Court Opinion

ID: 4650514
Source: CourtListenerOpinion
Date Created: 2021-01-11 21:00:33.034969+00
Date Added: 2024-06-11T08:01:33.537032
License: Public Domain

NOT FOR PUBLICATION                    FILED
                        UNITED STATES COURT OF APPEALS                    JAN 11 2021
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                                  FOR THE NINTH CIRCUIT

In re: LENORE L. ALBERT, Esquire,                   No.   20-60005

                   Debtor,                          BAP No. 19-1000

------------------------------
                                                    MEMORANDUM*
LENORE L. ALBERT, Esquire,

                   Appellant,

  v.

FORD MOTOR CREDIT COMPANY LLC;
JEFFREY IAN GOLDEN, Chapter 7
Trustee,

                   Appellees.

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

                                 Submitted November 20, 2020**
                                     Pasadena, California

Before: LINN,*** RAWLINSON, and HUNSAKER, 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).
Partial Concurrence and Partial Dissent by Judge RAWLINSON

      The bankruptcy court approved the sale of Lenore Albert’s litigation claims

under 11 U.S.C. § 363, and Albert challenges the validity of that sale on appeal.

Jeffrey Golden, the Chapter 7 Trustee, argues that the sale was proper or—in the

alternative—that the appeal is moot.1 We have jurisdiction under 28 U.S.C. §

158(d)(1), and we dismiss this appeal as moot.

      “Where, as here, a bankruptcy court invokes § 363 for a sale of claims

pursuant to a settlement agreement, all parties are bound by § 363(m)’s requirement

to seek a stay.” In re Berkeley Del. Ct., LLC, 834 F.3d 1036, 1041 (9th Cir. 2016).

If the sale is not stayed pending appeal, the appeal is moot if the sale was in good

faith and is not subject to a statutory right of redemption or could not otherwise be

set aside under state law. Id.; see also In re Onouli-Kona Land Co., 846 F.2d 1170,

1171 (9th Cir. 1988) (“Bankruptcy’s mootness rule applies when an appellant has

failed to obtain a stay from an order that permits a sale of a debtor’s assets.”).

      ***
              The Honorable Richard Linn, United States Circuit Judge for the U.S.
Court of Appeals for the Federal Circuit, sitting by designation.
1
  Although the dissent asserts that the mootness issue “is not properly before us”
because “the trustee did not file a cross-appeal challenging the [BAP’s] denial of
[the trustee’s motion to dismiss as moot],” the lack of a cross-appeal does not
prevent us from considering mootness, as “[a] prevailing party need not cross-
appeal to defend a judgment on any ground properly raised below, as long as it
seeks to preserve rather than to change the judgment.” S. Or. Barter Fair v.
Jackson Cnty., 372 F.3d 1128, 1133 (9th Cir. 2004).

                                           2
      Here, there is no dispute that Albert did not stay the sale pending her appeal.

And because there is no evidence of “fraud, collusion between the purchaser and

other bidders or the trustee, or an attempt to take grossly unfair advantage of other

bidders,” In re Berkeley, 834 F.3d at 1041, the bankruptcy court’s finding that the

sale was in good faith is not clearly erroneous. See id. at 1039. Nor could the sale

be set aside under state law. All of Albert’s arguments for setting aside the sale under

California law are premised on the litigation claims not being the property of the

estate, but the bankruptcy court correctly determined that those claims were

transferred to the bankruptcy estate. See Sierra Switchboard Co. v. Westinghouse

Elec. Corp., 789 F.2d 705, 709 (9th Cir. 1986) (explaining that “regardless of

whether a personal injury claim is transferable or assignable under state law, such

claims become part of the bankruptcy estate”) (footnote reference omitted).

      Because there are no grounds for setting aside the sale under state law, and

because we hold the bankruptcy court properly determined the sale was in good faith,

this appeal is moot. See In re Fitzgerald, 428 B.R. 872, 880 (B.A.P. 9th Cir. 2010)

(“Unless and until ‘good faith’ has been determined, the appeal is not moot under

section 363(m).” (citation omitted)). Thus, it must be dismissed. We decline to

“reach [Albert]’s challenges to the propriety of the sale of claims under § 363, as

such an analysis would require us to impermissibly reach the underlying merits of

the settlement.” In re Berkeley, 834 F.3d at 1041.

                                           3
DISMISSED.

             4
                                                                               FILED
Albert v. Ford Motor Credit Co., No. 20-60005                                   JAN 11 2021
Rawlinson, Circuit Judge, concurring in part and dissenting in part:
                                                                            MOLLY C. DWYER, CLERK
                                                                             U.S. COURT OF APPEALS
      Although I agree that the trustee should prevail in this case, I think it more

appropriate to resolve this case on the merits, rather than making a determination

that this case is moot, contrary to the conclusion reached by the Bankruptcy

Appellate Panel (BAP). The majority purports to resolve this case on the basis of

mootness, without mentioning the BAP’s conclusion that a case is not moot if an

issue of lack of good faith is raised. See BAP Order Denying Motion to Dismiss

and Requiring Prosecution of the Appeal, filed April 19, 2019 (citing Fitzgerald v.

