Mora v. SBS Trust Deed Network

[1] UNITED STATES BANKRUPTCY COURT 2 EASTERN DISTRICT OF CALIFORNIA 3 In re: ) ) 4 BULA DEVELOPMENTS, INC. ) Case No. 23-24619-C-11 ) 5 Debtor. ) ) 6 NATASHA MORA, CESAR MORA, ) Adv. Pro. 2025-02008 FAIZAL AWADAN, AND SHAINAZ ) 7 AWADAN, ) DCN LRL-1 ) 8 Plaintiffs, ) v. ) 9 ) SBS TRUST DEED NETWORK, BLACK ) 10 HORSE CAPITAL INC., FINE ) CAPITAL, DANIEL BENSHIMON, TODD ) 11 BERNSTEIN AS TRUSTEE OF TB TRUST) DATED MAY 8, 1997, KAREN ALWEIL,) 12 AND LOVE GMC HOLDINGS, LLC, ) ) 13 Defendants. ) ________________________________) [14] 15 MEMORANDUM ORDER ON SANCTIONS UNDER RULE 9011(c)(2) 16 After the Complaint in this Adversary Proceeding was filed 17 January 17, 2025, by Plaintiffs Natasha Mora, Cesar Mora, Faizal 18 Awadan, and Shainaz Awadan, Defendants SBS Trust Deed Network 19 (“SBS”), Black Horse Capital Inc. and Fine Capital Investments 20 served a Motion For Monetary Sanctions Against Plaintiffs For 21 Violation of Rule 9011 on January 30, 2025, demanding that 22 Plaintiffs voluntarily dismiss the Complaint (“SBS 9011 Motion”). 23 The bone of contention is the Plaintiffs’ collateral attack 24 on the transfer by foreclosure of real property commonly known as 25 6389 Castejon Drive, La Jolla, California 92307, owned by chapter 26 11 debtor Bula Investments, Inc. and the ensuing lockout of the 27 occupants, Plaintiffs Natasha Mora and Cesar Mora, by order of 28 the San Diego County Superior Court. 1 The SBS 9011 Motion asserts that the Complaint: (1) was filed for an improper purpose of delay, harassment, or increasing 3 || costs; makes unwarranted claims and legal contentions; and rests allegations and factual contentions lacking evidentiary 5 ]} support. Fed. R. Bankr. P. 9011 (b) (1)-(b) (3). 6 After the Rule 9011(c) “safe harbor” period expired without 71 the Complaint having been voluntarily dismissed, the SBS 9011 8 |} Motion was filed on March 5, 2025. 9 The history of the Bula Developments case, confirms that the 10 Rule 9011 monetary sanctions and non-monetary sanctions are appropriate because there is a pattern of bad faith litigation. [12] 13 Procedural History 14 This adversary proceeding comes with the baggage of earlier 15 || decisions, all of which are expressly incorporated here for the 16 || benefit of the record for any appellate court that may need to 17 || make sense of the issues presented in their appropriate context. 18 The record of federal litigation relating to the battle for 19 |} 6389 Castejon Drive, includes: In re Bula Developments, Inc., 201) Case No. 23-24619 (Bankr. E.D. Cal.); Mora v. EVO Enterprises, 21] Adv. No. 24-02171 (Bankr. E.D. Cal.); Mora v. Bula Developments, 22 Inc., Adv. No. 24-02173 (Bankr. E.D. Cal); Mora v. Bula 23 || Developments, Inc., Adv. No. 24-02175, (Bankr. E.D. Cal.); In re 24 Natasha Nisha Mora, Case No. 25-20575-chapter 13; Mora v. Black Horse Capital, Inc., 2025 WL 255459 (S.D. Cal. 2025); Mora v. SBS 26 || Trust Deed Network, Adv. No. 25-02008 (Bankr. E.D. Cal.); Mora v. 271 Marquee Funding Group, Inc., Adv. No. 25-02028 (Bankr. E.D. Cal.); Mora v. EVO Enterprises, Adv. No. 25-02052 (Bankr. E.D. 1 Cal.). 2 Among the decisions and orders of this Court and of the U.S. 3 District Court for the Southern District of California so 4 incorporated are: 5 (1) Order Denying Motion For Derivative Standing To Pursue Claims On Behalf Of Estate, Adv. No. 2024-02175-C 6 (8/23/2024) Dkt. 48; (2) Memorandum On Transfer Under 28 U.S.C. § 1412 and 7 Rule 1014(b) Of Case Pending In Another District (Amended), No. 23-24619-C-11 (2/06/2025) Dkt. 302 (reported at 666 8 B.R. 922 ); and (3) Order Denying Ex Parte Application To Rescind 9 Postjudgment Lockout, U.S. District Court, Southern District of California, No. 3:25-cv-00017-RBM-AHG (1/23/2025) (SD 10 Cal. Dkt 292) (reported at 2025 Westlaw 255459). 11 The chapter 11 debtor Bula Developments, Inc. is owned in 12 four equal 25 percent shares by Natasha Mora, her spouse Cesar 13 Mora, and her parents Faizal and Shainaz Adawan. Natasha Mora 14 acts as the person in control. 15 Bula constructed a luxury home in La Jolla, California, that 16 has been rendered unsaleable by virtue of land subsidence issues 17 following collapse of a retaining wall allegedly attributable to 18 faulty engineering and/or construction. 