Court Opinion

ID: 4664723
Source: CourtListenerOpinion
Date Created: 2021-03-04 01:00:53.35203+00
Date Added: 2024-06-11T08:02:37.870101
License: Public Domain

NOT FOR PUBLICATION                             FILED
                                                                                MAR 1 2021
                                                                      SUSAN M. SPRAUL, CLERK
                                                                           U.S. BKCY. APP. PANEL
                                                                           OF THE NINTH CIRCUIT

          UNITED STATES BANKRUPTCY APPELLATE PANEL
                    OF THE NINTH CIRCUIT

In re:                                               BAP No. NC-20-1060-BKT
MARTIN MUSONGE
           Debtor.                                   Bk. No. 19-42596

NATHANIEL BASOLA SOBAYO,
             Appellant,
v.                                                   MEMORANDUM 1
HIEN THI NGUYEN; MARTIN
MUSONGE,
             Appellees.

              Appeal from the United States Bankruptcy Court
                    for the Northern District of California
            Charles D. Novack, Chief Bankruptcy Judge, Presiding

Before: BRAND, KLEIN, 2 and TAYLOR, Bankruptcy Judges.

      Appellant, Nathaniel Basola Sobayo, appeals an order granting relief

from the automatic stay in Debtor Martin Musonge's case under § 362(d)(1) 3

      1  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 8024-1.
       2 Hon. Christopher M. Klein, United States Bankruptcy Judge for the Eastern

District of California, sitting by designation.
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and (d)(2) to appellee creditor, Hien Thi Nguyen, so she could proceed with a

pending unlawful detainer action against Debtor in state court. 4

       Prior to May 2017, Debtor owned a home in Richmond, California

("Residence"). Debtor sold the Residence in May 2017 to Kingsway Capital

Partners, LLC ("Kingsway"), which is owned by Sobayo. Kingsway financed

the purchase by borrowing $580,000 from Nguyen. The Kingsway promissory

note was secured by a deed of trust against the Residence in favor of Nguyen.

Debtor continued to live in the Residence after the sale based on a lease he

signed with Sobayo.

       Once Kingsway ceased making payments to Nguyen on the note in

February 2018, Nguyen started foreclosure proceedings. What followed was a

series of state court litigation and bankruptcy filings by Kingsway, Sobayo,

and Sobayo's wife in an apparent effort to forestall Nguyen's sale of the

Residence. In November 2018, after Kingsway's chapter 11 case was

dismissed, Kingsway transferred 95% of its interest in the Residence to

Sobayo, leaving 5% to Kingsway. On May 1, 2019, months after the dismissal

of Kingsway's chapter 11 case, Nguyen foreclosed on Kingsway's 5% interest

in the Residence. On July 3, 2019, after the 30-day automatic stay had expired

in Sobayo's second chapter 13 case, Nguyen foreclosed on Sobayo's 95%

       3 Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101–1532.
       4 We exercised our discretion to take judicial notice of documents electronically filed

in the bankruptcy court, where appropriate. See Atwood v. Chase Manhattan Mortg. Co. (In re
Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
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interest in the Residence. As a result, Nguyen owned a 100% interest in the

Residence as of July 3, 2019.

        After Debtor failed to pay rent or vacate the Residence following

service of a 3-day notice to quit, Nguyen filed an unlawful detainer action

("UD action") against Debtor in state court. A trial was set for November 19,

2019.

        On November 18, 2019, Sobayo, as a creditor of Debtor, filed an

involuntary chapter 7 petition against Debtor, which stayed the trial in the

UD action. Thereafter, Nguyen moved for relief from the automatic stay

under § 362(d)(1) and (d)(2) to continue with the UD action against Debtor in

state court. Sobayo opposed the stay relief motion. He claimed that Nguyen’s

foreclosure sales were invalid and that he was the owner of the Residence. In

other words, Sobayo wanted the stay to continue to protect his "ownership"

interest in the Residence. After a hearing, the bankruptcy court entered an

order granting Nguyen relief under § 362(d)(1) and (d)(2) ("Stay Relief

Order").

        We lack jurisdiction over appeals when the appellant lacks standing.

See Paine v. Dickey (In re Paine), 250 B.R. 99, 104 (9th Cir. BAP 2000). To have

standing to appeal a decision of the bankruptcy court, an appellant must

show that it is a "person aggrieved" who was "directly and adversely affected

pecuniarily by an order of the bankruptcy court[.]" Fondiller v. Robertson (In re

Fondiller), 707 F.2d 441, 442-43 (9th Cir. 1983). A "person aggrieved" is

someone whose interest is directly affected by the bankruptcy court's order,

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either by a diminution in property, an increase in the burdens on the

property, or some other detrimental effect on the rights of ownership

inherent in the property. Id.

      An individual creditor does not have independent standing to appeal

an order granting stay relief to another creditor, because the automatic stay is

intended to protect only the debtor, property of the debtor or property of the

estate, and not individual creditor interests. See The Bank of N.Y. Mellon v.

2298 Driftwood Tide Tr. (In re Barrett), 833 F. App'x 668, 670 (9th Cir. 2020)

(citing Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 129

(2014); Sierra Club v. Trump, 929 F.3d 670, 700 (9th Cir. 2019); Tilley v.

Vucurevich (In re Pecan Groves of Ariz.), 951 F.2d 242, 245 (9th Cir. 1991) ("[A]

creditor has no independent standing to appeal an adverse decision

regarding a violation of the automatic stay.")); U.S. Bank, Nat'l Assn. v. SFR

Inv. Pool 1, LLC (In re Patrone), 754 F. App'x 590, 591 (9th Cir. 2019). Here,

Sobayo, as a purported creditor, asserts that stay relief should not have been

granted because he owned the Residence, not Nguyen. Sobayo is asserting his

own interest and not that of Debtor or the estate. As a result, he does not have

standing to challenge the Stay Relief Order.

      In addition, the Stay Relief Order terminating the stay as to Nguyen

and her pending UD action against Debtor did not have direct or adverse

pecuniary effect on Sobayo. If anything, terminating the stay furthered

Sobayo's goal of removing a "squatting tenant."

                                         4
      To the extent that Sobayo may have rights against Nguyen or against

Debtor (now that the involuntary chapter 7 case has been dismissed 5), he

remains free to assert any such claims in state court.

      Because the automatic stay provisions of § 362 do not protect Sobayo,

and he was not "aggrieved" by the termination of Debtor's stay, he lacks

standing to appeal the Stay Relief Order.

      Accordingly, the appeal is DISMISSED.

      5 Although Sobayo appealed the case dismissal order, it does not appear that any
stay pending appeal has been requested or granted.
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