1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

FILED

JUL 25 2014

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-13-1316-PaKuBl

)

) Bankr. No. 10-41455-DS

PAUL PHILLIP BARDOS, )

dba CADMUS CONSTRUCTION CO., )

)

Debtor. )

______________________________)

)

TWENTY-NINE PALMS ENTERPRISES )

CORPORATION, )

)

)

Appellant, )

)

v. ) M E M O R A N D U M1

)

PAUL PHILLIP BARDOS, )

)

Appellee. )

______________________________)

Argued and Submitted on June 26, 2014

at Pasadena, California

Filed - July 25, 2014

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Deborah J. Saltzman, Bankruptcy Judge, Presiding

 

Appearances: Richard M. Freeman of Sheppard, Mullin, Richter &

Hampton, LLP, argued for appellant Twenty-Nine

Palms Enterprises Corporation; Martha A. Warriner

argued for appellee Paul Phillip Bardos; Maria J.

Nunez argued for Leslie T. Gladstone, Proposed

Successor Liquidating Agent.

 

1 This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8013-1.
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Before: PAPPAS, KURTZ and BLUMENSTIEL,2 Bankruptcy Judges.

Appellant Twenty-Nine Palms Enterprises Corporation

(“29 Palms”) appeals the bankruptcy court’s order approving a 

modification of debtor Paul Phillip Bardos’ (“Bardos”) confirmed

chapter 113 plan, and authorizing the sale of Bardos’ residence

for $625,000. We DISMISS this appeal as MOOT. 

FACTS

Bardos was a contractor. In February 2007, Bardos entered

into an agreement with the Twenty-Nine Palms Band of Mission

Indians of California (the “Band”) to oversee a number of

development and construction projects undertaken by the Band and

its corporate entity, 29 Palms,4 related to the Spotlight 29

Casino and associated grounds in Riverside County. Bardos

apparently functioned both as an owner’s representative on behalf

of 29 Palms for all these projects, as well as served as the

contractor on one or more of them, doing so under various names,

including his wholly owned proprietorship, Cadmus Construction

Co. (“Cadmus”).

2 Hon. Hannah L. Blumenstiel, United States Bankruptcy

Judge for the Northern District of California, sitting by

designation.

3 Unless otherwise indicated, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101–1532, all

Rule references are to the Federal Rules of Bankruptcy Procedure,

Rules 1001–9037, and all Civil Rule references are to the Federal

Rules of Civil Procedure 1–86.

4 Unless necessary to distinguish them, we will refer to

either the Band or 29 Palms as 29 Palms.

-2-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The Cadmus State Court Action and Judgment

On July 23, 2009, 29 Palms filed a complaint in California

state court against Cadmus and, indirectly, Bardos. Twenty-Nine

Palms v. Cadmus Construction Co., et al., CIVRS908132 (San

Bernardino Superior Court). In it, because Cadmus was not a

licensed contractor in California, 29 Palms alleged two counts

for violation of Cal. Bus. & Prof. Code §§ 7031 and 17200, and

asked the court to order that Cadmus disgorge all of the fees

29 Palms had paid it, amounting to approximately $750,000, plus

interest. The California court entered a summary judgment

awarding 29 Palms a judgment against Cadmus for $917,043.09 plus

post-judgment interest (the “Judgment”). Bardos appealed the

Judgment to the California Court of Appeals. In a published

opinion, the court ruled against Bardos and affirmed the

Judgment, noting that Bardos was fully responsible for the acts

of his proprietorship, Cadmus. Twenty-Nine Palms Enters. Corp.

v. Bardos, 210 Cal. App. 4th 1435, 1454 (2012).

Bardos filed a petition asking the Supreme Court of

California to review the Court of Appeals decision. The petition

was denied on February 20, 2013. Bardos then filed a petition

for certiorari (the “Cert. Petition”) with the United States

Supreme Court. As discussed below, Bardos voluntarily withdrew

the Cert. Petition on June 25, 2013. Bardos v. Twenty-Nine Palms

Enters. Corp., 133 S.Ct. 2884 (2013). We refer to these three

appeals collectively as the “Cadmus Appeals.”

The Bankruptcy Case and Chapter 11 Plans

Bardos filed a petition seeking relief under chapter 11 of

the Bankruptcy Code on September 29, 2010, about three weeks

-3-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

after filing the appeal with the California Court of Appeals. 

Based upon the stipulation of the parties, the bankruptcy court

granted relief from the automatic stay in the bankruptcy case so

that the appeal could proceed.

Bardos filed his initial proposed Plan of Reorganization and

Disclosure Statement (the “First Disclosure Statement”) on

March 29, 2012. In the plan, Bardos offered alternative

approaches he called “Plan A” and “Plan B” to dealing with his

financial challenges. Plan A proposed a fairly unremarkable

reorganization of Bardos’ financial affairs, with Bardos

proposing to pay his creditors’ claims out of the business income

generated by his construction businesses. However, if Bardos was

unsuccessful in the Cadmus Appeals, Plan B provided for

liquidation of his assets. 29 Palms objected to the First

Disclosure Statement arguing that it failed to provide sufficient

information about Bardos’ and his companies’ incomes, any

information about a pending grand jury investigation of Bardos,

or a liquidation analysis to show the results of Bardos’ proposed

asset liquidation under Plan B.

In response, Bardos filed a First Amended Plan of

Reorganization (the First Amended Plan) and First Amended

Disclosure Statement. The First Amended Plan contained minor

changes to address 29 Palms’ objections but, importantly, added a

provision stating that if Bardos were convicted in any criminal

proceedings, any criminal conviction would act as a second

“trigger” requiring him to liquidate under Plan B. The

bankruptcy court allowed Bardos to submit a slightly modified

Disclosure Statement (the “Second Amended Disclosure Statement”),

-4-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

providing additional information about Bardos’ recent federal

criminal indictment. The bankruptcy court approved Bardos’

Second Amended Disclosure Statement on May 29, 2012, and it

remained the operative disclosure statement at the time of plan

confirmation. 

One of the focal points of the bankruptcy case and this

appeal concerns Bardos’ residence in Rancho Cucamonga, California

(the “Property”). The Second Amended Disclosure Statement listed

the Property as a Bardos asset, and represented that it had a

value of $750,000, subject to a first mortgage in favor of Wells

Fargo with a balance due of $328,000. 

Bardos filed Second and Third Amended Plans of

Reorganization. The amended plans contained only minor changes. 

Shortly thereafter, Bardos and 29 Palms resolved their remaining

differences in the bankruptcy case in a stipulated agreement

allowing Bardos to confirm the Third Amended Plan according to

the terms of the stipulation. There were no objections to

confirmation, and the bankruptcy court approved the parties’

stipulation, and entered an order confirming the Third Amended

Plan on October 28, 2012 (the “Confirmed Plan” and “Confirmation

Order”). Like his prior plans, the Confirmed Plan provided two

means for Bardos to pay creditors: Plan A, the reorganization

option, provided that all creditors would be paid in full from

income generated over time by Bardos’ wholly owned corporation,

Bardos Construction, Inc., together with the proceeds from a

successful outcome to the Cadmus Appeals; and Plan B, the

liquidation option, required that Bardos’ assets be sold and the

sale proceeds distributed to creditors if any one of three events

-5-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

occurred: (1) if he lost or withdrew the Cadmus Appeals; (2) if

he were convicted in the pending federal criminal case;5 or

(3) if Bardos were to otherwise default under Plan A. In

addition, the Confirmation Order provided that, if Bardos were

convicted, a liquidating agent would be appointed to oversee the

liquidation of the assets. 

Bardos’ Motion to Modify the Confirmed Plan

By early May 2013, none of the events that would trigger

Plan B had occurred. Bardos decided to implement Plan B

immediately, rather than to await the events which would “force

his hand.” Since the Confirmed Plan did not allow him to

implement Plan B without a triggering event, Bardos filed a

motion to modify the Confirmed Plan (the “Modification Motion”). 

The Modification Motion provided for the immediate implementation

of Plan B under the Confirmed Plan, including termination of

Bardos’ business operations that had supported plan payments

under Plan A. Of particular interest in this appeal are the

5 In an opposition to Bardos’ motion to dismiss this

appeal, 29 Palms asks the Panel to take judicial notice of a

“First Superseding Indictment” entered against Bardos and his

alleged co-conspirators in the criminal case, which alleges that

Bardos engaged in conspiracy, bribery, money laundering and tax

evasion in dealings with 29 Palms. Since none of these

allegations are relevant to the issues on appeal, 29 Palms’

request for judicial notice is DENIED.

