Court Opinion

ID: 4094140
Source: CourtListenerOpinion
Date Created: 2016-10-31 20:01:26.944204+00
Date Added: 2024-06-11T14:36:44.402692
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                           OCT 28 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In re: MERUELO MADDUX                            No.   14-60063
PROPERTIES, INC.,
                                                 BAP No. 13-1494
          Debtor,
______________________________
                                                 MEMORANDUM*
EVOQ PROPERTIES, INC., FKA
Meruelo Maddux Properties, Inc.,

              Appellant,

 v.

RICHARD MERUELO,

              Appellee.

                          Appeal from the Ninth Circuit
                           Bankruptcy Appellate Panel
             Kirscher, Dunn, and Taylor, Bankruptcy Judges, Presiding

                      Argued and Submitted October 17, 2016
                               Pasadena, California

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: TALLMAN and CHRISTEN, Circuit Judges, and KENNELLY,** District
Judge.

      Richard Meruelo brought this action seeking severance pay after he was

terminated as CEO and Chair of MMPI (which later became EVOQ). Following

MMPI’s bankruptcy and subsequent confirmation of a reorganization plan,

Meruelo’s action argued that his severance pay should be treated as an

administrative expense. The bankruptcy court ruled that Meruelo did not have a

substantive right to severance pay in contract or quantum meruit and denied his

claim. The Bankruptcy Appellate Panel (BAP) concluded that the bankruptcy

court erred by not treating Meruelo’s claim as an administrative expense and

applying the wrong standard for such a claim under 11 U.S.C. § 503, but it did not

address the threshold issue: whether Meruelo had a substantive right to severance

pay. We have jurisdiction under 28 U.S.C. § 158(d), and we reverse and remand.

1.    Jurisdiction

      “We have jurisdiction to review final orders of the BAP under 28 U.S.C.

§ 158(d).” Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 980 (9th Cir. 2001).

Although remand orders from the BAP are not ordinarily considered final, we take

a “pragmatic” approach to finality in bankruptcy proceedings, given their “unique

      **
            The Honorable Matthew F. Kennelly, United States District Judge for
the Northern District of Illinois, sitting by designation.
                                         2
nature.” Id. (quoting Lundell v. Anchor Constr. Specialists, 223 F.3d 1035, 1038

(9th Cir. 2000)). We consider several factors when addressing finality, including

“(1) the need to avoid piecemeal litigation; (2) judicial efficiency; (3) systemic

interest in preserving the bankruptcy court’s role as the finder of fact; and (4)

whether delaying review would cause either party irreparable harm.” Id.

      All four factors weigh in favor of exercising jurisdiction here: (1) there is

little danger of piecemeal litigation, as this appeal is unlikely to generate new

issues in further proceedings; (2) exercising jurisdiction will conserve judicial

resources by ensuring that the BAP and bankruptcy court address Meruelo’s

substantive rights on remand; (3) this appeal primarily concerns questions of law

that do not intrude on the bankruptcy court’s fact-finding role; and (4) delay will

be avoided if the threshold issue is addressed before the parties litigate the priority

of Meruelo’s claim. Because “there are substantial benefits to exercising

jurisdiction now and no apparent countervailing reasons for declining to do so,” we

exercise jurisdiction under 28 U.S.C. § 158(d). In re Scholz, 699 F.3d 1167, 1171

(9th Cir. 2012).

2.    The bankruptcy court did not err by ruling that Meruelo did not have a
      substantive right to payment.

                                           3
      The BAP reversed and remanded the bankruptcy court’s decision because it

concluded that the bankruptcy court applied the wrong standard for administrative

expense claims under 11 U.S.C. § 503(b)(1)(A). But the BAP did not address the

threshold issue of whether Meruelo had a substantive right to payment. For an

administrative expense to be due, there must be an underlying right to payment

recognized by state law, “spelled out by the contract or calculable as owed in

quantum meruit.” Teamsters Local No. 310 v. Ingrum (In re Tucson Yellow Cab

Co.), 789 F.2d 701, 703 (9th Cir. 1986). “Quantum meruit (or quasi-contract) is an

equitable remedy implied by the law under which a plaintiff who has rendered

services benefit[t]ing the defendant may recover the reasonable value of those

services when necessary to prevent unjust enrichment of the defendant.” Carolco

Television Inc. v. Nat’l Broad. Co. (In re De Laurentiis Entm’t Grp. Inc.), 963 F.2d
1269, 1272 (9th Cir. 1992).

      The bankruptcy court did not err in ruling that Meruelo had no contractual

right to severance pay because his executive employment agreement expired prior

to his termination. Meruelo did not meet his burden of proving that he was entitled

to severance pay under quantum meruit because he offered almost no evidence

establishing the “reasonable value” of his services. See id.

                                          4
      Because the bankruptcy court did not err in ruling that Meruelo had no

substantive right to severance pay in contract or quantum meruit, we reverse and

remand to the BAP with instructions to reinstate the bankruptcy court’s ruling.

      Appellee shall bear all costs of appeal. See Fed. R. App. P. 39(a)(3).

      REVERSED AND REMANDED.

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