Little v. Taylor (In Re Taylor)

77 B.R. 237, 1987 Bankr. LEXIS 865, 16 Bankr. Ct. Dec. (CRR) 743
CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedAugust 7, 1987
DocketBAP No. CC 86-1740 MoMeV, BAP No. CC 86-2172 MoMeV, Bankruptcy No. LAX 85-54806 GM
StatusPublished
Cited by21 cases

This text of 77 B.R. 237 (Little v. Taylor (In Re Taylor)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Little v. Taylor (In Re Taylor), 77 B.R. 237, 1987 Bankr. LEXIS 865, 16 Bankr. Ct. Dec. (CRR) 743 (bap9 1987).

Opinion

OPINION

Before MOOREMAN, MEYERS and VOLINN, Bankruptcy Judges.

MOOREMAN, Bankruptcy Judge:

Two separate appeals have arisen from this case and because of the interrelated facts and issues posed within, they have been consolidated. In order to understand the issues presented it is necessary to set forth the relevant facts and proceedings of the underlying case.

FACTS

On September 2, 1984, creditors Dina Tsafaroff and Evelyn Simbas held a note and third deed of trust on the debtor’s principal residence which became due and payable in the amount of $12,500. On June 26, 1985, the debtor filed a petition for relief under Chapter 13 of Title 11. The creditors/Tsafaroff and Simbas brought an adversary proceeding to lift the automatic stay on September 6, 1985. However, on September 23, 1985, a hearing was held on the debtor’s proposed Chapter 13 plan. After determining that the debtor had failed to file a feasible plan, Bankruptcy Judge William J. Lasarow signed an order dismissing the Chapter 13 petition.

Subsequent to Judge Lasarow’s ruling, but prior to the entry of the dismissal order dated October 3, 1985, the debtor filed a second Chapter 13 petition on September 27, 1985. On October 2, 1985, Bankruptcy Judge Barry Russell presided over a hearing on Tsafaroff and Simbas’ complaint for relief from the automatic stay. The debtor and the debtor’s attorney failed to appear at the hearing and Judge Russell entered a Default Judgment on October 13, 1985. Judge Lasarow's final order dismissing the first Chapter 13 petition had been entered on October 3, 1985.

The debtor’s second Chapter 13 petition (case # 85-54806 filed on October 27, 1985) was converted to a Chapter 7 on December 16, 1985. However, relying on the previously entered Default Judgment lifting the automatic stay under the first Chapter 13 petition (case # 85-53242), the creditors Tsafaroff and Simbas proceeded with a foreclosure sale of the property on January 16, 1986. The property was purchased by William Little, for $22,088.94 subject to a $20,000 first deed of trust. 1 Both parties stipulated that the property was valued at at least $100,000 at a hearing on November 21, 1986. ER. at 379.

On April 10, 1986, in case # 85-54806, the debtor filed a complaint to set aside the foreclosure sale as being violative of the automatic stay which became effective upon the filing of the second Chapter 13 petition on September 27, 1985. Tsafaroff, Simbas and Little filed a motion to dismiss the complaint for lack of subject matter jurisdiction on May 12, 1986. They alleged that the original order lifting the automatic stay in the first Chapter 13 case was Res Judicata on any subsequent Chapter 13 petitions. On June 2, 1986, Mr. Little, again through Mr. Vickman, filed an ex parte motion for declaratory relief as to the absence of an automatic stay, and alternatively relief from the automatic stay. Notice of the motion was served on the debtor’s attorney eight days prior to the scheduled hearing. The hearing on both the motion to dismiss and the ex parte motion for relief from the automatic stay was held on June 10, 1986, before Bankruptcy Judge Geraldine Mund.

Judge Mund determined that the order lifting the automatic stay was not res judi-cata on the second Chapter 13 and denied both the motion to dismiss and the ex parte motion for relief from automatic stay. The denial of relief from the automatic stay was based on Judge Mund’s finding that the prior order obtained under the first Chapter 13 petition, did not permit the sellers to conduct the foreclosure when the automatic stay from the second filed peti *239 tion was in effect. She also found that relief from the stay could only be maintained after determining that the buyer Mr. Little was a bona fide purchaser and, therefore, not tainted by a foreclosure which was in violation of the automatic stay.

Not to be deterred, Mr. Little filed on July 2, 1986, a Motion to Alter or Amend Judge Mund’s previous order on the motion for relief from stay. Judge Mund considered the Motion to Alter or Amend the equivalent of a motion to reconsider and after a hearing on the matter denied the motion. Judge Mund determined that the previous ex parte motion for declaratory relief was improperly brought and should have been brought as an “adversary proceeding.” She also determined that Mr. Little’s attorney, Mr. Vickman had “multiplied the litigation in this matter ... and has attempted to shortcut the provisions of the Bankruptcy Code and Rules....” Based on these and other findings Judge Mund imposed sanctions against Mr. Vick-man in the amount of $500.

From this order denying the Motion to Alter or Amend and imposing sanctions on Mr. Vickman, Mr. Little appeals (“the first appeal”).

After the filing of the first appeal, a trial was held on the debtor’s complaint to set aside the foreclosure sale as void. Judge Mund determined therein that Mr. Little was a bona fide purchaser at the foreclosure sale and held the sale to be valid. Judge Mund also determined that an issue remained as to whether Mr. Little retained only a lien on the property pursuant to section 549(c) of the Bankruptcy Code concerning “fair equivalent value.” This issue was taken under advisement by Judge Mund. The debtor then filed a notice of appeal with respect to Judge Mund’s order deeming the foreclosure sale valid (“the second appeal”). (These appeals have been consolidated in consideration of the interrelated facts and judicial economy.)

DISCUSSION.

I.

This Panel reviews the bankruptcy court’s findings of fact under a “clearly erroneous” standard, while conclusions of law are reviewed de novo. Bankr.Rule 8013; Anderson v. City of Bessemer, 470 U.S. 564, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985). A bankruptcy court’s decision to impose sanctions upon an attorney will be reversed only upon a showing of abuse of discretion. In re Chisum, 68 B.R. 471, 473 (9th Cir. BAP 1986).

II.

In the first appeal, the issues are: 1-whether the trial court erred in holding that the prior order lifting the stay in the first Chapter 13 was not res judicata on the automatic stay arising under the second petition; and 2- whether the trial court abused its discretion in imposing sanctions upon Mr. Vickman. 2

Mr. Little argues that the bankruptcy court erred in holding that Judge Russell’s initial order lifting the automatic stay did not have res judicata effect. In support of his contention Mr. Little cites the express language of Judge Russell’s order from the default judgment entered on October 16, 1985. The order states as follows:

3. That for a period of six months from the date of entry of the Judgment herein, this relief from automatic stay shall also apply, as res judicata, to any subsequent Chapter 13 cases and proceedings and to any subsequent conversions of this case, which involve the debt- or herein, the subject property and the plaintiffs herein, as to conducting a foreclosure proceeding under the power of sale of the deed of trust....
4.

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Cite This Page — Counsel Stack

Bluebook (online)
77 B.R. 237, 1987 Bankr. LEXIS 865, 16 Bankr. Ct. Dec. (CRR) 743, Counsel Stack Legal Research, https://law.counselstack.com/opinion/little-v-taylor-in-re-taylor-bap9-1987.