In re Claude Dennis Wilkes v. The Santana Row-Forest Building Condominium Homeowners Association, et al.

• Court: United States Bankruptcy Court, N.D. California
• Decided: April 22, 2026
• Docket: 11-51135
• Status: Unknown

Opinion

U.S. BANKRUPTCY COURT SS NG NORTHERN DISTRICT OF CALIFORNIA □□□□ □□□□ 1 Signed and Filed: April 22, 2026 □□□ 2 ahs 4 5 DENNIS MONTALI U.S. Bankruptcy Judge 6 7 g UNITED STATES BANKRUPTCY COURT 9 NORTHERN DISTRICT OF CALIFORNIA ) Bankruptcy Case 10 |jIn re ) No. 11-51135-DM )

11 ||CLAUDE DENNIS WILKES, ) Chapter 13 ) 12 ) Ss ) 13 Debtor. ) ) 14 ) 15 || CLAUDE D. WILKES, Adversary Proceeding No. 25-05016-DM 16 Plaintiff, v. ) 17 )

18 || THE SANTANA ROW-DEFOREST BUILDING CONDOMINIUM HOMEOWNERS 19 ||ASSOCIATION, et al., 20 Defendants. 2 Ja. 22 MEMORANDUM DECISION REGARDING SUBMITTED MATTERS 23 INTRODUCTION Claude Dennis Wilkes (“Debtor”) petitioned for relief under 95 |}chapter 13 of the Bankruptcy Code,! thereby commencing this case 26 |jover fifteen years ago. _—_———__ im i —— 1 Unless otherwise indicated, all chapter, section, and 28 llrule references are to the Bankruptcy Code (the “Code”), 11

1 The primary question here, and in the related Adversary 2 Proceeding No. 25-5016 (the “AP”), is whether a pre-petition 3 special assessment owed to Debtor’s former homeowner 4 association, the DeForest Building Condominium Owners 5 Association (the “HOA”), was discharged when Debtor received his 6 discharge, and if so, whether the HOA violated the discharge 7 injunction when it failed to cease litigating a case in state 8 court that began after this case was previously closed without 9 a discharge. 10 Before the court are three motions: 11 (1) the HOA’s Motion for Partial Summary Judgment; 12 Mandatory and Permissive Abstention (“MPSJ”) (AP Dkt 68) filed 13 in the AP; 14 (2) Debtor’s Opposition to Defendant’s Motion for Partial 15 Summary Judgment and Cross-Motion for Summary Judgment (“CMSJ”) 16 (AP Dkt 71) also filed in the AP; and 17 (3) the HOA’s Motion for Ordering Confirming Creditor’s 18 Right to Offset or Recoup Post-Petition (“Offset Motion”) (BK 19 Dkt 128) filed in the main bankruptcy case.2 20

21 U.S.C. §§ 101-1532, and to the Federal Rules of Bankruptcy 22 Procedures, Rules 1001-9037. 2 The main bankruptcy case was initially assigned to the 23 Honorable Arthur S. Weissbrodt. After Judge Weissbrodt’s retirement, the case was re-assigned to the Honorable M. 24 Elaine Hammond in July 2015. When Judge Hammond retired, the case was then re-assigned to the Honorable Dennis Montali in 25 November 2025. At the time of Judge Hammond’s retirement, the 26 court had held a hearing on the HOA’s Offset Motion and taken it under submission. The court had not yet heard oral 27 argument for the HOA’s MPSJ and Debtor’s CMSJ. After reassignment, Judge Montali held a hearing on both matters. 28 By this decision, the court is disposing of all three matters 1 The court concludes that Debtor’s claims in his Amended 2 Complaint (AP Dkt 11) that, inter alia, the HOA violated the 3 discharge injunction to be unavailing. Debtor has not identified 4 any conduct by the HOA which occurred after he received his 5 discharge that would give rise to a claim under § 524(a)(2), and 6 the other causes of action he has pled in his Amended Complaint 7 are either untimely or inapplicable. 8 Additionally, the court concludes that the HOA has offset 9 rights associated with the discharged debt because Debtor has 10 returned to the fray by pursuing litigation in this court and 11 state court and he may be liable for damages incurred by the 12 HOA. In any event the HOA is entitled to any affirmative 13 defenses that do not threaten Debtor’s discharge but would reduce 14 or eliminate any of Debtor’s claims against it. 15 The HOA’s MPSJ will be granted3, Debtor’s CMSJ will be 16 denied, and the HOA’s Offset Motion will be granted. 17 The court is concurrently entering an order in the HOA’s 18 favor and a separate order on the Offset Motion in the main case. 19 There are two unrepresented individuals, Jurgen Weller and 20 Suzie Mize, named as defendants in the AP. The record reflects 21 a series of submissions by Debtor and orders by the court leading 22 to the present situation. Neither defendant has been properly 23 served, the court is denying all relief to Debtor against the 24 HOA, and a final judgment should be entered in the AP, for lack 25

