                                                        FILED
                                                          JUL 17 2012
 1                        ORDERED PUBLISHED
                                                     SUSAN M SPRAUL, CLERK
                                                       U.S. BKCY. APP. PANEL
 2                                                     O F TH E N IN TH C IR C U IT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5
 6   In re:                        )     BAP No.     NV-11-1620-KiPaD
                                   )
 7   CAVIATA ATTACHED HOMES, LLC, )      Bk. No.     11-52458-BTB
                                   )
 8                  Debtor.        )
                                   )
 9                                 )
     CAVIATA ATTACHED HOMES, LLC, )
10                                 )
                    Appellant,     )
11                                 )
     v.                            )          A M E N D E D
12                                 )
     U.S. BANK, NATIONAL           )          O P I N I O N
13   ASSOCIATION,                  )
                                   )
14                  Appellee.      )
     ______________________________)
15
16                  Argued and Submitted on June 15, 2012
                             at Las Vegas, Nevada
17
                    Original Opinion Filed - June 29, 2012
18
                     Amended Opinion Filed - July 17, 2012
19
                Appeal from the United States Bankruptcy Court
20                        for the District of Nevada
21        Honorable Bruce T. Beesley, Bankruptcy Judge, Presiding
22
23   Appearances:    Jeffrey L. Hartman, Esq. of Hartman & Hartman
                     argued for appellant, Caviata Attached Homes, LLC;
24                   Joshua D. Wayser, Esq. of Katten Muchin Rosenman
                     LLP argued for appellee, U.S. Bank, National
25                   Association.
                        _______________________________
26
27   Before:   KIRSCHER, PAPPAS, and DUNN, Bankruptcy Judges
28
 1   KIRSCHER, Bankruptcy Judge:
 2
 3        Appellant, chapter 111 debtor Caviata Attached Homes, LLC
 4   (“Caviata”), appeals an order from the bankruptcy court dismissing
 5   its second chapter 11 case due to Caviata’s inability to show that
 6   an extraordinary change in circumstances substantially impaired
 7   its performance under its confirmed plan to warrant the second
 8   chapter 11 filing.   In addressing this issue of first impression
 9   within the Ninth Circuit, we AFFIRM.
10               I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
11   A.   Prepetition facts.
12        Caviata, a Nevada limited liability company, was formed in
13   July 2005 for the purpose of real estate development.   The sole
14   owner of Caviata is Caviata 184, LLC, a Nevada limited liability
15   company.   William Pennington (“Pennington”) and Dane Hillyard
16   (“Hillyard”) are Caviata’s managers.   Caviata owns and operates a
17   184-unit apartment complex located in Sparks, Nevada (the
18   “Property”).   The Property was initially developed by Caviata as a
19   condominium project, but due to downturns in the real estate
20   market, it was converted to rental apartments.
21        To develop the Property, on or about September 20, 2005,
22   Caviata obtained a construction loan for $40,700,000 on a recourse
23   basis from California National Bank (“CNB”).   In exchange for the
24   loan, Caviata executed a promissory note and deed of trust in
25   favor of CNB, which assigned Caviata’s right, title and interest
26
          1
            Unless specified otherwise, all chapter, code, and rule
27   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The
28   Federal Rules of Civil Procedure are referred to as “Civil Rules.”

                                     -2-
 1   in the Property, including all rents, income and profits.    The
 2   parties agreed to an interest rate of prime plus .25% and a
 3   maturity date of September 20, 2007.    Guarantors on the loan
 4   included Caviata 184, LLC, Pennington, and Hillyard.
 5        Caviata defaulted on the loan.    On or about April 25, 2007,
 6   Caviata and CNB entered into a forbearance agreement whereby CNB
 7   agreed to forbear from exercising its rights under the loan
 8   documents.   The forbearance agreement was thereafter amended six
 9   times, with the most recent amendment dated January 15, 2009.      In
10   connection with the sixth amendment, Caviata and CNB executed an
11   amended note under which Caviata agreed to pay CNB the remaining
12   principal balance on the note of $27,476,632.88, plus 7% interest,
13   by no later than April 15, 2009.
14        Caviata again defaulted on the loan, and on April 24, 2009,
15   CNB sued Caviata and the loan guarantors in state court.    On
16   October 30, 2009, the FDIC closed CNB, and its assets were
17   assigned to U.S. Bank, N.A. (“U.S. Bank”).   Trial against the
18   guarantors was initially set for March 15, 2010.   The guarantors
19   filed a motion to continue trial, contending they had no assets to
20   satisfy a judgment.
21   B.   Caviata’s first chapter 11 case.
22        Caviata filed its first chapter 11 bankruptcy petition on
23   August 18, 2009 (Case No. 09-52786).    The case was ultimately
24   assigned to the Hon. John L. Peterson, sitting by designation.      As
25   of the petition date, U.S. Bank claimed it was owed
26   $29,564,308.77, as reflected in its filed proof of claim.    Just
27   prior to Caviata’s filing, U.S. Bank had obtained an appraisal on
28   the Property on June 29, 2009, from its appraiser William Kimmel

                                     -3-
 1   (the “June 2009 Appraisal”), which valued the Property at
 2   $23,100,000.
 3        Caviata filed its chapter 11 plan and disclosure statement on
 4   November 16, 2009, followed by a first amended plan and amendment
 5   to Caviata’s disclosure statement2 on January 28, 2010 (the “First
 6   Plan”).3   Pursuant to the First Plan, Caviata proposed to pay
 7   U.S. Bank 4.25% interest on its allowed secured claim of
 8   $27,476,632.88 for three years.    After three years, Caviata
 9   committed to sell the Property or refinance the loan to pay
10   U.S. Bank in full.   If Caviata defaulted under the First Plan,
11   U.S. Bank was entitled to enforce its rights and foreclose.
12   Caviata’s approved disclosure statement4 specifically disclosed
13   the following risks:
14             Because the Plan provides for the reorganization of
          the Debtor as a going concern or sale of the Property,
15        many of the common risk factors found in typical
          reorganizations apply with respect to the Plan. These
16        include (a) the value of the Debtor’s property has
          suffered significantly as a result of the downturn in
17        the United States economy since the summer of 2007.
          There is no assurance that the economy will turn around
18        and that property values, in general, or the value of
          the Debtor’s Property, in particular, will not continue
19
20
          2
            This amendment only amended the treatment of CNB’s claim
21   and all other aspects of Caviata’s disclosure statement remained
     unchanged.
22
          3
            In November 2009, the parties stipulated that Caviata is a
23   “Single Asset Real Estate” case as defined by § 101(51B). An
     order to that effect was entered on November 10, 2009.
24
          4
            Caviata’s appellate appendix does not include all the
25   documents listed in its Designation of Record. We thereby
     exercise our discretion to independently review the docket in
26   Caviata’s first and second bankruptcy cases, and documents
     electronically filed therein through the court’s CM/ECF system.
27   See O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887
     F.2d 955, 957-58 (9th Cir. 1989) (appellate court may take
28   judicial notice of underlying bankruptcy records).

