In re: Reza Fateh Manesh

FILED 1 FEB 06 2018 SUSAN M. SPRAUL, CLERK 2 U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. CC-17-1031-LKuF ) 6 REZA FATEH MANESH, ) Bk. No. 1:15-bk-12563-VK ) 7 Debtor. ) Adv. No. 1:15-ap-01237-VK ______________________________) 8 ) HOSSEIN FATEHMANESH, ) 9 ) Appellant, ) 10 ) v. ) M E M O R A N D U M* 11 ) DAVID SEROR, Chapter 7 ) 12 Trustee, ) ) 13 Appellee. ) ______________________________) [14] 15 Argued and Submitted on January 25, 2018 at Pasadena, California [16] Filed - February 6, 2018 [17] Appeal from the United States Bankruptcy Court 18 for the Central District of California 19 Honorable Victoria Kaufman, Bankruptcy Judge, Presiding _________________________ [20] Appearances: Appellant Hossein Fatehmanesh argued pro se; 21 Richard D. Burstein of Brutzkus Gubner Rozansky Seror Weber LLP argued for Appellee David Seror. 22 _________________________ [23] 24 Before: LAFFERTY, KURTZ, and FARIS, Bankruptcy Judges. [25] 26 * This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. 28 See 9th Cir. BAP Rule 8024-1. 1 The issue in this appeal is the ownership of commercial real 2 property located in Van Nuys, California (the “Delano Property”) 3 as of July 31, 2015, the date Debtor filed his bankruptcy 4 petition. After Appellant Hossein Fatehmanesh (“Hossein”), 5 Debtor’s brother, purchased the Delano Property in 1998, he 6 conveyed the property via quitclaim deed to the Debtor’s future 7 wife, Shahla Tehrani Broomand (“Shahla”). Later, as part of a 8 settlement of litigation brought by Hossein against Debtor and 9 Shahla, the parties agreed that Debtor and Shahla owned the 10 Delano Property. In 2014, Shahla quitclaimed 79.4 percent of her 11 interest in the Delano Property to Hossein, but the quitclaim 12 deed was not immediately recorded. Next, in March 2015, the Los 13 Angeles County Superior Court entered a default judgment in an 14 action brought by a creditor of the Debtor against Debtor and 15 Shahla; that judgment declared that the property had been held by 16 Shahla since 2006 as trustee of a resulting trust for Debtor’s 17 benefit and that Debtor was the equitable owner (the “Resulting 18 Trust Judgment”). Shortly after entry of the Resulting Trust 19 Judgment, Hossein recorded the quitclaim deed from Shahla. Thus, 20 as of the petition date, record title to the Delano Property was 21 in the names of Hossein and Shahla. 22 After Debtor filed for chapter 71 relief, the trustee, 23 Appellee David Seror (“Trustee”), filed an adversary proceeding 24 against Hossein seeking turnover of the Delano Property as an [1] 26 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532 , all 27 “Rule” references are to the Federal Rules of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal 28 Rules of Civil Procedure. -2- 1 asset of the estate. Hossein argued that he owned the Delano 2 Property, pointing out that it was titled in his name, that he 3 had, for at least some period of time, paid the mortgage, 4 property taxes, and insurance, and that he had held himself out 5 as an owner. He contended he was not bound by the Resulting 6 Trust Judgment because he was not a party to that litigation. 7 The bankruptcy court disagreed, finding that Hossein was in 8 privity with Shahla and was thus bound by the superior court 9 judgment under principles of issue preclusion. The bankruptcy 10 court thus found that the property was property of the estate 11 subject to turnover. 12 After trial, the bankruptcy court entered judgment for the 13 Trustee and against Hossein, ordering turnover of the property 14 and postpetition rents collected and held by Debtor or Hossein. 15 The court also awarded the Trustee his attorney’s fees as a 16 sanction for Hossein’s violation of the automatic stay. We find 17 no error of fact or law or abuse of discretion in the bankruptcy 18 court’s rulings. Accordingly, we AFFIRM. 19 FACTS 20 A. Pre-petition events 21 Hossein purchased the Delano Property in 1998. On August 6, 22 1999, Hossein executed a quitclaim deed conveying his interest in 23 the Delano Property to Shahla, who married Debtor in 2012. The 24 quitclaim deed was recorded on August 13, 1999. 25 In April 2001, even though the Delano Property was titled in 26 Shahla’s name, Debtor and Hossein entered into an agreement for 27 Debtor to purchase from Hossein the Delano Property and the 28 business located thereon for $90,000. The agreement called for a -3- 1 $10,000 down payment, with the balance due by August 31, 2001 and 2 monthly interest to be paid in the interim. The agreement 3 provided that if the buyer could not pay the purchase price, the 4 “seller [Hossein] has the full right to the ownership of the 5 business and [the Delano Property].” 6 Debtor defaulted on the payments due under the agreement, 7 and on March 2, 2005, Hossein filed a complaint against Debtor, 8 Shahla, and others2 in Los Angeles County Superior Court seeking 9 specific performance of the purchase agreement and to quiet 10 title, as well as damages for breach of contract, fraud, and 11 forgery (the “Specific Performance Litigation”). The complaint 12 alleged, among other things, that Debtor and Shahla had forged 13 Hossein’s signature on quitclaim deeds, including the August 1999 14 quitclaim deed conveying the Delano Property to Shahla.3 15 The parties settled the Specific Performance Litigation.4 16 They agreed that Debtor and Shahla would pay $175,000 to Hossein; 17 the partnership would be severed; and defendants would keep the 18 partnership business and the Delano Property. It was originally 19 intended that the settlement funds would be paid out of a pending 20 escrow for the sale of the Delano Property, but that sale fell [2] 22 The other named defendants were Abdolreza Ilkhani and United Escrow. The record does not indicate how the claims 23 against those parties were resolved. 