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1 Thi s di sposi t i on i s not appropr i at e f or publ i cat i on.Al t hough i t may be ci t ed f or what ever per suasi ve val ue i t mayhave ( see Fed. R. App. P. 32. 1) , i t has no pr ecedent i al val ue.See 9t h Ci r . BAP Rul e 8013- 1.

2 Hon. Laur a S. Tayl or , Bankrupt cy J udge Sout her nDi str i ct of Cal i f or ni a, s i t t i ng by desi gnat i on.

UNI TED STATES BANKRUPTCY APPELLATE PANELOF THE NI NTH CI RCUI T

I n r e: ) BAP No. CC- 12- 1143- TaMkH)

J AMES F. BI SHAY, ) Bk. No. 8: 08- bk- 11374- ES)

Debt or . ) Adv. No. 8: 10- ap- 01142- ES______________________________)J AMES F. BI SHAY, )

)Appel l ant , )

)v. ) M E M O R A N D U M1

)RI CHARD A. MARSHACK; )J P MORGAN CHASE, )

)Appel l ees. )

______________________________)

Ar gued and Submi t t ed on Sept ember 21, 2012at Pasadena, Cal i f or ni a

Fi l ed - Oct ober 24, 2012

Appeal f r om t he Uni t ed St at es Bankrupt cy Cour t

f or t he Cent r al Di str i ct of Cal i f or ni aHonor abl e Er i t he A. Smi t h, Bankrupt cy J udge, Pr esi di ng

________________________________

Appear ances: Al an Lei gh Ar mst r ong f or Appel l ant J ames F.Bi shay; Donal d W. Si eveke f or Appel l ee Ri char d A.Mar shack__________________________________

Bef ore: TAYLOR, 2 MARKELL, and HOLLOWELL, Bankr upt cy J udges.

FILED

OCT 24 2012

SUSAN M SPRAUL, CLERKU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT

7/25/2019 In re: James F. Bishay, 9th Cir. BAP (2012)

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3 I n t he r ecor d, t he par t i es use bot h t he t er m equi t abl esubor di nat i on and t he t er m equi t abl e subr ogat i on. Equi t abl esubor di nat i on i n t he bankrupt cy cont ext r ef er s t o 11 U. S. C. 510( c) . I t r equi r es mi sconduct and subor di nat i on as a r esul t

t her eof . 4 Col l i er on Bankrupt cy 510. 05[ 2] , p. 510- 18 ( Al an N.Resni ck & Henr y J . Sommer, eds. , 16t h ed. 2012) . The r ecor devi dences t hat t he par t i es her e r ef er ence t he st at e l aw t heor y ofequi t abl e subr ogat i on i nvol vi ng ef f ect i ve subor di nat i on wher e,under cer t ai n ci r cumst ances, a l ender pays an exi st i ngl i enhol der s cl ai m and assumes ( i s subr ogat ed t o) t he seni orl ender s pr i or i t y. Mi l l er & St ar r , Cal i f or ni a Real Est at e Thi r dEdi t i on, 11: 115, p. 11- 355. The Panel wi l l ut i l i ze t he t er mequi t abl e subr ogat i on her ei n and wi l l not r ef er ence equi t abl esubor di nat i on.

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The appel l ant , J oseph Bi shay, i s t he benef i ci ar y of a t r ust

deed r ecorded agai nst t he debt or s real pr oper t y. He appeal s

f r om t he bankrupt cy cour t s j udgment af t er t r i al det er mi ni ng t hat

hi s t r ust deed was j uni or t o anot her subsequent l y r ecor ded t r ustdeed. The bankrupt cy cour t based i t s deci si on f i r st on t he

f i ndi ng t hat t her e was a cont r act ual agr eement t o subor di nat e.

The bankr upt cy cour t r eached t hi s det er mi nat i on notwi t hst andi ng

t hat a wr i t t en subor di nat i on agr eement was never i nt r oduced i nt o

evi dence. The bankr upt cy cour t , al t er nat i vel y, based i t s r ul i ng

on an or al det er mi nat i on t hat equi t abl e subr ogat i on appl i ed. 3

The appel l ant onl y r ai sed i ssues r el at i ng t o t he cont r act ual

subor di nat i on det er mi nat i on i n hi s st at ement of i ssues on appeal

and i n hi s openi ng br i ef . He di scussed equi t abl e subr ogat i on

onl y i n hi s repl y br i ef .

Af t er a car ef ul consi der at i on of t he par t i es br i ef s and

oral argument , r evi ew of t he r ecor d pr ovi ded, and i ndependent

anal ysi s and appl i cat i on of t he l aw, we hol d t hat t he appel l antwai ved hi s r i ght t o di sput e t hat equi t abl e subr ogat i on appl i ed

when he f ai l ed t o r ai se thi s i ssue at any poi nt on appeal pr i or

t o hi s repl y, and, t hus, we af f i r m on t hi s basi s. We f ur t her

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4 For t he pur poses of cl ar i t y and si mpl i ci t y, t heappel l ant wi l l her ei naf t er be r ef er r ed t o as J oseph. We i nt endno di sr espect by t hi s i nf or mal i t y, but hope t o avoi d t heconf usi on t hat coul d r esul t f r om havi ng bot h a debt or and adef endant wi t h t he l ast name Bi shay and f i r st names begi nni ngwi t h a J .

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af f i r m on t he gr ounds t hat t he bankrupt cy cour t cor r ect l y f ound

t hat an act ual agr eement t o subor di nat e exi st ed, t hat i t bound

appel l ant , and t hat i t was unnecessar y f or t he bankrupt cy cour t

t o determi ne the compl ete terms of t he subordi nat i on agr eement i nconnect i on wi t h i t s rul i ng.

