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FILED

APR 15 2014

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NOT FOR PUBLICATION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. CC-13-1419-TaDKi

)

MARIA JUANA DUARTE, ) Bk. No. 12-24527-MW

)

Debtor. )

______________________________)

)

MARIA JUANA DUARTE, )

)

Appellant, )

)

v. ) MEMORANDUM*

)

NATIONSTAR MORTGAGE, LLC and )

QUALITY LOAN SERVICE CORP., )

)

Appellees. )

______________________________)

Argued and Submitted on March 20, 2014

at Pasadena, California

Filed - April 15, 2014

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Mark S. Wallace, Bankruptcy Judge, Presiding

________________________________

Appearances: Hector C. Perez, Esq. for Appellant Maria Juana

Duarte; Adam N. Barasch, Esq. of Severson & Werson

for Appellee Nationstar Mortgage, LLC; and Melissa

Robbins Coutts, Esq. of McCarthy & Holthus, LLP

for Appellee Quality Loan Service Corporation.

________________________________

Before: TAYLOR, DUNN, and KIRSCHER, Bankruptcy Judges.

* This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8013-1.
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INTRODUCTION

Appellant, chapter 7 Debtor Maria Juana Duarte, appeals from

the bankruptcy court’s denial of her motion seeking damages for

violations of the § 3621 automatic stay. She based her motion on

the postpetition foreclosure sale of her home. The bankruptcy

court found, however, that the violation was not willful as

neither of the Appellees had appropriate notice of Debtor’s

bankruptcy filing before the foreclosure sale went forward. The

bankruptcy court also found that Debtor failed to establish any

entitlement to damages under § 362(k) where Appellees, upon

learning of the filing, took immediate corrective action. We

AFFIRM.

FACTS

Appellee Nationstar Mortgage, LLC (“Nationstar”) is the

beneficiary of a deed of trust recorded against Debtor’s home. 

Appellee Quality Loan Service Corporation (“Quality”) is the

substituted trustee under the deed of trust. Due to mortgage

defaults, Quality noticed a trustee’s sale of Debtor’s home for

December 28, 2012, at 12:00 p.m. At 11:48 a.m. on the scheduled

sale date, Debtor filed a skeletal bankruptcy petition which did

not list Nationstar as a creditor. At 11:52 a.m. she sent notice

of the filing by facsimile to Quality. The foreclosure sale,

however, went forward on the courthouse steps at 12:10 p.m. 

Nationstar was the highest bidder through a credit bid. 

In her bankruptcy case, Debtor moved for rescission of the

foreclosure and recovery of damages under § 362(k) for Appellees’

1 Unless specified otherwise, all chapter and section

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

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violation of the automatic stay (“Sanctions Motion”).2 Debtor

argued that Appellees received effective facsimile notice of the

bankruptcy filing on the day of sale, but nonetheless proceeded

with the foreclosure, and, thus, willfully violated the automatic

stay. Debtor also alleged that at an unspecified time Quality

acknowledged notice of the bankruptcy filing.

Debtor alleged in a declaration that as a result of the

foreclosure she no longer owned her home.3 She also alleged that

post-foreclosure she “received a request for property occupancy”

and condition information from Appellees’ agents. ECF No. 62-1

at 3. To support this allegation, she filed a copy of a “Notice”

and a business card of Victor Vasu, Executive Director of The

Vasu Preferred Team. Debtor’s counsel’s paralegal alleged that

in response to this Notice, he called Quality, told them about

the information request, and obtained acknowledgment that the

sale violated the stay as well as a promise to rescind the

foreclosure. Debtor further alleged that Nationstar contacted

her “to determine what [her] plans are to relocate now that the

mortgage has been foreclosed upon,”4 and that she received

notices and telephone calls from “multiple businesses purporting

2 The bankruptcy court granted this initial Sanctions

Motion, based, in part, on lack of opposition by either

Nationstar or Quality. The order was subsequently set aside on

Nationstar’s motion and after the bankruptcy court determined

that Debtor failed to properly serve Nationstar and Quality. 

Debtor thereafter re-filed and served her Sanctions Motion,

denial of which is at issue in this appeal.

3 At oral argument in this appeal, Debtor’s counsel

conceded that title remained in Debtor’s name.

4 Debtor does not allege when this contact occurred or by

what method.

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to provide post foreclosure assistance.” Id. She finally

asserted that she never received a notice of rescission and

argued that she should have.

