FILED MAR 7 2019 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT
In re: BAP No. CC-18-1069-FLS
FRANK JAKUBAITIS, Bk. No. 8:13-bk-10223-TA
Debtor.
FRANK JAKUBAITIS,
Appellant,
v. MEMORANDUM*
JPMORGAN CHASE BANK, N.A.,
Appellee.
Submitted Without Argument on February 21, 2019
Filed – March 7, 2019
Appeal from the United States Bankruptcy Court for the Central District of California
Honorable Theodor C. Albert, Bankruptcy Judge, Presiding
* This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. Appearances: Frank Jakubaitis, pro se, on the brief.
Before: FARIS, LAFFERTY, and SPRAKER, Bankruptcy Judges.
INTRODUCTION
Chapter 71 debtor Frank Jakubaitis received his discharge in 2014,
and the bankruptcy court closed his case. In 2018, the bankruptcy court
granted creditor JPMorgan Chase Bank, N.A. (“Chase”) relief from the
automatic stay to enforce its lien rights against his automobile.
Mr. Jakubaitis appeals, arguing that the court should not have granted
relief from the automatic stay, because the stay terminated upon his
discharge. He also argues that Chase waited too long to seek relief.
The bankruptcy court should not have granted relief from the
automatic stay because the stay had already expired, and the court lacked
power to grant relief from the discharge injunction. But the discharge
injunction left Chase free to enforce its in rem rights against Mr. Jakubaitis’
automobile without seeking permission from the court. Accordingly, the
error was harmless, and we AFFIRM.
1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all “Rule” references are to the Federal Rules of Bankruptcy Procedure.
2 FACTUAL BACKGROUND2
A. Mr. Jakubaitis’ bankruptcy case
Mr. Jakubaitis filed his chapter 7 petition in January 2013 and
scheduled a 2005 Mercedes Benz ML350 (“Vehicle”), which was subject to
Chase’s purchase money lien. Mr. Jakubaitis indicated his intention to
reaffirm the debt to Chase.
Chase did not file a proof of claim, and Mr. Jakubaitis never executed
a reaffirmation agreement concerning the Vehicle. Mr. Jakubaitis received
his discharge in January 2014, and the bankruptcy court closed his case.
A year later, in January 2015, another creditor filed a motion to
reopen Mr. Jakubaitis’ case. The court granted the motion to reopen.
B. The motion for relief from the automatic stay
Chase made its first appearance in the case over two years later,
when it filed a request for courtesy notice of electronic filing in October
2017. Three months later, on January 29, 2018, it filed a motion for relief
from the automatic stay (“Motion for Relief”). Chase requested authority to
“proceed under applicable nonbankruptcy law to enforce its remedies to
repossess and sell the [Vehicle].”
Mr. Jakubaitis opposed the Motion for Relief. He argued that there
2 We exercise our discretion to review the bankruptcy court’s docket, as appropriate. See Woods & Erickson, LLP v. Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008).
3 was no cause to lift the automatic stay because he had received his
discharge and the stay had terminated; the reopened case did not give
Chase additional rights. He also argued that the Motion for Relief was
prejudicial and imposed a hardship on him. He contended that Chase was
barred by the doctrine of laches because five years had passed since the
petition date and four years had passed since his discharge, yet Chase had
not filed a proof of claim or sought relief prior to discharge.
The bankruptcy court issued a tentative ruling on the Motion for
Relief and stated that it was inclined to grant the motion: “The allegation of
prejudice and hardship makes no sense. Although the stay technically has
evolved into a discharge injunction upon the entry of a discharge, the
analysis is the same.”
After a hearing, the court granted the Motion for Relief.3 The court
entered a form order (“Stay Relief Order”) granting Chase relief from the
automatic stay under § 362(d)(1). It “[t]erminated [the automatic stay] as to
the Debtor and the Debtor’s bankruptcy estate.” It additionally provided:
Movant may enforce its remedies to repossess or otherwise obtain possession and dispose of the [Vehicle] in accordance with applicable nonbankruptcy law, but may not pursue any deficiency claim against the Debtor or property of the estate
3 Mr. Jakubaitis declined to provide us with a copy of the transcript of the hearing. Therefore, we are entitled to presume that nothing said at the hearing was helpful to his position. See Gionis v. Wayne (In re Gionis), 170 B.R. 675, 681 (9th Cir. BAP 1994), aff’d, 92 F.3d 1192 (9th Cir. 1996).
