                FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


IN THE MATTER OF: MORTGAGES            No. 12-15234
LTD.,
                      Debtor,            D.C. Nos.
                                    2:09-cv-02698-RCJ
                                    2:08-bk-07465-RJH
REV OP GROUP; STERNBERG
ENTERPRISES PROFIT SHARING
PLAN,
                    Appellants,

                v.

ML MANAGER LLC,
                       Appellee.



REV OP GROUP,                          No. 12-15459
                      Appellant,
                                         D.C. No.
                v.                  2:11-cv-00200-RCJ

ML MANAGER LLC,
                       Appellee.         OPINION


     Appeal from the United States District Court
              for the District of Arizona
     Robert Clive Jones, District Judge, Presiding
2            IN THE MATTER OF: MORTGAGES LTD.

                     Argued and Submitted
          January 16, 2014—San Francisco, California

                    Filed November 12, 2014

      Before: J. Clifford Wallace and Jay S. Bybee, Circuit
    Judges, and Robert W. Gettleman, Senior District Judge.*

                    Opinion by Judge Wallace


                           SUMMARY**


                            Bankruptcy

   The panel dismissed, as equitably moot, appeals from two
bankruptcy court orders in a Chapter 11 case.

    Pursuant to the confirmed plan of reorganization of
Mortgages Ltd., a private lender for certain real estate
investments in Arizona, ML Manager LLC was the manager
of the loans left in Mortgages Ltd.’s portfolio. Mortgages
Ltd. raised money from investors to extend loans to real
estate purchasers, secured by the purchased real estate, and
acted as servicing agent for the loans and properties. The
investors received pass-through fractional interests in the real


    *
    The Honorable Robert W. Gettleman, Senior District Judge for the
U.S. District Court for the Northern District of Illinois, sitting by
designation.
  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
           IN THE MATTER OF: MORTGAGES LTD.                 3

estate that secured the loans and the resulting loan payments.
They acquired an actual interest in each underlying loan.

    Rev Op Group, a group of pass-through investors, moved
for an order ruling that ML Manager could not act as agent
for their interests, and that objecting investors like Rev Op
Group should not be obliged to pay any share of an exit
financing loan taken by ML Manager to pay for expenses
related to the completed bankruptcy. The bankruptcy court
rejected both arguments in a “Clarification Order.” The
bankruptcy court also issued a “Distribution Order”
approving ML Manager’s distribution of the proceeds of its
liquidation of the loan portfolio.

    The panel held that Rev Op Group’s appeals from the
Clarification Order and the Distribution Order were equitably
moot because the Group did not seek a stay before the
bankruptcy or district courts, as required by In re Roberts
Farms, Inc., 652 F.2d 793 (9th Cir. 1981). In addition,
substantial consummation of the Chapter 11 plan had
occurred, the remedy Rev Op Group sought would
inequitably harm third parties, and the bankruptcy court on
remand would not be able to devise an equitable remedy.


                        COUNSEL

Bryce A. Suzuki (argued), Robert J. Miller, and Justin A.
Sabin, Bryan Cave LLP, Phoenix, Arizona, for Appellants.

Cathy L. Reece (argued), Fennemore Craig, P.C., Phoenix,
Arizona; Keith L. Hendricks and Joshua T. Greer, Moyes
Sellers & Hendricks, Phoenix, Arizona, for Appellee.
4          IN THE MATTER OF: MORTGAGES LTD.

                          OPINION

WALLACE, Senior Circuit Judge:

    Mortgages Ltd. was a private lender for certain real estate
investments in Arizona. Mortgages Ltd. raised money from
investors to extend loans to real estate purchasers, secured by
the purchased real estate, and acted as servicing agent for the
loans and properties. The investors received “pass-through”
fractional interests in the real estate that secured the loans and
the resulting loan payments. The pass-through investors
acquired an actual interest in each underlying loan.

    On June 24, 2008, Mortgages Ltd. filed for Chapter 11
bankruptcy. The company was restructured through a
confirmed bankruptcy plan. Pursuant to that plan, the entity
ML Manager LLC (ML Manager), the appellee here,
manages and operates the loans left in Mortgages Ltd.’s
portfolio. ML Manager took a $20 million loan in “exit
financing” to pay for expenses related to the completed
bankruptcy. The bankruptcy plan was confirmed by the
bankruptcy court in May 2009.