24 3 The complaint also alleged that Debtor and Shahla were married at the time of the alleged forgery. At trial, however, 25 Hossein testified that the couple were not married until 2012. 26 4 Although other defendants were named in the complaint, the 27 Specific Performance Judgment indicates that the only defendants who participated in the settlement conference were Debtor and 28 Shahla. -4- 1 through. The superior court entered a judgment (the “Specific 2 Performance Judgment”) on June 1, 2007, which ordered: 3 that judgment be entered for the sum of $175,000.00 pursuant to the terms of the settlement stipulated to 4 by defendants and plaintiff as follows: Defendants jointly and severally shall pay to plaintiff the sum of 5 $175,000.00. If not paid sooner, the judgment shall be paid directly from escrow from the sale of the property 6 and/or business located at 14520 Delano Street, Van Nuys, CA. The parties’ partnership is severed. 7 Defendants[] shall keep the partnership business and real property located at 14520 Delano Street, Van Nuys, 8 CA, legally described as Lot 13, Block 37, Tract 1200, Book 10, Page 35 of the records of the Los Angeles 9 County Recorder, subject to all encumbrances thereto. The parties shall each bear their own costs. [10] 11 Several years later, in September 2014, Shahla executed a 12 quitclaim deed purporting to transfer 79.4 percent of the Delano 13 Property to Hossein (the “2014 Quitclaim Deed”).5 The 2014 14 Quitclaim Deed was not recorded until July 21, 2015, shortly 15 before Debtor filed the instant chapter 7 case. 16 Soon after the execution of the 2014 Quitclaim Deed, Reza 17 Pour, one of Debtor’s judgment creditors, filed a complaint in 18 superior court against Debtor and Shahla seeking a judgment 19 declaring Debtor the sole owner of the Delano Property (the 20 “Resulting Trust Complaint”). Pour recorded a lis pendens 21 against the Delano Property on October 7, 2014 and served it on 22 Debtor and Shahla at several addresses, including the Delano 23 Property. 24 On March 19, 2015, the superior court entered a default [5] 26 The 2014 Quitclaim Deed included a notation that no documentary transfer tax was due because the conveyance was to 27 secure a debt. At trial, Hossein testified that he had inserted that language, but it was not clear from the record what debt was 28 intended to be “secured” by the 2014 Quitclaim Deed. -5- 1 judgment based on the Resulting Trust Complaint (the “Resulting 2 Trust Judgment”). The Resulting Trust Judgment states: 3 With regard to the [Delano Property] . . . as of April 19, 2006 when plaintiff’s Amended Abstract of 4 Judgment (“Judgment Lien”) arising out of a legal action filed in Los Angeles County Superior Court 5 entitled Reza Pour v. Reza Fatehmanesh, Los Angeles Superior Court Case No. BC075569, was recorded: 6 (a) defendant [Shahla] held title to the Delano Property as trustee of a resulting trust for the 7 benefit of defendant [Debtor], (b) that defendant [Debtor] was the equitable owner of the Delano 8 Property, (c) defendant [Shahla] had no valid right, title, or interest in the Delano Property and (d) the 9 Delano Property was and is thereby subject to plaintiff’s Judgment Lien against defendant [Debtor] as 10 of said date (April 19, 2006). 11 At trial in the adversary proceeding, Debtor testified that 12 he was not personally served with the Resulting Trust Complaint 13 because he was in Iran. Debtor testified, however, that he 14 returned to the United States in December 2014 and learned about 15 the Resulting Trust Complaint, months before entry of the 16 Resulting Trust Judgment, and that he had received a copy of the 17 Resulting Trust Complaint from Hossein. Debtor also testified 18 that on July 29, 2015, he and Shahla, through counsel, 19 unsuccessfully moved to vacate the Resulting Trust Judgment. 20 On July 21, 2015, after entry of the Resulting Trust 21 Judgment and shortly before Debtor and Shahla moved to vacate it, 22 Hossein recorded the 2014 Quitclaim Deed. 23 B. Post-Petition Events 24 On July 31, 2015, Debtor filed the instant chapter 7 case, 25 and Trustee was appointed. Debtor initially listed the Delano 26 Property on Schedule A with the notation that Shahla owned a 20 27 percent separate interest but that he did not own any interest. 28 Debtor listed on Schedule D a debt to First Bank secured by the -6- 1 Delano Property, indicating that Shahla owed this debt. Debtor 2 claimed an exemption in the Delano Property on Schedule C. 3 Debtor listed no income on Schedule I; the only income listed in 4 Debtor’s Statement of Financial Affairs (“SOFA”) was rental 5 income attributed to Shahla. 6 Debtor filed an amended Schedule D and amended SOFA on 7 October 30, 2015. In the amended Schedule D, Debtor indicated he 8 did not have any secured creditors; in the amended SOFA he 9 omitted the rental income attributed to Shahla and stated that he 10 had not received any year-to-date income or any income in the 11 preceding two years. 12 A few days later, Debtor appeared at his § 341 meeting. 