Filed: Dec. 27, 2017
Latest Update: Mar. 03, 2020
Summary: , 139 F.3d at 705. The only obligations which the parties owed to each, 5 other at the petition date were the obligation to give notice of, 6 the bankruptcy filing and any voluntary or involuntary, 7 assignment, and obligations not to compete with or disparage, 8 Softbase or encumber the stock.
FILED
1 ORDERED PUBLISHED DEC 27 2017
SUSAN M. SPRAUL, CLERK
2 U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
4
5 In re: ) BAP No. EW-17-1131-FSTa
)
6 TERELL W. EUTSLER, ) Bk. No. 2:15-bk-00870-FPC
)
7 Debtor. )
______________________________)
8 )
BRADY F. CARRUTH; WILLIAM )
9 LESLIE DOGGETT, )
)
10 Appellants, )
)
11 v. ) OPINION
)
12 TERELL W. EUTSLER, )
)
13 Appellee. )
______________________________)
14
Argued and submitted on September 27, 2017
15 at Spokane, Washington
16 Filed – December 27, 2017
17 Appeal from the United States Bankruptcy Court
for the Eastern District of Washington
18
Honorable Frederick P. Corbit, Bankruptcy Judge, Presiding
19
20 Appearances: Christopher L. Dodson of Bracewell LLP argued for
appellants Brady F. Carruth and William Leslie
21 Doggett; Eowen S. Rosentrater argued for appellee
Terell W. Eutsler.
22
23 Before: FARIS, SPRAKER, and TAYLOR, Bankruptcy Judges.
24
25
26
27
28
1 FARIS, Bankruptcy Judge:
2
3 INTRODUCTION
4 Appellants Brady F. Carruth and William Leslie Doggett (the
5 “Minority Shareholders”) appeal from the bankruptcy court’s
6 denial of their motion for relief from the automatic stay and
7 motion for reconsideration in debtor Terell W. Eutsler’s
8 (“Debtor”) chapter 131 bankruptcy case. They seek to enforce an
9 option agreement to purchase certain stock from the Debtor. We
10 AFFIRM.
11 FACTUAL BACKGROUND
12 The facts are undisputed. In 1995, the Debtor and Stephen
13 Dorr incorporated Softbase Development, Inc., a closely-held
14 Texas corporation. The Debtor is the president of Softbase and a
15 member of its board of directors.
16 Initially, the Debtor and Mr. Dorr each owned half of the
17 stock. In 1998, the Minority Shareholders purchased 49 percent
18 of the stock for $155,000. Thus, the Debtor and Mr. Dorr each
19 owned 25.5 percent, and the Minority Shareholders each owned 24.5
20 percent.
21 When the Minority Shareholders bought their stock, the
22 parties entered into a Stock Restriction/Buy-Sell Agreement (the
23 “Buy-Sell Agreement”). Among other things, the Buy-Sell
24 Agreement provided that, upon the occurrence of certain
25
1
26 Unless specified otherwise, all chapter and section
references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532,
27 all “Rule” references are to the Federal Rules of Bankruptcy
Procedure, and all “Civil Rule” references are to the Federal
28 Rules of Civil Procedure.
2
1 “terminating events,” one of which was “the filing of any
2 proceedings for bankruptcy . . . by a Shareholder,” that
3 shareholder was required to give written notice to the
4 corporation and the other shareholders. The corporation then had
5 the option, but not the obligation, to purchase the shareholder’s
6 stock at a price based on a formula. If the corporation did not
7 timely exercise the option, then the other shareholders had the
8 same option.
9 On March 12, 2015, the Debtor filed his chapter 13 petition
10 in the United States Bankruptcy Court for the Eastern District of
11 Washington. He valued his interest in Softbase at $5,000. He
12 did not schedule the Buy-Sell Agreement as an executory contract
13 in Schedule G.
14 The bankruptcy court confirmed the Debtor’s amended
15 chapter 13 plan on June 3, 2015. The form plan provides blanks
16 for the debtor to list assumed and rejected contracts, but the
17 Debtor did not complete either space.
18 Mr. Dorr received notice of the bankruptcy filing as one of
19 the Debtor’s unsecured creditors. The Debtor did not send notice
20 of his bankruptcy filing to Softbase or the Minority
21 Shareholders. Neither Softbase nor the other shareholders
22 (Mr. Dorr and the Minority Shareholders) exercised an option to
23 purchase the Debtor’s stock.