    After confirmation, a group of the pass-through investors
(Rev Op Group) moved for an order in the bankruptcy court
ruling that ML Manager could not act as agent for their
interests, and that objecting investors like the Rev Op Group
should not be obligated to pay any share of the exit financing
loan. The bankruptcy court rejected both arguments in its
“Clarification Order,” issued on October 21, 2009. Rev Op
Group appealed to the district court, which affirmed on
January 31, 2012.
             IN THE MATTER OF: MORTGAGES LTD.                          5

    Relying on the confirmed plan, the Clarification Order
and other decisions of the bankruptcy court, ML Manager
began liquidating the loan portfolio. As liquidation proceeds
became available, ML Manager filed an “Allocation Model”
on September 1, 2010, to allocate costs and distribute the
proceeds to investors. Rev Op Group objected to the model
and the proposed distributions of funds, but the bankruptcy
court provisionally overruled these objections. ML Manager
filed a notice of its intent to distribute proceeds according to
the allocation model and a motion to approve the
distributions. Rev Op Group objected to the motion. On
January 20, 2011, the bankruptcy court issued its
“Distribution Order” overruling the objections and granting
ML Manager’s motion to approve the distributions. Rev Op
Group appealed to the district court, which affirmed the
order on November 4, 2011.

    Rev Op Group timely appealed from the district court’s
affirmances of the Clarification and Distribution Orders to
this court.1 We have appellate jurisdiction under 28 U.S.C.
§ 158(d)(1).

    The bankruptcy court twice overruled Rev Op Group’s
objections, and the district court twice affirmed these orders.
However, Rev Op Group never sought to stay the bankruptcy
or district court decisions pending the appeals. As a result,
ML Manager moves this court to dismiss the appeals as


  1
    In a separate opinion filed with this Opinion, we address Rev Op
Group’s appeal from the bankruptcy court’s Declaratory Judgment. Rev
Op Grp. v. ML Manager LLC, Nos. 12-15229, 12-15438, 12-16293 &
12-16725. In a concurrently filed memorandum disposition, we resolve
three other appeals from bankruptcy court sales orders. Rev Op Grp. v. ML
Manager LLC, Nos. 12-15229, 12-15438, 12-16293 & 12-16725.
6          IN THE MATTER OF: MORTGAGES LTD.

equitably moot. The district court denied ML Manager’s
motions to dismiss on this basis, but did affirm the
bankruptcy court’s rulings on substantive grounds.

    We review factual findings about mootness for clear
error. In re Thorpe Insulation Co., 677 F.3d 869, 879 (9th
Cir. 2012). We review legal conclusions de novo. Id. But as
we explain later, ML Manager is also entitled to move to
dismiss in this court based on equitable mootness, regardless
of the decisions of the courts being reviewed. The “party
moving for dismissal on mootness grounds bears a heavy
burden.” Id. (citation omitted).

                               I.

    The district court denied ML Manager’s motions to
dismiss these appeals on equitable mootness grounds. Instead
of cross-appealing those denials, ML Manager requests that
we dismiss the appeals. Rev Op Group argues that ML
Manager waived its right to move to dismiss because of the
failure to cross-appeal.

    This is incorrect. A party can move to dismiss an appeal
as equitably moot if “great changes in the status quo occurred
after the district court rendered the orders appealed from,”
even if the party never moved to dismiss the appeal as moot
before the district court. Algeran, Inc. v. Advance Ross Corp.,
759 F.2d 1421, 1423 (9th Cir. 1985). ML Manager argues
that the distributions and other actions taken in the wake of
the district court orders have greatly changed the status quo.
Also, no cross-appeal is required for an argument that
supports the appealed judgment, “even where the argument
being raised has been explicitly rejected by the district court.”
Engleson v. Burlington N. R.R. Co., 972 F.2d 1038, 1041 (9th
           IN THE MATTER OF: MORTGAGES LTD.                    7

Cir. 1992). We thus consider ML Manager’s motions to
dismiss despite its failure to cross-appeal.

                               II.

     We therefore turn to ML Manager’s requested dismissal
of Rev Op Group’s appeals as moot. As we explained in
Thorpe, a bankruptcy appeal can be moot in two
circumstances. 677 F.3d at 880. The first derives from Article
III of the Constitution, the other from equity.

     Federal courts can only rule on cases or controversies
under Article III of the Constitution. U.S. Const. art. III, § 2,
cl.1. If an appeal is constitutionally moot under Article III, we
are powerless to hear it. These appeals are not constitutionally
moot because we “can give the appellant any effective relief
in the event that [we] decide[] the matter on the merits in [its]
favor.” Thorpe, 677 F.3d at 880 (citations omitted). We could
entirely “reverse plan confirmation or require modification of
the plan.” Id.