13 Hossein was also present. Debtor testified that the Delano 14 Property was rented to an automobile repair shop, was generating 15 rental income, and had generated $15,000 of postpetition rent and 16 security deposits. According to the parties’ Joint Pretrial 17 Stipulation, Debtor and Hossein agreed to meet with the Trustee 18 and bring a cashier’s check for $15,000. According to the 19 Trustee’s testimony at trial, when they appeared at the Trustee’s 20 office the next day, they told the Trustee that they had decided 21 not to bring a check because Debtor did not have any interest in 22 the Delano Property. 23 On November 5, 2015, the Trustee filed a motion for turnover 24 in the main bankruptcy case requesting that the court order 25 Debtor to turn over the Delano Property and its related income 26 and security deposits. On the same day, the Trustee filed the 27 adversary proceeding against Hossein (discussed below) that is 28 the subject of this appeal. -7- 1 Approximately two weeks after the Trustee filed the motion 2 for turnover and the adversary proceeding, Debtor again amended 3 his schedules. Amended Schedule A indicated that he owned the 4 Delano Property in fee simple; amended Schedule C claimed an 5 exemption in the Delano Property, and amended Schedule D listed 6 First Bank and Pour as secured creditors with liens against the 7 Delano Property and no longer attributed these debts to Shahla. 8 Debtor’s amended Schedule I showed $4,425.11 in monthly net 9 rental income, and the amended SOFA listed $26,167.05 in year-to10 date rental income for 2015, $10,326 in rental income for 2014, 11 and $4,399 in rental income for 2013; again, the SOFA no longer 12 attributed the rental income to Shahla. The same day, Debtor 13 filed a motion to convert the bankruptcy case to chapter 13. 14 On December 21, 2015, the bankruptcy court granted the 15 Trustee’s motion for turnover as to Debtor. The order granting 16 the motion instructed Debtor to turn over the Delano Property and 17 all related security deposits and postpetition rent. A few weeks 18 later, on January 15, 2016, the bankruptcy court denied Debtor’s 19 motion to convert.6 [20] 21 6 The Trustee objected to conversion on grounds of bad faith, and the bankruptcy court held a hearing on the motion on [22] January 7, 2016. The bankruptcy court agreed with the Trustee 23 that Debtor had acted in bad faith in concealing his interest in the Delano Property and related income and not amending his 24 schedules and SOFA until after the Trustee had moved for turnover. The order denying conversion was not appealed. [25] 26 In addition, on February 23, 2016, the United States Trustee filed an adversary proceeding seeking revocation of Debtor’s 27 discharge on grounds of false oath, knowing and fraudulent failure to deliver property to the trustee, and refusal to obey a 28 (continued...) -8- 1 About six months later, Debtor again amended Schedule A/B. 2 Although he listed the Delano Property, Debtor stated, “Debtor 3 disputes any ownership in the [Delano] property. Debtor believes 4 prior attorney . . . mischaracterized the [Delano] property. 5 Debtor [is] aware of the Courts [sic] position on turnover.” 6 C. The Trustee’s Adversary Proceeding against Hossein 7 The Trustee’s complaint against Hossein sought turnover of 8 the Delano Property and the associated postpetition rents and an 9 accounting. The Trustee also sought contempt sanctions under 10 § 105(a) for Hossein’s intentional refusal to turn over the 11 postpetition rents in violation of the automatic stay. Hossein 12 took the position that he was the rightful owner of the Delano 13 Property and its income based on the 2014 Quitclaim Deed and the 14 fact that Hossein was not a party to Pour’s state court action 15 which lead to the Resulting Trust Judgment. 16 A one-day trial was held on November 29, 2016. Hossein, 17 Debtor, and the Trustee each testified. Thereafter, the 18 bankruptcy court issued its findings and conclusions and a 19 judgment in favor of the Trustee. Hossein timely appealed.7 20 JURISDICTION 21 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 22 §§ 1334 and 157(b)(2)(E). We have jurisdiction under 28 U.S.C. [23] 24 6 (...continued) lawful order of the court. The matter was resolved by entry of a 25 stipulated judgment on June 2, 2016, under which Debtor agreed to 26 revocation of his discharge. [7] 27 After this appeal was filed, on March 31, 2017, the bankruptcy court awarded the Trustee $92,811.50 in attorney’s 28 fees and $3,015.25 in costs. Hossein did not appeal that order. -9- 1 § 158. 2 ISSUES 3 Whether the bankruptcy court erred in concluding that the 4 Delano Property was property of the estate. 5 Whether the bankruptcy court abused its discretion in 6 awarding the Trustee his attorney’s fees under § 105(a) for 7 Hossein’s violation of the automatic stay. 8 STANDARDS OF REVIEW 9 We review the bankruptcy court’s legal conclusions de novo 10 and its factual determinations for clear error. Banks v. Gill 11 Distrib. Centers, Inc. (In re Banks), 263 F.3d 862, 867 (9th Cir. 12 2001). 13 We review de novo the bankruptcy court’s determination that 14 issue preclusion was available. Plyam v. Precision Dev., LLC (In 15 re Plyam), 530 B.R. 456, 461 (9th Cir. BAP 2015). If issue 16 preclusion was available, we review the bankruptcy court’s 17 application of the doctrine for abuse of discretion. Id. 18 Whether property is property of the bankruptcy estate is also a 19 question of law that we review de novo. Mwangi v. Wells Fargo 20 Bank, N.A. (In re Mwangi), 432 B.R. 812, 818 (9th Cir. BAP 2010). 