                                                           FILED
                                                            OCT 24 2012
 1
                                                        SUSAN M SPRAUL, CLERK
                                                          U.S. BKCY. APP. PANEL
 2                                                        OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
                              OF THE NINTH CIRCUIT
 4
 5   In re:                        )      BAP No.      CC-12-1143-TaMkH
                                   )
 6   JAMES F. BISHAY,              )      Bk. No.      8:08-bk-11374-ES
                                   )
 7                  Debtor.        )      Adv. No.     8:10-ap-01142-ES
     ______________________________)
 8   JAMES F. BISHAY,              )
                                   )
 9                  Appellant,     )
                                   )
10   v.                            )      M E M O R A N D U M1
                                   )
11   RICHARD A. MARSHACK;          )
     JP MORGAN CHASE,              )
12                                 )
                    Appellees.     )
13   ______________________________)
14              Argued and Submitted on September 21, 2012
                          at Pasadena, California
15
                            Filed - October 24, 2012
16
              Appeal from the United States Bankruptcy Court
17                for the Central District of California
18        Honorable Erithe A. Smith, Bankruptcy Judge, Presiding
                     ________________________________
19
     Appearances:     Alan Leigh Armstrong for Appellant James F.
20                    Bishay; Donald W. Sieveke for Appellee Richard A.
                      Marshack
21                     __________________________________
22   Before: TAYLOR,2 MARKELL, and HOLLOWELL, Bankruptcy Judges.
23
24
25        1
               This disposition is not appropriate for publication.
     Although it may be cited for whatever persuasive value it may
26   have (see Fed. R. App. P. 32.1), it has no precedential value.
     See 9th Cir. BAP Rule 8013-1.
27
          2
               Hon. Laura S. Taylor, Bankruptcy Judge Southern
28   District of California, sitting by designation.
 1           The appellant, Joseph Bishay, is the beneficiary of a trust
 2   deed recorded against the debtor’s real property.      He appeals
 3   from the bankruptcy court’s judgment after trial determining that
 4   his trust deed was junior to another subsequently recorded trust
 5   deed.       The bankruptcy court based its decision first on the
 6   finding that there was a contractual agreement to subordinate.
 7   The bankruptcy court reached this determination notwithstanding
 8   that a written subordination agreement was never introduced into
 9   evidence.      The bankruptcy court, alternatively, based its ruling
10   on an oral determination that equitable subrogation applied.3
11   The appellant only raised issues relating to the contractual
12   subordination determination in his statement of issues on appeal
13   and in his opening brief.      He discussed equitable subrogation
14   only in his reply brief.
15           After a careful consideration of the parties’ briefs and
16   oral argument, review of the record provided, and independent
17   analysis and application of the law, we hold that the appellant
18   waived his right to dispute that equitable subrogation applied
19   when he failed to raise this issue at any point on appeal prior
20   to his reply, and, thus, we affirm on this basis.      We further
21
             3
               In the record, the parties use both the term “equitable
22   subordination” and the term “equitable subrogation.” Equitable
     subordination in the bankruptcy context refers to 11 U.S.C.
23   § 510(c). It requires misconduct and subordination as a result
     thereof. 4 Collier on Bankruptcy ¶ 510.05[2], p. 510-18 (Alan N.
24   Resnick & Henry J. Sommer, eds., 16th ed. 2012). The record
     evidences that the parties here reference the state law theory of
25   equitable subrogation involving effective subordination where,
     under certain circumstances, a lender pays an existing
26   lienholder’s claim and assumes (is subrogated to) the senior
     lender’s priority. Miller & Starr, California Real Estate Third
27   Edition, § 11:115, p. 11-355. The Panel will utilize the term
     “equitable subrogation” herein and will not reference “equitable
28   subordination.”
                                       - 2   -
 1   affirm on the grounds that the bankruptcy court correctly found
 2   that an actual agreement to subordinate existed, that it bound
 3   appellant, and that it was unnecessary for the bankruptcy court
 4   to determine the complete terms of the subordination agreement in
 5   connection with its ruling.
 6                                  FACTS
 7        On February 10, 2006, debtor James F. Bishay (the “Debtor”)
 8   purchased a house in Huntington Beach, California (the
 9   “Property”) and acquired title as his sole and separate property.
