Opinion
NOT FOR PUBLICATION
Argued and Submitted at Pasadena, California, March 19, 2010
Appeal from the United States Bankruptcy Court for the Central District of California. Bk. No. LA 08-23774 SB. Hon. Samuel L. Bufford, Bankruptcy Judge, Presiding.
Before DUNN, HOLLOWELL and PERRIS, [ Bankruptcy Judges.
Hon. Elizabeth L. Perris, Chief Bankruptcy Judge for the District of Oregon, sitting by designation.
This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. See 9th Cir. BAP Rule 8013-1.
Creditor, asserting " excusable neglect, " filed a motion seeking leave to file a late proof of claim. The bankruptcy court determined that the creditor had not demonstrated " excusable neglect" in failing to a file proof of claim within the time set by the court, and denied the motion on that basis. The creditor appealed. At oral argument the creditor withdrew the appeal to the extent it related to the bankruptcy court's determination with respect to " excusable neglect." Because this was the only issue properly raised on appeal, we DISMISS the appeal as moot.
I. FACTS
The debtor in this case is Crepes 1, Inc., a California corporation that operated La Creperie Cafe. On February 23, 2005, Crepes 1 succeeded to a 10-year lease dated November 6, 2001, for premises located in Long Beach, California. Appellant, Kurt Schneiter, is the landlord under the lease.
In conjunction with the lease, Mr. Schneiter advanced $825,000 to Crepes 1 through a series of commercial loans for which Crepes 1 executed six promissory notes between December 9, 2005, and December 18, 2007. Mr. Schneiter asserts that Crepes 1 granted him a security interest in all inventory, chattel paper, accounts, equipment, general intangibles and fixtures when the first note was executed. He further asserts that he filed a UCC-1 Financing Statement covering this collateral with the Office of the California Secretary of State on February 24, 2006.
Crepes 1 defaulted on its payment obligations under certain of the notes beginning in August 2007, and made no payments on notes dated November 2007 and December 2007. Beginning in January 2008, Crepes 1 defaulted on its rent payments under the lease. In April 2008, Mr. Schneiter filed an unlawful detainer action against Crepes 1.
Crepes 1 filed its voluntary chapter 7 petition on August 28, 2008. Mr. Schneiter was scheduled as a secured creditor with a disputed claim in the amount of $821,000.
Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. § § 101-1532. All " Rule" or " FRBP" references are to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
On October 6, 2008, Mr. Schneiter filed a motion for relief from the automatic stay (" RFS Motion"), seeking leave to continue the unlawful detainer action. The RFS Motion was filed on the bankruptcy court's local form F 4001-1M.UD (" Unlawful Detainer RFS Form"), which applies to motions specifically seeking relief from the automatic stay for the purpose of pursuing an unlawful detainer action against the debtor. Appended to the Unlawful Detainer RFS Form was a separate " Declaration of Kurt Schneiter" (" Separate Declaration") which stated that he also was seeking relief from the automatic stay to complete a pending state court case in which he sought to collect on the notes, each of which was identified as to date and amount. Mr. Schneiter asserted in the Separate Declaration a " claim for possession" based upon his alleged security interest in all inventory, chattel paper, accounts, equipment, general intangibles and fixtures of Crepes 1.
Mr. Schneiter filed a request that we take judicial notice of the RFS Motion and related pleadings. In light of the authority set forth in O'Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d 955, 957-58 (9th Cir. 1989), we are authorized to take judicial notice of the bankruptcy court records. See Atwood v. Chase Manhattan Mortgage Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003). Because those pleadings will assist in our disposition of this appeal, we grant Mr. Schneiter's request. We observe that in doing so we are taking judicial notice of the assertions made in those pleadings, not of the truth of the assertions. See Credit Alliance Corp. v. Idaho Asphalt Supply, Inc. (In re Blumer), 95 B.R. 143, 146-47 (9th Cir. BAP 1988).
