Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caeb-2_17-ap-02091/USCOURTS-caeb-2_17-ap-02091-0/pdf.json

Parties Involved:
Bank of America, N.A.
Defendant
THE BANK OF NEW YORK MELLON
Defendant
Select Portfolio Servicing, Inc.
Defendant
Saundra Battaglia
Plaintiff
The Bank of New York Mellon
Defendant
The Bank of New York
Defendant

Document Text:

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In re: Case No. 15-29573-B-13 

5 

SAUNDRA BATTAGLIA, Adversary No. 17-2091 

6 

DC No. BMV-9 

7 Debtor(s). 

8 

SAtJNDRA BATTAGLIA, 

9 

10 Plaintiff(s), 

11 V. 

12 THE BANK OF NEW YORK MELLON fka 

THE BANK OF NEW YORK AS TRUSTEE 

13 FOR THE CERTIFICATE HOLDERS OF 

THE CWABS, INC., ASSET-BACKED 

14 CERTIFICATES, SERIES 2005-3, 

and SELECT PORTFOLIO SERVICING, 

15 INC., 

16 

Defendant(s). 

17 

18 

MEMORANDUM DECISION GRANTING DEFENDANTS' MOTION FOR SUMMARY 

19 JUDGMENT ON THE FIRST, SECOND, AND FOURTH CAUSES OF ACTION 

20 The court has before it a Motion for Summary Judgment or, in 

21 the Alternative, Partial Summary Judgment filed by defendants The 

22 Bank of New York Mellon FKA the Bank of New York as Trustee for 

23 the Certificate Holders of the CWABS, Inc., Asset-Backed 

24 Certificates, Series 2005-3, and Select Portfolio Services, Inc.' 

25 Adv. Dkts. 222-229. Defendants move for summary judgment on the 

26 first, second, and fourth causes of action remaining in the 

27 

28 1 Bank of America, N.A., was also initially named as a 

defendant. It was dismissed on December 11, 2017. Adv. Dkts. 

60, 63. 

NOT FOR PUBLICATION 

UNITED STATES BANKRUPTCY COURT 

EASTERN DISTRICT OF CALIFORNIA 

• FILED 

JUL 9 2019 

UNrTED STATES BANKRUPTCY 

CALIF 

Filed 07/09/19 Case 17-02091 Doc 268
1 second amended complaint. 2 Alternatively, defendants request 

2 partial summary judgment on the punitive damage claim also 

3 alleged in the second amended complaint. Plaintiff Saundra 

4 Battaglia has filed an opposition to the motion. Adv. Dkts. 235- 

5 245. Defendants filed a reply. Adv. Dkts. 251-252. 

6 The court takes judicial notice of the docket in this 

7 adversary proceeding and in the parent Chapter 13 case. See Fed. 

8 R. Evid. 201. Defendants have also filed a Request for Judicial 

9 Notice. Adv. Dkt. 226. So too has plaintiff. Adv. Dkt. 236. 

10 Defendants object to plaintiff's request for judicial notice. 

11 Adv. Dkt. 254. Plaintiff objects to two documents included in 

12 defendants' request for judicial notice. Adv. Dkt. 226. The 

13 parties' objections are addressed below. 

14 The motion was heard on July 9, 2019. Appearances were 

15 noted on the record. 

16 The court has reviewed and considered the motion, 

17 opposition, reply, and all related declarations and exhibits. 

18 The court has also heard and considered the arguments and 

19 statements of counsel made on the record in open court. Findings 

20 of fact and conclusions of law are set forth below. See Fed. R. 

21 Civ. P. 52(a); Fed. R. Bankr. P. 7052. 

22 

23 Introduction 

24 This is an action by plaintiff against defendants for 

25 alleged willful violation(s) of the automatic stay of 11 U.S.C. § 

26 

27 2The third cause of action was dismissed with prejudice by 

an order entered on May 23, 2018. Adv. Dkts. 132, 134. 

28 Plaintiff did not appeal that dismissal. 

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1 362 (a), damages, including punitive damages, under § 362(k) (1), 

2 and for alleged unfair business practices under California 

3 Business & Professions Code § 17200. Plaintiff contends that 

4 defendants willfully violated the automatic stay by conducting a 

5 nonjudicial foreclosure sale of her residence at 15935 D Street, 

6 Meridian, California ("Property"), after she filed a petition for 

7 relief under Chapter 13 of the Bankruptcy Code and despite 

8 knowing that a bankruptcy petition was filed. Plaintiff also 

9 accuses defendants of engaging in deceitful conduct. 

10 Defendants do not dispute they foreclosed on the Property 

11 postpetition. Defendants also do not dispute they were aware of 

12 plaintiff's bankruptcy case when they foreclosed on the Property. 

13 Defendants assert that plaintiff had no interest in the Property 

14 when she filed her bankruptcy petition and so plaintiff had no 

15 interest in the Property that became property of the estate 

16 protected by the automatic stay when she filed her bankruptcy 

17 petition. Under those circumstances, defendants assert that the 

18 postpetition foreclosure was not (and could not have been) an act 

19 or attempt to obtain, possess, exercise control over, or enforce 

20 a lien against property of the estate in violation of § 362 (a). 

21 For the reasons explained below, the court agrees with 

22 I defendants and therefore will grant defendants' motion for 

23 summary judgment. Judgment on all remaining causes of action in 

24 the second amended complaint will be entered for defendants and 

25 against plaintiff. Defendants' alternative request for summary 

26 judgment on the punitive damage claim will be denied as moot. 

27 

28 

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1 Procedural Background 

2 Plaintiff filed the complaint that initiated this adversary 

3 proceeding on May 30, 2017. Adv. Dkt. 1. That initial complaint 

4 alleged two causes of action- both under § 362. Id. The 

5 complaint was served on defendants on July 5, 2017. Adv. Dkt. 9. 

