Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-05733/USCOURTS-cand-4_15-cv-05733-2/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 11:101 Bankruptcy

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United States District Court 

Northern District of Californi

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UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

IN RE LINDA SUE CATRON, 

Debtor / Appellant. 

Case No. 15-cv-05733-YGR 

ORDER GRANTING RESPONDENT’S MOTION 

TO DISMISS

Re: Dkt. No. 4 

 Appellant Linda Sue Catron (“Debtor”), proceeding pro se, appeals orders of the 

bankruptcy court below authorizing the sale of two real properties out of her estate (the “Sale 

Orders”). (Dkt. Nos. 12-5, 12-6.) Respondent Barry Milgrom, Chapter 7 trustee of Debtor’s 

estate, (“Trustee”) moves to dismiss under Federal Rule of Bankruptcy Procedure 8013 on 

jurisdictional grounds. (Dkt. No. 4, “Mtn.”) Having carefully considered the papers submitted 

and the record in this case, the Court now GRANTS Trustee’s motion to dismiss. 

I. FACTUAL AND PROCEDURAL BACKGROUND

On October 22, 2015, Trustee filed a “Motion: (1) to Sell Real Properties Free and Clear of 

Liens and Interests; (2) to Pay Real Estate Commission and Voluntary Deeds of Trust and 

Standard Closing Costs Out of Escrow; and (3) to Pay Specified Other Liens” (the “Motion”) in 

the bankruptcy court below. (Dkt. No. 12-1.) The Motion gave notice of Trustee’s execution of a 

contract for the sale of the properties contingent on the bankruptcy court’s approval, and requested 

the bankruptcy court enter orders authorizing the sale of two real properties. (Id.) The Trustee 

advised the bankruptcy court: 

The Trustee has accepted a sale price for the Haight Street Property 

of $3,250,000 with an initial deposit of $103,000, and the remaining 

$3,147,000 to be paid in cash. The Trustee has accepted a sale price 

for the Page Street Property of $3,100,000, with an initial deposit of 

$106,000, and the remaining $2,994,000 to be paid in cash. Close of 

escrow for the Properties is 45 days after approval by the 

Bankruptcy Court. The sale of the Properties is subject to overbid 

and Bankruptcy Court approval. The Trustee expects there to be 

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sufficient sale proceeds to pay all nonsubordinated liens in full from 

the proceeds of sale of the Properties. The Trustee estimates that, 

after payment in full of nonsubordinated liens, costs of sale, and 

income taxes owed by the bankruptcy estate, the net proceeds to the 

estate are expected to total in excess of $600,000. 

(Id. at 5:7-15.) Trustee served Debtor with a notice of hearing on the Motion by U.S. mail, 

informing Debtor that she could file an opposition to the Motion by November 5, 2015. (Dkt. No. 

4-1, “Hayes Decl.” ¶ 3; Dkt. No. 12-4.) Debtor did not file a written objection. (Hayes Decl., 

Exh. 5.) 

The bankruptcy court, Judge Blumenstiel presiding, held a hearing on the Motion on 

November 19, 2015 at which Debtor was present. (Hayes Decl. ¶ 15.) Debtor is heard on the 

audio recording of the hearing1

 telling Judge Blumenstiel she did not oppose the Motion. (Id.) 

After Judge Blumenstiel granted the Motion, however, Debtor can then be heard informing the 

Judge that she believed that the sale was to occur forty-five (45) days after the hearing and that she 

wanted the opportunity to be a bidder on the properties. (Id.) In response, Judge Blumenstiel 

noted the sales already occurred and the auction process was clearly outlined in the Motion. (Id.) 

On November 25, 2015, the bankruptcy court entered the Sale Orders authorizing the 

Trustee to sell the two properties. (See Sale Orders.) Debtor timely filed a notice of appeal of the 

Sale Orders wherein she elected to have this Court hear her appeal. (Dkt. No. 1-1.) 

Trustee now seeks dismissal of the appeal on two jurisdictional grounds, namely that: (i) 

Debtor lacks standing to bring the instant appeal, and (ii) Debtor waived her right to appeal by not 

challenging the Motion in bankruptcy court. 

II. STANDING

Standing is a jurisdictional issue which is open to review at all stages of litigation. 

National Organization for Women, Inc. v. Scheidler, 510 U.S. 249, 255 (1994). To have 

constitutional standing under Article III, an appellant need only allege an injury “fairly traceable” 

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 Although Debtor designated the audio recording of the November 19, 2015 bankruptcy 

court hearing to be a part of the record on appeal, this recording was not received by the Court. 

The recording is electronically accessible on the bankruptcy court docket and is also summarized 

in a declaration submitted in support of Trustee’s motion to dismiss. (Hayes Decl. ¶ 15.) 

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to the wrongful conduct. See Kane v. Johns-Manville Corp, 843 F.2d 636, 642 n.2 (2d Cir.1988). 

However, because bankruptcy cases generally affect the rights of many, “courts have created an 

additional prudential standing requirement in bankruptcy cases: The appellant must be a ‘person 

aggrieved’ by the bankruptcy court’s order.” In re P.R.T.C., Inc., 177 F.3d 774, 777 (9th Cir. 

1999) (citing Brady v. Andrew, 761 F.2d 1329, 1334 (9th Cir.1985) (“we have adopted the ‘person 

aggrieved’ test as the appropriate standard for determining standing to appeal under the 

[Bankruptcy] Code”)). “Only those persons who are directly and adversely affected pecuniarily 

by an order of the bankruptcy court have been held to have standing to appeal that order.” 

