Eastport Associates, In re
| Decision Date | 31 July 1991 |
| Citation | 935 F.2d 1071 |
| Parties | Bankr. L. Rep. P 74,021 In re EASTPORT ASSOCIATES, Debtor (Two Cases). EASTPORT ASSOCIATES, Plaintiff-Appellee, v. CITY OF LOS ANGELES, Defendant-Appellant. EASTPORT ASSOCIATES, Plaintiff-Appellant, v. CITY OF LOS ANGELES, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Margaret M. Morrow, Quinn, Kully and Morrow, Los Angeles, Cal., for plaintiff-appellant/cross-appellee.
James K. Hahn, City Atty., Claudia McGee Henry, Sr. Asst. City Atty., Anthony Saul Alperin, Asst. City Atty., and Jeri L. Burge, Deputy City Atty., Los Angeles, Cal., for defendant-appellee/cross-appellant.
Nancy K. Chiu, Deputy Atty. Gen., Los Angeles, Cal. and John B. Murdock, Santa Monica, Cal., for amici.
Appeal from the United States District Court for the Central District of California.
Before WALLACE, Chief Judge, and O'SCANNLAIN and RYMER, Circuit Judges.
Eastport Associates ("Eastport") filed for bankruptcy under Chapter 11 of the Bankruptcy Code. In the course of the bankruptcy proceeding, Eastport initiated an adversary proceeding against the City of Los Angeles ("the City") seeking declaratory relief on the issue of whether California law entitled it to an extension of time for final approval of a subdivision proposal. The bankruptcy court granted summary judgment to Eastport. The district court reversed and directed the bankruptcy court to dismiss Eastport's action. The district court, in a separate decision, also denied the City's motion to abstain. Eastport appeals and the City cross-appeals. We affirm both decisions of the district court.
In 1978, the City approved a change of zone that would have allowed Eastport to construct a 500-unit subdivision on land Eastport owned in the Santa Monica Mountains on the condition that Eastport get the County of Los Angeles ("the County") to provide land for a secondary access road. Without the access road, the change of zone would have allowed a subdivision, but only of 300 units. In 1979, Eastport submitted a tentative tract map for a 500-unit subdivision, which was approved with the same condition.
Normally, the development entitlement would only last for three years. At that point, Eastport would have had to obtain final approval for its subdivision or the tentative tract map would expire and Eastport would lose its entitlement. However, in this case, adjacent homeowners brought an unsuccessful suit challenging the rezoning and subdivision approvals. Eastport's three year period was tolled until June 1981 when the action reached final judgment.
At that time Eastport tried to obtain the property necessary for its access road from the County. It made numerous offers, first for fair market value, and eventually for nine times fair market value. The County refused all of Eastport's offers. Eastport contends that a 300-unit subdivision would have been economically infeasible. 1
Eastport's tentative map was scheduled to expire in June 1984, but the City granted several extensions. The last extension was to June 1987. By that time, Eastport was required either to get the land for the access road or post a bond. Eastport failed to meet the deadline and therefore lost its development entitlement.
Just before losing its entitlement, in March 1987, Eastport filed for Chapter 11 bankruptcy. In November 1987, Eastport filed an adversary proceeding in the bankruptcy court seeking declaratory relief. Eastport claimed that California Government Code Sec. 66452.6 extended the time for its development entitlement. Section 66452.6 provided for an extension of development entitlements for up to five years if a development moratorium existed. Eastport argued that the County's refusal to convey the property for the access road amounted to a development moratorium under the statute's definition.
Eastport moved for summary judgment and the City moved to dismiss and to abstain. The bankruptcy court denied Eastport's summary judgment motion and granted the City's motion to dismiss, but no final judgment was entered. The bankruptcy court also recommended denying the City's motion to abstain, and the district court entered an order denying the motion.
Eastport then lobbied the state legislature to amend Sec. 66452.6. In 1988, the legislature passed an amendment to the section. The amendment added to the definition of "development moratorium" any period of time during which a condition imposed by a city could not be satisfied because "[t]he condition necessitates acquisition of real property or any interest in real property from a public agency, other than the city or county that approved or conditionally approved the tentative map, and that other public agency fails or refuses to convey the property interest necessary to satisfy the condition." Cal.Gov't Code Sec. 66452.6(f)(2) (West Supp.1990). Eastport then moved for rehearing in the bankruptcy court in light of the amendment.
