FILED
JUL 8 2019
NOT FOR PUBLICATION
SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. EC-18-1271-TaBS
DAVID KENNETH LIND, Bk. No. 2:16-bk-27672
Debtor.
DAVID KENNETH LIND,
Appellant,
v. MEMORANDUM*
HANK SPACONE, Chapter 7 Trustee,
Appellee.
Argued and Submitted on June 20, 2019
at Sacramento, California
Filed – July 8, 2019
Appeal from the United States Bankruptcy Court
for the Eastern District of California
*
This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
Honorable Robert S. Bardwil, Bankruptcy Judge, Presiding
Appearances: David Kenneth Lind argued pro se; Kristen Renfro
argued for appellee.
Before: TAYLOR, BRAND, and SPRAKER, Bankruptcy Judges.
INTRODUCTION
Debtor David Lind entered bankruptcy owning a vineyard property
under contract for sale. Unfortunately, his paths to both asset sale and
reorganization proved rocky; the sale fell through postpetition, and his case
was eventually converted to chapter 7.1 The chapter 7 trustee then located a
new purchaser for the property, albeit at a price below the unachieved
prepetition sale price. The bankruptcy court approved this sale over
Debtor’s objection and also found that the buyer was a § 363(m) purchaser
in good faith. On appeal, Debtor does not establish that the bankruptcy
court clearly erred in this good faith determination.
Accordingly, we AFFIRM the § 363(m) finding and DISMISS the
remainder of the appeal as statutorily moot.
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code,
11 U.S.C. §§ 101–1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure.
2
FACTS
In November 2016, Debtor filed a chapter 12 bankruptcy case. In an
early case status report, he stated that he was a grape farmer, owned four
separate vineyard properties encumbered by loans, and wanted to sell the
properties and pay his debts in full. He advised that one of the properties
(the “Property”) was under contract for sale for $3,160,000, but he
acknowledged that it was a “complicated transaction” (the “First Sale
Attempt”).
Almost immediately, the chapter 12 trustee sought dismissal of the
case. Debtor responded by seeking conversion to chapter 11. The
bankruptcy court granted the conversion motion over objection; it later
ordered appointment of a chapter 11 trustee. Hank Spacone then became
the chapter 11 trustee and undertook sale, marketing, and other efforts to
sell the Property.
As part of this endeavor, the Trustee filed a motion to approve a lot-
line adjustment agreement in order to resolve a dispute and obtain
reconveyance of the second trust deed against the Property. The
bankruptcy court granted the motion over Debtor’s opposition; Debtor did
not appeal from this order.
After several months of effort the Trustee moved to sell the Property,
subject to overbid and free of clear of specified interests, for $2,440,000 (the
“Second Sale Attempt”). The bankruptcy court granted the motion.
3
Thereafter, Debtor filed a “notice of objection” to the sale order, which was
treated as a notice of appeal, generating BAP No. EC-18-1001 (the “First
Appeal”).
While the First Appeal was pending, the bankruptcy court granted
the Trustee’s request to convert the case from chapter 11 to chapter 7.
Mr. Spacone continued as trustee in the chapter 7 case.
The Trustee and purchaser subsequently agreed to abandon the
Second Sale Attempt. As a result, we granted the Trustee’s motion to
dismiss the First Appeal.
The Trustee later filed a new motion to sell the Property to Lange
Twins Limited Partnership (the “Buyer”) for $2,200,000, subject to overbid
and free and clear of specified interests. The Trustee also sought a finding
that the Buyer was a good faith purchaser under § 363(m). The Trustee
noted that, if this sale was approved and if another sale closed as expected,
the estate would be able to satisfy all obligations and return approximately
$335,657 to Debtor and his spouse.
In support of the sale motion, the Trustee attached his declaration
evidencing his marketing and sales efforts, expectation that there might be
overbidders, and the reasoning behind his belief that the sale price
approximated the Property’s fair market value. In short, he based his
valuation on his review of comparable sales, consultation with a broker,
inspection of the Property, and review of a broker’s opinion of value. To
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support his request for a § 363(m) finding of good faith, he also submitted a
declaration from a representative of the Buyer. The declarant stated, in
part, that: the purchase was an arm’s length transaction; he had not
engaged in any collusive bidding tactics to deflate the Property’s value or
deter overbids; the Buyer was not a creditor of the Debtor; and the Buyer
had no previous relationship with the Trustee.
Debtor filed an untimely opposition based on his assertion that the
sale price was too low. He referred to the First Sale Attempt and the
proposed $3,160,000 sale price but conceded that it fell through. He also
referred to an alleged earlier offer of $3,000,000 for the Property. Last, he
pointed to the sale of another, in his view comparable, property.
