in re: gasprom, inc., 9th cir. bap (2013)

7/25/2019 In re: Gasprom, Inc., 9th Cir. BAP (2013)

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281 Whi l e Gasprom s Not i ce of Appeal named al l of t he above-

r ef er enced appel l ees as par t i es t o t he or der on appeal , t he onl ynamed appel l ee who has par t i ci pat ed i n t hi s appeal i s Mi chel l e

Fateh.

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

I n r e: ) BAP No. CC- 12- 1567- KuKi Ta)

GASPROM, I NC. , ) Bk. No. ND 12- 10772- RR)

Debt or . )______________________________)

)GASPROM, I NC. , )

)Appel l ant , )

)

v. )OPINION

)MI CHELLE FATEH; FRED FATEH; )SANDRA MCBETH, Chapt er 7 )Tr ust ee; PARKER FORECLOSURE )SERVI CES; COLONI AL PACI FI C )LEASI NG CORP. ; J ULI AN BACH; )GREEN ENERGY HOLDI NGS, LLC; )UNI TED STATES TRUSTEE, )

)Appel l ees. 1 )

______________________________)

Ar gued and Submi t t ed on September 19, 2013at Pasadena, Cal i f or ni a

Fi l ed Oct ober 28, 2013

Appeal f r om t he Uni t ed St at es Bankrupt cy Cour tf or t he Cent r al Di str i ct of Cal i f or ni a

Honor abl e Robi n L. Ri bl et , Bankrupt cy J udge, Pr esi di ng

Appear ances: Mi chael R. Sment ar gued f or appel l ant Gaspr om,

I nc. ; Pet er A. Gol denr i ng of Gol denr i ng & Pr osserar gued f or appel l ee Mi chel l e Fat eh.

Bef ore: KURTZ, KI RSCHER and TAYLOR, Bankr upt cy J udges.

FILED

OCT 28 2013

SUSAN M. SPRAUL, CLERKU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT


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2 Unl ess speci f i ed ot her wi se, al l chapt er and sect i onr ef erences ar e t o t he Bankr upt cy Code, 11 U. S. C. 101- 1532.

2

KURTZ, Bankr upt cy J udge:

INTRODUCTION

Chapt er 72

debt or Gasprom, I nc. ( Gasprom) appeal s f r om abankrupt cy cour t or der hol di ng t hat t he post pet i t i on f or ecl osur e

of Gaspr om s pr i nci pal asset , a gas st at i on, di d not vi ol at e t he

aut omat i c s t ay because t he st ay had t ermi nated by operat i on of

l aw as a r esul t of t he chapt er 7 t r ust ee s abandonment of t he gas

st at i on. The bankrupt cy cour t based t hi s hol di ng on an i ncor r ect

l egal anal ysi s r egar di ng t he ef f ect of t he abandonment on t he

aut omat i c s t ay.

I n t he same or der , t he bankrupt cy cour t hel d i n t he

al t er nat i ve t hat i t woul d annul t he st ay i n or der t o

r et r oact i vel y val i dat e t he f or ecl osur e sal e and t he act i ons of

t he par t i es who conduct ed t he f or ecl osur e sal e. But t he

bankrupt cy cour t abused i t s di scr et i on i n annul l i ng t he st ay.

The cour t di d not appl y t he appr opr i at e l egal st andar d f ordet er mi ni ng whet her t he st ay shoul d be annul l ed. Nor di d t he

cour t gi ve t he par t i es any oppor t uni t y to devel op t he r ecor d

r egar di ng t he equi t i es of t hei r r espect i ve posi t i ons.

Consequent l y, we VACATE AND REMAND f or f ur t her proceedi ngs.

FACTS

Gasprom commenced i t s chapt er 11 bankr upt cy case i n Febr uary

2012. Wi t hi n r oughl y a mont h, t he bankr upt cy cour t conver t ed

Gaspr om s case t o chapt er 7, and Sandr a McBet h was appoi nted t o


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serve as chapt er 7 t r ust ee ( Trust ee) .

Gasprom s onl y asset of si gni f i cance was a nonoper at i onal

gas st at i on i n Oxnar d, Cal i f or ni a ( Gas St at i on) . I n J une 2012,

t he Tr ust ee f i l ed a not i ce of i nt ent i on t o abandon t he GasSt at i on. Gaspr om f i l ed a t wo- page obj ect i on t o t he pr oposed

abandonment , st at i ng that t he Tr ust ee shoul d not be per mi t t ed to

abandon t he Gas Stat i on because i t had si gni f i cant equi t y

pot ent i al . Gaspr om f ur t her asser t ed t hat t he Gas St at i on

suf f er ed f r om hazar dous wast e cont ami nat i on and t hat st at e l aw

pr ohi bi t ed t he Tr ust ee f r om abandoni ng cont ami nat ed pr oper t y.

Gaspr om of f er ed no evi dence or l egal aut hor i t y to suppor t i t s

asser t i ons.

