                                                          FILED
                                                           AUG 06 2013
 1                                                     SUSAN M SPRAUL, CLERK
                                                         U.S. BKCY. APP. PANEL
                                                         OF THE NINTH CIRCUIT
 2

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL

 4                            OF THE NINTH CIRCUIT

 5   In re:                        )       BAP No. NV-12-1547-CoDKi
                                   )
 6   NORMA CERALDE, AKA Michael A. )       Bk. No. NV-11-24631-BTB
     Henry, AKA Nolan A. Smith,    )
 7                                 )
               Debtor.             )
 8   ______________________________)
                                   )
 9   NOLAN A. SMITH,               )
                                   )
10             Appellant,          )
                                   )
11   v.                            )       MEMORANDUM DECISION1
                                   )
12   THE BANK OF NEW YORK MELLON, )
     FKA The Bank of New York, as )
13   Trustee for the               )
     Certificateholders of CWALT, )
14   Inc., Alternative Loan Trust )
     2007-22, Mortgage             )
15   Pass-Through Certificates,    )
     Series 2007-22,               )
16                                 )
               Appellee.           )
17   ______________________________)

18                    Argued and Submitted on July 19, 2013
                               at Las Vegas, Nevada
19
                             Filed - August 6, 2013
20
                 Appeal from the United States Bankruptcy Court
21                         for the District of Nevada

22           Honorable Bruce T. Beesley, Bankruptcy Judge, Presiding

23
     Appearances:      Jeffrey S. Yong, Esq. of Alexander & Yong argued
24                     for Appellant, Nolan A. Smith; and Chelsea A.
                       Crowton, Esq. of Wright, Finlay & Zak, LLP argued
25                     for Appellee, The Bank of New York Mellon.

26
     1
27        This disposition is not appropriate for publication.
         Although it may be cited for whatever persuasive value it may
28       have (see Fed. R. App. P. 32.1), it has no precedential value.
         See 9th Cir. BAP Rule 8013-1.
 1   Before: COLLINS,2 DUNN and KIRSCHER, Bankruptcy Judges.

 2

 3                                INTRODUCTION3

 4           This involuntary individual chapter 7 bankruptcy involves a

 5   dispute between the debtor and the secured lender holding a

 6   promissory note and deed of trust secured by real property.       The

 7   secured lender commenced and completed a trustee’s sale of the

 8   property postpetition and then filed a motion to retroactively

 9   annul the automatic stay and validate the postpetition

10   foreclosure of its collateral.

11           The bankruptcy court entered an order granting the secured

12   lender’s motion to annul the stay and then promptly dismissed the

13   chapter 7 proceedings.     Debtor Smith appealed the bankruptcy

14   court’s order annulling the stay.      We AFFIRM the bankruptcy

15   court’s order.

16                             STATEMENT OF FACTS

17           The debtor in this case is apparently known by many

18   different names, including: Nolan A. Smith, Nolan A. Smith, Jr.,

19   Nolan Shaheed (Smith), Norma Ceralde and Michael Henry

20   (“Debtor”).     Using the name Nolan A. Smith, Jr., the Debtor

21   executed a Promissory Note secured by a Real Property Deed of

22   Trust upon property located in Pasadena, CA (“Property”).     The

23

24   2
          Hon. Daniel P. Collins, Bankruptcy Judge for the District of
         Arizona, sitting by designation.
25
     3
26        Unless otherwise indicated, all chapter, section and
         rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-
27       1532, and to the Federal Rules of Bankruptcy Procedure, Rules
         1001-9037. The Federal Rules of Civil Procedure are referred to
28       as "Civil Rules."

                                        2
 1   Bank of New York Mellon, FKA The Bank of New York, as Trustee for

 2   the Certificateholders of CWALT, Inc., Alternative Loan Trust

 3   2007-22, Mortgage Pass-Through Certificates, Series 2007-22

 4   (“BNYM”), is the holder of the Promissory Note and Deed of Trust.