FACTS

On Febr uary 10, 2006, debt or J ames F. Bi shay ( t he Debt or)

pur chased a house i n Hunt i ngt on Beach, Cal i f or ni a ( t he

Pr oper t y) and acqui r ed t i t l e as hi s sol e and separ at e pr oper t y.

On Febr uary 14, 2006, hi s wi f e, Deborah West f i el d, al so known as

Debor ah Bi shay, qui t cl ai med her i nt er est i n t he Proper t y t o t he

Debt or . On t hi s same dat e, Ci t i mor t gage r ecor ded a t r ust deed

agai nst t he Pr oper t y secur i ng an obl i gat i on i n t he or i gi nal

pr i nci pal amount of $1, 000, 000. Ther eaf t er , on Apr i l 5, 2006,

Ci t i bank recor ded a second t r ust deed secur i ng an obl i gat i on i n

t he or i gi nal pr i nci pal amount of $169, 990.

On December 27, 2006, f or no consi derat i on, t he Debt ort r ansf er r ed t he Pr oper t y t o t he Bi shay I r r evocabl e Tr ust ,

J ames F. Bi shay as Tr ust ee ( t he Bi shay Tr ust ) . On Februar y 15,

2007, t he Debt or , i n hi s capaci t y as t r ust ee of t he Bi shay Tr ust ,

execut ed and del i ver ed a not e i n t he or i gi nal pr i nci pal amount of

$320, 000 i n f avor of hi s br ot her and appel l ant , J oseph Bi shay

( J oseph4) and The Rock of Ages, a suspended Cal i f orni a

cor por at i on owned or cont r ol l ed by J oseph ( t he Bi shay Not e) .

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J oseph and Rock of Ages r ecor ded a t r ust deed ( t he Bi shay Tr ust

Deed) secur i ng t he Bi shay Not e on March 16, 2007. The Bi shay

Tr ust Deed, t hus, was subor di nat e t o bot h t he Ci t i bank and

Ci t i mor t gage t r ust deeds, and J oseph knew t hi s was t he case.On November 6, 2007, and agai n f or no consi derat i on, t he

Bi shay Tr ust t r ansf err ed t he Pr opert y t o t he Al pha and Omega

I r r evocabl e Tr ust , Debor ah West f i el d as Tr ust ee. On Febr uar y 4,

2008, t he Debt or s mot her , Mar si l Bi shay, now act i ng as t r ust ee

of t he Al pha and Omega I r r evocabl e Tr ust ( Al pha & Omega Tr ust ) ,

bor r owed $1, 260, 000 f r om Washi ngt on Mutual Bank ( WaMu) and used

t he pr oceeds i n si gni f i cant par t t o r epay the Ci t i bank and

Ci t i mor t gage l oans. On Apr i l 1, 2008, WaMu r ecor ded a deed of

t r ust ( t he WaMu Tr ust Deed) secur i ng t he not e evi denci ng t hi s

l oan. Ther e i s no di sput e t hat t he par t i es t o t hi s t r ansact i on

i nt ended t hat t he WaMu Tr ust Deed cr eat e a f i r st pr i or i t y l i en

agai nst t he Pr oper t y.

On Mar ch 22, 2008, t he Debt or f i l ed hi s pet i t i on andi ni t i at ed t hi s chapt er 7 bankrupt cy.

On Sept ember 1, 2008, Ri char d A. Marshack, t he chapt er 7

t r ust ee ( Trust ee) , f i l ed adver sary pr oceedi ng 8: 08- ap- 01338 ES

seeki ng t o avoi d t he t r ansf er s of t he Pr oper t y t o the Bi shay

Tr ust and t o t he Al pha & Omega Tr ust as f r audul ent conveyances.

The Tr ust ee obt ai ned a j udgment avoi di ng t hese t r ansf er s and

pr eser vi ng t he t r ansf er r ed asset f or t he benef i t of t he est at e on

Apr i l 19, 2010.

The Tr ust ee i ni t i at ed t he subj ect adver sar y proceedi ng on

Mar ch 19, 2010. The or i gi nal compl ai nt i s not par t of t he r ecor d

on appeal , but we have t aken j udi ci al not i ce of t he bankrupt cy

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5 The pr i or i t y di sput e was not di r ect l y di scussed i n anypl eadi ng, but t he par t i es cl ear l y cont empl at ed t hi s as an i ssuei n a Pr e- Tr i al Or der , and i t appar ent l y ar ose f r om t hegeneral i zed r equest i n t he amended compl ai nt t hat t he bankr upt cycour t det er mi ne t he r espect i ve i nt er est s of t he par t i es i n and t ot he Pr oper t y.

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cour t docket and var i ous document s f i l ed t hr ough the el ect r oni c

docket i ng syst em. See O Rour ke v. Seaboar d Sur . Co. ( I n r e E. R.

Feger t , I nc. ) , 887 F. 2d 955, 957- 58 ( 9t h Ci r . 1989) ; At wood v.

Chase Manhat t an Mort g. Co. ( I n r e At wood) , 293 B. R. 227, 233 n. 9( 9t h Ci r . BAP 2003) . The docket i n t hi s pr oceedi ng evi dences

t hat t he Tr ust ee or i gi nal l y named onl y WaMu and Marsi l Bi shay as

t r ust ee of t he Al pha & Omega Tr ust as def endant s, but al so

i ncl uded 10 Doe def endant s. Thereaf t er , he added J P Morgan Chase

Bank, Nat i onal Associ at i on, successor i n i nt er est t o WaMu

( Chase) , Cal i f orni a Reconveyance Company ( Cal Recon) , as t he

Tr ust ee named i n t he WaMu Tr ust Deed, The Rock of Ages, and

J oseph as def endant s i n pl ace of Does 1 t hrough 4.

The bankrupt cy cour t event ual l y ent er ed a summar y j udgment

order adver se t o Marsi l Bi shay as Trust ee of t he Al pha & Omega

Tr ust and det er mi ned t hat she had no i nter est i n t he Pr oper t y.

