Smith v. IH4 Property West LP (In re Smith)

Case Type:
Case Status:
BAP No. CC-16-1414-FLKu (9th Circuit, Feb 01,2018) Not Published
BAP for 9th Cir. affirmed ruling of bankruptcy court (C.D. Cal.) denying chapter 13 debtor's motion for damages against creditor based on violation of automatic stay. BAP ruled that creditor deed holder's motion to set aside TRO in state court did not violate stay. Debtor had initiated quiet title action in state court, and thus it was not an action "against" debtor. Creditor's defensive response to debtor's efforts in action did not violate stay. State court's, creditor's, and bankruptcy court's initial assessment that stay applied were irrelevant.
Procedural context:
Ch. 13 debtor moved for order for damages/sanctions for violation of automatic stay. Bankruptcy court (C.D. Cal.) denied motion. Debtor appealed to BAP for 9th Circuit.
Debtor sought to block mortgage holder from foreclosure and eviction. Debtor borrowed $556k and secured obligation with deed of trust on Los Angeles residence. Debtor defaulted a year later. After several workout attempts, creditor sought foreclosure. Debtor commenced action in state court asserting claim that lender could not prove it "owned" note and deed of trust. Debtor appealed. State court dismissed action; debtor appealed. Debtor sought to but failed to enjoin foreclosure sale. Loan servicer credit bid at foreclosure sale and obtained deed. Servicer quit claimed deed to affiliate. Debtor filed a second state court suit challenging foreclosure, asserting that foreclosing lender was not "owner" of the debt. Deed holder filed suit to evict debtor and debtor's tenants. Debtor obtained writ of possession. Debtor sought TRO to enjoin enforcement. Deed holder failed to oppose, and TRO entered. Appellate court affirmed ruling of lower court dismissing debtor's first suit. State court then dismissed second suit and vacated TRO based on preclusive effect of first suit. Deed holder sought second writ of possession. Debtor filed motion to vacate order dissolving TRO and then filed chapter 13 bankruptcy. Debtor filed motion to enforce automatic stay against deed holder. Bankruptcy court denied motion without prejudice. State court issued writ of possession. Debtor filed motion in state court to enforce stay. Deed holder agreed that stay applied. State court reissued TRO. Ultimately, deed holder changed its mind regarding application of stay and filed motion to vacate TRO, while its motion to vacate stay was pending. Debtor filed motion for damages based on motion to vacate TRO.
Faris, Lafferty, Kurtz

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