Greenstein v. Wells Fargo Bank, N.A. (In re Greenstein)
| Decision Date | 25 October 2017 |
| Docket Number | Case No.: 1:12–bk–15099–MB,Adv. Case No.: 1:15–ap–01220–MB |
| Citation | 576 B.R. 139 |
| Court | U.S. Bankruptcy Court — Central District of California |
| Parties | IN RE: Laurel GREENSTEIN, Debtor. Laurel Greenstein, Plaintiff, v. Wells Fargo Bank, N.A.; Roger Lipkis, Steven Wolvek; Dean Reeves ; Marisol Nagata; Robert Little; Robert Bailey; John Stumpf ; Robert Lindaman; Marty A. Duran; Patrician M. Duran; The Duran Family Trust; Does 1 Through 10, Defendants. |
Laurel Greenstein, Van Nuys, CA, pro se.
Dean A. Reeves, AFRCT LLP, Robert A. Bailey, Pasadena, CA, Gerald N. Sims, San Diego, CA, Marisol A. Nagata, Darlene C. Vigil, Barrett Daffin Frappier Treder & Weiss LLP, Diamond Bar, CA, Steven A. Wolvek, Law Offices of Steven A. Wolvek, Calabasas, CA, for Defendants.
Does 1 Through 10, pro se.
Robert Lindaman, pro se.
Roger Lipkis, pro se.
AMENDED CONSOLIDATED MEMORANDUM OF DECISION:
(1) DENYING MOTION TO SET ASIDE FORECLOSURE SALE IN VIOLATION OF AUTOMATIC STAY; (2) GRANTING MOTIONS TO DISMISS ADVERSARY PROCEEDING WITH PREJUDICE AS TO ALL DEFENDANTS; (3) DENYING AS MOOT SPECIAL MOTION TO STRIKE CERTAIN CLAIMS; AND (4) DENYING REQUEST FOR VEXATIOUS LITIGANT RESTRICTIONS ON PLAINTIFF
TABLE OF CONTENTS
II. BACKGROUND...150
III. JURISDICTION...158
VI. MOTION TO STRIKE AND SANCTIONS...185
VII. VEXATIOUS LITIGANT REQUEST...186
I. INTRODUCTION
Laurel Greenstein, chapter 7 debtor pro se, contends that her home was wrongfully foreclosed on by Wells Fargo Bank, N.A. ("Wells Fargo") in violation of the automatic stay in her case. Greenstein seeks redress for this alleged violation of the automatic stay pursuant to the instant Motion to Set Aside Sale of Property Made in Violation of Automatic Stay(the "Set Aside Motion"), Case Dkt. 71, and a series of adversary proceedings, the third of which remains pending. Adv. Dkt. 30.1
At the time of the foreclosure sale, the automatic stay in Greenstein's case was in effect generally, but Greenstein's home was the subject of an order entered pursuant to Bankruptcy Code section 362(d)(4), exempting her home from the protection of the automatic stay. A court may enter such an "in rem" order when it determines that a bankruptcy case is being used as part of a scheme to hinder, delay or defraud a secured creditor with an interest in real property. 11 U.S.C. § 362(d)(4). If properly recorded, the order exempts the subject real property from the protection of the automatic stay in any subsequent bankruptcy case, for a period of two years—subject to the right of the debtor in such case to seek relief from the order based on changed circumstances or for cause shown. Id.
Approximately six months prior to the foreclosure of Greenstein's home, the Court entered an order under section 362(d)(4) (the "In Rem Order"), in the chapter 13 case of an entirely unrelated debtor, Roger Lipkis. Wells Fargo sought this relief in the Lipkis case based on its discovery of a grant deed purporting to transfer an interest in Greenstein's home to Lipkis, without the consent of Wells Fargo. Disclaiming any interest in Greenstein's home, Lipkis (through his attorney) stipulated to Wells Fargo's request for an order for relief from the automatic stay under section 362(d)(4) and the Court entered the In Rem Order. Wells Fargo thereafter recorded the order in accordance with section 362(d)(4).
The entry and recordation of the In Rem Order should be dispositive of Greenstein's contention that Wells Fargo violated the automatic stay in her own bankruptcy case when Wells Fargo foreclosed. If her home was not protected by the stay, there could be no violation of the stay resulting from the foreclosure.
