Court Opinion

ID: 4529813
Source: CourtListenerOpinion
Date Created: 2020-04-29 17:00:45.976035+00
Date Added: 2024-06-11T09:26:54.544253
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

IN RE POINT CENTER FINANCIAL,            No. 18-56398
INC.,
                          Debtor,          D.C. No.
                                        8:16-cv-01336-
                                             DSF
DAN J. HARKEY; ROBIN B. GRAHAM;
CELIA ALLEN-GRAHAM; RICHARD
SCHACHTER, as Trustees of the              OPINION
Robin B. Graham and Celia Allen-
Graham Revocable Trust,
                        Appellants,

                 v.

HOWARD B. GROBSTEIN, Chapter 7
Trustee,
                       Appellee.

      Appeal from the United States District Court
         for the Central District of California
       Dale S. Fischer, District Judge, Presiding

        Argued and Submitted February 4, 2020
                 Pasadena, California

                 Filed April 29, 2020
2               IN RE POINT CENTER FINANCIAL

    Before: Sandra S. Ikuta and Morgan Christen, Circuit
      Judges, and Algenon L. Marbley, * District Judge.

                Opinion by Judge Marbley;
 Partial Concurrence and Partial Dissent by Judge Christen

                          SUMMARY **

                           Bankruptcy

    The panel affirmed the district court’s order affirming
the bankruptcy court’s judgment authorizing a Chapter 7
trustee to exercise management rights over and to assume the
operating agreement with a limited liability company created
to hold title to foreclosed property securing investments by
private investors in the debtor.

    The panel held that appellants, the former principal of
the debtor and members of the limited liability company,
Dillon Avenue 44, LLC, had standing to appeal because they
were pecuniarily affected by the bankruptcy court’s order.

    The panel held that the bankruptcy court had subject
matter jurisdiction to confirm Dillon members’ vote
establishing the Chapter 7 trustee as manager of Dillon and
to hear the trustee’s assumption motion. The panel held that
the trustee’s failure to assume the operating agreement by

    *
     The Honorable Algenon L. Marbley, United States Chief District
Judge for the Southern District of Ohio, 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

the bankruptcy court’s deadline did not deprive the court of
jurisdiction over matters relating to the Dillon operating
agreement, which was part of the bankruptcy estate. Further,
under 11 U.S.C. § 1334(b), the bankruptcy court had
“arising under” and “related to” jurisdiction to rule on the
trustee’s assumption motion.

    The panel held that the bankruptcy court properly
authorized the trustee to exercise management rights over
Dillon after the majority of Dillon’s members voted for the
trustee to manage Dillon. The bankruptcy court had
jurisdiction and was within its authority to confirm the
trustee’s election as manager of Dillon.

    The panel held, in Section III(d) of its opinion, that the
bankruptcy court properly extended its own deadline for
assumption of the operating agreement pursuant to Fed. R.
Bankr. P. 9006(b)(1)(2) and did not run afoul of 11 U.S.C.
§ 365(d)(1), which establishes a statutory 60-day deadline
for assuming or rejecting executory contracts. The panel
reasoned that § 365(d)(1) permits the bankruptcy court to
grant a trustee additional time for cause within that 60-day
period, and the bankruptcy court did so. Thus, when the
bankruptcy court extended the deadline again, it was
extending a period specified by court order, not extending a
deadline mandated by statute.

  The panel declined to reach the question of equitable
mootness.

    Judge Christen concurred in part and dissented in part.
She concurred in the result reached by the majority and
agreed with the majority’s conclusion that appellants had
standing to pursue this appeal, and that the bankruptcy court
had jurisdiction pursuant to § 1334(b). Judge Christen
4             IN RE POINT CENTER FINANCIAL

disagreed with the majority’s decision that the bankruptcy
court permissibly reopened the statutory period for the
trustee to accept Dillon’s operating agreement, and she did
not join Section III(d) of the majority’s opinion. She wrote
that she would affirm the district court’s alternative holding
that the appeal of the bankruptcy court’s order was equitably
moot.

                        COUNSEL

Sean A. O’Keefe (argued), O’Keefe & Associates Law
Corporation P.C., Newport Beach, California, for
Appellants.

Roger M. Landau (argued) and Roye Zur, Landau Law LLP,
Los Angeles, California, for Appellee.

                         OPINION

MARBLEY, District Judge:

    On October 9, 2018, the district court entered an order
affirming the June 29, 2016 judgment of the bankruptcy
court that granted a motion by Howard Grobstein, the
Chapter 7 Trustee and Appellee, authorizing the Trustee to
exercise management rights over Dillon Avenue 44, LLC
(“Dillon”), and authorizing the Trustee’s assumption of the
operating agreement with Dillon. Dillon is a limited liability
company created to hold title to foreclosed property securing
investments by private investors in Point Center Financial.
Appellants are the former principal of Point Center
Financial, the debtor, and members of Dillon.
              IN RE POINT CENTER FINANCIAL                   5

    Appellants argue that the bankruptcy court lacked
jurisdiction to extend the deadline for accepting or rejecting
the operating agreement and to issue an order approving the
election of the Trustee as manager of Dillon. Appellants base
their argument on the premise that the expiration of the
deadline two years earlier constituted a statutory rejection of
the agreement, and rendered the agreement no longer
property of the estate. In addition to their jurisdictional
arguments, Appellants argue that the bankruptcy court did
not have authority to modify its own final order under Fed.
R. Bankr. P. 9006(b).

    Appellee argues Appellants do not have standing to bring
this appeal because they are not pecuniarily harmed by the
bankruptcy court’s order. Appellee further argues that the
appeal is equitably moot because the Trustee has
substantially completed the wind-down of Dillon.

    The district court rejected Appellants’ jurisdictional and
statutory arguments and affirmed the bankruptcy court’s
order. This appeal followed. We AFFIRM.

