In Re: Alexandra Spiegel

Filing 18

ORDER re: Appeal from Bankruptcy Court, signed by Judge Garland E. Burrell, Jr., on 1/21/15 ORDERING that the Bankruptcy Court's order is AFFIRMED. CASE CLOSED (Kastilahn, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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BLAIR WALLACE,

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No. 2:14-CV-00576-GEB

Appellant,

Adv. Proc. 08-02364-B

v.

Bankruptcy No. 08-29045-B-7

WRIGHT GRANDCHILDREN, LP;
MICHAEL WRIGHT,

BAP No. EC-14-1060

Appellees.

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APPEAL FROM BANKRUPTCY COURT

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Appellant Wallace (“Wallace”), as Plaintiff Spiegel‟s

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(“Spiegel”) successor in interest, appeals the Bankruptcy Court‟s

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order that granted Appellees Wright Grandchildren L.P.‟s (“WG”)

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and Michael Wright‟s (“Wright”) declaratory relief and judicial

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foreclosure claims, and denied Plaintiff Spiegel‟s counterclaim

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for breach of contract. For the reasons set forth below, the

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Bankruptcy Court‟s decision is AFFIRMED.
I.

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A

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district

STANDARD OF REVIEW
court

reviews

a

Bankruptcy

Court‟s

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“[f]indings of fact . . . under the clearly erroneous standard of

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review

and

legal

conclusions

are
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reviewed

de

novo.”

In

re

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Mortgage Store, Inc., ___F.3d___, 2014 WL 6844630, at *2 (9th

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Cir. Dec. 5, 2014).

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“A finding is „clearly erroneous‟ when
although there is evidence to support it, the
reviewing court on the entire evidence is
left with the definite and firm conviction
that a mistake has been committed.” This
standard plainly does not entitle a reviewing
court to reverse the finding of the trier of
fact simply because it is convinced that it
would have decided the case differently.

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Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573 (1985)

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(quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395

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(1948)).

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II. FACTUAL BACKGROUND AND PROCDURAL HISTORY

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Wallace‟s predecessor in interest and wife, Spiegel,

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owned two proprieties in Placer County, California: an 80-acre

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waterski lake and fish farm (the “Improved Parcel”) and an 80-

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acre unimproved parcel (the “Unimproved Parcel”) adjacent to the

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Improved Parcel. On June 1, 2006, Spiegel used the Parcels as

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security for a $1.7 million loan from Wright, who was acting as

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WG‟s

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release

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Parcel:

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managing
clause

partner.
in

the

The

agreement

event

that

included

Spiegel

sold

the
the

following
Improved

Beneficiary agrees to release . . . [the
Improved Parcel] provided that the loan to
value ratio of . . . [the Unimproved Parcel]
does not exceed 50% of the existing loan
balance. . . . If [the Improved Parcel] . . .
sells, the maximum dollar amount the Borrower
has to pay is $150,000, but in no event more
than is required to reduce the loan to value
ratio to less than 50% on [the Unimproved
Parcel]. (SRE 10.)
In

January

2008,

Spiegel

defaulted

on

the

Note.

At

approximately the same time, she entered talks with a third party
2

1

about

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communicated with Wright about the potential sale in February and

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March 2008 through both her attorney and Wallace. In March 2008,

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Spiegel‟s counsel, Wallace, and Wright had an in-person meeting

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about the Improved Parcel. The parties dispute whether during

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this

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releasing the Improved Property.

selling

meeting

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On

a

portion

Wright

April

was

2,

of

the

offered

2008,

Improved

$150,000

Spiegel

Parcel.

in

executed

Spiegel

exchange

a

final

for

sales

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agreement with a third party selling a one-half interest in the

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Improved Property for $1.5 million. Spiegel‟s attorney notified

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Wright‟s attorney of the sale on April 8. Wright and WG then made

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a demand for the full amount owned on the loan, in light of

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Spiegel‟s default, and filed a Complaint in state court seeking

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judicial

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cross complaint for breach of contract in which Spiegel alleged

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Wright and WG failed to perform under the release clause of the

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agreement.

