Aftandilian v. Prestige Mgmt. Grp., LLC (In re Aftandilian)
| Decision Date | 26 March 2014 |
| Docket Number | Bk. No. 11-12992,BAP No. CC-12-1538-KuPaTa |
| Parties | In re: VAHE AFTANDILIAN, Debtor. VAHE AFTANDILIAN, Appellant, v. PRESTIGE MANAGEMENT GROUP, LLC, Appellee. |
| Court | U.S. Bankruptcy Appellate Panel, Ninth Circuit |
NOT FOR PUBLICATION
MEMORANDUM*Argued and Submitted on February 20, 2014
at Pasadena, California
Appeal from the United States Bankruptcy Court
for the Central District of California
Appearances: Appellant Vahe Aftandilian argued pro se; Lewis R. Landau of Horgan, Rosen, Beckham & Coren, LLP argued for appellee Prestige Management Group, LLC.
Before: KURTZ, PAPPAS and TAYLOR, Bankruptcy Judges.
After obtaining relief from the automatic stay, appellee Prestige Management Group, LLC ("Prestige") conducted a nonjudicial foreclosure sale of the commercial real property owned by chapter 111 debtor Vahe Aftandilian. Aftandilian later filed a motion asking the bankruptcy court to declare the foreclosure sale void.
The bankruptcy court denied Aftandilian's declaratory relief motion. The bankruptcy court held that Aftandilian should have filed his request for declaratory relief as an adversary proceeding pursuant to Rule 7001 rather than as a contested matter motion under Rule 9014(a). The bankruptcy court also held that Aftandilian's motion was duplicative of one or more of the claims he asserted in his adversary proceeding against Prestige (Adv. No. 12-01230), which the bankruptcy court had dismissed with prejudice. The bankruptcy court further indicated that Aftandilian's motion offered the court no reason why it should depart from the analysis it had relied upon in dismissing the adversary proceeding.
We agree with the bankruptcy court's stated reasons for denying Aftandilian's motion, so we AFFIRM.
In March 2011, Aftandilian commenced his bankruptcy case byfiling a chapter 11 petition.2 In his bankruptcy schedules, Aftandilian listed Prestige as a secured creditor holding first and second trust deeds against Aftandilian's commercial real property located in Reseda, California. Aftandilian operated a car wash and an oil change business on part of the property and leased another portion of the property to a restaurant operator.
In August 2011, roughly five months after the bankruptcy filing, Prestige filed a motion for relief from the automatic stay under § 362(d)(1) and (2) to enable it to proceed with foreclosure and an action for possession of the property. On September 23, 2011, the bankruptcy court entered an order on Prestige's initial relief from stay motion. The order left the automatic stay in place, but required Aftandilian to make adequate protection payments of $22,547 per month. If Aftandilian defaulted on his adequate protection payments, the order further provided, Prestige could obtain termination of the automatic stay on an expedited basis and thereafter proceed with its foreclosure and its other remedies against the property.
Aftandilian apparently made the ordered adequate protection payments to Prestige, but Prestige nonetheless filed a new relief from stay motion in January 2012. According to Prestige, it had discovered that Aftandilian also owed a substantial amount of unpaid prepetition secured real property taxes against theproperty. These additional secured obligations, Prestige asserted, left its interest in the property inadequately protected.
The bankruptcy court once again declined to grant Prestige immediate relief from the automatic stay. Instead, the court set a schedule of monthly installments that it directed Aftandilian to pay in order to satisfy the unpaid prepetition property taxes, and it continued the relief from stay hearing so that the motion could be considered in conjunction with Aftandilian's and Prestige's competing reorganization plans and proposed disclosure statements.
In conjunction with the disclosure statement proceedings, the bankruptcy court ruled, on March 30, 2012, that it would grant Prestige relief from the stay. However, in granting stay relief, the court also granted Aftandilian a concession. Instead of permitting Prestige to immediately record a notice of sale, it ruled that the notice of sale could not be recorded before May 15, 2012, provided that Aftandilian made the adequate protection payments and the tax payments that were due in the interim. The order granting relief from stay, in relevant part, provided as follows:
Order Granting Relief from Stay (April 23, 2012) at ¶ 11.d.
Aftandilian appealed the relief from stay order, and also sought an emergency stay of the foreclosure from the Panel. The Panel issued an order on May 30, 2012 granting a temporary stay to maintain the status quo while the Panel considered the emergency stay motion. However, the Panel issued a subsequent order on June 5, 2012, denying Aftandilian's emergency stay motion and dissolving the temporary stay. According to the Panel's June 5 order, Aftandilian had not demonstrated a sufficient likelihood of success on the merits of the appeal to justify a stay for the remainder of the appeal.
Prestige thereafter completed its nonjudicial foreclosure sale against the property, and purchased the property at theforeclosure sale by credit bid. Prestige then obtained an unlawful detainer judgment in the Los Angeles County Superior Court, which entitled Prestige to take possession of the property. Ultimately, the Panel dismissed as moot Aftandilian's appeal from the relief from stay order.
In July 2012, roughly one month after Prestige's foreclosure sale, Aftandilian commenced a lawsuit against Prestige in the Los Angeles County Superior Court seeking to set aside the foreclosure sale. The operative complaint, Aftandilian's first amended complaint, stated several legal theories, all of which were based on the same predicate facts: (1) that, on June 1, 2012, Aftandilian made an adequate protection payment of $22,547 to Prestige; (2) that, on June 4, 2012, Prestige accepted that payment; (3) that, on June 6, 2012, Prestige conducted its foreclosure sale and purchased the property at the sale; and (4) having accepted the June 1, 2012 adequate protection payment, Prestige could not lawfully foreclose on the property on June 6, 2012.
Prestige removed Aftandilian's lawsuit to the bankruptcy court, and, while the lawsuit was pending before the bankruptcy court Aftandilian filed a separate motion in his bankruptcy case seeking to have Prestige's foreclosure sale declared void. Aftandilian never disputed that his declaratory relief motion arose from exactly the same facts as set forth in his lawsuit. Instead, he merely asserted that the lawsuit focused on his state law legal theories, whereas the motion focused on his bankruptcy law legal theories. More specifically, Aftandilian's motion asserted that, pursuant to the bankruptcy court's September 23,2011 adequate protection order, the automatic stay continued in effect so long as he was current on his adequate protection payments. And since he was current on his adequate protection payments at the time of foreclosure sale, that sale was void.
The bankruptcy court dismissed the lawsuit with prejudice. In the process of so ruling, the court held that nothing in its September 23, 2011 adequate protection order, nor in its April 23, 2012 relief from stay order, nor in the Panel's temporary stay order prohibited Prestige from foreclosing as it did on June 6, 2012. The court further explained that the explicit intent of the April 23, 2012 relief from stay order was to unconditionally permit Prestige to move forward with all foreclosure related proceedings on and after May 16, 2012. The court also pointed out that the September 23, 2011 adequate protection order explicitly provided that Prestige could accept adequate protection payments from Aftandilian without affecting Prestige's entitlement to foreclose under applicable nonbankruptcy law. In essence, the court held that, no matter how Aftandilian characterized Prestige's acceptance of the June 1, 2012 adequate protection payment, no state law theory, no bankruptcy law theory, and no court order prohibited Prestige from foreclosing on June 6, 2012.
On or about October 3, 2012, the bankruptcy court issued a tentative ruling on Aftandilian's declaratory relief motion. In the tentative ruling, the court pointed out that,...
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