Jimenez v. Arcpe 1, LLP (In re Jimenez)

• Decision Date: 03 March 2020
• Docket Number: BAP Nos. CC-19-1177-TaLG,CC-19-1186-TaLG,Bk. No. 2:19-bk-12271-VZ
• Citation: 613 B.R. 537
• Parties: IN RE: Javier JIMENEZ, Debtor. Javier Jimenez, Appellant, v. ARCPE 1, LLP, aka ARCPE Holding, LLC; Nancy K. Curry, Chapter 13 Trustee, Appellees.
• Court: U.S. Bankruptcy Appellate Panel, Ninth Circuit

613 B.R. 537

IN RE: Javier JIMENEZ, Debtor.Javier Jimenez, Appellant,

v.ARCPE 1, LLP, aka ARCPE Holding, LLC; Nancy K. Curry, Chapter 13 Trustee, Appellees.

BAP Nos. CC-19-1177-TaLG

CC-19-1186-TaLG

Bk. No. 2:19-bk-12271-VZ

United States Bankruptcy Appellate Panel of the Ninth Circuit.

Argued and Submitted on January 30, 2020 at Pasadena, California

Filed – March 3, 2020

Ordered Published - March 17, 2020

Appellant Javier Jimenez argued pro se, assisted by translator Victor Rivera;

Sevan Gorginian argued for appellee ARCPE 1, LLP aka ARCPE Holding, LLC;

Masako Okuda argued for appellee Nancy K. Curry, Chapter 13 Trustee

Before: Taylor, Lafferty, and Gan, Bankruptcy Judges.

OPINION

TAYLOR, Bankruptcy Judge:

INTRODUCTION

Here we consider related appeals.

First, chapter 13¹ debtor Javier Jimenez challenges an order dismissing his bankruptcy case² (the "Dismissal Order"). But he failed to promptly propose a confirmable plan, produce documents to the chapter 13 trustee, and otherwise to perform his debtor duties. We see no error in the dismissal and, therefore, we AFFIRM the Dismissal Order.

He also challenges an order (the "Stay Relief Order") granting appellee ARCPE 1, LLP ("ARCPE") § 362(d)(1) and (d)(4) relief from the automatic stay to foreclose on his residence located in Los Angeles, California (the "Property").³ Given our affirmance of case dismissal, we DISMISS the § 362(d)(1) stay relief appeal as MOOT; we cannot reimpose the stay in a dismissed case.

But the appeal of the § 362(d)(4) stay relief is not moot. Because in rem relief may impact future cases, we can grant effective relief on appeal. And ARCPE did not support its § 364(d)(4) stay relief request with evidence or argument beyond reference to three bankruptcies filed over the last decade and the unadorned assertion that this constitutes the inappropriate scheme required for in rem relief. The record adds no additional supportive evidence. And the bankruptcy court made no findings supporting this relief beyond a reference to the three cases and the conclusion that this evidenced the statutorily required scheme. As the mere filing of three bankruptcies over a 10-year period does not unfailingly equate to a scheme to delay, hinder, or defraud creditors, we REVERSE the Stay Relief Order to the extent it grants § 362(d)(4) relief.

FACTS

The following facts are primarily reconstructed from the bankruptcy court's dockets.⁴

The Property and Deeds of Trust

Mr. Jimenez and his non-debtor spouse, Julieta Jimenez, co-own the Property. In 2008, they borrowed money from Wells Fargo Bank, N.A.⁵ and E-Loan, Inc. ("E-Loan") and secured their indebtedness by deeds of trust on the Property. E-Loan's lien under its deed of trust (the "Deed of Trust") was second in priority. ARCPE claims interests in the Deed of Trust and related note (the "Note") through a series of assignments.

The Bankruptcies

The First Bankruptcy

The Jimenezes defaulted on Wells Fargo's loan. Accordingly, it scheduled a foreclosure sale for August 12, 2009. But on that day, the Jimenezes filed a chapter 13 case (In re Jimenez , 09-bk-31209-SK) (the "First Case"). They asserted that Wells Fargo's senior lien over encumbered the Property, and, thus, they also filed an adversary complaint to avoid the Deed of Trust pursuant to § 506(a) and (d). The bankruptcy court eventually entered a default judgment, avoiding the Deed of Trust lien on the condition that the Jimenezes complete their confirmed chapter 13 plan and receive a discharge.

Neither condition subsequent occurred. Almost two years into the case, Wells Fargo moved for stay relief to continue its foreclosure and, after a failed attempt at resolution through an adequate protection stipulation, the Jimenezes dismissed the First Case.

The Second Bankruptcy

The Jimenezes filed a second chapter 13 case (In re Jimenez , 12-bk-34474-SK) (the "Second Case") pro se one day before dismissing the First Case. The stay as to the Property promptly terminated by operation of § 362(c)(3)(A).

The Jimenezes failed to provide notice of this Second Case and all relevant filings therein to BLB Trading, LLC ("BLB"), the then holder of the Note. They neither scheduled BLB as a creditor nor provided for payment to it under their confirmed chapter 13 plan.

In May 2013, the Jimenezes obtained a loan modification from Wells Fargo and dismissed the Second Case without receiving a discharge.

The Third Bankruptcy

Thereafter ARCPE became the Deed of Trust beneficiary, the Jimenezes made no payments on the Note, and it matured. Accordingly, ARCPE scheduled a foreclosure sale of the Property.

