In re: Garegin Papazov, 9th Cir. BAP (2013)

7/25/2019 In re: Garegin Papazov, 9th Cir. BAP (2013)

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1 Thi s di sposi t i on i s not appr opr i at e f or publ i cat i on.Al t hough i t may be ci t ed f or whatever persuasi ve val ue i t may have( see Fed. R. App. P. 32. 1) , i t has no pr ecedent i al val ue. See 9t hCi r . BAP Rul e 8013- 1.

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

I n r e: ) BAP No. CC- 12- 1584- Ki Cl D)

GAREGI N PAPAZOV, ) Bk. No. 2: 10- 38924- RN)

Debt or . ) )

)ELI ZABETH GOLDENBERG, TRUSTEE )OF THE GOLDENBERG FAMI LY )TRUST, )

)Appel l ant , )

) M E M O R A N D U M1

v. ))

DEUTSCHE BANK NATI ONAL TRUST )COMPANY, )

)Appel l ee. )

______________________________)

Ar gued and Submi t t ed on May 16, 2013,at Pasadena, Cal i f or ni a

Fi l ed - May 30, 2013

Appeal f r om t he Uni t ed St at es Bankrupt cy Cour tf or t he Cent r al Di st r i ct of Cal i f or ni a

Honor abl e Ri char d M. Nei t er , Bankrupt cy J udge, Pr esi di ng

Appear ances: Russel l F. Behj at ni a, Esq. of Law Of f i ce of Russel lF. Behj at ni a ar gued f or appel l ant , El i zabet hGol denber g, Tr ust ee of t he Gol denber g Fami l y Tr ust ;Rober t J . J ackson, Esq. of Rober t J . J ackson &Associ at es, I nc. ar gued f or appel l ee, Deut sche BankNat i onal Trust Company.

FILEDMAY 30 2013

SUSAN M SPRAUL, CLERKU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT


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2 Hon. Fredr i ck E. Cl ement , Bankrupt cy J udge f or t he East er nDi str i ct of Cal i f or ni a, s i t t i ng by desi gnat i on.

3 Unl ess speci f i ed ot her wi se, al l chapt er , code and r ul er ef er ences ar e t o t he Bankrupt cy Code, 11 U. S. C. 101- 1532, andt he Federal Rul es of Bankr upt cy Procedur e, Rul es 1001- 9037. The

Feder al Rul es of Ci vi l Pr ocedur e ar e r ef er r ed t o as Ci vi l Rul es. 4 To f ul l y underst and t he backgr ound of t hi s appeal , we have

r evi ewed cer t ai n i t ems on t he bankrupt cy cour t ' s el ect r oni c docketof whi ch we t ake j udi ci al not i ce. See O Rour ke v. Seaboar d Sur .Co. ( I n r e E. R. Feger t , I nc. ) , 887 F. 2d 955, 957- 58 ( 9t h Ci r .1989) ( appel l at e cour t can t ake j udi ci al not i ce of document s f i l edwi t h t he bankrupt cy cour t ) .

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Bef or e: KI RSCHER, CLEMENT2 and DUNN, Bankr upt cy J udges.

Appel l ant , El i zabet h Gol denber g ( Gol denber g) , t r ust ee of

t he Gol denber g Fami l y Tr ust ( Trust ) , appeal s t wo or der s f r om t he

bankr upt cy cour t denyi ng her mot i on t o r eopen debt or ' s chapt er 73

bankrupt cy case and denyi ng her i nj unct i ve r el i ef . Because

Gol denber g l acked st andi ng t o r eopen t he case and f i l e t hi s

appeal , we DI SMI SS. Al t er nat i vel y, we AFFI RM. 4

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Events leading to the motion to reopen and request forinjunctive relief

On November 17, 2006, I r i na Lukashi n ( Lukashi n) obt ai ned a

l oan f or $1, 680, 000 f r om Money War ehouse, I nc. f or r eal pr oper t y

l ocat ed on Gr and Vi ew Dr i ve i n Los Angel es, Cal i f or ni a ( Gr and

Vi ew Pr oper t y) . As secur i t y f or t he l oan, Lukashi n execut ed a

pr omi ssor y not e ( Not e) and f i r st deed of t r ust ( DOT) i n f avor

of t he l ender .

On J une 27, 2008, Lukashi n, wi t hout t he consent of t he l ender

and wi t hout t he payment of any consi der at i on, execut ed a qui t cl ai m


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deed pur por t i ng to convey a 100% owner shi p i nt er est i n the Gr and

Vi ew Proper t y t o t he Tr ust . The qui t cl ai m deed was recor ded on

J ul y 8, 2008. Not hi ng i n t he r ecor d suggest s t hat t he Tr ust di d

not t ake t he Gr and Vi ew Propert y subj ect t o t he debt .

Despi t e Lukashi n s t r ansf er of her i nt er est i n t he Gr and Vi ew

Propert y, she subsequent l y execut ed a deed of t r ust and ass i gnment

of r ent s on Oct ober 18, 2009, t o Garegi n Papazov ( Papazov) f or

t he pur pose of secur i ng payment of a l oan i n t he amount of $30, 000

( Papazov DOT) . The Papazov DOT was recorded on J ul y 13, 2010.

Pr i or t o Lukashi n s pur por t ed t r ansf er and assi gnment t o

Papazov, nei t her Lukashi n, Gol denber g nor t he Tr ust ( nor anyoneel se) made any f ur t her payment s on t he Not e af t er J ul y 2, 2008. A

not i ce of def aul t was r ecor ded on Sept ember 2, 2008. A not i ce of

sal e was r ecor ded on J anuar y 13, 2010, wi t h an i ni t i al f or ecl osur e

dat e set f or Febr uar y 1, 2010.

On May 24, 2010, t he Not e and DOT wer e assi gned t o appel l ee,

Deut sche Bank Nat i onal Trust Company as Tr ust ee ( Deut sche Bank) .

The ass i gnment was r ecor ded on J ul y 8, 2010.

The day af t er t he Papazov DOT was r ecor ded, Papazov f i l ed a

chapt er 7 bankrupt cy case on J ul y 14, 2010. I n hi s Schedul e B,

Papazov i dent i f i ed a per sonal pr oper t y i nt er est i n a Real Est at e

Promi ssory Note i n the amount of $30, 000, whi ch appear s t o

r ef l ect hi s pur por t ed secur i t y i nt er est i n t he Gr and Vi ew

Pr oper t y.

On November 22, 2010, Deut sche Bank moved f or r el i ef f r om

st ay i n Papazov s bankrupt cy case t o pr oceed wi t h i t s f or ecl osur e

r i ght s on t he Gr and Vi ew Proper t y. Deut sche Bank r equest ed r el i ef


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5 Al t hough t he box f or 362( d) ( 4) on page 4 of mot i on For m

4001- 1M. RP was not checked, Deut sche Bank contended that t het r ansf er t o Papazov was unaut hor i zed and done i n bad f ai t h t odel ay, hi nder or def r aud, as expl ai ned f ur t her i n t he suppor t i ngdecl ar at i on f r om Paul Lacombe.

6 I n act ual i t y, Papazov hel d onl y a pur por t ed secur i t yi nt er est agai nst t he Gr and Vi ew Proper t y. No such grant deedexi sts.

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under 362( d) ( 1) , ( d) ( 2) and ( d) ( 4) . 5 I n suppor t of t he mot i on,

Deut sche Bank of f ered copi es of t he Note, t he DOT, t he ass i gnment ,

t he Papazov DOT and a br oker ' s appr ai sal .