                    I. BACKGROUND

A. Relevant Facts

    Debtor Point Center Financial, Inc. (PCF) was in the
business of originating and servicing loans by private
investors. PCF would obtain funding from private investors
secured by real property. Investors received either
fractionalized interest in the deeds of trust securing their
investments or investment in a blind mortgage pool in return
for funding. When loans began to default following the
recession in 2008, PCF foreclosed on the property securing
the loans and would create a limited liability company
(“LLC”) to hold title to the property. Investors’ interests
6             IN RE POINT CENTER FINANCIAL

were commonly converted to membership interests in the
LLC. Dillon Avenue 44, LLC (“Dillon”) was one such LLC
that held title to undeveloped property in Indio, California.
Appellants are PCF’s former principal and some of Dillon’s
members.

B. History

   On February 19, 2013, PCF filed a petition under
Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the Central District of
California.

   On August 13, 2013, the bankruptcy court entered an
order appointing Howard Grobstein as PCF’s Chapter 11
Trustee. The case was converted to a Chapter 7 Bankruptcy,
and Grobstein became the Chapter 7 Trustee.

    On December 24, 2013, the Trustee moved for the
bankruptcy court to extend the deadline set forth in
11 U.S.C. § 365 for him to assume or reject executory
contracts. On January 30, 2014, the bankruptcy court granted
the Trustee’s motion and set February 28, 2014 as the
deadline for the assumption or rejection of most executory
contracts, including the operating agreement with Dillon.
The Trustee did not assume the operating agreement by the
deadline because Dan Harkey, PCF’s former principal, had
falsely represented that no sale of real estate owned by
Dillon was imminent. On May 31, 2016, the Trustee filed a
motion seeking an order authorizing the Trustee to exercise
management rights over Dillon based on his election as
manager by Dillon’s members, and alternatively for an order
permitting him to assume Dillon’s operating agreement. The
Trustee argued that his failure to assume the operating
agreement by the February 28, 2014 deadline was the result
of “excusable neglect” under Fed. R. Bankr. P. 9006(b)
              IN RE POINT CENTER FINANCIAL                  7

given Harkey’s dishonest “representations that there was no
sale of Dillon’s real property on the horizon, and therefore
no reasonable likelihood that the estate could recover . . .
millions of dollars.” A hearing was set on the assumption
motion for June 21, 2016, and Appellants failed to appear,
claiming they failed to understand the threat to their rights
under the motion. They filed an emergency motion for
reconsideration on June 28, 2016, contending the bankruptcy
court lacked jurisdiction. The district court denied this
motion, concluding that Appellants filed no written
opposition to the assumption motion, offered no newly
discovered evidence, and demonstrated no other highly
unusual circumstances that would warrant reconsideration.

    On June 29, 2016, the bankruptcy court issued an order
granting the Chapter 7 Trustee’s motion authorizing the
Trustee to exercise management rights over Dillon and
authorizing the Trustee’s assumption of the operating
agreement (“Assumption Order”). The Trustee sold the real
property belonging to Dillon and distributed the proceeds to
creditors, PCF, and Dillon members under a plan approved
by the bankruptcy court.

    On October 9, 2018, the Central District of California
affirmed the bankruptcy court’s Assumption Order, holding
the bankruptcy court had jurisdiction to hear the assumption
motion and approve the Dillon membership vote, and
properly extended its own deadline pursuant to Fed. R.
Bankr. P. 9006(b). Appellants filed a notice of appeal to this
Circuit on October 19, 2018.

 II. JURISDICTION AND STANDARD OF REVIEW

    This Court has jurisdiction to hear appeals from the
district court pursuant to 28 U.S.C. § 1291. This Court
generally “review[s] de novo a district court's decision on
8             IN RE POINT CENTER FINANCIAL

appeal from a bankruptcy court,” and “review[s] a
bankruptcy court decision independently and without
deference to the district court's decision.” In re JTS Corp.,
617 F.3d 1102, 1109 (9th Cir. 2010). Findings of fact of the
bankruptcy court are reviewed for clear error, and
conclusions of law are reviewed de novo. Id. (citing In re
Strand, 375 F.3d 854, 857 (9th Cir. 2004)). Mixed questions
of law and fact are reviewed de novo. Id. (citing In re Chang,
163 F.3d 1138, 1140 (9th Cir. 1998).

    The question of a bankruptcy court’s jurisdiction is a
question of law reviewed de novo. In re Marciano, 459 B.R.
27, 34 (B.A.P. 9th Cir. 2011). The question of the statutory
construction of Fed. R. Bankr. P. 9006 is also a question of
law reviewed de novo. In re Simpson, 557 F.3d 1010, 1014
(9th Cir. 2009).

     Appellee argues that the standard of review of the
bankruptcy court’s order is plain error because Appellants
forfeited their opposition to the Assumption Motion by
failing to appear at the underlying hearing at the bankruptcy
court. In its May 29, 2018 Order, this Court found
Appellants had not waived their challenge to the Assumption
Order but found “the question of forfeiture is open for
determination on remand.” Matter of Point Ctr. Fin., Inc.,
890 F.3d 1188, 1193 (9th Cir. 2018). In a footnote, the
district court noted it “affirms the bankruptcy court’s
decision on other grounds, and therefore does not address the
issue of forfeiture.” Because this Court likewise affirms the
district court’s decision on other grounds, we need not reach
the question of forfeiture.
              IN RE POINT CENTER FINANCIAL                 9

                     III. ANALYSIS

A. The Harkey parties have standing to pursue this
   appeal.

    The Trustee argues Appellants lack standing to pursue
this appeal because they are not pecuniarily harmed by the
bankruptcy court’s order. The Trustee moved to assume
Dillon’s operating agreement after the deadline for assuming
or rejecting the executory contract had passed. The
bankruptcy court granted this motion in its Assumption
Order. The district court initially found Appellants lacked
standing to challenge the bankruptcy court’s order because
they did not attend the hearing before the bankruptcy court.

