                                                          FILED
                                                           DEC 09 2011
                                                       SUSAN M SPRAUL, CLERK
 1                                                       U.S. BKCY. APP. PANEL
                                                         OF THE NINTH CIRCUIT
 2
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                             ) BAP No. CC-11-1353-PaMkH
                                        )
 6   BRIAN W. DAVIES,                   ) Bk. No. 10-37900-SC
                                        )
 7                  Debtor.             )
     ___________________________________)
 8                                      )
     BRIAN W. DAVIES,                   )
 9                                      )
                    Appellant,          )
10                                      )
     v.                                 ) M E M O R A N D U M1
11                                      )
     PATRICIA ZIMMERMAN, Chapter 7      )
12   Trustee,                           )
                                        )
13                  Appellee.           )
                                        )
14   ___________________________________)
15                  Argued and Submitted on November 16, 2011
                             at Pasadena, California
16
                            Filed - December 9, 2011
17
               Appeal from the United States Bankruptcy Court
18                 for the Central District of California
19        Honorable Scott C. Clarkson, Bankruptcy Judge, Presiding
20
     Appearances:     Appellant Brian W. Davies argued pro se. Trustee
21                    Patricia Zimmerman filed a brief but did not appear
                      at oral argument.
22
23   Before: PAPPAS, MARKELL and HOLLOWELL, Bankruptcy Judges.
24
25
26
          1
             This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may have
     (see Fed. R. App. P. 32.1), it has no precedential value. See 9th
28   Cir. BAP Rule 8013-1.

                                       -1-
 1        Chapter 72 debtor Brian W. Davies (“Davies”) appeals the
 2   bankruptcy court’s “Order Denying in Part and Granting in Part
 3   Trustee’s Motion to Set Aside/Reconsider Order Granting Debtor’s
 4   Motion to Compel Abandonment of Property by the Trustee and to
 5   Withdraw the Trustee’s No Asset Report.”    We AFFIRM.
 6                                    FACTS
 7        Unless noted otherwise, the facts in this appeal are
 8   undisputed.
 9        Davies divorced his wife, Carolyn Kao, in 2007.     In
10   connection with the divorce, in October 2007, Davies was granted a
11   money judgment against Kao for $2,693,680.97 (the “Judgment”).
12   Davies alleges that Kao, a Canadian citizen, left the area and he
13   has been unable to locate her.
14        After several years of unsuccessful searching, Davies
15   assigned his interest in the Judgment to Scott Kohn, a collections
16   agent, on June 29, 2009.   The assignment provided that any amounts
17   collected by Kohn on the Judgment would be split evenly between
18   Davies and Kohn.   The agreement also provided that “if judgment
19   has not been satisfied after 2 years, judgment will be reassigned
20   back to [Davies].”
21        Davies filed a petition under chapter 7 on August 31, 2010.
22   Patricia Zimmerman was appointed trustee (“Trustee”).    Although
23   his original schedules made no reference to the Judgment, on
24   September 27, 2010, Davies amended Schedule B to include the
25   following information about the Judgment:
26
          2
             Unless otherwise indicated, all chapter, section and rule
27   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, to
     the Federal Rules of Bankruptcy Procedure, Rules 1001-9037, or to
28   the Federal Rules of Civil Procedure, Civil Rules 1–86.

                                       -2-
 1        Judgment against Carolyn Kao entered on 10/29/2007 as
          part of the divorce Debtor was awarded $2.7 million.
 2        Debtor signed over the award money to a collection
          agency to collect the money. If collection agency
 3        collects the debt, Debtor gets half and collection
          agency gets half of what is collected. Respondent in
 4        case has disappeared and a skip trace has been placed.
          Likelihood of collection is unknown.
 5
 6   Davies listed the value of the Judgment in the schedule as
 7   “$0.00.”
 8        Davies was examined by Trustee at the § 341(a) meeting on
 9   October 15, 2010, where Davies provided Trustee a copy of the
10   Judgment and Kohn’s address.   Davies and Trustee agree that, at
11   the creditor’s meeting, Davies advised Trustee that he tried to
12   collect on the Judgment but that he had “given up.”
13        Trustee thereafter contacted Kohn and was told that there was
14   little hope of recovering on the Judgment.   Trustee filed a “No
15   Asset” report with the bankruptcy court on November 26, 2010.3
16        Davies filed a motion to compel abandonment of property on
17   March 14, 2011.   The only reference in the moving papers to the
18   property at issue was the following:
19        The market value of Debtor’s real property [in Indio] is
          approximately $230,000 and the disputed debt against
20        said real property is $650,000. The real property,
          taking into account the mortgages, liens and the costs
21        of sale, has no equity for the benefit of the estate or
          the creditors. By this motion, the Debtor seeks the
22        Court for an Order to compel abandonment of property by
          the Trustee on the grounds that the property is
23        burdensome and is of inconsequential value to the
          estate.
24
25   Trustee did not oppose Davies’ abandonment motion, and the
26   bankruptcy court entered an order granting the motion on April 7,
27        3
             This conversation with Trustee is the only documented
     contact with Kohn in the bankruptcy case. Kohn has not appeared
28   or taken any part in the proceedings or in this appeal.

