good morning to the court my name is david gilmore i'm here on behalf of the casting again of these which are the healing end of these in this appeal before the court on the plimsoll issue it seems to me is a review of the district court conclusion under the cone elaine case that this appeal is moot and in reviewing the connellan case and the cases that followed i think the issue is whether or not the total land cases a style was some kind of a bright line test before we get to come to land what about all of st income property builders aren't they almost right on all fours well i don't believe they are all i'm all for going to because of the nature of the way this are virtually identical and the reality is that the underlying orders have become final because there was no stay posted when that occurs and their appeal period is over how do we do anything even if you're right about was in akron on the in this case final is done well his case is not final yet is no final order in the midnight litigation that's a decision to say that's true but in terms of the foreclosure why isn't that case over because you didn't stand because the foreclosure that was conducted in this case was conducted under california law as a private sale non judicial foreclosure and the creditor jackass stake is not a good faith purchaser here they're not a bona fide purchaser the underlying bankruptcy cases have now been dismissed and there's no appeal from them those dismissed orders are that right i'm sorry say again you're on the underlying bankruptcy matters are dismissed now yes that is correct and there's no appeal from those dismissal orders that is correct so what's the case or controversy that remains which somebody said like to see here was the granting of the relief from stay that allowed them to proceed to conduct the foreclosure you did you agreed to the dismissal of the bankruptcy case you joined in asking for it because we had already we were already appealing the issue of the relief from state to conduct the foreclosure so that the when the court granted the relief from stay here to conduct a foreclosure we must believe that the court did so granting relief to somebody who didn't have standing to proceed to conduct a foreclosure or standing could be raises an issue at any  bankrupt energy and say what real we would go back to the bankruptcy court to reopen the bankruptcy we would assess it you should heal the closure of the bankruptcy case how could we tell the bankruptcy court they made a mistake in closing the case when you asked them to close as well and asked them to close your honor what happened was a trustee move for just missile and i didn't oppose it all right well but that's been granted so that's the olive street situation on virtually identical facts the court they are determined that it doesn't serve any purpose to determine at this point which is the point that you're out in litigation whether the bankruptcy court properly lifted the automatic stay because the dismissal of the bankruptcy court rendered the appeal me under so how is your case different factually from  this case is factually different because the the dismissal if you will of the bankruptcy was based on the fact that the property was no longer in the bankruptcy where it belonged so that my client would have had the opportunity as a chapter eleven bankruptcy if i would pose a plan to get out from under the obligations of the debt and it seems to me that under the circumstances that this court you can go back to the bankruptcy court and say look the this case of the never been st based on what authority could we tell the bankruptcy court to reopen a case which falls under all history and you agreed to you agreed to the dismissal you didn't oppose it how could we possibly ask the court or not ask direct the court to reopen the case the only authority any case law that suggests that we could do what you just asked us to do the case law that i have your honor relates to the to the to that really based on all of st we don't need to get to that this is the dismissals final it's over there's no time for appeal it was no stay granted you noted that it should be terminated it was simple matter that they that the that the relief from station never been granted the property should never been taken out to allow there to be design just the foreclosure why didn't you why didn't you seek a stay if you felt as you do why didn't you say we want this state well we appeal this well i think you wanted to be fair at the time that was going on there was a lot of other things going on including we still have course the pending litigation in the valley and the judge owned that time w the complex litigation going on and california and those aren't really before us here that's true so whatever you got going judge jones and whatever the success of that this matter is now over under  where the creditor in this case is one that's in control and was in control there was no court supervision that would happen in the sale in this case so it seems to me that that distinction allows this court to use the equitable powers that it has and to look at the movie doctrine and say that this case this egg can be unscrambled by going back to the court back to the bankruptcy court maybe this will be moot but looking at a couple of the merits  in your brief that the second foreclosure is not before the court the second foreclosure as i understand it being the one where they went and got the what is it the fifty one jordan majority affidavit if there had been a problem with the first foreclosure why is the second which did comply with that statute but not before the court why would we not say ok maybe they did that wrong but now they've fixed it and the result was the same well as an initial matter of course of second foreclosure the place after  the this appeal was pending but the answer the short answer is under the california action majority action affidavit statute twenty one forty one point nine you have to get authority of the you put all the beneficial owners on notice there was no notice given what they did in that situation was there so we already own fifty one percent so we can just go record the majority action affidavit on our own without consulting without notifying any of the other parts and as a record i'm sorry i was under the impression that they didn't notify the party they did not well first of all of course i'd second foreclosures not in the record the first foreclosure though is in the record that there is what was challenge in that first foreclosure amongst other things the majority action affidavit under twenty nine forty one point nine is supposed to be recorded at the time the loan is made and it was never any recording of any documentation in california under the majority action affidavit and there in the record is devoid of any example of a majority action affidavit at any time up to the time of the employed the minority owners get their share of the