Racusin v. American Wagering, Inc. (In Re American Wagering, Inc.) ( 2014 )

FILED
NOT FOR PUBLICATION AUG 25 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: AMERICAN WAGERING, INC., No. 12-60060
Debtor, BAP No. 11-1549
MICHAEL RACUSIN, MEMORANDUM*
DBA M. Racusin & Company,
Appellant,
v.
AMERICAN WAGERING, INC. And
LEROY’S HORSE & SPORTS PLACE,
Appellees.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Pappas, Jury, and Hollowell, Bankruptcy Judges, Presiding
Argued and Submitted August 15, 2014
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: McKEOWN and CLIFTON, Circuit Judges, and EZRA, District Judge.**
Michael Racusin appeals the Bankruptcy Appellate Panel’s decision that he
is not entitled to interest under his Settlement Agreement with American
Wagering, Inc. (“AWI”) from the date AWI interpleaded stock until the date the
Ninth Circuit reversed the BAP’s decision that Racusin’s claim was
subordinated—the so called “gap period.” We reverse and remand.
The plain language of the Settlement Agreement contemplates interest
during the gap period. Ringle v. Bruton, 86 P.3d 1032, 1039 (Nev. 2004)
(explaining that the plain language of an unambiguous contract controls). The
parties agree that § III(7) of the Settlement requires AWI to make cash payments to
Racusin. That section also requires AWI to pay eight percent interest per year on
the unpaid balance with an “initial payment . . . on the Effective Date of the
Restated Amended Plan,” March 11, 2005. No terms in the Settlement specifically
exclude the gap period from AWI’s obligation to pay eight percent interest on the
unpaid balance. The plain language of the Settlement therefore provides for gap
period interest. See Royal Indem. Co. v. Special Serv. Supply Co., 413 P.2d 500,
502 (Nev. 1966) (“Every word [of a contract] must be given effect if at all
**
The Honorable David A. Ezra, United States District Judge for the
District of Hawaii, sitting by designation.
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possible”). The term “BAP Appeal” in § III(8) says little about the parties’
intentions concerning such interest in the unusual circumstances of this case. See In
re Las Vegas Monorail Co., 429 B.R. 317, 332 (Bankr. D. Nev. 2010) (explaining
that a contract should be “interpreted as a whole without giving undue weight to
any particular clause beyond that which [is] reasonable”).
The law of interpleader does not preclude gap period interest. AWI did not
interplead the full amount that it ultimately owed under the Settlement. See Michel
v. Eighth Judicial Dist. Court, 17 P.3d 1003, 1007 (Nev. 2001) (per curiam) (“the
disputed funds must be tendered to the court in their entirety” (emphasis added)). It
is immaterial that the BAP’s order subordinating Racusin’s claim was not stayed
while the subordination issue was on appeal to this court. Butler v. Eaton, 141 U.S.
240, 244 (1891) (explaining that a judgment reversed by a higher court is “without
any validity, force, or effect, and ought never to have existed”).
Finally, the bankruptcy court abused its discretion in holding that equity
prevents Racusin from obtaining gap period interest. The time it took this court to
decide the subordination issue, not Racusin’s motion to stay the interpleader,
caused the gap period. Racusin caused the gap period only in the sense that he was
responsible for appealing the BAP subordination decision to this court. But equity
should not punish him for exercising a right to appeal that he expressly reserved in
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the Settlement, especially as this court ultimately concluded that his appeal had
merit. See Gelfgren v. Republic Nat. Life Ins. Co., 680 F.2d 79, 82 (9th Cir. 1982)
(explaining that an award of interest in a non-statutory interpleader action depends
on equitable considerations).
We express no opinion on whether AWI materially breached the Settlement
Agreement. We hold only that AWI was required to pay interest during the gap
period. Accordingly, we reverse and remand for proceedings consistent with this
disposition.
REVERSED AND REMANDED.
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