Evoq Properties, Inc. v. Richard Meruelo , 669 F. App'x 930 ( 2016 )

FILED
NOT FOR PUBLICATION
OCT 28 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: MERUELO MADDUX No. 14-60063
PROPERTIES, INC.,
BAP No. 13-1494
Debtor,
______________________________
MEMORANDUM*
EVOQ PROPERTIES, INC., FKA
Meruelo Maddux Properties, Inc.,
Appellant,
v.
RICHARD MERUELO,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Kirscher, Dunn, and Taylor, Bankruptcy Judges, Presiding
Argued and Submitted October 17, 2016
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: TALLMAN and CHRISTEN, Circuit Judges, and KENNELLY,** District
Judge.
Richard Meruelo brought this action seeking severance pay after he was
terminated as CEO and Chair of MMPI (which later became EVOQ). Following
MMPI’s bankruptcy and subsequent confirmation of a reorganization plan,
Meruelo’s action argued that his severance pay should be treated as an
administrative expense. The bankruptcy court ruled that Meruelo did not have a
substantive right to severance pay in contract or quantum meruit and denied his
claim. The Bankruptcy Appellate Panel (BAP) concluded that the bankruptcy
court erred by not treating Meruelo’s claim as an administrative expense and
applying the wrong standard for such a claim under 11 U.S.C. § 503, but it did not
address the threshold issue: whether Meruelo had a substantive right to severance
pay. We have jurisdiction under 28 U.S.C. § 158(d), and we reverse and remand.
1. Jurisdiction
“We have jurisdiction to review final orders of the BAP under 28 U.S.C.
§ 158(d).” Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 980 (9th Cir. 2001).
Although remand orders from the BAP are not ordinarily considered final, we take
a “pragmatic” approach to finality in bankruptcy proceedings, given their “unique
**
The Honorable Matthew F. Kennelly, United States District Judge for
the Northern District of Illinois, sitting by designation.
2
nature.” Id. (quoting Lundell v. Anchor Constr. Specialists, 223 F.3d 1035, 1038
(9th Cir. 2000)). We consider several factors when addressing finality, including
“(1) the need to avoid piecemeal litigation; (2) judicial efficiency; (3) systemic
interest in preserving the bankruptcy court’s role as the finder of fact; and (4)
whether delaying review would cause either party irreparable harm.” Id.
All four factors weigh in favor of exercising jurisdiction here: (1) there is
little danger of piecemeal litigation, as this appeal is unlikely to generate new
issues in further proceedings; (2) exercising jurisdiction will conserve judicial
resources by ensuring that the BAP and bankruptcy court address Meruelo’s
substantive rights on remand; (3) this appeal primarily concerns questions of law
that do not intrude on the bankruptcy court’s fact-finding role; and (4) delay will
be avoided if the threshold issue is addressed before the parties litigate the priority
of Meruelo’s claim. Because “there are substantial benefits to exercising
jurisdiction now and no apparent countervailing reasons for declining to do so,” we
exercise jurisdiction under 28 U.S.C. § 158(d). In re Scholz, 699 F.3d 1167, 1171
(9th Cir. 2012).
2. The bankruptcy court did not err by ruling that Meruelo did not have a
substantive right to payment.
3
The BAP reversed and remanded the bankruptcy court’s decision because it
concluded that the bankruptcy court applied the wrong standard for administrative
expense claims under 11 U.S.C. § 503(b)(1)(A). But the BAP did not address the
threshold issue of whether Meruelo had a substantive right to payment. For an
administrative expense to be due, there must be an underlying right to payment
recognized by state law, “spelled out by the contract or calculable as owed in
quantum meruit.” Teamsters Local No. 310 v. Ingrum (In re Tucson Yellow Cab
Co.), 789 F.2d 701, 703 (9th Cir. 1986). “Quantum meruit (or quasi-contract) is an
equitable remedy implied by the law under which a plaintiff who has rendered
services benefit[t]ing the defendant may recover the reasonable value of those
services when necessary to prevent unjust enrichment of the defendant.” Carolco
Television Inc. v. Nat’l Broad. Co. (In re De Laurentiis Entm’t Grp. Inc.), 963 F.2d
1269, 1272 (9th Cir. 1992).
The bankruptcy court did not err in ruling that Meruelo had no contractual
right to severance pay because his executive employment agreement expired prior
to his termination. Meruelo did not meet his burden of proving that he was entitled
to severance pay under quantum meruit because he offered almost no evidence
establishing the “reasonable value” of his services. See id.
4
Because the bankruptcy court did not err in ruling that Meruelo had no
substantive right to severance pay in contract or quantum meruit, we reverse and
remand to the BAP with instructions to reinstate the bankruptcy court’s ruling.
Appellee shall bear all costs of appeal. See Fed. R. App. P. 39(a)(3).
REVERSED AND REMANDED.
5