Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-5_13-ap-05181/USCOURTS-canb-5_13-ap-05181-0/pdf.json

Parties Involved:
Abel Mekkoudi
Plaintiff
Andrea Mekkoudi
Plaintiff
First Tennessee Bank
Defendant

Document Text:

UNITED STATES BANKRUPTCY COURT

 For The Northern District Of California

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UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

In re ] Case No. 13-55492-ASW

]

ABEL MEKKOUDI and ANDREA MEKKOUDI, ] Chapter 13

]

Debtors. ]

]

]

ABEL MEKKOUDI and ANDREA MEKKOUDI, ] Adv. Pro. No. 13-05181-ASW

]

Plaintiffs, ] 

]

v. ]

] Hearing Date: Jan. 12, 2015

FIRST TENNESSEE BANK ] Hearing Time: 2:30 p.m.

]

Defendant. ]

___________________________________]

MEMORANDUM DECISION RE DEFENDANT’S 

MOTION TO VACATE PRELIMINARY INJUNCTION

Before the Court is the motion of Defendant First Tennessee

Bank (the “Bank”), which is represented by attorney Bernard

Kornberg, to vacate the preliminary injunction imposed by this

Court on April 17, 2014. The motion is opposed by Debtors, who are

represented by attorney Sara Lipowitz.

Debtors, who were then represented by attorney Judson Farley,

filed the underlying chapter 13 case on October 16, 2013. Debtors

had filed two prior cases, one of which was pending within a year

IT IS SO ORDERED.

Signed January 12, 2015

Arthur S. Weissbrodt

U.S. Bankruptcy Judge

________________________________________

Entered on Docket 

January 12, 2015

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 13-05181 Doc# 39 Filed: 01/12/15 Entered: 01/12/15 11:32:10 Page 1 of 5 
UNITED STATES BANKRUPTCY COURT

 For The Northern District Of California

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prior to the filing of the instant case. The stay was therefore due

to expire 30 days after filing. Due to an apparent oversight by Mr.

Farley, no motion to extend the stay was filed, and the stay

terminated. Thereafter, Debtors filed this adversary proceeding,

seeking a preliminary injunction to prevent the Bank from

foreclosing on its second position lien on Debtors’ real property

at 2050-2052 17th Avenue, Santa Cruz, CA (the “Property”). The Court

granted a preliminary injunction for an indefinite period to permit

Debtors time to obtain a loan modification on the first DOT and to

have the Court determine the value of the real property. The Court

ordered that if the loan modification was denied, counsel for the

Bank could move to vacate the injunction.

A motion to value was filed on April 17, 2014. The Bank filed

an opposition, but Mr. Farley never set the matter for hearing. At

the December 9, 2014 hearing, the Court set a hearing on the motion

to value for February 6, 2015 at 9:00 a.m.

In August 2014, Debtors were turned down for a loan

modification. According to a letter dated August 15, 2014, which

was sent to Mr. Farley by Nationstar, the servicer on the 1st Deed

of Trust, the application was denied due to failure to provide

requested documents. According to the declaration of Debtors filed

December 9, 2014, Debtors never directly received any

correspondence from Nationstar at all, let alone any letter

explaining what documents were missing. Debtors also state they

were unaware of the denial letter until October during a meeting

with Mr. Farley. Debtors state they tried to contact Nationstar to

follow up but none of the telephone numbers worked, and their email

correspondence went unanswered. Debtors state they have filed a new

Case: 13-05181 Doc# 39 Filed: 01/12/15 Entered: 01/12/15 11:32:10 Page 2 of 5 2
UNITED STATES BANKRUPTCY COURT

 For The Northern District Of California

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application for a loan modification, and attach a copy of the

return receipt showing delivery to Nationstar on November 17, 2014.

In the instant motion, which was filed September 18, 2014, the

Bank moves the Court to vacate the preliminary injunction because

Debtors’ application for a loan modification has been denied and

because Debtors had not pursued their motion to value. 

The hearing on the motion was initially set for October 20,

2014 but was continued to December 9, 2014, because Mr. Farley was

temporarily suspended from practice, leaving Debtors without

representation. Ms. Lipowitz appeared at the December 9 hearing and

requested time to file a substantive response, which the Court

granted. The Court also set an evidentiary hearing for February 6,

2015 on Debtors’ motion to value.1

The Bank contends that the Court should vacate the injunction

because Debtors cannot obtain a loan modification, nor can they

confirm a plan based on their current income and the amount of the

arrearages due on the subject loans. 

However, according to Debtors’ declaration in support of their

opposition, Mr. Mekkoudi is now able to return to work and expects

to be doing some consulting work beginning in January 2015, which

will increase the Debtors’ income. Additionally, as noted, Debtors

have filed a new loan modification application, and the motion to

value the Property is currently set for hearing on February 6.

1At the October 20 hearing Mr. Kornberg asked the Court to

order that if no timely written opposition were filed, the motion

to vacate would be granted. The Court did not so rule, but stated

that an attorney needed to appear on behalf of Debtors on December

9, and that such attorney would ideally would have met with the

Mekkoudis well before the hearing. The Court stated that it would

likely grant the motion if Debtors did not appear with an attorney

at the December 9 hearing.

Case: 13-05181 Doc# 39 Filed: 01/12/15 Entered: 01/12/15 11:32:10 Page 3 of 5 3
UNITED STATES BANKRUPTCY COURT

 For The Northern District Of California

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Debtors also state they intend to file new schedules in January and

supplement their pending loan modification request to reflect an

anticipated increase in income due to Mr. Mekkoudi’s expected new

employment. The Bank argues that the evidence of new employment and

of Debtor’s recent loan modification application is inadequate.

However, the Court accepts the unrebutted statements in Debtors’

declaration.

The Court understands the Bank’s exasperation with the delays

that have occurred in this case. However, the Court is unwilling to

penalize Debtors for the shortcomings of their former counsel,

especially when the likely result is the loss of Debtors’

residence. Debtors should be given the opportunity to pursue a loan

modification and a lien strip now that they are represented by

competent counsel, and now that it appears Debtors’ income will be

increasing.

For these reasons, the Bank’s motion is denied without

prejudice. Counsel for Debtors may submit a proposed form of order.

The Court is not making an order at this time, but wants the

Debtors and Ms. Lipowitz to understand that the Court expects

Debtors to follow through by filing updated schedules with the

Court reflecting their new income as soon as practicable. The Court

also notes that the chapter 13 trustee has moved to dismiss the

underlying case for lack of prosecution, with a hearing set for

February 3, 2015. Debtors should promptly take steps to address the

objections to confirmation that were raised by the trustee in her

most recent objection to confirmation filed February 27, 2014, and

file an amended chapter 13 plan.

*** END OF MEMORANDUM DECISION ***

Case: 13-05181 Doc# 39 Filed: 01/12/15 Entered: 01/12/15 11:32:10 Page 4 of 5 4
UNITED STATES BANKRUPTCY COURT

 For The Northern District Of California

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Court Service List

Parties to be served electronically.

Case: 13-05181 Doc# 39 Filed: 01/12/15 Entered: 01/12/15 11:32:10 Page 5 of 5 5