Opinion
NOT FOR PUBLICATION
Argued and Submitted at Pasadena, California: January 21, 2011
Appeal from the United States Bankruptcy Court for the Central District of California. Bk. No. 99-18593. Honorable Victoria S. Kaufman, Bankruptcy Judge, Presiding.
Andrew E. Smyth argued for the Appellant.
Nichole L. Glowin argued for the Appellee.
Before: DUNN, KIRSCHER and PAPPAS, Bankruptcy Judges.
MEMORANDUM
The debtor, Andy Atighi, appeals two of the bankruptcy court's orders: (1) the order annulling and terminating the automatic stay in favor of DLJ Mortgage Capital, Inc. (" DLJ"), and (2) the order denying his motion to invalidate the foreclosure sale of his residence located in San Diego, California (" San Diego property"). On appeal, the debtor contends that the bankruptcy court abused its discretion in annulling and terminating the automatic stay because DLJ's predecessor in interest purchased the San Diego property at the foreclosure sale in willful violation of the automatic stay. Because the foreclosure sale violated the automatic stay, the debtor argues, it was void. The bankruptcy court therefore erred, the debtor concludes, in denying his motion to invalidate the foreclosure sale.
For the reasons set forth below, we AFFIRM.
FACTS
The debtor filed his chapter 13 petition on March 8, 1999. Four months later, the debtor's third amended chapter 13 plan was confirmed. The chapter 13 plan provided monthly payments over a 36-month period. The chapter 13 plan also provided:
Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. § § 101-1330, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037, as enacted and promulgated prior to October 17, 2005, the effective date of most of the provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 119 Stat. 23.
The debtor listed in the chapter 13 plan a total of $5,638 in general unsecured claims, which he proposed to pay in full. At the time of the filing of the petition, the debtor scheduled real property located in Oxnard, California (" Oxnard property"). The confirmed plan provided for monthly mortgage payments to the senior lienholder on the Oxnard property. The debtor stated in the plan that he was current on his mortgage payments for the Oxnard property.
Any property of the estate shall not revest in the debtor until such time as a discharge is granted or the case is dismissed, subject to all liens and encumbrances not avoided herein. In the event the case is converted to a case under Chapter 7, 11 or 12 of the Bankruptcy Code, the property of the estate shall vest in accordance with applicable law.
At the time of plan confirmation, the debtor did not own the San Diego property. The debtor accordingly did not provide for the San Diego property in his chapter 13 plan.
On August 26, 2003, the chapter 13 trustee filed a notice of intent to submit a final report and to close the case (" closure notice")(docket no. 161). The debtor objected to the chapter 13 trustee's closure notice. A hearing on the debtor's objection was scheduled for February 2, 2004; however, according to a notation on the docket (docket no. 166), the matter was taken off calendar as there was " nothing for the [bankruptcy] court to decide." No substantial activity occurred in the bankruptcy case between November 2004 and October 2009; no discharge was entered, and the bankruptcy case did not close.
Meanwhile, on June 21, 2006, the debtor purchased the San Diego property, granting first and second trust deeds to WMC Mortgage Corporation (" WMC"). WMC later assigned the second trust deed to GRP Loan, LLC/GRP Financial Services Corporation (" GRP").
WMC held both the first trust deed in the amount of $636,000, and the second trust deed in the amount of $79,500.
The debtor eventually defaulted under the first trust deed. After recording a notice of default and a notice of trustee's sale, WMC conducted a foreclosure sale on November 6, 2008. GRP purchased the San Diego property at the foreclosure sale.
On October 5, 2009, the debtor amended his schedules (docket no. 170) to include the San Diego property for the first time. He listed the current market value of the San Diego property at $795,000.
The debtor also moved to invalidate the foreclosure sale (" first motion to invalidate the foreclosure sale"), contending that GRP willfully violated the automatic stay. Specifically, the debtor claimed that he notified GRP of his bankruptcy case; in support, the debtor provided copies of fax transmission reports and certificates of mailing. Despite being made aware of the bankruptcy case, the debtor contended, GRP proceeded with the foreclosure sale without obtaining relief from the automatic stay. The debtor also contested the arrears, asserting that he made payments to GRP and providing in support copies of various checks and money orders made out to GRP.