The Tr ust ee t hen submi t t ed evi dence i n support of her

i nt ent i on t o abandon t he Gas St at i on and not i ced her pr oposed

abandonment f or hear i ng. Accordi ng t o t he Tr ust ee s evi dence,

she di d not have any f unds avai l abl e t o r ender t he Gas Stat i on

oper at i onal . Nor di d she have any f unds avai l abl e t o addr ess anumber of t r oubl esome i ssues concerni ng permi t t i ng, hazar dous

wast e cont ami nat i on and undergr ound st orage t ank compl i ance. As

t he Tr ust ee expl ai ned, t he Gas St at i on s val ue was si gni f i cant l y

i mpai r ed by t hese i ssues and by i t s nonoper at i onal st at us, and

t he Gas St at i on al so was f ul l y encumbered.

On J ul y 27, 2012, a f ew days bef ore the hear i ng on t he

pr oposed abandonment , Mi chel l e Fat eh ( Fat eh) f i l ed a memorandum

and a decl ar at i on i n suppor t of t he Tr ust ee s pr oposed

abandonment . Fat eh asser t ed t hat she was t he hol der of a f i r st

deed of t r ust ( Deed Of Tr ust ) agai nst t he Gas Stat i on, t hat t he

obl i gat i on secur ed by the Deed Of Trust exceeded $1 mi l l i on and


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3 Fat eh or i gi nal l y not i ced her f or ecl osur e sal e f orFebr uar y 24, 2012, t he day Gaspr om f i l ed i t s chapt er 11bankrupt cy case. I n l i ght of t he bankrupt cy f i l i ng and t heaut omat i c st ay, Fat eh appar ent l y cont i nued t he f or ecl osur e sal e.

4 The t r anscr i pt of t he Abandonment Hear i ng t hat Gaspr omat t ached t o i t s excer pt s of r ecor d does not appear t o be an

of f i ci al t r anscr i pt . Nonet hel ess, because bot h si des have r el i edon t hi s unof f i ci al t r anscri pt i n pr oceedi ngs hel d i n t hebankrupt cy cour t and on appeal , we wi l l accept t he t r anscr i pt aspr ovi di ng a general l y accurate account of t he Abandonment Hear i ngand t he bankr upt cy cour t s key comment s and r ul i ngs. See Fi r stSt . Hol di ngs NV, LLC v. MS Mi ssi on Hol di ngs, LLC ( I n r e Fi r st St .Hol di ngs NV, LLC) , 2012 WL 6050459, at *7 n. 12 ( mem. dec. 9thCi r . BAP 2012) ( accept i ng unof f i ci al t r anscr i pt under si mi l arci r cumst ances) .

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t hat Gaspr om s opposi t i on t o t he proposed abandonment was

mer i t l ess. Mor e i mpor t ant l y f or our pur poses, Fat eh asser t ed

t hat , i f t he cour t aut hor i zed t he Tr ust ee to abandon t he Gas

St at i on, t he abandonment ef f ect i vel y woul d t er mi nat e the 362aut omat i c st ay as t o the Gas St at i on and t hereby woul d enabl e

Fat eh t o pr oceed wi t h her pendi ng f or ecl osur e sal e agai nst t he

Gas St at i on. 3

The bankrupt cy cour t hel d t he hear i ng on t he proposed

abandonment on August 1, 2012 ( Abandonment Hear i ng) . 4 At t he

hear i ng, Gaspr om asser t ed t hat t he cour t shoul d cont i nue t he

Abandonment Hear i ng t o pr event any r ash or sudden act i ons by

t he credi t or s asser t i ng l i ens agai nst t he Gas St at i on. Hr g Tr .

( Aug. 1, 2012) at 6: 15- 8: 13. The bankrupt cy cour t r ej ect ed

Gasprom s argument f or a cont i nuance. As t he cour t put i t ,

Gasprom onl y sought t o pr event t he Tr ust ee f r om abandoni ng t he

Gas Stat i on so t hat t he aut omat i c st ay woul d cont i nue t o enj oi n

ot her par t i es cl ai mi ng an i nt er est i n t he Gas St at i on f r ompur sui ng t hei r r i ght s i n st at e cour t . The cour t f ur t her opi ned


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5 At t he concl usi on of t he hear i ng, t he cour t r ei t er at edi t s vi ew t hat , upon abandonment , t he aut omat i c st ay woul d nol onger pr ot ect t he Gas St at i on f r om f or ecl osur e:

MS. LI NTON [ Gasprom s counsel ] : Your honor , i f I %% i f

I may cl ar i f y. The%%

t he st ay remai ns i n ef f ect , evenaf t er t hi s [ Abandonment Or der ] .

[ COURT] : No. Once t he [ Gas St at i on] i s no l ongerpr oper t y of t he est at e, i f i t s abandoned, t he st ay ast o t he [Gas St at i on] t er mi nat es.

Hr g Tr . ( Aug. 1, 2012) at 12: 5- 10.