24 A year and a half later, on December 16, 2016, the Minority
25 Shareholders filed a motion seeking relief from the automatic
26 stay (“Motion for Relief”). They argued that the Debtor’s
27 bankruptcy filing was a “terminating event” that triggered the
28 purchase options in the Buy-Sell Agreement. They claimed that
3
1 they only discovered the Debtor’s bankruptcy case on November 18,
2 2016, when an inspection of Softbase’s records revealed the
3 bankruptcy. Because Softbase did not exercise its right to
4 purchase the Debtor’s stock, the Minority Shareholders argued
5 that they were entitled to purchase the Debtor’s shares.
6 The Minority Shareholders contended that cause existed to
7 lift the stay because their rights under the Buy-Sell Agreement
8 were unaffected by the Debtor’s bankruptcy. They argued that the
9 Buy-Sell Agreement was an executory contract within the meaning
10 of § 365(a) and, because the Debtor did not accept or reject the
11 Buy-Sell Agreement in his plan, “the Agreement rode-through
12 Debtor’s bankruptcy unaffected.” They argued that the ipso facto
13 provision (that triggered the option rights upon the Debtor’s
14 bankruptcy filing) was enforceable.
15 Alternatively, the Minority Shareholders argued that the
16 shares were not property of the Debtor’s estate and were not
17 subject to the automatic stay because the confirmed chapter 13
18 plan did not address the Buy-Sell Agreement.
19 The Debtor opposed the motion. He argued that if he lost
20 his Softbase stock, his employment would terminate and he would
21 have no income with which to fund his plan. He also contended
22 that the thirty-day period for the Minority Shareholders to
23 exercise the purchase option had expired because Softbase had
24 notice of his bankruptcy as of April 2015.2 Finally, he argued
25 that the Buy-Sell Agreement is not an executory contract under
26
2
27 The bankruptcy court did not address this argument because
it decided the case on other grounds. The parties do not contend
28 that the bankruptcy court erred in that respect.
4
1 § 365 because the Minority Shareholders failed to exercise their
2 purchase option, which is the only feature of the Buy-Sell
3 Agreement that would give rise to a performance obligation and
4 make it an executory contract.
5 At the hearing on the Motion for Relief, the chapter 13
6 trustee sided with the Debtor and expressed concern that granting
7 the requested relief would imperil the Debtor’s ability to fund
8 his plan.
9 After receiving post-hearing briefing, the bankruptcy court
10 denied the Motion for Relief. The court held that the Buy-Sell
11 Agreement was not an executory contract under the so-called
12 “Countryman” definition. As we explain below, a contract is
13 “executory” under that definition only if, as of the petition
14 date, all parties to the contract owe duties that, if not
15 performed, would constitute a material breach excusing the other
16 parties’ duty to perform. Applying Texas law, the court held
17 that no breach of any of the parties’ outstanding obligations as
18 of the petition date would have constituted a material breach.
19 The court also held that the Bankruptcy Code barred
20 enforcement of the ipso facto provision of the Buy-Sell
21 Agreement. Finally, it was “concerned that Mr. Eutsler’s
22 employment may be in jeopardy if he was forced to sell his
23 interest in the company. Mr. Eutsler’s employment income is
24 necessary to make his Chapter 13 Plan payments.”
25 The Minority Shareholders filed a timely motion to
26 reconsider the ruling on the Motion for Relief (“Motion for
27 Reconsideration”), and the bankruptcy court denied it. The
28 Minority Shareholders then filed a timely notice of appeal from
5
1 the orders denying the Motion for Relief and the Motion for
2 Reconsideration.
3 JURISDICTION
4 The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
5 §§ 1334 and 157(b)(2)(G). We have jurisdiction under 28 U.S.C.
6 § 158.
7 ISSUES
8 (1) Whether the bankruptcy court abused its discretion in
9 denying the Motion for Relief.
10 (2) Whether the bankruptcy court abused its discretion in
11 denying the Motion for Reconsideration.
12 STANDARDS OF REVIEW
13 The question whether a particular contract is “executory”
14 under § 365 is a question of fact, Unsecured Creditors’ Comm. v.
15 Southmark Corp. (In re Robert L. Helms Constr. & Dev. Co.), 139
16 F.3d 702, 706 n.13 (9th Cir. 1998) (hereinafter “In re Helms
17 Constr.”) (en banc),3 which we review for clear error, Honkanen
18
3
19 The case law on this point in this circuit is
inconsistent. Helms Construction states that the question of
20 “executoriness” is a question of fact, although it does so in a
footnote with no supporting citation. But in two prior decisions
21 which Helms Construction did not cite, the Ninth Circuit held
that “[d]eterminations regarding the executory nature of a
22
contract are conclusions of law that this court reviews de novo.”
