Taylor, In re, s. 87-6312

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtBefore HUG, HALL and WIGGINS; CYNTHIA HOLCOMB HALL; Mund
Citation884 F.2d 478
Parties, Bankr. L. Rep. P 73,174 In re: Ezella M. TAYLOR, Debtor. Dina TSAFAROFF; Evelyn Simbas, Appellants, v. Ezella M. TAYLOR, Appellee. Ezella M. TAYLOR, Appellant, v. Dina TSAFAROFF; Evelyn Simbas; William Little, Appellees. William LITTLE, Appellant, v. Ezella M. TAYLOR; David A. Gill, Trustee in Bankruptcy, Appellee.
Docket NumberNos. 87-6312,87-6319 and 87-6367,s. 87-6312
Decision Date05 September 1989

Page 478

884 F.2d 478
19 Bankr.Ct.Dec. 1251, Bankr. L. Rep. P 73,174
In re: Ezella M. TAYLOR, Debtor.
Dina TSAFAROFF; Evelyn Simbas, Appellants,
Ezella M. TAYLOR, Appellee.
Ezella M. TAYLOR, Appellant,
Dina TSAFAROFF; Evelyn Simbas; William Little, Appellees.
William LITTLE, Appellant,
Ezella M. TAYLOR; David A. Gill, Trustee in Bankruptcy, Appellee.
Nos. 87-6312, 87-6319 and 87-6367.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted June 8, 1989.
Decided Sept. 5, 1989.

Page 479

Leon L. Vickman, Leon L. Vickman, a Law Corp., Encino, Cal., Michael R. Sment, Rich & Ezer, Los Angeles, Cal., for appellants.

Ezella M. Taylor, Pasadena, Cal., in pro per.

Appeal from the Ninth Circuit Bankruptcy Appellate Panel.

Before HUG, HALL and WIGGINS, Circuit Judges.


In No. 87-6319, Debtor Ezella M. Taylor ("the debtor" or "Taylor") timely appeals from a BAP decision, which affirmed the judgment of the Bankruptcy Court for the Central District of California (Judge Geraldine Mund, presiding), that Taylor's Creditors, Dina Tsafaroff and Evelyn Simbas

Page 480

(collectively "the creditors" or "Tsafaroff"), had conducted a valid foreclosure sale of Taylor's home. The bankruptcy court also decided, and the BAP affirmed, that William Little ("Little"), who was the sole bidder for Taylor's $100,000 house with a bid of $22,099.94 (subject to a $20,000 first mortgage), was a bona fide purchaser ("BFP") without notice of Taylor's pending bankruptcy petition.

In Nos. 87-6312 and 87-6367, respectively, Tsafaroff and Little timely appeal from the portion of the decision below in which BAP ruled that the bankruptcy court (Judge Barry Russell, presiding) did not have the power to enter an order lifting the automatic stay of 11 U.S.C. Sec. 362 in one bankruptcy proceeding, that would be effective in lifting the stay imposed upon filing by the same debtor of subsequent petitions. Tsafaroff and Little also appeal from the portion of the BAP judgment which affirmed an award of sanctions ordered by Judge Mund against Little's attorney, Leon L. Vickman, and a denial of their request for sanctions against Taylor and her attorney.


The underlying facts of this case are largely undisputed, and are adequately set forth in the BAP opinion, Little v. Taylor (In re Taylor), 77 B.R. 237, 238-39 (Bankr. 9th Cir.1987). The BAP opinion also chronicles the labyrinthine procedural history of this case. As necessary, the following discussion will contain amplification of particular segments of the case history, an understanding of which is critical to the resolution of some of the issues presented.


This court is in as good a position as the BAP to review the findings of the bankruptcy court. In re Bialac, 712 F.2d 426, 429 (9th Cir.1983). Accordingly, we review the bankruptcy court's factual determinations for clear error. Id.; In re Bloom, 875 F.2d 224, 227 (9th Cir.1989). The legal conclusions of the bankruptcy courts, on the other hand, are subject to de novo review. In re American Mariner Indus., Inc., 734 F.2d 426, 429 (9th Cir.1984).