6 Defendants moved to dismiss the initial complaint on July 

7 14, 2017. Adv. Dkts. 14-18. More precisely, defendants moved to 

8 dismiss the complaint "pursuant to Federal Rule of Civil 

9 Procedure 12(b) (6), without leave to amend[,]" Adv. Dkt. 16 at 

10 1:16, and "with prejudice." Id. at 6:15. The court denied 

11 defendants' motion to dismiss in an order entered on August 18, 

12 2017. Adv. Dkt. 29. 

13 Plaintiff thereafter filed a first amended complaint on 

14 September 29, 2017. Adv. Dkt. 34. In addition to the two 

15 original § 362 causes of action, the first amended complaint 

16 alleged a state law intentional misrepresentation claim in the 

17 third cause of action and an unfair business practices claim in 

18 the fourth cause of action. Id. Defendants were served with the 

19 first amended complaint on October 2, 2017. Adv. Dkt. 38. 

20 Defendants moved to dismiss the first amended complaint on 

21 October 30, 2017. Adv. Dkt. 40. As to all causes of action 

22 alleged in the first amended complaint, non-core state law claims 

23 included, defendants moved to dismiss "pursuant to Federal Rule 

24 of Civil Procedure 12(b) (6), without leave to amend[,]"Adv. Dkt. 

25 42:22-23, and requested that "the Court dismiss Plaintiff's 

26 Amended Adversary Complaint, with prejudice." Id. at 20:6-7. 

27 On December 21, 2017, the court entered an order granting in 

28 part and denying in part defendants' motion to dismiss the first 

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1 amended complaint. Adv. Dkt. 75. The motion was granted with 

2 leave to amend the intentional misrepresentation claim alleged in 

3 the third cause of action, denied as to the automatic stay 

4 violation claims alleged in the first and second causes of 

5 action, and denied as to the unfair business practice claim 

6 alleged in the fourth cause of action. 

7 The court granted plaintiff leave to file a second amended 

8 complaint by December 29, 2017, as to the dismissed intentional 

misrepresentation claim. . Plaintiff filed the second amended 

10 complaint on December 29, 2017, Adv. Dkt. 77, and defendants were 

11 served with it on January 3, 2018. Adv. Dkt. 80. The second 

12 amended complaint re-alleged the same four causes of action that 

13 were alleged in the first amended complaint. 

14 Meanwhile, on January 3, 2018, defendants filed a Notice of 

15 I Non-Consent To Final Orders which states as follows: 

16 Defendants, THE BANK OF NEW YORK MELLON FKA THE BANK OF 

NEW YORK AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF THE 

17 CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2005-3 

and SELECT PORTFOLIO SERVICING, INC., hereby provide 

18 notice that they respectfully do not consent to entry 

of final orders by the Court in (a) any non-core 

19 proceedings, or (b) core proceedings, to the extent it 

is determined that the Court, absent consent of the 

20 parties, cannot enter final orders or judgments 

consistent with Article III of the United States 

21 Constitution. 

22 lAdy. Dkt. 79 at 2:1-7. The court deferred ruling on defendants' 

23 notice until the time of trial. Adv. Dkts. 133, 135. 

24 The following day, January 4, 2018, defendants filed a 

25 notice of appeal and a motion for leave to appeal with the Ninth 

26 Circuit bankruptcy appellate panel. Adv. Dkts. 83-90, 101. The 

27 bankruptcy appellate panel denied leave and dismissed defendants' 

28 interlocutory appeal on March 15, 2018. Adv. Dkt. 111. 

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ii Then again, on April 24, 2018, defendants moved to dismiss 

2 the intentional misrepresentation claim alleged in the third 

3 cause of action of the second amended complaint with the 

4 suggestion that dismissal be with prejudice and without leave to 

5 amend. Adv. Dkt. 119 at 4:18-21. The court heard the motion to 

6 dismiss on May 22, 2018, granted it on the basis that plaintiff 

7 could not establish the reliance element of the intentional 

8 misrepresentation claim, and dismissed the intentional 

9 misrepresentation claim with prejudice in an order filed on May 

10 23, 2018. Adv. Dkt. 134. Defendants answered the second amended 

11 complaint, the operative complaint in this adversary proceeding, 

12 on May 29, 2018. Adv. Dkt. 136. 

13 

14 Undisputed Facts 

15 In March of 2004, plaintiff and her then husband, Kevin 

16 Heimburger ("Mr. Heimburger"), acquired a fee interest in the 

17 Property, Adv. Dkt. 226, Ex. 1 at ¶ 7, which they held as joint 

18 I tenants. Id., Ex. 2 at Ex. A. 

19 In August of 2004, plaintiff obtained a $30,000.00 loan from 

20 John Roth ("Mr. Roth") and signed a deed of trust which, without 

21 condition, restriction, or limitation, granted Mr. Roth her 

22 interest in the Property as security for the loan ("DOT 1 11 ). 

23 Adv. Dkt. 226, Ex. 1 at ¶ 8; Id., Ex. 2 at Ex. B; see also Adv. 

24 Dkt. 238 at ¶IJ 1, 14, 27. 

25 In January of 2005, plaintiff and Mr. Heimburger obtained a 

26 $318,750.00 loan from Countrywide Home Loans and, in connection 

27 with that loan, signed a deed of trust which granted MERS as 

28 Countrywide's nominee an interest in Mr. Heimburger's legal 

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1 interest in the Property ("DOT 2 11 ). Adv. Dkt. 226, Ex. 1 at ¶ 9 

2 (document authentication) ; Id., Ex. 2 at Ex. C ("Borrower 

3 understands and agrees that [the beneficiary] holds only legal 

4 title to the interest granted by Borrower in this Security 

5 Instrument[.]"); see also Adv. Dkt. 238 at ¶j 2, 15, 28. 

6 Plaintiff and Mr. Heimburger eventually divorced and, in the 

7 course of their divorce proceeding, they entered into a January 

8 2010 court-approved Marital Settlement Agreement ("MSA"). Adv. 

