ARMANDO NATERA

1 UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF CALIFORNIA 2 FRESNO DIVISION [3] 4 In re ) Case No. 17-14112-B-13 ) 5 ARMANDO NATERA, ) DCN: TAT-2 ) 6 ) Debtor. ) 7 ) 8 MEMORANDUM RULING ON ROGER AND SANDRA WARD’S MOTION TO RETROACTIVELY ANNUL THE AUTOMATIC STAY [9] ————————————————————————————— [10] Thomas A. Trapani, FIDELITY NATIONAL LAW GROUP, THE LAW DIVISION 11 OF FIDELITY NATIONAL TITLE GROUP, INC., Walnut Creek, CA, for Roger Ward and Sandra Ward, Movants. [12] Peter A. Sauer, FEAR WADDELL, P.C., Fresno, CA, for Armando 13 Natera, Debtor. 14 ————————————————————————————— 15 RENÉ LASTRETO II, Bankruptcy Judge: [16] 17 INTRODUCTION 18 Roger Ward and Sandra Ward (collectively “the Wards”) seek 19 to retroactively annul the automatic stay pursuant to 20 § 362(d)(1) and (d)(2) as of October 25, 2017, the same date 21 that Armando Natera’s (“Debtor”) petition was filed and the date 22 his real property located at 2430 E. Orrland Avenue, Pixley, CA 23 93256 (“Property”) was sold at a foreclosure sale. Doc. ##76-84. 24 The Wards submit that (1) the balance of equities favor 25 retroactively annulling the automatic stay, and (2) as result, 26 the automatic stay should be annulled under § 362(d)(2). 27 Doc. #80. 28 Debtor timely opposed the Ward’s motion, objected to the 1 Ward’s evidence, and submitted his own declarations, exhibits, 2 and a request for judicial notice. Doc. ##85-93. Debtor contends 3 that (1) the Wards were aware of the bankruptcy proceeding and 4 the automatic stay but chose to ignore it, (2) the Wards should 5 not be entitled to annul the stay for cause under § 362(d)(1), 6 and (3) the Wards are not entitled to annul the stay under 7 § 362(d)(2). Doc. #85. 8 The Wards replied that (1) Debtor’s chapter 13 case would 9 not have succeeded considering the case was dismissed for 10 failing to make installment payments, (2) the Wards and other 11 purchasers were not given notice, and (3) the motion should be 12 granted. Doc. #94. 13 This motion was originally set for hearing on January 13, 14 2021, on 28 days’ notice pursuant to Local Rule of Practice 15 (“LBR”) 9014-1(f)(1). Doc. #77. After many continuances to which 16 the parties agreed, the court permitted the Wards to augment the 17 record not later than August 31, 2022, any party could file and 18 serve written opposition not later than September 14, 2022, and 19 any reply could be filed and served not later than September 21, 20 2022. Docs. ##96-97; #108; #110; #146; #150; #166; #168; #194; 21 #196; #206; #208; #214; #217. 22 The Wards timely augmented the record. Docs. ##220-222. 23 Debtor timely filed supplemental opposition on September 14, 24 2022. Docs. ##230-31. 25 That same day, Richard Barnes, individually and as Trustee 26 of the Richard Allen Barnes Trust dated September 1, 2011 27 (“Barnes”), and Parker Foreclosure Services, LLC (“Parker 28 Foreclosure”) filed a joinder. Doc. #228. 1 Debtor opposed Barnes’ and Parker Foreclosure’s joinder on 2 the basis of issue preclusion. Doc. #233. 3 The Wards replied. Doc. #235. 4 At the hearing on September 28, 2022, the court further 5 continued the hearing so that the Debtor could file and serve 6 additional evidence solely to address Debtor’s lack of response 7 to the parties’ related State Court Action in Tulare County 8 Superior Court, and the Wards were permitted to file and serve 9 additional evidence in response not later than October 28, 2022. 10 Docs. #238; #240. 11 Debtor timely filed a supplemental declaration. Debtor 12 Decl., Doc. #252. The Wards did not file any additional 13 pleadings, but they were not required to do so. 14 On November 9, 2022, the parties presented oral argument and 15 this motion was taken under submission. Civ. Mins. (Nov. 9, 16 2022), Doc. #256. For good cause appearing, and for the reasons 17 stated below, the Wards’ motion will be GRANTED and the 18 automatic stay retroactively annulled as to the Wards effective 19 October 25, 2017. This ruling will annul the effect of the 20 automatic stay only, but not its existence. Whether willful stay 21 violations were committed by Barnes, Parker Foreclosure, the 22 Lincicums, or the Wards will be litigated in Debtor’s related 23 adversary proceeding, and Debtor’s claim for damages, if any, 24 will be determined at a later date. [25] 26 Request for Judicial Notice 27 The Wards and Debtor both request the court take judicial 28 notice of certain documents filed in this case, Debtor’s related 1 adversary proceeding, Adv. Proc. No. 20-01035 (“AP”), the Wards’ 2 state court lawsuit against Debtor (“State Court Action”), and 3 the retrospective appraisal report of Hopper Company. Docs. #82; 4 #91; #221. The court may take judicial notice of all documents 5 and other pleadings filed in this bankruptcy case, in the 6 related adversary proceeding, filings in other court 7 proceedings, and public records. Fed. R. Evid. (“FRE”) 201. Bank 8 of Am., N.A. v. CD-04, Inc. (In re Owner Mgmt. Servs., LLC), 530 9 B.R. 711, 717 (Bankr. C.D. Cal. 2015). The court takes judicial 10 notice of the requested documents, as well as the pleadings 11 filed in this bankruptcy case, Debtor’s adversary proceeding, 12 and the Wards’ State Court Action, but not the truth or falsity 13 of such documents as related to findings of fact. In re Harmony 14 Holdings, LLC, 393 B.R. 409, 412-15 (Bankr. D.S.C. 2008). [15] 16 Joinder 17 As noted above, Barnes and Parker Foreclosure filed a 18 joinder to the Wards’ motion on September 14, 2022. Doc. #228. 19 Debtor opposes joinder because joinder is impermissible in a 20 contested matter and issue preclusion bars the joinder. 21 Doc. #223. The court agrees. 22 First, Fed. R. Bankr. P. 9014(c) incorporates certain Part 23 VII rules to be applicable in contested matters. Notably absent 24 from those incorporated rules is Fed. R. Bankr. P. 7018 25 regarding joinder. 26 Second, under California law, issue preclusion is applicable 27 if the following threshold elements are satisfied: (1) the issue 28 sought to be precluded from relitigation is identical to that 1 decided in a former proceeding; (2) the issue was actually 2 litigated in the former proceeding; (3) the issue was 3 necessarily decided in the former proceeding; (4) the decision 4 in the former proceeding is final and on the merits; and (5) the 5 party against whom preclusion is sought was the same as, or in 6 privity with, the party to the former proceeding. Italiane v. 7 Catanzarite, (In re Italiane), 632 B.R. 662 , 671 (B.A.P. 9th 8 Cir. 2021), citing In re Plyam, 530 B.R. 456, 462 (B.A.P. 9th 9 Cir. 2015) & Lucido v. Superior Court, 51 Cal. 3d 335 , 351 10 (1990). 11 Here, Barnes and Parker Foreclosure previously sought to 12 retroactively annul the stay in this bankruptcy proceeding. 13 Docs. ##171-80; WEW-4. After considering Debtor’s opposition and 14 analyzing the application of the Fjeldsted factors, the court 15 denied that motion. Docs. ##191-92. Therefore, (1) the issues 16 sought to be precluded from relitigation by Barnes and Parker 17 Foreclosure are identical to those already decided in their 18 former motion; (2) the issues in the former proceeding were 19 actually litigated because the issues were fully briefed and 20 decided on the merits of the evidence proffered; (3) the issues 21 were necessarily decided because the court analyzed the merits 22 of each issue raised in the motion and opposition; (4) the 23 decision in the former proceeding is final and on the merits 24 because it was entered on March 16, 2022 and neither Barnes nor 25 Parker Foreclosure appealed the order within 14 days of its 26 entry; and (5) Barnes and Parker Foreclosure are the same 27 parties to the former proceeding. Accordingly, Barnes’ and 28 Parker Foreclosure’s joinder will be DENIED. 