As damages, Debtor alleged generally that she suffered

“emotional distress, including increased heart palpitations,

headaches, anxiety, sleeplessness, stomach aches, stress, and

depression” as a result of Appellees’ stay violation. Id. at 4. 

In addition, she alleged that she incurred $7,200 in attorney’s

fees for legal assistance to obtain rescission of the foreclosure

and to file her bankruptcy petition.

Appellees opposed the Sanctions Motion, primarily on two

grounds. First, they asserted that violation of the stay was not

willful; Quality received the facsimile notice so close in time

to the scheduled time of sale that Quality was not able to review

it in time to stop a sale that took place at another location

18 minutes later. The record before the bankruptcy court

contained unchallenged declaratory evidence from Quality’s

bankruptcy supervisor that on the day of the sale, she personally

reviewed all the bankruptcy notices in the bankruptcy

department’s fax inbox, which averaged between 100 and 150 faxes

per day. She testified that the notice of Debtor’s filing showed

that it came in at 11:53:58 a.m., and she attached a copy of the

facsimile to her declaration. She further testified that she

contacted the sales company after processing the information

contained in the Debtor’s facsimile, but that the sale had

already been cried. She finally testified that at 12:59 p.m.

that same day, she contacted Quality’s foreclosure unit, advising

them that the sale violated the stay and would need to be

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rescinded.

Appellees also emphasized that upon review of the bankruptcy

notice later that same day, and after recognizing that the sale

was void, Quality took steps to rescind the sale and did not

prepare or record a trustee’s deed upon sale. Appellees argued

that, as no trustee’s deed upon sale was ever issued, the sale

was not effective and an order of rescission was unnecessary. 

Appellees’ evidence generally described in-house procedures and

specifically identified call records and actions taken on the

sale date and afterwards. Based on this evidence, Appellees

argued that after the void sale, they committed no further

violation of the automatic stay and that Debtor failed to prove

otherwise.

As to communications allegedly received by Debtor, Appellees

argued that Debtor failed to specify a date or time of the call

allegedly confirming Quality’s receipt of the bankruptcy notice. 

Quality provided evidence that its call records reflected that

only one call was received, on January 3, 2013, days after the

sale. And, as to other alleged notices, calls, and

correspondence after foreclosure, Appellees argued that none of

the activity was attributable to either of them and that Debtor’s

evidence did not show otherwise.

Appellees finally asserted that even if Debtor established

that the stay violation was willful, she failed to prove

recoverable damages. Appellees acknowledged that Debtor likely

suffered emotional distress in the days that led to her

bankruptcy and the foreclosure, but she did not establish any

particular emotional distress caused by postpetition actions

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taken by Appellees. As to recovery of attorney’s fees, Appellees

argued that, pursuant to Sternberg v. Johnson, 595 F.3d 937, 948

(9th Cir. 2010), attorney’s fees incurred after remedy of the

stay violation are not recoverable under § 362(k). Further, they

noted that while Debtor failed to break down the attorney’s fees

by date incurred, the fee request included $3,953 more than the

$3,000 amount claimed in the first Sanctions Motion and appeared

to include fees and costs totally unrelated to the stay

violation, such as fees to defend against Nationstar’s motion to

set aside the order on the first Sanctions Motion (for improper

service) and Debtor’s bankruptcy filing costs. The bankruptcy

court issued a lengthy tentative ruling in advance of the

hearing. In its tentative ruling, the bankruptcy court

preliminarily found, in part, that: 

Neither Quality nor Nationstar [ ] had appropriate

notice of Debtor’s bankruptcy filing prior to the

foreclosure sale. As soon as Quality determined the

foreclosure sale had proceeded in violation of the

automatic stay, the appropriate people within Quality

were informed and no Trustee[‘]s Deed Upon Sale was

ever produced. Neither Quality nor Nationstar have

taken any further action in violation of the automatic

stay. Aside from the foreclosure sale that occurred on

December 28, 2012, Debtor has not provided any evidence

of violations of the automatic stay. While Debtor

claims to have received numerous telephone calls and

correspondence from a business purporting to provide

post-foreclosure assistance, these cannot be directly

attributed to Nationstar or Quality. The only evidence

submitted by Debtor regarding any of this

correspondence is a one-page occupancy request notice

delivered by a company called the Vatsu (sic) Preferred

Team. Debtor has failed to present any supporting

evidence to show that Quality and/or Nationstar

willfully violated the automatic stay.

