In the Matter of: COBALIS CORPORATION v. Ya Global Investments Lp

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In the Matter of: COBALIS
CORPORATION,
Debtor,
COBALIS CORPORATION and
MONTENEGREX, by Rey Olsen,
Appellants,
v.
YA GLOBAL INVESTMENTS LP,
Appellee.
No. 13-57078
D.C. No. 8:13-cv-00269-JLS
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Josephine L. Staton, District Judge, Presiding
Argued and Submitted February 9, 2016
Pasadena, California
FILED
FEB 23 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

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Before: BERZON, DAVIS**, and OWENS, Circuit Judges.
Appellants Cobalis Corporation and Montenegrex appeal from the district
court’s dismissal of their bankruptcy appeal as equitably moot. “In evaluating a
dismissal on equitable mootness grounds, we review factual findings for clear error
and legal conclusions de novo.” JPMCC 2007-C1 Grasslawn Lodging, LLC v.
Transwest Resort Props., Inc. (In re Transwest Resort Props., Inc.), 801 F.3d 1161,
1168 (9th Cir. 2015). As the parties are familiar with the facts, we do not recount
them here. We affirm.
This court has set out four considerations to determine whether an appeal is
equitably moot: (1) “whether a stay was sought, for absent that a party has not fully
pursued its rights”; (2) “whether substantial consummation of the plan has
occurred”; (3) “the effect a remedy may have on third parties not before the court”;
and (4) “whether the bankruptcy court can fashion effective and equitable relief
without completely knocking the props out from under the plan and thereby
creating an uncontrollable situation for the bankruptcy court.” Motor Vehicle Cas.
Co. v. Thorpe Insulation Co. (In re Thorpe Insulation Co.), 677 F.3d 869, 881 (9th
** The Honorable Andre M. Davis, Senior Circuit Judge for the U.S.
Court of Appeals for the Fourth Circuit, sitting by designation.
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Cir. 2012); see also Rev Op Grp. v. ML Manager LLC (In re Mortgages Ltd.), 771
F.3d 1211, 1217 (9th Cir. 2014).
Here, these considerations weigh in favor of equitable mootness. Appellants
did not seek a stay and were not otherwise diligent in challenging the bankruptcy
court’s underlying orders, and their own inaction permitted developments to
proceed without their participation. See In re Mortgages Ltd., 771 F.3d at 1217
(noting that the appellant “sat on its rights, which weighs strongly towards
equitable mootness”). Moreover, the bankruptcy court’s underlying orders have
been substantially consummated. See In re Thorpe Insulation Co., 677 F.3d at
881. In particular, as to the dissolution, the trustee has taken the steps required of
her. Finally, granting Appellants the relief they seek would unravel the settlement
agreement, and “knock[] the props out from under” the related bankruptcy court
orders, “thereby creating an uncontrollable situation for the bankruptcy court.” Id.
AFFIRMED.
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