Roberts v. Association of Apartment Owners of Liona Kona, 1:14-cv-00548

Background

Debtor Sandra Jo Roberts filed consecutive Chapter 13 petitions: Roberts I (dismissed June 6, 2014) and Roberts II (filed August 25, 2014) to stop nonjudicial foreclosure by the Liona Kona AOAO for unpaid maintenance fees.
Roberts I lasted over a year; the bankruptcy court rejected five proposed Chapter 13 plans and dismissed the case for failure to propose a confirmable plan.
Under 11 U.S.C. § 362(c)(3), the automatic stay in a second case filed within one year of dismissal terminates 30 days after filing unless a timely motion to extend the stay is filed and the debtor proves the later filing was in good faith.
Roberts filed a motion to extend the stay 38 days after filing Roberts II; the bankruptcy court denied the motion as untimely and found Roberts failed to show Roberts II was filed in good faith; a motion for reconsideration was also denied.
Roberts appealed to the Bankruptcy Appellate Panel; the AOAO timely elected to transfer the appeal to the district court under Fed. R. Bankr. P. 8005; the district court affirmed the bankruptcy court’s orders.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the bankruptcy court erred in denying extension of the automatic stay under 11 U.S.C. § 362(c)(3)(B)	Roberts argued the stay should be extended to prevent AOAO foreclosure, claiming AOAO lacked capacity and charged excessive fees among other improprieties	AOAO argued the motion was untimely (filed after 30 days) and Roberts failed to prove Roberts II was filed in good faith	Denied: motion untimely; stay not extended because hearing/motion were not within 30-day window and Roberts failed to show good faith
Whether Roberts rebutted the presumption of bad faith for a second filing within one year	Roberts contended generally that the motion and filing were in good faith and attacked AOAO’s standing and conduct	AOAO and the bankruptcy court pointed to lack of substantial change in Roberts’s finances, worsening income, increased debt, and evidence of delay tactics	Denied: presumption of bad faith arose and Roberts did not rebut it; financials worsened and motives suggested delay, not reorganization
Whether the bankruptcy court abused its discretion in denying reconsideration	Roberts argued the court overlooked arguments about AOAO’s standing and capacity	AOAO argued reconsideration lacked new evidence or controlling law and merely rehashed prior arguments	Denied/Waived: Roberts failed to brief this issue adequately; no abuse of discretion shown
Whether AOAO had standing to elect transfer of the appeal from the BAP to district court	Roberts argued AOAO lacked legal capacity due to prior involuntary dissolution and thus could not oppose or transfer the appeal	AOAO showed continuous association activity, statutory/bylaws support for continued unincorporated operation, and filed a timely election under Rule 8005	Denied: AOAO had capacity to participate and timely elected transfer; appeal properly before district court

Key Cases Cited

In re Kimura (United States v. Battley), 969 F.2d 806 (9th Cir. 1992) (standard of review: factual findings for clear error and legal conclusions de novo)
Connecticut Bar Ass'n v. United States, 620 F.3d 81 (2d Cir. 2010) (discussing BAPCPA purpose to curb bankruptcy abuse)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (party invoking federal jurisdiction bears burden to establish standing)
City of Emeryville v. Robinson, 621 F.3d 1251 (9th Cir. 2010) (issues not argued specifically in opening brief are forfeited)
In re Castaneda, 342 B.R. 90 (B.A.P. 9th Cir. 2006) (debtor bears burden to prove good faith by preponderance; mere assertions insufficient)
United States v. Devall, 704 F.2d 1513 (11th Cir. 1983) (purpose of Chapter 13 is to enable debtors to repay debts via a plan)