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FILED

DEC 20 2016

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION 

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NV-16-1024-KiLDo

)

ILIA CHAROV, ) Bk. No. 15-13297-mkn

)

Debtor. ) Adv. No. 15-01107-mkn

 )

)

ILIA CHAROV, )

)

Appellant, )

) M E M O R A N D U M1

v. )

)

BANK OF NEW YORK MELLON, )

SELECT PORTFOLIO SERVICING, )

INC., )

)

Appellees. )

______________________________)

Submitted Without Oral Argument 

 on October 21, 2016, 

Filed - December 20, 2016

Appeal from the United States Bankruptcy Court

for the District of Nevada

Honorable Mike K. Nakagawa, Bankruptcy Judge, Presiding

 

Appearances: Appellant Ilia Charov, pro se, on brief; Chelsea A.

Crowton of Wright, Finlay & Zak, LLP on brief for

appellees Bank of New York Mellon and Select

Portfolio Servicing, Inc. 

 

Before: KIRSCHER, LAFFERTY and DORE,2 Bankruptcy Judges.

1 This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have, it has no precedential value. See 9th Cir. BAP Rule 8024-1.

2 Hon. Timothy W. Dore, Bankruptcy Judge for the Western

District of Washington, sitting by designation.
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 Former chapter 133 debtor, Ilia Charov ("Charov"), appeals an

order dismissing his adversary complaint against appellees, the

Bank of New York Mellon, f/k/a/ Bank of New York, as Trustee for

the Certificate Holders CWALT, Inc., Alternative Loan Trust

2006-OC2, Mortgage Pass-through Certificates Series 2006-OC2

("BONY") and Select Portfolio Servicing, Inc. ("Select"). For the

reasons explained below, we AFFIRM.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY 

A. Prepetition events 

1. Charov's loan with BONY's predecessor 

In 2005, Charov obtained a loan for $247,100 from GreenPoint

Mortgage Funding, Inc. to purchase real property located in

Maricopa County, Arizona ("Property"). As a condition of the

loan, Charov signed a note and deed of trust ("DOT"), which was

secured by the Property. The note and DOT were ultimately

assigned through several recorded assignments to BONY in or about

2010. Select services the loan. Charov has admittedly not made a

payment on the loan since August 2008.4 

2. Charov's prior bankruptcy filings

Between April 13, 2009, and June 5, 2015, Charov filed five

chapter 13 bankruptcy cases in the District of Nevada. The

bankruptcy court dismissed these cases for various reasons,

including the failure to file required documents, schedules and a

3 Unless specified otherwise, all chapter, code and rule

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The

Federal Rules of Civil Procedure are referred to as “Civil Rules.”

4 According to the proof of claim filed by BONY, the

prepetition arrearages on the loan were $81,498.97.

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statement of financial affairs, to pay filing fees, to attend the

§ 341(a) meeting, to commence plan payments and to file chapter 13

plans. On June 5, 2015, Charov filed his fifth case within three

months of filing his fourth case and within seven days of the

dismissal of the fourth case.

B. Postpetition events

On June 30, 2015, Charov, pro se, filed an adversary

complaint against BONY and Select to determine the validity or

extent of their claims against the Property. Charov alleged that

he initiated the adversary proceeding to “determine the validity

or extent of [BONY’s and Select’s] claim against the [Property]”

and to determine whether Select by acting on behalf of BONY “is

liable for being negligent per se under state and federal

statutes[]” in asserting “aggressive claims against my property

without first proving those claims adequately under state and

federal law.” (emphasis in original).

That same day, Charov filed an "Application for Preliminary

Injunction" in the adversary proceeding, which sought an

injunction to prevent a nonjudicial foreclosure of the Property

apparently scheduled for July 8, 2015.5 However, Charov never

noticed the Application for hearing and no proof of service exists

showing that BONY or Select were served with the Application.

On July 7, 2015, BONY moved for a comfort order in the main

case stating that no stay was in effect under § 362(c)(3) due to

Charov's instant case being his second bankruptcy case filed

within the last year. Charov opposed the motion. The bankruptcy

5 After the bankruptcy court dismissed the bankruptcy case,

the record does not indicate whether any foreclosure occurred.

