In Re Gonzalez
456 B.R. 429
| Bankr. C.D. Cal. | 2011Background
- Gonzalez is a co-owner of 2765 Brockton Ave, Riverside, CA, subject to a deed of trust in favor of OneWest Bank with Quality Loan Service as trustee.
- Quality Loan Service issued a Notice of Trustee's Sale for December 9, 2010, later postponed to February 22, 2011 at 10:00 a.m.
- Quality Loan Service accepted Rancho Horizon's bid on February 22, 2011 during the nonjudicial foreclosure sale.
- Rancho Horizon obtained a Trustee's Deed Upon Sale in favor of Rancho Horizon on February 25, 2011 (recorded March 2, 2011) but the exact timing of delivery/acceptance is unclear.
- Gonzalez filed a Chapter 7 petition on February 22, 2011 at 1:46 p.m.; Rancho Horizon asserts occupancy rights and seeks relief from the automatic stay for unlawful detainer.
- This is Gonzalez's bankruptcy case in the Central District of California, Riverside Division; the court denied Rancho Horizon's previous stay-relief motion and now denies it with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether postpetition execution of the deed transfers title | Rancho Horizon claims it obtained title via trustee's deed postpetition. | Gonzalez contends deed postpetition is void and did not transfer title. | Deed postpetition is void; no transfer of title occurred. |
| Whether section 2924h validates postpetition deed or sale timing | Section 2924h(c) deems sale final and may relate back to 8 a.m. | Relation-back does not validate postpetition deed; sale deemed final refers to agreement, not closing. | Section 2924h does not validate postpetition execution of the trustee's deed. |
| Whether relief from stay is warranted under 362(d)(1) or 362(d)(4) | Defendant sought relief as a purchaser with unperfected title and alleged a scheme. | Gonzalez had possession and seller did not have title to perfect unlawful detainer; no scheme proven. | Relief from stay denied under both sections; no title or scheme established. |
| Whether 362(d)(4) showing of a deliberate scheme to defraud is established | Multiple bankruptcy filings and postpetition transfers indicate a scheme. | No evidence of intent to defraud creditors; two filings but no proven scheme to defraud. | No relief under 362(d)(4) because prima facie elements not satisfied. |
| Whether annulment of the stay is appropriate | Annulment retroactively validates postpetition acts. | Annulment denied due to lack of candor and equities; acts not uniquely compelling. | Annulment denied with prejudice. |
Key Cases Cited
- In re Schwartz, 954 F.2d 569 (9th Cir. 1992) (postpetition deed void where not properly executed or delivered)
- In re Garner, 208 B.R. 698 (Bankr.N.D. Cal. 1997) (section 2924h relation-back interpretation contested)
- Shaw v. County of San Bernardino (In re Shaw), 157 B.R. 151 (9th Cir. BAP 1993) (present fair equivalent value standard under § 549(c))
- Duncan & Forbes Development, Inc., 368 B.R. 27 (Bankr.C.D. Cal. 2006) (seven elements for relief under § 362(d)(4))
- Engles (Davisson v. Engles), 193 B.R. 23 (Bankr.S.D. Cal. 1996) (postpetition transfer issues and title/possession)
- Kissinger (In re Kissinger), 72 F.3d 107 (9th Cir. 1995) (retroactive annulment referenced; extreme circumstances)
- Garner (In re Garner), 208 B.R. 698 (Bankr.N.D. Cal. 1997) (relation-back and 2924h interpretation)