Court Opinion

ID: 4514536
Source: CourtListenerOpinion
Date Created: 2020-03-11 00:00:58.966752+00
Date Added: 2024-06-11T09:44:06.694413
License: Public Domain

FILED
                                                                         DEC 16 2019
                          NOT FOR PUBLICATION
                                                                     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 Nos. ID-18-1196-BGF
                                                              ID-19-1004-BGF
PRAVEEN KEVIN KHURANA,                                        ID-19-1093-BGF
                                                             (Related Appeals)
                    Debtor.
                                                     Bk. No.     3:13-bk-20058-TLM
PRAVEEN KEVIN KHURANA,
                                                     Adv. No. 3:19-ap-07001-TLM
                    Appellant,

v.                                                          MEMORANDUM*

STATE OF IDAHO, DEPARTMENT OF
HEALTH AND WELFARE,

                    Appellee.

                    Argued and Submitted on October 25, 2019
                           at San Francisco, California

                              Filed – December 16, 2019

                Appeal from the United States Bankruptcy Court
                           for the District of Idaho

         *
         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.
              Honorable Terry L. Myers, Bankruptcy Judge, Presiding

Appearances:        Appellant Praveen Kevin Khurana argued pro se; Douglass
                    E. Fleenor, Deputy Attorney General, argued for appellee
                    State of Idaho, Department of Health and Welfare.

Before:       BRAND, GAN and FARIS, Bankruptcy Judges.

                                  INTRODUCTION

      This case stems from the multiple transfers of real property known as

the Preston Property between appellant Praveen Khurana, Delores Adamson,

now deceased, and John Perry. The catalyst for these appeals is an order the

bankruptcy court entered on November 27, 2017 ("November 27 Stay Order"),

which Khurana did not appeal.

      In 2017, four years after Khurana had received a chapter 71 discharge,

the Department of Health and Welfare for the State of Idaho ("State") sought

to recover the Preston Property from Khurana in the Idaho state court (the

"Medicaid Action"). The State believed that Adamson's transfer of the Preston

Property to Khurana was fraudulent and recoverable as reimbursement for

          1
        Unless specified otherwise, all chapter and section references are to the
 Bankruptcy Code, 11 U.S.C. §§ 101-1532, all "Rule" references are to the Federal Rules of
 Bankruptcy Procedure, and all "Civil Rule" references are to the Federal Rules of Civil
 Procedure.

                                             2
Adamson's outstanding Medicaid debt.2 Once the Idaho state court learned

that Khurana had reopened his closed bankruptcy case, it stayed the

Medicaid Action. The State then sought relief from the automatic stay in the

bankruptcy court to continue with the Medicaid Action. The bankruptcy

court entered the November 27 Stay Order, denying the State's motion as

moot; no stay applied in Khurana's case. The bankruptcy court further

ordered that the Idaho state court could proceed to hear any matters related

to Khurana's "postpetition conduct" and "activities or interests" Khurana

acquired "postpetition."

      The State ultimately obtained a judgment in the Medicaid Action in

2018 (the "Transfer Judgment"),3 voiding the deeds transferring the Preston

Property to Khurana. Thereafter, Khurana sought relief from the bankruptcy

court to void that litigation and the resulting judgment and the State's

recovery of the Preston Property.

      Khurana filed motions and an adversary proceeding asserting that the

       2
          After the death of a Medicaid recipient, the State is authorized (and required by
 federal law) to recover the paid benefits from the recipient's estate. The estate includes
 assets that the recipient disposed of prior to death without adequate consideration,
 including transfers of property. The State maintained that, under Idaho and federal law,
 it could seek to avoid any fraudulent transfers by Adamson of the Preston Property
 dating back five years from the date she applied for Medicaid benefits — i.e., any
 transfers on or after August 1, 2002. See Idaho Code Ann. § 56-218(2).
       3
        The state court later entered an amended Transfer Judgment, to include the
 avoidance of a Quitclaim Deed to Adamson's son dated July 17, 2007. The Idaho Court
 of Appeals has since affirmed the amended Transfer Judgment. See Idaho Dep't of Health
 & Welfare v. Khurana, Case No. 46030, 2019 WL 2525850 (Idaho Ct. App. June 19, 2019).