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t hat i t woul d be i mpr oper t o pr ohi bi t or del ay abandonment onl y

so t hat t he aut omat i c st ay woul d cont i nue t o cover t he Gas

St at i on and woul d cont i nue t o enj oi n i nt er est ed par t i es f r om

pur sui ng t hei r st at e l aw r i ght s and r emedi es.Af t er t he bankr upt cy cour t or al l y rul ed t hat i t woul d

aut hor i ze t he Tr ust ee s pr oposed abandonment , Gaspr omr equest ed

t hat t he cour t del ay ent r y of t he abandonment or der . I f t he

cour t i mmedi atel y ent ered t he abandonment order , Gasprom

expl ai ned, i t f ear ed t hat Fat eh woul d i mmedi at el y pr oceed wi t h a

f or ecl osur e sal e she had schedul ed f or t hat day. But t he cour t

decl i ned t o del ay ent r y of t he abandonment order and i nst ead

suggest ed t hat , i f Gaspr om sought t o f ur t her enj oi n Fat eh s

f or ecl osur e sal e, Gaspr om shoul d seek an i nj unct i on f r om a st at e

cour t . 5

On the same day as t he Abandonment Hear i ng, August 1, 2012,

t he bankr upt cy cour t si gned and ent ered t he Trust ee s pr oposed

f or m of order aut hor i zi ng the abandonment and decl ar i ng the Gas


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6 The Abandonment Or der was not appeal ed by ei t her si de andi s beyond t he scope of our r evi ew i n t hi s appeal .

6

Stat i on abandoned ( Abandonment Or der ) . 6 Even t hough t he

Abandonment Or der was si l ent r egardi ng t he aut omat i c st ay,

Fat eh s af f i l i at e and her successor i n i nt er est under t he Deed of

Tr ust Gr een Ener gy Hol di ngs ( Gr een) proceeded wi t h t hef or ecl osur e sal e l at er t hat same day.

Bef ore the Abandonment Hear i ng, on J ul y 9, 2012, t he Tr ust ee

i ssued a f i nal r epor t r ef l ect i ng t hat t her e wer e no est at e asset s

avai l abl e f or di st r i but i on. Ther eaf t er , on August 16, 2012, t he

bankr upt cy case was cl osed. As a combi ned r esul t of t he August

1, 2012 abandonment and t he August 16, 2012 case cl osur e, t he

aut omat i c st ay t er mi nat ed f or al l pur poses wi t h r espect t o t he

Gas Stat i on on August 16, 2012, a shor t t i me af t er t he

f or ecl osur e sal e. See 362( c) .

I n Sept ember 2012, Gasprom moved t o r eopen i t s bankr upt cy

case, so t hat i t coul d seek t o set asi de t he f or ecl osur e sal e and

commence cont empt proceedi ngs agai nst Fat eh, Gr een and ot her s f or

vi ol at i on of t he aut omat i c st ay. Accor di ng t o Gaspr om, t heAbandonment Or der caused t he est at e s i nt er est i n the Gas St at i on

t o r ever t t o i t , and not wi t hst andi ng t he cour t s comment s

r egardi ng the aut omat i c st ay at t he Abandonment Hear i ng,

362( a) ( 5) and ( a) ( 6) cont i nued t o pr ot ect Gaspr om f r om

Fat eh/ Gr een s f or ecl osur e. As a r esul t , Gaspr om asser t ed, when

Fat eh/ Gr een pr oceeded wi t h t he f orecl osur e sal e on August 1,

2012, t hey wi l f ul l y vi ol at ed t he st ay, and t he f or ecl osur e sal e

was voi d as a vi ol at i on of t he st ay.


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Fat eh opposed t he mot i on t o reopen, argui ng t hat Gasprom was

not ent i t l ed t o any of t he r el i ef t hat i t i nt ended t o pur sue upon

r eopeni ng. Rel yi ng pr i nci pal l y on a si ngl e Mi nnesota bankrupt cy

case, I n r e D Anni es Rest . , I nc. v. N. W. Nat . Bank of Mankat o( I n r e D Anni es Rest . , I nc. ) , 15 B. R. 828 ( Bankr. D. Mi nn. 1981) ,

Fat eh asser t ed t hat no aspect of t he st ay had survi ved t he ent r y

of t he Abandonment Or der . Accor di ng t o Fateh and I n r e D Anni es,

when pr opert y of t he est ate i s abandoned and t he debt or i s a

cor por at i on ( as opposed t o an i ndi vi dual debt or ) , t he stay no

l onger pr ot ect s ei t her t he debt or or t he subj ect pr oper t y f r om

l i en enf or cement . I d. at 831- 32.

The bankrupt cy cour t hel d a hear i ng on t he mot i on t o r eopen

on Oct ober 23, 2012. As a t hr eshol d mat t er , t he cour t gr ant ed

t he mot i on t o r eopen. No one has chal l enged t hat r ul i ng on

appeal . The cour t f ur t her hel d t hat t he par t i es had f ul l y

br i ef ed t he i ssues concer ni ng Gasprom s ant i ci pat ed mot i on t o set

asi de t he f or ecl osure and Gasprom s ant i ci pat ed mot i on f or anorder t o show cause why Fateh, Gr een and ot hers shoul d not be

hel d i n cont empt . Hence, t he cour t expl ai ned, i t was pr epar ed t o

di spose of t hose mat t er s as wel l .

The cour t essent i al l y adopted Fat eh s posi t i on t hat , upon

ent r y of t he Abandonment Or der , t he aut omat i c st ay no l onger

enj oi ned Fat eh/ Gr een s f or ecl osur e sal e of t he Gas St at i on. I n

so r ul i ng, t he cour t r el i ed on I n r e D Anni es and t wo ot her cases

f r om out si de t he Ni nt h Ci r cui t .