1 BACKGROUND 2 Debtor’s Interest in Property 3 Debtor was conveyed an interest in Property via grant deed 4 from Raul Natera and quitclaim from Rachel N. Milby as trustee 5 of the Milby Trust in March of 2016. Doc. #83, Exs. A, B. 6 Shortly after, Debtor obtained a loan from Barnes on or about on 7 March 23, 2016, secured by a deed of trust. Id., Ex. C. Debtor 8 and his four siblings had been conveyed an interest in the 9 Property. Debtor Dep., Doc. #222, Ex. A. Debtor used the loan 10 proceeds from Barnes to satisfy all other encumbrances and 11 acquire all portions of the Property from his siblings. Id. 12 Debtor then conveyed the Property to himself as “an unmarried 13 man” on March 29, 2016. Doc. #83, Ex. D. 14 Debtor also owned a mobile home (“Mobile Home”), which he 15 and his then-wife, Maria Mills, aka Mary Mills, purchased in 16 1987. Even after they divorced, Ms. Mills continued to own half 17 of the Mobile Home. Debtor Dep., Doc. #222, Ex. A; Mills Dep., [18] id., Ex. G. At the time of the bankruptcy, the Mobile Home was 19 located on the Property and appears to be exempted from the 20 grant deeds executed by Raul Natera and Debtor, as well as the 21 rider deed of trust executed by Debtor in favor of Barnes. Grant 22 Deeds, Doc. #83, Exs. B, C, D; cf. Ex. A. [23] 24 Bankruptcy and Foreclosure 25 On May 25, 2017, Parker Foreclosure recorded a Notice of 26 Default against Property as trustee under the deed of trust. 27 Default Notice, id., Ex. E. Barnes executed a substitution of 28 trustee on June 6, 2017, naming Parker Foreclosure as the new 1 trustee, which was recorded June 15, 2017. Subst. of Trustee, [2] id., Ex. F. On August 25, 2017, Parker Foreclosure executed a 3 Notice of Trustee’s Sale that was recorded on August 29, 2017. 4 Notice of Trustee’s Sale, id., Ex. G. This notice provided that 5 a public auction foreclosure sale (“Trustee’s Sale”) was 6 scheduled for September 27, 2017, at 2:00 p.m., but it was later 7 postponed to October 25, 2017. Id.; cf. Ex. H. 8 Debtor filed chapter 13 bankruptcy on October 25, 2017, at 9 or around 1:59:28 p.m., which imposed the automatic stay under [10] 11 U.S.C. § 362 . Doc. #1. Meanwhile, at or around 2:00 p.m., 11 Parker Foreclosure proceeded with the rescheduled Trustee’s 12 Sale. Property was sold to Barnes as the prevailing bidder. 13 Doc. #83, Ex. H. [14] 15 Barnes’ and Parker Foreclosure’s Knowledge of the Bankruptcy 16 After the petition was filed, Debtor’s then-representative, 17 Sylvia Gutierrez, spoke by telephone with Donald Parker, Parker 18 Foreclosure’s owner, at approximately 2:03 p.m. and informed him 19 of the bankruptcy. Gutierrez Decl., Docs. #89, #231, Ex. B. 20 Since the sale was scheduled for 2:00 p.m., it had already 21 occurred by the time Debtor’s counsel’s office contacted Parker 22 Foreclosure. Id. Barnes has testified that although Mr. Parker 23 died before this action was filed, Mr. Parker’s notes showed 24 that he was not aware of the bankruptcy prior to the sale. 25 Barnes Dep., Doc. #222, Ex. B. 26 The following day, October 26, 2017, Parker Foreclosure 27 executed a Trustee’s Deed Upon Sale (“Trustee’s Deed”) in favor 28 of Barnes, which was recorded in Tulare County on October 30, 1 2017. Trustee’s Deed, Doc. #83, Ex. H. Parker Foreclosure 2 recorded the Trustee’s Deed despite having been informed of the 3 bankruptcy by Ms. Gutierrez the day of the sale.1 Id. 0F 4 Parker Foreclosure informed Barnes of the bankruptcy via 5 facsimile on November 28, 2017 and “STRONGLY” advised Barnes to 6 obtain a bankruptcy attorney to seek relief from the automatic 7 stay. Doc. #231, Ex. I to Ex. C. Although Barnes “held off for 8 quite some time” from initiating eviction proceedings until 9 after the case had been dismissed, neither he nor Parker 10 Foreclosure sought relief from the automatic stay because they 11 believed the sale was legal. Barnes Dep., Doc. #222, Ex. B. This 12 belief resulted in Parker Foreclosure’s recordation of the 13 Trustee’s Deed. Id. [14] 15 Dismissal and Eviction 16 On January 3, 2018, a little more than two months after 17 filing the petition, Debtor’s bankruptcy case was dismissed for 18 failure to timely pay filing fee installment payments. Doc. #36. 19 Debtor was subsequently evicted from Property. Sandra Ward 20 Decl., Doc. #78. However, Barnes has testified that he did not 21 evict Debtor until after the bankruptcy case was dismissed. 22 Barnes Dep., Doc. #222, Ex. B. 23 /// [25] 1 The court denied Barnes’ request to annul the automatic stay, reasoning that Barnes and Parker Foreclosure had actual knowledge of the bankruptcy after the Trustee’s Sale occurred on October 25, 2017, but before [26] the Trustee’s Deed was executed on October 26, 2017 and subsequently recorded October 30, 2017. See Civ. Mins. (Mar. 16, 2022), Doc. #191. This actual 27 knowledge, combined with Barnes’ considerably lengthy delay in taking corrective action, resulted in the Fjeldsted factors weighing against [28] Id. 1 Debtor declared that he was evicted from Property in 2 February 2018. Debtor Decl., Doc. #252. Around the time of the 3 eviction, he aggravated a long-standing knee injury, which was 4 eventually diagnosed as being a “bone on bone” injury that 5 necessitated surgery. Id. 6 During this period of time, Debtor recruited his cousin, an 7 attorney, to look into the eviction. After several months, he 8 found out that the Property had been sold, but that the sale 9 involved a title insurance company that Debtor’s attorney cousin 10 also represented, so there was a conflict of interest precluding 11 the cousin from representing Debtor. Id. Additionally, Debtor 12 believed that too much time had elapsed to fight the eviction 13 anyways. Id. [14] 15 Sale of Property to the Lincicums and Alleged Communications 16 Meanwhile, Barnes sold Property to Michael Lincicum and 17 Mitzi Lincicum (collectively “the Lincicums”) on March 27, 2018. 18 The deed was recorded in Tulare County on April 11, 2018. 19 Doc. #83, Ex. I. Debtor did not occupy Property then. Sandra 20 Ward Decl., Doc. #78; Debtor Decl., Doc. #252. [21] 22 Maria Mills— 23 Ms. Mills, discussed briefly above, was deposed on October 24 13, 2021. Mills Dep., Docs. #222, Ex. G, #231, Ex. D. She 25 attested to informing Mr. Lincicum that Debtor filed for 26 bankruptcy and urged him to speak to Barnes because the Property 27 still belonged to Debtor, and therefore the Mobile Home did not 28 need to move. Id. Ms. Mills also testified that she was 1 unfamiliar with Mitzi Lincicum, the wife of Michael Lincicum. [2] Id. 3 But in his deposition on September 16, 2021, Michael 4 Lincicum testified that he and his wife purchased Property after 5 seeing a picture of the eviction notice only. Michael Lincicum 6 Dep., Doc. #222, Ex. C. Both of the Lincicums testified in their 7 depositions that they did not know the Property was obtained by 8 Barnes from a foreclosure sale, did not know about the 9 bankruptcy, and did not know that it belonged to Debtor. Id.; 10 Mitzi Lincicum Dep., id., Ex. D. [11] 12 Susie Kellogg— 13 Susie Kellogg, Mr. Lincicum’s sister, allegedly gave Mr. 14 Lincicum $40,000 from a life insurance payment to invest in 15 Property. Kellogg Dep., id., Ex. E. 16 Ms. Mills testified that she was called by Ms. Kellogg, but 17 handed the phone to her son, Miguel Natera, aka Mike, who 18 purportedly explained that (1) Debtor had filed for bankruptcy; 19 (2) the Property was protected; (3) the Property still belonged 20 to Debtor; (4) Barnes was not the real owner of the Property; 21 and (5) Barnes did not have the right to sell Property to Mr. 22 Lincicum. Mills Dep., id., Ex. G; Mills Decl., Doc. #88; cf. 23 Miguel Natera Dep., Doc. #231, Ex. F. 24 Miguel Natera, Debtor’s son, filed a declaration claiming 25 that he spoke to Ms. Kellogg on or about May 3, 2018, and told 26 her about the issues relating to the sale of Property. Miguel 27 Natera Decl., Doc. #87. Specifically, he informed her that his 28 father’s bankruptcy had stopped the sale, so the Property still 1 belonged to Debtor. Id. Ms. Kellogg purportedly stated that she 2 would let Mr. Lincicum know about these issues. Id. Although 3 this claim is supported by the declaration of Maria Mills, the 4 statements of Ms. Kellogg in both the declarations and in the 5 depositions are hearsay. Mills Decl., Doc. #88; FRE 801-03. 