Mr. Jimenez stopped the foreclosure by filing his third chapter 13 case (In re Jimenez , 19-bk-12271-VZ) (the "Third Case"). ARCPE then filed a $262,131.60 secured claim. His chapter 13 plan did not provide for ARCPE's claim.

ARCPE's Motion for Relief from Stay

ARCPE moved for relief from the automatic stay (the "Stay Relief Motion") to continue its foreclosure for cause under § 362(d)(1) and based on an alleged scheme to delay, hinder, or defraud creditors under § 362(d)(4).

Mr. Jimenez filed opposition in which he asserted, without admissible evidence or authority, that ARCPE did not have a legitimate secured claim. He also asserted that he filed bankruptcy in good faith.

At the hearing on the Stay Relief Motion, Mr. Jimenez appeared pro se with an uncertified interpreter, Victor Rivera. The bankruptcy court allowed Mr. Rivera to translate even though Mr. Jimenez confirmed that he had personally read, understood, and prepared the opposition to the Stay Relief Motion. After hearing argument, the bankruptcy court observed that ARCPE had met its burden to establish a colorable secured claim. It then found that ARCPE presented admissible evidence that Mr. Jimenez: (1) filed multiple bankruptcies; and (2) failed to make postpetition payments as they came due on the Note.

On July 18, 2019, the court entered a form Stay Relief Order, granting the Stay Relief Motion pursuant to both § 362(d)(1) and (d)(4). The order contained a bald finding that Mr. Jimenez was involved in a scheme to delay, hinder, or defraud creditors that involved multiple bankruptcies affecting the Property.

The Trustee's Motion to Dismiss

At the § 341(a) meeting of creditors and in an objection to confirmation of the chapter 13 plan, the Trustee raised numerous case deficiencies (the "Issues"): (1) improper service of the plan and related notice; (2) significant plan shortcomings, including failures to meet § 1325(a)(4) liquidation requirements, to contribute all of Mr. Jimenez's disposable income, and to provide for all claims; (3) missing mandatory filings; (4) incomplete and inaccurate Schedule disclosures; and (5) significant unfulfilled document requests. Mr. Jimenez neglected to address these Issues. Accordingly, and because he also missed a plan payment, the Trustee moved to dismiss the case (the "Dismissal Motion").

At the Dismissal Motion hearing, the Trustee confirmed that, while Mr. Jimenez was now current on plan payments and had produced his 2017 tax returns, he failed to remedy the other Issues. Mr. Jimenez appeared pro se, was again assisted by his uncertified interpreter, Mr. Rivera, and offered no excuse for his failures. He merely stated that he wanted the case to remain open to protect the Property from ARCPE.

The bankruptcy court then entered its Dismissal Order based on the failure to adequately remedy the Issues.

The Appeals

Mr. Jimenez timely appealed from the Stay Relief Order and the Dismissal Order. He requested a stay pending the appeals, which we denied. ARCPE also moved to dismiss the stay relief appeal as moot because the Third Case was dismissed and it had a scheduled foreclosure sale. We denied its motion.

At oral argument, ARCPE confirmed that it had not completed its foreclosure. And Mr. Rivera, who appeared at oral argument as a "translator," eventually acknowledged that after case dismissal: (1) Mr. Jimenez granted him an interest in the Property; and (2) he filed his own bankruptcy. See In re Rivera , 19-bk-20664-SK.⁶

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334 and 157(b)(2)(A) and (G). Subject to the mootness discussion below, we have jurisdiction under 28 U.S.C. § 158.

ISSUES

1. Did the bankruptcy court abuse its discretion when it dismissed the Third Case?

2. Is Mr. Jimenez's appeal of the Stay Relief Order moot?

3. Did the bankruptcy court err when it determined that ARCPE had standing to file and prosecute the Stay Relief Motion?

4. Did the bankruptcy court abuse its discretion when it granted ARCPE stay relief?

5. Was the bankruptcy court biased against Mr. Jimenez?

STANDARD OF REVIEW

We review mootness and standing issues de novo. Suter v. Goedert , 504 F.3d 982, 985 (9th Cir. 2007) (mootness); Mayfield v. United States , 599 F.3d 964, 970 (9th Cir. 2010) (standing).

We review the bankruptcy court's orders dismissing a chapter 13 bankruptcy case and granting relief from the automatic stay for an abuse of discretion. Ellsworth v. Lifescape Med. Assocs., P.C. (In re Ellsworth) , 455 B.R. 904, 914 (9th Cir. BAP 2011) (dismissal); First Yorkshire Holdings, Inc. v. Pacifica L 22, LLC (In re First Yorkshire Holdings, Inc.) , 470 B.R. 864, 868 (9th Cir. BAP 2012) (relief from stay).

A bankruptcy court abuses its discretion if it applies an incorrect legal standard, misapplies the correct legal standard, or makes factual findings that are illogical, implausible, or not supported by the record. United States v. Hinkson , 585 F.3d 1247, 1261–62 (9th Cir. 2009) (en banc ). We may affirm on any ground fairly supported by the record. Leavitt v. Soto (In re Leavitt) , 171 F.3d 1219, 1223 (9th Cir. 1999).

The bankruptcy court did not abuse its discretion by dismissing the case.

Section 1307(c) provides that the bankruptcy court may either dismiss a chapter 13 case or convert it to chapter 7 for cause, "whichever is in the best interests of creditors and the estate." It must first consider "cau...