Lead Opinion
Opinion by Judge RAWLINSON; Dissent by Judge WATFORD.
OPINION
Appellant Eden Place, LLC (Eden Place), appeals the decision of the Bankruptcy Appellate Panel (BAP) affirming the bankruptcy court’s determination that Eden Place violated the automatic stay provisions of the Bankruptcy Code by evicting Debtor Sholem Perl (Perl) from a residential property. Because we conclude that Perl had no legal or equitable interest remaining in the property at the time of his eviction, we reverse the bankruptcy court’s ruling that Eden Place violated the automatic stay.
I. BACKGROUND
A. State Court Proceedings
Perl and a joint tenant owned a single-family duplex in Los Angeles, California. After refinancing, Perl defaulted on his mortgage payments, and Bank of America instituted foreclosure proceedings. The property was sold to Eden Place through a non-judicial foreclosure sale on March 20, 2013. Eden Place timely recorded the trustee’s deed nine days later.
Despite the legal transfer of title, Perl refused to vacate the premises. Eden Place served Perl with a three-day notice to quit, and later served Perl with two unlawful detainer complaints, one for each side of the duplex. In response, Perl filed a complaint against Eden Place to set aside the trustee’s sale (Complaint to Set Asidе Sale), and Eden Place filed a cross-complaint for damages, trespass, and interference with prospective economic advantage (Cross-Complaint), and a motion to expunge Perl’s Us pendens.
On June 11, 2013, the state court entered judgment in favor of Eden Place on the unlawful detainer actions, resulting in a judgment for possession and restitution. Three days later, the state court entered a Writ of Possession in favor of Eden Place. Sometime between June 14 and June 24, the Los Angeles County Sheriff posted the lockout, notice. On June 19, the state court heard Perl’s motion to stay the unlawful detainer proceedings аnd set various conditions for a stay. Once Perl failed to meet the conditions, the unlawful de-tainer judgment for possession remained in effect, culminating in eviction by the Sheriff.
B. Bankruptcy Court Proceedings
Rather than complying with the state court requirements to stay the unlawful detainer proceedings, Perl filed a “skeletal” chapter 13 bankruptcy petition pro se. He failed to file any schedules, financial affairs statement, or proposed plan of reorganization. Although not listed as a creditor, Eden Place learned of the bankruptcy filing from Perl’s counsel, who informed Eden Place that no exceptions to the automatic stay apрlied and that any eviction would violate the automatic stay.
Before the bankruptcy court held a hearing on the Stay Relief Motion, the Sheriff proceeded with the lockout and evicted Perl. As a result, Perl was unable to remove some of his personal belongings. Perl then filed an emergency motion to enforce the automatic stay, arguing that the eviction interfered with protectable equitable interests based on his continued possessory interest in the premises.
Over Eden Place’s objection, the bankruptcy judge determined that Perl’s “bare possessory interest, coupled with the possibility of some sort of relief [from the pending litigation]” gave “the bankruptcy estate a protected interest that is subject to the automatic stay.” Accordingly, the bankruptcy court determined that Eden Place had violated the automatic stay when it evicted Perl, and that the eviction was void. The bankruptcy court stayed its determination regarding contempt sanctions because Perl had not yet offered evidence of damages. Although Edеn Place later filed a status report pursuant to the bankruptcy court’s order, Perl never filed anything further in his bankruptcy case. Eventually, the bankruptcy case was dismissed for Perl’s failure to appear at the creditor’s meeting. Eden Place timely appealed the bankruptcy court’s order to the BAP.
C. BAP Proceedings
The BAP determined that it had jurisdiction over the appeal because Eden Place remained subject to a claim for damages based on the bankruptcy court’s finding that Eden Place violated the automatic stay.
After examining its jurisdiction, the BAP turned to the “sole issue” before it: whether “at the time Perl filed his bankruрtcy petition, he had any remaining interest in the Residence protected by the automatic stay.” Applying California law, the BAP held that Perl’s ownership interest was terminated prepetition when Eden Place purchased the property at the trustee’s sale. Nevertheless, the BAP held that Perl had a recognizable equitable interest in the property by virtue of his physical occupancy, notwithstanding the illegality of his continued occupancy.