    This Court reversed and remanded. Matter of Point Ctr.
Fin., Inc., 890 F.3d 1188. This Court reviewed the district
court’s decision de novo. Id. at 1191. In order to appeal a
bankruptcy court’s order, Appellants must be “directly and
adversely affected pecuniarily” by the order. Matter of
Fondiller, 707 F.2d 441, 442 (9th Cir. 1983). This Court
found that “[b]ankruptcy standing concerns whether an
individual or entity is ‘aggrieved,’ not whether one makes
that known to the bankruptcy court,” and therefore
Appellants failure to appear in court did not deprive them of
standing to appeal the bankruptcy court’s order. Matter of
Point Ctr. Fin., Inc., 890 F.3d at 1193.

    The Trustee now argues Appellants lack standing to
pursue this appeal because they are not pecuniarily harmed
given that the bankruptcy court’s order does not require them
to do anything or surrender any property. Appellants explain
that their interest in reversing the bankruptcy court’s order
means preventing Dillon’s investors from “forfeit[ing]
another thirty to forty percent of the remaining cash
available through the deduction of the ‘springing’
10             IN RE POINT CENTER FINANCIAL

management fee created by the bankruptcy court’s order.”
The Trustee argues that, because the bankruptcy court found
that the issue of management fees would be dealt with in
another proceeding, Appellants cannot claim this is a
pecuniary interest affected by the bankruptcy court’s order.

    This Court finds Appellants have standing to bring this
appeal. Even if the management fees will be addressed in
another proceeding, Appellants’ ability to pursue them is
dependent on the bankruptcy court’s original order and this
appeal. This Court has already found “there is no question
that Appellants’ pecuniary interests are directly and
adversely affected by the bankruptcy court order in
question.” Matter of Point Ctr. Fin., Inc., 890 F.3d at 1194.

B. The bankruptcy court had subject matter
   jurisdiction to confirm the vote establishing the
   Trustee as manager of Dillon and to hear the
   assumption motion.

     28 U.S.C. § 1334(b) and (e) provide:

        (b) Except as provided in subsection (e)(2),
        and notwithstanding any Act of Congress that
        confers exclusive jurisdiction on a court or
        courts other than the district courts, the
        district courts shall have original but not
        exclusive jurisdiction of all civil proceedings
        arising under title 11, or arising in or related
        to cases under title 11.

        ...

        (e) The district court in which a case under
        title 11 is commenced or is pending shall
        have exclusive jurisdiction—
                 IN RE POINT CENTER FINANCIAL                        11

         (1) of all the property, wherever located, of
         the debtor as of the commencement of such
         case, and of property of the estate[.]

     Appellants argue the district court erroneously found the
bankruptcy court had jurisdiction to extend the deadline for
the Trustee to accept the operating agreement. They argue
that when the original deadline to assume or reject the
operating agreement passed, this constituted a statutory
rejection of the agreement, meaning the agreement was no
longer property of the estate and, therefore, the bankruptcy
court had no jurisdiction over it under § 1334(e). See
11 U.S.C. § 365(d)(1) (“In a case under chapter 7 of this title,
if the trustee does not assume or reject an executory contract
or unexpired lease of residential real property or of personal
property of the debtor within 60 days after the order for
relief, or within such additional time as the court, for cause,
within such 60-day period, fixes, then such contract or lease
is deemed rejected.”).

   The Trustee argues that Appellants base their argument
on the erroneous belief that the operating agreement is an
executory contract. 1 But even if the operating agreement is
    1
       The district court assumed, but did not decide, that the operating
agreement was an executory contract. The district court stated that “[i]t
is not clear whether Appellee contends the Agreement is not an
executory contract” and that “[n]either party has adequately addressed
the issue and the Court need not decide it.” Though the district court
noted “Dillon’s members have ongoing financial obligations and are
required to vote to remove the manager, and PCF has ongoing fiduciary
and managerial obligations,” citing In re Robert L. Helms Constr. &
Dev. Co., 139 F.3d 702, 705 (9th Cir. 1998) (“[A] contract is executory
if the obligations of both parties are so unperformed that the failure of
either party to complete performance would constitute a material breach
and thus excuse the performance of the other.”) (quotation marks
omitted).
12            IN RE POINT CENTER FINANCIAL

executory, the Trustee claims rejection of the operating
agreement resulted only in its breach and did not deprive the
bankruptcy court of jurisdiction.

    This Court finds that the Trustee’s failure to assume the
operating agreement by the bankruptcy court’s deadline did
not deprive the court of jurisdiction over matters relating to
the Dillon operating agreement. Appellants’ argument that
the bankruptcy court could not rule on the Trustee’s
assumption motion under § 1334(e) is unavailing because
the subject of that motion, the operating agreement, was not
outside the bankruptcy estate. Even had there been a
rejection of the operating agreement, the operating
agreement would remain part of the estate because rejection
of an executory contract merely constitutes a breach. See
Mission Prod. Holdings, Inc. v. Tempnology, LLC, 139 S.
Ct. 1652, 1661 (2019).

    In any event, § 1334(b) provides an alternative
jurisdictional basis for the bankruptcy court’s order
confirming the Trustee’s election as manager and permitting
him to assume the operating agreement. The Trustee’s
election as manager of Dillon, acting in his capacity as
Trustee of the estate, is undoubtedly “related to” the
bankruptcy proceeding under § 1334(b). And § 1334(b) also
affords the district court (and thus the bankruptcy court by
reference under 28 U.S.C. § 157(a)) jurisdiction over matters
“arising under” the Bankruptcy Code. A proceeding “arises
under” the Bankruptcy Code if it “has no independent
existence outside of bankruptcy and could not be brought in
another forum, but whose cause of action is not expressly
rooted in the Bankruptcy Code.” In re Ray, 624 F.3d 1124,
1131 (9th Cir. 2010). Appellants make the tenuous argument
that neither “arising under” nor “related to” jurisdiction
empowered the bankruptcy court to rule on the Trustee’s
              IN RE POINT CENTER FINANCIAL                   13