21 A court’s factual determination is clearly erroneous if it 22 is illogical, implausible, or without support in the record. 23 United States v. Hinkson, 585 F.3d 1247 , 1261–62 & n.21 (9th Cir. 24 2009) (en banc) (quoting Anderson v. City of Bessemer City, 470 25 U.S. 564, 577 (1985)). Where there are two permissible views of 26 the evidence, the factfinder’s choice between them cannot be 27 clearly erroneous. Anderson, 470 U.S. at 574; see also Hinkson, [28] 585 F.3d at 1260 (recognizing the rule that a trial court’s -10- 1 choice between two permissible views of the weight of evidence is 2 not clearly erroneous where the evidence would support a 3 conclusion either way, citing United States v. Yellow Cab Co., [4] 338 U.S. 338, 342 (1949)). When factual findings are based on 5 determinations regarding the credibility of witnesses, we give 6 great deference to the bankruptcy court’s findings, because the 7 bankruptcy court, as the trier of fact, had the opportunity to 8 note “variations in demeanor and tone of voice that bear so 9 heavily on the listener’s understanding of and belief in what is 10 said.” Retz v. Samson (In re Retz), 606 F.3d 1189, 1196 (9th 11 Cir. 2010) (quoting Anderson, 470 U.S. at 575). 12 We review a bankruptcy court’s imposition of civil contempt 13 sanctions under § 105 for violation of the automatic stay for an 14 abuse of discretion. Knupfer v. Lindblade (In re Dyer), 322 F.3d 15 1178, 1191 (9th Cir. 2003). A bankruptcy court abuses its 16 discretion if it applies the wrong legal standard, misapplies the 17 correct legal standard, or if its factual findings are clearly 18 erroneous. TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 19 820, 832 (9th Cir. 2011). 20 DISCUSSION 21 A. The bankruptcy court did not err in concluding that the Delano Property was property of the estate. [22] 23 The bankruptcy court ruled that the Delano Property and its 24 postpetition proceeds were property of the estate based on its 25 conclusions that (1) the Specific Performance Judgment terminated 26 any interest Hossein may have had in the Delano Property; (2) the 27 Resulting Trust Judgment conclusively established that Debtor was 28 the equitable owner of the Delano Property as of the petition -11- 1 date, and under full faith and credit and the Rooker-Feldman 2 doctrine, the court could not reconsider or look behind the 3 Resulting Trust Judgment; and (3) Hossein was bound by the 4 Resulting Trust Judgment under the doctrine of issue preclusion. 5 On appeal, Hossein argues that the bankruptcy court erred in 6 all of these conclusions. Hossein contends that he owns the 7 Property because he is on title, is obligated on the note and 8 deed of trust encumbering the Delano Property, has paid the 9 property taxes and insurance, and has held himself out as the 10 owner. He argues that there was no evidence presented at trial 11 to support the conclusion that Debtor was the equitable owner of 12 the Delano Property, and that the Resulting Trust Judgment was 13 inadmissible at trial on relevance grounds.8 Hossein also lists 14 several disputed factual findings in his statement of issues 15 (discussed below) but does not substantively address those 16 findings in his brief. 17 1. Burden of Proof 18 In the bankruptcy court, the parties disputed which burden 19 of proof should apply to the issue of ownership of the Delano 20 Property. The Trustee contended that the preponderance of the 21 evidence standard under California Evidence Code § 115 applied.9 22 Hossein argued that under California Evidence Code § 662, the [8] The bankruptcy court overruled counsel’s relevance 25 objection at trial. On appeal, Hossein has asserted no 26 substantive argument as to why that ruling was in error. [9] 27 That statute provides: “Except as otherwise provided by law, the burden of proof requires proof by a preponderance of the 28 evidence.” -12- 1 clear and convincing standard was appropriate.10 The bankruptcy 2 court agreed with Hossein and concluded that California Evidence 3 Code § 662 applied but found that the Trustee had shown by clear 4 and convincing evidence that Debtor held equitable title to the 5 Delano Property on the petition date. 6 On appeal, Hossein argues that the bankruptcy court erred in 7 applying the preponderance of the evidence standard of California 8 Evidence Code § 115, but this argument misconstrues the 9 bankruptcy court’s ruling. In any event, we need not decide 10 whether the bankruptcy court correctly chose to apply the clear 11 and convincing standard because the Trustee’s evidence satisfied 12 that standard. See FreecycleSunnyvale v. The Freecycle Network, [13] 626 F.3d 509, 515 (9th Cir. 2010). 14 2. The bankruptcy court did not err in finding that the Specific Performance Judgment terminated Hossein’s 15 interest in the Delano Property. 16 Hossein lists as an issue on appeal whether the court 17 committed reversible error in determining that the Specific 18 Performance Judgment terminated Hossein’s interest in the Delano 19 Property. He does not, however, address this issue in his 20 opening brief and has thus waived the argument. See Smith v. 21 Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999). In any event, the 22 record reflects no error in the bankruptcy court’s conclusion. 