Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-4_16-ap-04175/USCOURTS-canb-4_16-ap-04175-0/pdf.json

Parties Involved:
Marr Sanchez & Associates
Plaintiff
Juan Hernandez
Defendant

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UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

In re ) 

) Case No. 16-42059 

Juan Felipe Hernandez, ) Chapter 13 

) 

Debtor. )

) Adv. Pro. No. 16-04175 

Marr Sanchez & Associates, ) 

) 

Plaintiff, )

v. ) 

) 

Juan Felipe Hernandez, et al., ) 

Defendants. ) 

MEMORANDUM RE: MOTION FOR IN REM RELIEF 

On August 1, 2016, Plaintiff filed the above-captioned adversary proceeding. The sole 

cause of action on the Plaintiff’s Complaint (doc. 1) is Injunctive Relief. On August 9, 2016, 

Plaintiff filed the Motion for Injunctive Relief (doc.6)(the “Motion”) and set it for hearing on 

August 17, 2016. In anticipation of the hearing on the Motion, the Court hereby directs the 

parties’ attention to the Order Denying In Rem Relief Pursuant to 11 U.S.C. § 362(d)(4) in a 

previous case. A copy of the document is attached hereto. The Court will expect that the parties 

read and be prepared to discuss the attached document during the hearing on the Motion. 

*END OF MEMORANDUM*

The following constitutes the order of the court.

Signed August 15, 2016

________________________________________

William J. Lafferty, III

U.S. Bankruptcy Judge

Entered on Docket 

August 16, 2016

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 16-04175 Doc# 13 Filed: 08/15/16 Entered: 08/16/16 08:34:11 Page 1 of 7
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UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

| Case No.: 15-42130 

In re | Chapter 13 

| 

Nicholas Frye, | ORDER DENYING IN REM RELIEF

| PURSUANT TO 11 U.S.C. § 362(d)(4) 

Debtor. | 

______________________________| 

A. Background 

On July 7, 2015 Debtor, Nicholas Frye, filed the above-cited bankruptcy case. The 

current case is Debtor’s fourth bankruptcy case and the fifth bankruptcy case affecting the 

subject residential property located at 5608 Maymont Lane, Dublin, CA 94568 (the 

“Property”).

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 On August 13, 2015, Wells Fargo Bank, NA as Trustee for Structured Asset 

Mortgage Investments II Inc. Bear Stearns Mortgage Funding Trust 2006-AR2, Mortgage 

Pass-Through Certificates, Series 2006-AR2 (“Movant”) filed its Motion for Relief from Stay 

(“Motion”). 

Movant alleges that it is the owner of the Property as a result of a successful bid at a 

pre-petition foreclosure sale held in February 2014. Upon acquiring ownership, Movant began 

eviction proceedings against Debtor and other parties residing in the Property. Since the 

residents failed to vacate the Property, Movant sought and acquired a Writ of Possession on 

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 Debtor filed two previous bankruptcy cases affecting the subject property (numbers: 13-4424 

and 14-24162). Bessie Washington, a third-party affiliated with the Property, filed the other two 

bankruptcy cases affecting the subject property (numbers: 15-40402 and 15-40691). 

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The following constitutes the order of the court.

Signed November 24, 2015

________________________________________

William J. Lafferty, III

U.S. Bankruptcy Judge

Entered on Docket 

November 25, 2015

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 15-42130 Doc# 55 Filed: 11/24/15 Entered: 11/25/15 11:59:28 Page 1 of 5 Case: 16-04175 Doc# 13 Filed: 08/15/16 Entered: 08/16/16 08:34:11 Page 2 of 7
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January 23, 2015. Shortly thereafter, one of the residents, Bessie Washington, consecutively 

filed two separate bankruptcy cases affecting the Property. Only two weeks after Ms. 

Washington’s second of two skeletal filings were dismissed, Debtor filed the current

bankruptcy case claiming an interest in the Property. 

On September 23, 2015, the Court held a hearing on the Motion. The Court granted 

relief from the automatic stay pursuant to § 362(d)(1) and § 362(d)(2), but pointed out that

Movant’s § 362(d)(4) request was problematic in light of the statute’s language limiting such 

extraordinary relief to secured creditors. The Court instructed Movant to file a supplemental 

memorandum on the issue. Upon due consideration of Movant’s Memorandum of Points and 

Authorities (“Memorandum”), the Court determines that it cannot grant relief under §

362(d)(4).

B. Applicable Law

Section 362(d)(4) states that relief can be granted “with respect to a stay of an act 

against real property under subsection (a), by a creditor whose claim is secured by an 

interest in such real property, if the court finds that the filing of the petition was part of a 

scheme to delay, hinder, or defraud creditors that involved... (B) multiple bankruptcy 

filings affecting such real property.” (emphasis added). 11 U.S.C. § 362(d)(4). If the 

court’s order granting relief under § 362(d)(4) is recorded in compliance with applicable 

state law, it is binding in any other bankruptcy case filed in the next two years purporting 

to affect the same real property. Id.; In re First Yorkshire Holdings, Inc., 470 B.R. 864 

(9th Cir. B.A.P. 2012).