assumption motion after the purported rejection of the
operating agreement. As this Court explains infra Section
IV, however, where a bankruptcy court makes a finding of
excusable neglect for the failure to seek a timely extension
of a deadline pursuant to Fed. R. Bankr. P. 9006(b)(1)(2), it
may retroactively extend its own deadline. See In re Chira,
343 B.R. 361, 370–71 (Bankr. S.D. Fla. 2006), aff’d In re
Chira, 367 B.R. 888 (S.D. Fla. 2007). And that is precisely
what the bankruptcy court did in this case. Having once
granted the Trustee an extension of the deadline to assume
or reject the operating agreement, the bankruptcy court—
upon a showing of excusable neglect by the Trustee—
retroactively permitted a subsequent extension of that
deadline through the date that it ultimately entered an order
granting the Assumption Motion. The Trustee’s request that
the bankruptcy court extend the deadline to assume the
operating agreement would “ha[ve] no independent
existence outside of the bankruptcy court and could not be
brought in another forum” and thus fell squarely within the
bankruptcy court’s “arising under” jurisdiction in § 1334(b).
Id.

    The district court’s analysis of the jurisdictional question
is brief and does not consider Appellants’ arguments
regarding § 1334. Rather, the district court concluded that
“the question of whether the Trustee can assume the
Agreement is a core proceeding within the meaning of § 157,
and the bankruptcy court had jurisdiction to hear the
Assumption Motion.”

   28 U.S.C. § 157 provides:

       (a) Each district court may provide that any
       or all cases under title 11 and any or all
       proceedings arising under title 11 or arising
       in or related to a case under title 11 shall be
14            IN RE POINT CENTER FINANCIAL

       referred to the bankruptcy judges for the
       district.

       (b) (1) Bankruptcy judges may hear and
       determine all cases under title 11 and all core
       proceedings arising under title 11, or arising
       in a case under title 11, referred under
       subsection (a) of this section, and may enter
       appropriate orders and judgments, subject to
       review under section 158 of this title.

    Appellants argue the district court’s holding is erroneous
because § 157 is not a jurisdictional statute. In Stern v.
Marshall, the Supreme Court explained, “[s]ection 157
allocates the authority to enter final judgment between the
bankruptcy court and the district court… . That allocation
does not implicate questions of subject matter jurisdiction.”
564 U.S. 462, 480 (2011) (internal citation omitted). The
Court went on to explain, “the district courts of the United
States have ‘original and exclusive jurisdiction of all cases
under title 11.’” Id. at 473 (quoting 28 U.S.C. §1334(a)).
“The manner in which a bankruptcy judge may act on a
referred matter depends on the type of proceeding involved.
Bankruptcy judges may hear and enter final judgments in ‘all
core proceedings arising under title 11, or arising in a case
under title 11.’” Id. at 473–74 (emphasis added) (quoting
28 U.S.C. § 157(b)(1)).

    Section 157(b) clearly “is not the source of the
bankruptcy court’s jurisdiction,” and it “applies only if there
is jurisdiction in the first place under 28 U.S.C. § 1334.”
Omicron Sys., Inc. v. Weiner (In re Weiner), 05-566, 2006
WL 6659548, at *4 (Bankr. E.D. Pa. Apr. 19, 2006). And it
may be the case post-Stern that “[w]hile a district court is
authorized to refer matters to a bankruptcy court, see
                 IN RE POINT CENTER FINANCIAL                          15

28 U.S.C. § 157(a), that provision [likewise] is not
jurisdictional.” Potter v. Newkirk, No. 19-1728, 2020 WL
549767, at *2 (3d Cir. Feb. 4, 2020) (citing Stern, 564 U.S.
at 480). 2 But, in any event, jurisdiction resided in the district
court under § 1334(b) and in the bankruptcy court by
reference from the district court under § 157(a) and its
general order of reference. Thus, this Court concludes the
district court did not err in finding the bankruptcy court had
jurisdiction to hear the assumption motion. Even if the
District Court incorrectly based jurisdiction on § 157, the
bankruptcy court still had jurisdiction under § 1334(b) for
the reasons stated above.

C. The bankruptcy court properly authorized the
   Trustee to exercise management rights over Dillon
   after the majority of Dillon’s members voted for the
   trustee to manage Dillon.

    On January 30, 2014, the bankruptcy court granted the
Trustee’s motion to extend the statutory deadline for
assumption of the operating agreement through February 28,
2014. As discussed above, the Trustee did not assume the
agreement by that new deadline or move for an additional
extension because of Harkey’s misrepresentations regarding
the potential sale of real estate owned by Dillon. On May 31,
2016, the Trustee filed a motion seeking an order
(1) authorizing the Trustee to exercise management rights

    2
        But see Celotex Corp. v. Edwards, 514 U.S. 300, 307 (1995)
(“Here, the Bankruptcy Court’s jurisdiction . . . must be based on the
‘arising under,’ ‘arising in,’ or ‘related to’ language of §§ 1334(b) and
157(a).”); In re Am. Hardwoods, Inc., 885 F.2d 621, 623 (9th Cir. 1989)
(“Similar to section 1334(b), section 157(a) grants to bankruptcy courts
jurisdiction over ‘any or all cases under title 11 and any or all
proceedings arising under title 11 or arising in or related to a case under
title 11.’”).
16            IN RE POINT CENTER FINANCIAL

over Dillon pursuant to a majority vote of Dillon’s members,
and alternatively (2) authorizing the Trustee to assume
Dillon’s operating agreement. On June 29, 2016 the
bankruptcy court approved both the Trustee’s election as
manager and his assumption of the operating agreement. On
October 9, 2018, the district court affirmed. With respect to
the Trustee’s election as manager, the district court reasoned
that because a majority of Dillon’s members voted for the
Trustee to manage Dillon, the Trustee could exercise
management authority over Dillon, and that authority was
not affected by any rejection of the operating agreement. The
court found: “Rejection did not cause Appellant Dan J.
Harkey to become manager of Dillon, nor did it remove PCF
as manager. Instead it constituted a breach of the Agreement
and permitted creditors to file a claim.”

