Facts

On June 3, 2015, James Gregory Barrett and his spouse applied for and obtained a loan from Salton Sea Estates III, LLC (SSE), for the property located at 2566 Sea Urchin Avenue, Salton City, California. By December 2016, however, Barrett had defaulted on the mortgage note, and SSE initiated foreclosure proceedings. On April 11, 2018, SSE completed a foreclosure sale, but Barrett filed suit in state court for wrongful foreclosure, unlawful detainer, and seeking to quiet title to the property.

In August 2021, almost two months after his quiet title action had ended and just weeks after the trial for his unlawful detainer action had completed, Barrett filed a bankruptcy petition, and on October 27, 2021, he removed the unlawful detainer and wrongful foreclosure actions to the bankruptcy court. Then, on January 10, 2022, the bankruptcy court dismissed Barrett's bankruptcy petition for cause, finding he had failed to prove he had proposed his Chapter 13 bankruptcy plan in good faith. Two weeks later, the bankruptcy court issued an order to show cause why the adversary proceedings should not be remanded to state court given the underlying bankruptcy case had been dismissed. Both actions were subsequently remanded to state court on February 17 after a hearing. Barrett then sought review by the district court.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that the bankruptcy court erred when it remanded his wrongful foreclosure action to state court while his appeal was pending; that the bankruptcy court was divested of jurisdiction over the matter once he had given notice of his appeal; and that therefore, the wrongful foreclosure action should be removed from state court.

DEFENDANT'S CONTENTIONS: Defendant denied any wrongdoing or liability and all the plaintiff's material allegations.

Result

The district court affirmed the ruling of the bankruptcy court and ordered the case closed.