19 Unfavorable developments in state court and a looming 20 foreclosure prompted filing of a chapter 11 petition for Bula in 21 the Eastern District of California on December 26, 2023. 22 Since no attorney signed the Bula petition, notice was 23 issued that the case would be dismissed, converted, or a trustee 24 appointed if a counsel did not promptly enter an appearance.1 [25] 1The Clerk of Court accepted the petition out of respect for [26] Rule 5005(a)(1) (“The clerk must not refuse to accept for filing 27 any petition or other paper solely because it is not in the form required by these rules or by any local rule or practice.”). A 28 corporation must be represented by counsel. Cf., Rowland v. California Men’s Colony, 506 U.S. 194 (1993). 1 Bula engaged counsel, who eventually sought permission to 2 withdraw because the debtor was not cooperating in performing 3 debtor-in-possession duties. That problem led this court to order 4 appointment of a chapter 11 trustee for cause. 5 The chapter 11 trustee, who is an experienced chapter 11 6 lawyer, investigated the case, dealt with all interested parties, 7 and sought financing that would be required in order to make the 8 subject property marketable. 9 The trustee’s report (Bula Dkt 93) related the property had 10 been marketed for two years with no offers. The asking price was 11 $15.8 million (down from $25 million). Interest was accruing at a 12 rate of $110,061 per month. There was an invalid mechanics lien. 13 Necessary site repairs could cost $300,000. Without either a 14 consensual priming lien of at least $300,000 or an agreement by 15 secured creditors to a significant carve-out to fund site repairs 16 (neither of which appeared reasonably in prospect) sale of 6389 17 Castejon would result in little or no dividend for unsecured 18 creditors, and nothing for equity owners. Hence, there was little 19 likelihood of reorganization. 20 This Court granted a pending stay relief motion, making a 21 finding of fact that the value of the property was less than the 22 $15,800,000 that had produced no offers (and far less than the 23 $18,034,000 value now asserted by Plaintiffs) and that there was 24 no prospect for an “effective” reorganization. It vacated the 25 automatic stay, thereby enabling the property at 6389 Castejon 26 Drive, La Jolla, California 92037, to be foreclosed by way of a 27 Trustee’s Sale. 28 Separately, in a transaction approved by the Court, the 1 chapter 11 trustee later sold the estate’s causes of action 2 arising from the construction and engineering defects that had 3 rendered 6389 Castejon unsaleable. 4 On August 23, 2024, this Bankruptcy Court denied the 5 Plaintiffs’ Motion for Derivative Standing to Pursue Claims on 6 Behalf of Bula Developments estate in their adversary proceeding 7 No. 2024-02175. Dkt. 48. The effect was that chapter 11 trustee 8 Dahl retained exclusive authority to act on behalf of the Bula 9 Developments estate. The record for that adversary proceeding is 10 hereby incorporated herein. The Order Denying Derivative Standing 11 was not appealed. 12 The trustee’s sale of 6389 Castejon occurred on August 26, 13 2024. 14 On September 8, 2024, attorney Marc Steven Applbaum 15 transmitted a letter (“Formal Notice of Intent to Bid In re: 16 August 26, 2024 Trustee Sale”) on behalf of Natasha Mora, Cesar 17 Mora, Faizal Awadan, and Shainaz Awadan attaching an “Affidavit 18 of Compliance with Civ. Code 2924m” with respect to 6389 19 Castejon. He asserted: “In accordance to Ca. Civ. Code 2924m 20 California law, this Notice and Affidavit of Compliance allows my 21 clients 45 days to provide the trustee a bid before the sale will 22 be deemed final.” Ex. C to Dkt 73, Adv. No. 2025-02008. 23 Applbaum certified under penalty of perjury in the standard 24 form Affidavit of Compliance, that “At the time of the trustee’s 25 sale, all of the eligible tenant buyers were occupying the real 26 property under a rental or lease agreement entered into as the 27 result of an arm’s length transaction with the mortgagor or 28 trustor... I have attached evidence of the existence of this 1 tenancy, including: a copy of the dated and signed rental or 2 lease agreement. ... At the time of the trustee’s sale none of 3 the eligible tenant buyers were the mortgagor or trustor or the 4 child, spouse or parent of the mortgagor or trustor...” Ex. C to 5 Dkt 73, Adv. No. 2025-02008 (emphasis supplied). 