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 1   2011 (the “Abandonment Order”).
 2        A month after entry of the Abandonment Order, on or about
 3   May 7, Trustee received an offer of $5,000 to buy the Judgment.
 4   The record does not reflect who submitted the offer.    Trustee, on
 5   June 20, 2011, filed a Motion to Set Aside/Reconsider Order
 6   Granting Debtor’s Motion to Compel Abandonment of Property by the
 7   Trustee and to Withdraw the Trustee’s No Asset Report (the “Set
 8   Aside Motion”).   In the motion, Trustee asked the bankruptcy court
 9   to either set aside the Abandonment Order, or to amend it to only
10   include real property.
11        Davies filed an opposition to the Set Aside Motion on
12   June 22, 2010.    Davies principally argued that an Abandonment
13   Order under § 554(b) is irrevocable.    Davies’ opposition contained
14   no reference to Kohn.
15        On June 29, 2011, finding that no hearing was necessary, the
16   bankruptcy court entered an Order denying in part and granting in
17   part the Set Aside Motion (the “Set Aside/Reconsider Order”).     The
18   court granted that portion of the Set Aside Motion requesting
19   leave by Trustee to withdraw the No Asset report, but denied the
20   request to set aside or modify the Abandonment Order because:
21        The Order entered on April 7, 2011 as docket number 75,
          granting Debtor’s Motion to Compel Abandonment by
22        Trustee (the “Abandonment Order”), only concerned and
          affected the real property identified as [the Indio
23        property]. No other property, real or personal, was
          abandoned by the Abandonment Order. The “Ko Judgment”
24        identified in the Motion remains property of the
          bankruptcy estate. Therefore, the [Set Aside] Motion
25        with respect to abandonment is denied as moot.
26        Davies filed a timely appeal of the Set Aside/Reconsider
27   Order on July 8, 2011, commencing the instant appeal.
28        On July 3, 2011, Trustee filed a Notice of Assets and

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 1   Possible Dividend in the bankruptcy case.    On July 13, 2011,
 2   Trustee filed a motion for approval of the sale of the Judgment.
 3   In this motion, Trustee proposed to sell the bankruptcy estate’s
 4   interest in the Judgment to Asset Acquisition Partners, LLC of
 5   Orlando Florida for $5,000, free and clear of liens, but subject
 6   to the right of others to submit overbids.    A hearing on the sale
 7   motion was set for August 10, 2011.
 8        Davies did not oppose the sale motion.     However, on July 20,
 9   2011, he filed an emergency motion for stay of the Set
10   Aside/Reconsider Order pending appeal in the bankruptcy court.      He
11   repeated his argument that the Judgment had been effectively
12   abandoned in the Abandonment Order under § 554(b), and that such
13   abandonment was irreversible.   He urged that he would likely
14   succeed on the merits in this appeal, that he would suffer
15   irreparable harm if Trustee’s proposed sale was not stayed, and
16   that a stay would not harm others.     Again, Davies made no mention
17   of Kohn in his motion for stay pending appeal.    Trustee opposed
18   the motion.
19        The bankruptcy court conducted a hearing on Davies’ stay
20   motion on July 25, 2011.   Davies and Trustee appeared.4   On
21   July 25, 2011, the bankruptcy court entered a Memorandum Opinion
22   indicating its intent to deny the stay motion.    The court observed
23   that the only legal question presented by Davies in the appeal was
24   whether the Abandonment Order effectively covered all estate
25   property, including the Judgment.     The court repeated its earlier
26   conclusion that the Abandonment Order pertained only to real
27   property, not the Judgment.   While it agreed, generally, with
28        4
              There is no transcript of this hearing in the record.