4 except by filing a proof of claim pursuant to 11 U.S.C. § 501.
Mr. Jakubaitis timely appealed the Stay Relief Order. He represents
on appeal that Chase has not contacted him concerning the Vehicle or
otherwise attempted to exercise its lien rights.
JURISDICTION
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334
and 157(b)(2)(A) and (G). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Whether the bankruptcy court erred in granting Chase relief from the
automatic stay to enforce its lien rights against the Vehicle.
STANDARDS OF REVIEW
We review de novo the bankruptcy court’s interpretation of the
Bankruptcy Code. Shapiro v. Henson, 739 F.3d 1198, 1200 (9th Cir. 2014). “De
novo review requires that we consider a matter anew, as if no decision had
been made previously.” Francis v. Wallace (In re Francis), 505 B.R. 914, 917
(9th Cir. BAP 2014) (citations omitted).
We review for an abuse of discretion the bankruptcy court’s rulings
regarding laches. Beaty v. Selinger (In re Beaty), 306 F.3d 914, 920-21 (9th Cir.
2002). We also review for abuse of discretion the bankruptcy court’s
decision to grant relief from the automatic stay. Kronemyer v. Am.
Contractors Indem. Co. (In re Kronemyer), 405 B.R. 915, 919 (9th Cir. BAP
2009) (citations omitted).
5 We apply a two-part test to determine whether the bankruptcy court
abused its discretion. First, we consider de novo whether the bankruptcy
court applied the correct legal standard. Then, we review the bankruptcy
court’s factual findings for clear error. See Sullivan v. Harnisch (In re
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FILED MAR 7 2019 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT
In re: BAP No. CC-18-1069-FLS
FRANK JAKUBAITIS, Bk. No. 8:13-bk-10223-TA
Debtor.
FRANK JAKUBAITIS,
Appellant,
v. MEMORANDUM*
JPMORGAN CHASE BANK, N.A.,
Appellee.
Submitted Without Argument on February 21, 2019
Filed – March 7, 2019
Appeal from the United States Bankruptcy Court for the Central District of California
Honorable Theodor C. Albert, Bankruptcy Judge, Presiding
* This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. Appearances: Frank Jakubaitis, pro se, on the brief.
Before: FARIS, LAFFERTY, and SPRAKER, Bankruptcy Judges.
INTRODUCTION
Chapter 71 debtor Frank Jakubaitis received his discharge in 2014,
and the bankruptcy court closed his case. In 2018, the bankruptcy court
granted creditor JPMorgan Chase Bank, N.A. (“Chase”) relief from the
automatic stay to enforce its lien rights against his automobile.
Mr. Jakubaitis appeals, arguing that the court should not have granted
relief from the automatic stay, because the stay terminated upon his
discharge. He also argues that Chase waited too long to seek relief.
The bankruptcy court should not have granted relief from the
automatic stay because the stay had already expired, and the court lacked
power to grant relief from the discharge injunction. But the discharge
injunction left Chase free to enforce its in rem rights against Mr. Jakubaitis’
automobile without seeking permission from the court. Accordingly, the
error was harmless, and we AFFIRM.
1 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all “Rule” references are to the Federal Rules of Bankruptcy Procedure.
2 FACTUAL BACKGROUND2
A. Mr. Jakubaitis’ bankruptcy case
Mr. Jakubaitis filed his chapter 7 petition in January 2013 and
scheduled a 2005 Mercedes Benz ML350 (“Vehicle”), which was subject to
Chase’s purchase money lien. Mr. Jakubaitis indicated his intention to
reaffirm the debt to Chase.
Chase did not file a proof of claim, and Mr. Jakubaitis never executed
a reaffirmation agreement concerning the Vehicle. Mr. Jakubaitis received
his discharge in January 2014, and the bankruptcy court closed his case.
