In re: Rw Meridian LLC
SC-16-1419-SAKu
| 9th Cir. BAP | Dec 6, 2017Background
- RW Meridian owned 58.53 acres in Imperial County; county scheduled a tax auction to satisfy roughly $167,000 of delinquent taxes.
- Auction began Feb 6, 2016 and completed Feb 9, 2016 with American Pacific Investments as apparent buyer; RW Meridian filed a Chapter 7 petition on Feb 8, 2016.
- Bankruptcy court held the postpetition completion of the tax sale void as a violation of the automatic stay and denied Imperial County’s relief-from-stay motion; this Panel affirmed that ruling on the stay issue.
- While the county’s appeal of the stay ruling to the Ninth Circuit remained pending, the Chapter 7 trustee moved to sell the property; the sale order provided for payment of the county’s tax lien from escrow or attachment of the lien to sale proceeds.
- Imperial County admits it has been paid in full from the trustee’s sale proceeds and appealed the trustee’s sale order.
- The Panel considered whether Imperial County has standing to pursue the appeal and dismissed the appeal for lack of standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Imperial County have Article III standing to appeal the sale order? | County: has institutional interest in validating its tax-sale procedures and risk that the sale order frustrates future tax sales; potential reinstatement of the tax sale on Ninth Circuit victory is a concrete injury. | Trustee: County was paid in full; no concrete, particularized injury, so no Article III standing. | No Article III standing — county’s alleged injury is speculative and has been fully satisfied. |
| Does Imperial County meet the prudential “person aggrieved” standard to appeal a bankruptcy order? | County: seeks to protect its institutional interests and official actions beyond monetary loss. | Trustee: Person-aggrieved requires a direct pecuniary harm; county received full payment and hence is not directly and adversely affected. | No prudential standing — county’s pecuniary interests were not diminished; the sale benefited the county. |
| Is the appeal moot because the county was paid? | County: argues importance of validating tax-sale procedures and preserving rights for pending Ninth Circuit appeal. | Trustee: Payment renders any challenge to the sale order non-justiciable; no redressable injury. | Court declined to rule on mootness after dismissing for lack of standing. |
| Does a pending appeal of the stay ruling keep that ruling ineffective? | County: contends the stay-denial ruling might be reversed, reinstating the tax sale and creating injury. | Trustee: Federal orders remain effective and enforceable during appeal absent a stay; the county’s asserted injury is hypothetical. | Reversal unlikely without stay; the pending appeal does not render the stay-denial order ineffective for standing analysis. |
Key Cases Cited
- Bishop Paiute Tribe v. Inyo County, 863 F.3d 1144 (9th Cir.) (Article III injury-in-fact must be concrete and particularized)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires injury in fact, causation, redressability)
- Republic of the Marshall Islands v. United States, 865 F.3d 1187 (9th Cir.) (standing framework discussion)
- In re Schwartz, 954 F.2d 569 (9th Cir.) (actions taken in violation of the automatic stay are void)
- Bennett v. Gemmill (In re Combined Metals Reduction Co.), 557 F.2d 179 (9th Cir.) (federal judgments and orders remain effective during appeal absent a stay)
- Giesbrecht v. Fitzgerald (In re Giesbrecht), 429 B.R. 682 (9th Cir. BAP) (de novo review of standing in bankruptcy appeals)