Although the debtor's first motion to invalidate the foreclosure sale was set for hearing on December 9, 2009, the hearing was continued to December 22, 2009 (docket nos. 179 and 180). After the hearing, the bankruptcy court issued an order denying the debtor's first motion to invalidate the foreclosure sale for failure to prosecute, as the debtor did not appear at the hearing.
There is nothing in the record and the bankruptcy main case docket explaining why the hearing on the debtor's first motion to invalidate the foreclosure sale was continued.
Judge Kaufman issued a tentative ruling for the December 9, 2009 hearing on the debtor's first motion to invalidate the foreclosure sale. In her tentative ruling, Judge Kaufman stated that the debtor had submitted evidence indicating that he provided notice of his bankruptcy case to GRP. She further stated that GRP did not obtain relief from the automatic stay before proceeding with the foreclosure sale. Judge Kaufman thus tentatively concluded that the foreclosure sale was void as a violation of the automatic stay.
Shortly thereafter, GRP assigned to DLJ the first trust deed on the San Diego property. DLJ then moved for relief from the automatic stay (" relief from stay motion"), seeking to annul and terminate the automatic stay under § 362(d)(1) and (2), in order to validate the foreclosure sale. Specifically, DLJ contended that the San Diego property had no equity and accordingly had no equity cushion to protect DLJ's interest; DLJ's unpaid first trust deed obligation totaled $872,198.53, and GRP's second trust deed totaled $79,500, but the San Diego property only had a fair market value of $595,000. Moreover, DLJ alleged that the debtor had defaulted on 38 postpetition payments totaling $194,287.54. DLJ also asserted that the San Diego property was unnecessary to the debtor's reorganization as it was purchased postconfirmation and was not provided for in the debtor's chapter 13 plan. DLJ further argued that the debtor acted in bad faith.
DLJ asserted that there was cause to annul and terminate the automatic stay under § 362(d)(1) because its interest in the San Diego property was not adequately protected and the debtor acted in bad faith. DLJ further asserted that there was cause to annul and terminate the automatic stay under § 362(d)(2) because there was no equity in the San Diego property and it was not necessary for an effective reorganization.
The debtor again moved to invalidate the foreclosure sale (" second motion to invalidate the foreclosure sale"), arguing that he provided notice of the bankruptcy case to GRP, and contested the arrears, claiming he made $40,534.43 in mortgage payments to GRP. The debtor also opposed DLJ's relief from stay motion.
The bankruptcy court held separate hearings on the relief from stay motion and the second motion to invalidate the foreclosure sale. At the hearing on the relief from stay motion, the bankruptcy court issued a tentative ruling in favor of DLJ. In its tentative ruling, the bankruptcy court determined that GRP was unaware of the debtor's bankruptcy case because (1) he purchased the San Diego property after his plan was confirmed and (2) he did not amend his schedules to include the San Diego property until after DLJ purchased it at the foreclosure sale. The bankruptcy court further determined that the debtor defaulted on 38 postpetition payments, totaling $194,287.54.
The bankruptcy court also determined that there was cause to annul and terminate the automatic stay on the ground that the debtor engaged in unreasonable and inequitable conduct. Specifically, the bankruptcy court found that the bankruptcy case should have been closed long ago, given that it had been pending since March 8, 1999, and the 36-month plan was confirmed on July 29, 1999. The bankruptcy court also found that the debtor purchased the San Diego property without its approval. The bankruptcy court further found that the debtor did not amend his schedules to include the San Diego property as an asset of the bankruptcy estate or to identify WMC as a creditor until nearly one year after the foreclosure sale.
On June 2, 2010, the bankruptcy court entered an order annulling and terminating the automatic stay under § 362(d)(1) and (d)(2). On the same day, the bankruptcy court entered an order denying the debtor's second motion to invalidate the foreclosure sale on the ground that the foreclosure sale was valid, as the automatic stay had been annulled retroactively with respect to the San Diego property.
The debtor timely appealed both orders.
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. § 1334 and 157(b)(2)(G). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
(1) Did the bankruptcy court err in denying the debtor's second motion to invalidate the foreclosure sale?
(2) Did the bankruptcy court abuse its discretion in granting DLJ's relief from stay motion?
STANDARDS OF REVIEW
We review the bankruptcy court's decision to annul the automatic stay, see Nat'l Envtl. Waste Corp. v. City of Riverside (In re Nat'l Envtl. Waste Corp.), 129 F.3d 1052, 1054 (9th Cir. 1997), and to terminate the automatic stay, Gruntz v. County of Los Angeles (In re Gruntz), 202 F.3d 1074, 1084 n.9 (9th Cir. 2000)(en banc), for an abuse of discretion. We follow a two-part test to determine objectively whether the bankruptcy court abused its discretion. United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009). First, we " determine de novo whether the bankruptcy court identified the correct legal rule to apply to the relief requested." Id . Second, we examine the bankruptcy court's factual findings under the clearly erroneous standard. Id . at 1262 & n.20. We must affirm the court's factual findings unless those findings are " (1) 'illogical, ' (2) 'implausible, ' or (3) without 'support in inferences that may be drawn from the facts in the record.'" Id . If we determine that the court erred under either part of the test, we must reverse for an abuse of discretion. Id.
We review a finding of bad faith, which is a factual determination, under the clearly erroneous standard. Can-Alta Props., Ltd. v. States Sav. Mortg. Co. (In re Can-Alta Props., Ltd.), 87 B.R. 89, 90 (9th Cir. BAP 1988).
We may affirm on any ground supported by the record. Shanks v. Dressel, 540 F.3d 1082, 1086 (9th Cir. 2008).
DISCUSSION
A. The automatic stay and after-acquired property in chapter 13
The crux of the debtor's argument in challenging the bankruptcy court's orders on appeal is the alleged violation of the automatic stay. The debtor asserts that the bankruptcy court should not have granted relief from stay nor denied his second motion to invalidate the foreclosure sale because GRP purchased the San Diego property while the automatic stay still was in effect.
Even though GRP purchased the San Diego property and DLJ was its assignee, we hereafter refer to GRP and DLJ interchangeably as " DLJ, " as DLJ stands in the shoes of GRP. See New Falls Corp. v. Boyajian (In re Boyajian), 367 B.R. 138, 145 (9th Cir. BAP 2007), aff'd, 540 F.3d 1082 (9th Cir. 2008).
DLJ contends that it did not violate the automatic stay because the automatic stay did not apply to the San Diego property. Specifically, DLJ argues that the San Diego property was not protected by the automatic stay because the debtor acquired the San Diego property after confirmation of his chapter 13 plan.
The automatic stay protects property that is part of the bankruptcy estate from attachment or execution by creditors. See § 362(a). According to DLJ, under § 1327(b), property acquired by a debtor postconfirmation does not become estate property but immediately vests in the debtor. Because the San Diego property was not a part of the bankruptcy estate, DLJ claims, it was not protected by the automatic stay. DLJ therefore did not violate the stay in purchasing the San Diego property at the foreclosure sale.
Although our holding in Cal. Franchise Tax Board v. Jones (In re Jones), 420 B.R. 506, 515 (9th Cir. BAP 2009), provides some support for DLJ's argument, given the rather unique facts of this case, we conclude that the automatic stay was in effect as to the San Diego property at the time of the foreclosure sale.
Upon the filing of a bankruptcy petition, the automatic stay protects property of the bankruptcy estate from attachment or execution by creditors. See § 362(a). This protection does not extend, however, to property that is not part of the bankruptcy estate. § 362(c)(1).
Generally, property of the estate includes all of the debtor's legal or equitable interests in property as of the petition date. § 541(a)(1). Within the context of a chapter 13 case, property of the estate includes, in addition to the property specified in § 541, all property acquired by the debtor postpetition but before the chapter 13 case is closed, dismissed or converted. § 1306(a)(1). Confirmation of the chapter 13 plan vests all property of the estate in the debtor, unless otherwise provided for in the chapter 13 plan or confirmation order. § 1327(b). See also § 1306(b)(" Except as provided in a confirmed plan or order confirming a plan, the debtor shall remain in possession of all property of the estate.").
In Jones, we determined that the automatic stay does not necessarily protect property acquired by the debtor postconfirmation. We read § § 1306(b) and 1327(b) together to mean that all property of the estate vests in the debtor at confirmation, unless otherwise provided in the plan or confirmation order. Id . Once the property vests in the debtor, we concluded, it is no longer part of the bankruptcy estate and thus loses the protection of the automatic stay. Id.
In Jones, we addressed the issue of whether the debtors' confirmed plan in their prior chapter 13 case tolled the three-year lookback period of § 507(a)(8) for postpetition taxes when the state taxing authority attempted to except its income tax claim from discharge in the debtors' pending chapter 7 case. As part of our determination, we discussed whether the state taxing authority could have collected the income tax during the debtors' prior chapter 13 case; specifically, whether the automatic stay protected the debtors' property from the state taxing authority's collection efforts postconfirmation.
