Opinion ID: 3168222
Heading Depth: 3
Heading Rank: 2

Heading: R. 566, 571 n.5 (B.A.P. 9th Cir. 2014). We agree.

Text: We also have jurisdiction over appeals from final judgments and orders of the bankruptcy court. See 28 U.S.C. § 158(d). In determining what constitutes an appealable order in bankruptcy proceedings, we have adopted a “pragmatic approach.” Rosson v. Fitzgerald (In re Rosson), 545 F.3d 764, 769 (9th Cir. 2008) (citation omitted). In Bullard v. Blue Hills Bank, 135 S. Ct. 1686, 1692 (2015), the Supreme Court reaffirmed the principle that, for jurisdictional purposes, “[t]he rules are different in bankruptcy. . . .” In an ordinary civil case, a party may appeal the district court’s judgment only under 28 U.S.C. § 1291 and only if the decision “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 373–74 (1981) (citation and internal quotation marks omitted). In bankruptcy cases, though, which typically are IN RE PERL 9 appealed (as this one is) under 28 U.S.C. § 158(d),2 a pragmatic approach is warranted; the court uses a more flexible standard. Orders in bankruptcy cases may be appealed immediately “if they finally dispose of discrete disputes within the larger case. . . .” Bullard, 135 S. Ct. at 1692 (citation omitted).3 The Court went on to hold that an order declining to confirm a proposed repayment plan was not “final” because the debtor remained free to propose an alternative plan; the process of attempting to arrive at an approved plan that would allow the bankruptcy to move forward was fluid. Id. at 1690, 1693. Our precedent has not been entirely pellucid regarding the flexible concept of finality in the bankruptcy context. In some instances, we have applied the following four-part test: 2 An appellate court hearing an interlocutory appeal from a district court that is sitting in bankruptcy can apply 28 U.S.C. § 1292, Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 254 (1992), but that exception does not apply here. This appeal comes from the BAP, not the district court. 3 Before Bullard, we had made the same point. We have adopted a pragmatic approach to finality in bankruptcy because certain proceedings in a bankruptcy case are so distinctive and conclusive either to the rights of individual parties or the ultimate outcome of the case that final decisions as to them should be appealable as of right. Our approach emphasizes the need for immediate review, rather than whether the order is technically interlocutory. Alexander v. Compton (In re Bonham), 229 F.3d 750, 761 (9th Cir. 2000) (citation, alteration, and internal quotation marks omitted). 10 IN RE PERL

interest in preserving the bankruptcy court’s role as the finder of fact; and (4) whether delaying review would cause either party irreparable harm. In re Landmark Fence, 801 F.3d at 1102 (citation and internal quotation marks omitted); see also Meyer v. U.S. Trustee (In re Scholz), 699 F.3d 1167, 1170 (9th Cir. 2012). In other instances, we look to whether the bankruptcy court’s decision: “1) resolves and seriously affects substantive rights and 2) finally determines the discrete issue to which it is addressed.” SS Farms, LLC v. Sharp (In re SK Foods, L.P.), 676 F.3d 798, 802 (9th Cir. 2012) (citation omitted); see also Law Offices of Nicholas A. Franke v. Tiffany (In re Lewis), 113 F.3d 1040, 1043 (9th Cir. 1997). A survey of our precedent reveals that the four-part finality test articulated in In re Landmark Fence is utilized almost exclusively when determining the finality of a case involving a remand to the bankruptcy court. See In re Landmark Fence, 801 F.3d at 1101–02; see also In re Scholz, 699 F.3d at 1170; In re Lakeshore Vill., 81 F.3d at 104, 106; Congrejo Invs., LLC v. Mann (In re Bender), 586 F.3d 1159, 1161, 1164 (9th Cir. 2009); Saxman v. Educ. Credit Mgmt. Corp. (In re Saxman), 325 F.3d 1168, 1171 (9th Cir. 2003); Knupfer v. Lindblade (In re Dyer), 322 F.3d 1178, 1182, 1187 (9th Cir. 2003); Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 978, 980 (9th Cir. 2001); Lundell v. Anchor Constr. Specialists, Inc. (In re Lundell), 223 F.3d 1035, 1038 (9th Cir. 2000); Walthall v. United States, 131 F.3d 1289, 1292–93 (9th Cir. 1997); Bonner Mall P’ship v. U.S. Bancorp Mortg. IN RE PERL 11 Co. (In re Bonner Mall P’ship), 2 F.3d 899, 902, 904 (9th Cir. 1993). On the other hand, when the decision of the bankruptcy court is affirmed or reversed, rather than remanded, we have applied the two-part finality test articulated in In re SK Foods, 676 F.3d at 802. See In re Rosson, 545 F.3d at 769; see also In re Lewis, 113 F.3d at 1043; Dye v. Brown (In re AFI Holding, Inc.), 530 F.3d 832, 836 (9th Cir. 2008); Schulman v. California (In re Lazar), 237 F.3d 967, 974, 985 (9th Cir. 2001); Duckor Spradling & Metzger v. Baum Trust (In re P.R.T.C., Inc.), 177 F.3d 774, 777, 780 (9th Cir. 1999); New Life Health