10   On February 14, 2006, his wife, Deborah Westfield, also known as
11   Deborah Bishay, quitclaimed her interest in the Property to the
12   Debtor.   On this same date, Citimortgage recorded a trust deed
13   against the Property securing an obligation in the original
14   principal amount of $1,000,000.     Thereafter, on April 5, 2006,
15   Citibank recorded a second trust deed securing an obligation in
16   the original principal amount of $169,990.
17        On December 27, 2006, for no consideration, the Debtor
18   transferred the Property to the Bishay Irrevocable Trust,
19   James F. Bishay as Trustee (the “Bishay Trust”).    On February 15,
20   2007, the Debtor, in his capacity as trustee of the Bishay Trust,
21   executed and delivered a note in the original principal amount of
22   $320,000 in favor of his brother and appellant, Joseph Bishay
23   (“Joseph”4) and The Rock of Ages, a suspended California
24   corporation owned or controlled by Joseph (the “Bishay Note”).
25
          4
               For the purposes of clarity and simplicity, the
26   appellant will hereinafter be referred to as “Joseph.” We intend
     no disrespect by this informality, but hope to avoid the
27   confusion that could result from having both a debtor and a
     defendant with the last name Bishay and first names beginning
28   with a “J”.
                                   - 3    -
 1   Joseph and Rock of Ages recorded a trust deed (the “Bishay Trust
 2   Deed”) securing the Bishay Note on March 16, 2007.    The Bishay
 3   Trust Deed, thus, was subordinate to both the Citibank and
 4   Citimortgage trust deeds, and Joseph knew this was the case.
 5           On November 6, 2007, and again for no consideration, the
 6   Bishay Trust transferred the Property to the Alpha and Omega
 7   Irrevocable Trust, Deborah Westfield as Trustee.    On February 4,
 8   2008, the Debtor’s mother, Marsil Bishay, now acting as trustee
 9   of the Alpha and Omega Irrevocable Trust (“Alpha & Omega Trust”),
10   borrowed $1,260,000 from Washington Mutual Bank (“WaMu”) and used
11   the proceeds in significant part to repay the Citibank and
12   Citimortgage loans.    On April 1, 2008, WaMu recorded a deed of
13   trust (the “WaMu Trust Deed”) securing the note evidencing this
14   loan.    There is no dispute that the parties to this transaction
15   intended that the WaMu Trust Deed create a first priority lien
16   against the Property.
17           On March 22, 2008, the Debtor filed his petition and
18   initiated this chapter 7 bankruptcy.
19           On September 1, 2008, Richard A. Marshack, the chapter 7
20   trustee (“Trustee”), filed adversary proceeding 8:08-ap-01338 ES
21   seeking to avoid the transfers of the Property to the Bishay
22   Trust and to the Alpha & Omega Trust as fraudulent conveyances.
23   The Trustee obtained a judgment avoiding these transfers and
24   preserving the transferred asset for the benefit of the estate on
25   April 19, 2010.
26           The Trustee initiated the subject adversary proceeding on
27   March 19, 2010.    The original complaint is not part of the record
28   on appeal, but we have taken judicial notice of the bankruptcy

                                     - 4   -
 1   court docket and various documents filed through the electronic
 2   docketing system.     See O’Rourke v. Seaboard Sur. Co. (In re E.R.
 3   Fegert, Inc.), 887 F.2d 955, 957-58 (9th Cir. 1989); Atwood v.
 4   Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9
 5   (9th Cir. BAP 2003).    The docket in this proceeding evidences
 6   that the Trustee originally named only WaMu and Marsil Bishay as
 7   trustee of the Alpha & Omega Trust as defendants, but also
 8   included 10 Doe defendants.    Thereafter, he added JP Morgan Chase
 9   Bank, National Association, successor in interest to WaMu
10   (“Chase”), California Reconveyance Company (“Cal Recon”), as the
11   Trustee named in the WaMu Trust Deed, The Rock of Ages, and
12   Joseph as defendants in place of Does 1 through 4.
13        The bankruptcy court eventually entered a summary judgment
14   order adverse to Marsil Bishay as Trustee of the Alpha & Omega
15   Trust and determined that she had no interest in the Property.
16   The Trustee obtained a default judgment resolving the claims
17   against The Rock of Ages and entered into a settlement agreement
18   with Chase.   The resolution of the Chase claims also resolved all
19   claims against Cal Recon, as Cal Recon was sued only as the
20   trustee under the WaMu Trust Deed.