                                       -4-
 1        to decline; (b) the Plan is dependent, at least in part,
          on continued leasing of the Property. There is no
 2        assurance that the Debtor’[s] predictions of the rate of
          stabilizing the Property and achieving performing leases
 3        will occur, or that these predictions will occur within
          the time period projected in the Plan; (c) because the
 4        Plan is dependent on continued leasing of the Property,
          there is a risk that the projections of net operating
 5        income, with which to pay the Allowed Claims of
          Creditors, may not be met; (d) the Debtor may not be
 6        able to sell its Property; (e) the Debtor may not be
          able to secure alternative financing to satisfy the
 7        Allowed Secured Claim of Cal National or the Allowed
          Secured Claim of Specialty Trust; (f) if Cal National is
 8        not paid in accordance with the Plan, and the Debtor is
          unable to sell the Property or to secure alternative
 9        financing, Cal National may foreclose on the Property.
10   Caviata disclosure statement, Case No. 09-52786, Doc. No. 31,
11   § 12.1, pp. 25-26 (Nov. 16, 2009).5
12        U.S. Bank objected to confirmation of the First Plan
13   contending, inter alia, that it was not feasible.   In support of
14   its objection, U.S. Bank offered a declaration from Kimmel
15   appraising the Property at $20 million (the “January 2010
16   Appraisal”).   According to Kimmel, although the Property’s
17   occupancy rate had increased since June 2009 from 95% to 98%,
18   average rent rates were down.   Considering the uncertainty in the
19   market, which Kimmel opined showed no signs of improving in the
20   near future, and the lack of financing, the Property’s value was
21   now only $20 million.   U.S. Bank argued that Caviata failed to
22   submit any evidence showing its ability to sell or refinance the
23   Property in the next three years in order to pay off the note.    In
24   fact, argued U.S. Bank, although Pennington asserted that Caviata
25   could sell the Property for $34 million in three years, Pennington
26
          5
            Caviata’s unapproved disclosure statement filed in its
27   second bankruptcy case contained the same provision in § 12.1,
     p. 16, except it amended the creditor’s name from “Cal National”
28   to “U.S. Bank”.

                                     -5-
 1   and Hillyard had admitted they had not marketed the Property to
 2   test its worth or sought any refinancing.     U.S. Bank further
 3   objected to Caviata’s proposed 4.25% interest rate, contending
 4   that its expert, Richard Zelle (“Zelle”), who also brokers
 5   commercial real estate loans, believed no efficient market existed
 6   for a loan on the Property and that 9.25% was a more appropriate
 7   rate.
 8        The bankruptcy court held a confirmation hearing on the First
 9   Plan on March 3, 2010.   Pennington, who has over thirty years
10   experience in large-scale real estate development in Northern
11   Nevada, testified that he agreed with the June 2009 Appraisal
12   valuing the Property at $23,100,000; however, he believed the
13   Property would be worth $34 million within the next couple of
14   years because of its desirability and uniqueness in the market.
15   Hr’g Tr., Mar. 3, 2010, 21:7-24:7.     When asked why Caviata was
16   unwilling to sell the Property now, Pennington responded that the
17   current economic situation was unlike anything he had ever seen
18   before, and a sale now would fail to realize a maximum return on
19   the Property.   Based on his experience, Pennington believed that
20   conditions were going to improve.     Id. at 25:12-27:11.   On cross-
21   examination, Pennington admitted that he had not tried marketing
22   the Property or obtaining refinancing because that was not part of
23   his business plan, at least not yet.     Id. at 33:18-35:17.
24        Caviata’s interest rate expert, Dr. Christopher Wazzan (“Dr.
25   Wazzan”), admitted that no loan market existed for a debtor like
26   Caviata.   Nonetheless, he believed a fixed rate of 4.75% was an
27   appropriate interest rate for U.S. Bank’s secured claim and that
28   the First Plan was feasible at that rate.     Id. at 76-93.    Dr.

                                     -6-
 1   Wazzan further testified that although forecasting was difficult,
 2   the empirical data showed that things were improving.      Id. at
 3   93:25-94:7.
 4        Appraiser Kimmel then testified about his January 2010
 5   Appraisal, to which Caviata’s counsel objected because Kimmel had
 6   not disclosed a new report on which he based his testimony.       Hr’g
 7   Tr., Mar. 3, 2010, 115-24.    The court noted the objection for the
 8   record.   Id. at 124:18-21.   Kimmel explained that the January 2010
 9   Appraisal for $20 million was consistent with testimony he gave in
10   January 2010 after reviewing Caviata’s income and expense
11   statements from that time period.      Id. at 125.   Kimmel disagreed
12   with Pennington’s and Dr. Wazzan’s opinion that the market was
13   improving in the Reno/Sparks area.      He believed it had declined
14   since June 2009 because financing had become more difficult to
15   obtain, and buyers were not willing to pay the prices they were
16   before due to larger down payment requirements.      Id. at 126:1-
17   127:12.   On cross-examination, Kimmel admitted that the
18   Reno/Sparks apartment market was “getting better and the rents now
19   [were] starting to creep up again.”      Id. at 146:21-147:8.
20        Interest rate expert Zelle testified that Caviata’s plan to
21   payoff U.S. Bank in three years was “a dream” and “a fairy tale,”
22   and for Caviata to pay $23 million or $29 million to U.S. Bank the
23   “property [was] going to have to become Disneyland in Reno.”        Id.
24   at 169:12, 170:17-21.   When asked about whether the market would
25   improve, Zelle testified that selling in three years was a risk
26   factor he considered because he did not see it happening.       Id. at
27   171:7-22.   Zelle further concluded that the First Plan was not
28   feasible because Caviata could not make the monthly payments or

                                      -7-
 1   the balloon payment.      Id. at 190:18-191:14.   Zelle admitted he had
 2   not provided any analysis as to why Caviata could not make the
 3   balloon payment in three years.      Id. at 191:15-18.
 4        The bankruptcy court ordered post-hearing briefing on certain
 5   issues.      U.S. Bank’s supplemental brief asserted essentially the
 6   same feasibility objection, contending that “the Plan [was] a mere
 7   hope and prayer of the Debtor to pay off some of its debts.”
 8   U.S. Bank argued that a sale price of $34 million for the
 9   Property, even if realized in three years, would not cover its
10   claim, which was already over $32 million,6 let alone the junior
11   lender’s claim, which was over $6 million.
12        On April 12, 2010, the bankruptcy court entered its
13   Memorandum Decision, Findings of Fact and Conclusions of Law and
14   Order overruling U.S. Bank’s objections and confirming the First
15   Plan.       The court rejected U.S. Bank’s tardy amended proof of
16   claim, determining that it improperly included the accrual of
17   postpetition interest in violation of United Sav. Ass’n of Tex. v.
18   Timbers of Inwood Forest Assocs., 484 U.S. 365 (1988), as well as
19   unreasonable (and unrequested) attorney’s fees.      The court also
20   rejected Kimmel’s January 2010 Appraisal as a “devious tactic” by
21   U.S. Bank to increase the amount of its unsecured claim in order
22   to defeat Class 4 acceptance of the First Plan, and it struck it
23   from the record as an improper report prejudicial to Caviata
24   because it contained no supporting data, exhibits, or basis for
25   its $20 million value.      Mem. Dec., Apr. 12, 2010, Doc. No. 152
26   pp. 8-9.      The court found that what data it did provide was
27
             6
            On March 12, 2010, U.S. Bank filed an amended proof of
28   claim for $32,801,217.95.

