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In re Sterling Mining Co.

May 5, 2010

IN RE: STERLING MINING COMPANY, DEBTOR.
SUNSHINE PRECIOUS METALS, INC., APPELLANT,
v.
STERLING MINING COMPANY, APPELLEE.



The opinion of the court was delivered by: Honorable Edward J. Lodge U. S. District Judge

Bk. Case No. 09-20178-TLM

MEMORANDUM ORDER

Pending before the Court in the above-entitled matter is Appellant Sunshine Precious Metals, Inc.'s appeal from the decisions of Bankruptcy Judge Terry L. Myers approving the lease assumption and ordering it to deliver possession. The parties have submitted their responsive briefing and the matter is now ripe for the Court's review. Having fully reviewed the record herein, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the court conclusively finds that the decisional process would not be significantly aided by oral argument, this matter shall be decided on the record before this court without oral argument.

FACTUAL BACKGROUND

On March 3, 2009, Debtor-Respondent Sterling Mining Company filed a voluntary chapter 11 bankruptcy petition that listed as an asset to the bankruptcy estate an interest in a lease agreement pertaining to the Sunshine Mine located in Kellogg, Idaho (the "Mine"). Appellant Sunshine Precious Metals, Inc. owns the Mine which it had leased to the Debtor under the terms of a written lease agreement (the "Lease") since 2003. On March 25, 2009, Debtor filed a motion to assume the lease under Bankruptcy Code § 365 and a motion for turnover possession of the Mine. The Bankruptcy Court issued Memorandums of Decision and Orders granting both motions which are the basis of this appeal.*fn1 Appellant argues the Bankruptcy Court erred in its factual and legal determinations.

STANDARD OF REVIEW

Factual findings of the Bankruptcy Court are reviewed by this court by applying a "clearly erroneous" standard. Fed. R. Bankr. P. 8013. Legal conclusions of the Bankruptcy Court are subject to a de novo review by this Court. Fed. R. Bankr. P. 8013. As a general rule, the Court will not consider an issue raised for the first time on appeal. United States v. Robinson, 20 F.3d 1030 (9th Cir. 1994).

ANALYSIS

I. Mootness

Debtor argues this appeal is moot or subject to dismissal on equitable grounds.

(Dkt. No. 16, p. 7). A reversal of the Bankruptcy Court's decisions at this stage, Debtor asserts, would create an unmanageable situation given the actions taken by the parties in reliance upon those decisions. In sum, the Debtor contends that a reversal would reverse several transactions, financing, and payments made to third parties. Appellant counters that the appeal is not moot because the Debtor has not shown that it is impossible for the Court to provide some effective relief.

"In general, the party asserting mootness 'has the heavy burden of establishing that there is no effective relief remaining for a court to provide.'" Suter v. Goedert, 504 F.3d 982, 986 (9th Cir. 2007) (citations omitted). Although the Debtor here has presented a compelling case, the Court finds the appeal is not moot because it seems possible to award relief to the Appellant were it to prevail on the appeal. It is true that much has occurred in reliance upon the Bankruptcy Court's decisions and orders. Relief from those decisions, however, still may be possible. Accordingly, the Court will consider the merits of the appeal.

II. Termination of the Lease

Appellant argues the Bankruptcy Court erred in finding that the parties had not terminated the Lease. Pointing to facts occurring mainly in February of 2009, Appellant contends the intent of the parties to terminate the Lease was evidenced by the conduct and statements of the parties. The Bankruptcy Court considered the events argued by the Appellant but concluded that the parties had not terminated the Lease. (BK Dkt. No. 131, ER000623). In particular, the Bankruptcy Court noted that the statements and actions made in ...


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