Court Opinion

ID: 4514553
Source: CourtListenerOpinion
Date Created: 2020-03-11 00:01:06.848108+00
Date Added: 2024-06-11T09:44:08.516158
License: Public Domain

FILED
                                                                            OCT 18 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                           NOT FOR PUBLICATION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 No. SC-19-1095-BKuL

AKI T. OYA,                                           Bk. No. 18-03598-CL

                    Debtor.

AKI T. OYA,

                    Appellant,

v.                                                            MEMORANDUM*

WELLS FARGO, N.A., AS TRUSTEE FOR
STRUCTURED ASSET MORTGAGE
INVESTMENTS II INC. STRUCTURED
ASSET MORTGAGE INVESTMENTS II
TRUST 2007-AR4, MORTGAGE PASS-
THROUGH CERTIFICATES SERIES 2007-
AR4,

                    Appellee.

                  Argued and Submitted on September 26, 2019
                           at Pasadena, California

         *
         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.
                               Filed – October 18, 2019

                 Appeal from the United States Bankruptcy Court
                     for the Southern District of California

          Honorable Christopher B. Latham, Bankruptcy Judge, Presiding

Appearances:        Michael G. Doan of Doan Law Firm argued for appellant
                    Aki T. Oya; Jonathan Fink of Wright Finlay & Zak, LLP
                    argued for appellee Wells Fargo, N.A., as Trustee for
                    Structured Asset Mortgage Investments II Inc. Structured
                    Asset Mortgage Investments II Trust 2007-AR4, Mortgage
                    Pass-Through Certificates Series 2007-AR4.

Before:       BRAND, KURTZ and LAFFERTY, Bankruptcy Judges.

                                  INTRODUCTION

      Appellant Aki Oya appeals an order granting appellee retroactive

annulment of the automatic stay under § 362(d)(1)1 and in rem stay relief

under § 362(d)(4).2 Because appellee could seek retroactive relief despite

having notice of the bankruptcy filing prior to its foreclosure sale, and

          1
         Unless specified otherwise, all chapter and section references are to the
 Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all "Rule" references are to the Federal
 Rules of Bankruptcy Procedure.
          2
         Aki does not challenge the bankruptcy court's ruling granting in rem relief
 under § 362(d)(4).

                                            2
because the bankruptcy court properly weighed the required factors

concerning such relief, we AFFIRM.

      I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A.    Prepetition events

      The facts are largely undisputed. Aki and her husband, Souichi Oya,3

acquired their residence in 2002 ("Property"). In 2007, the Oyas executed a

promissory note and deed of trust for a $600,000 loan, for which the Property

served as security. Appellee, Wells Fargo, N.A., as Trustee for Structured

Asset Mortgage Investments II Inc. Structured Asset Mortgage Investments II

Trust 2007-AR4, Mortgage Pass-Through Certificates Series 2007-AR4 ("Wells

Fargo"), acquired the note and deed of trust in 2013.

      The Oyas defaulted on the loan in 2014. They have not made a payment

since then. In response to at least two scheduled foreclosure sales for the

Property, the Oyas filed a series of five, alternating individual chapter 13

bankruptcy cases between September 2016 and April 2018. No case was

successful; all were dismissed for failure to file the required documents or a

plan. At least two of the five cases were filed the day before a scheduled

foreclosure sale.

      Following these five unsuccessful bankruptcy cases, another foreclosure

sale was set for Monday, June 18, 2018. Just prior to this, on June 13, 2018, Aki

       3
        We refer to Ms. Oya as "Aki" and Mr. Oya as "Souichi" to avoid any confusion.
 No disrespect is intended.

                                           3
called the loan's servicer, Select Portfolio Servicing, Inc. ("SPS"), to inquire

about the loan's status and was told that the sale was scheduled for June 18.

Aki called SPS on June 14, 2018, and was again told that the sale was

scheduled for June 18. In response, Aki requested postponement of the sale

due to Souichi's recent injury and asked that the person assigned to her case

contact her regarding postponement.

B.    Postpetition events

      On Friday, June 15, 2018, Aki filed this chapter 13 bankruptcy case —

the sixth case filed between the Oyas in less than two years and Aki's fourth

case.4 It too was a "bare-bones" filing, lacking any schedules, a statement of

financial affairs, or a plan.