21        Thus, as of the trial date, the only unresolved issues
22   pertained to Joseph’s claim based on the alleged priority of the
23   Bishay Trust Deed.5    Originally, the Trustee also objected to
24   Joseph’s claim, but the Trustee abandoned this issue before
25
          5
               The priority dispute was not directly discussed in any
26   pleading, but the parties clearly contemplated this as an issue
     in a Pre-Trial Order, and it apparently arose from the
27   generalized request in the amended complaint that the bankruptcy
     court determine the respective interests of the parties in and to
28   the Property.
                                     - 5   -
 1   trial.
 2        Prior to the trial, the Trustee and Joseph entered into a
 3   Pre-Trial Order and agreed, among other things, on the following
 4   facts:
 5               18. Joseph Bishay testified in his
                 deposition that on an unknown date, he
 6               subordinated his trust deed to the Washington
                 Mutual Deed of trust. The subordination
 7               agreement was not recorded and has not been
                 found.
 8
                 . . .
 9
                 21. Joseph Bishay has testified that he
10               understood that his deed of trust was in
                 second position, behind the new deed of trust
11               obtained by Marsil Bishay, in favor of
                 Washington Mutual.
12               22. Prior to the recordation of his deed of
                 trust, Joseph Bishay understood that Marsil
13               Bishay intended to obtain a loan against [the
                 Property], and that such deed of trust would
14               be in first position.
                 23. Marsil Bishay negotiated and obtained
15               the subordination of Joseph Bishay’s deed of
                 trust to the new deed of trust issued to WAMU
16               against the [Property].
17   Pre-Trial Order, Dkt. 62, at 4.
18        The Pre-Trial Order also included a judicial requirement
19   that the parties provide direct testimony (exclusive of adverse
20   or rebuttal testimony) only by declaration.   Finally, the Pre-
21   Trial Order established the witnesses to be called at trial and
22   the exhibits to be introduced at trial.   Joseph’s exhibits were
23   the Bishay Trust Deed, the WaMu Trust Deed, and an equity
24   purchase agreement dated March 8, 2007.   The Trustee submitted a
25   trial brief; Joseph did not.   Neither party submitted declaratory
26   evidence.
27        The bankruptcy court held the trial on February 21, 2012.
28   At trial, the Trustee rested after introducing the Bishay Trust

                                    - 6   -
 1   Deed and the WaMu Trust Deed into evidence.    Joseph’s counsel,
 2   after attempting to call Joseph as a witness, acknowledged that
 3   he was bound by the Pre-Trial Order and could not introduce
 4   testimonial evidence at trial.    Consequently, Joseph never
 5   testified.    Joseph’s counsel also did not seek to admit any
 6   documentary evidence.    The Trustee then relied on the agreed
 7   facts of the Pre-Trial Order and requested judgment in his favor.
 8        The Trustee argued two alternative theories - first, that
 9   the Bishay Trust Deed was subordinate to the WaMu Trust Deed
10   because Joseph contractually agreed to subordinate the Bishay
11   Trust Deed, and, second, that the doctrine of equitable
12   subrogation operated to grant seniority to the WaMu Trust Deed.
13   In opposition, counsel for Joseph offered a limited argument that
14   the terms of the subordination agreement were unknown and that
15   WaMu was negligent.
16        The bankruptcy court recited the admitted facts in the Pre-
17   Trial Order and made an oral finding that the admitted facts
18   provided adequate evidence of intent to subordinate and that, as
19   Joseph advanced no new evidence, a judgment finding that the WaMu
20   Trust Deed had priority over the Bishay Trust Deed was
21   appropriate.    The bankruptcy court stated that:
22                . . . under the admitted facts and given that
                  there is no counter evidence, either
23                factually or legally, then this Court feels
                  comfortable in making a finding consistent
24                with the trial briefs submitted that there
                  was a subordination agreement that was in
25                effect at the time the Washington Mutual loan
                  was made and that the intent was that the
26                Washington Mutual loan would, in fact, be
                  senior to the [Bishay Trust Deed].