Deut sche Bank al so of f ered t he decl arat i on of Paul Lacombe

( Lacombe) , empl oyee of l oan servi cer Amer i can Home Mor t gage

Ser vi ci ng, I nc. ( AHMSI ) . Lacombe st at ed t hat Papazov was the

sol e owner of t he Gr and Vi ew Propert y and that he had acqui r ed

t hi s i nt er est by gr ant deed on J ul y 13, 2010. 6 Lacombe f urt her

st at ed t hat pr epet i t i on ar r ear s on t he Not e t ot al ed $143, 442. 36,

post pet i t i on ar r ear s t ot al ed $11, 054. 94, and t hat Deut sche Bank' s

cl ai m as of Sept ember 21, 2010, was $2, 110, 488. 44 ( not i ncl udi ngcost s of sal e) , whi ch exceeded t he pr oper t y' s f ai r mar ket val ue of

$1, 800, 000 t o $2, 000, 000. I n an at t ached cont i nuat i on sheet ,

Lacombe st ated t hat Papazov' s bankr upt cy case had been f i l ed i n

bad f ai t h t o del ay, hi nder , or def r aud movant based on t he

f ol l owi ng:

Unaut hor i zed Tr ansf er s: On or about J ul y 13, 2010, anunaut hor i zed Gr ant Deed i n vi ol at i on of t he Mor t gagor sor i gi nal Deed of Trust was r ecor ded i n t he LOS ANGELESCount y Recor der s of f i ce wher eby Mor t gagor I r i naLukashi n pur por t ed t o t r ansf er a 100% i nt er est i n t hepr oper t y t o Gar egi n Papazov as a gi f t f or noconsi der at i on or f or nomi nal consi der at i on. The Gr antDeed was executed on J ul y 13, 2010 wi t hout t heknowl edge or consent of t he Movant . A t r ue and cor r ectcopy of t he unaut hor i zed Gr ant Deed i s at t ached heretoas Exhi bi t "5" and i ncor por at ed her ei n by ref er ence.


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At t ached t o t he mot i on was al so Deut sche Bank' s r equest f or

ext r aor di nar y r el i ef , mot i on For m 4001- 1M. ER. Deut sche Bank

checked t he boxes r equest i ng t he f ol l owi ng ext r aor di nar y rel i ef :

1. That t he Or der be bi ndi ng and ef f ect i ve i n any bankr upt cycase commenced by or agai nst t he above- named Debtor ( s)f or a per i od of 180 days, so t hat no f ur t her aut omat i cst ay shal l ar i se i n t hat case as t o t he Pr oper t y.

2. That t he Or der be bi ndi ng and ef f ect i ve i n any bankr upt cycase commenced by or agai nst any successor s, t r ansf erees,or ass i gnees of t he above- named Debt or ( s) f or a per i od of180 days f r om t he hear i ng of t hi s Mot i on upon r ecor di ngof a copy of t hi s Or der or gi vi ng appr opr i at e not i ce ofi t s ent r y i n compl i ance wi t h appl i cabl e nonbankrupt cyl aw.

3. That t he Or der be bi ndi ng and ef f ect i ve i n any bankr upt cy

case commenced by or agai nst any Debt or ( s) who cl ai m( s)any i nt er est i n t he Pr oper t y f or a per i od of 180 daysf r om t he hear i ng of t hi s Mot i on upon r ecor di ng of a copyof t hi s Or der or gi vi ng appr opr i at e not i ce of i t s ent r yi n compl i ance wi t h appl i cabl e nonbankrupt cy l aw.

4. That t he Or der be bi ndi ng and ef f ecti ve i n any f ut ur ebankrupt cy case, no mat t er who t he Debt or ( s) may be uponr ecor di ng of a copy of t hi s Or der or gi vi ng appr opr i at enot i ce of i t s ent r y i n compl i ance wi t h appl i cabl enonbankr upt cy l aw.

7. Ot her ( speci f y) : I f recorded i n compl i ance wi t happl i cabl e st at e l aws gover ni ng not i ces of i nt er est s orl i ens i n t he Pr oper t y, t hi s Or der i s bi ndi ng andef f ect i ve under 11 U. S. C. 362( d) ( 4) ( A) and ( B) i n anyot her bankrupt cy case pur por t i ng t o af f ect t he Pr oper t yf i l ed not l at er t han t wo ( 2) year s af t er t he dat e ofent r y of t hi s Or der , except t hat a debt or i n a subsequentbankrupt cy case may move f or r el i ef f r omt hi s Or der basedupon changed ci r cumst ances or f or good cause shown, af t ernot i ce and a hear i ng. Any f eder al , st at e or l ocalgover nment al uni t t hat accept s not i ces of i nt er est s orl i ens i n r eal pr oper t y shal l accept a cer t i f i ed copy oft hi s Or der f or i ndexi ng and r ecor di ng.

A hear i ng was hel d on Deut sche Bank' s st ay r el i ef mot i on on

December 14, 2010. I t was unopposed.

On December 21, 2010, t he bankrupt cy cour t ent ered an order

gr ant i ng Deut sche Bank rel i ef f r om st ay under 362( d) ( 1) and

( d) ( 2) , and f or i n r em r el i ef under 362( d) ( 4) ( St ay Rel i ef


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7 The J anuar y 18, 2012 Or der Cl osi ng Case st at es:

Or der di smi ss i ng t he case of t he Debt or ( s) named above wasent er ed on 10/ 18/ 2011, and not i ce was provi ded t o par t i es i ni nt er est . Si nce i t appear s that no f ur t her mat t er s ar er equi r ed and t hat t hi s case r emai n open, or t hat t hej ur i sdi ct i on of t hi s Cour t cont i nue, i t i s or der ed t hat t he

Tr ust ee i s di schar ged f r om hi s/ her dut i es i n t hi s case,hi s/ her bond i s exoner at ed, and t he case i s cl osed.

8 Pr i or t o t hi s case, Lukashi n had f i l ed a chapt er 7bankr upt cy case i n t he Cent r al Di st r i ct of Cal i f or ni a on J ul y 8,2009, case no. 2: 09- 27405, whi ch was di smi ssed on Oct ober 16,2009, f or f ai l i ng t o appear at t hr ee 341( a) meet i ngs ofcredi t or s.

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Or der ) . Despi t e Deut sche Bank' s extensi ve r equest f or

ext r aor di nar y r el i ef , t he bankr upt cy cour t gr ant ed i t onl y as t o

Papazov and any of hi s successors, t r ansf er ees or assi gnees f or

180 days f r omt he hear i ng on t he mot i on and upon r ecor di ng of t he

or der - i . e. , ext r aor di nar y r el i ef nos. 1 & 2. The St ay Rel i ef

Or der was not bi ndi ng i n any f ut ur e bankrupt cy case i nvol vi ng

any debt or who cl ai med any i nt erest i n t he Gr and Vi ew Propert y.

Deut sche Bank r ecor ded t he St ay Rel i ef Or der on J anuary 7, 2011.

Upon t he chapt er 7 t r ust ee' s mot i on t o di smi ss f i l ed on

September 28, 2010, Papazov' s bankr upt cy case was di smi ssed a year

l at er on Oct ober 18, 2011, f or f ai l i ng t o appear at mul t i pl e 341( a) meet i ngs of cr edi t or s. The di smi ssal or der was not

appeal ed. Papazov' s case was cl osed on J anuary 18, 2012. 7

Meanwhi l e, on J anuar y 11, 2011, Lukashi n f i l ed a chapt er 7

bankr upt cy case i n t he Cent r al Di st r i ct of Cal i f or ni a, case no.