      On Monday, June 18, 2018, approximately two hours before the

scheduled foreclosure sale, an SPS representative called Aki as she requested.

Aki told the SPS representative that she had filed a bankruptcy case on

June 15, that Souichi was having surgery, and that she would call back later

with an update. During the call, Aki did not provide SPS with any

bankruptcy court filing information or a case number. At 11:22 a.m., without

any mention of the bankruptcy filing, the foreclosure trustee proceeded with

the sale and sold the Property to Magnum Property Investments, LLC

       4
         Aki's and Souichi's "tag team" bankruptcy filings were filed at such times to
 avoid either of them invoking § 362(c)(4) and the loss of any automatic stay.

                                             4
("Magnum") for $915,300.5 Wells Fargo immediately rescinded the sale the

next day on June 19, 2018, and returned the purchase funds to Magnum the

following day.

      1.       Magnum's Motion for Relief/Annulment of Stay

      Refusing to accept that the sale had been rescinded, Magnum moved to

annul the stay. The bankruptcy court granted stay annulment, finding that it

was warranted under Fjeldsted v. Lien (In re Fjeldsted), 293 B.R. 12, 25 (9th Cir.

BAP 2003). Specifically, the court found that the Oyas were serial bankruptcy

filers, having filed numerous cases that interfered with the foreclosure sale of

the Property, and that this "bare-bones" filing was simply another bad-faith

case filed as part of a scheme to hinder or delay the sale. Even though

rescinded, the court deemed the June 18 sale valid and ruled that any

postpetition acts taken by Magnum in purchasing the Property did not

violate the stay.

      Prior to entry of the Magnum order, the bankruptcy court dismissed

Aki's bankruptcy case on July 3, 2018, for failure to file the required

schedules, statement of financial affairs, or plan. Her attempts to reinstate the

case failed.

        5
         Wells Fargo disputed that it received the BNC notice sent to "WFFC.com" on
 Saturday, June 16, 2018, and argued that the oral notice SPS received from Aki about
 her bankruptcy filing during the June 18, 2018 phone call was insufficient. While Wells
 Fargo still disputes the BNC notice, it no longer appears to argue that the oral notice to
 SPS prior to the sale was insufficient.

                                              5
      2.     Aki's motion to reconsider

      Aki moved for reconsideration of the Magnum order ("Motion to

Reconsider"). She argued that the order should be reversed because she had

significant equity in the Property. At the same time, the Oyas filed a separate

civil action against Wells Fargo, SPS and Magnum for willful violation of the

automatic stay and unfair debt collection practices in the U.S. District Court

for the Southern District of California ("Civil Action").6

      After a hearing, the bankruptcy court entered an order granting in part

and denying in part Aki's Motion to Reconsider. The court denied the motion

to the extent that the Magnum order annulled the stay as to Magnum, and it

granted the motion to the extent that the Magnum order retroactively

validated the June 18 foreclosure sale. This ruling, however, was without

prejudice to Wells Fargo bringing its own stay annulment motion and

       6
          The Civil Action was dismissed with prejudice on July 17, 2019. With respect to
 Aki's claim for stay-violation damages, the district court held:

       Here, the bankruptcy court granted Defendants' motion for stay relief. (Doc.
       No. 45-5.) Given that the bankruptcy court has the power to grant retroactive
       relief from a stay, and the bankruptcy court granted such relief in this case,
       no stay violation occurred. See In re Schwartz, 954 F.2d 569, 573 (9th Cir. 1992)
       ("If a creditor obtains retroactive relief under section 362(d), there is no
       violation of the automatic stay. . . ."). Accordingly, Plaintiffs' argument that
       Defendants violated 11 U.S.C. § 362 and 11 U.S.C. § 1301 is without merit.

       Aki moved for reconsideration of the dismissal order, which the district court
 denied on September 19, 2019. Aki has appealed both orders to the Ninth Circuit Court
 of Appeals. See Ninth Cir. Case No. 19-56152.

                                              6
requesting sale validation should annulment be granted.

