Edwards v. Wells Fargo Bank, N.A. (In Re Edwards)
454 B.R. 100
| 9th Cir. BAP | 2011Background
- Edwards filed a voluntary Chapter 7 petition on August 5, 2010.
- Wells Fargo filed a motion for relief from the automatic stay regarding Edwards' Long Beach property.
- Wells Fargo attached a Trustee's Deed Upon Sale and related foreclosure documents showing a May 2010 foreclosure and transfer of title to Wells Fargo.
- State-court actions followed: unlawful detainer action filed June 3, 2010; summary judgment for Wells Fargo on July 14, 2010; writ of possession issued July 26, 2010.
- Edwards responded August 26, 2010 asserting the property remained hers and stating it was unencumbered and necessary for reorganization.
- A relief-from-stay hearing occurred September 9, 2010, resulting in a tentative ruling and a September 13, 2010 Relief from Stay Order granting relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of Wells Fargo to seek relief from stay | Edwards contends Wells Fargo Lacks standing due to trustee issues. | Wells Fargo has a colorable claim and title interest after foreclosure and pertinent state actions. | Wells Fargo had standing to seek relief. |
| Whether cause existed to lift the stay under § 362(d)(1) | Debtor argues ongoing possession and reorganization rights; foreclosure was improper. | Foreclosure completed pre-petition; debtor no longer has interest; lawful possession and writ support stay relief. | The bankruptcy court did not abuse its discretion; cause existed to grant relief. |
| Effect of state court judgments and absence of adversary proceeding on stay relief | Adv proceedings were pending to challenge Wells Fargo's title; stay relief should be denied to prevent prejudice. | State court judgment and res judicata/preclusion support relief; adversary proceeding timing does not negate stay relief discretion. | Adversary proceeding timing does not negate the court's discretion; stay relief proper. |
Key Cases Cited
- In re Veal, 450 B.R. 897 (9th Cir. BAP 2011) (standing from colorable claim to enforce rights in property of the estate)
- Kronemyer, 405 B.R. 915 (9th Cir. BAP 2009) (two-part abuse of discretion standard; correct legal standard and factual findings)
- In re Robbins, 310 B.R. 626 (9th Cir. BAP 2004) (permissive approach to stay relief when adversary proceedings are pending)
- Bebensee-Wong v. Fed. Nat'l Mortg. Ass'n, 248 B.R. 820 (9th Cir.BAP 2000) (California Civil Code foreclosure completion effects on debtor's interest)
- Freeze v. Salot, 122 Cal. App. 2d 561 (1954) (preclusion after unlawful detainer judgment; res judicata in title disputes)
- In re Salazar, 448 B.R. 814 (Bankr.S.D. Cal. 2011) (distinction when bank moving for relief had prepetition title; final state judgment)