In re: PAUL PHILLIP BARDOS, DBA Cadmus Construction Co.

FILED MAR 23 2016 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 OF THE NINTH CIRCUIT

3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. CC-15-1217-FDKu ) 6 PAUL PHILLIP BARDOS, ) Bk. No. 6:10-bk-41455-SY DBA Cadmus Construction Co., ) 7 ) Debtor. ) 8 _____________________________ ) ) 9 MICHAEL D. ROGERS, ) ) 10 Appellant, ) ) 11 v. ) MEMORANDUM* ) 12 LESLIE T. GLADSTONE, ) Liquidating Agent for the ) 13 Estate of Paul Phillip Bardos,) DBA Cadmus Construction Co., ) 14 ) Appellee. ) 15 ______________________________) 16 Argued and Submitted on February 19, 2016 at Pasadena, California 17 Filed – March 23, 2016 18 Appeal from the United States Bankruptcy Court 19 for the Central District of California 20 Honorable Scott Ho Yun, Bankruptcy Judge, Presiding 21 Appearances: Appellant Michael D. Rogers argued pro se; 22 Appellee Leslie T. Gladstone argued pro se. 23 24 25 26 * This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 28 9th Cir. BAP Rule 8024-1.

1 Before: FARIS, DUNN,** and KURTZ, Bankruptcy Judges. 2 INTRODUCTION 3 Appellant Michael D. Rogers appeals the bankruptcy court’s 4 order approving the sale of stock of chapter 111 debtor Paul 5 Phillip Bardos’ company, Cadmus Construction, Inc. (“Cadmus 6 Inc.”). We AFFIRM. 7 FACTUAL BACKGROUND2 8 A. The Construction Contracts and State Court Litigation3 9 Mr. Bardos was in the construction business. He sometimes 10 did business as a sole proprietor under the name Cadmus 11 Construction Co. (“Cadmus Co.”). He owned 100% of the shares of 12 Cadmus Inc., which was also engaged in the construction business. 13 Beginning in or around 2007, Mr. Bardos entered into a 14 ** 15 At oral argument held on February 19, 2016, Appellant raised potential grounds for the recusal of Judge Laura S. 16 Taylor. On February 23, Judge Taylor issued an order recusing herself from the Panel assigned to this appeal. Following the 17 recusal, Judge Randall L. Dunn was assigned to the Panel for this 18 appeal in place of Judge Taylor. Judge Dunn has reviewed the briefs and records filed with respect to this appeal as well as 19 the recording of the oral argument. 20 1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, all 21 “Rule” references are to the Federal Rules of Bankruptcy 22 Procedure, Rules 1001-9037, and all “Civil Rule” references are to the Federal Rules of Civil Procedure, Rules 1-86. 23 2 Mr. Rogers presents us with a deficient record. We have 24 exercised our discretion to review the bankruptcy court’s docket, as appropriate. See Woods & Erickson, LLP v. Leonard (In re AVI, 25 Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008). 26 3 The background facts of this section are drawn largely 27 from an earlier BAP appeal in this case. See Twenty-Nine Palms Enters. Corp. v. Bardos (In re Bardos), No. CC-13-1316-PaKuBl, 28 2014 WL 3703923 (9th Cir. BAP July 25, 2014) (“In re Bardos I”).

1 number of construction contracts with Twenty-Nine Palms Band of 2 Mission Indians of California (the “Tribe”) to oversee 3 development and construction projects undertaken by the Tribe and 4 its corporate entity, Twenty-Nine Palms Enterprises Corporation 5 (“Twenty-Nine Palms”). In re Bardos I, 2014 WL 3703923, at *1. 6 Mr. Bardos served as contractor for some or all of these 7 projects, doing so under various names, including his sole 8 proprietorship, Cadmus Co. Id. 9 In 2009, Twenty-Nine Palms filed a complaint in the 10 San Bernardino superior court against Cadmus Co. Id. 11 Twenty-Nine Palms alleged that, because Cadmus Co. was not a 12 licensed contractor, it was in violation of the relevant state 13 licensing statutes. Id. It asked the court to order that Cadmus 14 Co. disgorge all of the fees Twenty-Nine Palms had paid it. Id. 15 The superior court granted summary judgment in favor of 16 Twenty-Nine Palms and awarded it $917,043.09 plus pre-judgment 17 interest. Id. 18 B. The Individual Bankruptcy Case 19 On September 29, 2010, Mr. Bardos filed his chapter 11 20 bankruptcy petition (the “Individual Case”). He listed 21 Twenty-Nine Palms as his largest creditor with a claim for 22 $917,043.09. One of the assets of the estate is Mr. Bardos’ 23 stock in Cadmus Inc., with its value listed as “unknown.” 24 C. The Corporate Bankruptcy Case 25 A few months after Mr. Bardos filed his chapter 11 petition, 26 Cadmus Inc. also filed for chapter 11 bankruptcy (the “Corporate 27 Case”). The Corporate Case was ultimately converted to 28 chapter 7, and Steven Speier was appointed as chapter 7 trustee.

1 D. The Retention of Mr. Rogers’ Firm in the Individual Case 2 On December 29, 2010, the court in the Individual Case 3 approved Mr. Bardos’ application for the employment of 4 Mr. Rogers’ law firm, Lambert & Rogers, APLC, as special counsel. 5 Lambert & Rogers was retained to represent Mr. Bardos’ estate in 6 the state-court litigation between Twenty-Nine Palms and Cadmus 7 Co. The law firm would be compensated based on an hourly rate. 8 Mr. Rogers’ firm apparently completed its work in the 9 Individual Case. On October 18, 2012, Mr. Rogers applied for 10 final compensation in the amount of $58,066 plus expenses. He 11 stated that $48,169.50 had been paid to date. The court approved 12 and authorized payment of the requested compensation (a net 13 balance of $9,896.50) by order entered on November 14, 2012. 14 Mr. Rogers now claims that the compensation was never paid in 15 full and that the unpaid balance is $8,431.12. Nothing in the 16 record corroborates this assertion, and there is no indication 17 that Mr. Rogers ever brought the issue to the court’s attention. 18 E. The Retention of Mr. Rogers’ Firm in the Corporate Case 19 On March 21, 2014, the chapter 7 trustee in the Corporate 20 Case filed an application to employ Mr. Rogers’ law firm as 21 special litigation counsel. The retainer agreement, which was 22 attached to Mr. Rogers’ declaration, provided for a contingency 23 fee as follows: 24 CONTINGENCY FEE COMPENSATION 25 The CLIENT agrees to employ ATTORNEYS to defend and prosecute a lawsuit and arbitration and assigns to 26 them for their fee TWENTY-FIVE PERCENT (25%) of all amounts actually recovered by way of settlement, 27 compromise or otherwise prior to the filing of the Opening Brief with the California Court of Appeal, and 28 FORTY PERCENT (40%) of all amounts actually recovered

1 by way of settlement, compromise, judgment, order, award or otherwise after the filing of the Opening 2 Brief, subject to the below and any Bankruptcy Court order (the “Compensation Terms”). 3 4 The retainer agreement also provided: 5 OTHER EMPLOYMENT TERMS 6 In addition to the Compensation Terms, the Employment Terms includes all of the following: 7 (1) ATTORNEYS [Lambert & Rogers] and CLIENT [the 8 chapter 7 trustee in the Corporate Case] have conferred and agree that no ownership interest in 9 the DEBTOR [Cadmus Inc.] should [be] sold, transferred, or otherwise disposed of during the 10 pendency of the CASE and a prohibition against such a transfer should be included in any order 11 approving the engagement of ATTORNEYS by CLIENT as provided for herein. 12 (2) In the event any ownership interest in Cadmus 13 Construction, Inc., is sold, transferred, or otherwise disposed of, and such transferral or 14 disposition causes a prejudicial impact on ATTORNEYS’ ability to obtain maximum recovery, the 15 above-stated contingency fees shall be applied to the actual cash proceeds of any such sale, 16 transferral, or disposition. The determination of “prejudicial impact” shall be made by ATTORNEYS in 17 their sole, unfettered discretion, subject to the right of the CLIENT in the reasonable exercise of 18 its duties to contest such a determination with the Court in the Case. 19 20 (Emphases added.) Although the entire retainer agreement was 21 filed with the bankruptcy court, neither Mr. Rogers nor the 22 chapter 7 trustee called these unusual provisions to the 23 bankruptcy court’s attention. 24 The court granted the application and approved the 25 “compensation that is to be paid on a contingency fee basis as 26 set forth in the . . . Application.” 27 F. The Stock Sale in the Individual Case 28 The bankruptcy court apparently confirmed a plan of

1 reorganization in the Individual Case that provided, among other 2 things, that if Mr. Bardos was convicted in a pending criminal 3 case, the court would immediately appoint a liquidating agent. 4 After Mr. Bardos pleaded guilty to one count in the criminal 5 case, the court appointed accounting firm Squar Milner as 6 liquidating agent on April 4, 2014. On July 23, the court 7 approved the appointment of Appellee Leslie T. Gladstone 8 (“Liquidating Agent”) as successor liquidating agent. 9 When the Liquidating Agent took over, the estate in the 10 Individual Case had essentially no cash, making it very difficult 11 for the Liquidating Agent to do her job. The bankruptcy court 12 permitted the Liquidating Agent to borrow $15,000 from 13 Twenty-Nine Palms to fund an investigation of potential claims. 14 In granting the request for approval of the advance, the 15 bankruptcy court cautioned the Liquidating Agent that, given the 16 doubtfulness of recovery, she “should be mindful that this case 17 should not linger or stay open.” 18 One of the assets of the estate in the Individual Case was 19 Mr. Bardos’ stock in Cadmus Inc. It initially appeared that the 20 stock was worthless, but the Liquidating Agent negotiated an 21 agreement to sell the stock to Twenty-Nine Palms for $20,000. 22 On April 28, 2015, she filed a Motion to Approve Stock 23 Purchase Agreement (“Motion to Approve Stock Purchase”) under 24 § 363(b). She stated that “[t]here are no liens against the 25 [Cadmus Inc.] Stock and [Cadmus Inc.] is a debtor in [a separate] 26 bankruptcy with no expected distribution to shareholders.” She 27 argued that the sale of the stock was in the best interests of 28 the estate, since it had unpaid claims and no other source of

