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

Heading: Post-Bankruptcy Events: Appellants and Appellee Enter the Picture.

Text: 44 On April 10, 1996, nearly a year after Debtor's bankruptcy case was closed, PFI assigned all of its right, title and interest in the Judgment, including the Abstract, to appellee William A. Klapperman (Klapperman). 45 On September 11, 1996, appellants Jeffrey Brian Palm (Palm) and Dannielle Lynn Scapparo (Scapparo) purchased Spyglass from Rowland. In connection with this transaction, Palm and Scapparo paid off the obligations secured by FHLMC's first deed of trust with a loan from Fleet Mortgage Corporation (Fleet) Fleet, in turn, took a new deed of trust on Spyglass which was recorded September 20, 1996. 46 Finally, in September of 1997, a year after Palm and Scapparo purchased Spyglass from Rowland, Klapperman took steps to enforce the Judgment and execute on Spyglass after Debtor failed to make the first installment payment on the Judgment. During a series of unsuccessful settlement discussions between Klapperman and representatives of Fleet's title insurer, First American Title Insurance Company (FATIC), FATIC contended that (1) Fleet was entitled to step into former deed of trust holder FHLMC's first priority position through equitable subrogation and (2) the Abstract was void because its recordation violated the automatic stay in Debtor's bankruptcy case. Klapperman, in turn, argued that Fleet was not subrogated to FHLMC due to Fleet's actual and/or constructive knowledge of defects in the Cady-Rowland transfer. 47 On October 2, 2000, Palm and Scaparro filed motions seeking to (1) reopen the Debtor's bankruptcy case; (2) annul the automatic stay with regard to the transfer of Spyglass from the Debtor to Rowland; and (3) have the bankruptcy court determine that recordation of the Abstract violated the automatic stay. Klapperman filed oppositions to these motions. 48 Both motions came for hearing before the bankruptcy court on October 26, 2000. During oral argument, Palm and Scapparo conceded that the Debtor violated the automatic stay by transferring property of the estate, i.e., Spyglass to Rowland, and the court took that concession as a stipulation with Klapperman. 49 Although the court granted Palm and Scapparo's motion to reopen the Debtor's bankruptcy case (which is not an issue on appeal), it denied their motion for annulment of the automatic stay. Then, as the court prepared to conclude the hearing, Palm and Scaparro renewed their argument that PFI's recordation of the Abstract violated the automatic stay. After  entertaining oral argument on this issue, the Court found that recordation of the Abstract did not violate the automatic stay, relying on this court's decision in Watson v. City National Bank (In re Watson), 78 B.R. 232 (9th Cir.BAP 1987) ( Watson I ). 50 Accordingly, on December 19, 2000, the Bankruptcy Court entered its Order Re: Motion to Reopen and Annul the Automatic Stay, which mirrored the court's oral findings of fact and conclusions of law made during the October 26 hearing. Palm and Scapparo filed a timely Notice of Appeal on December 29, 2000.