    Even when we could entirely reverse plan confirmation or
wholly modify the plan, and thus the appeals are not
constitutionally moot, we can dismiss appeals of bankruptcy
matters when there has been a “comprehensive change of
circumstances . . . so as to render it inequitable for this court
to consider the merits of the appeal.” Id. (internal quotation
marks and citation omitted). We call this “equitable
mootness,” a “judge-made abstention doctrine” unrelated to
the constitutional prohibition against hearing moot appeals.
See, e.g., In re Semcrude, L.P., 728 F.3d 314, 317 & n.2 (3d
Cir. 2013); In re UNR Indus., Inc., 20 F.3d 766, 769 (7th Cir.
1994) (“[t]here is a big difference between inability to alter
the outcome (real mootness) and unwillingness to alter the
8            IN THE MATTER OF: MORTGAGES LTD.

outcome (‘equitable mootness’)”).2 An appeal is equitably
moot if the case presents “transactions that are so complex or
difficult to unwind” that “debtors, creditors, and third parties
are entitled to rely on [the] final bankruptcy court order.”
Thorpe, 677 F.3d at 880 (citation omitted).

    A party that disagrees with an order of a bankruptcy judge
can move to stay the order before that bankruptcy judge, who
has the power to suspend the order or offer other appropriate
relief during the pendency of an appeal of the order, to protect
the rights of all parties in interest. FED. R. BANKR. P. 8005.3
The bankruptcy court can condition granting the stay on
payment of a supersedeas bond. Id. If the bankruptcy judge
does not grant the stay, the objecting party can seek a stay
from the district court or bankruptcy appellate panel, which
can also grant a stay and condition the stay on payment of a
bond or other security. Id. The stay ensures “that the estate
and the status quo may be preserved pending resolution of the
appeal.” In re Chateaugay Corp., 988 F.2d 322, 326 (2d Cir.
1993).



 2
   We have at times referred to equitable mootness as a jurisdictional bar.
See, e.g., In re Baker & Drake, Inc., 35 F.3d 1348, 1351 (9th Cir. 1994)
(stating that equitable “[m]ootness is a jurisdictional issue”). But the
correct approach, as we recognized in Thorpe, is that equitable mootness
is a prudential doctrine whereby we elect not to entertain certain
bankruptcy appeals.
    3
   After argument in this case, the Chief Justice submitted to Congress
amendments to the Federal Rules of Bankruptcy Procedure that change
and renumber Rule 8005. Those rules go into effect “December 1, 2014,
and shall govern in all proceedings in bankruptcy cases thereafter
commenced.” Proposed Amendments to the Federal Rules of Bankruptcy
Procedure, available at 2014 US ORDER 0011 (Apr. 25, 2014).
           IN THE MATTER OF: MORTGAGES LTD.                    9

    When an appellant fails to seek a stay without giving
adequate cause, we have held that we dismiss the appeal as
equitably moot. In re Roberts Farms, Inc., 652 F.2d 793, 798
(9th Cir. 1981) (“[a]ppellants have failed and neglected
diligently to pursue their available remedies to obtain a stay
of the objectionable orders of the Bankruptcy Court and have
permitted such a comprehensive change of circumstances to
occur as to render it inequitable for this court to consider the
merits of the appeal. . . . Appellants flunked the first step.
They did not apply to the bankruptcy judge for a stay . . . and
have given no adequate reason on the record for not doing
so”); see also Thorpe, 677 F.3d at 881 (stating that “[w]e will
look first at whether a stay was sought, for absent that a party
has not fully pursued its rights,” and that the “failure to seek
a stay can render an appeal equitably moot”). We have not
consistently followed this helpful and clear rule, though, and
have held in at least two cases that, in the instances there
described, an appeal is not equitably moot despite the failure
to seek a stay. See, e.g., Suter v. Goedert, 504 F.3d 982, 990
(9th Cir. 2007); In re Sylmar Plaza, L.P., 314 F.3d 1070,
1074 (9th Cir. 2002).

                               A.

    In Roberts Farms, we held that before we analyze any of
the other factors regarding equitable mootness, the “first step”
is whether the appellant “appl[ied] to the bankruptcy judge
for a stay” or gave an “adequate reason on the record for not
doing so.” 652 F.2d at 798. “[I]t is obligatory upon [the]
appellant in a situation like the one with which we are faced
to pursue with diligence all available remedies to obtain a
stay of execution of the objectionable order . . . if the failure
to do so creates a situation rendering it inequitable to reverse
the orders appealed from.” Id. While we recognized in
10         IN THE MATTER OF: MORTGAGES LTD.

Thorpe that an appeal should not be automatically dismissed
for failure to obtain a stay, we reiterated our warning from
Roberts Farms that an appellant must seek a stay. 677 F.3d at
881. Otherwise, we stated, the appellant has by definition
“not fully pursued its rights,” and thus the appeal is subject to
dismissal. Id.