6 Applbaum’s sworn certification contains two materially false 7 statements. First, the statement the lease agreement was “an 8 arm’s length transaction” was untrue. The Moras were 9 simultaneously lessors (as 50% owners of Bula Developments) and 10 lessees. Under no theory is that an “arm’s length transaction.” 11 Their presence on both sides of the lease transaction 12 disqualified them from status as “eligible tenant buyers.” Cal. 13 Civ. Code § 2924m(a)(2)(B). 14 Second, the statement that at the time of the trustee’s sale 15 none of the putative eligible tenant buyers were trustor and 16 child, spouse or parent of a trustor was untrue. The Moras as 17 putative tenant buyers were trustors, along with Natasha’s 18 parents the Awadans in their capacity as the four sole owners and 19 officers of trustor Bula Developments. Thus, they suffered from 20 all four of the § 2924m(a)(2)(C) relationship disqualifications: 21 trustor, child, spouse, and parent. Cal. Civ. Code 22 § 2924m(a)(2)(C). 23 In other words, the Plaintiffs had no § 2924m right to bid 24 for 45 days after the sale. 25 The Trustee’s Deed Upon Sale was recorded September 13, 26 2024, in the Official Records of the San Diego County Recorder as 27 Doc. # 2024-0246585. 28 Unlawful Detainer proceedings ensued in San Diego County 1 Superior Court with respect to 6389 Castejon as Black Horse 2 Capital v. Bula Developments Inc, No. 24UD012825C. 3 Natasha Mora and Cesar Mora defended against the unlawful 4 detainer on the theory that Civil Code § 2924m afforded them as 5 lessees a right to bid within 45 days after the trustee’s sale. 6 The Superior Court rejected the Moras’ claims on the merits, 7 including their § 2924m claims, as invalid by order entered 8 December 16, 2024. That conclusion was logical since it is 9 apparent on the face of the lease that the Moras as the Bula 10 Developments owners acted as trustors and simultaneously were 11 lessor and lessee. In short, they flunked multiple black-letter 12 threshold prerequisites for § 2924m post-sale bidding. 13 The Superior Court ordered the Sheriff to proceed with 14 enforcement of the writ of possession, which would be 15 accomplished by a so-called “lockout.” 16 On December 30, 2024, Plaintiff Natasha Mora filed an 17 emergency writ of mandamus with the California Court of Appeal, 18 Fourth District, which request the Court of Appeal denied the 19 same day. 20 The next day, December 31, 2024, Natasha Mora filed chapter 21 13 case, No. 24-04961, in the Southern District of California, 22 for the purpose of interposing the bankruptcy automatic stay. 23 On January 6, 2025, Natasha Mora, represented by Applbaum, 24 filed in U.S. District Court, Southern District of California, a 25 Complaint alleging one cause of action under the Fourteenth 26 Amendment Due Process Clause, coupled with an Ex Parte 27 Application to Rescind Postjudgment Lockout. Case No. 3:25-cv28 00017-RBM-AHG. 1 On January 17, 2025, Natasha Mora, Cesar Mora; Faizal 2 Awadan; and Shainaz Awadan, acting pro se, filed in this 3 Bankruptcy Court a Complaint commencing this Adversary Proceeding 4 No. 2025-02008 within the Bula Developments chapter 11 case. The 5 Complaint alleges seven counts: (1) Injunction § 105(a); (2) & 6 (3) Set aside Transfer under § 549 (two counts § 2924m); (4) Void 7 State Court Unlawful Detainer Judgment and related State Court 8 orders; (5) Writ of Assistance restoring Plaintiffs to possession 9 per Federal Rule of Civil Procedure 70(d), as incorporated by 10 Federal Rule of Bankruptcy Procedure 7070; (6) Injunction under 11 § 362(a); (7) Unspecified Additional Relief. Three of the counts 12 are expressly premised on various subsections of California Civil 13 Code § 2924. 14 On January 23, 2025, the District Court, construing its Case 15 No. 3:25-cv-00017-RBM-AHG as being in the nature of an appeal 16 from the state court’s final unlawful detainer judgment, denied 17 Natasha Mora’s Application to Rescind Postjudgment Lockout. 