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Summarizing by Amir Shachmurove


Case Type:
Case Status:
21-1035 (9th Circuit, Jun 07,2022) Not Published
The U.S. Bankruptcy Appellate Panel of the Ninth Circuit (BAP) affirmed the decision of the U.S, Bankruptcy Court for the Southern District of California (BC) that reopened an adversary proceeding, a prepetition state court action that had been removed to the BC, administratively closed by clerk's office after the dismissal of the bankruptcy case of Isha Deen (ISD), and, upon reopening, remanded the removed action to the state court for decision, as requested by Sana Deen (SAD), Sidrah Deen (SID), and Chodry Deen (CHD), appellees and opposed by ISD and her spouse, Kevin Khwaja (KEK).
Procedural context:
Prior to the deadline for the appellees to tender a motion to remand a state court case removed to the BC upon the DR's chapter 13 filing, ISD moved to dismiss her case. The BC granted this request on April 9, 2020, and the main case was closed on June 8, 2020. On April 10, 2020, the day after ISD's bankruptcy case was dismissed, the clerk issued a Notice to Parties under Local Rule 7041-2 in the adversary proceeding that warned: "[T]his adversary proceeding will likewise be closed unless a party files a motion seeking continuation of the adversary proceedings within seven (7) days of the entry of this notice." As no one sought a continuation by the deadline, the clerk properly closed the adversary. Months later, ISD informed the state court that, because she had unilaterally dismissed the state court action in her bankruptcy,. it now lacked jurisdiction. At first, the appellee filed a reques for remand and order to remand; after filing was denied due to the closure of the "case," they filed a motion to reopen under Rule 5010. Ultimately, the BC determined that it had the discretion to reopen the adversary proceeding because no final order or judgment had been entered and proceeded to make findings supporting remand under Citigroup, Inc. v. Pacific Investment Management Co. (In re Enron Corp.), 296 B.R. 505, 508 n.2 (C.D. Cal. 2003). ISD and KEK timely appealed
The prepetition state court action was a family affair. SID, SAD, and ISD, are sisters; CHD, now deceased, was their father, and KEK is ISD's husband. The six-year dispute between the parties centers on ownership interests in a residence known as the El Brazo property, where the parties reside together, or at least did at one time. Over time this quintet split into two groups: SID, SAD and CHD (or "perhaps" CHS's estate) versus ISD and KEK. In 2016, the latter two filed suit against the appellees in the state court alleging various claims concerning the El Brazo property, including quiet title. Appellees responded with a cross-complaint which included, among other things, a competing claim for quiet title (the State Court Action). The state court bifurcated the State Court Action, setting for trial only the cross-claim for quiet title. After a bench trial, the state court issued a decision regarding quiet title, which the parties appealed. The cross-appeal of the quiet title order was dismissed as interlocutory. A jury trial on the remaining claims was set to begin in November 2019. Before that jury trial was set to commence. the BC got involved. First, naturally and obviously, ISD filed a chapter 13 petition. Then she and KEK submitted a notice of removal. The appellees responded with a statement of non-consent to the removal and a declaration of their intent to file a motion to remand.
Julia W. Brand; Gary A. Spraker; and Robert J. Faris

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