In re- GUINEVERE MARIE MALLEY

Case Type:
Business
Case Status:
Dismissed
Citation:
21-1020 (9th Circuit, Oct 21,2021) Not Published
Tag(s):
Ruling:
The U.S. Bankruptcy Appellate Panel of the Ninth Circuit (BAP) dismissed the appeal, filed by Thee Aguila, Inc. (TA), of the denial of its motion for reconsideration of a retroactive stay relief order issued by the U.S. Bankruptcy Court for the Central District of California (BC) in favor of Pico Rivera First Mortgage Investors (PR) for one simple reason: TA's purported lack of constitutional standing.
Procedural context:
Having, in the course of a foreclosure sale, sold property legally owned by Guinevere Malley (DR) but encumbered by a deed of trust held by TA after the latter's default years after the DR had confirmed her chapter 13 plan, PR sought a comfort order from the BC that this transaction did not violate the automatic stay via a motion filed in the DR's main case on November 10, 2020 (Relief Motion). It did so because the principal of TA, Henry Aguila (HA), had mused that the foreclosure, which indisputably disposed of property ostensibly subsumed within the still extant estate of a chapter 13 debtor, certainly violated the automatic stay and that this violation surely impacted the sale in the midst of his deposition, all part of years of state litigation between PR and both TA and HA kicked off by PR's conduct. Even though PR, HA, and TA had ended years of state court litigation with a settlement agreement only days after the filing of the Relief Motion--and even though the BC had annulled the hearing and granted the request made therein by order dated December 10, 2020--TA filed a motion for reconsideration and a request to set aside the order annulling the stay on December 21, 2020. After hearing argument, the BC denied this plea because TA, a non-party to the DR's bankruptcy, had no standing to move the bankruptcy court to reconsider the annulment order. TA timely appealed.
Facts:
Guinevere Malley (DR) filed a chapter 13 petition on February 10, 2015, and confirmed her plan on April 28, 2015. She never listed either TA or PR in its schedules, and neither was involved in the DR's bankruptcy until PR filed its motion to annual the automatic stay. In the summer after confirmation, TA obtained a $5,700,000 loan from PR secured by a deed of trust on real property (the Property). In 2017, TA defaulted on the loan, but also recorded a deed of trust with a face value of $2,000,000 in favor of DR, allegedly to secure a debt it owed the DR for past due legal fees. Though well-aware of it, the DR neither reported the deed of trust to the bankruptcy court nor amended her schedules to include the deed or the alleged obligation that it secured. On December 6, 2017, PR held a foreclosure sale on the Property and gave notice of the sale to DR as a junior lienholder. Neither the DR nor TA objected to the sale or informed PR of the bankruptcy. PR purchased the Property by credit bid and obtained title and later sold the Property to an unrelated third party. Naturally, after closing, state court litigation ensnared PR and both TA and HA, whose remarks regarding the automatic stay in a 2020 deposition engendered the underlying suit.
Judge(s):
Mary Jo Heston; William J. Lafferty III; and Scott H. Gan

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