FILED JAN 29 2021 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT

In re: BAP No. EW-20-1156-FBG GIGA WATT, INC., Debtor. Bk. No. 2:18-bk-03197

JUN DAM, Appellant, v. MEMORANDUM* MARK D. WALDRON, Chapter 11 Trustee, Appellee.

Appeal from the United States Bankruptcy Court for the Eastern District of Washington Frederick P. Corbit, Bankruptcy Judge, Presiding

Before: FARIS, BRAND, and GAN, Bankruptcy Judges.

INTRODUCTION

Creditor Jun Dam challenges chapter 111 trustee Mark D. Waldron’s

(“Trustee”) sale of certain assets to a third party. This appeal is limited to

* This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. 1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code,

, all “Rule” references are to the Federal Rules of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of Civil Procedure. the order denying Mr. Dam’s motion for reconsideration of the sale order.

We AFFIRM.

FACTUAL BACKGROUND

Giga Watt Inc. owned the “Giga Watt Project,” which consisted of

facilities built (and yet to be built) in eastern Washington. The facilities

included small buildings, called “pods,” that are equipped to house and

provide electricity to powerful computers called “cryptocurrency miners”

or just “miners.” “Cryptocurrency mining” is “the complex process in

which computers solve a complicated math puzzle to win a stack of virtual

currency . . . .” Paul Roberts, This is What Happens When Bitcoin Miners Take

Over Your Town, Politico Magazine, Mar./Apr. 2018,

https://www.politico.com/magazine/story/2018/03/09/bitcoin-mining-energ

y-prices-smalltown-feature-217230 (last visited October 14, 2020). The

miners also maintain the distributed ledgers that keep track of ownership

of cryptocurrency. See Darren J. Sandler, Citrus Groves in the Cloud: Is

Cryptocurrency Cloud Mining A Security?, 34 Santa Clara High Tech. L.J. 250,

253-55 (2018).

Giga Watt raised funds by selling “WTT tokens” in what it referred to

as an “initial coin offering.” Giga Watt told investors that a “WTT Token is

an Ethereum token representing the right to use the Giga Watt processing

center’s capacity, rent-free for 50 years, to accommodate 1 Watt’s worth of

mining equipment power consumption.” Basically, Giga Watt promised to

2 provide space, electrical power, cooling, and maintenance for miners that

(at least nominally) belonged to the token holders. Token holders could

provide their own miners or they could buy miners from Giga Watt’s

Singapore-based partner.

Mr. Dam purchased 1,025,660 WTT tokens for approximately $1.03

million. At oral argument, he acknowledged that he did not purchase or

provide any miners for installation in any of Giga Watt’s facilities.

About a year later, the value of digital currencies dropped

dramatically and the cost of electricity increased in eastern Washington,

diminishing the profitability of cryptocurrency mining. Giga Watt’s

business collapsed, and it filed a chapter 11 petition. Later, the Trustee was

appointed.

Mr. Dam filed a proof of claim for $5,391,720.37, based on his

projection of his lost profits over the fifty-year token period.

The Trustee filed a motion (“Sale Motion”) to sell the so-called TNT

Facility, including certain miners located there. The proposed buyer was

EcoChain, Inc. The sale was to be free and clear of liens. The purchase price

was $200,000, subject to overbidding.

The Non-Profit Creditors’ Committee of WTT Token Holders and

Miners, of which Mr. Dam was a member, objected to the proposed sale on

multiple grounds.

After a hearing, the bankruptcy court approved the sale agreement

3 between the Trustee and EcoChain by order entered May 19, 2020 (“Sale

Order”). It found that “EcoChain is purchasing the Purchased Assets in

good faith within the meaning of

(m) and EcoChain is entitled

to the protections of

(m).”

No one sought or obtained a stay of the Sale Order. The sale closed

shortly after the court entered the Sale Order.

Seventeen days after the court entered the Sale Order, Mr. Dam filed

a motion for reconsideration under Rule 9024 (“Motion for

Reconsideration”) and an adversary complaint2 against the Trustee. The

court denied the Motion for Reconsideration by order entered on June 18,

2020 (“Reconsideration Order”).

Mr. Dam filed a notice of appeal on June 25, 2020, thirty-seven days

after entry of the Sale Order and seven days after entry of the

Reconsideration Order. The notice of appeal identified only the Sale Order

as the order on appeal.