 5           Alleged creditors Dex Enterprise, Advant Co, and On-The-Go

 6   (“Petitioning Creditors”) filed the instant chapter 7 involuntary

 7   petition on September 16, 2011, listing “Norma Ceralde aka

 8   Michael Henry aka Nolan A. Smith” as the Debtor.     The Property

 9   and associated loan owed to BNYM were not listed in bankruptcy

10   schedules, nor was BNYM listed on a master mailing list.4
11           Prior to the filing of the involuntary bankruptcy case, the

12   Debtor defaulted on the loan and BNYM commenced foreclosure

13   proceedings on the Property.     BNYM conducted a private

14   foreclosure sale of the Property on September 16, 2011, the same

15   day the Debtor was placed into involuntary bankruptcy.      After

16   learning of this involuntary bankruptcy case, on November 21,

17   2011, BNYM recorded a notice of rescission, rescinding the

18   foreclosure of the Property.

19           Less than two months later, BNYM commenced a second private

20   foreclosure, without seeking relief from the automatic bankruptcy

21   stay.     A notice of sale was recorded on January 6, 2012, and a

22   trustee’s sale of the Property was conducted on January 30, 2012.

23   BNYM then filed an unlawful detainer action against the Debtor in

24   Los Angeles County Superior Court to gain possession of the

25

26   4
          No bankruptcy schedules or statements were ever filed nor was
27       an order for relief ever entered by the court in this
         involuntary case. Further, no master mailing list was ever
28       filed with the bankruptcy court.

                                        3
 1   Property.     BNYM obtained a default judgment in that action.

 2           On May 8, 2012, the Debtor filed a voluntary chapter 13

 3   bankruptcy in California under the name “Nolan Shaheed (Smith).”

 4   Less than a month later, that case was dismissed for failure to

 5   timely file all required documents under Rules 1007 and 3015(b).5

 6   The Debtor retained counsel, Jeffrey Yong (“Yong”), to combat

 7   BNYM’s state court eviction action.     Yong notified BNYM of the

 8   instant involuntary bankruptcy proceeding and requested that

 9   BNYM’s state court action be dismissed.

10           The Debtor filed an action in Los Angeles County Superior

11   Court on May 29, 2012 seeking injunctive relief, declaratory

12   relief and to quiet title on the Property.

13           On June 20, 2012, BNYM filed a motion in the involuntary

14   bankruptcy case requesting annulment of the automatic stay and

15   validation of its postpetition sale of the Property (“Motion to

16   Annul”).     The Motion to Annul alleged the stay should be annulled

17   because BNYM had not received notice of the Debtor’s bankruptcy

18   until just before its motion to annul.     BNYM also alleged the

19   Debtor committed fraud.     The Debtor responded with an objection

20   alleging that BNYM had notice of the bankruptcy when it commenced

21   the postpetition foreclosure of the Property.     The bankruptcy

22   court held a hearing on the Motion to Annul on July 24, 2012

23   (“July Hearing”).

24                1.   July Hearing on the Motion to Annul

25           At the July Hearing, the bankruptcy court expressed its

26   5
          Bankruptcy Case No. 2:12-bk-26176, United States Bankruptcy
27       Court for the Central District of California (dismissed on
         June 1, 2012). See also Debtor’s Declaration dated July 5,
28       2012.

                                        4
 1   suspicion that the involuntary bankruptcy case was a fraudulent

 2   bankruptcy filing.   The bankruptcy court reasoned that the

 3   Petitioning Creditors failed to appear at any hearing or take any

 4   action in this case.   Moreover, it appeared to the court that the

 5   case may have been filed under aliases of the Debtor, “Norma

 6   Ceralde aka Michael Henry aka Nolan A. Smith.”

 7        The bankruptcy court issued an order requiring the

 8   Petitioning Creditors to appear and show cause why the

 9   involuntary bankruptcy case should not be dismissed.     The hearing

10   on BNYM’s Motion to Annul was continued until October 2, 2012
11   (“October Hearing”).
12               2.   Debtor’s Supplemental Opposition
13        Prior to the October Hearing, the Debtor filed his
14   Supplemental Opposition to the Motion to Annul (“Supplemental
15   Opposition”).    The Supplemental Opposition references the
16   deposition of Christina Balandran (“Balandran”), the Person Most
17   Knowledgeable at ReconTrust Company, the foreclosure trustee and
18   agent of BNYM that conducted the foreclosure sale of the
19   Property.   The deposition transcript reveals that, on

