1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA
IN RE JAMES GREGORY Case No. 22-cv-00078-RBM-BGS 11 BARRETT, Bankruptcy No. 21-03295-MM13 12 Debtor. ORDER DENYING 13 JAMES GREGORY BARRETT, APPELLANT’S MOTION FOR REHEARING 14 Appellant,
16 v.
THOMAS H. BILLINGSLEA, JR., 17
Appellee. [Doc. 30] 18
19 Before the Court is Appellant James Gregory Barrett’s (“Appellant”) motion for 20 rehearing filed on October 5, 2022. (Doc. 30.) Appellant requests reconsideration of this 21 Court’s September 27, 2022 Order Affirming the Bankruptcy Court’s Order Sustaining 22 Objection to Confirmation by Chapter 13 Trustee and Granting Chapter 13 Trustee’s 23 Motion to Dismiss in Part on the Issue of Lack of Good Faith (“September 27, 2022 24 Order”). (See Doc. 28.) Pursuant to Federal Rule of Bankruptcy Procedure 8022(a)(2), 25 oral argument is not permitted on a motion for rehearing. Similarly, “[u]nless the district 26 court . . . requests, no response to a motion for rehearing is permitted.” FED. R. BANKR. P. 27 8022(a)(3). Having considered the motion and for the reasons set forth below, the motion 28 1 is DENIED. 2 I. BACKGROUND 3 The Court’s September 27, 2022 Order contains a complete and accurate recitation 4 of the factual and procedural history underlying Appellant’s Motion. (See Doc. 28.) This 5 Order incorporates by reference the background in the September 27, 2022 Order as set 6 forth therein. 7 As relevant to this Order, on June 3, 2015, Appellant and his spouse obtained a loan 8 from Salton Sea Estates III, LLC (“SSE”), which was reflected in a promissory note 9 secured by a deed of trust encumbering the real property located at 2566 Sea Urchin 10 Avenue, Salton City, California (“Property”). After Appellant defaulted on the note, SSE 11 completed a non-judicial foreclosure sale of the Property on April 11, 2018. SSE pursued 12 a quiet title action as to the Property, followed by an unlawful detainer action. After the 13 state court granted possession of the Property to SSE after conclusion of the unlawful 14 detainer trial, Appellant filed for bankruptcy on August 13, 2021. 15 On September 7, 2021, SSE filed a motion for relief from the bankruptcy court’s 16 automatic stay in the unlawful detainer action. On September 21, 2021, the Chapter 13 17 Trustee filed an objection to confirmation of the proposed Chapter 13 plan and motion to 18 dismiss. On October 14, 2021, the bankruptcy court ultimately granted SSE relief from 19 the stay, which allowed SSE “to proceed [with the unlawful detainer action] to its 20 conclusion and entry of a final judgment and writ of execution as to the premises involved 21 . . .” See In re James Gregory Barrett, Bk. No. 21-03295-MM13, Doc. 51 (Bankr. S.D. 22 Cal. Oct. 14, 2021). On October 20, 2021, the state court issued its “Ruling on Request for 23 Statement of Decision,” which found in favor of SSE on its unlawful detainer cause of 24 action and entered judgment for possession of the premises with no monetary damages 25 awarded. The state court determined that Appellant was estopped from denying the 26 validity of the foreclosure sale. Appellant subsequently removed the unlawful detainer 27 action to the bankruptcy court in a related bankruptcy case on October 27, 2021. See Salton 28 Sea Estates III, LLC v. James Barrett, Bk. No. 21-90087-MM, Doc. 1 (Bankr. S.D. Cal. 1 Oct. 27, 2021). 2 On January 10, 2022, the bankruptcy court sustained the Chapter 13 Trustee’s 3 objection to confirmation and granted in part the Chapter 13 Trustee’s motion to dismiss. 