The BAP noted that “changing the locks on the Residence, locking inside Perl’s personal property, which was also property of the estate, was an act to exercise control over property of the estate in violation of’ the automatic stay. Thus, the BAP affirmed the bankruptcy court’s ruling, and Eden Place filed a timely appeal to this court.
II. STANDARD OF REVIEW
“Whether the automatic stay provisions of 11 U.S.C. § 362(a) have been violated is a question of law reviewed de novo.” Mwangi v. Wells Fargo Bank, N.A. (In re Mwangi),
III. DISCUSSION
A. Jurisdictiour-Finality
Before considering the merits of Eden Place’s appeal, we first consider whether we have jurisdiction over the appeal. See Sahagun v. Landmark Fence Co. (In re Landmark Fence Co.),
The BAP determined that it had jurisdiction because there was a final order from the bankruptcy court, and Eden Place rеmained subject to a claim for damages based on the bankruptcy court’s determination that Eden Place violated the automatic stay. See Eden Place, LLC v. Perl (In re Perl),
We also have jurisdiction over appeals from final judgments and orders of the bankruptcy court. See 28 U.S.C. § 158(d). In determining what constitutes an appealable order in bankruptcy proceedings, we have adopted a “pragmatic approach.” Rosson v. Fitzgerald (In re Rosson),
In Bullard v. Blue Hills Bank, — U.S. -,
Our precedent has not been entirely pellucid regarding the flexible concept of finality in the bankruptcy context. In some instances, we have applied the following four-part test:
(1) the need to avoid piecemeal litigation; (2) judicial efficiency; (3) the sys-temicinterest in preserving the bankruptcy court’s role as the finder of fact; and (4) whether delaying review would cause either party irreparable harm.
In re Landmark Fence,
In other instances, we look to whether the bankruptcy court’s decision: “1) resolves and seriously affects substantive rights and 2) finally determines the discrete issue to which it is addressed.” SS Farms, LLC v. Sharp (In re SK Foods, L.P.),
A survey of our precedent reveals that the four-part finality test articulated in In re Landmark Fence is utilized almost exclusively when determining the finality of a case involving a remand to the bankruptcy court. See In re Landmark Fence,
On the other hand, when the decision of the bankruptcy court is affirmed or reversed, rather than remanded, we have applied the two-part finality test articulated in In re SK Foods,
Because this case did not involve a remand, application of the two-part finality test is appropriate. See In re SK Foods,
We respectfully part company with our dissenting colleague’s view of the finality of the bankruptcy court’s order, largely because the cases relied on by the dissent were decided in the context of general civil litigation rather than in the bankruptcy context, where “[t]he rules are different ...” Bullard,
We also look to the clear language of the bankruptcy appeals statute, which as the Supreme Court noted, “authorizes appeals as of right not only from final judgments in cases but from final judgments, orders, and decrees in cases and proceedings.” Id. (quoting 28 U.S.C. § 158(a)) (alteration and internal quotation marks omitted). After considеring our applicable precedent and the clear language of the statute, we hold that the bankruptcy court’s order that Eden Place violated the automatic stay was final and appealable. See 28 U.S.C. § 158(d).
