Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-04817/USCOURTS-cand-3_16-cv-04817-0/pdf.json

Parties Involved:
Anthony Freeman
Appellant
George Anthony Freeman
Appellant
Alan Albert Henry Ow
Appellee

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

GEORGE ANTHONY FREEMAN,

Appellant,

v.

ALAN ALBERT HENRY OW,

Appellee.

Case No.16-cv-04817-JST 

ORDER DENYING MOTION TO STAY 

BANKRUPTCY PENDING APPEAL

Re: ECF No. 3

Before the Court is Appellant’s motion to stay bankruptcy pending appeal to this Court. 

ECF No. 3. The Court denies the motion. 

I. BACKGROUND

A. Factual Summary1

Appellee Alan Albert Henry Ow owns a single-family residence located at 5724 Alta Punta 

Avenue, El Cerrito, California. ECF No. 1-2 at 2. Ow lived at the property for his entire life until 

2011, when it sustained significant fire damage and was declared uninhabitable by the City of El 

Cerrito. Id.; ECF No. 3-2 at 6. Lacking the funds to repair the fire damage, Ow became homeless, 

living with friends or in local motels. ECF No. 1-2 at 2. After defaulting on his mortgage in 

March 2013, Ow unsuccessfully tried to obtain a loan modification and initiate bankruptcy 

proceedings. Id.; ECF No. 3-2 at 7. Notwithstanding these efforts, the bank noticed a trustee’s 

sale of his home for June 6, 2014. ECF No. 1-2 at 2. 

In May 2014, Ow met Appellant George Anthony Freeman through a friend. Id. Freeman 

told Ow that he knew third parties (Mario Oropeza and Karen Passentine) who were interested in 

 

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The Court takes much of this this factual summary from the bankruptcy court’s Memorandum 

After Trial. ECF No. 1-2. In addition, the Court takes judicial notice of the transcript from the 

trial proceedings in the bankruptcy court pursuant to Federal Rule of Evidence 201. See Request 

for Judicial Notice, ECF No. 3-2. 

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purchasing the party for $300,000, and Freeman offered to pay the outstanding mortgage 

payments to prevent foreclosure until Ow could sell the property. Id. at 2-3. In exchange, 

Freeman requested a 35 percent interest in the property. Id. 

On May 30, 2014, just a week before the scheduled trustee’s sale of the property, Ow and 

Freeman signed an agreement to that effect (“May 2014 Agreement”). Id. at 3. Under that

agreement, Freeman would pay $24,200.70 in mortgage arrears in exchange for a 35 percent

ownership interest in the property, and Oropeza and Passentine would have the right to purchase 

the property for $300,000 after specified repairs. Id. The agreement also contained an addendum 

providing that Ow would receive a minimum of $120,000 from the proceeds of the home. Id. 

Pursuant to the May 2014 Agreement, Freeman paid $24,200.70 to cure the arrears, and 

Citimortgage withdrew the trustee’s sale. Id. Freeman subsequently made four or five subsequent 

monthly loan payments to Citimortgage to prevent further foreclosure efforts. Id. at 4. Freeman 

also paid to clean the property in advance of the sale and gave Ow some money for his own 

personal use. Id.; ECF No. 3-2 at 15. The bankruptcy court later estimated that Freeman spent a 

total of $38,960.50 on the property. ECF No. 1-2 at 4. 

Freeman referred Ow and the purchasers of the property to real estate agent Jeremy 

Lebeau, who prepared a purchase agreement for the property. Id.; ECF No. 3-2 at 28-29. On July 

8, 2014, Ow and the purchasers entered into a real estate purchase agreement. ECF No. 1-2 at 4. 

On July 29, 2014, at the behest of the title company responsible for the sale escrow, 

Freeman and Ow agreed to convert Freeman’s 35 percent interest into a deed of trust and a 

promissory note in the amount of $105,000 upon the close of escrow (“July 2014 Agreement”). 

ECF No. 3-2 at 47-48; ECF No. 1-2 at 3. The title company recorded the deed of trust on August 

5, 2014. ECF No. 1-2 at 3. 

In October 2014, the purchasers requested a cancellation of the purchase agreement, but 

then withdrew that cancellation request only a few days later. ECF No. 3-2 at 40-41. Despite the 

withdrawal, Ow accepted their cancellation request a month later. Id. After the sale was 

cancelled, Freeman stopped making the monthly mortgage payments and Citimortgage recorded a 

notice of default on the property. ECF No. 1-2 at 4. 