The Trustee has moved this Panel to dismiss the appeal, arguing that

we lack jurisdiction to review the Sale Order because neither the notice of

appeal nor the Motion for Reconsideration was filed within fourteen days

of the order.

2 The complaint against the Trustee and his attorneys asserted breach of fiduciary duty, negligence, and unjust enrichment in the sale of the TNT Facility. The bankruptcy court dismissed the adversary proceeding. Mr. Dam appealed the dismissal order to the district court, where it is pending.

4 JURISDICTION

The bankruptcy court had jurisdiction pursuant to

and 157(b)(2)(N). We have jurisdiction under

to review the

Reconsideration Order.

A. Timeliness

The Trustee’s Motion to Dismiss asserts that Mr. Dam’s appeal was

untimely. We agree in part.

An appeal from a final bankruptcy court order must be filed within

fourteen days of entry of the order. See Rule 8002(a). The deadline for filing

an appeal is mandatory and jurisdictional. See Browder v. Dir., Dep't of

Corrs.,

(1978); Slimick v. Silva (In re Slimick),

(9th Cir. 1990).

Rule 8002(b) tolls the time for filing an appeal if a party files a motion

to alter or amend the judgment under Rule 9023 or a motion for relief

under Rule 9024 within fourteen days after the judgment is entered. Rule

8002(b)(1)(B), (D). An untimely motion for reconsideration does not extend

the time to file a notice of appeal. Preblich v. Battley,

(9th

Cir. 1999).

The Sale Order was a final, appealable order. See In re Douglas J.

Roger, M.D., Inc., APC,

, 956 (C.D. Cal. 2019) (“[O]rders

approving a sale of a debtor’s property . . . are considered final decisions

and immediately appealable.” (citation and quotation marks omitted)).

5 Mr. Dam did not file a notice of appeal or tolling motion within fourteen

days. Rather, he filed the Motion for Reconsideration seventeen days after

the court entered the Sale Order. Thus, the Motion for Reconsideration did

not toll the time for Mr. Dam to file an appeal from the Sale Order, and he

was too late to appeal the Sale Order. See Rule 8002(a).3

The notice of appeal was filed within fourteen days of the

Reconsideration Order. But Mr. Dam did not designate the Reconsideration

Order in his notice of appeal, contrary to Rule 8003(a)(3)(B). Nevertheless,

we will construe the notice of appeal as encompassing the Reconsideration

Order. Even if an order “does not appear on the face of the notice of

appeal,” we are to consider: “(1) whether the intent to appeal a specific

judgment can be fairly inferred and (2) whether the appellee was

prejudiced by the mistake.” Le v. Astrue,

(9th Cir.

2009) (quoting Lolli v. Cty. of Orange,

, 414 (9th Cir. 2003)). “In

determining whether intent and prejudice are present, we consider first,

whether the affected party had notice of the issue on appeal; and, second,

whether the affected party had an opportunity to fully brief the issue.” Id.

at 1023 (quoting Meehan v. Cty. of L.A.,

, 105 (9th Cir. 1988)

(quotation marks omitted)).

3 Mr. Dam argues on appeal that the Motion for Reconsideration was timely under Civil Rule 60(b)(2) for excusable neglect because the postal service delivered his filing late. But neglect cannot excuse his untimely notice of appeal. See Rule 8002(d)(2)(B).

6 Mr. Dam has briefed the issues concerning the denial of the Motion

for Reconsideration, and the Trustee had a fair opportunity to respond.

Because it is clear that Mr. Dam intended to appeal the Reconsideration

Order, we exercise our discretion to review it.

In short, we lack jurisdiction to review the Sale Order and will review

only the Reconsideration Order.

B. Statutory mootness

The Trustee argues that this appeal is statutorily moot under

§ 363(m). “We cannot exercise jurisdiction over a moot appeal.” Ellis v. Yu

(In re Ellis),

(9th Cir. BAP 2014).

Section § 363(m) provides:

reversal or modification on appeal of an authorization under [§ 363(b) or (c)] of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith . . . unless such authorization and such sale or lease were stayed pending appeal.