9 Dkt. 226, Ex. 1 at ¶ 10; Id., Ex. 2 at Ex. D; see also Adv. Dkt. 

10 238 at ¶j 6-7, 19-20, 32-33. The MSA granted plaintiff the 

II Property as her sole and separate property. Adv. Dkt. 226, Ex. 1 

12 at ¶ 11; Id., Ex. 2 at Ex. D. The MSA was never recorded. Adv. 

13 Dkt. 238 at ¶ 7; see also Adv. Dkt. 238 at 3, ¶J 6-7, 19-20, 

14 32-33. 

15 Meanwhile, in July of 2011, DOT 2 and the corresponding 

16 promissory note were transferred and assigned to defendants. 

17 Adv. Dkt. 226, Ex. 1 at ¶ 12; Id., Ex. 2 at Ex. E; see also Adv. 

18 Dkt. 238 at 2, ¶ 4, 17, 30. 

19 Mr. Roth conducted a nonjudicial foreclose sale under DOT 1 

20 on or about September 6, 2011, and a trustee's deed was 

21 thereafter recorded on or about September 13, 2011. Adv. Dkt. 

22 226, Ex. 1 at ¶ 13; Id., Ex. 2 at Ex. F; see also Adv. Dkt. 238 

23 at ¶j 5, 18, 31. That foreclosure extinguished plaintiff's 

24 interest in the Property and vested it in Mr. Roth. Adv. Dkt. 

25 226, Ex. 1 at ¶ 13. A little over a week later, on September 22, 

26 2011, Mr. 1-leimburger quitclaimed whatever interest he then held 

27 in the Property to Mr. Roth. , Ex. 1 at ¶ 14; Ex. 2 at Ex. G. 

28 Over four years later, on December 11, 2015, plaintiff filed 

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1 a petition for relief under Chapter 13 of the Bankruptcy Code. 

2 Adv. Dkt. 226, Ex. 1 at ¶ 37; Id., Ex. 2 at Ex. X; see also Adv. 

3 Dkt. 238 at ¶j 8, 21, 34. Although plaintiff notified defendants 

4 of her bankruptcy filing after she filed and before December 14, 

5 2015, Adv. Dkt. 226, Ex. 1 at ¶ 38; Id., Ex. 2 at Ex. W, 

6 defendants nevertheless foreclosed on DOT 2 on December 14, 2015. 

7 Adv. Dkt. 226, Ex. 1 at ¶ 38; Id., Ex. 2 at Ex. X; see also Adv. 

8 Dkt. 238 at ¶j 9, 22, 35. A trustee's deed was recorded on 

9 December. 22, 2015. Adv. Dkt. 226, Ex. 1 at ¶ 41; Id., Ex. 2 at 

10 Ex. X; see also Ex. 238 at ¶j 10, 23, 36. Mr. Roth subsequently 

11 conveyed his interest in the Property to defendants in a grant 

12 deed recorded on December 30, 2015. Adv. Dkt. 226 at Ex 3. 

13 Plaintiff's bankruptcy case was dismissed on May 11, 2016. 

14. Adv. Dkt. 226, Ex. 1 at ¶ 46; Bankr. Dkt. 52; see also Adv. Dkt. 

15 238 at ¶J 11, 24, 37. Six months later, on November 9, 2019, 

16 defendants initiated unlawful detainer proceedings to recover 

17 possession of the Property. Adv. Dkt. 226,Ex. 1 at ¶ 48; Id., 

18 Ex. 2 at Ex. Z; see also Adv. Dkt. 238 at ¶J 12, 25, 38. 

19 However, at all times, plaintiff has remained in possession of 

20 and continued to reside on the Property. Adv. Dkt. 226, Ex. 1 at 

21 ¶ 18; see also Adv. Dkt. 238 at ¶j 13, 26, 39. Indeed, although 

22 plaintiff has continued to reside on the Property at all relevant 

23 times, she has only paid rent in the amount of $900.00 per month 

24 to Mr. Roth in cash payments for several months in 2013-2014. 

25 Adv. Dkt. 226, Ex. 1 at ¶ 18. 

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Venue, Jurisdiction, and Consent 

2 Venue is proper under 28 U.S.C. § 1409. 

3 Federal subject matter jurisdiction is founded on 28 U.S.C. 

4 § 1334. This adversary proceeding involves core claims under 28 

5 U.S.C. §§ 157(b) (2) (A), (G), and (0), as well as a non-core claim 

6 under California state law. 

7 Plaintiff consents to the entry of final orders and judgment 

8 by a bankruptcy judge under 28 U.S.C. § 157(c) (2). Adv. Dkt. 77 

9 at 2:14-16. Defendants concede that consent is not necessary for 

10 a bankruptcy judge to enter a final judgment on the core § 362 

11 automatic stay claims alleged in the first and second causes of 

12 action and, therefore, their earlier non-consent applies only to 

13 the remaining non-core state law claim alleged in the fourth 

14 cause of action. Adv. Dkt. 131 (audio at 21:08-22:30). Although 

15 the court reserved that issue for trial, given the disposition 

16 below, the court now concludes that defendants have impliedly 

17 consented to the entry of a final judgment by a bankruptcy judge 

18 on the non-core state law claim alleged in the fourth cause of 

19 action. See 28 U.S.C. 157(c) (2) 

20 Bankruptcy proceedings fall into three categories, those: 

21 (i) that arise under Title 11; (ii) that arise in a Title 11 

22 case; and (iii) that are "related to" a Title 11 proceeding. 