                                             3
Transfer Judgment and the State violated the November 27 Stay Order, the

automatic stay and the discharge injunction. He also sought to avoid the

Transfer Judgment as a lien under § 522(f) and sought damages for contempt

against the State. The bankruptcy court denied all of the requested relief and

it is these orders that are the subject of Khurana's appeals. Khurana appeals:

(1) an order denying his motion for violation of the automatic stay, the

November 27 Stay Order, and the discharge injunction; (2) an order denying

his motions to (a) avoid a judgment lien under § 522(f), (b) void postpetition

state court orders, and (c) confirm the State's violation of the automatic stay;

and (3) an order granting the State's motion to dismiss Khurana's adversary

proceeding.

      None of Khurana's arguments on appeal has merit. He argues that the

State violated the automatic stay. This argument is wrong because the stay

expired by operation of law when Khurana received his discharge in 2013.

The State did not violate the stay when it sued Khurana in 2017, because the

stay did not exist at that time. The State also did not violate the discharge

injunction. The discharge injunction only applies to debts that arose before

Khurana filed his bankruptcy petition. The State's claim did not arise before

Khurana filed his petition; it arose in 2016 when Adamson passed away.

Thus, the State's rights were not subject to Khurana's discharge. In addition,

the discharge only protects a debtor from personal liability on discharged

debts. The State did not seek to hold Khurana personally liable for Adamson's

                                        4
Medicaid debt – the State only sought recovery of the Preston Property which

it asserted was fraudulently transferred to Khurana. The discharge does not

protect the Preston Property. Because the November 27 Stay Order allowed

the Medicaid Action to proceed, there was also no violation of the November

27 Stay Order. Finally, the bankruptcy court properly found that the Transfer

Judgment could not be avoided under § 522(f). Accordingly, we AFFIRM.

      I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A.   The transfers and Khurana's bankruptcy case

     Adamson applied for Medicaid benefits on August 1, 2007. The State

provided medical benefits to Adamson until her death on October 6, 2016.

Adamson's estate owed the State $239,781.80 in Medicaid debt.

     Adamson acquired her 100% interest in the Preston Property by 1994.

The transfers of the Preston Property began in 2006 and are as follows:

•    November 17, 2006, Adamson executed a Warranty Deed conveying
     one-half of the Preston Property to Khurana; deed recorded on
     November 27, 2006;

•    May 9, 2012, Khurana executed and recorded a Warranty Deed
     conveying his one-half interest in the Preston Property to Adamson;

•    August 13, 2012, Adamson executed and recorded a Quitclaim Deed
     conveying the Preston Property to both Adamson and Khurana as
     "tenants in entirety";

•    May 9, 2012, Adamson executed a Quitclaim Deed conveying her one-
     half interest in the Preston Property to Khurana; deed recorded on July
     31, 2013;

                                      5
•    April 28, 2016, Khurana executed a "Corrected" Quitclaim Deed
     conveying the Preston Property to Perry for the sum of One Dollar;
     deed recorded on September 12, 2016;

•    December 26, 2017, Perry executed and recorded a Quitclaim Deed
     conveying the Preston Property back to Khurana for the sum of One
     Dollar.

     Khurana filed a chapter 13 bankruptcy case on January 23, 2013. His

case was converted to chapter 7 on May 7, 2013. The deed in effect for the

Preston Property on the petition date was the August 13, 2012 Quitclaim

Deed. Khurana eventually disclosed an ownership interest in the Preston

Property in an amended Schedule A and claimed a homestead exemption for

it in an amended Schedule C. The chapter 7 trustee did not object to the

claimed homestead exemption. Khurana received a chapter 7 discharge on

September 20, 2013. The case was closed as a "no asset" case. Khurana

reopened the case in 2015.