proceeds of your window proceeds which is part of part of significance here because the foreclosure is done under california law which is a part of the sale non judicial foreclosure they made accredited no money changed hands now to be fair in the record there is ability to claim that they had a right when they were supposed to pay two hundred thousand dollars and made in advance a loan to cover their past new property taxes as money spending two hundred thousand dollars was what is paid well th the minority shareholders or whatever you want to call on already stakeholders however you construe the validity of the nevada action were part of the credit bit if you will you know you say they don't want to be but but whatever they were entitled to didn't go away right well i would disagree with if there was one hundred percent of the owners represented at least arguably under judge has really i don't agree with it a there was a credit to the same entities or people who had a stake in the land still have the results of whatever the credit produce which i assume in this case was the land so they would they would have their pro rata interest in the land they weren't in quotes cheated out of whatever the minority majority got under judge jones's analysis of the battle all right i believe that that would be correct the i think judge jones over the course of time in this proceeding as theory has his thoughts of you all the little bit but i think those folks are would be considered a death sentence and home and this it seems to me is whatever the majority interest holders be they tenants in common or whatever got through their credit the minority interest holders got their pro rata share i hope that's the case is not entirely clear from the records of  she's a largely responsible for writing that fan and her name is not on brief and if this decision is published i hope her name is on is included among council appearing here because she's an important part of the t am the very first thing that i need to tell the court which spent most of its time on all of st is i have a little egg on my face on all of st and the reason is that and i was research the way we do research now because all of the terms are so common in bankruptcy cases and there are so many that one i actually found all of st the eighth circuit opinion obviously i said  aha then when i was preparing for argument in this case i was reviewing the cases that were cited by the debtor's by by mr gilmore for the first time in their reply and i'm embarrassed to say that that review  led me to ninth circuit authority on this point that i was unaware of and hadn't hadn't included in dak as brief a bankruptcy appellate panel decision which is  in the reply as in ray davis and that in turn cites the ninth circuit decision which is in re income property builders six ninety nine f second nine sixty three an income property builder slightly different relief from state was granted in a foreclosure sale happened but a creditor filed a motion to reinstate the stay and that motion was denied in the denial was appealed from and later the bankruptcy case itself was dismissed the ninth circuit held that the bankruptcy case dismissal mooted the appeal and remember as the court is pointed out the that there are small argument here what they ask for there's no expressed finding of good faith by the bankruptcy court and so the remedy is to remain and to the bankruptcy court to examine the facts and determine whether there was good faith something that an appellate court can't do  and the income property builders opinion says and i quote quote a re manned by us to the bankruptcy court would be useless if we had some power to restore the bankruptcy proceeding the situation would be different but there is no appeal from the order dismissing it so what the the ninth circuit had to say in that case now the other case cited by the debtors for the first time in their reply that i took a look at is in re universal me let me just ask this question  i had also cited income property builders and it seems to me for purposes of our discussion however you construe the eighth circuit case and all of st this one also covers this fact right i  and then the universal farming industries case that cited for the first time by the debtors in their reply that case allowed in this is why they cited an adversary proceeding between two creditors over a lien priority to continue after the underlying bankruptcy case was dismissed but the opinion explains why this says again quote when the issue being litigated directly involves the debtor's reorganization the case is mooted by the of the bankruptcy and in support of that observation it cites income property builders so unless the debtor can overcome this threshold issue we don't need to go any further and and i think the other issue that can be characterized as a threshold issue on this appeal is what the ninth circuit's mortgages limited case describes itself as a bright line rule unless the appellant has diligently sought a stay pending appeal the completion of a foreclosure sale renders a bankruptcy appeal moot and you know there's good reason for that rule he is seeking a stake creates a record for the court to review about the effect of the order what happens the facts surrounding it the debtors here made no attempt as the court has already observed to obtain a stay and equity it if you seek an equitable relief by saying asking this court to say that this appeal is equitably moot we've got to be diligent equity requires diligence on the part of someone seeking equitable relief they weren't diligent they had twenty six days after the court ruled bankruptcy rules themselves provide a time dead time after a stay order is issued before foreclosure is they are going to happen correct they did nothing now it's interesting that in response to the court's question mr gilmore said well we didn't oppose that dismissal because the property was gone well you know that was the point wasn't it they did not want the property to be gone and therefore they should have been attempting to stop the foreclosure sale by looking to obtain a stay and knowing that the success on their appeal state been obtained would restore the property to the or even if they had been obtained if they're successful in their appeal with restore the property to the debtor in possession they should have asked the court hold off closing this case until the appeals decided that it is not particularly true here i mean you've got big tracts of land held for speculation on a continually booming real estate economy everything was the land there was nothing saying to the court is bring the property back and my point is if there's no bankruptcy case there's no point to bring the property back there's no state or restore there's nothing to do because there's no bankruptcy now there's one other thing that i really think is important to tell the court about and the court may not want to hear about it