Fireman's Fund Insurance v. Brady ( 2011 )

FILED
NOT FOR PUBLICATION MAR 08 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In the Matter of: CALSOL, INC., No. 09-56389
Debtor, D.C. No. 2:08-cv-07003-FMC
FIREMAN’S FUND INSURANCE MEMORANDUM*
COMPANY,
Appellant,
v.
ERNEST JAMES BRADY; et al.,
Appellees.
Appeal from the United States District Court
for the Central District of California
Florence-Marie Cooper, District Judge, Presiding
Submitted February 8, 2011**
Pasadena, California
Before: PREGERSON, WARDLAW, and BEA, Circuit Judges.
*
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).
Fireman’s Fund Insurance Company (“FFIC”) appeals the district court’s
order affirming the bankruptcy court’s order, which granted a group of plaintiffs
(“Appellees”) relief from the automatic stay to assert claims against Calsol, Inc.
(“Calsol”), a debtor in a Chapter 7 bankruptcy proceeding, but limiting Appellees’
recovery to proceeds of insurance. We have jurisdiction under 28 U.S.C.
§ 158(d)(1). We review de novo the district court’s decision on an appeal from the
bankruptcy court and review for abuse of discretion the bankruptcy court’s
decision to grant relief from the automatic stay. Benedor Corp. v. Conejo Enters.,
Inc. (In re Conejo Enters., Inc.), 96 F.3d 346, 351 (9th Cir. 1996). We affirm.
The bankruptcy court did not abuse its discretion when it granted relief from
the automatic stay. See 11 U.S.C. § 362(d)(1) (allowing the bankruptcy court to
grant relief from the automatic stay for cause). Appellees presented sufficient
evidence to establish that it would be more efficient to allow their claims to
proceed in state court. In support of their motion for relief from the automatic stay,
Appellees submitted the declaration of Raphael Metzger (“Declaration”). This
Declaration included three exhibits: (1) copies of the complaints filed by Appellees
in their state court actions, (2) a list of the other defendants in the state court
actions, and (3) a list of the insurance carriers and policy numbers that relate to
Appellees’ claims against Calsol. Neither FFIC, Calsol, nor any other party to this
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action objected to this declaration and the bankruptcy court made no rulings
striking the content of the Declaration. Hence, the Declaration and its
accompanying exhibits satisfied the evidentiary requirements necessary for relief
from the automatic stay.
Furthermore, because a desire to permit a state action to proceed in a state
tribunal has been recognized as a proper cause to grant relief from the automatic
stay, see Piombo Corp. v. Castlerock Props. (In re Castlerock Props.), 781 F.2d
159, 163 (9th Cir. 1986), the bankruptcy court did not abuse its discretion when it
granted relief for this reason.
Appellees’ motion for sanctions on the ground that FFIC’s appeal is
frivolous is granted. Because the outcome of this appeal was obvious, sanctions
are warranted under Federal Rule of Appellate Procedure 38. See Grimes v.
Comm’r, 806 F.2d 1451, 1454 (9th Cir. 1986) (per curiam).
AFFIRMED, Appellees’ motion for sanctions for a frivolous appeal is
GRANTED, and the matter is REFERRED to the Appellate Commissioner for
determination of a just amount for sanctions.
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