B. Merits-Violation of Automatic Stay
Having resolved the issue of finality, we now turn to the merits of this case—whether Eden Place violated the automatic stay. We start from the premise that the filing of a bankruptcy petition creates the bankruptcy estate, which includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. 541(a)(1). The bankruptcy filing acts as an automatic stay of “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate____”11 U.S.C. § 362(a)(3). The violation of the automatic stay inquiry determines whether the debtor, in isolation, has any protecta-ble legal, equitable, or possessory interest. See Ramirez v. Fuselier (In re Ramirez),
We look to state law to determine property interests in bankruptcy proceedings. See Butner v. United States,
The BAP correctly determined that Perl had no remaining legal interest in the property because, when Eden Place purchased the property at the foreclosure sale and recorded its deed within fifteen days of the sale, any legal interest Perl retained in the property was extinguished. See Wells Fargo Bank v. Neilsen,
California’s unlawful detainer statutory scheme was designed to adjudicate the right to possession оf realty between a landlord and tenant when the tenant is in violation of the lease. See Knowles v. Robinson,
In California, an unlawful detainer proceeding is quasi in rem and, accordingly, a judgment rendered in an unlawful detainer proceeding is “not binding upon the world, but conclusive only between the parties and their, privies.” Park v. Powers, 2 Cal.2d 590,
We recognize that the BAP may have considered itself bound to follow its prior decision in Williams v. Levi (In re Williams),
The earliest case espousing the reasoning adopted by the BAP is In re DiGior-gio. The DiGiorgios were the defendants in an unlawful detainer action. They subsequently entered into a Stipulation for Judgment, forfeiting the lease and providing for the issuance of a writ of possession. See
This holding was repeated in In re Butler, and adopted by the BAP in In re Williams, see
Title by Occupancy; extent
Occupancy for any period confers a title sufficient against all except the state and those who have title by prescription, accession, transfer, will, or succession; but the title conferred by occupancy is not a sufficient interest in real property to enable the occupant or the occupant’s privies to commence or maintain an action to quiet title, unless the occupancy has ripened into title by prescription.
The bankruptcy court concluded that, under California ease law, “the mere possession of real estate is constantly treated as property, which may be purchased and sold, and for the recovery of which an action may be maintained against one having no better title.” In re Butler,
The flaw in the bankruptcy court’s analysis is that the unlawful detain-er proceedings under § 1161a are expressly designed to determine who has superior title to the property, including the right to immediate possession. See Vella,
The unlawful detainer judgment and writ of possession entered pursuant to California Code Civil Procedure § 415.46 bestowed legal title and all rights of possession upon Eden Place. See Vella,
IV. CONCLUSION
The bankruptcy court erred when it ruled that Eden Place violated the automatic stay provisions of the Bankruptcy Code. Perl had no legal or equitable interest remaining in the property after issuance of the unlawful detainer judgment and writ of possession in state court. We therefore reverse the bankruptcy court order. We need not and do not reach any other issues presented on appeal.
REVERSED.
. The background facts are taken from the BAP’s opinion. See Eden Place, LLC v. Perl (In re Perl),
. An appellate court hearing an interlocutory appeal from a district court that is sitting in bankruptcy can apply 28 U.S.C. § 1292, Connecticut Nat’l Bank v. Germain,
. Before Bullard, we had made the same point.
We have adopted a pragmatic approach to finality in bankruptcy because certain proceedings in a bankruptcy case are so distinctive and conclusive either to the rights of individual parties or the ultimate outcome of the case that final decisions as to them should be appealable as of right. Our approach emphasizes the need for immediate review, rather than whether the order is technically interlocutory.
Alexander v. Compton (In re Bonham),
. California Code of Civil Procedure § 1161a provides in relevant part:
(b) In any of the following cases, a person who holds over and continues in possession of a manufactured homе, mobilehome, floating home, or real property after a three-day written notice to quit the property has been served upon the person, or if there is a subtenant in actual occupation of the premises, also upon such subtenant, as prescribed in Section 1162, may be removed therefrom as prescribed in this chapter:
(1) Where the property has been sold pursuant to a writ of execution against such person, or a person under whom such person claims, and the title under the sale has been duly perfected.
(2) Where the property has been sold pursuant to a writ of sale, upon the foreclosure by proceedings taken as prescribed in this code of a mortgage, or under an express power of sale contained therein, executed by such person, or a person under
whom such person claims, and the title under the foreclosure has been duly perfected.
(3) Where the property has been sold in accordance with Section 2924 of the Civil Code, under a power of sale contained in a deed of trust executed by such person, or ’a person under whom such person claims, and the title under the sale has been duly perfected.