because i think these are two threshold issues that we don't need to get past it or do you agree that if your analysis is and in rape or other income property builders controls would not consider anything else that is correct that is correct and so you know feel free as i know you will to shut me up about this because it goes beyond these two what i consider to be critical threshold issues and that regard that relates to a newly land and the interpretation of that case that was cast on it by judge of care of otherwise known as kona yes the new economy kona correct and judge otero didn't decide this case mutinous which is what we're talking about with the dismissal of the bankruptcy there's no way for the court to grant relief so no case or controversy constitutional move ness he didn't decided on equitable ness he decided on statutory move yes and the basis for that was the notion that kona held that section three sixty three m of the bankruptcy code applies in relation to the issue of moving us and good faith as a part of that issue this and i did not brief three sixty three m to judge otero either time didn't brief it here three sixty three m says pacifically that it relates to sales under sections three sixty three b and three sixty three c in other words which is not the case here not the case here in other words bankruptcy sales of bankruptcy estate property well that's quite a bit different now what i want to point out to the court i mean because what if there's a published opinion here or even if there's not these days you know there's an important saying about kona and that is that judge otero assume that kona held that three sixty three and applies to this appeal and kona did not so hold kona speaks in terms of a general bankruptcy rule of move this bankruptcy move this that's what that appeal says i take it you're raising this issue so that in the event a publication or even an unpublished disposition to clarify that this is a constitutional maintenance analysis i yes and i'm a i'm a bankruptcy specialist brandon certified and this issue has been troublesome because it is it is taking a statute that obviously doesn't fit and putting it into a context that that doesn't apply as as your honour's pointed out just as a matter  policy if this case is constitutionally moot how could our discussion of the three sixty three matter be anything other than dicta i you know i totally agree with that your honor and i which is not to say the dicta doesn't mean a lot in our survey i and i you know i again i'm i'm prepared to be shut up on this point but what i want to say is that  bankruptcy mootness i think obviously does require good faith as a component of it you know if you're going to accord and saying this case is equitably moved well in if the record below shows that there was bad faith in connection with the sale how can it be equitably well then you're going to get into the burden of proof and who has to prove good faith or does someone have to prove bad faith exactly and to avoid that problem that one could well exactly and  here's here's why i say that this relates to that exact issue three sixty three m relates to bankruptcy sales a bankruptcy estate property so you're going to the court and asking the court please approve this sale usually before the sale happens but approve the sale here the terms of the sale here the bidders here's evidence to indicate the bidders are disinterested and so forth it is natural in the context of a bankruptcy sale that we have evidence about the good faith of the bidder and the the arm's length the nature of the sale negotiation process and so it's natural that three sixty three am talks about good faith and that the bankruptcy court make a finding of good faith at the time the property is sold but here of course we have a foreclosure sale that happens after and sometimes a long time after release from the stay is granted the bankruptcy court has no way to examine whether the sale happens you know in compliance with its well whether there was bad faith conduct in relation to the sale itself and we're not talking here under another one circuit decision about a bad faith in the origination of a loan bad faith in the acquisition of a loan we're talking about bad faith in relation to the conduct of the sale itself and that sale itself if it's a foreclosure sale happens after the entry of the order for relief from the army i saw under the under those circumstances since judge jones made his ruling on the nature under nevada law and of the nature of their law which preceded this by some time is irrelevant basically is that your position well it's certainly not irrelevant that now there is a judgement out there which is part of our request for  foreclosure was conducted properly under california nevada law that's not relevant you know and one last thing judge well can you had asked whether there was anything in the record to show that these beneficiaries receive notice of the majority action affidavit if you look in the record and again it's our request for a judicial notice that's a qualified document or excuse me a judicial notice documents are recorded thank you for your commentary any questions about my colleagues you know i just want to point out that you had indicated that your co counsels name isn't on the brief and and so if you would like her name reflected i don't know whether it's going to be publication or not you might want to leave that with the we left both cards with the clerk your honor ok thank you very much thank you very much i counsel you have a little time to respond i have to have a little and hopefully i won't take it all for once i want to stand up here and say that i agree with mr kirby that three sixty three am that the court used to make this determination was an improper analysis all because of course three sixty three am does deal with sales that are done through the auspices of the court which is not what happened in this case and i think that's one of the significant points in this case actually cast their substitute itself in as the trustee under the deeds of trust so they could conduct this sale which was not supervised by any court they did a non judicial foreclosure under california law and the deeds of trust themselves are governed by california law they did not comply with the rules in order to do that the the notice of the majority action affidavit is basically here it is we filed it that's essentially what they're saying the sum total of all this is this is in fact a very unusual set of facts and then usual set of circumstances because of the of the disputes between the nevada and california law how how to get back to the beginning here do you agree that income property builders controls this case i do not do not and why because i believe that the other precedents of the questions thank you both for your very very very helpful interesting i actually like bankruptcy law so it's kind of interesting stuff there so thank you both