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court entered the comfort order stating that the stay had expired

and was no longer in effect as to the Property. The order

dismissing Charov’s adversary proceeding states that the stay

expired as to Charov and the Property on July 5, 2015, by

operation of law under § 362(c)(3)(A).

On July 22, 2015, the chapter 13 trustee moved to dismiss

Charov's bankruptcy case under § 1307(c)(3) for failure to timely

file a plan; the deadline to file a plan expired on June 19, 2015.

A hearing on the dismissal motion was set for August 27, 2015.6 

On July 28, 2015, BONY filed its proof of claim for

$327,806.46 based on its debt secured by the Property. BONY

asserted that its debt was fully secured, even though Charov had

valued the Property at $314,000 in his Schedule A.

On August 12, 2015, Charov filed an objection to BONY's

claim, but never noticed the matter for hearing.7 It also appears

he never served the objection on BONY or Select. Charov

questioned BONY's standing as a creditor, alleging that BONY had

failed to bring forth an authenticated copy of the note and DOT.

On September 1, 2015, the bankruptcy court entered an order

dismissing Charov's bankruptcy case. He did not appeal the

dismissal order. Subsequently, the court closed the case. Later

the court administratively reopened the case solely with respect

to Charov’s remaining adversary proceeding against BONY and

6 Charov did not oppose the trustee's motion to dismiss or

appear at the hearing on August 27, 2015.

7 Based on his asserted claim that English is his second

language, Charov requested that no hearing be held. Unfortunately

for Charov, claim objections require hearings per Rule 3007(a) and

Local Bankruptcy Rule 3007(b).

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Select. 

On November 13, 2015, BONY and Select moved to dismiss

Charov's adversary complaint under Civil Rule 12(b)(6),

incorporated in Rule 7012(b), for its failure to state a claim or,

alternatively, for a more definite statement under Civil

Rule 12(e), incorporated in Rule 7012(b). Defendants contended

that BONY had a valid lien against the Property as evidenced by

the recorded DOT and assignments. To the extent Charov was asking

defendants to present the original note prior to any nonjudicial

foreclosure, defendants contended they were not required to do so

under Arizona law. 

Charov opposed BONY and Select's motion to dismiss the

adversary complaint. Besides his repeated standing argument, much

of Charov's argument was based on his erroneous view of civil

procedure or substantive law. BONY and Select noted these

deficiencies in their reply.8

Charov did not appear at the hearing on the motion to dismiss

the adversary complaint on January 14, 2016. We do not have a

transcript from that hearing and it is not available on the

docket. The bankruptcy court took the matter under submission.

On January 15, 2016, the bankruptcy court entered an order

denying BONY and Select's motion to dismiss under Civil

Rule 12(b)(6), but nevertheless dismissed the adversary complaint. 

Specifically, the court determined:

8 BONY and Select spent a great deal of time in their reply

discussing Nevada nonjudicial foreclosure law. However, because

the Property is located in Arizona and the DOT states that Arizona

law governs, Arizona law governs. In any event, it does not

matter because the bankruptcy court dismissed the adversary

proceeding on an entirely different basis.

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Because the Debtor's Chapter 13 proceeding has been

dismissed, no bankruptcy relief presently is being

sought. The order dismissing the Debtor's case has not

been appealed. No distribution will be made on the

[proof of claim]. Thus, the validity, extent or priority

of Defendants' interest in the Arizona Property has no

relationship to any bankruptcy matter or case before this

court.

. . . .

Absent any connection with a bankruptcy matter before

this court, the claims set forth in the Complaint reflect

only a two-party dispute governed by Arizona law

involving real property located in Maricopa County,

Arizona.

 

Under these circumstances, dismissal of the Complaint is

appropriate. Such dismissal, however, will be without

prejudice to the Debtor presenting his claims, if any, in

an appropriate non-bankruptcy forum. No further

adversary proceedings may be commenced in connection with

Case No. 15-13297. 

Charov timely appealed.

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334

and 157(b)(2)(A) and (K). We have jurisdiction under 28 U.S.C. 

§ 158.

III. ISSUES

Did the bankruptcy court abuse its discretion in dismissing

Charov's adversary complaint given that his underlying bankruptcy

case had been dismissed?

