Loc. Joint Exec. Bd., AFL-CIO v. Hotel Circle, Inc.
| Decision Date | 11 June 1976 |
| Docket Number | No. 74-2279-GT.,74-2279-GT. |
| Citation | 419 F. Supp. 778 |
| Parties | LOCAL JOINT EXECUTIVE BOARD, AFL-CIO, affiliated with the Hotel and Restaurant Employees and Bartenders International Union, Appellant, v. HOTEL CIRCLE, INC., also known as Monarch Advertising, aka Hotel Associates, aka Le Baron Hotels, Inc., et al., Appellees. |
| Court | U.S. District Court — Southern District of California |
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Richard D. Prochazka and Ralph M. Phillips, Domnitz, Prochazka & Mazirow, San Diego, Cal., for appellant.
Robert W. Bell, Jr., and William McCurine, Gray, Cary, Ames & Frye, San Diego, Cal., for Official Creditors' Committee.
Stephen R. Brown, Luce, Forward, Hamilton & Scripps, San Diego, Cal., for Cabot, Cabot & Forbes Land Trust.
Harvey H. Hiber, Jr., San Diego, Cal., for Home Federal Savings & Loan Ass'n.
V. Frank Asaro, San Diego, Cal., for Hotel Circle, Inc.
Joel C. Estes, San Diego, Cal., for Harry Henke, III.
Richard A. Peterson, San Diego, Cal., for First National Bank.
Ralph M. Pray, III, San Diego, Cal., for Official Creditors' Committee.
Leon Savitch, Los Angeles, Cal., Official Creditors Committee, for Kenneth Riley.
Clifford L. Duke, Jr., San Diego, Cal., for Atlas Hotel.
Abigail Cooley, Asst. Gen. Counsel for Special Litigation, Washington, D.C.
James S. Scott, Regional Attorney Region 21, N.L.R.B., Los Angeles, Cal.
On October 10, 1974, Hotel Circle, Inc., also known as Le Baron Hotels, Inc., a California corporation, filed for protection under Chapter XI of the Bankruptcy Act. After the filing of the Chapter XI petition, the business was operated by the debtor in possession. On July 21, 1975, a receiver was appointed to replace the debtor in possession and operate the business.
The Le Baron Hotel was a member of the Restaurant-Hotel Employers' Council, a multi-employer group formed to negotiate terms and conditions under which the employer members of the council would hire members of the Local Joint Executive Board AFL-CIO (the union). The receiver's representative participated in discussions of the Employers' Council relating to the negotiations between the council and the union. At a council meeting on August 18, 1975, the representative of the receiver voted to accept a proposed wage increase and extend the life of the existing collective bargaining agreement.
Thereafter, the receiver paid the hotel employees covered by the agreement in accordance with the renegotiated contract. The receiver did not indicate to the union that he considered himself bound by the agreement.
During the course of the Chapter XI proceedings, Atlas Hotels, Inc. offered to purchase the Le Baron Hotel, provided the purchase was clear of any existing collective bargaining agreements. An express condition of the sale was that none of the debtor's collective bargaining agreements be transferred to the purchaser, Atlas Hotels.
In December of 1975, the receiver proposed to sell the Le Baron property, subject to the approval of the bankruptcy court. On December 12, 1975, the Official Creditors' Committee filed a motion seeking to reject various executory contracts, including a contract between the San Diego Hotel and Restaurant Employers and Bartenders Union of San Diego, Local 30 and the Restaurant-Hotel Employers' Council of San Diego. On December 15, 1975, at the conclusion of a hearing on the motion, the bankruptcy judge stated:
On this date, December 15, 1975, the bankruptcy court issued an order authorizing the sale of the Le Baron Hotel to Atlas Hotels. The amended order authorizing the sale and prescribing its terms was issued on December 16, 1975.
The sale was consummated on December 29, 1975, and escrow closed in accordance with the terms of the order of the bankruptcy court. On January 6, 1976, the bankruptcy court issued its order rejecting the purported collective bargaining agreements of the Local Joint Executive Board (union).