27
28   Trial Tr. (Feb. 21, 2012) at 10:14-21.

                                     - 7   -
 1           The bankruptcy court also made an alternative oral finding
 2   that:
 3                the Plaintiff has also presented evidence
                  sufficient to support a finding [] that the
 4                doctrine of equitable subordination should
                  apply as well. So, judgment will be in favor
 5                of the Plaintiff.
 6   Id. at 13:3-6.
 7           Finally, the bankruptcy court stated its ultimate finding
 8   that, “under either theory, the Court finds in favor of the
 9   Plaintiff, Richard Marshack that there was a subordination
10   agreement.”    Id. at 12:20-22.
11           On March 2, 2012, the bankruptcy court entered a separate
12   written Judgment After Trial which stated:
13                After considering the evidence and hearing
                  argument, and for the reasons set forth in
14                the Court’s oral findings, IT IS HEREBY
                  ADJUDGED: 1) Judgment in favor of the
15                Plaintiff and against Defendant JOSEPH
                  BISHAY. 2) The [Bishay Trust Deed] is hereby
16                declared fully subordinate to the [WaMu Trust
                  Deed].
17
18   Judgment After Trial, Dkt. 86, at 2:2-14.
19           Joseph timely appealed the bankruptcy court’s Judgment After
20   Trial and identified only one issue:        “Did the bankruptcy court
21   err in deciding that the [Bishay Trust Deed] was fully
22   subordinate to the [WaMu Trust Deed] based on a Subordination
23   Agreement that has not been found, without making a finding as to
24   the wording or contents of that subordination agreement?”
25   Appellant’s Statement of Issue on Appeal (April 2, 2012) at 2.
26   As the Trustee points out in his opening brief, Joseph failed to
27   raise, as an issue on appeal, the bankruptcy court’s alternative
28   finding that the Bishay Trust Deed was subordinate to the WaMu

                                       - 8   -
 1   Trust Deed based on the doctrine of equitable subrogation.
 2   Joseph first addressed the equitable subrogation issue in his
 3   reply brief.
 4                               JURISDICTION
 5        The bankruptcy court had jurisdiction under 28 U.S.C.
 6   §§ 1334 and 157(b)(2)(K).   Judgment was entered on the issue of
 7   the full subordination of the Bishay Trust Deed to the WaMu
 8   Trust Deed.    The judgment is final because the judgment fully and
 9   finally disposed of the priority dispute, the only dispute then
10   remaining in this adversary proceeding.    See Kashani v. Fulton
11   (In re Kashani), 190 B.R. 875, 882 (9th Cir. BAP 1995).     Because
12   the judgment underlying Joseph’s appeal is final, we have
13   jurisdiction pursuant to 28 U.S.C. § 158.
14                                  ISSUES
15        A.   Whether Joseph waived his right to appeal the
16   bankruptcy court’s application of equitable subrogation.
17        B.   Whether the bankruptcy court erred, as a matter of law,
18   by finding subordination without first determining all the terms
19   and conditions of subordination.
20        C.   Whether the bankruptcy court erred, as a matter of
21   fact, by finding the Bishay Trust Deed fully subordinate to the
22   WaMu Trust Deed.
23                            STANDARD OF REVIEW
24        We review "the bankruptcy court's conclusions of law de novo
25   and factual findings for clear error."     Clear Channel Outdoor,
26   Inc. v. Knupfer (In re PW, LLC), 391 B.R. 25, 32 (9th Cir. BAP
27   2008)(citations omitted).   A factual determination is clearly
28   erroneous if the appellate court, after reviewing the record, has

                                    - 9   -
 1   a definite and firm conviction that a mistake has been committed.
 2   Anderson v. Bessemer City, 470 U.S. 564, 573 (1985).
 3        We review a bankruptcy court's interpretation of California
 4   law de novo in order to determine if it correctly applied the
 5   substantive law.     Kipperman v. Proulx (In re Burns), 291 B.R.
 6   846, 849 (9th Cir. BAP 2003); Astaire v. Best Film & Video Corp.,
 7   116 F.3d 1297, 1300 (9th Cir. 1997)(issues of state law are
 8   reviewed de novo).    Mixed questions of law and fact are also
 9   reviewed de novo.    Murray v. Bammer (In re Bammer), 131 F.3d 788,
10   792 (9th Cir. 1997).    "A mixed question of law and fact occurs
11   when the historical facts are established; the rule of law is
12   undisputed . . . and the issue is whether the facts satisfy the
13   legal rule."   Id.
