113 F.3d 1029 (9th Cir. 1997), 95-56527, In re Claremont Acquisition Corp.

Docket Nº:95-56527, 95-56589.
Citation:113 F.3d 1029
Party Name:97 Cal. Daily Op. Serv. 3531, 97 Daily Journal D.A.R. 6061 In re CLAREMONT ACQUISITION CORPORATION, INC.; Claremont Pontiac/GMC Truck, Inc.; Claremont Ford, Inc.; Claremont Cadillac, Inc.; Claremont Isuzu, Inc.; and Claremont Hyundai, Inc., Debtors. Cal WORTHINGTON; Cal Worthington Dodge, Inc.; and Claremont Acquisition Corporation, Inc., Appellant
Case Date:May 12, 1997
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1029

113 F.3d 1029 (9th Cir. 1997)

97 Cal. Daily Op. Serv. 3531,

97 Daily Journal D.A.R. 6061

In re CLAREMONT ACQUISITION CORPORATION, INC.; Claremont

Pontiac/GMC Truck, Inc.; Claremont Ford, Inc.;

Claremont Cadillac, Inc.; Claremont

Isuzu, Inc.; and Claremont

Hyundai, Inc., Debtors.

Cal WORTHINGTON; Cal Worthington Dodge, Inc.; and

Claremont Acquisition Corporation, Inc., Appellants,

v.

GENERAL MOTORS CORPORATION, Appellee.

In re CLAREMONT ACQUISITION CORPORATION, INC.; Claremont

Pontiac/GMC Truck, Inc.; Claremont Ford, Inc.;

Claremont Cadillac, Inc.; Claremont

Isuzu, Inc.; and Claremont

Hyundai, Inc., Debtors.

GENERAL MOTORS CORPORATION, Appellant,

v.

Cal WORTHINGTON; Cal Worthington Dodge, Inc.; Claremont

Acquisition Corporation, Inc.; Claremont Pontiac/GMC Truck,

Inc.; Claremont Ford, Inc.; Claremont Cadillac, Inc.;

Claremont Isuzu, Inc.; and Claremont Hyundai, Inc., Appellees.

Nos. 95-56527, 95-56589.

United States Court of Appeals, Ninth Circuit

May 12, 1997

Argued and Submitted March 3, 1997.

Page 1030

Gary E. Klausner, Robinson, Diamant, Brill & Klausner, Los Angeles, California, for appellants and cross-appellees.

Wallace M. Allan, O'Melveny & Myers, Los Angeles, California, for appellees and cross-appellants.

Appeals from the United States District Court for the Central District of California, Mariana R. Pfaelzer, District Judge, Presiding. D.C. No. CV 95-03248-MRP

Before: BROWNING and KLEINFELD, Circuit Judges, and MERHIGE, [*] Senior District Judge.

MERHIGE, Senior District Judge:

Appellants Cal Worthington & Cal Worthington Dodge, Inc. ("Worthington") and Debtors, a group of commonly owned automobile dealerships in the Claremont Auto Center ("Debtors"), appeal an order of the district court which reversed an order of the bankruptcy court compelling Appellee General Motors Corporation ("GM") to accept assignment of Debtors' franchise agreements to Worthington. GM has filed a cross-appeal regarding an issue upon which it was unsuccessful in the courts below. For the reasons which follow, we affirm.

I

FACTS AND PROCEDURAL HISTORY

Debtors operated Cadillac, Pontiac/GMC Truck, Ford, Isuzu and Hyundai dealerships at the Claremont Auto Center in Claremont, California. On or about November 7, 1994, Debtors ceased operating their automobile dealerships. On November 20, 1994, Debtors commenced a Chapter 11 bankruptcy

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proceeding. On March 31, 1995, the bankruptcy court approved Worthington as the purchaser of the Debtors' assets, including the dealer franchises. Applying California Vehicle Code § 11713.3(e), which prohibits transfer of an automobile franchise agreement without the consent of the manufacturer whose consent may not be unreasonably withheld, the bankruptcy court required the consent of GM prior to ordering the assignment of the franchise agreements to Worthington. GM refused to consent to the assignment, prompting Debtors to seek an order compelling the assignment. After hearing argument, the bankruptcy court entered an order finding that GM had unreasonably withheld consent within the meaning of Cal.Veh.Code § 11713.3(e). The bankruptcy court therefore ordered GM to accept the assignment of Debtors' GM Dealer and Service Agreements (the "GM Dealer Agreements") from the Debtors to Worthington. The bankruptcy court also ruled that pursuant to § 365(b)(2)(D) of the Bankruptcy Code (the "Code"), Debtors were not required to cure any nonmonetary defaults in order to assume and assign their contracts to Worthington.

GM appealed the order compelling assignment of the GM Dealer Agreements. The district court found that the bankruptcy court had misapplied Cal.Veh.Code § 11713.3(e) and reversed the bankruptcy court's order as it applied to GM. In re Claremont Acquisition Corp., 186 B.R. 977, 986-87. (C.D.Cal.1995). The district court affirmed, however, the bankruptcy court's interpretation of § 365(b)(2)(D). Id. at 989-90. Worthington and Debtors now appeal the district court's decision with respect to the application of § 11713.3(e) to the assignment. GM has filed a cross-appeal challenging the district court's interpretation of § 365(b)(2)(D).

II

STANDARD OF REVIEW

This court reviews the district court's decision on an appeal from a bankruptcy court de novo. Federal Deposit Insurance Corp. v. Daily (In re Daily), 47 F.3d 365, 367 (9th Cir.1995); Siragusa v. Siragusa (In re Siragusa), 27 F.3d 406, 407 (9th Cir.1994) (per curiam). The court independently reviews the bankruptcy court's decision and need not give deference to the district court's determinations. Robertson v. Peters (In re Weisman), 5 F.3d 417, 419 (9th Cir.1993). We review the bankruptcy court's interpretation of applicable law de novo, and the findings of fact for clear error. 550 West Ina Road Trust v. Tucker (In re Tucker), 989 F.2d 328, 330 (9th Cir.1993).

III

DISCUSSIO...

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