6 Ms. Kellogg denied allegations that she was informed of the 7 bankruptcy when she was deposed on October 21, 2021. Kellogg 8 Dep., Doc. #222, Ex. E. Ms. Kellogg claims that when she tried 9 to call a lady named Mary (which appears to be a reference to 10 Maria Mills), the lady hung up on her. Id. As a result, Kellogg 11 claims that she did not speak to anybody about the Property. Id. 12 Ms. Kellogg testified that she called Mary’s son, Miguel 13 Natera, who allegedly said he would speak to Mr. Lincicum, and 14 that he was not going to spend $15,000 to move the Mobile Home 15 off of the Property. Id. But as above, Miguel Natera’s alleged 16 statements here are hearsay. FRE 801-03. Upon Ms. Lincicum’s 17 inquiry about a bankruptcy after this lawsuit was filed, Ms. 18 Kellogg stated that she did not know anything about a 19 bankruptcy. Kellogg Dep., Doc. #222, Ex. E. [20] 21 Bryce Smith— 22 Bryce Smith, a realtor, was engaged by the Lincicums, and 23 later the Wards, in both their purchase and sale of the 24 Property. Debtor declared that sometime in March 2018, around 25 the time Barnes sold Property to the Lincicums, Debtor saw 26 Barnes, Michael Lincicum, Roger Ward, and realtor Bryce Smith on 27 the Property. Debtor Decl., Doc. #86. Bryce Smith allegedly 28 approached Debtor and demanded that he leave the Property. Id. 1 Mr. Smith’s comments to Debtor are hearsay. FRE 801-03. 2 Mr. Smith was deposed on August 23, 2021. Smith Dep., 3 Doc. #222, Ex. F. Mr. Smith claims that he dealt with Raul 4 Natera, Debtor’s father, prior to the sale in an effort to get 5 information about the Mobile Home. Id. Although the Mobile Home 6 issues remained unresolved, the Wards decided to move forward 7 with the purchase anyway. 8 Mr. Smith claims that he had no contact with Debtor or Ms. 9 Mills. Id. Ms. Mills purportedly did not return his calls or 10 respond to his letters. Until learning about it at the 11 deposition, Mr. Smith claims that he did not know Debtor had 12 filed bankruptcy, or even that he ever owned the Property at any 13 point. Id. 14 Although Mr. Smith claims that Ms. Mills did not return his 15 calls and that he did not know about the bankruptcy, Ms. Mills 16 claims that she told Mr. Smith that Debtor had filed bankruptcy, 17 and that he was still the legal owner of the Property and Mr. 18 Barnes did not have the right to sell it. Mills Dep., 19 Docs. #222, Ex. G, #231, Ex. D. 20 Since Ms. Mills told Mr. Smith, an agent of the Lincicums, 21 about the bankruptcy, Debtor argues that the Lincicums must have 22 had constructive knowledge of the bankruptcy. Doc. #230. Mr. 23 Smith denies these allegations. However, Mr. Smith did 24 acknowledge that Debtor contested ownership of the Mobile Home, 25 which was allegedly based on hearsay from the Wards and 26 Lincicums. 27 Additionally, Mr. Smith testified that his practice was to 28 review title reports and to instruct clients to do so as well. 1 Smith Dep., Docs. #222, Ex. F, #231, Ex. E. The preliminary 2 title report did disclose Debtor’s bankruptcy during which the 3 October 30, 2017, conveyance from Parker Foreclosure to Barnes 4 occurred. Id., Ex. D to Ex. E. The Lincicums signed for receipt 5 of the preliminary title report. Id., Ex. E to Ex. E. [6] 7 Sale of Property to the Wards 8 On June 14, 2018, the Lincicums sold the Property to the 9 Wards via grant deed, which was recorded in Tulare County on 10 June 21, 2018. Grant Deed, Doc. #83, Ex. J. 11 Both Roger and Sandra Ward were deposed on August 27, 2021. 12 Roger Ward & Sandra Ward Deps., Doc. #222, Exs. H & I. Both 13 claim that they had never spoken with Debtor, had no knowledge 14 of the bankruptcy filing, and claim to be bona fide purchasers 15 of Property. Id. Specifically, the Wards claim that they did not 16 learn of the bankruptcy until they were served with the 17 adversary complaint in June of 2020. Sandra Ward Decl., 18 Doc. #78. 19 Since Mr. Smith acted as the Lincicums’ and the Wards’ 20 agent, Debtor contends that the Wards also had knowledge of the 21 bankruptcy due to their agency relationship. [22] 23 Michael Reeder— 24 Additionally, Miguel Natera declares that he told Michael 25 Reeder, the son-in-law to the Wards, that the bankruptcy had 26 stopped the foreclosure sale and Debtor still owned the 27 Property, but Mr. Reeder was allegedly not concerned about the 28 bankruptcy because it could not be undone if sold more than 1 once. Miguel Natera Decl. & Dep., Docs. #87, #231, Ex. F. Mr. 2 Reeder allegedly informed Miguel Natera that his parents-in-law 3 were intending to purchase the Property and was allegedly acting 4 as a middleman for the Wards, but this statement is also 5 hearsay. Id.; FRE 801-03. 6 But Mr. Reeder was deposed on September 20, 2021 and denied 7 ever talking to Miguel Natera or Maria Mills when the Wards were 8 in the process of purchasing the Property. Reeder Dep., 9 Doc. #222, Ex. J. Mr. Reeder acknowledges that he has known 10 Debtor for many years but claims that he does not know Ms. Mills 11 and has never spoken to her. Further, Mr. Reeder claims that he 12 has not represented the Wards in any capacity with respect to 13 the Property. Id. [14] 15 Improvements 16 The Wards claim to have paid the property taxes and invested 17 at least $35,647.00 to maintain and improve Property. Sandra 18 Ward Decl., Doc. #78. Specifically, the Wards removed trees and 19 irrigated, laid a permanent foundation for the mobile home, 20 laser-leveled and cleaned up the 9.6-acre parcel, fumigated, 21 fenced and gated the 9.6-acre parcel, relocated an electrical 22 pole, pumped the septic tank and improved plumbing and 23 insulation, and erected a flagpole. Id. Additionally, the Wards 24 claim that the Lincicums improved the Property before selling it 25 to the Wards by drilling a water well and installing and 26 repairing the equipment necessary to pump groundwater to the 27 surface for residential use. Id. However, Debtor objected to the 28 Wards’ statements regarding improvements made by Lincicums, 1 which is sustained in the rulings on objections attached to the 2 end of this ruling. Evid. Objs., Doc. #90. 3 In addition to paying $150,000 to purchase Property, the 4 Wards have invested $35,647.00 in improvements and maintenance 5 and $19,515.00 to clear title to the Mobile Home and pay 6 property taxes and irrigation assessments. Sandra Ward Decl., 7 Doc. #78. If this motion is not granted, the Wards estimate that 8 they stand to lose over $200,000. Id. [9] 10 Debtor’s Knee Surgery and Recovery 11 Shortly after the sale to the Wards, Debtor was admitted to 12 the Veteran’s Affairs (“VA”) hospital in Fresno for knee surgery 13 on June 22, 2018. Debtor Decl., Doc. #252. Debtor was discharged 14 from the hospital nearly one month later on July 17, 2018. Id. 15 After being released from the hospital, Debtor stayed with his 16 son, Manny, for approximately one month before moving in with 17 family in Hanford, where he continued post-surgery rehab. Id. 18 After that, Debtor briefly moved to Pixley, returned to Hanford, 19 and then eventually settled in Tulare. Id. Debtor completed 20 physical therapy in September 2018. Id. [21] 22 State Court Action 23 In August of 2018, the Wards asked Debtor to remove the 24 Mobile Home. Sandra Ward Decl., Doc. #78. In November of 2018 25 and after receiving no response, the Wards filed the State Court 26 Action, Tulare County Superior Court Case No. 186664, which 27 sought a judgment of abandonment of the Mobile Home and for 28 recovery of rents and costs related to maintenance and storage. 