (citing various cases). An unusual circumstance is something more than 12 financial pressure or adversarial differences. Id. at 969. Courts have found unusual 13 circumstances “exist where continuing the case in Chapter 11 will likely yield a higher 14 recovery for creditors without the usual risks of failure associated with a Chapter 11 plan.” 15 Id. at 968–69; see also In re Orbit Petroleum, Inc., 395 B.R. 145, 149 (Bankr. D.N.M. 16 2008) (continuing in Chapter 11 was in the best interests because the proposed plan 17 provided for a significant capital infusion that would pay all creditors in full); In re Costa 18 Bonita Beach Resort Inc., 479 B.R. 14, 43 (Bankr. D.P.R. 2012) (unusual circumstances 19 existed where Chapter 11 plan protected unsecured creditors more than other options). 20 The Ninth Circuit has held that “the ability to cure a default is not itself an unusual 21 circumstance” because the statute separately requires unusual circumstances and the ability 22 to cure. In re Baroni, 36 F.4th at 969; see also 11 U.S.C. § 1112(b) (requiring both unusual 23 circumstances and that the grounds for dismissing the case include an act or omission of 24 the debtor that will be cured within a reasonable period of time). 25 Here, Robinson first puts forth the COVID-19 pandemic as an unusual 26 circumstance. (Doc. 5 at 18). Robinson does not point to, nor can the Court find, any place 27 in the record where he presented this argument to the Bankruptcy Court. (Id.) The Court 28 will not consider this argument because the factual record was not developed below and 1 Robinson has provided no exceptional reason for the Court to do so. See Rose Ct., LLC v. 2 Select Portfolio Servicing, Inc., 119 F.4th 679, 688–89 (9th Cir. 2024) (listing 3 circumstances where courts exercise discretion to consider new arguments on appeal). 4 Furthermore, the fact that Robinson was prepared to make a cure payment in August 2024 5 is also not an unusual circumstance. In re Baroni, 36 F.4th at 969. Section 1112(b) requires 6 both unusual circumstances and the ability to cure. Id. The ability to cure alone is not 7 sufficient. Id. 8 The Bankruptcy Court also investigated whether there were any other unusual 9 circumstances that might militate against a dismissal. At the Hearing, the Bankruptcy 10 Court asked Robinson’s counsel why Robinson had not paid the U.S. Trustee any quarterly 11 fees since confirmation. (Doc. 5-1 at 110). Robinson’s counsel answered: “I mean, I could 12 try to give you an answer. I can tell you that it’s not going to be an adequate response to 13 what’s going on.” (Id. at 110–11). In other words, Robinson provided the Bankruptcy 14 Court with no unusual circumstances other than the ability to cure, which is not by itself 15 an unusual circumstance. In re Baroni, 36 F.4th at 969. 16 The Court finds that the Bankruptcy Court did not commit clear error in finding that 17 dismissal was in the best interests of creditors and the estate. In re JTS Corp., 617 F.3d at 18 1109. 19 3. Form of Relief 20 Finally, Robinson argues that the Bankruptcy Court failed to inquire whether 21 conversion or appointment of a trustee or examiner was more appropriate than dismissal. 22 (Doc. 5 at 17). 23 If cause exists, “the decision whether to convert or dismiss the case falls within the 24 sound discretion of the court.” In re Sullivan, 522 B.R. at 612. Regardless of what the 25 parties argue, the bankruptcy court has “an independent obligation under § 1112 to consider 26 . . . whether dismissal or conversion would be in the best interest of all creditors.” Id. at 27 612–613. When making that decision, the bankruptcy court “must consider the interests 28 of all of the creditors,” not merely the largest creditor or the majority of the creditors. In 1 re Owens, 552 F.3d at 961 (quoting In re Superior Siding & Window, Inc., 14 F.3d 240, 2 243 (4th Cir. 1994)) (emphasis in original). 