23 The evidence showed that at the time the Specific Performance 24 Complaint was filed, record title was in Shahla’s name. Hossein [25] 26 10 That statute provides: “The owner of the legal title to 27 property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and 28 convincing proof.” -13- 1 alleged in that complaint that the 2001 purchase agreement 2 conveyed the Delano Property to Debtor, and the Specific 3 Performance Judgment provided that “defendants,” which included 4 Debtor, would keep the Delano Property. Nothing in the Specific 5 Performance Judgment stated or implied that Hossein had any 6 interest, and no evidence was presented at trial that Hossein 7 thereafter held any interest in the Delano Property until the 8 2014 Quitclaim Deed was executed. 9 3. The bankruptcy court did not err in giving issue preclusive effect to the Resulting Trust Judgment. [10] 11 The bankruptcy court found that the Resulting Trust Judgment 12 was entitled to issue preclusive effect in the adversary 13 proceeding, barring Hossein from disputing that Shahla held the 14 Delano Property in a resulting trust for Debtor’s benefit. In 15 its analysis, the bankruptcy court correctly applied California 16 preclusion law. See In re Plyam, 530 B.R. at 462 (bankruptcy 17 court must apply the forum state’s law of issue preclusion in 18 relying on the preclusive effect of a state court judgment). 19 The requirements for issue preclusion in California are: 20 (1) the issue sought to be precluded from relitigation is 21 identical to that decided in a former proceeding; 22 (2) the issue was actually litigated in the former 23 proceeding; 24 (3) the issue was necessarily decided in the former 25 proceeding; 26 (4) the decision in the former proceeding is final and on 27 the merits; 28 (5) the party against whom preclusion is sought was the same -14- 1 as, or in privity with, the party to the former proceeding; and 2 (6) application of preclusion furthers the public policies 3 underlying the doctrine. Harmon v. Kobrin (In re Harmon), 250 4 F.3d 1240, 1245 (9th Cir. 2001) (citing Lucido v. Superior Court, [5] 51 Cal. 3d 335, 341 (1990)). 6 In California, issue preclusion may apply to a default 7 judgment so long as (1) the defendant had actual notice of the 8 proceedings and a full and fair opportunity to litigate; and 9 (2) the material factual issues were raised in the pleadings, 10 submitted to the court for determination, and the court actually 11 determined the issues. Id. at 1247. 12 Examining each element in turn, we agree with the bankruptcy 13 court that the Resulting Trust Judgment was entitled to issue 14 preclusive effect in the adversary proceeding. 15 Identical issue. The issue decided by the Resulting Trust 16 Judgment was the ownership of the Delano Property, which was also 17 the salient issue in the adversary proceeding. Hossein 18 nevertheless argues that the issues are not identical. This 19 argument seems to be premised upon the fact that the Trustee sued 20 for turnover under § 542, which was not a claim in the resulting 21 trust litigation. While that fact might matter for purposes of 22 claim preclusion, it is irrelevant for purposes of issue 23 preclusion. See DKN Holdings LLC v. Faerber, 61 Cal. 4th 813 , 24 824 (2015) (“Issue preclusion prohibits the relitigation of 25 issues argued and decided in a previous case, even if the second 26 suit raises different causes of action.”). This element was met. 27 Actually litigated. Hossein does not dispute that the 28 ownership issue was actually litigated in the resulting trust -15- 1 litigation. Nevertheless, because the Resulting Trust Judgment 2 was a default judgment, we must examine whether the defendant 3 (1) had actual notice of the proceedings and a full and fair 4 opportunity to litigate; and (2) the material factual issues were 5 raised in the pleadings, submitted to the court for 6 determination, and the court actually determined the issues. 7 In connection with its privity analysis, the bankruptcy 8 court found that Debtor had actual notice of the resulting trust 9 complaint. Although the pleadings underlying the Resulting Trust 10 Judgment are not in the record, that judgment contains sufficient 11 detail for the bankruptcy court to have concluded that the 12 material factual issues were presented and decided by the state 13 court, and Hossein does not argue otherwise. 14 Necessarily decided. It is undisputed that the ownership of 15 the Delano Property was necessarily decided by the Resulting 16 Trust Judgment. 17 Final and on the merits. It is undisputed that the 18 Resulting Trust Judgment was final and on the merits. 19 Identical parties or parties in privity. Hossein argues 20 that issue preclusion does not apply to the Resulting Trust 21 Judgment because neither the Trustee nor Hossein were parties to 22 that litigation. However, as the bankruptcy court noted, the 23 party or privity requirement applies only to the party against 24 whom preclusion is sought, which in this case was Hossein. Thus, 25 the fact that the Trustee was not a party in the state court was 26 irrelevant. 27 Hossein also disagrees with the bankruptcy court’s 28 conclusions that (i) he was in privity with Shahla and -16- 1 (ii) application of issue preclusion based on privity was fair. 2 We find no error in the bankruptcy court’s conclusion that 3 Hossein was in privity with Shahla. 