14                                 DISCUSSION
15   A.   Joseph Waived His Right To Appeal The Bankruptcy Court’s
          Determination Based On Equitable Subrogation.
16
          1.   The Judgment Based On Equitable Subrogation Was Final.
17
18        Joseph argues that he was not obligated to appeal from the
19   bankruptcy court’s determination that the theory of equitable
20   subrogation resulted in a loss of the priority of his trust deed.
21   He argues, thus, that he did not waive his right to appeal this
22   determination.   He bases his argument on the fact that the post
23   trial judgment “does not mention equitable subrogation.”
24   Appellant’s Reply Brief (June 21, 2012) at 1.    He apparently
25   claims that because the written Judgment After Trial did not
26   expressly state that subordination was granted alternatively on
27   the theory of equitable subrogation, that a judgment was not
28   rendered on that theory.

                                     - 10   -
 1        In the absence of an order allowing an interlocutory appeal,
 2   an appellant may only appeal to a Bankruptcy Appellate Panel from
 3   final judgments, orders, or decrees of a bankruptcy judge.
 4   28 U.S.C. § 158(a).   To become final, the decision, order, or
 5   decree must end the litigation or dispose of complete claims of
 6   relief.   In re Kashani, 190 B.R. at 882.     The Ninth Circuit takes
 7   a flexible approach to determining the finality of a judgment or
 8   order such that even a minute order can be a final, appealable
 9   order if it:   “fully adjudicates the issues and clearly evidences
10   the court’s intent that the order be the court’s final act.”
11   Key Bar Invs. v. Cahn (In re Cahn), 188 B.R. 627, 629 (9th Cir.
12   BAP 1995).   A court’s intent is evidenced by:    “a clear and
13   unequivocal manifestation by the trial court of its belief that
14   the decision made, so far as it is concerned, is the end of the
15   case.”    Brown v. Wilshire Credit Corp. (In re Brown), 484 F.3d
16   1116, 1122 (9th Cir. 2007) (citation omitted).     This flexible
17   approach is intended to ensure that a case does not make “two
18   complete trips through the appellate process.”     Lewis v. Law
19   Offices of Nicholas A. Franke (In re Lewis), 113 F.3d 1040, 1043
20   (9th Cir. 1997).
21        Here, the bankruptcy court’s written Judgment After Trial
22   does not specifically delineate the individual legal theories on
23   which it is based.    However, the judgment does incorporate by
24   express reference, the “reasons set forth in the Court’s oral
25   findings.”   Judgment After Trial at 2:2-3.    The use of the plural
26   “reasons” indicates more than one basis for the judgment.     The
27   trial transcript evidences that those reasons specifically
28   included the bankruptcy court’s oral finding that “the doctrine

                                    - 11   -
 1   of equitable subordination should apply as well.”        Trial Tr. at
 2   13:5.    Indeed, the bankruptcy court made this particular
 3   alternative finding “to make a complete record in the event there
 4   is an appeal.”     Id. at 11:1-2.   Therefore, the oral findings
 5   clearly evidence the bankruptcy court’s intent to grant final
 6   judgment in favor of the Trustee on the alternative basis of
 7   equitable subrogation.
 8           Joseph’s anti-finality argument is not only inconsistent
 9   with the record, it is also inconsistent with his position on
10   appeal.      The Judgment After Trial did not delineate any specific
11   theory on which relief was granted.         Notwithstanding this
12   silence, Joseph chose to appeal based on the assumption that the
13   judgment involved a contractual determination.        Nothing in the
14   express language of the Judgment After Trial itself, however,
15   supports the assertion that this basis for relief was the sole
16   basis for relief or even a basis for relief.        The Judgment After
17   Trial was equally non-specific and silent as to the contract
18   based subordination claim.
19           For these reasons, we conclude that the bankruptcy court
20   granted a final judgment in favor of the Trustee on the
21   alternative theory of equitable subrogation.
22           2.    Joseph Failed To Timely and Appropriately Raise The
                   Equitable Subrogation Issue On Appeal.