A year later, in January 2015, another creditor filed a motion to
reopen Mr. Jakubaitis’ case. The court granted the motion to reopen.
B. The motion for relief from the automatic stay
Chase made its first appearance in the case over two years later,
when it filed a request for courtesy notice of electronic filing in October
2017. Three months later, on January 29, 2018, it filed a motion for relief
from the automatic stay (“Motion for Relief”). Chase requested authority to
“proceed under applicable nonbankruptcy law to enforce its remedies to
repossess and sell the [Vehicle].”
Mr. Jakubaitis opposed the Motion for Relief. He argued that there
2 We exercise our discretion to review the bankruptcy court’s docket, as appropriate. See Woods & Erickson, LLP v. Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008).
3 was no cause to lift the automatic stay because he had received his
discharge and the stay had terminated; the reopened case did not give
Chase additional rights. He also argued that the Motion for Relief was
prejudicial and imposed a hardship on him. He contended that Chase was
barred by the doctrine of laches because five years had passed since the
petition date and four years had passed since his discharge, yet Chase had
not filed a proof of claim or sought relief prior to discharge.
The bankruptcy court issued a tentative ruling on the Motion for
Relief and stated that it was inclined to grant the motion: “The allegation of
prejudice and hardship makes no sense. Although the stay technically has
evolved into a discharge injunction upon the entry of a discharge, the
analysis is the same.”
After a hearing, the court granted the Motion for Relief.3 The court
entered a form order (“Stay Relief Order”) granting Chase relief from the
automatic stay under § 362(d)(1). It “[t]erminated [the automatic stay] as to
the Debtor and the Debtor’s bankruptcy estate.” It additionally provided:
Movant may enforce its remedies to repossess or otherwise obtain possession and dispose of the [Vehicle] in accordance with applicable nonbankruptcy law, but may not pursue any deficiency claim against the Debtor or property of the estate
3 Mr. Jakubaitis declined to provide us with a copy of the transcript of the hearing. Therefore, we are entitled to presume that nothing said at the hearing was helpful to his position. See Gionis v. Wayne (In re Gionis), 170 B.R. 675, 681 (9th Cir. BAP 1994), aff’d, 92 F.3d 1192 (9th Cir. 1996).
4 except by filing a proof of claim pursuant to 11 U.S.C. § 501.
Mr. Jakubaitis timely appealed the Stay Relief Order. He represents
on appeal that Chase has not contacted him concerning the Vehicle or
otherwise attempted to exercise its lien rights.
JURISDICTION
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334
and 157(b)(2)(A) and (G). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Whether the bankruptcy court erred in granting Chase relief from the
automatic stay to enforce its lien rights against the Vehicle.
STANDARDS OF REVIEW
We review de novo the bankruptcy court’s interpretation of the
Bankruptcy Code. Shapiro v. Henson, 739 F.3d 1198, 1200 (9th Cir. 2014). “De
novo review requires that we consider a matter anew, as if no decision had
been made previously.” Francis v. Wallace (In re Francis), 505 B.R. 914, 917
(9th Cir. BAP 2014) (citations omitted).
We review for an abuse of discretion the bankruptcy court’s rulings
regarding laches. Beaty v. Selinger (In re Beaty), 306 F.3d 914, 920-21 (9th Cir.
2002). We also review for abuse of discretion the bankruptcy court’s
decision to grant relief from the automatic stay. Kronemyer v. Am.
Contractors Indem. Co. (In re Kronemyer), 405 B.R. 915, 919 (9th Cir. BAP
2009) (citations omitted).
5 We apply a two-part test to determine whether the bankruptcy court
abused its discretion. First, we consider de novo whether the bankruptcy
court applied the correct legal standard. Then, we review the bankruptcy
court’s factual findings for clear error. See Sullivan v. Harnisch (In re
Sullivan), 522 B.R. 604, 611 (9th Cir. BAP 2014) (citing United States v.
Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en banc)). We must affirm
the bankruptcy court’s factual findings unless we conclude that they are
illogical, implausible, or without support in the record. Id. at 612 (citing
Hinkson, 585 F.3d at 1262).
We may affirm the decision of the bankruptcy court on any basis
supported by the record. See ASARCO, LLC v. Union Pac. R.R. Co., 765 F.3d
999, 1004 (9th Cir. 2014) (citations omitted).
DISCUSSION
A. The bankruptcy court erred by granting Chase relief from the automatic stay or discharge injunction.
Mr. Jakubaitis argues that the bankruptcy court could not grant
Chase relief from the automatic stay because he had received his discharge.
In its tentative ruling, the bankruptcy court recognized that the automatic
stay was not in effect and had been superseded by the discharge injunction.
Nevertheless, the Stay Relief Order granted Chase relief from the automatic
stay. This was erroneous.
When the court grants a debtor a discharge, the automatic stay
6 terminates and is replaced by the discharge injunction. See § 362(c)(2)(C)
(“the [automatic] stay . . . continues until . . . the time a discharge is granted
or denied”). In other words, “the existence of a discharge means that there
is no automatic stay from which relief may be granted to permit an action
against the debtor. Insofar as the automatic stay bars actions against the
debtor, the stay automatically expires upon the grant of a discharge.”
Ruvacalba v. Munoz (In re Munoz), 287 B.R. 546, 551 (9th Cir. BAP 2002); see
also ZiLOG, Inc. v. Corning (In re ZiLOG, Inc.), 450 F.3d 996, 1009 n.13 (9th
Cir. 2006) (“We don’t understand why the district court discussed the
automatic stay. By August 21, 2002, the automatic stay had long since
disappeared; it was only the discharge injunction that was relevant.”). The
court abuses its discretion if it grants relief from the automatic stay after it
is terminated. See Lakhany v. Khan (In re Lakhany), 538 B.R. 555, 561 (9th Cir.
BAP 2015) (“As the stay had ‘automatically expire[d] upon the grant of
[Lakhany’s] discharge,’ the bankruptcy court abused its discretion in
granting relief from the stay. Rather, the appropriate inquiry would have
been the applicability of the discharge injunction.”).
The automatic stay terminated on January 21, 2014, when the
bankruptcy court issued Mr. Jakubaitis’ discharge. The court could not
thereafter grant Chase relief from the nonexistent automatic stay. The
bankruptcy court abused its discretion when it did so.
In its tentative ruling, the bankruptcy court stated that it was inclined
7 to grant the Motion for Relief as to the discharge injunction. This was also
erroneous.
“The assumption that the § 524(a)(2) statutory discharge injunction
can be modified is incorrect; the discharge injunction is set in statutory
concrete.” In re Munoz, 287 B.R. at 550. Although the court cannot modify
the discharge injunction, it can determine its scope. However,
“determinations regarding the scope of the discharge require a declaratory
judgment obtained in an adversary proceeding.” Id. at 551 (citations
omitted); see Clark v. Strand (In re Clark), BAP No. CC-07-1393-CKMo, 2008
WL 8444804, at *3 (9th Cir. BAP Apr. 3, 2008) (“relief from the discharge
injunction of Section 524 is only available through a complaint to revoke
discharge under Section 727(e) and Rule 7001(4)”). Such determination
cannot be sought in the guise of a relief from stay motion.
Therefore, the bankruptcy court erred when it granted Chase relief
from either the automatic stay or discharge injunction.
B. The bankruptcy court’s error was harmless because Chase did not need stay relief to enforce its lien rights.
Both Chase’s motion and the bankruptcy court’s order were
unnecessary. Chase did not need relief from the discharge injunction to
enforce its in rem rights against the Vehicle. Accordingly, the bankruptcy
court’s error was harmless.
A discharge “operates as an injunction against the commencement or
8 continuation of an action, the employment of process, or an act, to collect,
recover or offset any [discharged] debt as a personal liability of the
debtor . . . .” § 524(a)(2) (emphasis added).
