In re: STEWART NEIL MAYER v. Stewart Neil Mayer

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: STEWART NEIL MAYER,
Debtor,
______________________________
ROBERT J. HARRINGTON,
Appellant,
v.
STEWART NEIL MAYER,
Appellee.
No. 20-56340
DC No. 3:20-cv-01376-TWR
MEMORANDUM*
Appeal from the United States District Court
for the Southern District of California
Todd W. Robinson, District Judge, Presiding
Argued and Submitted January 10, 2022
Pasadena, California
Before: TASHIMA, M. SMITH, and WATFORD, Circuit Judges.
Partial Dissent by Judge TASHIMA.
FILED
MAR 8 2022
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.

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Robert J. Harrington appeals from an order of the district court denying his
motion for leave to appeal from the bankruptcy court’s order, which denied his
motion for relief from the automatic stay imposed in the bankruptcy proceeding of
debtor Stewart Neil Mayer. In a concurrently filed opinion, we hold that the
bankruptcy court’s denial of stay relief was final and appealable. In this
memorandum disposition, we conclude that: (1) we should address the merits of
the appeal rather than remand to the district court; and (2) the bankruptcy court did
not abuse its discretion in denying Harrington’s stay-relief motion.
1. “When a district court improperly dismisses a bankruptcy appeal
without reaching the merits, we generally reverse the district court’s dismissal and
remand for the district court’s consideration of the appeal in the first instance.”
Mastro v. Rigby, 764 F.3d 1090, 1097 (9th Cir. 2014). However, “remand is not
mandatory.” Reid & Hellyer, APC v. Laski (In re Wrightwood Guest Ranch, LLC),
896 F.3d 1109, 1113 (9th Cir. 2018). As in In re Wrightwood, the record here is
“sufficient for us to decide the issues now presented,” and “we are ‘in as good a
position as the district court’” to consider the merits of the appeal because “both
we and the district court review orders of the bankruptcy court in an appellate
capacity.” Id. (quoting Kasdan, Simonds, McIntyre, Epstein & Martin v. World
Sav. & Loan Ass’n (In re Emery), 317 F.3d 1064, 1069 (9th Cir. 2003)); see also
2

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Alexander v. Compton (In re Bonham), 229 F.3d 750, 763–71 (9th Cir. 2000) (after
concluding that the district court erred in dismissing the appeal for lack of finality,
addressing the merits of the appeal, reversing the district court decision, and
remanding with instructions to affirm the bankruptcy court order). We therefore
turn to the merits of Harrington’s appeal.
2. In denying Harrington’s request for stay relief, the bankruptcy court
explained that, by granting in part Mayer’s summary judgment motion, the court
had narrowed the issues such that it was appropriate to address Harrington’s claims
against Mayer in the adversary proceeding rather than in the Massachusetts state
court. The court further reasoned that there was no stay in effect as to Harrington’s
claims against nondebtor parties.
The bankruptcy court did not abuse its discretion in denying Harrington’s
motion for stay relief. See Gruntz v. County of Los Angeles (In re Gruntz), 202
F.3d 1074, 1084 n.9 (9th Cir. 2000) (en banc) (stating that the bankruptcy court’s
decision to deny relief from the automatic stay is reviewed for an abuse of
discretion). “Decisions committed to the bankruptcy court’s discretion will be
reversed only if ‘based on an erroneous conclusion of law or when the record
contains no evidence on which [the bankruptcy court] rationally could have based
that decision.’” Benedor Corp. v. Conejo Enters., Inc. (In re Conejo Enters., Inc.),
3