2: 11: 11269. 8 Her case was di smi ssed on March 29, 2011, f or

f ai l ur e t o at t end t hr ee 341( a) meet i ngs of cr edi t or s.

About t hr ee weeks af t er t hat di smi ssal , Lukashi n f i l ed a

chapt er 13 bankr upt cy case i n t he Cent r al Di st r i ct of Cal i f or ni a


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9 Af t er t he 180 days had expi r ed, Lukashi n f i l ed yet anot herchapt er 7 bankr upt cy case i n t he Cent r al Di st r i ct of Cal i f or ni a onDecember 8, 2011, case no. 2: 11- 60015. The schedul es f i l ed werei dent i cal t o t hose f i l ed i n t he pr i or chapt er 13 case. Thi s casewas di smi ssed on Mar ch 26, 2012, f or f ai l ur e t o at t end t hr ee 341( a) meet i ngs of cr edi t or s. I t was cl osed on Apr i l 24, 2012.

Not abl y, bef or e thi s f our t h case was di smi ssed, Lukashi n hadf i l ed an adver sar y compl ai nt agai nst Deut sche Bank and AHMSI f orvi ol at i ng t he aut omat i c st ay based on t he f or ecl osur e, t he samecl ai ms Gol denberg wi shes t o pur sue i n Papazov' s case. SeeAdv. No. 12- 1330. Deut sche Bank had f i l ed a mot i on t o di smi ss t hecompl ai nt , but , bef or e i t coul d be deci ded, t he adver sar ypr oceedi ng was di smi ssed due t o t he di smi ssal of Lukashi n' sunder l yi ng bankr upt cy case.

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on Apr i l 22, 2011, case no. 2: 11: 27570. Her addr ess of r ecor d was

t he Gr and Vi ew Pr oper t y. I n her Schedul e A, Lukashi n i dent i f i ed a

f ee i nt er est i n a house val ued at $1, 000, 000 subj ect t o a

secur ed cl ai m of $1, 000. 000. I n her Schedul e D, she i dent i f i ed

AHMSI as hol di ng a $1, 200, 000 cl ai m ( of whi ch $200, 000 was

unsecur ed) agai nst t hi s pr esumed same house. Lukashi n st ated i n

her Schedul e F t hat she owed AHMSI $66, 879. 00 i n def aul t ed

mor t gage payment s. Based on t hese number s, t he house does not

appear t o be t he Gr and Vi ew Propert y. Lukashi n' s chapt er 13 case

was di smi ssed a f ew weeks l at er on May 12, 2011, f or f ai l ur e to

f i l e al l r equi r ed document s. The di smi ssal or der prohi bi t ed herf r om f i l i ng anot her bankrupt cy case f or 180 days. 9

Meanwhi l e, Deut sche Bank pr oceeded wi t h i t s f orecl osur e of

t he Gr and Vi ew Proper t y on Apr i l 27, 2011, whi l e Lukashi n' s

chapt er 13 case was pendi ng. Deut sche Bank was the successf ul

bi dder at t he f or ecl osur e sal e wi t h a bi d of $1, 530, 000, f ar l ess

t han t he val ue of i t s f i r st l i en. Shor t l y af t er t he sal e,

Lukashi n' s bankrupt cy at t or ney sent a l et t er t o AHMSI asser t i ng

t hat t he St ay Rel i ef Or der obt ai ned by Deut sche Bank i n


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t he Papazov case was voi d because he di d not own t he Gr and Vi ew

Proper t y. Her counsel advi sed AHMSI t hat t he f or ecl osure sal e had

vi ol at ed t he aut omat i c st ay and t hat AHMSI needed t o set i t asi de

and cancel t he t r ust ee' s deed. Deut sche Bank pr oceeded t o r ecor d

i t s t r ust ee' s deed on November 29, 2011. Lukashi n was i dent i f i ed

as t he Tr ust or i n t he t r ust ee' s deed.

On J ul y 23, 2012, Gol denber g f i l ed a per sonal chapt er 7

bankr upt cy case i n t he Cent r al Di st r i ct of Cal i f or ni a, case no.

2: 12- 35204. She i dent i f i ed t he Gr and Vi ew Proper t y as her pl ace

of r esi dence, but i n her Schedul e A she r epr esent ed t hat she had

no i nt er est i n any r eal pr oper t y. Gol denber g di d not di scl ose anyi nt er est i n t he Tr ust or pr oper t y she was hol di ng f or t he Tr ust as

t r ust ee. Her case was di smi ssed on November 2, 2012, f or f ai l i ng

t o appear at t hr ee 341( a) meet i ngs of cr edi t or s. I t was cl osed

on Mar ch 20, 2013, af t er t hi s appeal had been f i l ed.

At some poi nt not cl ear f r om t he r ecor d, Deut sche Bank f i l ed

an unl awf ul det ai ner act i on ( UD Act i on) agai nst Lukashi n and

Gol denber g i n st at e cour t t o evi ct t hem f r om t he Gr and Vi ew

Proper t y. On August 3, 2012, Deut sche Bank f i l ed a Not i ce of No

St ay wi t h respect t o Gol denber g' s t hen- pendi ng bankrupt cy case,

asser t i ng t hat her bankrupt cy di d not st ay the UD Act i on i n l i ght

of t he St ay Rel i ef Or der . Accordi ng t o Deut sche Bank, because t he

St ay Rel i ef Or der had gr ant ed r el i ef under 362( d) ( 4) , upon i t s

r ecor di ng i t became bi ndi ng i n any ot her bankrupt cy case

pur por t i ng t o af f ect t he Gr and Vi ew Pr oper t y f or t wo year s f r om

t he dat e of t he ent r y of t he or der , whi ch i t assert ed was unt i l

December 21, 2012. On September 20, 2012, pur suant t o a

t er mi nat i ng sanct i ons mot i on f i l ed by Deut sche Bank f or


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Gol denber g' s and Lukashi n' s f ai l ur es t o r espond t o di scover y

r equest s as or der ed, t he st at e cour t ent er ed a def aul t j udgment i n

f avor of Deut sche Bank. A wr i t of possessi on was t o be i ssued t o

evi ct t he t wo women.

On Sept ember 24, 2012, Gol denberg, as t r ust ee of t he Tr ust ,

and Lukashi n f i l ed a wr ongf ul f or ecl osur e act i on agai nst Deut sche

Bank and AHMSI i n st at e cour t , al l egi ng t he f or ecl osure was

i mpr oper because i t was based on t he f al se St ay Rel i ef Or der and

was done i n vi ol at i on of t he st ay i n ei t her Gol denber g s or

Lukashi n s bankrupt cy cases.

On Oct ober 10, 2012, wi t h t hei r cur r ent counsel , Gol denber gand Lukashi n f i l ed an ex par t e mot i on t o set asi de the UD Act i on

j udgment and t o r ecal l and st ay al l wr i t s of possess i on. I n

shor t , t hey ar gued t hat t he st at e cour t i ncor r ect l y det er mi ned

t hat t he aut omat i c st ays i n ei t her Lukashi n' s or Gol denber g' s

bankrupt cy cases wer e not i n ef f ect i n r el at i on t o t he Gr and Vi ew

Pr oper t y. They f ur t her asser t ed t hat t he aut omat i c st ays i n t hei r

cases pr ecl uded t hem f r om def endi ng t hemsel ves i n t he UD Act i on,

whi ch l ed t o t hei r def aul t , and t hei r due pr ocess r i ght s wer e

vi ol ated when t he cour t ent ered j udgment agai nst t hem.

