In re: Marion Chatmon

United States Bankruptcy Appellate Panel for the Ninth Circuit·Decided June 18, 2026·No. 25-1151·Unpublished

Opinion

FILED JUN 18 2026 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY.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-25-1151-SGL MARION CHATMON, Debtor. Bk. No. 2:25-bk-16046-WB

MARION CHATMON, Appellant, v. MEMORANDUM* PACIFIC LOANWORKS, INC., Appellee.

Appeal from the United States Bankruptcy Court for the Central District of California Julia Wagner Brand, Chief Bankruptcy Judge, Presiding

Before: SPRAKER, GAN, and LAFFERTY, Bankruptcy Judges.

INTRODUCTION

Chapter 131 debtor Marion Chatmon appeals from an order granting

Pacific Loanworks, Inc. relief from stay. The order in relevant part annulled

the stay retroactively to validate Pacific Loanworks’ postpetition

* 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. 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. foreclosure of real property in which Marion claimed a fractional

ownership interest.2 The bankruptcy court applied the correct legal

standard for granting retroactive stay annulment. And none of its factual

findings were clearly erroneous. Furthermore, Marion’s belated attempt on

appeal to challenge Pacific Loanworks’ standing lacks merit. Accordingly,

we AFFIRM.

FACTS 3

A. Marion’s daughter borrows money from the lenders.

In September 2019, Marion’s daughter Ashlei borrowed $355,000. She

secured her obligation to repay this loan by granting the lenders a security

interest in a parcel of mixed-use real property located on Crenshaw

Boulevard in Los Angeles, California (“Property”). To document this loan

transaction, Ashlei executed a note and a deed of trust. The note

collectively identified several different individuals and a family trust as the

“Lender” but directed Ashlei to make all loan payments to Pacific

Loanworks.4 In addition, the deed of trust identified Pacific Loanworks as

2 We refer to Marion by her first name for ease of reference and to differentiate her from her daughter Ashlei Antionette Chatmon-James, to whom we refer as Ashlei. No disrespect is intended to either party. 3 We exercise our discretion, when appropriate, to take judicial notice of

documents electronically filed in the underlying bankruptcy case. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003). 4 Some of the original lenders later assigned their respective rights under the note

and deed of trust to others. Regardless, Pacific Loanworks has claimed to represent the interests of the lenders—whoever they might be—as their servicing agent at all relevant times. 2 trustee under the deed of trust, with a power to sell the Property in the

event of a default.5

The note contemplated that Ashlei would make monthly interest-

only payments until the loan matured in November 2022, at which point

the entire remaining loan balance would come due. The parties agreed in

2022 to extend the maturity date of the loan to November 2024.

B. Events leading up to Pacific Loanworks’ foreclosure and Marion’s bankruptcy filings.

According to Pacific Loanworks, unbeknownst to it and without the

lenders’ consent, Ashlei conveyed a 50% interest in the property to Marion

in December 2022 or January 2023.

Ashlei failed to repay the outstanding loan balance when the

extended loan matured in November 2024. Consequently, Pacific

Loanworks initiated foreclosure proceedings against the Property. On the

eve of the scheduled foreclosure sale in April 2025, Marion filed a chapter

13 bankruptcy and immediately notified the foreclosure trustee to prevent

the trustee’s sale from moving forward (“First Bankruptcy”). However, the

bankruptcy court entered an order on July 11, 2025, granting the chapter 13

trustee’s motion to dismiss the First Bankruptcy for failure to make any

plan payments and failure to appear at her continued § 341(a) meeting of

5 Pacific Loanworks subsequently executed and recorded a Substitution of Trustee naming Total Lender Solutions, Inc. as successor trustee under the deed of trust. Total Lender Solutions later served as the foreclosing trustee at the trustee’s sale. 3 creditors.

Marion filed her second chapter 13 petition on July 17, 2025 (“Second

Bankruptcy”). The foreclosure trustee completed the trustee’s sale of the

Property roughly forty-five minutes after the commencement of the Second

Bankruptcy, allegedly without any knowledge of the Second Bankruptcy.

C. Pacific Loanworks moves for relief from stay.

Less than a week later, Pacific Loanworks moved for relief from stay.

The motion sought not only to permit Pacific Loanworks to proceed with

its rights under state law to perfect the prior foreclosure sale and obtain

possession of the Property but also to annul the stay retroactively to

validate the foreclosure sale even though the sale occurred postpetition.

Pacific Loanworks identified itself as the lenders’ duly-authorized

servicing agent. In two accompanying declarations, the movant’s president

Matthew Gross reiterated that Pacific Loanworks was the servicing agent

for the lenders, who qualified as both “holders” of the note and

“beneficiaries” under the deed of trust.

The stated basis for relief from stay was Marion’s alleged

misconduct. Among other things, Gross stated in his supporting

declarations that Ashlei and Marion had a history of sharing fractionalized

interests in real property and filing serial, skeletal bankruptcies to impede

foreclosure. He further asserted that Marion and Ashlei were engaging in a

scheme to delay, hinder, or defraud their creditors. Gross also stated that

both Pacific Loanworks and the lenders were unaware of the Second

4 Bankruptcy until after completion of the foreclosure sale to lenders by

partial credit bid.6

Marion initially filed a request for additional time to respond to the

relief from stay motion. She represented that she recently had undergone a

surgical procedure and hence needed more time to respond. The day

before the first scheduled relief from stay hearing, August 11, 2025, Marion

filed two responses to the motion—one by counsel and the other pro se.

The response filed by counsel focused on the value of the Property and

whether it was necessary for an effective reorganization. This response

claimed that Marion had $700,000 in equity in the Property and the

Property was necessary for an effective reorganization. Marion’s one-page

pro se response alleged that Pacific Loanworks and its agents had notice of

her Second Bankruptcy prior to the trustee’s sale but nonetheless

proceeded with the sale in willful violation of the automatic stay. Neither

response was accompanied by any supporting evidence.

The first hearing on the relief from stay motion was held on August

12, 2025. Notwithstanding his client’s allegations to the contrary, Marion’s

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