Our review of the sanction orders, entered by the bankruptcy court pursuant to Bankruptcy Rule 9011, is conducted under the same standard applicable to an order of sanctions under Rule 11 of the Federal Rules of Civil Procedure. In re Chisum, 847 F.2d 597, 599 (9th Cir.), cert. denied sub nom. Mortgage Mart Inc. v. Rechnitzer, --- U.S. ----, 109 S.Ct. 228, 102 L.Ed.2d 218 (1988). That is, factual findings relied on by the court to establish a violation of the rule are reviewed under the clearly erroneous standard, the legal conclusion that the facts constitute a violation of the rule is reviewed de novo, and the appropriateness of the sanction imposed is reviewed for an abuse of discretion. See Zaldivar v. City of Los Angeles, 780 F.2d 823, 828 (9th Cir.1986).


We must first decide whether the BAP erred in concluding that Judge Russell's order, which purported to lift the automatic stay imposed upon Taylor's filing of her first Chapter 13 petition, was ineffective in lifting the stay imposed upon filing of Taylor's second Chapter 13 petition. Based on a literal reading of the terms of the order, the bankruptcy court ruled that Judge Russell's "default judgment" of October 11, 1985, was not intended to apply to Taylor's second Chapter 13 petition. 1 Taylor, 77 B.R. at 239-40. The BAP affirmed this "factual finding" as not clearly erroneous. Id. at 240. Relying on two bankruptcy court decisions, In re Norris, 39 B.R. 85, 87 (Bankr.E.D.Pa.1984), and In re Surace, 52

Page 481

B.R. 868, 870 (Bankr.C.D.Cal.1985), the BAP went on to affirm Judge Mund's ruling that Judge Russell's stay lift order did not have the preclusive effect urged by Tsafaroff and Little, holding that "it is doubtful that a bankruptcy court can enter" a stay lift order that would have res judicata effect in all proceedings brought under Chapter 13 by the same debtor. Taylor, 77 B.R. at 240.

Objecting to this sweeping statement by the BAP, Tsafaroff and Little urge this court to decide the broad question whether a bankruptcy court order lifting the automatic stay in favor of a creditor in one bankruptcy proceeding is ever effective to lift the stay imposed upon filing by the same debtor of a subsequent petition in bankruptcy. They argue that such stay lift orders are, in general, entitled to both claim preclusive 2 and issue preclusive effect in subsequent Chapter 13 proceedings.

We need not reach the broad question framed by Tsafaroff and Little 3 because there is a second and more fundamental ground upon which to affirm the BAP conclusion as to the res judicata effect of Judge Russell's stay lift order. It is a fundamental principle of the law of former adjudication that only "valid and final" judgments are afforded claim preclusive or issue preclusive effect. See Restatement (Second) of Judgments Secs. 17, 27 (1982). One of the prerequisites for a "valid" judgment is that the rendering court have jurisdiction of the subject matter of the action. Id. at Sec. 1.

Under the law of this circuit, the bankruptcy court retains subject matter jurisdiction to interpret orders entered prior to dismissal of the underlying bankruptcy case, Beneficial Trust Deeds v. Franklin (In re Franklin ), 802 F.2d 324, 326-27 (9th Cir.1986), and to dispose of ancillary matters such as an application for an award of attorney's fees for services rendered in connection with the underlying action, see USA Motel Corp. v. Danning, 521 F.2d 117 (9th Cir.1975). The bankruptcy court does not have jurisdiction, however, to grant new relief independent of its prior rulings once the underlying action has been dismissed. See Armel Laminates, Inc. v. Lomas & Nettleton Co. (In re Income Property Builders, Inc.), 699 F.2d 963, 964 (9th Cir.1982). See also Spacek v. Thomen (In re Universal Farming Indus.), 873 F.2d 1334, 1335 (9th Cir.1989) (dismissal of underlying bankruptcy case moots all issues directly involving the debtor's reorganization, but not those ancillary to the bankruptcy).

In this case, the bankruptcy court lacked subject matter jurisdiction to render a valid judgment granting Tsafaroff's request for relief from the stay that arose upon filing of Taylor's first bankruptcy petition, because Judge Russell did not enter his "default judgment" in the adversary action until after both the adversary action and the underlying bankruptcy petition had been dismissed by final order of Judge Lasarow. 4 The following chronology demonstrates that Judge Russell exceeded his jurisdiction in granting Tsafaroff's request for stay relief.

