F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

I N T H E M A T T E R O F C A S T A I C P A R T N E R S I I
, L L C, Debtor
,

C A S T A I C P A R

T N E R S I I
, L L C,

Appellant
,

v.

DACA-C A S T A I C , L L C, Appellee. No. 14-55281

D.C. No. 2:13-cv-05452-SJ O

I N T H E M A T T E R O F C A S T A I C P A R T N E R S , L L C, Debtor
,

C A S T A I C P A R

T N E R S , L L C,

Appellant
,

v.

DACA-C A S T A I C , L L C, Appellee. No. 14-56367

D.C. No. 2:13-cv-05997-SJ O

OPI NI ONI

N T H E M A T T E R O F C A S T A I C P A R T N E R S I I
, L L C 2

A ppeal from the United States District Court

for the Central District of California S. J ames Otero, District J udg e, Presiding

Arg ued and Submitted May 2, 2016 Pasadena, California

F iled May

23, 2016

B efore: MI L AN D. SMI T H , J R., and J ACQUEL I NE H. NGUYEN, Circuit J udg es, and CL A UDI A W I L K E N
, *

Senior District J udg e.

O pinion by

J udg e Milan D. Smith, J r.

SUMMARY * *

Bankruptcy

The pan e l d i smissed b a

n kruptcy appeals as moot under Article I I I

.

The b ankruptcy c o u rt g ranted a party ’s motion for relief from the a

utomatic bankruptcy stay s o that it could proceed with foreclosure sales. Debtors appealed to the district court,

* T h e Ho n o rab le Clau d ia W ilk en , Sen io r District J u d g e f o r th e U .S. District Co u r t f

o r th e No rth ern District o f Calif o rn ia, sittin g b y d esig n atio n

.

** T h is su m m ary co n stitu

t es n o p ar t o f t h e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.I

N T H E M A T T E R O F C A S T A I C P A R T N E R S I I
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but did n o t s e e k a stay of the bankruptcy court’s order pending appeal. The foreclosures went forward. Thereafter, with debtors’ consent, the bankruptcy cases were dismissed.

The panel held that debtors’ appeals were constitutionally moot because there no long er was any case or controversy

.

COUNSEL

David M. G i l m ore (arg

ued) and Stephen D. B lea, Gilmore, W o od, Vinnard & Mag ness, F resno, Californ ia, for Appellants.

Dean T. Kirby
, J r., (arg

ued), Kirby & McGuinn, A P.C., San Dieg o, California, for Appellee.

OP INION

M. SMI TH, Circuit J udg e :

D eb tors-Appellants Castaic Partners, L L C, and Castai c Partners I I
, L L C, (collectively Casta i c ) a ppeal the district

co u r t ’s dismissal o f this bankruptcy appeal as moot under 11 U.S.C. § 363(m). During the pendency of the a p p e a l, the bankruptcy

court dismissed the underly ing bankruptcy cases

as well. Castaic d id not appeal those dismissals, and after 14 day s, they became final. There is therefore no long er any case or controversy , and this Court has no power to g rant Castaic
any e ffective relief. W e dismiss this appeal as moot under Article I I I o f

the Constitution.I

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F ACTS AND P RIOR P ROCEEDING S

Castaic boug ht certain parcels of r eal property located in rural L os Ang eles County , California, with financing from a number of investors throug h a Nevada loan-ser v i cing
company

. Shortly thereafter, Castaic defaulted on th e loans. That g ave r ise to what Dis trict J udg e Robert C. J ones has called a “ hy dra of litig ation,” of which this consolidated appeal represents one head. Richard & Sheila J. McKnight 2000 Family T

r u s t v. B arkett
, 2011 W L 3159137, at *8 (D. Nev. J uly 26, 2011) (describing related litig ation n ot a t issue in this appeal).

