In re: Reza Jangali Shirazi

Filing 16

MINUTES (IN CHAMBERS) APPEAL FROM BANKRUPTCY COURT by Judge Christina A. Snyder: The Court hereby AFFIRMS the bankruptcy court's decision on appellee's motion for relief from stay. (Made JS-6. Case Terminated.) Court Reporter: Not Present. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

JS-6

Case No.

CV 12-6597 CAS

Date

June 18, 2013

Title

IN RE: REZA JANGALI SHIRAZI [REZA JANGALI SHIRAZI v. BANK OF
AMERICA, N.A., ETC.; ET AL.]
Bankruptcy No.: 2:12-bk-23492 WB

Present: The Honorable

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants

Not Present

Not Present

Proceedings:

I.

(IN CHAMBERS): APPEAL FROM BANKRUPTCY COURT
(Filed 7/31/12)

INTRODUCTION

On July 31, 2012, debtor-appellant Reza Jangali Shirazi (“Shirazi”) filed an appeal
in this Court, seeking review of the Bankruptcy Court’s grant of appellee Bank of
America, N.A.’s (“BANA”) motion for relief from an automatic stay. On August 31,
2012, Shirazi filed his opening brief, and BANA filed its response on September 14,
2012. After considering the parties arguments, the Court finds and concludes as follows.
II.

BACKGROUND

The instant appeal arises out of the foreclosure of Shirazi’s home. On April 16,
2012, Shirazi’s home at 6869 Oriole Way, La Verne, California 91750 (“Subject
Property”) was sold to appellee BANA at a public foreclosure auction. Dkt. No. 10.1
BANA did not record the Trustee’s Deed Upon Sale (“TDUS”), which names BANA as
the beneficial owner of the Subject Property, until April 25, 2012. Prior to recordation,
Shirazi filed a voluntary petition for bankruptcy on April 17, 2012, the day after the
foreclosure sale occurred. Dkt. No. 10.

1

The sale was conducted pursuant to a Deed of Trust with power of sale in favor of
BANA executed by Shirazi, recorded on February 7, 2007 in the Los Angeles County
Recorder’s Office. Dkt. No. 13.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 12-6597 CAS

June 18, 2013

Title

IN RE: REZA JANGALI SHIRAZI [REZA JANGALI SHIRAZI v. BANK OF
AMERICA, N.A., ETC.; ET AL.]

On May 25, 2012, BANA filed a motion seeking relief from the automatic
bankruptcy stay with respect to actions against the Subject Property. BANA argued that
relief from the automatic stay was appropriate because BANA held title to the Subject
Property, the Subject Property was not necessary to the bankruptcy because Shirazi had
no equity, and Shirazi’s petition for bankruptcy protection was filed in bad faith. Dkt.
No. 10. The Bankruptcy Court granted BANA’s motion for relief from the automatic
stay on July 11, 2012. Dkt. Nos. 6, 10.
III.

LEGAL STANDARD
Fed. R. Bankr. P. 8013 provides:
On appeal the district court or bankruptcy appellate panel may
affirm, modify, or reverse a bankruptcy judge’s judgment,
order, or decree or remand with instructions for further
proceedings. Findings of fact, whether based on oral or
documentary evidence, shall not be set aside unless clearly
erroneous, and due regard shall be given to the opportunity of
the bankruptcy court to judge the credibility of the witnesses.

A “finding is clearly erroneous when although there is evidence to support it, the
reviewing court on the entire evidence is left with the definite and firm conviction that a
mistake has been committed.” United States v. United States Gypsum Co., 333 U.S. 364,
395 (1948). Questions of law are reviewed de novo. In re Luna, 122 B.R. 575, 576 (9th
Cir. BAP 1991). A bankruptcy judge has discretion to grant or deny a secured creditor
relief from the automatic stay, but a judge’s decision may be reversed when it is “based
on an erroneous conclusion of law or when the record contains no evidence on which [the
bankruptcy court] rationally could have based that decision.” In re Conejo Enters., 96
F.3d 346, 351 (9th Cir. 1996).
IV.

DISCUSSION

The dispositive issue in this case is whether a violation of the automatic stay took
place because the TDUS was recorded subsequent to Shirazi’s bankruptcy filing. Shirazi
argues that the post-bankruptcy petition execution and recordation of the TDUS was
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Page 2 of 5

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 12-6597 CAS

June 18, 2013

Title

IN RE: REZA JANGALI SHIRAZI [REZA JANGALI SHIRAZI v. BANK OF
AMERICA, N.A., ETC.; ET AL.]

ineffective to transfer title, leading to the conclusion that the Subject Property remains
part of his bankruptcy estate and is subject to the automatic stay. Dkt. No. 10.
Additionally, Shirazi argues that because BANA does not lawfully own the Subject
Property, it lacks standing to obtain relief from the automatic stay. Dkt. No. 10.
The Court rejects Shirazi’s arguments. Several decisions have considered the
validity of a pre-petition trustee’s sale where recordation of the TDUS occurs postpetition, and have overwhelmingly affirmed the validity of the sales.2 These decisions
reason that, on these facts, no violation of the automatic stay occurs due to the “relation
back” doctrine found in California Civil Code § 2924h(c). See Garner, 208 B.R. at 700
(“The plain language of § 2924h(c) provides that the sale is final when the highest and
last bid is accepted. Thus . . . the foreclosure sale was final when the bankruptcy petition
was filed.”). Section 2924h(c) states, in relevant part, that at mortgage auctions:
[T]he trustee’s sale shall be deemed final upon the acceptance
of the last and highest bid, and shall be deemed perfected as of
8 a.m. on the actual date of sale if the trustee’s deed is recorded
within 15 calendar days after the sale, or the next business day
following the 15th day if the county recorder in which the
property is located is closed on the 15th day.
Cal. Civ. Code § 2924h(c). Applying this provision to the instant facts, the Court finds
that even though the TDUS was not recorded until April 25, 2012, the transfer of title to

