Cruz v. Stein Strauss Trust (In re Cruz)

Summarized by Joel Newell , Ballard Spahr, LLP
11 years 6 months ago

Citation:

Cruz v. Stein Strauss Trust (In re Cruz) 9th Cir. BAP Case No. CC-13-1554-KiTaD (August 29, 2014)

Tag(s):

Ruling:

Stein Strauss Trust #1361 (“SS Trust”) was a party-in-interest based on its pecuniary interest; therefore, it was a real party in interest. The Property was not property of the estate, but it was property of the Debtor. Therefore, the automatic stay was still applicable. However, there was no stay violation based on the bankruptcy court's annulment of the stay.

Procedural context:

Guido Cruz (“Debtor”) appeals the order of the bankruptcy court for the Central District of California granting the motion of PDQ Investments, LLC as trustee for the SS Trust to annul retroactively the automatic stay or, in the alternative, to confirm that no stay was in effect, and he appeals the order denying reconsideration of the prior order.

Facts:

Mr. Doo Ko ("Ko") obtained a loan from IndyMac Bank, FSB (“IndyMac”) to purchase a residence located on Stein Strauss Street in Fullerton, California (“Property”). The loan defaulted and for three years no trustee sale was held. It was discovered that the reason was based on Mrs. Ko filing not less than six bankruptcy during that time period. IndyMac was granted stay relief in the Ko bankruptcy and the order included a bad faith filing wherein there was a two year in rem bar contained in the order that expired May 31, 2013. Debtor filed bankruptcy two week prior to the expiration of the in rem bar. However, based on the Debtor's failure to file the required documents by July 11, 2013, the bankruptcy court entered an order dismissing the case on July 17, 2013. Debtor did not appeal the dismissal order. Ko, who now held only an 80% interest in the Property, executed a grant deed purporting to transfer a 5% interest in the Property to the Debtor. The Debtor's Deed was recorded at 12:52 p.m. on July 15, 2013. On that same day at approximately 2:18 p.m., the Property was sold by the lender at a trustee’s sale to SS Trust, who was the highest bidder.

Judge(s):

Honorable KIRSCHER, TAYLOR and DUNN.

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