- BAP Nos. CC-14-1017-PaTaKu; CC-14-1073-PaTaKu (unpublished)
- In an unpublished decision, the BAP found dismissal of an adversary proceeding brought by a Chapter 7 debtor was proper under Rule 12(b)(6) because a Chapter 7 debtor lacks standing to assert claims that are property of the estate and under the exclusive control of a Chapter 7 Trustee who has not otherwise abandoned or assigned the claims. The Bankruptcy Court also did not abuse its discretion granting the secured lender stay relief based on a long history of non-payment, lack of equity in the property, and the Debtor's serial filings. The BAP also sua sponte noted that the automatic stay actually never arose in this case under Section 362(c)(4)(A)(i), because that provision provides "the stay shall not go into effect" in an individual or joint debtor's third or successive Chapter 7 case if the debtor has filed two or more Chapter 7 cases that were dismissed (other than a case refiled under a different chapter after dismissal under Section 707(b)) within the previous year.
- Procedural context:
- Consolidated appeals from a bankruptcy court order granting automatic stay relief in a Chapter 7 case and a separate order dismissing an adversary case filed by the Chapter 7 Debtor.
- In 2007, Debtor and her husband borrowed approximately $400,000 from IndyMac to purchase a house. The note was secured by a deed of trust. Over the next several years, the deed of trust was assigned multiple times, ultimately ending up with Ocwen. The Debtor defaulted in late 2009 and a Notice of Trustee sale was provided in April 2013. The Debtor was a serial filer. Her first two Chapter 7 petitions, filed in January and February 2013, respectively, were both dismissed for failure to file required papers. A third Chapter 7 was filed in March 2013 and remained open at the time of the instant case, but a discharge had not been entered because Debtor failed to file the required credit counseling certificate. This appeal arose out of Debtor's fourth case filed within a year--a Chapter 7 filed in July 2013. In the fourth case, Ocwen filed a stay relief motion under several provisions of Section 362(d). The bankruptcy court granted relief, determining the fourth case was an abuse of the bankruptcy system, particularly in light of Debtor's serial filing history and long-term failure to pay anything toward the note. Prior to Ocwen being granted stay relief, the Debtor filed a cryptic pro se adversary complaint against all parties who, either in the past or present, held an interest in the note or deed of trust--requesting quiet title relief and asserting various violations of California statute. While the debtor listed both herself and the Trustee as the plaintiff, the Trustee promptly filed a "Notice of Improper Filing of Pleadings" advising that the Trustee did not authorize the adversary proceeding. Several defendants moved to dismiss on the basis the debtor lacked standing to bring the claims because the Chapter 7 trustee was the sole party authorized to do so. The Bankruptcy Court agreed. The Debtor appealed both the order granting stay relief and the order dismissing the adversary case.
- PAPPS, TAYLOR, and KURTZ, Bankruptcy Judges.
3217 in the system
1 Being Processed