CFLC, Inc., In re, 94-16960
Citation | 39 USPQ2d 1518,89 F.3d 673 |
Decision Date | 16 July 1996 |
Docket Number | No. 94-16960,94-16960 |
Parties | , 39 U.S.P.Q.2d 1518, 96 Cal. Daily Op. Serv. 5234, 96 Daily Journal D.A.R. 8488, 96 Daily Journal D.A.R. 8523 In re: CFLC, INC., a Delaware corporation, formerly known as Everex Systems, Inc., a Delaware corporation, Debtor. EVEREX SYSTEMS, INC., a California corporation formerly known as Yside, Incorporated, Appellant, v. CADTRAK CORPORATION, Appellee. |
Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Patrick M. Costello, and Mark A. Wayne, Murray & Murray, Palo Alto, California, for appellant Everex Systems, Inc.
K. John Shaffer, Stutman, Treister & Glatt, Los Angeles, California, for appellee Cadtrak Corporation.
Appeal from the United States District Court for the Northern District of California, Claudia Wilken, District Judge, Presiding. D.C. No. CV-94-01079-CW.
Before: SNEED, PREGERSON, and KLEINFELD, Circuit Judges.
Everex Systems, Inc., a buyer of certain of the assets of CFLC, Inc. in a Chapter 11 bankruptcy, appeals the district court's affirmance of a bankruptcy court order denying CFLC's motion as debtor to assume and assign to Everex a patent license from Cadtrak Corporation to CFLC. 1 We have jurisdiction under 28 U.S.C. § 158(d) and affirm.
In a 1986 agreement, as modified by a 1989 supplemental agreement, Cadtrak, in return for a one-time $290,000 payment, granted CFLC, a personal computer company, a royalty-free, worldwide, nonexclusive license to use certain computer graphics technology for which Cadtrak holds a patent (the "Cadtrak license"). The license agreement specified, among other things, that the license was non-transferrable, that it extended to any company more than 50% of which was owned by CFLC, that it conferred on CFLC no right On January 4, 1993, CFLC began a Chapter 11 proceeding, in the course of which it sold certain divisions, foreign subsidiaries, and assets for nearly $20 million. It then sought and received approval to sell "substantially all" of its remaining assets to Everex. The sale closed on November 12, 1993; Everex paid approximately $4 million.
to sublicense, that it could be terminated by Cadtrak upon CFLC's bankruptcy, and that it was to be construed according to California law.
The sale agreement provided that the parties would seek the assumption and assignment by CFLC to Everex of certain designated executory contracts, and for the designation up to 30 days after the closing date of additional contracts to be assumed and assigned; Everex acknowledged that the bankruptcy court had the final decision on the assumption and assignment of the contracts. On December 8, 1993, Everex designated additional contracts, including the Cadtrak license. On January 4, 1994, CFLC moved to assume and assign executory contracts, including the Cadtrak license; Cadtrak objected to the assumption and assignment. Bankruptcy Judge Randall J. Newsome held a hearing on the motion on February 4 and orally denied the motion as to the Cadtrak license; a written order followed.
Everex and CFLC appealed to the District Court, where Judge Wilken heard oral argument in September 1994 and affirmed the bankruptcy court's denial in a written order on October 4, 1994, published as In re CFLC, Inc., 174 B.R. 119 (N.D.Cal.1994).
We review a 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). We review a bankruptcy court's findings of fact for clear error and its conclusions of law de novo. Robertson v. Peters (In re Weisman), 5 F.3d 417, 419 (9th Cir.1993).
Cadtrak argues that Everex lacks standing to pursue this appeal. Although the Bankruptcy Code is silent on the question of appellate standing, this court has held that the "person aggrieved" test, derived from the Bankruptcy Act of 1898, governs appellate standing under the code. Fondiller v. Robertson (In re Fondiller), 707 F.2d 441, 442-43 (9th Cir.1983). That test limits appellate standing to "those persons who are directly and adversely affected pecuniarily by an order of the bankruptcy court". Id. at 442. Cadtrak argues that since CFLC, the debtor, has not appealed from the district court decision, this court lacks jurisdiction because Everex does not meet the "person aggrieved" test. See Tilley v. Vucurevich (In re Pecan Groves of Arizona), 951 F.2d 242, 245 (9th Cir.1991) ().
Cadtrak argues that Everex is merely an unsuccessful bidder at a bankruptcy sale, a category of persons that several cases have held not to be "aggrieved" for standing purposes. See, e.g., G-K Development Co. v. Broadmoor Place Investments, L.P. (In re Broadmoor Place Investments, L.P.), 994 F.2d 744, 746 n. 2 (10th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 877, 127 L.Ed.2d 73 (1994); Davis v. Seidler (In re HST Gathering Co.), 125 B.R. 466 (W.D.Tex.1991); Big Shanty Land Corp. v. Comer Properties, Inc., 61 B.R. 272 (N.D.Ga.1985).
Section 365 of the Bankruptcy Code Metropolitan Airports Commission v. Northwest Airlines, Inc. (In re Midway Airlines, Inc.), 6 F.3d 492, 494 (7th Cir.1993). Once a contract has been assumed, the trustee can assign it. 2 11 U.S.C. § 365(f). "The trustee's power, however, is not absolute", id., and both § 365(a), which authorizes assumption, and § 365(f), which authorizes assignment, are expressly subject to an exception provided in § 365(c):
The trustee may not assume or assign any executory contract or unexpired lease of the debtor, whether or not such contract or lease prohibits or restricts assignment of rights or delegation of duties, if--
(1)(A) applicable law excuses a party, other than the debtor, to such contract or lease from accepting performance from or rendering performance to an entity other than the debtor or the debtor in possession, whether or not such contract or lease prohibits or restricts assignment of rights or delegation of duties; and
(B) such party does not consent to such assumption or assignment ...
The parties agree that if the exception of 365(c) applies to the Cadtrak license, the bankruptcy court was correct in denying the motion to assume and assign that license.
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