23 Stern v. Marshall, 564 U.S. 462, 473 (2011) . Cases in the former 

24 two categories are known as "core" proceedings, while cases that 

25 are only related to a Title 11 proceeding are "non-core." See 

26 Id.at 473-475; 28 U.S.C. § 157(b) . District courts may refer 

27 any bankruptcy proceeding, whether core or non-core, to the 

28 bankruptcy court. 28 U.S.C. § 157(a); Id. at 474. 

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1 Generally, a bankruptcy judge may hear and enter a final 

2 judgment in a core proceeding, but in a non-core proceeding, may 

3 only submit proposed findings of fact and conclusions of law to 

4 the district court which then enters final judgment. Id. at 

5 474-75; 28 U.S.C. § 157(c) (1). A bankruptcy judge may, however, 

6 "with the consent of all the parties to the proceeding, ... hear 

7 and determine and ... enter appropriate orders and judgments 

8 ." 28 U.S.C. § 157(c) (2); Executive Benefits Ins. Agency v. 

9 Arkison, 573 U.S. 25, 38 (2014) 

10 In Weilness Int'l Network, Ltd. v. Sharif, 135 s.ct. 1932 

11 (2015), the Supreme Court addressed the question whether parties 

12 can consent to adjudication and the entry of final orders and 

13 judgment by the bankruptcy court of traditional non-core claims. 

14 Id. at 1939. The Supreme Court answered the question in the 

15 affirmative. Id. at 1944-45. More importantly, the Weliness 

16 court clarified that neither the United States Constitution nor 

17 28 U.S.C. § 157 mandate that a party expressly consent to 

18 bankruptcy court adjudication. Id. at 1947. "The implied 

19 consent standard ... supplies the appropriate rule for 

20 adjudications by bankruptcy courts under § 157." Id. at 1948. 

21 "[T]he key inquiry is whether the litigant or counsel was made 

22 aware of the need for consent and the right to refuse it, and 

23 still voluntarily appeared to try the case before the non-Article 

24 III adjudicator." Id. (internal quotation and citation omitted); 

25 see also Executive Benefits Ins. Agency v. Arkinson (In re 

26 Bellingham Ins. Agency, Inc.), 702 F.3d. 553, 567 (9th Cir. 2012) 

27 (discussing party's implied consent to permit a bankruptcy judge 

28 "to decide finally") 

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The intentional misrepresentation claim that was alleged in 

the third cause of action was previously dismissed with prejudice 

and without leave to amend. 3 Adv. Dkts. 132,134. That 

dismissal was not appealed. That leaves the unfair business 

practices claim in the fourth cause of action as the only 

remaining state law non-core claim alleged in the second amended 

complaint and, thus, the only claim for which defendants 

previously acknowledged consent is needed. 

The Supreme Court in Wellness observed that the 

determination of whether a party has in fact consented to 

bankruptcy court jurisdiction on a non-core claim may "require a 

deeply fact bound analysis of the procedural history" of a 

particular case. Weilness, 135 S.Ct. at 1949. A fact bound 

analysis of the procedural history of this case implicates the 

defendants' implied consent to the entry by this court of a final 

judgment on the fourth cause of action. 

Defendants asked the court to dismiss plaintiff's state law 

claims "with prejudice" on multiple occasions. Defendants' 

request for a "with prejudice" dismissal is tantamount to a 

request for the court to enter a final judgment on the merits of 

the non-core claims. Mann v. HEW, Health Care Financing Agency, 

769 F.2d 590, 594 (9th Cir. 1985), cent. denied, 474 U.S. 1061 

3The court has the authority to issue final orders on 

pretrial matters that do not involve factual findings. Sigma 

Micro Corp. v. Healthcentral.com(In re Healthcentral.com ), 504 

F.3d 775, 787-88 (9th Cir. 2007) . That includes a claimdispositive motion to dismiss. In re AWTR Liquidation, Inc., 547 

B.R. 831, 839 (Bankr. C.D. Cal. 2016) (citing PDG Los Arcos, LLC 

v. Adams, 436 Fed. Appx. 739, 743 (9th Cir. 2011)). 

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(1986); see also 9 Wright & Miller § 2373, at 396, n. 4 ("{W]±th 

2 prejudice is an acceptable form of shorthand for an adjudication 

3 upon the merits.") (internal quotations omitted) . For some 

4 courts, that is enough to trigger implied consent. In re Jordan, 

5 543 B.R. 878, 882 (Bankr. C.D. Ill. 2016) (finding implied 

6 consent where defendant moved to dismiss and asked the bankruptcy 

7 court "to enter a final order of dismissal.") . But even more 

8 compelling here is that defendants have now explicitly and 

9 unconditionally asked the court to grant summary judgment and 

10 thereby enter a final judgment on the remaining non-core claim 

11 alleged in the fourth cause of action. See Adv. Dkt. 224 at 11. 

12 In this court's view, defendants' request for summary judgment 

13 after withholding consent is enough to warrant a finding of 

14 implied consent to the entry of a final judgment by the 

15 bankruptcy court on the remaining state law non-core claim 

16 alleged in the fourth cause of action. See 11 U.S.C. § 

17 157(c) (2); True Traditions, LC v. Wu, 552 B.R. 826, 839 (N.D. 

18 Cal. 2015) (request for entry of final judgment on summary 

19 judgment motion is implied consent); see also Haley v. Barlays 

20 Bank Del. (In re Carter), 506 B.R. 83, 88 (Bankr. D. Ariz. 2014) 

21 (finding that a summary judgment movant waived its Stern 

22 objection to the court's constitutional authority and commenting 

23 that "it is difficult to understand how both the objection to 

24 final judgment and the request for entry of final judgment could 

25 have been filed in compliance with Rule 9011(b) .") 