Spiegel

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which

case

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consented to the Bankruptcy Court‟s jurisdiction.

the

foreclosure

and

declaratory

eventually

was

removed

filed
to

relief.

for

Spiegel

bankruptcy,

Bankruptcy

Court.

filed

a

following

The

parties

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A trial was conducted in May 2010. The disputed trial

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issue was the interpretation of the release clause. Wright and WG

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argued the release clause did not require the release of the

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Improved Property unless Spiegel agreed to maintain the loan to

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value ratio on the Unimproved Property. Spiegel argued she was

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not

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Unimproved Property so long as she tendered $150,000 to Wright.

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The Bankruptcy Court ruled in favor of Wright and WG. Wallace

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then purchased Spiegel‟s appeal rights from her bankruptcy estate

required

to

maintain

the

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loan

to

value

ratio

on

the

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on November 23, 2010.

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Wallace appealed, and the Bankruptcy Court‟s ruling was

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reversed by the Ninth Circuit. The Ninth Circuit held that the

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terms of the release clause were unambiguous and Spiegel had the

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right to release the Improved Parcel in the event of a sale of

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that property by offering to pay the maximum fixed payment of

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$150,000 with no requirement to “maintain” the loan to value

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ratio on the Unimproved Property.

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On

remand,

during

Wright

conducted

and

WG‟s

a

second

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judicial foreclosure and declaratory relief, and denied Spiegel‟s

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cross-complaint for breach of contract, finding that no tender

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had ever been made.

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granted

Court

trial,

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it

Bankruptcy

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which

the

request

The court entered its findings of fact orally, stating
in part:

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I don‟t think there was any proof, per se,
that [Wallace] had enough money at any given
time to tender $150,000.

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. . . .

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I don‟t think there was the money available
at any time to perform, and a tender does
require, as I understand it, a present
ability to perform. A tender is ineffective
if the party making the offer is actually
unwilling or unable to perform at the time of
the tender. Thus, when the offer is to pay
money, it must appear that the offeror has
the money to pay, and the tender is
ineffective if the offeror doesn‟t have the
present ability to perform the tender if it
is accepted. Well, I didn‟t have any proof
that the money was available, and as I said,
I had some doubt about what Mr. Wallace was
testifying to.

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for

(RT-2, Vol. 2, pg. 120, 124.)
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III. DISCUSSION

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A.

Ability to Perform

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Wallace argues that from February 12, 2008, through

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March 24, 2008, Spiegel made four valid offers to tender $150,000

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to Wright in exchange for a release of the deed of trust on the

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Improved Parcel. He argues the Bankruptcy Court clearly erred

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when it found Spiegel‟s tenders were not valid because she did

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not

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contends

have

access
the

to

$150,000

court‟s

when

findings

the

are

offers

were

contradicted

by

made,

and

Wallace‟s

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testimony that he had access to the money as a result of “a

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substantial

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(“Mot.”) 21, 23, ECF No. 4.) Wallace argues the Bankruptcy Court

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should not have discredited his trial testimony because it was

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supported by his prior deposition testimony and by bankruptcy

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documents created prior to trial. (Mot. 23.)

consulting

contract.”

(Appellant‟s

Opening

Br.

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Wright counters that the Bankruptcy Court acted within

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its discretion when it discredited Wallace‟s testimony because

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although

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presented

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Wallace and Spiegel did not have access to $150,000 at the time

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of the alleged tenders. (Opening Br. Of Appellees (“Opp‟n”) 21,

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ECF No. 7.)

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critical
at

the

Cal.

to

Spiegel‟s

first

Civ.

trial,

Code

§

case,
and

1495

the

other

testimony
evidence

prescribes:

“An

was

not

suggested

offer

of

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performance is of no effect if the person making it is not able

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and

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section 1495 [of the California Civil Code, a person] . . . must

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. . . be[] able to tender payment.” In re Worcester, 811 F.2d

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1224, 1230 (9th Cir. 1987). Ability to tender payment can be

willing

to

perform

according

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to

the

offer.”

“To

satisfy

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demonstrated by showing access to either assets or credit in the

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required

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(1941)

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presented evidence that he “could have borrowed” the required

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amount).

amount.
(finding

Backus

v.

plaintiff

Sessions,

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was

to

able

Cal.

2d

perform

380,

380-90

because

he

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In the second trial, Wallace testified that he offered

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to pay Wright $150,000 during the March 2008 meeting and that he

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had access to the money “probably . . . since the first of

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February, maybe sooner.” (RT-2, Vol. 1 p. 124.)