In her Set Aside Motion, Greenstein argues that the Court should disregard the In Rem Order and deem the foreclosure sale void. First, Greenstein argues that the In Rem Order is void for lack of jurisdiction. Specifically, Greenstein argues that the deed purporting to transfer an interest in her property to Lipkis was a forgery, that no interest in property was actually transferred to Lipkis (or his estate) and, therefore, that the Court did not have jurisdiction to enter the In Rem Order.
Second, Greenstein argues that entry of the In Rem Order violated her due process rights because she did not receive notice and an opportunity to be heard on the stipulation pursuant to which Wells Fargo and Lipkis consented to entry of the In Rem Order. Greenstein contends that if she had been given notice, she could have opposed the relief affecting her property, preserved the benefit of the automatic stay in her subsequent bankruptcy case, and prevented the foreclosure of her home.
Without specifically addressing these issues, the prior bankruptcy judge assigned to this case, denied the Set Aside Motion on the grounds of claim preclusion, i.e., that he had already denied the same claim for relief in a prior proceeding. At the time of this ruling, the Court had granted several motions to dismiss various parties from adversary complaints filed by Greenstein.
But in denying the Set Aside Motion, the Court did not identify which of its prior rulings constituted a final judgment precluding relief on the Set Aside Motion.
Greenstein appealed the Court's denial of the Set Aside Motion to the Ninth Circuit Bankruptcy Appellate Panel ("BAP"). The BAP vacated the order and remanded the matter to this Court for further proceedings. See Case Dkt. 137; BAP Case No. 14–1101, Dkt. 62 (hereinafter, the "BAP Memorandum"). The BAP found that the Court's failure to make specific findings made it difficult to determine whether the requirements of claim preclusion had been satisfied. In light of this conclusion, the BAP did not find it necessary to address Greenstein's arguments regarding the validity of the In Rem Order.
Following remand, the Court heard argument from the parties on all of the issues raised by the BAP Memorandum in respect of the Set Aside Motion, including the validity of the In Rem Order. In conjunction with these post-remand hearings, the Court also heard argument on separate motions to dismiss (the "Motions to Dismiss") filed by four different groups of defendants in the above-captioned adversary proceeding, Adv. Dkt. 32,2 34,3 37,4 39,5 and a special motion to strike and award sanctions filed by certain of the defendants (the "Motion to Strike"), Adv. Dkt. 35. One of the motions to dismiss also contained a request for a vexatious litigant injunction preventing Greenstein from commencing future litigation in the Court, without first obtaining leave of court. (the "Vexatious Litigant Request"). See Adv. Dkt. 32.
In some significant respects, the issues in these adversaries are related to those in the Set Aside Motion. In the interests of economy, the Court sets forth its findings of fact and conclusions of law on the Set Aside Motion, the Motions to Dismiss, the Motion to Strike, and the Vexatious Litigant Request in this consolidated memorandum.
After reviewing the record, the Court concludes that it should not apply the doctrine of claim preclusion to the Set Aside Motion. As discussed in greater detail below, the Court finds that there has not yet been a final judgment on the merits of the one and only claim asserted in the Set Aside Motion against Wells Fargo, i.e., that the In Rem Order is invalid and the foreclosure of the Property by Wells Fargo is therefore void as a violation of the automatic stay. Furthermore, the Court rejects the argument, asserted on remand by Wells Fargo, that the Set Aside Motion should be denied under the doctrine of issue preclusion.
The Court concludes, however, that the Set Aside Motion should be denied on the merits. The Court has carefully considered Greenstein's arguments and finds they are without merit. First, even if the Lipkis Deed were proven to be a forgery, as Greenstein insists, the Court was not without jurisdiction in the Lipkis case to consider and act upon the parties' stipulation for relief under Bankruptcy Code section 362(d)(4). The existence of the Lipkis Deed—whatever its provenance—gave the Court an arguable basis for jurisdiction to grant section 362(d)(4) relief against the property. Only a "total want of jurisdiction" would render the In Rem Order void, and that is not the case here.
Second, even though Greenstein, as the property owner, should have received notice of the proposed In Rem Order and an opportunity to be heard prior to its entry, the failure of the parties to provide such notice did not constitute a denial of due process under the circumstances. Under the unique provisions of Bankruptcy Code section 362(d)(4), the owner of property subject to an in rem order entered in a prior case may seek relief from that order in any future bankruptcy case she elects to file, based on changed circumstances or cause shown.
Here, Greenstein received...
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