Opinion ID: 780453
Heading Depth: 3
Heading Rank: 2

Heading: Events During Pendency of the Bankruptcy Case

Text: 36 Debtor commenced his bankruptcy case on May 11, 1993, by filing a petition in pro se under chapter 7 of the Bankruptcy Code.[FN1] Maria Cady did not file for bankruptcy. Debtor listed Spyglass in Schedule A with a value of $135,000; Schedule D showed the FHLMC and Rowland liens on Spyglass as totaling $127,201.[FN2] In his Statement of Intention, Debtor indicated that he would surrender Spyglass to the deed of trust holders. Chapter 7 trustee Alfred Siegel subsequently filed a no-asset report on March 1, 1994. 37 FN1. Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1330 and the Federal Rules of Bankruruptcy Procedure, Rules 1001-9036. 38 FN2. Spyglass appears to be vacation property and was not claimed as exempt. 39 Although the bankruptcy case was open and Spyglass had not been abandoned, the Cadys nevertheless proceeded to transfer their respective interests in Spyglass to Rowland, the second deed of trust holder. Maria Cady transferred her interest to Rowland via quitclaim deed executed September 4, 1994, and recorded October 24, 1994, and Debtor purportedly transferred his interest to Rowland via grant deed executed January 1, 1995, and recorded January 23, 1995.[FN3] Both of these transfers were made with neither the knowledge nor approval of the bankruptcy court or the trustee. In return, Rowland signed a deed of full reconveyance of his deed of trust on January 6, 1995, which was recorded on January 23, 1995. 40 FN3. Debtor claims that he transferred his interest to Rowland for three reasons: (1) because he had no equity in the Property; (2) because the Trustee had already noticed his intention to abandon the Property; and (3) because Debtor wanted to save [Rowland] the time and expense of having to foreclose. 41  Meanwhile, in a separate chain of events, creditor Prime Filmworks, Inc. (PFI) filed a complaint against Debtor under section 523 of the Bankruptcy Code, seeking to have its unsecured claim declared nondischargeable. This adversary proceeding culminated on December 2, 1994, with a stipulated judgment (Judgment) determining PFI's claim in the amount of $117,677.88 to be nondischargeable. On January 3, 1995, two days after the Spyglass deed to Rowland was executed, but before it was recorded. PFI recorded an abstract of the judgment (Abstract) against Debtor in Calaveras County, California, where Spyglass is located. 42 Debtor received his discharge two weeks later and his bankruptcy case was closed by order filed March 30, 1995. As a result, any property not administered by the trustee was abandoned to the Debtor pursuant to section 554(c). 43