B.   Khurana's motion for violation of the automatic stay and discharge
     injunction and contempt damages (Appeal No. 18-1196)

     Following the Transfer Judgment, Khurana filed a Motion for Relief

from (1) Violations of Discharge Injunction and Court Order Denying Relief

from Lift of Stay and (2) Damages, Costs and Other Appropriate Sanctions for

Contempt By State of Idaho ("Contempt Motion"). Khurana argued that the

Transfer Judgment violated the automatic stay because stay relief was denied

in the November 27 Stay Order yet the State continued to prosecute the

                                       6
Medicaid Action. Khurana argued that the Transfer Judgment violated the

discharge injunction because the deeds that the state court deemed void were

all prepetition transfers that had been discharged. In other words, Khurana

believed that the state court could not set aside any transfers of the Preston

Property that occurred prepetition.

      The bankruptcy court denied the Contempt Motion ("Contempt

Order"). It explained that the State's fraudulent transfer claim against

Khurana did not "accrue" until Adamson died in October 2016.4 The court

noted that the State was free to pursue whatever postpetition claim it had

against Khurana, including the fraudulent transfer claim, regardless of

whether the transfers at issue occurred pre- or postpetition. And, the state

court was free to evaluate Khurana's interest in the Preston Property and to

"adjudicate the validity, and avoidability, of any of the transferred interests."

      In rejecting Khurana's argument that the state court could not consider

the prepetition transfers, the bankruptcy court noted:

      Debtor apparently views this Court's November [27 Stay Order] as
      insulating the assorted deeds and transfers prior to the petition
      date from any inquiry, scrutiny or avoidance. That is an
      over-reading or over-statement. While Debtor had, in this Court's
      view and analysis, a "tenant in common"5 interest in the [Preston]

       4
           See Idaho Code Ann. § 56-218(8).
       5
         The bankruptcy court had previously found that under Idaho law a "Tenancy in
 Entirety" applies only to spouses, and there was no evidence that Khurana was ever
                                                                     (continued...)

                                         7
      Property as of his petition date, that interest was "abandoned" by
      the bankruptcy trustee. But abandonment does not validate the
      interest claimed. That interest is still subject to otherwise applicable
      state law. And if state law deems Debtor's interest, held as of
      bankruptcy, to be void, it is void. This Court abstained and allowed
      the [Medicaid] [A]ction to proceed to reach such a decision.

Mem. Dec. (July 3, 2018) 6-7. For these reasons, the bankruptcy court found

that there was no violation of the discharge injunction, the automatic stay, or

the November 27 Stay Order. Khurana timely appealed the Contempt Order.

C.    Khurana's motions to (a) avoid a judgment lien under § 522(f),
      (b) declare other state court orders void, and (c) confirm the State's
      violation of the automatic stay (Appeal No. 19-1004)

      Khurana then filed three more motions in the bankruptcy court seeking

relief from the Transfer Judgment and other proceedings pending against

him in the state court. The State did not oppose any of the three motions.

      The first motion Khurana filed was the Motion to Avoid Judicial Lien.

Khurana sought to avoid what he claimed was a judicial lien on the Preston

Property under § 522(f). Khurana argued that the "$283,000 Judgment" had to

be avoided because it impaired his unchallenged $100,000 homestead

exemption.

      The second motion Khurana filed was the Motion to Void Judgment,

Orders and Rulings. Khurana asked the bankruptcy court to declare that

      5
       (...continued)
 married to Adamson.

                                          8
other state court proceedings pending against him involving the Preston

Property violated the November 27 Stay Order and were outside the scope of

what the state court could hear. Specifically, Khurana argued that the State's

actions to quiet title to the Preston Property and for his ejectment violated the

November 27 Stay Order, and thus the orders entered in those actions were

void.

        Lastly, Khurana filed a Motion for Order Confirming Stay Violation.

This motion consisted of one sentence again alleging that the State had

violated the November 27 Stay Order.

        The bankruptcy court orally denied each motion for lack of merit. To

the extent Khurana was seeking an order confirming a stay violation by the

State, that issue had already been decided against him. As for Khurana's

request to void state court orders entered against him in the State's actions for

quiet title and ejectment, the court noted that the state court was authorized

to adjudicate any and all issues involving Khurana and the Medicaid estate

recovery; hence, these actions did not violate the November 27 Stay Order

and the orders were not void. Lastly, with respect to Khurana's motion to

avoid a judicial lien, the court explained that § 522(f) applies only to liens

existing at the time of the bankruptcy filing, not to postpetition liens. In any

case, Khurana had not established that any judicial liens for the Transfer

Judgment or other state court orders had even been filed against the Preston

Property. Khurana timely appealed the bankruptcy court's later written

                                         9
order.

D.   Khurana's adversary proceeding (Appeal No. 19-1093)

     Undeterred, Khurana then filed an adversary proceeding against the

State, asserting claims for violations of the November 27 Stay Order, the

discharge injunction, and contempt. Khurana alleged that the State had

violated the automatic stay and November 27 Stay Order by continuing to

prosecute the Medicaid Action and by obtaining the Transfer Judgment,

which Khurana asserted was void. Khurana requested that the Preston

Property be returned to him.

     The State moved to dismiss Khurana's complaint for lack of subject

matter jurisdiction. The State argued that the court had already decided the

issue of its alleged violation of the November 27 Stay Order in the Contempt

Order, and Khurana appealed that ruling to this Panel. Thus, argued the

State, the bankruptcy court was divested of jurisdiction to hear a complaint

alleging the same claims. Khurana opposed the motion.

     The bankruptcy court granted the State's motion to dismiss, ruling that

it was divested of jurisdiction over the claims raised in Khurana's complaint.

Claims concerning the State's alleged stay or discharge injunction violations

had already been raised and decided against Khurana in the Contempt

Order, which he appealed to this Panel. The court also found it improper to

file an adversary complaint to raise the same issues already raised by motion

                                      10
and rejected by the court. Khurana timely appealed the dismissal order.6

                                   II. JURISDICTION

      The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(G) and (K). We have jurisdiction under 28 U.S.C. § 158.

                                        III. ISSUES

1.    Did the bankruptcy court abuse its discretion in denying the Contempt

Motion?

2.    Did the bankruptcy court err or abuse its discretion in denying the

motions to (a) avoid a judgment lien under § 522(f), (b) declare other state

court orders void, and (c) confirm the State's violation of the automatic stay?

3.    Did the bankruptcy court err in granting the State's motion to dismiss

the adversary complaint?

                           IV. STANDARDS OF REVIEW

      The bankruptcy court's decision respecting civil contempt and sanctions

is reviewed for abuse of discretion. Rediger Inv. Corp. v. H Granados Commc'ns,

Inc. (In re H Granados Commc'ns, Inc.), 503 B.R. 726, 731 (9th Cir. BAP 2013).

We apply a two-part test to determine whether the bankruptcy court abused

its discretion. First, we consider de novo whether the bankruptcy court

        6
          Although no separate judgment was entered, the bankruptcy court's order
 became final 150 days after it was entered on the docket — i.e., September 7, 2019. Civil
 Rule 58(c)(2)(B), Rule 7058. In any case, the separate judgment requirement is not
 jurisdictional and can be waived. See Bankers Tr. Co. v. Mallis, 435 U.S. 381, 384-85 (1978).
 Khurana has not argued the lack of a separate judgment. Accordingly, he waived his
 right to require entry of a separate judgment. Id. at 386.

                                              11
applied the correct legal standard. Then, we review the bankruptcy court's

factual findings for clear error. Sullivan v. Harnisch (In re Sullivan), 522 B.R.