The Tr ust ee obt ai ned a def aul t j udgment r esol vi ng t he cl ai ms

agai nst The Rock of Ages and ent ered i nt o a set t l ement agr eementwi t h Chase. The r esol ut i on of t he Chase cl ai ms al so r esol ved al l

cl ai ms agai nst Cal Recon, as Cal Recon was sued onl y as t he

t r ust ee under t he WaMu Tr ust Deed.

Thus, as of t he t r i al date, t he onl y unr esol ved i ssues

per t ai ned t o J oseph s cl ai m based on t he al l eged pr i or i t y of t he

Bi shay Trust Deed. 5 Or i gi nal l y, t he Tr ust ee al so obj ected t o

J oseph s cl ai m, but t he Tr ust ee abandoned t hi s i ssue bef or e

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t r i al .

Pr i or t o t he t r i al , t he Tr ust ee and J oseph ent er ed i nt o a

Pr e- Tr i al Or der and agr eed, among ot her t hi ngs, on t he f ol l owi ng

f act s:18. J oseph Bi shay t es t i f i ed i n hi sdeposi t i on t hat on an unknown date, hesubor di nat ed hi s t r ust deed t o the Washi ngt onMut ual Deed of t r ust . The subor di nat i onagr eement was not r ecor ded and has not beenf ound.

. . .

21. J oseph Bi shay has t est i f i ed t hat heunder st ood t hat hi s deed of t r ust was i n

second posi t i on, behi nd t he new deed of t r ustobt ai ned by Mar si l Bi shay, i n f avor ofWashi ngt on Mut ual .22. Pr i or t o t he r ecor dat i on of hi s deed oft r ust , J oseph Bi shay under st ood t hat Mar si lBi shay i nt ended t o obt ai n a l oan agai nst [ t hePr oper t y] , and t hat such deed of t r ust woul dbe i n f i rs t pos i t i on.23. Mar si l Bi shay negot i at ed and obt ai nedt he subor di nat i on of J oseph Bi shay s deed oft r ust t o t he new deed of t r ust i ssued t o WAMUagai nst t he [ Pr oper t y] .

Pr e- Tr i al Or der , Dkt . 62, at 4.The Pr e- Tr i al Or der al so i ncl uded a j udi ci al r equi r ement

t hat t he par t i es pr ovi de di r ect t est i mony ( excl usi ve of adver se

or r ebut t al t est i mony) onl y by decl ar at i on. Fi nal l y, t he Pr e-

Tr i al Or der est abl i shed t he wi t nesses t o be cal l ed at t r i al and

t he exhi bi t s t o be i nt r oduced at t r i al . J oseph s exhi bi t s wer e

t he Bi shay Tr ust Deed, t he WaMu Tr ust Deed, and an equi t y

pur chase agr eement dat ed March 8, 2007. The Trust ee submi t t ed a

t r i al br i ef ; J oseph di d not . Nei t her par t y submi t t ed decl ar at or y

evi dence.

The bankrupt cy cour t hel d t he t r i al on Februar y 21, 2012.

At t r i al , t he Tr ust ee r est ed af t er i nt r oduci ng t he Bi shay Tr ust

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Deed and t he WaMu Trust Deed i nt o evi dence. J oseph s counsel ,

af t er at t empt i ng t o cal l J oseph as a wi t ness, acknowl edged t hat

he was bound by the Pre- Tr i al Or der and coul d not i nt r oduce

t est i moni al evi dence at t r i al . Consequent l y, J oseph nevert est i f i ed. J oseph s counsel al so di d not seek t o admi t any

document ary evi dence. The Trust ee t hen r el i ed on t he agr eed

f act s of t he Pr e- Tr i al Or der and r equest ed j udgment i n hi s f avor .

The Tr ust ee ar gued t wo al t er nat i ve t heor i es - f i r st , t hat

t he Bi shay Trust Deed was subordi nat e t o t he WaMu Tr ust Deed

because J oseph cont r act ual l y agr eed t o subor di nat e t he Bi shay

Tr ust Deed, and, second, t hat t he doct r i ne of equi t abl e

subr ogat i on oper at ed to gr ant seni or i t y t o t he WaMu Tr ust Deed.

I n opposi t i on, counsel f or J oseph of f er ed a l i mi t ed ar gument t hat

t he t erms of t he subordi nat i on agr eement were unknown and t hat

WaMu was negl i gent .

The bankrupt cy cour t r eci t ed t he admi t t ed f act s i n t he Pr e-

Tr i al Or der and made an or al f i ndi ng t hat t he admi t t ed f act spr ovi ded adequat e evi dence of i nt ent t o subor di nate and t hat , as

J oseph advanced no new evi dence, a j udgment f i ndi ng t hat t he WaMu

Tr ust Deed had pr i or i t y over t he Bi shay Tr ust Deed was

appr opr i at e. The bankrupt cy cour t s t at ed t hat :

. . . under t he admi t t ed f act s and gi ven t hatt her e i s no count er evi dence, ei t herf actual l y or l egal l y, t hen t hi s Cour t f eel s

comf or t abl e i n maki ng a f i ndi ng consi st entwi t h t he t r i al br i ef s submi t t ed t hat t her ewas a subordi nat i on agr eement t hat was i nef f ect at t he t i me t he Washi ngt on Mut ual l oanwas made and that t he i nt ent was t hat t heWashi ngt on Mut ual l oan woul d, i n f act , beseni or t o t he [ Bi shay Tr ust Deed] .

Tr i al Tr . ( Feb. 21, 2012) at 10: 14- 21.

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The bankrupt cy cour t al so made an al t er nat i ve or al f i ndi ng

that:

t he Pl ai nt i f f has al so pr esent ed evi dencesuf f i ci ent t o suppor t a f i ndi ng [ ] t hat t he

doct r i ne of equi t abl e subor di nat i on shoul dappl y as wel l . So, j udgment wi l l be i n f avorof t he Pl ai nt i f f .