4 The concept of privity for the purposes of . . . collateral estoppel refers to a mutual or successive 5 relationship to the same rights of property, or to such an identification in interest of one person with 6 another as to represent the same legal rights and . . . to a relationship between the party to be estopped and 7 the unsuccessful party in the prior litigation which is sufficiently close so as to justify application of the 8 doctrine of collateral estoppel. . . . This requirement of identity of parties or privity is a 9 requirement of due process of law. 10 Rodgers v. Sargent Controls & Aerospace, 136 Cal. App. 4th 82 , 11 90–91 (2006) (citations omitted). “In the final analysis, the 12 determination of privity depends upon the fairness of binding a 13 party to the present proceeding with the result obtained in 14 earlier proceedings in which it did not participate.” Gottlieb 15 v. Kest, 141 Cal. App. 4th 110, 150 (2006). See also Bailey v. 16 Safeway, Inc., 199 Cal. App. 4th 206, 213 (2011) (collateral 17 estoppel is an equitable concept based on fundamental principles 18 of fairness; even if a party is in privity with another, 19 application of the doctrine is not warranted unless the 20 fundamental principle of fairness underlying the doctrine will be 21 served by its application). 22 Legal relationships that may result in a finding of privity 23 include grantor and grantee. See Bailey, 199 Cal. App. 4th at 24 212-13. The parties do not dispute that Shahla and Hossein had a 25 grantor-grantee relationship arising out of the 2014 Quitclaim 26 Deed, and Hossein does not dispute the bankruptcy court’s finding 27 that his and Shahla’s interests were mutual and successive based 28 on the 2014 Quitclaim Deed. -17- 1 As for fairness and due process, the bankruptcy court 2 considered the relevant standard: 3 Due process requires that the nonparty have had an identity or community of interest with, and adequate 4 representation by, the . . . party in the first action. The circumstances must also have been such that the 5 nonparty should reasonably have expected to be bound by the prior adjudication. [6] 7 Citizens for Open Access to Sand & Tide, Inc. v. Seadrift Ass’n, [8] 60 Cal. App. 4th 1053, 1070 (1998) (citations omitted). Adequate 9 representation means that the interests of the party against whom 10 issue preclusion is sought “are so similar to a party’s interest 11 that the latter was the former’s virtual representative in the 12 earlier action.” Gottlieb, 141 Cal. App. 4th at 150 . The trial 13 court must examine “whether the . . . party in the suit which is 14 asserted to have a preclusive effect had the same interest as the 15 party to be precluded, and whether that . . . party had a strong 16 motive to assert that interest.” Id. If the interests of those 17 parties are likely to have been divergent, or if a party’s motive 18 for asserting a common interest is relatively weak, adequate 19 representation should not be inferred. Id. 20 The bankruptcy court correctly found that Hossein’s and 21 Shahla’s interests were similar enough for Shahla to have been 22 Hossein’s “virtual representative” in the state court litigation: 23 both parties had the incentive to defend their title to the 24 Delano Property, as losing that litigation would (and did) reduce 25 the equity in the Delano Property by subjecting it to the Pour 26 judgment lien. 27 The bankruptcy court also concluded that the evidence showed 28 Shahla had had a full and fair opportunity to represent her -18- 1 interests in the resulting trust litigation. Although Debtor 2 testified that he was not served with the Resulting Trust 3 Complaint, he testified that he received a copy of that complaint 4 from Hossein in December 2014, three months before the state 5 court entered the Resulting Trust Judgment.11 The bankruptcy 6 court also found that Hossein was aware of the Resulting Trust 7 Complaint. More importantly, Shahla and Debtor, through counsel, 8 eventually participated in the litigation by filing a motion to 9 vacate the Resulting Trust Judgment, which was denied.12 10 Based on these findings, the bankruptcy court concluded that 11 applying issue preclusion would not infringe on Hossein’s due 12 process rights, and it was fair to find that he was in privity 13 with Shahla. Although Hossein protests this conclusion as 14 unsupported by the evidence, he points to no specific factual or 15 legal error in the court’s conclusion, and we have found none. 16 Public policy. Finally, the bankruptcy court determined 17 that application of issue preclusion would further the public 18 policies behind the doctrine. It determined that relitigating 19 the issues already decided by the state court would reward a [11] The bankruptcy court found Debtor’s testimony not 21 credible, given the inconsistencies in his testimony and his 22 history of multiple inconsistent amendments to his bankruptcy schedules to suit the circumstances. The court did not 23 specifically state which testimony it found not credible, but it is clear from its ruling that it generally did not find either 24 Debtor or Hossein credible. 