As noted in the BAP opinion, Taylor, 77 B.R. at 238, Taylor commenced her first bankruptcy action, Case No. LAX-85-53242, by filing a Chapter 13 petition on June 26, 1985. After Taylor proposed a plan of reorganization on July 26, 1985, and noticed a meeting of listed creditors by order of August 18, 1985, Tsafaroff and Simbas commenced an adversary action, with Reference No. MX5-53583 and Case No. LAX 85-53242, by filing a "Complaint for Relief from Automatic Stay" on September 6, 1985. On September 23, 1985,

Page 482

Judge William J. Lasarow held a confirmation hearing in Case No. LAX 85-53242 and dismissed Taylor's Chapter 13 petition from the bench. On September 27, 1985, Taylor filed her second Chapter 13 petition and plan, in Case No. LAX 85-54806, both of which were served on the listed creditors on the same date.

On October 2, 1985, Judge Russell held a hearing on Tsafaroff's complaint in the adversary action. Only the creditors' attorney, Leon Vickman, made an appearance at the October 2 hearing. Although Vickman reported that Taylor's first bankruptcy case had been "dismissed from the bench on the 23rd of last month," Judge Russell indicated that he would approve a stay lift order, which was to be drafted and submitted by Vickman, that would be "binding in 13's" for six months. Judge Russell adjourned the hearing without any specific ruling from the bench.

The next day, October 3, 1985, Judge Lasarow entered his final "Order Dismissing Chapter 13 Petition," which purported to apply to Case No. LAX 85-53242, citing Taylor's failure to file a feasible plan as "good cause" for dismissal. Judge Lasarow's October 3 order provided in relevant part:

1. That the order for relief resulting from the filing of the petition be set aside and vacated; and

2. That the petition herein be, and the same hereby is dismissed...

To continue reading

Request your trial
168 cases
  • In re Menk, BAP No. SC-98-1816-KRyB. Bankruptcy No. 95-14067. Adversary No. 97-90319.
    • United States
    • Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Ninth Circuit
    • November 5, 1999
    ...Cir. 1994); Spacek v. Thomen (In re Universal Farming Indus.), 873 F.2d 1334, 1335-37 (9th Cir.1989); Tsafaroff v. Taylor (In re Taylor), 884 F.2d 478, 481 (9th Cir.1989); U.S.A. Motel Corp. v. Danning, 521 F.2d 117 (9th Equitable subordination disputes under 11 U.S.C. § 510 similarly remai......
  • In re Fingers, 93-328-G/R. Bankruptcy No. 89-02143-H7. Adv. No. 91-90597-H7.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • July 8, 1994
    ...Indus., Inc., 784 F.2d 926, 929 (9th Cir.1986). The appropriateness of a sanction is reviewed for abuse of discretion. In re Taylor, 884 F.2d 478 (9th B. FINGERS WAS A PROPER PARTY TO BRING AN ACTION UNDER 11 U.S.C. § 362(h) FOR VIOLATION OF THE AUTOMATIC STAY The appellant United States ar......
  • In re Herrera, Bankruptcy No. 96 B 02069.
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois
    • March 28, 1996
    ...does not constitute lack of good faith per se, but it may be evidence of the lack of good faith. See Tsafaroff v. Taylor (In re Taylor), 884 F.2d 478, 485 (9th Cir.1989) ("Successive filings may be evidence of bad faith. . . ."); Downey Sav. & Loan Ass'n v. Metz (In re Metz), 820 F.2d 1495,......
  • In re Petroleum Piping Contractors, Inc., Bankruptcy No. 96-61379.
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana
    • February 28, 1997
    ...Ellis v. Consolidated Diesel Elec. Corp., 894 F.2d 371, 372 (10th Cir.1990); In re Smith, 876 F.2d 524, 526 (6th Cir.1989); In re Taylor, 884 F.2d 478, 483 (9th Cir.1989); Matthews v. Rosene, 739 F.2d 249, 251 (7th Cir. 1984); In re Smith Corset Shops, Inc., 696 F.2d 971, 976 (1st Cir.1982)......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT