                                                         FILED
 1                                                        JUL 31 2013
                                                      SUSAN M SPRAUL, CLERK
 2                                                      U.S. BKCY. APP. PANEL
                                                        OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5
     In re:                        )      BAP No.    NV-12-1512-DKiCo
 6                                 )
     RENO SNAX SALES, LLC,         )      Bk. No.    11-53130-BTB
 7                                 )
                    Debtor.        )
 8   ______________________________)
                                   )
 9   RENO SNAX SALES, LLC,         )
                                   )
10                  Appellant,     )
                                   )
11   v.                            )      M E M O R A N D U M1
                                   )
12   HERITAGE BANK OF NEVADA,      )
                                   )
13                  Appellee.      )
     ______________________________)
14
                     Argued and Submitted on July 19, 2013
15                            at Las Vegas, Nevada
16                           Filed - July 31, 2013
17             Appeal from the United States Bankruptcy Court
                         for the District of Nevada
18
          Honorable Bruce T. Beesley, Bankruptcy Judge, Presiding
19
20   Appearances:     Michael Lehners, Esq. for appellant, Reno Snax
                      Sales, LLC; Louis M. Bubala, III, Esq. of
21                    Armstrong Teasdale LLP for appellee, Heritage Bank
                      of Nevada
22
23   Before:   DUNN, KIRSCHER and COLLINS,2 Bankruptcy Judges.
24
25
          1
            This disposition is not appropriate for publication.
26   Although it may be cited for whatever persuasive value it may
27   have (see Fed. R. App. P. 32.1), it has no precedential value.
     See 9th Cir. BAP Rule 8013-1.
28
          2
            The Hon. Daniel P. Collins, Bankruptcy Judge for the
     District of Arizona, sitting by designation.
 1        Reno Snax Sales, LLC (“Reno Snax”) appeals the bankruptcy
 2   court’s order overruling its objection to the proof of claim
 3   filed by Heritage Bank of Nevada (“Heritage Bank”).3   We AFFIRM.
 4
 5                                  FACTS
 6        On October 4, 2011, Reno Snax and Coffee & Coolers Etc.,
 7   Inc. (“Coffee & Coolers”), a related entity, each filed chapter 7
 8   bankruptcy petitions.4   Separate trustees were duly appointed,
 9   one for Coffee & Coolers (“Coffee & Coolers trustee”) and another
10   for Reno Snax (“Reno Snax trustee”).   The Reno Snax trustee and
11   the Coffee & Coolers trustee each operated the businesses of Reno
12   Snax and Coffee & Coolers, respectively, postpetition.
13        Reno Snax and Coffee & Coolers were co-obligors on debt owed
14   to Heritage Bank,5 which was secured by nearly all of their
15   assets (i.e., inventory, accounts receivable and equipment).
16   Heritage Bank filed a proof of claim in each of the bankruptcy
17
18
19
20        3
            Unless otherwise indicated, all chapter, section and rule
21   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
22
          4
            Reno Snax supplied food and snacks in approximately 500
23   vending machines in various businesses throughout the Reno-Sparks
24   area. Coffee & Coolers supplied coffee machines and related
     products to businesses in the Reno-Sparks area.
25        Reno Snax and Coffee & Coolers had a common ownership;
     Ronald and Brenda Bevers were managing members of Reno Snax and
26   officers of Coffee & Coolers.
27        5
            Reno Snax scheduled Coffee & Coolers as a co-debtor to
28   Heritage Bank.