26 Based on the foregoing, the court concludes it has full 

27 constitutional and statutory authority to hear and determine the 

28 defendants' summary judgment motion and to enter a final judgment 

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1 on all claims alleged in the second amended complaint, the non2 core state law claim in the fourth cause of action included. 

3 

4 Requests for Judicial Notice 

5 Plaintiff and defendants have both filed requests for 

6 judicial notice. 

7 Defendants request judicial notice of allegations in 

8 plaintiff's second amended complaint, exhibits submitted with the 

9 second amended complaint, and a recorded grant deed pursuant to 

10 which Mr. Roth conveyed his interest in the Property to 

11 defendants. Adv. Dkt. 226. 

12 Plaintiff makes limited objections to defendants' request 

13 for judicial notice. Plaintiff objects only to judicial notice 

14 of the allegation in the second amended complaint that references 

15 DOT 2 and also objects to the DOT 2 exhibit attached to the 

16 second amended complaint on the basis it lacks foundation. Adv. 

17 Dkt. 238 at ¶j 3, 16, 29, 42. Plaintiff also objects to judicial 

18 notice of the allegation in the second amended complaint that 

19 defendants conducted a nonjudicial foreclosure sale on December 

20 14, 2015, and the trustee's deed from that ñonjudicial 

21 foreclosure sale. Id., at fT 9, 22, 35, 49. For the reasons 

22 explained below, plaintiff's objections are OVERRULED and 

23 defendants' request for judicial notice is GRANTED. 

24 The court initially notes that an opposing party's pleadings 

25 are admissible and can serve as a basis for summary judgment. 

26 Prepaid Teleconnect, Inc. v. City of Murrieta, 2016 WL 1622609, 

27 *3 (E.D. Cal. 2016) ("A statement in an opposing party's 

28 pleadings qualifies as an admission, rendering it admissible for 

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purposes of summary judgment."); see also Lockwood v. Wolf Corp., 

629 F.2d 603, 611 (9th Cir. 1980) . As to DOT 2 on which 

defendants rely for their motion, it is the same document that 

plaintiff attached as an exhibit to the second amended complaint 

and which plaintiff states in the second amended complaint is a 

true and correct copy. Adv. Dkt. 78 at Ex. C. Thus, not only is 

judicial notice of matters on the court's docket appropriate, 

United States v. Wilson, 631 F.2d 118, 119-20 (9th Cir. 1980), 

but plaintiff has already authenticated the document to which she 

now objects to the court taking judicial notice of. In any case, 

the court will take judicial notice of Exhibits 1, 2, and 3 

attached to Adv. Dkt. 226. 

Plaintiff requests that the court take judicial notice of 

pleadings in what appears to be related litigation involving 

defendants before the Sutter County Superior Court. Adv. Dkt. 

236. Defendants object to plaintiff's request to the extent it 

is a request for the court to accept the truth of facts stated in 

the pleadings. For the reasons explained below, defendants' 

objection is SUSTAINED IN PART and OVERRULED IN PART which means 

plaintiff's request for judicial notice is GRANTED IN PART and 

4 1n any event, defendants have sufficiently admitted 

allegations in the second amended complaint relevant to the 

disposition of the summary judgment motion. Compare Adv. Dkts. 

77 and 136 at ¶j 7-10, 12-15, 29, 30, 37-39, 41, 46-50; Adv. 

Dkts. 238 and 254. Judicial notice of undisputed facts within 

the court's own records is appropriate. Forte v. County of 

Merced, 2013 WL 3282957, *2(E.D. Cal. 2012) ("[A] court may take 

judicial notice of undisputed facts contained in a public 

document such as a court filing and may rely on those facts as if 

they are true."); see also Teixeira v. County of Alameda, 873 

F.3d 670, 676 n. 6 (9th Cir. 2017) 

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i-I DENIED IN PART. 

2 Judicial notice of documents and pleadings filed in related 

3 litigation is permissible. See Reyn's Pasta Bella, LLC v. Visa 

4 USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006). However, a 

5 court may take judicial notice of a document filed in another 

6 court not for the truth of the matters asserted in the other 

7 litigation document but, rather, only to establish the fact of 

8 such litigation. San Luis v. Badgley, 136 F. Supp. 2d 1136, 1146 

9 (E.D. Cal. 2000). Applying that standard here, the court will 

10 take judicial notice of the existence of the Sutter County 

11 Superior Court pleadings and proceedings. See Nelson v. Union 

12 Bank of Calif., N.A., 290 F. Supp. 2d 1101, 1113 (C.D. Cal. 

13 2003) . However, the court does not take judicial notice of facts 

14 asserted in the Sutter County Superior Court pleadings. 

15 

16 Applicable Legal Standard 

17 Federal Rule of Civil Procedure 56, applicable by Federal 

18 Rule of Bankruptcy Procedure 7056, permits the court to grant 

19 summary judgment if the movant shows that there is no genuine 

20 dispute as to any material fact and the movant is entitled to 

21 judgment as a matter of law." Fed. R. Civ. P. 56(a); Fed. R. 

22 Bankr. P. 7056; see also Local Bankr. R. 7056-1. 

23 A motion for summary judgment calls for a "threshold 

24 inquiry" into whether a trial is necessary, that is, whether "any 

25 genuine factual issues . . . properly can be resolved only by a 

26 finder of fact because they may reasonably be resolved in favor 

27 of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 

28 250 (1986) . The court does not weigh evidence or assess 

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1 credibility; rather, it determines which facts the parties do not 

2 dispute, then draws all inferences and views all evidence in the 

3 light most favorable to the nonmoving party. See Id. at 255; 

4 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 

5 587-88 (1986). "Where the record taken as a whole could not lead 

6 a rational trier of fact to find for the non-moving party, there 

7 is no 'genuine issue for trial.'" Id. at 587. 