I n t he al t er nat i ve, t he cour t r ul ed t hat i t was pr epar ed t o

annul t he aut omat i c st ay. Even t hough nei t her par t y i n t hei r

paper s had di scussed or even ment i oned t he possi bi l i t y of


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annul ment of t he st ay, t he cour t r ul ed t hat , t o t he extent

necessar y t o val i dat e t he f or ecl osur e, i t woul d sua spont e

gr ant r el i ef f r om t he st ay r et r oact i vel y and nunc pr o t unc. Hr g

Tr . ( Oct . 23, 2012) at 4: 19- 23. I ndi cat i ng t hat i t had been i t si nt ent at t he Abandonment Hear i ng t o per mi t t he f or ecl osure sal e

t o i mmedi atel y pr oceed upon ent r y of t he Abandonment Or der , t he

cour t deemed i t pr oper t o f ur t her t hat i nt ent by sua spont e

annul l i ng t he st ay, as a bel t and suspender s measure. I d.

The bankrupt cy cour t t hereaf t er ent er ed a wr i t t en or der

gr ant i ng t he mot i on t o r eopen. I t al so ent ered on December 4,

2012, a separ at e wr i t t en or der denyi ng t he ant i ci pat ed mot i on t o

set asi de the f or ecl osur e and denyi ng t he ant i ci pat ed mot i on f or

an order t o show cause re cont empt . Gaspr omt i mel y appeal ed t he

t he December 4, 2012 or der .

JURISDICTION

The bankrupt cy cour t had j ur i sdi ct i on pur suant t o 28 U. S. C.

1334 and 157( b) ( 2) ( A) , and we have j ur i sdi ct i on under 28U. S. C. 158.

ISSUES

Di d the bankr upt cy cour t err when i t hel d i n the December 4,

2012 or der t hat Fat eh/ Gr een s f or ecl osur e sal e di d not vi ol at e

t he aut omat i c st ay?

Di d t he bankrupt cy cour t abuse i t s di scr et i on when i t

annul l ed t he aut omat i c st ay i n or der t o r et r oact i vel y val i dat e

Fat eh/ Gr een s f or ecl osur e sal e?

STANDARDS OF REVIEW

We revi ew de novo t he bankrupt cy cour t s i nt er pr et at i on of

t he Bankrupt cy Code. See Dani el son v. Fl or es ( I n r e Fl or es) ,


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- - F. 3d - - , 2013 WL 4566428, at *1 n. 4 ( 9t h Ci r . Aug. 29, 2013)

( en banc) .

A bankrupt cy cour t s deci si on t o r et r oact i vel y annul t he

aut omat i c st ay i s revi ewed f or an abuse of di scr et i on. Nat lEnvt l . Wast e Cor p. v. Ci t y of Ri ver si de ( I n r e Nat l Envt l . Wast e

Cor p. ) , 129 F. 3d 1052, 1054 ( 9t h Ci r . 1997) ; Wi l l i ams v. Levi ( I n

r e Wi l l i ams) , 323 B. R. 691, 696 ( 9t h Ci r . BAP 2005) .

A bankr upt cy cour t abuses i t s di scret i on i f i t s deci si on i s

based on an i ncor r ect l egal r ul e, or i f i t s f i ndi ngs of f act wer e

i l l ogi cal , i mpl ausi bl e, or wi t hout suppor t i n t he r ecor d. Uni t ed

St at es v. Hi nkson, 585 F. 3d 1247, 1262 ( 9t h Ci r . 2009) ( en banc) .

DISCUSSION

Gener al l y speaki ng, act i ons t aken i n vi ol at i on of t he

aut omat i c st ay ar e consi der ed voi d ab i ni t i o. Gr i f f i n v.

Wardr obe ( I n r e Wardr obe) , 559 F. 3d 932, 934 ( 9t h Ci r . 2009) ;

Schwar t z v. Uni t ed St at es ( I n r e Schwar t z) , 954 F. 2d 569, 571

( 9t h Ci r . 1992) . And cr edi t or s who at t empt t o enf or ce t hei rnonbankrupt cy r i ght s agai nst a debt or or i t s pr oper t y wi t hout

f i r st obt ai ni ng r el i ef f r om t he st ay may be hel d l i abl e f or

damages f or cont empt of cour t . See J ohnst on Envt l . Cor p. v.

Kni ght ( I n r e Goodman) , 991 F. 2d 613, 620 ( 9t h Ci r . 1993)

( hol di ng t hat a corporat i on may r ecover ci vi l cont empt damages

f or an aut omat i c st ay vi ol at i on) .

The bankrupt cy cour t here concl uded t hat t he August 1, 2012

f or ecl osur e sal e had not vi ol at ed t he aut omat i c st ay. The

bankr upt cy cour t r easoned t hat t he Tr ust ee s abandonment of t he

Gas St at i on ear l i er t hat same day had f ul l y t er mi nat ed t he st ay

as t o t he Gas St at i on. We di sagr ee. By oper at i on of l aw, t he


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August 1, 2012 Abandonment Or der onl y t ermi nat ed one aspect of

t he st ay, t he aspect pr ot ect i ng t he Gas St at i on as proper t y of

t he est at e. Upon abandonment , t he Gas St at i on no l onger was

pr oper t y of t he est at e; t i t l e t o t he Gas St at i on r ever t ed t oGasprom. See Catal ano v. Comm r , 279 F. 3d 682, 685 ( 9t h Ci r .