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B. Procedural History 

On June 8, 2015, Ow filed the underlying bankruptcy proceedings to stay the foreclosure. 

Id. In the adversary proceeding at issue in this appeal, Ow sought declaratory relief that both the 

May 2014 Agreement and the July 2014 Agreement were unconscionable under California law 

and therefore void. Id. at 1, 5. 

On August 5, 2016, the bankruptcy court agreed with Ow, finding both agreements

procedurally and substantively unconscionable. Id. at 5-8. To support its finding of “significant 

substantive unconscionability,” the bankruptcy court explained that both contracts were “overly 

harsh and not justified by their circumstances” because “in exchange for $38,960.50, Freeman 

expected a return of $105,000 in a matter of months,” noting that this “rate of return would have 

exceeded 250%.” Id. The court found that this high rate of return was not justified in light of the 

fact that “Freeman entered into the transaction with substantial equity in the El Cerrito Property 

and a buyer at hand.” Id. Given the circumstances, the court explained that “Freeman’s 

investment was not a high risk venture,” but rather “easy money.” Id. The court relied on a case 

called Carboni v. Arrospide, in which a California court refused to enforce an excessive interest 

rate on a loan because “at some point the price [of the money lent] becomes so extreme that it is 

unconscionable.” Id. (quoting Carboni v. Arrospide, 2 Cal. 4th 76, 82 (1991)). 

With respect to procedural unconscionability, the bankruptcy court found that “Ow had 

little, if any, bargaining power, and this left him without any meaningful choice.” Id. 

Specifically, the court pointed to the fact that Ow “was homeless, distraught over the pending 

trustee’s sale, and desperate to save his childhood home” at the time he approached Freeman. Id. 

The court explained that the terms of Ow’s deal with Freeman, which “ultimately provided 

Freeman with a secured claim worth far more than the amount financed,” were “the product of a 

substantially uneven playing field.” Id. The court concluded that these facts, when combined with 

the evidence of “significant substantive unconscionability,” were sufficient to render the May 

2014 Agreement, the deed of trust, and the promissory note unenforceable. Id. Freeman was 

therefore only entitled to a general unsecured claim for the $38,960.50 that he spent on the 

property. Id. 

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II. JURISDICTION

This court has jurisdiction to hear appeals from final judgments issued by bankruptcy 

courts pursuant to 28 U.S.C. § 158(a). 

III. LEGAL STANDARD

A court’s “power to stay proceedings is incidental to the power inherent in every court to 

control the disposition of the causes on its docket with economy of time and effort for itself, for 

counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). A stay is “an 

exercise of judicial discretion, and the propriety of its issue is dependent upon the circumstances 

of the particular case. The party requesting a stay bears the burden of showing that the 

circumstances justify an exercise of that discretion.” Nken v. Holder, 556 U.S. 418, 433–34 

(2009) (internal alterations, citations, and quotations omitted).

To decide whether a stay pending appeal is warranted, district courts consider four factors: 

(1) whether the movant has made a strong showing that it is likely to succeed on the merits; (2) 

whether the movant will be irreparably injured absent a stay; (3) whether a stay will substantially 

injure other parties to the proceeding; and (4) the public interest implicated by the grant or denial 

of the stay. Id. at 434; see also Leiva–Perez v. Holder, 640 F.3d 962, 964 (9th Cir. 2011).

In the district court, as in the court of appeals, “[t]he bankruptcy court’s findings of fact are 

reviewed for clear error, while its conclusions of law are reviewed de novo.” In re JTS Corp., 617 

F.3d 1102, 1109 (9th Cir. 2010) (quoting In re Strand, 375 F.3d 854, 857 (9th Cir. 2004)). “Mixed 

questions of law and fact are reviewed de novo.” In re JTS Corp., 617 F.3d at 1109 (quoting In re 

Chang, 163 F.3d 1138, 1140 (9th Cir. 1998)).

IV. ANALYSIS

A. Federal Rule of Bankruptcy Procedure 8007

As a preliminary matter, a motion for a stay pending appeal must ordinarily be presented to 

the bankruptcy court in the first instance. See Fed. R. Bankr. P. 8007(a)(1). Therefore, Freeman 

must either show that making such a motion would be impracticable or, if such a motion was 

made, state whether the bankruptcy court has ruled on it and set out any reasons given for the 

ruling. Fed. R. Bankr. P. 8007(b)(2). 

