Court Opinion

ID: 3172252
Source: CourtListenerOpinion
Date Created: 2016-01-26 19:01:18.577092+00
Date Added: 2024-06-11T09:34:39.048001
License: Public Domain

FILED
                                                           JAN 26 2016
 1                        NOT FOR PUBLICATION          SUSAN M. SPRAUL, CLERK
                                                         U.S. BKCY. APP. PANEL
                                                         OF THE NINTH CIRCUIT
 2
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )     BAP No.     CC-14-1101-KiBrD
                                   )
 6   LAUREL BELKIN GREENSTEIN,     )     Bk. No.     1:12-15099-AA
                                   )
 7                  Debtor.        )
                                   )
 8                                 )
     LAUREL BELKIN GREENSTEIN,     )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )     M E M O R A N D U M1
11                                 )
     WELLS FARGO BANK, N.A.,       )
12   SUCCESSOR BY MERGER WITH      )
     WELLS FARGO BANK SOUTHWEST,   )
13   N.A., f/k/a WACHOVIA MORTGAGE,)
     FSB, f/k/a WORLD SAVINGS BANK,)
14                                 )
                    Appellee.      )
15                                 )
16                  Argued and Submitted on July 23, 2015,
                            at Pasadena, California
17
                            Filed - January 26, 2016
18
                 Appeal from the United States Bankruptcy Court
19                   for the Central District of California
20            Honorable Alan M. Ahart, Bankruptcy Judge, Presiding
21
     Appearances:    Appellant Laurel Belkin Greenstein argued pro se;
22                   Robert A. Bailey of Anglin Flewelling Rasmussen
                     Campbell & Trytten LLP argued for appellee Wells
23                   Fargo Bank, N.A.
24
25
26
          1
27          This disposition is not appropriate for publication.
     Although it may be cited for whatever persuasive value it may
28   have, it has no precedential value. See 9th Cir. BAP Rule 8024-1.
 1   Before:      KIRSCHER, BRANDT2 and DUNN, Bankruptcy Judges.
 2           Chapter 73 debtor Laurel Greenstein appeals an
 3   order denying her motion to set aside the sale of her home, a sale
 4   she contends is void because it violated the automatic stay.       The
 5   bankruptcy court denied the motion on the basis of claim
 6   preclusion, but failed to articulate any findings to support the
 7   doctrine's application.     Thus, we VACATE and REMAND for further
 8   proceedings.
 9                I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
10   A.      The Lipkis bankruptcy case and the in rem order
11           In 2007, Debtor obtained a $510,000 loan from World Savings
12   Bank, predecessor to appellee Wells Fargo Bank, N.A., secured by a
13   deed of trust recorded against her residence in Woodland Hills,
14   California ("Property").     Debtor later defaulted and a notice of
15   default was recorded in July 2011.      A notice of sale was recorded
16   on October 26, 2011, with a trustee's sale of the Property
17   scheduled for November 15, 2011.     Meanwhile, Debtor sued Wells
18   Fargo and others in state court with respect to the pending
19   foreclosure in October 2011.     On November 22, 2011, the state
20   court issued a temporary restraining order enjoining Wells Fargo
21   from selling the Property at foreclosure pending a hearing on the
22   issuance of a preliminary injunction scheduled for January 9,
23   2012.
24
25           2
            Hon. Philip H. Brandt, Bankruptcy Judge for the Western
     District of Washington, sitting by designation.
26
             3
            Unless specified otherwise, all chapter, code and rule
27   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The
28   Federal Rules of Civil Procedure are referred to as “Civil Rules.”

                                       -2-
 1        On November 10, 2011, five days before the scheduled sale, a
 2   grant deed appeared to be recorded transferring title to the
 3   Property from Debtor to Roger Lipkis ("Lipkis Deed").    On
 4   November 18, 2011, Lipkis filed a chapter 13 bankruptcy case.4
 5   Lipkis did not claim an interest in the Property.5    His case was
 6   assigned to Judge Tighe.
 7        In February 2012, Debtor sent an email to counsel for Wells
 8   Fargo in the state court action informing him that the Lipkis Deed
 9   was a fake and appeared to be a "cut and paste" job.    She denied
10   knowing Lipkis or executing the Lipkis Deed.   In actuality, the
11   recording number on the Lipkis Deed — 20111253614 — is identified
12   with a tax lien document recorded on September 15, 2011 (two
13   months before the Lipkis Deed), against an unrelated third party.
14        It later became clear that the Property had been transferred
15   to Lipkis without his knowledge or consent or the consent of Wells
16   Fargo prior to him filing bankruptcy.   On March 7, 2012, counsel
17   for Lipkis and Wells Fargo filed a stipulation to terminate the
18   automatic stay with respect to the Property under § 362(d)(1).
19   The parties further agreed to in rem relief under § 362(d)(4).
20        On March 19, 2012, the bankruptcy court entered an order in
21   the Lipkis case granting the stipulated motion for relief from
22   stay under § 362(d)(1) and (d)(4) ("In Rem Order").    The In Rem
23
24
25
          4
            Wells Fargo contends that Lipkis's bankruptcy filing on
26   November 18, 2011, stopped the pending trustee’s sale.
27        5
            Notably, the Lipkis Deed indicates that Lipkis is an
     "unmarried man," but his bankruptcy documents filed just eight
28   days later indicate that he is "married."