Of course, under the Confirmed Plan, were Bardos convicted

in the federal case, that conviction would trigger implementation

of Plan B, including the appointment of a liquidating agent. The

parties have informed the Panel that Bardos eventually entered a

guilty plea to one count of the indictment (income tax evasion). 

Therefore, because he stands convicted in the federal case,

Plan B was triggered under the Confirmed Plan.

-6-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Modification Motion’s provisions relating to liquidation of the

Property:

Plan B provides for, among other things, the listing

and sale of the [Property], which is Debtor’s

residence. That [P]roperty has been listed for sale

for the sum of $625,000; the Plan requires that escrow

be closed within 6 months. It is also Debtor’s desire

that this [P]roperty be sold as quickly as is

reasonable in the present real estate market.

Modification Motion at ¶ II(5).

The [Property] shall be sold at a market price within

6 months pursuant to Plan B, listed by the Debtor at

$625,000 in consultation with a qualified local real

estate broker[.]

Modification Motion at ¶ VI(C).

29 Palms objected to the Modification Motion, raising two

arguments:

29 Palms is not opposed to the Debtor implementing

Plan B[;] however, [Debtor] should be required to

abandon his appeal to the [U.S.] Supreme Court as

indicated in the motion. Additionally, 29 Palms is

opposed to the Debtor’s proposal to sell his primary

residence at a discount to the detriment of his

unsecured creditors. The Debtor is proposing to list

and sell the [Property] for $625,000, which may be

substantially below fair market value and well below

the value he stated in the Plan ($750,000).

Attached to the 29 Palms opposition was the Declaration of

Bram Hanono, one of its attorneys. The Hanono Declaration in

turn attached two screen prints from internet sites Hanono

attested he had recently visited. One printout was from

zillow.com, ostensibly containing information about the value of

the Property. The second attachment was from dqnews.com, a

website operated by the Los Angeles Times, with information

regarding the average year-to-year sale price of homes located in

the same zip code as the Property. 

-7-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Bardos responded to 29 Palms’ opposition to the Modification

Motion. Bardos disagreed with 29 Palms that he should be

compelled to abandon his appeal to the Supreme Court, suggesting

that it was only an option that he might take. Bardos also

argued in favor of the $625,000 listing price for the Property

and submitted documentary evidence, including a local broker’s

assessment of the value of the Property based upon comparable

sales of similarly situated houses. Bardos argued that the

Zillow estimate and other website printout were not admissible

evidence.

The bankruptcy court conducted a hearing on the Modification

Motion on June 6, 2013. Early on, the court sustained Bardos’

objection to 29 Palms’ attempt to submit the zillow.com and other

website printout, noting that “[t]he Zillow and other website

printouts are not evidence.” Hr’g Tr. 5:13-15, June 6, 2013. 

The court also agreed with Bardos concerning his proposal to

list and sell the Property for $625,000: 

The evidence that is here suggests that the value that

the [P]roperty was listed for and appears to be about

to be sold for is an appropriate value, notwithstanding

the older appraisal and the amount set forth in the

disclosure statement. 

Hr’g Tr. 5:17-21. However, the bankruptcy court also advised the

parties: 

I don’t have as much of an issue with the sale price of

the house as I do with the appeal. It seems to me that

the stipulation and the plan were very clear on the

conditions that would trigger the implementation of

Plan B, and now what the Debtor’s asking for is what I

view as a material modification of the plan. . . . I

don’t see how I can grant the motion. The []

conditions [of the Confirmed Plan] haven’t been

satisfied.

Hr’g Tr. 10:22–11:6.

-8-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

During a recess, the parties apparently reached a compromise

concerning Bardos’ pending Cert. Petition and some other issues

not involved in this appeal. After the bankruptcy court

reconvened, the following colloquy ensued:

WARRINER [Bardos’ Counsel]: And we would also assume

that in granting the motion, obviously you are letting

the sale [of the Property to] proceed without a

liquidating agent.

THE COURT: Uh-huh.

WARRINER: — and sustaining our evidentiary objection

and approving the values for the other assets. If all

of those are approved by the Court, Mr. Bardos will

withdraw the petition for cert.

THE COURT: Okay. Mr. Warum:

WARUM [29 Palms’ Counsel]: That is satisfactory, Your

Honor. . . .