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Freeman explains that he filed a similar motion to stay with the bankruptcy court, but his 

attorney failed to appear at the hearing and the motion was subsequently denied due to lack of 

prosecution. ECF No. 3 at 2. Appellant then filed a motion for relief in the bankruptcy court, 

explaining that his attorney missed the hearing based on a scheduling mistake. Id. The 

bankruptcy court denied the motion on the ground that it no longer had jurisdiction to reconsider 

its previous order given that a notice of appeal had already been filed. Id.; see also Ow v. 

Freeman, Case No. 15-04069 (N.D. Cal. Bankruptcy Ct.), ECF No. 62 (citing In re Ho, 265 B.R. 

603, 605 (B.A.P. 9th Cir. 2001) (“[T]he court cannot reconsider an earlier decision denying a stay 

(and thus belatedly impose one) after a notice of appeal is filed.”).

The Court finds that Freeman has satisfied the requirements of Rule 8007, and so turns to 

the merits of Freeman’s motion. 

B. Likelihood of Success on the Merits

To demonstrate a likelihood of success on the merits, the movant “need not demonstrate 

that it is more likely than not that they will win on the merits.” Leiva-Perez v. Holder, 640 F.3d 

962, 968 (9th Cir. 2011). However, the movant must show that he “has a substantial case for 

relief on the merits.” Id. Freeman has not done so here. 

Under California law, a court may refuse to enforce a contract if it finds that the contract 

was unconscionable at the time it was entered. See Cal. Civ. Code § 1670.5. “One common 

formulation of unconscionability is that it refers to an absence of meaningful choice on the part of 

one of the parties together with contract terms which are unreasonably favorable to the other 

party.” Sanchez v. Valencia Holding Co., LLC, 61 Cal. 4th 899, 910 (2015) (internal quotation 

marks and citations omitted). “As that formulation implicitly recognizes, the doctrine of 

unconscionability has both a procedural and a substantive element, the former focusing on 

oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided 

results.” Id. “The prevailing view is that [procedural and substantive unconscionability] must 

both be present in order for a court to exercise its discretion to refuse to enforce a contract or 

clause under the doctrine of unconscionability.” Id. (emphasis in original). However, both 

elements “need not be present in the same degree,” and courts use a sliding scale in which “the 

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more substantively oppressive the contract term, the less evidence of procedural unconscionability 

is required to come to the conclusion that the term is unenforceable, and vice versa.” Id. (quoting 

Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83, 114 (2000). 

Freeman argues on appeal that the bankruptcy judge erred by treating the two separate 

agreements as a single agreement, thereby failing to examine the circumstances of each individual 

contract at the time it was entered into. ECF No. 3 at 10-12. Freeman argues that, when viewed 

individually, neither agreement is substantively or procedurally unconscionable. Id. at 12-18. In

response, Ow argues that, “[w]hether the transactions are treated separately or otherwise, the result 

was clearly unconscionable.” ECF No. 6 at 4. 

Freeman is correct that “substantive unconscionability must be evaluated as of the time the 

contract was made.” A & M Produce Co. v. FMC Corp., 135 Cal. App. 3d 473, 487 (Ct. App. 

1982); accord Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1172 (9th Cir. 2003) (quoting A & 

M Produce, 135 Cal. App. 3d at 487). The Court therefore analyzes each agreement—the May 

2014 Agreement and the July 2014 Agreement—based on the circumstances at the time they were 

entered into. Even when considered individually, however, the agreements exhibit the hallmarks 

of both substantive and procedural unconscionability. As a result, Freeman has not shown a 

likelihood of success on the merits of his appeal. 

1. May 2014 Agreement 

First, the circumstances surrounding the May 2014 Agreement demonstrate that Ow had 

neither equal bargaining power nor meaningful choice, which indicates that the agreement was 

procedurally unconscionable. That contract was entered into on May 30, 2014, just one week 

before the scheduled trustee’s sale of the property. At the time, Ow was homeless and desperate 

to save his childhood home. He had already unsuccessfully tried to modify his mortgage loan, and 

an earlier bankruptcy had failed because Ow could not make his plan payments. The bankruptcy 

court also noted that Ow “unhesitatingly testified that he had no [sic] choice but to sign the May 

30th contract.” ECF No. 1-2 at 5. In addition, both Ow and his friend testified at trial that 

Freeman “constantly rushed him to sign the various documents,” “refused to give him complete 

copies of the documents that he signed,” and “told him that he did not need an attorney to review 

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the transaction.” Id. The evidence therefore suggests that Ow did not have any other viable 

options available to him.

