In re: MICHAEL JACQUES JACOBS, Debtor.
No. 19-12591-j11
UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW MEXICO
May 24, 2021
MEMORANDUM OPINION
The Court held a final hearing on the merits of the Motion for Relief from the Automatic Stay and for the Abandonment of Property; Motion for In Rem Relief Pursuant to 362(d)(4) by DLJ Mortgage Capital, Inc. ("Motion for Relief from Stay" - Doc. 27) and the Debtor's Objection to Claim #6 (DLJ Mortgage Capital, Inc.) ("Claims Objection" - Doc. 96) and took the matters under advisement.1 For the reasons explained below, the Court will deny stay relief under 11 U.S.C. §§ 362(d)(1) and (2),2 grant in rem stay relief to DLJ Mortgage Capital, Inc. ("DLJ Mortgage") under § 362(d)(4), and overrule Debtor's objection to DLJ Mortgage's claim.
Debtor has filed three bankruptcy cases, and his non-filing spouse, Ruby Handler Jacobs, has filed five bankruptcy cases. A summary of those cases is as follows:
| No. | Debtor | Case Number | Chapter | Filing Date | Disposition |
| 1 | Ruby Handler a/k/a Ruby Adriatico | 1:98-bk-27664-AG Central District of California (Exhibit 29) | 7 | 12/29/98 | Discharge entered on 4/16/99 |
| 2 | Ruby Jacobs (Michael Jacobs listed as non-filing spouse) | 11-14707-j7 District of New Mexico (Exhibit 30) | 7 | 10/28/11 | Discharge entered on 2/6/12 |
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| 3 | Ruby Handler Jacobs (Michael Jacobs listed as non-filing spouse) | 12-10748-j13 District of New Mexico (Exhibit 31) | 13 | 2/28/12 | Dismissed 6/7/12 |
| 4 | Michael Jacques Jacobs (Ruby Handler Jacobs listed as non-filing spouse) | 12-14163-t13 District of New Mexico (Exhibit 32) | 13 | 11/13/12 | Dismissed 1/7/13 |
| 5 | Ruby Handler Jacobs (Michael Jacobs listed as non-filing spouse) | 18-11829-t13 District of New Mexico (Exhibit 34) | 13 | 7/24/18 | Dismissed 9/18/18 |
| 6 | Ruby Handler Jacobs (Michael Jacobs listed as non-filing spouse) | 18-12634-t13 District of New Mexico (Exhibit 35) | 13 | 10/24/18 | Dismissed 1/14/19 |
| 7 | Michael Jacques Jacobs f/d/b/a Michael Jacobs Photojournalism (Ruby Jacobs listed as non-filing spouse) | 19-10685-t13 District of New Mexico (Exhibit 37) | 13 | 3/27/19 | Dismissed 10/2/19 |
| 8 | Michael Jacques Jacobs f/d/b/a/ Michael Jacobs Photojournalism (Ruby Jacobs listed as non-filing spouse) | 19-12591-j11 District of New Mexico | 11 | 11/13/19 | Pending |
Debtor testified that he is aware of his spouse's bankruptcy filings only because of the documents DLJ Mortgage provided him in connection with the hearing on the Motion for Relief from Stay.
Debtor's residence is located at 800 Calle Divina NE, Albuquerque, NM 87113 (the "Property"). Since at least October 2011, the Property has been Debtor's and his spouse's principal residence. Debtor is self-employed as a photographer. He has a photography studio in the Property.
To acquire the Property, Ruby Handler Jacobs executed an Adjustable Rate Note (the "Note") dated November 9, 2005 in the principal amount of $308,000. See Exhibit 1. Debtor did not execute the Note. To secure the Note, Debtor and Ruby Handler Jacobs executed a mortgage on the Property (the "Mortgage"). Debtor crossed out the word "Borrower" under his signature
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line on the Mortgage. See Exhibit 2. The loan went into default in October of 2011. No payments have been made on the Note or Mortgage since October of 2011. See Exhibit 14. Following the default, DLJ Mortgage made escrow advances for insurance and property taxes to protect its interest in the Property. Id.3
After the loan went into default, on October 28, 2011 Ruby [Handler] Jacobs filed a chapter 7 case, No. 11-14707-j7 ("Case 2").4 See Exhibit 30.5 She listed Debtor as her non-filing spouse. Ruby [Handler] Jacobs was granted a discharge in Case No. 2 on February 6, 2012, which discharged her personal liability under the Note. That chapter 7 case was closed on February 21, 2012. Shortly thereafter, on February 28, 2012, Ruby Handler Jacobs filed a chapter 13 case, No. 12-10748-j13 ("Case 3"). See Exhibit 31. Ruby Handler Jacobs listed Debtor as her non-filing spouse. On June 7, 2012, the Court entered an order granting the Chapter 13 trustee's motion to dismiss that chapter 13 case because Ms. Jacobs failed to file a plan or amended schedules as ordered by the Court. While Cases 2 and 3 were pending, DLJ Mortgage was prevented by the automatic bankruptcy stay from commencing an action to foreclose the Mortgage.