WARRINER: And the only other thing that I’ve added to

the [proposed order granting the Modification Motion]

is an abstract of judgment that showed up on the title

report in favor of [29 Palms], and [Mr. Warum] has

agreed that his client will withdraw that. I’d like to

include that in the order.

THE COURT: Okay. . . . Mr. Warum, does that work for

you?

WARUM: That’s fine, Your Honor. No objections.

Hr’g Tr. 13:24–15:7.

The bankruptcy court concluded the hearing by instructing

Bardos’ counsel to prepare an agreed order that “will be entered

right away.” Hr’g Tr. 16:1. Bardos submitted an order bearing

the endorsement of counsel for 29 Palms as “approved as to form

and content.” The bankruptcy court entered the order granting

the Modification Motion on June 19, 2013 (the Modification

Order”). It provided, in relevant part:

The [Modification] Motion is granted, subject to the

-9-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

following:

A. The Debtor shall dismiss his appeal to the United

States Supreme Court in the matter of Paul Bardos,

Petitioner v. Twenty-Nine Palms Enters. Corp,

Respondent. . . .

B. The Debtor may proceed with the sale of the

[Property], as proposed in the Motion, on behalf of the

Bankruptcy Estate, free and clear of the abstract of

judgment in favor of 29 Palms, which abstract shall be

released by 29 Palms prior to the close of escrow[.]

Modification Order at 2.

Consistent with the Modification Order, the Supreme Court

appeal was dismissed upon stipulation of the parties on June 25,

2013. However, on July 3, 2013, 29 Palms filed a timely appeal

of the Modification Order. 29 Palms did not seek a stay of the

Modification Order in the bankruptcy court or from this Panel.

Events Occurring During This Appeal

Bardos filed a motion to dismiss this appeal on August 15,

2013, arguing that, because 29 Palms had benefitted from the

Modification Order, it was estopped from appealing it (the “First

Dismissal Motion”). 29 Palms opposed the First Dismissal Motion. 

A BAP motions panel denied the First Dismissal Motion in an order

entered October 15, 2013. 

Bardos filed a second dismissal motion (the Second Dismissal

Motion”), representing that, on December 4, 2013, the Property

had been sold as allowed in the Modification Order to unrelated

third parties, and that the sale proceeds had been distributed to

creditors as provided in the Confirmed Plan shortly thereafter. 

Thus, Bardos argued, the 29 Palms appeal of the Modification

Order was now moot. 29 Palms opposed the Second Dismissal

Motion, arguing that, even if the sale of the Property could not

-10-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

be undone (which it challenges), the Panel could still grant

29 Palms effective relief. The BAP motions panel referred the

resolution of the Second Dismissal Motion to this merits Panel.

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C.

§§ 1334 and 157(b)(2)(L). The Panel has jurisdiction over

appeals from the bankruptcy court’s final orders under 28 U.S.C.

§ 158, and the Modification Order was a final order. Everett v.

Perez (In re Perez), 30 F.3d 17, 20 (9th Cir. 1994). However, we

lack jurisdiction to decide moot appeals. United States v.

Patullo (In re Patullo), 271 F.3d 898, 900 (9th Cir. 2001). If

an appeal becomes moot while it is pending before the Panel, we

must dismiss it. Id. Even so, the Panel always has jurisdiction

to determine its own jurisdiction, including a determination of

mootness. Hupp v. Educ. Credit. Mgmt. Corp. (In re Hupp),

383 B.R. 476, 478 (9th Cir. BAP 2008).

ISSUE

Whether this appeal is moot.

STANDARD OF REVIEW

We review our own jurisdiction, including questions of

mootness, de novo. Silver Sage Partners, Ltd. v. City of Desert

Hot Springs (In re City of Desert Hot Springs), 339 F.3d 782, 787

(9th Cir. 2003).

DISCUSSION

Status of the Parties to the Appeal

As a preliminary matter, we address a procedural anomaly

about which the Panel was first informed at the oral argument in

this appeal. Apparently, on April 9, 2014, after briefing was

-11-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

completed in this appeal, a liquidating agent had been appointed

by the bankruptcy court because Bardos had entered a guilty plea

in the federal criminal case.