1 funds. 2 Mr. Rogers opposed the Motion to Approve Stock Purchase. He 3 pointed out that he had been employed since May 2014 as special 4 litigation counsel in the Corporate Case. He contended that, 5 based on his retention agreement in that case, he is entitled to 6 a lien on the stock owned by the estate in the Individual Case. 7 Specifically, he argued that the contingency fee employment 8 agreement in the Corporate Case entitles him “to 40% of the 9 purchase money in the event of a transfer in ownership interest 10 of [Cadmus Inc.] . . . . [He] will be entitled to $8,000 of the 11 purchase money.” Mr. Rogers argued that: (1) the Liquidating 12 Agent had not properly evaluated the estate’s claims; 13 (2) “$20,000 seems a bit low, especially considering it is a net 14 of $12,000 after [Mr. Rogers’] cut” and even less after repayment 15 of the Tribe’s $15,000 loan and various fees; (3) he is pursuing 16 Cadmus Inc.’s claims against the Tribe, and the sale would mean 17 the he “will be, on some level, suing [his] own client”; (4) the 18 Liquidating Agent failed to demonstrate the fairness or 19 reasonableness of the purchase price; and (5) the Liquidating 20 Agent “has been bought and paid for” or “is, at the very least, 21 being played.” Significantly, Mr. Rogers did not mention that he 22 was owed any unpaid fees for work done in the Individual Case. 23 Mr. Rogers failed to appear at the hearing on the Motion to 24 Approve Stock Purchase. The court rejected his contentions, 25 reasoning that the chapter 7 trustee in the Corporate Case (i.e., 26 Mr. Rogers’ client) had consented to the sale, and Mr. Rogers did 27 not have standing in the Individual Case. It held: 28 I’m prepared to grant the motion and if Mr. Rogers was

1 here I was going to let him know that I really, although I do share some concerns that he has raised in 2 his opposition, I don’t really think he has a right to object. I think his client, the Chapter 7 Trustee in 3 the Cadmus case, as I can see from the e-mail exchange attached by Ms. Gladstone that Mr. Rogers’ client 4 seemed to have consented to this transaction and too I think Mr. Rogers is mistaken. I think to the extent 5 that he’s a professional and a potential admin creditor it’s in the Cadmus case, not in this case, so I don’t 6 think he has the standing or the right to object to this transaction as a professional with a potential 7 admin claim in this case. 8 The court expressed its incredulity that anyone would want 9 to purchase the stock, when “[t]here is no money in it” and there 10 likely will not “ever be money for equity.” Nevertheless, the 11 Liquidating Agent had stated in her briefs that Twenty-Nine Palms 12 had approached her with an offer to buy the potentially worthless 13 stock for $5,000, which she later negotiated to $20,000. She 14 represented that there were no negative tax consequences to the 15 estate. The Liquidating Agent stated that the sale “is fair and 16 equitable and in the best interests of creditors.” 17 The court made clear that Twenty-Nine Palms’ stock purchase 18 would not terminate the litigation between Cadmus Inc. and 19 Twenty-Nine Palms, since Cadmus Inc.’s claims were property of 20 its bankruptcy estate under the control of the chapter 7 trustee 21 in the Corporate Case. The court cautioned Twenty-Nine Palms 22 that it would have no ability to control the litigation against 23 it or otherwise influence the handling of the lawsuit by the 24 trustee in the Corporate Case. Counsel for Twenty-Nine Palms 25 indicated that his client understood. 26 The bankruptcy court granted the Motion to Approve Stock 27 Purchase and entered the order to that effect on June 23, 2015. 28 Mr. Rogers timely appealed.

