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In Re: Flamingo 55, Inc.; Vegas v. Timothy S. Cory

July 25, 2011

IN RE: FLAMINGO 55, INC.; VEGAS TOWNHOMES PARTNERS, L.P., DEBTORS,
LRL GREGORY GRANTHAM; JOHN SABA, APPELLANTS,
v.
TIMOTHY S. CORY, CHAPTER 7 TRUSTEE; EMERALD GATE CONSTRUCTION, INC., APPELLEES.



Appeal from the United States District Court for the District of Nevada Robert Clive Jones, Chief District Judge, Presiding D.C. No. 2:07-cv-01640-RCJ-

The opinion of the court was delivered by: Fernandez, Circuit Judge:

FOR PUBLICATION

OPINION

Argued and Submitted June 14, 2011-San Francisco, California

Before: Diarmuid F. O'Scannlain, Ferdinand F. Fernandez, and Jay S. Bybee, Circuit Judges.

Opinion by Judge Fernandez

OPINION

Gregory Grantham and John Saba appeal the district court's order affirming the bankruptcy court's decision*fn1 that they were not entitled to subrogation pursuant to the provisions of

11 U.S.C. § 509.*fn2 We affirm.

The bankruptcy court issued a lengthy and detailed opinion dealing with the facts and issues before it and we perceive no reason to iterate the details of its discussion.*fn3 Therefore, we adopt the bankruptcy court's statements of facts in part II of its decision. In re Flamingo 55, 378 B.R. 893, 900-04 (Bankr. D. Nev. 2007).

With one clarification and one exception, we also adopt the bankruptcy court's discussion and determination denying Grantham and Saba's assertion that they were entitled to subrogation pursuant to 11 U.S.C. § 509. See Flamingo 55, 378 B.R. at 919-21 (part V).

(1) Clarification:

[1] The bankruptcy court determined that Grantham and Saba's predecessor in interest, Broadway-Acacia, LLC, and the debtor Flamingo 55, Inc., were partners or coventurers in a venture to develop certain property, and that the loan in question was to them for the purpose of pursuing that venture. As a result, the bankruptcy court determined that Grantham and Saba do not come within the provisions of 11 U.S.C. § 509(a), which provides for subrogation,*fn4 and do come within the provisions of 11 U.S.C. § 509(b)(2), which precludes subrogation.*fn5 We clarify that it is Broadway-Acacia's position as a partner or coventurer in the development enterprise that distinguished it as a joint borrower rather than a mere surety, guarantor or accommodation comaker.*fn6 That drove and ...


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