23
24           An appellant is required to serve and file a statement of
25   issues on appeal.     Fed. R. Bankr. P. 8006.     Issues not included
26   in the statement of issues may be deemed waived.        Woods v. Pine
27   Mountain, Ltd. (In re Pine Mountain, Ltd.), 80 B.R. 171, 173
28   (9th Cir. BAP 1987) (holding that appellant waived the issue of

                                      - 12   -
 1   bankruptcy court’s refusal to consider parol evidence when the
 2   issue was not included in the statement of issues).     An appellant
 3   must also raise and argue an issue in its opening brief or the
 4   issue will be waived.    Seven Words LLC v. Network Solutions,
 5   260 F.3d 1089, 1097 (9th Cir. 2001); see also McLain v. Calderon,
 6   134 F.3d 1383, 1384 n.2 (9th Cir. 1998) (issue mentioned in
 7   statement of issues, but not discussed in brief is considered
 8   waived).   Further, an argument waived by the failure to raise it
 9   in an appellant’s opening brief cannot be raised for the first
10   time in the appellant’s reply brief.      Alaska Ctr. For Env’t v.
11   United States Forest Serv., 189 F.3d 851, 858 n.4 (9th Cir.
12   1999).
13        Here, Joseph’s statement of issues does not mention
14   equitable subrogation.   The only issue raised is, “Did the
15   bankruptcy court err in deciding that the [Bishay Trust Deed] was
16   fully subordinate to the [WaMu Trust Deed] based on a
17   Subordination Agreement that has not been found, without making a
18   finding as to the wording or contents of that subordination
19   agreement?”   Appellant’s Statement of Issue on Appeal at 2.
20   Correspondingly, Joseph’s opening brief discusses the same single
21   issue, slightly re-phrased as, “The Subordination Agreement has
22   not been found.   Was it error to make that decision without
23   determining the wording of that subordination agreement?”
24   Appellant’s Opening Brief (May 21, 2012) at 1.     Again, no mention
25   is made of equitable subrogation.
26        The Trustee raised this omission in his brief.      Thus,
27   Joseph, in his reply brief, eventually contended that the
28   bankruptcy court erred in granting judgment on a theory of

                                    - 13   -
 1   equitable subrogation because the elements of equitable
 2   subrogation were not met.   Because Joseph raises this issue for
 3   the first time in his reply brief, he waived his right to appeal
 4   the bankruptcy court’s judgment based on this alternative theory.
 5   For this reason alone, the trial court’s judgment must stand.
 6   B.   The Bankruptcy Court Did Not Err, As A Matter Of Law, By
          Finding Subordination Without First Determining All The
 7        Terms And Conditions Of Subordination.
 8        Joseph contends that the subordination agreement at issue
 9   cannot be located and, therefore, that its terms are unknown.
10   Joseph then argues that when the terms of a subordination
11   agreement are not known, the subordination agreement is void.
12        In support of this position, Joseph briefly identifies cases
13   that he alleges require contractual certainty in the
14   subordination agreement context.       This case law, however, is
15   either distinguishable or declarative of a non-controversial rule
16   of law that is consistent with the bankruptcy court’s legal
17   determinations.
18        Joseph cites to Resolution Trust Corp v. BVS Dev., Inc.,
19   42 F.3d 1206 (9th Cir. 1994) for its statement that “the law is
20   well settled that rights under an agreement of subordination
21   extend to and are limited strictly by the express terms and
22   conditions of the agreement.”    Id. at 1214.     This point is well
23   taken, but Joseph fails to even suggest how his admitted
24   agreement to subordinate is in any way less than an agreement to
25   full subordination to the WaMu Trust Deed.
26        Similarly, Joseph cites to Weddington Prods., Inc. v. Flick,
27   60 Cal.App.4th 793 (1998) (citing White Point Co. v. Herrington,
28   268 Cal.App.2d 458 (1968)) and Roffinella v. Sherinian,

                                     - 14    -
 1   179 Cal.App.3d 230, 239 (1986) to make the point that
 2   subordination provisions found to be uncertain, indefinite, and
 3   incapable of ascertainment by reference to an objective standard,
 4   have been deemed void for the uncertainty of a material
 5   provision.     Id. at 817.6   But again, Joseph fails to identify any
 6   point of uncertainty related to his agreement to subordinate,
 7   much less a material one.