23 McDonald’s Corp. v. Rincon E., Inc. (In re Rincon E., Inc.), 24
F.3d 248,
1994 WL 140430, at *1 (9th Cir. Apr. 15, 1994) (table);
24 Aslan v. Sycamore Inv. Co. (In re Aslan),
909 F.2d 367, 369 (9th
Cir. 1990). To compound the confusion, the Ninth Circuit
25 affirmed an unpublished decision of this Panel that cited and
26 followed Aslan’s standard of review but did not mention the
subsequent decision in Helms Construction. Olson v. Bay Area
27 Foreclosure Invs., LLC (In re Olson), BAP No. EC-05-1368-SJB,
2006 WL 6811004, at *4 (9th Cir. BAP Nov. 21, 2006), aff’d, 276
28 (continued...)
6
1 v. Hopper (In re Honkanen), 446 B.R. 373, 378 (9th Cir. BAP
2 2011). A finding of fact is clearly erroneous if it is
3 illogical, implausible, or without support in the record. Retz
4 v. Samson (In re Retz),
606 F.3d 1189, 1196 (9th Cir. 2010). “To
5 be clearly erroneous, a decision must strike us as more than just
6 maybe or probably wrong; it must . . . strike us as wrong with
7 the force of a five-week-old, unrefrigerated dead fish.” Papio
8 Keno Club, Inc. v. City of Papillion (In re Papio Keno Club,
9 Inc.),
262 F.3d 725, 729 (8th Cir. 2001) (quoting Parts & Elec.
10 Motors, Inc. v. Sterling Elec., Inc.,
866 F.2d 228, 233 (7th Cir.
11 1988)). The bankruptcy court’s choice among multiple plausible
12 views of the evidence cannot be clear error. United States v.
13 Elliott,
322 F.3d 710, 715 (9th Cir. 2003).
14 “A bankruptcy court’s determinations regarding stay relief
15 are reviewed for an abuse of discretion.” Veal v. Am. Home
16 Mortg. Servicing, Inc. (In re Veal),
450 B.R. 897, 915 (9th Cir.
17 BAP 2011) (citing Kronemyer v. Am. Contractors Indem. Co. (In re
18 Kronemyer),
405 B.R. 915, 919 (9th Cir. BAP 2009)).
19 Similarly, we review for abuse of discretion a bankruptcy
20 court’s denial of a motion for reconsideration. See Ahanchian v.
21 Xenon Pictures, Inc.,
624 F.3d 1253, 1258 (9th Cir. 2010);
22 Tennant v. Rojas (In re Tennant),
318 B.R. 860, 866 (9th Cir. BAP
23 2004).
24 To determine whether the bankruptcy court has abused its
25
3
26 (...continued)
F. App’x 641 (9th Cir. 2008). In this decision, we are compelled
27 to follow Helms Construction, the Ninth Circuit’s most recent en
banc pronouncement on this issue, and to treat as a question of
28 fact the determination whether a contract is executory.
7
1 discretion, we conduct a two-step inquiry: (1) we review de novo
2 whether the bankruptcy court “identified the correct legal rule
3 to apply to the relief requested” and (2) if it did, whether the
4 bankruptcy court’s application of the legal standard was
5 illogical, implausible, or without support in inferences that may
6 be drawn from the facts in the record. United States v. Hinkson,
7 585 F.3d 1247, 1262–63 & n.21 (9th Cir. 2009) (en banc). “If the
8 bankruptcy court did not identify the correct legal rule, or its
9 application of the correct legal standard to the facts was
10 illogical, implausible, or without support in inferences that may
11 be drawn from the facts in the record, then the bankruptcy court
12 has abused its discretion.” USAA Fed. Sav. Bank v. Thacker
13 (In re Taylor),
599 F.3d 880, 887–88 (9th Cir. 2010) (citing
14
Hinkson, 585 F.3d at 1262).
15 DISCUSSION
16 The Minority Shareholders’ argument has three steps: first,
17 the Buy-Sell Agreement was an executory contract; second, because
18 the Debtor neither assumed nor rejected it, the Buy-Sell
19 Agreement “rode through” the bankruptcy unaffected; and third,
20 the automatic stay no longer precluded the Minority Shareholders
21 from enforcing it. Neither party disputes the second point.
