Whitney v. Everett (In re Pacific Thomas Corp.)

Case Type:
Case Status:
NC-16-1255-BJuF (9th Circuit, Aug 03,2017) Not Published
Affirming the bankruptcy court's denial of the appellant's motion for relief from stay that would allow the appellant to prosecute a state mandamus action that the appellant had brought on behalf of the debtor. [NOTE -- the appellant is NOT the debtor or the trustee.]
Procedural context:
The bankruptcy court had denied the appellant's motion for relief from the automatic stay requesting that he, over the objection of the Chapter 11 trustee, could prosecute a petition for a writ of administrative mandamus in state court on behalf of the debtor.
The appellant (Whitney) was the president of the debtor before the filing of a voluntary Chapter 11 petition. Creditors and the U.S. Trustee complained that Whitney mismanaged the debtor, and a Chapter 11 trustee was appointed. The Chapter 11 trustee marketed the real property owned by the debtor. In order to sell the realty, the Chapter 11 trustee had to obtain Certificates of Compliance from the City of Oakland. The Chapter 11 trustee eventually sold certain of the debtor's real property assets, and obtained court approval to abandon underwater real estate assets. The sale order included section 363(m) protective language. Whitney appealed the sale order and the abandonment order to the USDC. The USDC dismissed the appeal as moot because, among other factors, Whitney did not request a stay and the sale had closed. Whitney's subsequent appeal to the Ninth Circuit was dimissed as moot. During the Chapter 11 trustee's sale process, the City of Oakland issued Certificates for the debtor's realty. The Chapter 11 trustee agreed with the form and substance of the Certificates, but Whitney asserted that the Certificates had significant errors and omissions. The City refused to revoke the Certificates, and Whitney filed a petition for a writ of administrative mandamus against the City and City officials. Whitney identified himself as the "debtor representative" in the petition. The petition did not name the Chapter 11 trustee as a party in interest, and Whitney did not timely serve the petition on the trustee. Whitney also filed four lis pendens against the debtor's real property. The bankruptcy court subsequently found Whitney's conduct contemptuous, awarding the Chapter 11 trustee $30,000 in attorney's fees and costs. Whitney then filed a motion for relief from stay, which was denied.
BRAND, JURY, FARIS (bankruptcy judges)

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