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Margaret Kinney v. HSBC Bank USA

Summarizing by Lars Fuller

In re Javier Jimenez

Case Type:
Case Status:
BP Nos. CC-1901177-TaLG (9th Circuit, Mar 03,2020) Not Published
BAP for 9th Cir. affirmed bankruptcy court (CD California) order dismissing chapter 13 case based on serial filer's bad faith attempts to hinder and delay secured creditor's foreclosure on residence. Although bankruptcy court did not explicitly identify basis for dismissal, record strongly supported dismissal under § 1307(c)(1): “unreasonable delay by the debtor that is prejudicial to creditors" and "debtor’s unjustified failure to expeditiously accomplish any task required either to propose or confirm a chapter 13 plan."
Procedural context:
Bankruptcy court (CD California) granted chapter 13 trustee's motion to dismiss case. Debtor appealed to BAP for 9th Circuit.
Mr. Jimenez and his non-debtor spouse, Julieta, co-owned a residence. In 2008, they borrowed money from Wells Fargo Bank, N.A.5 and E-Loan, Inc. (“E-Loan”) and secured their indebtedness by deeds of trust. E-Loan’s lien under its deed of trust ("Deed of Trust") was second in priority. ARCPE claims interests in the Deed of Trust and related note (the “Note”) through a series of assignments. The Jimenezes defaulted on Wells Fargo’s loan. Accordingly, it scheduled a foreclosure sale for August 12, 2009. But on that day, Jimenezes filed a chapter 13 case (“First Case”). Jimenezes filed an adversary complaint to avoid the Deed of Trust pursuant to § 506(a) and (d). Bankruptcy court entered a default judgment, avoiding the Deed of Trust lien on the condition that the Jimenezes complete their confirmed chapter 13 plan and receive a discharge. Neither condition subsequent occurred. Almost two years into the case, Wells Fargo moved for stay relief to continue its foreclosure and, after a failed attempt at resolution through an adequate protection stipulation, the Jimenezes dismissed the First Case. The Jimenezes filed a second chapter 13 case (“Second Case”) pro se one day before dismissing the First Case. The stay as to the Property promptly terminated by operation of § 362(c)(3)(A). The Jimenezes failed to provide notice of this Second Case and all relevant filings therein to BLB Trading, LLC (“BLB”), the then holder of the Note. They neither scheduled BLB as a creditor nor provided for payment to it under their confirmed chapter 13 plan. In May 2013, the Jimenezes obtained a loan modification from Wells Fargo and dismissed the Second Case without receiving a discharge. Thereafter ARCPE became the Deed of Trust beneficiary, the Jimenezes made no payments on the Note, and it matured. Accordingly, ARCPE scheduled a foreclosure sale of the Property. Mr. Jimenez stopped the foreclosure by filing his third chapter 13 case (“Third Case”). ARCPE then filed a $262,131.60 secured claim. His chapter 13 plan did not provide for ARCPE’s claim. ARCPE moved for relief from the automatic stay (the “Stay Relief Motion”) to continue its foreclosure for cause under § 362(d)(1) and based on an alleged scheme to delay, hinder, or defraud creditors under § 362(d)(4). Mr. Jimenez filed opposition in which he asserted, without admissible evidence or authority, that ARCPE did not have a legitimate secured claim. He also asserted that he filed bankruptcy in good faith. At the hearing on the Stay Relief Motion, Mr. Jimenez appeared pro se with an uncertified interpreter, Victor Rivera. The bankruptcy court allowed Mr. Rivera to translate even though Mr. Jimenez confirmed that he had personally read, understood, and prepared the opposition to the Stay Relief Motion. After hearing argument, the bankruptcy court observed that ARCPE had met its burden to establish a colorable secured claim, and found that Mr. Jimenez was involved in a scheme to delay, hinder, or defraud creditors that involved multiple bankruptcies affecting the Property. The Chapter 13 moved to dismiss the Third Case, and the bankruptcy court granted the motion over Mr. Jimenez's objection.
Taylor, Lafferty, Gan

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