18 The District Court noted that a California unlawful detainer 19 judgment and writ of possession bestow legal title and all rights 20 of possession (including equitable possessory rights) on the 21 prevailing party. Cal. Code Civ. P. §§ 415.46 & 1161a; Eden 22 Place, LLC. v. Perl (In re Perl), 811 F.3d 1120, 1130 (9th Cir. 23 2016). 24 The District Court concluded that federal jurisdiction over 25 the January 23 Complaint was lacking by virtue of the so-called 26 Rooker-Feldman doctrine that prohibits federal suits “brought by 27 state-court losers complaining of injuries caused by state-court 28 judgments rendered before the district court proceedings 1 commenced and inviting district court review and rejection of 2 those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., [3] 544 U.S. 280, 284 (2005); Carmona v. Carmona 603 F.3d 1041 (9th 4 Cir. 2010). 5 The District Court warned the parties of the potential for 6 sanctions when it suggested Applbaum and his clients had violated 7 Rule 11 in three respects: (1) not making an inquiry reasonable 8 under the circumstances to confirm legal contentions are 9 warranted under law; (2) needlessly increasing litigation costs; 10 and (3) improper purpose of delay. The District Court warned that 11 sanctions could loom in future cases: 12 (1) Plaintiff’s attempts to obtain possession of the Property have been rejected numerous times by different 13 courts, including the Bankruptcy Court, San Diego Superior Court, and the California Court of Appeal. ... This calls 14 into question whether Plaintiff’s counsel conducted “an inquiry reasonable under the circumstances” to confirm their 15 legal contentions were warranted under law; 16 (2) The Bankruptcy Court has previously observed Plaintiff’s “unclean hands” and found Plaintiff intended to 17 “delay in order to continue living rent-free in the property as long as possible. ... The Court warns Plaintiff that a 18 legally meritless complaint could expose Plaintiff and Plaintiff’s counsel to sanction or referral to the State Bar 19 of California for violation of his Rule 11 obligations; and 20 (3) The circumstances surrounding Plaintiff’s similar filings before state and federal courts suggests Plaintiff 21 may have filed this action in federal court for an improper purpose. Rule 11(b) makes clear that an intent to cause 22 unnecessary delay is an improper purpose. 23 Mora v. Black Horse Capital Inc., 2025 WL 255459 , Slip op. at 5-6 24 (S.D. Cal. 2025). 25 On January 24, 2025, this Bankruptcy Court invoked Federal 26 Rule of Bankruptcy Procedure 1014(b), issuing an order to show 27 cause why Mora’s chapter 13 case filed December 31, 2024, should 28 not be transferred to the Eastern District of California and 1 ordered the parties not to proceed until the question is decided. 2 On January 30, 2025, the SBS 9011 motion was served on 3 Plaintiffs. At that point, the Plaintiffs knew what the District 4 Court had ruled on January 23, 2025. They knew what the District 5 Court had said about potential Rule 11 sanctions. And, they knew 6 that by January 31, 2025, they were required to show cause why 7 the District Court action should not be dismissed. 8 On February 6, 2025, this court, in a published decision, 9 ordered, pursuant to 28 U.S.C. § 1412 and Rule 1014(b), that the 10 Natasha Mora chapter 13 case be transferred to the Eastern 11 District of California. In re Bula Developments Inc., 666 B.R. 12 922 (Bankr. E.D. Cal. 2025). 13 The Natasha Mora chapter 13 case was designated as No. 202514 20575-C-13 upon transfer to Eastern District of California. 15 On February 24, 2025, Plaintiff Faizal Awadan (Natasha 16 Mora’s father) signed “pro se” and had notarized a Notice Of 17 Pending Action (Lis Pendens) with the San Diego County Recorder 18 pursuant to California Code of Civil Procedure § 405.20 based on 19 Adversary No. 2025-02008. The Lis Pendens was recorded in San 20 Diego County on February 28, 2025, and filed in this Court’s No. 21 2025-02008 on March 10, having been served by Natasha Mora on 22 March 4, 2025. Dkts. 31-32. The Lis Pendens was invalid because 23 this Court did not approve the filing as required by California 24 Code of Civil Procedure § 405.21 for a Lis Pendens not signed by 25 an attorney. This Court has ordered expungement of the Lis 26 Pendens. 