Brown v. Lion Share Investments, LLC et al

Filing 13

ORDER by Judge Edward M. Chen DENYING 4 Ex Parte Motion to Stay Pending Appeal. (emclc1, COURT STAFF) (Filed on 10/12/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 Appellant, 8 10 LION SHARE INVESTMENTS, LLC, Docket No. 4 Respondent. 11 Appellant Arlene Brown moved the Court ex parte for a stay of the bankruptcy court’s 12 For the Northern District of California ORDER DENYING EX PARTE MOTION TO STAY PENDING APPEAL v. 9 United States District Court Case No. 17-cv-05531-EMC BROWN, 7 13 order granting Respondent Lion Share Investments, LLC’s motion for relief from the automatic 14 stay under 11 U.S.C. § 362(a) pending a review of her appeal on the merits. For the reasons 15 herein stated, Appellant’s request is DENIED. 16 A. Factual and Procedural Background1 17 Appellant Brown lives at 39 Minerva Street (the “Minerva Property”). It is undisputed 18 that, on July 19, 2017, Lion Share obtained a judgment for possession of the Minerva Property 19 from the San Francisco County Superior Court. It is further undisputed that Appellant did not file 20 a Chapter 13 bankruptcy case until August 16, 2017, case no. 17-30799 DM. Appellant disputes 21 the legal validity of Wells Fargo Bank, N.A.’s (“Wells Fargo”) purchase of the Minerva Property 22 at a Trustee Sale on July 6, 2016 and subsequent recording of the purchase, but does not dispute 23 that it occurred. Similarly, Appellant disputes the legal validity of a transfer of the Minerva 24 25 26 27 28 1 Both parties request judicial notice of documents recorded with the County of San Francisco, documents filed with the Bankruptcy Court, and documents filed in the Superior Court of California related to the unlawful detainer and writ of possession. Because these documents are public records not reasonably subject to dispute, the Court GRANTS both motions with respect to the existence of such documents. See Docket Nos. 5, 11. The Court does not take judicial notice of, or rely on, Respondent’s alleged facts numbers 5-9 related to Appellant’s bankruptcy petitions filed prior to March 2015 because they are not material to this dispute. See Docket No. 11. 1 Property from Wells Fargo to Lion Share on or about January 12, 2017, but does not dispute that it 2 occurred. 3 Lion Share filed a motion for relief from the automatic stay in the bankruptcy court on 4 August 19, 2017, which was granted after a hearing on September 8, 2017. Appellant did not 5 appear at the hearing because she arrived at the court late, after the matter had been heard and the 6 motion granted. Appellant then filed a motion for reconsideration, which was denied on 7 September 12, 2017. Appellant then filed a Notice of Appeal to this Court and an ex parte request 8 in the bankruptcy court for a stay pending appeal on September 4. The bankruptcy court denied 9 the stay request after a hearing on September 29. 10 Discussion The issuance of a stay pending appeal is “an exercise of judicial discretion” “dependent 12 For the Northern District of California United States District Court 11 B. upon the circumstances of the particular case.” Lair v. Bullock, 697 F.3d 1200, 1203 (9th Cir. 13 2012). The Court analyzes four factors: (1) whether the party requesting the stay has made a 14 strong showing that it is likely to succeed on the merits; (2) whether the requesting party will be 15 irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other 16 parties interested in the proceeding; and (4) where the public interest lies. Id. at 1203 (citation and 17 quotation omitted). 18 Here, even if Appellant can demonstrate irreparable injury to herself absent a stay, she has 19 not shown a strong likelihood of success on the merits. The Bankruptcy Court explained that “it is 20 obvious . . . that there is little or nothing this court can do when the moving party has already 21 obtained a judgment for possession of the property Debtor seeks to protect by the automatic stay.” 22 Order on Debtor’s Application for Reconsideration, In re Arlene R. Brown, Case No. 17-30799- 23 DM, Docket No. 24 at 2 (Bankr. N.D. Cal. Sep. 12, 2017) (“Reconsideration Order’). That ruling 24 was correct. In a very similar case, the Ninth Circuit recently “conclude[d] that under California 25 law, entry of judgment and a writ of possession following unlawful detainer proceedings 26 extinguishes all other legal and equitable possessory interests in the real property at issue.” See In 27 re Perl, 811 F.3d 1120, 1127-28 (9th Cir. 2016). Accordingly, “the Sheriff’s lockout did not 28 violate the automatic stay because no legal or equitable interests in the property remained to 2 1 become part of the bankruptcy estate.” Id. at 1130 (emphasis added). Similarly, here, Lion Share 2 obtained an unlawful detainer judgment and writ of possession on July 19, 2017, before Appellant 3 filed for bankruptcy on August 16, 2017. Under In re Perl, Appellant no longer had any legal or 4 equitable interest in the Minerva Property by the time she filed for bankruptcy; accordingly, there 5 was no automatic stay in place, let alone one that Lion Share was required to lift. The Bankruptcy 6 Court’s order granting the motion to lift the stay—which, under In re Perl, did not apply to the 7 Minerva Property in these circumstances—therefore was not erroneous. To the extent Appellant 8 challenges the California court’s issuance of a writ of possession or unlawful detainer proceeding, 9 the Bankruptcy Court correctly advised her that her “remedies, if any, are to be found in the state 10 courts.” Reconsideration Order at 2. Appellant also challenges various procedural issues in the Bankruptcy Court. However, 12 For the Northern District of California United States District Court 11 even if her allegations of procedural error are correct (and they appear not to be), she cannot show 13 that she was prejudiced by those errors. See Fed. R. Bankrutpc. P. 9005 (incorporating Fed. R. 14 Civ. P. 61, which states that “[a]t every stage . . . the court must disregard all errors and defects 15 that do not affect any party’s substantial rights”); In re Rosson, 545 F.3d 764, 776 (9th Cir. 2008) 16 (rejecting claim of procedural error in bankruptcy proceeding where party “can show no prejudice 17 arising from the defective process”). Appellant had an opportunity to be heard at the Bankruptcy 18 Court on at least three occasions: on Lion Share’s initial motion at the September 8 hearing; when 19 she filed a request for reconsideration; and then when she filed a request for a stay pending appeal 20 to this Court. Further, none of the procedural errors alleged would have changed the outcome. 21 The undisputed fact that Lion Share had obtained an unlawful detainer judgment and writ of 22 possession before Appellant filed for bankruptcy disposes of this issue under In re Perl. 23 C. For the reasons herein stated, Appellant’s ex parte application for a stay of the bankruptcy 24 25 Conclusion court’s order is DENIED. This order disposes of Docket No. 4. 26 27 // 28 // 3 1 2 3 4 IT IS SO ORDERED. Dated: October 12, 2017 ______________________________________ EDWARD M. CHEN United States District Judge 5 6 7 8 9 10 12 For the Northern District of California United States District Court 11 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4

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