1 Id.; cf. State Court Action Compl., AP Doc. #357, Ex. C. The 2 Superior Court entered a judgment in favor of the Wards on 3 December 2, 2019. J., Doc. #83, Ex. K. This judgment provides: 4 (1) the Wards are the owners of the Property; (2) the Mobile 5 Home was legally abandoned by Debtor; (3) the Wards can take 6 title to the Mobile Home through the California Department of 7 Housing and Community Development’s (“HCD”) process, and (4) 8 Debtor must pay the Wards $15,131.87. Ibid. The Superior Court 9 also entered an Order for Costs. Order, id., Ex. L. 10 The Wards followed the HCD procedures and became title 11 owners of the Mobile Home. Sandra Ward Decl., Doc. #78. The 12 Wards claim to have spent $19,515.00 in attorney’s fees, costs, 13 investigator fees, HCD fees, and registration fees to obtain 14 title ownership, as well as property taxes and irrigation 15 assessments. Id. [16] 17 Debtor’s Lack of Involvement and Eventual Reinvolvement 18 Towards the end of 2018 or beginning of 2019, Debtor began 19 receiving documents that required a response to the Wards’ legal 20 action against him and his ex-wife, Ms. Mills. Debtor Decl., 21 Doc. #252. In approximately March of 2019, Debtor hired a man 22 named “Mr. Dunn” to prepare paperwork. Id. Debtor and Mr. Dunn 23 went to State Court Action hearings on two occasions, but Mr. 24 Dunn was not an attorney. Debtor claims he was not permitted to 25 be in court without an attorney because the case was very 26 complicated. Id. 27 Debtor did not have any money to pay an attorney to 28 represent him and did not know what to do. Ms. Mills, who had 1 previously been helping Debtor, was caring for her sick father, 2 and lived over seven hours away, so she was not available. Id. 3 Sometime in 2019, Debtor was informed that the State Court 4 Action would go to mediation. Id. Since an attorney was not 5 needed for mediation, Debtor stopped looking for one. However, 6 mediation was canceled, and the Wards subsequently sought and 7 prevailed on summary judgment. Id. 8 Debtor learned that the Wards had obtained a judgment 9 against him in late 2019 or early 2020. Id. In March 2020, 10 Debtor hired his current counsel, Fear Waddell, P.C., on a 11 contingency basis, who reopened the case in June of 2020 and 12 filed the adversary proceeding against Barnes, Parker 13 Foreclosure, the Lincicums, and the Wards. [14] 15 Related Bankruptcy Proceedings Post-Reopening 16 The Wards filed their first motion to retroactively annul 17 the automatic stay on September 25, 2020. Doc. #55; TAT-1. It 18 was denied for procedural reasons on October 21, 2020. Docs. 19 ##73-74. 20 The Wards’ second attempt — this motion — was filed on 21 November 12, 2020. Doc. #76. It has been pending for nearly two 22 years. 23 In September of 2021, Debtor filed a motion for summary 24 judgment in the bankruptcy seeking declaratory relief on 25 violation of the automatic stay. Doc. #115; FW-3. 26 Not long after, Barnes and Parker Foreclosure filed their 27 first motion to retroactively annul the automatic stay on 28 October 29, 2021. Doc. #130; WEW-3. It was denied for procedural 1 reasons on January 7, 2022. Docs. ##163-64. 2 Barnes and Parker Foreclosure re-filed their second motion 3 to retroactively annul the automatic stay on February 16, 2022. 4 Doc. #171; WEW-4. After reviewing the evidence, the court denied 5 that motion because it appeared that Barnes and Parker 6 Foreclosure had knowledge of the bankruptcy, repeatedly violated 7 the automatic stay, and considerably delayed in seeking 8 annulment. Docs. ##191-92. The minutes indicated that damages 9 would be determined in the parties’ related adversary 10 proceeding. Civ. Mins. (Mar. 16, 2022), Doc. #191. 11 On October 4, 2022, the court issued a ruling denying 12 Debtor’s summary judgment motion related to this contested 13 matter due to remaining genuine issues of material fact. 14 Docs. #242; #244. 15 Meanwhile, the adversary proceeding continued. AP 20-01035. 16 Barnes and Parker filed a third-party complaint to add the title 17 company as a third-party defendant, but the third-party 18 complaint was amended in August 2022. AP Docs. #246; #327. 19 Multiple summary judgment motions have been filed, but discovery 20 has halted and has not yet resumed due to supplemental and 21 third-party pleadings. AP Docs. #124; #138. 22 At first, the Wards and Debtor agreed this motion could be 23 continued to track the related adversary proceeding in which 24 Debtor seeks relief against the Wards and others. This allowed 25 for efficient discovery and factual development. Now, the Wards 26 and Debtor ask the court to decide this motion on the record 27 presented. Each party then is deemed to consent to the court’s 28 resolution of factual issues under Fed. R. Civ. P. 43(c) (Fed. 1 R. Bankr. P. 9017) and LBR 9014-1(f), (g)(3). [2] 3 DISCUSSION [4] 11 U.S.C. § 362 (d)(1) allows the court to grant relief from 5 the stay for cause, including the lack of adequate protection. 6 “Because there is no clear definition of what constitutes 7 ‘cause,’ discretionary relief from the stay must be determined 8 on a case-by-case basis.” In re Mac Donald, 755 F.2d 715 , 717 9 (9th Cir. 1985). [10] 11 U.S.C. § 362 (d)(2) allows the court to grant relief from 11 the stay if the debtor does not have an equity in such property 12 and such property is not necessary to an effective 13 reorganization. 14 The Wards seek retroactive annulment to lift the automatic 15 stay effective as of the time of the sale on the petition date: 16 October 25, 2017, at 2:00 p.m. Docs. #76; #85. In summary, the 17 Wards maintain that they acquired Property from the Lincicums 18 without any knowledge of the bankruptcy that was dismissed 19 before they knew about Property. Docs. #76; #78; #80; #94; #220. 20 Debtor opposes on the basis that both the Lincicums and the 21 Wards had both actual and constructive knowledge of the 22 bankruptcy, either directly or through their agents, but they 23 opted to proceed exercising control over Property despite 24 knowledge of the automatic stay, and therefore are not entitled 25 to retroactive stay relief. Docs. ##85-89; #230. 26 /// 27 /// 28 /// 1 Agency Liability and the Wards’ Bona Fide Purchaser Defense 2 A bona fide purchaser is a buyer that purchases property 3 (1) for value, (2) in good faith, and (3) without actual or 4 constructive knowledge of another’s rights. Oakdale Village 5 Group v. Fong, 43 Cal. App. 4th 539, 547 (1996). 6 Debtor argues that the Wards, as well as Barnes, Parker, 7 and the Lincicums, had both direct, actual knowledge of the 8 bankruptcy and constructive knowledge through their agents. 9 Docs. #85; #230. Relying on Cal. Civ. Code § 2295 , Debtor 10 insists: (1) realtor Bryce Smith was the agent of Barnes, the 11 Lincicums, and the Wards; (2) Susie Kellogg was an agent of the 12 Lincicums; and (3) Michael Reeder was an agent of the Wards. Id. 13 The existence of an agency relationship can be demonstrated 14 by circumstantial evidence, including the acts of the parties 15 and their written and oral communications. Whittaker v. Otto, [16] 188 Cal. App. 2d 619, 622-23 (Ct. App. 1961). Further, an agent 17 is required to keep a principal informed of acts in the course 18 of the agency. Cal. Civ. Code § 2020 . 19 Since Mr. Smith, Ms. Kellogg, and Mr. Reeder were all 20 informed of the bankruptcy at one point or another, Debtor 21 argues that their knowledge of the automatic stay is imputed to 22 their principals, which includes the Lincicums and the Wards. 23 Docs. #85; #230. On that basis, Debtor urges the court to deny 24 this motion because the Wards are not bona fide purchasers 25 because they had actual and/or constructive knowledge of the 26 bankruptcy. 