                                     -5-
 1   Davies that an abandonment under § 554(b) is irrevocable, the
 2   bankruptcy court concluded, again, that there had never been an
 3   abandonment of the Judgment so it never left the bankruptcy
 4   estate.   Applying the four-part test for determining whether to
 5   grant a stay pending appeal expressed in Leiva-Perez v. Holder,
 6   640 F.3d 962, 964 (9th Cir. 2011), the court concluded:
 7        The Debtor has not shown any likelihood of irreparable
          injury in the absence of stay, nor has it been shown
 8        that the balance of hardships tips sharply in favor of
          Debtor. Because Debtor has not made a strong showing of
 9        likelihood of success on appeal, and more importantly,
          because Debtor has failed to demonstrate any likelihood
10        of irreparable injury, his motion for stay pending
          appeal is denied.
11
12   The bankruptcy court entered an order denying the motion for a
13   stay pending appeal on July 25, 2011.5
14        The hearing on Trustee’s motion to sell the Judgment took
15   place on August 10, 2011.   Only the Trustee appeared, and there
16   were no other bidders.   The bankruptcy court granted the motion
17   and entered an order approving Trustee’s proposal to sell the
18   Judgment as proposed in his motion on August 12, 2011.    Davies did
19   not appeal that order, and it is not clear in the record or the
20   bankruptcy docket whether the sale has been completed.
21                               JURISDICTION
22        The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
23   and 157(b)(2)(A) and (O).   We have jurisdiction under 28 U.S.C.
24   § 158.
25        5
             Davies filed an emergency motion for stay pending appeal
     with the Panel on August 2, 2011, in which he made the same
26   arguments presented in the bankruptcy court. Notably, again,
     there was no mention in this motion of Kohn. The Panel denied the
27   motion on August 3, 2011, concluding that Davies was not likely to
     succeed on the merits. Davies v. Zimmerman, BAP no. CC-11-1353
28   (9th Cir. BAP, August 3, 2011).

                                     -6-
 1                                 ISSUE
 2        Whether the bankruptcy court abused its discretion in
 3   deciding that the Judgment had not been abandoned.
 4                           STANDARD OF REVIEW
 5        The bankruptcy court's decision to authorize or deny
 6   abandonment is reviewed for an abuse of discretion.   Viet Vu v.
 7   Kendall (In re Viet Vu), 245 B.R. 644, 647 (9th Cir. BAP 2000).     A
 8   bankruptcy court abuses its discretion if it bases a decision on
 9   an incorrect legal rule, or if its application of the law was
10   illogical, implausible, or without support in inferences that may
11   be drawn from the facts in the record.   United States v. Hinkson,
12   585 F.3d 1247, 1261–63 (9th Cir. 2009) (en banc); Ellsworth v.
13   Lifescape Med. Assocs. (In re Ellsworth), 455 B.R. 904, 914 (9th
14   Cir. BAP 2011).
15                               DISCUSSION
16                                   I.
17        Before reaching the merits, we examine an issue raised by
18   Davies for the first time late in this appeal: that Davies had
19   sold the Judgment to Kohn pre-petition and, thus, “the
20   [bankruptcy] estate did not contain the Debtor’s sold judgment,
21   and both the Court and Trustee erred in pursuing the sale of
22   property not contained in the estate.”   Davies’ Reply Br. at 1.
23        While the practice is disfavored, we have discretion to
24   review an issue raised for the first time on appeal, if "(1) there
25   are ‘exceptional circumstances’ why the issue was not raised in
26   the trial court, (2) the new issue arises while the appeal is
27   pending because of a change in the law, or (3) the issue presented
28   is purely one of law and the opposing party will suffer no