See Paulman v. Gateway Venture Partners III, LP (In re Filtercorp, Inc.),

(9th Cir. 1998) (When a “sale of assets is made to a good faith

purchaser, it may not be modified or set aside unless the sale was stayed

pending appeal.”).

Mr. Dam did not seek a stay pending appeal. The bankruptcy court

found that “EcoChain is purchasing the Purchased Assets in good faith

within the meaning of

(m) and EcoChain is entitled to the

7 protections of

(m).” Mr. Dam does not challenge the finding of

good faith.4

Rather, Mr. Dam argues that the appeal is not statutorily moot

because the sale was made free and clear of his possessory rights as a lessee

under § 365(h). He relies on Clear Channel Outdoor, Inc. v. Knupfer (In re PW,

LLC),

(9th Cir. BAP 2008), where we “conclude[d] that § 363(m)

does not apply to lien-stripping under § 363(f).” Id. at 35.

We are bound to follow our precedent in PW, LLC. Therefore, this

appeal is not statutorily moot.5

ISSUE

Whether the bankruptcy court abused its discretion in denying the

Motion for Reconsideration.

STANDARD OF REVIEW

We review for an abuse of discretion the bankruptcy court’s ruling

4 At oral argument, Mr. Dam argued that EcoChain knew of the token holders’ asserted rights. EcoChain’s mere knowledge of a dispute of ownership does not establish its lack of good faith. See Thomas v. Namba (In re Thomas),

(9th Cir. BAP 2002) (“‘Good faith’ is a factual determination to be reviewed for clear error and can be defeated by ‘fraud, collusion between the purchaser and other bidders or the trustee, or an attempt to take grossly unfair advantage of other bidders.’” (quoting Ewell v. Diebert (In re Ewell),

(9th Cir. 1992))). 5 At oral argument, the Trustee asserted that this appeal is equitably moot. But equitable mootness only applies if (among other factors) the bankruptcy court could not grant “effective and equitable relief” from an “uncontrollable situation” upon reversal of the order. Motor Vehicle Cas. Co. v. Thorpe Insulation Co. (In re Thorpe Insulation Co.),

(9th Cir. 2012). We are not persuaded that these conditions exist here.

8 regarding a motion for reconsideration. Carruth v. Eutsler (In re Eutsler),

(9th Cir. BAP 2017) (citations omitted). To determine whether

the bankruptcy court has abused its discretion, we conduct a two-step

inquiry: (1) we review de novo whether the bankruptcy court “identified

the correct legal rule to apply to the relief requested” and (2) if it did, we

consider whether the bankruptcy court’s application of the legal standard

was illogical, implausible, or without support in inferences that may be

drawn from the facts in the record. United States v. Hinkson,

,

1262-63 & n.21 (9th Cir. 2009) (en banc).

DISCUSSION

We review the Reconsideration Order under Civil Rule 60, made

applicable in bankruptcy by Rule 9024, because Mr. Dam filed the Motion

for Reconsideration after the fourteen-day period following the entry of the

Sale Order. See Am. Ironworks & Erectors, Inc. v. N. Am. Constr. Corp.,

, 898-99 (9th Cir. 2001) (“A ‘motion for reconsideration’ is treated

as a motion to alter or amend judgment under [Civil Rule] 59(e) if it is filed

within [fourteen] days of entry of judgment. Otherwise, it is treated as a

[Civil] Rule 60(b) motion for relief from a judgment or order.” (citation

omitted)).

To obtain relief under Rule 9024(b), the movant must show

entitlement to one of the specified grounds for relief in Civil Rule 60(b):

(1) mistake, inadvertence, surprise, or excusable neglect;

9 (2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or (6) any other reason that justifies relief. Civil Rule 60(b). Mr. Dam’s burden is a heavy one. See Casey v. Albertson’s

Inc.,

(9th Cir. 2004) (movant must prove fraud under

Civil Rule 60(b)(3) by clear and convincing evidence); Harvest v. Castro,

(9th Cir. 2008) (Civil Rule 60(b)(6) “is to be used sparingly as

an equitable remedy to prevent manifest injustice and is to be utilized only

where extraordinary circumstances prevented a party from taking timely

action to prevent or correct an erroneous judgment.” (internal quotation

marks omitted)).

