Harkey v. Grobstein (In the Matter of Point Center Financial, Inc.)

Although there may be standing to appeal, failure to object can bar an appeal under doctrines of waiver or forfeiture.

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Case Type:
Case Status:
Reversed and Remanded
16-56321 (9th Circuit, May 29,2018) Published
The 9th Circuit reversed the district court’s dismissal for lack of standing of an appeal from a bankruptcy court order that authorized a Chapter 7 trustee to assume an executory contract, where the appellants had failed to object to the trustee's motion or appear in the bankruptcy court. The 9th Circuit remanded the matter for the district to consider whether appellants had waived or forfeited their arguments, or if not, to review the bankruptcy court's order for clear error.
Procedural context:
District court dismissed the appeal from a bankruptcy court order, based upon lack of standing for failure to file opposition or appear in bankruptcy court. The 9th Circuit reversed the dismissal of the appeal, finding that appellants did have standing, and remanded to the district court for further proceedings.
The Chapter 7 trustee filed a motion to retroactively assume an LLC operating agreement. The motion was set for a hearing, and oppositions were due 14 days ahead of time. Appellants received notice of the hearing and the opposition deadline, but did not file an opposition or appear at the hearing. The bankruptcy court granted the motion, and asked the trustee to submit a proposed order. One week after the hearing, Appellants filed an emergency motion for reconsideration. The next day, the bankruptcy court denied the Appellants’ application for an order setting a hearing on their emergency motion. It is not entirely clear from the opinion whether the court declined to set it on shortened time, or denied the emergency motion on the merits. Later that day, the bankruptcy court entered its order granting the original motion. Appellants filed a timely notice of appeal of the bankruptcy court’s order on the Assumption Motion. The district court dismissed the appeal on the grounds that the Appellants lacked standing to appeal because they had not filed an opposition and had not appeared at the hearing. The Ninth Circuit reversed. The Ninth Circuit focused on the “persons aggrieved” standard and held that the Appellants had standing to appeal. On remand to the district court, the district court may consider whether the Appellants forfeited their opposition (“waiver” is knowing and voluntary and “forfeiture” is involuntary). But even if they forfeited their opposition, the district court will need to determine whether the bankruptcy court’s granting of the underlying motion should be reversed for “plain error.”
A. Wallace Tashima and Marsha S. Berzon, Circuit Judges, and Matthew F. Kennelly, District Judge

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