26 for the completion of the record and conclusion of the AP and the only pending matter in the main case. 27 3 Despite the word “Partial” in the Motion, this Memorandum Decision and the order and Judgment that follow, support 28 disposing of it in its entirety. 1 of prosecution as to those persons. If Debtor in good faith 2 believes he is entitled to any relief against Mr. Weller or Ms. 3 Mize, the court will give him one more chance to do so. A final 4 judgment disposing of the entire AP will be entered two weeks 5 from the date of this Memorandum Decision unless, prior to then 6 Debtor files a request for an alias summons and requests a 7 scheduling conference to be held on June 26, 2026 at 1:30 pm. 8 If Debtor is willing to abandon these efforts before then, he 9 should file a statement to that effect within two weeks and the 10 court will issue the judgment. 11 II. BACKGROUND 12 Debtor purchased real property in San Jose (the “Condo”) 13 over twenty years ago. The Condo is located in a common interest 14 development managed by the HOA. Debtor was responsible for 15 paying the HOA regular dues and assessments. 16 Debtor’s transaction was originally financed by a mortgage 17 loan from Washington Mutual Bank and later taken over by JPMorgan 18 Chase Bank, N.A. (“JPMorgan”), who eventually initiated 19 foreclosure proceedings on the Condo which led Debtor to file 20 this chapter 13. 21 Per his schedules, Debtor listed the value of the Condo as 22 $650,000, encumbered by a senior deed of trust held by JPMorgan, 23 securing a debt in the amount of $980,000, and a junior lien for 24 $15,000 owed to the HOA based on arrears. 25 Based on this over-encumbrance, Debtor filed a motion 26 (“Avoidance Motion”) (BK Dkt 48) asking the court to hold that 27 the HOA had a wholly unsecured lien junior to JPMorgan 28 (“Avoidance Action”). The HOA did not oppose the Avoidance 1 Motion, and it was granted by the court. Debtor did not contest 2 the deficiency claim that followed, nor did Debtor challenge the 3 validity of the HOA’s lien but only its secured status. 4 The court confirmed Debtor’s Chapter 13 Plan in December 5 2011 and in October 2016, the Chapter 13 Trustee (“Trustee”) 6 notified the court that Debtor had completed all plan payments. 7 However, the Trustee stated that Debtor was not entitled to a 8 discharge because he had not completed a required personal 9 financial management course and had not complied with certain 10 non-standard provisions in the confirmed plan. The case was 11 closed in November 2016 without a discharge. 