In appeal number 1, the union seeks to review the amended order of December 16, 1975, authorizing and confirming the sale of the Le Baron property to Atlas Hotels. In appeal number 2, the union seeks to review the January 6, 1976 order, granting permission to the receiver to reject the collective bargaining agreement between the receiver and the Local Joint Executive Board.
The appellees move to dismiss the appeal from the amended order of December 16, 1975. They contend that the matter is moot and appeal number 1 should be dismissed. No attempt was made by the appellants to stay the execution of the amended order of the bankruptcy court, and on December 29, 1975, the Le Baron Hotel was conveyed to Atlas Hotels. The appellees maintain that in order for the union to contest the bankruptcy order authorizing the sale, the union should have moved for a stay of the order under the provisions of rule 805 of the Rules of Bankruptcy Procedure. Rule 805 provides:
A motion for a stay of the judgment or order of a referee, for approval of a supersedeas bond, or for other relief pending appeal must ordinarily be made in the first instance to the referee. . . . The referee may suspend or order the continuation of proceedings or make any other appropriate order during the pendency of an appeal upon such terms as will protect the rights of all parties in interest. A motion for such relief, or for modification or termination of relief granted by the referee, may be made to the district court, but the motion shall show why the relief, modification, or termination was not obtained from the referee.
The appellee also relies upon rule 11-62(2) of the Rules of Bankruptcy Procedure for further support; it provides:
Under the provisions of rule 11-62(2), the sale to a "good faith" purchaser will not be disturbed by a modification, on appeal, of an order approving the sale of property. Absent a stay of the order approving the sale, the sale to a good faith purchaser will not be affected. However, the rule does not shield a purchaser who has not proceeded in good faith. Mere knowledge of the pendency of an appeal does not deprive the purchaser of the protection of rule 11-62(2), but knowledge may be relevant in determining the purchaser's good faith status.
Rule 11-62(2) itself envisions the "reversal or modification" of a bankruptcy order approving the sale of property where a stay pending appeal did not issue. The rule does not preclude the district court from reviewing the amended bankruptcy court order and granting relief. Nevertheless, the appellees urge that the court need not reach the merits of this appeal because the sale of the Le Baron has rendered the appeal moot.
Since the date of the amended order authorizing the sale, December 16, 1975, the sale of the Le Baron has been consummated. Where circumstances so change during the pendency of an appeal that no effectual relief can be granted, the court will dismiss the appeal as moot. Sobel v. Whittier Corp. et al., 195 F.2d 361 (6th Cir. 1952).
However, consummation of the sale of the Le Baron Hotel is not conclusive. As the court stated in Ramsburg v. American Investment Company of Illinois, 231 F.2d 333, 336 (7th Cir. 1956):
Even where the subject matter of the suit has been so completely destroyed as to preclude restoration of the status quo, the court still has jurisdiction to grant incidental relief and the cause is not moot.
After reviewing the provisions of the bankruptcy court's amended order, it appears that this court is incapable of fashioning any relief, incidental or otherwise, that would affect substantial interests of the parties.
It should be noted that Atlas Hotels, the purchaser of the Le Baron Hotel, is not a party to this proceeding and is not within the court's jurisdiction. See Fink v. Continental Foundry & Machine Company, 240 F.2d 369 (7th Cir. 1957). Under these circumstances, if this court were to reach the merits of this appeal, it would render an advisory opinion upon a moot question. This court will not declare rules of law that will have no effect on the case at bar.
Accordingly, appeal number one is moot and is hereby dismissed.
Appeal number two in this proceeding pertains to the January 6, 1976, order of the bankruptcy court rejecting the executory collective bargaining agreements of the Le Baron Hotel.1
Relying on section 313(1) of the Bankruptcy Act, 11 U.S.C. § 713(1), the bankruptcy court authorized the receiver to reject the collective bargaining agreements between the Restaurant-Hotel Employers' Council of San Diego, Inc., and the Local Joint Executive Board of San Diego. Section 313(1) of the Act provides, in part, as follows:
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