I d. at 13: 3- 6.

Fi nal l y, t he bankr upt cy cour t st at ed i t s ul t i mat e f i ndi ng

t hat , under ei t her t heor y, t he Cour t f i nds i n f avor of t he

Pl ai nt i f f , Ri char d Mar shack t hat t her e was a subor di nat i on

agr eement . I d. at 12: 20- 22.

On March 2, 2012, t he bankr upt cy cour t ent ered a separ ate

wr i t t en J udgment Af t er Tr i al whi ch st at ed:

Af t er consi der i ng the evi dence and hear i ngar gument , and f or t he r easons set f or t h i nt he Cour t s or al f i ndi ngs, I T I S HEREBYADJ UDGED: 1) J udgment i n f avor of t hePl ai nt i f f and agai nst Def endant J OSEPHBI SHAY. 2) The [ Bi shay Tr ust Deed] i s her ebydecl ar ed f ul l y subor di nat e t o t he [ WaMu Tr ustDeed] .

J udgment Af t er Tr i al , Dkt . 86, at 2: 2- 14.

J oseph t i mel y appeal ed t he bankrupt cy cour t s J udgment Af t er

Tr i al and i dent i f i ed onl y one i ssue: Di d t he bankr upt cy cour t

er r i n deci di ng t hat t he [ Bi shay Tr ust Deed] was f ul l y

subordi nat e to the [WaMu Trust Deed] based on a Subordi nat i on

Agr eement t hat has not been f ound, wi t hout maki ng a f i ndi ng as t o

t he wor di ng or cont ent s of t hat subor di nat i on agr eement ?

Appel l ant s St at ement of I ssue on Appeal ( Apr i l 2, 2012) at 2.

As t he Tr ust ee poi nt s out i n hi s openi ng br i ef , J oseph f ai l ed t o

r ai se, as an i ssue on appeal , t he bankrupt cy cour t s al t er nat i ve

f i ndi ng that t he Bi shay Tr ust Deed was subordi nate t o t he WaMu

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Tr ust Deed based on t he doct r i ne of equi t abl e subr ogat i on.

J oseph f i r st addressed t he equi t abl e subr ogat i on i ssue i n hi s

r epl y br i ef .

JURISDICTION

The bankrupt cy cour t had j ur i sdi ct i on under 28 U. S. C.

1334 and 157( b) ( 2) ( K) . J udgment was ent ered on t he i ssue of

t he f ul l subor di nat i on of t he Bi shay Tr ust Deed t o the WaMu

Tr ust Deed. The j udgment i s f i nal because t he j udgment f ul l y and

f i nal l y di sposed of t he pr i or i t y di sput e, t he onl y di sput e t hen

r emai ni ng i n t hi s adver sary pr oceedi ng. See Kashani v. Ful t on

( I n r e Kashani ) , 190 B. R. 875, 882 ( 9t h Ci r . BAP 1995) . Because

t he j udgment under l yi ng J oseph s appeal i s f i nal , we have

j ur i sdi ct i on pur suant t o 28 U. S. C. 158.

ISSUES

A. Whet her J oseph wai ved hi s r i ght t o appeal t he

bankrupt cy cour t s appl i cat i on of equi t abl e subr ogat i on.

B. Whet her t he bankr upt cy cour t er r ed, as a mat t er of l aw,by f i ndi ng subor di nat i on wi t hout f i r st det er mi ni ng al l t he t er ms

and condi t i ons of subor di nat i on.

C. Whet her t he bankr upt cy cour t er r ed, as a mat t er of

f act , by f i ndi ng t he Bi shay Tr ust Deed f ul l y subor di nat e t o t he

WaMu Tr ust Deed.

STANDARD OF REVIEW

We r evi ew " t he bankr upt cy cour t ' s concl usi ons of l aw de novo

and f act ual f i ndi ngs f or cl ear er r or . " Cl ear Channel Out door ,

I nc. v. Knupf er ( I n r e PW, LLC) , 391 B. R. 25, 32 ( 9t h Ci r . BAP

2008) ( ci t at i ons omi t t ed) . A f actual det er mi nat i on i s cl ear l y

er r oneous i f t he appel l at e cour t , af t er r evi ewi ng t he r ecor d, has

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a def i ni t e and f i r m convi ct i on t hat a mi st ake has been commi t t ed.

Anderson v. Bessemer Ci t y, 470 U. S. 564, 573 (1985) .

We r evi ew a bankrupt cy cour t ' s i nt er pr et at i on of Cal i f or ni a

l aw de novo i n or der t o det er mi ne i f i t cor r ect l y appl i ed t hesubst ant i ve l aw. Ki pper man v. Pr oul x ( I n r e Bur ns) , 291 B. R.

846, 849 ( 9t h Ci r . BAP 2003) ; Ast ai r e v. Best Fi l m & Vi deo Cor p. ,

116 F. 3d 1297, 1300 ( 9t h Ci r . 1997) ( i ssues of st at e l aw ar e

r evi ewed de novo) . Mi xed quest i ons of l aw and f act ar e al so

r evi ewed de novo. Murr ay v. Bammer ( I n r e Bammer ) , 131 F. 3d 788,

792 ( 9t h Ci r . 1997) . "A mi xed quest i on of l aw and f act occur s

when t he hi st or i cal f act s ar e est abl i shed; t he r ul e of l aw i s

undi sput ed . . . and t he i ssue i s whet her t he f act s sat i sf y the

l egal rul e. " I d.

DISCUSSION

A. Joseph Waived His Right To Appeal The Bankruptcy CourtsDetermination Based On Equitable Subrogation.

1. The Judgment Based On Equitable Subrogation Was Final.

J oseph ar gues t hat he was not obl i gat ed t o appeal f r om t he

bankrupt cy cour t s det er mi nat i on t hat t he t heor y of equi t abl e

subr ogat i on r esul t ed i n a l oss of t he pr i or i t y of hi s t r ust deed.