12 While this case was closed, JPMorgan foreclosed on the Condo 13 in June 2022. Whatever secured rights the HOA had— 14 notwithstanding the Avoidance Action—were thus eliminated by 15 operation of the foreclosure.4 16 During the period that this case was closed without a 17 discharge, the HOA began collection efforts against Debtor for 18 delinquent assessments and in April 2018, the HOA filed a 19 complaint in Santa Clara County Superior Court (the “State Court 20 Action”) captioned The Santana Row-Deforest Building Residential 21 Condominium Owners Association v. Claude Wilkes et al, 22 18CV326162) seeking to foreclose on the Condo. Debtor filed a 23 cross-complaint (“State Cross-Complaint”) in the State Court 24 25 4 Debtor has repeatedly argued that the HOA has an invalid 26 lien, citing state law. But Debtor has conceded that no state or federal court has ever invalidated the HOA’s lien. 27 Regardless, whatever lien arguments Debtor contends are relevant became moot after JPMorgan foreclosed on the 28 collateral property. 1 Action based on slander of title and breach of the Davis-Stirling 2 Act. 3 A year and a half later, and over eight years from when 4 this case was closed without discharge, Debtor returned to this 5 court and filed an application to re-open the case so that he 6 could resolve the outstanding requirements to obtain his 7 discharge. After the case was re-opened and Debtor provided the 8 requisite documents, he was granted a discharge on April 29, 9 2024 and the case was closed. 10 Another year went by and Debtor once again sought to re- 11 open the case, this time for the purpose of removing the State 12 Court Action to the bankruptcy court and to file an adversary 13 complaint against the HOA. Over the HOA’s opposition, this case 14 was re-opened in May 2025, and Debtor initiated the AP. 15 III. LEGAL STANDARDS 16 Federal Rule of Civil Procedure 56(c), made applicable in 17 adversary proceedings by Federal Rule of Bankruptcy Procedure 18 7056, mandates entry of summary judgment where a moving party 19 demonstrates the absence of a genuine issue of material fact and 20 entitlement to judgment as a matter of law. Thrifty Oil Co. v. 21 Bank of Am. Nat’l Tr. & Sav. Ass’n, 322 F.3d 1039, 1045 (9th 22 Cir. 2003). The movant has the burden of proof. See N. Slope 23 Borough v. Rogstad (In re Rogstad), 126 F.3d 1224, 1227 (9th 24 Cir. 1997). 25 As there are no material facts in dispute, summary judgment 26 is appropriate and the court will dispose both the MPSJ and CMSJ. 27 // 28 // 1 IV. DISCUSSION 2 A. Summary Judgment – MPSJ and CMSJ 3 Debtor pled nine causes of action in his Amended Complaint: 4 (1) Count I – Violation of discharge injunction (11 U.S.C. § 524(a)(2)); 5

