Caviata Attached Homes, LLC v. U.S. Bank, National Ass'n (In Re Caviata Attached Homes, LLC)
481 B.R. 34
9th Cir. BAP2012Background
- Caviata Attached Homes, LLC filed its first Chapter 11 on Aug 18, 2009; U.S. Bank claimed about $29.56M and a June 2009 appraisal valued the Property at $23.1M.
- The First Plan proposed 4.25% interest on the secured claim for three years, with sale/refinance to pay in full, and disclosed significant risks.
- The First Plan was confirmed in 2010; the court accepted the June 2009 $23.1M appraisal over a later $20M appraisal.
- Caviata began monthly plan payments in June 2010; about 15 months later, it filed a second Chapter 11 on Aug 1, 2011; property value was ~ $23.42M (Beebe appraisal $20.9M).
- U.S. Bank moved to dismiss arguing no extraordinary change in circumstances; Caviata argued unforeseeable relapse post-consummation; the court dismissed Oct 27, 2011.
- On appeal, the Ninth Circuit affirmed, concluding no abuse of discretion in either denying an evidentiary hearing or dismissing the second case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the hearing on disputed facts was required | Caviata argues an evidentiary hearing was needed for disputed facts. | U.S. Bank contends no disputed material issues exist; record suffices for decision. | No abuse; no evidentiary hearing required. |
| Whether dismissal of the second case was proper for lack of extraordinary change | Caviata contends unforeseeable, fundamental economic changes justified a second filing. | Bank argues market decline was foreseeable; no extraordinary, unforeseeable change impairing performance. | Affirmed dismissal; no extraordinary change warranting second filing. |
Key Cases Cited
- Bouy Hall, Assocs. v. Hall, 208 B.R. 740 (Bankr. M.D. Fla. 1997) (unforeseeable changes may warrant a second filing in rare cases)
- In re Casa Loma Assocs., 122 B.R. 814 (Bankr. N.D. Ga. 1991) (unforeseen federal law changes and hidden defects can justify second filing)
- Elmwood Dev. Co. v. Gen. Electric Pension Trust, 964 F.2d 508 (5th Cir. 1992) (economic change may support second filing depending on foreseeability and impact)
- In re Adams, 218 B.R. 597 (Bankr. D. Kan. 1998) (extraordinary changes must substantially impair performance under the plan)