604, 611 (9th Cir. BAP 2014) (citing United States v. Hinkson, 585 F.3d 1247,

1261-62 (9th Cir. 2009) (en banc)). We must affirm the bankruptcy court's

factual findings unless we conclude that they are illogical, implausible, or

without support in the record. Id. at 612 (citing Hinkson, 585 F.3d at 1262).

      Whether a judicial lien is avoidable under § 522(f) is a question of law

we review de novo. Law Offices of Moore & Moore v. Stoneking (In re Stoneking),

225 B.R. 690, 692 (9th Cir. BAP 1998).

      Whether the bankruptcy court had subject matter jurisdiction is a

question of law we review de novo. McCowan v. Fraley (In re McCowan), 296

B.R. 1, 2 (9th Cir. BAP 2003).

                                 V. DISCUSSION

A.    The bankruptcy court did not abuse its discretion in denying the
      Contempt Motion (Appeal No. 18-1196).

      Nearly all of the eleven issues Khurana raises in his opening brief are

not relevant to this appeal. For example, Khurana spends the majority of his

time arguing that the bankruptcy court erred by abstaining from hearing the

fraudulent transfer dispute and allowing the state court to do so. The

bankruptcy court's decision to abstain was the subject of the November 27

Stay Order, which Khurana did not appeal. That decision is final. Therefore,

we have no jurisdiction over the abstention issue and are unable to address it.

Tucker v. Sambo's Rest., Inc. (In re Sambo's Rest., Inc.), 27 B.R. 630, 631 (9th Cir.

                                          12
BAP 1983) (once an order has become final because no appeal is taken,

appellate courts are without jurisdiction over that matter). For the issues he

raises that are relevant, we are not persuaded by Khurana's arguments.

      Khurana continues to argue that the State violated the automatic stay

by ignoring the bankruptcy court's ruling in the November 27 Stay Order and

proceeding to judgment in the Medicaid Action. We disagree. As the

bankruptcy court explained in its oral ruling, one reason it denied stay relief

was because the State's request was moot. The automatic stay was not in

effect at the time the State requested relief in October 2017; it had been

replaced by the discharge injunction upon Khurana's discharge in September

2013. See § 362(c)(2)(C).7 Thus, the State had not violated the automatic stay

by continuing to prosecute the Medicaid Action. The bankruptcy court

further denied stay relief because it was abstaining from hearing the disputed

property transfer matter. The Idaho state court ultimately determined that the

transfers of the Preston Property from Adamson to Khurana were fraudulent,

without adequate consideration, and that the three deeds at issue were void.

      Khurana argues that the Idaho state court was prohibited from voiding

the prepetition transfers of the Preston Property due to the discharge

injunction and his asserted homestead exemption. Khurana's view that the

        7
         Also, the reopening of Khurana's case in 2015 did not revive the automatic stay.
 Menk v. Lapaglia (In re Menk), 241 B.R. 896, 914 (9th Cir. BAP 1999) ("[T]o the extent that
 the automatic stay expired in conjunction with closing, it does not automatically spring
 back into effect."). Therefore, the State did not need to seek stay relief in October 2017.

                                             13
state court was prohibited from considering or avoiding the prepetition deeds

and transfers is wrong. The bankruptcy court explained in detail why that

argument failed, and we agree with its analysis.