 8        Lastly, Joseph relies on Krasley v. Superior Court,
 9   101 Cal.App.3d 425, 430 (1980) to suggest that when a
10   subordination agreement is uncertain, trade usage and custom
11   cannot be used to fill the gaps.        The facts of Krasley, however,
12   are far from the facts here.      The trade usage discussion arose in
13   another context and pertained to the court’s determination that a
14   document entitled a “counter counter offer” could not be treated
15   as an acceptance of a prior offer.       Id.   The subordination
16   discussion in Krasley related to an alternative basis for
17   concluding that a contract did not arise.       The Krasley court
18   found that inclusion of the term “Seller to subordinate to a
19   Construction Loan . . .” was not sufficiently specific to bind
20   the elderly and ill sellers who responded only with a counter
21   offer.   Id.    Joseph, in contrast, knew the loan as to which his
22   subordination agreement applied.
23        In summary, Joseph’s cases all concern the contractual
24   requirement of certainty, in some cases in the subordination
25   agreement setting.     These rules generally apply to deny
26
          6
               Neither Weddington Prods. nor White Pointe Co. are
27   directly applicable on the facts. They both refer to
     subordination agreement cases, but do not analyze the
28   enforceability of a subordination clause.
                                      - 15    -
 1   enforcement of a subordination agreement where a party agreed to
 2   subordinate in the future to an unknown amount of additional
 3   security and where material deal terms of that future loan are
 4   unknown.   The certainty requirements then operate to limit the
 5   scope of an otherwise open ended agreement to only the amount
 6   that was within the subordinating parties’ objective intent at
 7   the time of contracting.    Here, Joseph never states that his
 8   objective intent was anything other than full subordination.
 9        Under California law, contract formation requires mutual
10   consent of the parties.    Cal. Civ. Code § 1561; 1 Witkin Summary
11   of California Law (10th ed. 2005) Contracts, § 116 p. 155.       Such
12   mutual consent may be determined based on the reasonable meaning
13   of the words and actions of the parties.     Weddington Prods.,
14   60 Cal.App.4th at 811.    The contract’s terms must be certain in
15   material respects, but the existence of minor areas of
16   disagreement will not render the contract void and entirely
17   unenforceable.   Id. at 811-12.    Consistent with the general
18   requirements of California law in the area of contracts, a
19   subordination agreement must be interpreted to enforce the
20   objective intent of the parties.      Bratcher v. Buckner,
21   90 Cal.App.4th 1177, 1186 (2001).
22        Courts are cautious when asked to enforce agreements to
23   subordinate to uncertain and future financing of unknown terms.
24   See Roskamp Manley Assocs., Inc. v. Davin Dev. & Inv. Corp.,
25   184 Cal.App.3d 513 (1986).   A subordination agreement,
26   notwithstanding, may be enforceable even in the absence of
27   absolute certainty as to all contract terms.     In Resolution Trust
28   Corp., the subordinating party was a seller who took back a loan

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 1   and security from the buyer and also agreed to subordinate to
 2   future construction financing.   42 F.3d at 1210.   The Resolution
 3   Trust Corp. court found the underlying subordination agreement
 4   enforceable despite some lack of certainty as to terms of this
 5   financing at the time of subordination.    Id. at 1214.   See also
 6   Int’l Mortg. Bank v. Eaton, 39 Cal.App. 39 (1918) (holding that
 7   an executed agreement to subordinate was enforceable where there
 8   was no specification of interest rate, subordinated amount, or
 9   use of the future senior loan proceeds.)   In Krasley, in
10   contrast, the court found no contract and no subordination
11   agreement where the agreement was entirely open-ended.
12   101 Cal.App.3d at 431.   In short, there are situations where the
13   law will not enforce a subordination agreement because the terms
14   are so uncertain that the court cannot find a meeting of the
15   minds.   California law, however, does not require 100% certainty.
16        Joseph’s situation is not analogous to the Krasley facts.
17   The bankruptcy court determined as a factual matter that Joseph’s
18   testimony evidenced an objective intent to subordinate the Bishay
19   Trust Deed to the WaMu Trust Deed.   It is clear that Joseph knew
20   that the WaMu loan would be used to repay existing loans secured
21   by already senior trust deeds.   Thus, this determination leaves
22   no real ambiguity regarding its scope.
23        And, perhaps more importantly, Joseph never specifies any
24   unknown feature of this subordination.    Having conceded that he
25   subordinated his trust deed, the burden shifted to Joseph to
26   specify any area where he did not agree to subordination and
27   where, as a result, subordination cannot be required.     He could
28   not remain silent and prevail.