He ar gues, t hus, t hat he di d not wai ve hi s r i ght t o appeal t hi s

determi nat i on. He bases hi s ar gument on t he f act t hat t he post

t r i al j udgment does not ment i on equi t abl e subr ogat i on.

Appel l ant s Repl y Br i ef ( J une 21, 2012) at 1. He appar ent l y

cl ai ms t hat because the wr i t t en J udgment Af t er Tr i al di d not

expr essl y st at e t hat subor di nat i on was gr ant ed al t er nat i vel y on

t he theor y of equi t abl e subr ogat i on, t hat a j udgment was not

r endered on t hat t heor y.

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I n t he absence of an or der al l owi ng an i nt er l ocut or y appeal ,

an appel l ant may onl y appeal t o a Bankrupt cy Appel l at e Panel f r om

f i nal j udgment s, or der s, or decr ees of a bankrupt cy j udge.

28 U. S. C. 158( a) . To become f i nal , t he deci si on, or der , ordecr ee must end t he l i t i gat i on or di spose of compl et e cl ai ms of

r el i ef . I n r e Kashani , 190 B. R. at 882. The Ni nt h Ci r cui t t akes

a f l exi bl e appr oach t o det er mi ni ng t he f i nal i t y of a j udgment or

or der such t hat even a mi nut e or der can be a f i nal , appeal abl e

or der i f i t : f ul l y adj udi cat es t he i ssues and cl ear l y evi dences

t he cour t s i nt ent t hat t he or der be t he cour t s f i nal act .

Key Bar I nvs. v. Cahn ( I n r e Cahn) , 188 B. R. 627, 629 ( 9t h Ci r .

BAP 1995) . A cour t s i nt ent i s evi denced by: a cl ear and

unequi vocal mani f est at i on by t he t r i al cour t of i t s bel i ef t hat

t he deci si on made, so f ar as i t i s concer ned, i s t he end of t he

case. Br own v. Wi l shi r e Cr edi t Cor p. ( I n r e Br own) , 484 F. 3d

1116, 1122 ( 9t h Ci r . 2007) ( ci t at i on omi t t ed) . Thi s f l exi bl e

appr oach i s i nt ended t o ensur e that a case does not make t wocompl et e t r i ps thr ough t he appel l at e pr ocess. Lewi s v. Law

Of f i ces of Ni chol as A. Franke ( I n r e Lewi s) , 113 F. 3d 1040, 1043

( 9t h Ci r . 1997) .

Her e, t he bankrupt cy cour t s wr i t t en J udgment Af t er Tr i al

does not speci f i cal l y del i neat e t he i ndi vi dual l egal t heor i es on

whi ch i t i s based. However , t he j udgment does i ncorporate by

expr ess r ef er ence, t he r easons set f or t h i n t he Cour t s or al

f i ndi ngs. J udgment Af t er Tr i al at 2: 2- 3. The use of t he pl ur al

r easons i ndi cat es mor e t han one basi s f or t he j udgment . The

t r i al t r anscri pt evi dences t hat t hose r easons speci f i cal l y

i ncl uded t he bankrupt cy cour t s or al f i ndi ng t hat t he doct r i ne

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of equi t abl e subor di nat i on shoul d appl y as wel l . Tr i al Tr . at

13: 5. I ndeed, t he bankrupt cy cour t made t hi s par t i cul ar

al t er nat i ve f i ndi ng t o make a compl et e recor d i n t he event t her e

i s an appeal . I d. at 11: 1- 2. Ther ef or e, t he or al f i ndi ngscl ear l y evi dence t he bankrupt cy cour t s i nt ent t o gr ant f i nal

j udgment i n f avor of t he Tr ust ee on t he al t er nat i ve basi s of

equi t abl e subr ogat i on.

J oseph s ant i - f i nal i t y ar gument i s not onl y i nconsi st ent

wi t h t he r ecor d, i t i s al so i nconsi st ent wi t h hi s posi t i on on

appeal . The J udgment Af t er Tr i al di d not del i neat e any speci f i c

t heor y on whi ch r el i ef was gr ant ed. Not wi t hst andi ng t hi s

si l ence, J oseph chose t o appeal based on t he assumpt i on t hat t he

j udgment i nvol ved a cont r act ual det er mi nat i on. Not hi ng i n t he

expr ess l anguage of t he J udgment Af t er Tr i al i t sel f , however ,

suppor t s t he asser t i on t hat t hi s basi s f or r el i ef was t he sol e

basi s f or r el i ef or even a basi s f or r el i ef . The J udgment Af t er

Tr i al was equal l y non- speci f i c and si l ent as t o t he cont r actbased subor di nat i on cl ai m.

For t hese r easons, we concl ude t hat t he bankr upt cy cour t

gr ant ed a f i nal j udgment i n f avor of t he Tr ust ee on t he

al t er nat i ve t heor y of equi t abl e subr ogat i on.

