In Re National Environmental Waste Corp., a California Corporation, Debtor. National Environmental Waste Corp., a California Corporation v. City of Riverside, a Political Subdivision of the State of California, in Re National Environmental Waste Corp., a California Corporation, Debtor. City of Riverside, a Political Subdivision of the State of California v. National Environmental Waste Corp., a California CorporationIn Re National Environmental Waste Corp., a California Corporation, Debtor. National Environmental Waste Corp., a California Corporation v. City of Riverside, a Political Subdivision of the State of California, in Re National Environmental Waste Corp., a California Corporation, Debtor. City of Riverside, a Political Subdivision of the State of California v. National Environmental Waste Corp., a California Corporation
In re NATIONAL ENVIRONMENTAL WASTE CORP., a California
corporation, Debtor.
NATIONAL ENVIRONMENTAL WASTE CORP., a California
corporation, Appellant,
v.
CITY OF RIVERSIDE, a political subdivision of the State of
California, Appellee.
In re NATIONAL ENVIRONMENTAL WASTE CORP., a California
corporation, Debtor.
CITY OF RIVERSIDE, a political subdivision of the State of
California, Appellant,
v.
NATIONAL ENVIRONMENTAL WASTE CORP., a California
corporation, Appellee.
Nos. 96-55825, 96-55852.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted Oct. 8, 1997.
Decided Nov. 10, 1997.
William M. Burd, Burd & Naylor, Santa Ana, CA, for appellant in No. 96-55825 and appellee in No. 96-55852.
J. Scott Williams, Rus, Miliband, Williams & Smith, Irvine, CA, for appellee in No. 96-55825 and appellant in No. 96-55852.
Appeals from the United States District Court for the Central District of California; Linda H. McLaughlin, District Judge, Presiding. D.C. Nos. CV-96-00299 LHM, CV-96-00300 LHM.
Before: REINHARDT and TASHIMA, Circuit Judges, and SHADUR, District Judge.*
TASHIMA, Circuit Judge:
Debtor National Environmental Waste Corporation ("Newco") appeals the district court's affirmance of the bankruptcy court's retroactive annulment of the automatic stay. Because of the unusual circumstances of this case, we conclude that the bankruptcy court did not abuse its discretion in granting retroactive relief from the stay.
I. BACKGROUND
Newco has provided waste hauling services in a portion of the City of Riverside ("City") since 1972. Since 1991, the City has been divided into five areas for purposes of solid waste handling services, retaining four different solid waste enterprises to service those areas. In 1991, Newco entered into a contract with the City to provide waste handling services. It was an "evergreen" contract, meaning it was automatically renewed from year to year, subject to the City's right to cancel without cause upon eight years' notice. The City's contracts with the other three solid waste enterprises were also evergreen contracts.
On March 11, 1993, the City's Utility Services/Land Use/ Energy Development Committee, at the request of the Riverside City Council, reviewed the four evergreen contracts. The Committee concluded that the eight-year notice requirement did not allow the City to provide best for its constituents. It thus recommended that the eight-year termination notices be given. The Committee stressed that its recommendation was not due to poor performance by the waste haulers, but was based on its conclusion "that it is simply good public policy to review the contracts periodically to ensure competition, innovation and the best possible service to the City's businesses and residents."
On May 4, 1993, Newco filed a Chapter 11 petition in bankruptcy. On May 11, 1993, at a meeting in which representatives of Newco and the other waste haulers participated, the City Council approved the Committee's recommendation to terminate the evergreen contracts. On May 18, 1993, the City gave notice of termination to all four solid waste enterprises serving the City, including Newco. Newco's Plan of Reorganization was confirmed in 1994.1 On April 10, 1995, Newco informed the City that it considered the notice of termination to be void as a violation of the automatic stay imposed by 11 U.S.C. § 362(a).
