Valentine v. Holmes (In re Valentine)

648 B.R. 324

IN RE: Bertha Lee VALENTINE, Debtor(s).

Bertha Lee Valentine, Plaintiff(s),

v.Roy B. Holmes, III, Alliance Roth 401(k) Profit Sharing Plan and Trust, Shawn O'connor and Yelena Ostrovsky, as Trustees of the Alliance Roth 401(k) Profit Sharing Plan and Trust, Defendant(s).

Case No. 22-21184-B-13

Adversary No. 22-2086

United States Bankruptcy Court, E.D. California.

Signed December 2, 2022

Fred A. Ihejirika, Sacramento, CA, for Plaintiff.

Sanaz S. Bereliani, Los Angeles, CA, for Defendants Alliance 401(k) Profit Sharing Plan and Trust, Shawn O'Connor, and Yelena Ostrovsky.

Louis J. Esbin, Stevenson Ranch, CA, for Defendant Steffanie Stelnick.

MEMORANDUM DECISION GRANTING PARTIAL SUMMARY JUDGMENT FOR PLAINTIFF ON CLAIMS UNDER 11 U.S.C. § 362(a) IN THE EIGHTH AND NINTH CLAIMS FOR RELIEF OF THE COMPLAINT

Christopher D. Jaime, United States Bankruptcy Judge

This memorandum decision holds that all acts taken in violation of the automatic stay of 11 U.S.C. § 362(a) are void and are of absolutely no effect whatsoever regardless of whether the acts are willful or so-called "technical" automatic stay violations. This memorandum decision also holds that a bankruptcy court has the authority to declare acts that violate the automatic stay void independent of its authority to determine whether the violations warrant actual damages and attorney's fees under 11 U.S.C. § 362(k).

I.Introduction

Plaintiff Bertha Valentine is 80 years old. She is also the debtor in the parent Chapter 13 case.

Plaintiff filed the Complaint that commenced this adversary proceeding on August 29, 2022. See Adv. Docket 1. Generally, the Complaint alleges: (1) Plaintiff met with Defendant Roy B. Holmes, III, in Las Vegas, Nevada; (2) Holmes convinced Plaintiff it was necessary for Plaintiff to sign a Quitclaim Deed conveying her residence to him so that he could help Plaintiff with mortgage issues; (3) Plaintiff was unrepresented and did not understand the implications of signing the Quitclaim Deed; (4) Holmes obtained a rental agreement from occupants who reside with Plaintiff at her residence; (5) Holmes conveyed Plaintiff's residence to Defendant Alliance 401(k) Profit Sharing Plan and Trust; (6) Plaintiff sued Holmes in state court to void the Quitclaim Deed, recorded a lis pendens in the state court action, and thereafter filed a Chapter 13 bankruptcy case; (7) Alliance 401(k) Profit Sharing Plan and Trust conveyed Plaintiff's residence to Defendant Alliance Roth 401(k) Profit Sharing Plan and Trust; (8) in an effort to obtain title to and possession of Plaintiff's residence, Defendants (other than Holmes) retained an attorney by the name of Steffanie Stelnick who filed quiet title and unlawful detainer actions against Plaintiff and her residence in state court; and (9) transfers of the Plaintiff's residence occurred and were recorded - and attorney Steffanie Stelnick filed the quiet title and unlawful detainer actions in state court - after Plaintiff filed her bankruptcy petition.

Defendants Shawn O'Connor, Yelena Ostrovsky, Alliance 401(k) Profit Sharing Plan and Trust, and/or Alliance Roth 401(k) Profit Sharing Plan and Trust filed an answer on October 4, 2022. See Adv. Docket 8. Defendant Holmes filed an answer on October 25, 2022.¹ See Adv. Docket 23.

On October 25, 2022, the court issued an Order and Notice of Intent to Sua Sponte Grant Partial Summary Judgment for Plaintiff on Eighth and Ninth Claims for Relief and Providing Opportunity to Respond (the "Order and Notice"). See Adv. Docket 24. The Order and Notice informed the parties of the court's intent to sua sponte grant partial summary judgment for Plaintiff on claims brought under 11 U.S.C. § 362(a) in the Eighth and Ninth Claims for Relief of the Complaint. It also noted the unique procedural posture of this adversary proceeding which permitted the court to consider facts undisputed for purposes of summary judgment.²

The Order and Notice further provided Defendants with an opportunity to respond under Local Bankruptcy Rule 7056-1 by November 15, 2022. None of the Defendants availed themselves of that opportunity.³

II.Undisputed Facts

The presence or absence of a genuine dispute of material fact lies at the core of the summary judgment process. It is therefore critical that, when responding to a motion for summary judgment, a non-moving party challenge asserted undisputed facts. See Fed. R. Civ. P. 56(c) ; Fed. R. Bankr. P. 7056.

Failure to dispute an assertion of fact permits the court to consider the fact undisputed for purposes of a motion for summary judgment and grant summary judgment. See Fed. R. Civ. P. 56(e)(2)-(3) ;⁴ Fed. R. Bankr. P. 7056. This court's local rules also stress the importance of disputing assertions of undisputed facts. See Local Bankr. R. 7056 -1(b).⁵

The United States Supreme Court has stated that a party opposing summary judgment who "fail[s] specifically to challenge the facts identified in [a] statement of undisputed facts ... is deemed to have admitted the validity of [those] facts[.]". Beard v. Banks, 548 U.S. 521, 527, 126 S.Ct. 2572, 165 L.Ed.2d 697 (2006) ; accord Moon v. Rush, 69 F.Supp. 3d 1035, 1039-40 (E.D. Cal. 2014) (under local district court rule virtually identical to local bankruptcy court rule); Baroni v. NationStar Mortgage, Inc. (In re Baroni), 2015 WL 6956664, *6 (9th Cir. BAP Nov. 10, 2015) ("Once the moving party has presented facts as undisputed and has presented admissible evidence in support of those facts, the non-moving party may be deemed to have admitted those facts for summary judgment purposes unless he or she specifically challenges those facts and presents controverting evidence in support of his or her position.").