3 Robinson relies on In re Sullivan for the proposition that the Bankruptcy Court 4 committed clear error by failing to consider whether conversion or dismissal was 5 appropriate. (Doc. 5 at 17). However, in that case, the court focused its analysis on 6 whether dismissal was in the best interests of all of the creditors, noting that some creditors 7 did not support dismissal. In re Sullivan, 522 B.R. at 613 (“[I]t is notable that the United 8 States Trustee made clear that it did not support dismissal.”). Ultimately, the court 9 concluded that there was a strong possibility that conversion was in the best interest of 10 other creditors. Id. at 614 (“The evidence strongly suggests that conversion is in the best 11 interest of all creditors other than Appellees.”). 12 Here, no creditor has objected to the dismissal of the case—in fact, at the Hearing, 13 the U.S. Trustee, the only other creditor, indicated that it supported FTAS’s position. 14 (Doc. 5-1 at 111–12). Although the Bankruptcy Court did not explicitly address whether 15 dismissal was a better alternative to conversion, it inquired about the position of another 16 creditor, the U.S. Trustee, before it decided to grant the motion. (Id.) 17 Because no creditor objected to dismissal and the Bankruptcy Court considered the 18 best interests of all of the creditors, the Court finds that the Bankruptcy Court did not 19 commit clear error here. In re Sullivan, 522 B.R. at 613–14; see also In re Baroni, 36 F.4th 20 at 970 (rejecting an argument that the bankruptcy court did not adequately consider form 21 of relief where no creditor had objected to a motion for conversion). 22 B. Evidence and Notice of Default 23 Robinson contends that the Bankruptcy Court committed clear error when it found 24 that FTAS met the requirement of notice of default in the Plan. (Doc. 5 at 12–13). The 25 Plan requires that a creditor seeking to enforce the Plan in the event of a default “provide 26 notice to the Debtors specifying the nature of the alleged default and providing the Debtors 27 a 30-day period to cure such default. Any such notice shall be in writing and sent to the 28 Debtors via certified mail.” (Doc. 5-1 at 23–24). Robinson claims that the Bankruptcy 1 Court did not have any evidence that the Notice of Default was delivered via certified mail 2 when it granted the motion to dismiss. (Doc. 5 at 13). 3 In response, FTAS argues (1) the Stipulation does not require that the notice be sent 4 via certified mail, (2) notice in the contractually prescribed manner is not required where a 5 party has actual notice and has not suffered prejudice, and (3) that there is evidence in the 6 record that the Notice of Default was sent via certified mail. (Doc. 6 at 9). The Court 7 addresses each argument and finds that the Bankruptcy Court did not commit clear error 8 when it found that the Notice of Default was sufficient. 9 1. The Stipulation 10 FTAS observes that the Stipulation does not require delivery via certified mail and 11 argues that because the Stipulation controls, the certified mail requirement in the Plan no 12 longer applies. (Doc. 6 at 9). 13 A Chapter 11 bankruptcy plan “must be interpreted according to the rules governing 14 the interpretation of contracts.” Miller v. United States, 363 F.3d 999, 1004 (9th Cir. 2004) 15 (citation omitted). Under Arizona law, courts “give effect to a contract as written where 16 the terms of the contract are clear and unambiguous.” Mining Inv. Grp., LLC v. Roberts, 17 177 P.3d 1207, 1211 (Ariz. Ct. App. 2008) (citation omitted). If the intent of the parties is 18 clear “by their language and in view of all circumstances,” there is no ambiguity. In re 19 Estate of Lamparella, 109 P.3d 959, 963 (Ariz. Ct. App. 2005). Language is ambiguous 20 only if “it can reasonably be construed to have more than one meaning.” Id. 21 The Plan states that a stipulation “only modifies the Plan to the degree an issue is 22 addressed. For instance, if there is no discussion of the number of days required to be 23 considered in default, the terms of the Plan control.” (Doc. 5-1 at 17). The portion of the 24 Stipulation in question provides, “[i]n order to be in default, the Creditor must provide a 25 thirty-day notice providing the details of the default to the Debtor directly at the [subject 26 property address] or as notified by the Debtor.” (Doc. 5-1 at 31). 