On October 5, 2012, DLJ Mortgage filed a complaint for in rem foreclosure of the Property in the Second Judicial District Court, State of New Mexico, County of Bernalillo, styled DLJ Mortgage Capital, Inc. v. Ruby Handler Jacobs a/k/a Ruby Jacobs, Michael Jacobs, et al., Case No. D-2020-CV-2012-09237 (the "State Court Action"). See Exhibit 8.6
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About a month later, on November 13, 2012, Debtor commenced a chapter 13 case, No. 12-14163-t13 ("Case 4"). See Exhibit 32. Debtor listed Ruby Handler Jacobs as his non-filing spouse. Case 4 ended in dismissal because Debtor failed to timely file the required documents under § 521. Debtor sought to set aside the dismissal of Case 4 and requested an extension of time to file the past due documents. On January 30, 2013 the Court denied that request, finding, among other things, that Debtor had not timely filed most of his bankruptcy schedules, the statement of financial affairs, or a chapter 13 plan and had not timely started making plan payments as required by the Bankruptcy Code. See Exhibit 33. Debtor testified that he filed Case 4 because of a home in Los Angeles that eventually sold through a short sale, and that once that happened, he ended the bankruptcy. Given the timing of Case 4 in relation to commencement of the State Court Action and what transpired in Case 4, the Court does not find that testimony credible. Further, the docket in Case 4 does not reflect entry of an order authorizing a sale of property in California or modifying the stay to allow property to be sold. While Case 4 was pending, DLJ Mortgage was prevented by the automatic bankruptcy stay from prosecuting the State Court Action.
Following a trial on the merits held in the State Court Action on August 31, 2016, the New Mexico District Court for the Second Judicial District ("State Court") entered Findings of Fact and Conclusions of Law on July 13, 2017. See Exhibit 11. On June 5, 2018, the State Court entered a foreclosure judgment in the State Court Action (the "Foreclosure Judgment") foreclosing the Mortgage against the Property and authorizing the plaintiffs in the State Court Action to conduct a foreclosure sale. See Exhibit 12.
About a month and a half after entry of the Foreclosure Judgment, on July 24, 2018, Ruby Handler Jacobs commenced a chapter 13 case, No. 18-11829-t13 ("Case 5"). See Exhibit
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34. Ruby Handler Jacobs listed Debtor as her non-filing spouse. On the same day, July 24, 2018, a Notice of Bankruptcy was filed in the State Court Action, and a week later, on July 31, 2018, a notice of postponement of foreclosure sale was filed in the State Court Action. See Exhibit 13. On August 27, 2018, the Chapter 13 trustee filed a motion to dismiss Case 5 for failure to file bankruptcy schedules and a statement of financial affairs, failure to provide the trustee with financial documents, and failure to timely file a chapter 13 plan. On September 5, 2018 Ms. Jacobs filed a motion to voluntarily dismiss the chapter 13 case, and Case 5 was dismissed on September 18, 2018.
About five weeks later, on October 24, 2018, Ruby Handler Jacobs filed another chapter 13 case, No. 18-12634-t13 ("Case 6"). See Exhibit 35. Ruby Handler Jacobs listed Debtor as her non-filing spouse. On the same day, a Notice of Bankruptcy was filed in the State Court Action, and about two weeks later, on November 6, 2018, a notice of postponement of foreclosure sale was filed in the State Court Action. See Exhibit 13. On November 21, 2018, the Chapter 13 trustee filed a motion to dismiss Case 6 for failure to file schedules and a statement of financial affairs, failure to provide the trustee with financial documents, and failure to timely file a chapter 13 plan. On January 14, 2019, the Court granted the trustee's motion to dismiss. On February 15, 2019, Ms. Jacobs filed a motion to reinstate the bankruptcy case. On March 27, 2019, the Court denied the motion to reinstate, and on April 11, 2019 denied a motion to reconsider the order denying the motion to reinstate. See Exhibit 36. Case 6 was closed on May 1, 2019.
On March 27, 2019, about two months after dismissal of Case 6, Debtor commenced a chapter 13 case, No. 19-10685-t13 ("Case 7"). See Exhibit 37. Debtor listed Ruby Handler Jacobs as his non-filing spouse. On April 30, 2019 the Chapter 13 trustee filed a motion to dismiss Case 7 for failure to file schedules and a statement of financial affairs, failure to provide
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the trustee with financial documents, and failure to timely file a chapter 13 plan. Debtor filed a chapter 13 plan on May 13, 2019, forty-eight days after the commencement of Case 7.7 On May 14, 2019, the chapter 13 trustee filed a second motion to dismiss based on Debtor's failure to file schedules and statements, failure to provide the Chapter 13 Trustee with financial documents and information, and failure to timely file a chapter 13 plan. On August 13, 2019, DLJ Mortgage filed a motion for relief from stay to permit it to conduct a foreclosure sale in the State Court Action. On October 2, 2019, the Court granted the Chapter 13 trustee's motion to dismiss thereby terminating the stay. Notices of postponement of a foreclosure sale were filed in the State Court Action on April 17, 2019, May 28, 2019, July 23, 2019, and September 7, 2019. See Exhibit 13.
About five weeks after dismissal of Case 7, on November 13, 2019 (the "Petition Date"), Debtor filed the chapter 11 case now pending before this Court, No. 11-19-12591-JA ("Case 8"). See Doc. 1. Debtor listed Ruby [Handler] Jacobs as his non-filing spouse. A notice of bankruptcy was...
