Fadel v. DCB United LLC (In re Fadel)

Summarized by Mark Hudson , Schian Walker, PLC
12 years 9 months ago

Citation:

Not available

Tag(s):

Ruling:

The Ninth Circuit BAP AFFIRMED the Bankruptcy Court granting of relief from the automatic stay to permit a purchaser at foreclosure sale to pursue a forcible detainer action against the debtor in state court and denying motion for reconsideration.

Procedural context:

Appeal from Bankruptcy Court orders granting relief from the automatic stay to purchaser of debtor's real property to proceed with forcible detainer (eviction) of debtor; denying debtor's motion for reconsideration; and granting debtor a stay pending appeal. Debtor appealed to the Ninth Circuit BAP.

Facts:

The chapter 13 debtor, a married woman filing alone, attempted to dispute ownership of real property that was titled solely in her husband's name; which property had been sold at a foreclosure auction. The purchaser sought relief from stay to evict the debtor and her husband from the purchased property. While acknowledging that California law provides for a rebutable presumption that property acquired during marriage is community property, the BAP affirmed that this presumption is trumped by another rebutable presumption, that the form of title, coupled with the consent of the other spouse, reflects actual ownership as the sole and separate property of the spouse holding legal title. The Bankruptcy Court found that the property was not protected by the automatic stay because it was not part of the debtor's estate The BAP agreed with the Bankruptcy Court as to ownership and also rejected the argument that the marital community held a "pro tanto" interest in the Property by virtue of presumably community funds (wages) being used to pay the debt. The BAP also concluded that the codebtor stay did not apply because the debtor was not a "debtor" as to the debt secured by the Property. Importantly, the BAP refused to adopt the Fifth Circuit holding in Brown v. Chesnut, 422 F.3d 298, that an "arguable" interest in property, even if it later turns out to be nonexistent, is sufficient for the property to be protected by the automatic stay. The BAP had two rationales for this. First, it would render recording systems nugatory. Second, the evidence did not support that the debtor held any interest in the Property. Finally, the BAP ruled that the Bankruptcy Court did not abuse its discretion in refusing to grant the reconsideration motion because (a) Mrs. Fadel waived the argument on appeal and (b) even if she had not, she improperly raised new issues in the motion that she could have raised earlier and rehashed arguments already presented.

Judge(s):

Kircher, Dunn and Markell (BAP Ninth Circuit)

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