Meruelo Maddux Properties-760 S. Hill Street, LLC v. Bank of America, N.A.
667 F.3d 1072
| 9th Cir. | 2012Background
- MMP Hill, a subsidiary of MMPI, sought a determination that it was not a single asset real estate debtor under 11 U.S.C. § 101(51B) and § 362(d)(3).
- Bank of America argued that MMP Hill should be treated as a single asset real estate debtor and requested relief from the automatic stay under § 362(d)(3).
- Union Lofts is a 92-unit apartment project owned by MMP Hill, which secured a $28.72 million loan from Bank of America to renovate the property.
- MMPI and 53 subsidiaries filed Chapter 11 petitions in March 2009, with joint administration but no substantive consolidation; revenues and finances were consolidated across the group.
- The bankruptcy court found MMP Hill appeared to have single asset characteristics but declined to apply § 101(51B) due to the consolidated nature of MMPI and its subsidiaries.
- The district court reversed, holding no whole business enterprise exception to § 101(51B) and that MMP Hill could be treated as a single asset real estate debtor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Union Lofts satisfies §101(51B) elements | BoA argues MMP Hill is a single asset real estate debtor. | MMP Hill contends no single asset treatment due to integrated enterprise. | Yes; Union Lofts meets §101(51B) elements. |
| Whether a 'whole business enterprise' exception exists to §101(51B) | MMP Hill claims no exception should apply; the statute is broad. | MMPI argues for a whole enterprise exception to avoid single asset treatment. | No such exception in the plain language; no reliance on substantive consolidation. |
| Whether the district court correctly applied §101(51B) despite MMPI’s consolidated structure | BoA contends the statute should apply to MMP Hill as a standalone asset. | MMP Hill argues structure should negate single asset status. | Plain language controls; absent consolidation, MMP Hill is evaluated as a separate entity. |
| Mootness and whether relief from stay remains reviewable | Relief under §362(d)(3) was not moot because issues could recur in future proceedings. | Relief from stay moot due to plan confirmation and current status. | Case not moot; questions could repeat and evade review. |
Key Cases Cited
- United States v. Ron Pair Enterprises, Inc., 489 U.S. 235 (Sup. Ct. 1989) (plain meaning governs unless absurd or contrary to purpose)
- Int’l Ass’n of Machinists & Aerospace Workers v. BFGoodrich Aerospace Aerostructures Grp., 387 F.3d 1046 (9th Cir. 2004) (statutory interpretation respects plain language and intent)
- Griffin v. Oceanic Contractors, Inc., 458 U.S. 564 (Sup. Ct. 1982) (rare cases permit non-literal statutory interpretation to carry out intent)
- Lamie v. U.S. Trustee, 540 U.S. 526 (Sup. Ct. 2004) (court cautions against rescuing drafting errors by broad reading)
- Meyer v. Grant, 486 U.S. 414 (Sup. Ct. 1988) (repetition in case law and mootness considerations)
- In re Bonham, 229 F.3d 750 (9th Cir. 2000) (substantive consolidation discussed as a tool for related debtors)
- Barrientos v. Wells Fargo Bank, N.A., 633 F.3d 1186 (9th Cir. 2011) (standards of de novo review and statutory interpretation in bankruptcy)