1 The Liquidating Agent represents that the sale of the stock 2 has closed and the stock has been transferred to Twenty-Nine 3 Palms. Under the stock purchase agreement, the entry of an order 4 approving the sale and the expiry of the appeal period without an 5 appeal being taken were conditions to the closing.4 The 6 Liquidating Agent represents that Twenty-Nine Palms waived this 7 condition. 8 JURISDICTION 9 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 10 §§ 1334, 157(b)(1), and 157(b)(2)(K). We have jurisdiction under 11 28 U.S.C. § 158. 12 ISSUES 13 (1) Whether this appeal is moot. 14 (2) Whether the bankruptcy court erred in approving the sale 15 of stock. 16 STANDARDS OF REVIEW 17 We review de novo our own jurisdiction, including questions 18 of mootness. Silver Sage Partners, Ltd. v. City of Desert Hot 19 Springs (In re City of Desert Hot Springs), 339 F.3d 782, 787 20 (9th Cir. 2003). 21 4 The Stock Purchase Agreement states: 22 23 The obligations of each Party to consummate the transactions contemplated by this Agreement shall be 24 subject to the fulfillment, at or prior to the Closing, of each of the following conditions: (a) The Bankruptcy 25 Court having jurisdiction over the Bankruptcy 26 Proceedings shall have approved this Agreement and the transactions contemplated by this Agreement by entry of 27 an order that is final for purposes of appeal, as to which the time for appeal, including any extensions, 28 has expired, and from which no appeal has been taken[.]

1 Similarly, standing is a legal issue that we review de novo. 2 Wedges/Ledges of Cal., Inc. v. City of Phoenix, 24 F.3d 56, 61 3 (9th Cir. 1994); Kronemyer v. Am. Contractors Indem. Co. 4 (In re Kronemyer), 405 B.R. 915, 919 (9th Cir. BAP 2009). 5 We review for abuse of discretion an order approving a § 363 6 sale. Moldo v. Clark (In re Clark), 266 B.R. 163, 168 (9th Cir. 7 BAP 2001). We apply a two-part test to determine objectively 8 whether the bankruptcy court abused its discretion, first 9 determining de novo whether the court identified the correct 10 legal rule, and second examining the court’s factual findings 11 under the clearly erroneous standard. Beal Bank USA v. Windmill 12 Durango Office, LLC (In re Windmill Durango Office, LLC), 13 481 B.R. 51, 64 (9th Cir. BAP 2012) (citing United States v. 14 Hinkson, 585 F.3d 1247, 1261–62 (9th Cir. 2009) (en banc)). A 15 bankruptcy court abuses its discretion if it applied the wrong 16 legal standard or its findings were illogical, implausible, or 17 without support in the record. See TrafficSchool.com, Inc. v. 18 Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011). 19 DISCUSSION 20 A. This appeal is not moot. 21 We have requested that the parties address the issue of 22 mootness. As we stated in the prior appeal in this case: 23 We cannot exercise jurisdiction over a moot appeal. A moot case is one where the issues presented are no 24 longer live, and no case or controversy exists. The test for mootness is whether an appellate court can 25 still grant effective relief to the prevailing party if it decides the merits in his or her favor. If a case 26 becomes moot while the appeal is pending, an appellate court must dismiss the appeal. 27 28 In re Bardos I, 2014 WL 3703923, at *6 (internal citations

1 omitted). We recognize two types of mootness: constitutional 2 mootness and equitable mootness. 3 1. Constitutional Mootness 4 Constitutional mootness “occurs when an appellate court 5 cannot give the appellant any relief whatsoever in the event that 6 it decides in appellant’s favor.” Id. (citing Felster Publ’g v. 7 Burrell, 415 F.3d 994, 998 (9th Cir. 2005)). Constitutional 8 mootness is inapplicable in the present case, because we have the 9 authority to grant the requested relief and undo the sale of 10 stock. 11 2. Equitable Mootness 12 Equitable mootness requires “that practical and equitable 13 factors should be taken into consideration in determining if an 14 appeal is moot.” In re Bardos I, 2014 WL 3703923, at *6; see 15 Onouli-Kona Land Co. v. Richards (In re Onouli-Kona Land Co.), 16 846 F.2d 1170, 1171 (9th Cir. 1988) (“[b]ankruptcy’s mootness 17 rule applies when an appellant has failed to obtain a stay from 18 an order that permits a sale of a debtor’s assets”). Equitable 19 mootness arises when “appellants have failed and neglected 20 diligently to pursue their available remedies to obtain a stay of 21 the objectionable orders of the Bankruptcy Court, thus 22 ‘permitting such a comprehensive change of circumstances to occur 23 as to render it inequitable . . . to consider the merits of the 24 appeal.” In re Bardos I, 2014 WL 3703923, at *6 (quoting Focus 25 Media, Inc. v. NBC (In re Focus Media, Inc.), 378 F.3d 916, 922 26 (9th Cir. 2004)). The party asserting equitable mootness must 27 “demonstrate that the case involves transactions ‘so complex or 28 difficult to unwind’ that equitable mootness applies.” Id. at *7

