SEASONS, LLC, acting by and through its special services and sole member; v. Seasons Partners LLC

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
Re SEASONS PARTNERS LLC,
Debtor.,
________________________________,
ML-CFC 2006-3 SEASONS, LLC, acting
by and through its special services and sole
member; et al.,
Appellants,
v.
SEASONS PARTNERS LLC,
Appellee.
No. 11-16999
D.C. No. 4:10-cv-00772-DCB
MEMORANDUM*
Appeal from the United States District Court
for the District of Arizona
David C. Bury, District Judge, Presiding
Argued and Submitted June 10, 2013
San Francisco, California
FILED
JUN 25 2013
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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The Honorable Lawrence L. Piersol, Senior District Judge for the U.S.**
District Court for the District of South Dakota, sitting by designation.
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Before: O’SCANNLAIN and HURWITZ, Circuit Judges, and PIERSOL, Senior
District Judge.**
ML-CFC 2006-3 Seasons, LLC (Torchlight) appeals from a district court
decision affirming a Chapter 11 reorganization plan for Seasons Partners, LLC
(Seasons). We grant Seasons’ motion to dismiss the appeal as equitably moot.
1. In 2006, Seasons received a $20.5 million secured loan from Torchlight’s
predecessor to construct a Tucson apartment complex. Seasons filed for Chapter 11
reorganization in 2009. After Seasons filed a reorganization plan, Torchlight
requested a hearing to determine the value of the real estate subject to its lien.
Torchlight then made an 11 U.S.C. § 1111(b) election, which required that the plan
treat Torchlight’s entire claim as secured. The bankruptcy court held an evidentiary
hearing and determined that the secured property was worth $11.6 million.
Torchlight moved for reconsideration, citing a projection by Seasons that the
complex would enjoy increased revenues in the year following confirmation. The
bankruptcy court denied the motion and confirmed the plan. On appeal to the district
court, Torchlight argued that the bankruptcy court erred in declining to reevaluate

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Seasons’ property before confirmation and by treating certain pre-petition defaults as
cured. The district court affirmed.
2. While the appeal was pending, this court decided In re Thorpe Insulation Co.,
677 F.3d 869 (9th Cir. 2012). Seasons filed a motion to dismiss, citing In re Thorpe,
and arguing that the appeal was equitably moot.
3. Torchlight did not seek a stay pending appeal. That failure weighs heavily in
favor of finding the appeal equitably moot. Id. at 881-82. Even if a stay had been
sought, we would “next determine whether substantial consummation of the plan has
occurred.” Id. at 882. Torchlight, however, does not contest that the plan has been
substantially consummated.
Under Thorpe, we also consider whether modification of the plan would
negatively affect the interests of parties not before the court. Id. at 882-83. Any
modification of the plan here would plainly affect the interests of the investor that has
infused $2.5 million into the apartment venture in reliance on the confirmed plan.
Finally, we look to whether the bankruptcy court could fashion an equitable
remedy on remand. Id. at 883. Torchlight argues that the reorganization plan could
simply be adjusted to alleviate its concerns. But the investor would not be obligated

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to agree to any modification of the plan. Even assuming that the investor’s existing
contribution could be refunded, an unraveling of the plan would be detrimental to
other creditors and likely fatal to Seasons’ reorganization.
4. Torchlight’s failure to seek a stay has led to the precise situation the doctrine
of equitable mootness seeks to avoid: the debtor, other creditors, and an additional
investor have acted in reliance on the plan, and there is no equitable way to return the
parties to their original positions. We grant the motion to dismiss.
DISMISSED

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