4 (Doc. 20-1 at 105-111.) The bankruptcy court’s decision dismissed Appellant’s 5 bankruptcy case for cause and due to his failure to demonstrate he filed the Chapter 13 Plan 6 in good faith as required under 11 U.S.C. § 1325(a)(3) and (7). (Doc. 21-1 at 105-111.) 7 Appellant appealed the bankruptcy court’s decision. (Doc. 1, Doc. 20 at 6.) This Court 8 affirmed the bankruptcy court’s decision. (Doc. 28.) 9 II. LEGAL STANDARD 10 Federal Rule of Bankruptcy Procedure 8022 (“Rule 8022”) governs the procedure 11 for filing a motion for rehearing. Rule 8022(a)(2) provides, “[t]he motion must state with 12 particularity each point of law or fact that the movant believes the district court . . . has 13 overlooked or misapprehended and must argue in support of the motion.” Oral argument 14 is not permitted. FED. R. BANKR. P. 8022(a)(2). “Petitions for rehearing are designed to 15 ensure that the appellate court properly considered all relevant information in rendering its 16 decision.” In re Hessco Indus., Inc., 295 B.R. 372, 375 (B.A.P. 9th Cir. 2003) (citing 17 Armster v. U.S. District Court, C.D. Cal., 806 F.2d 1347, 1356 (9th Cir. 1986).) “A petition 18 for rehearing is not a means by which to reargue a party’s case.” Id. (citing Anderson v. 19 Knox, 300 F.2d 296, 297 (9th Cir. 1962).) 20 III. DISCUSSION 21 Appellant’s motion for rehearing argues the record on appeal “reveals that all of 22 [Appellant’s] foreclosure related evidence provided to the [b]ankruptcy [c]ourt in his 23 opposition to the Motion to Dismiss, (EOR, Docket Items 64, 64-1), has been completely 24 ignored in the [c]ourt below.” (Doc. 30 at 2.) More specifically, Appellant alleges all of 25 the evidence related to the non-foreclosure sale should have been taken as true at the motion 26 to dismiss stage, such that this Court and the bankruptcy court must determine the validity 27 of the non-judicial foreclosure sale of the Property or if the non-judicial foreclosure sale is 28 void as a matter of law. (Id. at 2-3.) In sum, Appellant contends the question of property 1 of the bankruptcy estate “must be answered conclusively” before conclusions concerning 2 ownership or the good faith analysis may proceed. (Id. at 4 (citing In re Leavitt, 171 F.3d 3 1219 (9th Cir. 1999).) 4 The above argument by Appellant was advanced in his opening brief on appeal and 5 it fails for the same reason as noted in the Court’s September 27, 2022 Order. (See Doc. 6 20 at 6, 14-16; 20-29; see also Doc. 28 at 9-11.) The bankruptcy court’s order addressed 7 why any dispute regarding title to the Property was no longer in issue stating, “the State 8 Court found in favor of Salton in the Unlawful Detainer pursuant to California Code of 9 Civil Procedure § 1161a, which, unlike other unlawful detainer proceedings, requires state 10 courts to make determinations regarding title.” (Doc. 20-1 at 110 (citing Eden Place, LLC 11 v. Perl (In re Perl), 811 F.3d 1120, 1128-1129 (9th Cir. 2016), cert. denied sub nom., Perl 12 v. Eden Place, LLC, 137 S. Ct. 39 (2016)).) The state court’s October 20, 20211 statement 13 of decision ruled in favor of SSE on the unlawful detainer action pursuant to California 14 Code of Civil Procedure § 1161a and expressly noted that Appellant is estopped from 15 denying the validity of the foreclosure sale. See In re James Gregory Barrett, Bk. No. 21- 16 03295-MM13, Doc. 63-3, Ex. 15 (Bankr. S.D. Cal. Jan. 3, 2022). The ruling also provided 17 for entry of judgment for possession of the premises with no monetary damages awarded. 18 Id.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA
IN RE JAMES GREGORY Case No. 22-cv-00078-RBM-BGS 11 BARRETT, Bankruptcy No. 21-03295-MM13 12 Debtor. ORDER DENYING 13 JAMES GREGORY BARRETT, APPELLANT’S MOTION FOR REHEARING 14 Appellant,
16 v.