1 (quoting Lowenschuss v. Selnick (In re Lowenschuss), 170 F.3d 2 923, 933 (9th Cir. 1999)). 3 “Equitable mootness requires the court to look beyond 4 impossibility of a remedy to ‘the consequences of the remedy and 5 the number of third parties who have changed their position in 6 reliance on the order that is being appealed.’” Clear Channel 7 Outdoor, Inc. v. Knupfer (In re PW, LLC), 391 B.R. 25, 33 (9th 8 Cir. BAP 2008) (quoting Darby v. Zimmerman (In re Popp), 323 B.R. 9 260, 271 (9th Cir. BAP 2005)). “In other words, equitable 10 principles may require dismissal of the appeal when the appellant 11 neglects to obtain a stay pending appeal and the rights of third 12 parties intervene.” Zuercher v. Kravitz (In re Zuercher Trust of 13 1999), BAP No. NC-13-1299, 2014 WL 7191348, at *6 (9th Cir. BAP 14 Dec. 17, 2014) (citing Spirtos v. Moreno (In re Spirtos), 15 992 F.2d 1004, 1006 (9th Cir. 1993); In re Popp, 323 B.R. at 16 271). 17 Although the concept of equitable mootness is not new, the 18 Ninth Circuit recently endorsed standards for evaluating 19 equitable mootness: 20 We will look first at whether a stay was sought, for absent that a party has not fully pursued its rights. 21 If a stay was sought and not gained, we then will look to whether substantial consummation of the plan has 22 occurred. Next, we will look to the effect a remedy may have on third parties not before the court. 23 Finally, we will look at whether the bankruptcy court can fashion effective and equitable relief without 24 completely knocking the props out from under the plan and thereby creating an uncontrollable situation for 25 the bankruptcy court. 26 Motor Vehicle Cas. Co. v. Thorpe Insulation Co. (In re Thorpe 27 Insulation Co.), 677 F.3d 869, 881 (9th Cir. 2012). 28 Beginning with the first factor, in the present case,

1 Mr. Rogers never sought a stay of the order approving the stock 2 sale. He says that there was no need to seek a stay, since his 3 appeal prevented the satisfaction of a condition to closing. The 4 Liquidating Agent says that Twenty-Nine Palms waived this 5 condition. Both the Stock Purchase Agreement and the bankruptcy 6 court’s order approving that agreement contemplate possible 7 waivers of the closing conditions.5 Mr. Rogers simply assumed 8 that his notice of appeal would block the sale. His assumption 9 was unwarranted. Therefore, Mr. Rogers did not diligently pursue 10 his rights to stay the sale. 11 However, our inquiry does not stop there. While “failure to 12 seek a stay pending appeal, at least without an adequate excuse, 13 requires dismissal of an appeal[,]” In re Zuercher Trust of 1999, 14 2014 WL 7191348, at *7 (citing Rev Op Grp. v. ML Manager LLC 15 (In re Mortgs. Ltd.), 771 F.3d 1211 (9th Cir. 2014)), we recently 16 held that, even when an objector did not seek a stay, “there must 17 also be some subsequent event that would render consideration of 18 the issues on appeal inequitable, and thereby trigger an 19 equitable mootness analysis.” In re Zuercher Trust of 1999, 20 2014 WL 7191348, at *7 (citations omitted). In other words, even 21 where “[the objector] did not seek a stay of the Sale Order 22 pending appeal and has provided no satisfactory explanation for 23 the failure to do so, to complete our equitable mootness analysis 24 25 5 Paragraph 2.1 of the agreement provides that the closing 26 will take place no later than three business days “after the last of the conditions to Closing set forth in Section 6 have been 27 satisfied or waived . . . .” (Emphasis added.) Paragraph 3 of the bankruptcy court’s order contains virtually the same 28 language.

1 we must consider whether [the objector’s] failure to seek a stay 2 ‘creates a situation rendering it inequitable to reverse the 3 orders appealed from.’” Id. (quoting In re Mortgs., Ltd., 4 771 F.3d at 1216). Thus, we continue with our analysis of the 5 remaining Thorpe factors. 6 The second factor described in Thorpe is whether the plan 7 has been substantially consummated. In re Thorpe Insulation Co., 8 677 F.3d at 882.6 Here, the Liquidating Agent represents that 9 the stock sale has been completed, with the stock transferred to 10 Twenty-Nine Palms. This weighs in favor of mootness. 11 The third Thorpe factor considers the effect of a reversal 12 on third parties who are not “before the court.” See 13 In re Zuercher Trust of 1999, 2014 WL 7191348, at *8. While it 14 is true that Twenty-Nine Palms is not a party to this appeal, it 15 is the largest creditor and a participant in both the Individual 16 Case and the Corporate Case. Accordingly, we cannot say that 17 Twenty-Nine Palms is the type of third party that equitable 18 mootness is meant to protect. 19 Further, “the question is not whether it is possible to 20 alter a plan such that no third party interests are affected, but 21 whether it is possible to do so in a way that does not affect 22 third party interests to such an extent that the change is 23 inequitable.” In re Thorpe Insulation Co., 677 F.3d at 882. If 24 we conclude that the bankruptcy court erred, it would be 25 26 6 In the context of a chapter 11 plan, § 1101(2) provides a 27 special statutory definition of the phrase “substantial consummation.” The phrase does not directly apply to an asset 28 sale, but a similar concept can be applied by analogy.