27 In her chapter 13 case, Natasha Mora did not comply with any 28 of her responsibilities under chapter 13: (1) failed to file a 1 chapter 13 plan; (2) failed to provide to the Chapter 13 Trustee 2 payment advices, tax returns, valid identification, proof of 3 social security number; (3) failed to file Schedules, Statement 4 of Financial Affairs, Statement of Current Monthly Income, 5 Calculation Disposable Income; (4) failed to appear at the 6 Meeting of Creditors. 7 The Natasha Mora chapter 13 case was dismissed for cause on 8 April 16, 2025, on the motion of the Chapter 13 Trustee. In 9 addition to not complying with chapter 13 duties, she did not 10 appear at the hearing on dismissal. This Court has found that 11 Natasha Mora filed the chapter 13 case with no intention of 12 seeking the adjustment of her debts. Rather, it was a frivolous 13 attempt to thwart a “lockout” by the Sheriff enforcing a writ of 14 possession based on a final judgment on the merits by California 15 Courts of competent jurisdiction. The Ninth Circuit holds that in 16 such circumstances a debtor has no legal or equitable interest in 17 property. Perl, 811 F.3d at 1130 . 18 To the extent the pattern of litigation is probative of the 19 Rule 9011 issues Natasha Mora and her three co-Plaintiffs in this 20 Adversary Proceeding No. 2025-02008 to which the SBS 9011 Motion 21 applies, filed on April 23, 2025, a new Adversary Proceeding No. 22 2025-02052 attacking the chapter 11 trustee’s court-approved sale 23 of the estate’s causes of action for engineering and construction 24 defects. The theories are fraudulent transfer under 11 U.S.C. 25 § 548 and the Uniform Voidable Transfer Act, California Civil 26 Code § 3439. In deciding the SBS 9011 Motion, this Court will 27 limit its assessment of the No. 2025-02052 only for the limited 28 purpose of the fact that it illustrates a pattern of litigation 1 and not for any other purpose. [2] 3 I 4 Rule 9011 5 The SBS 9011 Motion seeks sanctions, for reasonable 6 attorney’s fees and other expenses, after having complied with 7 the Rule 9011(c)(2) 21-day “safe harbor” provisions. The record 8 establishes that the Motion was served on the Plaintiffs on 9 January 30, 2025, and was filed on March 5, 2025, more than 21 10 days after having been served upon Plaintiffs. 11 As the Plaintiffs neither withdrew, nor corrected, the 12 Complaint before the SBS 9011 Motion was filed, monetary 13 sanctions are permitted. 14 This Court later granted the SBS Motion to Dismiss the 15 Complaint for reasons stated in a separate memorandum filed 16 May 1, 2025. Dkt. 162. 17 A 18 Rule 9011(b), as restyled, in 2024 provides: 19 (b) Representations to the Court. By presenting to the Court a petition, pleading, written motion, or other 20 document — whether by signing, filing, submitting, or later advocating it — an attorney or unrepresented party certifies 21 that to the best of the person’s knowledge, information, and belief formed after an inquiry reasonable under the 22 circumstances: (1) it is not presented for an improper purpose, such 23 as to harass, cause unnecessary delay or needlessly increase litigation costs; 24 (2) the claims, defenses or other legal contentions are warranted by existing law or by a nonfrivolous argument to 25 extend, modify, or reverse existing law, or to establish new law; 26 (3) the allegations and factual contentions have evidentiary support — or if specifically so identified, are 27 likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and 28 (4) the denials of factual contentions are warranted on the evidence — or if specifically so identified are 1 reasonably based on a lack of information and belief. 2 Fed. R. Bankr. P. 9011. 