FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN THE MATTER OF POINT CENTER

FINANCIAL, INC.,

Debtor,

DAN J. HARKEY; ROBIN B. GRAHAM,

as Trustee of the Robin B. Graham

and Celia Allen-Graham Revocable

Trust; CELIA ALLEN-GRAHAM, as

Trustee of the Robin B. Graham and

Celia Allen-Graham Revocable

Trust; RICHARD SCHACHTER,

Appellants,

v.

HOWARD B. GROBSTEIN, Chapter 7

Trustee,

Appellee.

No. 16-56321

D.C. No.

8:16-cv-01336-

DSF

OPINION

Appeal from the United States District Court

for the Central District of California

Dale S. Fischer, District Judge, Presiding

Argued and Submitted December 5, 2017

Pasadena, California

Filed May 29, 2018
2 IN RE POINT CENTER FINANCIAL

Before: A. Wallace Tashima and Marsha S. Berzon,

Circuit Judges, and Matthew F. Kennelly,

*

 District Judge.

Opinion by Judge Kennelly

SUMMARY**

Bankruptcy

The panel reversed the district court’s dismissal for lack

of standing of an appeal from a bankruptcy court order that

authorized a Chapter 7 trustee to assume the operating

agreement of a limited liability company whose interests

were implicated in the bankruptcy proceedings.

The district court concluded that the members and

original president of the company lacked standing to

challenge the bankruptcy court order because, despite

receiving adequate notice of the trustee’s assumption motion,

they did not file an objection or attend the hearing before the

bankruptcy court.

Reversing, and agreeingwith the Fourth Circuit, the panel

held that attendance and objection are not prerequisites for

satisfying the “person aggrieved” requirement for prudential

standing. The panel remanded the case to the district court.

* The Honorable Matthew F. Kennelly, United States District Judge

for the Northern District of Illinois, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
IN RE POINT CENTER FINANCIAL 3

COUNSEL

Sean A. O’Keefe (argued), O’Keefe & Associates Law

Corporation P.C., Irvine, California, for Appellants.

Roye Zur (argued), Landau Gottfried & Berger LLP, Los

Angeles, California, for Appellee.

OPINION

KENNELLY, District Judge:

Appellants are members and the original president of

Dillon Avenue 44, LLC (Dillon), a limited liability company

whose interests have been implicated in the bankruptcy

proceedings of Point Center Financial, Inc. (PCF). They

appealed from a bankruptcy court order that, among other

things, authorized PCF’s Chapter 7 trustee, Howard B.

Grobstein, to assume Dillon’s operating agreement long after

the deadline for assuming or rejecting executorycontracts had

passed. The district court dismissed the appeal on the ground

that Appellants lacked standing to challenge the bankruptcy

court order because, despite receiving adequate notice of the

motion, they did not file an objection or attend the hearing

before the bankruptcy court. We reverse.

I. Background

A. Facts

This appeal arises from an order issued by the bankruptcy

court in the bankruptcy proceeding of Point Center Financial,

Inc., an originator and servicer of residential and commercial
4 IN RE POINT CENTER FINANCIAL

loans. PCF obtained funding for loans from private investors

who would typically receive a fractionalized interest in the

loan and in the deed of trust securing the loan. In the event

of a default, PCF would initiate foreclosure proceedings

against the real property securing the loan. If PCF purchased

that property at the foreclosure sale, PCF would create a new

limited liability company (LLC) to hold title to the property,

and the investors’ interests in the loan and foreclosed deed of

trust would then be exchanged for membership interests in

the LLC, which PCF would manage.

After a borrower defaulted on a PCF-originated loan

secured by an undeveloped property in Indio, California, PCF

formed Dillon Avenue 44, LLC to hold title to the property. 

Once Dillon obtained title to the Indio property after

foreclosure, the investors who provided the funds for the

original loan exchanged their fractional interests in the loan

and deed of trust for membership interests in Dillon. Dillon’s

2011 operating agreement designated PCF as the manager of

the company, and appellant Dan J. Harkey was appointed

president. Appellants Robin B. Graham, Celia AllenGraham, and Richard Schachter all holdmembership interests

in Dillon.

B. Procedural history

In February 2013, PCF filed a voluntary petition for relief

under Chapter 11 of the U.S. Bankruptcy Code. The

proceeding was later converted to a Chapter 7 proceeding. In

January 2014, the bankruptcy court entered an order setting

February 28, 2014 as the deadline for Grobstein, the Chapter

7 trustee, to assume or reject PCF’s remaining executory

contracts, which included Dillon’s 2011 operating agreement. 
IN RE POINT CENTER FINANCIAL 5

Grobstein did not assume Dillon’s operating agreement bythe

February 28, 2014 deadline.