8 The moving party bears the initial burden of "informing the 

9 district court of the basis for its motion, and identifying those 

10 portions of [the record] which it believes demonstrate the 

11 absence of a genuine issue of material fact." Celotex Corp. v. 

12 Catrett, 477 U.S. 317, 323 (1986). As noted above, an opposing 

13 party's pleadings are admissible for that purpose. Id. at 324; 

14 Prepaid Teleconnect, 2016 WL 1622609 at *3; see also Lockwood, 

15 629 F.2d at 611. 

16 The non-moving party must, in response to a summary judgment 

17 motion, "go beyond the pleadings" and "designate specific facts 

18 showing that there is a genuine issue for trial." Celotex, 477 

19 U.S. at 324 (quotation marks omitted). The non-moving party 

20 "must do more than simply show that there is some metaphysical 

21 doubt as to the material facts." Matsushita, 475 U.S. at 586. 

22 "Only disputes over facts that might affect the outcome of the 

23 suit under the governing law will properly preclude the entry of 

24 summary judgment." Anderson, 477 U.S. at 248. 

25 

26 Discussion 

27 A. The First and second Causes of Action 

28 The commencement of a case in bankruptcy creates an 

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1 "estate," which contains all of the debtor's interests (whether 

2 legal or equitable) in property, tangible or intangible. 11 

3 U.S.C. § 541(a); United States v. Whiting Pools, Inc., 462 U.S. 

4 198, 203-05 (1983). The bankruptcy estate - and property of it - 

5 is protected by an automatic stay of actions by all entities to 

6 collect or recover on claims and with regard to property of the 

7 estate. See 11 U.S.C. H 541(a) & 362(a). 

8 However, interests that a debtor does not hold at the 

9 commencement of the bankruptcy case do not pass to the estate, 

10 and such interests are not subject to the automatic stay. 

11 "Section 362(a) only stays actions against the debtor, property 

12 of the debtor or property of the bankruptcy estate. The stay 

13 does not apply to property in which the debtor's interest was 

14 completely extinguished before the case was filed." Rutter, Cal. 

15 Prac. Guide Bankruptcy § 8:790, Exceptions to Automatic Stay 

16 (citation omitted) . Unfortunately for the plaintiff, these are 

17 the circumstances in which she finds herself in this adversary 

18 I proceeding. 

19 We begin with DOT 1. When plaintiff executed DOT 1 she 

20 conveyed the entirety of her legal interest in the Property as 

21 security for the loan from Mr. Roth. See Bank of Italy Nat'l Tr. 

22 & Say. Ass'n v. Bentley, 217 Cal. 644, 655-56 (1933) (explaining 

23 conveyance of legal title or interest as security under deed of 

24 trust); Davidow v. Corp. of Am., 16 Cal.App.2d 6, 11-12 (1936) 

25 (accord). Plaintiff and Mr. Heimburger then signed DOT 2. 

26 Consistent with Bank of Italy and Davidow, supra, DOT 2 states 

27 that MERS as Countrywide's nominee holds legal title as security 

28 for Countrywide's loan to plaintiff and Mr. Heimburger. For 

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1 purposes relevant here, that included Mr. Heimburger's legal 

2 interest in the Property which was not encumbered by DOT 1. 

3 By 2005 then, plaintiff's legal interest in the Property is 

4 encumbered by Mr. Roth's lien under DOT 1, and Mr. Heimburger's 

5 legal interest in the Property is encumbered by Countrywide's 

6 lien under DOT 2. Plaintiff and Mr. Heimburger retained whatever 

7 equitable interests in the Property they each held at the time. 

8 Fast forward to 2010. Plaintiff and Mr. Heimburger are 

9 divorced and, in the course of their divorce proceeding, they 

10 entered into the state-court approved MSA. The MSA granted 

11 plaintiff the Property as her sole and separate property. The 

12 NSA was never recorded. Nevertheless, the unrecorded MSA has the 

13 status of an unrecorded grant of an intterest in property from Mr. 

14 Heimburger to the plaintiff. See California Family Code § 

15 1502(b) ("Recording or nonrecording of a premarital agreement or 

16 other marital property agreement has the same effect as recording 

17 or nonrecording of a grant of real property.") 

18 Plaintiff conceded during oral argument that the interests 

19 in the Property that she now claims were affected by the 

20 defendants' postpetition foreclosure were interests she acquired 

21 from Mr. Heimburger under the MSA. Plaintiff's opposition 

22 confirms this, page 7 of which states as follows: 

23 The Complaint alleges that Ms. Battaglia had an 

interest in 15935 D Street Meridian, CA via her 

24 unrecorded Marital Settlement Agreement that became 

part of the bankruptcy estate.. The foreclosure sale 

25 affected Ms. Battaglia's interest in the property and 

was an attempt to enforce a lien against her, which she 

26 had obtained from Kevin Heimburger in their divorce. 

27 IDkt. 235 at 7:9-13. 

28 When pressed as to the precise interests that plaintiff 

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1 acquired from Mr. Heimburger under the MSA and that are issue in 

2 this adversary proceeding, plaintiff identified two: (i) the 

3 right to obtain legal title to the Property from Mr. Heimburger 

4 and (ii) the right to live on the Property. Again, this is 

5 consistent with plaintiff's opposition which states that 

6 defendants "nonjudicial foreclosure sale affected Ms[sic} 

7 Battaglia's right to obtain title from Kevin Heimburger that she 

8 was entitled too and disturbed her peace in her home." Dkt. 235 

9 at 7:18-19. As plaintiff correctly noted during oral argument, 

10 the right to obtain title is an equitable interest in property. 