I n r esponse, t he stat e cour t i ssued an or der st ayi ng t he

execut i on of t he wr i t of possessi on f or 30 days unt i l November 9,

2012, wi t h no l ockout t o occur unt i l t hen. The st ay was gr ant ed,

appar ent l y, t o gi ve Gol denber g t i me t o pur sue any necessar y rel i ef

i n t he bankr upt cy cour t . Gol denberg and Lukashi n were r equi r ed t o

post a bond of $8, 750. 00 by Oct ober 12, 2012, f or t he st ay t o t ake

ef f ect .


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B. The motion to reopen and the request for injunctive relief

On Oct ober 24, 2012, Gol denber g, as t r ust ee of t he Tr ust ,

f i l ed an ex part e mot i on t o reopen t he Papazov bankr upt cy case

( Mot i on t o Reopen) and t o st ay t he execut i on of any wr i t s of

possessi on r egar di ng t he Gr and Vi ew Proper t y ( Mot i on f or

I nj unct i ve Rel i ef ) . Gol denber g want ed t o r eopen t he Papazov case

t o: ( 1) set asi de what she cont ended was a f r audul ent l y acqui r ed

St ay Rel i ef Or der used t o per pet r at e t he wr ongf ul f or ecl osur e;

( 2) pr osecut e an adver sar y pr oceedi ng agai nst Deut sche Bank and

AHMSI f or vi ol at i ng t he aut omat i c st ay; and ( 3) seek an or der

r evoki ng t he St ay Rel i ef Or der and st ayi ng al l act i ons andpr oceedi ngs whi ch had occur r ed as a resul t .

Speci f i cal l y, Gol denber g cont ended t hat upon Lukashi n' s

execut i on and r ecor di ng of t he qui t cl ai m deed on J une 27, 2008,

Lukashi n had no i nt er est , what soever , i n t he Gr and Vi ew

Proper t y. As a r esul t , cont ended Gol denber g, because Lukashi n

di d not own or possess any i nt er est i n t he Gr and Vi ew Proper t y,

t he Papazov DOT had no ef f ect . Gol denberg f ur t her cont ended t hat

Deut sche Bank knew when i t sought r el i ef f r om st ay i n Papazov' s

case t hat he had no ownershi p i nt erest i n t he Gr and Vi ew Propert y,

and Lacombe' s st atement s t o t he cont r ary were f al se. Gol denberg

ar gued t hat Lukashi n' s bankrupt cy case f i l ed on Apr i l 22, 2011,

i nvoked t he aut omat i c st ay wi t h r espect t o t he Gr and Vi ew

Pr oper t y, whi ch was subj ect t o a f or ecl osur e at t he t i me, and

t her ef or e t he t r ust ee' s sal e on Apr i l 27, 2011, had vi ol at ed t he

stay.

Deut sche Bank opposed t he Mot i on t o Reopen, contendi ng t hat

Gol denber g was not a par t y i n i nt er est wi t h st andi ng t o r eopen a


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10 Deut sche Bank had al so obj ect ed t o t he i mpr oper scope ofr el i ef sought i n Gol denber g' s mot i on because i t r equest ed t o setasi de j udgment s and st ay execut i on of wr i t s, whi ch vi ol ated LocalBankr upt cy Rul e 5010- 1. Gol denberg cur ed t hi s def ect bysubsequent l y f i l i ng a separ at e ex par t e mot i on r equest i ng t hat

r el i ef .11 Deut sche Bank al so argued t hat t he Mot i on t o Reopen shoul d

be deni ed because Gol denber g had f ai l ed t o gi ve not i ce t o t hef or mer chapt er 7 t r ust ee and t he Uni t ed St at es Tr ust ee i nvi ol at i on of l ocal r ul e. I n l i ght of t hat obj ecti on, Gol denber gserved t he f or mer chapt er 7 t r ust ee and t he Uni t ed St at es Tr ust eewi t h her movi ng paper s. No r esponse was f i l ed by ei t her par t y.

- 11-

case under 350( b) as she was not t he debt or , a cr edi t or , or t he

t r ust ee i n Papazov' s case. Deut sche Bank count ered Gol denberg' s

asser t i on t hat t he St ay Rel i ef Or der was obt ai ned by f r aud,

cont endi ng t hat i t had est abl i shed a col or abl e cl ai m t o t he Gr and

Vi ew Proper t y based on t he Not e, t he DOT, Deut sche Bank s

assi gnment , t he br oker s appr ai sal and t he Papazov DOT. 10 I n a

suppor t i ng decl ar at i on, counsel f or Deut sche Bank ( agai n,

i ncor r ect l y) st at ed t hat t he Papazov DOT pur por t ed t o t r ansf er

100% of Lukashi n' s i nt er est i n t he Gr and Vi ew Pr oper t y t o Papazov

f or l i t t l e or no consi der at i on. 11

Wi t hout a hear i ng, t he bankrupt cy cour t ent er ed two or der s onNovember 5, 2012, denyi ng t he Mot i on t o Reopen and t he Mot i on f or

I nj unct i ve Rel i ef . The bankrupt cy cour t deni ed t he Mot i on t o

Reopen, f i ndi ng t hat no good cause exi st ed t o r eopen t he case

t hat woul d accor d r el i ef t o t he Debt or s under 11 USC 350( b) [ . ]

Gol denberg t i mel y appeal ed both or ders.

On December 14, 2012, t he mot i ons panel ent ered an order

denyi ng Gol denber g' s emer gency mot i on f or i nj unct i ve r el i ef t o

st ay the execut i on of any wr i t s as t o t he Gr and Vi ew Proper t y.

The mot i ons panel f ound t hat because t he Stay Rel i ef Or der di d not


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12 Deut sche Bank ar gues i n i t s br i ef and at or al ar gument t hatt he or der denyi ng t he Mot i on t o Reopen i s i nt er l ocut or y. Deut scheBank ci t es Mass Dep' t of Revenue v. Cr ocker ( I n r e Cr ocker ) ,362 B. R. 49, 53 ( 1st Ci r . BAP 2007) ( ci t i ng Pai ne v. Di ckey( I n r e Pai ne) , 250 B. R. 99, 103 n. 4 ( 9t h Ci r . BAP 2000) ) , f or t hepr oposi t i on t hat an or der on a mot i on t o reopen i s i nt er l ocut or ybecause [ i t does] not r esol ve t he ul t i mat e i ssue bef or e the

bankrupt cy cour t , but mer el y const i t ut e[ s] a pr el i mi nar y st ep i nt he . . . pr ocess. These cases ar e i napposi t e as t hey i nvol veor der s gr ant i ng mot i ons t o r eopen i nst ead of or der s denyi ngmot i ons t o reopen.

13 Al t hough Gol denberg appeal ed t he bankr upt cy cour t ' s or derdenyi ng her Mot i on f or I nj unct i ve Rel i ef , she has not asser t ed any

( cont i nued. . . )

- 12-

cont ai n a det er mi nat i on t hat Papazov' s f i l i ng of t he pet i t i on was

par t of a scheme t o del ay, hi nder , and def r aud cr edi t or s under

11 U. S. C. 362( d) ( 4) , i t had expi r ed 180 days af t er t he

December 14, 2010 hear i ng on t he mot i on f or r el i ef f r om st ay,

whi ch woul d have been May 17, 2011. Because Gol denberg had not

f i l ed a bankr upt cy case bef ore May 17, 2011, t he mot i ons panel

det er mi ned t hat t he St ay Rel i ef Or der coul d not possi bl y have had

any ef f ect on an aut omat i c st ay wher e she was t he debt or ent i t l ed

t o such pr ot ect i on.