                                    -3-
 1            Order6 provides, in relevant part:
 2        3.      The motion is granted under:
 3                     : 11 U.S.C. § 362(d)(1)
                       : 11 U.S.C. § 362(d)(4) (See attached
 4                     continuation page)
 5        4.      As to Movant, its successors, transferees and
                  assigns, the stay of 11 U.S.C. § 362(a) is:
 6
                  a.   : Terminated as to Debtor and Debtor's
 7                     bankruptcy estate.
 8        5.      :    Movant may enforce its remedies to foreclose
                       upon and obtain possession of the Property in
 9                     accordance with applicable nonbankruptcy law.
10        9.      :    The filing of the petition was part of a
                       scheme to delay, hinder and defraud creditors
11                     that involved either:
12                     :    transfer of all or part ownership of, or
                            other interest in, the Property without
13                          the consent of the secured creditor or
                            court approval. (see attached
14                          continuation page).
15        If recorded in compliance with applicable state law
          governing notices of interests or liens in the Property,
16        this Order is binding and effective under § 362(d)(4)(A)
          and (B) in any other bankruptcy case purporting to affect
17        the Property filed not later than 2 years after the date
          of the entry of this Order, except that a debtor in a
18        subsequent bankruptcy case may move for relief from this
          Order based upon changed circumstances or for good cause
19        shown, after notice and a hearing. Any federal, state or
          local government unit that accepts notices of interests or
20        liens in real property shall accept any certified copy of
          this Order for indexing and recording.
21
22   The "attached continuation page" in the In Rem Order provides, in
23   relevant part:
24
25        6
            Prior to December 22, 2010, the relevant language in
     § 362(d)(4) read “hinder, delay and defraud creditors” (emphasis
26   added). The Bankruptcy Technical Corrections Act of 2010, Pub. L.
     No. 111-327, 124 Stat. 3557 (2010) (effective December 22, 2010)
27   replaced this language with “hinder, delay or defraud” (emphasis
     added). The mandatory form used for the In Rem Order contained
28   the outdated “and” language.

                                       -4-
 1        a.     That [Lipkis] asserts no interest in the [Property].
 2        b.     That an interest in the Property was impermissibly
                 transferred to [Lipkis] without the knowledge of
 3               [Lipkis]. Without [Lipkis's] consent, his Chapter 13
                 bankruptcy case proceeding is being used for an
 4               improper purpose as part of a scheme to delay, hinder
                 and defraud creditors that involved a transfer of all
 5               or part ownership of, or interest in the [Property]
                 without the consent of this Movant or court approval.
 6
 7        Nothing in the record indicates Debtor was given notice of
 8   the stipulation or any motion to approve it or of the entry of the
 9   order.    A certified copy of the In Rem Order was recorded on
10   March 28, 2012.    A new notice of sale for the Property was
11   recorded on May 14, 2012, with a trustee's sale scheduled for
12   June 4, 2012.
13   B.   Debtor's bankruptcy case and her multiple attempts to vacate
          the In Rem Order and/or to seek damages from the alleged stay
14        violation
15        1.     The Lipkis motions and Debtor's adversary proceedings
16        Debtor filed a chapter 7 bankruptcy case on May 31, 2012,
17   five days before the rescheduled foreclosure sale of the Property.
18   Her case was assigned to Judge Ahart.     Debtor identified an
19   interest in the Property valued at $975,000, subject to Wells
20   Fargo's secured claim of $575,000.      Debtor claimed a homestead
21   exemption of $150,000.
22        A trustee's sale of the Property proceeded on July 11, 2012.7
23   Wells Fargo was the successful bidder with a credit bid of
24   $563,411.26.    A trustee's deed was recorded on November 13, 2012.
25        Debtor, pro se, proceeded thereafter to file three post-sale
26
          7
            The sale set for June 4 was apparently delayed to July 11
27   due to Debtor's listing of the Property in her bankruptcy
     schedules and the chapter 7 trustee's ("Trustee") attempt to list
28   and sell the Property on behalf of the estate.