1 relatively easy to restore the status quo ante: the Liquidating 2 Agent could return the purchase price to Twenty-Nine Palms, and 3 Twenty-Nine Palms could return the stock to the Liquidating 4 Agent. Thus, there is no evidence that Twenty-Nine Palms has 5 irrevocably changed its position or cannot be made whole. 6 At oral argument, the Liquidating Agent said that she 7 already spent part of the sale proceeds on fees due to the United 8 States Trustee and other administrative expenses, and she is 9 unsure whether she can recall all or part of those funds. But 10 the Liquidating Agent bears the burden of demonstrating that the 11 transaction cannot be undone; uncertainty about whether it can be 12 undone is not sufficient. See id. at 880 (“The party moving for 13 dismissal on mootness grounds bears a heavy burden.” (citation 14 and quotation marks omitted)). 15 Finally, the inability of the Liquidating Agent to repay the 16 entire purchase price to Twenty-Nine Palms might not lead to an 17 inequitable result; after all, it was Twenty-Nine Palms that 18 chose to waive the closing condition and close the transaction 19 despite Mr. Rogers’ pending appeal. It might not be inequitable 20 to require Twenty-Nine Palms to face the consequences of its 21 calculated risk. 22 “Fourth, and most importantly, we look to whether the 23 bankruptcy court on remand may be able to devise an equitable 24 remedy. . . . Where equitable relief, though incomplete, is 25 available, the appeal is not moot.” Id. at 883 (citing Paulman 26 v. Gateway Venture Partners III, L.P. (In re Filtercorp, Inc.), 27 163 F.3d 570, 578 (9th Cir. 1998)). Aside from the fact that the 28 stock sale has been consummated, the Liquidating Agent has failed

1 to provide us with any evidence that the transaction is “so 2 complex or difficult to unwind” that equitable mootness would 3 prevent our reversal of the order granting the Motion to Approve 4 Stock Purchase. 5 Therefore, we hold that this appeal is not equitably moot. 6 B. Mr. Rogers failed to establish his standing in the Individual Case to object to the stock sale. 7 8 The Liquidating Agent argues that Mr. Rogers lacks standing 9 to object to the stock sale in the Individual Case. We agree 10 with the conclusion, but for slightly different reasons. 11 Mr. Rogers objected to the stock sale in the Individual Case 12 on the basis that it would impair his rights under the contingent 13 fee agreement. But Mr. Rogers’ contingent fee agreement was with 14 the chapter 7 trustee in the Corporate Case. The Liquidating 15 Agent in the Individual Case was not bound by that agreement, and 16 the agreement gave Mr. Rogers no rights in the Individual Case. 17 Indeed, the stock transfer restriction in his retention agreement 18 in the Corporate Case was completely ineffective, because Cadmus 19 Inc. did not own or control its own stock and had no power to 20 restrict transfers of that stock.7 The chapter 7 trustee in the 21 Corporate Case had no more power over the stock than Cadmus Inc. 22 As the Liquidating Agent correctly pointed out, “Steven Speier – 23 the client named in the Retainer Agreement and representative of 24 [Cadmus Inc.’s] estate – never owned the Stock and never had any 25 7 26 The Liquidating Agent also argues that the creation of a lien on the stock in the Corporate Case would have violated the 27 automatic stay under § 362(a)(4). We decline to address it because it is unnecessary and because the Liquidating Agent 28 admittedly failed to raise it in the bankruptcy court.

1 authority whatsoever to encumber the Stock, which is property of 2 the Shareholder bankruptcy estate.” (Emphasis omitted.) 3 Mr. Rogers has failed to provide any facts or authority to the 4 contrary. Therefore, the contingent fee agreement in the 5 Corporate case gave Mr. Rogers no rights in the Individual Case.8 6 Mr. Rogers argues for the first time on appeal that he has 7 standing in the Individual Case because his approved final 8 compensation for services rendered in that case was not paid in 9 full. He says that “[t]here wasn’t enough money in the estate to 10 pay [his] last fee bill; [he] is still owed $8,431.12.” Nothing 11 in the record either corroborates or refutes this assertion. 12 More importantly, Mr. Rogers did not make this argument in 13 the bankruptcy court, and, because he did not attend the hearing 14 on approval of the stock sale, he was not available to address 15 the court’s concerns about his standing. We decline to consider 16 this new argument on appeal. See Ezra v. Seror (In re Ezra), 17 537 B.R. 924, 932 (9th Cir. BAP 2015) (“[F]ederal appellate 18 courts will not consider issues not properly raised in the trial 19 courts. . . . An issue only is ‘properly raised’ if it is raised 20 sufficiently to permit the trial court to rule upon it.” 21 (internal citations omitted)). Accordingly, Mr. Rogers lacks 22 standing to prosecute this appeal. 23 24 8 We are troubled by the fact that neither Mr. Rogers nor 25 counsel for the chapter 7 trustee specifically called the stock 26 transfer restrictions to the bankruptcy court’s attention when they asked the bankruptcy court to approve that agreement in the 27 Corporate Case. Although the agreement was filed with the court, most bankruptcy courts expect counsel to point out, explain, and 28 justify non-standard provisions such as these.

