Bishara v. One West Bank, FSB

Filing 24

ORDER that the order of the Bankruptcy Court is AFFIRMED. Signed by Judge Robert C. Jones on 6/2/2014. (Copies have been distributed pursuant to the NEF; CC: BK Court - SLR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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In re FRANK BISHARA,
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Debtor.
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FRANK BISHARA,

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Appellant,

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vs.
ONEWEST BANK, FSB,

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Appellee.

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Bankr. No. 11-bk-23182-ABL
Adv. No. 12-ap-01084-ABL
2:14-cv-00082-RCJ
OPINION AND ORDER

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This is an appeal of the findings of fact and conclusions of law issued after a bench trial

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in an adversary proceeding arising out of a pending Chapter 13 bankruptcy case in this District.

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Debtor–Appellant appeals the Bankruptcy Court’s denial of sanctions for violation of the

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automatic stay. The Court has jurisdiction under 28 U.S.C. § 158(a), and it affirms.

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I.

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FACTS AND PROCEDURAL HISTORY
The Bankruptcy Court found substantially as follows. Debtor–Appellant filed bankruptcy

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case No. 11-23182 in this District on August 19, 2011. (See Bankr. Ct. Order ¶ 1, Dec. 3, 2013,

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ECF No. 40 in Adv. No. 12-ap-01084). At the time, Debtor–Appellant owned real property at

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8632 Wild Diamond Ave. in Las Vegas, Nevada (the “Property”). (Id. ¶ 2). Because within one

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year of filing the present bankruptcy petition, Debtor–Appellant had been party to another

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pending bankruptcy case that was dismissed, and because Debtor–Appellant never asked the

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Bankruptcy Court to extend the stay in the present bankruptcy case, the stay expired by operation

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of law thirty days after Debtor–Appellant filed the petition in the present bankruptcy case. (See

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id. ¶¶ 3–4 (citing 11 U.S.C. § 362(c)(3))). The foreclosure sale Appellee OneWest Bank, FSB

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(“OneWest”) conducted on the Property during the pendency of the automatic stay was void ab

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initio as a violation of the automatic stay; however, OneWest had no knowledge of the

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bankruptcy case when it conducted the sale, so the violation was not willful, and Debtor-

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Appellant was not entitled to damages or fees. (See id. ¶¶ 5, 7). Also, the lockout of the property

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by a non-party to the adversary proceeding occurred after the stay had expired and was therefore

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no violation of the stay at all. (See id. ¶¶ 8–9).

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II.

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STANDARD OF REVIEW
The bankruptcy court’s conclusions of law, including its interpretations of the bankruptcy

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code, are reviewed de novo, and its factual findings are reviewed for clear error. See Blausey v.

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U.S. Trustee, 552 F.3d 1124, 1132 (9th Cir. 2009). A reviewing court must accept the

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bankruptcy court’s findings of fact unless it is left with the definite and firm conviction that a

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mistake has been committed. See In re Straightline Invs., Inc., 525 F.3d 870, 876 (9th Cir. 2008).

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III.

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ANALYSIS
Debtor-Appellant does not appear to challenge any of the Bankruptcy Court’s findings of

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fact but argues that the violation of the stay became “willful” under the Bankruptcy Code after

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the stay expired once Appellee became aware of its previous violation and failed to remedy it.

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Appellee argues that no action or inaction can ever constitute a violation of a stay if the action or

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inaction occurs after the stay expires. Neither party cites to any appellate decisions squarely

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addressing the issue, but the Court agrees with Appellee that violation of a stay under § 362

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requires a willful act or omission during the pendency of the stay, and it appears clear there was

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none here.

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Debtor-Appellant complains that Appellee has still not rescinded the void foreclosure sale

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or “re-transferred” the property to him. But since the Bankruptcy Court declared the sale to have

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been void ab initio, Debtor-Appellant has been able to use the Bankruptcy Court’s order to prove

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his good title in the Property (assuming Appellee or an assignee did not properly foreclose anew

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after the stay expired) in any forum. Debtor-Appellant’s remedy (assuming Appellee or an

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assignee did not properly foreclose anew after the stay expired) is to record the Bankruptcy

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Court’s order with the county recorder and/or request an order from the Bankruptcy Court

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expunging the void trustee’s deed pursuant to 11 U.S.C. § 105 if Appellee refuses to do it. It

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would not be a proper remedy, as Debtor-Appellant suggests, for Appellee (or a third party) to

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“reconvey” the title, because the Bankruptcy Court has ruled that the trustee’s deed is void, such

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that the putative grantee has nothing to reconvey. If Debtor-Appellant truly believed he could

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have sold the Property and obtained substantial equity from the sale but for Appellee’s void

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trustee’s sale, Debtor–Appellant could have moved under § 105 in the Bankruptcy Court for an

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order that OneWest expunge the recorded trustee’s deed. In any case, Debtor–Appellant does not

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even so much as allege in the Adversary Complaint that he had any buyer willing and able to

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purchase at a price that would have given him any equity or, moreover, that the Bankruptcy Court

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had permitted a post-petition, pre-confirmation sale of what was likely one of the most valuable

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assets of the estate, if not the most valuable—an incredibly unlikely situation. In other words,

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there is simply no cognizable continuing harm alleged in the Adversary Complaint as to

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OneWest’s actions.

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Finally, the Court notes that Appellee is almost certainly correct that the present

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bankruptcy case was filed in order to thwart the proper foreclosure of the Property. As Appellee

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notes, and as the public records of which the Court takes judicial notice confirm, Debtor-

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Appellant filed the present bankruptcy case after a notice of sale was filed in July 2011, but

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before the trustee’s sale occurred in August 2011. Debtor-Appellant filed the present bankruptcy

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case (his sixth) seventeen days after his fifth bankruptcy action was dismissed.1

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CONCLUSION

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IT IS HEREBY ORDERED that the order of the Bankruptcy Court is AFFIRMED.

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IT IS SO ORDERED.

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2nd day of June, 2014.
Dated this 23rd day of May, 2014.

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_____________________________________
ROBERT C. JONES
United States District Judge

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The Trustee’s motion to dismiss the present action is currently pending.
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