Sazegar v. Jadidolahi (In re Sazegar)

CC-14-1188-TaDPa (9th Cir. BAP February 19, 2015)
In the unpublished decisions, the Ninth Circuit Bankruptcy Appellate Panel ("BAP"), the BAP affirmed the bankruptcy court. Rule 7004(b)(9) Fed.R.Bankr.P. provides that service of a motion for stay relief is to be made on the debtor at the address listed on the petition. Despite Behdad Jadidolahi's ("Appellee") knowledge the Debtor did not reside at the address the motion was served, because the Appellee was occupying the real property, Appellee complied with the rule. Appellee also served a copy of the motion to Debtor's counsel; therefore, the Debtor suffered no prejudice. The BAP further held that the Debtor lacks standing to contest proper service to the lenders. The BAP held that the bankruptcy court sufficiently conducted the case specific balancing test set forth in In re Fjeldsted. Therefore, the Appellee acted in good faith and his stay violation was unintentional.
Procedural context:
The Debtor appeals the bankruptcy court's ruling granting the annulment of the stay, and, holding that any property ownership issues could be litigated in state court.
The Debtor fell significantly behind on the outstanding mortgage encumbering his home. With the foreclosure pending, the Debtor entered listing agreement to sell the real property. Debtor later executed a grant deed transferring the real property to Appellee. Appellee cured the outstanding arrears directly to the lender, and 11 days later recorded the grant deed. The Debtor disputes that he was aware escrow was opened or the grant deed had been delivered to Appellee. The day after Appellee remitted payment and 10 days prior to recording the grant deed, Debtor filed a Chapter 13 petition. Debtor never completed his Chapter 13 Schedules, never filed a Chapter 13 plan, or appeared at the Meeting of Creditors. The only creditors listed in the Chapter 13 case were the 2 original trust deed holders. The Chapter 13 case was dismissed. The pre-petition state court litigation proceeded during the 2 years after the dismissal of the bankruptcy, then the Debtor reopened his Chapter 13 case. This time the only activity in the case was the Debtor filing a Notice of Bankruptcy is the pending state court action. Approximately 1 year after reopening the Chapter 13 case, the Debtor filed a Chapter 11, and commenced an adversary proceeding against Appellee asserting a violation of the automatic stay regarding the recording of the grant deed. Appellee filed a counterclaim in the adversary proceeding and moved to annul the automatic stay in the Chapter 13. Debtor timely responded asserting that motion to annul the stay was procedurally deficient and the equities did not favor annulment.
TAYLOR, DUNN, and PAPPAS, Bankruptcy Judges.

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