Appeal from the United States Bankruptcy Court for the District of Arizona Honorable George B. Nielsen, Jr., Bankruptcy Judge, Presiding Bk. No. 2:05-bk-27993-GNB
SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
Argued and Submitted on September 20, 2012 at Phoenix, Arizona
Before: JURY, HOULE*fn2 , and DUNN Bankruptcy Judges.
1 George and Susan Tindall appeal from the bankruptcy court's 2 order denying their Motion to Confirm that the Automatic Stay 3 Does Not Apply, or in the Alternative, to Allow for Nunc Pro 4 Tunc Relief From the Automatic Stay (the "Motion for Relief").
On July 14, 2003, Aircraft Seal & Gasket Corporation 8 ("ASGC"), as maker, entered into a promissory note (the "Note") 9 with Mathon Fund, LLC ("Mathon" or "Debtor") in the principal 10 amount of $500,000. The repayment terms provided for payment of 11 $625,000 in four months. Herbert Menold ("Herbert") and Wilbur 12 Hanley ("Wilbur"), principals of ASGC, personally guaranteed the 13 loan. The loan was secured with business assets of ASGC, and 14 Herbert's guarantee was secured by real property owned by 15 Herbert.
16 In addition, Herbert's wife, Rene Role Menold ("Rene"), 17 executed a Deed of Trust dated July 16, 2003 (the "Mathon Deed 18 of Trust"), pledging her sole and separate property located in 19 Corona del Mar, California (the "Property") as collateral for 20 the Note. On August 12, 2003, the Mathon Deed of Trust was 21 filed as Instrument No. 2003-000970041 with the Recorder's 22 Office for the County of Orange, California. 23 ASGC defaulted on the loan. Herbert and Wilbur executed an 24 extension agreement on March 26, 2004, increasing the repayment 25 amount to $771,250.
26 In February 2005, Rene contracted to sell the Property to 27 the Tindalls. In March 2005, Mathon received a letter from 28 Chicago Title Insurance Company advising that the Menolds were selling the Property to the Tindalls and requesting that Mathon release the Mathon Deed of Trust. Mathon declined the request because the Note had not been paid off.
During this time frame, the Arizona Corporation Commission commenced a state court action against Mathon. On April 5, 2005, James Sell ("Sell") was appointed as the receiver for Mathon in that action.
On July 20, 2005, Rene filed suit against Mathon in the United States District Court, Central District of California (Case No. SACV05-698-AHS), alleging that Mathon's lien against the Property was invalid and requesting, among other things, an order rescinding the lien (the "California Action").
Rene applied for permission to serve Mathon pursuant to Civil Rule 4(h)(1)*fn3 which authorizes service of process on a limited liability company under the law of the state in which the federal district is located. Cal. Corp. Code § 17061(c)(1)*fn4 authorizes service on a foreign limited liability company by and through service on the ...