6 (2) Count II – Violation of automatic stay (11 U.S.C. § 362(a)(6)); 7 (3) Count III – Declaratory relief that the HOA’s claims 8 were discharged and that continued collection 9 efforts violate federal law;

10 (4) Count IV – Violation of the Fair Debt Collection Practices Act (FDCPA) (15 U.S.C. §§ 1692e, 1692f); 11

12 (5) Count V – Violation of the Rosenthal Act (Cal. Civ. Code § 1788.17); 13 (6) Count VI – Tortious interference with prospective 14 economic advantage; 15 (7) Count VII – Civil harassment (Cal. Civ. Proc. § 16 527.6);

17 (8) Count VIII – Violation of the Davis-Stirling Act 18 (Cal. Civ. Code §§ 4515, 5655, 5976); and

19 (9) Count IX – Defamation (slander per se) and invasion of privacy (Cal. Civ. Code § 46). 20 21 In its MPSJ, the HOA argues that the majority of Debtor’s 22 causes of action are time-barred as a matter of law. In the 23 court’s Order Denying Defendant’s Motion to Dismiss (AP Dkt 63), 24 Judge Hammond agreed with the HOA and concluded that most of 25 Debtor’s causes of action were untimely. The court here 26 incorporates Judge Hammond’s ruling and reiterates that under 27 the applicable statutes of limitation, Counts 4 through 9 are 28 1 untimely and/or inapplicable here.5 Although Debtor did not 2 appeal or seek reconsideration of the court’s conclusion 3 regarding timeliness, he has since argued that Rule 15’s relation 4 back doctrine saves the untimely counts. 5 Only Debtor’s claims for violation of the automatic stay 6 under § 362(c) and violation of the discharge injunction under 7 § 524(a) survived. 8 Section 362(c)’s automatic stay terminates when a case is 9 closed. 11 U.S.C. § 362(c)(2)(A). This case closed on November 10 23, 2016 and was not re-opened until January 23, 2024. Since 11 there was no stay in effect during this period, the HOA was free 12 to act without violating § 362(c). Additionally, whether the 13 Avoidance Action was still effective was an open question that 14 could be dealt with in the Superior Court or this court but is 15 now moot. 16 Section 524 deals with the effect of a discharge. It 17 provides that “[a] discharge in a case under this title […] 18 operates as an injunction against the commencement or 19 continuation of an action, the employment of process, or an act, 20 to collect, recover or offset any such debt as a personal 21 liability, whether or not discharge of such debt is waived.” 11 22 U.S.C. § 524(a)(2). However, when a case is closed without a 23 discharge, the injunction does not apply and a creditor may 24 collect on the debt. 25 5 Counts 4 and 5 have 1-year statutes of limitations; 26 Counts 6 and 9 have 2-year statutes of limitations; Count 7 has a 3-year statute of limitation; and Count 8 is governed by 27 a 5-year statute of limitation. All the conduct alleged in the Amended Complaint as to Counts 4 through 9 occurred in 28 2019 at the latest. 1 Here, the HOA initiated the State Court Action in April 2 2018, during the time that this case was closed without a 3 discharge. When this case closed, Debtor still owed the HOA for 4 his delinquent assessments. The lien strip affected by the 5 Avoidance Action did not wipe out the debt owed to the HOA; the 6 underlying debt still existed, albeit in an unsecured status as 7 of the date the Avoidance Motion was granted. Debtor conceded 8 that status in the Avoidance Motion and has never questioned the 9 existence of that status since, but only that the HOA did not 10 file an unsecured claim. More importantly, when Debtor did 11 finally receive his discharge in April 2024, the debt owed to 12 the HOA was discharged and any activity by the HOA to collect on 13 this debt post-April 2024 would have violated § 524(a)(2). 14 But the HOA’s failure to dismiss the State Court Action and 15 its continued filings in this case do not constitute such a 16 violation. Section 524(a)(2)’s injunctive provision is intended 17 to be used as a shield to protect the debtor rather than a sword 18 against the creditor. In re Irigoyen, 659 B.R. 1, 12-13 (9th 19 Cir. BAP 2024); see also, In re Watson, 192 B.R. 739, 749 (9th 20 Cir. BAP 1996); In re Getzoff, 180 B.R. 572, 575 (9th Cir. BAP 21 1995). 