United States District Court, C.D. California, Eastern Division
IN RE CONSOLIDATED FREIGHTWAYS CORP. ET AL.
OPINION AFFIRMING THE BANKRUPTCY COURT’S 2016
MICHAEL W. FITZGERALD, UNITED STATES DISTRICT JUDGE
the Court is a bankruptcy appeal from the United States
Bankruptcy Court (the Honorable Wayne Johnson, United States
Bankruptcy Judge) (the “Bankruptcy Court”).
Appellants Crown Enterprises and Hayward Property, LLC appeal
from the Bankruptcy Court’s January 2016 Order Denying
Motion to Reopen Case for the Limited Purpose of Correcting
Sale Order and Defective Deed (the “2016 Order”).
(Excerpts of Record (“ER”) Ex. A (Docket No.
April 27, 2016, Appellants filed their Opening Brief. (Docket
No. 10). No Appellee has appeared in this case, although XPO
Logistics Freight, Inc. has appeared as an Interested Party.
On June 24, 2016, XPO filed an Objection to Bankruptcy Appeal
or Alternatively Request for Continuance
(“Request”). (Docket No. 17).
Court has reviewed the papers filed in this appeal and held a
hearing on June 27, 2016. Counsel for Appellants as well as
XPO appeared at the hearing.
reasons stated below, the Court AFFIRMS the 2016 Order. The
Bankruptcy Court did not abuse its discretion by refusing to
reopen the bankruptcy proceeding. The Bankruptcy Court
applied the correct law, and its application of the law to
the facts of the case was neither illogical, implausible, nor
unsupported by facts in the record.
the Court affirms the Bankruptcy Court’s decision, the
Court DENIES as moot XPO’s Request to continue
the oral argument.
2002, Consolidated Freightways filed for bankruptcy
protection. (ER Ex. E at 333 (Docket No. 10-7)). In the
bankruptcy sale, Appellants purchased the real property
located at 2256 Claremont Ct., Hayward, CA 94545 (the
“Hayward Property”). (Id. at 340, 356).
In the Bankruptcy Court’s order authorizing the sale
(“Sale Order”), the Bankruptcy Court retained
jurisdiction to “resolve any disputes, controversies or
claims arising out of or relating to the Agreement.”
(Id. at 361).
when the Quitclaim Deed was recorded, the Quitclaim Deed
reflected a different property in Emeryville, rather than
Hayward, California. (ER Ex. C at 137 (Docket No. 10-5)). In
addition, according to Appellants, the metes and bounds
description in the purchase agreement memorializing the sale,
which was attached as Exhibit A to the Sale Order, failed to
“fully” describe the Hayward Property.
(Id. at 131).
did not discover these defects until approximately September
2015, when a prospective purchaser expressed interest in the
Hayward Property. (Id. at 132). Appellants attempted
to remedy this issue by contacting counsel for the Trust, but
counsel for the Trust indicated that the Trust was dissolved
in 2012. (ER Ex. D at 227 (Docket No. 10-6) (“We no
longer have a client that we can discuss this with, as there
is no longer any Trust in existence and the Trustee’s
authority and services terminated in late 2012.”)).
December 2015, Appellants filed a Motion to Reopen Case for
the Limited Purpose of Correcting Sale Order and Defective
Deed (the “Motion”) with the Bankruptcy Court.
(See generally ER Ex. B (Docket No. 10-4)). Notice
of the Motion was served by email to 104 recipients who had
participated in the bankruptcy proceeding, and no oppositions
to the Motion were filed. (ER Ex. H at 411 (Docket No.
10-10); ER Ex. I at 420-25 (Docket Nos. 10-11)). The
Bankruptcy Court held a hearing on January 12, 2016, and
denied the Motion. (ER Ex. F at 399 (Docket No. 10-8)).
Appellants then filed a timely Notice of Appeal to this Court
on January 22, 2016. (Id. at 389).
17, 2016, Appellants filed a supplemental brief notifying the
Court that XPO Logistics Freight, Inc. has come forward and
“asserted that it, and not Appellants, owns one of the
parcels of [Hayward] [P]roperty.” (Notice of Disclosure
of Newly-Discovered Claims Relevant to Appeal ¶ 4
(Docket No. 15)). Appellants dispute XPO’s claim and
contend that XPO owns only a neighboring property to the
Hayward Property. (Id.).
of a motion to reopen a bankruptcy case is reviewed for an
abuse of discretion. Lopez v. Specialty Res. Corp. (In re
Lopez), 283 B.R. 22, 26 (B.A.P. 9th Cir. 2002). To
determine whether the Bankruptcy Court abused its discretion,
the Court conducts a two-step inquiry: (1) the Court reviews
de novo whether the Bankruptcy Court
“identified the correct legal rule to apply to the
relief requested”; and (2) if it did, the Court
considers whether the Bankruptcy Court’s application of
the legal standard was illogical, implausible, or
“without support in inferences that may be drawn from
the facts in the record.” United States v.
Hinkson, 585 F.3d 1247, 1261-62 & n.21 (9th Cir.
2009) (en banc).
to have the estate reopened may be made by an
‘interested party’ who would be benefitted by the
reopening.” In re Welch, No. BK 11-18277-LBR,
2015 WL 65307, at *4 (B.A.P. 9th Cir. Jan. 5, 2015) (citation
omitted). The Bankruptcy Court’s decision to reopen or
not is discretionary and governed by 11 U.S.C. § 350.
Id. In exercising this discretion, the Bankruptcy
Court may consider numerous factors, including (1) the
benefit to creditors, (2) the benefit to debtor, (3) the
prejudice to affected parties, (4) the availability of relief
in other forums, (5) whether the estate has been fully
administered, (6) the length of time between the closing of
the case and the motion to reopen, and (7) good faith.
See In re Arana, 456 B.R. 161, 172-73 (Bankr.
E.D.N.Y. 2011); accord In re Welch, 2015 WL 65307,
at *4 (“[A] bankruptcy court may consider a number of
nonexclusive factors in determining whether to reopen,
including (1) the length of time that the case has been
closed; whether the debtor would be ...