Court Opinion

ID: 4166312
Source: CourtListenerOpinion
Date Created: 2017-05-04 20:04:18.659474+00
Date Added: 2024-06-11T07:46:56.731810
License: Public Domain

FILED
                            NOT FOR PUBLICATION
                                                                             MAY 04 2017
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

KLINKENBORG AERIAL SPRAYING                      No.   15-35008
AND SEEDING, INC.,
                                                 D.C. No.
               Plaintiff-Appellee,               9:12-cv-00202-DLC

 v.
                                                 MEMORANDUM*
ROTORCRAFT DEVELOPMENT
CORPORATION; ROTORCRAFT
HOLDINGS, LLC; SELECT AVIATION
SERVICES, INC.; SELECT AVIATION
HOLDINGS, LLC; GARY FOX,
individually; SELECT TURBINE
COMPONENTS, INC.,

               Defendants-Appellants.

                   Appeal from the United States District Court
                            for the District of Montana
                Dana L. Christensen, Chief District Judge, Presiding

                              Submitted April 3, 2017**
                                Seattle, Washington

           *
         This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

      **
         The panel unanimously concludes this case is suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2).
Before: KOZINSKI and FLETCHER, Circuit Judges, and TUNHEIM, Chief
District Judge.***

      As a general rule, 11 U.S.C. § 362(a)’s automatic stay only protects the

debtor and not corporate affiliates. Chugach Timber Corp. v. N. Stevedoring &

Handling Corp. (In re Chugach Forest Prods., Inc.), 23 F.3d 241, 246 (9th Cir.

1994). Appellants Rotorcraft Development, Rotorcraft Holdings LLC, Select

Aviation Services Inc., Select Aviation Holdings LLC, and Gary Fox (collectively,

“Rotorcraft entities”) are corporate affiliates of now-bankrupt Select Turbine

Components, Inc., and, therefore, the stay does not automatically protect the

Rotorcraft entities.

      The Rotorcraft entities nevertheless contend that the automatic stay extends

to Klinkenborg’s alter-ego claims because they are property of the estate. We have

construed such contentions as assertions that “unusual circumstances” warrant

departure from the “general rule” articulated above. See In re Chugach Forest

Prods., 23 F.3d at 246; O’Malley Lumber Co. v. Lockard (In re Lockard), 884 F.2d

1171, 1179–78 (9th Cir. 1989). We have never adopted the “unusual

circumstances” exception in the Ninth Circuit and we decline to do so here. See In

re Chugach Forest Prods., 23 F.3d at 246–47. Further, even if we were to adopt

        ***
           The Honorable John R. Tunheim, Chief United States District Judge for
the District of Minnesota, sitting by designation.

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“unusual circumstances” exception, the exception requires the bankruptcy court to

extend the automatic stay using its equity jurisdiction “‘after hearing and the

establishment of unusual need to take this action to protect the administration of the

bankruptcy estate.’” Solidus Networks, Inc. v. Excel Innovations, Inc. (In re Excel

Innovations, Inc.), 502 F.3d 1086, 1096 (9th Cir. 2007) (quoting In re Chugach

Forest Prods., 23 F.3d at 247 n.6). Here, the bankruptcy court has not used its

equity jurisdiction to extend the automatic stay to the Rotorcraft entities. Finally,

even if the bankruptcy court were not required to apply its equity jurisdiction,

Klinkenborg’s alter-ego claim pled “[u]pon information and belief,” does not

support a finding of “unusual circumstances” to automatically extend the protection

of § 362(a).

AFFIRMED

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