3 Because the four Plaintiffs are self-represented, they 4 personally are responsible for compliance with Rule 9011 and bear 5 the risks associated with noncompliance. [6] 7 B 8 The SBS 9011 Motion alleges the Complaint was filed for an 9 improper purpose that includes unnecessary delay and needlessly 10 increasing litigation costs. [11] 12 1 13 The SBS 9011 Motion focuses on the allegations in Complaint 14 paragraph 16. The allegation in Complaint Exhibit 2 is that a 15 copy of the Moras’ lease from Bula Developments was included in 16 the Notice of Intent to Bid transmitted by Attorney Applbaum 17 dated September 8, 2024. The assertion that a copy of the lease 18 was included makes a difference because, if true, it could 19 support the Plaintiffs’ theory more clearly alleged in Complaint 20 paragraphs 10-12 that the Plaintiffs were erroneously denied the 21 opportunity to redeem the foreclosed property pursuant to 22 California Civil Code § 2924m. 23 If the lease was omitted from the Notice of Intent to Bid, 24 then the notice would have been incomplete and arguably would 25 have not triggered post-sale bidding rights under § 2924m. 26 The only admissible evidence on that point is proffered by 27 SBS. This Court believes that the probabilities, in light of the 28 false statements in Applbaum’s Affidavit described in the 1 procedural history section of this decision, favor the SBS 2 position that the lease was omitted from the Notice of Intent. 3 Applbaum likely recognized that including a copy of the lease 4 would fatally impeach his representations regarding eligibility 5 to bid. 6 If the lease had been attached to the Notice of Intent, it 7 would have been apparent that the Moras have no rights under 8 § 2924m because they are disqualified by the black-letter terms 9 of that statute from being “eligible tenant buyers” on three 10 independent grounds. It was not an “arm’s length” lease as 11 required by Cal. Civ. Code § 2924m(a)(2)(B). The Plaintiffs were 12 also ineligible as “tenant buyers” because they were the trustors 13 through their control as sole officers and shareholders of Bula 14 Developments. Cal. Civ. Code § 2924m(a)(2)(C). Nor were they 15 “prospective owner occupants” because they were disqualified by 16 virtue of being trustor or child, spouse, or parent of trustor. 17 Cal. Civ. Code § 2924m(a)(1)(C)(i), (ii), iv, and (v). 18 The quarrel, however, over whether the lease was omitted 19 from the Notice of Intent to bid is largely a red herring 20 distracting from SBS’s larger assertion of improper purpose. 21 This ineligibility for the protections of § 2924m is so 22 obvious on the face of the lease as to render frivolous the 23 Complaint’s allegations of denial of rights that did not exist 24 and supports the SBS assertion of improper purpose. 25 In short, the answer to whether a copy of the lease was 26 included cannot change the fact that the Plaintiffs have no 27 bidding or redemption rights under § 2924m. [28] 1 2 2 A filing is frivolous if it is “both baseless and made 3 without a reasonable and competent inquiry.” Townsend v. Holman 4 Consulting Corp., 929 F.2d 1358, 1362 (9th Cir. 1990)(en banc). 5 Here, no reasonable and competent inquiry would have led anyone, 6 including any lay person not trained in law, to believe that 7 § 2924m created any bidding rights for the Plaintiffs. 8 Moreover, as explained in this Court’s May 1, 2025, Order 9 dismissing the Complaint for lack of standing, lack of subject10 matter jurisdiction and failure to state a claim upon which 11 relief can be granted, the state court unlawful detainer judgment 12 is issue preclusive under rules of res judicata with respect to 13 § 2924m and claim preclusive as to all other § 2924 issues 14 asserted in the Complaint. 15 A bankruptcy filing is made for an improper purpose if filed 16 to harass or to cause unnecessary delay or needless increase in 17 the cost of litigation. In re Silberkraus, 336 F.3d 864 , 870 n.5 18 (9th Cir. 2003), citing Marsch v. Marsch (In re Marsch), 36 F.3d 19 825, 830 (9th Cir. 1994). 20 The Procedural History set forth earlier in this decision 21 evinces a distinct pattern of unnecessary delay and of needless 22 increase in cost of litigation. 23 The recording by Plaintiffs of the Notice of Pendency of 24 Action (Lis Pendens) pursuant to California Code of Civil 25 Procedure § 405.20, and the filing of that Lis Pendens in this 26 adversary proceeding likewise was an exercise in harassment with 27 the purpose of improperly and intentionally clouding title. The 28 Notice of Pendency is void on its face because it was signed by 1 “Faizal Adawan pro se” but was recorded and filed by Natasha Mora 2 without the approval by a judge as required by Cal. Code Civ. P. 3 § 405.21. Any lay person can understand § 405.21: “A notice of 4 pendency of action shall not be recorded unless ....