25 12 The court stated in its findings and conclusions that 26 Debtor testified that he and Shahla received the complaint. Debtor testified he received it, but he did not mention whether 27 Shahla knew about it. Nevertheless, both Debtor and Shahla had an opportunity to defend the lawsuit when they moved to vacate 28 the Resulting Trust Judgment. -19- 1 party (Hossein) who (i) had secretly obtained the Delano Property 2 from Shahla; (ii) was aware of the Resulting Trust Complaint but 3 failed to take any action in state court; (iii) had recorded the 4 2014 Quitclaim Deed only when Debtor and Shahla were attempting 5 to vacate the Resulting Trust Judgment; and (iv) had sought 6 through Debtor’s bankruptcy filing to stake a claim in the Delano 7 Property in contravention of the Resulting Trust Judgment. The 8 record supports these findings. We therefore find no abuse of 9 discretion in the bankruptcy court’s application of issue 10 preclusion. 11 As the bankruptcy court found, giving issue preclusive 12 effect to the Resulting Trust Judgment meant that the 2014 13 Quitclaim Deed conveyed to Hossein 79.4 percent of the interest 14 Shahla held at the time – bare legal title as trustee for 15 Debtor’s benefit. Thus, as of the petition date, Shahla and 16 Hossein held only bare legal title to the Delano Property, and 17 Debtor held the equitable interest, which became property of the 18 estate. Accordingly, turnover of the Delano Property and its 19 postpetition proceeds was appropriate. 20 4. The bankruptcy court’s application of the RookerFeldman doctrine was harmless error. [21] 22 The bankruptcy court recognized that it must give full faith 23 and credit to the Resulting Trust Judgment. 28 U.S.C. § 1738 . 24 But the bankruptcy court took the additional step of applying the 25 Rooker-Feldman doctrine in determining that it could not question 26 the validity of the Resulting Trust Judgment. Hossein argues 27 that the doctrine has no application here because neither party 28 to the adversary proceeding was a party to the resulting trust -20- 1 litigation. Hossein is correct. 2 Under the Rooker-Feldman doctrine, federal district courts 3 lack jurisdiction to review or reverse state court judgments. 4 See Rooker v. Fidelity Tr. Co., 263 U.S. 413 (1923); District of 5 Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983). More 6 recently, the Supreme Court has clarified that the Rooker-Feldman 7 doctrine is a narrow, jurisdictional doctrine that does not 8 supplant preclusion doctrines, which are not jurisdictional. See 9 Lance v. Dennis, 546 U.S. 459, 466 (2006) (“Whatever the impact 10 of privity principles on preclusion rules, Rooker–Feldman is not 11 simply preclusion by another name.”); Exxon Mobil Corp. v. Saudi 12 Basic Indus. Corp., 544 U.S. 280, 284 (2005) (holding that the 13 Rooker-Feldman doctrine is limited to “cases brought by state14 court losers complaining of injuries caused by state-court 15 judgments rendered before the district court proceedings 16 commenced and inviting district court review and rejection of 17 those judgments”). See also Lopez v. Emergency Serv. 18 Restoration, Inc. (In re Lopez), 367 B.R. 99 , 103–04 (9th Cir. 19 BAP 2007) (vacating and remanding summary judgment for plaintiff 20 in part because bankruptcy court erroneously applied Rooker21 Feldman in giving preclusive effect to a state court 22 misappropriation judgment in a dischargeability proceeding). 23 Here, no party to the state court litigation was attempting to 24 reverse the state court judgment; accordingly, Rooker-Feldman did 25 not apply. 26 Despite this error, the bankruptcy court correctly found 27 that it must give full faith and credit to the Resulting Trust 28 Judgment and that issue preclusion barred relitigation of the -21- 1 ownership issue. Therefore, the erroneous application of the 2 Rooker-Feldman doctrine did not affect the outcome and was thus 3 harmless error, which we ignore. Van Zandt v. Mbunda (In re 4 Mbunda), 484 B.R. 344, 355 (9th Cir. BAP 2012). See also Civil 5 Rule 61, applicable via Rule 9005 (“At every stage of the 6 proceeding, the court must disregard all errors and defects that 7 do not affect any party’s substantial rights.”) 8 5. Hossein’s evidence did not have any bearing on the issue of ownership of the Delano Property as of the 9 petition date. 10 At trial, Hossein presented evidence that he originally 11 borrowed the funds to purchase the Delano Property and, from time 12 to time, had paid the mortgage, taxes, and insurance, collected 13 rents from tenants and deposited them into an account in his 14 name; he also testified that he held himself out as the owner of 15 the Delano Property in negotiating some leases. In his reply 16 brief, Hossein focuses almost exclusively on this evidence, which 17 might be relevant were the court deciding the ownership issue on 18 a clean slate. But in light of the Resulting Trust Judgment, 19 none of that evidence had any bearing on the issue of ownership 20 of the Delano Property as of the petition date. 21 6. The factual findings disputed by Hossein are either nonexistent or are supported by the record. [22] 23 Hossein listed in his statement of issues several disputed 24 factual findings. As noted, Hossein did not elaborate on how 25 these findings were in error and, for the most part, the disputed 26 findings discussed below would have no bearing on the outcome of 27 this appeal. In any event, Hossein assigns error to nonexistent 28 findings, findings that he misinterpreted, and findings that were -22- 1 supported by evidence. 2 Hossein purports to dispute the bankruptcy court’s findings 3 that (1) Hossein purchased the Property from Shahla through her 4 agent, the Debtor; (2) Hossein sold the Property to Shahla in 5 2001; (3) Debtor paid the mortgage; and (4) the August 2014 6 transfer by Shahla to Hossein was fraudulent. The record, 7 however, does not reflect that the bankruptcy court made any such 8 findings. 