Second, the terms of the May 2014 Agreement are overly harsh and unreasonably favor 

Freeman, which suggests that the agreement was substantively unconscionable. Under the terms 

of that agreement, Freeman agreed to make an initial payment of just $24,200.70 in mortgage 

arrears in exchange for an immediate 35 percent equity interest in a property that he knew to be 

worth at least $300,0002‒ a return of over 330 percent. Indeed, Freeman had already found thirdparty buyers who were willing to purchase the property for $300,000 at the time he entered into 

agreement, and those third-party purchasers were mentioned in the agreement itself. Despite 

knowing that the property would likely sell for $300,000, and therefore that a 35 percent equity 

interest would translate into roughly $105,000 for himself within a matter of months, Freeman 

agreed to pay just $24,200.70 in mortgage payments. 

The bankruptcy court’s analogy to a California case called Carboni underscores both the 

procedural and substantive unconscionability of the May 2014 Agreement. In that case, the court 

held that a 200 percent annual interest rate on a personal loan was substantively unconscionable. 

Carboni v. Arrospide, 2 Cal. App. 4th 76 (1991). The court found the interest rate unconscionable 

in part based on the disparity between the price of the credit and its actual value as suggested by 

the prevailing interest rate in the credit market for similar loans. Id. at 84. Specifically, the court 

noted that “the price of the credit was approximately 10 times its true value.” Id. (emphasis in 

original). The court further explained that the high interest rate was not justified by the 

circumstances of the transaction. Id. at 84-85. In addition, the court found that the high interest 

rate was procedurally unconscionable because the borrower was acting under emotional distress 

when he entered into the agreement: he needed the money so he could pay his parents’ medical 

 

2

Freeman also orally agreed to pay Ow some money for his personal use and to make additional 

payments to keep the mortgage current, but it is not clear from the record currently before this 

Court how much either Freeman or Ow expected that amount to be at the time they entered into 

the May 2014 Agreement. Since the bankruptcy court ultimately estimated that Freeman spent a 

total of $38,960.50 on the property and Ow’s personal expenses, an amount that is still almost 

three times less than the value of Freeman’s stake in the property, it does not alter this Court’s 

substantive unconscionability analysis. ECF No. 1-2 at 4.

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expenses and he had unsuccessfully tried to obtain a loan from other sources. Id. at 85-86. 

As in Carboni, the gross disparity between the price that Freeman paid for his 35 percent

equity interest in the property ($24,200.70 plus unspecified additional expenses) and the actual 

value of his stake in the property (approximately $105,000) suggests that the agreement was 

substantively unconscionable. Although the disparity does not reach the tenfold level in Carboni, 

the Carboni court cited to other cases in which courts found substantive unconscionability where 

“the price of the commodities was only three to four times their true value.” Id. (citing Jones v. 

Star Credit Corp., 298 N.Y.S.2d 264 (Sup. Ct. 1969) and Frostifresh Corp. v. Reynoso, 281 

N.Y.S.2d 964 (App. Term 1967)). Here, the true value of Freeman’s stake in the property was 

more than four times the amount he agreed to pay for it. Moreover, Ow accepted these overly 

harsh terms in an effort to save his childhood home after unsuccessfully trying to obtain a 

mortgage loan modification and filing for bankruptcy. These circumstances are comparable to the 

circumstances that the Carboni court found sufficient to support a finding of procedural 

unconscionability. 

In response, Freeman argues that Carboni does not apply because that case dealt with a 

high interest rate on a loan, whereas this case deals with the purchase of equity. ECF No. 3 at 11-

13. The distinction is not material, because the same considerations apply with equal force. The

Carboni court noted that it could find no case that applied the doctrine of unconscionability to a 

shockingly high rate of interest on a loan, so it analogized to cases finding unconscionability on 

the basis of gross price disparity. Id. at 81-82. To justify this analogy, the court explained that 

“the interest rate is the ‘price’ of the money lent; at some point the price becomes so extreme that 

it is unconscionable.” Id. So here, regardless of whether the May 2014 Agreement is 

characterized as a loan or the purchase of equity, the disparity between the price that Freeman paid 

for his property interest and its true value suggests substantive unconscionability. 