2. Joseph Failed To Timely and Appropriately Raise TheEquitable Subrogation Issue On Appeal.

An appel l ant i s r equi r ed t o serve and f i l e a st at ement of

i ssues on appeal . Fed. R. Bankr. P. 8006. I ssues not i ncl uded

i n t he st at ement of i ssues may be deemed wai ved. Woods v. Pi ne

Mount ai n, Lt d. ( I n r e Pi ne Mount ai n, Lt d. ) , 80 B. R. 171, 173

( 9t h Ci r . BAP 1987) ( hol di ng t hat appel l ant wai ved t he i ssue of

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bankrupt cy cour t s r ef usal t o consi der par ol evi dence when t he

i ssue was not i ncl uded i n t he st at ement of i ssues) . An appel l ant

must al so rai se and ar gue an i ssue i n i t s openi ng br i ef or t he

i ssue wi l l be wai ved. Seven Wor ds LLC v. Net wor k Sol ut i ons,260 F. 3d 1089, 1097 ( 9t h Ci r . 2001) ; see al so McLai n v. Cal deron,

134 F. 3d 1383, 1384 n. 2 ( 9t h Ci r . 1998) ( i ssue ment i oned i n

st at ement of i ssues, but not di scussed i n br i ef i s consi der ed

wai ved) . Fur t her , an ar gument wai ved by t he f ai l ur e t o r ai se i t

i n an appel l ant s openi ng br i ef cannot be r ai sed f or t he f i r st

t i me i n t he appel l ant s repl y br i ef . Al aska Ct r . For Env t v.

Uni t ed St at es For est Ser v. , 189 F. 3d 851, 858 n. 4 ( 9t h Ci r .

1999) .

Her e, J oseph s s t at ement of i ssues does not ment i on

equi t abl e subr ogat i on. The onl y i ssue r ai sed i s, Di d t he

bankrupt cy cour t er r i n deci di ng t hat t he [ Bi shay Tr ust Deed] was

f ul l y subordi nate t o t he [WaMu Trust Deed] based on a

Subordi nat i on Agr eement t hat has not been f ound, wi t hout maki ng af i ndi ng as t o t he wor di ng or cont ent s of t hat subor di nat i on

agr eement ? Appel l ant s St at ement of I ssue on Appeal at 2.

Cor r espondi ngl y, J oseph s openi ng br i ef di scusses t he same si ngl e

i ssue, sl i ght l y re- phr ased as, The Subor di nat i on Agr eement has

not been f ound. Was i t er r or t o make t hat deci si on wi t hout

det er mi ni ng t he wor di ng of t hat subor di nat i on agr eement ?

Appel l ant s Openi ng Br i ef ( May 21, 2012) at 1. Agai n, no ment i on

i s made of equi t abl e subr ogat i on.

The Tr ust ee r ai sed t hi s omi ssi on i n hi s br i ef . Thus,

J oseph, i n hi s r epl y br i ef , event ual l y cont ended t hat t he

bankr upt cy cour t err ed i n gr ant i ng j udgment on a theor y of

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equi t abl e subr ogat i on because t he el ement s of equi t abl e

subr ogat i on wer e not met . Because J oseph r ai ses thi s i ssue f or

t he f i r st t i me i n hi s r epl y br i ef , he wai ved hi s r i ght t o appeal

t he bankrupt cy cour t s j udgment based on t hi s al t er nat i ve t heor y.For t hi s r eason al one, t he t r i al cour t s j udgment must st and.

B. The Bankruptcy Court Did Not Err, As A Matter Of Law, ByFinding Subordination Without First Determining All TheTerms And Conditions Of Subordination.

J oseph cont ends t hat t he subor di nat i on agr eement at i ssue

cannot be l ocat ed and, t her ef or e, t hat i t s t er ms ar e unknown.

J oseph t hen ar gues t hat when t he t er ms of a subor di nat i on

agr eement are not known, t he subordi nat i on agr eement i s voi d.

I n suppor t of t hi s posi t i on, J oseph br i ef l y i dent i f i es cases

t hat he al l eges r equi r e cont r act ual cer t ai nt y i n t he

subor di nat i on agr eement cont ext . Thi s case l aw, however , i s

ei t her di st i ngui shabl e or decl ar at i ve of a non- cont r over si al r ul e

of l aw t hat i s consi st ent wi t h t he bankrupt cy cour t s l egal

det er mi nat i ons.J oseph ci t es t o Resol ut i on Tr ust Cor p v. BVS Dev. , I nc. ,

42 F. 3d 1206 ( 9t h Ci r . 1994) f or i t s st at ement t hat t he l aw i s

wel l set t l ed t hat r i ght s under an agr eement of subor di nat i on

extend t o and ar e l i mi t ed st r i ct l y by the expr ess t er ms and

condi t i ons of t he agr eement . I d. at 1214. Thi s poi nt i s wel l

t aken, but J oseph f ai l s t o even suggest how hi s admi t t ed

agr eement t o subordi nate i s i n any way l ess t han an agr eement t o

f ul l subordi nat i on t o t he WaMu Trust Deed.

Si mi l ar l y, J oseph ci t es t o Weddi ngt on Pr ods. , I nc. v. Fl i ck,

60 Cal . App. 4t h 793 ( 1998) ( ci t i ng Whi t e Poi nt Co. v. Her r i ngt on,

268 Cal . App. 2d 458 ( 1968) ) and Rof f i nel l a v. Sher i ni an,

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6 Nei t her Weddi ngt on Prods. nor Whi t e Poi nt e Co. ar edi r ect l y appl i cabl e on t he f act s. They bot h r ef er t osubordi nat i on agr eement cases, but do not anal yze t heenf or ceabi l i t y of a subor di nat i on cl ause.

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179 Cal . App. 3d 230, 239 ( 1986) t o make t he poi nt t hat

subor di nat i on pr ovi si ons f ound t o be uncer t ai n, i ndef i ni t e, and

i ncapabl e of ascer t ai nment by r ef er ence t o an obj ect i ve st andar d,

have been deemed voi d f or t he uncer t ai nt y of a mater i alpr ovi si on. I d. at 817. 6 But agai n, J oseph f ai l s t o i dent i f y any

poi nt of uncer t ai nt y r el at ed t o hi s agr eement t o subor di nat e,

much l ess a mater i al one.