II. JURISDICTION

Subj ect t o t he st andi ng di scussi on set f or t h bel ow, t hebankrupt cy cour t had j ur i sdi ct i on under 28 U. S. C. 157( b) ( 2) ( A)

and 1334. An or der denyi ng a mot i on t o r eopen i s a f i nal or der .

Ri azuddi n v. Schi ndl er El evat or Cor p. ( I n r e Ri azuddi n) , 363 B. R.

177, 182 ( 10t h Ci r . BAP 2007) . 12 We addr ess our j ur i sdi ct i on under

28 U. S. C. 158 bel ow.

III. ISSUE

Di d t he bankrupt cy cour t abuse i t s di scr et i on i n denyi ng t he

Mot i on to Reopen?13


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13( . . . cont i nued)

speci f i c ar gument as t o how t he bankr upt cy cour t abused i t sdi scr et i on i n denyi ng i t . As such, t hi s i ssue has been wai ved.Ar pi n v. Sant a Cl ar a Val l ey Tr ansp. Agency, 261 F. 3d 912, 919 ( 9t hCi r . 2001) ( i ssues not speci f i cal l y and di st i nct l y r ai sed andar gued i n openi ng br i ef ar e wai ved) . I n any event , i n l i ght ofour hol di ng bel ow, we concl ude t hat t he bankr upt cy cour t di d notabuse i t s di scr et i on i n denyi ng Gol denber g the request edi nj unct i ve rel i ef .

- 13-

IV. STANDARDS OF REVIEW

Deut sche Bank di sput es Gol denber g' s st andi ng as a par t y i n

i nt er est t o r eopen Papazov' s bankrupt cy case. The i ssue of a

par t y' s st andi ng i s subj ect t o de novo r evi ew. Mayf i el d v. Uni t ed

St ates, 599 F. 3d 964, 970 ( 9t h Ci r . 2010) ; Veal v. Am. Home Mort g.

Ser vi ci ng, I nc. ( I n r e Veal ) , 450 B. R. 897, 906 ( 9t h Ci r . BAP

2011) .

Deni al of a mot i on t o r eopen a bankr upt cy case i s r evi ewed

f or an abuse of di scr et i on. Lopez v. Speci al t y Rest . Cor p.

( I n r e Lopez) , 283 B. R. 22, 26 ( 9t h Ci r . BAP 2002) . A bankrupt cy

cour t abuses i t s di scret i on i f i t appl i ed t he wr ong l egal st andar dor i t s f i ndi ngs wer e i l l ogi cal , i mpl ausi bl e or wi t hout suppor t i n

t he r ecor d. Tr af f i cSchool . com, I nc. v. Edr i ver I nc. , 653 F. 3d

820, 832 ( 9t h Ci r . 2011) .

We may af f i r m on any basi s support ed by t he recor d, even

where the i ssue was not expr essl y consi dered by t he bankr upt cy

cour t . I n r e E. R. Feger t , I nc. , 887 F. 2d at 957.

V. DISCUSSION

The bankruptcy court abused its discretion by applying awrong legal standard, but such error was harmless asGoldenberg was not entitled to the requested relief.

A mot i on t o reopen a cl osed bankr upt cy case i s governed by

350( b) and Rul e 5010. The bankrupt cy cour t has di scr et i on


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r egar di ng whet her i t shoul d r eopen pr oceedi ngs t o reconsi der i t s

pr i or or der s. El i as v. Li sowski , 188 F. 3d 1160, 1161 ( 9t h Ci r .

1999) ( ci t i ng 350( b) ) .

Under 350( b) , a case may be reopened t o admi ni st er asset s,

t o accor d r el i ef t o t he debt or , or f or ot her cause. The basi s f or

Gol denberg t o reopen Papazov' s case was not t o admi ni st er asset s

or t o accor d r el i ef t o Papazov. Hence, i t had t o be f or ot her

cause, whi ch Gol denberg argued. The bankr upt cy cour t ' s onl y

basi s f or denyi ng t he Mot i on t o Reopen was because reopeni ng t he

case woul d not af f or d any r el i ef t o Papazov. We agr ee wi t h

Gol denberg that t he bankr upt cy cour t appl i ed a wr ong st andard ofl aw i n r eachi ng i t s deci si on. As we expl ai n bel ow, however , t hi s

err or was harml ess as Gol denberg was not ent i t l ed t o t he r equest ed

r el i ef i n any event .

A. Goldenberg lacked standing to reopen Papazov's bankruptcycase and to file this appeal.

St andi ng i s a t hr eshol d quest i on i n ever y f eder al case,

det er mi ni ng t he power of t he cour t t o ent er t ai n t he sui t .

I n r e Veal , 450 B. R. at 906 ( quot i ng War t h v. Sel di n, 422 U. S.

490, 498 ( 1975) ) . Even t hough t he bankr upt cy cour t appl i ed an

i ncor r ect l egal st andar d t o t he Mot i on t o Reopen, Gol denber g' s

f ai l ur e t o est abl i sh st andi ng was suf f i ci ent gr ounds t o deny i t .

See Ni nt endo Co. , Lt d. v. Pat t en ( I n r e Al pex Comput er Cor p. ) ,

71 F. 3d 353, 356 ( 10t h Ci r . 1995) ( st andi ng i s a pr udent i al

r equi r ement ) ( quot i ng Tr avel er s I ns. Co. v. H. K. Por t er Co. ,

45 F. 3d 737, 741 ( 3r d Ci r . 1995) ) .

Mot i ons t o reopen can be made by t he debt or or any par t y i n

i nt er est . Rul e 5010. Whet her a par t y i s a par t y i n i nt er est i s


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determi ned on a case by case basi s. I n r e D' Ant i gnac, 2013 WL

1084214, at *2 ( Bankr. S. D. Ga. Feb. 19, 2013) ( sl i p copy) ( ci t i ng

Peacht r ee Lane Assocs. , Lt d. v. Gr andader ( I n r e Peacht r ee Lane

Assocs. , Ltd. ) , 188 B. R. 815, 824 ( N. D. I l l . 1995) ) . Gol denber g

cont ends she i s a par t y i n i nt er est because she has a st ake i n

Papazov' s bankrupt cy case due t o t he i mpr oper i ncl usi on of her

r eal pr oper t y i n hi s est at e. Speci f i cal l y, Gol denber g cont ends

t hat she shoul d be per mi t t ed t o r ect i f y and voi d t he ver y or der

t hat wr ongf ul l y di vest ed her of her r i ght , t i t l e and i nt er est i n

t he Gr and Vi ew Proper t y. Gol denberg had t he bur den of showi ng

t hat she had st andi ng as a par t y i n i nt er est t o seek t he reopeni ngof Papazov' s bankrupt cy case. Summer s v. Ear t h I sl and I nst . ,

555 U. S. 488, 493 (2009) ( movant bear s t he bur den of showi ng that

she has st andi ng f or each t ype of r el i ef sought ) .

The t er m par t y i n i nter est i s not def i ned i n t he Bankr upt cy

Code or Rul es, and t he Ni nt h Ci r cui t has not determi ned who

qual i f i es as a par t y i n i nt er est under Rul e 5010. As gui dance,

t he def i ni t i on of a par t y i n i nt er est i s br oadl y def i ned i n

1109( b) t o i ncl ude t he debt or , t he t r ust ee, a cr edi t or ' s

commi t t ee, an equi t y secur i t y hol der ' s commi t t ee, a cr edi t or , an

equi t y secur i t y hol der , or any i ndent ur e t r ust ee. The Tent h

Ci r cui t has hel d t hat , however , not wi t hst andi ng t he expansi ve

def i ni t i on of par t y i n i nt er est i n 1109( b) , f or pur poses of

r eopeni ng a bankrupt cy case t he concept of st andi ng i s i mpl i ci t l y

conf i ned t o debt or s, credi t or s, or t r ust ees, each wi t h a

par t i cul ar and di r ect st ake i n r eopeni ng cogni zabl e under t he

Bankr upt cy Code. I n r e Al pex Comput er Corp. , 71 F. 3d at 356- 57

( but al so r ecogni zi ng t hat cer t ai n ci r cumst ances may qual i f y a


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debt or of a debt or as a par t y i n i nt er est wi t h st andi ng t o

r eopen) .