Freeman next argues that, even if there is a disparity between the amount Freeman paid 

and his expected return, that disparity was justified because Ow was a high-risk investment. ECF 

No. 3 at 11-13. Freeman points to the following facts to support that argument: Ow was 

unemployed and had no source of income, Freeman had little time to appraise the property 

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because of the upcoming foreclosure, the property was uninhabitable and fire-damaged, and the 

property was not insured. Id. Although these considerations suggest that the purchase entailed 

some risk, any potential risk was largely negated by the fact that Freeman had already found 

buyers who were willing to purchase the property for $300,000 at the time he entered into the May 

2014 Agreement. 

Freeman also attempts to distinguish Carboni’s finding of procedural unconscionability

from the present case. ECF No. 3 at 17-18. Specifically, Freeman argues that Ow’s level of 

emotional distress when he entered into the May 2014 Agreement did not rise to the level of 

distress at issue in Carboni because Ow was not trying to pay for a family member’s medical 

expenses, but rather simply trying to obtain more money through a private sale of the property 

than would otherwise be obtained through foreclosure. Id. Freeman also argues that the 

bankruptcy court should not have considered Ow’s living situation (i.e., that he was homeless) 

because Ow had not been living in the property. Id. In addition, Freeman argues, Ow had a 

meaningful choice because he had other options, such as allowing the foreclosure to continue, 

filing for bankruptcy, or seeking other sources of funding. Id. With respect to Ow’s bargaining 

power, Freeman argues that a finding of procedural unconscionability is undercut by the fact that 

Ow wrote the addendum attached to the May 2014 Agreement that entitled him to a minimum of 

$120,000 from the proceeds of the sale. Id. 

Freeman’s attempts to distinguish Carboni are unavailing. Although Ow was not living in 

the property at the time he entered into the May 2014 Agreement with Freeman, he had been 

living in it his entire life until 2011 when it was declared uninhabitable after the fire. In addition 

to being his childhood home, the property appears to be Ow’s only asset, which he owns both in 

an individual capacity and as trustee of his mother’s trust. The prospect of losing this asset for 

less than its full value through a trustee’s sale likely exerted an immense pressure on Ow that was 

similar to the pressure of having to pay an ill parent’s medical expenses. This, combined with

Ow’s homelessness and desperate need of money to cure outstanding mortgage payments, 

undoubtedly contributed to Ow’s lack of bargaining power at the time he entered the May 2014 

Agreement. Moreover, Ow had exhausted at least some of the alternative options that Freeman 

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points to, such as filing for bankruptcy. ECF No. 3-2 at 38:20-22; id. at 13:1-4 (testifying that he 

was not given any choices at the time the agreement was presented to him). Ow also testified that 

he “tried to find some help from other sources” after the bankruptcy was dismissed. Ow v. 

Freeman, Case No. 15-04069 (N.D. Cal. Bankruptcy Ct.), ECF No. 31 at 6:4-6. Finally, with 

respect to the addendum, Ow testified that the addendum was in Mr. Freeman’s handwriting. ECF 

No. 3-2 at 31:13-17. And, although Ow responded “[s]ure” when asked whether he had negotiated 

the agreement with the addendum, he repeatedly testified that he did not read the documents or 

understand the basic terms because he trusted Freeman. See, e.g., id. at 32:20-25; 35:11-13; 

37:11-18. The court also gives substantial deference to the bankruptcy court’s factual finding that 

“Ow generally could not explain what documents he signed or why he signed them, other than to 

say he ‘trusted’ Freeman.” ECF No. 1-2 at 2. All of these factual circumstances suggest that Ow 

did not have equal bargaining power or viable alternatives at the time he entered into the May 

2014 Agreement. 

Lastly, Freeman tries to discredit the precedential value of Carboni by pointing to De La 

Torre v. CashCall, Inc., 56 F. Supp. 3d 1105 (N.D. Cal. 2014), judgment entered, No. 08-CV03174-MEJ, 2014 WL 7277377 (N.D. Cal. Dec. 22, 2014). However, the court in that case did 

not even reach the issue of unconscionability because it determined that, “[e]ven if Plaintiffs were 

able to prove that the challenged loans were unconscionable, the Court could provide no remedy 

without impermissibly intruding upon the legislature’s province.” Id. at 1109. The court reasoned 

that any judicial decision regarding the unconscionability of the challenged interest rates would 

necessarily “intrude in matters of economic policy” because the California Legislature had

expressly decided not to cap interest rates on loans exceeding $2,500. Id. at 1109-10. No such 

legislative determinations are implicated in this case.

