FILED
JUN 22 2021
SUSAN M. SPRAUL, CLERK
NOT FOR PUBLICATION U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. CC-20-1243-TFL
MAZIYAR JAMES KHABUSHANI,
Debtor. Bk. No. 2:19-bk-11796-BR
MAZIYAR JAMES KHABUSHANI,
Appellant,
v. MEMORANDUM*
KILEY TASLITZ ANDERSON,
Appellee.
Appeal from the United States Bankruptcy Court
for the Central District of California
Barry Russell, Bankruptcy Judge, Presiding
Before: TAYLOR, FARIS, and LAFFERTY, Bankruptcy Judges.
*
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.
INTRODUCTION
Chapter 71 debtor Maziyar James Khabushani appeals the
bankruptcy court’s order granting creditor Kiley Taslitz Anderson relief
from the automatic stay to file a California Code of Civil Procedure § 187
motion to amend her California state court judgment to add
Mr. Khabushani’s postpetition-created entity as a judgment debtor and to
enforce the judgment against the entitynot against estate assets.
On this record, however, the matter was moot when decided.
Mr. Khabushani received a § 727 discharge nearly twelve weeks
beforehand, and the stay terminated for all applicable purposes at that
time. Thus, the bankruptcy court abused its discretion by granting relief
from a nonexistent stay. We REVERSE.
FACTS 2
Prepetition, Ms. Anderson obtained a final arbitration award
(“Award”) determining that Mr. Khabushani was jointly and severally
liable for her wrongful termination.
Mr. Khabushani later filed his chapter 7 bankruptcy case, and
Ms. Anderson successfully excepted the Award from discharge. In a
concurrently pending appeal, we affirmed this determination.
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code,
11 U.S.C. §§ 101-1532.
2 We exercise our discretion to take judicial notice of documents electronically
filed in the bankruptcy court’s dockets. See Atwood v. Chase Manhattan Mortg. Co. (In re
Atwood),
293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
2
After filing bankruptcy, Mr. Khabushani created Dreamcrzy Studios
LLC (“Dreamcrzy”). Ms. Anderson, having identified Dreamcrzy as a
possible source of collection, filed a motion for relief from the automatic
stay allowing her to: (1) file a motion to amend the state court judgment to
add Dreamcrzy as an additional judgment debtor pursuant to California
Code of Civil Procedure § 187 3; and (2) enforce the state court judgment
against Dreamcrzy. Her motion specified that the stay would remain in
effect with respect to any enforcement action against property of
Mr. Khabushani’s bankruptcy estate or as to other collection action against
him.
Mr. Khabushani opposed the stay relief motion. He disputed that
Dreamcrzy was his alter ego or otherwise liable for payment of the Award.
He further contended that assuming, arguendo, that Dreamcrzy was his
alter ego, Dreamcrzy would be his equivalent and Ms. Anderson would be
essentially seeking an improper enforcement of the judgment against him
and his postpetition assets.
At the hearing on the stay relief motion, the bankruptcy court did not
address the arguments made by the parties in their papers. Instead, it
indicated that it would grant Ms. Anderson stay relief if she prevailed on
3
Under California Code of Civil Procedure § 187, “[j]udgments may be amended
to add additional judgment debtors on the ground that a person or entity is the alter ego
of the original judgment debtor.” Danko v. O'Reilly,
232 Cal. App. 4th 732, 736 (2014)
(citation omitted).
3
her thenpending § 523(a)(6) claim. Thus, the bankruptcy court trailed the
stay relief motion until it considered a summary judgment motion
potentially resolving the § 523(a)(6) matter.
Thereafter and before the summary judgment hearing, the
bankruptcy court entered an order granting Mr. Khabushani a § 727
discharge. It then held a joint hearing on the stay relief motion and
summary judgment motion at which it orally granted Ms. Anderson
summary judgment on her § 523(a)(6) claim, and, consistent with its
tentative ruling, orally granted stay relief. A judgment and stay relief order
followed.
Mr. Khabushani timely appealed.
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
Did the bankruptcy court abuse its discretion in granting
Ms. Anderson stay relief?
STANDARD OF REVIEW
We review a bankruptcy court’s order granting relief from the
automatic stay for an abuse of discretion. Lakhany v. Khan (In re Lakhany),
538 B.R. 555, 559 (9th Cir. BAP 2015). A bankruptcy court abuses its
discretion if it applies the wrong legal standard or its findings are illogical,
implausible, or without support in the record. See TrafficSchool.com, Inc. v.
4
Edriver Inc.,
653 F.3d 820, 832 (9th Cir. 2011).
DISCUSSION
Pursuant to § 362(a), the filing of a bankruptcy petition imposes an
automatic stay on, among other things: (1) the continuation of prepetition
litigation against the debtor; (2) any act to collect or recover a prepetition
claim against the debtor; and (3) the enforcement, against the debtor or
against property of the estate, of a judgment obtained before the
bankruptcy filing. § 362(a)(1), (2), (6). “[T]he stay of an act against property
of the estate . . . continues until such property is no longer property of the
estate[.]” § 362(c)(1). The stay of all other acts listed in § 362(a) expires at
the earliest of the time the bankruptcy case is closed, the case is dismissed,
or a discharge is granted or denied. § 362(c)(2). Thus, “insofar as the
automatic stay bars actions against the debtor, the stay automatically
expires upon the grant of a discharge.” In re Lakhany, 538 B.R. at 561
(quoting Ruvacalba v. Munoz (In re Munoz),
287 B.R. 546, 551 (9th Cir. BAP
2002)); see also ZiLOG, Inc. v. Corning (In re ZiLOG, Inc.),
450 F.3d 996, 1009
n.13 (9th Cir. 2006).4
A bankruptcy court abuses its discretion by granting relief from the
automatic stay after the stay has terminated. In re Lakhany, 538 B.R. at 561;
In re Munoz,
287 B.R. at 551. Here, the stay terminated as to the
4 Typically, when the automatic stay terminates, the discharge injunction takes its
place. But the bankruptcy court held that the Award was not dischargeable, and we
affirmed that decision; the discharge injunction did not apply to it.
5
continuation of the state court action and other acts against
Mr. Khabushani and his non-estate property when Mr. Khabushani
received his § 727 discharge. While at the time of the stay relief order the
automatic stay remained in effect as to acts against estate property, no one
contends that Dreamcrzy is an estate asset and nothing in the record
suggests a different conclusion. Further, Ms. Anderson never sought stay
relief to pursue estate property. She sought stay relief only to enforce the
Award against Dreamcrzy, which Mr. Khabushani contends he formed
postpetition with non-estate property.
Because the stay did not prevent Ms. Anderson from continuing the
state court action or enforcing the Award against Dreamcrzy at the time the
stay relief order was entered, the bankruptcy court necessarily abused its
discretion in granting stay relief.
CONCLUSION
Based on the foregoing, we REVERSE.
6