    Appellants argue that confirming the Trustee’s election
as the manager of Dillon, a non-debtor entity, presented no
case or controversy for resolution because the Trustee
contends the vote was valid with or without the bankruptcy
court order confirming the election, and therefore,
Appellants argue, there was nothing at stake when the
Trustee moved for the bankruptcy court to confirm the vote.

    The Trustee contends that after he did not assume the
operating agreement by February 28, 2014, some members
of Dillon thought PCF remained the manager while others
thought there was no manager. To eliminate any dispute,
approximately 60% of the membership interests in Dillon
voted to appoint or reinstate PCF as the manager of Dillon.
The majority of Dillon’s members voted for the Trustee to
manage Dillon and had a vested interest in protecting their
rights, and the bankruptcy court properly approved their
vote.
              IN RE POINT CENTER FINANCIAL                 17

    This Court finds Appellants’ jurisdictional claim that the
bankruptcy court lacked the ability to approve the Trustee as
manager of Dillon because the operating agreement was not
part of the bankruptcy estate fails. Here, the Trustee was not
elected as manager in his private capacity; he was elected to
manage Dillon on behalf of the bankruptcy estate, to earn a
management fee for that estate. As discussed above, the
question whether the Trustee, acting on behalf of the
bankruptcy estate, could exercise management authority
over Dillon “related to” the bankruptcy proceeding. See
28 U.S.C. § 1334(b); supra Part III.B.

    Moreover, the bankruptcy court was within its authority
to enter an order confirming the Trustee’s election as
manager of Dillon. It is well established that bankruptcy
courts have “considerable discretion” to approve motions
authorizing resolutions appointing or removing managers of
LLCs. See, e.g., In re Walter, 83 B.R. 14, 17 (B.A.P. 9th Cir.
1988) (“The bankruptcy court has considerable discretion in
deciding whether to approve or disapprove the use of estate
property by a debtor in possession.”). And Appellants cite
no case law to support their argument that there is somehow
no case or controversy presented when the bankruptcy court
confirmed the Trustee’s election as manager of Dillon. They
claim the Trustee admits there is no controversy when he
acknowledges “[t]he vote of Dillon’s members was
conducted independent of the assumption of the operating
agreement and is valid with or without an order of the
bankruptcy court.” But the fact that members of Dillon voted
to authorize the Trustee to exercise PCF’s managements
rights in Dillon does not mean the bankruptcy court lacked
jurisdiction to enter an order approving the vote. The
Trustee’s contention that the vote was “valid” is not akin to
conceding that it was not subject to court approval.
18           IN RE POINT CENTER FINANCIAL

D. The bankruptcy court properly extended its own
   deadline for assumption of the operating agreement
   pursuant to Fed. R. Bankr. P. 9006(b)(1)(2).

    Our decision does not hinge on the bankruptcy court’s
order confirming the Trustee’s election as manager of
Dillon, however, because an alternative ground supports the
district court’s judgment. Even if the Trustee had not been
elected as manager, the bankruptcy court could properly
extend the deadline for the Trustee to assume the operating
agreement under the Federal Rules of Bankruptcy
Procedure.

    Whether the bankruptcy court properly extended the
deadline for assumption of the operating agreement is
governed by Fed. R. Bankr. P. 9006(b)(1)(2). We conclude
that Rule 9006(b)(1)(2)’s plain language permitted the
bankruptcy court to extend the deadline.

    Federal Rule of Bankruptcy Procedure 9006(b)(1) and
(2) provide:

       (1) In General. Except as provided in
       paragraphs (2) and (3) of this subdivision,
       when an act is required or allowed to be done
       at or within a specified period by these rules
       or by a notice given thereunder or by order of
       court, the court for cause shown may at any
       time in its discretion (1) with or without
       motion or notice order the period enlarged if
       the request therefor is made before the
       expiration of the period originally prescribed
       or as extended by a previous order or (2) on
       motion made after the expiration of the
       specified period permit the act to be done
              IN RE POINT CENTER FINANCIAL                 19

       where the failure to act was the result of
       excusable neglect.

       (2) Enlargement Not Permitted. The court
       may not enlarge the time for taking action
       under Rules 1007(d), 2003(a) and (d), 7052,
       9023, and 9024.

    The bankruptcy court’s extension fits within Rule
9006(b)’s plain language. “[A]n act [was] required . . . to be
done at or within a specified period by . . . order of court,”
because the bankruptcy court’s order extending the initial
deadline established a new deadline for the Trustee to
assume or reject the operating agreement. The Trustee
moved for an extension “after the expiration of the specified
time period,” and the district court found that his failure to
act by the deadline “was the result of excusable neglect”
based on Harkey’s dishonest statements. Therefore, the
bankruptcy court properly extended its own deadline under
Rule 9006(b), and the Trustee’s assumption of the operating
agreement was valid.

    Although 11 U.S.C. § 365(d)(1) establishes a statutory
60-day deadline for assuming or rejecting executory
contracts, the bankruptcy court’s order extending the
Trustee’s deadline did not run afoul of this provision.
Section 365(d)(1) permits the bankruptcy court to grant a
trustee “additional time . . . for cause” within that 60-day
period, and the bankruptcy court did so here. Thus, when the
bankruptcy court later extended the deadline again, it was
extending a period specified by “order of court,” see Fed. R.
Bankr. P. 9006(b)(1), not extending a deadline mandated by
statute.
20            IN RE POINT CENTER FINANCIAL

    Appellants argue that the relief the Trustee sought
constituted Fed. R. Bankr. P. 9023 (Fed. R. Civ. P. 59) and
Fed. R. Bankr. P.9024 (Fed R. Civ. P. 60(b)) motions, which
they argue the bankruptcy court was barred from extending
under the exception in Rule 9006(b)(2). They contend that,
contrary to the district court’s opinion, the Trustee sought to
“reconsider,” or modify, the extension order, arguing “[a]
motion that seeks to alter the relief granted in a prior order
necessarily seeks to modify the prior order.”

