Opinion
No. 17-16938
02-22-2019
In the Matter of: DINO J. PETRONE; CONNIE L. PETRON, U.S. BANK, NATIONAL ASSOCIATION; PHH MORTGAGE SERVICES, Appellants, v. SFR INVESTMENTS POOL 1, LLC, Appellee.
NOT FOR PUBLICATION
D.C. No. 2:16-cv-02885-JCM MEMORANDUM Appeal from the United States District Court for the District of Nevada
James C. Mahan, District Judge, Presiding Submitted February 13, 2019 San Francisco, California Before: McKEOWN, W. FLETCHER, and MURGUIA, Circuit Judges.
This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).
U.S. Bank and PHH Mortgage Services (collectively, "Appellants") appeal the district court's order dismissing Appellants' appeal of a bankruptcy order for lack of standing. "Standing is an issue of law which we review de novo." In re Palmdale Hills Prop., LLC, 654 F.3d 868, 873 (9th Cir. 2011). We have jurisdiction under § 158(d)(1) and we affirm. Because the parties are familiar with the facts of the case, we do not recount them except as necessary.
In connection with Appellee SFR's efforts to quiet title to certain real property, the bankruptcy court granted Appellee's motion for the retroactive annulment of an automatic stay related to that property. Appellants, as creditors with liens on the same property, sought to appeal the bankruptcy court's annulment order. The district court dismissed their appeal, relying on the Ninth Circuit's holding in Tilley v. Vucurevich, (In re Pecan Groves of Arizona), 951 F.2d 242, 245 (9th Cir. 1991), that "a creditor has no independent standing to appeal an adverse decision regarding a violation of [an] automatic stay."
The standing limitation established in In re Pecan Groves is an application of the "person-aggrieved" test. See id. The "person-aggrieved" test limits standing in bankruptcy appeals to appellants who can show they are "directly and adversely affected pecuniarily by the order of the bankruptcy court." In re Fondiller, 707 F.2d 441, 443 (9th Cir. 1983). Consistent with the Supreme Court's decision in Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118, 129 (2014) (internal quotation marks and citation omitted), the "person-aggrieved" test identifies appellants "whose interests fall within the zone of interests protected by the law invoked," here, the Bankruptcy Code. See In re Fondiller, 707 F.2d at 443 (determining that Congress intended to maintain the "person-aggrieved" test for appellate standing after amendments to the Bankruptcy Code). In In re Pecan Groves, the Ninth Circuit held that only a debtor or bankruptcy trustee can appeal an adverse decision by the bankruptcy court under the Bankruptcy Code's section on automatic stays, 11 U.S.C. § 362, because § 362 is intended to protect solely the interests of debtors and their estates. 951 F.2d at 245.
Appellants' arguments that In re Pecan Groves does not apply here are unpersuasive. First, the Ninth Circuit's holding in Schwartz v. United States (In re Schwartz), 954 F.2d 569, 571 (9th Cir. 1992), that an act in violation of an automatic stay is void ab initio, rather than voidable, does not alter the holding of In re Pecan Groves. Whatever the legal status of a violative act, In re Pecan Groves' holding applies by its own terms to all actions "seek[ing] to enforce the protections of an automatic stay." In re Pecan Groves, 951 F.2d at 245. Insofar as Appellants argue that, in light of Schwartz, a violative act cannot later be validated, their challenge is really to the bankruptcy court's authority to issue retroactive annulments of automatic stays. That authority is granted by the Bankruptcy Code at 11 U.S.C. § 362(d) and is not the subject of this appeal.
Next, Appellants argue that the court in In re Pecan Groves erred in concluding that an automatic stay is for the benefit of the debtor alone because the stay also benefits creditors. That argument was directly considered and rejected in In re Pecan Groves. 951 F.2d at 245. Furthermore, the Ninth Circuit cases cited by Appellants that describe an automatic stay as also benefitting creditors do not purport to define "the zone of interests protected by" 11 U.S.C. § 362 for purposes of determining appellate standing and so do not disturb In re Pecan Groves' holding on that point. See Lexmark, 572 U.S. at 129.
Finally, Appellants' efforts to distinguish the facts of this case from In re Pecan Groves and from In re Heaton, 697 F. App'x 524 (9th Cir. 2017) (unpublished), all fail. To the extent Appellants seek to rely on characteristics of the Appellee, those facts are irrelevant to the question of Appellants' standing. Furthermore, the fact that In re Pecan Groves was an "adversary proceeding" while the present case is part of "a collective action" actually weighs against Appellants' position—the "broad scope of interests impacted" in a bankruptcy action is precisely why the "person-aggrieved" test exists. See In re Fondiller, 707 F.2d at 443 ("[T]he need for an explicit limitation on standing to appeal in bankruptcy proceedings . . . springs from the nature of bankruptcy litigation which almost always involves the interests of persons who are not formally parties to the litigation."). Appellants also highlight the length of time that has lapsed since the violative actions and the fact that the sale of the property occurred after the bankruptcy case had closed, but Appellants do not explain why these facts should be determinative.
As creditors, Appellants have "no independent standing to appeal an adverse decision regarding a violation of [an] automatic stay." See In re Pecan Groves, 951 F.2d at 245. Appellants have shown no compelling reason why the holding in In re Pecan Groves does not apply here.
AFFIRMED.