Judith S. Suelzle, Esq. (130315)
19925 Sevens Creek Boulevard
Cupertino, CA 95014-?358
CAROL WU, TRUSTEE
Wayne A. Silver, Esq, (1081.35)
111 West Evelyn Avenue, Suite 3.07
Sunnyvale, California 940&.
Tel. (408) 7211-7007
Fax. (408) 720-7001
V. AREL LUCAS
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
H. KEITH HENSON
USDC Case N0.: 03-4923-RMW
BKR Case No.: 98-51326-A5W-7
EMERGENCY MOTION TO VACATE NUNC PRO TUNC
ORDER GRANTING TEMPORARY STAY
Carol Wu, Chapter 7 Trustee (the "Trustee") in the above-styled and numbered bankruptcy case of Howard Keith Henson (the "Debtor"), and V. Arel Lucas co-owner (the "Co-Owner") of the real property at 302 College Avenue, Palo Alto, California (the "Property") hereby move the Court to vacate the Order Granting Temporary Stay entered on November 13, 2003 (the "Temporary Stay Order") in this matter _nunc pro tunc_
I. BRIEF PROCEDUAL HISTORY Appellant Religious Technology Center ("RTC") requested a prior emerge stay from the Ninth Circuit Bankruptcy Appellate Panel (the "BAP") pending a ruling on its motion for a stay pending appeal of an Order from the Bankruptcy Court approving the sale of the Property free and clear of the disputed lien of the RTC (the "Sale Order"). The Sale Order provided, among other things, that the disputed lien of RTC would attach to the net proceeds of the sale after payment of the costs of sale and senior lien. A copy of the Sale Order is attached as Tab 2B to the Appendix for Emergency Motion for Stay Pending Appeal and for Expedited Briefing Schedule on the Motion for Leave To Appeal originally filed with the H
BAP (the "Appendix'). The Bankruptcy Appellate panel granted the RTCs request arid entered are Order Granting 10-Day Temporary Stay of the Sale Order on November 3, 2003, (the "BAP Order") a copy of which is attached hereto as Exhibit "A" and of which this Court is requested to take judicial notice.
*Although the RTC was aware that the BAP order would expire by November 14th, they waited until the evening of November 13th* to file their Emergency Motion to Continue the Temporary Stay Pending Ruling on Emergency Motion for Stay and for Expedited Briefing Schedule on Motion for Leave to Appeal and on the Appeal (the "Emergency Stay Motion"). By doing so, the RTC not only deprived the Trustee, the Co-Owner and other interested parties of any ability to oppose the Emergency Stay Motion, they also deprived the Court of reasonable opportunity to consider the Emergency Stay Motion prior to the expiration of the prior Stay Order from the BAP.
The Court is requested to take judicial notice that the Emergency Stay Motion and accompanying proof of service were filled by the RTC by facsimile approximately 4:25 the afternoon of November 13th. As set forth in the Declaration of Judith Suelzle in Support of Order Vacating Temporary Stay Nunc Pro Tunc, (the "Suelzle Decl."), the Emergency Stay Motion was not served on counsel for the Trustee, the party whose actions RTC sought to stay, until after 5:00 p.m on Thursday, November 13th, and the fact that arrangements had been made to file the Emergency Stay _by facsimile_ was not mentioned in either the faxed service of the Emergency Stay Motion or the telephone call from counsel from RTC notifying the Trustee's attorney that the facsimile service on the Trustee's attorney was in progress. Although the RTC could have served and filed their emergency motion well in advance of the close of business the day before the BAP temporary stay was about to expire, by delaying *the RTC created their own emergency* and left this Court with no choice and assured that the interested parties had no opportunity to respond. The RTC should not benefit from its own delay and the resulant prejudice not only to the undersigned but also to the buyers of the property and the lien holders that were paid, all of which parties acted in good faith.
*In addition, the court will note that after entry at approximately 6:00 pm on November 13th the Temporary Stay Order was not served on any of the parties by facsimile* but was instead apparently served by mail (although as of today, six days after entry of the Slay Order, neither the Trustee nor the Co-owner has received a copy from the District Court, as set forth in the Suelzle Decl.), In fact, the Trustee And the Co-Owner first learned of the order when they received a faxed memo (the "Kobrin Memo") from Helena Kobrin one of the RTC's attorneys, on November 17th , four days after the order was entered and three days after the sale closed. RTC has, however, sent to counsel for the Trustee, counsel for the Co-Owner and others, by facsimile transmission, a purported copy of the Temporary Stay Order. A copy of that facsimile transmission is attached as an Exhibit to the Suelzle Decl. Because of this complete lack of timely notice of the Temporary Stay Order, on November 14th the Trustee and Old Republic Tale Company, the escrow agent for the sale, assumed that the temporary stay imposed by the BAP Order had expired and therefore closed the escrow as set forth in the Notice of Sale of Property of the Bankruptcy Estate previously filed with this Court, a copy of which is attached as Exhibit "B" hereto.
II. ARGUMENT AND RELIEF REQUESTED
The Trustee and Co-Owner move this Court on the grounds that they were not provided with any notice: of the Temporary Stay Order that was entered the evening of November 13th, and consequently were unable to communicate the fact that the Temporary Stay Order had been entered to Old Republic Title Company, which closed escrow early on the morning of November 14th. As set forth in the Suelzle Decl., the deed to the buyers was recorded by the County Recorder at 8:58 a.m. on November 14th.
The Trustee and Co-Owner will not repeat here the arguments in the Opposition to the Motion of the RTC for Stay of Order Approving Sale of Property Pending Appeal, which is included in Tab 4C to the Appendix, but urge the Court to be mindful of the fact that a series of temporary stays of the Sale Order under these circumstances is extremely prejudicial to the parties and will undoubtedly spawn an exponential increase in litigation, while no bond has been ordered or posted. The spirit of Rule 8005 is to protect the interests of _all of the parties_ during the pendency of an appal. The Trustee and Co-Owner there respectively ask the Court to consider their interests, which are now in serious jeopardy.
The present status of this matter is untenable. By the Kobrin Memo, the RTC now accuses the Trustee of violating the Temporary Order of which the Trustee had no notice The status of the closed sale is in limbo, it is virtually impossible to unwind, and all of the parties need direction from this Court on how to proceed. To the extent the Court feels argument or additional information would be useful, the Trustee and Co-Owner request the Court set this matter for hearing as soon as possible.
Vacating the Temporary Stay Order nuns-pro-tunc will ratify the close of escrow. After payment of closing costs and real estate commissions, and the payment to the first mortgage holder, *all remaining proceeds will be held by the Trustee pending further order Bankruptcy Court and the dispute lien of RTC will attach to such remaining proceeds.*
The RTC cannot show any damage or prejudice from the closing. All of the other parties, however, can, show substantial damage and prejudice if the Court finds that the closing was improper or stays the Sale Order pending, a decision on the appeal. The Court needs to vacate the Temporary Stay Order nunc-pro-tunc to ameliorate the harsh consequences of the RTC's game playing.
Dated: November 19, 2003
Judith S Suelzle, Attorney for Carol WU, TRUSTEE
Wayne A Silver, Attorney for V. AREL LUCAS