                                    -7-
 1   prejudice as a result of the failure to raise the issue in the
 2   trial court.”    Rhoades v. Henry, 598 F.3d 495, 501 (9th Cir.
 3   2010).    None of these conditions apply.   However, even if we were
 4   to examine this tardy argument, we conclude it lacks merit.
 5           At the very beginning of the case, Trustee contacted Kohn and
 6   was informed that there was little likelihood of collecting on the
 7   Judgment.    Thus, Kohn was aware that Davies had filed a bankruptcy
 8   case, and that Trustee had concluded that the bankruptcy estate
 9   held some interest in the Judgment.     Despite being the putative
10   owner of the Judgment, Kohn did not participate in the case.       One
11   reasonable inference from these events would be that Kohn
12   considered whatever interest he might have in the Judgment to be
13   worthless, and he therefore chose not to assert that interest in
14   the bankruptcy case.
15           Second, and perhaps more important, whatever interests Kohn
16   had in the Judgment had been extinguished by the time that the
17   bankruptcy court entered its Set Aside/Reconsider Order, the order
18   on appeal.    As noted above, Davies’ assignment to Kohn contained a
19   reversion clause:    "if [the] judgment has not been satisfied after
20   2 years, judgment will be reassigned back to [Davies].”    It is
21   apparently undisputed that Kohn had made no collections on the
22   Judgment, and thus, by the terms of the assignment, whatever
23   interest in the Judgment Kohn had been given under the assignment
24   reverted back to Davies, and to his bankruptcy estate, on June 29,
25   2011.
26           That this date is coincidentally the same as the day the
27   bankruptcy court entered the Set Aside/Reconsider Order at issue
28   in this appeal is interesting, but not necessarily relevant.       Even

                                       -8-
 1   before that, Davies had, at a minimum, a contingent, reversionary
 2   interest in the Judgment and, under § 541(a) and Ninth Circuit
 3   case law, Davies’ contingent reversionary interest became property
 4   of the bankruptcy estate on the petition date.   Nicholas v.
 5   Birdsell, 491 F.3d 987, 990 (9th Cir. 2007) ("By including all
 6   legal interests without exception, Congress indicated its
 7   intention to include all legally recognizable interests although
 8   they may be contingent and not subject to possession until some
 9   future time.").
10        We therefore conclude there is no merit in Davies’ late
11   argument that Trustee “erred in pursuing the sale of property not
12   contained in the estate.”    Davies’ interest in the Judgment was
13   always part of the estate, and Kohn’s interest in the Judgment was
14   extinguished under the terms of the assignment by the time the
15   bankruptcy court entered the Set Aside/Reconsider Order.6
16                                    II.
17        Turning to the merits, in the bankruptcy court, and on
18   appeal, Davies has steadfastly contended that the bankruptcy
19   court’s Abandonment Order effectively abandoned the Judgment.
20   From that premise, Davies argues that whatever is abandoned cannot
21   be returned to the estate.   There is, of course, support for the
22   irrevocability of an abandonment:
23        A number of cases recognize a general rule that
          abandonment is irrevocable, even if it is subsequently
24        discovered that the abandoned property had greater value
          than previously believed. In re Lintz West Side Lumber,
25        Inc., 655 F.2d 786, 789 (7th Cir. 1981) [other citations
26        6
             Davies has filed a Request for Judicial Notice of five
     documents relating to Kohn’s actions and services. These
27   documents were never presented to the bankruptcy court. See
     Kirschner v. Uniden Corp. of Am., 842 F.2d 1074, 1077-78 (9th Cir.
28   1988). The request is therefore DENIED.