In sum, Freeman has not made a substantial case on the merits of his argument that the 

May 2014 Agreement was neither procedurally nor substantively unconscionable. 

2. July 2014 Agreement 

The July 2014 Agreement to convert Freeman’s 35 percent equity interest into a 

promissory note in the amount of $105,000 shows similar signs of both substantive and procedural 

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unconscionability. The July 2014 Agreement involves a similar price disparity in which Freeman 

expected $105,000 in exchange for just $38,960.50, the total amount of money he had invested in 

the property. Again, this price disparity lacked a reasonable basis given the low-risk nature of the 

investment. By July 2014, Freeman had not only found buyers, he had referred the buyers to a 

real estate agent and the purchase was already underway. As in Carboni, this gross disparity 

between price and value strongly suggests substantive unconscionability. It is also notable that 

this conversion meant that Freeman would recover $105,000 regardless of whether the sale went 

through, whereas Ow did not receive any consideration in return for this added assurance. 

The factual circumstances surrounding the July 2014 Agreement also suggest unequal 

bargaining power. Although the property was no longer in immediate risk of default, that state of 

affairs was contingent on Freeman’s continued fulfillment of his promise to pay the monthly 

mortgage payments for Ow. In addition, Ow was still homeless and presumably still relying on 

Freeman’s financial support to satisfy his personal necessities. 

Freeman argues that the July 2014 Agreement was not unconscionable because Ow and his 

agents—namely, the escrow officer for the title company and the real estate agent—requested the 

conversion of the equity interest into debt. But Ow was not, as Freeman suggests, “the drafting 

party” of the July 2014 Agreement. ECF No. 3 at 14. To the contrary, Ow testified that he did not 

even know how Freeman arrived at the $105,000 amount. ECF No. 1-2 at 4. He further testified 

that $105,000 “was just what [Freeman] came up with.” Ow v. Freeman, Case No. 15-04069 

(N.D. Cal. Bankruptcy Ct.), ECF No. 31 at 21:12-16. Even when Ow signed documents with Ms. 

Skipper (the title company’s escrow agent), he did so at the direction of Freeman. ECF No. 3-2 at 

35. It is also notable that Freeman referred Ow to the real estate agent, whom Ow never met with 

in person. ECF No. 3-2 at 28:24-29:20. Instead, Ow simply went to Freeman’s office to fill out 

paperwork for the agent when necessary. See id. 

Because the terms of and the circumstances surrounding the July 2014 Agreement 

similarly suggest both substantive and procedural unconscionability, Freeman has not shown that 

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he is likely to succeed on the merits with respect to that agreement, either.3

C. Irreparable Harm to Movant 

Freeman argues that he will suffer irreparable harm absent a stay because he will be left 

with a lesser-value unsecured claim that may not be satisfied under the current bankruptcy plan. 

ECF No. 3 at 8-9. Specifically, Freeman argues that the bankruptcy plan contemplates Ow 

entering into a transaction with a new investor who would have a $135,000 lien on the property. 

Id. In response, Ow argues that, regardless of whether Freeman is a secured or an unsecured 

creditor, he will not suffer irreparable harm because his injury is compensable with monetary 

damages. ECF No. 6 at 4. 

“Purely monetary injuries are not normally considered irreparable” because they can be 

remedied by a damages award later. See Lydo Enterprises, Inc. v. City of Las Vegas, 745 F.2d 

1211, 1213 (9th Cir. 1984). The same rule applies in the context of bankruptcy proceedings. See

8B C.J.S. Bankruptcy § 1285 (“Economic injury alone does not support a finding of irreparable 

harm because such injury can be remedied by a damage award.”). For that reason, courts have 

declined to stay bankruptcy proceedings pending appeal where “[t]he only harms [appellant] has 

put forth are economic in nature.” In re Irwin, 338 B.R. 839, 853–54 (E.D. Cal. 2006) (holding 

that potential loss of monetary recovery caused by the sale of property pending appeal of the 

bankruptcy court’s decision would not cause irreparable harm). 