Ctr. Co. v. I.R.S. (In re New Life Health Ctr. Co.), 102 F.3d 428, 429 (9th Cir. 1996) (per curiam); United States v. Stone (In re Stone), 6 F.3d 581, 583 (9th Cir. 1993); Elliott v. Four Seasons Props. (In re Frontier Props., Inc.), 979 F.2d 1358, 1361, 1364 (9th Cir. 1992); Turgeon v. Victoria Station Inc. (In re Victoria Station Inc.), 840 F.2d 682, 683–84 (9th Cir. 1988); United States v. Technical Knockout Graphics, Inc. (In re Technical Knockout Graphics, Inc.), 833 F.2d 797, 798, 801 (9th Cir. 1987); Farber v. 405 N. Bedford Dr. Corp. (In re 405 N. Bedford Dr. Corp.), 778 F.2d 1374, 1376–77 (9th Cir. 1985). Because this case did not involve a remand, application of the two-part finality test is appropriate. See In re SK Foods, 676 F.3d at 802. Notwithstanding the fact that no financial penalty or sanction has yet been assessed against Eden Place, the bankruptcy court’s determination that Eden Place violated the automatic stay is a substantive ruling with real effects, including money damages that could be sought by Perl indefinitely. See Price v. Rochford, 947 F.2d 829, 831–32 (7th Cir. 1991) (holding that a cause of action for violation of the automatic stay survives the termination of the bankruptcy 12 IN RE PERL proceeding). The bankruptcy court’s order determined the discrete issue of whether there was a stay violation, which was the only issue litigated in the bankruptcy proceedings and before the BAP. See In re SK Foods, 676 F.3d at 802 (discussing finality in the bankruptcy context). As a practical matter, resolution of this issue resolved the entire case and thereby qualifies as a final decision under our pragmatic approach to finality in the bankruptcy context. See id. We respectfully part company with our dissenting colleague’s view of the finality of the bankruptcy court’s order, largely because the cases relied on by the dissent were decided in the context of general civil litigation rather than in the bankruptcy context, where “[t]he rules are different . . .” Bullard, 135 S. Ct. at 1692. Neither are we persuaded by the out-of-circuit authority cited in the dissent. Rather, we look to our precedent specifically addressing finality in the bankruptcy context. That precedent persuades us that the ruling by the bankruptcy court that Eden Place violated the automatic stay resolved the only issue in the case, and seriously affected substantive rights related to damages. There is no question that the discrete issue addressed by the bankruptcy court—violation of the automatic stay—has been definitively and finally resolved. Resolution of that issue is as final as it will ever be in this case. We also look to the clear language of the bankruptcy appeals statute, which as the Supreme Court noted, “authorizes appeals as of right not only from final judgments in cases but from final judgments, orders, and decrees in cases and proceedings.” Id. (quoting 28 U.S.C. § 158(a)) (alteration and internal quotation marks omitted). After considering our applicable precedent and the clear language of the statute, we hold that the bankruptcy court’s order that IN RE PERL 13 Eden Place violated the automatic stay was final and appealable. See 28 U.S.C. § 158(d). B. Merits - Violation of Automatic Stay Having resolved the issue of finality, we now turn to the merits of this case—whether Eden Place violated the automatic stay. We start from the premise that the filing of a bankruptcy petition creates the bankruptcy estate, which includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. 541(a)(1). The bankruptcy filing acts as an automatic stay of “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate. . . .” 11 U.S.C. § 362(a)(3). The violation of the automatic stay inquiry determines whether the debtor, in isolation, has any protectable legal, equitable, or possessory interest. See Ramirez v. Fuselier (In re Ramirez), 183 B.R. 583, 587 (B.A.P. 9th Cir. 1995); see also 11 U.S.C. § 362(a)(3). Thus, the question in this case is whether Perl had any remaining legal or equitable possessory interest in the property after Eden Place properly recorded the trustee’s deed from the non-judicial foreclosure sale, and after the state court fully adjudicated in the unlawful detainer proceedings Perl’s remaining possessory interest in the premises. See id. We look to state law to determine property interests in bankruptcy proceedings. See Butner v. United States, 440 U.S. 48, 54–55 (1979). We conclude that under California law, entry of judgment and a writ of possession following unlawful detainer proceedings extinguishes all other legal and equitable possessory interests in the real property at issue. See Vella v. Hudgins, 572 P.2d 28, 30 (Cal. 1977). 