THOMAS H. BILLINGSLEA, JR., 17
Appellee. [Doc. 30] 18
19 Before the Court is Appellant James Gregory Barrett’s (“Appellant”) motion for 20 rehearing filed on October 5, 2022. (Doc. 30.) Appellant requests reconsideration of this 21 Court’s September 27, 2022 Order Affirming the Bankruptcy Court’s Order Sustaining 22 Objection to Confirmation by Chapter 13 Trustee and Granting Chapter 13 Trustee’s 23 Motion to Dismiss in Part on the Issue of Lack of Good Faith (“September 27, 2022 24 Order”). (See Doc. 28.) Pursuant to Federal Rule of Bankruptcy Procedure 8022(a)(2), 25 oral argument is not permitted on a motion for rehearing. Similarly, “[u]nless the district 26 court . . . requests, no response to a motion for rehearing is permitted.” FED. R. BANKR. P. 27 8022(a)(3). Having considered the motion and for the reasons set forth below, the motion 28 1 is DENIED. 2 I. BACKGROUND 3 The Court’s September 27, 2022 Order contains a complete and accurate recitation 4 of the factual and procedural history underlying Appellant’s Motion. (See Doc. 28.) This 5 Order incorporates by reference the background in the September 27, 2022 Order as set 6 forth therein. 7 As relevant to this Order, on June 3, 2015, Appellant and his spouse obtained a loan 8 from Salton Sea Estates III, LLC (“SSE”), which was reflected in a promissory note 9 secured by a deed of trust encumbering the real property located at 2566 Sea Urchin 10 Avenue, Salton City, California (“Property”). After Appellant defaulted on the note, SSE 11 completed a non-judicial foreclosure sale of the Property on April 11, 2018. SSE pursued 12 a quiet title action as to the Property, followed by an unlawful detainer action. After the 13 state court granted possession of the Property to SSE after conclusion of the unlawful 14 detainer trial, Appellant filed for bankruptcy on August 13, 2021. 15 On September 7, 2021, SSE filed a motion for relief from the bankruptcy court’s 16 automatic stay in the unlawful detainer action. On September 21, 2021, the Chapter 13 17 Trustee filed an objection to confirmation of the proposed Chapter 13 plan and motion to 18 dismiss. On October 14, 2021, the bankruptcy court ultimately granted SSE relief from 19 the stay, which allowed SSE “to proceed [with the unlawful detainer action] to its 20 conclusion and entry of a final judgment and writ of execution as to the premises involved 21 . . .” See In re James Gregory Barrett, Bk. No. 21-03295-MM13, Doc. 51 (Bankr. S.D. 22 Cal. Oct. 14, 2021). On October 20, 2021, the state court issued its “Ruling on Request for 23 Statement of Decision,” which found in favor of SSE on its unlawful detainer cause of 24 action and entered judgment for possession of the premises with no monetary damages 25 awarded. The state court determined that Appellant was estopped from denying the 26 validity of the foreclosure sale. Appellant subsequently removed the unlawful detainer 27 action to the bankruptcy court in a related bankruptcy case on October 27, 2021. See Salton 28 Sea Estates III, LLC v. James Barrett, Bk. No. 21-90087-MM, Doc. 1 (Bankr. S.D. Cal. 1 Oct. 27, 2021). 2 On January 10, 2022, the bankruptcy court sustained the Chapter 13 Trustee’s 3 objection to confirmation and granted in part the Chapter 13 Trustee’s motion to dismiss. 4 (Doc. 20-1 at 105-111.) The bankruptcy court’s decision dismissed Appellant’s 5 bankruptcy case for cause and due to his failure to demonstrate he filed the Chapter 13 Plan 6 in good faith as required under 11 U.S.C. § 1325(a)(3) and (7). (Doc. 21-1 at 105-111.) 7 Appellant appealed the bankruptcy court’s decision. (Doc. 1, Doc. 20 at 6.) This Court 8 affirmed the bankruptcy court’s decision. (Doc. 28.) 9 II. LEGAL STANDARD 10 Federal Rule of Bankruptcy Procedure 8022 (“Rule 8022”) governs the procedure 11 for filing a motion for rehearing. Rule 8022(a)(2) provides, “[t]he motion must state with 12 particularity each point of law or fact that the movant believes the district court . . . has 13 overlooked or misapprehended and must argue in support of the motion.” Oral argument 14 is not permitted. FED. R. BANKR. P. 8022(a)(2). “Petitions for rehearing are designed to 15 ensure that the appellate court properly considered all relevant information in rendering its 16 decision.” In re Hessco Indus., Inc., 295 B.R. 372, 375 (B.A.P. 9th Cir. 2003) (citing 17 Armster v. U.S. District Court, C.D. Cal., 806 F.2d 1347, 1356 (9th Cir. 1986).) “A petition 18 for rehearing is not a means by which to reargue a party’s case.” Id. (citing Anderson v. 19 Knox, 300 F.2d 296, 297 (9th Cir. 1962).) 