1 C. The bankruptcy court did not err when it approved the sale. 2 Even assuming he has standing, Mr. Rogers has failed to show 3 reversible error. 4 1. Mr. Rogers’ briefs do not identify any error. 5 As a preliminary matter, we note that Mr. Rogers’ nebulous 6 arguments, spanning approximately two pages of his opening brief, 7 do not clearly identify any points of error or cite any error in 8 the record. 9 As a general rule, a party’s brief “must make specific 10 references to the relevant portions of the record. Opposing 11 parties and the court are not obliged to search the entire 12 record, unaided, for error.” Tevis v. Wilke, Fleury, Hoffelt, 13 Gould & Birney, LLP (In re Tevis), 347 B.R. 679, 686 (9th Cir. 14 BAP 2006) (internal citations omitted). Moreover, we “will not 15 consider a matter on appeal that is not specifically and 16 distinctly argued in [an] appellant’s opening brief.” Id. at 690 17 (citing Affordable Housing Dev. Corp. v. Fresno, 433 F.3d 1182, 18 1193 (9th Cir. 2006); Price v. Lehtinen (In re Lehtinen), 19 332 B.R. 404, 410 (9th Cir. BAP 2005)). 20 Mr. Rogers’ failure to “specifically and distinctly” argue 21 the alleged errors and provide “specific references” to the 22 record supports our decision to reject this appeal. 23 2. The court may approve a sale in the best interest of the estate under § 363. 24 25 Section 363(b)(1) provides that “[t]he trustee, after notice 26 and a hearing, may use, sell, or lease, other than in the 27 ordinary course of business, property of the estate . . . .” 28 § 363(b)(1). “The trustee (and, ultimately, the bankruptcy

1 court) must assure that the estate receives optimal value as to 2 the asset to be sold.” DeBilio v. Golden (In re DeBilio), 3 BAP No. CC-13-1441-TaPaKi, 2014 WL 4476585, at *6 (9th Cir. BAP 4 Sept. 11, 2014) (citing § 363(b)(1); Simantob v. Claims 5 Prosecutor, LLC (In re Lahijani), 325 B.R. 282, 288-89 (9th Cir. 6 BAP 2005)). We also stated that, “[i]n the Ninth Circuit, a 7 § 363(b)(1) sale does not require a good faith finding.” Id. 8 (citing Thomas v. Namba (In re Thomas), 287 B.R. 782, 785 (9th 9 Cir. BAP 2002) (“While no bankruptcy judge is likely to approve a 10 sale that does not appear to be in ‘good faith,’ an actual 11 finding of ‘good faith’ is not an essential element for approval 12 of a sale under § 363(b).”)). 13 3. The sale price was adequate. 14 Mr. Rogers’ basic argument is that the purchase price for 15 the stock was “a bit low.” The bankruptcy court did not clearly 16 err when it rejected this factual contention. 17 In her motion for approval of the stock sale, the 18 Liquidating Agent declared that: 19 The Agreement is based on my sound business judgment, as it provides for payment of substantial funds to the 20 estate. I have also been advised that there are no adverse tax consequences to the estate. Thus, the 21 proposed Agreement is fair and equitable and in the best interests of creditors. 22 23 In his opposition, Mr. Rogers briefly described the claims 24 against Twenty-Nine Palms and declared that “[i]t does not seem 25 that [Liquidating Agent] has evaluated this before agreeing to a 26 sale of the stock for $20,000.” He acknowledged, however, that, 27 “[o]f course, coming up with a methodology for calculating a sale 28 price that efficaciously incorporates the risk/return is