2

See In re Lucore, 2013 WL 2367800 at *1 (9th Cir. BAP May 30, 2013) (debtor
filed for bankruptcy on August 25, 2011; purchaser filed for relief from stay after having
purchased the property in question at a trustee’s sale on August 18, 2011 and recording
the TDUS on September 2, 2011); In re Garner, 208 B.R. 698 (Bankr.N.D.Cal. 1997)
(debtor filed for bankruptcy on March 12, 1997; purchaser filed from relief from stay
after having purchased the property in question at a foreclosure sale on March 11, 1997
and recording the TDUS on March 18, 1997); In re Bebensee-Wong, 248 B.R. 820 (9th
Cir. BAP 2000) (debtor filed for bankruptcy on August 16, 1999; purchaser filed for
relief from stay after having purchased the property in question at a trustee’s sale on
August 4, 1999 and recording the TDUS on August 18, 1999).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 12-6597 CAS

June 18, 2013

Title

IN RE: REZA JANGALI SHIRAZI [REZA JANGALI SHIRAZI v. BANK OF
AMERICA, N.A., ETC.; ET AL.]

the Subject Property relates back to April 16, 2012, the date of the foreclosure sale. The
transfer of title to the Subject Property therefore took place prior to the filing of Shirazi’s
petition, leading to the conclusion that the Subject Property was not part of the
bankruptcy estate under 11 U.S.C. § 541 and was not subject to the automatic stay.
Consequently, the transfer did not violate the automatic stay.
In opposition to this line of reasoning, Shirazi cites In re Gonzalez, 456 B.R. 429
(Bankr.C.D.Cal. 2011), rev’d, 2012 WL 8262445 (C.D.Cal. June 14, 2012), and argues
that § 2924h(c) does not support affirming the order below. Like the instant action,
Gonzalez considered the validity of a transfer of title pursuant to a trustee’s auction when
the auction took place prior to the filing of a bankruptcy petition but the transfer was
recorded post-petition. In contrast to the decisions cited above, the court in Gonzalez
found that despite § 2924h(c), the transfer was barred by the automatic stay. The court in
Gonzalez disagreed with these decisions because it found that § 2924h(c) did not make
the transfer of title to property relate back to the date of a trustee’s sale. Instead,
according to Gonzalez, § 2924h(c) only provides that the trustee’s “agreement for sale”
becomes final on the actual date of the trustee’s sale, not that the transfer occurs on the
date of the trustee’s sale. Gonzalez, 459 B.R. at 436 – 438. The court reasoned that
because § 2924h(c) did not contain provisions making transfer of title retroactive, title
does not transfer until the recording date, leading the court to conclude that the transfer
took place after the automatic stay. Id. at 438.
The Court declines to rely on Gonzalez, which is not consistent with the majority
of decisions to have considered the issue raised by appellant. Moreover, to the extent §
2924h(c) is ambiguous, the stated intent of the California legislature leading to the
amendment of this section in 1993 is instructive:
C[alifornia] T[rustees] A[ssociation] points out that the validity
of foreclosure sales is sometimes thrown into question when a
bankruptcy is filed after the trustee’s sale is final, but before the
trustee’s deed can be recorded. Federal bankruptcy courts,
which normally rely on state real property laws, have reached
different results because California law is unclear on how this
situation should be handled. This bill is intended to clarify
California law in these situations by providing that a trustee’s
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 12-6597 CAS

June 18, 2013

Title

IN RE: REZA JANGALI SHIRAZI [REZA JANGALI SHIRAZI v. BANK OF
AMERICA, N.A., ETC.; ET AL.]
sale is deemed ‘perfected’ as of the date of the sale if the
trustee’s deed is recorded within 15 days of the sale.

Comm.Rep. CAA.B. 1196 (1993-94 Reg.Sess.); see also In re Engles, 193 B.R. 23, 27 –
28 (Bankr.S.D.Cal. 1996) (discussing history and purpose of § 2924h(c)). As the court in
Engles makes clear, the purpose of § 2924h(c) is to insure that on facts such as these, a
debtor cannot avoid a foreclosure sale by filing a bankruptcy petition after the foreclosure
sale but prior to the date the sale was recorded. Id.
Because the Subject Property was not part of the bankruptcy estate and therefore
was not subject to the automatic stay, the Court rejects Shirazi’s arguments for reversing
the order below.
V.

CONCLUSION

In light of the foregoing, the Court hereby AFFIRMS the bankruptcy court’s
decision on appellee’s motion for relief from stay.
IT IS SO ORDERED.
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Initials of Preparer

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