    The Trustee argues that the bankruptcy court did not
extend the statutory deadline under § 365(d) or Fed. R. Civ.
P. 60, but its own deadline established in its January 30, 2014
order. This, he argues, is permitted by Rule 9006(b)(1)(2).
The Trustee agrees with the district court that “given that a
Rule 60 motion is an exception to the general rule of
9006(b)(1)…a request to extend a date under it cannot
generally be considered a Rule 60 motion or the exception
would swallow the rule.” See In re Chira, 343 B.R. at 370–
71 (retroactively extending court-ordered deadline to
assume executory contract and explaining that “[o]nce the
court has taken control of the § 365 deadline by extending it
once or more, the new deadline is one governed by the
general rules governing enlargement of time under Rule
9006(b)(1)”), aff’d In re Chira, 367 B.R. 888 (S.D. Fla.
2007); see also In re Pan Am. Hosp. Corp., No. 06-CIV-
21593, 2006 WL 8434254, at *5 (S.D. Fla. Sept. 6, 2006)
(stating that the court “concur[s] entirely with [the]
reasoning in [the Chira] opinion).

    The district court explained the Assumption Motion
sought to extend the court-ordered deadline, not the statutory
deadline. It found “Appellants offer no authority supporting
the proposition that the bankruptcy court lacked authority to
retroactively extend the deadline in its order pursuant to
              IN RE POINT CENTER FINANCIAL                  21

9006(b) and the plain language of the rule supports that
authority in this circumstance.” The lower court explained:

       Appellee did not seek to vacate or reconsider
       the original order extending the deadline to
       assume the Agreement. Appellee made a
       motion for an entirely new order extending
       the deadline set in the previous order… given
       that a Rule 60 motion is an exception to the
       general rule of Rule 9006(b)(1), see Rule
       9006(b)(1)–(2), a request to extend a date
       under it cannot generally be considered a
       Rule 60 motion or the exception would
       swallow the rule.

    We affirm the district court’s holding that the bankruptcy
court had authority under Rule 9006(b)(1)(2) to modify its
order extending the deadline to accept or reject the operating
agreement upon a finding of excusable neglect. The cases
Appellants rely on do not deal with a court’s ability to extend
a deadline established by its own order. See Bd. of Trs. of W.
Conference of Teamsters Pension Tr. Fund v. P & H
Distrib., 2 F.3d 1156 (9th Cir. 1993) (vacating and
remanding district court decision that permitted a Rule 60(b)
motion to be filed beyond the one year deadline imposed by
the rule); Nevitt v. United States, 886 F.2d 1187, 1188 (9th
Cir. 1989) (finding Rule 60(b) motion untimely and one-year
limitation period not tolled during appeal).

    Appellants argue that In re Tompkins, 95 B.R. 722
(B.A.P. 9th Cir. 1989) is on point, but that case deals with
the expiration of a statutory deadline that was not previously
extended by the court. In Tompkins, the debtors entered into
a lease-option agreement with appellants during their
Chapter 11 case. After the case was converted to Chapter 7,
22             IN RE POINT CENTER FINANCIAL

the trustee failed to seek an extension of the deadline to
assume or reject the agreement (60 days after the
conversion) or to file a motion requesting the assumption of
the agreement. The deadline to assume the agreement having
expired, the debtors filed a motion asking the bankruptcy
court to extend the time for the trustee to assume or reject
the agreement, and the court granted the motion. Id. at 723.
The Bankruptcy Appellate Panel reversed, holding that the
motion was untimely because it was not filed within 60 days
of the conversion of the debtors’ case to Chapter 7. Id. at
724. The BAP rejected the debtors’ argument that the 60-
day deadline should not apply because the trustee became
aware of the agreement only at the meeting of creditors.
According to the BAP, “[o]nce the 60 day period expired
without any action taken by the trustee, the lease was
deemed rejected and the court had no authority to revive the
lease.” Id. But the BAP reached this conclusion in the
context of a deadline to assume or reject that was never
extended by court order until after the deadline expired, and
the BAP did not even reach the issue of excusable neglect
under Rule 9006(b)(1)(2).

    In short, none of the decisions on which Appellants rely
addressed the precise issue in this case, and so this is an issue
of first impression in this Circuit. This Court agrees with
Chira based on the plain language of the Federal Rules of
Bankruptcy Procedure. In Chira, the bankruptcy court,
before the expiration of the § 365(d) 60-day statutory
deadline, extended the deadline for assumption of an
executory contract an additional 45 days. 343 B.R. at 369.
After the court-imposed deadline expired, the court then
granted the Trustee’s motion for retroactive extension of the
deadline upon a finding of excusable neglect under Fed. R.
Bankr. P. 9006(b)(1)(2). Id. The court in Chira explained the
distinction between cases where “the court is powerless to
              IN RE POINT CENTER FINANCIAL                  23

modify the deadline in an ex post facto manner” once the
initial 60-day period has expired, and cases where “the court
has taken control of the § 365 deadline by extending it once
or more.” Id. at 371. This case falls into the latter category,
and therefore is governed by the enlargement rules of Rule
9006(b)(1), not the exception in 9006(b)(2).

     Appellee contends that Mr. Harkey’s misrepresentations
about the status of Dillon—namely, failure to disclose a
pending multimillion-dollar sale—was the basis for
Appellee’s delay in assuming the operating agreement. The
district court found that “the affirmative misconduct of Mr.
Harkey was the reason for the delay in assuming the
Agreement,” and therefore the bankruptcy court did not
abuse its discretion in finding excusable neglect. Appellants
have not challenged the excusable neglect finding on this
appeal. While Appellants express concerns about the
unpredictability of such a rule, 9006(b)(1)(2) is limited to
circumstances in which the bankruptcy court makes a
finding of excusable neglect, and this high bar is sufficient
to limit the rule’s effect.