Last l y, J oseph r el i es on Kr asl ey v. Super i or Cour t ,

101 Cal . App. 3d 425, 430 ( 1980) t o suggest t hat when a

subor di nat i on agr eement i s uncer t ai n, t r ade usage and cust om

cannot be used t o f i l l t he gaps. The f act s of Kr asl ey, however ,

ar e f ar f r om t he f act s her e. The t r ade usage di scussi on ar ose i n

anot her cont ext and per t ai ned t o the cour t s det er mi nat i on t hat a

document ent i t l ed a count er count er of f er coul d not be t r eat ed

as an accept ance of a pr i or of f er . I d. The subor di nat i on

di scussi on i n Kr asl ey r el at ed t o an al t er nat i ve basi s f or

concl udi ng t hat a cont r act di d not ar i se. The Kr asl ey cour tf ound t hat i ncl usi on of t he t er m Sel l er t o subor di nat e t o a

Const r uct i on Loan . . . was not suf f i ci ent l y speci f i c t o bi nd

t he el der l y and i l l sel l er s who r esponded onl y wi t h a count er

of f er . I d. J oseph, i n cont r ast , knew t he l oan as t o whi ch hi s

subor di nat i on agr eement appl i ed.

I n summar y, J oseph s cases al l concer n t he cont r act ual

r equi r ement of cer t ai nt y, i n some cases i n t he subor di nat i on

agr eement set t i ng. These r ul es gener al l y appl y t o deny

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enf orcement of a subordi nat i on agr eement where a par t y agr eed t o

subordi nate i n t he f ut ur e to an unknown amount of addi t i onal

secur i t y and wher e mat er i al deal t er ms of t hat f ut ur e l oan ar e

unknown. The cer t ai nt y r equi r ement s then oper at e t o l i mi t t hescope of an ot her wi se open ended agr eement t o onl y t he amount

t hat was wi t hi n t he subor di nat i ng par t i es obj ect i ve i nt ent at

t he t i me of cont r act i ng. Her e, J oseph never st at es that hi s

obj ect i ve i nt ent was anyt hi ng ot her t han f ul l subor di nat i on.

Under Cal i f or ni a l aw, cont r act f or mat i on r equi r es mut ual

consent of t he par t i es. Cal . Ci v. Code 1561; 1 Wi t ki n Summar y

of Cal i f or ni a Law ( 10t h ed. 2005) Cont r act s, 116 p. 155. Such

mutual consent may be det er mi ned based on t he r easonabl e meani ng

of t he words and act i ons of t he par t i es. Weddi ngt on Prods. ,

60 Cal . App. 4t h at 811. The cont r act s t er ms must be cer t ai n i n

mat er i al r espect s, but t he exi st ence of mi nor ar eas of

di sagr eement wi l l not r ender t he cont r act voi d and ent i r el y

unenf or ceabl e. I d. at 811- 12. Consi st ent wi t h t he gener alr equi r ement s of Cal i f or ni a l aw i n t he ar ea of cont r act s, a

subor di nat i on agr eement must be i nt er pr et ed to enf or ce t he

obj ect i ve i nt ent of t he par t i es. Br at cher v. Buckner ,

90 Cal . App. 4t h 1177, 1186 ( 2001) .

Cour t s ar e caut i ous when asked t o enf orce agr eement s t o

subor di nate t o uncer t ai n and f ut ur e f i nanci ng of unknown t er ms.

See Roskamp Manl ey Assocs. , I nc. v. Davi n Dev. & I nv. Corp. ,

184 Cal . App. 3d 513 ( 1986) . A subordi nat i on agr eement ,

notwi t hst andi ng, may be enf orceabl e even i n t he absence of

absol ut e cer t ai nt y as to al l cont r act t er ms. I n Resol ut i on Tr ust

Cor p. , t he subor di nat i ng par t y was a sel l er who t ook back a l oan

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and secur i t y f r om t he buyer and al so agr eed t o subor di nat e to

f ut ur e const r uct i on f i nanci ng. 42 F. 3d at 1210. The Resol ut i on

Tr ust Cor p. cour t f ound t he under l yi ng subor di nat i on agr eement

enf or ceabl e despi t e some l ack of cer t ai nt y as t o t er ms of t hi sf i nanci ng at t he t i me of subor di nat i on. I d. at 1214. See al so

I nt l Mor t g. Bank v. Eat on, 39 Cal . App. 39 ( 1918) ( hol di ng t hat

an execut ed agr eement t o subordi nate was enf orceabl e where t here

was no speci f i cat i on of i nt er est r at e, subor di nat ed amount , or

use of t he f ut ur e seni or l oan pr oceeds. ) I n Kr asl ey, i n

cont r ast , t he cour t f ound no cont r act and no subor di nat i on

agr eement wher e the agr eement was ent i r el y open- ended.

101 Cal . App. 3d at 431. I n shor t , t her e ar e si t uat i ons wher e t he

l aw wi l l not enf orce a subordi nat i on agr eement because t he t erms

ar e so uncer t ai n t hat t he cour t cannot f i nd a meet i ng of t he

mi nds. Cal i f or ni a l aw, however , does not r equi r e 100% cer t ai nt y.

J oseph s si t uat i on i s not anal ogous t o t he Kr asl ey f act s.

The bankr upt cy cour t det er mi ned as a f act ual mat t er t hat J oseph st est i mony evi denced an obj ect i ve i nt ent t o subor di nat e the Bi shay

Tr ust Deed t o t he WaMu Tr ust Deed. I t i s cl ear t hat J oseph knew

t hat t he WaMu l oan woul d be used t o r epay exi st i ng l oans secur ed

by al r eady seni or t r ust deeds. Thus, t hi s det er mi nat i on l eaves

no r eal ambi gui t y regar di ng i t s scope.

And, per haps mor e i mpor t ant l y, J oseph never speci f i es any

unknown f eat ur e of t hi s subor di nat i on. Havi ng conceded t hat he

subor di nat ed hi s t r ust deed, t he bur den shi f t ed t o J oseph t o

speci f y any ar ea where he di d not agr ee t o subordi nat i on and

wher e, as a r esul t , subor di nat i on cannot be r equi r ed. He coul d

not r emai n si l ent and pr evai l .