ECF No. 71 at 4.

After hearing oral argument, the bankruptcy court placed

additional comments and findings on the record. It found that

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Appellees “act[ed] pretty quickly” by voiding the sale within

less than an hour, considering that facsimile notice was received

only minutes before the lunch hour. Hr’g Tr. (July 29, 2013) at

14:21-25, 15:1-3. The bankruptcy court, thus, held that the

short-lived stay violation was not the type of violation to “give

rise to damages.” Id. at 15:1. And even if it were, the

bankruptcy court found that Debtor suffered no actual damages in

the “intervening hour.” Id. at 15:3. The bankruptcy court

adopted its tentative ruling as its final ruling and denied the

Sanctions Motion, with prejudice.

Debtor timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2). We have jurisdiction under 28 U.S.C.

§ 158.

ISSUES

1. Whether the bankruptcy court committed reversible error

when it found that neither Nationstar nor Quality willfully

violated the automatic stay.

2. Whether the bankruptcy court committed reversible error

when it found that debtor failed to establish entitlement to any

damages under § 362(k).

STANDARD OF REVIEW

We review the bankruptcy court’s factual finding that a

creditor did not willfully violate the automatic stay under the

clearly erroneous standard. See Sternberg v. Johnston, 595 F.3d

at 943; Ozenne v. Bendon (In re Ozenne), 337 B.R. 214, 218 (9th

Cir. BAP 2006). A court’s findings of fact are clearly erroneous

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if they are illogical, implausible, or without support in the

record. Retz v. Sampson (In re Retz), 606 F.3d 1189, 1197 (9th

Cir. 2010).

We review the bankruptcy court’s assessment of damages under

§ 362(k) for an abuse of discretion. See Sternberg, 595 F.3d at

945; Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210, 1213 (9th

Cir. 2002).5 We apply a two-part test to determine whether the

bankruptcy court abused its discretion. First, we review de novo

whether the bankruptcy court selected the correct legal standard

to apply. United States v. Hinkson, 585 F.3d 1247, 1261-63 (9th

Cir. 2009) (en banc). Second, if the bankruptcy court selected

the correct legal standard, we consider whether the court’s

findings and its application of those findings to the correct

legal standard were illogical, implausible or without support in

the record. Id. at 1262.

DISCUSSION

To find a willful stay violation, the bankruptcy court must

conclude that the creditor knew of the bankruptcy filing and

intended the actions that violated the stay. See Knupfer v.

Lindblade (In re Dyer), 322 F.3d 1178, 1191 (9th Cir. 2003)

(citing Pinkstaff v. United States (In re Pinkstaff), 974 F.2d

113, 115 (9th Cir. 1992)). In the event of a willful stay

violation, an individual injured thereby “shall recover actual

damages, including costs and attorneys’ fees, and, in appropriate

circumstances, may recover punitive damages.” 11 U.S.C.

5 As part of the Bankruptcy Abuse Prevention and Consumer

Protection Act of 2005, Pub.L. 109-8, 119 Stat. 23, § 362(h) was

redesignated as § 362(k).

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§ 362(k)(1). 

A. The bankruptcy court did not clearly err when it found that

the foreclosure sale was not a willful violation of the

automatic stay.

The bankruptcy court and the parties acknowledged that the

foreclosure sale violated the automatic stay. The bankruptcy

court found, however, that the violation was not willful because,

although the foreclosure sale was an intentional act, the

facsimile notice sent by Debtor arrived less than 8 minutes

before the scheduled sale and at the lunch hour. Quality,

therefore, did not have actual or effective notice of the filing.

On appeal, Debtor argues that Appellees acted willfully by

going forward with the sale when Quality received the facsimile

notice a full 17 minutes before the sale was actually cried at

12:10 p.m. 

We determine that the bankruptcy court’s finding is not

clearly erroneous. Based on this record, and, in particular on

the evidence provided by Quality’s bankruptcy supervisor, we

determine that the bankruptcy court’s finding is well supported

by the record and is not illogical or implausible.

B. The bankruptcy court did not clearly err when it found that

Appellees did not otherwise willfully violate the automatic

stay.

Even a non-willful stay violation becomes willful if the

creditor fails to remedy the violation after receiving notice of

the stay. See Eskanos & Adler, P.C., 309 F.3d at 1213 (section

362(a) imposes an affirmative duty to cease actions); Goodrich v.