Counsel for Bardos informed the Panel that the parties had

stipulated to the appointment of a successor liquidating agent in

the bankruptcy case and that an order had been submitted to the

bankruptcy court for its entry. Thus, Bardos’ counsel conceded

that the successor liquidating agent should likely be substituted

as the real party in interest in the place of Bardos in this

appeal.6 

Counsel for the proposed successor liquidating agent, who

also appeared at the argument, informed the Panel that the

successor liquidating agent intended to join 29 Palms in

requesting that the bankruptcy court’s Modification Order be

reversed. Counsel for Bardos indicated that while Bardos did not

dispute the successor liquidating agent’s standing to participate

in the appeal, Bardos did not agree with the successor

6 The Confirmation Order required that a liquidating agent

be appointed if Bardos was convicted in the federal criminal

case. Bardos was convicted, and the bankruptcy court approved

the appointment of Squar Milner, LLP, as liquidating agent on

April 9, 2014 (the “Liquidating Agent Order”). The Liquidating

Agent Order directed Debtor to turn over all assets of the estate

to the liquidating agent “to liquidate and administer in

accordance with the provisions of the Plan and the Bankruptcy

Code.” Liquidating Agent Order at 1, April 9, 2014. 

On June 23, 2014, Bardos, 29 Palms and Squar Milner

submitted a stipulation to the bankruptcy court informing the

court that Squar Milner desired to be replaced as liquidating

agent. The parties requested appointment of Leslie Gladstone as

successor liquidating agent. 

The bankruptcy court approved the stipulation appointing

Leslie Gladstone as successor liquidating agent on July 23, 2014.

-12-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

liquidating agent’s position regarding the merits of this appeal. 

Despite these somewhat perplexing and surprising

developments about the status of the parties to this appeal, the

Panel directed that oral argument proceed, hearing from counsel

for Bardos, the proposed successor liquidating agent, and

29 Palms. We conclude that questions concerning the parties are,

under the circumstances, not an impediment to the Panel’s

disposition of this appeal. Because we decide below that this

appeal is equitably moot, the Panel lacks jurisdiction to

consider the merits of this appeal, including whether or not to

reverse the decision of the bankruptcy court. In re Patullo,

271 F.3d at 900 (a federal court cannot exercise jurisdiction

over a moot appeal). Thus, even assuming the proposed successor

liquidating agent is a proper party to the appeal, we do not

address the implications of the joint request of the liquidating

agent and 29 Palms for reversal.

Mootness

We cannot exercise jurisdiction over a moot appeal. 

In re Pattullo, 271 F.3d at 900; GTE Cal., Inc. v. FCC, 39 F.3d

940, 945 (9th Cir. 1994) ("The jurisdiction of federal courts

depends on the existence of a ‘case or controversy' under Article

III of the Constitution."). A moot case is one where the issues

presented are no longer live, and no case or controversy exists. 

Pilate v. Burrell (In re Burrell), 415 F.3d 994, 998 (9th Cir.

2005). The test for mootness is whether an appellate court can

still grant effective relief to the prevailing party if it

decides the merits in his or her favor. Id. If a case becomes

moot while the appeal is pending, an appellate court must dismiss

-13-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the appeal. In re Pattullo, 271 F.3d at 900.

Constitutional mootness, in the strict sense, occurs when an

appellate court cannot give the appellant any relief whatsoever

in the event that it decides in appellant’s favor. Felster

Publ’g v. Burrell, 415 F.3d 994, 998 (9th Cir. 2005). This

appeal is not moot in the Constitutional sense because the Panel

has the authority to grant the relief requested, that is, we

could reverse the bankruptcy court’s decision approving the plan

modification and sale of the Property.

However, the case law recognizes that practical and

equitable factors should be taken into consideration in

determining if an appeal is moot. This is the doctrine of

equitable mootness. An appeal becomes equitably moot when:

appellants have failed and neglected diligently to

pursue their available remedies to obtain a stay of the

objectionable orders of the Bankruptcy Court, thus

"permitting such a comprehensive change of

circumstances to occur as to render it inequitable

. . . to consider the merits of the appeal." Trone v.

Roberts Farms, Inc. (In re Roberts Farms, Inc.),

652 F.2d 793, 798 (9th Cir. 1981).

Focus Media, Inc. v. NBC (In re Focus Media, Inc.), 378 F.3d 916,

922 (9th Cir. 2004). In other words, equitable principles may

require dismissal of the appeal when the appellant neglects to

obtain a stay pending appeal and the rights of third parties

intervene. Spirtos v. Moreno (In re Spirtos), 992 F.2d 1004,

1006 (9th Cir. 1993); Darby v. Zimmerman (In re Popp), 323 B.R.