2002) . Hence, t he aspect of t he st ay pr ot ect i ng est at e pr oper t y

no l onger appl i ed. See 362( c) ( 1) .

But t he abandonment di d not by operat i on of l aw t ermi nate

t he aspect of t he st ay ar i si ng f r om 362( a) ( 5) , whi ch pr ot ect s

pr oper t y of t he debt or . Absent a r ul i ng by t he cour t gr ant i ng

r el i ef f r om st ay under 362( d) so as t o per mi t f or ecl osur e t o

occur , 362( a) ( 5) cont i nued t o pr ot ect t he Gas St at i on f r om

f or ecl osur e, at l east unt i l t he bankrupt cy cour t cl osed Gaspr om s

bankr upt cy case on August 16, 2012. See 362( c) ( 2) .

The canons of st at utor y i nter pret at i on support our

const r uct i on of 362( a) ( 5) . I n accor dance wi t h t hose canons,

our anal ysi s must begi n wi t h t he st at ut or y t ext . See Lami e v.Uni t ed St at es Tr ust ee, 540 U. S. 526, 534 ( 2004) . Our anal ysi s

al so must end wi t h t he st at ut or y text i f t he st at ut or y l anguage

i s unambi guous . . . and t he st at ut or y scheme i s coher ent and

consi st ent . Schi ndl er El evat or Cor p. v. Uni t ed St at es ex r el .

Ki r k, U. S. , 131 S. Ct . 1885, 1893 ( 2011) ( quot i ng Robi nson

v. Shel l Oi l Co. , 519 U. S. 337, 340 ( 1997) ) . Put anot her way,

when t he pl ai n and unambi guous l anguage of t he st at ute does not

l ead t o absur d r esul t s, t he cour t s onl y r ol e i s t o appl y t he

st at ut e accor di ng t o i t s t er ms. See Lami e, 540 U. S. at 534.

Sect i on 362( a) ( 5) extends t he pr ot ect i on of t he aut omat i c

st ay t o pr oper t y of t he debt or . Debt or i s a def i ned t er m i n


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t he Bankr upt cy Code, so ther e can be no doubt as t o what Congress

i nt ended t hat word t o mean. The t erm debt or means any person

or muni ci pal i t y f or whi ch a bankr upt cy case has been commenced.

See 101( 13) . I n t ur n, f or pur poses of t he Bankrupt cy Code, aper son i s expl i ci t l y def i ned as i ncl udi ng i ndi vi dual s,

par t ner shi ps and cor por at i ons. 101( 41) .

Nor can t here be any genui ne doubt what t he ent i r e phr ase

proper t y of t he debt or means. Wi t hout any l i mi t i ng or

qual i f yi ng l anguage i n t he st at ut or y t ext , t he phr ase must r ef er

t o pr oper t y i nt er est s hel d by any of t he above- r ef er enced t ypes

of debt or s. I f Congr ess want ed t o l i mi t pr oper t y of t he debt or

t o excl ude pr oper t y of cor por at e and par t ner shi p debt or s, i t onl y

woul d have needed t o add t he word i ndi vi dual bef ore t he word

debt or . Or i t coul d have used t he same phr aseol ogy i t used i n

362( c) ( 3) , i n whi ch i t r ef er s t o a debt or who i s an

i ndi vi dual . Congr ess obvi ousl y knew how t o l i mi t t he t er m

debt or when i t want ed t o do so. I t di d not so l i mi t t he phr asepr oper t y of t he debt or i n 362( a) ( 5) . We cannot and wi l l not

r ead t he addi t i onal wor d i ndi vi dual i nt o t he st at ut e, when i t

appear s t hat Congr ess af f i r mat i vel y and speci f i cal l y omi t t ed t hat

wor d. See Lami e, 540 U. S. at 538. I f Congr ess act ual l y i nt ended

t o so l i mi t 362( a) ( 5) , t hen i t wi l l need t o amend t he st at ut e.

I d. at 542.

Sever al bankrupt cy cases f r om bot h wi t hi n and wi t hout t he

Ni nt h Ci r cui t have si mi l ar l y i nt er pr et ed t he ef f ect of

abandonment on t he aut omat i c st ay. See, e. g. , Mut . I ns. Co. of

New Yor k v. Count y of Fresno ( I n r e D. Papagni Fr ui t Co. ) , 132

B. R. 42, 45 ( Bankr . E. D. Cal . 1991) ; Cor onado v. Beach Fur ni t ur e


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& Appl i ance ( I n r e Cor onado) , 11 B. R. 8, 9 ( Bankr . D. Ar i z.

