Branch Banking & Trust Co. v. R & S St. Rose, LLC , 621 F. App'x 505 ( 2015 )

FILED
NOT FOR PUBLICATION NOV 02 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: R & S ST. ROSE, LLC, No. 14-16605
Debtor, D.C. Nos. 2:13-cv-02165-JCM
2:13-cv-02177-JCM
BRANCH BANKING AND TRUST
COMPANY, Successor In Interest to MEMORANDUM*
FDIC as Receiver of Colonial Bank, N.A.,
Plaintiff - Appellant,
v.
R & S ST. ROSE, LLC,
Defendant - Appellee.
In re: R & S ST. ROSE, LLC, No. 14-16702
Debtor, D.C. Nos. 2:13-cv-02165-JCM
2:13-cv-02177-JCM
COMMONWEALTH LAND TITLE
INSURANCE COMPANY,
Plaintiff - Appellant,
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
v.
R & S ST. ROSE, LLC,
Defendant - Appellee.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Argued and Submitted October 22, 2015
San Francisco, California
Before: CLIFTON and N.R. SMITH, Circuit Judges and LASNIK,** District
Judge.
Branch Banking and Trust Co. and Commonwealth Land Title Insurance Co.
appeal the district court’s order affirming the bankruptcy court’s confirmation of a
plan pertaining to the bankruptcy of R & S St. Rose, LLC. The confirmation of a
plan is a final order pursuant to 28 U.S.C. § 158(d) and we therefore have
jurisdiction over this appeal. See Bullard v. Blue Hills, 135 S. Ct. 1686, 1692
(2015). We note, however, that since the filing of this appeal the property at issue
has been sold at auction. It is therefore unclear exactly what the parties hoped to
accomplish through this appeal, particularly since neither appellant has put forward
**
The Honorable Robert S. Lasnik, District Judge for the U.S. District
Court for the Western District of Washington, sitting by designation.
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an alternative plan. Nevertheless, the parties did not address the legal relevance of
the auction proceedings and we decline to do so here.
The district court correctly concluded that the Clark County Taxing
Authority was properly treated as a class under the Bankruptcy Code. 11 U.S.C.
§ 1123(a)(1) excludes claims specified in 11 U.S.C. § 507(a)(8), which include
unsecured tax claims, from being designated as a class for purposes of plan
approval. However, § 1123(a)(1) fails to address in any respect secured tax claims,
such as the claim held by Clark County. The mere fact that the Code mandates that
both secured and unsecured tax claims be treated equally with respect to the
distribution of cash payments, 11 U.S.C. § 1129(a)(9)(D), says nothing as to how
the two types of claims are to be classified. Accordingly, Clark County’s secured
tax claim was free to be classified by Debtor in the same way as any other claim
not excluded from classification by § 1123(a)(1).
The district court also correctly concluded that Clark County’s claim was
impaired. This circuit has broadly defined “impairment” to include “any alteration
of [a creditor’s] rights . . . even if the value of the rights is enhanced.” L & J
Anaheim Assocs. v. Kawasaki Leasing Int’l, Inc. (In re L & J Anaheim Assocs.),
995 F.2d 940, 942 (quoting In re Acequia, 787 F.2d 1352, 1363 (9th Cir. 1986)).
Under the confirmed plan, Clark County is entitled to be paid in full within 90 days
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after the effective date of the plan. This treatment differs from the treatment that
would have been accorded to the County had it not been subject to the plan. Clark
County’s claim was consequently impaired by the plan.
Finally, the district court did not err in affirming the bankruptcy court’s
finding that the plan was proposed in good faith. A bankruptcy court’s factual
determination of good faith is reviewed for clear error. Marshall v. Marshall (In re
Marshall), 721 F.3d 1032, 1046 (9th Cir. 2013). Good faith is determined “based
on the totality of the circumstances.” Platinum Capital, Inc. v. Sylmar Plaza L.P.
(In re Sylmar Plaza, L.P.), 314 F.3d 1070, 1074 (9th Cir. 2002). The bankruptcy
court did not clearly err in finding that there were valid economic or business
reasons for the proposed treatment of Clark County. Debtor had no operations, no
cash flow, and no funds to pay Clark County until the effective date. The 90 day
delay also allowed for additional time after the sale of property during which the
parties could file any remaining objections and address potential issues
surrounding easements attached to the property.
AFFIRMED.
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