(b) it is 5 signed by a party acting in propria persona and approved by a 6 judge as provided in this section.” The Lis Pendens is also 7 subject to expungement for failure to establish “probable 8 validity.” Cal. Code Civ. P. §§ 405.3 & 405.32. In short, the Lis 9 Pendens was made, recorded, and filed without reasonable and 10 competent inquiry for, this Court finds, the purpose of 11 harassment and delay in violation of Rule 9011(b). 12 The assessment of the two frivolity factors — baseless and 13 improper purpose — is considered on a sliding scale where the 14 more compelling the showing as to one element, the less decisive 15 the need for the showing as to the other. Silberkraus, at 870; 16 Marsch, at 830. Here the showings are powerful on both counts. 17 This Court is persuaded that the Complaint, especially in 18 the context of the procedural history of the battles over 6389 19 Castejon, was baseless, for an improper purpose, and in violation 20 of Rule 9011(b)(1). [21] 22 3 23 The Complaint also violates Rule 9011(b)(2) because the 24 claims and other legal contentions are not warranted by existing 25 law. 26 This Court has previously determined that the Plaintiffs 27 lack standing to assert claims on behalf of Bula Developments. 28 The Moras’ lease viewed through the prism of § 2924m reveals 1 no basis for any form of relief for them. Their claims lack 2 substantive merit. 3 The claims are also barred by the rules of res judicata, 4 including issue preclusion regarding the validity of the 5 foreclosure and unlawful detainer in the face of allegations 6 based on § 2924m. The issues were actually and necessarily 7 litigated. Claim preclusion applies to block litigation with 8 respect to other § 2924 issues. The state court’s final judgment 9 adverse to the Plaintiffs is not subject to being upset by what 10 amounts to a de facto appeal in federal court. 11 Nor is it clear that this Court has subject-matter 12 jurisdiction over this lawsuit. While avoiding post-petition 13 transfers is a trustee avoiding power, the Plaintiffs lack 14 standing to prosecute such an action. Without standing, 15 jurisdiction depends on whether the outcome “could conceivably 16 have an effect on the estate being administered in bankruptcy.” 17 Great W. Savings v. Gordon (In re Fietz), 852 F.2d 455 , 457-59 18 (9th Cir. 1988). It is not certain there could be such an effect. [19] 20 D 21 This Court is persuaded that the conduct of the Plaintiffs 22 described in the Procedural History set forth above has been 23 conducted intentionally, in bad faith, and with a contemptuous 24 attitude toward the judicial system. [25] 26 II 27 Remedy 28 A Rule 9011 sanction is limited to what suffices to deter 1 repetition of the conduct or deter comparable conduct by others 2 similarly situated. Fed. R. Bankr. P. 9011(c)(4)(A). 3 Such sanctions may include a nonmonetary directive, an order 4 to pay a penalty into court, or if imposed on motion and 5 warranted for effective deterrence, an order directing payment to 6 the movant of all or part of the reasonable attorney’s fees and 7 other expenses resulting from the motion. Fed. R. Bankr. P. 8 9011(c)(4)(A). [9] 10 A 11 As the SBS 9011 Motion is made under Rule 9011(c)(2), this 12 Court may award to the prevailing party reasonable expenses and 13 attorney’s fees incurred in presenting the motion if warranted 14 for effective deterrence. Fed. R. Bankr. P. 9011(c)(2)(C) & 15 (c)(4)(A)(iii). 16 This Court is persuaded that reasonable attorney’s fees and 17 expenses resulting from the violation are warranted for the 18 purpose of effective deterrence. Accordingly, that aspect of the 19 SBS 9011 Motion will be GRANTED, jointly and severally against 20 all four Plaintiffs. Reasonable attorney’s fees shall be 21 determined by separate motion. [22] 23 B 24 This Court is also persuaded that a nonmonetary directive is 25 needed to deter repetition of the Plaintiffs’ conduct and of 26 comparable conduct by others similarly situated. 27 The record indicates that the Mora’s litigation offensive 28 regarding 6389 Castejon Drive began in 2022 in Superior Court of 1 California, County of San Diego Case No. 37-2022-00041470-CU-BCwhen Bula Developments filed a cross-complaint alleging work 3 EVO Enterprises, Inc., was defective and untimely. 