SHANNON HAGER

CourtUnited States Bankruptcy Court, E.D. California
DecidedMay 25, 2023
Docket22-12056
StatusUnknown

This text of SHANNON HAGER (SHANNON HAGER) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SHANNON HAGER, (Cal. 2023).

Opinion

1 UNITED STATES BANKRUPTCY COURT

2 EASTERN DISTRICT OF CALIFORNIA

3 FRESNO DIVISION

5 In re ) Case No. 22-12056-B-13 ) 6 SHANNON HAGER, ) DCN PK-2 ) 7 Debtor. ) ) 8 ) ) 9

10 MEMORANDUM RULING ON MOTION TO ANNUL STAY

11 —————————————————————————————

12 Patrick Kavanagh, LAW OFFICES OF PATRICK KAVANAGH, Bakersfield, CA, for Ian McGilvray, Movant. 13

14 Andrew J. Christensen, LAW OFFICES OF ANDREW J. CHRISTENSEN, P.C., Oakland, CA, & Robert S. Williams, WILLIAMS & WILLIAMS, 15 INC., Bakersfield CA, for Shannon Hager, Debtor.

16 —————————————————————————————

17 RENÉ LASTRETO II, Bankruptcy Judge:

18 19 California’s nonjudicial foreclosure system is designed to 20 provide the lender-beneficiary with an inexpensive and efficient 21 remedy against a defaulting borrower, while protecting the 22 borrower from wrongful loss of the property and ensuring that a 23 properly conducted sale is final between the parties and 24 conclusive as to a bona fide purchaser. Moeller v. Lien, 25 Cal. 25 App. 4th 822, 830, 30 Cal. Rptr. 2d 777 (1994). 26 My, how things change. 27 Ian McGilvray (“McGilvray”) moved to annul the automatic 28 stay under 11 U.S.C. § 362(d)(1) to validate his purchase of 1 real property located at 2313 Sycamore Lane, Pine Mountain Club, 2 CA 93222 (“Property”) at a foreclosure sale, and to allow him to 3 proceed with his unlawful detainer action in Kern County 4 Superior Court, entitled Giuliana Vista GP v. Shannon Hager, et 5 al., case no. BCL-23-010025 (“Unlawful Detainer Action”).1 Dckt. 0F 6 44. McGilvray also requested waiver of the 14-day stay of Fed. 7 R. Bankr. P. (“Rule”) 4001(a)(3). Id. 8 Shannon Hager (“Debtor”) timely opposed and McGilvray 9 replied. Dckt. 58-59, 61-64. 10 At the hearing on May 17, 2023, the parties presented oral 11 argument and the court took the matter under submission. Dckt. 12 65. Under 11 U.S.C. § 362(e) and for good cause, the court 13 ordered continuation of the automatic stay through July 14, 14 2023, unless terminated by further order of the court. Id. 15 Applying the amended California foreclosure statutes and 16 weighing the factors at play when considering a request to annul 17 the stay, the court finds annulment inappropriate and DENIES the 18 motion. 19 20 I. FACTS 21 In early November 2022, Property was Debtor Shannon Hager’s 22 residence. She lived there for 24 years. Dckt. 62. Her sister 23 and her 75-year-old mother with declining health also reside 24 there. Id. Property, which is in one of the mountain communities 25 in Tejon Pass in southwestern Kern County, was encumbered by a 26 Deed of Trust in favor of Flagstar Bank (“Flagstar”). Due to the 27 1 McGilvray is one of the partners in Giuliana Vista (“Giuliana Vista”). 28 1 COVID-19 outbreak, Ms. Hager’s employment and that of her sister 2 and daughter, were interrupted. Id. Earlier, she had difficulty 3 making payments to Flagstar. Id. So, Flagstar agreed to forbear 4 collection of some payments. But due to Ms. Hager’s employment 5 situation, she could not qualify for a loan modification. Id. 6 Flagstar rejected Ms. Hager’s tender of $10,000 six months 7 earlier and was foreclosing. 8 McGilvray has been in the real estate business for years 9 and has purchased properties at foreclosure sales before. Dckt. 10 48. He is also familiar with the “multiple steps” foreclosing 11 parties have to take to foreclose on certain properties 12 including allowing for sales to “non-profits.” Id. 13 McGilvray purchased Property at the nonjudicial 14 foreclosure sale for $164,512.71 on November 7, 2022. Dckt 48. 