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96 F.3d 346, 351 (9th Cir. 1996) (quoting Vanderpark Props., Inc. v. Buchbinder
(In re Windmill Farms, Inc.), 841 F.2d 1467, 1472 (9th Cir. 1988)). The
bankruptcy court properly considered interests of judicial economy in denying the
relief from stay motion. See Merriman v. Fattorini (In re Merriman), 616 B.R.
381, 389 (B.A.P. 9th Cir. 2020). At the hearing on July 2, 2019, when the
bankruptcy court vacated its tentative ruling granting the stay relief motion, the
court emphasized that permitting limited discovery could significantly narrow the
issues in the adversary proceeding and might be more efficient “in the long term.”
The bankruptcy court reiterated these considerations when it later denied the stay
relief motion, indicating that it would not permit Harrington to return to the
Massachusetts court to litigate issues that had been addressed at summary
judgment or were ready for trial in the adversary proceeding. Thus, the bankruptcy
court’s decision was neither based on an erroneous conclusion of law nor
unsupported by the record.
We reverse the order of the district court and remand with instructions to
affirm the order of the bankruptcy court denying relief from the automatic stay.
REVERSED and REMANDED with INSTRUCTIONS.
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Harrington v. Mayer (In re Mayer), No. 20-56340
TASHIMA, Circuit Judge, dissenting in part:
As set forth in the opinion filed concurrently with this memorandum, I agree
with the majority that the bankruptcy court order was final and appealable and that
we should address the merits of the appeal. I would, however, reverse the
bankruptcy court order denying Harrington’s request for relief from the stay in
order to allow him to pursue his claims against Mayer in his chosen forum. I
therefore respectfully dissent from the majority’s disposition on the merits.
The bankruptcy court denied the stay-relief motion “for the reasons stated in
open session.” At the hearing, the court stated only that, by granting in part
Mayer’s summary judgment motion, the court had narrowed the issues such that it
was appropriate to address Harrington’s claims against Mayer in the adversary
proceeding rather than returning to Massachusetts, and that there was no stay in
effect as to the nondebtor parties. The court did not consider the concerns raised
by forcing Harrington to litigate his Massachusetts claims against Mayer in
bankruptcy court in California. Nor did it consider the fact that Mayer is a party in
both state cases.
The factors we generally consider in such cases favor granting relief from
the stay. All the following factors favor Harrington’s position: “the extent to
which state law issues predominate over bankruptcy issues,” “the presence of a
FILED
MAR 8 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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related proceeding commenced in state court,” “the feasibility of severing state law
claims from core bankruptcy matters to allow judgments to be entered in state
court with enforcement left to the bankruptcy court,” “the lack of a federal
jurisdictional basis other than bankruptcy jurisdiction for the state claims,” “the
right to a jury trial in state court,”1 and Harrington’s “nondebtor status.”
Christensen v. Tucson Ests., Inc. (In re Tucson Ests., Inc.), 912 F.2d 1162, 1167,
1169 (9th Cir.1990).
The following factors also favor relief from the stay: allowing the state
litigation to proceed would result in “complete resolution of the issues” in the
adversary proceeding and the proof of claim, and the state court issues lack “any
connection” with the bankruptcy case. Truebro, Inc v. Plumberex Specialty Prods.,
Inc. (In re Plumberex Specialty Prods., Inc.), 311 B.R. 551, 559 (Bankr. C.D. Cal.
2004). In addition, the bankruptcy trustee favored stay relief in order to allow the
bankruptcy estate to benefit from Harrington’s litigation of the claims against
1 Harrington requested a jury trial in both state actions. The
Massachusetts Constitution provides that “the parties have a right to a trial by jury”
“[i]n all controversies concerning property, and in all suits between two or more
persons.” Mass. Const. pt. 1, art. XV; Dalis v. Buyer Advert., Inc., 636 N.E.2d
212, 214 (Mass. 1994) (“Article 15 ‘preserves the common law trial by jury in its
indispensable characteristics as established and known at the time the Constitution
was adopted in 1780.’” (quoting Dep’t of Revenue v. Jarvenpaa, 534 N.E.2d 286,
291 (Mass. 1989))).
2

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Mayer in the state court, indicating that the state litigation would not “prejudice the
interests of other creditors.” Id. Finally, because the denial of the stay deprives
Harrington of his state constitutional right to a jury trial, the “balance of hurt”
favors Harrington. Id.
Although the bankruptcy court reasoned that Harrington could proceed
against nondebtor parties in the state litigation, the record indicates that
Harrington’s claims against Mayer are intertwined with his claims against Mayer’s
sister. Harrington’s allegations in both state cases concerned the same real estate2
and the same allegations regarding Mayer’s and his sister’s actions as to those
properties through their family trust. Furthermore, in the case filed by Mayer’s
sister, Harrington counterclaimed against both Mayer and his sister, which means
that Mayer is a party in both state cases. Thus, not only are the two cases
intertwined, but the issues are the same, making it difficult and burdensome for
Harrington to litigate the claims in both bankruptcy court and state court, and
“significantly increas[ing] [his] costs.” Ritzen Grp., Inc. v. Jackson Masonry, LLC,
140 S. Ct. 582, 590 (2020). Because Harrington’s claims against Mayer and his
sister are identical, judicial economy would be served by litigating all of
2 Both state actions concerned land in Framingham, Massachusetts –
parcels owned by Nexum that Terrian and Nexum planned to develop and a
contiguous lot owned by Terrian.
3

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Harrington’s claims in state court.
In addition to these other considerations, at oral argument, Harrington’s
counsel represented that the state court would not allow the consolidated cases to
be tried separately. Harrington accordingly cannot proceed against the nondebtor
parties unless the stay is lifted.
Thus, although a decision on a request for stay relief is committed to the
bankruptcy court’s discretion, on this record, the denial of stay relief was an abuse
of discretion. I therefore respectfully dissent from the majority’s denial of relief
from the automatic stay.
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