22 With respect to the third point, the Minority Shareholders argued
23 that cause existed to lift the stay solely because the Buy-Sell
24 Agreement rode through the bankruptcy unaffected; conversely,
25 they conceded that, if the Buy-Sell Agreement was not an
26 executory contract and therefore could not “ride through,” cause
27 to lift the stay did not exist. Thus, our analysis turns on
28 whether the Buy-Sell Agreement is an executory contract. We hold
8
1 that the bankruptcy court was correct under controlling Ninth
2 Circuit law.4
3 A. The bankruptcy court did not clearly err in finding, as a
matter of fact, that the Buy-Sell Agreement is not an
4 executory contract.
5 The bankruptcy court found that the Buy-Sell Agreement was
6 not an executory contract. This factual determination was not
7 clearly erroneous.5
8 The bankruptcy court correctly held that the Ninth Circuit
9 has adopted Professor Countryman’s definition of an executory
10 contract: “a contract under which the obligation of both the
11 bankrupt and the other party to the contract are so far
12 unperformed that the failure of either to complete performance
13 would constitute a material breach excusing the performance of
14 the other.” Vern Countryman, Executory Contracts in Bankruptcy:
15 Part I, 57 Minn. L. Rev. 439, 460 (1973); see In re Helms
16
Constr., 139 F.3d at 705 (“An executory contract is one ‘on which
17
18
4
19 We explain in footnotes why we think the court of appeals
should revisit some of those issues, including the definition of
20 “executory contract” in general and specifically whether an
option contract such as the Buy-Sell Agreement is an executory
21 contract.
22 5
The bankruptcy court made this decision in ruling on a
23 stay relief motion. Ordinarily, bankruptcy courts refrain from
making merits decisions in that procedural context. In re Veal,
24 450 B.R. at 914 (“[A] creditor’s claim or security is not finally
determined in the relief from stay proceeding.”) (citing Johnson
25 v. Righetti (In re Johnson), 756 F.2d 738, 740-41 (9th Cir. 1985)
26 (“Hearings on relief from the automatic stay are thus handled in
a summary fashion. The validity of the claim or contract
27 underlying the claim is not litigated during the hearing.”)).
But any challenge on this ground is waived because no party
28 raised it.
9
1 performance remains due to some extent on both sides.’”).6
2 The bankruptcy court correctly held that the materiality of
3 the parties’ remaining obligations depends on whether, under
4 applicable state law, one party’s nonperformance would excuse the
5 other party’s obligation to perform. Hall v. Perry (In re
6 Cochise Coll. Park, Inc.), 703 F.2d 1339, 1348 n.4 (9th Cir.
7 1983). The bankruptcy court properly looked to Texas law,
8 because the Buy-Sell Agreement specified that it was “made
9 pursuant to and shall be construed under the laws of the state of
10 Texas” and was predominately signed in Texas, see Ulrich v.
11 Schian Walker, P.L.C. (In re Boates),
551 B.R. 428, 434 (9th Cir.
12 BAP 2016), and the court accurately recited the Texas law of
13 materiality.
14
15 6
Most courts follow the Countryman definition, but some
16 decisions adopt a more flexible approach. See, e.g., Chattanooga
Mem’l Park v. Still (In re Jolly), 574 F.2d 349, 351 (6th Cir.
17 1978) (“[D]efinitions [such as Countryman’s] are helpful, but do
not resolve this problem. The key, it seems, to deciphering the
18 meaning of the executory contract rejection provisions, is to
19 work backward, proceeding from an examination of the purposes
rejection is expected to accomplish. If those objectives have
20 already been accomplished, or if they can’t be accomplished
through rejection, then the contract is not executory within the
21 meaning of the Bankruptcy Act.”). A very recent law review
article makes a powerful argument in favor of a “modern contract
22
approach” to executory contracts. Under that approach, all
23 contracts with any unperformed obligation on either side,
material or not, are “executory contracts” under § 365. Jay
24 Lawrence Westbrook & Kelsi Stayart White, The Demystification of
Contracts in Bankruptcy, 91 Am. Bankr. L.J. 481 (2017). The
25 alternative approaches have much to recommend them; the
26 Countryman definition turns on factors that have little if
anything to do with the underlying policies of bankruptcy law and
27 produce anomalous results in some cases. But neither party to
this appeal challenges Helms Construction, and we could not
28 disregard or overrule it even if they asked us to do so.