Throug h a complex series of t r a n sactions a nd bankruptcies that need not trouble u s here, Creditor-Appellee DACA-Castaic (DACA) obtained a majority o f the beneficial interests in the loans—and, per J udge J o n es, the power to f o reclose on them. Richard & Sheila J. McKnight 2000 Family Trust v

. Barkett
, 2012 W L 870503, a t * 6 (D. Nev. Mar. 14, 2 0 1 2). Rely ing o n J u d g e J o nes’s ruling
, DACA
p u rsued foreclosure proceeding s and r ecorded Notices o f Trustee’s Sale for the properties

. T h e sales were scheduled for J uly 31, 2012. On J u ly 30, Castaic filed for bankruptcy in the Central District of California. According ly
, the sales were halted pursuant to the a

utomatic-stay

provision of 11 U.S.C. § 362(a).

DACA moved the bankruptcy court for relief from the

a u t o matic stay so that it could proceed with the foreclos u r e sales. Castaic o pposed the motion, arg uing that DACA lacked

a valid interest in the propert i e s a nd therefore did not have standing to move for relie f from stay or foreclose. 1 The

1 B ecau s e w e d ism iss t

h e ap p eal as m o o t , w e do n o t reach th is arg u m en t.I

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bankruptcy court disag r eed and g ranted DACA the requested relief.

Castaic filed a notice of ap p e al in the district court, but d i d not seek a stay of the bankruptcy court’s relief o r d e r pending appeal. According ly
, DACA foreclosed on the properties and acquired them by c r edit bids a t the f oreclosure sales. Shortly thereafter, on the motion of the United States Trustee, the bankruptcy c ourt dismissed Castaic’s bankruptcy

cases because th e p r operties had been Castaic’s only sig nificant assets. Castaic consented to and did not appeal the dismissals.

D ISCUSSION

“I n b ankruptcy
, mootness co m e s in a variety of flavors: constitutional, equitable, and st a tutory .” Clear Channel Outdoor Inc. v. Knupfer ( In re P W

, LLC ), 391 B .R. 2 5, 33 (B .A.P. 9th Cir. 2008). Constitutional mootness is jurisdictional and derives from the case-or-controversy requirement of Article I I I

. Id. Equitable mootness concerns whether chang es to the status quo f o l l owing the o r der being appealed make it impractical or ine q u i t a ble to “unscramble the eg g s.” I

d. (quoting Baker & D rake, Inc. v

. P u b. Serv. Comm’n ( I n re Baker & Drake, Inc. ), 35 F .3d 1348, 1352 (9th Cir. 1994)). F inally
, statutory mootness codifies part, but not all, o f the doctrine of equitab l e m o otness. Id. at 35; see 11 U .S.C. § 363(m); Onouli-Ko n a L a n d Co. v. E state of Richards (

In re Onouli-Kona Land Co. ), 846 F

. 2d 1170, 1172 (9th Cir. 1988) (holding that the codification of § 363(m) did not abrog a te the rest of the equitable-mootness doctrine).I

N T H E M A T T E R O F C A S T A I C P A R T N E R S I I
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This appeal is constitutional l y moot. 2 “The test for
mootness of an appeal is w hether the appellate court can g ive the appellant any effective relief in the e vent that it decid e s the matter o n the merits in his favor.” Motor Vehicle Cas. Co.

v. Thorpe Insulation Co. ( In re Thorpe Insulation Co. ), 677 F .3d 869, 8 80 ( 9th Cir. 2012) (quotation marks omitted). I f it cannot g r ant such r elief, the matter is moot. See id. I n a bankruptcy appeal, when the u nderly ing bankruptcy case is dismissed a

nd that dismissal is allowed to become final, there is likely no long e r any case or co n t ro v ersy “with respect to issues directly involving the reorg aniz ation of the estate.” See Oliv e S t. Inv., Inc. v. Howard Sav. B ank
, 972 F .2d 214, 215 (8th Cir. 1992) (quotation marks omitted).