(4) Where the property has been sold by such person, or a person under whom such person claims, and the title under the sale has been duly perfected.
(5) Where the property has been sold in accordance with Section 18037.5 of the Health and Safety Code under the default provisions of a conditional sale contract or security agreement executed by such person, or a person under whom such person claims, and the title under the sale has been duly perfected.
. California Code of Civil Procedure § 415,46 provides in relevant part:
(a) In addition to the service of a summons and complaint in an action for unlawful detainer upon a tenant and subtenant, if any, as prescribed by this article, a prejudgment claim of right to possession may also be served on any person who appears to be or who may claim to have occupied the premises at the time of the filing of the action. Service upon occupants shall be made pursuant to subdivision (c) by serving a copy of a prejudgment claim of right to possession, as specified in subdivision (f), attached to a copy of the summons and complaint at the same time service is made upon the tenant and subtenant, if any.
. California Code of Civil Proсedure § 715.050 provides in relevant part:
Except with respect to enforcement of a judgment for money, a writ of possession issued pursuant to a judgment for possession in an unlawful detainer action shall be enforced pursuant to this chapter without delay, notwithstanding receipt of notice of the filing by the defendant of a bankruptcy proceeding.
Because we resolve this case without relying upon the provisions of § 715.050, we express no view on whether the state statute is preempted by the Bankruptcy Code.
Dissenting Opinion
dissenting:
I would dismiss this appeal for lack of jurisdiction. The appeal is taken from a bankruptcy сourt order that cannot by any stretch be deemed final, even under the more relaxed standard for finality that we apply in bankruptcy appeals. See Bullard v. Blue Hills Bank, — U.S. -,
The Bankruptcy Appellate Panel (BAP) correctly held that dismissal of Perl’s underlying bankruptcy case did not render his request for damages or sanctions moot. See Price v. Rockford,
Bankruptcy court orders are final and appealable “if they finally dispose of discrete disputes within the larger case.” Bullard,
The first rule applies here. This is not a case in which the bankruptcy court resolved the merits of the dispute and left unresolved only a request for attorney’s fees. The bankruptcy court’s order merely determined liability; it left entirely unresolved the relief to be awarded, which included a potential award of compensatory and punitive damages as well as an award of attorney’s fees. (Eden Place incorrectly asserts that Perl requested attorney’s fees alone as relief; in fact, his motion requested all appropriate relief, including but not limited to attorney’s fees.) Because the bankruptcy court’s order determined liability but left the issue of damages unresolved, this case is governed by Wetzel. Under the finality rule established there, the bankruptcy court’s order did not finally determine even “the discrete issue of whether there was a stay violation,” Maj. op. at 1127, because the order resolved only liability and nothing else.
Eden Place contends the bankruptcy court’s order should be deemed final under In re Dyer,
But we can put that matter to one side. The only portion of Dyer that has any bearing on this case is the court’s observation, in dicta, that the finality analysis might be different if the court were confronted with an order finding a stay violation but postponing assessment of damages under 11 U.S.C. § 362(h) (now § 362(k)),
What we said in dicta in Dyer about the finality of orders under § 362(k) is entirely correct. Our sister circuits have uniformly held that an order finding a stay violation but postponing assessment of damages under § 362(k) is not final. See In re Atlas,
Whatever the merits of the rule established by Dyer for orders under § 105(a), it doesn’t apply here. It’s true that Perl cited § 105(a) in his moving papers when requesting sanctions for Eden Place’s stay violation, but in fact no relief was available to him under that statutory provision. Individual debtors like Perl have a specific remedy available to them under § 362(k), so it would not be “necessary or appropriate” for the bankruptcy court to enforce the stay by imposing contempt sanctions under the catch-all authority granted by § 105(a). See In re Snowden,
What we are left with, then, is an order finding a stay violation but postponing until later a ruling on damages under § 362(k). Because that order addressed liability but deferred a determination of damages, it was not final under Wetzel, our dicta in Dyer, or the uniform holdings of our sister circuits. I would dismiss the appeal for lack of jurisdiction.