Fondiller v. Robertson, 707 F.2d 441, 442 (9th Cir. 1983) (“a hopelessly insolvent debtor does not 

have standing to appeal orders affecting the size of the estate ... Such an order would not diminish 

the debtor’s property, increase his burdens, or detrimentally affect his rights”). 

Debtors cannot ordinarily challenge a bankruptcy court order unless there is likely to be a 

surplus in the estate. See In re P.R.T.C., 177 F.3d at 778 n.2 (“Ordinarily, a debtor cannot 

challenge a bankruptcy court’s order unless there is likely to be a surplus after bankruptcy.”); see 

also In re Cathryn Reiff, 33 Fed.Appx. 878, 879 (9th Cir. 2002) (holding that when there is no 

residual estate, such an order does not diminish the debtor’s property, increase the debtor’s 

burdens, or detrimentally affect the debtor’s rights). A surplus estate is created if “there is 

something to distribute to the [debtor] after payment of priority claims and expenses, timely and 

untimely claims, fines and penalties, and interest on all of these items.” In re Meronk, 249 B.R. 

208, 214 (B.A.P. 9th Cir. 2000). Thus, a debtor “does not have standing to object to a sale by the 

bankruptcy trustee of [her] assets [where she] fails to establish that an alternative sale would have 

returned [her] to solvency or that the sale otherwise detrimentally affect[s] [her] rights.” In re 

Viola, 2011 WL 4831200, at *2 (N.D.Cal. Oct. 12, 2011).

Here, Debtor does not contest that the “person aggrieved” test applies nor does she contest 

the “undisputed fact that the case involves [a] non-surplus estate.” (Dkt. No. 10 at 4:10-12.) 

Debtor in fact concedes that “there is no evidence that liquidation [of the marketable assets] will 

result in a distribution to the debtor.” (Id. at 4:20-21.) Debtor nonetheless contends she has 

standing to appeal the Sale Orders as a result of Trustee’s failure to create a surplus estate. More 

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particularly, Debtor contends that each of the two properties have a “near term” value of $1.5 

million above the value listed by Trustee in the Motion. (Id. at 4:24-26.) 

The Court finds that Debtor’s argument fails to persuade for two independent reasons. 

First, Debtor’s assertion with respect to the value of the two properties is without declaration or 

support, and is therefore not entitled to any evidentiary weight. See In re Viola, 2011 WL 

4831200, at *2. In In re Viola, the district court rejected a debtor’s similar argument that the sale 

price of property was below the market value of the property. Id. There the district court 

concluded that the debtor’s “bald assertions” were inadequate and declined to entertain the appeal. 

Id. Here, Debtor likewise presents no evidentiary support for her belief that the properties are 

valued at $1.5 million more than the sales price each. Because Debtor’s valuation is based on 

nothing more than her unsubstantiated belief, the Court finds she has presented no evidence giving 

rise to standing that would enable her to pursue this appeal. 

Second, even if the Court were to accept Debtor’s proffer that each of the two properties 

has a value of $1.5 million above their sales prices, the Court would still conclude that Debtor is 

not a “person aggrieved” with standing to bring this appeal. In other words, adding $3 million to 

the total assets held by Debtor’s estate does not result in a solvent estate. The assets held by the 

estate would still total only $10,143,000.13,2 which is substantially less than the estate’s total 

liabilities of $14,835,838.09.3 Therefore, total liabilities would continue to exceed total assets; 

Debtor has not shown that she was pecuniarily affected by the Sale Orders. See In re P.R.T.C., 

177 F.3d at 782 n.2 (a debtor cannot challenge a bankruptcy court’s order unless there is likely to 

be a surplus after bankruptcy). Because there is no surplus estate even when considering the 

additional $3 million asserted value, Debtor has not shown an adverse effect from the Sale Orders. 

/// 

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 As of the filing of this appeal, the only assets of the estate were net proceeds from the 

sale of the two properties and cash in the estate. The total assets held by the estate amount to 

$7,143,200.13, which includes: $443,200.13 in cash (Hayes Decl., Exh. 6) and the final sale prices 

of the two properties totaling $6,700,000. (See Sale Orders.) 

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 Total liabilities include secured claims of $12,689,450.51, unsecured priority claims of 

$66,071.52, and unsecured non-priority claims of $2,080,316.06. (Hayes Decl., Exh. 13.) 

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Accordingly, the Court finds that Debtor lacks standing to bring this appeal. Trustee’s 

motion on standing grounds is GRANTED. 

III. WAIVER

Trustee also contends that the Court does not have appellate jurisdiction as Debtor waived 

her right to appeal the Sale Orders by not making any objection to the proposed sales in the 

bankruptcy court below. See In re Am. W. Airlines, Inc., 217 F.3d 1161, 1165 (9th Cir. 2000) 

(party that raises an argument for the first time on appeal from the ruling of a bankruptcy court is 

generally deemed to have waived the argument); In re Wade, 2014 WL 5088258, at *2 (N.D.Cal. 

Oct. 9, 2014) (district courts’ “appellate jurisdiction extends only to matters raised before the 

Bankruptcy Court”). In opposition, Debtor contends that she made an oral objection at the hearing 

before Judge Blumenstiel. 

The Court need not reach this issue. Already having found the Court is otherwise without 

jurisdiction to hear this appeal, the Court declines to address the merits of the parties’ arguments 

with respect to waiver. 

IV. CONCLUSION 

For the foregoing reasons, Trustee’s motion to dismiss is GRANTED. Judgment will be 

entered accordingly. 

IT IS SO ORDERED. 

Dated: February 25, 2016 

______________________________________ 

 YVONNE GONZALEZ ROGERS

 UNITED STATES DISTRICT COURT JUDGE

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