                                      2
 1   cases of Reno Snax and Coffee & Coolers.6
 2        The Coffee & Coolers trustee soon sold substantially all of
 3   Coffee & Coolers’ assets to a third-party (“Coffee & Coolers
 4   sale”) for $322,000 cash (“Coffee & Coolers sale proceeds”) under
 5   § 363.   Four delivery vans and miscellaneous automobiles
 6   (collectively, “vehicles”) were among the assets sold in the
 7   Coffee & Coolers sale.
 8        Out of the Coffee & Coolers sale proceeds, Heritage Bank
 9   received $6,881.01 for costs advanced at the beginning of the
10   bankruptcy case.   It also received $252,095.19 on its secured
11   claim, the amount remaining after the Coffee & Coolers trustee
12   took $63,023.80, a 20% carveout for the bankruptcy estate arising
13   out of her negotiations with Heritage Bank.
14        The Reno Snax trustee also sought to sell substantially all
15   of Reno Snax’s assets (“Reno Snax sale”) to a third-party for
16   $400,000 (“Reno Snax sale proceeds”) under § 363.   Reno Snax
17   objected to any distribution of the Reno Snax sale proceeds to
18   Heritage Bank (“sale objection”).    Reno Snax contended that
19   Heritage Bank was required to comply with the notice provisions
20   of N.R.S. 482.516 when it sold the vehicles as part of the Coffee
21
22
          6
            On March 7, 2012, Heritage Bank filed nearly identical
23   proofs of claim, each in the amount of $1,502,508.49, secured by
     accounts receivable, inventory and equipment, in both of the
24
     bankruptcy cases of Reno Snax and Coffee & Coolers.
25        On June 13, 2012, Heritage Bank filed amended proofs of
     claim, both in the amount of $953,733.72, in the bankruptcy cases
26   of Reno Snax and Coffee & Coolers. Heritage Bank amended its
27   proofs of claim to reflect the unsecured portion of the debt that
     remained after the sale of Reno Snax’s and Coffee & Coolers’
28   assets.

                                      3
 1   & Coolers sale.7    According to Reno Snax, N.R.S. 482.516 required
 2
 3        7
              N.R.S. 482.516 provides:
 4
          1. Any provision in any security agreement for the sale
 5        or lease of a vehicle to the contrary notwithstanding,
 6        at least 10 days’ written notice of intent to sell or
          again lease a repossessed vehicle must be given to all
 7        persons liable on the security agreement. The notice
          must be given in person or sent by mail directed to the
 8
          address of the persons shown on the security agreement,
 9        unless such persons have notified the holder in writing
          of a different address.
10
11        2. The notice:

12               (a) Must set forth that there is a right to redeem
                 the vehicle and the total amount required as of
13               the date of the notice to redeem;
14               (b) May inform such persons of their privilege of
                 reinstatement of the security agreement, if the
15               holder extends such a privilege;
                 (c) Must give notice of the holders’ intent to
16
                 resell or again lease the vehicle at the
17               expiration of 10 days from the date of giving or
                 mailing the notice;
18               (d) Must disclose the place at which the vehicle
19               will be returned to the buyer or lessee upon
                 redemption or reinstatement; and
20               (e) Must designate the name and address of the
                 person to whom payment must be made.
21
22        3. During the period provided under the notice, the
          person or persons liable on the security agreement may
23        pay in full the indebtedness evidenced by the security
          agreement. Such persons are liable for any deficiency
24
          after sale or lease of the repossessed vehicle only if
25        the notice prescribed by this section is given within
          60 days after repossession and includes an itemization
26        of the balance and of any costs or fees for
27        delinquency, collection or repossession. In addition,
          the notice must either set forth the computation or
28                                                      (continued...)

                                         4
 1   strict compliance with its notice provisions; failure to do so
 2   would eliminate any deficiency debt owed.    Here, Reno Snax
 3   argued, Heritage Bank failed to provide Reno Snax notice pursuant
 4   to N.R.S. 482.516.   Reno Snax therefore no longer owed Heritage
 5   Bank any deficiency debt.
 6        Reno Snax also objected to Heritage Bank’s proof of claim
 7   (“claim objection”), repeating its arguments from the sale
 8   objection.   It contended that Heritage Bank had no valid claim
 9   against it because Heritage Bank was prohibited from recovering
10   any deficiency debt out of the Reno Snax sale proceeds when it
11   failed to comply with N.R.S. 482.516.   Heritage Bank therefore
12   was limited in its recovery to the Coffee & Coolers sale
13   proceeds.
14        Heritage Bank countered that N.R.S. 482.516 did not apply.
15   It asserted that N.R.S. 482.516 only applied to secured creditors
16   repossessing and selling their collateral.   Here, the
17   Coffee & Coolers trustee conducted the Coffee & Coolers sale,
18   exercising her right to sell bankruptcy estate assets as
19   representative of the bankruptcy estate.    Because it was the
20   Coffee & Coolers trustee who sold the vehicles and not Heritage
21   Bank, and there was no repossession or sale by Heritage Bank,
22   Heritage Bank was not required to comply with the notice
23   provisions of N.R.S. 482.516.
24
25
          7
           (...continued)
26        estimate of the amount of any credit for unearned
27        finance charges or cancelled insurance as of the date
          of the notice or state that such a credit may be
28        available against the amount due.