                                       -5-
 1   motions in the Lipkis bankruptcy case attempting to obtain relief
 2   from the In Rem Order.    On August 7, 2012, Debtor filed a "Motion
 3   for Hearing to Reverse Order Granting Motion for Relief Under
 4   11 U.S.C. § 362 (Real Property)."       Debtor alleged that the facts
 5   presented in the stipulation by counsel for Lipkis and Wells Fargo
 6   were false, and that Wells Fargo had used the In Rem Order to
 7   bypass the automatic stay in her bankruptcy case and sell the
 8   Property.     Debtor alleged that the Lipkis Deed was a fake and that
 9   she never transferred the Property to Lipkis, whom she did not
10   know.    Debtor further alleged that while Trustee was not
11   challenging the July 11 sale, she had previously stated in writing
12   to Wells Fargo and Debtor that the In Rem Order was improper.
13   Debtor presented no evidence to support Trustee's alleged written
14   statement.8
15           Before the August 7 motion could be heard, Debtor filed an
16   "Amended Motion for Hearing to Reverse Order Granting Motion for
17   Relief Under 11 U.S.C. § 362 (Real Property)" on August 14, 2012.
18   This motion was identical to the first motion, except for the
19   inclusion of a declaration from Debtor.      Debtor said she knew who
20   did the "cut and paste" job to create the fake Lipkis Deed and get
21   it to Wells Fargo, but she could not prove it.      In any event, she
22   denied any involvement.    Debtor stated that the notary who
23   allegedly signed the Lipkis Deed was willing to testify that she
24
          8
            Debtor later included a copy of an email from Trustee to
25   Wells Fargo's counsel dated July 11, 2012 — the day of the sale —
     with her motion to set aside the sale filed in December 2013. In
26   that email, Trustee opined "[t]here is no in rem relief contained
     in the [In Rem Order]." Trustee further opined that the sale had
27   violated the automatic stay and had to be reversed immediately.
     Trustee indicated that significant equity existed in the Property
28   (about $133,000 based on a $749,000 sale price).

                                       -6-
 1   never notarized the document and that she had no record of it in
 2   her notary book.
 3        Two days later on August 16, 2012, Debtor filed a third
 4   motion — "Motion to set hearing Re contempt."    In this motion,
 5   Debtor requested that the bankruptcy court find counsel for Lipkis
 6   and Wells Fargo in contempt for their alleged willful
 7   misrepresentations made to the court in their stipulation for stay
 8   relief in the Lipkis bankruptcy case.
 9        Four days after filing the last of her three motions in the
10   Lipkis bankruptcy case, Debtor in her own bankruptcy case filed an
11   adversary proceeding against Wells Fargo, its counsel and counsel
12   for Lipkis, Adv. No. 12-1300 ("First Adversary Proceeding").
13   Although her complaint failed to set forth any precise claim for
14   relief, Debtor attacked the validity of the In Rem Order and
15   contended that the July 11 sale was void because it violated the
16   automatic stay in effect in her case.   Debtor requested that title
17   to the Property be restored to her and that she be awarded
18   monetary damages for the alleged stay violation.
19        Wells Fargo moved to dismiss the First Adversary Proceeding
20   on September 24, 2012, asserting several theories as to why the
21   complaint should be dismissed, including that Debtor lacked
22   standing to bring the action.    Wells Fargo argued that the claims
23   asserted by Debtor arose out of an alleged prepetition action and
24   were property of the bankruptcy estate.   Because Debtor had not
25   scheduled these alleged claims and/or because Trustee had not yet
26   abandoned them, Wells Fargo argued that Debtor lacked standing to
27   pursue them on her own behalf.   A hearing on Wells Fargo's motion
28   to dismiss was scheduled for October 23, 2012.   Meanwhile, on

                                      -7-
 1   October 4, 2012, Trustee filed her notice of intent to abandon the
 2   Property as burdensome and of inconsequential value to the estate.
 3   No objections were filed.
 4        The hearing on Wells Fargo's motion to dismiss the First
 5   Adversary Proceeding went forward on October 23, 2012.   We do not
 6   have a transcript, but because Debtor filed another adversary
 7   proceeding the next day, we assume the bankruptcy court announced
 8   its intent to dismiss the First Adversary Proceeding at that
 9   hearing.
10        The court entered an order on November 1, 2012, granting
11   Wells Fargo's motion to dismiss without leave to amend on the
12   basis that "Debtor has no standing."   The First Adversary
13   Proceeding was closed shortly thereafter.   Debtor did not appeal
14   the dismissal of the First Adversary Proceeding.
15        Before the First Adversary Proceeding was dismissed, Debtor
16   filed a second adversary proceeding against the same defendants on
17   October 24, 2012, Adv. No. 12-1379 ("Second Adversary
18   Proceeding").   The complaint in the Second Adversary Proceeding
19   was virtually identical to the first one, except Debtor asserted
20   that she now had standing to pursue the action against defendants
21   because Trustee had abandoned the Property.   All three defendants
22   filed separate motions to dismiss under Civil Rule 12(b)(6).
23   Wells Fargo filed its motion to dismiss on November 26, 2012.   It
24   contended that Debtor still lacked standing to pursue the action
25   despite Trustee's abandonment of the Property, because her
26   purported claims arose out of an alleged prepetition action
27   respecting the loan for the Property and those claims had not been
28   abandoned by Trustee.