27 The court need not decide at this time whether the Wards 28 are bona fide purchasers in good faith without actual or 1 constructive knowledge, or whether the Wards are liable under 2 agency theories of liability. Both issues are heavily contested 3 and will be resolved in the related adversary proceeding. [4] 5 Retroactive Stay Relief 6 The Ninth Circuit Bankruptcy Appellate Panel warned that 7 retroactive relief should only be “applied in extreme 8 circumstances.” In re Aheong, 276 B.R. 233, 250 (B.A.P. 9th Cir. 9 2002) (citations omitted). When deciding a motion to annul the 10 automatic stay, the court may consider the following “Fjeldsted” 11 factors: 12 1. Number of filings; 2. Whether, in a repeat filing case, the 13 circumstances indicate an intention to delay and hinder creditors; 14 3. A weighing of the extent of prejudice to creditors or third parties if the stay relief 15 is not made retroactive, including whether harm exists to a bona fide purchaser; 16 4. The Debtor’s overall good faith (totality of circumstances test; 17 5. Whether creditors knew of the stay but nonetheless took action, thus compounding the 18 problem; 6. Whether the debtor has complied, and is 19 otherwise complying, with the Bankruptcy Code and Rules; 20 7. The relative ease of restoring parties to the status quo ante; 21 8. The costs of annulment to debtors and creditors; 22 9. How quickly creditors moved for annulment, or how quickly debtors moved to set aside the 23 sale or violative contract; 10. Whether, after learning of the bankruptcy, 24 creditors proceeded to take steps in continued violation of the stay, or whether they moved 25 expeditiously to gain relief; 11. Whether annulment of the stay will cause 26 irreparable injury to the debtor; 12. Whether stay relief will promote judicial 27 economy or other efficiencies. 28 In re Fjeldsted v. Lien (In re Fjelsted), 293 B.R. 12 , 24-25 1 (B.A.P. 9th Cir. 2003). One factor alone may be dispositive. Id. 2 The court finds that the Fjeldsted factors weigh slightly 3 in favor of annulling the automatic stay as follows: 4 1. Number of filings: There has only been one chapter 13 5 filing here, which ended in dismissal after two months due to 6 failure to pay filing fees. This factor appears to either be 7 inapplicable, or slightly weighs against annulling the automatic 8 stay. 9 2. Whether, in a repeat filing case, the circumstances 10 indicate an intent to delay and hinder creditors: The Wards 11 claim that the timing of the bankruptcy on the day of the 12 scheduled foreclosure and Debtor’s failure to pay the filing 13 fees indicate that the chapter 13 bankruptcy was filed with the 14 intent to delay or hinder creditors, including later bona fide 15 purchasers of the Property. Doc. #235. Although this was 16 Debtor’s only bankruptcy filing, his failure to intervene in the 17 sale to the Lincicums and then to the Wards is evidence of 18 scheme to harm creditors who spent resources improving the 19 Property. Further, the bankruptcy was not disclosed in the State 20 Court Action, and stay violation allegations were only raised 21 after the state court issued a judgment against Debtor. Id. 22 In response, Debtor notes that this factor applies 23 specifically to repeat filings. Docs. #85; #230. Since this was 24 Debtor’s first bankruptcy filing, this factor is inapplicable. 25 The court agrees that this factor is inapplicable. 26 3. Prejudice to creditors or third parties if the stay 27 relief is not made retroactive, including harm to bona fide 28 purchasers: The Wards contend that they are bona fide purchasers 1 of Property because they purchased it for value, in good faith, 2 and without actual or constructive knowledge of another’s 3 rights. Doc. #235. Although the Wards concede knowledge that 4 ownership of the Mobile Home was in dispute at the time of their 5 purchase, they affirm their lack of knowledge about the 6 bankruptcy, or Debtor’s claim to Property itself. 7 As bona fide purchasers, the Wards claim that they would be 8 severely prejudiced if stay relief was not made retroactive. At 9 the time this motion was filed, the Wards spent more than 10 $35,000 improving and maintaining Property, in addition to 11 paying the property taxes. The Wards claim that they purchased 12 Property to give to their grandson. Further, they have been the 13 current owners of the Property for more than four years and 14 would not have continued to improve Property or sought to obtain 15 ownership of the Mobile Home had they known that the underlying 16 sale would be voided. 17 Debtor responds that the Wards are not bona fide purchasers 18 because they had actual and/or constructive knowledge of the 19 bankruptcy and the automatic stay with Barnes, Parker 20 Foreclosure, and the Lincicums. Docs. #85; #230. This knowledge 21 allegedly derives from their predecessors, who also had 22 knowledge of the bankruptcy. Even so, Debtor claims the Wards 23 were notified of the bankruptcy through (i) conversations with 24 Ms. Mills and Miguel Natera and (ii) constructive knowledge 25 under theories of agency liability from their realtor, Mr. 26 Smith, and their alleged agent and son-in-law, Michael Reeder. 27 As a result, there are no bona fide purchasers in this case, 28 says Debtor, because the Wards were fully aware of the risks of 1 acquiring the Property. Id. 2 However, the Wards correctly point out that there is no 3 reliable evidence of their knowledge, constructive or otherwise. 4 Debtor’s ex-wife and son claim to have notified the Wards’ 5 agents, but those agents dispute being notified, or in the case 6 of Mr. Reeder, dispute being agents. 7 As noted above, the court declines to make any finding on 8 whether the Wards are bona fide purchasers at this time. Whether 9 the Property was purchased in good faith or without actual or 10 constructive knowledge will be an issue to be determined in the 11 adversary proceeding. Regardless of the correct narrative and 12 the Wards’ status as bona fide purchasers, the record indicates 13 that the Wards would be severely prejudiced if the stay is not 14 annulled as to them because they have significantly improved the 15 Property over the last four years. Though Debtor was certainly 16 prejudiced by Barnes’ and Parker Foreclosure’s violation of the 17 automatic stay, such prejudice has been the status quo for five 18 years. Further, Debtor’s prejudice can be mitigated if he 19 prevails in his claim for damages in the adversary proceeding. 20 This factor favors annulment. 21 4. Debtor’s overall good faith (totality of the 22 circumstances): Good faith includes whether (1) the debtor has 23 misrepresented the facts or manipulated the Bankruptcy Code in 24 an inequitable manner; (2) Debtor’s history of bankruptcy 25 filings; (3) Debtor intended to frustrate collection of a state 26 court judgment; and (4) “egregious behavior.” In re Welsh, 711 27 F.3d 1120 , 1132 (9th Cir. 2013), citing In re Leavitt, 171 F.3d 28 1219, 1224 (9th Cir. 1999). “In sum, the inquiry focuses on the 1 debtor’s motivation and forthrightness with the court in seeking 2 relief.” Welsh, 711 F.3d at 1132. 3 The Wards argue that Debtor has not acted in good faith 4 because: (a) his bankruptcy case was dismissed because he never 5 paid the filing fee; (b) he did not complete credit counseling, 6 so he was not eligible to even be a chapter 13 debtor; and (c) 7 he never filed a plan or made any plan payments. Since he was 8 never eligible to file bankruptcy, never eligible to confirm a 9 plan, and did not own any equity interest in the Property, there 10 was no estate to reorganize, and Property was not necessary for 11 an effective reorganization. Doc. #235. Further, Debtor waited 12 multiple years before reopening the bankruptcy and filing the 13 adversary proceeding. 14 Debtor disagrees, contending that the chapter 13 petition 15 was filed with intent to make his plan payments and cure the 16 arrearage owed on the claim to Barnes, but due to Barnes’ 17 illegal filing of the Trustee’s deed, any prospective refinance 18 was rendered impossible. Docs. #85; #230. Debtor postulates that 19 the joint collusion of the parties — Barnes, Parker Foreclosure, 20 the Lincicums, and the Wards — resulted in the dismissal of his 21 bankruptcy. These circumstances beyond his control hindered his 22 ability to successfully complete the bankruptcy through 23 refinancing Property, says Debtor. 