1981) ; Gui l d Mor t gage Co. v. Cor ni st ( I n r e Cor ni st ) , 7 B. R. 118,

120 ( Bankr . S. D. Cal . 1980) ; see al so Gen. Mot or s Accept ance

Cor p. v. Bel l ( I n r e Bel l ) , 700 F. 2d 1053, 105758 ( 6t h Ci r .1983) ; Young v. Twi n St at es Fi n. , I nc. ( I n r e Young) , 2012 WL

1189900, at **5- 6 ( Bankr . S. D. Mi ss. 2012) ; I n r e Vi cent e, 446

B. R. 26, 29- 30 ( Bankr . D. Mass. 2011) ; Adams v. Hart conn Assocs. ,

I nc. ( I n r e Adams) , 212 B. R. 703, 710 ( Bankr . D. Mass. 1997) ; I n

r e Lai r , 235 B. R. 1, 21- 22 ( Bankr . M. D. La. 1999) ; Gassaway v.

Fed. Land Bank of New Or l eans ( I n r e Gassaway) , 28 B. R. 842, 846

( Bankr. N. D. Mi ss. 1983) ; I n r e Cr uset ur ner , 8 B. R. 581, 592

( Bankr . D. Ut ah 1981) . These cases st and f or t he gener al

pr oposi t i on t hat abandoned pr oper t y cont i nues t o be pr ot ect ed by

t he aut omat i c st ay t o t he extent i t has r ever t ed back t o t he

debt or , unl ess and unt i l t he case i s cl osed or di smi ssed, or a

di schar ge i s gr ant ed or deni ed. Accor d, H. R. Rep. No. 95- 595 at

343 ( 1977) ( st at i ng t hat , whi l e 362( c) ( 1) t er mi nat es t heaut omat i c st ay as t o est at e pr oper t y when t he subj ect pr oper t y i s

no l onger est at e pr oper t y, t hat pr ovi si on does not t er mi nat e t he

st ay agai nst pr oper t y of t he debt or i f t he pr oper t y l eaves t he

est at e and goes t o the debt or . ) .

Fat eh/ Gr een doubt l essl y woul d ar gue t hat t he above- ci t ed

cases ar e di st i ngui shabl e because t he debt or s i n these cases

t ypi cal l y wer e i ndi vi dual s and not cor por at i ons l i ke Gaspr om.

However , as we have expl ai ned above, t here i s no pr oper l egal

basi s f or excl udi ng cor por at e debt or s f r om t he pr ot ect i on

expl i ci t l y af f or ded t o al l debt or s under 362( a) ( 5) .

The r ul es of st at utor y const r uct i on r equi r e us t o


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addi t i onal l y determi ne whether t he meani ng we have der i ved f r om

t he t ext of t he st at ut e i s par t of a coher ent and consi st ent

st at ut or y scheme. See Schi ndl er El evat or Cor p. , U. S. at ,

131 S. Ct . at 1893 ( 2011) ; see al so Gal e v. Fi r st Frankl i n LoanSer vs. , 701 F. 3d 1240, 1244 ( 9t h Ci r . 2012) ( hol di ng t hat t he

cour t must consi der t he st at ut or y text i n cont ext and wi t h a vi ew

t o t he ent i r e st at ut or y scheme) .

Not hi ng i n t he cont ext or scheme of 362 r equi r es us t o

i nt er pr et pr oper t y of t he debt or di f f er ent l y. The t wo

ar t i cul at ed pur poses of t he aut omat i c st ay ar e br oad. See

Bur kar t v. Col eman ( I n r e Ti ppet t ) , 542 F. 3d 684, 689- 90 ( 9t h

Ci r . 2008) . Fi r st , t he st ay gi ves t he debt or r espi t e f r om any

credi t or ef f or t s t o enf or ce r i ght s agai nst t he debt or and i t s

pr oper t y. I d. And second, i t al so pr ot ect s t he credi t or s f r om

each ot her , as i t pr event s t he credi t or s f r om r aci ng t o be t he

f i r st t o cl ai m t he debt or s l i mi t ed asset s. I d. I n t ur n, t hese

t wo pur poses f aci l i t at e and pr omot e the tandem bankrupt cy goal sof a f r esh st ar t f or t he t he debt or and equi t abl e di st r i but i on

f or cr edi t or s. See i d.

I n l i ght of 362 s pur poses, t he scope of t he st ay gr ant ed

i n 362( a) i s i nt er pr et ed ver y br oadl y, and t he except i ons set

f or t h i n 362( b) ar e i nt er pr et ed nar r owl y. See Snavel y v.

Mi l l er ( I n r e Mi l l er ) , 397 F. 3d 726, 730- 31 ( 9t h Ci r . 2005)

( ci t i ng St r i nger v. Huet ( I n r e St r i nger ) , 847 F. 2d 549, 552 n. 4

( 9t h Ci r . 1988) ) . Thus, t he cont ext and st at ut or y scheme i n

whi ch Congr ess used t he phr ase proper t y of t he debt or i n

362( a) ( 5) suppor t s our r ef usal t o r ead i nt o t he t ext any

l i mi t i ng or qual i f yi ng l anguage that Congr ess chose not t o


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i ncl ude.

