Debt Acquisition Company of America V, LLC v. William Leonard, Jr.

FILED
NOT FOR PUBLICATION OCT 15 2013

MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: ASSET RESOLUTION, LLC, No. 11-15713

Debtor, D.C. No. 2:09-bk-32824-RCJ

DEBT ACQUISITION COMPANY OF MEMORANDUM*
AMERICA V, LLC; et al.,

Appellants,

v.

WILLIAM A. LEONARD, Jr., Trustee; et
al.,

Appellees.

Appeal from the United States Bankruptcy Court
for the District of Nevada
Robert C. Jones, Chief District Judge, Presiding

Submitted October 10, 2013**
San Francisco, California

Before: WALLACE, M. SMITH, and IKUTA, Circuit Judges.

*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
 Because the parties are familiar with the facts and procedural history of this

case, we repeat only those facts necessary to resolve the issues raised on appeal.

Debt Acquisition Company of America appeals from an order in a Chapter 7

bankruptcy action,1 arguing that Paragraph Six of the district court’s order violates

various provisions of the Bankruptcy Code, as well as the terms of a previously

confirmed Chapter 11 plan (the Chapter 11 Plan). We hold that Paragraph Six

constitutes an abuse of discretion, and we vacate this portion of the district court’s

order.

The Bankruptcy Code requires that all Chapter 11 plans “provide the same

treatment for each claim or interest of a particular class.” 11 U.S.C. § 1123(a)(4).

With limited exception, creditors are bound by the provisions of a confirmed plan

“whether or not such creditor . . . has accepted the plan.” 11 U.S.C. § 1141(a).

Once a Chapter 11 plan is confirmed, “all questions that could have been

raised pertaining to the plan are entitled to res judicata effect.” Miller v. United

States, 363 F.3d 999, 1004 (9th Cir. 2004) (quoting Trulis v. Barton, 107 F.3d 685,

691 (9th Cir. 1995)). Courts read Chapter 11 plans under traditional contract

principles, and, absent ambiguity, such agreements should be given their plain

1
In the underlying Chapter 7 action, reference to the Bankruptcy Court was
withdrawn pursuant to 28 U.S.C. § 157(d), and all relevant proceedings took place
in the District Court, “sitting in bankruptcy.”

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meaning. Miller, 363 F.3d at 1004 (citing Hillis Motors, Inc. v. Haw. Auto. Dealers

Ass’n, 997 F.2d 581, 588 (9th Cir. 1993)).

Section 1144 of the Bankruptcy code is the only avenue for revoking a

confirmed Chapter 11 plan. In re Orange Tree Assocs., 961 F.2d 1445, 1447 n.6

(1992) (citing In re Longardner & Assocs., 855 F.2d 455, 460 (7th Cir. 1988)).

Under Section 1144, a party seeking revocation may only move for such relief

within 180 days after “the date of the entry of the order of confirmation, and . . .

the court may revoke such order if and only if such order was procured by fraud.”

11 U.S.C. § 1144. Creditors may not collaterally attack a confirmed plan, even

where the plan contains illegal provisions. Stratosphere Litig. L.L.C. v. Grand

Casinos, Inc., 298 F.3d 1137, 1143 (9th Cir. 2002) (citations omitted).

The district court abused its discretion by invoking its equitable powers to

alter the unambiguous terms of the Chapter 11 Plan, more than three years after its

entry. Committee of Creditors Holding Unsecured Claims v. Koch Oil Co. (In re

Powerine Oil Co.), 59 F.3d 969, 973 (9th Cir.1995). In doing so, the district court

further erred by elevating the claims of Class A-5 creditors who did not support the

plan above those Class A-5 creditors who voted in the Plan’s favor. See 11 U.S.C.

§ 1123(a)(4).

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 For these reasons, Paragraph Six of the district court’s order is vacated. We

remand this action to the district court for further proceedings consistent with this

disposition.

VACATED AND REMANDED.

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