27 The Stipulation contains no language about the method of delivery. By the clear 28 and unambiguous language of the Plan, when the Stipulation is silent on an issue, the terms 1 of the Plan control. See In re Estate of Lamparella, 109 P.3d at 963 (language is 2 unambiguous if it cannot have more than one meaning). Hence, the Plan still required 3 FTAS to send the Notice via certified mail. See id. 4 2. Actual Notice and Prejudice 5 Relying on Wickahoney Sheep Co. v. Sewell, 273 F.2d 767 (9th Cir. 1959), FTAS 6 argues that notice in the prescribed manner is not required where a party has actual notice 7 and has not suffered prejudice. (Doc. 6 at 9). That case involved two competing 8 agreements with separate procedures for providing notice. Wickahoney Sheep Co., 273 9 F.2d at 769–70. The Ninth Circuit, applying state law, found that whichever agreement 10 controlled, “notice in the prescribed manner is not required where a party has actual notice 11 and has not suffered prejudice.” Id. at 770 (citing Idaho law). But Wickahoney is 12 inapplicable to this case because that court relied on Idaho law for this holding. 13 Wickahoney Sheep Co., 273 F.2d at 770 (citing Quinn v. Hartford Accident & Indem. Co., 14 232 P.2d 965 (Idaho 1959)).2 15 Courts interpret Chapter 11 bankruptcy plans like contracts. Miller, 363 F.3d at 16 1004. If the Plan is clear and unambiguous, the Court gives it effect as written. See Mining 17 Inv. Grp., 177 P.3d at 1211. The language of the Plan can only be reasonably construed to 18 have one meaning: “Before [enforcing the Plan], however, a Creditor must provide notice 19 to the Debtors. . . . Any such notice shall be in writing and sent to the Debtors via certified 20 mail.” (Doc. 5-1 at 23–24 (emphasis added)). Therefore, according to the Plan, FTAS 21 was obligated to provide notice via certified mail. See id. 22 3. Evidence of Certified Mail 23 FTAS, as the party moving to dismiss, bears the burden of showing that Robinson

24 2 FTAS cites Neves v. Great American Capital, 291 Fed. Appx. 36 (9th Cir. 2008) (unpublished), to show that the Ninth Circuit has applied Wickahoney to a Chapter 11 case 25 outside Idaho. (Doc. 6 at 6). In Neves, notice was sent to the debtor’s attorney instead of the debtor as required. 291 Fed. Appx. at 38. The Ninth Circuit stated, “[i]t is settled that 26 ‘notice in the prescribed manner is not required where a party has actual notice and has not suffered prejudice.’ ” Id. (quoting Wickahoney Sheep Co., 273 F.2d at 770). But Neves is 27 an unpublished decision that is not precedent except in certain circumstances and not applicable here. See 9th Cir. R. 36-3 (“Unpublished dispositions and orders of this Court 28 are not precedent, except when relevant under the doctrine of law of the case or rules of claim preclusion or issue preclusion.”). 1 was in default. In re Baroni, 36 F.4th at 966. The record below is scant as to evidence that 2 the Notice of Default was sent via certified mail. However, FTAS claims that there is 3 enough in the record to prove that the Notice was indeed properly sent. (Doc. 6 at 9). In 4 support of this assertion, it points only to the Notice itself. (Id.) Indeed, the Notice contains 5 the text “VIA CERTIFIED MAIL.” (Doc. 5-1 at 55). Robinson argues that FTAS could 6 have shown this through a mailing receipt, testimony, or an affidavit from the custodian of 7 record—but did not. (Doc. 9 at 6). This, he claims, shows that the Bankruptcy Court 8 committed clear error in finding notice proper. (Id.) 9 Robinson did not raise this issue in his response/objection to the motion to dismiss. 10 (Id. at 68–69). At the hearing, Robinson’s attorney raised it to the Bankruptcy Court for 11 the first and only time as follows: 12 [Robinson’s Counsel]: . . . . The only question would really be whether they’re in default. 13 The plan in paragraph 8 has a provision regarding certified mails 14 required for notice. There’s a stipulation. The stipulation mentions [a] 15 thirty-day notice, doesn’t say anything about certified mail, but it also doesn’t say that the terms of the plan apply to this particular stipulation, 16 or in other words, that it could still be restricted by the plan. But beyond 17 that, those are the main—that would be the main defense the Debtor would have as to the motion as to whether he’s in default. 