Rel yi ng on I n r e D Anni es, 15 B. R. at 831, t he bankrupt cy

cour t hel d t hat , af t er abandonment of est at e pr oper t y,

362( a) ( 5) onl y pr ot ect s a debt or f r om f or ecl osur e of t hatpr oper t y i f t hat debt or i s an i ndi vi dual . We decl i ne t o f ol l ow

I n r e D Anni es. I n r e D Anni es i nvoked cer t ai n pol i cy concer ns

i n an at t empt t o j ust i f y a nar r ow i nt er pr et at i on of 362( a) ( 5) ,

an i nt er pr et at i on t hat woul d excl ude cor por at e and par t ner shi p

debt or s f r om t he pr ot ect i ons af f or ded under 362( a) ( 5) . But I n

r e D Anni es nar r ow i nt er pr et at i on i s i nconsi st ent wi t h t he pl ai n

r eadi ng of t he st at ut or y text and wi t h t he st at ut or y scheme and

cont ext we descr i bed above. Even i f t her e wer e some val i di t y t o

I n r e D Anni es pol i cy concer ns, t hose concer ns do not per mi t us

t o al t er t he meani ng of Congr ess s pl ai n and unambi guous

st at ut or y l anguage. See Lami e, 540 U. S. at 538. As t he Ni nt h

Ci r cui t has not ed, t he Supr eme Cour t f r owns on cour t s t hat

at t empt t o modi f y unambi guous pr ovi si ons of t he Bankr upt cy Codef or pol i cy r easons. See Sher wood Par t ner s, I nc. v. Lycos, I nc. ,

394 F. 3d 1198, 1202 n. 4 ( 9t h Ci r . 2005) ( ci t i ng Har t f or d

Under wr i t er s I ns. Co. v. Uni on Pl ant er s Bank, N. A. , 530 U. S. 1,

14 ( 2000) ) .

The bankrupt cy cour t al so r el i ed on Dewsnup v. Ti mm ( I n r e

Dewsnup) , 908 F. 2d 588, 590 ( 10t h Ci r . 1990) , af f d, 502 U. S. 410

( 1992) . At t he Oct ober 23, 2012 hear i ng, t he bankrupt cy cour t

r eci t ed and r el i ed upon t he f ol l owi ng l anguage f r om Dewsnup:

[ Sect i on 554( a) ] al l ows abandonment of pr oper t y t hati s bur densome to the est at e or t hat i s ofi nconsequent i al val ue and benef i t t o t he est at e. Propert y abandoned under t hi s sect i on ceases t o be part


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of t he est at e. I t r ever t s t o t he debt or and st ands asi f no bankr upt cy pet i t i on was f i l ed.

I d. at 590 ( ci t at i ons omi t t ed and emphasi s added) .

We do not di sput e t he corr ect ness of t hi s st at ement .I ndeed, t he Ni nt h Ci r cui t Cour t of Appeal s has made si mi l ar

st at ement s. See, e. g. , Cat al ano, 279 F. 3d at 685 ( Upon

abandonment , t he debt or s i nt er est i n t he pr oper t y i s r est or ed

nunc pr o t unc as of t he f i l i ng of t he bankr upt cy pet i t i on. ) .

These st at ement s r ef l ect t he unr emar kabl e proposi t i on t hat , af t er

an abandonment of est ate pr oper t y, t he debt or hol ds t he same

l egal i nt er est i n t he abandoned pr oper t y that i t hel d at t he t i me

of i t s bankrupt cy f i l i ng. The bankrupt cy cour t her e mi sconst r ued

t hese st at ement s. I t conf l at ed t he i ssue of t he debt or s l egal

i nt er est i n abandoned pr oper t y wi t h t he i ssue of t he i mpact of

abandonment on t he aut omat i c st ay.

I n sum, t he bankr upt cy cour t err ed as a mat t er of l aw when

i t concl uded t hat , i mmedi atel y upon abandonment , t he aut omat i cst ay no l onger enj oi ned Fat eh/ Gr een f r om f or ecl osi ng on t he Gas

St at i on.

The bankrupt cy cour t s December 4, 2012 or der al so provi ded

f or annul ment of t he aut omat i c st ay, f or t he nunc pr o t unc

t er mi nat i on of t he st ay as t o the Gas St at i on i n or der t o

r et r oact i vel y val i dat e t he f or ecl osur e sal e. The bankr upt cy

cour t r el i ed on t hi s annul ment as an al t er nat e basi s f or

concl udi ng t hat t he f or ecl osur e sal e di d not vi ol at e t he

aut omat i c s t ay.

I n deci di ng whet her t o annul t he st ay, a bankrupt cy cour t

or di nar i l y shoul d exami ne t he ci r cumst ances of t he speci f i c case


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and bal ance t he equi t i es of t he par t i es r espect i ve posi t i ons.