“Ninth Circuit decisions have settled that Rule 60(b) is not a

substitute avenue for appeal[.]” Atkins v. Fiberglass Representatives, Inc. (In re

Atkins),

(9th Cir. BAP 1992). A movant seeking relief

under Civil Rule 60(b) after the appeal period has expired “is not permitted

to revisit the merits of the underlying judgment or argue that the trial court

committed some legal error in arriving at that judgment.” United Student

10 Funds, Inc. v. Wylie (In re Wylie),

(9th Cir. BAP 2006). The

movant cannot use a Civil Rule 60(b) motion to reargue points already

made, or that could have been made, in dispute of the underlying motion.

Branam v. Crowder (In re Branam),

(9th Cir. BAP 1998), aff'd,

(9th Cir. 1999).

Instead, the movant is limited to the narrow grounds enumerated in

Civil Rule 60(b). “These grounds generally require a showing that events

subsequent to the entry of the judgment make its enforcement unfair or

inappropriate, or that the party was deprived of a fair opportunity to

appear and be heard in connection with the underlying dispute.” In re

Wylie,

.

On an appeal from a Civil Rule 60(b) order, we review an appellant’s

arguments “solely as they bear on the [bankruptcy court’s] exercise of

discretion on the Rule 60(b) motion. [Appellant] cannot prevail merely by

showing that the [underlying judgment] . . . was erroneous.” Sec. & Exch.

Comm’n v. Seaboard Corp.,

, 415-16 (9th Cir. 1982).

Nearly all of Mr. Dam’s arguments on appeal are ones that he could

have made, or that the committee he chaired did make, in opposition to the

Sale Motion. The bankruptcy court correctly refused to allow Mr. Dam to

relitigate the Sale Order.

Mr. Dam argues that he was entitled to reconsideration under Civil

Rule 60(b)(3) because the Trustee and his counsel had engaged in

11 misconduct and made misrepresentations to the court.

In order to prevail under Civil Rule 60(b)(3), Mr. Dam had to “prove

by clear and convincing evidence that the verdict was obtained through

fraud, misrepresentation, or other misconduct and the conduct complained

of prevented the losing party from fully and fairly presenting the defense.”

De Saracho v. Custom Food Mach., Inc.,

, 880 (9th Cir. 2000).

“[Civil Rule] 60(b)(3) require[s] that fraud . . . not be discoverable by due

diligence before or during the proceedings.” Casey,

(quoting Pac. & Arctic Ry. & Navigation Co. v. United Transp. Union,

(9th Cir. 1991)).

The bankruptcy court properly rejected this argument because

Mr. Dam offered only allegations, and no evidence, of misconduct. Based

on this complete failure of proof, the court did not abuse its discretion in

rejecting Mr. Dam’s arguments concerning misconduct and fraud.

Mr. Dam also argues that the bankruptcy court violated his

contractual rights because the Trustee could not sell the TNT Facility free of

his rights as a lessee under § 365(h). Mr. Dam apparently thinks that this

supposed error is a reason justifying relief under Civil Rule 60(b)(6). The

argument fails, however, because there was no error. The Ninth Circuit has

held that a lessor’s trustee may sell property free and clear of a tenant’s

rights notwithstanding § 365(h), where § 363(f) permits a sale free and clear

of the particular tenant’s interest and the court provides adequate

12 protection for the tenant’s interest. Pinnacle Restaurant at Big Sky, LLC v. CH

SP Acquisitions, LLC (In re Spanish Peaks Holdings II, LLC),

(9th Cir. 2017). In its oral ruling, the court made clear that the sale proceeds

would not be distributed until the court decided the token holders’

administrative and ownership claims. Transferring interests from property

to sale proceeds is a standard method of providing adequate protection, see

Moldo v. Clark (In re Clark),

(9th Cir. BAP 2001) (“Typically,

the proceeds of sale are held subject to the disputed interest and then

distributed as dictated by the resolution of the dispute; such procedure

preserves all parties’ rights by simply transferring interests from property

to dollars that represent its value.”), and the court did not abuse its

discretion in applying that method to Mr. Dam’s interest.

Thus, Mr. Dam has not shown that the bankruptcy court abused its

discretion when it denied his Motion for Reconsideration.

CONCLUSION

For the foregoing reasons, we AFFIRM.

13