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Trinisha and David v. National Mortgage Servicing

September 24, 2011



This matter comes before the court upon the appeal by Trinisha and David Turturici ("appellants") of the bankruptcy court's abstention order and dismissal of the adversarial proceedings. The court heard this matter on March 30, 2011; David Turturici, an attorney, appeared pro se and on behalf of Trinisha Turturici, and Jeremy Jessup appeared on behalf of appellee. For the following reasons, the court AFFIRMS the bankruptcy court judgment.


The court adopts the relevant factual and procedural history set forth in the August 11, 2010 order of the district judge who heard a prior appeal in appellants' case:

On May 20, 2009, National Mortgage purchased a parcel of real property located at 6708 Palm Avenue in Fair Oaks, California . . . at the trustee's sale for $217,000. Two days after the trustee's sale, on May 22, 2009, Trinisha Turturici filed a complaint in the California Superior Court for Sacramento County . . . . Sixteen days after the trustee's sale, on June 5, 2009 at approximately 9:15 a.m., Debtors filed a chapter 7 bankruptcy petition in the Sacramento Division of the Bankruptcy Court for the Eastern District of California. National Mortgage recorded its trustee's deed upon sale for the [property] at approximately 12:54 p.m. that same day. On July 21, 2009, Debtors . . . initiated an adversary proceeding before the bankruptcy court. Debtors filed a first amended complaint in the adversary proceeding on October 6, 2009. On September 14, 2009, the trustee filed a statement, disclaiming any interest in the [property]. Debtors' bankruptcy was discharged in an order filed on September 21, 2009.

(Appellants' Br., Appx., Order Reversing Dismissal of Debtors' Adversarial Proceeding at 1-3, ECF 4-6 at 13-15 (citations omitted).)

Appellants' amended complaint in the adversary proceeding alleges three causes of action: 1) turnover of estate property under 11 U.S.C. § 544; 2) turnover of estate property under 11 U.S.C. § 549; and 3) turnover of estate property under 11 U.S.C. § 522. (ECF 4-3.) Appellants seek, in relevant part: 1) a declaration that the property in question is property of the bankruptcy estate; 2) an order that appellee deliver the property to the bankruptcy trustee or to the debtors; and 3) costs. (Id.)

The bankruptcy court held a status conference on November 24, 2009 at which it dismissed the adversary proceeding (see Appellants' Br., Appx. at 000104-000114, Nov. 24, 2009 Transcript, ECF 4-4, 4-5), after having put parties on notice that it would be considering reasons it should not dismiss the adversary proceeding at that time. (Appellants' Br., Appx. at 00088:12-24, Nov. 17, 2009 Transcript, ECF 4-4.) Appellants appealed the dismissal to the district court, which reversed and remanded on August 11, 2010, in the order referenced above.

(See Appellants' Br., Appx., Aug. 11, 2010 Order, ECF 4-6 at 13-23.) The district court did not rule on the merits of the bankruptcy court's dismissal, instead finding that it could not affirm because the bankruptcy court failed to consider the In re Tucson abstention factors, discussed below. (Id. at 10, ECF 4-6 at 22.) On remand, the bankruptcy court found that discretionary abstention was appropriate under 28 U.S.C. § 1334(c)(1) after applying, albeit in a cursory manner, each In re Tucson factor; the court dismissed the adversary proceeding on October 4, 2010. (Appellants' Br., Appx., Oct. 4, 2010 Order, ECF 4-6 at 6.) Appellants filed their notice of appeal on October 15, 2010. (Appellants' Br., Appx., ECF 4-6 at 25.)

The above-captioned matter was filed in this court on October 21, 2010. (ECF 1.) Appellants filed their brief on December 20, 2010 (ECF 4) and appellees filed their opposition brief on January 17, 2011. (ECF 11.) Appellants filed their reply brief on January 31, 2011. (ECF 14.)


A. Standard

A district court may "affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings." FED. R. BANKR. P. 8013.

The court reviews "'the bankruptcy court's findings of fact under the clearly erroneous standard . . . its conclusions of law de novo,'" Clinton v. Acequia, Inc. (In re Acequia, Inc.), 787 F.2d 1352, 1357 (9th Cir. 1986) (quoting Ragsdale v. Haller, 780 F.2d 794, 795 (9th Cir. 1986)) and "[m]ixed questions of law and fact . . . de novo." Beaupied v. Chang (In re Chang), 163 F.3d 1138, 1140 (9th Cir. 1998). "'A finding is "clearly erroneous" when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" Anderson v. City of Bessemer, 470 U.S. 564, 573 (1985) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)); see also Savage v. Greene (In re Greene), 583 F.3d 614, 618 (9th Cir. 2009). "The existence of subject-matter jurisdiction, the scope of a bankruptcy court's inherent authority, and the scope of its power to act under 11 U.S.C. § 105, are questions of law that [are] review[ed] de novo." Johnson v. TRE Holdings, LLC (In re Johnson), 346 B.R. 190, 193 (B.A.P. 9th Cir. 2006); see also Krasnoff v. Marchack (In re Gen. Carriers Corp.), 258 B.R. 181, 185-86 (B.A.P. 9th Cir. 2001).*fn1 The bankruptcy court's decision to abstain is reviewed for abuse of discretion. In re Delorean Motor Co., 155 B.R. 521, 524 (B.A.P. 9th Cir. 1993).

"The bankruptcy court has original and exclusive jurisdiction over all cases under title 11, 28 U.S.C. § 1334(a), and original but not exclusive jurisdiction over all civil proceedings arising under title 11, or arising in or related to cases under title 11, 28 U.S.C. § 1334(b)." Krasnoff, 258 B.R. at 189. However, § 1334(c)(1) states: "nothing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under title 11 or arising in or related to a case under title 11." "Proceedings 'arise under' title 11 if they involve a cause of action created or determined by a statutory provision of title 11. [] Proceedings that 'arise in' title 11 refer to administrative matters that arise only in bankruptcy cases and that would have no existence outside of bankruptcy. [] A 'related to' proceeding may be related to the bankruptcy because of its potential effect, but it does not invoke a substantive right ...

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