                                      -9-
 1        omitted].
 2   DeVore v. Marshack (In re DeVore), 223 B.R. 193, 197 (9th Cir. BAP
 3   1998).   The bankruptcy court agreed with Davies on this point,
 4   even citing In re Lintz W. Side Lumber, Inc.     But the court
 5   repeatedly, and correctly, reminded Davies that this case did not
 6   present any question whether the Abandonment Order should be
 7   “revoked.”   Instead, the bankruptcy court construed its order, and
 8   concluded in the Set Aside/Reconsider Order that the Abandonment
 9   Order:
10        only concerned and affected the real property identified
          as [the Indio, California property]. No other property,
11        real or personal, was abandoned by the Abandonment
          Order. The [Judgment] identified in the Motion remains
12        property of the bankruptcy estate.
13   Set Aside Order at 1.   Because it concluded that the Abandonment
14   Order only concerned Davies’ real property in Indio, California,7
15   it held the Judgment had never been abandoned.    As a result,
16   Davies’ arguments are misplaced.
17        In reaching its conclusion, the bankruptcy court interpreted
18   its own order.8   The Ninth Circuit instructs that we should "give
19   deference to [a] court's interpretation of its own order, based on
20   the court's extensive oversight of the decree from the
21        7
             Concurrently with this appeal, the Panel examined a
     dispute between Davies and Deutsche Bank regarding this real
22   property. See Davies v. Deutsche Bank Nat’l Trust Co., BAP no.
     CC-11-1221 (9th Cir. BAP 2011).
23
          8
              The full text of the Abandonment Order reads as follows:
24
           “On March 14, 2011, Brian William Davies (the “Debtor”) filed
25   his Motion to Compel Abandonment of Property by Trustee in this
     case.
26         “The Debtor having filed a declaration on April 1, 2011
     stating that he has not received any opposition nor any objection
27   to his Motion, and for good cause shown,
           “IT IS HEREBY ORDERED that the Debtor’s Motion to Compel
28   Abandonment of Property by Trustee is GRANTED.”

                                     -10-
 1   commencement of the litigation to the current appeal."   Hallett v.
 2   Morgan, 296 F.3d 732, 739-40 (9th Cir. 2002); accord Zinchiak v.
 3   CIT Small Bus. Lending Corp. (In re Zinchiak), 406 F.3d 214, 224
 4   (3rd Cir. 2005) (noting that the bankruptcy court is well suited
 5   to "provide the best interpretation of its own order.");
 6   Graefenhain v. Pabst Brewing Co., 870 F.2d 1198, 1203 (7th Cir.
 7   1989) ("Few persons are in a better position to understand the
 8   meaning of a [court order] than the judge who oversaw and approved
 9   it."); Brown v. Neeb, 644 F.2d 551, 558 n.12 (6th Cir. 1981).
10        Our deference to the construction by the bankruptcy court is
11   not blind and, in this case, there is considerable support in the
12   record for the bankruptcy court’s conclusion that the Abandonment
13   Order did not cover the Judgment.   For example, Davies’ motion to
14   compel abandonment described only the real property.   Immediately
15   following that description, the motion represents that, “By this
16   motion, the Debtor seeks the Court for an Order to compel
17   abandonment of property by the Trustee on the grounds that the
18   property is burdensome and is of inconsequential value to the
19   estate.”   And though § 554(b) authorizing abandonment upon request
20   of a party targets property which is either burdensome or of
21   inconsequential value, the only property of Davies that was both
22   burdensome and of inconsequential value (as referenced in the
23   motion) was the over-encumbered real property.    The Judgment,
24   arguably, had inconsequential value at the time the abandonment
25   motion was acted on by the bankruptcy court, but it is difficult
26   to see how it could be described as burdensome.
27        Davies’ argument supporting the abandonment motion notes:
28        Not all property of the bankruptcy estate will be of

                                     -11-
 1        value to creditors. Often, the Debtor’s property is so
          heavily encumbered, as in this case, that there is no
 2        equity and the expenses of maintaining the property are
          greater than can be realized from the sale or other
 3        disposition of the property.
 4   In this passage, Davies is arguing to the bankruptcy court that
 5   the property to be abandoned has no equity and its maintenance is
 6   costing the bankruptcy estate more than it is worth.    Fairly, that
 7   argument can only refer to the real property.   Even if the
 8   Judgment had no equity, it also was maintenance-free.
 9        Finally, as shown above, neither the motion for abandonment
10   nor the Abandonment Order contains any reference to the Judgment.
11        The bankruptcy court, in construing its own order, is
12   entitled to deference.   The court based its construction on its
13   parallel review of Davies’ abandonment motion, that unquestionably
14   referred to abandonment of property that was both burdensome on
15   the estate and of inconsequential value.   That description can
16   only apply to the real property in this case.   Neither the motion
17   nor the order entered by the bankruptcy court specifically
18   references the Judgment.
19        All things considered, the bankruptcy court did not abuse its
20   discretion when it decided that the Abandonment Order did not
21   cover the Judgment, and in denying Davies’ Set Aside Motion for
22   that reason.
23                                CONCLUSION
24        We AFFIRM the order of the bankruptcy court.
25
26
27
28

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