Despite his written objection, Debtor did not appear at the hearing on
the sale motion. The bankruptcy court noted that there was no timely
opposition but, notwithstanding, considered Debtor’s untimely opposition
and concluded that it was not meritorious. The bankruptcy court then
confirmed that there were no overbidders, granted the motion, and found
that the Buyer was a good faith purchaser under § 363(m).
That same day, the bankruptcy court entered civil minutes and its
order (the “Sale Order”). The Sale Order included the following: “The
Buyer has been found to be in good faith under 11 U.S.C. Section 363(m).”
On October 1, 2018, Debtor timely appealed.
Post-appeal events. On October 2, 2018, Debtor filed a motion to stay
5
the sale. On October 10, 2018, the Trustee filed a notice reporting that the
sale had been completed. Two days later, the Trustee opposed the stay
motion on mootness grounds. On October 31, 2018, the bankruptcy court
denied the motion as moot.
The Trustee also sought dismissal of Debtor’s appeal as moot. We
denied the motion because Debtor was challenging the § 363(m) good faith
finding.
JURISDICTION
The bankruptcy court had jurisdiction under
28 U.S.C. §§ 1334 and
157(b)(2)(N). We have jurisdiction under
28 U.S.C. § 158.
ISSUES
Did the bankruptcy court clearly err when it made a § 363(m)
finding?
Is the appeal statutorily moot under § 363(m)?
STANDARDS OF REVIEW
Although we review mootness de novo, Wilson v. Lynch,
835 F.3d
1083, 1091 (9th Cir. 2016), we review a § 363(m) “good faith” finding for
clear error. Thomas v. Namba (In re Thomas),
287 B.R. 782, 785 (9th Cir. BAP
2002).
“Clearly erroneous review is significantly deferential, requiring that
the appellate court accept the [trial] court’s findings absent a definite and
firm conviction that a mistake has been made.” United States v. Syrax,
6
235 F.3d 422, 427 (9th Cir. 2000) (internal quotation marks omitted). The
bankruptcy court’s choice among multiple plausible views of the evidence
cannot be clear error. United States v. Elliott,
322 F.3d 710, 714 (9th Cir.
2003). A factual finding is clearly erroneous, however, if, after examining
the evidence, the reviewing court “is left with the definite and firm
conviction that a mistake has been committed.” Anderson v. City of Bessemer
City,
470 U.S. 564, 573 (1985). Put differently, a factual finding is clearly
erroneous if it is illogical, implausible, or without support in inferences that
may be drawn from the facts in the record. See TrafficSchool.com, Inc. v.
Edriver Inc.,
653 F.3d 820, 832 (9th Cir. 2011).
DISCUSSION
We begin by emphasizing that we liberally construe Debtor’s pro se
appellate briefs. See Cruz v. Stein Strauss Trust # 1361 (In re Cruz),
516 B.R.
594, 604 (9th Cir. BAP 2014).2 We similarly consider the arguments he made
at oral argument. But here there is a significant disconnect between the
critical issue, the Buyer’s good faith, and the Debtor’s apparent concerns,
the sale price primarily and the Trustee’s actions in general.
Our appellate review is limited to the Sale Order. We start by
2
Nearly a month after filing his appellate reply brief, Debtor filed additional
documents. We strike these supplemental documents. We do not evaluate new
evidence and confine our review to the record as presented to the bankruptcy court.
United States v. Waters,
627 F.3d 345, 355 n.3 (9th Cir. 2010) (“Facts not presented to the
district court are not part of the record on appeal.”).
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clarifying the scope of this appeal. In his informal opening brief, Debtor
rightly states that he is appealing the October 5, 2018 sale order. Despite
that, he takes issue with: the decisions converting the case to chapter 11
and later to chapter 7; the bankruptcy judge’s refusal to remove the
Trustee; both of his attorneys’ acts, alleged misdoings, and alleged
malpractice; the bankruptcy judge’s positive statements about the Trustee
and the United States Trustee’s Program’s oversight of the Trustee; the
Trustee’s choice of real estate agents; and the Trustee’s other decisions in
the case. But our jurisdiction in this appeal extends only to the Sale Order.
We do not have jurisdiction over the order denying Debtor’s motion to
remove the Trustee, nor can we order removal of the Trustee; Debtor’s
appeal from that order has been dismissed as interlocutory. BAP No. EC-
18-1179, Dkt. No. 8.