The Ninth Circuit has yet to address this issue.
However, the rationale of Jones does not apply here. In Jones, the debtors' plan explicitly provided that property of the estate revested in the debtor upon confirmation. Id . at 516. Here, the debtor's plan provided that estate property did not revest in the debtor unless and until he received a discharge or the case was dismissed. Neither of these events have occurred. Because the property of the estate never vested in the debtor, it still was protected by the automatic stay.
We nonetheless agree with DLJ that it did not willfully violate the automatic stay. As stated earlier, we may affirm on any basis supported by the record. Shanks, 540 F.3d at 1086. Based on the record before us, we conclude that the bankruptcy court did not clearly err in determining that DLJ did not have prior notice of the debtor's bankruptcy case.
DLJ was unaware of the debtor's bankruptcy case before the foreclosure sale because the debtor did not purchase the San Diego property until after his chapter 13 plan was confirmed. The debtor moreover did not amend his schedules to include the San Diego property as an asset or to identify DLJ as a creditor until almost a year after the foreclosure sale took place.
The debtor claims that he provided notice of his bankruptcy case to GRP and submits various fax transmission reports and certificates of mailing as evidence. But neither the fax transmission reports nor the mailing certificates show what the debtor actually sent to DLJ. The debtor never provided the documents allegedly providing notice of his bankruptcy case. The debtor also never explained or described what he sent to DLJ to provide notice of his bankruptcy case. Thus, the bankruptcy court had no way to determine what was sent and whether it constituted adequate notice of the debtor's bankruptcy case, and the bankruptcy court did not clearly err in determining that DLJ was not aware of the debtor's bankruptcy case prior to the foreclosure sale.
As an additional argument in his second motion to invalidate the foreclosure sale, the debtor relied on Judge Kaufman's tentative ruling, contending that Judge Kaufman determined that DLJ conducted the foreclosure sale in violation of the automatic stay. The debtor repeats this argument before us on appeal. As noted above, Judge Kaufman's tentative ruling was marked " VACATED" and was not entered on the bankruptcy main case docket. Given these facts, Judge Kaufman's tentative ruling is not dispositive.
We believe that an additional procedural ground existed for denying the debtor's second motion to invalidate the foreclosure sale. Given the debtor's arguments in his second motion to invalidate the foreclosure sale, the debtor should have initiated an adversary proceeding under Rule 7001(7)(adversary proceeding to obtain an injunction or other equitable relief).
B. Cause existed to annul and terminate the automatic stay
Even if DLJ violated the automatic stay, the foreclosure sale would be valid if the bankruptcy court properly annulled the automatic stay. See Schwartz v. United States (In re Schwartz), 954 F.2d 569, 573 (9th Cir. 1992) (" If a creditor obtains retroactive relief under § 362(d), there is no violation of the automatic stay . . . ."). See also Algeran v. Advance Ross Corp., 759 F.2d 1421, 1425 (9th Cir. 1985); Fjeldsted v. Lien (In re Fjeldsted), 293 B.R. 12, 21 (9th Cir. BAP 2003)(citations omitted). The question then is whether the bankruptcy court erred in annulling and terminating the automatic stay. We conclude that it did not.
A bankruptcy court has " wide latitude in crafting relief from the automatic stay, including the power to grant retroactive relief from the stay, " under § 362(d). Nat'l Envtl. Waste Corp., 129 F.3d at 1054. The standards for relief from stay under § 362(d)(1) and (d)(2) are independent and alternative. Can-Alta Props., Ltd., 87 B.R. at 90.
The bankruptcy court may annul and/or terminate the automatic stay for cause. § 362(d)(1). See also Christensen v. Tucson Estates, Inc. (In re Tucson Estates, Inc.), 912 F.2d 1162, 1166 (9th Cir. 1990). " Cause" has no clear definition, so it is determinated on a case-by-case basis. Id.
Here, the bankruptcy court annulled and terminated the automatic stay on three grounds: (1) the balance of the equities tilted in favor of DLJ; (2) lack of adequate protection; and (3) the debtor did not have equity in the property and the property was not necessary to an effective reorganization. We consider each of these three grounds in turn, mindful that we may affirm on any basis supported by the record. See Shanks, 540 F.3d at 1086. After reviewing the record, we conclude that the bankruptcy court did not abuse its discretion in annulling and terminating the automatic stay for the following reasons.