9 Hossein also disputes the following findings for which there 10 is evidence in the record: (1) Debtor was aware of the Resulting 11 Trust Complaint three months before the Resulting Trust Judgment 12 was entered; and (2) Debtor attended the 341 meeting and stated 13 he was receiving rental income from the Property. The first of 14 these findings was supported by Debtor’s own testimony, and the 15 second by Stipulated Fact No. 12 in the parties’ Joint Pre-Trial 16 Stipulation and Order, and the Trustee’s testimony. 17 Additionally, Hossein disputes the bankruptcy court’s 18 findings that (1) Shahla secretly transferred 79.4 percent of her 19 interest in the Property to Hossein; and (2) Hossein demanded 20 payment (on the sales contract) from Debtor but not Shahla. 21 Hossein seems to misinterpret these findings. The finding that 22 Shahla “secretly” transferred a portion of her interest referred 23 to the fact that the 2014 Quitclaim Deed was not recorded until 24 several months after it was executed; during that time the 25 transfer would have been “secret” to anyone searching title. As 26 to the second “finding,” it was not a finding but a statement of 27 the allegations of the Specific Performance Complaint. 28 Finally, Hossein assigns error to the court’s “failing to -23- 1 recognize” that: (1) Hossein bought 79.4 percent of the Property 2 in August 2014 from Shahla for valuable consideration; and 3 (2) Hossein held a valid, enforceable lien on the Property when 4 he sold it to Shahla. Hossein points to no evidence in the 5 record to support these assertions. 6 Importantly, the bankruptcy court found Hossein’s and 7 Debtor’s testimony not credible. Therefore, to the extent any of 8 Hossein’s arguments are based on that testimony, we must defer to 9 the bankruptcy court. See In re Retz, 606 F.3d at 1196 . 10 B. The bankruptcy court did not abuse its discretion in awarding the Trustee his attorney’s fees and costs under 11 § 105(a). 12 In his complaint, the Trustee requested contempt sanctions 13 under § 105(a) for Hossein’s violation of the automatic stay in 14 failing to turn over the postpetition rents.13 15 For the bankruptcy court to make a finding of contempt, the 16 moving party must show “by clear and convincing evidence that the 17 contemnors violated a specific and definite order of the court.” 18 In re Dyer, 322 F.3d at 1190-91 . The automatic stay qualifies as 19 a specific and definite court order. Id. at 1191. Before 20 imposing civil contempt sanctions for a violation of the 21 automatic stay, the court must find that the defendant knew of [13] Although § 362(h) authorizes compensatory and, where 24 appropriate, punitive damages for violation of the automatic stay, such relief is available only to an “individual.” The 25 Trustee, however, is not an “individual” entitled to damages 26 under that code section. In re Dyer, 322 F.3d at 1189 (citing Havelock v. Taxel (In re Pace), 67 F.3d 187, 192 (9th Cir. 27 1995)). Nevertheless, the Trustee may recover damages for a stay violation under § 105(a) as a sanction for ordinary civil 28 contempt. Id. -24- 1 the automatic stay and that his actions which violated the stay 2 were intentional. Id. No finding of bad faith or a subjective 3 intent to violate the stay is required. Id. Alternatively, 4 civil contempt sanctions may be imposed where the defendant 5 failed to remedy his stay violation after he learned of the stay. 6 See Cal. Emp’t Dev. Dep’t v. Taxel (In re Del Mission Ltd.), 98 7 F.3d 1147, 1151-52 (9th Cir. 1996). 8 In finding that Hossein knew about the automatic stay, the 9 bankruptcy court relied upon the complaint filed in the adversary 10 proceeding, which included an allegation that “Debtor and 11 Defendant knew of the automatic stay when they came to the 12 Trustee’s office and refused to turn over the Postpetition Rent.” 13 Because the complaint was served on Hossein and he filed an 14 answer, the bankruptcy court found that he knew of the automatic 15 stay and failed to remedy it thereafter. Although the bankruptcy 16 court did not cite it, the parties’ Joint Pre-Trial Stipulation 17 and Order includes as an admitted fact that on October 29, 2015, 18 the Trustee sent Hossein and Debtor, through counsel, a letter 19 informing them that they were undertaking actions that were 20 “unlawful attempts to exercise control over property of the 21 Estate in violation of the automatic stay, and demanding 22 immediate turnover . . . .” Hossein does not dispute that he 23 thereafter refused to turn over the Delano Property and its 24 postpetition proceeds. Accordingly, the bankruptcy court did not 25 err in finding that Hossein willfully violated the automatic stay 26 and in awarding the Trustee his attorney’s fees and costs. 27 Hossein argues that there was no basis for the sanctions and 28 that the Trustee should seek compensation from the estate. He -25- 1 further argues that the court may not use its inherent power to 2 take action otherwise prohibited by the Bankruptcy Code, but he 3 does not elaborate or explain why the Ninth Circuit authority 4 relied upon by the bankruptcy court and cited above does not 5 control the outcome. We find no abuse of discretion in the 6 bankruptcy court’s awarding of compensatory civil contempt 7 sanctions under the facts presented here. 8 CONCLUSION 9 For the reasons explained above, we AFFIRM. [28] -26-