      3.     Wells Fargo's motion for relief from stay

      Taking the cue from the bankruptcy court, Wells Fargo moved for

retroactive annulment of the automatic stay under § 362(d)(1) ("Motion to

Annul"). Wells Fargo maintained that it was seeking annulment of the stay

solely to protect it and SPS from the stay violation claim asserted by the Oyas

in the Civil Action; it was not seeking to validate the rescinded sale. Wells

Fargo argued that the Fjeldsted factors weighed in favor of granting

annulment.

      In opposition, Aki argued that the Motion to Annul was Wells Fargo's

attempt to obtain forgiveness and immunity from its willful stay violation,

and that retroactive annulment of the stay was not proper under those

circumstances. Aki maintained that Wells Fargo's stay violation was willful,

and not merely technical, because it had notice of her bankruptcy filing prior

to the June 18 foreclosure sale yet proceeded with the sale anyway. If there

was any doubt as to notice, Aki requested that an evidentiary hearing be held

after discovery was complete. Even if Wells Fargo obtained annulment of the

stay, argued Aki, that did not eliminate its liability for any stay-violation

damages under § 362(k) at issue in the Civil Action. Aki also argued that

Wells Fargo's claim for relief was barred by laches and unclean hands.

      Wells Fargo maintained that its actions were, at most, a technical

violation of the automatic stay and not a willful one. Wells Fargo further

                                        7
disputed Aki's ability to claim any stay-violation damages if retroactive

annulment was granted. To annul the stay, argued Wells Fargo, means that

no stay violation occurred. And without a stay violation, there can be no

damages under § 362(k).

      After a hearing, the bankruptcy court issued an order granting the

Motion to Annul. Without deciding the issue of notice, the court reasoned

that, even if Wells Fargo had notice of Aki's bankruptcy filing prior to the

foreclosure sale, Aki's inequitable conduct significantly outweighed it. It

further found that all but two of the twelve Fjeldsted factors weighed

"strongly" in favor of annulment. The court rejected Aki's arguments that the

doctrines of laches and unclean hands barred Wells Fargo's claim for relief;

Wells Fargo's five-month delay in seeking stay relief was not unreasonable or

inexcusable, and it was not clear to the court whether Wells Fargo's actions

were willful to preclude relief on the basis of unclean hands. In any event, the

court believed that Aki's inequitable conduct precluded her from avoiding

stay annulment. This timely appeal followed.

                              II. JURISDICTION

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

157(b)(2)(G). Aheong v. Mellon Mortg. Co. (In re Aheong), 276 B.R. 233, 242-43 &

n.8 (9th Cir. BAP 2002) (bankruptcy court retains jurisdiction to review

motions to annul the automatic stay even after a bankruptcy case is dismissed

or closed). We have jurisdiction under 28 U.S.C. § 158.

                                        8
                                    III. ISSUE

      Did the bankruptcy court abuse its discretion in granting the Motion to

Annul?

                         IV. STANDARD OF REVIEW

      A bankruptcy court's decision to retroactively annul the automatic stay

is reviewed for an abuse of discretion. Nat'l Envtl. Waste Corp. v. City of

Riverside (In re Nat'l Envtl. Waste Corp.), 129 F.3d 1052, 1054 (9th Cir. 1997).

The bankruptcy court abuses its discretion if it applies the wrong legal rule or

if its findings are illogical, implausible or without support in the record.

United States v. Hinkson, 585 F.3d, 1247, 1262 (9th Cir. 2009) (en banc).

                                V. DISCUSSION

A.    The bankruptcy court did not abuse its discretion in granting the
      Motion to Annul.

      1.      Governing law for annulling the automatic stay

      Under § 362(a), the filing of Aki's bankruptcy petition operated as a stay

of "any act to obtain possession of property of the estate" and "any act to

create, perfect, or enforce any lien against property of the estate." § 362(a)(3)

& (4). Here, the foreclosure sale, conducted after Aki filed her bankruptcy

case, constituted an act to obtain possession of and to enforce a lien against

property of the estate in violation of § 362. Actions taken in violation of the

stay are void. Schwartz v. United States (In re Schwartz), 954 F.2d 569, 572 (9th

Cir. 1992).

                                         9
      However, § 362(d) "gives the bankruptcy court wide latitude in crafting

relief from the automatic stay, including the power to grant retroactive relief

from the stay." Id.7 Retroactive relief validates acts which violate the

automatic stay and would otherwise be void. Id. at 573; Lone Star Sec. & Video,

Inc. v. Gurrola (In re Gurrola), 328 B.R. 158, 172 (9th Cir. BAP 2005); see also E.