IV. STANDARDS OF REVIEW

We review a bankruptcy court's decision not to exercise

jurisdiction over an adversary proceeding following the dismissal

of the underlying bankruptcy case for an abuse of discretion. 

Carraher v. Morgan Elec., Inc. (In re Carraher), 971 F.2d 327, 328

(9th Cir. 1992); Davis v. C.G. Courington (In re Davis), 177 B.R.

907, 910-11 (9th Cir. BAP 1995). Likewise, we review the

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bankruptcy court’s sua sponte dismissal of an action for an abuse

of discretion. Snell v. Cleveland, Inc., 316 F.3d 822, 825 (9th

Cir. 2002). A bankruptcy court abuses its discretion if it

applies the wrong legal standard, misapplies the correct legal

standard, or if its factual findings are clearly erroneous. 

TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th

Cir. 2011).

We may affirm on any ground supported by the record,

regardless of whether the bankruptcy court relied upon, rejected

or even considered that ground. Fresno Motors, LLC v. Mercedes

Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014).

V. DISCUSSION

The bankruptcy court did not abuse its discretion in

dismissing the adversary proceeding.

Charov's argument on appeal consists of two short paragraphs. 

Interpreting his pro se brief liberally as we must, Balistreri v.

Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990), Charov

argues that in light of 28 U.S.C. § 157(c)(1),9 because the

matters before the bankruptcy court in the adversary proceeding

were "non-core," the court lacked authority to enter a final order

dismissing the adversary proceeding; rather, it was required to

9 28 U.S.C. § 157(c)(1) provides:

A bankruptcy judge may hear a proceeding that is not a core

proceeding but that is otherwise related to a case under

title 11. In such proceeding, the bankruptcy judge shall

submit proposed findings of fact and conclusions of law to

the district court, and any final order or judgment shall be

entered by the district judge after considering the

bankruptcy judge's proposed findings and conclusions and

after reviewing de novo those matters to which any party has

timely and specifically objected.

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submit proposed findings of fact and conclusions of law to the

district court. In other words, he contends the bankruptcy court

had no authority or discretion to dismiss the adversary

proceeding.

We disagree with Charov that the claims at issue in the

adversary proceeding were non-core. Among the list of "core"

proceedings is the determination of the validity, extent or

priority of liens against property of the estate. 28 U.S.C.

§ 157(b)(2)(K). Additionally, Charov’s allegations stated in his

adversary complaint raise claims concerning the extent of BONY’s

and Select’s interest in the Property and their standing. Thus,

Charov raised issues concerning the allowance or disallowance of

any claims asserted by BONY or Select against property of the

estate, even though he failed to properly notice his previous

objection to BONY’s proof of claim.10 28 U.S.C. § 157(b)(2)(B). 

Charov’s allegations, even though based on state law claims, arose

in his bankruptcy case.

Even though the underlying bankruptcy case was later

dismissed, the bankruptcy court had "core" jurisdiction over the

adversary proceeding when it was filed. See Linkway Inv. Co. v.

Olsen (In re Casamont Inv'rs, Ltd.), 196 B.R. 517, 521 (9th Cir.

BAP 1996) ("Jurisdiction is determined as of the commencement of

the action."). Bankruptcy courts are empowered to enter final

judgments in "core proceedings." 28 U.S.C. § 157(b)(2). A matter

may be a core proceeding even if state law may affect its outcome. 

Bronson v. Thompson (In re Bronson), 2016 WL 5956642, at *4 (9th

10 The record fails to establish that Charov ever exempted

the Property.

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Cir. BAP Oct. 12, 2016) (citing 28 U.S.C. § 157(b)(2), (3);

Marshall v. Stern (In re Marshall), 600 F.3d 1037, 1054 (9th Cir.

2010), aff'd, 564 U.S. 462 (2011)). Thus, Charov is mistaken that

the bankruptcy court was required to submit proposed findings and

conclusions with respect to his claims to the district court.11

While the main case was pending, Charov’s claims asserted in

his adversary complaint potentially affected the confirmation of

his chapter 13 plan and the treatment of his creditors’ claims in

his chapter 13 plan. However, when his case was dismissed, his

state law claims remained, but such claims no longer affected

confirmation or the treatment of his creditors’ claims. Circuit

authority instructs us that dismissal of the main bankruptcy case

does not necessarily end an adversary proceeding seeking relief on

state law theories. See Carraher, 971 F.2d at 328.