                                     -8-
 1        On December 4, 2012, Judge Tighe ruled on Debtor's post-sale
 2   motions filed in Lipkis's bankruptcy case, denying all three.
 3   Judge Tighe noted that Debtor had filed the Second Adversary
 4   Proceeding on October 24, 2012, in her own case which stated the
 5   same allegations of fact that were the basis for the three
 6   motions.   Judge Tighe opined that the Second Adversary Proceeding,
 7   rather than the post-sale motions, was the proper action for
 8   Debtor to address her complaints.     Debtor did not appeal the
 9   orders.
10        On December 19, 2012, the bankruptcy court held a hearing on
11   two of the defendants' motions to dismiss the Second Adversary
12   Proceeding.   Wells Fargo's motion was not scheduled to be heard
13   until January 2, 2013, but it appeared at the December 19 hearing.
14   As for the other two defendants, the bankruptcy court entered two
15   orders dismissing the Second Adversary Proceeding without leave to
16   amend on December 26 and 27, 2012.    Before Wells Fargo's motion
17   was heard, Debtor voluntarily dismissed the Second Adversary
18   Proceeding without prejudice on December 28, 2012.    The Second
19   Adversary Proceeding was closed July 24, 2013.9
20
          9
21          A hearing on Wells Fargo's motion to dismiss the Second
     Adversary Proceeding went forward on January 2, 2013, but Debtor
22   failed to appear. Judge Ahart announced at that hearing that he
     would grant Wells Fargo's motion and dismiss the Second Adversary
23   Proceeding with prejudice, not knowing that Debtor had already
     dismissed it without prejudice several days prior. For reasons
24   unknown, and without ever conducting a hearing, Judge Ahart then
     entered an order granting Wells Fargo's motion to dismiss and
25   dismissing the Second Adversary Proceeding with prejudice on
     February 7, 2014, even though the proceeding had already been
26   dismissed and closed on July 24, 2013. The order did not set
     forth the reasons for the dismissal. Debtor tried to appeal the
27   February 7 dismissal order on August 11, 2014, and at the same
     time filed a motion to reconsider in the bankruptcy court. We
28                                                        (continued...)

                                     -9-
 1           2.     Debtor's motion to set aside the sale of the Property
 2           Debtor, pro se, filed the instant motion in her bankruptcy
 3   case against Wells Fargo (only) on December 27, 2013.        By this
 4   time, she had been evicted from the Property.        Essentially, Debtor
 5   sought damages for Wells Fargo's alleged willful violation of the
 6   automatic stay.       As with her prior motions and adversary
 7   complaints, Debtor contended that because Wells Fargo had failed
 8   to seek relief from stay in her bankruptcy case, Wells Fargo
 9   violated the stay when it foreclosed on the Property on July 11,
10   2012.       Debtor made no mention of the In Rem Order.
11           Wells Fargo maintained that it had not violated the automatic
12   stay because the In Rem Order entered and recorded in March 2012
13   authorized the trustee's sale on July 11, 2012, despite Debtor's
14   bankruptcy filing on May 31, 2012.         Therefore, because the sale
15
16           9
           (...continued)
     dismissed the appeal as untimely on September 29, 2014.         Debtor’s
17   reconsideration motion went forward.
18        On July 8, 2015, Debtor informed the Panel of recent
     developments respecting her motion to reconsider the dismissal
19   order entered on February 7, 2014. On June 25, 2015, Judge Barash
     (to whom the adversary proceeding had been assigned) entered an
20   order allowing supplemental briefing on the matter, realizing the
     court's potential mistake of dismissing the Second Adversary
21   Proceeding with prejudice when Debtor had already dismissed it
     without prejudice. The bankruptcy court scheduled a hearing for
22   August 19, 2015. On September 1, 2015, the bankruptcy court
     granted Debtor’s motion and vacated the February 7, 2014 order
23   dismissing the Second Adversary Proceeding. Debtor subsequently
     filed a third adversary proceeding, 1:15-ap-01220-MB. On
24   December 15, 2015, the bankruptcy court dismissed the third
     adversary proceeding with leave to amend prior to February 5,
25   2016. To the extent the parties have requested that we take
     judicial notice of these recent developments, we GRANT that
26   request. Otherwise, we are able to take judicial notice of the
     existence, filing and content of documents filed in Debtor’s
27   underlying bankruptcy case and her related adversary proceedings.
     O’Rourke v. Seaboard Surety Co. (In re E.R. Fegert, Inc.),
28   887 F.2d 955, 957-58 (9th Cir. 1989).

                                         -10-
 1   did not violate the automatic stay, Wells Fargo argued that no
 2   basis existed for setting it aside.
 3        In her reply, Debtor contended that the In Rem Order did not
 4   apply in her case because: (1) the Lipkis court had no authority
 5   or jurisdiction to make any order relating to the Property;
 6   (2) the Property was never part of the Lipkis bankruptcy nor did
 7   Lipkis ever claim any interest in it; and (3) Wells Fargo knew
 8   months before the sale the Lipkis Deed was a fake and was never
 9   recorded.   Debtor further contended that the In Rem Order provided
10   no findings of an intent to hinder, delay or defraud creditors;
11   there was only a stipulation to that by parties she alleged had no
12   authority to make the stipulation.     Debtor contended she had no
13   opportunity to address the allegations raised in support of the
14   In Rem Order.
15        Prior to the hearing on February 12, 2014, the bankruptcy
16   court issued a tentative ruling sua sponte denying Debtor’s motion
17   on the basis of claim preclusion.    The court stated that because
18   it had "previously determined that debtor is unable to void the
19   sale, the debtor cannot do so now via the motion."
20        At the hearing, Debtor was represented by attorney Lenore
21   Albert ("Albert").   Albert sought clarification from the
22   bankruptcy court as to which order or judgment had already
23   determined the issues raised in Debtor's motion.    The court never
24   directly answered Albert's question, but when it noted that Wells
25   Fargo had filed a motion to dismiss the Second Adversary
26   Proceeding, Albert responded that the proceeding was dismissed
27   only as to the other two defendants, not as to Wells Fargo; Debtor
28   dismissed that proceeding without prejudice before Wells Fargo's

                                     -11-
 1   motion was decided.   Nonetheless, Albert argued that even if the
 2   Second Adversary Proceeding had been dismissed as to Wells Fargo
 3   under Civil Rule 12(b)(6), such dispositions are not final
 4   judgments on the merits.
 5        Counsel for Wells Fargo conceded that Wells Fargo had not
 6   been dismissed from the Second Adversary Proceeding before Debtor
 7   dismissed it without prejudice, but argued that the issue of the
 8   validity of the In Rem Order was decided in that proceeding as to
 9   the other defendants when they were dismissed.   The bankruptcy
10   court agreed and set forth its oral ruling:
11        THE COURT: Well, you know, I'm going to – first of all,
          I agree with opposing counsel. I've already ruled on the
12        merits – how do I put this – it's really – you say res
          judicata. I haven't used the word res judicata. I've
13        ruled on the particular claims here on the merits. Okay.
          So I wouldn't call that – you want to call it collateral
14        estoppel, claim preclusion, whatever, it's there. It's
          been done. She's had her bites at the apple. Okay. So
15        this – that's why I said what I said in the tentative.
          So I believe she is barred from bringing this motion at
16        this point.
          . . . .
17
          So I'm going to stick to my tentative and I'm going to
18        deny the motion and ask opposing counsel to prepare the
          order.
19
20   Hr'g Tr. (Feb. 12, 2014) at 8:2-14, 8:19-21.   The order denying
21   Debtor's motion to set aside the sale of the Property entered on
22   March 5, 2014, states only that the motion was "denied."   This
23   timely appeal followed.10
24
          10
25          On July 9, 2015, Debtor filed a motion for sanctions. Her
     motion is essentially an unauthorized third brief for her appeal.
26   Instead of the $150,000 she requested in her Second Adversary
     Proceeding, Debtor now seeks compensatory damages of "not less
27   than $5,000,000" and "substantial punitive damages." The Panel
     cannot grant Debtor such relief in the context of this appeal,
28                                                       (continued...)

                                     -12-
 1                              II. JURISDICTION
 2        The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
 3   and 157(b)(2)(A).   We have jurisdiction under 28 U.S.C. § 158.
 4                                 III. ISSUE
 5        Did the bankruptcy court err in denying Debtor's motion to
 6   set aside the sale of the Property on the basis of claim
 7   preclusion?
 8                           IV. STANDARDS OF REVIEW
 9        We review rulings regarding the availability of res judicata
10   doctrines, including claim preclusion, de novo as mixed questions
11   of law and fact in which legal questions predominate.   George v.
12   City of Morro Bay (In re George), 318 B.R. 729, 732-33 (9th Cir.
13   BAP 2004) (citing Robi v. Five Platters, Inc., 838 F.2d 318, 321
14   (9th Cir. 1988), and Alary Corp. v. Sims (In re Associated Vintage
15   Grp., Inc.), 283 B.R. 549, 554 (9th Cir. BAP 2002)).    Once we
16   determine that the doctrines are available to be applied, the
17   actual decision to apply them is left to the trial court's
18   discretion.   In re George, 318 B.R. at 732-33 (citing Robi,
19   838 F.2d at 321).
20        The Panel must apply a two-part test to determine whether the
21   bankruptcy court abused its discretion.    United States v. Hinkson,
22   585 F.3d 1247, 1261-62 (9th Cir. 2009) (en banc).   First, we
23   consider de novo whether the bankruptcy court applied the correct
24   legal standard.   Id.   A bankruptcy court abuses its discretion if
25
26
          10
           (...continued)
27   even if we reversed. Any proof of damages would have to be
     presented in the first instance to the bankruptcy court.
28   Accordingly, we DENY the sanctions motion.