11 See Rosenthal v. Landau, 90 Cal.App.2d 310, 312-13 (1949). The 

12 latter right may appropriately be characterized as a possessory 

13 interest that remains with the trustor even after title passes as 

14 security under a deed of trust. See Bank of Italy, 217 Cal. at 

15 656-57 ("The legal estate thus left in the trustor or his 

16 successors entitles them to the possession of the property until 

17 their rights have been fully divested by a conveyance made by the 

18 trustees in the lawful execution of their trust, and entitles 

19 them to exercise all the ordinary incidents of ownership in 

20 regard to the property, subject always, of course, to the 

21 execution of the trust.") 

22 To the extent the aforementioned rights plaintiff states she 

23 acquired from Mr. Heimburger under the MSA are unrecorded 

24 property interests, by operation of California law they passed 

25 from plaintiff to the DOT 1 trustee as additional security for 

26 Mr. Roth's benefit under DOT 1. California Civil Code § 2930 

27 states that "[t] itle acquired by the mortgagor subsequent to the 

28 execution of the mortgage, inures to the mortgagee as security 

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1 for the debt in like manner as if acquired before the execution." 

2 As explained in Perego v. Seltzer, 260 Cal.App.2d 825 (1968) 

3 This code section is fully applicable to trust deeds 

(Barberi v. Rothchild, 7 Cal.2d 537 [61 P.2d 7601), and 

4 it is well settled that a trust deed creates a valid 

lien on real property to secure a debt for which it is 

5 executed, even though the trustor has no title to the 

property at the time of the execution of the 

6 instrument, provided he subsequently acquires title 

thereto during the life of the deed of trust. Title to 

7 real property acquired after it is mortgaged is deemed 

to be covered by the lien on the theory that the 

8 mortgagor is estopped from denying title under such 

circumstances. (California Bank v. Bell), 38 Cal.App.2d 

9 533 [101 P.2d 7241; Civ. Code, § 2930; 17 Cal.Jur., § 

142, p.854; 58 A.L.R. 391, note; Orr v. Stewart, 67 

10 Cal. 275 [7 P. 693]; Schelling v. Thomas, 96 Cal.App. 

682, 688 [274 P. 755].) 

11 

Id. at 828-29. 

12 

Although § 2930 is an equitable doctrine of common law, In 

13 

re Wagabaza, 582 B.R. 486, 496 (Bankr. C.D. Cal. 2018), it 

14 

remains a fundamental and well-grounded principle codified in 

15 

California law that must not be ignored so as to render it 

16 

meaningless. See In re Southbay Expressway, L.P., 2010 WL 

17 

4393869, *4 (Bankr. S.D. Cal. 2010) . This is particularly true 

18 

when, as here, plaintiff received the benefit of two loans 

19 

totaling nearly $360,000.00 and does not assert any inequity 

20 

arising from the MSA. 

21 

The same is also true even if the rights that plaintiff 

22 

states she acquired from Mr. Heimburger under the MSA are 

23 

equitable interests in the Property. Although they transferred 

24 

to plaintiff under the MSA they likewise passed to the DOT 1 

25 

trustee as additional security for Mr. Roth's benefit under DOT 1 

26 

by operation of California law. California Civil Code § 1106 

27 

states that "[w] here a person purports by proper instrument to 

28 

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1 grant real property in fee simple, and subsequently acquires any 

2 title, or claim of title thereto, the same passes by operation of 

3 law to the grantee, or his successors." The California Supreme 

4 Court has held that Civil Code § 1106 is applicable to deeds of 

5 trust except that the title or claim to it passes to the trustee 

6 as additional security rather than to the grantee. Barberi, 7 

7 Cal. 2d at 540. 

8 The point here is this: Although it is true that plaintiff 

9 acquired Mr. Heimburger's interest in the Property consisting of 

10 his right to obtain title and a possessory right through the MSA, 

11 it is equally true that by operation of California law those 

12 interests became additional security for Mr. Roth's benefit under 

13 DOT 1. So by January of 2010, in addition to plaintiff's legal 

14 interest in the Property, Mr. Roth's security under DOT 1 

15 included the equitable and possessory rights that plaintiff 

16 received from Mr. Heimburger under the MSA. 

17 Mr. Roth foreclosed on DOT 1 in September of 2011. That 

18 foreclosure extinguished the entirety of plaintiff's legal 

19 interest in the Property and any residual equitable interest 

20 associated with plaintiff's legal title. Moeller v. Lien, 25 

21 Cal.App.4th 822, 834 (1994) (after foreclosure, trustor lacks 

22 legal or equitable right, title, or interest in property all of 

23 which vest in purchaser) . Mr. Roth's foreclosure on DOT 1 also 

24 extinguished the equitable and possessory interests that 

25 plaintiff states she acquired from Mr. Heimburger under the MSA 

26 and which by operation of law transferred to the DOT 1 trustee as 

27 additional security for Mr. Roth's benefit under DOT 1. Bank of 

28 Italy, 217 Cal. at 656-57; see also Perkins v. Chad Dev. Corp., 

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95 Cal.App.3d 645, 651 (1979) (holding that foreclosure 

extinguished any interest claimed in property, including 

equitable interest acquired after deed of trust was executed) 

Indeed, plaintiff concedes these points. See Dkt. 226, Ex. 1 at 

¶ 13 ("On September 13, 2011, John Roth, III obtained an interest 

in one half of the property by a Trustee's Deed Upon Sale[.]"). 

Effectively, then, Mr. Roth's foreclosure on DOT 1 gave Mr. 

Roth the entirety of plaintiff's interests in the Property which, 

at the time of his foreclosure, included the equitable right to 

Mr. Heimburger's title and the possessory right which plaintiff 

stated she received under the MSA. 5 So by September 2011 all 

interests in the Property were held by non-debtors, i.e., Mr. 

Roth following his foreclosure on DOT 1 and Mr. Heimburger whose 

legal title remained encumbered by defendants' lien under DOT 2. 