1 problematic and open to bias depending on the ‘experts’ canvassed 2 for their opinion, but $20,000 seems a bit low, especially 3 considering it is a net of $12,000 after my cut.” He also 4 attacked the Liquidating Agent personally. He claimed that “she 5 also has a conflict of interest in that she is the first one to 6 get paid out of the $20,000” and “[i]t must be assumed that [the 7 Liquidating Agent] has been bought and paid for.” 8 In reply, the Liquidating Agent declared that the stock 9 “does not have any other value to the Debtor’s estate” apart from 10 the proposed sale. She emphasized her independence and stated 11 that Mr. Rogers was free to bid for the stock if he thought the 12 purchase price was too low. She also provided e-mail 13 correspondence between herself and the chapter 7 trustee in the 14 Corporate Case, in which the trustee said, “I doubt there will be 15 a surplus in my case, but we will probably make a small 16 distribution to creditors.” 17 The bankruptcy court accepted the Liquidating Agent’s 18 evidence. The court noted that “this is very unusual why [sic] 19 anybody would want to buy a privately held equity interest of a 20 Chapter 7 debtor. There is no money in it and at least according 21 to [the chapter 7 trustee in the Corporate Case,] he doesn’t 22 think there will ever be money for equity.” The court went on to 23 say, “I’m still mystified why anybody will want to buy a [sic] 24 out of the money equity privately held in a Chapter 7 case but it 25 generates money for this estate so I am willing to grant the 26 motion.” 27 The bankruptcy court did not commit clear error when it 28 rejected Mr. Rogers’ contention that the sale price was “a bit

1 low” and instead agreed with the Liquidating Agent’s evidence. 2 4. We decline to take judicial notice of a state court decision that postdated the bankruptcy court’s order. 3 4 Mr. Rogers submits that the Panel should take judicial 5 notice of a recent, unpublished opinion in which the California 6 Court of Appeals held that the arbitration provisions in the 7 various construction contracts were valid. 8 We decline to take judicial notice of the opinion. Our job 9 is to determine whether the bankruptcy court erred based on the 10 evidence before it, which in turn depends in part on whether the 11 Liquidating Agent properly exercised her business judgment based 12 on the facts known at the time. Neither the bankruptcy court nor 13 the Liquidating Agent had the appellate opinion before them, and 14 neither of them is charged with perfect foresight. Therefore, 15 that opinion is not relevant to this appeal. 16 5. The bankruptcy court properly addressed the effects of the stock sale on Mr. Rogers and the Corporate Case. 17 18 Mr. Rogers argues that, if Twenty-Nine Palms owns 100% of 19 Cadmus Inc.’s stock, then he “will be, on some level, suing his 20 own client.” Mr. Rogers posits that this “could cause problems 21 down the road.” 22 In the first place, his premise is wrong. As the bankruptcy 23 court correctly observed, and as Twenty-Nine Palms’ counsel 24 confirmed, the chapter 7 trustee of Cadmus Inc., not the 25 shareholder of Cadmus Inc., is Mr. Rogers’ client and will 26 control the prosecution of the claims. 27 Further, the conclusion does not follow. The Liquidating 28 Agent’s duty in the Individual Case was to take steps which, in

1 her judgment, advanced the interests of Mr. Bardos’ estate and 2 creditors. She had no duty to protect Cadmus Inc.’s estate and 3 creditors or to protect Mr. Rogers’ contingent fee. Put simply, 4 even if it were true that the sale of the stock put Mr. Rogers in 5 a difficult position in the Corporate Case, that would not be the 6 concern of the Liquidating Agent or the bankruptcy court in the 7 Individual Case. 8 6. Lahijani and Fitzgerald are inapplicable. 9 Mr. Rogers argues that “it would seem to be appropriate to 10 use the analysis set forth in In re Fitzgerald, 428 B.R. 872, 11 883-884 (9th Cir. BAP 2010) and In re Lahijani, 325 B.R. 282, 12 289-290 (9th Cir. BAP 2005).” We disagree. 13 Fitzgerald and Lahijani both considered the sale of 14 litigation claims to a person against whom those claims might be 15 asserted. Both decisions rest on the common-sense proposition 16 that a “sale” of claims to a defendant has the same effect as a 17 settlement of those claims, so such “sales” should be evaluated 18 both as sales and as settlements. Lahijani holds that: 19 when a cause of action is being sold to a present or potential defendant over the objection of creditors, a 20 bankruptcy court must, in addition to treating it as a sale, independently evaluate the transaction as a 21 settlement under the prevailing ‘fair and equitable’ test, and consider the possibility of authorizing the 22 objecting creditors to prosecute the cause of action for the benefit of the estate, as permitted by 23 § 503(b)(3)(B). 24 In re Lahijani, 325 B.R. at 284. Fitzgerald expands on Lahijani, 25 holding that “it is not enough for Trustee to have stopped his 26 inquiry when he determined that the sale price was adequate as 27 long as it covered administrative expenses and the claims of 28 non-insider creditors.” In re Fitzgerald, 428 B.R. at 884.

1 Lahijani and Fitzgerald are inapplicable to this case 2 because the Liquidating Agent was not selling claims; rather, she 3 was selling stock. The claims about which Mr. Rogers was 4 concerned belonged to the corporation, not to the bankruptcy 5 estate in the Individual Case which the Liquidating Agent was 6 administering. Moreover, the bankruptcy court carefully 7 confirmed that the sale of the corporation’s stock would not have 8 any effect on the claims of the Cadmus Inc. estate against third 9 parties. 10 CONCLUSION 11 For the reasons set forth above, we AFFIRM. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28