Refractories Co. v. Forty Eight Insulations Inc., 157 F.3d 169, 172 (2d Cir. 1998)

(retroactive annulment of the stay validates actions taken in contravention of

such stay, whereas termination, modification, and conditioning generally

take effect only as of the date such relief is granted). Thus, the Code accounts

for the fact that it may be inappropriate in certain circumstances to permit a

debtor to take advantage of the automatic stay. DelConte v. Torrez (In re

DelConte), BAP No. 06-1302-SDK, 2007 WL 7535060, at *4 (9th Cir. BAP Aug.

14, 2007) (citing Sherman v. SEC (In re Sherman), 441 F.3d 794, 815 (9th Cir.

2006)), opinion amended and superseded, 491 F.3d 948 (9th Cir. 2007).

      In deciding whether "cause" exists to annul the stay under § 362(d)(1),

the bankruptcy court is required to examine the circumstances of the

particular case and balance the equities of the creditor's position in

comparison to that of the debtor's. Souang v. Fularon (In re Fularon), BAP No.

10-1428-JuHPa, 2011 WL 4485202, at *3 (9th Cir. BAP July 11, 2011) (citing In

       7
           Section 362(d) provides:

       On request of a party in interest and after notice and a hearing, the court
       shall grant relief from the stay provided under subsection (a) of this section,
       such as by terminating, annulling, modifying, or conditioning such stay[.]

                                             10
re Nat'l Envtl. Waste Corp., 129 F.3d at 1055). Under this approach, the

bankruptcy court considers "(1) whether the creditor was aware of the

bankruptcy petition; and (2) whether the debtor engaged in unreasonable or

inequitable conduct, or prejudice would result to the creditor." In re Nat'l

Envtl. Waste Corp.,129 F.3d at 1055.

      In Fjeldsted, we identified twelve additional factors that can be relevant

in deciding whether retroactive annulment of the stay is justified:

      1. Number of filings;

      2. Whether, in a repeat filing case, the circumstances indicate an
      intention to delay and hinder creditors;

      3. A weighing of the extent of prejudice to creditors or third parties if
      the stay relief is not made retroactive, including whether harm exists to
      a bona fide purchaser;

      4. The debtor's overall good faith (totality of circumstances test);

      5. Whether creditors knew of stay but nonetheless took action, thus
      compounding the problem;

      6. Whether the debtor has complied, and is otherwise complying, with
      the Code and Rules;

      7. The relative ease of restoring parties to the status quo ante;

      8. The costs of annulment to debtors and creditors;

      9. How quickly creditors moved for annulment, or how quickly debtors
      moved to set aside the sale or violative conduct;

                                        11
      10. Whether, after learning of the bankruptcy, creditors proceeded to
      take steps in continued violation of the stay, or whether they moved
      expeditiously to gain relief;

      11. Whether annulment of the stay will cause irreparable injury to the
      debtor;

      12. Whether stay relief will promote judicial economy or other
      efficiencies.

293 B.R. at 25. These factors, however, "are merely a framework for analysis

and not a scorecard," and thus "[i]n any given case, one factor may so

outweigh the others as to be dispositive." Id. The debtor bears the ultimate

burden of proving that the request for retroactive relief from the stay should

be denied. In re Fularon, 2011 WL 4485202, at *5 (citing In re Nat'l Envtl. Waste

Corp., 191 B.R. 832, 836 (Bankr. C.D. Cal. 1996)), aff'd, 129 F.3d 1052 (9th Cir.

1997) (debtor has the burden of proof under § 362(g)(2) to demonstrate that

cause does not exist to annul the stay).

      2.    Wells Fargo's knowledge of the bankruptcy filing prior to the
            foreclosure sale did not preclude retroactive annulment of the
            stay.

      For its analysis under the two-factor test in National Environmental Waste

Corporation, 129 F.3d at 1055, the bankruptcy court assumed that Wells Fargo

had notice of Aki's bankruptcy filing prior to the foreclosure sale but found

that it was "significantly outweighed" by Aki's inequitable conduct. Facts

important to the court's decision were Aki's intent to delay Wells Fargo's

                                         12
foreclosure efforts and her bad-faith filing scheme, and Wells Fargo's quick

rescission of the sale. The court also found that Fjeldsted factor 5 – whether the

creditor knew of the stay but nonetheless took action — weighed against

annulment.