As in Irwin, Freeman will suffer only monetary injury absent a stay of the bankruptcy 

 

3

Freeman also argues that the bankruptcy court improperly allowed Ow to use the 

unconscionability doctrine as an affirmative cause of action when it can only be used as a defense. 

ECF No.3 at 19. “[W]hile unconscionability cannot stand alone, it can be the basis for another 

claim.” In re First All. Mortg. Co., 280 B.R. 246, 251 (C.D. Cal. 2002) (citing Perdue v. Crocker 

National Bank, 38 Cal.3d 913 (1985)); Gaitan v. Mortg. Elec. Registration Sys., No. EDCV09-

1009 VAP MANX, 2009 WL 3244729, at *13 (C.D. Cal. Oct. 5, 2009) (“Unconscionability may 

be raised as a defense in a contract claim, or as a legal argument in support of some other claim, 

but it does not constitute a claim on its own.”). Here, Ow did not bring an affirmative cause of 

action for unconscionability; rather, unconscionability was simply the basis for Ow’s rescission 

claim in the adversary proceeding. See Bankruptcy Petition No. 15-41959 (N.D. Cal.), ECF No. 

15 (bringing a claim for rescission). 

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proceedings.4 Even if the property is sold, as Freeman argues that it will be, any harm to him will 

be purely economic. After all, Freeman does not live in the property and the property has no 

personal value to him, just monetary value, such that any harm to Freeman’s commercial interest 

in the property can be remedied through monetary damages. See In re Coyle, No. 15-CV-04126-

YGR, 2016 WL 5673247, at *8 (N.D. Cal. Oct. 3, 2016) (“Where the harm absent an injunction is 

loss of an interest in a commercial property, such loss is ‘easily calculable and compensable in 

damages’ upon conclusion of the litigation.”). He will therefore not suffer irreparable harm absent 

a stay. 

D. Substantial Injury to Other Parties and Public Interest 

“Because Appellant fails to satisfy the first two factors, his motion necessarily fails.” In re 

Woodcraft Studios, Inc., No. C-11-3219 EMC, 2012 WL 160225, at *3 (N.D. Cal. Jan. 18, 2012)

(citing Nken, 129 S. Ct. at 1762). Thus, the Court need not reach the two remaining factors: 

whether a stay will substantially injure other parties to the proceeding, and the public interest 

implicated by the grant or denial of the stay. 

The Court evaluates them nonetheless, and finds that both factors weigh against the 

issuance of a stay. Ow’s bankruptcy proceedings were commenced in June 2015, almost eighteen 

months ago. He will suffer substantial injury if the confirmation of his bankruptcy plan and the 

sale of his property are further delayed, especially because the interest on his debt continues to 

accrue in the interim. The remaining creditors will also be harmed by further delay. See Lynch v. 

California Pub. Utilities Comm'n, No. C-04-0580 VRW, 2004 WL 793530, at *3 (N.D. Cal. Apr. 

9, 2004) (holding that “delay of payment constitutes significant harm warranting the denial of a 

stay”). “[T]he public interest in speedy and accurate bankruptcy proceedings” similarly counsels 

 

4 One district court has distinguished Irwin to find irreparable harm where a creditor stands to lose 

a first-position lien, which necessarily has value as long as the property itself has value. See

JPMCC 2007-CIBC 19 E. Greenway, LLC v. Bataa/Kierland, LLC, No. 2:11-BK-05850-RJH, 

2013 WL 210845, at *5 (D. Ariz. Jan. 18, 2013). The present case is more analogous to Irwin: 

Freeman has at most a second-position lien, and the trustee recently objected to Ow’s bankruptcy 

plan because “the property is underwater and lacks any equity so its sale will not fund the plan.”

See Bankruptcy Petition No. 15-41959 (N.D. Cal.), ECF No. 72. Given that Freeman is unlikely 

to recover anyway, an unsecured claim for monetary damages is an adequate remedy. 

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against a stay. See In re N. Plaza, LLC, 395 B.R. 113, 127 (S.D. Cal. 2008). 

CONCLUSION

None of the relevant factors weigh in favor a stay of the bankruptcy proceedings pending 

appeal. Freeman’s motion is denied. 

IT IS SO ORDERED.

Dated: November 16, 2016

______________________________________

JON S. TIGAR

United States District Judge

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