Eden Place v. Sholem Perl
545 B.R. 1120
| 9th Cir. | 2016Background
- Perl and a co-owner defaulted on a deed-of-trust; Eden Place bought the property at a nonjudicial trustee’s sale and recorded the trustee’s deed within 15 days.
- Perl remained in possession, Eden Place sued in unlawful detainer; state court entered judgment for possession and issued a writ of possession; sheriff posted lockout and ultimately evicted Perl.
- Perl filed a skeletal Chapter 13 petition (failed to file schedules or plan) and removal/related pleadings in state actions; eviction occurred before the bankruptcy court resolved stay-relief motions.
- Perl moved in bankruptcy to enforce the automatic stay, asserting a protected possessory/equitable interest; bankruptcy court found a stay violation and stayed sanctions pending damages proof.
- The BAP affirmed, concluding that although Perl had no legal title, his continued occupancy gave rise to an equitable possessory interest protected by § 362(a).
- Ninth Circuit majority reversed: held Perl had no legal or equitable interest at petition date because the § 1161a unlawful detainer judgment and writ of possession extinguished his interests; therefore no stay violation occurred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bankruptcy court order finding a stay violation was final/appealable | Perl (BAP) argued the stay-violation determination was final and could be appealed despite dismissal of the bankruptcy case | Eden Place argued no final order existed because damages/sanctions remained to be decided | Court held the order was final and appealable under bankruptcy finality principles (pragmatic test) |
| Whether Perl had a legal interest in the property at the time of filing | Perl implicitly argued his possessory interest survived because eviction had not yet been executed | Eden Place argued recorded trustee’s deed and state unlawful detainer judgment/writ extinguished Perl’s legal interest prepetition | Held: Perl had no remaining legal interest; Eden Place’s recorded deed and unlawful detainer judgment terminated legal title |
| Whether Perl had an equitable or possessory interest protected by the automatic stay | Perl/BAP: physical occupancy created an equitable possessory interest that became property of the estate and was protected by § 362(a) | Eden Place: California unlawful detainer judgment under § 1161a and writ of possession extinguish any equitable/possessory interest prepetition | Held: No cognizable equitable possessory interest remained; unlawful detainer judgment/writ divested Perl of possessory rights, so § 362(a) did not protect the property and no stay violation occurred |
| Whether executing the writ and sheriff’s lockout violated the automatic stay | Perl: sheriff’s lockout interfered with estate property and thus violated § 362(a) | Eden Place: enforcement of a valid writ after final unlawful detainer does not violate the stay when debtor holds no interest in estate property | Held: Sheriff’s lockout did not violate the automatic stay because Perl had no legal or equitable interest to become part of the estate under § 541(a)(1) |
Key Cases Cited
- Mwangi v. Wells Fargo Bank, N.A., 764 F.3d 1168 (9th Cir. 2014) (automatic-stay violation reviewed de novo)
- Decker v. Tramiel (In re JTS Carp.), 617 F.3d 1102 (9th Cir. 2010) (appellate review independent of BAP)
- Butner v. United States, 440 U.S. 48 (1979) (state law governs property interests in bankruptcy)
- Vella v. Hudgins, 20 Cal.3d 251 (Cal. 1977) (unlawful detainer judgment/writ settle right to possession; dispossessory remedies)
- In re Dyer, 322 F.3d 1178 (9th Cir. 2003) (discusses finality of orders finding stay violations and sanctions)
- Price v. Rochford, 947 F.2d 829 (7th Cir. 1991) (cause of action for stay violation survives termination of bankruptcy proceeding)
- SS Farms, LLC v. Sharp (In re SK Foods, L.P.), 676 F.3d 798 (9th Cir. 2012) (two-part test for finality in bankruptcy appeals)