Cl ear l y, Gol denber g i s not t he debt or , not a cr edi t or of

Papazov' s and not t he f or mer chapt er 7 t r ust ee of hi s case. She

i s al so not any of t he ot her par t i es r ef er enced i n 1109( b) .

Nonet hel ess, t he Four t h Ci r cui t has i nt er pr et ed par t y i n

i nt er est t o i ncl ude al l per sons whose pecuni ar y i nt er est s ar e

di r ect l y af f ect ed by t he bankrupt cy pr oceedi ngs. Yadki n Val l ey

Bank & Trust Co. v. McGee ( I n r e Hut chi nson) , 5 F. 3d 750, 756 ( 4t h

Ci r . 1993) ( ci t at i ons omi t t ed) . Thi s def i ni t i on r i ngs of t he

st andar ds set f or t h f or Ar t i cl e I I I or const i t ut i onal standi ng.See I n r e D' Ant i gnac, 2013 WL 1084214, at *2 ( The part y i n

i nt er est anal ysi s al so i s subj ect t o t he di ctat es of st andi ng

conf er r ed by Ar t i cl e I I I of t he Consti t ut i on. )( ci t i ng

I n r e Phi l l i ps, 2012 WL 1232008, at *2 ( Bankr. D. N. J . Apr . 12,

2012) ; I n r e Tar r er , 273 B. R. 724, 730- 31 ( Bankr . N. D. Ga. 2001) ) .

Under t hi s br oader doct r i ne of const i t ut i onal st andi ng, a

pl ai nt i f f must adequat el y est abl i sh: ( 1) an i nj ur y i n f act ( i . e. ,

a concret e and par t i cul ar i zed i nvasi on of a l egal l y pr ot ect ed

i nt er est ) ; ( 2) causat i on ( i . e. , a f ai r l y t r aceabl e connecti on

bet ween t he al l eged i nj ur y i n f act and t he al l eged conduct of t he

def endant ) ; and ( 3) r edr essabi l i t y ( i . e. , i t i s l i kel y and not

mer el y specul at i ve t hat t he pl ai nt i f f ' s i nj ur y wi l l be r emedi ed by

t he r el i ef pl ai nt i f f seeks i n br i ngi ng sui t ) . Spr i nt Commc' ns Co.

v. APCC Ser vs. , I nc. , 554 U. S. 269, 273- 74 ( 2008) ( ci t i ng Luj an v.

Def ender s of Wi l dl i f e, 504 U. S. 555, 560- 61 ( 1992) ) ( i nt er nal

quot at i ons omi t t ed) . A par t i cul ar i zed i nj ur y means one t hat

af f ect s t he pl ai nt i f f i n a per sonal and i ndi vi dual way. Luj an,


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504 U. S. at 561 n. 1.

Gol denberg has not est abl i shed st andi ng t o r eopen Papazov' s

case even under t hi s br oad doct r i ne. At mi ni mum, Gol denberg has

not est abl i shed t hat she, per sonal l y, has an owner shi p i nt er est i n

t he Gr and Vi ew Pr oper t y. Accor di ng t o t he qui t cl ai m deed, t he

pr oper t y i s owned by t he Tr ust . Not abl y, she never i dent i f i ed any

i nt er est i n t he pr oper t y (or i n t he Tr ust ) i n her bankr upt cy

schedul es. Fur t her , t he r ecor d does not est abl i sh whet her t he

Tr ust i s r evocabl e, i r r evocabl e or somet hi ng el se. Thus, an

i nj ury i n f act i s l acki ng.

Even assumi ng Gol denberg as t r ust ee has a l egal l y pr otectedownershi p i nt erest i n t he Gr and Vi ew Propert y, she has not shown

causat i on or r edr essabi l i t y. Gol denber g cont ends that t he

r eason Deut sche Bank was abl e t o f orecl ose on t he Gr and Vi ew

Pr oper t y was because of i t s f r audul ent l y obt ai ned St ay Rel i ef

Or der i n Papazov' s case. Thi s i s not ent i r el y t r ue. I n r evi ewi ng

t hi s convol ut ed and dubi ous r ecor d, pr i or t o Deut sche Bank' s

mot i on f or r el i ef f r om st ay, t he Gr and Vi ew Pr oper t y had been i n

f or ecl osur e f or t wo year s based on Lukashi n' s, Gol denber g' s or t he

Tr ust s ( or someone el se' s) severe def aul t on t he Not e. Al t hough

Deut sche Bank was car el ess t o asser t i n i t s mot i on f or r el i ef f r om

st ay t hat Papazov hel d a 100% owner shi p i nt er est i n t he Gr and Vi ew

Propert y by way of a gr ant deed, t he evi dence submi t t ed by

Deut sche Bank showed t hat Papazov hel d a pur port ed j uni or l i en i n

t he Gr and Vi ew Propert y vi a t he Papazov DOT. Theref ore, i t was

pr oper f or Deut sche Bank t o seek r el i ef f r om st ay i n Papazov' s

case t o cont i nue wi t h t he f orecl osure because t he Papazov DOT was,

at l east on i t s f ace, pr oper t y of hi s est at e. See Fi r st Yor kshi r e


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14 Sect i on 362(d) ( 4) was amended by t he Bankr upt cy Techni calCor r ect i ons Act of 2010, Pub. L. No. 111- 327, 124 St at . 3557( 2010) and became ef f ect i ve on December 22, 2010. The conj unct i veand i n paragr aph ( 4) was el i mi nated and r epl aced wi t h t hedi sj unct i ve or . Ther ef or e, af t er December 22, 2010, a par t y

seeki ng r el i ef f r om st ay under 362( d) ( 4) must show onl y a schemeby debt or t o del ay, hi nder or def r aud. Cont r ar y t o Deut scheBank' s asser t i on, because t he St ay Rel i ef Or der was ent ered onDecember 21, 2010, i t was st i l l subj ect t o t he f or mer ver si on - t odel ay, hi nder and def r aud.

15 I f t he St ay Rel i ef Or der had been ef f ect i ve f or t wo year s( cont i nued. . . )

- 18-

Hol di ngs, I nc. v. Paci f i ca L 22, LLC ( I n r e Fi r st Yor kshi r e

Hol di ngs, I nc. ) , 470 B. R. 864, 869 ( 9t h Ci r . BAP 2012) ( ci t i ng

Fi r st Fed. Bank of Cal . v. Cogar ( I n r e Cogar ) , 210 B. R. 803, 809

( 9t h Ci r . BAP 1997) ( pr oper t y of t he est at e i s def i ned br oadl y

under 541 and i ncl udes a l i en hel d by the debt or on pr opert y of

a t hi r d par t y) ) . The evi dence f ur t her showed t hat Deut sche Bank

est abl i shed a col or abl e cl ai m t o the Gr and Vi ew Pr oper t y

ent i t l i ng i t t o r el i ef . I n r e Veal , 450 B. R. at 914- 15.