4 When in December 2023 the state court announced its 5 flantention to rule in favor of EVO, and with a foreclosure 6 looming, the Bula Developments chapter 11 case was filed in this 7W!Court by Natasha Mora on December 26, 2023. See In re Bula 8 |Developments, Inc., 666 B.R. 922 , 924 (Bankr. E.D. Cal. 2025). 9 The ensuing federal litigation has included the following: 10 In re Bula Developments, Inc., Case No. 23-24619 (Bankr. E.D. li |Cal.); Mora v. EVO Enterprises, Adv. No. 24-02171 (Bankr. E.D. 12 1!Cal.); Mora v. Bula Developments, Inc., Adv. No. 24-02173 (Bankr. 13 E.D. Cal); Mora v. Bula Developments, Inc., Adv. No. 24-02175, 14 |IBankr. E.D. Cal.); In re Natasha Nisha Mora, Case No. 25-2057515 [chapter 13; Mora v. Black Horse Capital, Inc., 2025 WL 255459 16q(S.D. Cal. 2025); Mora v. SBS Trust Deed Network, Adv. No. 2517 #02008 (Bankr. E.D. Cal.); Mora v. Marquee Funding Group, Inc., 18 No. 25-02028 (Bankr. E.D. Cal.); Mora v. EVO Enterprises, 19 No. 25-02052 (Bankr. E.D. Cal.). 20 Filings such as the Lis Pendens stunt of recording without 21 having obtained the required approval of the court have been in 22 abject bad faith. 23 Enough is enough. The offending litigation has already 24 |jlasted nearly three years, having commenced in 2022 and migrated 25 federal court in 2023. 26 A nonmonetary sanction in the form of imposing a prefiling 27 |Wreview requirement for a finite period is appropriate. Such a 28 sanction must be sufficient to deter repetition of the conduct [19] 1 and to deter comparable conduct by others similarly situated. 2 Fed. R. Bankr. P. 9011(c)(4)(A). 3 This Court has broad discretion in determining the sanctions 4 to impose so long as they are fair, supported by evidence, and 5 reasonable. Rocha v. Fiedler (In re Fiedler), 654 B.R. 787 , 7966 97 (Bankr. E.D. Cal. 2023), aff’d, 2024 WL 2137356 (9th Cir. BAP 7 2024), aff’d, 2025 WL 1219007 (9th Cir. 2025); DeLuca v. Seare 8 (In re Seare), 515 B.R. 599 (9th Cir. BAP 2014). 9 In the discretionary judgment of this Court, deterrence of 10 repetition of the offending conduct by the Plaintiffs and others 11 similarly situated would be served by a two-year prefiling 12 requirement. 13 The prefiling requirement is that the plaintiffs must obtain 14 permission of this Court or of the Chief Bankruptcy Judge, 15 Eastern District of California, before filing any new case or 16 adversary proceeding in any federal court venue within two years 17 of the date this order is entered on docket. Their attention is 18 directed to the power of this bankruptcy court under Rule 1014(b) 19 to control the venue of related case filings, as was exercised in 20 the instance of Natasha Nisha Mora’s chapter 13 case. In re Bula 21 Developments, Inc., 666 B.R. 922 (Bankr. E.D. Cal. 2025). [22] 23 C 24 In addition, this Court specifically warns the Plaintiffs 25 that future transgressions of Rule 9011 will invite an Order to 26 Show Cause why the transgressors should not pay a penalty, 27 potentially an eye-opening penalty, into court. Fed. R. Bankr. P. 28 9011(c)(4)(A)(ii). 1 Future transgressions of the prefiling requirement will be treated as contempt. [3] 4 IT IS ORDERED: 5 First, the Motion for Sanctions under Rule 9011 made by 6 |Defendants SBS Trust Deed Network, Black Horse Capital Inc. and Capital is GRANTED; 8 Second, Defendants SBS Trust Deed Network, Black Horse 9llCapital Inc. and Fine Capital shall recover from Plaintiffs 10 |INatasha Mora, Cesar Mora, Faizal Awadan, and Shainaz Awadan, 11 jointly and severally reasonable attorney’s fees and other 12 expenses directly resulting from their violations of Rule 13 9011 (b); and, 14 Third, on pain of contempt for violation, Natasha Mora, 15 [Cesar Mora, Faizal Awadan, and Shainaz Awadan must obtain 16 permission from this Court or from the Chief Bankruptcy Judge, 17 Eastern District of California, before filing any new case or 18 adversary proceeding in any federal court in any venue within two 19 lyears of the date this order is entered on docket. 20 SOQ ORDERED. [21] 22 Datea: May 07, 2025 | \\) \} 24 I We 25 United § akon Baxlicupeery Judge