See Nat l Envt l . Wast e Cor p. , 129 F. 3d at 1055; Fj el dst ed v. Li en

( I n r e Fj el dst ed) , 293 B. R. 12, 24 ( 9t h Ci r . BAP 2003) . I n

bal anci ng t he equi t i es, t he cour t may consi der a number ofdi f f er ent f actor s. I n r e Fj el dst ed, 293 B. R. at 24- 25. Whi l e

any speci f i c l i st of r el evant f actor s i s subj ect t o modi f i cat i on

dependi ng on t he ci r cumst ances of t he par t i cul ar case, I n r e

Fj el dst ed suggest ed t hat t he f ol l owi ng l i st of f act or s coul d be

used as a gener al gui del i ne or f r amewor k f or assessi ng t he

equi t i es:

1. Number of f i l i ngs;2. Whet her , i n a r epeat f i l i ng case, t he ci r cumst ancesi ndi cat e an i nt ent i on t o del ay and hi nder cr edi t or s;3. A wei ghi ng of t he extent of pr ej udi ce t o cr edi t or sor t hi r d par t i es i f t he st ay r el i ef i s not mader et r oact i ve, i ncl udi ng whet her har m exi st s t o a bonaf i de pur chaser ;4. The Debt or s over al l good f ai t h ( t ot al i t y ofci r cumst ances t est ) ;5. Whet her cr edi t or s knew of st ay but nonet hel ess t ookact i on, t hus compoundi ng t he pr obl em;6. Whether t he debt or has compl i ed, and i s ot herwi se

compl yi ng, wi t h t he Bankr upt cy Code and Rul es;7. The r el at i ve ease of r est or i ng par t i es t o t he st at usquo ant e;8. The cost s of annul ment t o debt or s and cr edi t or s;9. How qui ckl y credi t ors moved f or annul ment , or howqui ckl y debt or s moved t o set asi de t he sal e orvi ol at i ve conduct ;10. Whet her , af t er l ear ni ng of t he bankrupt cy,cr edi t or s pr oceeded t o t ake st eps i n cont i nuedvi ol at i on of t he st ay, or whet her t hey movedexpedi t i ousl y t o gai n r el i ef ;11. Whether annul ment of t he st ay wi l l causei r r epar abl e i nj ur y t o t he debt or ;

12. Whet her st ay r el i ef wi l l pr omot e j udi ci al economyor ot her ef f i ci enci es.

I d. at 25 ( ci t at i ons omi t t ed) .

Her e, t he bankrupt cy cour t i dent i f i ed onl y a si ngl e f act or

as j ust i f yi ng annul ment of t he st ay: because i t pr evi ousl y had

i ndi cated at t he Abandonment Hear i ng that Fat eh/ Gr een coul d


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7 I n l i ght of our deci si on, we decl i ne t o expr ess any

opi ni on at t hi s t i me regar di ng t he pr opr i et y of t he bankrupt cycour t sua spont e gr ant i ng annul ment . Of cour se, t he cour t onr emand i s not r equi r ed t o f ur t her consi der annul ment unl essFat eh/ Gr een shoul d see f i t t o f or mal l y r equest such r el i ef byf i l i ng an appr opr i at e mot i on. Nor woul d i t be necessar y f or t hecour t t o reopen t he bankrupt cy case i n or der t o addr ess such amot i on. See Aheong v. Mel l on Mor t gage Co. ( I n r e Aheong) , 276B. R. 233, 242 ( 9t h Ci r . BAP 2002) ( hol di ng t hat bankrupt cy cour thad anci l l ar y j ur i sdi ct i on t o deci de mot i on t o annul t he st ay

( cont i nued. . . )

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pr oceed wi t h t he f or ecl osur e, i t sua spont e concl uded t hat

annul ment shoul d be gr ant ed. And i t r eached t hi s concl usi on

wi t hout any advance not i ce t o t he par t i es and wi t hout any

oppor t uni t y f or t he par t i es t o submi t any evi dence or ar gumentconcer ni ng t he equi t i es.

I n bal anci ng t he equi t i es, a si ngl e f act or may so out wei gh

t he consi der at i on of al l ot her f act or s t hat t he si ngl e f act or may

be di sposi t i ve. I d. Her e, however , t he r ecor d r ef l ect s t hat t he

bankrupt cy cour t di d not act ual l y at t empt t o wei gh anythi ng. I n

ot her wor ds, t he bankrupt cy cour t di d not ut i l i ze t he appr opr i at e

l egal f r amewor k because ther e i s no i ndi cat i on t hat i t at t empt ed

t o bal ance t he equi t i es. Nor di d i t gi ve t he par t i es any

oppor t uni t y t o devel op t he r ecor d concer ni ng t he equi t i es. As a

r esul t , t he bankrupt cy cour t abused i t s di scr et i on when i t r ul ed

t hat t he st ay shoul d be annul l ed. See Hi nkson, 585 F. 3d at 1262

( hol di ng t hat t r i al cour t abuses i t s di scr et i on i f i t does not

i dent i f y t he cor r ect l egal r ul e t o appl y) .On remand, t he bankr upt cy cour t must gi ve t he part i es an

oppor t uni t y t o br i ef and pr esent evi dence r egar di ng t he equi t i es

of gr ant i ng an annul ment i f t he cour t i s i nt ent on movi ng

f or war d, sua spont e, wi t h st ay annul ment pr oceedi ngs. 7


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7( . . . cont i nued)wi t hout r eopeni ng the bankrupt cy case or vacat i ng the casedi smi ssal or der ) .

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CONCLUSION

For t he reasons set f or t h above, t he December 4, 2012 or der

i s VACATED, and thi s mat t er i s hereby REMANDED f or f ur t her

pr oceedi ngs consi st ent wi t h t hi s deci si on.

in re: gasprom, inc., 9th cir. bap (2013)

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