24 However, there is no evidence that any alleged collusion 25 prevented Debtor from paying the filing fee or attending to the 26 prerequisite credit counseling. Even if he had paid the filing 27 fee, this bankruptcy would ultimately still have been dismissed 28 because Debtor was not eligible to be a chapter 13 debtor due to 1 his failure to complete a credit counseling course from an 2 approved counseling agency and failure to file a credit 3 counseling certificate reflecting the same. See 11 U.S.C. 109(h) 4 (“an individual may not be a debtor under this title unless such 5 individual has, during the 180-day period ending on the date of 6 filing of the petition . . . received from an approved nonprofit 7 budget and credit counseling agency . . . an individual or group 8 briefing . . .”). 9 Though there is no evidence of bad faith, misrepresentation 10 of facts, or egregious conduct, the timing of the bankruptcy 11 less than one minute before a rescheduled foreclosure sale and 12 Debtor’s ineligibility to be a debtor suggest that Debtor’s 13 bankruptcy petition was filed prematurely and/or solely to delay 14 the sale. 15 Debtor’s supplemental declaration explains that the delay 16 in prosecuting this case was the result of health issues that 17 occurred shortly after dismissal of the bankruptcy and during 18 the pendency of the State Court Action. Debtor Decl., Doc. #252. 19 Although the court is not making any findings of bad faith, 20 Debtor’s ineligibility to be a debtor and the undisputed reason 21 for the dismissal — failure to pay a filing fee — causes this 22 factor to slightly weigh in favor of annulment. 23 5. Whether creditors knew of the stay but nonetheless took 24 action, thus compounding the problem: The Wards claim that there 25 was no stay in effect at the time they purchased the Property, 26 and that there is no credible evidence that they learned of the 27 dismissed bankruptcy and its effect on the foreclosure sale of 28 Property prior to the Wards’ purchase. Doc. #235. However, the 1 bankruptcy case and its potential impact on Parker Foreclosure’s 2 recording the Trustee’s Deed on October 30, 2017, was disclosed 3 in the preliminary title report to the Lincicums when they 4 closed on the purchase of Property from Barnes. 5 Debtor emphasizes that this is the most relevant factor 6 here. Docs. #85; #230. Barnes and Parker Foreclosure were 7 promptly notified on the day of or shortly after the foreclosure 8 sale. In spite of that knowledge and without taking any 9 corrective action, they proceeded to execute and record the 10 Trustee’s Deed and then transferred Property to the Lincicums. 11 Next, the Lincicums further compounded the problem by 12 transferring Property to the Wards. The Wards subsequently 13 improved the Property and obtained the Mobile Home, compounding 14 the initial stay violation even more. But this argument begs the 15 question of whether the Wards had knowledge of the bankruptcy 16 case. This factor weighs against annulment but is not 17 conclusive. 18 6. Whether the debtor has complied, and is otherwise 19 complying, with the Bankruptcy Code and Federal Rules of 20 Bankruptcy Procedure: The Wards argue that Debtor failed to 21 comply with the Bankruptcy Code, as evidenced by the dismissal 22 for failing to pay the filing fee, failing to provide all pages 23 of his state and federal tax returns, failing to complete credit 24 counseling in the six months preceding the petition date, and 25 failing to make all payments required by his chapter 13 plan. 26 Doc. #235. Further, the Wards assert that Debtor further failed 27 to comply with the Code because he neither notified them nor the 28 Lincicums of the bankruptcy. 1 On the other hand, Debtor maintains that his lack of 2 compliance was due to the Wards’, the Lincicums’, and Barnes’ 3 actions in clouding title to Property with the void Trustee’s 4 Deed. Had this not been done, Debtor could have potentially 5 refinanced Property to fund his chapter 13 plan. Debtor’s 6 position is speculative at this time. 7 However, blaming Debtor’s lack of compliance with the 8 credit counseling prerequisite on his post-petition foreclosure 9 does not make sense. Since Debtor was not eligible to be a 10 debtor at the time he filed bankruptcy, his was never going to 11 be able to comply with the Bankruptcy Code. This factor favors 12 annulment. 13 7. The relative ease of restoring parties to the status quo 14 ante: The Wards contend that it would be impossible to restore 15 the parties to the status quo ante. Doc. #235. The Property has 16 been sold multiple times, the Wards have been the owners for 17 more nearly four and a half years, have paid property taxes, and 18 have improved Property by setting the Mobile Home on a permanent 19 foundation, fencing and laser leveling Property, installing 20 plumbing and landscaping, and performing other maintenance and 21 improvements. It would be impossible to remove those 22 improvements or restore the value added back to the Wards. 23 Further, the real estate and economic markets have shifted 24 drastically since October 25, 2017, and there has been a 25 pandemic. 26 In contrast, Debtor theorizes that restoring the parties to 27 the status quo ante is relatively simple. Docs. #85; #230. 28 Debtor is still the owner of the Property, and other parties may 1 litigate against each other or title insurance to recover their 2 expenses from illegally removing Debtor from his property. 3 Given the complexity of this case and multiple transactions 4 involved, it would be extremely burdensome to restore the 5 parties to the status quo ante. The Wards paid property taxes, 6 attorneys’ fees, and made improvements to Property, which cannot 7 be easily reversed. This factor weighs in favor of annulment. 8 8. The costs of annulment to debtors and creditors: The 9 Wards claim there is no cost of annulling the stay because it 10 maintains the status quo. Doc. #235. Debtor has damage claims 11 against multiple parties, so he can recover his damages from 12 those parties. Id. Meanwhile, the Wards claim to be at risk of 13 losing over $200,000 if the stay is not annulled. Sandra Ward 14 Decl., Doc. #78. 15 But if granted, Debtor replies that the cost of annulment 16 would be “astronomical” because he would be denied his right to 17 pursue corrective action against the creditors who colluded to 18 willfully violate the automatic stay. Docs. #85; #230. 19 The cost to Debtor is certainly excessive but given the 20 vast amount of change in the last five years, restoration of 21 Property to its status before October 25, 2017 is not feasible. 22 Further, Debtor has a damage claim under 11 U.S.C. § 362 (k). 23 This factor supports annulment. 24 9. How quickly creditors moved for annulment, or how 25 quickly debtors moved to set aside the sale or violative 26 contract: The Wards focus on Debtor’s 2.5-year delay between the 27 initial stay violation and Debtor’s reopening the case to file 28 an adversary proceeding. Doc. #235. During this period, the 1 Wards maintain that they were never notified of the bankruptcy 2 and did not learn about it until Debtor filed his adversary 3 proceeding in June of 2020. Prior to reopening, the parties were 4 engaged in litigation in the State Court Action, but Debtor did 5 not raise the bankruptcy in any of his pleadings or appearances. 6 Shortly after the case was reopened and the adversary proceeding 7 was filed, the Wards moved relatively expeditiously to 8 retroactively annul the automatic stay in September of 2020. But 9 the Wards were not proactive, either. They did not act until 10 after the case was reopened and the adversary proceeding was 11 filed. 