Silver Sands R. v. Resort, Bayview Loan Servicing, LLC
| Decision Date | 01 February 2016 |
| Docket Number | No. 13-60026,No. 13-60025,13-60025,13-60026 |
| Parties | In re: SILVER SANDS R.V. RESORT, Debtor. BAYVIEW LOAN SERVICING, LLC, Appellant, v. CWCAPITAL ASSET MANAGEMENT, LLC; G&G REAL ESTATE INVESTMENT; CHAD MESTLER; JESSICA MESTLER; STUART SCHNEIDER; JANINE SCHNEIDER; PHYLLIS GORBY KELLEY; SILVER SANDS R.V. RESORT, Appellees. In re: SILVER SANDS R.V. RESORT, Debtor. G&G REAL ESTATE INVESTMENT; CHAD MESTLER; JESSICA MESTLER; STUART SCHNEIDER; JANINE SCHNEIDER; PHYLLIS GORBY KELLEY, Appellants, v. CWCAPITAL ASSET MANAGEMENT, LLC; BAYVIEW LOAN SERVICING, LLC; SILVER SANDS R.V. RESORT, Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
NOT FOR PUBLICATION
MEMORANDUM*Appeals from the Ninth Circuit Bankruptcy Appellate Panel
Argued and Submitted April 15, 2015 San Francisco, California
Before: KOZINSKI and GRABER, Circuit Judges, and BENSON,** Senior District Judge.
Bayview Loan Servicing, LLC, and G&G Real Estate Investment, et al., appeal the bankruptcy court's order and the Bankruptcy Appellate Panel's ("BAP") holding that CWCapital Asset Management, LLC, held a superior lien against property located in Mesa, Arizona, owned by Silver Sands R.V. Resort. We review the bankruptcy court's decision de novo. Arab Monetary Fund v. Hashim(In re Hashim), 213 F.3d 1169, 1171 (9th Cir. 2000). We review its findings of fact for clear error, and we review de novo questions of law, as well as mixed questions of law and fact, including whether the historical facts satisfy the relevant legal rule. Murray v. Bammer (In re Bammer), 131 F.3d 788, 791-92 (9th Cir. 1997) (en banc). We affirm in part and reverse in part.
1. The bankruptcy court properly concluded that there was no accord and satisfaction. Under Arizona law, there must be a bona fide dispute regarding the claim that is meant to be settled. Baker v. Emmerson, 734 P.2d 101, 104 (Ariz. Ct. App. 1986). Here, there was no such dispute.
2. The bankruptcy court erred in holding that no bailment relationship was created by the delivery of the check to Capmark. Although there was no express or implied bailment, there was a constructive bailment.
The party seeking to establish a constructive bailment must show that the circumstances surrounding the putative bailee's possession of personal property were sufficient to give rise to a duty to use due care in handling the property. See, e.g., Alitalia v. Arrow Trucking Co., 977 F. Supp. 973, 980 (D. Ariz. 1997); Chesterfield Sewer & Water, Inc. v. Citizens Ins. Co. of N.J., 207 N.E.2d 84, 86 (Ill. Ct. App. 1965); Hadfield v. Gilchrist, 538 S.E.2d 268, 272 (S.C. Ct. App. 2000); Aegis Investigative Grp. v. Metro. Gov't, 98 S.W.3d 159, 163 (Tenn. Ct.App. 2002). An agreement between the putative bailor and bailee is not necessary to create a constructive bailment when a person comes into lawful possession of personal property of another and when justice so requires. But the bankruptcy court incorrectly equated the requirement of "justice" in this context with a typical balancing of equities. Instead, the inquiry is, more narrowly, whether the circumstances surrounding possession and control over the property were such that they required the putative bailee to use due care—irrespective of any negligence by the putative bailor that led to the putative bailee's possession. See, e.g., Chesterfield, 207 N.E.2d at 86 (); Aegis, 98 S.W.3d at 163 (); Hadfield, 538 S.E.2d at 272 (); 8A Am. Jur. 2d Bailments § 13 (2015) ().
