Court Opinion

ID: 3179676
Source: CourtListenerOpinion
Date Created: 2016-02-23 21:06:17.062742+00
Date Added: 2024-06-11T07:38:48.886823
License: Public Domain

FILED
                            NOT FOR PUBLICATION
                                                                            FEB 23 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                             FOR THE NINTH CIRCUIT

In the Matter of: COBALIS                        No. 13-57078
CORPORATION,
                                                 D.C. No. 8:13-cv-00269-JLS
              Debtor,

                                                 MEMORANDUM*
COBALIS CORPORATION and
MONTENEGREX, by Rey Olsen,

              Appellants,

 v.

YA GLOBAL INVESTMENTS LP,

              Appellee.

                   Appeal from the United States District Court
                       for the Central District of California
                   Josephine L. Staton, District Judge, Presiding

                        Argued and Submitted February 9, 2016
                                 Pasadena, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      Before: BERZON, DAVIS**, and OWENS, Circuit Judges.

      Appellants Cobalis Corporation and Montenegrex appeal from the district

court’s dismissal of their bankruptcy appeal as equitably moot. “In evaluating a

dismissal on equitable mootness grounds, we review factual findings for clear error

and legal conclusions de novo.” JPMCC 2007-C1 Grasslawn Lodging, LLC v.

Transwest Resort Props., Inc. (In re Transwest Resort Props., Inc.), 801 F.3d 1161,

1168 (9th Cir. 2015). As the parties are familiar with the facts, we do not recount

them here. We affirm.

      This court has set out four considerations to determine whether an appeal is

equitably moot: (1) “whether a stay was sought, for absent that a party has not fully

pursued its rights”; (2) “whether substantial consummation of the plan has

occurred”; (3) “the effect a remedy may have on third parties not before the court”;

and (4) “whether the bankruptcy court can fashion effective and equitable relief

without completely knocking the props out from under the plan and thereby

creating an uncontrollable situation for the bankruptcy court.” Motor Vehicle Cas.

Co. v. Thorpe Insulation Co. (In re Thorpe Insulation Co.), 677 F.3d 869, 881 (9th

       **
            The Honorable Andre M. Davis, Senior Circuit Judge for the U.S.
Court of Appeals for the Fourth Circuit, sitting by designation.

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Cir. 2012); see also Rev Op Grp. v. ML Manager LLC (In re Mortgages Ltd.), 771

F.3d 1211, 1217 (9th Cir. 2014).

      Here, these considerations weigh in favor of equitable mootness. Appellants

did not seek a stay and were not otherwise diligent in challenging the bankruptcy

court’s underlying orders, and their own inaction permitted developments to

proceed without their participation. See In re Mortgages Ltd., 771 F.3d at 1217

(noting that the appellant “sat on its rights, which weighs strongly towards

equitable mootness”). Moreover, the bankruptcy court’s underlying orders have

been substantially consummated. See In re Thorpe Insulation Co., 677 F.3d at

881. In particular, as to the dissolution, the trustee has taken the steps required of

her. Finally, granting Appellants the relief they seek would unravel the settlement

agreement, and “knock[] the props out from under” the related bankruptcy court

orders, “thereby creating an uncontrollable situation for the bankruptcy court.” Id.

      AFFIRMED.

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