Cont r ar y t o Deut sche Bank' s posi t i on, however , t he St ay

Rel i ef Or der was not ef f ect i ve f or t wo year s as t o any f ut ur e

debt or cl ai mi ng an i nt er est i n t he Gr and Vi ew Pr oper t y si mpl ybecause t he bankrupt cy cour t gr ant ed r el i ef under 362( d) ( 4) .

Such i n r em r el i ef r equi r ed af f i r mat i ve f i ndi ngs by the bankr upt cy

cour t t hat Papazov' s bankrupt cy f i l i ng was par t of a scheme to

del ay, hi nder , and def r aud cr edi t or s, 14 and that t he scheme

i nvol ved ei t her t he t r ansf er of some i nt er est i n t he Gr and Vi ew

Pr oper t y wi t hout t he secur ed cr edi t or ' s consent or cour t appr oval ,

or t hat mul t i pl e bankr upt cy f i l i ngs exi st ed af f ect i ng t he Gr and

Vi ew Pr oper t y. I n r e Fi r st Yor kshi r e Hol di ngs, I nc. , 470 B. R. at

870- 71. The bankr upt cy cour t made no such f i ndi ngs. 15


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15( . . . cont i nued)

agai nst any debt or i n any f ut ur e bankrupt cy case cl ai mi ng ani nt er est i n t he Gr and Vi ew Pr oper t y, t he appl i cabi l i t y of suchr el i ef has been speci f i cal l y uphel d i n t he Ni nt h Ci r cui t even i ft he bankr upt cy case i n whi ch the or der was obt ai ned di d noti nvol ve t he borr ower under t he deed of t r ust and t he bor r ower hadno not i ce of t he ent r y of t he or der . See I n r e Fer nandez,212 B. R. 361 ( Bankr. C. D. Cal . 1997) , af f ' d, 227 B. R. 174 ( 9t hCi r . BAP 1998) , af f ' d, 208 F. 3d 200 ( 9t h Ci r . 2000) .

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The Stay Rel i ef Or der was ef f ect i ve onl y unt i l May 17, 2011,

and onl y agai nst Papazov and hi s successor s, t r ansf er ees or

assi gnees. Lukashi n and Gol denberg were not successors,

t r ansf er ees or assi gnees of Papazov. As a r esul t , t he St ay Rel i ef

Or der never had any ef f ect i n ei t her of t hei r bankrupt cy cases.

I t cl ear l y coul d never have had any ef f ect i n Gol denber g' s case

because, as t he mot i ons panel observed, she never f i l ed a

bankrupt cy case bef or e May 17, 2011. Thus, i f t he St ay Rel i ef

Or der had no ef f ect i n Gol denberg' s case, she cannot show how she

was i nj ur ed by i t .

Despi t e Gol denber g' s cont ent i on, t he St ay Rel i ef Or der wasnot what gave Deut sche Bank i t s aut hor i t y t o f or ecl ose and, as she

cl ai ms, wr ongf ul l y di vest her of al l r i ght , t i t l e and i nt er est i n

t he Gr and Vi ew Pr oper t y. Cal i f or ni a nonj udi ci al f or ecl osur e l aw

pr ovi ded t hat aut hor i t y. The St ay Rel i ef Or der was real l y a

not hi ng as t o Gol denber g. I f anythi ng, Gol denber g benef i t t ed

f r om Papazov' s bankrupt cy f i l i ng because i t post poned t he

f or ecl osur e sal e yet agai n. Ther ef or e, Gol denber g has not

est abl i shed how vacat i ng t he St ay Rel i ef Or der coul d pr ovi de her

any r el i ef f or her al l eged and unsuppor t ed i nj ur y.

Gol denberg al so cannot show how Deut sche Bank' s al l eged

vi ol at i on of t he st ay i n Lukashi n' s chapt er 13 case i nj ur ed


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16 Sect i on 109( g) pr ovi des, i n r el evant par t :

Not wi t hst andi ng any ot her pr ovi si on of t hi s sect i on, noi ndi vi dual or f ami l y f ar mer may be a debt or under t hi s t i t l ewho has been a debt or i n a case pendi ng under t hi s t i t l e atany t i me i n t he pr ecedi ng 180 days i f - - -

( 1) t he case was di smi ssed by the cour t f or wi l l f ulf ai l ur e of t he debt or t o abi de by or der s of t he cour t ,or t o appear bef or e the cour t i n pr oper pr osecut i on oft he case[ . ]

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Gol denber g. She has asser t ed, and t he r ecor d r ef l ect s, t hat

Lukashi n had no r ecor ded ownershi p i nt erest i n t he Gr and Vi ew

Proper t y when she f i l ed her chapt er 13 case on Apr i l 22, 2011.

Because Lukashi n di d not hol d l egal t i t l e when she f i l ed her

pet i t i on, her nonexi st ent owner shi p of t he pr oper t y was not

pr ot ect ed by t he st ay. Under Cal i f or ni a l aw, nonj udi ci al

f or ecl osur e af f ect s onl y l egal t i t l e, and not any possessor y

r i ght . Wi l l i ams v. Levi ( I n r e Wi l l i ams) , 323 B. R. 691, 699 ( 9t h

Ci r . BAP 2005) ( ci t i ng I n r e Tor r ez, 132 B. R. 924, 939 ( Bankr. E. D.

Cal . 1991) ) . At best , Lukashi n may have had a possessory i nt er est

i n t he Gr and Vi ew Proper t y pr ot ect ed by t he st ay, but t hat had noef f ect on t he f or ecl osur e sal e on Apr i l 27, 2011. I d. ( ci t i ng

I n r e But l er , 271 B. R. 867, 876- 77 ( Bankr. C. D. Cal . 2002) ) .

I n any event , r egar dl ess of who hel d l egal t i t l e t o t he Gr and

Vi ew Proper t y, whet her i t was Lukashi n or t he Tr ust , no st ay even

exi st ed i n Lukashi n s chapt er 13 case pr event i ng t he f or ecl osur e

because she was not an el i gi bl e debt or under 109( g) . 16 Pr i or to

t he f i l i ng of her chapt er 13 case on Apr i l 22, 2011, Lukashi n' s

chapt er 7 case had been di smi ssed j ust a f ew weeks bef ore on

Mar ch 29, 2011, f or her wi l l f ul f ai l ur e t o at t end 341( a)

meet i ngs of cr edi t or s. That di smi ssal was cl ear l y wi t hi n t he

180- days pr escr i bed i n 109( g) ( 1) , pr ecl udi ng her f r om


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el i gi bi l i t y as a debt or . And, because Gol denber g had no

bankrupt cy case pendi ng unt i l J ul y 23, 2012, whi ch was l ong af t er

t he f or ecl osur e sal e, no st ay exi st ed i n her case that coul d have

been vi ol ated by Deut sche Bank' s f orecl osur e causi ng her damages.

Besi des, t he Gr and Vi ew Proper t y i s pur port edl y owned by the

Tr ust , so t he st ay i n Gol denber g' s per sonal bankr upt cy woul d have

had no af f ect on i t .

On t hi s r ecor d, Gol denber g f ai l ed t o est abl i sh st andi ng t o

r eopen Papazov' s bankr upt cy case. She has not shown any pecuni ary

i nt er est or st ake i n hi s case t hat coul d be r emedi ed by the

r eopeni ng. Accor di ngl y, t he bankrupt cy cour t di d not abuse i t sdi scr et i on i n denyi ng her Mot i on t o Reopen. Because Gol denberg

l acked st andi ng t o r eopen, she al so l acks st andi ng t o br i ng t hi s

appeal . As a r esul t , we must DI SMI SS f or l ack of j ur i sdi ct i on.