                                      -13-
 1   it applied the wrong legal standard or its findings were
 2   illogical, implausible, or without support in the record.           See
 3   TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th
 4   Cir. 2011).
 5                                   V. DISCUSSION
 6   A.      Governing law
 7           1.      Section 362
 8           The filing of a bankruptcy petition creates an automatic
 9   stay.        See generally § 362(a).   Unless an exception enumerated in
10   § 362(b)(1)-(28) applies, the automatic stay prohibits, among
11   other things, any act to enforce a lien against property of the
12   debtor or of the bankruptcy estate.           § 362(a)(4), (5).   Actions
13   taken by creditors in violation of the automatic stay are void.
14   Griffin v. Wardrobe (In re Wardrobe), 559 F.3d 932, 934 (9th Cir.
15   2009).       In cases of a willful violation, the injured individual
16   can recover actual damages, including costs and attorney's fees,
17   and, in appropriate circumstances, may recover punitive damages.
18   § 362(k)(1); Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210, 1215
19   (9th Cir. 2002).
20           Section 362(d)(4)11 permits the bankruptcy court to grant "in
21
             11
22          The text of § 362(d)(4) in effect at the time the In Rem
     Order was entered stated:
23
             (d) On request of a party in interest and after notice and a
24           hearing, the court shall grant relief from the stay . . .
             such as by terminating, annulling, modifying, or conditioning
25           such stay – . . .
26                   (4) with respect to a stay of an act against real
                     property under subsection (a), by a creditor whose claim
27                   is secured by an interest in such real property, if the
                     court finds that the filing of the petition was part of
28                                                             (continued...)

                                            -14-
 1   rem" relief from the automatic stay to a creditor whose legitimate
 2   foreclosure efforts are being thwarted through one or more
 3   transfers of interest or multiple bankruptcy filings.     "An order
 4   entered under § 362(d)(4) has serious implications.     By seeking
 5   relief under § 362(d)(4), the creditor requests specific
 6   prospective protection against not only the debtor, but also every
 7   non-debtor, co-owner, and subsequent owner of the property."
 8   First Yorkshire Holdings, Inc. v. Pacifica L 22, LLC (In re First
 9   Yorkshire Holdings, Inc.), 470 B.R. 864, 871 (9th Cir. BAP 2012).
10   See also § 362(b)(20).12
11
12
          11
               (...continued)
13                 a scheme to delay, hinder, or defraud creditors that
                   involved either –
14                      (A) transfer of all or part ownership of, or other
                        interest in, such real property without the consent
15                      of the secured creditor or court approval; or
                        (B) multiple bankruptcy filings affecting such real
16                      property.
17        If recorded in compliance with applicable State laws
          governing notices of interests or liens in real property, an
18        order entered under paragraph (4) shall be binding in any
          other case under this title purporting to affect such real
19        property filed not later than 2 years after the date of the
          entry of such order by the court, except that a debtor in a
20        subsequent case under this title may move for relief from
          such order based upon changed circumstances or for good cause
21        shown, after notice and a hearing. Any Federal, State, or
          local governmental unit that accepts notices of interests or
22        liens in real property shall accept any certified copy of an
          order described in this subsection for indexing and
23        recording.
24        12
            Section 362(b)(20) provides that the filing of a petition
     does not operate as a stay "under subsection (a), of any act to
25   enforce any lien against or security interest in real property
     following entry of the order under subsection (d)(4) as to such
26   real property in any prior case under this title, for a period of
     2 years after the date of the entry of such an order, except that
27   the debtor, in a subsequent case under this title, may move for
     relief from such order based upon changed circumstances or for
28   other good cause shown, after notice and a hearing."

                                       -15-
 1        Thus, not only does the § 362(d)(4) order grant stay relief
 2   to the moving party in the immediate bankruptcy case, if properly
 3   recorded, it also gives the moving party stay relief in subsequent
 4   bankruptcy cases.   See Alakozai v. Citizens Equity First Credit
 5   Union (In re Alakozai), 499 B.R. 698, 703 (9th Cir. BAP 2013).
 6        2.    Claim preclusion
 7        Claim preclusion, sometimes referred to as res judicata,
 8   prohibits relitigation of "any claims that were raised or could
 9   have been raised" in a prior action between the same parties or
10   their privies.   Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d
11   708, 713 (9th Cir. 2001).     The doctrine "serves to promote
12   judicial efficiency by preventing multiple lawsuits and to enable
13   the parties to rely on the finality of adjudications."    Dodd v.
14   Hood River Cty., 136 F.3d 1219, 1224-25 (9th Cir. 1998).     Claim
15   preclusion bars a plaintiff from relitigating claims adjudicated
16   in a prior judgment, even if the prior decision was wrongly
17   decided.   See, e.g., Federated Dep't Stores, Inc. v. Moitie,
18   452 U.S. 394, 398 (1981)("Nor are the res judicata consequences of
19   a final, unappealed judgment on the merits altered by the fact
20   that the judgment may have been wrong or rested on a legal
21   principle subsequently overruled in another case.").
22        Claim preclusion requires three elements:    (1) an identity of
23   claims; (2) a final judgment on the merits; and (3) the same
24   parties or privity between the parties.    Owens, 244 F.3d at 713.
25   The Ninth Circuit has mandated a four factor test for determining
26   whether there is an identity of claims:    "(1) whether rights or
27   interests established in the prior judgment would be destroyed or
28   impaired by prosecution of the second action; (2) whether