                                      5
 1        In its reply to Heritage Bank’s opposition, Reno Snax
 2   bolstered its earlier arguments by referencing certain provisions
 3   of Article 9 of the U.C.C., adopted in N.R.S. Chapter 104
 4   (“Article 9").8    Specifically, Reno Snax contended that
 5   repossession of the vehicles was not necessary for the notice
 6   requirements of N.R.S. 482.516 to become operative.    Under
 7   Article 9, no matter who takes possession of and sells
 8   collateral, a secured creditor must provide notice, unless it
 9   assigns its security interest to another or transfers the
10   collateral, with the transferee agreeing to undertake the secured
11   creditor’s duties.    Here, Heritage Bank neither transferred its
12   security interest nor transferred the vehicles to the Coffee &
13   Coolers trustee.    Yet, Reno Snax argued, Heritage Bank still had
14   a duty to provide notice, even though the Coffee & Coolers
15   trustee sold the vehicles.
16        At the May 9, 2012 hearing on the Reno Snax sale, Reno Snax
17   withdrew its sale objection in light of its pending claim
18   objection.   Reno Snax agreed to Heritage Bank receiving a
19   distribution of the Reno Snax sale proceeds, subject to
20   disgorgement in the event that the bankruptcy court sustained the
21   claim objection.
22
23        8
            Reno Snax switches between references to a number of
     provisions in N.R.S. Chapter 104 and U.C.C. Article 9. We refer
24
     to these provisions collectively as “Article 9.” Reno Snax
25   specifically relies on U.C.C. 9-611(b), essentially incorporated
     in N.R.S. 104-9611(2). U.C.C. 9-611(b) provides: “Except as
26   otherwise provided in subsection (d), a secured party that
27   disposes of collateral under Section 9-610 shall send to the
     persons specified in subsection (c) a reasonable authenticated
28   notification of disposition.”

                                       6
 1           Out of the Reno Snax sale proceeds, Heritage Bank received
 2   $29,150.53 for costs advanced at the beginning of the bankruptcy
 3   case.       It also received $296,679.57, the amount remaining after
 4   the Reno Snax trustee took $74,169,90, a 20% carveout for the
 5   bankruptcy estate arising out of her negotiations with Heritage
 6   Bank.
 7           Following a hearing, on July 13, 2012, the bankruptcy court
 8   issued an order (“claim order”) overruling the claim objection.
 9   It determined that Heritage Bank was not required to comply with
10   the notice requirements of N.R.S. 482.516 or Article 9 of the
11   U.C.C. because the Coffee & Coolers trustee sold the assets in
12   her capacity as representative of the bankruptcy estate.      The
13   bankruptcy court found that the requirements of those provisions
14   did not apply to the Coffee & Coolers sale because it did not
15   fall “within the statutory provisions of [a] disposition of
16   collateral by a secured party.”
17           Reno Snax timely appealed.9
18
             9
19          Reno Snax later moved to amend the findings in the claim
     order (“motion to amend”), contending that the bankruptcy court
20   incorrectly found that a chapter 7 trustee’s powers of sale under
     the Bankruptcy Code preempted Heritage Bank’s duty to comply with
21   N.R.S. 482.516. Reno Snax argued that Heritage Bank’s
22   non-compliance with N.R.S. 482.516 was not excused simply because
     the Coffee & Coolers trustee sold the vehicles.
23        At the September 25, 2012 hearing on the motion to amend,
     the bankruptcy court stated that the “[Coffee & Coolers trustee]
24
     was the one who sold the property, not the Bank. [She], by the
25   supremacy clause of the United States and the Bankruptcy Rules[,]
     [was] not subject to those notice rules. [Therefore, the
26   bankruptcy court was] not reconsidering.” Tr. of September 25,
27   2012 hr’g, 2:12-15.
          The bankruptcy court issued an order denying the motion to
28                                                      (continued...)