20   September 16, 2011 (the date the involuntary petition was filed),

21   a ReconTrust technician received notification of a bankruptcy

22   filing, including the Nevada involuntary bankruptcy case number,

23   by a “Nolan Shaheed,” but ReconTrust proceeded with the

24   foreclosure because the alleged debtor was named “Nolan Shaheed,”

25   not “Nolan Smith.”   Ms. Balandran also testified that another

26   ReconTrust technician received notification of the instant

27   bankruptcy on October 14, 2011 and, in turn, notified the loan

28   servicer, Bank of America, of the bankruptcy.    On November 10,

                                       5
 1   2011, Bank of America ordered ReconTrust to rescind the

 2   foreclosure sale conducted on September 16, 2011 because of the

 3   instant bankruptcy filing.

 4                 3.     October Hearing on the Motion to Annul

 5            The Petitioning Creditors did not appear at the order to

 6   show cause October Hearing.        The bankruptcy court acknowledged

 7   after reading the Supplemental Opposition that BNYM “may well

 8   have had notice of the filing, at least constructive notice.”

 9   October 2, 2012 Hr’g Tr., at 4:2-3.          Regardless, the bankruptcy

10   court found that the case should be dismissed, noting the

11   Petitioning Creditors failed to respond to the Order to Show

12   Cause or appear at the hearing.           Counsel for the Debtor consented

13   to dismissal of the case and suggested that dismissal “makes the

14   motion to annul moot.”        October 2, 2012 Hr’g Tr., at 4:25, 5:1.

15   However, counsel for BNYM urged the court to also grant its

16   Motion to Annul to aid it in connection with defending against

17   the Debtor’s California state court action seeking to set aside

18   the sale of the Property based on BNYM’s alleged violation of the

19   bankruptcy stay.        The bankruptcy court granted the Motion to

20   Annul and ordered that the involuntary bankruptcy case be

21   dismissed.     The order granting the Motion to Annul was entered on

22   October 17, 2012.        The order dismissing the bankruptcy was

23   entered on October 29, 2012.        The Debtor timely appealed the

24   order annulling the automatic stay.6

25            4.        Motion for Stay Pending Appeal and Hearing

26            The Debtor filed a motion for stay pending appeal to

27
     6
          The Debtor did not appeal the bankruptcy court’s
28       order dismissing the involuntary chapter 7 bankruptcy case.

                                           6
 1   prevent an eviction from the Property.      BNYM objected to the

 2   motion and the Debtor filed a reply to BNYM’s opposition.

 3            On December 18, 2012, the bankruptcy court held a hearing

 4   on the motion for stay pending appeal and again noted this

 5   appeared to be a fraudulent bankruptcy because none of the

 6   Petitioning Creditors appeared at the October Hearing pursuant to

 7   the Order to Show Cause.     The Debtor, in turn, re-asserted his

 8   argument that there was no basis to annul the stay because BNYM

 9   had notice of the bankruptcy case.     The bankruptcy court stated

10   that the Debtor was not harmed because the bankruptcy court would

11   have very likely granted relief from the stay if BNYM moved for

12   relief prior to initiating foreclosure.     Judge Beesley further

13   explained why he was suspicious of the Debtor in this case:

14            Your client has lived in this house for over two
              years without paying any fees. It appears to me
15            that there was a fraudulent bankruptcy filing.
              Now, there’s no connection to your client as you
16            say in the fraudulent bankruptcy filing, but the
              only person who benefitted from the fraudulent
17            involuntary is your client. Nobody else.

18   December 18, 2012 Hr’g Tr., at 9:10-16.

19            Because the balance of harm favored BNYM, the bankruptcy

20   court denied Debtor’s motion for stay pending appeal.7

21                                JURISDICTION

22           The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

23   §§ 1334 and 157(b)(2)(A), (G), (I) and (J).     “Orders granting or

24   denying relief from the automatic stay are deemed to be final

25   orders.”     Nat’l Env’t Waste Corp. v. City of Riverside

26   (In re Nat’l Env’t Waste Corp.), 129 F.3d 1052, 1054 (9th Cir.

27
     7
          BNYM noted at oral argument on appeal that the Debtor has not
28       yet been evicted from the Property.