E. The Court need not reach the question of equitable
   mootness because it affirms the district court on other
   grounds.

    Appellees also argue the Court should exercise its
discretion to find the appeal equitably moot. This Court has
held that a court may dismiss an appeal as equitably moot
when there has been a “comprehensive change of
circumstances” so “as to render it inequitable for this court
to consider the merits of the appeal.” In re Roberts Farms,
Inc., 652 F.2d 793, 798 (9th Cir. 1981). “[E]quitable
mootness” is a “judge-made abstention doctrine unrelated to
the constitutional prohibition against hearing moot appeals.”
In re Mortgages Ltd., 771 F.3d 1211, 1214 (9th Cir. 2014)
24            IN RE POINT CENTER FINANCIAL

(quotation omitted). Because the Court affirms the district
court’s opinion on the merits, it declines to reach the
question of equitable mootness.

                     CONCLUSION

   For the foregoing reasons, the opinion of the district
court is AFFIRMED.

CHRISTEN, Circuit Judge, concurring in part, dissenting in
part:

    I concur in the result reached by the majority. I agree
with the majority’s conclusion that appellants have standing
to pursue this appeal, and that the bankruptcy court had
jurisdiction pursuant to 28 U.S.C. § 1334(b). The district
court erred by relying on 28 U.S.C. § 157 as a basis for
jurisdiction. Section 157 allocates authority between
bankruptcy courts and district courts, but cannot serve as a
basis for the assertion of subject matter jurisdiction. See
Stern v. Marshall, 564 U.S. 462, 480 (2011).

    I part ways with the majority’s decision that the
bankruptcy court permissibly reopened the statutory period
for the Trustee to accept Dillon, LLC’s operating agreement.
Pursuant to 11 U.S.C. § 365(d), Congress allowed a 60-day
window for Chapter 7 trustees to assume or reject executory
contracts or unexpired leases. During that 60-day window,
the Trustee in this proceeding requested and received an
extension of time. No one disputes that it was within the
bankruptcy court’s authority to grant an extension of the 60-
day window “for cause” before the 60-day period expired.
11 U.S.C. § 365(d)(1). But the bankruptcy court’s extended
deadline also passed without the Trustee taking any action to
              IN RE POINT CENTER FINANCIAL                 25

accept the operating agreement. Accordingly, by operation
of § 365(d), the LLC’s operating agreement was deemed
rejected. The majority relies on Federal Rule of Bankruptcy
Procedure 9006(b)(1), a general provision that allows
bankruptcy courts to extend their own deadlines, to conclude
that the bankruptcy court had the authority to allow the
Trustee to retroactively assume Dillon’s operating
agreement two and a half years after it was deemed rejected
by operation of law. Because I am not persuaded that the
bankruptcy court had the authority to retroactively reopen
the period Congress specified for accepting an executory
contract, and because it appears the majority’s reasoning
would allow the bankruptcy court to reopen and extend any
deadline without limit, I do not join section III(d) of the
majority’s opinion. I would affirm the district court’s
alternative holding, that the appeal of the bankruptcy court’s
order is equitably moot. See Rev Op Grp. v. ML Manager
LLC (In re Mortgs. Ltd.), 771 F.3d 1211, 1214–15 (9th Cir.
2014).

    The doctrine of equitable mootness is alive and well in
our circuit. See id.; see also Motor Vehicle Cas. Co. v.
Thorpe Insulation Co. (In re Thorpe Insulation Co.),
677 F.3d 869 (9th Cir. 2012). It has been recognized by our
case law since at least 1981. See Trone v. Roberts Farms,
Inc. (In re Roberts Farms, Inc.), 652 F.2d 793 (9th Cir.
1981). The doctrine applies in Chapter 7 proceedings, see,
e.g., Fitzgerald v. Ninn Worx SR, Inc. (In re Fitzgerald),
428 B.R. 872, 881–82 (B.A.P. 9th Cir. 2010); Darby v.
Zimmerman (In re Popp), 323 B.R. 260, 271 (B.A.P. 9th Cir.
2005), and it allows the dismissal of bankruptcy appeals if
there has been a “comprehensive change of circumstances”
that would render it inequitable for our court to consider the
merits of an appeal. In re Mortgs., 771 F.3d at 1214 (quoting
In re Thorpe, 677 F.3d at 880).
26            IN RE POINT CENTER FINANCIAL

    Equitable mootness is a judge-made abstention doctrine,
rather than a determination that our court lacks Article III
subject matter jurisdiction. Id. A bankruptcy appeal is
equitably moot “if the case presents ‘transactions that are so
complex or difficult to unwind’ that ‘debtors, creditors, and
third parties are entitled to rely on [the] final bankruptcy
court order.’” Id. at 1215 (alteration in original) (quoting In
re Thorpe, 677 F.3d at 880). We employ this doctrine
because “public policy values the finality of bankruptcy
judgments,” In re Thorpe, 677 F.3d at 880, and because
bankruptcy proceedings “often implicate parties besides the
debtor and its creditors,” In re Mortgs., 771 F.3d at 1216.

     For these reasons, where bankruptcy proceedings have
continued in the wake of a bankruptcy court order that a
litigant wishes to challenge, we consider as a threshold
inquiry whether the party challenging the bankruptcy court
ruling sought a stay pending appeal. Id. at 1215. The
requirement for seeking a stay is grounded in equity; it
signals to third parties that any transactions they enter into
with the bankruptcy estate may not be final. Id. at 1216. “If
the disagreeing party fails to seek a stay, any third parties
who purchased property or extended a loan may later have a
transaction undone without sufficient notice.” Id. Where a
stay was requested, the appellate court considers the
remaining three Thorpe factors before entertaining the
appeal: whether “substantial consummation” of the
bankruptcy plan has occurred; “the effect a remedy may
have on third parties not before the court”; and whether the
court “can fashion effective and equitable relief without
completely knocking the props out from under the plan and
thereby creating an uncontrollable situation.” 677 F.3d
at 881.
                 IN RE POINT CENTER FINANCIAL                          27