      Aki argues that Wells Fargo was not entitled to retroactive stay relief

because it failed to establish "cause." Her argument is two-fold: (1) Wells

Fargo was seeking only to escape liability under § 362(k),8 as opposed to

validating the void foreclosure sale, which did not provide cause; and (2) a

creditor who willfully violates the automatic stay can never obtain retroactive

annulment for the purpose of escaping liability under § 362(k).

      The bankruptcy court found that even if Wells Fargo had notice of Aki's

bankruptcy filing prior to the foreclosure sale, it was not clear whether its

stay violation was "willful". While it is ultimately not relevant to our analysis,

the court's finding was erroneous. If Wells Fargo had notice of the

bankruptcy filing, which it now appears to concede it had via Aki's oral

notice to SPS, but proceeded with the foreclosure sale anyway, that was a

willful violation of the automatic stay. Knupfer v. Lindblade (In re Dyer), 322

F.3d 1178, 1191 (9th Cir. 2003) (a stay violation is "willful" if the party knew of

the stay and the party's actions which violated the stay were intentional);

        8
          Section 362(k)(1) provides, in relevant part, that "an individual injured by any
 willful violation of a stay provided by this section shall recover actual damages,
 including costs and attorneys’ fees, and, in appropriate circumstances, may recover
 punitive damages."

                                             13
Yellow Express, LLC v. Dingley (In re Dingley), 514 B.R. 591, 596 (9th Cir. BAP

2014); Ramirez v. Fuselier (In re Ramirez), 183 B.R. 583, 589 (9th Cir. BAP 1995)

(knowledge of the bankruptcy filing is legal equivalent of knowledge of the

automatic stay). In any case, Wells Fargo was not precluded from seeking or

obtaining retroactive stay annulment despite any willful stay violation.

      The Ninth Circuit Court of Appeals has held that the bankruptcy court's

power to annul the stay under § 362(d) exists whether the creditor acts at a

time when he is unaware of the stay, "or proceeds with a foreclosure sale

when he has actual knowledge of the stay." Glaser v. Dowell (In re Glaser), 56

F.3d 71 (9th Cir. May 19, 1995) (table) (citing Algeran, Inc. v. Advance Ross

Corp., 759 F.2d 1421, 1422-25 (9th Cir. 1985)). In Glaser, the debtor provided

evidence that the creditor knew of his bankruptcy filing prior to the

foreclosure sale. However, the Ninth Circuit ruled that notice did not limit

the court's discretion to validate the creditor's actions. Id. Likewise, in

National Environmental Waste Corporation, the Ninth Circuit rejected the

debtor's argument that the creditor's knowledge of the bankruptcy filing and

its own innocence of egregious conduct should be dispositive in a motion to

annul. 129 F.3d at 1055. "[W]e have never held these two factors to be

dispositive; instead, we have engaged in a case by case analysis." Id.

      This Panel has also affirmed bankruptcy court decisions retroactively

annulling the automatic stay, even when the creditor had (or allegedly had)

knowledge of the debtor's bankruptcy filing prior to acting. The creditor's

                                         14
knowledge is just one factor to consider in weighing the equities of the case.

See Staton v. United States (In re Staton), BAP Nos. 18-1045 & 18-1046-TaBKu,

2019 WL 994026, at *4 (9th Cir. BAP Feb. 27, 2019) (debtor failed to argue why

creditor's knowledge of the bankruptcy filing prior to the foreclosure sale

should outweigh the other factors and be dispositive); Bray v. U.S. Bank, N.A.

(In re Bray), BAP No. 17-1373-SKuF, 2018 WL 3748503, at *6 (9th Cir. BAP

Aug. 7, 2018) (bankruptcy court did not err in determining that debtor's bad-

faith conduct outweighed creditor's alleged notice of the bankruptcy filing

prior to the foreclosure sale; a creditor's awareness of the bankruptcy is "not

dispositive"); Ceralde v. The Bank of N.Y. Mellon (In re Ceralde), BAP No. 12-

1547-CoDKi, 2013 WL 4007861, at *5-6 (9th Cir. BAP Aug. 6, 2013)

(bankruptcy court did not err in determining that the debtor's egregious

conduct outweighed the creditor's admitted knowledge of the bankruptcy

filing prior to the foreclosure sale); Williams v. Levi (In re Williams), 323 B.R.