260, 271 (9th Cir. BAP 2005). 

The party asserting equitable mootness must demonstrate that

the case involves transactions "so complex or difficult to

unwind" that equitable mootness applies. Lowenschuss v. Selnick

-14-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(In re Lowenschuss), 170 F.3d 923, 933 (9th Cir. 1999). In

deciding whether an appeal is equitably moot, the Ninth Circuit

instructs that we must consider the consequences of the remedy on

appeal, and the number of third parties who have changed their

position, in reliance on the validity of the order on appeal. 

Kaonohi Ohana, Ltd. v. Sutherland (In re Kaonohi Ohana, Ltd.),

873 F.2d 1302, 1306 (9th Cir. 1989). The Ninth Circuit recently

provided guidelines for our inquiry into equitable mootness:

We endorse a test similar to those framed by the

circuits that have expressed a standard: We will look

first at whether a stay was sought, for absent that a

party has not fully pursued its rights. If a stay was

sought and not gained, we then will look to whether

substantial consummation of the plan has occurred.

Next, we will look to the effect a remedy may have on

third parties not before the court. Finally, we will

look at whether the bankruptcy court can fashion

effective and equitable relief without completely

knocking the props out from under the plan and thereby

creating an uncontrollable situation for the bankruptcy

court. 

Motor Vehicle Cas. Co. v. Thorpe Insulation Ins. Co.

(In re Thorpe Insulation Ins. Co.), 677 F.3d 869, 881 (9th Cir.

2012).

In Thorpe Insulation, and the other circuit opinions it

cites, the first and most important consideration is if the party

seeking to appeal failed to seek a stay. Id. at 881 (appellant

may not “sit on its rights”); Nordhoff Invs. v. Zenith Elecs.

Corp., 258 F.3d 180, 186 (3d Cir. 2001) ("It is obligatory upon

appellant . . . to pursue with diligence all available remedies

to obtain a stay of execution of the objectionable order (even to

the extent of applying to the Circuit Justice for relief)[.]"); 

Chateaugay Corp. v. LTV Steel Co. (In re Chateaugay Corp.),

10 F.3d 944 (2d Cir. 1993) (appellant must “pursue[] with

-15-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

diligence all available remedies to obtain a stay of execution of

the objectionable order”). Here, 29 Palms did not seek a stay of

the bankruptcy court’s order pending appeal either in the

bankruptcy court or with this Panel; instead, it “sat on its

rights.” 

In its opening brief, 29 Palms attempted to excuse its

failure to request any stay pending appeal concerning a sale of

the Property by explaining that:

29 Palms has been informed by Bardos that the Property

has not been sold and that it cannot be sold until this

appeal is resolved because the title company will not

issue a clean title report; therefore there are no

issues of mootness or need for stay pending appeal.

29 Palms Op. Br. at 2, n.1. Apparently, 29 Palms elected not to

seek a stay of the Modification Order believing that, as a

practical matter, the Property could not be sold because this

appeal prevented Bardos from providing insurable title to a

buyer. Even assuming there may have been some communication

between 29 Palms and Bardos concerning difficulties obtaining a

title policy, 29 Palms has not argued that Bardos agreed not to

sell the Property during the pendency of the appeal. To the

contrary, the Modification Order expressly empowered Bardos to

sell the Property, and so he did. 29 Palms, on the other hand,

had the right to seek a stay of that sale; it did not. Simply

put, while Bardos exercised his rights, 29 Palms did not

“diligently” pursue its rights to stay a sale of the Property.

The other relevant inquiries7 in Thorpe focus on the rights

7 Because 29 Palms never requested a stay pending appeal,

we do not consider the second Thorpe element, substantial

consummation.

-16-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

of third parties, and whether intervening transactions have taken

place that are "so complex or difficult to unwind" as to create

an uncontrollable situation for the bankruptcy court. In this

case, 29 Palms asserts that the purchasers of the Property would

not be prejudiced by an order voiding the sale because they would

have recourse to reimbursement from the title insurance company

that insured their good title in the sales transaction. 