18 (Doc. 5-1 at 110). Significantly, Robinson never informed the Bankruptcy Court that he 19 did not receive notice or that notice was not sent via certified mail.3 (Id.) 20 A district court determines that a bankruptcy court was in clear error only when its 21 finding of fact is “illogical, implausible, and without support in inferences that may be 22 drawn from the record.” Doe, 28 F.4th at 106. The Bankruptcy Court’s finding that notice 23 of default was sufficient is not so. It could have logically and plausibly found that the text 24 of the Notice of Default was sufficient for FTAS to meet its burden. See Doe, 28 F.4th at 25 106. The Court is not convinced that the Bankruptcy Court needed to have asked for more 26 27 3 The Court observes that Robinson has not argued in his briefings that the Notice of 28 Default was not sent via certified mail, only that the Bankruptcy Court had no evidence that it was sent via certified mail. (Docs. 5 at 12–13; 9 at 6). 1 evidence about the method of delivery, especially since Robinson never mentioned that the 2 Notice was not sent via certified mail. See In re JTS Corp., 617 F.3d at 1109 (a court must 3 accept a bankruptcy court’s finding of fact unless it is firmly convinced there is a mistake). 4 The Bankruptcy Court did not commit clear error here. 5 C. Notice of Hearing 6 For the first time on appeal, Robinson argues that the Bankruptcy Court erred when 7 it granted the motion to dismiss because FTAS’s Notice of Hearing failed to comply with 8 Local Rule of Bankruptcy 9013-1(k). (Doc. 5 at 13–15). This rule provides that “the 9 moving party must obtain and provide . . . the following information: . . . [t]hat the Court 10 may vacate the hearing and grant the relief requested if no timely objection is served and 11 filed.” LRBankr 9013-1(k). Robinson notes that FTAS’s Notice of Hearing filed on July 12 29, 2024, did not include that language. (Docs. 5 at 15; 5-1 at 59–60). Therefore, he 13 claims the Notice of Hearing was deficient and the Bankruptcy Court committed clear error 14 by granting the motion to dismiss. (Doc. 5 at 13–15). The Court finds Robinson waived 15 this argument because it was not argued below. 16 Generally, courts “will not consider arguments raised for the first time on appeal, 17 although [they] have the discretion to do so.” Rose Ct., LLC, 119 F.4th at 688 (quoting In 18 re Am. W. Airlines, Inc., 217 F.3d 1161, 1165 (9th Cir. 2000)); see also In re Solimano 19 Framing Grp. LLC, 664 B.R. 803, 810 n.7 (B.A.P. 9th Cir. 2024) (“[A] party ‘who fails to 20 timely raise an issue in the bankruptcy court cannot raise it on appeal.’ ” (quoting In re 21 Wash. Coast I, L.L.C., 485 B.R. 393, 411 (B.A.P. 9th Cir. 2012))). Courts exercise their 22 discretion to consider these arguments “in the following three circumstances: (1) in the 23 exceptional case in which review is necessary to prevent a miscarriage of justice or to 24 preserve the integrity of the judicial process, (2) when a new issue arises while appeal is 25 pending because of a change in the law, and, (3) when the issue presented is purely one of 26 law and either does not depend on the factual record developed below, or the pertinent 27 record has been fully developed.” Rose Ct., LLC, 119 F.4th at 688–689 (internal quotation 28 marks omitted) (citing Ruiz v. Affinity Logistics Corp., 667 F.3d 1318, 1322 (9th Cir. 2012)). 2 Robinson does not present any exceptional circumstances that prevented him from || raising the issue before the Bankruptcy Court. Nor has he identified any relevant changes 4|| in the law. Finally, the issue presented is one of fact, not one of law, as Robinson himself || concedes. (See Doc. 9 at 9-10 (arguing that there is a lack of facts in the record to show 6 || proper notice of hearing)). The Court therefore declines to consider this new argument raised for the first time on appeal. See Rose Ct., LLC, 119 F.4th at 688-689. 8 Accordingly, 9 IT IS HEREBY ORDERED that the Order Granting the Motion to Dismiss issued || by the Bankruptcy Court (Doc. 5-1 at 104-105) is AFFIRMED. The Clerk of Court is 11 || directed to enter judgment accordingly and close this matter. 12 Dated this 21st day of July, 2025. 13 14 oC. . fo □□ 15 norable’ Dian¢g4. Hunfetewa 16 United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28

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