                                         -8-
 1   contradicted by other data within the declaration and/or Kimmel’s
 2   testimony at the confirmation hearing.    Accordingly, the court
 3   accepted Kimmel’s June 2009 Appraisal of the Property for
 4   $23,100,000, which Caviata had accepted as its own, and determined
 5   that U.S. Bank held a secured claim in that amount.
 6        As for the interest rate on the secured portion of
 7   U.S. Bank’s claim, the bankruptcy court found Dr. Wazzan’s
 8   testimony credible and consistent with Till v. SCS Credit Corp.,
 9   541 U.S. 465 (2004).    The court found Zelle’s approach flawed and
10   not credible because it resulted in a negative LTV ratio due to
11   failing to bifurcate U.S. Bank’s claim.   The court further found
12   that Zelle’s “coerced” loan approach had been rejected in Till.
13   As a result, Dr. Wazzan’s proposed interest rate of 4.75% applied.
14        Finally, as to feasibility, the bankruptcy court found
15   Pennington’s testimony credible that Caviata should be able to
16   sell the Property for at least $34 million within three years,
17   when the cycle of downturn would improve.7
18        Per the First Plan, Caviata began making monthly payments of
19   $120,500.53 to U.S. Bank in June 2010.    To date, Caviata’s plan
20   payments are current.
21   C.   Caviata’s second chapter 11 case.
22        Approximately fifteen months after confirming the First Plan
23
24        7
            U.S. Bank appealed the confirmation order on several
     grounds, including the bankruptcy court’s finding that the First
25   Plan was feasible. While the appeal was pending, Caviata filed an
     objection to U.S. Bank’s claim. The parties eventually entered
26   into a stipulation resolving the appeal and claim objection and
     agreed that U.S. Bank would have a claim of $29,564,308.77 against
27   Caviata. The order approving the stipulation was entered on
     January 12, 2011. The appeal of the confirmation order was
28   dismissed on January 24, 2011.

                                      -9-
 1   and almost two years after its first chapter 11 filing, Caviata
 2   filed its second chapter 11 case on August 1, 2011 (Case No. 11-
 3   52458).   Caviata valued the Property at $23,420,928 in its
 4   schedules filed on August 23, 2011.    U.S. Bank’s appraiser, Scott
 5   Beebe, conducted an appraisal of the Property as of August 23,
 6   2011, and he asserted that the Property’s value had decreased to
 7   $20,900,000.
 8        On September 9, 2011, U.S. Bank moved to dismiss Caviata’s
 9   second bankruptcy case.   In short, U.S. Bank contended the second
10   filing was a bad faith filing and a backdoor attempt to circumvent
11   the prohibition on modifying a substantially consummated plan
12   under § 1127.   While acknowledging that some courts have created a
13   limited “good faith” exception to this prohibition, U.S. Bank
14   contended that Caviata failed to demonstrate that an extraordinary
15   change in circumstances occurred after substantial consummation of
16   the First Plan, which substantially impaired its performance under
17   the First Plan.   U.S. Bank argued that “extraordinary
18   circumstances” did not include decreased income, increased
19   expenses, or reasonably foreseeable changes in debtor’s
20   operations, the market or the economy.   U.S. Bank noted that in
21   Caviata’s first quarter report filed on April 25, 2011, Caviata
22   represented that it did not foresee any circumstances that would
23   affect its ability to perform under the First Plan.   A hearing on
24   the motion to dismiss was set for October 7, 2011.
25        Caviata opposed dismissal, contending that substantial and
26   fundamental changes had seriously impacted the finance and real
27   estate markets beyond any level that could have been foreseen,
28   and, at the time of confirmation, Caviata did not and could not

                                     -10-
 1   have known that recovery from the 2007-2009 recession would not
 2   occur as predicted, but, rather, the economy would suffer a
 3   relapse.   Although it was not yet in default under the First Plan,
 4   Caviata contended that modifications were necessary or it would be
 5   unable to fully perform its confirmed plan.   Caviata acknowledged
 6   that while courts have typically determined that changed market
 7   conditions alone are insufficient to warrant a second chapter 11
 8   filing, such cases were based upon “general” market fluctuations,
 9   not the global economic crisis the world was currently
10   experiencing.   Notwithstanding these cases, argued Caviata, courts
11   have allowed a second filing when an “unforeseeable” economic
12   change fundamentally changes market conditions, citing Lincoln
13   Nat’l Life Ins. Co. v. Bouy, Hall & Howard and Assocs. (In re
14   Bouy, Hall & Howard and Assocs.), 208 B.R. 737, 745 (Bankr. S.D.
15   Ga. 1995) [hereinafter “Bouy Hall”].    Because Caviata believed
16   this matter involved highly disputed factual issues requiring
17   evidentiary support and expert testimony, it asked the court to
18   set an evidentiary hearing.
19        In support of its opposition, Caviata offered the declaration
20   of banking expert Tod Little (“Little”), who was retained to opine
21   on the state of the country’s economy as of March 3, 2010 –-- the
22   First Plan confirmation hearing date.   Little offered his
23   declaration in lieu of a forthcoming report he claimed would
24   support his testimony at a future evidentiary hearing on
25   U.S. Bank’s motion.   According to Little, no one, including
26   Caviata, could have predicted at the time of confirmation of the
27   First Plan in 2010 that a relapse in the recession not seen since
28   the Great Depression of the 1930s would occur, or that it would

                                     -11-
 1   continue for such an extended period of time.       Typically, asserted
 2   Little, national economic recessions cycle and recover within 10-
 3   22 months, with the average duration being 18 months.       Little
 4   claimed that significant, unforeseen national economic changes
 5   during the past eighteen months seriously impacted Caviata’s
 6   ability to fully perform the First Plan.     These events included:
 7   !    The U.S. experienced an economic recession during 2007-
          2009 which significantly impacted the residential and
 8        commercial real estate markets causing real estate values
          to plummet, banks to collapse, and lending to become non-
 9        existent;
10   !    In late 2009/early 2010 the federal government adopted
          numerous reforms, instituted stimulus programs and
11        created incentives for banks and lending institutions;
12   !    In early 2010, prominent national economists, including
          Fortune 500 CEOs and the chairman of the federal reserve,
13        and even President Obama, were touting that our economy
          had “hit bottom” and could only improve;
14
     !    The European banking      system   meltdown   compounded   the
15        U.S. Banking crisis;
16   !    A market for new loans or refinancing of existing loans
          still did not exist due to few active lenders and
17        stricter underwriting guidelines, and no resolution to
          the banking system problem would be achieved anytime
18        soon;
19   !    FDIC policy changes, which caused lenders to benefit more
          from foreclosure than working out agreements with
20        borrowers, added to the disruption of the normal economic
          relationship between borrowers and banks.
21
22        In further support of its opposition, Caviata also offered a
23   declaration from Pennington.    Pennington stated that he had
24   contacted no less than five lenders seeking refinancing of
25   Caviata’s existing loan on the Property, but all five had advised
26   him that no financing was available due to the credit markets and
27   the restrictions placed on banks by the FDIC.       The lenders also
28   advised Pennington that until the economy recovered, the chances