                                        7
 1   1997) (citing Benedor Corp. v. Conejo Enters., Inc. (In re Conejo

 2   Enters., Inc.), 96 F.3d 346, 351 (9th Cir. 1996)).    The Panel has

 3   jurisdiction under 28 U.S.C. § 158.

 4                                     ISSUE

 5        Was it an abuse of the bankruptcy court’s discretion to annul

 6   the stay in this case?

 7                               STANDARD OF REVIEW

 8        The standard of review of a motion to annul the automatic

 9   stay is abuse of discretion.   Mataya v. Kissinger

10   (In re Kissinger), 72 F.3d 107, 108 (9th Cir. 1995).    “An abuse

11   of discretion occurs (a) if the [trial] court makes legal error

12   by identifying the incorrect legal rule or (b) if the [trial]

13   court’s application of the correct legal standard was

14   ‘(1) illogical, (2) implausible, or (3) without support in

15   inferences that may be drawn from the facts in the record.’”

16   United States v. Anekqu, 695 F.3d 967, 978 (9th Cir. 2012)

17   (quoting United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir.

18   2009) (en banc)).

19                                   DISCUSSION

20        Pursuant to § 362, when an involuntary bankruptcy petition

21   is filed under § 303, an automatic stay is imposed which

22   prohibits all acts that may affect property of the bankruptcy

23   estate.   The automatic stay is designed to protect debtors from

24   their creditors while bankruptcy proceedings are under way.

25   Schwartz v. United States (In re Schwartz), 954 F.2d 569, 571

26   (9th Cir. 1992).    The stay also “protect[s] creditors from the

27   ‘race of diligence,’ in which those who acted first would receive

28   payment ‘in preference to and to the detriment of other

                                       8
 1   creditors.’”   In re Nat’l Env’t Waste Corp., 129 F.3d at 1054

 2   (quoting H.R.Rep. No. 95-595, at 340 (1978)).    A debtor is

 3   equally protected by the automatic stay regardless of whether the

 4   bankruptcy is voluntary or involuntary.

 5        Actions taken in violation of the automatic stay are void.

 6   However, “§ 362(d) gives [a bankruptcy] court the power to ratify

 7   retroactively any violation of the automatic stay which would

 8   otherwise be void.”    In re Schwartz, 954 F.2d at 573.    “Whether

 9   to grant retroactive relief from the automatic stay under

10   § 362(d) is a decision committed to the discretion of the

11   bankruptcy court.”    In re Williams, 323 B.R. 691, 700 (9th Cir.

12   BAP 2005) (citing In re Nat’l Env’t Waste Corp., 129 F.3d at

13   1054).

14             1.      Applicable Standard for Stay Annulment

15        The standard for annulling the stay has been stated

16   differently by different courts in the Ninth Circuit.      Some cases

17   such as Phoenix Bond & Indemnity Co. v. Shamblin

18   (In re Shamblin), 890 F.2d 123 (9th Cir. 1989); and

19   In re Kissinger, 72 F.3d 107 (9th Cir. 1995) appear to suggest

20   that retroactive annulment should be exercised only in “extreme

21   circumstances.”    In re Shamblin, 890 F.2d at 126 (referring to

22   equitable exceptions to the automatic stay).    On the other hand,

23   In re Schwartz, 954 F.2d 569 (9th Cir. 1992); and In re Nat’l

24   Env’t Waste Corp., 129 F.3d 1052 (9th Cir. 1997) do not mention

25   any “extreme circumstances” requirement to annul the stay and

26   instead simply balance the equities of the case.

27        No Ninth Circuit case has actually applied the restrictive

28   “extreme circumstances” standard to annul the stay.    This is true

                                        9
 1   even in cases that have suggested this narrow standard.    In

 2   Kissinger, for example, the Ninth Circuit simply balanced the

 3   equities of the case and relied on non-extraordinary

 4   circumstances in its decision confirming the bankruptcy court’s

 5   decision to annul the stay, including: that there would have been

 6   cause to lift the stay, the failure to obey the stay was caused

 7   by a state court judge rather than the creditor, and not

 8   annulling the stay would impose an undue hardship on creditors.