14 IN RE PERL The BAP correctly determined that Perl had no remaining legal interest in the property because, when Eden Place purchased the property at the foreclosure sale and recorded its deed within fifteen days of the sale, any legal interest Perl retained in the property was extinguished. See Wells Fargo Bank v. Neilsen, 178 Cal. App. 4th 602, 613–14 (2009), as modified; see also Cal. Civ. Code. § 2924h(c). But, the BAP went further, reasoning that Perl’s unlawful possession bestowed equitable possessory rights upon him, which he retained until the Sheriff actually dispossessed him of the property by executing the writ of possession. See In re Perl, 513 B.R. at 574–76. However, whether Perl had actual possession of the property when he filed for bankruptcy has no bearing on whether he had a cognizable possessory interest in the property. In resolving this issue, the unlawful detainer statutory provisions are the point of departure for our analysis. California’s unlawful detainer statutory scheme was designed to adjudicate the right to possession of realty between a landlord and tenant when the tenant is in violation of the lease. See Knowles v. Robinson, 387 P.2d 833, 836–37 (Cal. 1963). The unlawful detainer provisions authorize a summary proceeding that adjudicates the right to immediate possession of the property. See Vella, 572 P.2d at 30. For this reason, claims regarding title to the property are not generally litigated in an unlawful detainer proceeding. See id. One exception to the rule that title is not generally determined in an unlawful detainer proceeding is found in California Code of Civil Procedure § 1161a, governing the right of possession by a party initiating an unlawful detainer proceeding after obtaining title at a nonjudicial foreclosure IN RE PERL 15 sale.4 See id. The exception allows for “a narrow and 4 California Code of Civil Procedure § 1161a provides in relevant part: (b) In any of the following cases, a person who holds over and continues in possession of a manufactured home, mobilehome, floating home, or real property after a three-day written notice to quit the property has been served upon the person, or if there is a subtenant in actual occupation of the premises, also upon such subtenant, as prescribed in Section 1162, may be removed therefrom as prescribed in this chapter: (1) Where the property has been sold pursuant to a writ of execution against such person, or a person under whom such person claims, and the title under the sale has been duly perfected. (2) Where the property has been sold pursuant to a writ of sale, upon the foreclosure by proceedings taken as prescribed in this code of a mortgage, or under an express power of sale contained therein, executed by such person, or a person under whom such person claims, and the title under the foreclosure has been duly perfected.
with Section 2924 of the Civil Code, under a power of sale contained in a deed of trust executed by such person, or a person under whom such person claims, and the title under the sale has been duly perfected.
person, or a person under whom such person claims, and the title under the sale has been duly perfected.
with Section 18037.5 of the Health and Safety 16 IN RE PERL sharply focused examination of title.” Id.; see also Mortg. Guarantee Co. v. Smith, 50 P.2d 835, 836 (Cal. Ct. App. 1935) (noting that in actions brought under § 1161a, title is determined “as a necessary element of the remedy of unlawful detainer”). In California, an unlawful detainer proceeding is quasi in rem and, accordingly, a judgment rendered in an unlawful detainer proceeding is “not binding upon the world, but conclusive only between the parties and their privies.” Park v. Powers, 42 P.2d 75, 79 (Cal. 1935). Pursuant to Code of Civil Procedure § 415.46,5 no occupant of the premises retains any possessory interest of any kind following service of the writ of possession. See Cal. Code Civ. Proc. § 715.020(d) (explaining that “if the summons, complaint, and prejudgment claim of right to possession were served Code under the default provisions of a conditional sale contract or security agreement executed by such person, or a person under whom such person claims, and the title under the sale has been duly perfected. 5 California Code of Civil Procedure § 415.46 provides in relevant part:
complaint in an action for unlawful detainer upon a tenant and subtenant, if any, as prescribed by this article, a prejudgment claim of right to possession may also be served on any person who appears to be or who may claim to have occupied the premises at the time of the filing of the action. Service upon occupants shall be made pursuant to subdivision (c) by serving a copy of a prejudgment claim of right to possession, as specified in subdivision (f), attached to a copy of the summons and complaint at the same time service is made upon the tenant and subtenant, if any. IN RE PERL 17 upon the occupants in accordance with Section 415.46, no occupant of the premises, whether or not the occupant is named in the judgment for possession, may object to the enforcement of the judgment . . .”) We recognize that the BAP may have considered itself bound to follow its prior decision in Williams v. Levi (In re Williams), 323 B.R. 691 (9th Cir. BAP 2005), and the cases upon which In re Williams relied. See id. at 699 (citing Di Giorgio v. Lee (In re Di Giorgio), 200 B.R 664 (C.D. Cal. 1996), and Westside Apartments, LLC v. Butler (In re Butler), 271 B.R. 867, 876–77 (Bankr. C.D. Cal. 2002)). However, we are not persuaded that those cases engaged in the proper analysis. The earliest case espousing the reasoning adopted by the BAP is In re DiGiorgio. The DiGiorgios were the defendants in an unlawful detainer action. They subsequently entered into a Stipulation for Judgment, forfeiting the lease and providing for the issuance of a writ of possession. See 200 B.R. at 667. After the writ of possession was issued by the court, but before it was executed, the DiGiorgios filed a voluntary petition for bankruptcy. See id. Relying on California Code of Civil Procedure § 715.050, the Sheriff’s Department indicated its intent to enforce the writ of possession without seeking relief from the automatic stay.6 6 California Code of Civil Procedure § 715.050 provides in relevant part: Except with respect to enforcement of a judgment for money, a writ of possession issued pursuant to a judgment for possession in an unlawful detainer action shall be enforced pursuant to this chapter without delay, notwithstanding receipt of notice of the filing by the defendant of a bankruptcy proceeding. 18 IN RE PERL In addition to ruling that § 715.050 was preempted by the Bankruptcy Code, the district court held that, although the DiGiorgios had no legal possessory interest in the tenancy at the time of the filing of the bankruptcy petition, they retained an equitable possessory interest by virtue of their continued physical presence. See id. at 670–71. This holding was repeated in In re Butler, and adopted by the BAP in In re Williams, see 323 B.R. at 699. In In re Butler, the court relied upon California Civil Code § 1006. See 271 B.R. at 870–71. That statute provides: Title by Occupancy; extent Occupancy for any period confers a title sufficient against all except the state and those who have title by prescription, accession, transfer, will, or succession; but the title conferred by occupancy is not a sufficient interest in real property to enable the occupant or the occupant's privies to commence or maintain an action to quiet title, unless the occupancy has ripened into title by prescription. The bankruptcy court concluded that, under California case law, “the mere possession of real estate is constantly treated as property, which may be purchased and sold, and for the recovery of which an action may be maintained against Because we resolve this case without relying upon the provisions of § 715.050, we express no view on whether the state statute is preempted by the Bankruptcy Code. IN RE PERL 19 one having no better title.” In re Butler, 271 B.R. at 871 (citations omitted) (emphasis added). The flaw in the bankruptcy court’s analysis is that the unlawful detainer proceedings under § 1161a are expressly designed to determine who has superior title to the property, including the right to immediate possession. See Vella, 572 P.2d at 30. As a result, the prevailing party in the unlawful detainer proceeding under § 1161a has “better title” than the evicted resident. In re Butler, 271 B.R. at 871. The conclusion that the occupying resident retains an equitable possessory interest is inconsistent with § 1161a, which contemplates a final and binding adjudication of legal title and rights of immediate possession. See Mortg. Guarantee Co., 50 P.2d at 836; see also Vella, 572 P.2d at 30. We therefore conclude that because Perl had no remaining interest in the property, legal or equitable, when the bankruptcy petition was filed, the bankruptcy court erred in concluding that Eden Place violated the automatic stay by executing the writ of possession. The unlawful detainer judgment and writ of possession entered pursuant to California Code Civil Procedure § 415.46 bestowed legal title and all rights of possession upon Eden Place. See Vella, 572 P.2d at 30. Thus, at the time of the filing of the bankruptcy petition, Perl had been completely divested of all legal and equitable possessory rights that would otherwise be protected by the automatic stay. See id. Consequently, the Sheriff’s lockout did not violate the automatic stay because no legal or equitable interests in the property remained to become part of the bankruptcy estate. See id.; see also 11 U.S.C. § 541(a)(1) (describing the bankruptcy estate as consisting of “all legal or equitable 20 IN RE PERL interests of the debtor in property as of the commencement of the case”).