Defendants’ failure dispute facts identified as undisputed means the following facts are admitted for present purposes:

(1) Plaintiff resides at 3854 Townshend Circle, Stockton, California. Adv. Docket 6 at ¶ 2.

(2) Plaintiff acquired her residence with her now deceased husband in 2003. Id. at ¶ 4; Adv. Docket 7 at Ex. 1.

(3) Prior to her husband's death, Plaintiff and her husband held the residence as joint tenants. Adv. Docket 6 at ¶ 5; Adv. Docket 7 at Ex. 2.

(4) On or about September 22, 2011, Plaintiff conveyed her residence to a revocable trust and thereafter held the property as trustee of the trust. Adv. Docket 6 at ¶ 7; Adv. Docket 7 at Ex. 3.

(5) A June 10, 2021, Quitclaim Deed which purports to convey Plaintiff's residence to Holmes was recorded with the San Joaquin County Recorder on June 17, 2021, as Document No. 2021-104274. Adv. Docket 6 at ¶¶ 12, 15; Adv. Docket 7 at Ex. 5; Bankr. Dkt. 23 at Ex. 2.

(6) Disputing the validity of the Quitclaim Deed on the basis it was fraudulently obtained, on September 29, 2021, Plaintiff filed an action against Holmes in the San Joaquin County Superior Court (Case No. STK-CV-2021-0009120) which seeks to void the Quitclaim Deed. Adv. Docket 6 at ¶ 17.

(7) A lis pendens concerning the Plaintiff's state court action was recorded with the San Joaquin County Recorder on October 7, 2021, as Document No. 2021-168697, and on November 9, 2021, as Document No. 2021-187604. Adv. Docket 6 at ¶ 18; Adv. Docket 7 at Ex. 7.

(8) Plaintiff filed a Chapter 13 petition on May 9, 2022 ("Petition Date"). Adv. Docket 6 at ¶ 19; Bankr. Docket 1.⁶

(9) A May 20, 2022 , Quitclaim Deed which purports to transfer Plaintiff's residence from Holmes to Shawn O'Connor and Yelena Ostrovsky, Trustees of the Alliance 401(k) Profit Sharing Plan and Trust, was recorded with the San Joaquin County Recorder on May 23, 2022 , as Document No. 2022-065505. Adv. Docket 6 at ¶ 21; Adv. Docket 7 at Ex. 10; Bankr. Dkt. 23 at Ex. 4.

(10) An unrecorded May 31, 2022 , Grant Deed purports to transfer Plaintiff's residence from Shawn O'Connor and Yelena Ostrovsky, Trustees of the Alliance 401(k) Profit Sharing Plan and Trust, to Shawn O'Connor and Yelena Ostrovsky, Trustees of the Roth 401(k) Profit Sharing Plan and Trust. Adv. Docket 6 at ¶ 23; Adv. Docket 7 at Ex. 12.

(11) On or about June 10, 2022 , a Three-Day Notice to Pay Rent or Quit signed by attorney Steffanie Stelnick was posted on Plaintiff's residence. Adv. Docket 6 at ¶ 20; Adv. Docket 7 at Ex. 9.

(12) On June 29, 2022 , attorney Steffanie Stelnick filed a complaint, which seeks to quiet title to Plaintiff's residence in Defendants Shawn O'Connor and Yelena Ostrovsky as Trustees of the Alliance Roth 401(k) Profit Sharing Plan and Trust and which names Plaintiff individually as a defendant, in the San Joaquin County Superior Court (Case #STK-CV-URP-2022-0005483). Adv. Docket 6 at ¶ 23; Adv. Docket 7 at Ex. 12; Bankr. Dkt. 23 at Ex. 7.

(13) On July 13, 2022 , attorney Steffanie Stelnick filed an unlawful detainer complaint in the San Joaquin County Superior Court (Case #STK-CV-LUDR-2022-6501) which seeks to obtain possession of Plaintiff's residence on behalf of Shawn O'Connor as Trustee of the Alliance Roth 401(k) Profit Sharing Plan and Trust. Adv. Docket 6 at ¶ 24; Adv. Docket 7 at Ex. 13.

(14) A version of the Grant Deed of May 31, 2022, this one dated June 7, 2022 , was recorded with the San Joaquin County Recorder on October 26, 2022 , as Document No. 2022-123236. Bankr. Dkt. 21 at ¶ 5; Bankr. Dkt. 21 at Ex. 8.⁷

III.Jurisdiction and Venue

The court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 157(b)(2) and 1334. The claims brought under 11 U.S.C. § 362(a) in the Eighth and Ninth Claims for Relief are core matters under 28 U.S.C. §§ 157(b)(2)(A), (G), and (O). Venue is proper under 28 U.S.C. §§ 1408 and 1409.

IV.Applicable Legal Standard

Civil Rule 56(f) - made applicable in this adversary proceeding by Bankruptcy Rule 7056 - states as follows: "After giving notice and a reasonable time to respond, the court may: ... (3) consider summary judgment on its own after identifying for the parties material facts that may not be genuinely in dispute." Fed. R. Civ. P. 56(f)(3) ; see also Norse v. City of Santa Cruz, 629 F.3d 966,...