NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: ALEX A. KHADAVI,

Debtor,

------------------------------ GREEN COIN, Appellant,

v.

ALEX A. KHADAVI ; JASON M. RUND, Chapter 7 Trustee,

Appellees. No. 23

- 60020

BAP No. 22

- 1205

MEMORANDUM *

Appeal from the Ninth Circuit Bankruptcy Appellate Panel Spraker, Corbit, and Lafferty III, Bankruptcy Judges, Presiding

Submitted December 8, 2023 * * Pasadena, California Before: CALLAHAN, R. NELSON, and BADE, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36

- 3.

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). 

# FILED

DEC 12 2023

MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS2

Green Coin appeals from the Bankruptcy Appellate Panel’s (“BAP”) order affirming the bankruptcy court’s summary judgment for the bankruptcy Trustee in an adversary proceeding. Green Coin contracted with Alex Khadavi, the bankruptcy debtor, to buy his residential property for $85 million with a 3% deposit requirement. After Green Coin failed to pay the full deposit, the Trustee,

as successor - in

- inter est to Khadavi, moved for summary judgment on the grounds that Green Coin had defaulted on the purchase agre ement and therefore the bankruptcy estate could retain the amount of the deposit that had been paid, $900,000 , as liquidated damages. The bankruptcy court ruled in favor of the bankruptcy estate, finding that Green Coin had defaulted by failing to pay the full deposit and that liquidated damages were proper. The BAP affirmed. We have jurisdiction over final decisions of three

- judge bankruptcy appellate panels under 28 U.S.C. § 158(d)(1). In re Gugliuzza , 852 F.3d 884, 891 (9th Cir. 2017). We affirm.

1. Under the liquidated damages clause of the purchase agreement, “[i]f Buyer fails to complete th [e] purchase because of Buyer’s default, Seller shall retain, as liquidated damages, the deposit actually paid

. ” The term “default” is not defined in the purchase agreement, so “[t]he clear and explicit meaning of [the term], interpreted in [its] ordinary and popular sense,

. . . controls judicial interpretation.” California v. Cont’l Ins. Co. , 281 P.3d 1000, 1004 (Cal. 2012)3

(internal quotation marks and citations omitted). Green Coin argues that its failure to pay the full deposit was not a default for purposes of th e liquidated damages provision because the default did not prevent

the sale from closing. This interpretation of the liquidated damages provision is

flawed because it is too narrow. The liquidated damages provision includes a conditional clause preceding the “default” clause: “ If Buyer fails to complete this purchase because of Buyer’s default, Seller shall retain, as liquated damages, the deposit actually paid.” Under the clear meaning of this conditional phrasing, the buyer’s default leads to a failure to complete the purchase, not the reverse

. See

Cont’l Ins. Co. , 281 P.3d at 10 04. And the phrase in this provision, “ deposit

a ctually paid , ” includes a failed purchase in which the buyer paid part, but not all, of the deposit, as happened here. Beyond that, the ordinary meaning of “default” encompasses more than a failure to complete a purchase. Rather, it is the “[t]he omission or failure to perform a legal or contractual duty.” Default , Black’s Law Dictionary (11th ed. 2019); s ee In re Hawkeye Ent., LLC , 49 F.4th 1232, 1237 (9th Cir. 2022) (“The ordinary meaning of ‘default’ is uncontroversial: it means ‘[a] failure to perform a task or fulfill an obligation.’” (citing American Heritage Dictionary of the English Language 345 (1976) and Black’s Law Dictionary 505 (4th ed. 1968) ) ). Here, it is undisputed that Green Coin failed to timely pay the full amount of the required4

deposit. And timely payment of the deposit was a contractual duty under the purchase agreement. Given its ordinary meaning, “default” includes the failure to complete a contractual duty, like the timely payment of a deposit. See Default , Black’s Law Dictionary (11th ed. 2019)

. The liquidated damages provision was therefore triggered when Green Coin failed to timely pay the full deposit.

2. No record evidence supports Green Coin’s position that Khadavi’s December 6, 2021 declaration operated to unilaterally cancel the purchase

agreement and trigger ¶ 14D ’s r equire ment that the seller mus t return the deposit

upon unilateral cancel lation . Khadavi did not indicate in his declaration that he intended to return the deposit, and his counsel affirmatively stated in court that Khadavi would “seek to retain th[e] deposit.” In addition, under ¶ 14D, “Seller” may not unilaterally cancel until it “deliver[s] to Buyer a [notice to buyer to perform].” Khadavi sent Green Coin a notice to perform on December 1, 2021. The notice states that Green Coin needed to perform “within [three] Days After Delivery” before Khadavi “may cancel the Agreement.” Based on the definitions in the purchase agreement, Green Coin was required to perform no later than 11:59 p.m. on Monday, December 6, 2021. See

Cont’l Ins. Co. , 281 P.3d at 1004 (“If c ontractual language is clear and explicit, it governs.” (citation omitted)). This means that Khadavi could not have validly cancelled the agreement under ¶ 14D until the day after he filed his declaration.5

Considering those undisputed facts, Green Coin fails to carry its burden to show that Khadavi unilaterally cancelled the agreement. See generally In re Adbox, Inc. , 488 F.3d 836, 843 (9th Cir. 2007) (explaining that the non

- moving party bears the burden “to identify ‘specific facts showing that there is a genuine issue for trial.’” (quoting Celotex Corp. v. Catrett , 477 U.S. 317, 324 (1986) ))

. 3. Lastly, there is evidence in the record that Khadavi and Green Coin attempted to mutually cancel the purchase agreement and disburse the deposit

funds that were held in escrow through the cancellation of contract form and

Addendum #3 , which is inconsistent with Khadavi’s alleged unilateral cancellation of that agreement

. Regardless, t heir purported agreement was unenforceable because it was never approved by the bankruptcy court pursuant to the court’s sale

order

. And Green Coin does not dispute the findi ngs of the bankruptcy court and the BAP that the agreement in Addendum # 3 to split the deposit was “an attempted compromise of the parties’ dispute over the deposit,” and was thus “subject to notice and the requirements of [Federal Rule of Bankruptcy Procedure] 9019.” Rule 9019 requires a compromise or settlement to be approved by the bankruptcy court “[o]n motion by the trustee and after notice and a hearing.” Yet

Green Coin never points to any evidence in the record indicating that the

cancellation of contract form and Addendum #3 were ever presented to the bankruptcy court for approval. T he purchase agreement was therefore never6

validly cancelled

. S

ee Fed. R. Bankr. P. 9019

. Accordingly, t he bankruptcy court did not err in concluding that the bankruptcy estate was entitled to retain the $900,000 partial deposit as liquidated damages upon Green Coin’s default.

AFFIRM ED

.