The chapter 7 trustee opposed the RFS Motion on the basis that he intended to assume and assign the lease, which would cure Mr. Scheiter's landlord deficiency claim, and to sell other related assets which might generate sufficient cash to make a distribution to unsecured creditors in the case. In his reply, Mr. Schneiter asserted only his right to postpetition rent. After hearing, the bankruptcy court denied the RFS Motion.
On December 17, 2008, the bankruptcy court entered an order authorizing the chapter 7 trustee to sell certain assets of the bankruptcy estate, specifically, two liquor licenses, the trade name " La Creperie, " and the lease (" Sale Assets"). Although Mr. Schneiter participated in the auction sale, he was not the successful bidder. The ultimate sales price was $820,000 (" Sale Proceeds"). As part of the sale, the trustee assumed and assigned the Lease, using the Sale Proceeds to cure the rent defaults owed to Mr. Schneiter.
On December 4, 2008, the bankruptcy court sent a " Notice of Possible Dividend and Order Fixing Time to File Claims, " setting March 9, 2009, as the deadline (" Claims Bar Date") by which creditors were to file proofs of claim as required by Rule 3002(c)(5). No proof of claim was filed by or on behalf of Mr. Schneiter by the Claims Bar Date.
On March 31, 2009, Fainsbert Mase & Snyder, LLP (" FMS") substituted as counsel for Mr. Schneiter in the bankruptcy case. FMS received former counsel's case files on May 1, 2009. Sometime after receipt of the files, FMS reviewed them and discovered no proof of claim had been filed on Mr. Schneiter's behalf in the case.
On July 2, 2009, Mr. Schneiter filed a motion (" Motion") to extend the Claims Bar Date to allow him to file a proof of claim, relying solely on a request that the bankruptcy court find that missing the Claims Bar Date was the result of " excusable neglect." The chapter 7 trustee filed a limited opposition. Specifically, the chapter 7 trustee did not oppose Mr. Schneiter's request to file a proof of claim, unless he intended to file a claim asserting a security interest in the Sale Proceeds. At the hearing on the Motion, the bankruptcy court determined that Mr. Schneiter had not satisfied his burden of proving that the neglect in failing to file a proof of claim by the Claims Bar Date was excusable. The bankruptcy court further found prejudice to the chapter 7 trustee in the delay in asserting the claim.
Asserting error in the bankruptcy court's findings with respect to " excusable neglect" and prejudice, Mr. Schneiter appealed from the order entered denying leave to file his proof of claim. At oral argument, Mr. Schneiter informed the panel that he did not intend to pursue on appeal his assertion that the bankruptcy court erred in determining that Mr. Schneiter did not prove " excusable neglect" for his failure to meet the Claims Bar Date. Instead, he intended to rely solely on his assertion, raised for the first time in his opening brief, i.e., that the RFS Motion constitutes a timely-filed informal proof of claim.
II. JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. § § 1334 and 157(b)(2)(A) and (B). Federal courts may decide only actual cases or live controversies. Clear Channel Outdoor, Inc. v. Knupfer (In re PW, LLC), 391 B.R. 25, 33 (9th Cir BAP 2008). While it is well established that we lack jurisdiction to hear moot cases, United States v. Pattullo (In re Pattullo), 271 F.3d 898, 900 (9th Cir. 2001), we have jurisdiction to determine our jurisdiction. Hupp v. Educ. Credit Mgmt. Corp. (In re Hupp), 383 B.R. 476, 478 (9th Cir. BAP 2008).
III. ISSUE
Whether Mr. Schneiter's assertion that he timely filed an informal proof of claim is properly before the panel.
IV. DISCUSSION
As noted previously, the only relief Mr. Schneiter sought through the Motion was that the bankruptcy court find " excusable neglect" in his failure to meet the Claims Bar Date. Rule 8006 requires that an appellant, within ten days after filing the notice of appeal, serve on the appellee a statement of issues to be presented. In his Statement of Issues on Appeal, Mr. Schneiter listed a single issue: " Did [the bankruptcy court] err in determining that Appellant failed to establish 'excusable neglect' when he failed to [file] his proof of claim before the bar date?" He expressly waived this issue at oral argument. Typically, this would end our review of the appeal. See Pattullo, 271 F.3d at 900 (" If a case becomes moot while pending on appeal it must be dismissed.").