20 III. DISCUSSION 21 Appellant’s motion for rehearing argues the record on appeal “reveals that all of 22 [Appellant’s] foreclosure related evidence provided to the [b]ankruptcy [c]ourt in his 23 opposition to the Motion to Dismiss, (EOR, Docket Items 64, 64-1), has been completely 24 ignored in the [c]ourt below.” (Doc. 30 at 2.) More specifically, Appellant alleges all of 25 the evidence related to the non-foreclosure sale should have been taken as true at the motion 26 to dismiss stage, such that this Court and the bankruptcy court must determine the validity 27 of the non-judicial foreclosure sale of the Property or if the non-judicial foreclosure sale is 28 void as a matter of law. (Id. at 2-3.) In sum, Appellant contends the question of property 1 of the bankruptcy estate “must be answered conclusively” before conclusions concerning 2 ownership or the good faith analysis may proceed. (Id. at 4 (citing In re Leavitt, 171 F.3d 3 1219 (9th Cir. 1999).) 4 The above argument by Appellant was advanced in his opening brief on appeal and 5 it fails for the same reason as noted in the Court’s September 27, 2022 Order. (See Doc. 6 20 at 6, 14-16; 20-29; see also Doc. 28 at 9-11.) The bankruptcy court’s order addressed 7 why any dispute regarding title to the Property was no longer in issue stating, “the State 8 Court found in favor of Salton in the Unlawful Detainer pursuant to California Code of 9 Civil Procedure § 1161a, which, unlike other unlawful detainer proceedings, requires state 10 courts to make determinations regarding title.” (Doc. 20-1 at 110 (citing Eden Place, LLC 11 v. Perl (In re Perl), 811 F.3d 1120, 1128-1129 (9th Cir. 2016), cert. denied sub nom., Perl 12 v. Eden Place, LLC, 137 S. Ct. 39 (2016)).) The state court’s October 20, 20211 statement 13 of decision ruled in favor of SSE on the unlawful detainer action pursuant to California 14 Code of Civil Procedure § 1161a and expressly noted that Appellant is estopped from 15 denying the validity of the foreclosure sale. See In re James Gregory Barrett, Bk. No. 21- 16 03295-MM13, Doc. 63-3, Ex. 15 (Bankr. S.D. Cal. Jan. 3, 2022). The ruling also provided 17 for entry of judgment for possession of the premises with no monetary damages awarded. 18 Id. 19 The bankruptcy court found Appellant removed the unlawful detainer action to 20 bankruptcy court with the intent to: (1) thwart the bankruptcy court’s ruling on stay relief 21 and the state court’s ability to enter a final judgment; and (2) manipulate the bankruptcy 22 process. (Doc. 20-1 at 109.) These factors supported the bankruptcy court’s findings that 23 Appellant did not propose the Chapter 13 plan in good faith. (Id. at 109-111.) The 24 bankruptcy court relied upon In re Eisen to support its decision, where the Ninth Circuit 25 26 27 1 The state court decision is dated August 27, 2021, but it was filed October 20, 2021. See In re James Gregory Barrett, Bk. No. 21-03295-MM13, Doc. 63-3, Ex. 15 (Bankr. S.D. 28 1 || affirmed a bankruptcy court’s dismissal of a Chapter 13 petition for being filed in bad faith. 2 ||(Doc. 20-1 at 109 (citing In re Eisen, 14 F.3d 469 (9th Cir. 1994).) The Court in Jn re 3 || Eisen found the debtor’s “contradictory and misleading descriptions of his interest” in the 4 subject property supported the bankruptcy court’s finding that the Chapter 13 petition was 5 || properly dismissed for bad faith. 14 F.3d at 470-471. 6 One of the factors the bankruptcy court considers in determining whether a plan is 7 || filed in good faith is whether the debtor misrepresents facts in their plan. See Jn re 8 || Ellsworth, 455 B.R. at 917-919 (stating, “it is well established that a lack of good faith 9 constitutes ‘cause’ to dismiss a chapter 13 case, and that courts may look at the same 10 |/evidence for both confirmation and dismissal purposes.”’); Jn re Welsh, 711 F.3d 1120, 11 (9th Cir. 2013) (listing four factors to determine whether plan is proposed in good 12 || faith, including whether debtors misrepresent facts in their plan) (citing Leavitt v. Soto, 171 13 1219 (9th Cir. 1999)). Here, the bankruptcy court found Appellant misrepresented 14 ||his ownership of the Property based upon the state court’s determination of title in the 15 |}unlawful detainer action. (Doc. 20-1 at 110.) Based upon the foregoing, the Court finds 16 bankruptcy court did not err in its decision dismissing the bankruptcy case without 17 holding an adversary hearing to determine the property of the estate. See In re Eisen, 14 18 469. Therefore, the Court finds no error in its prior order. 19 IV. CONCLUSION 20 For the reasons above, the Court DENIES Appellant’s motion for rehearing (Doc. 21 ||30). This bankruptcy appeal remains dismissed. 22 IT IS SO ORDERED. 23 ||DATE: April 24, 2023 24 et Berrien, Mitltsypes 5 ON. RUTH BERMWDEZ MONTENEGRO UNITED STATES DISTRICT JUDGE 26 27 28