22 The HOA’s conduct has largely been defensive. After Debtor 23 received his discharge, the HOA did not appear before the 24 bankruptcy court nor file any moving papers. It was only when 25 Debtor filed his motion to re-open the case in April 2025—with 26 the stated purpose of seeking affirmative relief against the 27 HOA—that the HOA appeared and filed an opposition. 28 1 Similarly, the HOA’s posture in the State Court Action has 2 been defensive. The HOA has only filed two documents in the 3 State Court Action since Debtor received his discharge: a notice 4 of no opposition to Debtor’s attorney’s motion to withdraw as 5 counsel in the State Court Action, and a related proof of 6 service. The HOA even admits that it is only still in the State 7 Court Action because Debtor refuses to drop his State Cross 8 Complaint 9 In sum, the unsecured obligation owed to the HOA was 10 discharged when Debtor received his discharge. But Debtor has 11 not provided any undisputed material facts which show that the 12 HOA has tried to collect on that discharged debt which would 13 give rise to a claim under § 524(a). 14 Lastly, as there is no private right of action to enforce 15 a discharge injunction violation, the commencement of Debtor’s 16 adversary proceeding against the HOA is the wrong avenue for 17 relief even if the HOA had violated § 524(a). See, Walls v. 18 Wells Fargo Bank, N.A., 276 F.3d 502, 509 (9th Cir. 2002); 19 Barrientos v. Wells Fargo Bank, N.A., 633 F.3d 1186, 1191 (9th 20 Cir. 2011). 21 That is not to say that Debtor has no available paths for 22 recourse if the HOA ever does violate the discharge injunction 23 in the future; if that does occur, Debtor may always return to 24 this court and move for contempt. 25 B. The HOA’s Affirmative Defenses 26 The HOA has alleged two different but related affirmative 27 defenses: the equitable right to offset and the “return to the 28 fray” doctrine. 1 1. Offset 2 The bankruptcy law allows a creditor to offset a claim that 3 the debtor owes it against a claim that it owes the debtor, as 4 long as both debts arose before the bankruptcy. In re De 5 Laurentiis Group Inc., 963 F.2d 1269, 1274 (9th Cir. 1992), cert. 6 denied, 506 U.S. 918 (1992). The offset right is allowed as a 7 defense to a claim brought by the debtor against a creditor and 8 the creditor can claim only an amount large enough to offset its 9 debt and cannot collect anything further from debtor. Id. at 10 1277. 11 For example, “if the debtor and the creditor each owed the 12 other $20, they could set those debts off against each other, 13 rather than attempting to collect from each other.” Id. at 1274. 14 The policy underlying the offset right is to avoid ‘the absurdity 15 of making A pay B when B owes A.’” Citizens Bank of Maryland v. 16 Strumpf, 516 U.S. 16, 18 (1995) (quoting Studley v. Boylston 17 Nat’l Bank, 229 U.S. 523, 528 (1913)). 18 In the present case, the HOA’s claims of offset rights are 19 permissible as they are based on mutual, pre-petition 20 obligations between Debtor and the HOA. In re Fu, Case No. 17- 21 41205 CN, 2020 WL 9211230, at *4 (Bankr. N.D. Cal. Sept. 25, 22 2020). (citing In re Pieri, 86 B.R. 208, 210 (9th Cir. BAP 23 1988)). In other words, under § 553(a), the HOA is required to 24 establish two elements: timing and mutuality. In re Verco 25 Industries, 704 F.2d 1134, 1139 (9th Cir. 1983). 26 The court concludes that both criteria have been satisfied 27 in this case. 28 1 As a clarifying matter, the underlying debt owed to the HOA 2 was not extinguished by the Avoidance Motion. In filing that 3 motion, Debtor never disputed the underlying debt owed to the 4 HOA and after the court granted the Avoidance Motion that debt 5 became an unsecured obligation owed to the HOA that was 6 eventually discharged in 2024. There was no need for HOA to 7 file a proof of claim. 