                                       -16-
 1   substantially the same evidence is presented in the two actions;
 2   (3) whether the two suits involve infringement of the same right;
 3   and (4) whether the two suits arise out of the same transactional
 4   nucleus of facts."   Harris v. Cty. of Orange, 682 F.3d 1126, 1132
 5   (9th Cir. 2012).   The common nucleus criterion is the most
 6   important.   Id.
 7   B.   The bankruptcy court abused its discretion when it applied
          claim preclusion to Debtor's motion to set aside the sale of
 8        the Property.
 9        Debtor first contends that it was reversible error for the
10   bankruptcy court to apply claim preclusion sua sponte to the
11   motion to set aside the sale.   We disagree.
12        The court may dismiss an action sua sponte where a defense of
13   claim preclusion is not raised by a defendant.   United States v.
14   Sioux Nation of Indians, 448 U.S. 371, 432 (1980).   As the Supreme
15   Court explained, the policy underlying this doctrine is "not based
16   solely on the defendant's interest in avoiding the burdens of
17   twice defending a suit, but [is] also based on the avoidance of
18   unnecessary judicial waste."    Id.; see also Clements v. Airport
19   Auth. of Washoe Cty., 69 F.3d 321, 329 (9th Cir. 1995).   A
20   district court's sua sponte recognition of claim preclusion is
21   "entirely proper" when the parties are permitted to address the
22   question before the court.   See McClain v. Apodaca, 793 F.2d 1031,
23   1033 (9th Cir. 1986).   Although Wells Fargo did not specifically
24   raise claim preclusion, the bankruptcy court was free to do so.
25   Further, the court put Debtor on notice of the question in its
26   tentative ruling, and she had an opportunity to address it at the
27   hearing before a final decision was rendered.
28        We are concerned, however, with Debtor's argument that the

                                      -17-
 1   bankruptcy court failed to articulate any findings as to why claim
 2   preclusion applied.   The court seemed to indicate at the hearing
 3   that it had already decided the merits of Debtor's claims in the
 4   Second Adversary Proceeding.    But, without any findings, we cannot
 5   know for sure.    We must consider the bankruptcy court’s
 6   application of claim preclusion and determine whether an abuse of
 7   discretion occurred in that application.
 8        1.   Identity of claims
 9        Both the First Adversary Proceeding and the instant motion
10   are based on the same set of facts under the transactional test.
11   In re George, 318 B.R. at 735, citing W. Sys., Inc. v. Ulloa,
12   958 F.2d 864, 871 (9th Cir. 1991); Restatement (Second) of
13   Judgments § 24.   In both actions, Debtor alleged the same course
14   of conduct:   that the In Rem Order was invalid due to the fake
15   Lipkis Deed and the alleged false statements made by Wells Fargo
16   in the stipulation; that the July 11, 2012 foreclosure sale was
17   void because Wells Fargo had willfully violated the automatic stay
18   by not first seeking stay relief in her case; and that Debtor was
19   damaged as a result of Wells Fargo's alleged stay violation.    In
20   addition, the same evidence was presented in both actions and the
21   two actions involved infringement of the same rights.    Clearly,
22   the instant motion and the First Adversary Proceeding13 have an
23   identity of claims.
24        2.   Identity of parties
25        It is undisputed that Debtor sued Wells Fargo in the First
26
          13
             The Second and Third Adversary Proceedings also have an
27   identity of facts under the transactional test similar, if not
     nearly identical, to the First Adversary Proceeding and instant
28   motion.

                                      -18-
 1   Adversary Proceeding and in her motion to set aside the sale of
 2   the Property.   Therefore, this criterion is met.
 3        3.   Final judgment on the merits
 4        Debtor contends that her voluntary dismissal of the Second
 5   Adversary Proceeding without prejudice, which was entered before
 6   Wells Fargo's motion to dismiss that action was heard or decided,
 7   was not a final judgment on the merits.    The bankruptcy court
 8   failed to identify which proceeding or order constituted the basis
 9   for applying claim preclusion.   Under Rule 7041, incorporating
10   Civil Rule 41(a)(1)(B), the voluntary dismissal by Debtor of the
11   Second Adversary Proceeding as to Wells Fargo was without
12   prejudice and was not an adjudication on the merits.    Did the
13   disposition of the First Adversary Proceeding have any effect on
14   Debtor’s motion to set aside the sale?
15        Wells Fargo moved to dismiss the First Adversary Proceeding
16   under Civil Rule 12(b)(1), (4) and (6).    In that motion, Wells
17   Fargo challenged Debtor's standing.     The bankruptcy court entered
18   an order on November 1, 2012, granting Wells Fargo's motion under
19   Civil Rule 12(b)(6) for failure to state a claim based on Debtor's
20   lack of standing.   The court dismissed another defendant, Lipkis's
21   counsel, on the same ground before that on October 24, 2012.      Both
22   orders state that the First Adversary Proceeding was dismissed
23   "without leave to amend."   Debtor did not appeal these orders; the
24   First Adversary Proceeding was closed shortly thereafter.
25        Although the bankruptcy court granted the motions to dismiss
26   under Civil Rule 12(b)(6), it did so on the basis that Debtor
27   lacked standing.    Standing is a threshold question that must be
28   resolved before proceeding to the merits of a case.    L.A. Cty. Bar