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 1        Therefore, the bankruptcy court did not err in finding that
 2   Joseph subordinated the Bishay Trust Deed to the WaMu Trust Deed
 3   even though he alleges that unspecified terms of the
 4   subordination agreement remain unclear.   Enough is known to make
 5   clear that subordination occurred, and there is no evidence of a
 6   material term in dispute.
 7   C.   The Bankruptcy Court Did Not Err, As A Matter Of Fact, By
          Finding The Bishay Trust Deed Fully Subordinate To The WaMu
 8        Trust Deed.
 9        The Pre-Trial Order describes the relevant trial issues of
10   fact as:
11              3.   Whether Joseph Bishay has agreed that
                his deed of trust is subordinate to that of
12              the Washington Mutual Bank deed of trust.
                4.   Whether Joseph Bishay agreed to
13              subordinate his deed of trust to the
                Washington Mutual Deed of trust obtained by
14              Marsil Bishay against the Subject Property.
15   Pre-Trial Order at 6.
16        It also contained stipulated facts that evidence an
17   agreement to subordinate.   Admitted facts which are agreed upon
18   in a pre-trial order give rise to an inference that must be
19   rebutted by opposing evidence.   Harding v. Hall (In re Hall),
20   2006 WL 6810950, *2 (9th Cir. BAP Aug. 14, 2006); see also
21   Jauregui v. City of Glendale, 852 F.2d 1128 (9th Cir. 1988)
22   (recognizing that facts admitted by the defendant in a pre-trial
23   order established plaintiff's prima facie case which gave rise to
24   a presumption requiring evidentiary rebuttal).   Joseph fails to
25   identify any alleged limitation as to the extent of his admitted
26   agreement to subordinate.   Thus, the bankruptcy court did not err
27   in finding that Joseph entirely subordinated the Bishay Trust
28   Deed based on the admitted facts in the Pre-Trial Order.

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 1           On appeal, Joseph does not directly contest any of the
 2   bankruptcy court’s findings of fact.       Indeed, as they are based
 3   on his stipulations in the Pre-Trial Order, it is difficult to
 4   see how he could do so.    As the Trustee correctly points out,
 5   however, Joseph’s statement of the issue on appeal can be
 6   interpreted in a number of ways, and Joseph may argue that the
 7   bankruptcy court erred in finding that he fully rather than
 8   partially subordinated.
 9           In particular situations, where a subordination agreement
10   relates to an unknown future indebtedness, the subordinating
11   party may be held to have only partially subordinated to the
12   amount that was within its objective intent at the time of
13   contracting.    See generally Wells Fargo Bank v. Neilsen,
14   178 Cal.App.4th 602, 615-17 (2009) (limiting subordination amount
15   to that which was within the objective intent of the
16   subordinating lender in a “circuity of liens” context).      Here,
17   however, there is no ambiguity in the evidence; the bankruptcy
18   court relied on Joseph’s own testimony and agreement in its
19   determination that Joseph subordinated the Bishay Trust Deed and
20   was in second position behind the entirety of the WaMu Trust
21   Deed.
22           This ultimate fact is evidenced by Joseph’s admitted
23   testimony that:    “ . . . he subordinated his trust deed to the
24   Washington Mutual Deed of trust,” (Pre-Trial Order at 4:11-12)
25   and that:    “he understood that his deed of trust was in second
26   position behind the new deed of trust obtained by Marsil Bishay
27   in favor of Washington Mutual.”    Pre-Trial Order at 4:18-20.
28   Thus, the bankruptcy court correctly found that subordination

                                     - 19   -
 1   occurred.
 2        It is also clear on this record that Joseph knew in
 3   connection with this general agreement to subordinate that his
 4   mother would use the WaMu Loan proceeds to pay off existing
 5   senior liens and that WaMu would, thus, enjoy the same priority
 6   over his lien that was enjoyed by the prior senior lenders.
 7   Joseph offers no counter evidence.   Therefore, the record
 8   supports the bankruptcy court’s determination that Joseph
 9   objectively intended to fully subordinate.   Again, Joseph
10   advances no evidence to the contrary.
11                              CONCLUSION
12        For the reasons stated above, we AFFIRM the judgment of the
13   bankruptcy court.
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