The City moved for an order determining that its actions fell under 11 U.S.C. § 362(b)(4), the police and regulatory power exception to the automatic stay or, in the alternative, for an order retroactively annulling the automatic stay. The bankruptcy court denied the motion to determine that the police and regulatory power exception applied to the City's actions, but granted the motion to annul the automatic stay with respect to the City's termination of the contract. In re National Envtl. Waste Corp.,
II. JURISDICTION AND STANDARDS OF REVIEW
In No. 96-55825, Newco appeals the district court's affirmance of the order annulling the automatic stay. In No. 96-55852, the City appeals the district court's order dismissing its appeal as moot. Orders granting or denying relief from the automatic stay are deemed to be final orders. Benedor Corp. v. Conejo Enters., Inc. (In re Conejo Enters., Inc.),
III. DISCUSSION
Pursuant to 11 U.S.C. § 362, a petition in bankruptcy operates as a stay against acts that may affect property of the bankruptcy estate. The automatic stay is designed to "protect debtors from all collection efforts while they attempt to regain their financial footing." Schwartz v. United States (In re Schwartz),
Many courts have focused on two factors in determining whether cause exists to grant relief from the stay: (1) whether the creditor was aware of the bankruptcy petition; and (2) whether the debtor engaged in unreasonable or inequitable conduct, or prejudice would result to the creditor. See, e.g., Easley v. Pettibone Mich. Corp.,
Newco asserts that the City's knowledge of the bankruptcy and its own innocence of egregious conduct should be dispositive in this case.3 However, we have never held these two factors to be dispositive; instead, we have engaged in a case by case analysis. See Christensen v. Tucson Estates, Inc. (In re Tucson Estates, Inc.),
Although the conduct of neither party was exemplary, "either ... not recogniz[ing] the problem or recogniz[ing] it and proceed[ing] ... without doing anything about it," we find that the bankruptcy court did not abuse its discretion in weighing the equities in favor of the City. In re Confidential Investigative Consultants, Inc.,
Other factors the court considered include the length of the required notice period in the contract (eight years); prejudice to the City by giving Newco exclusive rights in serving the City for three additional years; Newco's "reinforcement" of the perception that the termination was valid by failing to challenge it either at the May 11, 1993, City Council meeting or in its reorganization plan;6 possible prejudice to other parties who confirmed the plan in reliance on the eight-year termination notice; and lack of prejudice to Newco if the stay were annulled. The court's reliance on the fact that it would have granted the relief had the City applied beforehand is also a valid factor on which to rely in granting retroactive relief. See Kissinger,
We conclude, in light of all of the factors involved, that the bankruptcy court did not abuse its discretion in granting the City retroactive annulment of the automatic stay.
In its own appeal, the City addresses only the merits and not the district court's dismissal of its appeal as moot. However, its motion in the bankruptcy court was in the alternative, suggesting that if the City prevailed on either part of its motion, it would obtain all of the relief that was necessary. We agree with the district court that affirming the bankruptcy court's grant to the City of retroactive relief from the automatic stay for purposes of the City's termination of the evergreen contract has rendered moot the question presented in the City's appeal of whether the termination was an exercise of the City's police and regulatory power.
IV. CONCLUSION
In No. 96-55825, the order of the district court affirming the bankruptcy court is AFFIRMED. In No. 96-55852, the order of the district court dismissing the City's appeal as moot is AFFIRMED. Because the latter appeal was a "protective" appeal, the City shall recover its costs on both appeals.
Notes
The Honorable Milton I. Shadur, Senior United States District Judge for the Northern District of Illinois, sitting by designation
As discussed below, the Plan assumed that Newco's contract with the City would terminate in accordance with the notice given in 1993
Section 362(d)(1) provides in relevant part, "On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay ... such as by terminating, annulling, modifying, or conditioning such stay-for cause...."
Although it is not entirely clear from the record, the bankruptcy court found that the City had actual knowledge of the bankruptcy. We defer to this finding of fact, as it is not clearly erroneous. See Weisman,
On May 28, 1993, Newco informed the City that any attempt to recover excess dump fees would be a violation of the automatic stay
The debtor's awareness of his or her rights has been considered by one court in the analysis of whether to annul the stay. In Scrima v. John DeVries Agency, Inc.,
Newco analogizes its conduct to the debtors' three-year delay in Schwartz. However, in Schwartz, the sole issue was whether such violations of the stay are void or voidable.