The Eig hth Circuit’s decision in Olive St. is instructive. I n that case, a creditor soug ht to foreclose on a debtor’s property pledg ed a s collateral for a note. Id. T he debtor petitioned for bankruptcy
, trig g ering an automatic stay , b u t the creditor
soug h t and obtained relief from the stay

. Id. I t t h e n held a foreclosure sale and obtained the property on a c redit bid. Id. The d ebtor appealed, but f ailed to se e k a s t a y of the relief order. A ccording ly
, the district court dismissed the appeal a s equitably moot. Id. The d ebtor appealed ag ain, but while its appeal was pending
, the bank r u p t c y court dismissed the underly ing b ankruptcy case pursuant to 11 U

. S.C. § 1112(b)(1). Id. The debtor appealed that order to the district court, but when that court a ffirmed, the debtor did not pursue

2 T h e district co u rt d eterm i n e d t ha t th is case is statu to rily m o o t. Statu t o ry m o o tn ess ap p lies o n ly to sales o r leases co n d u cted p u rsu an t to th e au th o rity o f 11 U.S.C. § § 3 6 3 (b ) o r (c). § 3 6 3 (m ). T h ose su b sectio n s, in tu rn , co n cern sales b y th e ban k ru p tcy t ru stee o r d e b t o r- in

- p o ssessio n

. Here, f o reclo s u re sales w ere co n du cted by tru stees u n d er th e d e e d s of
tru s t—n o t th e b an k

ru p tcy tru stee. T h u s, statu to ry m o o tn ess is i n ap p licab le in th is case.I

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a n appeal to the Court of Appeals. Id. Therefore, t h e dismissal became final. Id. The Eig hth Circuit held that

[ o] nce the bankruptcy p r oceeding is d i smissed, neither the g oal of a successfu l
reorg aniz ation nor the d e b tor’s rig ht to the

a u t o m a t i c s t a y c o n t i n u e s t o e x i s t

. According ly
, it no long er serves a n y purpose to determine wheth e r the bankruptcy court properly lifted the au t omatic stay ; the appeal has become moot.

Id. at 216 (citing Armel Laminates, Inc. v. Lomas & Nettleton Co. ( In re Income P rop. Builders, I nc. ), 699 F .2d 963, 964 (9th Cir. 1982) (per curiam)).

The facts of Olive St. are materially identical to the facts in this case. As in Olive St.
, the b a n k ruptcy court here dismissed the underlying cases pursuant to § 1112(b) while

an appeal w as pending

. 3 Then, Castaic fa i l e d t o appeal the orders of dismissal. 4 The bankruptcy c o urt here dismissed o ne

case on J anuary 29, 2013, a nd the other on J a

nuary 30. Under F ederal Rule of B ankruptcy Procedure 8002(a)(1), the orders of dismissal became f

inal 14 day s later. At t h at time, “a bankruptcy court no long er had power to order [ a] stay or to award damag es alleg edly attribut able to its vacation.” See

3 T h is ord er o f ev en ts is p erm issib le b ec a u s e t h e fi l i n g o f a n o tice of
ap p eal d o es n ot d iv est th e t rial co u rt o f j u

risd ictio n o v er m atters o r issu es

n o t ap p ealed

. See W

a d e v. S ta te Ba r of Arizo na ( I n r e Wa d e ), 1 1 5 B .R. 2 2 2 , 2 3 0 (B .A .P . 9 th

Cir. 1 9 9 0).

4 T h e on ly d istin ctio n th at can b e d raw n m ak es n o d if

f eren ce: In Olive S t. , th e d eb to r d id ap p eal th e dism issal as f ar as th e d i strict co u rt; in th is case, Castaic d id n o t ap p eal th e o rd ers o f d i sm issal at all.I

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Income Prop. Builders
, 699 F .2d at 96 4

. 5 Absent an appeal from the d ismissal orders, we have n o power to r estore the bankruptcy proceeding

. Id. ; see O l i v e St.
, 972 F .2d at 216. This appeal is therefore moot.

CONCLUSION

Had Castaic appealed fro m t he order of dismissal, this Court mig h t h ave had some power to g rant effectiv e relief. Absent such power, this appeal does not present a justiciable case or controversy . I t is therefore

DISMISSED.

5 In c o m e P r o

p e r t y Bu ild ers is also m aterially sim ilar to t h is case. T h e p rim ary d istin ctio n i s t h a t th e ap p eal t h ere w as b ro u g h t b y a th ird p arty claim in g a m ech an ic’ s lien o n th e f o reclo sed p ro p erty . 6 99 F.2 d at 9 6 4

.