In May 2016, Grobstein filed a motion (the Assumption

Motion) asking the bankruptcy court to issue an order

(1) authorizing him to exercise management authority over

Dillon, so long as a majority of the membership interests in

Dillon so voted, (2) authorizing him to assume Dillon’s

operating agreement backdated to February 2013, and

(3) compelling delivery to him of the company’s records and

property. Grobstein’s motion alleged that his failure to

assume the operating agreement by the February 2014

deadline was the result of excusable neglect stemming from

reliance on deliberate misrepresentations made by appellant

Harkey and others. Grobstein provided notice of the motion

to Appellants. The notice stated that, pursuant to a local

bankruptcy court rule, any response to the motion must be

filed and served at least 14 days prior to the hearing date. No

one filed an opposition to the motion prior to the hearing.

The bankruptcy court held a hearing on the Assumption

Motion on June 21, 2016. Neither Appellants nor counsel for

Appellants attended the hearing. At the end of the hearing,

the bankruptcy court orally granted the motion, stating that it

was unopposed. The transcript of the hearing makes clear

that the court contemplated that Grobstein’s counsel would

draft an order for the court’s signature.

On June 28, 2016, evidently having learned that the

bankruptcy court had orally granted the Assumption Motion,

Appellants filed an emergencymotion for reconsideration and

sought an expedited hearing on the motion. The bankruptcy

court had not yet issued the anticipated written order on the

Assumption Motion. On June 29, the bankruptcy court
6 IN RE POINT CENTER FINANCIAL

denied Appellants’ application for an order setting a hearing

on the emergency motion for reconsideration. The

bankruptcy court stated that it could construe Appellants’

failure to file a written opposition to the Assumption Motion

as consent to the granting of the motion, but instead it

addressed the merits of Appellants’ arguments in support of

reconsideration. The court noted that the order on the

Assumption Motion had not yet been entered but concluded

that Appellants had not shown either that the oral ruling was

manifest error or that they were likely to prevail on appeal. 

Later that day, the bankruptcy court entered a written order

(the Assumption Order) granting the Assumption Motion in

its entirety. Appellants filed a timely notice of appeal, stating

that theywere appealing from the bankruptcy court’s order on

the Assumption Motion.

Before the district court, Grobstein moved to dismiss the

appeal on the ground that Appellants lacked standing to

appeal because they did not file an objection to the

Assumption Motion or attend the June 2016 hearing on the

matter, despite having received adequate notice of the motion. 

The district court agreed and granted Grobstein’s motion to

dismiss for lack of standing.

II. Discussion

We review a district court’s decision on appeal from the

bankruptcy court de novo, “applying the same standards

applied by the district court, without deference to the district

court.” Hughes v. Tower Park Props. (In re Tower Park

Props., LLC), 803 F.3d 450, 456 n.5 (9th Cir. 2015) (internal

quotation marks and citation omitted). Standing is an issue

of law that we review de novo, while related factual

determinations are reviewed for clear error. Palmdale Hills
IN RE POINT CENTER FINANCIAL 7

Prop., LLC v. Lehman Commercial Paper, Inc. (In re

Palmdale Hills Prop., LLC), 654 F.3d 868, 873 (9th Cir.

2011).

All circuits, including this one, limit standing to appeal a

bankruptcy court order to “person[s] aggrieved” by the order. 

See, e.g., Opportunity Fin., LLC v. Kelley, 822 F.3d 451, 457

(8th Cir. 2016); Duckor Spradling & Metzger v. Baum Tr. (In

re P.R.T.C., Inc.), 177 F.3d 774, 777 (9th Cir. 1999). Under

this prudential standing doctrine, only a “person aggrieved,”

that is, someone who is “directly and adversely affected

pecuniarily” by a bankruptcy court’s order, has standing to

appeal that order. Fondiller v. Robertson (In re Fondiller),

707 F.2d 441, 443 (9th Cir. 1983). An order that diminishes

one’s property, increases one’s burdens, or detrimentally

affects one’s rights has a direct and adverse pecuniary effect

for bankruptcy standing purposes. See, e.g., P.R.T.C.,

177 F.3d at 777.

As we explained in Fondiller, this prudential standing

requirement “exists to fill the need for an explicit limitation

on standing to appeal in bankruptcy proceedings.” Fondiller,

707 F.2d at 443. Bankruptcy proceedings invariably give rise

to disputes that implicate the interests of many different

stakeholders, including those who are not formally parties to

the litigation. Id. Limiting appellate standing to “person[s]

aggrieved” by a particular bankruptcy order serves the

interests of judicial efficiency. Id.; see also In re Ray,

597 F.3d 871, 874 (7th Cir. 2010) (“[C]ourts consistently

have noted a public policy interest in reducing the number of

ancillary suits that can be brought in the bankruptcy context

so as to advance the swift and efficient administration of the

bankrupt’s estate. This goal is achieved primarily by

narrowly defining who has standing in a bankruptcy
8 IN RE POINT CENTER FINANCIAL

proceeding.”) (quoting Cult Awareness Network, Inc. v.

