Suchy, In re, 85-5513
| Citation | 786 F.2d 900 |
| Decision Date | 09 April 1986 |
| Docket Number | No. 85-5513,85-5513 |
| Parties | , Bankr. L. Rep. P 71,189 In re Daniel D. SUCHY, Alice M. Suchy, Debtors. COMMUNITY THRIFT & LOAN, Plaintiff/Cross-Defendant/Appellee, v. Daniel D. SUCHY, Alice M. Suchy, Defendants/Cross-Claimants/Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Leon L. Vickman, Encino, Cal., for plaintiff/cross-defendant/appellee.
Gregory A. Wedner, Bergman & Wedner, Inc., Los Angeles, Cal., for defendants/cross-claimants/appellants.
Appeal From the United States District Court for the Central District of California.
Before DUNIWAY, TANG, and PREGERSON, Circuit Judges.
Daniel D. Suchy and Alice M. Suchy ("Suchys") appeal the district court's dismissal of their cross-claim for fraud against cross-defendant and appellee Community Thrift & Loan ("Community") for lack of subject matter jurisdiction. On appeal, the Suchys contend that completion of foreclosure proceedings, to which they stipulated, did not preclude the district court from exercising jurisdiction over their claims against Community, who purchased the property through foreclosure. The Suchys further contend that their stipulation permitting foreclosure did not preclude their challenging the outcome of those proceedings when the foreclosing party is also the purchaser at the foreclosure sale. We affirm the district court's dismissal of the Suchys' cross-claim for lack of subject matter jurisdiction.
The Suchys entered into loan transactions with Community. They intended to use the loan funds to construct a single-family residence that also secured the loans. After the Suchys missed quarterly loan payments, Community began foreclosure proceedings. The Suchys then filed for bankruptcy under Chapter 11, thereby obtaining an automatic stay of the foreclosure. However, they later stipulated to vacate the stay and to permit foreclosure, if they did not make payment within a specified period. Community foreclosed the property when the Suchys failed to make the payment.
After Community purchased the property at the foreclosure sale, the Suchys filed a cross-claim against Community for equitable relief and money damages for the allegedly fraudulent misrepresentations Community made in connection with the loans.
The district court reasoned that it would have subject matter jurisdiction over the Suchys' cross-claim only if it is "related to" the Suchys' bankruptcy proceeding, as required by 28 U.S.C. Sec. 1471(b). Finding that the foreclosure sale was final and that therefore the property was outside the bankrupt's estate, the district court concluded that it lacked subject matter jurisdiction over the cross-claim.
We review de novo a district court's decision on subject matter jurisdiction. Miller v. City of Los Angeles, 755 F.2d 1390, 1391 (9th Cir.1985). When a district court dismisses a case for lack of subject matter jurisdiction, we will overturn the court's underlying factual findings only if they are clearly erroneous. Lowe v. City of Monrovia, 775 F.2d 998, 1003 (9th Cir.1985).
Former Bankruptcy Rule 805, 1 which applies in the instant case, expresses a policy of finality of foreclosure sales absent a stay. In interpreting Rule 805, we have held that the sale of property of a bankrupt's estate to a good faith purchaser will not be affected unless the bankrupt obtained a stay of the order approving the sale. Casady v. Bucher (In re Royal Properties, Inc.), 621 F.2d 984, 986-87 (9th Cir.1980); Taylor v. Lake (re CADA Investments, Inc.), 664 F.2d 1158, 1160 (9th Cir.1981); Dunlavey v. Arizona Title Insurance and Trust Co., (In re Charlton), 708 F.2d 1449, 1454 (9th Cir.1983).
The primary goal of Rule 805 is to protect the interest of a good faith purchaser, third party or otherwise, of the property unless the order approving a sale is stayed pending appeal. See In re Charlton, 708 F.2d at 1454-55. The district court was correct in dismissing the cross-claim for lack of subject matter jurisdiction. Sulmeyer v. Karbach Enterprises (In re Exennium, Inc.), 715 F.2d 1401, 1404 (9th Cir.1983), emphasized that "[w]e are quite reluctant to invoke public policy to override [Rule 805's] express requirement that reversal of an authorization of sale not affect the sale's validity unless the authorization and sale were stayed." Moreover, "[i]n the field of the administration of estates under the bankruptcy laws, the policy of the law strongly supports a requirement that a stay be obtained if review on appeal is not to be foreclosed because of mootness." Trone v. Roberts Farms Inc. (In re Roberts Farms, Inc.), 652 F.2d 793, 796 (9th Cir.1981). See Algeran, Inc. v. Advance Ross Corp., 759 F.2d 1421, 1424 (9th Cir.1985) ().
The Suchys also contend that Rule 805 affords no protection to Community because it did not qualify as a "good faith purchaser." Neither Bankruptcy Rule 805 nor the accompanying committee notes define "good faith purchaser." See L. King, 2 Collier on Bankruptcy, p 363.13 (15th Ed.1985) () Lack of good faith, however, is determined by fraudulent conduct during the sale proceedings. In re Exennium, 715 F.2d at 1404-05.
The requirement that a purchaser act in good faith, of course, speaks to the integrity of his conduct in the course of the sale proceedings. Typically, the misconduct that would destroy a purchaser's good faith status at a judicial sale involves fraud, collusion between the purchaser and other bidders or the trustee, or an attempt to take grossly unfair advantage of other bidders.
Prichard v. Sherwood & Roberts, Inc. (In re Kings Inn, Ltd.), 37...
To continue reading
Request your trial
-
Filtercorp, Inc., In re
...bidders or the trustee, or an attempt to take grossly unfair advantage of other bidders.' " Id. (quoting Community Thrift & Loan v. Suchy (In re Suchy), 786 F.2d 900, 902 (9th Cir.1985)). Although Gateway Lenders comprised insiders, Paulman's allegations of bad faith are unsupported by the ......
-
Suter v. Goedert
...creditor) (citing Algeran, Inc. v. Advance Ross Corp., 759 F.2d 1421, 1424 (9th Cir.1985) (sale of securities)). See also In re Suchy, 786 F.2d 900, 901 (9th Cir.1985) (sale of real estate). The policy behind mootness is "to protect the interest of a good faith purchaser ... of the property......
-
Thomas v. Shree Jalaram LLC, Case No. 18-cv-06409-LB
...before it." Brionez v. U.S. Dep't of Agric., No. C 01-3969 CW, 2007 WL 217680, at *2 (N.D. Cal. Jan. 26, 2007) (citing In re Suchy, 786 F.2d 900, 902-903 (9th Cir. 1985)). But courts have no inherent power to enforce settlement agreements after a case has been dismissed: "Enforcement of the......
-
Zerand-Bernal Group, Inc. v. Cox
...debtor is not even a party, years after the bankruptcy was wound up. In re Edwards, 962 F.2d 641, 643 (7th Cir.1992); In re Suchy, 786 F.2d 900, 902 (9th Cir.1985). We said that the federal interest is tenuous, not that it is nonexistent. Zerand points out that the price received in a bankr......
-
Alla Raykin, section 363 Sales: Mooting Due Process?
...Cir. 2001); In re Abbotts Dairies of Pa., Inc., 788 F.2d 143, 150–51 (3d Cir. 1986).See e.g., Cmty. Thrift & Loan v. Suchy (In re Suchy), 786 F.2d 900, 902 (9th Cir. 1985) (finding thatgood faith and whether § 363 applies is the trial court’s domain); M Capital Corp., 290 B.R. at 748 (holdi......