                                      -12-
 1   of Caviata obtaining a new loan or refinancing for the Property
 2   were nonexistent.   Pennington further represented that he was also
 3   seeking to sell the Property for $32,400,000, but was told by
 4   several brokers that until the credit markets opened up to buyers
 5   of multi-residential properties, it was highly doubtful the
 6   Property would sell.   Finally, Pennington stated that because of
 7   the representations by President Obama and the nation’s leading
 8   economists in early 2010 that the recession had ended and had
 9   entered a state of recovery, he believed the First Plan’s three-
10   year term was reasonable at the time of confirmation, and he could
11   not have foreseen the changes articulated by Little that occurred
12   after confirmation of the First Plan.8
13        Caviata filed a proposed second plan and disclosure statement
14   on September 27, 2011, which extended the time within which it was
15   required to sell or refinance the Property from three years to ten
16   years, reduced the amount paid to U.S. Bank from $29,564,308.77 to
17   $22,420,928.00, and reduced the interest rate on U.S. Bank’s
18   secured claim from 4.75 to 4.00%.
19        In its reply, U.S. Bank contended that from the beginning of
20   the first bankruptcy case its experts had warned Caviata that the
21   First Plan was a pipe dream, but, instead of heeding these
22   warnings, Caviata essentially stuck its head in the sand and went
23   forward with its First Plan.   According to U.S. Bank, Caviata’s
24   opposition failed to explain how a recession that was present
25
26        8
            Caviata had also intended to submit a declaration from real
     estate expert Reese Perkins (“Perkins”) concerning the local
27   market and how values had been impacted by the unforeseen changed
     circumstances occurring since early 2010, but Perkins was out of
28   town and unavailable until just days before the dismissal hearing.

                                     -13-
 1   during the first bankruptcy case and was still present during the
 2   second bankruptcy case was “unforeseeable,” or how it was a
 3   “changed” market condition when the market was just as bad now as
 4   it was then.     U.S. Bank further argued that mere opinion of public
 5   figures on the improved state of the economy in early 2010 was not
 6   evidence that the recession was an unforeseeable circumstance or a
 7   changed market condition.    U.S. Bank opposed an evidentiary
 8   hearing as a waste of the court’s time; it was common knowledge
 9   that the economy was bad in both 2010 and 2011.
10         The hearing on U.S. Bank’s motion to dismiss took place on
11   October 7, 2011, before the Hon. Bruce T. Beesley.     Before hearing
12   oral argument, the bankruptcy court recited a brief history of
13   Caviata’s first bankruptcy case and noted that the First Plan had
14   been ongoing for about “10 months.”      Hr’g Tr., Oct. 7, 2011, 2:8-
15   19.   Caviata’s counsel confirmed the court’s version of the facts.
16   Id. at 2:20.   The court then noted that it had considered the
17   pleadings, declarations, attachments, and parts of the First Plan
18   and proposed second plan.    It summarized the parties’ positions
19   regarding the First Plan and then posed the following question to
20   Caviata:
21         So I have difficulty understanding how this is a surprise
           to the debtor as a basis for filing a new . . . Chapter
22         11 while the existing Chapter 11 is pending because you
           have to show as I understand it some significant change
23         in circumstances that wasn’t anticipated. And I guess --
           my question is and what I have real problems with is I
24         can’t see given the objection by the secured party how
           they can say that their -- we had no inkling that this
25         was going to happen because they were fighting with
           somebody who says exactly what has happened did happen.
26         It’s very difficult for me to understand how that can be
           a surprise, but I’m happy to hear from you.
27
28   Id. at 5:4-17.    Caviata’s counsel began by noting that an

                                       -14-
 1   evidentiary hearing was necessary because not all of the facts
 2   were set forth in the declarations.    The court responded by asking
 3   counsel for an offer of proof as to what facts he would present if
 4   an evidentiary hearing were granted.   Counsel stated that although
 5   he had not yet obtained a declaration from Perkins, Little and
 6   Pennington would testify that the economy taking such a turn for
 7   the worse was an unforeseeable event, and it fundamentally changed
 8   the real estate market by eliminating funding for new loans.     Id.
 9   at 6:11-8:12.
10        Caviata’s counsel and the court then engaged in a lengthy
11   colloquy about Bouy Hall.   Id. at 8:12-9:25.   When the court
12   opined that loans were also not available when the First Plan was
13   confirmed in April 2010, counsel responded that no evidence had
14   been presented at that time about the possibility of a recession
15   of this magnitude, and no such evidence could have been presented
16   because no one knew or thought it could happen.   Had there been
17   any such evidence, argued counsel, the First Plan would not have
18   been confirmed.   Counsel further noted that although U.S. Bank
19   disputed the First Plan’s feasibility, its experts had never
20   opined that the real estate market would collapse or that no
21   funding would be available during the First Plan’s term.
22        U.S. Bank contended that during the proceedings culminating
23   in confirmation of the First Plan, it had articulated doubts about
24   the Property appreciating in three years to a value sufficient to
25   pay off its claim.   U.S. Bank further argued that the fact the
26   loan market was currently tight was not a new fact supporting the
27   extraordinary change required for filing a second case; the market
28   was also tight in 2010 and everyone knew it.    Finally, U.S. Bank

                                     -15-
 1   argued that an evidentiary hearing was not necessary for a motion
 2   to dismiss.
 3           After hearing further argument from the parties, the
 4   bankruptcy court orally granted U.S. Bank’s motion to dismiss.
 5   The court again noted that it had reviewed the pleadings,
 6   declarations, a number of cases including Bouy Hall, and § 1141.
 7   Hr’g Tr., Oct. 7, 2011, 25:11-14.      It then entered its findings
 8   and conclusions on the record:
 9        [A] plan of reorganization which is confirmed is a
          contract between two parties. It’s between the secured
10        lender here and the debtors, and the fact that the
          economy changes doesn’t relieve people from their
11        contractual obligations. If I have purchased a car and
          because of the economy I lose my job, I don’t get to go
12        back to the person who financed my car and say I want to
          do this over because I don’t have enough money.
13
          I think the economy is terrible, but I think that in 2010
14        there were certainly inklings that the economy was very
          bad. It was only 10 months ago and the situation has not
15        deteriorated that badly in the last 10 months. It’s been
          awful. The debtor when they made their plan basically
16        said, you know, our best guess that we can get confirmed
          is we think we can get this done in three years. They
17        were just wrong. And I’m not saying that’s a bad faith
          issue in this case, but I don’t think just being wrong
18        that the economy is worse than they thought it was going
          to be is a basis for filing a new plan.
19
20   Id. at 25:15-26:8.    As a result of the dismissal, Caviata was
21   still operating under the First Plan.      Caviata’s request for an
22   evidentiary hearing was denied.      Id. at 26:19-22.
23        The bankruptcy court entered an order granting U.S. Bank’s
24   motion to dismiss Caviata’s second chapter 11 case on October 27,
25   2011.    Caviata timely appealed.
26                               II. JURISDICTION
27           The bankruptcy court had jurisdiction under 28 U.S.C.
28   §§ 157(b)(2)(A) and 1334.     We have jurisdiction under 28 U.S.C.