    This case is a prime candidate for application of the
equitable mootness doctrine, not because the appellants’
argument lacks merit, but because they slept on their right to
raise it. The original deadline to accept or reject Dillon’s
operating agreement was 60 days from the date the case was
converted to Chapter 7: October 28, 2013. See In re
Tompkins, 95 B.R. 722, 724 (B.A.P. 9th Cir. 1989). Within
the 60-day timeframe imposed by § 365(d), the Trustee
timely requested and received an extension until February
28, 2014 to assume the operating agreement. The new
deadline came and went, but the Trustee took no action and
the operating agreement was deemed rejected by operation
of § 365(d). Two and a half years later, on June 30, 2016,
the bankruptcy court retroactively reopened the expired
February 2014 deadline and allowed the Trustee to assume
Dillon’s operating agreement as of the original February
2013 petition date. 1

    In July 2016, appellants timely sought a stay of the order
that authorized the Trustee to assume the Dillon operating
agreement nunc pro tunc. The motion for a stay was to be
heard in October 2016, but appellants voluntarily withdrew
the motion a month before the hearing. This allowed the
Trustee to proceed with his plan to wind up Dillon’s affairs.
The Trustee foreclosed on Dillon’s real property and, in
November 2017, sought an order approving the liquidation
of Dillon’s assets and distribution of the sales proceeds. The
bankruptcy court allowed the Trustee to proceed with

    1
      The district court’s decision includes the statement that “the
affirmative misconduct of Mr. Harkey was the reason for the [Trustee’s]
delay in assuming the Agreement,” but the bankruptcy court did not
make that finding or decide whether Harkey’s conduct prevented the
Trustee from acting. Neither our court nor the district court acting in its
appellate capacity are empowered to make factual findings. See Forest
Grove Sch. Dist. v. T.A., 638 F.3d 1234, 1238 (9th Cir. 2011).
28            IN RE POINT CENTER FINANCIAL

liquidation and distribution, and the Trustee entered into
individual settlement agreements with Dillon’s members.
As of February 2019, the Trustee represented that he had
entered 97 settlement agreements and distributed funds
pursuant to those agreements, including one with the state-
court-appointed receiver who held approximately 40% of
Dillon’s ownership interests. On appeal, appellants object
that the Trustee was retroactively given an extra 854 days to
assume Dillon’s operating agreement. More to the point,
they argue that the bankruptcy court lacked the authority to
reopen the § 365 deadline and accept an operating agreement
that had been deemed rejected by operation of law.
Appellants raised a serious objection, but it has been three
and a half years since they sought, and affirmatively
withdrew, their motion for a stay pending appeal.
Appellants do not explain why they withdrew their motion
for a stay and allowed the Trustee to go forward with the sale
and liquidation of Dillon’s assets. Whatever the reason, at
this point it would be entirely inequitable to grant relief and
risk disrupting the 97 distributions and allocations made to
third parties not before us. See In re Mortgs., 771 F.3d
at 1217.

    The district court gave two alternative reasons for
affirming the bankruptcy court’s order reopening the § 365
deadline. First, the district court decided the bankruptcy
court properly applied Rule 9006(b)(1) to extend its own
deadline for the Trustee to assume the operating agreement.
Alternatively, the district court applied the four-part Thorpe
test, correctly determined that all parts of the test were
satisfied, and decided that this appeal was equitably moot.
The majority approves the retroactive extension of § 365’s
60-day window, but leaves unanswered what limits are to be
placed on the bankruptcy court’s new-found authority to
extend statutory deadlines dictated by Congress.
              IN RE POINT CENTER FINANCIAL                 29

    The single out-of-circuit case the majority cites offers
only anemic support for its holding. See In re Chira,
343 B.R. 361 (Bankr. S.D. Fla. 2006). Chira involved a sale
of real property to a third-party buyer, and a Chapter 7
trustee’s motion to assume a purchase agreement. Id. at 363.
The court granted an initial extension of the § 365 deadline.
Thereafter, the trustee and the purchaser agreed several
times to extend the court-extended deadline for assumption
of the real estate contract. Id. at 370. The most recently
extended deadline passed without an additional motion
requesting another extension, but it was uncontested that the
parties and the court intended that the court’s extended
deadline was to be reextended before it expired. Id. at 369,
371. Something—perhaps an oversight or clerical error—
prevented the trustee from receiving notice of the bankruptcy
court’s most recent deadline for accepting or rejecting the
contract. Id. at 371. The trustee’s motion explained that she
had not been served with the court’s order announcing the
most recent deadline, and had not learned of the order until
a court hearing two days before she sought relief. Id. at 370.
The bankruptcy court made factual findings that no party of
interest would be prejudiced, and that the “duration of the
delay and its effects upon the orderly and efficient
administration of this case are de minimis,” before invoking
its equitable power to enter an order extending its own
expired deadline. Id. at 371. It was in this context that the
Chira court held that “[o]nce the court has taken control of
the § 365 deadline by extending it once or more, the new
deadline is one governed by the general rules governing
enlargement of time under Rule 9006(b)(1).” Id. at 371.
Chira is neither binding nor persuasive; it is an extreme
outlier and the circumstances in Chira, including the
bankruptcy court’s finding that no party would be prejudiced
by the trustee’s failure to act, are entirely distinguishable
from the two-and-a-half-year interval that occurred here.
30            IN RE POINT CENTER FINANCIAL

    I take no issue with a bankruptcy court’s ability to extend
the § 365 deadline within the 60-day window, or to further
extend a court-granted extension before the extended
deadline has expired. Where § 365 deadlines are extended
within § 365’s 60-day window, parties are not disadvantaged
because they are on notice that the deadline has been
extended and can rely on the new date. In contrast, the
majority’s new rule will leave parties guessing about
whether expired deadlines will be revived years after the
fact. Because this case is an easy fit for the doctrine of
equitable mootness, I would affirm on that basis alone.