The Memorandum correctly states that the Court is likely to have little difficulty 

in making a determination that there is a scheme to hinder, delay, or defraud Movant’s 

attempt to foreclosure, but that “the more difficult task is fashioning a remedy to address 

the situation” because Movant is not a secured creditor. Memorandum of Points and 

Authorities (docket no. 49) at p. 5. The plain language in § 362(d)(4) requires a denial of

in rem relief to any moving party that is not a “secured creditor.” See Ellis v. Yu, 523 

B.R. 673 (9th Cir. B.A.P. 2014). Despite this unambiguous limitation, Movant requests § 

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362(d)(4) relief on the theory that the Court’s inherent powers under 11 U.S.C. § 105(a) 

allow it to expand the specific limitations of § 362(d)(4) and, alternatively, the Court 

could grant in rem relief by imposing an equitable servitude on the Property. 

C. Analysis 

The 9th Circuit Bankruptcy Appellate Panel (the “BAP”) opinion of Ellis v. Yu is 

highly instructive on the analysis of a § 362(d)(4) question. 523 B.R. 673. In Ellis, the 

BAP reversed the bankruptcy court’s granting of in rem relief to a party who was not a 

secured creditor but instead the owner of the property. The BAP found that the first step 

of the § 362(d)(4) analysis required a finding that the moving party be a secured creditor. 

Id.; see also In re Duncan & Forbes Development, Inc. 368 B.R. 27 (Bankr. C.D. Cal. 

2007)(finding that the first requirement for a moving party to prevail on a motion under § 

362(d)(4) is proving that it holds a security interest in the real property at issue); In re 

Gonzalez, 456 B.R. 429, 442 (Bankr. C.D. Cal. 2011); In re Laconico, 2014 WL 

3687202, at *1 (Bankr. N.D. Cal. 2014). Collier’s, a leading treatise in bankruptcy law, 

further agrees with this view by stating that “relief under § 362(d)(4) is available only to 

a creditor whose claim is secured by an interest in real property.” 3. Collier on 

Bankruptcy ¶ 362.05[19][a] (Alan N. Resnick & Henry J. Sommer, eds. 16th ed. 2013). 

Here, Movant is not a secured creditor yet requests in rem relief pursuant to the Court’s 

power under § 105(a). 

Section 105(a) states that “[t]he court may issue any order, process, or judgment 

that is necessary or appropriate to carry out the provisions of this title.” 11 U.S.C. § 

105(a). However, the Court is uncomfortable granting substantive relief based solely on 

its “inherent powers” under § 105(a). As the U.S. Supreme Court has instructed, § 105(a) 

“is not a roving commission to do equity or to do anything inconsistent with the 

Bankruptcy Code.” Norwest Bank Worthingon v. Ahlers, 485 U.S. 197 (1988). 

Granting § 362(d)(4) relief pursuant to the powers provided the Court under § 105(a) 

would necessarily require this Court to expand the explicit limitation of § 362(d)(4) to a 

party that is clearly not a “creditor holding a secured interest.” See In re Johnson, 346 

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B.R. 190 (9th Cir. B.A.P. 2006)(finding that the newly added § 362(d)(4) did not give the 

bankruptcy court authority to grant an in rem order under § 105(a)). Furthermore, there 

is no other provision within the Code allowing the Court to grant such extraordinary 

relief to a non-secured creditor. Put simply, there is no statutory authority for an in rem

order for property owners anywhere in the Bankruptcy Code and § 105(a) cannot create 

one.2 Id.; In re Van Ness, 399 B.R. 897 (Bankr. E.D. Cal. 2009). 

The Court notes that at least one other bankruptcy court has granted in rem relief 

in the form of an equitable servitude. See Great Western Bank v. Snow, 201 B.R. 968 

(Bankr. C.D. Cal. 1996). In Snow, the moving party sought in rem relief to cure an abuse 

of the bankruptcy laws and obvious scheme by several parties to frustrate the moving 

party’s attempts to foreclose. Id. The bankruptcy court granted an equitable servitude 

that would run with the land and thereby prevented other parties from thwarting the 

foreclosure. Interestingly, the court’s creative approach turned to a common law remedy 

instead of finding such remedy within the bankruptcy laws. Approximately nine years 

later, Congress specifically addressed these kind of strategic bankruptcy filings and 

abusive tactics by enacting § 362(d)(4). Congress has spoken on this issue and it 

specifically limited in rem relief to secured creditors. Therefore, to the extent that other 

bankruptcy courts have granted in rem relief to a party that does not fit the statutorily 

defined class found in § 362(d)(4), this Court will not join them. 

D. Conclusion 

For the reasons stated above and good cause appearing, Movant’s request for in rem

relief pursuant to § 362(d)(4) is DENIED. 

*END OF ORDER*

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 The Court would also be concerned about granting in rem relief on account of an argument not 

found in the original motion for relief from stay.

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COURT SERVICE LIST

Debtor 

Nicholas Frye 

5608 Maymont Lane 

Dublin, CA 94568 

Counsel for Moving Party 

Mark T. Domeyer 

2955 Main Street, 2nd Floor

Irvine, CA 92614 

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Court Service List

All ECF Participants.

Juan Hernandez

2016 104th Ave.

Oakland, CA 94608 

Case: 16-04175 Doc# 13 Filed: 08/15/16 Entered: 08/16/16 08:34:11 Page 7 of 7