 9   In re Kissinger, 72 F.3d at 109.

10        In the end, the Ninth Circuit has simply balanced the

11   equities of the case when deciding whether stay annulment was

12   appropriate, even in cases where it articulated an extraordinary

13   circumstances standard.    We agree with the Panel in Fjeldsted v.

14   Lien (In re Fjeldsted), 293 B.R. 12 (9th Cir. BAP 2003) that

15   “extreme or extraordinary circumstances” should not be required

16   to annul the stay and, instead, a court should apply a

17   case-by-case approach.    See In re Eastlick, 349 B.R. 216, 226-27

18   (Bankr. D. Idaho 2004); see also In re Sullivan, 2006 WL 1686732

19   (E.D. Cal. 2006) (agreeing with Fjelsted that extraordinary

20   circumstances are not needed to annul the stay).

21        The case-by-case approach requires a bankruptcy court to

22   balance the equities of the case to determine whether there is

23   cause to annul the stay.   When analyzing a request to annul the

24   stay, the two main factors considered by courts are: “(1) whether

25   the creditor was aware of the bankruptcy petition; and

26   (2) whether the debtor engaged in unreasonable or inequitable

27   conduct, or prejudice would result to the creditor.”   In re Nat’l

28   Env’t Waste Corp., 129 F.3d at 1055.

                                      10
 1        The Panel has set forth a more expanded list of factors that

 2   may bear on a motion for retroactive annulment of the stay,

 3   including:    the number of bankruptcy filings; whether, in a

 4   repeat filing case, there is an intent to hinder and delay

 5   creditors; the extent of prejudice to creditors; a debtor’s

 6   overall good faith; whether creditors took action with knowledge

 7   of the stay; whether a debtor complied with the Bankruptcy Code

 8   and Rules; the ease of restoring parties to the status quo ante;

 9   the costs of annulment to debtors and creditors; how quickly

10   creditors moved for annulment or how quickly debtors moved to set
11   aside a foreclosure sale; whether creditors moved for stay relief
12   after learning of the bankruptcy; whether annulment of the stay
13   will cause irreparable injury to the debtor; and whether stay
14   relief will promote judicial economy.        In re Fjeldsted, 293 B.R.
15   at 25.   No one factor is dispositive and the list of factors

16   should, instead, serve as “a framework for analysis and not a

17   scorecard.”       Id.

18                2.     Findings of Fact and Conclusions of Law

19        The filing of an objection to the Motion to Annul initiated

20   a contested matter, subject to Rule 9014.        See Rule 4001(a).   In

21   a contested matter, the bankruptcy court must make findings of

22   fact and state its conclusions of law, either orally on the

23   record or in a written decision.         Rule 9014(c)(incorporating Rule

24   7052, which in turn incorporates Civil Rule 52).        “These findings

25   must be sufficient to enable a reviewing court to determine the

26   factual basis for the court’s ruling.”        Veal v. Am. Home Mortg.

27   Servicing, Inc. (In re Veal), 450 B.R. 897, 919 (9th Cir. BAP

28   2011) (citing Vance v. Am. Haw. Cruises, Inc., 789 F.2d 790, 792

                                         11
 1   (9th Cir. 1986)).

 2           We   may conduct appellate review, even when a bankruptcy

 3   court does not make formal findings, “if a complete understanding

 4   of the issues may be obtained from the record as a whole or if

 5   there can be no genuine dispute about omitted findings.”

 6   In re Veal, 450 B.R. at 919-20.      Moreover, we may affirm on any

 7   basis supported by the record.     Shanks v. Dressel, 540 F.3d 1082,

 8   1086 (9th Cir. 2008).

 9           The bankruptcy court in this case did not make detailed

10   findings of fact and conclusions of law at the July Hearing,

11   October Hearing or at the hearing on the motion for stay pending

12   appeal.      Although the bankruptcy court’s findings of fact and

13   conclusions of law are sparse, a review of the record supports

14   the bankruptcy court’s reasons for retroactively annulling the

15   stay.

16                 3.   Balancing the Equities of the Case

17           The bankruptcy court properly applied the case-by-case

18   approach in its decision to annul the stay.     The record before

19   the Panel reveals that the bankruptcy court did not clearly err

20   in finding the equities of the case favored annulling the stay.