We affirm the bankruptcy court’s § 363(m) finding; as a result, the
remainder of the appeal is statutorily moot. Section 363 authorizes a
trustee to sell property of the estate. In § 363(b) sale motions, the
bankruptcy court’s obligation “is to assure that optimal value is realized by
the estate under the circumstances.” Simantob v. Claims Prosecutor, LLC (In
re Lahijani),
325 B.R. 282, 288 (9th Cir. BAP 2005). Here, the bankruptcy
court approved the sale under § 363(b) and found that the estate was
receiving fair value for the estate’s interest in the Property.
Under § 363(m), when a “sale of assets is made to a good faith
8
purchaser, it may not be modified or set aside unless the sale was stayed
pending appeal.” Paulman v. Gateway Venture Partners III, LP (In re
Filtercorp, Inc.),
163 F.3d 570, 576 (9th Cir. 1998);
11 U.S.C. § 363(m). An
“[a]bsence of good faith is ‘typically shown by fraud, collusion between the
purchaser and other bidders or the trustee, or an attempt to take grossly
unfair advantage of other bidders.’ ” Adeli v. Barclay (In re Berkeley Del.
Court, LLC),
834 F.3d 1036, 1041 (9th Cir. 2016) (quoting Paulman v. Gateway
Venture Partners III, L.P. (In re Filtercorp, Inc.),
163 F.3d 570, 577 (9th Cir.
1998)). And the relevant focus of inquiry is good faith during the course of
the sale proceedings. Cmty. Thrift & Loan v. Suchy (In re Suchy),
786 F.2d
900, 902 (9th Cir. 1985).
To start, the bankruptcy court’s Sale Order finds that the buyer
purchased the Property in good faith, and the Sale Order was not stayed.
Statutory mootness exists, at least facially, on these facts. But Debtor
attacks the good faith finding itself: he baldly asserts that the sale was not
in good faith. And, if we reverse on this point, we could examine the sale
itself. See Ferrari of N. Am., Inc. v. Sims (In re R.B.B., Inc.),
211 F.3d 475, 480
(9th Cir. 2000).
But Debtor never raised this assertion of a lack of good faith with the
bankruptcy court; we treat it as waived and see no exceptional
circumstances that warrant considering the matter for the first time on
appeal. Mano-Y&M, Ltd. v. Field (In re Mortg. Store, Inc.),
773 F.3d 990, 998
9
(9th Cir. 2014) (“A litigant may waive an issue by failing to raise it in a
bankruptcy court.”). Cf. Orr v. Plumb,
884 F.3d 923, 932 (9th Cir. 2018) (“The
usual rule is that arguments raised for the first time on appeal . . . are
deemed forfeited.”).
Further, Debtor’s murmuring the words “good faith”, see Opening Br.
at 2 (“I am appealing the sale of the estates Davis Rd property due to the
lack of good faith . . . .”), without any corresponding argument or reference
to the underlying facts, does not adequately challenge the § 363(m) good
faith determination. Cf. Christian Legal Soc. Chapter of Univ. of California v.
Wu,
626 F.3d 483, 487 (9th Cir. 2010) (“[W]e won’t consider matters on
appeal that are not specifically and distinctly argued in appellant’s opening
brief. Applying this standard, we have refused to address claims that were
only argued in passing or that were bare assertions . . . with no supporting
argument.”) (internal quotation marks and alterations omitted).
Even if we consider Debtor’s other appellate filings, his position on
good faith is not persuasive. In opposition to the Trustee’s motion to
dismiss the appeal, he argued that the sale was not in good faith under
§ 363(m) because the purchase price was $1,000,000 below fair market
value, which the Buyer knew. But a good faith finding does not turn on the
purchase price in isolation.
Debtor does not argue fraud or collusion, nor does he argue that the
Buyer sought to take an unfair advantage over other bidders. More to the
10
point, the bankruptcy court’s finding of good faith was supported by the
record. The Trustee submitted a declaration from the Buyer establishing its
good faith. Further, the Trustee provided evidence of reasonable attempts
to market the Property and to attract overbidders. The only offer came
from the Buyer. Debtor presented no contrary evidence.
We thus conclude that the bankruptcy court did not clearly err when
it found that the sale was in good faith under § 363(m). Accordingly, we
affirm the bankruptcy court’s § 363(m) finding and, as a result, “the sale
may not be modified or set aside on appeal unless it was stayed pending
appeal.” In re Berkeley Del. Court, LLC, 834 F.3d at 1041. It was not stayed, so
what remains of the appeal is statutorily moot. Id.
CONCLUSION
Based on the foregoing, we AFFIRM the § 363(m) finding and
DISMISS the remainder of the appeal as statutorily moot.
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