1. Balance of equities tilts in favor of DLJ
The bankruptcy court must balance the equities in determining whether cause exists to annul the automatic stay. Nat'l Envtl. Waste Corp., 129 F.3d at 1055. In doing so, the bankruptcy court focuses on two factors: (1) whether the creditor was aware of the bankruptcy petition; and (2) whether the debtor engaged in unreasonable or inequitable conduct, or unfair prejudice would result to the creditor. See id. These factors are not dispositive, however. Fjeldsted, 293 B.R. at 24. Bankruptcy courts consider other factors, such as the debtor's and creditor's good faith, the relative prejudice to the parties, and the judicial or practical efficacy of annulling the stay. Id . at 24-25.
In Fjeldsted, we listed twelve factors to consider when determining whether to annul the automatic stay. We took care to mention, however, that these factors only were " a framework for analysis and not a scorecard [as in] any given case, one factor may so outweigh the others as to be dispositive." Id . at 25.
We conclude upon review that there are sufficient facts in the record supporting the bankruptcy court's decision to annul and terminate the automatic stay for cause. With respect to the first factor, we determine that the bankruptcy court did not clearly err in concluding that DLJ was unaware of the debtor's bankruptcy case. The debtor did not purchase the San Diego property until after his chapter 13 plan was confirmed. He did not amend his schedules to include the San Diego property as an asset and to identify DLJ as a creditor until October 5, 2009, almost a year after the foreclosure sale occurred.
The debtor moreover did not supply competent evidence demonstrating that he gave notice of his bankruptcy case to DLJ. He merely submitted copies of fax transmission reports and mailing certificates, none of which show what he actually sent to DLJ as notice. He failed to provide the documents comprising notice of his bankruptcy case and to explain what he sent to DLJ as notice.
As to the second factor, the record supports the bankruptcy court's determination that the debtor indeed engaged in unreasonable or inequitable conduct. Although the debtor completed his 36-month plan, the chapter 13 case remained open thereafter for years -- the debtor even objected to the chapter 13 trustee's closure notice. The debtor purchased the San Diego property without leave of the bankruptcy court. He further did not amend his schedules to include the San Diego property as an asset and to list DLJ as a creditor until long after the foreclosure sale took place. The debtor also substantially defaulted on postpetition payments to DLJ.
All of these facts tilt the equities in favor of DLJ. There was ample evidence for the bankruptcy court to find cause to annul and terminate the automatic stay.
2. Lack of adequate protection
The bankruptcy court here granted relief from the automatic stay, in part, on the ground that DLJ's interest in the San Diego property was not adequately protected under § 362(d)(1). Under § 362(d)(1), the bankruptcy court may annul the automatic stay for lack of adequate protection of an interest in property. Although adequate protection is not defined in the Bankruptcy Code, § 361 sets forth the following examples of what may constitute adequate protection: (1) periodic cash payments equivalent to the decrease in the value of the creditor's interest in the property; (2) an additional or replacement lien on other property; or (3) other relief that provides the indubitable equivalent. Pistole v. Mellor (In re Mellor), 734 F.2d 1396, 1400 (9th Cir. 1984).
We conclude from the record before us that the facts support the bankruptcy court's decision to grant DLJ relief from stay under § 362(d)(1). The record shows that the debtor substantially defaulted on payments to DLJ postpetition. On appeal, the debtor claims that he made payments to DLJ totaling $40,534.43. He provides copies of various checks and money orders as evidence of his payments. Reviewing the checks and money orders, it appears that the debtor made a total of $45,647.52 in postpetition payments. Subtracting this amount from the $194,287.54 in postpetition default claimed by DLJ, the debtor apparently still was $148,640.02 in default.
DLJ claimed in its relief from stay motion that debtor defaulted on November 13, 2007, and that another payment was due on April 1, 2010. Many of the dates on the debtor's checks are illegible, but it appears that the debtor issued them sometime in 2009.
The bankruptcy court did not make a determination as to whether the debtor indeed made these payments.