      Khurana filed his bankruptcy case in January 2013. He received a

discharge of debts for which he was personally liable in September 2013. His

interest in the Preston Property, whatever it was on the petition date, was

abandoned by the bankruptcy estate and was therefore not property of the

estate. The estate's abandonment of the Preston Property did not adjudicate

Khurana's interest in that property under state law. Under Idaho law, the

State's fraudulent transfer claim against Khurana — which is an in rem right

not subject to Khurana's discharge8 — did not accrue until Adamson died in

October 2016. And, contrary to Khurana's position, the State could not pursue

any recovery against him for Adamson's estate until after she had passed.9

The State was free to pursue the Medicaid Action against Khurana, since that

cause of action accrued more than three years after he filed his bankruptcy

petition. As part of that litigation, the state court could evaluate Khurana's

interest in the Preston Property and "adjudicate the validity, and avoidability,

       8
          The discharge only protects the debtor from "personal liability" on discharged
 debts. § 524(a)(1), (2). The State has never attempted to hold Khurana personally liable
 for Adamson's Medicaid debt. Rather, the State only sought recovery of the property
 that Adamson fraudulently transferred to Khurana. The discharge protects Khurana
 from personal liability, but it does not protect the Preston Property.
       9
          See Idaho Code Ann. § 56-218(1)(a) ("There shall be no adjustment or recovery
 until after the death of . . . the individual[.]").

                                            14
of any of the transferred interests," even if the transfers of interests involved

transfers that occurred prepetition. Accordingly, neither the State nor the

Transfer Judgment violated the automatic stay, the discharge injunction, or

the November 27 Stay Order.

      Khurana fails to assert any argument for why the bankruptcy court's

decision here was erroneous, other than arguing that the court erred by

abstaining. However, as we have explained above, we cannot consider that

argument because the court's decision to abstain was set forth in the

November 27 Stay Order, which Khurana did not appeal.

      The only other discernable and possibly relevant argument Khurana

raises is that the Contempt Motion should have been granted because the

State did not appear for the hearing or serve him with its opposition.

Khurana did not raise these issues before the bankruptcy court. Nonetheless,

to the extent he raises due process concerns with the alleged lack of service,

that argument lacks merit. Khurana was the movant for the Contempt

Motion, he was allowed to make additional arguments at the hearing, and the

bankruptcy court entered its findings of fact and conclusions of law on the

record. Thus, he received sufficient due process, even if the State failed to

serve him with its opposition, which has not been established in the record.

See Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950) (due

process requires notice reasonably calculated to apprise interested parties of

the pendency of the action and afford them an opportunity to present their

                                        15
objections). In fact, the certificate of service attached to the State's opposition

demonstrates that he was served. On that same note, Khurana argues that if

we "strike" the State's opposition for lack of service, then he should be

granted relief. As noted, Khurana has not established that he was not served

with the opposition. But even if he was not, that does not mean he was

entitled to the relief he requested in the Contempt Motion. As the bankruptcy

court found, and we agree, the motion lacked merit.

      Accordingly, the bankruptcy court did not abuse its discretion in

denying the Contempt Motion.

B.    The bankruptcy court did not err or abuse its discretion in denying
      the motions to (a) avoid a judgment lien under § 522(f), (b) declare
      other state court orders void, and (c) confirm the State's violation of
      the automatic stay (Appeal No. 19-1004).

      Again, Khurana raises many irrelevant issues and arguments in his

opening brief on appeal. He further fails to assert any cogent argument for

how the bankruptcy court erred in denying all three of his motions. In any

case, we discern no error or abuse of discretion by the bankruptcy court.

      In his series of three motions, Khurana's first motion sought to avoid

what he claimed was a judicial lien on the Preston Property under § 522(f).

Subject to certain exceptions not relevant here, § 522(f)(1)(A) provides that

"the debtor may avoid the fixing of a lien on an interest of the debtor in

property to the extent that such lien impairs an exemption to which the

debtor would have been entitled under subsection (b) of this section, if such

                                         16
lien is — (A) a judicial lien. . . ." The bankruptcy court found that Khurana

failed to establish that a judicial lien even existed against the Preston

Property. However, even if it did, the court declined to grant Khurana relief

because § 522(f)(1)(A) applies to prepetition, not postpetition, judgment liens.