In Carraher, the Ninth Circuit recognized the bankruptcy

court's discretion to retain jurisdiction over related state law

claims once the underlying bankruptcy case has been dismissed. 

Id. Since Charov’s state law claims may form the bases for either

arising in or related to jurisdiction depending on the effect the

claims may have had during the pendency of the bankruptcy case, we

conclude the four Carraher factors should be applied in this

instance. In deciding whether to retain jurisdiction, the

bankruptcy court must consider economy, convenience, fairness and

11 Even if Charov is correct and his claims are non-core, the

bankruptcy court had authority to enter an order dismissing the

adversary proceeding without prejudice. The bankruptcy court’s

decision to decline to retain jurisdiction is a decision not to

hear the proceeding and, thus, does not trigger 28 U.S.C. 

§ 157(c)(1)’s requirement to submit the order with proposed

findings and conclusions to the district court.

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comity. Id. "The [bankruptcy] court's weighing of these factors

is discretionary." Id. Although the bankruptcy court did not

expressly refer to Carraher or its four factors to dismiss the

adversary proceeding, we may affirm on any ground supported by the

record. Fresno Motors, LLC, 771 F.3d at 1125. We therefore

examine whether the court abused its discretion in dismissing the

adversary under Carraher.

Judicial Economy. The adversary proceeding had been pending

for about six months when the bankruptcy court decided to dismiss

it without prejudice.12 Essentially, other than BONY and Select's

motion to dismiss Charov's complaint and Charov's opposition to

dismissal, no discovery or briefing had occurred; nor was any

court time expended on the issues. A state court (or district

court if diversity is shown) could just as efficiently determine

the validity or extent of BONY's and Select's lien or other

interest in the Property under Arizona law. And, the state court

is presumed to have more familiarity with such issues. 

Accordingly, the record supports dismissal under this factor.

Convenience. It does not appear on the record that a

proceeding in state court would be inconvenient for the parties. 

Although the Property is located in Arizona, both Charov and

counsel for BONY and Select are in Las Vegas. Thus, a state court

in Las Vegas would be as convenient as the bankruptcy court. 

Charov can easily re-file his complaint in state court and BONY

and Select can simply re-file their motion to dismiss. This

12 As noted by the bankruptcy court, it dismissed Charov’s

adversary proceeding without prejudice so Charov would be able to

commence future litigation in a nonbankruptcy forum.

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factor supports dismissal or, at worst, is neutral. 

Fairness. Nothing in the record indicates that it would be

unfair to make Charov pursue his claims against BONY and Select in

state court. However, some delay would be involved. Thus, this

factor appears neutral or would perhaps weigh in favor of the

bankruptcy court retaining jurisdiction.

Comity. This factor clearly supports dismissal. As noted by

the bankruptcy court, the adversary complaint reflected only a

two-party dispute governed by Arizona law involving real property

in Arizona. In addition, the bankruptcy estate no longer had any

interest in the outcome of Charov's claims against BONY and Select

regarding their interest in the Property, as the Property was no

longer property of the estate and its disposition would have no

impact on the administration of Charov's dismissed chapter 13

case. 

Because the Carraher factors support dismissal, we conclude

that the bankruptcy court did not abuse its discretion in

dismissing Charov's adversary proceeding.13

VI. CONCLUSION

For the foregoing reasons, we AFFIRM.

13 It also bears noting, although we are not deciding this

matter on this basis, that as a consequence of the Supreme Court's

decision in Wellness International Network, Ltd. v. Sharif, 135 S.

Ct. 1932, 1948 (2015), which concluded that parties to a dispute

could waive an objection to the entry of a dispositive order by a

non-Article III Judge by conduct indicating an acquiescence in

such a Judge disposing of the matter, Charov may well have waived

the grounds for his appeal in this instance by electing to have

this appeal determined by this Court, instead of opting for a

determination by the District Court.

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