29 Palms’ Opposition to Motion for Mootness at 1-2. We disagree.

Of course, neither the Property purchasers nor their title

insurer are parties to this appeal, nor did they participate in

the proceedings before the bankruptcy court. Under these facts,

we simply cannot be certain as to the impact of our possible

decision reversing the bankruptcy court’s order approving the

sale. Presumably, both the purchasers and title company relied

upon 29 Palms’ failure to seek a stay of that order in proceeding

to close the sale. 

In addition, 29 Palms must remember that the title insurer’s 

contract is with the purchasers, not Bardos. We therefore cannot

know whether the title company would be obliged to compensate the

purchasers for any damages or expenses they might incur if the

sale of the Property by Bardos to them is rescinded. As can be

seen, then, 29 Palms takes a cavalier approach to evaluating the

relative equities and potential consequences to third parties of

any decision to undo the sale. 

Moreover, the impact and efficacy of an order in this appeal

requiring that the distributions from the sale proceeds be

disgorged would be, at best, uncertain. Indeed, proceedings by

the bankruptcy court to compel the several creditors who have

-17-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

received full payment of their claims to return approximately

$620,000 to the estate may be problematic, lengthy and expensive. 

And although the mortgage creditor and bankruptcy case

administrative creditors would continue to hold claims senior to

29 Palms if the sale is undone, there is no guarantee that any

future sale of the Property would generate as much for them as

they have already received. 

Finally, we are concerned that if the Property is put back

onto the market, the prospects for another sale are unclear and

additional holding costs will be incurred until another sale can

be arranged. 

All things considered, we conclude that undoing the sale of

the Property and recovery of the sale proceeds at this late stage

of the proceedings could adversely impact the rights of third

parties and could require potentially extensive, expensive, and

lengthy proceedings in the bankruptcy court. Since 29 Palms did

not diligently seek a stay pending appeal, and the relief

requested by 29 Palms would be complex and difficult for the

Panel to provide, we conclude this appeal is equitably moot.

In response to Bardos’ mootness contention, 29 Palms argues

that since the bankruptcy court did not enter an order that the

buyers of the property were good faith purchasers for purposes of

§ 363(m), any protections against reversal or modification of a

sale order on appeal are not available to the buyers, relying on

the Ninth Circuit’s decision in Algeran, Inc. v. Advance Ross

Corp., 759 F.2d 1421, 1423-24 (9th Cir. 1985). 29 Palms’

argument lacks merit.

While, admittedly, no § 363(m) finding was made by the

-18-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

bankruptcy court in connection with the sale of the Property in

this case, it is of no consequence to determining whether this

appeal is equitably moot. Vista del Mar Assocs., Inc. v. W.

Coast Land Fund (In re Vista del Mar Assocs, Inc.), 181 B.R. 422,

424 (9th Cir. BAP 1995). 29 Palms offers us no case law clearly

holding that § 363(b) or (m) applies to a sale of property made

pursuant to a confirmed chapter 11 plan. Such sales are not

subject to § 363, but are authorized by another Code provision

which requires that “[n]otwithstanding any otherwise applicable

nonbankruptcy law, a plan shall . . . provide adequate means for

the plan's implementation, such as . . . transfer of all or any

part of the property of the estate to one or more entities,

whether organized before or after the confirmation of such plan.” 

§ 1123(a)(5)(B); see also In re Smurfit-Stone Container Corp.,

2010 Bankr. LEXIS 1971, at *26 (Bankr. D. Del. 2010) (a sale

pursuant to a plan may be approved by a bankruptcy court without

reference to the requirements of § 363).

In sum, when it elected not to seek a stay of the bankruptcy

court’s order authorizing Bardos to sell the Property and

distribute the sale proceeds, 29 Palms assumed the risk that this

appeal would become equitably moot. At this point, even if

possible, unwinding the sale and distribution of the sale

proceeds would be complex, impractical, and would potentially

prejudice the rights of third parties. Therefore, the appeal is

equitably moot.

///

///

///

-19-
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

CONCLUSION

This appeal is DISMISSED.8

8 Because our decision is founded upon mootness, we do not

reach the merits. We also express no opinion concerning whether

the successor liquidating agent could seek some form of relief

from the Modification Order in the bankruptcy court via motion

under Rule 9024 (incorporating Civil Rule 60(b)).

-20-