                                      -19-
 1   Ass'n v. Eu, 979 F.2d 697, 700 (9th Cir. 1992).      See also Lujan v.
 2   Defs. of Wildlife, 504 U.S. 555, 570 n.5 (1992)(Article III
 3   standing like other bases of jurisdiction must be present at the
 4   inception of the lawsuit).    Therefore, because standing is
 5   jurisdictional, lack of standing precludes a ruling on the merits.
 6   Media Techs. Licensing, LLC v. Upper Deck Co., 334 F.3d 1366, 1370
 7   (Fed. Cir. 2003)(citing Scott v. Pasadena Unified Sch. Dist.,
 8   306 F.3d 646, 653-54 (9th Cir. 2002)("[w]e must establish
 9   jurisdiction before proceeding to the merits of the case"); Bird
10   v. Lewis & Clark Coll., 303 F.3d 1015, 1019 (9th Cir. 2002)
11   (recognizing that before reaching merits of the case the court
12   must determine the threshold issue of standing).     Accord Stewart,
13   297 F.3d at 957.
14        Without question, “a judgment in favor of a defendant
15   ordinarily bars the plaintiff from maintaining another action on
16   the same claim.”    In re George, 318 B.R. at 735.   But the
17   bankruptcy court failed to consider the implications of dismissal
18   for lack of standing, which is jurisdictional and precludes a
19   ruling on the merits.    See Restatement (Second) of Judgments § 19
20   & 20.14
21
          14
22             The General Rule of Bar is:
23             § 19. Judgment for Defendant—The General Rule of Bar
               A valid and final personal judgment rendered in favor of
24             the defendant bars another action by the plaintiff on the
               same claim.
25
               RESTATEMENT (SECOND) OF JUDGMENTS § 19.
26
               The exceptions to the General Rule of Bar are:
27
               § 20.   Judgment for Defendant—Exceptions to the General
28                                                          (continued...)

                                      -20-
 1   C.   Procedural Due Process
 2        We do not reach the question of whether procedural due
 3   process was satisfied when, after Debtor had informed Wells
 4   Fargo’s counsel that she challenged the validity of the Lipkis
 5   Deed, Wells Fargo apparently failed to notice Debtor of the
 6   stipulation for in rem relief from stay or its motion for approval
 7   of it.     Debtor was, after all, the borrower and the record title
 8   holder if her allegation was correct – clearly someone whose
 9   property interest would be affected if in rem relief were granted.
10   See Ford v. Ford (In re Ford), 159 B.R. 590, 594 (Bankr. D. Or.
11   1993).     Without dispute, Debtor has enjoyed due process in the
12   subsequent motions and proceedings.
13        Given the procedural history and pending proceedings, we
14   conclude that vacating and remanding the order denying the motion
15
16        14
               (...continued)
                 Rule of Bar
17               (1) A personal judgment for the defendant, although valid
                 and final, does not bar another action by the plaintiff on
18               the same claim:
                 (a) When the judgment is one of dismissal for lack of
19               jurisdiction, for improper venue, or for nonjoinder or
                 misjoinder of parties; or
20               (b) When the plaintiff agrees to or elects a nonsuit (or
                 voluntary dismissal) without prejudice or the court
21               directs that the plaintiff be nonsuited (or that the
                 action be otherwise dismissed) without prejudice; or
22               (c) When by statute or rule of court the judgment does not
                 operate as a bar to another action on the same claim, or
23               does not so operate unless the court specifies, and no
                 such specification is made.
24               (2) A valid and final personal judgment for the defendant,
                 which rests on the prematurity of the action or on the
25               plaintiff's failure to satisfy a precondition to suit,
                 does not bar another action by the plaintiff instituted
26               after the claim has matured, or the precondition has been
                 satisfied, unless a second action is precluded by
27               operation of the substantive law.
28              RESTATEMENT (SECOND) OF JUDGMENTS § 20.

                                       -21-
 1   to set aside the sale of the Property allows the bankruptcy court
 2   to consider questions discussed herein in one comprehensive
 3   proceeding.15
 4                             IV. CONCLUSION
 5        For the foregoing reasons, we VACATE and REMAND for further
 6   proceedings consistent with this memorandum.16
 7
 8
 9
10
11
12
13
14
15
16
17
18
19
          15
            We disagree with Wells Fargo's contention that this appeal
20   is "moot." Because Debtor was seeking stay violation damages
     under § 362(k), this appeal would never be moot. Further, it does
21   not appear from the record that Wells Fargo has sold the Property
     to a third party. Even if it has, that fact would not absolve
22   Wells Fargo from any potential stay violation damages.
23        16
            Debtor filed a request for judicial notice along with her
     opening brief on appeal. She asks the Panel to take judicial
24   notice of three documents: (1) a copy of the complaint filed in
     the First Adversary Proceeding; (2) the order dismissing the First
25   Adversary Proceeding; and (3) one of the three orders entered by
     Judge Tighe respecting the post-sale motions filed in Lipkis's
26   bankruptcy case. Because we are able to take judicial notice of
     the existence, filing and content of documents filed in Debtor's
27   underlying bankruptcy case and her related adversary proceedings,
     In re E.R. Fegert, Inc., 887 F.2d at 957–58, we GRANT Debtor's
28   request for judicial notice of these documents.

                                    -22-