                                           7
 1                               JURISDICTION
 2        The bankruptcy court had jurisdiction under 28 U.S.C.
 3   §§ 1334 and 157(b)(2)(B).   We have jurisdiction under 28 U.S.C.
 4   § 158.
 5
 6                                  ISSUE
 7        Did the bankruptcy court err in overruling Reno Snax’s claim
 8   objection?
 9
10                           STANDARDS OF REVIEW
11        “An order overruling a claim objection can raise legal
12   issues (such as the proper construction of statutes and rules),
13   which we review de novo, as well as factual issues (such as
14   whether the facts establish compliance with particular statutes
15   or rules), which we review for clear error.”      Veal v. Am. Home
16   Mortg. Srvc., Inc. (In re Veal), 450 B.R. 897, 918 (9th Cir. BAP
17   2011).
18        Under de novo review, we give no deference to the bankruptcy
19   court’s decision.   Barclay v. Mackenzie (In re AFI Holding,
20   Inc.), 525 F.3d 700, 702 (9th Cir. 2008).       Under the clearly
21   erroneous standard, we give significant deference to the
22   bankruptcy court’s decision, only reversing when we have a
23   “definite and firm conviction that a mistake has been committed.”
24   Easley v. Cromartie, 532 U.S. 234, 242 (2001).       That is, “[a
25   bankruptcy] court’s factual determination is clearly erroneous if
26
          9
27         (...continued)
     amend (“motion to amend order”).       Reno Snax did not appeal the
28   motion to amend order.

                                        8
 1   it is illogical, implausible, or without support in the record.”
 2   Retz v. Samson (In re Retz), 606 F.3d 1189, 1196 (9th Cir.
 3   2010)(citation omitted).
 4        We may affirm on any ground supported by the record.      Shanks
 5   v. Dressel, 540 F.3d 1082, 1086 (9th Cir. 2008).
 6
 7                               DISCUSSION
 8        Reno Snax insists that Heritage Bank was required to comply
 9   with the notice provisions of N.R.S. 482.516 and Article 9 of the
10   U.C.C., even though it was the Coffee & Coolers trustee who had
11   taken possession of and sold the vehicles.   It presumes that the
12   notice provisions of N.R.S. 482.516 apply.   Given the plain
13   language of N.R.S. 482.516, we agree with the bankruptcy court
14   that it is inapplicable.
15        N.R.S. 482.516 by its terms establishes two triggers for the
16   notice requirements to kick in: 1) repossession and 2) a secured
17   creditor disposing of the subject assets.
18        Heritage Bank never repossessed the vehicles.   As it pointed
19   out, Heritage Bank did not attempt to exercise its state law
20   right of repossession; it did not seek relief from the automatic
21   stay and instead deferred to the Coffee & Coolers trustee in her
22   administration of the bankruptcy estate.
23        Also, the Coffee & Coolers trustee is not a secured
24   creditor.   She does not qualify as a creditor because she has no
25   prepetition claim to property of the bankruptcy estate.    See
26   United States v. Lowell, 256 F.3d 463, 466 (7th Cir. 2000)
27   (quoting United States v. Shadduck, 112 F.3d 523, 531 (1st Cir.
28   1997)).

                                      9
 1        More importantly, N.R.S. 482.516 runs counter to the schema
 2   of the Bankruptcy Code.   When a debtor files a chapter 7
 3   bankruptcy petition, all of the debtor’s property becomes part of
 4   the bankruptcy estate.    § 541(a).   The property of the bankruptcy
 5   estate “includes property in which a creditor has a security
 6   interest.”    Dewhirst v. Citibank (In re Contractors Equip. Supply
 7   Co.), 861 F.2d 241, 244 (9th Cir. 1988)(citing United States v.
 8   Whiting Pools, Inc., 462 U.S. 198, 203 (1983)).      See also
 9   5 Collier on Bankruptcy (“Collier on Bankruptcy”) ¶ 541.05[2]
10   (Alan N. Resnick & Henry J. Sommer, eds., 16th ed. rev. 2012)
11   (“[T]he debtor’s estate succeeds to the debtor’s interest in
12   goods subject to a security interest.”).
13        As representative of the bankruptcy estate, the chapter 7
14   trustee controls the property of the bankruptcy estate.     See
15   § 323(a).    See also In re Bunn-Rodemann, 491 B.R. 132, 133
16   (Bankr. E.D. Cal. 2013)(“One of the immediate results of electing
17   to file a Chapter 7 case is that all of the property of the
18   estate is placed under the exclusive control of the Chapter 7
19   Trustee.”).   In this capacity, the chapter 7 trustee has the duty
20   to “collect and reduce to money the property of the estate for
21   which such trustee serves . . . as is compatible with the best
22   interests of parties in interest.”    § 704(a)(1).
23        “In performing [her] duties of administration and
24   liquidation under the Bankruptcy Code, the trustee represents all
25   the creditors of the [bankruptcy] estate generally.     The trustee
26   does not act for the benefit of any particular creditor.”
27   3 Collier on Bankruptcy ¶ 323.02[1].     See also Hall v. Perry
28   (In re Cochise Coll. Park, Inc.), 703 F.2d 1339, 1357 (9th Cir.