See Abbot t v. Daf f ( I n r e Abbot t ) , 183 B. R. 198, 201 ( 9t h Ci r .

1995) ( Nei t her t he or der set t i ng asi de t he r eopeni ng, nor t he

or der r eopeni ng i t sel f , di mi ni shed [ a per son s] pr oper t y,

i ncr eased her bur dens or det r i ment al l y af f ect ed her r i ght s. She

i s not a per son aggr i eved by ei t her order . Consequent l y, she

l acks st andi ng t o br i ng t hi s appeal . ) .

B. Alternatively, Goldenberg could not seek to reopen Papazovscase because it was not closed pursuant to 350(a).

Even i f Gol denberg had st andi ng t o reopen Papazov s case, she

was st at ut or i l y pr ecl uded f r om doi ng so. Sect i on 350( b)

i mmedi at el y f ol l ows 350( a) , whi ch pr ovi des t hat a case shal l be

cl osed [ a] f t er an est at e i s f ul l y admi ni st er ed and t he cour t had

di schar ged t he t r ust ee[ . ] The Ni nt h Ci r cui t has hel d t hat a

di smi ssed case cannot be reopened under 350( b) because i t was


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not cl osed under 350( a) f ol l owi ng t he admi ni st r at i on of t he

est at e. I n Ar mel Lami nat es, I nc. v. Lomas & Net t l et on Co.

( I n r e I ncome Pr op. Bui l der s, I nc. ) , 699 F. 2d 963, 965 ( 9t h Ci r .

1982) ( per cur i am) , t he Ni nt h Ci r cui t observed t hat a di smi ssed

case i s f undament al l y di f f er ent f r om a case t hat i s cl osed:

11 U. S. C. 349, t r eat i ng t he ef f ect s of a bankrupt cy,obvi ousl y cont empl at es t hat on di smi ssal a bankrupt i sr ei nvest ed wi t h t he est at e, subj ect t o al l encumbr anceswhi ch exi st ed pr i or t o bankrupt cy. Af t er an or der ofdi smi ssal , t he debt or ' s debt s and pr oper t y ar e subj ect t ot he gener al l aws, unaf f ect ed by bankr upt cy concept s.Af t er di smi ssal a debt or may f i l e anot her pet i t i on f orbankrupt cy unl ess t he i ni t i al pet i t i on was di smi ssed wi t hpr ej udi ce.

On t he ot her hand, a bankr upt cy i s nor mal l y cl osed af t ert he bankrupt cy pr oceedi ngs ar e compl et ed. At t hat t i met he debt s of t he bankrupt ar e usual l y di schar ged and t hepr oceeds of debt or ' s nonexempt asset s di vi ded amongcr edi t or s. A bankr upt cy i s r eopened under 11 U. S. C.350( b) , not t o r est or e t he pr ebankrupt cy st at us, but t ocont i nue t he bankr upt cy pr oceedi ng. The word r eopenedused i n Sect i on 350( b) obvi ousl y rel at es t o t he wor d cl osed used i n t he same sect i on. I n our opi ni on a casecannot be r eopened unl ess i t has been cl osed. An orderdi smi ss i ng a bankr upt cy case accompl i shes a compl etel ydi f f er ent r esul t t han an or der cl osi ng i t woul d and i snot an or der cl osi ng.

I d. ( f oot not es omi t t ed) .

Upon t he chapt er 7 t r ust ee s mot i on, Papazov' s bankrupt cy

case was di smi ssed on Oct ober 18, 2011, f or f ai l i ng t o appear f or

341( a) meet i ngs of cr edi t or s. The di smi ssal or der was never

appeal ed. Hi s case was l at er cl osed on J anuar y 18, 2012.

Not wi t hst andi ng t hi s cl osur e, we concl ude t hat t he hol di ng of

I ncome Pr oper t y Bui l der s appl i es nonet hel ess because Papazov s

case was not cl osed f or t he r easons ar t i cul at ed i n 350( a) - - -

af t er f ul l admi ni st r at i on of t he est at e. Nei t her t he Bankr upt cy

Code nor t he Bankrupt cy Rul es def i ne f ul l y admi ni st er ed, but

Rul e 5009( a) pr ovi des, i n par t , t hat i f a chapt er 7 t r ust ee f i l es


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a f i nal r epor t and f i nal account and no obj ect i on has been f i l ed

wi t hi n 30 days, t her e shal l be a pr esumpt i on t hat t he est at e has

been f ul l y admi ni st er ed.

The chapt er 7 t r ust ee f i l ed a r epor t of no di st r i but i on i n

Papazov' s case on J anuary 18, 2012, but no par t y was gi ven 30 days

t o obj ect as t he case was cl osed t he day t he t r ust ee f i l ed hi s

r epor t and sought t o be di schar ged. Fur t her , t he Cl osi ng Or der

makes no r ef erence t hat Papazov s case was f ul l y admi ni st ered,

st at i ng onl y t hat i t was di smi ssed. No Fi nal Decr ee was f i l ed

usi ng any var i at i on of pr ocedur al For m B 271, whi ch gener al l y

i ndi cat es t he case i s f ul l y admi ni st er ed and di schar ges t het r ust ee. Papazov di d not obt ai n a di schar ge, and no pr oceeds of

hi s nonexempt asset s were di vi ded among cr edi t ors. Thus, no

pr esumpt i on ar i ses t hat t he est at e had been f ul l y admi ni st er ed t o

sat i sf y 350( a) .

The cl osi ng i n t hi s case appear s t o have been mor e of an

admi ni st r at i ve mat t er as opposed t o a st at ut or y cl osi ng under

350( a) . Ther ef or e, Papazov' s case was not cl osed f or pur poses

of 350( a) , and Gol denber g coul d not seek t o r eopen i t under

350( b) . I n r e I ncome Pr op. Bui l der s, I nc. , 699 F. 2d at 965.

But see I n r e Ross, 278 B. R. 269, 273 ( Bankr . M. D. Ga. 2001)

( di sagr eei ng wi t h I ncome Pr oper t y Bui l der s and hol di ng that

because t he cour t coul d r eopen t he case wi t hout any ef f ect on t he

di smi ssal or der , a case that i s di smi ssed and subsequent l y cl osed

may never t hel ess be r eopened i n accor dance wi t h 350( b) ) . The

di smi ssal order coul d have been appeal ed or undone by a mot i on

under Ci vi l Rul es 59( e) or 60( b) , i ncor por at ed by Rul es 9023 and

9024. I n r e I ncome Pr op. Bui l der s, I nc. , 699 F. 2d at 965.


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Accor di ngl y, because Gol denberg coul d not r eopen a

bankrupt cy case t hat was not cl osed f or pur poses of 350( a) ,

t he bankrupt cy cour t di d not abuse i t s di scr et i on when i t deni ed

her Mot i on t o Reopen.

VI. CONCLUSION

Despi t e the bankrupt cy cour t appl yi ng an i ncor r ect l egal

st andard t o t he Mot i on t o Reopen, but because Gol denberg l acked

st andi ng to seek t he reopeni ng of Papazov' s case, such er r or was

har ml ess, and we DI SMI SS her appeal f or l ack of j ur i sdi ct i on.

Al t er nat i vel y, because Papazov s bankrupt cy case was di smi ssed and

not cl osed i n accor dance wi t h 350( a) , we AFFI RM.

In re: Garegin Papazov, 9th Cir. BAP (2013)

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Transcript of In re: Garegin Papazov, 9th Cir. BAP (2013)