Martino (In re Cult Awareness Network, Inc.), 151 F.3d 605,

609 (7th Cir. 1998)).

In the present case, the district court concluded that

Appellants’ failure to attend the bankruptcy court hearing on

the Assumption Motion deprived them of standing to appeal

the Assumption Order. The district court relied for this

conclusion on Brady v. Andrew (In re Commercial Western

Finance Corp.), 761 F.2d 1329, 1335 (9th Cir. 1985), which

stated in dicta that “attendance and objection” at the

bankruptcy court proceedings “should usually” be

prerequisites to meeting the “person aggrieved” bankruptcy

standing rule.

Although a number of unpublished, non-binding opinions

in this circuit appear to suggest otherwise,1there is no

controlling law in this circuit regarding whether a person who

has a pecuniary interest affected by a bankruptcy proceeding

and received adequate notice of a bankruptcy court hearing,

but failed to appear and object, may be found to satisfy the

“person aggrieved” requirement for appellate standing. This

court’s suggestion in In re Commercial Western Finance

Corp. (Commercial) that “attendance and objection should

usually be prerequisites to fulfilling the ‘person aggrieved’

standard” was not a holding and does not bind us. 

Commercial, 761 F.2d at 1335. In Commercial, we were

presented with the question of whether investors adversely

1

See French Auto. LLC v. Gill (In re W. Covina Motors, Inc.), 691 F.

App’x 362, 362 (9th Cir. 2017); Benham v. Hagen (In re Benham), 678 F.

App’x 474, 476 (9th Cir. 2017); Wathen v. Yarnall (In re Wathen), 412 F.

App’x 13, 14 (9th Cir. 2011); Marin v. Sanders(In re Marinkovic), 295 F.

App’x 153, 154 (9th Cir. 2008).
IN RE POINT CENTER FINANCIAL 9

affected by a bankruptcy court order confirming a particular

plan of reorganization could satisfy the “person aggrieved”

standing requirement despite having failed to attend the

hearing and object to the proposed plan. Id. at 1332. We

observed that a “leading commentator” supported requiring

attendance and objection “as a limitation on the number of

people who have standing to appeal” in light of “the need for

economy and efficiency in the bankruptcy system.” Id. at

1335. For that reason, we “agree[d] that attendance and

objection should usually be prerequisites to fulfilling the

‘person aggrieved’ standard.” Id. (footnote omitted). 

Nonetheless, we decided the case on different grounds: we

held that the investors’ failure to appear and object did not

defeat their standing to appeal the bankruptcy court order at

issue because the trustee had not given them proper notice

that the reorganization plan affected their security interests. 

Id.

Our sister circuits that have addressed the issue disagree

regarding whether attendance and objection are prerequisites

for satisfying the “person aggrieved” standing requirement. 

Compare In re Schultz Mfg. Fabricating Co., 956 F.2d 686,

690 (7th Cir. 1992) (“Prerequisites for being a ‘person

aggrieved’ are attendance and objection at a bankruptcy court

proceeding.”) (citingCommercial, 761 F.2d at 1334–35) with

White v. Univision of Va. Inc. (In re Urban Broad. Corp.),

401 F.3d 236, 244 (4th Cir. 2005) (attendance and objection

are not requirements for standing to appeal a bankruptcy

court order). Courts that have approved of attendance and

objection standing prerequisites in dicta or otherwise cite the

same considerations of judicial economy and efficiency that

underlie the general “person aggrieved” standard. See, e.g.,

Ray, 597 F.3d at 874 (“These requirements reflect the need

for economy and efficiency in the bankruptcy system.”);
10 IN RE POINT CENTER FINANCIAL

Commercial, 761 F.2d at 1335 (support for attendance and

objection requirement stems from recognition of “the need

for economy and efficiency in the bankruptcy system”).

