In the Matter of: DINO J. PETRONE v. Sfr Investments Pool 1, LLC

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In the Matter of:
DINO J. PETRONE; CONNIE L.
PETRON,
------------------------------
U.S. BANK, NATIONAL
ASSOCIATION; PHH MORTGAGE
SERVICES,
Appellants,
v.
SFR INVESTMENTS POOL 1, LLC,
Appellee.
No. 17-16938
D.C. No. 2:16-cv-02885-JCM
MEMORANDUM*
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Submitted February 13, 2019**
San Francisco, California
FILED
FEB 22 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).

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Before: McKEOWN, W. FLETCHER, and MURGUIA, Circuit Judges.
U.S. Bank and PHH Mortgage Services (collectively, “Appellants”) appeal
the district court’s order dismissing Appellants’ appeal of a bankruptcy order for
lack of standing. “Standing is an issue of law which we review de novo.” In re
Palmdale Hills Prop., LLC, 654 F.3d 868, 873 (9th Cir. 2011). We have
jurisdiction under § 158(d)(1) and we affirm. Because the parties are familiar with
the facts of the case, we do not recount them except as necessary.
In connection with Appellee SFR’s efforts to quiet title to certain real
property, the bankruptcy court granted Appellee’s motion for the retroactive
annulment of an automatic stay related to that property. Appellants, as creditors
with liens on the same property, sought to appeal the bankruptcy court’s annulment
order. The district court dismissed their appeal, relying on the Ninth Circuit’s
holding in Tilley v. Vucurevich, (In re Pecan Groves of Arizona), 951 F.2d 242,
245 (9th Cir. 1991), that “a creditor has no independent standing to appeal an
adverse decision regarding a violation of [an] automatic stay.”
The standing limitation established in In re Pecan Groves is an application
of the “person-aggrieved” test. See id. The “person-aggrieved” test limits standing
in bankruptcy appeals to appellants who can show they are “directly and adversely
affected pecuniarily by the order of the bankruptcy court.” In re Fondiller, 707
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F.2d 441, 443 (9th Cir. 1983). Consistent with the Supreme Court’s decision in
Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118, 129
(2014) (internal quotation marks and citation omitted), the “person-aggrieved” test
identifies appellants “whose interests fall within the zone of interests protected by
the law invoked,” here, the Bankruptcy Code. See In re Fondiller, 707 F.2d at 443
(determining that Congress intended to maintain the “person-aggrieved” test for
appellate standing after amendments to the Bankruptcy Code). In In re Pecan
Groves, the Ninth Circuit held that only a debtor or bankruptcy trustee can appeal
an adverse decision by the bankruptcy court under the Bankruptcy Code’s section
on automatic stays, 11 U.S.C. § 362, because § 362 is intended to protect solely
the interests of debtors and their estates. 951 F.2d at 245.
Appellants’ arguments that In re Pecan Groves does not apply here are
unpersuasive. First, the Ninth Circuit’s holding in Schwartz v. United States (In re
Schwartz), 954 F.2d 569, 571 (9th Cir. 1992), that an act in violation of an
automatic stay is void ab initio, rather than voidable, does not alter the holding of
In re Pecan Groves. Whatever the legal status of a violative act, In re Pecan
Groves’ holding applies by its own terms to all actions “seek[ing] to enforce the
protections of an automatic stay.” In re Pecan Groves, 951 F.2d at 245. Insofar as
Appellants argue that, in light of Schwartz, a violative act cannot later be validated,
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their challenge is really to the bankruptcy court’s authority to issue retroactive
annulments of automatic stays. That authority is granted by the Bankruptcy Code
at 11 U.S.C. § 362(d) and is not the subject of this appeal.
Next, Appellants argue that the court in In re Pecan Groves erred in
concluding that an automatic stay is for the benefit of the debtor alone because the
stay also benefits creditors. That argument was directly considered and rejected in
In re Pecan Groves. 951 F.2d at 245. Furthermore, the Ninth Circuit cases cited
by Appellants that describe an automatic stay as also benefitting creditors do not
purport to define “the zone of interests protected by” 11 U.S.C. § 362 for purposes
of determining appellate standing and so do not disturb In re Pecan Groves’
holding on that point. See Lexmark, 572 U.S. at 129.
Finally, Appellants’ efforts to distinguish the facts of this case from In re
Pecan Groves and from In re Heaton, 697 F. App’x 524 (9th Cir. 2017)
(unpublished), all fail. To the extent Appellants seek to rely on characteristics of
the Appellee, those facts are irrelevant to the question of Appellants’ standing.
Furthermore, the fact that In re Pecan Groves was an “adversary proceeding” while
the present case is part of “a collective action” actually weighs against Appellants’
position—the “broad scope of interests impacted” in a bankruptcy action is
precisely why the “person-aggrieved” test exists. See In re Fondiller, 707 F.2d at
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443 (“[T]he need for an explicit limitation on standing to appeal in bankruptcy
proceedings . . . springs from the nature of bankruptcy litigation which almost
always involves the interests of persons who are not formally parties to the
litigation.”). Appellants also highlight the length of time that has lapsed since the
violative actions and the fact that the sale of the property occurred after the
bankruptcy case had closed, but Appellants do not explain why these facts should
be determinative.
As creditors, Appellants have “no independent standing to appeal an adverse
decision regarding a violation of [an] automatic stay.” See In re Pecan Groves,
951 F.2d at 245. Appellants have shown no compelling reason why the holding in
In re Pecan Groves does not apply here.
AFFIRMED.
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