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Ther ef or e, t he bankrupt cy cour t di d not er r i n f i ndi ng t hat

J oseph subor di nat ed t he Bi shay Tr ust Deed t o t he WaMu Tr ust Deed

even t hough he al l eges t hat unspeci f i ed t er ms of t he

subordi nat i on agr eement r emai n uncl ear . Enough i s known t o makecl ear t hat subor di nat i on occur r ed, and t her e i s no evi dence of a

mat er i al t er m i n di sput e.

C. The Bankruptcy Court Did Not Err, As A Matter Of Fact, ByFinding The Bishay Trust Deed Fully Subordinate To The WaMuTrust Deed.

The Pr e- Tr i al Or der descr i bes t he r el evant t r i al i ssues of

f act as:

3. Whet her J oseph Bi shay has agr eed t hathi s deed of t r ust i s subor di nat e t o t hat oft he Washi ngt on Mutual Bank deed of t r ust .4. Whet her J oseph Bi shay agr eed t osubor di nat e hi s deed of t r ust t o t heWashi ngt on Mut ual Deed of t r ust obt ai ned byMar si l Bi shay agai nst t he Subj ect Pr oper t y.

Pr e- Tr i al Or der at 6.

I t al so cont ai ned st i pul at ed f act s t hat evi dence an

agr eement t o subordi nate. Admi t t ed f act s whi ch are agr eed uponi n a pr e- t r i al or der gi ve r i se t o an i nf er ence t hat must be

r ebut t ed by opposi ng evi dence. Har di ng v. Hal l ( I n r e Hal l ) ,

2006 WL 6810950, *2 ( 9t h Ci r . BAP Aug. 14, 2006) ; see al so

J aur egui v. Ci t y of Gl endal e, 852 F. 2d 1128 ( 9th Ci r . 1988)

( r ecogni zi ng t hat f act s admi t t ed by the def endant i n a pr e- t r i al

or der est abl i shed pl ai nt i f f ' s pr i ma f aci e case whi ch gave r i se t o

a pr esumpt i on r equi r i ng evi dent i ar y r ebut t al ) . J oseph f ai l s t o

i dent i f y any al l eged l i mi t at i on as t o t he ext ent of hi s admi t t ed

agr eement t o subor di nat e. Thus, t he bankrupt cy cour t di d not er r

i n f i ndi ng t hat J oseph ent i r el y subor di nat ed t he Bi shay Tr ust

Deed based on t he admi t t ed f acts i n t he Pre- Tr i al Or der .

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On appeal , J oseph does not di r ect l y cont est any of t he

bankrupt cy cour t s f i ndi ngs of f act . I ndeed, as t hey ar e based

on hi s st i pul at i ons i n t he Pr e- Tr i al Order , i t i s di f f i cul t t o

see how he coul d do so. As t he Tr ust ee cor r ect l y poi nt s out ,however , J oseph s st atement of t he i ssue on appeal can be

i nt erpr eted i n a number of ways, and J oseph may ar gue t hat t he

bankrupt cy cour t er r ed i n f i ndi ng t hat he f ul l y r at her t han

par t i al l y subor di nat ed.

I n par t i cul ar si t uat i ons, wher e a subor di nat i on agr eement

r el at es t o an unknown f ut ur e i ndebt edness, t he subor di nat i ng

par t y may be hel d t o have onl y par t i al l y subor di nat ed t o t he

amount t hat was wi t hi n i t s obj ect i ve i nt ent at t he t i me of

cont r act i ng. See gener al l y Wel l s Far go Bank v. Nei l sen,

178 Cal . App. 4t h 602, 615- 17 ( 2009) ( l i mi t i ng subordi nat i on amount

t o t hat whi ch was wi t hi n t he obj ect i ve i nt ent of t he

subor di nat i ng l ender i n a ci r cui t y of l i ens cont ext ) . Her e,

however , t her e i s no ambi gui t y i n t he evi dence; t he bankrupt cycour t r el i ed on J oseph s own t est i mony and agr eement i n i t s

determi nat i on t hat J oseph subordi nated t he Bi shay Tr ust Deed and

was i n second posi t i on behi nd t he ent i r ety of t he WaMu Trust

Deed.

Thi s ul t i mat e f act i s evi denced by J oseph s admi t t ed

t est i mony t hat : . . . he subor di nat ed hi s t r ust deed t o t he

Washi ngt on Mut ual Deed of t r ust , ( Pr e- Tr i al Or der at 4: 11- 12)

and t hat : he under st ood t hat hi s deed of t r ust was i n second

posi t i on behi nd t he new deed of t r ust obt ai ned by Mar si l Bi shay

i n f avor of Washi ngt on Mut ual . Pr e- Tr i al Or der at 4: 18- 20.

Thus, t he bankrupt cy cour t cor r ect l y f ound t hat subor di nat i on

7/25/2019 In re: James F. Bishay, 9th Cir. BAP (2012)

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occur r ed.

I t i s al so cl ear on t hi s r ecor d t hat J oseph knew i n

connect i on wi t h t hi s gener al agr eement t o subor di nat e that hi s

mother woul d use t he WaMu Loan pr oceeds t o pay of f exi st i ngseni or l i ens and t hat WaMu woul d, t hus, enj oy the same pr i or i t y

over hi s l i en t hat was enj oyed by the pr i or seni or l ender s.

J oseph of f er s no count er evi dence. Ther ef or e, t he r ecor d

suppor t s t he bankrupt cy cour t s det er mi nat i on t hat J oseph

obj ect i vel y i nt ended t o f ul l y subor di nat e. Agai n, J oseph

advances no evi dence t o t he cont r ary.

CONCLUSION

For t he r easons st ated above, we AFFI RM t he j udgment of t he

bankrupt cy cour t .