Ninn Worx, Sr., Inc. (In re Fitzgerald), 428 B.R. 872, 880 (9th Cir. BAP 2010)).

The trustee did not file a cross-appeal challenging the denial of this motion, so that

issue is not properly before us. See Satey v. JPMorgan Chase & Co., 521 F.3d
1087, 1093 n.1 (9th Cir. 2008). In addition, the majority actually addresses the

merits by concluding that “the bankruptcy court’s finding that the sale was in good

faith was not clearly erroneous” and that the bankruptcy court “correctly

determined that [Appellant’s] claims were transferred to the bankruptcy estate.”

Rather than cloaking these merit determinations under an unpreserved mootness

argument, we should conduct a straightforward merits determination.

      On the merits, the bankruptcy court properly determined that Appellant’s

                                           1
emotional distress claim and claim under the Rees-Levering Automobile Sales

Finance Act were property of the bankruptcy estate, and applied the requisite

factors before approving settlement and sale of the claims. See Arden v. Motel

Partners (In re Arden), 176 F.3d 1226, 1228 (9th Cir. 1999) (delineating factors to

consider in determining if settlement of claims was fair and equitable). The

bankruptcy court did not abuse its discretion in determinating that the settlement

was reasonable based on the trustee’s negotiation of the claims resulting in an

amount exceeding Ford Motor’s initial offer of $50,000, particularly as no party

submitted an overbid.1 See id. at 1228 (applying abuse of discretion standard in

reviewing the bankruptcy court’s determination that settlement of claims was

reasonable).

      Appellant’s contention that the trustee lacked standing to settle or sell the

claims because the trustee was not the real party in interest in the underlying state

litigation is unavailing. “When [Appellant] declared bankruptcy, all the legal or

equitable interests [she] had in [her] property became the property of the

bankruptcy estate and [were] represented by the bankruptcy trustee,” and “[c]auses

      1
          Appellant maintains that she received an offer from Ford Motor to settle
her litigation claims for $299,000. However, Appellant fails to provide any record
support for this assertion. Additionally, Appellant’s assertions that the trustee
failed to engage in good faith negotiations in settling the claims is unpersuasive, in
view of the bankruptcy court’s contrary finding supported by the record.
                                           2
of action are among such legal or equitable interests.” Turner v. Cook, 362 F.3d
1219, 1225-26 (9th Cir. 2004) (citations and internal quotation marks omitted). As

a result, the trustee was not compelled to substitute into Appellant’s pre-petition

litigation for standing to settle or sell the litigation claims once they became

property of the bankruptcy estate. See id.

      Contrary to Appellant’s assertions, the bankruptcy court correctly

determined that Appellant’s emotional distress claim was not excluded by state law

from the bankruptcy estate. See Sierra Switchboard Co. v. Westinghouse Elec.

Corp., 789 F.2d 705, 709 (9th Cir. 1986) (explaining that “regardless of whether a

personal injury claim is transferable or assignable under state law, such claims

become part of the bankruptcy estate”) (footnote reference omitted).

      Appellant waived any constitutional claims because she did not raise them in

the bankruptcy proceedings. See Mano–Y & M, Ltd. v. Field (In re The Mortgage

Store, Inc.), 773 F.3d 990, 998 (9th Cir. 2014) (explaining that “[a] litigant may

waive an issue by failing to raise it in a bankruptcy court”) (citation omitted). In

any event, no constitutional defects were evident in the bankruptcy court’s

approval of the settlement and sale of the litigation claims.

      Appellant’s assertions that sale of the litigation claims was procedurally

defective are also unpersuasive. Appellant did not demonstrate lack of service on

                                             3
the requisite entities or any other failure to satisfy procedural requirements. See

Federal Rule of Bankruptcy Procedure 9019(a) (providing that “[n]otice shall be

given to creditors, the United States trustee, the debtor, and indenture trustees . . .

and to any other entity as the court may direct”). Contrary to Appellant’s assertion,

the notice of sale did not provide that bidders other than Ford Motor were required

to tender cash.

      The bankruptcy court’s order granting Ford Motor relief from the automatic

stay did not preclude inclusion of the litigation claims as part of the bankruptcy

estate or the subsequent settlement and sale (stating that “Movant may proceed

under applicable nonbankruptcy law to enforce its remedies to proceed to final

judgment in the nonbankruptcy forum, including any request for attorneys fees and

costs, provided that the stay remains in effect with respect to enforcement of any

judgment against the Debtor or property of the Debtor’s bankruptcy estate. Debtor

may litigate to judgment and recovery her claims under her cross-complaint”)

(emphases added).

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