691, 701 (9th Cir. BAP 2005)(“Williams I”) (affirming the bankruptcy court's

annulment of the automatic stay, even though purchaser at foreclosure sale

had notice of the bankruptcy filing, based on debtor's inequitable conduct),

abrogated on other grounds by Eden Place, LLC v. Perl (In re Perl), 811 F.3d 1120

(9th Cir. 2016).

      In another noteworthy case, In re Fularon, the bankruptcy court denied

retroactive stay relief on the sole basis that the foreclosure trustee had notice

of the debtor's bankruptcy filing prior to the sale of the debtor's real property.

                                          15
2011 WL 4485202, at *4. There, the successful bidder at the sale claimed he

lacked notice of the bankruptcy filing, which the debtor filed just five minutes

prior to the sale, but there were allegations that the foreclosing trustee had

notice. The bankruptcy court considered only notice and failed to weigh all

relevant factors for stay annulment. The Panel reversed, noting that balancing

the equities requires the court to reach an equitable conclusion, rather than a

factual or legal one, and that "there is no per se rule that notice of the

bankruptcy case precludes retroactive relief from stay." Id.

      While Aki appears to agree that the automatic stay can be retroactively

annulled to validate an otherwise void foreclosure sale conducted with the

creditor's knowledge of the bankruptcy filing, she maintains that such relief is

not available when the creditor seeks only to avoid liability under § 362(k).

This case is a procedural anomaly. Few, if any, creditors would seek

absolution from a stay violation without also seeking validation of a void

foreclosure sale or some other transaction. However, relief from § 362(k)

liability is not all that Wells Fargo requested; it also sought prospective stay

relief under § 362(d)(4). In any case, we are not persuaded by Aki's argument.

      Neither the Ninth Circuit Court of Appeals nor this Panel has expressly

ruled that a creditor cannot obtain retroactive stay relief to avoid liability

under § 362(k). Although in the above cases the movant was seeking to

validate an otherwise void foreclosure sale, it defies logic to say that a

bankruptcy court can validate by annulment the sale but not the creditor's act

                                         16
of commencing the sale that subjected it to § 362(k) liability. If a void sale can

be blessed, so can the creditor's actions surrounding the sale. In fact, that is

exactly what retroactive annulment does.

      Aki's argument is also contrary to this circuit's mandate, that

bankruptcy courts engage in a weighing of equitable factors, including the

creditor's knowledge, to decide when retroactive annulment of the stay is

justified. If a creditor's knowledge of the bankruptcy filing was an absolute

bar to retroactive stay relief, there would be no need for the court to consider

the remaining factors. On the flip side of this, we would be hard-pressed to

say that a bankruptcy court abused its discretion in denying retroactive stay

relief if it found that the creditor's knowledge outweighed the other factors.

See In re Fjeldsted, 293 B.R. at 25 (one factor may so outweigh the others as to

be dispositive). The problem in Fularon was that the bankruptcy court

considered notice only to the exclusion of all other factors. 2011 WL 4485202,

at *4. In summary, a creditor's knowledge of the bankruptcy is just one of the

many factors the court must consider.9

       9
          Aki argues that the bankruptcy court erred by not conducting an evidentiary
 hearing regarding Wells Fargo's notice. No such hearing was necessary. The bankruptcy
 court assumed Wells Fargo knew about the bankruptcy filing prior to the foreclosure
 sale for purposes of the Motion to Annul. Further, although Aki had requested (in her
 brief) an evidentiary hearing if notice was in dispute, her counsel never complained
 about the lack of one at the hearing on the Motion to Annul, even after the court
 announced that it was taking the matter under advisement and would issue a decision.
 Instead, Aki's counsel requested that the court provide findings of fact and conclusions
 of law for her probable appeal without voicing any objection to the lack of an
                                                                               (continued...)