Moreover, there was no equity cushion in the San Diego property to protect DLJ's interest therein. DLJ submitted a declaration and broker's price opinion stating that the San Diego property had a fair market value of $595,000. (Notably, the debtor did not contest DLJ's valuation of the San Diego property, other than to assert a value of $795,000 in his amended schedules filed in October 2009.) The declaration also indicated that the amount owed to DLJ on the first trust deed alone totaled $872,198.53. Based on these figures, the San Diego property apparently was way under water.
3. No equity in the San Diego property and the San Diego property was unnecessary to the debtor's reorganization
The bankruptcy court also annulled the automatic stay under § 362(d)(2). Under § 362(d)(2), the bankruptcy court may annul the automatic stay when the debtor lacks equity in the collateral and if the collateral is unnecessary to an effective reorganization. See also People's Capital & Leasing Corp. v. In re Big3D, Inc. (In re Big3D, Inc.), 438 B.R. 214, 220 (9th Cir. BAP 2010)(en banc). The burden of proof as to whether a debtor lacks equity in property lies with the creditor. § 362(g)(1). See also Harsh Inv. Corp. v. Bialac (In re Bialac), 712 F.2d 426, 432 (9th Cir. 1983).
Again, we conclude there is sufficient evidence in the record before us to support the bankruptcy court's determination. With respect to the lack of equity in the San Diego property, DLJ submitted a declaration stating that there was -$356,698.53 in equity, based on the total amount of claims against the property (first and second trust deeds totaling $951,698.53) and the fair market value of the San Diego property. DLJ also attached, as evidence, a broker's price opinion as to the San Diego property's fair market value. The debtor never contested DLJ's valuation of the San Diego property (though in his October 5, 2009 amended schedules, the value of the San Diego property was listed as $795,000).
The San Diego property obviously was unnecessary for an effective reorganization. The debtor purchased the San Diego property after plan confirmation, but never modified his chapter 13 plan to provide for its acquisition. The debtor moreover completed his chapter 13 plan within the 36-month deadline, long before the San Diego property was acquired.
Because the bankruptcy court did not err in annulling and terminating the automatic stay in DLJ's favor, the foreclosure sale still was valid. We therefore conclude that the bankruptcy court did not err in denying the debtor's second motion to invalidate the foreclosure sale.
CONCLUSION
Based on our review of the record, we conclude that the bankruptcy court did not err in finding cause for annulling and terminating the automatic stay. The bankruptcy court applied the appropriate legal standards, and sufficient evidence was submitted supporting the bankruptcy court's findings of cause for annulling and terminating the automatic stay. We therefore conclude that the bankruptcy court did not abuse its discretion in granting DLJ's relief from stay motion.
Moreover, because the bankruptcy court annulled the automatic stay in favor of DLJ, the foreclosure sale was not void. The bankruptcy court thus did not err in denying the debtor's second motion to invalidate the foreclosure sale.
For these reasons, we AFFIRM the decisions of the bankruptcy court granting the motion to retroactively annul the automatic stay and denying the motion to invalidate the foreclosure sale.
Judge Kaufman's tentative ruling was not entered on the bankruptcy main case docket; it was marked " VACATED, " as the hearing was continued to December 22, 2009.
Judge Zurzolo presided at the December 22, 2009 hearing; he issued the order denying the debtor's first motion to invalidate the foreclosure sale.
Two months after Judge Zurzolo issued the order denying the first motion to invalidate the foreclosure sale, the debtor filed a motion for reconsideration under Fed.R.Civ.P. 60(a)(" motion for reconsideration")(docket nos. 183, 185 and 188). In his motion for reconsideration, the debtor argued that Judge Zurzolo had no authority to deny the first motion to invalidate the foreclosure sale because Judge Kaufman already had ruled in the debtor's favor. The debtor contended that it did not matter that Judge Kaufman's ruling was tentative; it " naturally became the [bankruptcy court's] Order" because Judge Kaufman considered the debtor's arguments in the first motion to invalidate the foreclosure sale and based her ruling thereon.
Judge Zurzolo denied the debtor's motion for reconsideration (docket no. 187), as Judge Kaufman's tentative ruling never became effective and was not entered.
The money orders are dated between mid to late 2008 and early 2009. The debtor apparently often submitted partial payments; according to DLJ, the payment due was $5,112.83, but the debtor only twice submitted the full amount due. Moreover, some of these payment amounts were nominal (i.e., less than $1,000), so it is unclear whether the debtor made these payments to make up for earlier partial payments or to cover late charges.