12 Debtor explains that the reason for the delay is that he 13 was facing financial issues, including being forced out of his 14 residence, and health issues, which prevented him from enforcing 15 his rights sooner. Debtor Decl., Doc. #252. Shortly after the 16 case was reopened and the adversary proceeding was filed, the 17 Wards filed their first motion to annul the stay. 18 The delay from both sides is fairly egregious, but both 19 Debtor and the Wards mitigate their delay through financial and 20 health issues for Debtor, and lack of knowledge of the 21 bankruptcy for the Wards. This factor appears to be neutral as 22 to the Wards. 23 10. Whether, after learning of the bankruptcy, creditors 24 proceeded to take steps in continued violation of the stay, or 25 whether they moved expeditiously to gain relief: After the 26 bankruptcy case was reopened, the Wards filed their first motion 27 to annul the stay on September 25, 2020, approximately three 28 months after reopening. Doc. #55; TAT-1. 1 Debtor accuses the parties – Barnes, Parker Foreclosure, 2 the Lincicums, and the Wards – of knowing about the bankruptcy 3 and continuing to violate the automatic stay anyway by 4 repeatedly conveying Property. Docs. #85; #230. 5 But in the reverse, Debtor could have reopened the case 6 sooner, and could have taken more proactive steps to notify the 7 parties, including sending or recording a notice of the 8 bankruptcy. Debtor explains that he could not do this because of 9 his health and financial issues. Debtor Decl., Doc. #252. But 10 these issues also could have prevented a successful bankruptcy. 11 This factor weighs slightly in favor of annulling the automatic 12 stay. 13 11. Whether annulment of the stay will cause irreparable 14 injury to the debtor: If the stay is annulled, the Debtor will 15 still have a damage claim against the parties involved in the 16 transfers of Property in Debtor’s related adversary proceeding. 17 If the stay is not annulled, the Wards will suffer injury, but 18 they may have a damage claim too. 19 On the other hand, Debtor argues that if the stay is 20 annulled, he will lose his property, his right to deal with the 21 debt owed on Property, and his ability to seek damages against 22 the parties that willfully violated the stay. Docs. #85; #230. 23 Debtor neglects to mention he exercised his right to reorganize 24 and keep Property but his case was dismissed. 25 The court disagrees that Debtor will not have a damage 26 claim if the stay is annulled as to the Wards. The extent of 27 those damages is unclear but will be litigated in the adversary 28 proceeding. This factor slightly favors annulment. Further, the 1 reality is Debtor has not pursued his rights until hiring his 2 current counsel. 3 12. Whether stay relief will promote judicial economy or 4 other efficiencies: The Wards insist that annulling the stay 5 will promote judicial economy and other efficiencies by 6 resolving the adversary proceeding. Doc. #235. The subsequent 7 sale will remain intact, and title will be quieted to the Wards. 8 However, if the stay is not annulled, litigation will continue, 9 including all of the cross-actions between the parties for 10 failure to deliver clear title to the Wards. But this is not 11 completely accurate either. If the stay is annulled, it will be 12 to the effect of the automatic stay only. Debtor still has a 13 damage claim. Though the sale will remain intact, the Wards will 14 not be relieved of any liability in the adversary proceeding 15 should Debtor prevail. The court will not make a finding 16 quieting title to the Wards. Such relief is unavailable on this 17 motion. See Fed. R. Bankr. P. 7001(2). 18 In response, Debtor acknowledges that annulment would 19 reduce litigation. Docs. #85; #230. But with that loss would be 20 Debtor’s loss of his right to pursue his claims against the 21 parties that took illegal action against him to acquire his 22 property. Debtor contends that annulling the stay would unjustly 23 harm the bankruptcy process by undermining the promotion of 24 equity. The court disagrees. Equity is fostered by annulling the 25 stay as to the Wards. This will allow the Debtor’s damage action 26 to proceed to trial against all defendants. 27 Debtor does not believe that this factor should weigh 28 heavily into the court’s decision. Though this factor weighs 1 heavily in favor of annulment, the court agrees that it is not, 2 by itself, dispositive. [3] 4 CONCLUSION 5 Despite a compelling showing from both sides, the Fjeldsted 6 factors slightly weigh in favor of retroactively annulling the 7 automatic stay. There is conflicting evidence that the Wards had 8 any knowledge of the bankruptcy. The considerable harm that 9 would befall the Wards if annulment were not granted cannot be 10 justified without more substantial evidence. The Debtor bears 11 that burden under 11 U.S.C. § 362 (g)(2). 12 Notwithstanding Debtor’s ineligibility to be a debtor under [13] 11 U.S.C. § 109 (h), the automatic stay arose upon the filing of 14 the petition and was still in full force and effect on October 15 25, 2017. Debtor was undoubtedly damaged due to Barnes’ and 16 Parker Foreclosure’s recording of the Trustee’s Deed, but Debtor 17 still has a damage claim in the adversary proceeding. The court 18 is not insulating the Wards or any other defendant in the 19 adversary proceeding from Debtor’s damage claim. Annulling the 20 stay as to the Wards is not tantamount to a finding that the 21 Wards, or any other defendant, did not willfully violate the 22 stay. That issue remains to be decided. [23] 11 U.S.C. § 362 (d)(1) affords the court broad discretion 24 and flexibility in its approach to granting relief from the 25 automatic stay imposed under § 362(a). Groshong v. Sapp (In re 26 MILA, Inc.), 423 B.R. 537, 542 (B.A.P. 9th Cir. 2010) (“The 27 Bankruptcy Code also recognizes that certain circumstances 28 require the court to respond to other interests and permits a 1 flexible approach to the stay as the circumstances may 2 require.”); see also, Barnes v. Barnes (In re Barnes), 279 F. 3 | App’ 318, 319 (5th Cir. 2008) (per curiam) (“Bankruptcy courts 4 are given broad discretion to fashion relief from the automatic 5 stay, including retroactive annulment if warranted.”). 6 Based on a weighing of the Fjeldsted factors, and for the 7 reasons stated above, the court will GRANT this motion under 11 8 U.S.C. § 362 (d) (1) to retroactively annul the effect of the 9 automatic stay as to the Wards only, effective as of October 25, 10 2017. This ruling annuls only the effect of the automatic stay 11 only, not its existence. The stay arose when Debtor filed 12 chapter 13 bankruptcy on October 25, 2017 and this ruling does 13 not negate any violation(s) of the stay. Debtor’s claim for 14 damages resulting from any stay violation(s) will proceed in his 15 related adversary proceeding against all parties, including the 16 Wards, and will be determined at a later date. 17 The Wards’ request for relief under 11 U.S.C. § (2) 18 is therefore moot. 19 The Moving Party shall lodge a proposed order approved only 20 as to form by the Debtor’s counsel. [22] Dated: Nov 16, 2022 By the Court [23] 25 ené Lastreto II, Judge United States Bankruptcy Court [28] 1 RULINGS ON EVIDENTIARY OBJECTIONS 2 Debtor’s Objections to the Declaration of Thomas Trapani 3 Material Grounds for Court’s Objected To: Objections: Ruling: 4 1. “According to the records, the 1a. Foundation, FRE 602. 1a. Sustained. Debtor filed Case No. 17-14112 at 5 2:00 p.m. on October 25, 2017.” 1b. Personal knowledge, 1b. Sustained. Trapani Decl., Doc. #70 at ¶ 5, FRE 602. 6 Lines 2:11-12. 1c. Relevance, FRE 401. 1c. Overruled. [7] 1d. Original documents, 1d. Sustained. 8 FRE 104(b), 1005, 1007 9 1e. Unidentified record, 1e. Sustained. FRE 901(a). [10] 1f. Inadmissible hearsay, 1f. Sustained. 11 FRE 801-03. 12 2. “According to the records, the 2a. Foundation, FRE 602. 2a. Sustained. Debtor filed Case No. 17-14112 at 13 exactly the same moment as the 2b. Personal knowledge, 2b. Sustained. Trustee’s foreclosure auction of FRE 602. 14 the Subject Property.” Id. at ¶ 6, Lines 2:13-14. 2c. Relevance, FRE 401. 2c. Overruled. [15] 2d. Original documents, 2d. Overruled. 