Unpublished Disposition, 844 F.2d 791 (9th Cir. 1984)

MEMORANDUM^* 

Cardinal Enterprises ("Cardinal") appeals from the order of the Bankruptcy Appellate Panel ("BAP") affirming the bankruptcy court's dismissal of Cardinal's adversary claim. Cardinal sought to set aside the nonjudicial foreclosure sale of a deed of trust by Far West Federal Bank ("Far West") as a fraudulent transfer under 11 U.S.C. § 548. Cardinal contends that In re Madrid, 725 F.2d 1197 (9th Cir.), cert. denied, 469 U.S. 833 (1984), which held that a nonjudicial foreclosure sale does not constitute a "transfer" under 11 U.S.C. § 548, was incorrectly decided. We affirm the BAP's decision.

* Standard of Review

Because this court is in as good a position as the BAP to review the findings of a bankruptcy judge, we independently review the bankruptcy court's decision without deference to the BAP's decision. In re Center Wholesale, Inc., 759 F.2d 1440, 1445 (9th Cir. 1985) (citations omitted). We review the bankruptcy court's findings of fact under the clearly erroneous standard and its conclusions of law de novo. Pizza of Hawaii, Inc. v. Shakey's, Inc., 761 F.2d 1374, 1377 (9th Cir. 1985). Here, the issue of whether fraudulent "transfers" under 11 U.S.C. § 548(d) (1) include trust deed sales is purely legal and thus reviewed de novo. See id.

II

Discussion

Cardinal contends that the bankruptcy court erred in refusing to set aside the foreclosure sale of its interest in a trust deed as a fraudulent transfer under 11 U.S.C. § 548. Cardinal contends that out-of-circuit caselaw and the 1984 Congressional amendments to the Bankruptcy Code establish that the controlling Ninth Circuit case, In re Madrid, 725 F.2d 1197 (9th Cir.), cert. denied, 469 U.S. 833 (1984), was incorrectly decided. This contention is without merit.

The version of 11 U.S.C. § 548(a) (2) (A) and (B) (1) applicable to these proceedings provides:

The trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of the filing of the petition, if the debtor ... received less than a reasonably equivalent value in exchange for such transfer or obligation; and ... was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation....¹ 

"Transfer" is defined in the applicable version of 11 U.S.C. § 101 as "every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an interest in property, including retention of title as a security interest." 11 U.S.C. § 101(40) (1979). This court has held that a noncollusive and regularly conducted foreclosure sale is not a "transfer" under the pre-1984 amendments version of sections 101 and 548(a) (2) (A). In re Madrid, 725 F.2d at 1199. The 1984 amendments to the Bankruptcy Code expressly include the "foreclosure of the debtor's equity of redemption" under the definition of "transfer," 11 U.S.C. § 101(50) (Supp.1987), but those amendments do not apply to the case at hand.

Cardinal contends that In re Madrid was incorrectly decided because the 1984 amendments to the Bankruptcy Code, coming less than six months after the filing of the opinion in In re Madrid, demonstrate that Congress sought to overrule this court's limited definition of "transfer." However, we are bound by the holding in In re Madrid. See Royal Dev. Co., Ltd. v. N.L.R.B., 703 F.2d 363, 368 (9th Cir. 1983) (ordinarily, a decision of a panel of our court may not overturn a previous panel decision).

We may reexamine an earlier case to determine its validity if its precedent has been effectively undermined. Heath v. Cleary, 708 F.2d 1376, 1378-79 n. 2 (9th Cir. 1983). However, In re Madrid has not been undermined. First, the 1984 amendments were not made retroactive; rather, they were only made effective for cases filed after October 10, 1984. Pub. L. 98-353, Sec. 553, 98 Stat. 365 (1984). Second, the legislative history contains an explicit reference to In re Madrid and contrary authority of other circuits and expressly states that the passing of the 1984 amendments was not intended to intimate any view as to the correctness of those decisions. 130 Cong. Rec. S13771-13772 (daily ed. Oct. 5, 1984) (statements of Sen. DeConcini and Sen. Dole).

Cardinal contends that the panel should recommend en banc consideration of this case. We reject that contention.

CONCLUSION

Affirmed.