Wright gave

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conflicting testimony during the second trial testifying that

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Wallace did not offer to pay him $150,000 at the March 2008

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meeting.

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The
the

oral

findings

fact

the

of

conflict

trial

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Wallace‟s testimony and Wright‟s testimony, and the conclusion

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that

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Bankruptcy Court stated:

testimony

was

more

a

second

included

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acknowledgment

during

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Wright‟s

court‟s

of

credible.

between

Specifically,

the

It‟s two people, conflict in the evidence, I
have to decide who is telling the truth ....
I heard the testimony of both parties. As so
often happens, I tend to believe most of the
witnesses, but in this situation I believe
Mr. Wright. . . . Because I had to make a
previous choice about who was telling the
truth,
unfortunately
Mr.
Wallace‟s
credibility was put into doubt, and I don‟t
think there was any proof, per se, that he
had enough money at any given time to tender
$150,000.

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(RT-2, Vol. 2 p. 120.)

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The

Bankruptcy

Court

explained

Wallace‟s

credibility

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had been “put into doubt” because the information about which he

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testified

during

the

second

trial
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was

“crucial”

to

Spiegel‟s

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claim, yet this information was not presented at the first trial.

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During the first trial, Wallace did not mention he had access to

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$150,000 at the time of the March 2008 meeting or that he offered

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to write Wright a check for $150,000 in the March 2008 meeting.

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The court stated it “did not understand why” this information had

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been presented for the first time at such a late stage of the

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proceedings. (RT-2 Vol. 2, p. 119-20.)

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The
consistent

Bankruptcy

with

other

Court‟s

credibility

evidence

submitted

determination

at

trial.

was

Although

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Wallace testified that he had access to the money “probably . . .

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since the first of February, maybe sooner,” (RT-2 Vol. 1, pg.

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124), a letter Spiegel‟s counsel sent to Wright dated February

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27, 2008, states: “My client by way of this letter is tendering

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to your client $150,000, which would be available within two or

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four

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Excerpts (“SRE”) 15) (emphasis added). This letter suggests the

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money was not available in February as Wallace testified during

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the second trial.

weeks

from

the

date

of

this

letter.”

(Appellant‟s

R.

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Further, the deposition testimony and documents Wallace

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cites as support for his trial testimony do not demonstrate that

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the Bankruptcy Court clearly erred when finding Wallace lacked

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access

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evidence does not show the funds were available in those months.

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During Wallace‟s deposition, counsel asked him in which months he

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received

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responded: “I don‟t know” and “I don‟t want to speculate.” (SRE

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23.) A bankruptcy document on which Wallace relies indicates he

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received payment on a construction consulting contract, but it

to

$150,000

payment

in

from

February

the

and

March

consulting

7

2008,

contract

since

and

this

Wallace

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does not indicate that the payment was made in or before March

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2008. (SRE 24.)

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In light of the evidence in the record, the Bankruptcy

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Court‟s determination that Spiegel did not have access to the

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$150,000 required to make a valid tender has not been shown to be

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clearly erroneous.

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B.

Waiver

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Wallace

argues

Wright

and

WG

waived

objection

to

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Spiegel‟s tender on the ground that she did not have access to

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$150,000 at the time of the alleged tender because Wright did not

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raise this objection when Spiegel tendered the money; and when “a

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party does not object to the form of the tender or the ability to

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pay

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consider the offer, the party waives its ability to raise such

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objections at a later date.” (Mot. 13.) Wallace cites Rose v.

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Hecht, 94 Cal. App. 2d 662, 665-666 (1949) in support of this

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argument.

at

the

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of

the

offer

but

instead

simply

refuses

to

The Rose court held:
Where a creditor declines to negotiate with
his debtor concerning an offer of payment and
without making an objection to the form of
tender or inquiring as to the latter‟s
ability to pay the obligation, but merely
refuses to consider the offer to pay, it may
be assumed that any further attempt by the
latter would meet with like rebuff.