15 Multiple parties submitted notices of intent to bid on the 16 Property from November 10 to 21, 2022, but it is undisputed that 17 no bids were received. Ex. A, Dckt. 63. The foreclosure trustee, 18 Prober & Rafael (“Prober”), executed the Trustee’s Deed Upon 19 Sale (“Trustee’s Deed”) on November 23, 2022 and sent it to 20 McGilvray. Ex. A, Dckt. 49. 21 On December 1, 2022, 21 days after the foreclosure sale, 22 Debtor filed chapter 13 bankruptcy. Dckt. 1. She says she did 23 not know of the foreclosure sale until someone claiming to be 24 the owner of Property called her the day after Thanksgiving, 25 2022. Dckt. 62. The day after Debtor filed her bankruptcy case, 26 McGilvray submitted the Trustee’s Deed to the Kern County 27 recorder’s office who recorded it that day. Ex. A, Dckt. 49. 28 McGilvray claims he had no knowledge of the bankruptcy at that 1 time. Dckt. 48. McGilvray initiated the Unlawful Detainer Action 2 about one month later. Ex. B, Dckt. 29. According to McGilvray’s 3 attorney, the Unlawful Detainer Action has been dismissed. 4 Debtor valued Property in her schedules at $426,600 and 5 listed Flagstar as the mortgagee with a secured claim of 6 $177,863.79. Dckt. 18. Flagstar’s treatment under the proposed 7 plan is to be paid as though the foreclosure sale did not occur. 8 Dckt. 17. Notably, neither McGilvray nor Giuliana Vista were 9 listed as creditors in the schedules or the master address list. 10 Dckt. 1, 3, 18. 11 On March 1, 2023, McGilvray filed a motion for relief from 12 the automatic stay under 11 U.S.C. § 362(d)(1) and (d)(2). Dckt. 13 27; PK-1. The court granted the motion without retroactive 14 relief because it was not requested. Dckt. 37. The court 15 directed McGilvray to prepare the order, which was to be 16 approved by Debtor’s counsel, but an order is not yet submitted. 17 McGilvray now seeks to annul the stay on two grounds. Dckt. 18 44. First, he contends California law allows the post-petition 19 recording of the Trustee’s Deed to relate back to the date of 20 the sale. Since notices of intent to bid were submitted, 21 McGilvray contends the Trustee’s Deed will be deemed perfected 22 as of the date of the sale under Cal. Civ. Code § 2924h(c) if it 23 is recorded within 60 days of the sale, as it was here. Dckt. 24 46. Second, McGilvray contends the Fjeldsted balancing test 25 supports annulling the automatic stay. Id.; see Fjeldsted v. 26 Lien (In re Fjeldsted), 293 B.R. 12, 32 (B.A.P. 9th Cir. 2003). 27 Debtor opposes, first, because the foreclosure sale was 28 void as a matter of law for violating the automatic stay. Under 1 California law, Debtor argues the trustee’s sale was not final 2 before the bankruptcy was filed. Dckt. 61. Second, Debtor 3 contends the Fjeldsted factors do not support annulling the 4 stay. Id. Neither party requested discovery. Both parties 5 consented on the record to the court taking this matter under 6 submission and ruling based on the existing record. 7 8 II. JURISDICTION 9 The United States District Court for the Eastern District 10 of California has jurisdiction of this civil proceeding by 11 virtue of 28 U.S.C. § 1334(b) because it arises under title 11 12 and in a case under title 11 of the United States Code. The 13 District Court has referred this matter to this court under 28 14 U.S.C. § 157(a). This is a “core” proceeding under 28 U.S.C. 15 § 157(b)(2)(G). 16 17 III. ISSUES 18 1. Whether the post-petition finalizing of a pre-petition 19 foreclosure sale subject to overbid under Cal. Civ. Code (“CC”) 20 § 2924m(c) violated the automatic stay of 11 U.S.C.

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