That means when plaintiff filed her bankruptcy petition over four 

years later on December 11, 2015, and when defendants foreclosed 

on DOT 2 three days after the petition was filed knowing that a 

bankruptcy case was filed, plaintiff had no interest in the 

Property that would (or could) have become property of the estate 

protected by the automatic stay. That also means defendants' 

postpetiton foreclosure on DOT 2 did not (and could not) violate 

any provision of § 362(a), willfully or otherwise. 6 

5That also means that when Mr. Heimburger purported to 

quitclaim his interest to Mr. Roth one week after Mr. Roth 

foreclosed on DOT 1 he really quitclaimed nothing. At that point 

Mr. Heimburger no longer had anything left to quitclaim. 

6Because the entirety of plaintiff's interest in the 

Property - interests received from Mr. Heimburger under the MSA 

included - was terminated prepetition by Mr. Roth's foreclosure 

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To reiterate, defendants' postpetition foreclosure did not 

(and could not) implicate property of the estate and, 

correspondingly, it did not (and could not) violate the automatic 

stay of § 362(a). Therefore, for the foregoing reasons, summary 

judgment on the first and second causes of action alleged in the 

second amended complaint will be granted for defendants and 

against plaintiff. 

B. Fourth Cause of Action 

The fourth cause of action purports to allege an unfair 

business practices claim under California Business & Professions 

Code § 17200. The claim is premised on purported violations of § 

362 and California Civil Code § 1709. 

Because the court will grant summary judgment for defendants 

on the first and second causes of action, there can be no claim 

under California Business & Professions Code § 17200 premised on 

a violation of § 362. Defendants are therefore entitled to 

judgment as a matter of law on that aspect of the claim alleged 

in the fourth cause of action. 

To the extent the intentional misrepresentation claim 

I previously alleged in the third cause of action was dismissed 

on DOT 1, plaintiff's presence on the Property when she filed her 

bankruptcy petition and thereafter did not give rise to an 

independent possessory interest protected by the automatic stay. 

See In Eden Place, LLC v. Pen (In re Perl), 811 F.3d 1120 (9th 

Cir. 2016) . And in any case, defendants did not initiate state 

law unlawful detainer proceedings to recover possession of the 

Property until six months after plaintiff's bankruptcy case was 

dismissed at which point there was no longer an estate or an 

automatic stay. 1(00 v. VNO Shops on the Lake (In re Koo), 2013 

WL 5460138, *2(9th Cm. BAP 2013) . Defendants also made no 

attempt to remove plaintiff from the Property during this 

litigation. 

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1 with prejudice on the basis plaintiff is unable to establish the 

2 element of reliance necessary for the claim, the fourth cause of 

3 action similarly fails as a matter of law to the extent it is 

4 premised on California Civil Code § 1709. Section § 1709 states 

5 that "[o]ne who willfully deceives another with intent to induce 

6 him to alter his position to his injury or risk, is liable for 

7 any damage which he thereby suffers." Cal. Civ. Code § 1709. 

8 Like the intentional misrepresentation claim of the former third 

9 cause of action, § 1709 is grounded in fraud and therefore 

10 requires proof of reliance. Apumac, LLC v. Flint Hills Int'l, 

11 2015 WL 13306128, *3 (C.D. Cal. 2015) (citing Lazar v. Superior 

12 Court, 12 Cal. 4th 631, 638 (Cal. 1996) and Cal. Civ. Code § 

13 1709); Jones v. Wells Fargo Bank N.A., 2011 WL 13136503, *4 (C.D. 

14 Cal. 2011) . Inasmuch as this aspect of the § 17200 claim 

15 requires proof of an element the court has already determined 

16 plaintiff is unable to establish in the context of fraud as a 

17 matter of law, this aspect of the fourth cause of action likewise 

18 fails as a matter of law. 

19 In short, plaintiffs are entitled to judgment on the fourth 

20 cause of action as a matter of law. Therefore, consistent with 

21 I the court's determination that defendants have consented to entry 

22 of a final judgment by a bankruptcy judge on the remaining non23 core state-law claim, summary judgment will be granted for 

24 defendants and against plaintiff on the state law claim alleged 

25 I under California Business & Professions Code § 17200 in the 

26 I fourth cause of action. 

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1 Conclusion 

2 For all the foregoing reasons, defendants' motion for 

3 summary judgment is granted. Judgment will be entered for the 

4 defendants and against plaintiff on the first, second, and fourth 

5 causes of action remaining in the second amended complaint with 

6 plaintiff taking nothing on those claims. Defendants' 

7 alternative request for summary judgment on the punitive damage 

8 claim will be denied as moot. 

9 Provided a timely application is filed, defendants, as the 

10 prevailing parties, shall be awarded costs, other than attorney's 

11 fees. See Fed. R. Bankr. P. 7054(b) (1). 

12 I To the extent there is a basis under applicable law, and 

13 consistent with Fed. R. Bankr. P. 9011, defendants may file a 

14 motion for attorney's fees under Fed. R. Bankr. P. 7054(b) (2) and 

15 Fed. R. Civ. P. 54(d). 

16 The continued hearing scheduled for July 16, 2019, at 9:30 

17 a.m. will be vacated. 

18 A separate order granting defendants' motion for summary 

19 judgment and a separate judgment will issue. 

20 Dated: July 9, 2019. 

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UNITED STATES BANKRUPTCY JUDGE 

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INSTRUCTIONS TO CLERK OF COURT 

SERVICE LIST 

TheClerk of Court is instructed to send the attached 

document, via the ENC, to the following parties: 

Kimberly A. Harrison 

604 10th Street 

Sacramento CA 95814 

Bryan L. Hawkins 

500 Capitol Mall #1600 

Sacramento CA 95814 

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