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time

Rose, 94 Cal. App. 2d at 665-666.
However, Wallace has not shown this law is applicable
since

the

trial

evidence

demonstrates

that

through

counsel,

Spiegel and Wright engaged in written communication and in-person
meetings regarding the proposed sale of the Improved Parcel and
the release clause during February and March 2008. (SRE 13-18)
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(letters between Spiegel‟s counsel and either Wright or Wright‟s

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counsel dated February 12, 2008 (SRE 13), February 20, 2008 (SRE

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14), February 27, 2008 (SRE 15), February 28, 2008 (SRE 16), and

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March

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Spiegel‟s counsel and Wright‟s counsel to set up an in-person

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meeting on March 10, 2008 (SRE 17.)) Therefore, Wallace has not

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shown that this argument justifies reversal.

24,

2008

8

C.

9

Wallace

(SRE

18));

(e-mail

correspondence

between

Refusal
argues

that

even

if

Spiegel‟s

tender

was

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ineffective, she had no legal obligation to tender the money to

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Appellees because Wright stated he would refuse to release the

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Improved Property even if Spiegel tendered $150,000; and under

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California Code of Civil Procedure § 2074 if a party refuses an

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offer to perform, that refusal entirely excuses performance.

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Section 2074 of the Code of Civil Procedure
provides that an offer in writing to pay a
sum of money if not accepted, is equivalent
to actual production and tender of the money
[;] th[is] section[]
do[es] not affect
section [] 1495 of the Civil Code which
require[s] an offer to be made in good faith
and that the offeror must be willing and able
to perform according to the offer.

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Backus v. Sessions, 17 Cal.2d 380, 389 (1941).

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Section 2074 does not negate the requirement that a

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party

have

the

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Therefore, Wallace has not shown that this argument justifies

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reversal.

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D.

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Wallace

funds

necessary

to

make

a

bona

fide

tender.

Second Trial
also

argues

the

Bankruptcy

Court

“erred

in

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holding a second trial on the issues of tender and sale” since

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“there was no reason for a second trial.” (Mot. 29.)
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Wright counters that a second trial was appropriate

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because the Ninth Circuit “specifically directed the [B]ankruptcy

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[C]ourt to make any necessary findings to resolve the competing

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claims of the parties” and the Bankruptcy Court was acting in the

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scope of the Ninth Circuit‟s remand order when it held the second

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trial. (Opp‟n 29.)

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The Bankruptcy Court stated during the first trial it

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focused

on

the

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interpreted.

issue

(RT-2,

of

Vol.

how
2,

the
p.

release

118:1-8.)

clause
The

was

Ninth

to

be

Circuit

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reversed the Bankruptcy Court‟s interpretation of the release

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clause and remanded the matter holding that the release clause

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“required

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Improved Property, to release the Improved Property if Spiegel

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tendered $150,000.” (SER 8) (emphasis added.) The Ninth Circuit

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states in the reversal order:

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Grandchildren

L.P.,

upon

the

sale

Having considered the plain language of the
contract, as well as the evidence offered to
prove the intention of the parties, see
Jones-Hamilton Co. v. Beazer Materials &
Services, Inc., 973 F.3d 688, 692 (9th Cir.
1992), we hold that the release clause in the
contract
between
Spiegel
and
Wright
Grandchildren L.P. is not ambiguous. It
should therefore be interpreted in accordance
with its plain language, giving effect to all
of its provisions. Cal. Civ. Code § 1638
(Deering 2012); Cal. Civ. Proc. Code § 1858
(Deering 2012). The clause required Wright
Grandchildren L.P., upon the sale of the
Improved Property, to release the Improved
Property
if
Spiegel
tendered
$150,000.
Consistent with this decision, the case is
reversed and remanded for the bankruptcy
court to make any necessary findings to
resolve the competing claims of the parties.
REVERSED AND REMANDED.

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Wright

(SRE 8).
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of

the

1

The

second

trial

conducted

by

the

Bankruptcy

Court

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concerning the issue of whether “Spiegel tendered $150,000” falls

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within the Ninth Circuit‟s remand directive that the Bankruptcy

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Court

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claims of the parties.” Therefore, Wallace has not shown the

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Bankruptcy Court erred in holding a second trial.

“make

any

necessary

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IV.

findings

to

resolve

the

competing

CONCLUSION

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For the stated reasons, the Bankruptcy Court did not

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clearly err when it found Spiegel never made a valid tender to

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Appellees. Therefore, the Bankruptcy Court‟s order is AFFIRMED.

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Dated:

January 21, 2015

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