Court Opinion

ID: 2659000
Source: CourtListenerOpinion
Date Created: 2014-03-31 20:30:49.076768+00
Date Added: 2024-06-11T12:34:45.733892
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                        MARCH 31 2014
                    UNITED STATES COURT OF APPEALS                    MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In re: SOUTH COAST OIL                           No. 12-56014
CORPORATION,
                                                 D.C. No. 8:11-cv-01598-JVS
             Debtor,

                                                 MEMORANDUM*
JOSEPH M. PALLADINO, individually
and in his capacity as Trustee for the
Alfred Joseph Palladino 1994 Trust; and
BG/ANGUS JOINT VENTURE,

             Appellants,

  v.

SOUTH COAST OIL CORPORATION;
JAMES J. JOSEPH, Chapter 11 Trustee
for the Bankruptcy Estate of South Coast
Oil Corporation, E&B NATURAL
RESOURCES MANAGEMENT
CORPORATION; and ELYSIUM WEST,
LLC,

             Appellees.

                   Appeal from the United States District Court

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

                                          1
                       for the Central District of California
                     James V. Selna, District Judge, Presiding

                     Argued and Submitted February 12, 2014
                              Pasadena, California

Before: PAEZ and NGUYEN, Circuit Judges, and MOTZ, Senior District Judge.**

      Joseph Palladino (“Palladino”) appeals the district court’s dismissal of his

appeal challenging the bankruptcy court’s order authorizing the Chapter 11 trustee

to use the estate’s interest in the stock of Angus Petroleum Corporation (“Angus”)

to vote in favor of an agreement between Angus and several third parties, including

Elysium West, LLC (“Elysium”), settling various state law claims.1

      “We review de novo the district court’s decision on appeal from the

bankruptcy court, applying the same standards applied by the district court, without

deference to the district court.” Motor Vehicle Cas. Co. v. Thorpe Insulation Co.

(In re Thorpe Insulation Co.), 677 F.3d 869, 879 (9th Cir. 2012). “The bankruptcy

court’s conclusions of law are reviewed de novo, and its findings of fact are

reviewed for clear error.” Id. We affirm.

      **
         The Honorable J. Frederick Motz, Senior District Judge for the U.S.
District Court for the District of Maryland, sitting by designation.
      1
       On March 5, 2014, Bob Grayson, individually and on behalf of the
BG/Angus Joint Venture, and appellees jointly moved to dismiss the appeal as to
the BG/Angus Joint Venture. We grant the motion in a separate order. See Fed. R.
App. P. 42(b).
                                         2
      We note at the outset that the bankruptcy court possessed jurisdiction under

28 U.S.C. § 157 to authorize the trustee to use the estate’s interest in Angus stock.

See § 157(b)(2)(M) (conferring jurisdiction to enter “orders approving the use or

lease of property”). Despite Palladino’s protestations to the contrary, neither the

trustee nor the bankruptcy court directly negotiated or approved the settlement

agreement. The parties to the settlement agreement simply conditioned their

agreement upon the entry of an order by the bankruptcy court that the decision to

enter into the agreement was within the purview of Angus’s management, or in the

alternative, that the trustee was authorized to vote the estate’s shares in favor of the

agreement. The bankruptcy court issued an order along the lines of the latter.

      Palladino’s appeal is unquestionably equitably moot under the test set forth

in In re Thorpe Insulation Co., 677 F.3d at 881. First, neither Palladino nor any

other objector diligently sought a stay pending appeal—in fact, they never sought a

stay or emergency relief of any kind from the district court, this court, or the

Circuit Justice. We find that this fact weighs heavily, if not conclusively, in

support of the conclusion that the present appeal is equitably moot. See id. (“A

failure to seek a stay can render an appeal equitably moot.”). Second, there has

been a comprehensive change in circumstances since the bankruptcy court’s

authorization order: the trustee voted the shares in favor of the settlement

agreement, the parties to the litigation settled their state law claims with prejudice,

                                           3
the parties exchanged a cash settlement, and the estate sold its interest in Angus

stock to Elysium, one of Angus’s opponents in the settled state litigation.2 Third,

although most of the affected parties are before the court on appeal, one party,

XTO Offshore, Inc. (“XTO”), is not a party to this appeal, so any decision on

appeal would be inequitable with respect to XTO’s interests. Finally, the events

set into motion by the bankruptcy court’s authorization order are “so complex

[and] difficult to unwind” that it would be impossible for the bankruptcy court on

remand to fashion an effective and equitable remedy. See Lowenschuss v. Selnick

(In re Lowenschuss), 170 F.3d 923, 933 (9th Cir. 1999).3 We therefore conclude

that the appeal is equitably moot and decline to address the merits of the appeal.

      AFFIRMED.

      2
        We also decide today in a related appeal that Palladino’s appeal
challenging the estate’s sale of Angus stock to Elysium is itself moot under 11
U.S.C. § 363(m). See Palladino v. E&B Natural Res. (In re S. Coast Oil Corp.),
No. 12-56043 (9th Cir. March 25, 2014).
      3
         Even if Palladino is correct that the trustee may be held personally liable
for his actions, such liability would exist regardless of whether we upset the
bankruptcy court’s authorization order on appeal.
                                           4