Because the discharge applies only to the debtor’s “personal
liability,” a creditor’s rights in the debtor’s property are not affected. See
HSBC Bank, USA, Nat’l Ass’n v. Blendheim (In re Blendheim), 803 F.3d 477,
494 (9th Cir. 2015) (“Discharges leave unimpaired a creditor’s right to
proceed in rem against the debtor’s property.”); Ocwen Loan Servicing, LLC
v. Marino (In re Marino), 577 B.R. 772, 783-84 (9th Cir. BAP 2017) (“The
discharge has one important limit: it bars only efforts to collect debts ‘as a
personal liability of the debtor.’ . . . This means that secured creditors can
foreclose their liens after the discharge is entered.” (citations omitted)); 4
Collier on Bankruptcy ¶ 524.02 (Richard Levin & Henry J. Sommer eds.,
16th ed.) (“[T]he provisions [of § 524] apply only to the personal liability of
the debtor, so they do not affect an otherwise valid prepetition lien on
property.”). Thus, the discharge does not affect a creditor’s rights in the
debtor’s property, including the right to repossess an automobile. See Cobbs
v. Nissan Motor Acceptance Corp. (In re Cobbs), BAP No. SC-18-1064-FSKu,
2018 WL 5289698, at *5-6 (9th Cir. BAP Oct. 24, 2018), appeal dismissed, 2018
WL 7137677 (9th Cir. Nov. 28, 2018).
In the present case, the bankruptcy court ruled that Chase “may
enforce its remedies to repossess or otherwise obtain possession and
9 dispose of the Property in accordance with applicable nonbankruptcy law
. . . .” But this ruling was unnecessary; Chase did not need prior court
approval to enforce its rights against the Vehicle (as opposed to its claims
against Mr. Jakubaitis personally), because the discharge injunction did not
affect its lien rights. The Stay Relief Order also did not permit Chase to
enforce any in personam claim against Mr. Jakubaitis: it provides that
Chase “may not pursue any deficiency claim against the Debtor or
property of the estate except by filing a proof of claim pursuant to 11 U.S.C.
§ 501.” Therefore, the order granting relief from the discharge injunction
was unnecessary, the bankruptcy court’s error was harmless, and
affirmance is warranted.4
C. The bankruptcy court did not err in declining to apply laches.
Mr. Jakubaitis argues that Chase sat on its hands for too long such
that the doctrine of laches barred it from seeking relief. We need not decide
this issue.
Mr. Jakubaitis does not make clear exactly what he thinks Chase is
barred from doing. If he means that Chase is barred from seeking stay
relief, his argument is superfluous, because (as he correctly asserts) the
automatic stay has terminated by operation of law. If he means that Chase
4 We note that reversal of the bankruptcy court’s order would leave the parties in exactly the same positions that they occupy upon affirmance. Either way, the automatic stay does not apply, and the discharge injunction does not bar Chase’s enforcement of its lien rights.
10 may not seek relief from the discharge injunction, his argument is also
superfluous, because one cannot ever obtain relief from that injunction.
We think that Mr. Jakubaitis probably intends to argue that Chase’s
delay precludes it from enforcing its lien on the Vehicle. But this question
was not before the bankruptcy court and is not before us. In deciding a
motion for relief from stay, the bankruptcy court is only tasked with
deciding whether the movant has a colorable claim to enforce its rights
against the property, not the substance or merit of the claim. See Veal v. Am.
Home Mortg. Servicing, Inc. (In re Veal), 450 B.R. 897, 914-15 (9th Cir. BAP
2011) (“a party seeking stay relief need only establish that it has a colorable
claim to enforce a right against property of the estate”); First Fed. Bank. of
Cal. v. Robbins (In re Robbins), 310 B.R. 626, 631 (9th Cir. BAP 2004) (“Stay
relief hearings do not involve a full adjudication on the merits of claims,
defenses, or counterclaims, but simply a determination as to whether a
creditor has a colorable claim.”). Accordingly, we need not decide whether
laches precludes Chase from enforcing its lien rights.
CONCLUSION
Although the bankruptcy court should not have granted relief from
the automatic stay or discharge injunction, to do so was harmless error. We
AFFIRM.