However, Mr. Schneiter announced at oral argument his intent to pursue his assertion that the RFS Motion constitutes an informal proof of claim that could be amended by filing a formal proof of claim after the Claims Bar Date, a matter raised for the first time in his opening brief in this appeal.
We typically do not consider arguments on appeal that were not " properly raised" in the bankruptcy court. O'Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d 955, 957 (9th Cir. 1989); Woods v. Pine Mountain, Ltd. (In re Pine Mountain, Ltd.), 80 B.R. 171, 173 (9th Cir. BAP 1987) (generally, an issue not raised before the bankruptcy court is waived). It is true that we have discretion to consider an argument raised for the first time on appeal " if the issue presented is purely one of law and either does not depend on the factual record developed below, or the pertinent record has been fully developed." In re Pike, 243 B.R. 66, 69 (9th Cir. BAP 1999); Pizza of Hawaii Inc. v. Shakey's, Inc. (In re Pizza of Hawaii, Inc.), 761 F.2d 1374, 1379 (9th Cir. 1985). However, these conditions are not satisfied to allow the exercise of such discretion in this appeal.
" For a document to constitute an informal proof of claim, it must state an explicit demand showing the nature and amount of the claim against the estate, and evidence an intent to hold the debtor liable." In re Holm, 931 F.2d 620, 622 (9th Cir. 1991). These are factual issues, which Mr. Schneiter never raised for determination by the bankruptcy court in the first instance.
The Declaration of Kurt Schneiter (" RFS Declaration"), upon which Mr. Schneiter appears to rely as the evidentiary record for purposes of establishing that he holds an informal proof of claim, contains several evidentiary defects which impact the determination that the RFS Motion provided sufficient notice of Mr. Schneiter's alleged secured claim to constitute an informal proof of claim. In particular, Mr. Schneiter says he has a security interest in " all inventory, chattel paper, accounts, equipment, general intangibles and fixtures, " and that the security interest was perfected by the filing of a UCC-1 financing statement on February 24, 2006, in the office of the California Secretary of State. Yet the RFS Declaration did not include any evidence of the attachment of a security interest through a security agreement. Further, although the UCC-1 financing statement attached to the RFS Declaration includes a collateral description, it does not reflect a filing date to evidence perfection. Finally, the security interest Mr. Schneiter claims has no apparent connection to the assets the trustee sold, i.e., the liquor licenses, the trade name, and the estate's interest in the lease.
Prior to the auction, counsel for the chapter 7 trustee clarified what was being sold:
These deficiencies relate directly to whether Mr. Schneiter stated an " explicit demand showing the nature and amount of the claim against the estate." Because our determination of the informal proof of claim issue on appeal depends on a factual record that was not developed before the bankruptcy court, we cannot decide that issue in this appeal.
VI. CONCLUSION
Mr. Schneiter did not present to the bankruptcy court the issue that the RFS Motion constituted an informal proof of claim; accordingly this issue is not properly before us. Because Mr. Schneiter has withdrawn the only issue properly raised on appeal, we DISMISS the appeal as moot.
I wanted to make clear before we start the auction of a couple of things. First of all, we're not selling a business today. We're selling specific assets. We are selling two liquor licenses for beer and wine. We are selling the name of the restaurant, and we are assuming and assigning a lease. So to the extent that there's other assets in the facility, most of them are [under]-secured and over encumbered . . . . [T]he Trustee at this moment is planning to abandon those assets, which will have whatever affect [sic] it's going to have. But I wanted to be very clear today on what we're selling and what we're not selling.
Tr. of Dec. 2, 2008 Hearing, at 3:2-16.