and Submitted February 8, 2017 Pasadena, California
from the Ninth Circuit Bankruptcy Appellate Panel BAP No.
14-1334 Kirscher, Pappas, and Taylor, Bankruptcy Judges,
N. Tedford, IV (argued) and Aaron E. De Leest, Danning Gill
Diamond & Kollitz LLP, s Los Angeles, California, for
Michael R. Totaro (argued) and Maureen J. Shanahan, Totaro
& Shanahan, Pacific Palisades, California, for Appellees.
Before: Mary M. Schroeder, Andre M. Davis, [*] and Mary H.
Murguia, Circuit Judges.
panel affirmed the Bankruptcy Appellate Panel's decision
affirming the bankruptcy court's order disallowing a
claim in a Chapter 11 case.
11 U.S.C. § 1111(b), those who hold non-recourse liens
on real property are granted recourse against the bankruptcy
estate upon the filing of the bankruptcy petition. Those
protected are creditors who have "a claim secured by a
lien on property of the estate." The panel held that a
creditor does not continue to have a right of recourse after
there has been a non-judicial foreclosure, so that the
property is no longer part of the estate and the liens have
SCHROEDER, Circuit Judge:
bankruptcy appeal we consider for the first time some of the
key provisions of 11 U.S.C. § 1111(b) that apply to
Chapter 11 proceedings. They provide that those who hold
non-recourse liens on real property are granted recourse
against the bankruptcy estate upon the filing of the
bankruptcy petition. Those protected are creditors who have
"a claim secured by a lien on property of the
estate." The issue before us is whether the creditor
continues to have a right of recourse after there has been a
non-judicial foreclosure, so that the property is no longer
part of the estate and the liens have been extinguished. The
Bankruptcy Appellate Panel ("BAP") in a
well-reasoned decision said no and we affirm. Mastan v.
Salamon (In re Salamon), 528 B.R. 171, 175-78 (B.A.P.
9th Cir. 2015).
April of 2009, Jeanne Salamon purchased a piece of real
property located at 716 South Westlake Avenue, Los Angeles,
California ("the Westlake Property") from David
Behrend. The Westlake Property was already subject to two
liens. Rather than fund the purchase price at the time of
closing, Salamon executed a wrap-around mortgage in the
amount of $1, 030, 000 in favor of Behrend called the
"All Inclusive Note Secured by a Deed of Trust"
(the "All-Inclusive Note") and funded the balance
of the purchase price with a "Note Secured by Deed of
Trust" ("the Note") in the amount of $325, 000
in favor of Behrend. Under the terms of these notes, Salamon
would make monthly payments to an entity designated by
Behrend, and that entity would make monthly payments to the
the seller, filed a Chapter 11 bankruptcy petition on March
25, 2010, and on March 1, 2011, Peter Mastan, the appellant,
became the Behrend estate's Chapter 11 trustee; the
proceeding was later converted into a Chapter 7 bankruptcy
with Mastan remaining the trustee. On June 8, 2012, Salamon,
the buyer, and her husband James, the appellees, also filed a
Chapter 11 bankruptcy petition. On October 3, 2012, Mastan
filed a timely proof of claim on behalf of the Behrend estate
for the two liens secured by the Westlake Property. On
October 19, 2012, the bankruptcy court ...