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In re Dorwin B. COOK, Debtor. Dorwin B. COOK and Sylvia G. Cook, his wife, Plaintiffs-Appellants, v. T.F. FLETCHER, Jr., and Rebecca Fletcher, his wife, Defendants-Appellees

United States Court of Appeals for the Ninth Circuit1984-04-16No. No. 83-3515
730 F.2d 1324

Summary

Holding. The appeal is dismissed as moot because the appellants dismissed the Chapter 11 proceeding and obtained a subsequent Chapter 7 discharge, making effective appellate relief impossible without addressing the separate Chapter 7 discharge, and because appellants failed to seek a stay of the bankruptcy court's orders during the appeal.

The Cooks purchased property from the Fletchers under a contract of sale but fell behind on monthly payments. After the Fletchers initiated a state court forfeiture action, the Cooks filed for Chapter 11 bankruptcy. The forfeiture action was removed to bankruptcy court. The Cooks again defaulted on the state court's modified payment schedule, and the Fletchers obtained relief from the automatic stay and secured a forfeiture decree in bankruptcy court. The bankruptcy court also denied the Cooks' request to assume the contract. The district court affirmed the forfeiture order and found other issues moot after the Cooks dismissed their Chapter 11 case and obtained a Chapter 7 discharge.

On appeal, the Cooks argued the bankruptcy court improperly applied the state court's default standard and failed to exercise its discretionary authority. However, the court declined to address the merits, finding the appeal moot because the Cooks had dismissed the underlying Chapter 11 proceeding and obtained a separate Chapter 7 discharge. The court emphasized that effective relief was impossible without vacating the Chapter 7 discharge, which was not before the court on appeal. The court also noted the Cooks' failure to seek a stay of the bankruptcy orders during the appeal, which is disfavored in bankruptcy administration.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether a bankruptcy court properly applied state law default standards in ordering forfeiture of a real estate contract
  • Mootness when the underlying bankruptcy estate is closed by a subsequent discharge proceeding
  • Effect of failure to seek a stay on appellate review in bankruptcy matters

Procedural posture

Appellants appealed three bankruptcy court orders affirmed by the district court, but after filing for Chapter 11 bankruptcy protection, dismissed that proceeding and obtained a Chapter 7 discharge while the appeal was pending.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

TANG, Circuit Judge:

Appellants seek reversal of three bankruptcy court orders affirmed by the district court. Specifically, this appeal centers on the bankruptcy court’s decree of forfeiture pursuant to a state court order. Also appealed are the granting of relief from the automatic stay provision of the bankruptcy code and the denial of appellants’ motion to assume the contract under the code.

FACTS:

Appellants purchased property from the appellees with payments due on the contract of sale of approximately $5,000 per month. After the appellants fell behind in payments, appellees brought a forfeiture action in state court. The state court found a sufficient basis for forfeiture but reinstated the contract subject to further conditions to establish “substantial default.” After appellants filed a voluntary petition in bankruptcy under Chapter 11, appellees removed the forfeiture action to the bankruptcy court. Appellants again fell behind, this time of the state court’s payment schedule, and appellees, after obtaining relief from the automatic stay provision of 11 U.S.C. § 362, sought and obtained a decree of forfeiture in the bankruptcy court. The bankruptcy court at the same time denied appellants’ motion to assume the contract under 11 U.S.C. § 365. No stays of the bankruptcy court orders were sought pending their appeal. While the appeals were pending, the appellants dismissed their Chapter 11 proceedings and then sought and obtained discharge in bankruptcy under Chapter 7. The district court then affirmed the forfeiture decree on appeal and found the other appeals moot because the Chapter 11 proceedings were dismissed.

DISCUSSION

Appellants contend on this appeal that the bankruptcy court erroneously entered the decree of forfeiture when it placed too much reliance on the state court’s standard for “substantial default” and failed to exercise its equitable discretion under the bankruptcy code. We do not reach the merits of this contention because we hold that the appeal must be dismissed as moot.

When an appellate court is unable to grant effective relief, the appeal is dismissible as moot. Mills v. Green, 159 U.S. 651, 16 S.Ct. 132, 40 L.Ed. 293 (1895); United States v. State of Oregon, 718 F.2d 299, 302 (9th Cir.1983); In re Combined Metals Reduction Co., 557 F.2d 179, 187-89 (9th Cir.1977). The appellants in this Chapter 11 appeal have since dismissed the proceeding below and have further closed the bankruptcy estate under a subsequent and separate Chapter 7 proceeding; this court is unable now to grant effective relief in this appeal. Appellants would now request this court not only to overturn the bankruptcy court’s decree of forfeiture issued during the initial Chapter 11 proceedings but also to vacate and set aside the subsequent Chapter 7 discharge in order to include the property as an asset of the former Chapter 11 bankruptcy estate. By securing discharge under the subsequent Chapter 7 proceeding and closing the estate, however, the appellants have foreclosed the possibility of effective relief since the propriety of the discharge under Chapter 7 has not been appealed and is not before us. In re Cantwell, 639 F.2d 1050 (3d Cir.1981).

In addition, the appellants’ failure to seek a stay of the bankruptcy court’s orders supports our conclusion that this appeal is moot. “In the field of the administration of estates under the bankruptcy laws, the policy of the law strongly supports a requirement that a stay be obtained if review on appeal is not to be foreclosed because of mootness.” In re Roberts Farms, Inc., 652 F.2d 793, 796 (9th Cir. 1981). During the pendency of their appeal, the appellants failed to seek a stay of the bankruptcy court’s forfeiture decree. This court is not inclined to overturn that decree and all of its attendant consequences in light of appellants’ failure to seek and obtain a stay of the bankruptcy court’s decree.

Because the appellants have failed to seek a stay of the bankruptcy court’s orders and because of the consequent mootness in this case, the appeal is dismissed.

DISMISSED.

. According to the state court order, " ‘substantial default’ shall be deemed to occur either: when any one installment on a note or contract is not made within the calendar month that it is due; or that (sic) any payment or payments required (i.e., contract, note, taxes) is, on more than three occasions during any one calendar year, not made on or before the due date for such payment or performance.”

. Appellants raised the question of a stay in a memorandum filed in the bankruptcy court. However, no motion for a stay was filed and the bankruptcy court did not rule on the suggestion for a stay. Appellants did not thereafter request a ruling from the bankruptcy court, nor did appellant request a stay of any of the bankruptcy court’s orders from the district court, this court, or the Circuit Justice. Appellants’ "minimal efforts” to obtain a stay were insufficient to preserve their claim in this court for equitable relief. See In re Roberts Farms, Inc., 652 F.2d 793, 798 (9th Cir.1981); Valley National Bank of Arizona v. Trustee for Westgate-California Corp., 609 F.2d 1274, 1283 (9th Cir.1979).