10
1 Further, the bankruptcy court correctly ruled that whether a
2 contract is “executory” is a question of fact, both under the
3 Bankruptcy Code, In re Helms Constr., 139 F.3d at 706 n.13, and
4 under Texas law, Hudson v. Wakefield,
645 S.W.2d 427, 430 (Tex.
5 1983).7
6 The bankruptcy court correctly applied these principles to
7 the Buy-Sell Agreement. The Ninth Circuit has held that “a paid-
8 for but unexercised option” is typically not an executory
9 contract, but that other kinds of options may be executory. In
10 re Helms
Constr., 139 F.3d at 705.
11 [W]e look to outstanding obligations at the time the
petition for relief is filed and ask whether both sides
12 must still perform. Performance due only if the
optionee chooses at his discretion to exercise the
13 option doesn’t count unless he has chosen to exercise
it. An option may on occasion be an executory
14 contract, for instance, where the optionee has
announced that he is exercising the option, but not yet
15 followed through with the purchase at the option price.
16 The question thus becomes: At the time of filing, does
each party have something it must do to avoid
17 materially breaching the contract? Typically, the
answer is no; the optionee commits no breach by doing
18 nothing.
19 Id. at 706 (emphasis added).8
20 In the present case, the Debtor’s obligation to sell the
21 stock and the Minority Shareholders’ obligation to pay for it
22
23
7
See n.3 supra.
24
8
The advocates of the modern contract approach would treat
25 LLC operating agreements (which are similar in many respects to
26 the Buy-Sell Agreement in this case) and options in general as
executory contracts. Westbrook & White, supra n.6, at 503-06,
27 511-13. This approach has substantial appeal, but we are not
writing on a blank slate. Instead, we must follow Helms
28 Construction, which holds otherwise.
11
1 were (when the Debtor filed his bankruptcy petition) contingent
2 on the Minority Shareholders’ future decision to exercise the
3 option. Therefore, under Helms Construction, those obligations
4 don’t count. The only obligations which the parties owed to each
5 other at the petition date were the obligation to give notice of
6 the bankruptcy filing and any voluntary or involuntary
7 assignment, and obligations not to compete with or disparage
8 Softbase or encumber the stock. The bankruptcy court held that a
9 breach of these provisions might justify an award of damages or
10 injunctive relief but would not defeat the purpose of the Buy-
11 Sell Agreement or justify the other party’s suspension of
12 performance. See Mustang Pipeline Co. v. Driver Pipeline Co.,
13 134 S.W.3d 195, 199 (Tex. 2004); Hernandez v. Gulf Grp. Lloyds,
14
875 S.W.2d 691, 692 (Tex. 1994).
15 Under binding Ninth Circuit precedent, we review this aspect
16 of the court’s decision for clear error. In re Helms Constr.,
17 139 F.3d at 706 n.13. Neither party argued that the facts were
18 in dispute or requested an evidentiary hearing. Although other
19 judges might reach the opposite conclusion on the same or similar
20 facts,9 we cannot say that the bankruptcy court clearly erred.
21
22 9
The Buy-Sell Agreement prohibited the Debtor from selling
23 any of his shares to a third party without first offering them to
Softbase and the Minority Shareholders. If the Debtor breached
24 that obligation and secretly sold half of his shares to a third
party without giving notice to his fellow shareholders, and one
25 of the other shareholders later tried to sell his stock, some
26 judges might find that the Debtor’s prior breach of the Buy-Sell
Agreement excused the other shareholder’s obligation to sell to
27 the Debtor. But, although it is a close question, we cannot say
that the bankruptcy court’s contrary finding rises to the level
28 of clear error.
12
1 The Minority Shareholders urge us to follow In re Parkwood
2 Realty Corp., 157 B.R. 687, 690 (Bankr. W.D. Wash. 1993), in
3 which the bankruptcy court held that a shareholders agreement
4 including the option to repurchase stock was an executory
5 contract because “at the very least, upon Parkwood Lakes’
6 decision to exercise its repurchase rights under the Shareholders
7 Agreement, the debtor is required to turn over its stock, and
8 Lakes is required to pay the purchase price.” However, Parkwood
9 was decided before the Ninth Circuit held, in Helms Construction,
10 that performance obligations contingent on the exercise of an
11 option “do not count.”
12 The Minority Shareholders also argue that this case is
13 similar to In re RoomStore, Inc.,
473 B.R. 107 (Bankr. E.D. Va.
14 2012), which held that a buyback option and negative and
15 affirmative covenants rendered the subject agreement executory.