    We have not consistently followed the clear Roberts
Farms rule. On at least two occasions, we denied motions to
dismiss appeals despite appellants’ failures to seek stays of
bankruptcy orders. See, e.g., Suter, 504 F.3d at 990; Sylmar,
314 F.3d at 1074. There is tension between Roberts Farms on
the one hand and Suter and Sylmar on the other. The
bankruptcy appellate panel has recognized that tension. In re
Cmty. Bancorp, 2013 WL 4441925, at *13 (B.A.P. 9th Cir.
Aug. 20, 2013) (stating that Sylmar rejected a motion to
dismiss as equitably moot based solely on the failure to seek
a stay, but that under Thorpe, “failure to seek a stay may
alone be enough to render these appeals equitably moot,” and
thus recognizing that “[c]learly, an inconsistency exists
between Sylmar and Thorpe”).

                               B.

    It would appear that the best way to resolve any
inconsistency would be to cabin Sylmar and Suter as narrow
exceptions to the general rule, from Roberts Farms, that
appeals from orders where the objecting party did not seek a
stay are moot. Our requirement that a party seek a stay of a
bankruptcy court order with which it disagrees before appeal
is grounded in important principles of equity. Bankruptcy
cases often implicate parties besides the debtor and its
creditors. For example, the estate may sell or dispose of its
property, or borrow money from a lender. As seen in these
           IN THE MATTER OF: MORTGAGES LTD.                  11

appeals, the estate usually does so pursuant to orders from the
bankruptcy court. When a party that disagrees with an order
of the bankruptcy court seeks a stay of the order, it notifies
third parties that the transactions they might enter into with
the estate may be undone on appeal. If the disagreeing party
fails to seek a stay, any third parties who purchased property
or extended a loan may later have a transaction undone
without sufficient notice. This inequitable result means that
“the appellant has a high obligation to seek a stay pending
appeal, even if the chances of success seem dim.” 13B
CHARLES ALAN WRIGHT & ARTHUR R. MILLER, et al., FED.
PRAC. & PROC. JURIS. § 3533.2.3 (3d ed.). Obviously, if the
disagreeing party succeeds in obtaining a stay, it is
impossible for third parties to enter into transactions with the
estate, which means that no inequitable results could ensue.

    Under this interpretation of our case law, these
consolidated appeals are moot. Rev Op Group never moved
to stay the appealed orders before the bankruptcy or district
courts. According to Roberts Farms, we should dismiss these
appeals as equitably moot unless Rev Op Group offers
“adequate reason” for its failure to seek a stay. 652 F.2d at
798.

     Rev Op Group argues that it was “financially unable to
post the extremely expensive bond that would be required,”
advising that in two related appeals from the Mortgages Ltd.
bankruptcy, ML Manager sought a prohibitively expensive
$90 million bond. But this is not an adequate reason for
failing to seek a stay of the Clarification and Distribution
Orders. First, ML Manager sought the $90 million bond for
different orders. We cannot assess whether ML Manager
would have requested a more affordable bond for stays of the
Clarification and Distribution Orders. Second, it is the
12         IN THE MATTER OF: MORTGAGES LTD.

bankruptcy and district courts, following Federal and Local
Rules, that determine the precise amount of the bond, not the
debtor or its agent. In re Swift Aire Lines, Inc., 21 B.R. 12,
13–14 (B.A.P. 9th Cir. 1982); accord In re Tribune Co., 477
B.R. 465, 480–83 (Bankr. D. Del. 2012) (closely analyzing a
number of factors to quantify “the potential harm for the
purpose of fixing the amount of a bond”). The bankruptcy
court may have viewed stays for the Clarification and
Distribution Orders differently than the stays sought for the
other orders. Third, our precedents were quite clear at the
time of the Clarifiation and Distribution Orders that an
objecting party must at least seek a stay to ensure its appeal
will not be equitably moot. See, e.g., In re Lowenschuss, 170
F.3d 923, 933 (9th Cir. 1999).

    Thus, Rev Op Group’s appeals must be dismissed for
mootness under Roberts Farms because of its failure to seek
stays of the Clarification and Distribution Orders. This is a
clear bright-line rule that all litigants can understand.