                                      10
 1   1983)(the chapter 7 trustee “is a fiduciary of each creditor of
 2   the estate . . . . [She therefore] has a duty to treat all
 3   creditors fairly . . . .”)(citations omitted).
 4        We agree with Heritage Bank that a chapter 7 trustee’s sale
 5   of assets under § 363 is not a disposition of collateral by a
 6   secured creditor under N.R.S. 482.516 or Article 9.    The
 7   Coffee & Coolers trustee sold the assets, including the vehicles,
 8   as part of her duty in liquidating the property of the bankruptcy
 9   estate.   And she did so as representative of all the creditors of
10   the bankruptcy estate, not as an agent of Heritage Bank.     Cf.
11   Sigmon v. Miller-Sharpe, Inc. (In re Miller), 197 B.R. 810, 815
12   (W.D. N.C. 1996)(stating that § 544 does not make the trustee an
13   agent for the creditors).
14        Reno Snax relies on an unpublished state appellate court
15   decision from Michigan, Dearborn Capital Corp. v. Bravo,
16   2009 WL 3013077 (Mich. App. 2009)(“Dearborn”), in arguing that a
17   chapter 7 trustee’s sale under § 363, after making a carveout
18   deal with the secured creditor, constitutes a disposition within
19   the meaning of N.R.S. 482.516 and Article 9.    Reno Snax insists
20   that Dearborn applies here.   We disagree.
21        In Dearborn, Dearborn Capital Corp. (“DCC”) earlier had made
22   a loan to a debtor who later filed for bankruptcy protection; the
23   loan had been secured against certain equipment.    The bankruptcy
24   court allowed the sale of the debtor’s assets, including the
25   equipment.   Some of the sale proceeds were to be held in a
26   segregated account pending a determination of the amount and
27   priority of DCC’s secured claim.     DCC eventually entered into a
28   settlement under which a portion of its claim was allowed as

                                     11
 1   secured.   It was to receive a part of the funds in the segregated
 2   account in satisfaction of its secured claim.     The balance of its
 3   claim was treated as unsecured.
 4         Applying Michigan’s version of the U.C.C., the state
 5   appellate court determined that the settlement constituted a
 6   disposition of a secured interest in collateral.     But other than
 7   acknowledging the underlying bankruptcy case, the state appellate
 8   court did not engage in any analysis or application of the
 9   Bankruptcy Code or the Rules.   The state appellate court had no
10   evidence as to the adequacy of the notice of the settlement; it
11   simply assumed that the notice of the settlement had not been
12   adequate for Michigan U.C.C. purposes.     In this case, Reno Snax
13   concedes that the trustees’ sale notices were adequate and fully
14   satisfied all requirements under the Bankruptcy Code and Rules.
15         We reject the application of Dearborn to the matter before
16   us.   Applying Dearborn in the context of this appeal would be a
17   stretch which we are not prepared or obliged to make.
18         N.R.S. 482.516 and Article 9 may apply only if Heritage Bank
19   had obtained relief from the automatic stay and had exercised its
20   rights concerning its collateral.      Otherwise, the Bankruptcy Code
21   precluded any such action.   See § 362(a)(3) and (5).     Without
22   relief from the automatic stay, Heritage Bank could not exercise
23   its right to repossess and dispose of its collateral.
24         Because Heritage Bank was not required to comply with the
25   notice provisions of N.R.S. 482.516 and Article 9 in order to
26   assert a claim to recover any deficiency out of the Reno Snax
27   sale proceeds, the bankruptcy court did not err in overruling the
28   claim objection.

                                       12
 1                         CONCLUSION
 2   For the foregoing reasons, we AFFIRM.
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