16 FRE 104(b), 1005, 1007. 17 2e. Unidentified record, 2e. Sustained. FRE 901(a). [18] 2f. Inadmissible Hearsay, 2f. Sustained. 19 FRE 801-03. [20] 3. “My review of the official 3a. Foundation, FRE 602. 3a. Sustained. records of Tulare County for the [21] Subject Property shows that 3b. Personal knowledge, 3b. Sustained. neither the Voluntary Petition FRE 602. [22] filed by the Debtor, nor the notice of the Chapter 13 Case, 3c. Relevance, FRE 401. 3c. Overruled. [23] were ever recorded in those official records.” Id. at ¶ 8, 3d. Original documents, 3d. Overruled. [24] Lines 2:16-18. FRE 104(b). [25] 3e. Inadmissible Hearsay, 3e. Sustained. FRE 801-03. [26] 27 /// 28 /// 1 Material Grounds for Court’s Objected To: Objections: Ruling: 2 4. “Claims that would have to be 4a. Prejudice exceeds 4a. Overruled. adjudicated would include (a) probative value. FRE 403. 3 claims by Mr. and Mrs. Ward 4b. Overruled. against Mr. and Mrs. Lincicum for 4b. Relevance, FRE 401. 4 failure to deliver clear title to the Subject Property, (b) claims 4c. Improper opinion. FRE 4c. Overruled. 5 by Mr. and Mrs. Lincicum against 701-02. Mr. Barnes for failure to deliver 6 clear title to the Subject Property, (c) claims for unjust 7 enrichment by Mr. and Mrs. Ward against the Debtor, and (d) the 8 claims of the Debtor that are currently pending. All of these 9 legal proceedings will unnecessarily consume judicial 10 resources and drain the resources of innocent parties as well. The 11 Court would face the challenge of making Mr. and Mrs. Ward whole 12 while depriving them of the benefit of their bargain.” Id. at 13 ¶ 10, Lines 2:22-28. [14] 15 Debtor’s Evid. Objs, Doc. #90. 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 1 Debtor’s Objections to the Declaration of Sandra Ward 2 Material Grounds for Court’s Objected To: Objections: Ruling: 3 1. “As bona fide purchasers of the 1a. Improper lay 1a. Sustained. property . . .” Ward Decl., Doc. opinion, FRE 701-02. 4 #78 at ¶ 1, Lines 2:2-3. 1b. Prejudice exceeds 1b. Overruled. 5 probative value. FRE 403. [6] 2. “According to the records that 2a. Foundation, FRE 2a. Sustained. 7 I have reviewed, the Debtor filed 602. Case No. 17-14112 at the same 8 exact moment as the trustee’s 2b. Personal knowledge, 2b. Sustained. foreclosure sale auction of the FRE 602. 9 property that we purchased and now own.” Id. at ¶ 6, Lines 2:13-14. 2c. Relevance, FRE 401. 2c. Sustained. [10] 2d. Original documents, 2d. Overruled. 11 FRE 104(b), 1005, 1007. 12 2e. Unidentified 2e. Sustained. record, FRE 901(a). [13] 2f. Inadmissible 2f. Sustained. 14 hearsay, FRE 801-03. 15 3. “My representatives have 3. Inadmissible 3. Sustained. conducted a search of the official hearsay. FRE 801-03. 16 records of Tulare County and found that neither the Voluntary 17 Petition filed by the Debtor, nor the notice of the Chapter 13 Case 18 were ever recorded in those official records.” Id. at ¶ 7, 19 Lines 2:15-17. 20 4. “According to my research, the 4a. Foundation, FRE 4a. Sustained. successful bidder, Mr. Barnes, 602. 21 evicted the Debtor from the Subject Property sometime between 4b. Personal knowledge, 4b. Sustained. 22 October 25, 2017 and March 27, FRE 602. 2018.” Id. at ¶ 8, Lines 2:18-19. 23 4c. Relevance, FRE 401. 4c. Sustained. 24 4d. Original documents, 4d. Sustained. FRE 104(b), 1005, 1007. [25] 4e. Unidentified 4e. Sustained. 26 record, FRE 901(a). [27] 28 /// 1 Material Grounds for Court’s Objected To: Objections: Ruling: 2 5. “According to the [sic] my 5a. Foundation, FRE 5a. Sustained. research, after March 27, 2018, 602. 3 but before June 14, 2018, Mr. and Mrs. Lincicum improved the Subject 5b. Personal knowledge, 5b. Sustained. 4 Property by drilling a water well FRE 602. and installing and repairing the 5 equipment necessary to pump ground 5c. Relevance, FRE 401. 5c. Sustained. water to the surface for 6 residential use on the Subject 5d. Original documents, 5d. Sustained. Property. The retail value of this FRE 104(b), 1005, 1007. 7 well and pump equipment is $30,555.00.” Id. at ¶ 10, Lines 5e. Unidentified 5e. Sustained. 8 2:22-25. record, FRE 901(a). 9 6. “My husband and I have cared 6. Relevance, FRE 401. 6. Sustained. for the Subject Property since 10 purchasing it in June of 2018.” Id. at ¶ 12, Lines 3:1-2. [11] 7. “My husband and I were not 7. Prejudice exceeds 7. Overruled. 12 creditors or interested parties in probative value. FRE the Debtor’s Chapter 13 Case.” Id. 403. 13 at ¶ 25, Lines 4:19-20. 14 8. “As the successors in interest 8. Improper lay opinion 8. Overruled. to Mr. Barnes’ position in the as to ultimate issue. 15 Property, my husband and I have FRE 701-02. standing in this re-opened Chapter 16 13 Case to seek annulment of the automatic stay.” Id. at ¶ 27, 17 Lines 4:23-24. 18 9. “My husband and I are informed 9a. Personal knowledge 9a. Sustained. and believe that the Promissory and/or foundation, FRE 19 Note this is secured by the Deed 602. of Trust recorded against the 20 Subject Property was in default on 9b. Inadmissible 9b. Sustained. the Petition Date because a hearsay, FRE 801-03. 21 foreclosure sale against the Subject Property was scheduled for 22 the Petition Date.” Id. at ¶ 28, Lines 4:25-27. [23] 10. “My husband and I paid market 10a. Personal knowledge 10a. Overruled. 24 value to a third party through and/or foundation, FRE escrow . . .” Id. at ¶ 33, Lines 602. 25 5:9-10. 10b. Improper lay 10b. Overruled. 26 opinion. FRE 701. [27] 28 /// 1 Material Grounds for Court’s Objected To: Objections: Ruling: 2 11. “Had a notice of the Debtor’s 11. Relevance, FRE 401. 11. Overruled. petition been given, my husband 3 and I would have taken steps to protect our interests before 4 purchasing the Subject Property.” 5 Id. at I 34, Lines 5:11-12. 6 12. “Had notice of the Debtor’s 12. Relevance, FRE 401. 12. Overruled. Petition been given, my husband 7 and I would have taken steps to protect our interests before we g invested significant resources in the Subject Property.” Id. at 9 35, Lines 5:13-14. 10 13. “My husband and I are at risk 13. Improper lay 13. Overruled. of losing over $200,000.00 if we opinion. FRE 701-02. 11 are not granted the relief we seek. Id. at JI 38, Lines 5:20-21. 12 — 14. “It would be impossible to 14. Prejudice exceeds 14. Overruled. 13 remove the improvements and/or to probative value. FRE restore the value added by Mr. and 403. 14 Mrs. Lincicum and my husband and me.” Id. at J 40, Lines 5:25-26. [15] 15. “In order to return the 15. Prejudice exceeds 15. Overruled. 16 parties to the Status Quo Ante, probative value. FRE the Debtor would have to 403. 17 compensate my husband and me for the time, money, effort, trauma 18 and disruption of our lives that occurred while being forced to 19 file a lawsuit and obtain a Judgment and then registering the 20 mobile home in our name and paying property taxes.” Id. at { 41, 21 Lines 5:27-6:2. [22] 23 Id. [24] Dated: Nov 16, 2022 By the Court [25] 27 ené Lastreto II, Judge United States Bankruptcy Court [28] 1 Instructions to Clerk of Court Service List - Not Part of Order/Judgment [2] 3 The Clerk of Court is instructed to send the Order/Judgment or other court generated document transmitted herewith to the 4 parties below. The Clerk of Court will send the Order via the BNC or, if checked , via the U.S. mail. [5] 6 ARMANDO NATERA PO Box 590 7 Pixley CA 93256 8 Michael H. Meyer PO Box 28950 9 Fresno CA 93729-8950 10 Office of the U.S. Trustee United States Courthouse 11 2500 Tulare Street, Room 1401 Fresno CA 93721 [12] Gabriel J. Waddell 13 7650 North Palm Avenue, Suite 101 Fresno CA 93711 [14] Peter A. Sauer 15 7650 North Palm Avenue, Suite 101 Fresno CA 93711 [16] Thomas A. Trapani 17 1550 Parkside Drive, Suite 300 Walnut Creek CA 94596 [18] William E. Winfield 19 5811 Olivas Park Dr., Suite 202 Ventura CA 93003 [20] Zi C. Lin 21 225 S. Lake Avenue Suite 1400 22 Pasadena CA 91101 23 Kelly Andrew Beall 2212 Dupont Drive 24 Irvine CA 92612