Opinion
Case No. 06-00191-H11.
May 24, 2006
MEMORANDUM RE DEBTOR'S EX PARTE APPLICATION FOR ORDER SHORTENING TIME
An involuntary chapter 11 proceeding was commenced against WS-TH, Inc. (the "debtor") on February 8, 2006. The involuntary proceeding was dismissed on April 24, 2006. Debtor filed a motion to reopen the Chapter 11 case, or in the alternative set aside the order dismissing Chapter 11 case. The hearing is scheduled for June 2, 2006.
Subsequently, debtor filed its Ex Parte Application for an Order Shortening Time, to also set for hearing on June 2, 2006r a Motion to Set Aside Foreclosure Sale.
Debtor contends the Court should set aside the foreclosure sale on its real property because it "assumed" the relief from stay that was requested and granted to secured creditors Pacific Horizon Financial, Inc. and Pacific Horizon Mortgage Investors I LLC (collectively, PHF) did not include relief from stay with with state court litigation. Debtor contends that "despite the specific language in the Order for Relief from Stay, [PHF] held a non-judicial foreclosure sale on April 18, 2006." [See Ex Parte Application, ¶ 41. No declarations were submitted in support of debtor's ex parte application.
Both PHF and Ronald A. Bedell, the president of PHF, oppose the debtor's request.
A. THE COURT HAS JURISDICTION TO CONSIDER DEBTOR'S REQUEST DESPITE THE FACT THE UNDERLYING CASE HAS BEEN DISMISSED
"Since dismissal of an underlying bankruptcy case does not automatically strip a federal court of residual jurisdiction to dispose of matters after the underlying bankruptcy case has been dismissed, exercise of such jurisdiction is left to the sound discretion of the trial court." Lawson v. Tilem (In re Lawson), 156 B.R. 43, 45 (BAP 9th Cis. 1993). "Under the law of the Ninth Circuit, `the bankruptcy court retains subject matter jurisdiction to interpret orders entered prior to dismissal of the underlying bankruptcy case. I' Id. "The bankruptcy court does not have jurisdiction, however, to grant new relief independent of its prior rulings once the underlying action has been dismissed." Id. See also Davis v. Courinaton (In re Davis), 177 B.R. 907 (BAP 9th Cir. 1995) (holding that, where the underlying case has been dismissed, a bankruptcy court retains discretionary subject matter jurisdiction over a complaint alleging a § 362(h) willful violation of the stay).
The Court first notes that the request for an order shortening time is procedural in nature regarding the time period for proper notice of a motion and does not concern the underlying merits of the motion. Granting or denying an order shortening time certainly does not implicate a request for "new relief" that would run afoul of this Court's jurisdiction after dismissal of a bankruptcy case.
Nonetheless, the Court considers the underlying merits of the debtor's motion to determine whether the matter should be set on shortened notice. Debtor's ex parte is poorly drafted, but appears to complain that PHF violated the stay by foreclosing on debtor's real property without relief and, therefore, the foreclosure should be set aside. This Court has jurisdiction to examine its order granting PHI? relief from stay which was ruled on prior to the dismissal of the underlying case.
B. THE RELIEF FROM STAY MOTION AND ORDER
PHF filed a motion for relief from stay on March 21, 2006. In the Motion, PHF alleged that the real property owned by the debtor, known as Warm Springs town homes (16 units) on Torrey Pines Road in Murrieta, CA (the llpropertyll), was the subject of the motion. PHF alleged that debtor had failed to insure the property and also that it was not adequately protected. The Points and Authorities in support of the motion state that PHF sought relief from stay to proceed with state court litigation and additionally stated that movants "seek relief from stay for lack of adequate protection because the property is not insured." [PA 1:26-28].
PHF submitted declarations in support of its motion. Martin T. McGuinn declares that the debtor does not appear to have insurance coverage on the property. McGuinn sets forth his efforts in trying to obtain information regarding debtor's insurance coverage. The declaration of Robert Bedell, president of PHF, also states that he is "informed and believe . . . that the Property is not insured." Bedell's declaration further states that PHF had scheduled a foreclosure sale on the real property on February 8, 2006. PHF also submitted the declaration of Steve Downey, the president of Downey Insurance, which addressed the type and costs of insurance on debtor's real property. The supplemental declaration of Martin T. McGuinn states in ¶ 3, "in addition to continuing with the Riverside litigation, it is currently the intent of the Movant to continue with its foreclosure sale once PHF . . . obtain relief from stay. The foreclosure sale is currently continued to April 10, 2006."
Collectively the pleadings submitted in support of the motion are clear that PHF sought relief with respect to both the debtor's real property and the state court litigation. Debtor cannot complain that it did not get notice of PHF's intent given the numerous references in the notice, motion, points and authorities, and declaration that it sought relief with respect to the real property.
PHF's motion was unopposed. The Court granted the relief requested and the order specifically states that the automatic stay is terminated "for all purposes as to Movant in connection with the estate's and the debtor's interest in the following real property . . . Warm Springs town homes (16 units) located at 39565 Torrey Pines Road, Murrieta, California. The order further provided for relief from stay to continue with the state court litigation. The order was entered on April 6, 2006 [Docket #19]. The Court finds that the order granting relief from stay is clear with respect to the relief granted. Debtor never filed a motion for reconsideration or any pleading that would seek to "clarify" the relief granted set forth in the order.
The foreclosure sale evidently took place on April 18, 2006. Now, over a month after the foreclosure, debtor requests an order shortening time for a motion to set aside a trustee's sale of the real property. The Court denies the debtor's request for an order shortening time. Debtor provides no evidence in the form of declarations in support of its motion. Further, debtor makes no other argument other than debtor "assumed" relief from stay was granted only with respect to the state court litigation. It appears to the Court that PHF's motion for relief from stay was properly served and gave ample notice regarding the relief sought. It is puzzling to the Court as to why debtor assumed relief was granted only with respect to the state court lawsuit. Debtor had plenty of opportunity to file any pleadings in opposition that were necessary to clear up any confusion regarding the relief sought and the subsequent foreclosure and it did not do so until over a month after the foreclosure. Further, there is no evidence that PHF is going to sell the property to a third party thereby negating any urgency for shortening time. The debtor's Ex Parte Application for an Order Shortening Time is DENIED.
IT IS SO ORDERED.