                                             17
      The only case, at least from this circuit, that could have supported Aki's

argument is Williams I, 323 B.R. at 702. However, that case was ultimately

overruled by the Ninth Circuit Court of Appeals in 2010. In Williams I, the

Panel affirmed the bankruptcy court's decision to annul the stay but

remanded for the court to decide if the debtor was entitled to stay-violation

damages under former § 362(h), now § 362(k). The Panel stated that case law

had not yet definitively addressed whether an action taken in violation of the

stay, validated by annulment after the fact, may still serve as the basis for an

award of money damages if the debtor has suffered an injury. Id. "[I]t is far

from clear that annulment of the stay should preclude damages for violation

of the stay before the annulment: the principle that one may be held in

contempt notwithstanding the reversal of the order violated, Worden v. Searls,

121 U.S. 14 (1887); U.S. v. United Mine Workers of Am., 330 U.S. 258, 294 (1947),

or even its unconstitutionality, Walker v. City of Birmingham, 388 U.S. 307

(1967), seems an appropriate analogy." Id.10

      On remand, the bankruptcy court ruled that stay-violation damages are

precluded when the stay is retroactively annulled. The district court affirmed,

      9
      (...continued)
 evidentiary hearing. Thus, Aki's argument regarding an evidentiary hearing has been
 abandoned in any event.
          10
          Although Williams I was initially affirmed by the Ninth Circuit Court of
 Appeals, 204 F. App'x 582 (9th Cir. 2006), the unpublished opinion did not address the
 Panel's discussion of whether stay violations may serve as a basis for damages even
 when validated by retroactive annulment. Id.

                                           18
ruling that once a stay is retroactively annulled, the opportunity for stay-

violation damages is eliminated. See Williams v. Franklin Towers Homeowners

Ass'n, Inc. (In re Williams), No. 07-2879, 2008 WL 11334031, at *5 (C.D. Cal. Jan.

16, 2008)(“Williams II”). In its well-reasoned decision, the district court

observed:

       Generally, retroactive annulment operates to negate the existence
       of the stay from the effective date of the annulment, validating the
       prior action. . . . Damages for violations of a stay may be (and likely
       are) available when a court merely modifies or terminates a stay,
       without validating any prior violations or negating the existence of
       the stay from the date of the violation. Inclusion of these various
       statutory alternatives strongly suggests that Congress intended
       that an annulment would operate in some way different from a
       mere modification or termination of an automatic stay. An
       annulment's distinguishing characteristic, therefore, is that it
       operates to erase the stay from the date of any violation, validating
       prior impermissible actions. To allow damages even when a stay
       is annulled would render it identical to a termination or
       modification of a stay, and its inclusion in section 362(d) would
       then be redundant.

Id. at *4.11

         11
           The district court disagreed with the Panel's earlier suggestion that the
 availability of damages when the stay is annulled is analogous to the validity of
 contempt sanctions even where the underlying court order is later invalidated.
 Williams II, 2008 WL 11334031, at *5. It found the Panel's analogy inapt, because the
 cases on which the Panel relied involved criminal contempt, not proceedings for civil
 contempt and compensatory damages. Id. Unlike criminal contempt, noted the district
 court, a civil contempt judgment falls with the decision invalidating the underlying
 injunction. Id. (citing Scott & Fetzer Co. v. Dile, 643 F.2d 670, 675 (9th Cir. 1981)). Because
                                                                                     (continued...)

                                                19
      The Ninth Circuit Court of Appeals affirmed, ruling that the

"bankruptcy court correctly denied [the debtor's] request for damages for

violation of the automatic stay because the stay was retroactively annulled."

Williams v. Franklin Towers Homeowners Ass'n, Inc. (In re Williams), No. 08-

55235, 386 F. App'x. 608 (9th Cir. July 6, 2010)(“Williams III”). See also In re

Schwartz, 954 F.2d at 573 (retroactive stay annulment under § 362(d) disposes

of an underlying stay violation). Therefore, Aki's reliance on Williams I, as

well as this Panel's reliance on Williams I after 2010, for the proposition that

stay annulment does not necessarily preclude stay-violation damages under

§ 362(k) is misplaced. See Wallace v. Carcredit Auto Grp., Inc. (In re Wallace),

BAP No. 13-1414-KuPaTa, 2014 WL 1244792, at *6 (9th Cir. BAP Mar. 26,

2014) (relying on Williams I, 323 B.R. at 702, to state, in dicta, that an overtly

willful stay violation presumably cannot be cured by stay annulment).