21   On the one hand, BNYM apparently had notice of the involuntary

22   bankruptcy prior to initiating its postpetition foreclosure of

23   the Property.      BNYM conceded at oral argument that it rescinded

24   the first trustee’s sale based on knowledge of the instant

25   bankruptcy.8

26   8
          The Debtor argues that, because BNYM maintained at all times
27       leading up to oral argument that BNYM did not have notice of the
         bankruptcy before it filed its Motion to Annul, BNYM’s position
28                                                         (continued...)

                                        12
 1           On the other hand, the nature of this case and the Debtor’s
 2   conduct weighs in favor of annulling the stay.     The involuntary
 3   petition was filed in an improper venue9 and under three aliases
 4   of the Debtor, “Norma Ceralde aka Michael Henry aka Nolan A.

 5   Smith.”     Also, the Petitioning Creditors did not appear or take

 6   any action in this bankruptcy, beyond filing the petition.     This

 7   involuntary bankruptcy had all the hallmarks of a fraudulent

 8   filing.

 9           Although the bankruptcy court did not impute fraud to the

10   Debtor, the Debtor’s lack of diligence or engagement in the

11   involuntary bankruptcy serves as additional grounds to annul the

12   stay.     Debtor’s counsel noted at oral argument that the Debtor

13   received notice of the involuntary bankruptcy petition

14   immediately upon its filing.     However, the Debtor utterly failed

15   to pursue any aspect of the bankruptcy until he was faced with an

16   eviction proceeding in Los Angeles County nearly 7 months

17   postpetition.     The Debtor did not file schedules.   Nor did he

18   either object or consent to the involuntary bankruptcy petition.

19   The Debtor, in effect, never availed himself of the stay in this

20   case (and even gained a stay in his chapter 13 bankruptcy filed

21   in May 2012) until he hired counsel in May 2012 and began raising

22
     8
23    (...continued)
      should constitute a lack of candor to the Court that precludes
24    stay annulment. See In re Gonzalez, 456 B.R. 429, 443 (C.D.
      Cal. 2011) (“a party who seeks annulment has a duty of candor to
25    the court”). However, we do not view the circumstances of this
26    appeal as fitting that model.
     9
27        Venue was improper because the bankruptcy petition was filed
         in Nevada even though the Debtor resides in California and the
28       Property is in California.

                                        13
 1   stay violation arguments.10

 2        Despite his lack of participation in the involuntary

 3   bankruptcy case, the Debtor now seeks the benefits of the

 4   bankruptcy.   The Debtor was the only one who benefitted from the

 5   involuntary bankruptcy as he has been living in the Property

 6   without making any payments to BNYM for almost two years.11    The

 7   Debtor also filed a lawsuit in California state court seeking

 8   damages from BNYM for violating the stay imposed in this

 9   bankruptcy.   The complete lack of diligence on the Debtor’s part

10   should preclude him from using the stay as a weapon in his

11   California state action against BNYM.

12        The record is sufficient to conclude that the bankruptcy

13   court was not clearly erroneous in finding that the equities of

14   the case favored BNYM.   The bankruptcy court had wide discretion

15   to decide whether to retroactively annul the stay based on the

16   equities of the case.    The bankruptcy court’s analysis and ruling

17   were not “illogical, implausible, or without support in

18   inferences that may be drawn from the facts in the record.”

19   Anekqu, 695 F.3d at 978.    The bankruptcy court did not abuse its

20   discretion when it annulled the stay.

21

22
     10
23      It is particularly telling that Debtor’s counsel consented to
      dismissal of the involuntary bankruptcy against the Debtor. In
24    fact, Debtor’s counsel stated at the October Hearing on the
      Motion to Annul that dismissal of this involuntary chapter 7
25    would render the Motion to Annul “moot.”
26   11
        The Debtor’s July 5, 2012 Declaration fails to indicate he
27    tendered payments to BNYM at any relevant time nor did he supply
      an explanation as to why he had not made payments for nearly two
28    years.

                                      14
 1                              CONCLUSION

 2        For all of the reasons set forth above, we AFFIRM the

 3   bankruptcy court’s order granting BNYM’s Motion to Annul.

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