Thus, a consideration of who is more blameworthy—a balancing of equities in the usual sense—is irrelevant. Rather, the question is simply whether the circumstances established a duty on the part of the Trust to use due care to safeguard the funds and to return those funds to their rightful owner. We answer "yes." Capmark deposited the check into a "suspense account," thereby taking full control of the funds (which were substantial) while simultaneously recognizing that the money was not theirs to keep. On remand, the bankruptcy court should consider in the first instance whether the duty of due care was violated.
3. The bankruptcy court did not rule on Bayview's conversion claim. Because there are factual issues to resolve the bankruptcy court should consider this claim in the first instance. See Carter v. Anderson (In re Carter), 182 F.3d 1027, 1034 (9th Cir. 1999) .
AFFIRMED in part; REVERSED in part; REMANDED. The parties shall bear their own costs on appeal.Judge BENSON, concurring in part and dissenting in part.
I agree with the majority that the bankruptcy court correctly concluded there was no accord and satisfaction in this case and that a remand is necessary for the bankruptcy court to consider Bayview's conversion claim. I respectfully dissent from the Court's finding that Capmark and the Trust are potentially liable to Bayview on a theory of constructive bailment. I agree with the majority that the bankruptcy court and the BAP misinterpreted the definition and application of constructive bailment law. However, I would affirm the bankruptcy court on the grounds that Capmark and the Trust acted reasonably under the circumstances. In re Slatkin, 525 F.3d 805, 811 (9th Cir. 2008) ().
A constructive bailment may arise as an operation of law "where a person comes into lawful possession of the personal property of another, even though there is no formal agreement between the property's owner and its possessor . . . when justice so requires." Atalia v. Arrow Trucking Co., 977 F. Supp. 973, 980-81 (D. Ariz. 1997) (quoting Christensen v. Hoover, 643 P.2d 525, 529 (Colo. 1982)). A constructive bailment may even be imposed where delivery of the bailedproperty to the bailee occurs by mistake or accident. Choice Hotels Int'l, Inc. v. Manor Care of Am., Inc., 795 A.2d 145, 149 (Md. Ct. Spec. App. 2002); Armored Car Serv., Inc. v. First Nat'l Bank of Miami, 114 So. 2d 431, 434 (Fla. Dist. Ct. App. 1959). However, a constructive bailment does not arise in every circumstance where property is negligently delivered to an unsuspecting party. Many jurisdictions have limited the imposition of a constructive bailment to circumstances where "justice so requires." See, e.g., Atalia, 977 F. Supp. at 980 (applying Arizona law); Christensen v. Hoover, 643 P.2d 525, 528-29 (Colo. 1982); Khan v. Heritage Prop. Mgmt., 584 N.W.2d 725, 729-30 (Iowa Ct. App. 1998); 8 C.J.S. Bailments § 14 (2005). Similarly, many jurisdictions limit constructive bailments to circumstances where "principles of justice" require the court to impose a constructive bailment. See, e.g., Hoblyn v. Johnson, 55 P.3d 1219, 1229 (Wyo. 2002); Loomis v. Imperial Motors, Inc., 396 P.2d 467, 469 (Idaho 1964); Aegis Investigative Grp. v. Metro. Gov't of Nashville & Davidson Cty., 98 S.W.3d 159, 163 (Tenn. Ct. App. 2002); Am. Ambassador Cas. Co. v. City of Chicago, 563 N.E.2d 882, 885 (Ill. App. 1990); 8A Am. Jur. 2d Bailments § 12 (2009); 8 C.J.S. Bailments § 14 (2005).
The BAP interpreted the "justice so requires" limitation to require the Court to weigh the relative equities between the parties before imposing a constructivebailment. In my view, which is consistent with the majority, the "justice so requires" limitation does not refer to equity. Rather, the "justice so requires" limitation asks the Court to review the circumstances surrounding the putative bailee's possession of bailed property to determine if justice demands imposing a duty on the bailee to exercise due care in handling the property. See Alitalia, 977 F. Supp. at 980; Aegis Investigative Grp, 98 S.W.3d at 160 ( ; 8A Am. Jur. 2d Bailments § 12 (2009). Therefore, the Court's focus should be on Capmark's possession of Bayview's funds,...
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