Eden Place, LLC v. Perl (In Re Perl)
513 B.R. 566
9th Cir. BAP2014Background
- Debtor Sholem Perl and co-owner lost title to their Los Angeles duplex at a nonjudicial foreclosure; Eden Place purchased and recorded the trustee's deed prepetition (March 2013).
- Eden Place obtained unlawful detainer judgments, a writ of possession, and posted a lockout notice before Perl filed chapter 13 on June 20, 2013; Perl remained in physical possession.
- Perl filed bankruptcy and removed related state actions to bankruptcy court; Eden Place filed a motion for relief from stay and to remand the removed actions.
- The Los Angeles County Sheriff executed the lockout/eviction at Eden Place’s request on June 27, 2013, after notices of the bankruptcy filing had been sent.
- Bankruptcy court ruled the postpetition eviction violated the automatic stay and was void, denied retroactive annulment, and reserved damages/sanctions; Eden Place appealed.
Issues
| Issue | Plaintiff's Argument (Perl) | Defendant's Argument (Eden Place) | Held |
|---|---|---|---|
| Whether Perl had an interest in the residence protected by the automatic stay when he filed bankruptcy | Perl: physical possession conferred an equitable/possessory interest under California law and § 541, so eviction violated § 362(a) | Eden Place: recorded trustee's deed and prepetition UD judgment/writ extinguished any legal or equitable interest; Perl was a squatter and not protected | Court: Held Perl’s physical possession was a protected possessory interest; eviction violated stay and is void |
| Whether state statute permitting execution of writ despite notice of bankruptcy (Cal. Civ. Proc. Code § 715.050) preempts federal stay | Perl: federal automatic stay controls; state statute is preempted | Eden Place: statute permits enforcement of writ post-bankruptcy filing | Court: Held § 715.050 is preempted by § 362(a); state statute cannot override federal stay |
| Whether Eden Place acted willfully with knowledge of the stay | Perl: Eden Place had notice (counsel’s fax) and intentionally proceeded | Eden Place: Sheriff was following ministerial duties after prepetition writ; authority to act | Court: Held Eden Place had notice and its actions were intentional; therefore violated stay (ministerial-act argument not considered on appeal) |
| Whether relief from stay should be annulled retroactively | Eden Place: requested retroactive annulment to validate eviction | Perl: opposed annulment | Court: Denied retroactive annulment; granted only prospective relief for Eden Place to seek state-court relief by a set date |
Key Cases Cited
- Williams v. Levi, 323 B.R. 691 (9th Cir. BAP 2005) (physical possession post-title transfer can create a possessory interest protected by the automatic stay)
- Pettit v. McCarthy, Johnson & Miller, 217 F.3d 1072 (9th Cir. 2000) (automatic stay scope and de novo review of stay-violation questions)
- Butler (In re Butler), 217 B.R. 867 (Bankr. C.D. Cal. 1998) (possession after writ issuance can create an equitable interest subject to the stay)
- Di Giorgio v. Lee (In re Di Giorgio), 200 B.R. 664 (C.D. Cal. 1996) (mere possession of real property may create a protected interest despite a writ of possession)
- Wardrobe (In re Wardrobe), 559 F.3d 932 (9th Cir. 2009) (actions taken in violation of the automatic stay are void)
- Gruntz v. County of Los Angeles (In re Gruntz), 202 F.3d 1074 (9th Cir. 2000) (automatic stay is an injunction from the bankruptcy court and not subject to collateral attack)