                                         -16-
 1   § 158.
 2                                 III. ISSUES
 3   1.      Did the bankruptcy court abuse its discretion when it denied
 4   Caviata’s request for an evidentiary hearing?
 5   2.      Did the bankruptcy court abuse its discretion in dismissing
 6   Caviata’s second chapter 11 case?
 7                           IV. STANDARDS OF REVIEW
 8        We review for an abuse of discretion the bankruptcy court’s
 9   decision not to conduct an evidentiary hearing.    Zurich Am. Ins.
10   Co. v. Int’l Fibercom, Inc. (In re Int’l Fibercom, Inc.), 503 F.3d
11   933, 939 (9th Cir. 2007).
12        We review the bankruptcy court’s decision to dismiss a case
13   for abuse of discretion.    Leavitt v. Soto (In re Leavitt), 171
14   F.3d 1219, 1223 (9th Cir. 1999).
15        In applying the abuse of discretion standard, we first
16   “determine de novo whether the [bankruptcy] court identified the
17   correct legal rule to apply to the relief requested.”    United
18   States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc).
19   If it applied the correct legal rule, we then review the
20   bankruptcy court’s fact findings for clear error.    Id. at 1262 &
21   n.20.    We must affirm the bankruptcy court’s fact findings unless
22   we conclude that they are “(1) ‘illogical,’ (2) ‘implausible,’ or
23   (3) without ‘support in inferences that may be drawn from the
24   facts in the record.’”    Id. at 1262.
25        We may affirm on any basis supported by the record.    Pac.
26   Capital Bancorp, N.A. v. E. Airport Dev., LLC (In re E. Airport
27   Dev., LLC), 443 B.R. 823, 828 (9th Cir. BAP 2011).
28

                                       -17-
 1                               V. DISCUSSION
 2   A.   The bankruptcy court did not abuse its discretion when it
          denied Caviata’s request for an evidentiary hearing.
 3
 4        Caviata asserts that it requested an evidentiary hearing to
 5   show: (1) extraordinary changed circumstances occurred in the
 6   economy and market (other than a general decline) that warranted
 7   its second chapter 11 filing; and (2) that the extraordinary
 8   changed circumstances were unforeseeable to Caviata.     Caviata
 9   argues that because a factual dispute between the parties existed
10   on these issues, the bankruptcy court was required to provide
11   procedures and schedule an evidentiary hearing on the matter.
12   Caviata argues that, because the bankruptcy court weighed the
13   evidence before it knowing that the record was incomplete and yet
14   made its determination to dismiss the second chapter 11 filing,
15   the court violated Caviata’s due process rights and severely
16   prejudiced Caviata by not allowing it to present its entire case.
17   We disagree.
18        U.S. Bank’s motion to dismiss is a contested matter subject
19   to Rule 9014.    See Rule 1017(f)(1).    A contested matter hearing
20   under Rule 9014,9 as amended in 2002, “ordinarily requires trial
21   testimony in open court with respect to disputed material factual
22   issues in the same manner as an adversary proceeding.”     Khachikyan
23   v. Hahn (In re Khachikyan), 335 B.R. 121, 126 (9th Cir. BAP 2005).
24   The advisory committee’s note provides:
25
26        9
              Rule 9014(d) provides:
27          (d) Testimony of witnesses. Testimony of witnesses with
          respect to disputed material factual issues shall be taken in
28        the same manner as testimony in an adversary proceeding.

                                       -18-
 1        Subdivision (d) is added to clarify that if the motion
          cannot be decided without resolving a disputed material
 2        issue of fact, an evidentiary hearing must be held at
          which testimony of witnesses is taken in the same manner
 3        as testimony is taken in an adversary proceeding or at a
          trial in a district court civil case. Rule 43(a),
 4        rather than Rule 43(e)[now 43(c)], F.R.Civ.P., would
          govern the evidentiary hearing on the factual dispute.
 5        Under Rule 9017, the Federal Rules of Evidence also
          apply in a contested matter. Nothing in the rule
 6        prohibits a court from resolving any matter that is
          submitted on affidavits by agreement of the parties.
 7
 8   Rule 9014(d), Advisory Comm. Note to 2002 amendments.
 9   Consequently, through Rule 9017, such testimonial evidence is
10   taken pursuant to Civil Rule 43(a), unless the parties agree to
11   submit the contested matter on affidavits.   Such agreement to use
12   affidavits did not exist between the parties in this case.   If a
13   court determines that no “disputed material factual issues” exist,
14   it may then hear a motion on affidavits, oral testimony or
15   depositions when the motion relies on facts outside the record.
16   See Civil Rule 43(c) incorporated by Rule 9017.
17        Section 1112(b) provides for the dismissal of a debtor’s case
18   for cause “after notice and a hearing.”   “Notice and a hearing” is
19   defined in § 102(1)(A) to mean “after such notice as is
20   appropriate in the particular circumstances, and such opportunity
21   for a hearing as is appropriate in the particular
22   circumstances[,]” subject to the discretionary limitation imposed
23   by Rule 9014(d).   The bankruptcy court specifically noted its
24   partial review of the record in the first bankruptcy case in
25   conjunction with the affidavits submitted in the second case.
26        Caviata’s approved disclosure statement in the first case
27   identified through its designated risks the factual issues that
28   Caviata now argues were unforeseen at the time of confirmation in

                                     -19-
 1   the first case.   Caviata specifically disclosed in § 12.1:
 2        (a) the value of the Debtor’s property has suffered
          significantly as a result of the downturn in the United
 3        States economy since the summer of 2007. There is no
          assurance that the economy will turn around and that
 4        property values, in general, or the value of the
          Debtor’s Property, in particular, will not continue to
 5        decline; (b) the Plan is dependent, at least in part, on
          continued leasing of the Property. There is no
 6        assurance that the Debtor’[s] predictions of the rate of
          stabilizing the Property and achieving performing leases
 7        will occur, or that these predictions will occur within
          the time period projected in the Plan; (c) because the
 8        Plan is dependent on continued leasing of the Property,
          there is a risk that the projections of net operating
 9        income, with which to pay the Allowed Claims of
          Creditors, may not be met; (d) the Debtor may not be
10        able to sell its Property; (e) the Debtor may not be
          able to secure alternative financing to satisfy the
11        Allowed Secured Claim of Cal National or the Allowed
          Secured Claim of Specialty Trust; (f) if Cal National is
12        not paid in accordance with the Plan, and the Debtor is
          unable to sell the Property or to secure alternative
13        financing, Cal National may foreclose on the Property.
14   At the confirmation hearing on March 3, 2010, U.S. Bank also
15   raised issues through its expert, William G. Kimmel, concerning
16   the ability to refinance, Hr’g Tr., Mar. 3, 2010, 126:20-127:6,
17   the poor global economic situation, id. 146:15-19, and the status
18   of the housing market, id. 126:15-19.
19        In the second case, Caviata submitted declarations from
20   Little and Pennington in support of its opposition to U.S. Bank’s
21   motion to dismiss.   The bankruptcy court considered these
22   declarations.   The court went one step further and asked Caviata’s
23   counsel for an offer of proof.   Counsel stated that although he
24   had not yet obtained a declaration from Perkins, Little and
25   Pennington would testify that the worsening economy from 2010 to
26   2011 was an unforeseeable event, and that it fundamentally changed
27   the real estate market by eliminating funding for new loans.
28        Caviata set forth similar disclosures in the approved

                                      -20-
 1   disclosure statement filed in the first case.   Additionally,
 2   U.S. Bank provided such evidence during the confirmation hearing
 3   in the first case.   The material facts before the bankruptcy court
 4   in the second case were not disputed.   Such evidence already
 5   existed in the record from the first case and was not disputed in
 6   the second case.   Any economic changes alleged by Caviata were
 7   foreseeable, as affirmed by the evidence submitted by U.S. Bank in
 8   both the first and second cases and by Caviata in its approved
 9   disclosure statement in the first case.   Consequently the factual
10   issues were not disputed as required under Rule 9014(d).    “Where
11   the . . . core facts are not disputed, the bankruptcy court is
12   authorized to determine contested matters . . . on the pleadings
13   and arguments of the parties, drawing necessary inferences from
14   the record.”   Tyner v. Nicholson (In re Nicholson), 435 B.R. 622,
15   636 (9th Cir. BAP 2010) (quoting Gonzalez–Ruiz v. Doral Fin. Corp.
16   (In re Gonzalez–Ruiz), 341 B.R 371, 381 (1st Cir. BAP 2006)).     We
17   conclude the bankruptcy court had sufficient undisputed evidence
18   before it to issue its ruling without any further evidentiary
19   hearing and did not abuse its discretion in denying the request
20   for an evidentiary hearing.   In re Int’l Fibercom, Inc., 503 F.3d
21   at 939; Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1139 (9th
22   Cir. 2004).
23
     B.   The bankruptcy court did not abuse its discretion in
24        dismissing Caviata’s second chapter 11 case.
25        Under § 1141(a), the terms of a confirmed plan are binding on
26   all parties.   Section 1127(b) provides that a chapter 11 plan may
27   be modified before but not after “substantial consummation” of the
28

                                     -21-
 1   plan.10   Taken together, “§§ 1127(b) and 1141(a) impose an
 2   important element of finality in chapter 11 proceedings, allowing
 3   parties to rely on the provisions of a confirmed reorganization
 4   plan.”    Integon Life Ins. Corp. v. Mableton-Booper Assocs. (In re
 5   Mableton-Booper Assocs.), 127 B.R. 941, 943 (Bankr. N.D. Ga.
 6   1991).
 7        Although § 1127(b) prohibits modification of a substantially
 8   consummated plan, several courts have held that serial chapter 11
 9   filings are not per se impermissible, and that a second plan may
10   modify the first plan where there has been an unforeseeable or
11   unanticipated change in circumstances.    See Elmwood Dev. Co. v.
12   Gen. Electric Pension Trust (In re Elmwood Dev. Co.), 964 F.2d
13   508, 511-12 (5th Cir. 1992) (“[A] second petition would not
14   necessarily contradict the original proceedings because a
15   legitimately varied and previously unknown factual scenario might
16   require a different plan to accomplish the goals of bankruptcy
17   relief.”) (citing Johnson v. Home State Bank, 501 U.S. 78 (1991));
18   PNC Mortg. v. Deed & Note Traders, LLC (In re Deed & Note Traders,
19   LLC), 2012 WL 1191891, at *6-7 (9th Cir. BAP Apr. 5, 2012); In re
20   Woods, 2011 WL 841270, at *3-4 (Bankr. D. Kan. Mar. 7, 2011); In
21   re 1633 Broadway Mars Rest. Corp., 388 B.R. 490, 500 (Bankr.
22
          10
               “Substantial consummation” is defined in § 1101(2) as:
23
          (A) transfer of all or substantially all of the property
24        proposed by the plan to be transferred;
          (B) assumption by the debtor or by the successor to the
25        debtor under the plan of the business or of the management of
          all or substantially all of the property dealt with by the
26        plan; and
          (C) commencement of distribution under the plan.
27
     The parties do not dispute that the First Plan has been
28   substantially consummated.

                                      -22-
 1   S.D.N.Y. 2008); In re Motel Props., Inc., 314 B.R. 889, 895-96
 2   (Bankr. S.D. Ga. 2004); In re Tillotson, 266 B.R. 565, 569 (Bankr.
 3   W.D.N.Y. 2001); In re Adams, 218 B.R. 597, 601-02 (Bankr. D. Kan.
 4   1998); In re Northtown Realty, Co., 215 B.R. 906, 913 (Bankr.
 5   E.D.N.Y. 1998); In re Woodson, 213 B.R. 404, 405-06 (Bankr. M.D.
 6   Fla. 1997); Bouy Hall, 208 B.R. at 743-44; In re Del. Valley
 7   Broadcasters L.P., 166 B.R. 36, 40 (Bankr. D. Del. 1994); In re
 8   Roxy Real Estate Co., 170 B.R. 571, 576 (Bankr. E.D. Penn. 1993);
 9   In re Mableton-Booper Assocs., 127 B.R. at 943-44 (“Where
10   unexpected circumstances doom the debtor’s chances for success,
11   binding the parties to the original confirmation decision in the
12   name of finality would frustrate [the goal of reorganization], and
13   the confirmation decision should be reevaluated.”); In re Casa
14   Loma Assocs., 122 B.R. 814, 817-18 (Bankr. N.D. Ga. 1991).11
15   However, “[e]ven extraordinary and unforeseeable changes will not
16   support a new Chapter 11, if these changes do not substantially
17   impair the debtor’s performance under the confirmed plan.”     In re
18   Adams, 218 B.R. at 602; see also In re Woods, 2011 WL 841270, at
19   *4.   Thus, for the bankruptcy court to consider a debtor’s second
20   chapter 11 filing and plan, the unforeseeable or unanticipated
21   change in circumstances must have affected the debtor’s ability to
22   fully perform under its confirmed plan.   In re Woods, 2011 WL
23   841270, at *4; In re Adams, 218 B.R. at 602; In re Northtown
24   Realty, Co., 215 B.R. at 913; In re Woodson, 213 B.R. at 405; In
25
26         11
            The Seventh Circuit in Fruehauf Corp. v. Jartran, Inc.
     (In re Jartran, Inc.), 886 F.2d 859 (7th Cir. 1989), held that
27   serial bankruptcy filings are not per se impermissible, but it did
     not expressly discuss unforeseen or unanticipated changed
28   circumstances as a basis for a serial filing.

                                     -23-
 1   re Roxy Real Estate, 170 B.R. at 576; In re Casa Loma Assocs., 122
 2   B.R. at 818.   Examples of unforeseen changed circumstances in the
 3   above cases include a change in federal law affecting tenancy of
 4   an apartment building, termination of service by major airlines
 5   which had provided vital customers for an airport hotel, lost
 6   crops due to hail, cattle and pasture lost due to fire, and
 7   substantial adverse judgments.
 8        In cases of economic change, courts have held generally that
 9   changed market conditions alone are insufficient to warrant a
10   second chapter 11 filing.   In re Elmwood Dev. Co., 964 F.2d at
11   512-13 (event of national “credit crunch” in early 1990’s might be
12   a changed circumstance justifying a second chapter 11 filing but
13   appellate court upheld bankruptcy court’s decision to reject it);
14   In re 1633 Broadway Mars Rest. Corp., 388 B.R. at 502 n.17
15   (recession of late 2007 was a change in general economic condition
16   and insufficient basis for second chapter 11 filing); In re Motel
17   Props., Inc., 314 B.R. at 896 (foreseeable risk of operating any
18   business is the fluctuation in supply and demand and its impact on
19   the market); In re Tillotson, 266 B.R. at 569 (changes associated
20   with realities of economic change are an insufficient reason to
21   allow second chapter 11 filing); In re Adams, 218 B.R. at 602
22   (same); In re Northtown Realty Co., 215 B.R. at 913; Bouy Hall,
23   208 B.R. at 745; In re Roxy Real Estate Co., 170 B.R. at 576 (a
24   change in market condition for rental properties or real estate is
25   insufficient changed circumstance); In re Mableton-Booper Assocs.,
26   127 B.R. at 944; In re Casa Loma Assocs., 122 B.R. at 818.
27        However, “where a debtor experiences a ‘fundamental change in
28   its market’ and not the typical fluctuations of supply and demand,

                                      -24-
 1   if unforeseeable, the change may represent sufficiently changed
 2   circumstances to warrant a second filing.”   Bouy Hall, 208 B.R. at
 3   745; In re Motel Props., Inc., 314 B.R. at 896 (second filing
 4   permitted when an unforeseeable economic event fundamentally
 5   changes the market conditions).    “When an unforeseeable economic
 6   change effects a significant change in the market, a second filing
 7   may be permitted.”   Bouy Hall, 208 B.R. at 745 (emphasis in
 8   original).
 9        Cases in which a chapter 11 debtor has been successful at
10   showing unforeseen changed circumstances to warrant a second
11   chapter 11 filing are clearly the exception rather than the rule.
12   Bouy Hall and In re Casa Loma Associates are two of those rare
13   exceptions.   In Bouy Hall, after the debtor had confirmed and
14   substantially consummated its chapter 11 plan, the debtor’s hotel
15   business was damaged when a nearby airport which supplied much of
16   the hotel’s customer base relocated its terminal to a location
17   further away.   Id. at 740.   In addition, two major airlines
18   eliminated their service into the airport and another airline had
19   filed a chapter 7 bankruptcy, further eroding the debtor’s
20   customer market.   Id.   Based upon this showing, the bankruptcy
21   court overruled the creditor’s argument that debtor’s problems
22   were either foreseeable or purely economic and denied its motion
23   to dismiss the debtor’s second chapter 11 case.   Id. at 746.
24   According to the court, the debtor had not only demonstrated that
25   the demand for its service decreased, but also that the market
26   itself had been significantly altered.   Id. at 745.
27        In In re Casa Loma Associates, the bankruptcy court held that
28   an unanticipated change in federal law prohibiting “adults only”

                                       -25-
 1   apartment complexes, which severely affected debtor’s tenancy
 2   rates, and discovery of fire damage and structural defects in an
 3   apartment building, which were unknown at the time of plan
 4   confirmation, were changed circumstances warranting the second
 5   chapter 11 filing.   122 B.R. at 818-19.   Accordingly, dismissal of
 6   debtor’s second chapter 11 case was denied.   Id. at 819.   The
 7   bankruptcy court did note, however, that the result would have
 8   been different had the debtor relied merely on changed market
 9   conditions to support the second filing.   Id. at 818.
10        Caviata asserts that fundamental and significant changes in
11   the national and local economy have taken place since it confirmed
12   the First Plan, which were not only unforeseeable, but seriously
13   impacted its ability to fully perform the First Plan.    Caviata
14   argues that the bankruptcy court ignored the case law and failed
15   to consider whether the change in the economy was a general market
16   decline, as opposed to a fundamental economic change effecting a
17   significant change in the market.   We disagree.
18        In reviewing the statements made by the bankruptcy court at
19   the dismissal hearing, it is clear that it considered the
20   relevant, although not binding, case law, and that it recognized
21   what extraordinary circumstances Caviata needed to show to permit
22   the second chapter 11 filing.   The court noted that it had
23   reviewed Bouy Hall and several other cases, and it even discussed
24   some of the facts in Bouy Hall on the record.   The court also
25   warned Caviata at the beginning of the hearing that the alleged
26   changed circumstances were not unforeseeable based on U.S. Bank’s
27   objections to the First Plan.   While agreeing that the current
28   economy is “terrible,” the bankruptcy court concluded Caviata had

                                     -26-
 1   not shown that at the time of confirmation of the First Plan it
 2   was unforeseeable that the economy would remain depressed and not
 3   improve as Caviata had predicted.
 4        Caviata also argues that the bankruptcy court’s findings are
 5   not supported by the record and are contrary to the evidence
 6   presented.   Specifically, Caviata contends the bankruptcy court
 7   failed to consider its evidence that significant changes occurred
 8   after confirmation of the First Plan that could not have been
 9   foreseen by Caviata.    We now review the evidence presented in this
10   case to see if it supports the bankruptcy court’s decision.
11        In U.S. Bank’s objection to confirmation of the First Plan,
12   Kimmel opined in his declaration that because the real estate
13   market showed no signs of improving in the near future and because
14   financing was unavailable, he believed the Property’s value was
15   now only $20 million, down from his previous June 2009 Appraisal
16   of $23,100,000.   However, the bankruptcy court struck Kimmel’s
17   declaration from the record.   Nonetheless, Kimmel testified at the
18   confirmation hearing in March 2010 that since June 2009, financing
19   had become more difficult to obtain, and buyers were not willing
20   to pay the prices they were before due to larger down payment
21   requirements.   However, on cross-examination, Kimmel admitted that
22   the apartment market in Reno/Sparks was getting better.   Interest
23   rate expert Zelle testified that Caviata’s plan to payoff
24   U.S. Bank in three years was “a dream” and “a fairy tale,” and
25   that the Property would have to become “Disneyland in Reno” in
26   order to pull it off.   The bankruptcy court rejected Zelle’s
27   “coerced” loan approached to support his 9.25% interest rate.
28   However, Zelle, who brokers commercial real estate loans, also

                                      -27-
 1   testified at the confirmation hearing that he did not see the real
 2   estate market improving in three years as Caviata predicted.
 3        In support of the First Plan, Caviata offered the testimony
 4   of interest rate expert, Dr. Wazzan, and Caviata’s manager,
 5   Pennington.   Dr. Wazzan testified at the confirmation hearing that
 6   although forecasting was difficult, the empirical data showed that
 7   things were improving.   Pennington, with his thirty-plus years of
 8   experience in large-scale real estate development in Northern
 9   Nevada, testified that he believed conditions would improve and
10   the Property, which was worth $23,100,000 at the time of
11   confirmation, would be worth $34 million within the next couple of
12   years because of its desirability and uniqueness in the market.
13   Pennington offered no further details as to why he thought the
14   Property’s value would appreciate to such a degree in a rather
15   short period of time.
16        In support of its motion to dismiss Caviata’s second chapter
17   11 case, U.S. Bank did not offer any direct evidence, but it did
18   ask the bankruptcy court to take judicial notice of Caviata’s
19   first quarter report filed on April 25, 2011.   In that report,
20   Caviata represented that it did not foresee any circumstances that
21   would affect its ability to perform under the First Plan.
22   Arguably, some (if not all) of the catastrophic events Little
23   described had occurred by then, yet Caviata did not foresee any
24   problems fully consummating the Plan in April 2011, which was
25   approximately four months before the second filing.
26        In its opposition to dismissal, Caviata offered the Little
27   and Pennington declarations.   Little articulated a laundry list of
28   events occurring after confirmation of the First Plan that he

                                     -28-
 1   opined no one, including Caviata, could have predicted at the time
 2   of confirmation of the First Plan in 2010, which warranted the
 3   second chapter 11 filing.   Pennington stated that, because of the
 4   representations by President Obama and the nation’s leading
 5   economists in early 2010 that the recession had ended and had
 6   entered a state of recovery, he believed the First Plan’s three-
 7   year term was reasonable at the time of confirmation.   Pennington
 8   asserted that he could not have foreseen the changes articulated
 9   by Little that occurred post-confirmation.   Notably, during his
10   testimony at the confirmation hearing on the First Plan,
11   Pennington never stated that his belief that the market would
12   improve or that the Property would be worth $34 million in the
13   next couple of years was based on these early 2010 representations
14   by national figures.   Pennington also stated that he contacted
15   several lenders seeking refinancing of Caviata’s existing loan on
16   the Property, and all had advised him that no financing was
17   available due to the credit market and the restrictions placed on
18   banks by the FDIC.   Pennington did not offer any loan application
19   documents or declarations from these lenders in the record.     He
20   also did not offer any declarations from the several brokers he
21   claimed he spoke to about listing the Property for sale.
22        Not finding the testimony offered by Little and Pennington
23   persuasive, the bankruptcy court found that a decline in the
24   economy between 2010 and 2011 was not an unforeseeable and changed
25   circumstance justifying Caviata’s second chapter 11 filing.12
26
          12
27          The bankruptcy court also found that Caviata’s second
     chapter 11 filing was not in bad faith, a necessary element for a
28                                                       (continued...)

                                     -29-
 1   Caviata in its approved disclosure statement from the first case
 2   specifically highlighted that risk.    We cannot conclude, on this
 3   record, that the bankruptcy court’s findings are illogical,
 4   implausible, or without support in inferences that may be drawn
 5   from the facts in the record.   Hinkson, 585 F.3d at 1262.
 6   Although it may be that no one could have anticipated the
 7   precipitous decline in the economy that occurred in 2008, in late
 8   2009/early 2010, when Caviata filed and sought confirmation of the
 9   First Plan, the real estate market in many parts of the country,
10   including Northern Nevada, was still depressed.   Even Little
11   testified that the lending market at that time was “nonexistent.”
12   Some people believed in early 2010 that the economy was
13   recovering; some believed that recovery was still to be seen.     As
14   the bankruptcy court put it, Caviata took its “best guess” that
15   things would only get better in the next three years, but it
16   guessed wrong.   Even if the economic changes from 2010 to 2011
17   were as catastrophic as Little indicated, it was not unforeseeable
18   that the real estate and lending markets would not recover as soon
19   as some, including Caviata, had thought especially given Caviata’s
20   disclosure of risks and facts in its approved disclosure
21
22        12
           (...continued)
     successful second chapter 11 filing. In re Elmwood Dev. Co., 964
23   F.2d at 511-12; In re Jartran, Inc., 886 F.2d. at 866-67; In re
     Deed & Note Traders, LLC, 2012 WL 1191891, at *7; In re 1633
24   Broadway Mars Rest. Corp., 388 B.R. at 500; In re Motel Props.,
     Inc., 314 B.R. at 896; In re Tillotson, 266 B.R. at 569; In re
25   Adams, 218 B.R. at 601-02; In re Northtown Realty, Co., 215 B.R.
     at 913; In re Woodson, 213 B.R. at 405-06; Bouy Hall, 208 B.R. at
26   744; In re Del. Valley Broadcasters L.P., 166 B.R. at 40; In re
     Roxy Real Estate Co., 170 B.R. at 576; In re Mableton-Booper
27   Assocs., 127 B.R. at 943-44; In re Casa Loma Assocs., 122 B.R. at
     817-18. U.S. Bank does not dispute this finding, so we need not
28   elaborate on the point.

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 1   statement.
 2        Upon the request of a party in interest, the bankruptcy court
 3   may dismiss or convert a chapter 11 case for “cause.”   § 1112(b).
 4   Here, the “cause” relied upon by U.S. Bank and found by the
 5   bankruptcy court was Caviata’s inability to show an extraordinary
 6   change in circumstances which substantially impaired its
 7   performance under the First Plan to warrant the second chapter 11
 8   filing.   Because the bankruptcy court applied the correct legal
 9   standard, and its factual findings are not illogical, implausible,
10   or without support in the record, we conclude that it did not
11   abuse its discretion in dismissing Caviata’s second chapter 11
12   case.   Accordingly, Caviata is still operating under the First
13   Plan.
14                              VI. CONCLUSION
15        For the foregoing reasons, we AFFIRM.
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28

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