Evergreen Financial Group, L.P. v. City National Bank

Filing 13

ORDER GRANTING 3 APPELLEE'S MOTION TO DISMISS APPEAL AS MOOT. Signed by Judge Beth Labson Freeman on 6/2/2016. (blflc1S, COURT STAFF) (Filed on 6/2/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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EVERGREEN FINANCIAL GROUP, L.P.,

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Case No. 16-cv-00430-BLF

Appellant,
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v.
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CITY NATIONAL BANK,

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Appellee.

ORDER GRANTING APPELLEE’S
MOTION TO DISMISS APPEAL AS
MOOT
[Re: ECF 3]

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United States District Court
Northern District of California

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Debtor/Appellant Evergreen Financial Group, L.P. (“Evergreen”), has appealed an order of

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the Bankruptcy Court granting Appellee City National Bank’s (“the Bank”) motion for relief from

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stay. See Notice of Appeal, ECF 1-1. The Bank moves to dismiss the appeal as moot. See

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Motion to Dismiss, ECF 3. For the reasons discussed below, the Bank’s motion is GRANTED

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and the appeal is DISMISSED AS MOOT.1
I.

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BACKGROUND
Evergreen filed a Chapter 11 Petition on March 25, 2015. See Pet., ECF 1 in BR 15-50981

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SLJ. The Bank sought relief from the automatic stay to allow it to pursue its rights and remedies

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with respect to residential real property located at 174 Spendrift Road, Carmel, California

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(“Spendrift Property”). See Motion for Relief from Stay, ECF 64 in BR 15-50981 SLJ. The

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Bankruptcy Court granted the motion for relief from stay on the record at a hearing on December

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8, 2015 and issued a written order on December 18, 2015. See Order on Motion for Relief from

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Stay, ECF 71 in BR 15-50981 SLJ. The written order provides that the Bank “shall have relief

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from stay, effective as of January 7, 2016, to exercise its rights and remedies with respect to the

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Property.” Id. Evergreen filed a Notice of Appeal of that order on December 21, 2015. See

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Notice of Appeal, ECF 72 in BR 15-50981 SLJ. The appeal initially was transmitted to the

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The Court took the motion to dismiss under submission without oral argument. See Order
Submitting Motion Without Oral Argument; and Vacating Hearing, ECF 11.

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Bankruptcy Appellate Panel, but subsequently it was transferred to the District Court and assigned

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to the undersigned judge. See Notice of Transfer of Appeal to District Court, ECF 1.
The Bankruptcy Court denied Evergreen’s motion for a stay of the order for relief from the

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automatic stay. See Order Denying Ex Parte Motion for Stay Pending Appeal, ECF 88 in BR 15-

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50981 SLJ. On January 7, 2016, the Bank concluded a non-judicial foreclosure sale at which it

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purchased the Spendrift Property for a credit bid in excess of $6.3 million. On February 18, 2016,

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the Bank moved the Bankruptcy Court for relief from stay to permit it to remove Evergreen and

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Evergreen’s personal property from the Spendrift Property. See Motion for Relief From Stay,

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ECF 97 in BR 15-50981 SLJ. The Bankruptcy Court entered an order granting that motion on

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March 1, 2016. See Order Granting Relief from Stay, ECF 103 in BR 15-50981 SLJ. Six days

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United States District Court
Northern District of California

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later, the Bankruptcy Court dismissed the bankruptcy case. See Order Dismissing Chapter 11

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Bankruptcy Case, ECF 104 in BR 15-50981 SLJ. Evergreen did not appeal the order of dismissal,

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which has become final.
The Bank now seeks dismissal of Evergreen’s appeal of the Bankruptcy Court’s December

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2015 order granting relief from stay. Following briefing on the motion and its submission for

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disposition, the Bank filed a Supplemental Brief notifying the Court of a recent decision issued by

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the Ninth Circuit Court of Appeals, In the Matter of Castaic Partners II, LLC, --- F.3d ---- (9th

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Cir. 2016), 2016 WL 2957150 (9th Cir. May 23, 2016). Evergreen did not file a response to the

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supplemental brief within the time provided by the Federal Rules of Bankruptcy Procedure. See

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Fed. R. Bankr. P. 8014(f) (any response to supplemental authority must be filed within seven days

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of service).

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II.

DISCUSSION
The present case is indistinguishable in all material respects from the Ninth Circuit’s recent

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decision in Castaic, which mandates dismissal of Evergreen’s appeal as moot. Castaic defaulted

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on loans secured by parcels of real property in Los Angeles County, California, and subsequently

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filed multiple related bankruptcy cases. Castaic, 2016 WL 2957150, at *1. DACA, which held

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the beneficial interests in the loans, moved the bankruptcy court for relief from the automatic stay

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so that it could proceed with foreclosure sales of the properties. Id. The bankruptcy court granted
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the requested relief, and Castaic appealed that order. Id. While that appeal was pending, DACA

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foreclosed on the properties and acquired them by credit bids at the foreclosure sales; and the

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bankruptcy court dismissed Castaic’s bankruptcy cases on the ground that the real properties had

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been Castaic’s only significant assets. Id. Castaic did not appeal the dismissal orders, which

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became final fourteen days later. Id.; see also Fed. R. Bankr. P. 8002(a)(1) (“a notice of appeal

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must be filed with the bankruptcy clerk within 14 days after entry of the judgment, order, or

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decree being appealed”).
The Ninth Circuit held that under those circumstances, Castaic’s appeal of the bankruptcy

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court’s order granting relief from the automatic stay was constitutionally moot. Castaic, 2016 WL
2957150, at *2. The Ninth Circuit held that “[i]n a bankruptcy appeal, when the underlying

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United States District Court
Northern District of California

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bankruptcy case is dismissed and that dismissal is allowed to become final, there is likely no

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longer any case or controversy with respect to issues directly involving the reorganization of the

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estate.” Id. (internal quotation marks and citation omitted). The Court went on to state that

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“[a]bsent an appeal from the dismissal orders, we have no power to restore the bankruptcy

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proceeding.” Id. The Court concluded by observing that, “Had Castaic appealed from the order of

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dismissal, this Court might have had some power to grant effective relief. Absent such power, this

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appeal does not present a justiciable case or controversy.” Id. at *3.
As did the debtor/appellant in Castaic, Evergreen appealed the Bankruptcy Court’s order

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granting relief from the automatic stay, but did not appeal the subsequent order dismissing the

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bankruptcy case that was filed while that appeal was pending. The order of dismissal was issued

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on March 7, 2016 and became final fourteen days later. Evergreen’s appeal therefore must be

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dismissed as moot under the holding of Castaic.

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III.

ORDER

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(1)

Appellant’s motion to dismiss the appeal as moot is GRANTED;

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(2)

The appeal is DISMISSED AS MOOT; and

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(3)

The Clerk shall close the file.

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Dated: June 2, 2016

______________________________________
BETH LABSON FREEMAN
United States District Judge
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