Most procedural rules that serve the interests of judicial

economy and efficiency are not rules of standing. Rather, we

enforce applicable procedural rules when appropriate,

sometimes ruling that failure to comply constitutes forfeiture

or waiver. See, e.g., Cellular 101, Inc. v. Channel Commc’ns,

Inc. (In re Cellular 101, Inc.), 539 F.3d 1150, 1154–57 (9th

Cir. 2008); Enewally v. Wash. Mut. Bank (In re Enewally),

368 F.3d 1165, 1173 (9th Cir. 2004); see also Wellness Int’l

Network, Ltd. v. Sharif, 135 S. Ct. 1932, 1949 (2015). We do

not automatically toss a litigant out of court for

noncompliance with a trial court rule without allowing the

litigant to explain why the noncompliance should be excused,

caused no harm, or had limited impact.

Bankruptcy standing concerns whether an individual or

entity is “aggrieved,” not whether one makes that known to

the bankruptcy court. In other words, one need not have

attended and made objections at the hearing to be directly and

adversely affected by a bankruptcy court’s decision. We

therefore agree with the Fourth Circuit that an appellant’s

failure to attend and object at a bankruptcy court hearing has

no bearing on the question of whether that appellant has

standing to appeal a bankruptcy court order:

[D]efining standing bywhether a partywaives

or forfeits rights to object to claims, . . .

misconstrues the standing requirement . . . ,

that the appellant show that he has been

directly and adversely affected pecuniarily by

the bankruptcy order. Moreover, defining
IN RE POINT CENTER FINANCIAL 11

standing by whether an appellant has objected

to an order or attended a hearing conflates

basic notions of standing with notions of

waiver and forfeiture. Accordingly, we . . .

ask only whether [the appellant] was directly

and adversely affected pecuniarily by the

bankruptcy court’s order.

Urban Broad. Corp., 401 F.3d at 244 (emphasis in the

original). Failure to attend and object may result in waiver or

forfeiture of the right to make certain arguments or object to

certain claims, but it does not present a jurisdictional standing

issue.

We also note that although Appellants did not attend the

hearing on the Assumption Motion, they filed a motion to

reconsider with the bankruptcy court before it had issued a

written order on the motion—a written order that the court

expressly contemplated when it made its oral ruling. 

Appellants laid out their objections to the Assumption Motion

and the anticipated order in great detail in that motion to

reconsider. Significantly, the bankruptcy court did not deny

the motion to reconsider based on Appellants’ failure to

appear; rather, it addressed their arguments for

reconsideration on the merits. Under these circumstances, we

find that Appellants have not waived their challenge to the

propriety of the underlying Assumption Order, though the

question of forfeiture is open for determination on remand. 

See Hamer v. Neighborhood Hous. Servs. Of Chi., 138 S. Ct.

13, 17 n.1 (2017) (“The terms waiver and forfeiture–though

often used interchangeably by jurists and litigants–are not

synonymous. Forfeiture is the failure to make the timely

assertion of a right; waiver is the intentional relinquishment

or abandonment of a known right.”) (internal quotation marks
12 IN RE POINT CENTER FINANCIAL

and alterations omitted); Cadillac Fairview/Ca., Inc. v.

United States, 41 F.3d 562, 565 n.3 (9th Cir. 1994) (issue not

raised in opposition to motion for summary judgment was

nonetheless properly before the court of appeals where it had

been raised in a motion to vacate the grant of summary

judgment and the district court rejected it on the merits in an

order supplementing its ruling on the summary judgment

motion).

Because there is no question that Appellants’ pecuniary

interests are directly and adversely affected by the bankruptcy

court order in question, we reverse the district court’s

dismissal of the appeal for lack of standing. We therefore

remand the case to the district court. See Mastro v. Rigby,

764 F.3d 1090, 1097 (9th Cir. 2014) (“When a district court

improperly dismisses a bankruptcy appeal without reaching

the merits, we generally reverse the district court’s dismissal

and remand for the district court’s consideration of the appeal

in the first instance.”). On remand, the district court may

consider whether Appellants forfeited their opposition to the

Assumption Motion and, if so, whether the bankruptcy

court’s granting of the Motion should be reviewed for plain

error. See Draper v. Rosario, 836 F.3d 1072, 1085 (9th Cir.

2016) (“In the civil context, plain error review requires:

(1) an error, (2) the error is plain or obvious, (3) the error was

prejudicial or affects substantial rights, and (4) review is

necessary to prevent a miscarriage of justice.”) (internal

quotation marks and alterations omitted).
IN RE POINT CENTER FINANCIAL 13

III. Conclusion

We reverse the district court’s dismissal for lack of

standing and remand to the district court.

REVERSED and REMANDED.