The bankruptcy court granted the motion for rehearing and granted Eastport's motion for summary judgment, finding that the amendment applied retroactively to extend Eastport's entitlements. However, it reiterated its earlier holding that the pre-amendment version of Sec. 66452.6 did not extend Eastport's time. The bankruptcy court also recommended denying the City's renewed motion to abstain, and the district court entered an order denying the motion. The City appealed that decision to this court.
The City also appealed the bankruptcy court's grant of summary judgment to the district court. Eastport cross-appealed on the issue of the pre-amendment version's applicability to Eastport. The district court reversed the bankruptcy court's grant of summary judgment and remanded with instructions to dismiss Eastport's claim. In re Eastport Associates, 114 B.R. 686 (C.D.Cal.1990). Eastport now appeals to this court. The City's appeal of the denial of its motion to abstain has been consolidated with Eastport's appeal and is now treated as a cross-appeal.
We first address the issue of whether the district court erred in denying the City's motion to abstain. As a threshold matter, we must decide whether denial of the City's motion is appealable. Because the district court entered the order denying the City's motion, our jurisdiction must rest on 28 U.S.C. Sec. 1291, which provides for appeals from final decisions of the district courts. Eastport argues that the decision not to abstain cannot be appealed because it is not a final decision.
Whatever prematurity existed in the City's original appeal of the decision not to abstain has been cured by the entry of a final judgment on the merits. Anderson v. Allstate Insurance Co., 630 F.2d 677 (9th Cir.1980), set out the rule in this circuit that once a final judgment is entered, an appeal from an order that otherwise would have been interlocutory is then appealable. "There is no danger of piecemeal appeal confronting us if we find jurisdiction here, for nothing else remains in the federal courts." Id. at 681.
The decision entered by the district court on April 16, 1990, reversing the bankruptcy court's decision is a final order. When a bankruptcy court enters a final order, a district court's order affirming or reversing that order is also final. In re Sambo's Restaurants, Inc., 754 F.2d 811, 814 (9th Cir.1985). As in Anderson, piecemeal review is no longer an issue because the merits of the case are now before us. The denial of the City's motion to abstain is therefore appealable.
The district court denied the City's motion to abstain on the basis of the bankruptcy court's findings that:
(1) This adversary proceeding is a core proceeding.
(2) The State Law issues raised by the Rehearing Motion are not so difficult or complex that this Court ought to defer to the State Court to adjudicate the merits. Furthermore, the state statute at issue is not the subject of conflicting judicial decisions.
(3) Timely resolution of the issues raised is critical to the administration of the debtor's estate.
(4) The State Court cannot timely adjudicate this matter.
Congress has provided for permissive abstention in bankruptcy cases in 28 U.S.C. Sec. 1334(c)(1) 2:
Nothing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under title 11 or arising in or related to a case under title 11.
The decision not to abstain under Sec. 1334(c)(1) is reviewed for an abuse of discretion. In re Tucson Estates, Inc., 912 F.2d 1162, 1166 (9th Cir.1990).
In Tucson Estates, we laid out the factors courts should consider in deciding whether to abstain under Sec. 1334(c)(1):
"(1) the effect or lack thereof on the efficient administration of the estate if a Court recommends abstention, (2) the extent to which state law issues predominate over bankruptcy issues, (3) the difficulty or unsettled nature of the applicable law, (4) the presence of a related proceeding commenced in state court or other nonbankruptcy court, (5) the jurisdictional basis, if any, other than 28 U.S.C. Sec. 1334, (6) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case, (7) the substance rather than form of an asserted 'core' proceeding, (8) the feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court, (9) the burden of [the bankruptcy court's] docket, (10) the likelihood that the commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties, (11) the existence of a right to a jury trial, and (12) the presence in the proceeding of nondebtor parties."
Id. at...
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