16 However, RoomStore explicitly rejected the Ninth Circuit
17 authority by which we are bound: “I decline to follow the line of
18 authority of the Helms Construction decision of the Ninth Circuit
19 and cases following it.”
Id. at 114. Moreover, RoomStore did
20 not consider the materiality of the ongoing obligations, nor did
21 it apply Texas law.
22 Accordingly, the bankruptcy court did not clearly err in
23 holding that the Buy-Sell Agreement was not an executory
24 contract.
25 B. We do not decide whether the Buy-Sell Agreement has “ridden
through” the bankruptcy case.
26
27 The second step of the Minority Shareholders’ argument is
28 that, because the Debtor’s confirmed chapter 13 plan neither
13
1 assumed nor rejected the Buy-Sell Agreement, it has “ridden
2 though” the bankruptcy case such that the Minority Shareholders
3 could enforce it. This is consistent with our precedents.
4 Diamond Z Trailer, Inc. v. JZ L.L.C. (In re JZ L.L.C.), 371 B.R.
5 412, 424 (9th Cir. BAP 2007) (holding that, “where there is no
6 breach or default in an executory contract as of the commencement
7 of the case, the contract remains in force unless it is rejected
8 and, if not rejected, ‘passes with other property to the
9 reorganized’ debtor”) (quoting Consol. Gas Elec. Light & Power
10 Co. v. United Rys. & Elec. Co.,
85 F.2d 799, 805 (4th Cir.
11 1936)). The Debtor did not challenge this assertion and the
12 bankruptcy court accepted it without discussion. Therefore, any
13 argument to the contrary has been waived.10
14 ///
15 ///
16 ///
17
10
We express no opinion on the question whether a debtor
18 may modify a chapter 13 plan to provide for the assumption or
19 rejection of a previously omitted executory contract. Section
365(d)(2) provides that, in a chapter 13 case, “the trustee may
20 assume or reject an executory contract or unexpired lease of
residential real property or of personal property of the debtor
21 at any time before the confirmation of a plan” or an earlier date
set by the court. But this must be read in conjunction with
22
§ 1329, which broadly authorizes post-confirmation modifications
23 of chapter 13 plans. That section does not specifically mention
the assumption or rejection of executory contracts. See Oseen v.
24 Walker (In re Oseen), 133 B.R. 527, 529 n.1 (Bankr. D. Idaho
1991). It does, however, permit amendments to “increase or
25 reduce the amount of payments on claims of a particular class
26 provided for by the plan,” § 1329(a)(1), and assumption or
rejection of a contract often changes the amount distributed to
27 the other party to the contract. (In fact, if assumption or
rejection did not change the creditors’ distributive rights,
28 assumption or rejection would probably be a meaningless gesture.)
14
1 C. The Minority Shareholders concede that, if the Buy-Sell
Agreement is not executory, cause to lift the automatic stay
2 did not exist.
3 The third step of the Minority Shareholders’ argument is
4 that the bankruptcy court should have lifted the automatic stay
5 to permit them to enforce the Buy-Sell Agreement. But they take
6 the position that, if the Agreement is not an executory contract,
7 the ipso facto provision is not enforceable and there is no
8 reason to lift the automatic stay: “Appellants do not dispute
9 that § 541 would preclude enforcement of the Agreement if it were
10 non-executory because the ‘ride-through’ doctrine only applies to
11 executory contracts.” Given our determination that the Buy-Sell
12 Agreement is not an executory contract, we need not reach the
13 question whether the bankruptcy court should have lifted the
14 stay.
15 D. The bankruptcy court did not abuse its discretion in denying
the Motion for Reconsideration.
16
17 The bankruptcy court did not err when it denied the Minority
18 Shareholders’ Motion for Reconsideration. There were no
19 “extraordinary circumstances,” Buck v. Davis, 137 S. Ct. 759, 777
20 (2017), that would warrant relief under Civil Rule 60(b)(6), made
21 applicable in bankruptcy by Rule 9024. Nor was there any newly
22 discovered evidence, clear error, intervening change in the
23 applicable law, or other circumstance that would justify relief
24 under Civil Rule 59(e), made applicable in bankruptcy by Rule
25 9023. Kona Enters., Inc. v. Estate of Bishop,
229 F.3d 877, 890
26 (9th Cir. 2000). The bankruptcy court did not abuse its
27 discretion under either of these rules.
28 ///
15
1 CONCLUSION
2 The bankruptcy court did not err in denying the Motion for
3 Relief and Motion for Reconsideration. Accordingly, we AFFIRM.
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
16
