Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_16-cv-00222/USCOURTS-caed-2_16-cv-00222-1/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:1334 Bankruptcy Appeal

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

COREY CLINTON DEGUIRE,

Appellant,

v.

MARICOPA ORCHARDS, LLC,

Appellee.

No. 2:16-cv-00222-MCE

MEMORANDUM AND ORDER

The Bankruptcy Court below dismissed Appellant Corey Clinton DeGuire’s 

(“Appellant”) bankruptcy petition after determining that he was not eligible for Chapter 13

relief. Appellant timely noticed his appeal of that order and filed his Motion for Stay 

Pending Appeal in this Court. ECF No. 5. Because Appellant has not met his burden of 

justifying the imposition of a stay, Appellant’s Motion is DENIED. 

BACKGROUND

Appellant and his father, Stephen DeGuire, are the sole principals of DeGuire

Marketing, LLC (“DeGuire Marketing”). Appellee Maricopa Orchards, LLC (“Appellee”) 

retained DeGuire Marketing to sell the almonds it had grown on its behalf. Under the 

terms of their agreement, DeGuire Marketing was to remit the proceeds of the almond 

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sales, while keeping a small commission for itself. After Appellee delivered its 2013 

almond crop, DeGuire Marketing apparently sold the crop and converted a portion of the 

proceeds to their own use. Accordingly, Appellee commenced litigation against DeGuire 

Marketing and Appellant in state court. 

Appellant commenced his Chapter 13 case in the Bankruptcy Court in September 

2015 and moved for orders confirming a Chapter 13 plan. Appellee opposed that 

motion, filed a motion to dismiss, and also initiated an adversary proceeding against 

Appellant seeking a determination that he was indebted to Appellee and that such debt 

was non-dischargeable. The Bankruptcy Court ruled in favor of Appellee as to both 

motions. After initiating his appeal in this Court, Appellant applied for a stay pending 

appeal in the Bankruptcy Court. The Bankruptcy Court denied Appellant’s application. 

DISCUSSION

A federal district court has broad discretion in deciding whether to issue a stay. 

Fed. Sav. & Loan Ins. Corp. v. Molinaro, 889 F.2d 899, 902 (9th Cir. 1989). In 

exercising such discretion, courts in the Ninth Circuit adhere to a sliding-scale balancing 

of four traditional factors. In re Vandenberg, 09-BK-23387, 2012 WL 1854298, at *2 

(Bankr. D. Ariz. May 21, 2012). The traditional factors are: (1) whether the applicant 

has made a strong showing that he is likely to succeed on the merits; (2) whether the 

applicant will suffer irreparable injury absent a stay; (3) whether issuance of the stay will 

injure other parties interested in the proceeding; and (4) the public interest. Id. The first 

two factors are the most critical, but a failure on any one factor requires the Court to 

deny the application for a stay. In re Rivera, 5:15-cv-04402, 2015 WL 6847973 at *2 

(N.D. Cal. Nov. 9, 2015). 

Here, Appellant’s failure to make a showing of either a likelihood of success on 

the merits or irreparable harm dooms the instant Motion. Appellant argues that he will 

suffer irreparable harm if the dismissal order is not stayed because he will be forced to 

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spend money defending himself against Appellee’s state court action. That argument 

borders on the frivolous. As Judge Jaime explained in adjudicating Appellant’s Motion 

for a Stay in the Bankruptcy Court, nearly all courts hold that litigation expenses do not 

constitute irreparable harm. ECF No. 8-1 at 120 (citing Mohamad v. Uber Techs., Inc., 

115 F. Supp. 3d 1024, 1032-33 (N.D. Cal. 2015).1 

Furthermore, the likelihood that Appellant will prevail on the merits of his appeal is 

slim. Appellant’s primary contention is that the Bankruptcy Court erred in applying 

California’s trust-fund doctrine in finding Appellant personally liable for the debts of 

DeGuire Marketing to Appellee. The trust-fund doctrine “imposes a fiduciary obligation 

on corporate officers and directors in favor of the corporation’s creditors when the 

corporation is insolvent.” In re Tsai, No. 2:13-BK-27391, 2014 WL 1154032 at *6 (Bankr. 

C.D. Cal. Mar. 19, 2014). Insolvency can be established at the moment a corporation’s 

liabilities exceed its assets. Id. Appellant argues that the Bankruptcy Court found that it 

was insolvent on September 23, 2015, but made no finding that it had breached a 

fiduciary duty imposed by the trust-fund doctrine. But the duties created by the trustfund doctrine require a debtor to affirmatively avoid dissipating, diverting, or diluting 

corporate assets. In re Houng, No. 13-56656, 2016 WL 145841 at *2 (9th Cir. Jan. 11, 

2016). Given that Appellant had a duty of avoidance, it was proper for the Bankruptcy 

Court to find that he was personally liable for DeGuire Marketing’s debt to Appellee even 

in the absence of affirmative wrongdoing between the date of insolvency and the filing of 

his Chapter 13 petition. Appellant’s Motion is therefore denied. 

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 1 The parties’ Requests for Judicial Notice (ECF Nos. 8-1 and 11) are unopposed and GRANTED 

on that basis. 

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CONCLUSION

For the reasons set forth above, Appellant’s Motion for a Stay Pending Appeal 

(ECF No. 5) is hereby DENIED. 

IT IS SO ORDERED.

Dated: March 29, 2016

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