    Even if we were to extend our analysis beyond Roberts
Farms to cases in “tension” with it, Suter or Sylmar, Rev Op
Group would still not prevail. Unlike in Suter, Rev Op Group
has never argued that it has a right under Arizona state law to
return to the status quo after the distributions and allocations
made pursuant to the Clarification and Distribution Orders.
See Suter, 504 F.3d at 990 (“[t]his exception to mootness
exists when the debtor had a state statutory right to redeem
real property sold to a creditor or other purchaser”). Nor is
Rev Op Group solely seeking monetary damages from a
solvent debtor. Sylmar, 314 F.3d at 1074. Any relief we grant
to Rev Op Group would require overturning previous
distributions and allocations to third parties not before this
           IN THE MATTER OF: MORTGAGES LTD.                    13

court. Unlike in Sylmar, then, we cannot simply award Rev
Op Group more money from a stable pool of available funds.

                               C.

    But as a three-judge panel, we cannot resolve the tension
in our case law because doing so requires overruling prior
decisions of this court. In re Complaint of Ross Island Sand
& Gravel, 226 F.3d 1015, 1018 (9th Cir. 2000). There is no
need to resolve the tension here because Rev Op Group’s
appeals must be dismissed under the four considerations from
Thorpe, even if the failure to seek stays of the Clarification
and Distribution Orders were not fatal. Those four
considerations are: (1) “whether a stay was sought, for absent
that a party has not fully pursued its rights”; (2) “if a stay was
sought and not gained, we then will look to whether
substantial consummation of the plan has occurred”; (3) “we
will look to the effect that a remedy may have on third parties
not before the court”; (4) “[f]inally, we will look at 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 before
the bankruptcy court.” 677 F.3d at 881.

    As we have previously explained at length, Rev Op Group
failed to satisfy the first Thorpe consideration because it did
not seek a stay. By doing so, Rev Op Group did not “use due
diligence in seeking the stay,” and has, “by its own inaction”
“permit[ted] developments to proceed without its
participation,” namely, distributions of funds from ML
Manager to unsuspecting third parties who could not have
realized the distributions could be retaken. Id. This is a case
where Rev Op Group sat on its rights, which weighs strongly
towards equitable mootness. Thorpe, 677 F.3d at 881–82; see
14           IN THE MATTER OF: MORTGAGES LTD.

also Nordhoff Invs., Inc. v. Zenith Elec. Corp., 258 F.3d 180,
187 (3d Cir. 2001) (determining that “Appellants did not, at
any time, seek a stay . . . [which] weighs heavily in favor of
dismissing Appellants’ claims”).

    Moreover, in addition to the fact that substantial
consummation of the bankruptcy plan has occurred,4 the
remedy Rev Op Group seeks “would bear unduly on the
innocent.” Thorpe, 677 F.3d at 882. That turns on whether it
is possible to alter the Clarification and Distribution Orders
“in a way that does not affect third party interests to such an
extent that the change is inequitable.” Id. Any alterations
would inequitably harm third parties not before this court.
Third parties would have to return distributions from the
estate or sell property back to ML Manager. Because the
bankruptcy proceeding is, in substance, a liquidation, any
increase in future distributions to Rev Op Group must come
from money allocated to and expected by a third party
investor. Any modification to the underlying orders would
inequitably affect those third parties.

    Finally, “and most importantly, we look to whether the
bankruptcy court on remand may be able to devise an
equitable remedy.” Id. at 883. It is not possible to devise an
equitable remedy. While the bankruptcy court could withhold
proceeds from future property sales and reallocate those
proceeds based on a revised formula, because many investors
have likely already received all of the distributions owed to
them, withholding the proceeds of future sales would not
allow the bankruptcy court to reallocate the money
proportionally. Clawing back money from those investors

 4
   See Section I.2 of the concurrently filed Opinion in Rev Op Grp. v. ML
Manager LLC, Nos. 12-15229, 12-15438, 12-16293 & 12-16725.
              IN THE MATTER OF: MORTGAGES LTD.                            15

who already paid their full allocation would be either
impossible or inequitable. Even if these steps were possible,
the costs of implementing such a remedy would probably
exceed the amount of redistributed funds.

    Thus, whether Rev Op Group’s failure to seek a stay is
fatal under Roberts Farms, standing alone, or whether we
must assess this appeal under Thorpe, the appeals must be
dismissed.5

      APPEALS DISMISSED.




  5
    Rev Op Group requests that we vacate the underlying orders because
these appeals are now moot, under In re Burrell, 415 F.3d 994 (9th Cir.
2005). However, “the touchstone of vacatur is equity,” and it would be
inequitable to allow Rev Op Group to relitigate the underlying issues in
these appeals. Id. at 999 (citation omitted). Indeed, unlike in Burrell, here
Rev Op Group “has by [its] own act caused the dismissal of the appeal”
by its failure to seek stays of the Clarification and Distribution Orders. Id.
(citation omitted).
