Court Opinion

ID: 622106
Source: CourtListenerOpinion
Date Created: 2012-02-03 01:02:51+00
Date Added: 2024-06-11T17:50:59.464396
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             FEB 02 2012

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

In the Matter of: NUTTERY FARM, INC.,            No. 10-17800

                                                 D.C. No. 3:10-cv-03146-WHA
HENDRIK SMEDING and
LETTIE SMEDING,
                                                 MEMORANDUM *
              Appellants,

  v.

AHCOM, LTD.,

              Appellee,

JEFFREY G. LOCKE, Chapter 7 Trustee,

              Trustee - Appellee.

                    Appeal from the United States District Court
                      for the Northern District of California
                     William Alsup, District Judge, Presiding

                      Argued and Submitted January 18, 2012
                            San Francisco, California

Before: McKEOWN, CLIFTON, and BYBEE, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      Hendrik and Lettie Smeding appeal from the bankruptcy court’s approval of

the sale of Nuttery Farm Inc.’s causes of action to Adam Hacking, Ahcom’s

principal. The district court dismissed their appeal for lack of standing. We

affirm.

      The Bankruptcy Code allows the trustee of a bankruptcy estate to move the

bankruptcy court for authority to sell or settle a cause of action. 11 U.S.C. § 363;

In re Mickey Thompson Entm’t Grp., Inc., 292 B.R. 415, 421 (9th Cir. B.A.P.

2003). The trustee must give interested parties notice twenty-one days 1 before the

sale or hearing on approval of settlement, and provide an opportunity to object.

Fed. R. Bankr. Proc. 6004(a), 9019(a), 2002(a)(2)-(3), (c)(1). However, a trustee’s

management of the other procedural details surrounding bidding and sale are

“ultimately a matter of discretion that depends upon the dynamics of the particular

situation.” Mickey Thompson, 292 B.R. at 422.

      The Smedings observe that in this case the trustee originally noticed a

proposal to sell the estate’s claims to the Smedings, not to Ahcom. The Smedings

argue that when the trustee decided to instead seek approval of Ahcom’s

counteroffer, the trustee was obligated to provide a new twenty-day notice.

      1
       At the time of the trustee’s motion, the Bankruptcy Rules required only
twenty days’ notice. Fed R. Bankr. Proc. 2002(a) (2009).

                                          2
However, the trustee’s notice clearly contemplated the possibility of sale to a

higher bidder. It informed the interested parties that Ahcom “has expressed

interest in potentially overbidding for control of these causes of action” and that

“[a]ccordingly, this compromise is subject to overbids.” The Smedings argue that

any such overbid should have come by way of the telephonic auction procedure

proposed by the trustee, not by way of an objection. However, the notice outlined

procedures for objections as well as for overbids, and the Smedings identify no

rule or court order which required Ahcom to choose the overbid route instead of

the objection route. We hold that the trustee gave the required notice of its

intention to sell the claims.

      The Smedings raise a new version of their argument in their reply brief.

They observe that the causes of action the trustee originally planned to sell to the

Smedings did not include a fiduciary duty claim, but that the causes of action the

trustee ended up selling to Hacking did. They argue that the trustee never gave

notice of the sale of the fiduciary duty claim. However, in spite of the fact that

Ahcom’s objections put the Smedings on notice that Ahcom was offering to buy

the fiduciary duty claim, the Smedings never mentioned the issue in their

objections to the bankruptcy court or at the hearing, gave no sign of being

surprised, and never identified any prejudice they suffered as creditors as a result.

                                           3
They therefore do not have standing to raise the issue on appeal. See In re

Commercial W. Fin. Corp., 761 F.2d 1329, 1335 (9th Cir. 1985).

      AFFIRMED.

                                         4