Dobos v. People`s Bail Bonds; Harry Kassabian (In re Dobos)

Case Type:
Case Status:
CC-18-1239-FLKu (9th Circuit, Aug 02,2019) Published
A creditor seeking to enforce an avoided lien needs to ensure that the lien does not otherwise expire during the course of the litigation or appeal. In this case, a judgment creditor whose lien had been avoided filed a motion to reopen the debtor's bankruptcy case but then failed to take further action for two years. In the meantime, the judgment lien expired under state law. As a result, the bankruptcy court's dismissal of the nondischargability action was affirmed. Further, a motion to dismiss filed after an answer has been filed is still proper under Rule 12(c) or 12(h)(2).
Procedural context:
The bankruptcy court granted a debtor's motion to dismiss judgment creditors' adversary proceeding seeking to have a judgment lien deemed nondischargable. The bankruptcy court ruled that the judgment creditors' failure to act to preserve their judgment liens during the pendency of the bankruptcy case and the subsequent motion to reopen the bankruptcy case made it proper for the court to dismiss the case on the pleadings alone.
Agneta Dobos was arrested and, unfortunately for her, got her bond from People's Bail Bonds and Harry Kassabian (the "bondsmen"). Kassabian met with Ms. Dobos, decided that she was a flight risk, revoked her bond, refunded her money, and took her back to jail. Dobos sued the bondsmen, but the bondsmen got a judgment against Dobos for their attorney's fees in the amount of $52,000. The bondsmen recorded their judgment in 2007, which became a junior lien on on Dobos' real property. On October 25, 2013, Dobos filed a chapter 13 petition, which scheduled the bondsmen's judgment lien and listed the bondsmen and their attorney at the addresses on the 2007 lien. Dobos filed a motion to avoid the lien under 11 U.S.C. § 522(f), and served the motion on the addresses in her petition and schedules. The bondsmen did not oppose the motion; and the bankruptcy court granted the motion. Dobos was granted a discharge on February, 2014. On September 1, 2015, Kassabian filed a motion to reopen Dobos' bankruptcy case, claiming that he was not served with notice of Dobos' petition, the motion to avoid his lien, or the lien avoidance order. Kassabian then took no action to prosecute his motion for more than two years, during which time the bondsmen's judgment lien expired under California state law (Cal. C. Civ. P. § 683.020). Dobos did not oppose Kassabian's motion to reopen her bankruptcy case. In January 2018, the bankruptcy court granted Kassabian's motion to reopen, and the bondsmen filed an adversary proceeding against Dobos seeking to declare the judgment debt nondischargeable under 11 U.S.C. §§ 523(a)(2), (3)(B), and (6). Dobos filed an answer with only one affirmative defense, the statute of limitations. Three months later, she filed a motion to dismiss, arguing among other things that the judgment lien was no longer enforceable because the bondsmen failed to renew it before the 10-year period of effectiveness had expired. The bondsmen failed to timely file an objection to the motion to dismiss, and filed a response the day before the hearing. At the hearing, the bankruptcy court announced that it would not consider the bondsmen's arguments and further stated that their arguments "border[ed] on being frivolous."

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