Memorandum of Decision Re: Effect of Confirmed Ch. 13 Plan
NORTHERN DISTRICT OF CALIFORNIA
ROY and JULIE CRUMRINE, No. 98-13599
ROY and JULIE CRUMRINE,
v. A.P. No. 00-1230
PATRICIA and MICHAEL BLUM, et al.,
Memorandum of Decision
There are no disputed facts in this case. Defendants Michael and Patricia Blum are the parents
of debtor Julie Crumrine. Prior to the Crumrines' bankruptcy filing, the Blums had sued the Crumrines
in state court and recorded a lis pendens
against the Crumrines' home, alleging that money wrongfully
taken from them had been used to buy the home. In a decision which was not final at the time of the
bankruptcy filing, the state court had ruled that the home had not been purchased with the Blums'
money but that $32,000.00 in mortgage payments had been made with their money.
The bankruptcy was originally filed as a Chapter 7 and subsequently converted to Chapter 13.
In actions fully documented in a separate adversary proceeding, the Blums elected to ignore the
Chapter 13 proceedings. Despite full notice and actual knowledge of the conversion and confirmation
of a plan, the Blums took no action to contest the plan until after it was too late to set it aside.
This adversary proceeding centers around the lis pendens
recorded by the Blums against the
Crumrines' home. The Crumrines allege that the lis pendens was improperly recorded, and must be
expunged. They also allege that the failure of the Blums to voluntarily remove the lis pendens
continuing violation of the automatic stay. Both sides seek summary judgment.
The court sees the issue quite differently from the Crumrines. They argue that the court should
apply state law to find that the lis pendens is improper and order its expungement, even though it was
not recorded as part of litigation pending in this court. However, the true issue is whether under federal
bankruptcy law any prepetition interest of the Blums survived the confirmation of the Crumrines' plan.
If it did not, the court has the power to issue declaratory relief that the Blums have no right, title or
interest in the property after confirmation. This determination would supercede the lis pendens
It seems clear that the Blums had a strong claim to a constructive trust against the Crumrine
home to recover the $32,000.00 of their money used by the Crumrines to make mortgage payments.
However, it also seems clear that their failure to press their claim before confirmation of the plan was
fatal. The plan, which calls for payments of $2,000.00 per month for 60 months and 100% payment of
allowed claims, makes no other provision for the Blums. Section 1327 of the Bankruptcy Code
(a) The provisions of a confirmed plan bind the debtor and each creditor, whether or
not the claim of such creditor is provided for by the plan, and whether or not such
creditor has objected to, has accepted, or has rejected the plan.
(b) Except as otherwise provided in the plan or the order confirming the plan, the
confirmation of a plan vests all of the property of the estate in the debtor.
(c) Except as otherwise provided in the plan or in the order confirming the plan, the
property vesting in the debtor under subsection (b) of this section is free and clear of
any claim or interest of any creditor provided for by the plan.
Thus, the Blums do not have an enforceable interest in the Crumrines' home not because the lis pendens
was improperly recorded under state law but because confirmation of the Chapter 13 plan revested the
home in the Crumrines free and clear of the Blums' interest. The plan is res judicata as to all issues that
could have or should have been litigated at the confirmation hearing. In re Pardee
, 193 F.3d 1083, 1087
The court finds no merit to the allegations that the Blums violated the automatic stay by failing to
voluntarily remove the lis pendens
It is certainly true that a continuing act, such as failure to turn over
repossessed property, may be a violation of the automatic stay even if the property was repossessed pre-petition. In re Del Mission Ltd.
, 98 F.3d 1147, 1151 (9th
Cir. 1996); In re Abrams
, 127 B.R. 239, 241-43 (9th
Cir.BAP 1991). However, the recording of a lis pendens is not a continuing act. It is a one-time
notice. The fact that it may have postpetition effect
does not make it a postpetition act
failure to remove it does not result in violation of the automatic stay.
For the foregoing reasons, the court will enter a judgment declaring that the Blums no longer
have any right, title or interest in the Crumrines' home, and permanently enjoining them from asserting
any such interest. The Crumrines shall take nothing by their claim that the Blums violated the automatic
stay. Each side shall bear its own attorneys' fees and costs. Counsel for the Crumrines shall prepare an
appropriate form of order granting each side's motion for summary judgment in part, and a form of
judgment consistent with this Memorandum.
Dated: March 22, 2001 ___________________________
U.S. Bankruptcy Judge
1. In this circuit, the postpetition recording of a lis pendens violates the automatic stay. In re
Edwards, 214 B.R. 613 (B.A.P. 9th Cir.1997). However, the rule may different in other circuits. See
In re Knightsbridge Development Co., 884 F.2d 145, 148 (4th Cir.1989). The court has found no case
in which a prepetition lis pendens has been found to be the basis for a violation of the sta