8 The timing element requires that both claims arose pre- 9 petition. Both Debtor’s counterclaims in Superior Court against 10 the HOA for slander of title and breach of the Davis-Stirling 11 Act and the HOA’s breach of contract claim are pre-petition 12 claims. This conclusion derives from the Code’s expansive 13 definition of the terms “claim” and “debt.” Buckenmaier, 127 14 B.R. at 238. Section 101(11) defines “debt” as a “liability on 15 a claim” and a “claim” is defined by § 101(4)(A) as a “right to 16 payment, whether or not such right is reduced to judgment, 17 liquidated, unliquidated, fixed, contingent, matured, unmatured, 18 disputed, undisputed, legal, equitable, secured or unsecured.” 19 11 U.S.C. §§ 101(11), 101(4)(A). Here, the claims arise from 20 Debtor’s 2007 purchase of the Condo and the related contract 21 between Debtor and the HOA. Therefore, they are pre-petition 22 claims. 23 With respect to mutuality, in order for debts to be mutual, 24 “something must be ‘owed’ by both sides” Buckenmaier, 127 B.R. 25 at 238. The requirement of mutuality is easily met here: the 26 Debtor and the HOA are the same parties and the dispute here 27 arose out of the purchase of the Condo. 28 1 With the requirements of timing and mutuality being 2 satisfied here, the question is whether the HOA’s offset rights 3 survived Debtor’s 2024 discharge. The court concludes that it 4 does. 5 A majority of courts have held that a valid offset claim 6 cannot be defeated by a discharge and a creditor’s right to 7 offset a mutual, pre-petition debt survives even the discharge 8 of the debtor. See, 5 COLLIER ON BANKRUPTCY ¶ 553.08 (16th ed. 9 2026); De Laurentiis, 963 F.2d at 1276-78; In re Luongo, 259 10 F.3d 323 (5th Cir. 2001); In re Davidovich, 901 F.3d 1533, 1537 11 (10th Cir. 1990); In re Buckenmaier, 127 B.R. 233, 236-37 (9th 12 Cir. BAP 1991). 13 As such, it appears clear to the court that the entire 14 accrued amount of Debtor’s underlying pre-petition discharged 15 debt then owed may be used to offset any amount he may recover 16 against the HOA in the future. 17 2. Return to the Fray 18 In addition to its right to offset, the HOA has also 19 contended that it would be entitled to post-petition attorneys’ 20 fees under the so-called “return to the fray” doctrine. 21 The Ninth Circuit has held that “post-petition attorney fee 22 awards are not discharged where post-petition, the debtor 23 voluntarily ‘pursue[d] a whole new course of litigation,’ 24 commenced litigation, or ‘return[ed] to the fray.’ Voluntarily.” 25 In re Ybarra, 424 F.3d 1018, 1024 (9th Cir. 2005) (quoting Siegel 26 v. Federal Home Loan Mortg. Corp., 143 F.3d 525, 533-35 (9th 27 Cir. 1998)). In Ybarra, the Ninth Circuit endorsed the “notion 28 that by voluntarily continuing to pursue litigation post- 1 petition that had been initiated pre-petition, a debtor may be 2 held personally liable for attorney fees and costs that result 3 from that litigation.” Ybarra, 424 F.3d at 1024. 4 The Ninth Circuit BAP extended the Ybarra rule to litigation 5 that begins post-petition regardless of the forum in which the 6 post-petition litigation takes place. In re Gillespie, 516 B.R. 7 586, 591-92 (9th Cir. BAP 2014). The focus of the Ybarra inquiry 8 is on the debtor’s motivation for engaging in the post-petition 9 litigation and “whether the debtor ‘returned to the fray’ to 10 press his disputed claims and property interests or for some 11 other purpose.” Gillespie, 516 B.R. at 592; see also, Ybarra, 12 414 F.3d at 1023-24. 13 Here, the court concludes that Debtor is not entitled to a 14 discharge of the HOA’s post-petition attorneys’ fees given that 15 he chose to resume his participation in the State Court Action 16 and in this court post-petition. After receiving his discharge 17 in 2024, instead of using the discharge as a fresh start, Debtor 18 took affirmative steps to voluntarily continue the State Court 19 Action as well as re-opening this bankruptcy case to litigate 20 against the HOA. 21 V. CONCLUSION 22 For the foregoing reasons, Debtor’s CMSJ is DENIED, the 23 HOA’s MPSJ is GRANTED, and the HOA’s Offset Motion is GRANTED. 24 **END OF MEMORANDUM DECISION** 25

27 28 1 COURT SERVICE LIST 2 Via U.S. Mail: 3 Claude D. Wilkes Jr. 4 4683 Flagstaff Dr. 5 Folsom, CA 95630 6 7 Via ECF: 8 All ECF Recipients 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28