Union Planters Mortg. (In re Goodrich), 196 Fed. App’x. 586, 587

(9th Cir. 2006) (foreclosing lender has a duty to promptly

rescind a trustee’s deed of sale upon learning of the pre-sale

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bankruptcy filing).

Debtor here testified that she never received notice of the

rescission of the foreclosure. She also presented declaratory

testimony from her attorney’s paralegal, however, that Quality

acknowledged the ineffectiveness of the foreclosure sale during a

phone call. Appellees argued that because no trustee’s deed upon

sale ever issued or recorded, title did not transfer and the sale

had no effect – citing without discussion California Civil Code

§§ 1091 and 2924.

The bankruptcy court found that Appellees took steps to

correct their wrongful sale and did so promptly after learning

that Debtor filed bankruptcy. We determine that this finding is

not clearly erroneous.

The Appellees’ characterization of the effect of the

trustee’s deed of sale misinterprets the governing statute. 

Section 2924h(c) of the California Civil Code provides that for

the purposes of finalizing a trustee’s sale, “the sale shall be

deemed final upon the acceptance of the last and highest bid.” 

It then discusses perfection of the sale, which is based on

recordation of the trustee’s deed within 15 days. Cal. Civ. Code

§ 2924h(c). Here, title technically transferred even without

recordation of a trustee’s deed on sale.

Nonetheless, the bankruptcy court could appropriately

determine that Appellees decided to rescind within an hour of the

sale and took all appropriate action in connection with this

decision. Section 2924h(c) provides that a “sale is subject to

an automatic rescission for a failure of consideration . . . .” 

All the trustee is required to do in the event of failed

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consideration, is to send a notice of rescission to the “last and

highest bidder” whose consideration failed. Cal. Civ. Code

§ 2924h(c). Notice to the owner of the property subject to

foreclosure is not required.

When the foreclosing party’s credit bid is the highest bid,

the determination that a credit bid was ineffective given the

pendency of the automatic stay is equivalent to a failure of a

third party bidder to timely tender funds; debt is not repaid and

the foreclosure is not finalized. The California foreclosure

statutes do not require any formal notice of rescission in this

circumstance. Again, notice to the property owner, here the

Debtor, is not required, and Appellants provided evidence that

they recognized and internally communicated the need for

rescission promptly.

Thus, under California’s comprehensive foreclosure statute,

nothing else was required under the circumstances. There

certainly are consequences once the sale is rescinded: a new

notice of sale must issue and a new reinstatement period arises. 

See Cal. Civ. Code § 2924c. Debtor offered no evidence, however,

that Appellees took any positions inconsistent with their

internal decision to rescind the ineffective sale.6 Therefore,

the record supports the bankruptcy court’s finding that Appellees

did not further violate the stay by failing to promptly remedy

the wrongful foreclosure.

6 After completion of briefing on this appeal, Nationstar

sought authority from the bankruptcy court to proceed to notice a

new foreclosure sale, by way of a motion for relief from stay

filed in October 2013. At oral argument, the parties’ counsel

conceded that Appellees obtained relief from stay but have not as

yet issued a new notice of sale.

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The bankruptcy court also found that Debtor failed to

provide any evidence that would support holding either Nationstar

or Quality responsible for the allegedly numerous telephone calls

and correspondence from businesses purporting to provide postforeclosure assistance. The one document submitted in evidence,

on its face, contains no reference to either Nationstar or

Quality, and Debtor offered no evidence from which the bankruptcy

court could reasonably attribute it to either appellee. 

Therefore, on this record, we conclude that the bankruptcy court

did not commit error.

C. Even if the violation was willful, Debtor suffered no

damages as a result thereof.

As the bankruptcy court also found, even if it determined

that Appellees had adequate notice before the foreclosure sale,

Debtor failed to provide evidence of damages suffered during the

49 minutes that elapsed between the time of sale and Quality’s

determination to rescind the sale. And the record reflects that

no trustee’s deed upon sale ever issued. The stay violation was

short-lived, and Appellees promptly remedied the wrongful

foreclosure on their own. Debtor failed to establish any actual

damages. Therefore, even if the notice was deemed to be

adequate, the bankruptcy court did not abuse its discretion when

it denied Debtor’s Sanctions Motion.

CONCLUSION

For the reasons set forth above, we AFFIRM the bankruptcy

court.

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