Moreover, Aki took the issue of stay-violation damages to the district court,

which has ruled against her.

      3.     The bankruptcy court properly weighed the Fjeldsted factors.

      Alternatively, Aki argues that the Fjeldsted factors weighed against

annulment. She contests the bankruptcy court's findings of fact, which we

review for clear error. The court painstakingly went through each of the

twelve Fjeldsted factors, finding that only two weighed against annulment —

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        (...continued)
 stay-violation damages are virtually identical in character to civil compensatory
 contempt sanctions, reasoned the district court, the Panel's analogy did not apply.

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factors 5 and 9. We do not discern any clear error here.

      The court found that Aki's and Souichi's repeat filings, without any

genuine effort to reorganize their debts, were part of an intentional scheme to

hinder and delay the foreclosure of the Property and an abuse of the

bankruptcy process. Aki (and Souichi) filed multiple bare-bones bankruptcy

petitions, several of which were filed on the eve of a scheduled foreclosure

sale. Aki (and Souichi) never filed schedules or statements of financial affairs

or plans. And given that all six of the cases were dismissed for failure to file

the required documents, Aki (and Souichi) apparently never intended to

actually follow through and prosecute a bankruptcy case to conclusion. It is

clear, especially given their careful timing, that the petitions were filed simply

to get the benefit of the automatic stay. Thus, the court did not err in finding

that factors 1, 2, 4 and 6 weighed in favor of annulment.

      Likewise, the court did not err in finding that factors 3, 7, 8, 10, 11 and

12 weighed in favor of annulment. The court found that Wells Fargo would

suffer prejudice if retroactive annulment was not granted because it would

have to face § 362(k) sanctions, and that Aki should not be able to profit from

her bad-faith scheme. Further, Aki had already been restored to the status

quo ante with Wells Fargo's rescission of the sale, and annulment would now

restore Wells Fargo to the pre-foreclosure status quo. The court found that

annulment cost nothing to either party. Aki's threat of an appeal was not a

cost of granting retroactive relief. And given that she had lived at the

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Property for the past five years without making payments, the typical

attorney's fees associated with stay motion practice would have no net cost to

her. Because Wells Fargo immediately rescinded the sale the next day, the

court found that there was no continuing violation of the stay. The court also

found that annulment would not cause irreparable injury to Aki. Because her

case had been dismissed, no stay was in place to prevent Wells Fargo's

foreclosure efforts, no matter the motion's outcome. Finally, the court found

that judicial economy and efficiency favored annulling the stay. Resolving the

stay violation matter between Aki and Wells Fargo via annulment would

expedite a resolution in the Civil Action. In other words, without a stay

violation, damages under § 362(k) would be impossible to establish.

      4.    Laches and Unclean Hands

      Lastly, Aki argues that the bankruptcy court erred in determining that

laches and unclean hands did not preclude Wells Fargo's relief. It appears to

us that the doctrines of laches and unclean hands are subsumed within the

balancing tests of both National Environmental Waste Corporation and Fjeldsted.

As we have already concluded above, the bankruptcy court did not err in

weighing the relevant factors to conclude that Wells Fargo was entitled to

retroactive stay relief. While the court found that Wells Fargo's five-month

delay in seeking retroactive stay relief weighed against annulment, it also

found that Aki was not prejudiced by any purported delay given her five

years of living at the Property rent free. Further, even if Wells Fargo had

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notice of Aki's bankruptcy filing prior to the foreclosure sale giving it unclean

hands, her inequitable conduct of living at the Property for five years without

making payments and her years-long scheme to avoid foreclosure

outweighed it or likely precluded her from asserting that defense. See

Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814 (1945)

(unclean hands "closes the doors of a court of equity to one tainted with

inequitableness or bad faith relative to the matter in which he seeks relief,

however improper may have been the behavior of the defendant.").

                              VI. CONCLUSION

      The bankruptcy court could grant retroactive annulment of the

automatic stay despite Wells Fargo's knowledge of the bankruptcy case prior

to the foreclosure sale, and the court did not clearly err in finding that Wells

Fargo's knowledge was outweighed by Aki's inequitable conduct under

National Environmental Waste Corporation and Fjeldsted. Accordingly, we

AFFIRM.

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