We further observe that, based on the Transfer Judgment and the avoidance

of the prepetition deeds, Khurana had no interest in the Preston Property to

which the lien "fixed" at the time he filed his bankruptcy petition in January

2013. See Goswami v. MTC Distrib. (In re Goswami), 304 B.R. 386, 392 (9th Cir.

BAP 2003) (a debtor's § 522(f) lien avoidance rights are determined as of the

petition date). Thus, for many reasons, relief under § 522(f)(1)(A) was not

available to Khurana.

        Khurana's second motion asked the bankruptcy court to declare that the

orders entered by the Idaho state court in the State's actions against him for

quiet title and ejectment were void, because they were entered in violation of

the November 27 Stay Order. As the bankruptcy court noted, the state court

was authorized to adjudicate all issues involving Khurana and the State's

attempts to recover the Preston Property for repayment of Adamson's

Medicaid benefits. Therefore, the orders entered in the quiet title and

ejectment actions did not violate the November 27 Stay Order and were not

void.

        Finally, Khurana's third motion sought confirmation that the State had

violated the November 27 Stay Order. The motion, which consisted of one

                                        17
sentence, was merely a rehash of the same argument that Khurana has been

making since the Contempt Motion and that the bankruptcy court already

rejected in the Contempt Order. As we and the bankruptcy court have stated,

the State did not violate the November 27 Stay Order.

C.    The bankruptcy court did not err in dismissing the adversary
      proceeding (Appeal No. 19-1093).

      In his opening brief, Khurana identifies thirteen issues. With the

exception of number 1, all of these issues were copied from his list of issues in

Appeal No. 18-1196, and are unrelated to the bankruptcy court's decision to

dismiss the adversary proceeding. The only relevant issue Khurana raises is

whether the dismissal of the complaint was appropriate. However, he does

not present any argument as to why dismissal was not appropriate.

      In his adversary complaint, Khurana brought claims for violations of

the November 27 Stay Order, the discharge injunction, and contempt. Again,

these claims centered around Khurana's incorrect belief that the State had

violated the November 27 Stay Order. The bankruptcy court dismissed the

adversary complaint on the basis that it lacked jurisdiction over it, because

claims about the State's alleged stay and discharge injunction violations had

been raised by Khurana and decided against him in the Contempt Order, and

Khurana had appealed that order to the Panel.

      Although not articulated by the State or the bankruptcy court, we

construe the State's motion to dismiss as one under Civil Rule 12(b)(1) for lack

of subject matter jurisdiction. The bankruptcy court was correct to dismiss the

                                       18
adversary complaint. It was divested of jurisdiction over the issue of the

State's alleged stay and discharge injunction violations once Khurana filed the

notice of appeal of the Contempt Order. "The filing of a notice of appeal is an

event of jurisdictional significance – it confers jurisdiction on the court of

appeals and divests the district court of its control over those aspects of the

case involved in the appeal." Griggs v. Provident Consumer Disc. Co., 459 U.S.

56, 58 (1982); see also Sherman v. SEC (In re Sherman), 491 F.3d 948, 967 (9th Cir.

2007) (a notice of appeal typically divests a bankruptcy court of jurisdiction

over aspects of the case involved in the appeal).

         However, even if the bankruptcy court had jurisdiction to consider the

State's alleged violations of the automatic stay or discharge injunction,

contempt proceedings for violation of the discharge injunction must be

initiated by motion under Rule 9014 and not by adversary proceeding.

Barrientos v. Wells Fargo Bank, N.A., 633 F.3d 1186, 1190-91 (9th Cir. 2011); Rule

9020. Presumably this rule also applies to contempt proceedings for violation

of the automatic stay. See Zilog, Inc. v. Corning (In re Zilog), 450 F.3d 996, 1008

n.12 (9th Cir. 2006) (noting that contempt orders for violations of either the

discharge injunction or the automatic stay are governed by the same

standards). Thus, Khurana's adversary proceeding was procedurally

improper, and the bankruptcy court could have also dismissed it on that

basis.

                                         19
                      VI. CONCLUSION

For the reasons stated above, we AFFIRM.

                              20