Mike Davidyan

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UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
LOS ANGELES DIVISION
In re:
Mike Davidyan,
Debtor(s).
Case No.: 2:26-bk-12003-BB
CHAPTER 7
ORDER DENYING DEBTOR'S MOTION FOR
ORDER STAYING ENFORCEMENT OF
ORDER SUSTAINING OBJECTION TO
DEBTOR'S HOMESTEAD EXEMPTION
PENDING APPEAL
(No hearing required)
The Court, having reviewed and considered the motion of debtor Mike
Davidyan (“Debtor” or “Davidyan”)) for an order staying enforcement of this
Court's May 27, 2026 Order Sustaining Objection to Debtor's Homestead
Exemption [Dkt. No. 86] pending appeal (the "Motion") [Dkt. No. 117], the
Declaration of Mike Davidyan in support thereof, the Opposition to Debtor's
Motion for Order Staying Enforcement of Order Sustaining Objection to Debtor's
Homestead Exemption Pending Appeal filed by Joyce Faye Atlas and
Neighborhood Legal Services of Los Angeles County ("Judgment Creditors") [Dkt.
FILED & ENTERED
AUG 19 2026
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	evangeli
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No. 122], the Memorandum of Points and Authorities in support thereof, the
Declaration of David Pallack in support thereof, the Evidentiary Objections to
Declaration of Debtor submitted by Judgment Creditors [Dkt. No. 123] (the
“Evidentiary Objections”), and the Court’s records and files in the above-entitled
bankruptcy case (the “Case”), hereby issues the following order:
I
RULINGS ON THE EVIDENTIARY OBJECTIONS
The Court rules on Judgment Creditors' evidentiary objections to the
Declaration of Mike Davidyan filed in support of the Motion as follows:
Paragraph 4, page 25 ("The Property is my residence and has been my
residence.")
Objection OVERRULED as to best evidence rule. The statement does not
require production of a writing under the best evidence rule because it is a
testimonial assertion of fact, not proof of the content of a writing and is fact
within the Debtor’s personal knowledge. However, the testimony is
sustained as an improper legal opinion as to the meaning of the word,
“residence.” (Court notes further that the Debtor does not testify that the
property was his residence as of the petition date or as of any particular
point in time.)
Paragraph 8, page 25 ("The Property has undergone substantial
remodeling.") and Paragraph 9, page 26 ("I undertook remodeling involving
plumbing, electrical work, roofing, painting, siding, bathroom work, laundry
work, and related construction.")
Objection that this calls for an improper opinion is OVERRULED. A layperson
can testify that a property has been substantially remodeled. However,
objection SUSTAINED as to relevance in that the Debtor does not say when
or whether any of the work he “undertook” was performed or has been
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completed and has offered no evidence that remodeling was actually going
on as of the petition date. The testimony therefore has no bearing upon
whether the property was or was not the Debtor’s residence at the time the
petition was filed.
Paragraph 10, page 26 ("Utility records reflect substantial use of the
Property."), Paragraph 11, page 26 ("The January 30, 2026, utility bill
reflected approximately 374 HCF of water usage during the relevant billing
period."), and Paragraph 12, page 26 ("The March 31, 2026, utility bill
reflected charges totaling approximately $3,587.53.")
Objection SUSTAINED as to best evidence rule and relevance. The utility bills
are documentary evidence and the best evidence of their contents is the bills
themselves, not Debtor's summary testimony about what they show.
Moreover, the Court reviewed the actual utility records submitted as exhibits
to Debtor's Opposition to Trustee's Application to Employ Shulman Bastian
[Dkt. No. 35] and found at the time of the hearing that they showed no
electrical use between November 2025 and the end of March 2026 and no
water use from January through March 2026. The 374 HCF water usage
reflected in the January 30, 2026 bill covered the billing period from
November 26, 2025 through January 28, 2026, before the critical period
immediately prior to the March 3, 2026 petition date. This evidence does not
support ongoing residence as of the petition date.
Paragraph 13, page 26 ("Adan Bonilla assisted me with remodeling the
Property.")
Objection OVERRULED as to form but SUSTAINED as to relevance. The
statement that Mr. Bonilla assisted with remodeling is based on personal
knowledge, but, as this Court found, the evidence of remodeling was either
from 2022 or from after the date the objection to the Debtor’s homestead
was filed and did not establish residence as of the petition date.
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Paragraph 16, page 26 ("My appeal raises substantial questions concerning
the homestead exemption and the evidence concerning my residence.")
Objection SUSTAINED. This is a legal conclusion, not factual testimony. A lay
witness may not offer opinion testimony on legal questions or the merits of
an appeal. The determination of whether an appeal raises substantial
questions is for the Court, not the witness.
Paragraph 16, page 26 ("I am willing to maintain hazard insurance.")
Objection OVERRULED as to form; SUSTAINED as to foundation. A statement
of willingness to maintain insurance is testimonial, but without evidence of
current insurance coverage or ability to obtain coverage, the statement lacks
foundation and relevance to determining whether conditions can adequately
protect the estate.
Paragraph 16, page 26 ("I am willing to pay applicable property taxes.")
Objection SUSTAINED. The preliminary title report dated March 26, 2026
shows unpaid and defaulted property taxes from prior tax years. A
statement of willingness to pay taxes is contradicted by documentary
evidence of past default and provides no foundation for finding that taxes
will actually be paid.
Paragraph 16, page 26 ("I am willing to preserve the Property and prevent
waste.")
Objection as to relevance is OVERRULED. A statement of willingness to
preserve property is relevant to conditions that might be imposed if a stay
were granted.
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Paragraphs 22-27 (regarding alleged malpractice action)
Objection SUSTAINED as to relevance to the Motion. Disclosure of a
potential malpractice claim is properly made through amendment of
schedules and disclosure to the Trustee, not through a declaration in support
of a stay motion. The alleged malpractice claim against appellate counsel
does not bear on whether Debtor is entitled to a stay of the homestead
order or whether he resided at the Property as of the petition date.
II
PROCEDURAL HISTORY
In October 2016, Joyce Faye Atlas, then 62 years old and the owner of
a home at 932 West 82nd Street, Los Angeles, learned she owed over
$10,000 in back property taxes and faced foreclosure. Mike Davidyan
contacted Ms. Atlas and offered assistance. On October 10, 2016, Ms. Atlas
signed documents conveying title to her home to Davidyan, believing she
was obtaining a loan to pay the back taxes. Davidyan paid the $10,596.62 in
back taxes on October 14, 2016.
Ms. Atlas alleges Davidyan misled her into signing the grant deed,
purchase and sale agreement, and release by representing the documents
were for a loan rather than a transfer of title. She met with Davidyan again
on October 16, 2016, told him she no longer wanted to work with him, and
took back the documents she had given him. Ms. Atlas continued to live in
the home, believing the transaction had been cancelled. In February 2021,
more than four years later, Davidyan served Ms. Atlas with an eviction
notice.
On April 16, 2021, Ms. Atlas filed a civil action (the “State Court
Action”) against Davidyan alleging fraud, undue influence, financial elder
abuse, cancellation of instruments, return of real property, quiet title, and
intentional infliction of emotional distress. Davidyan represented himself
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and filed an answer and cross-complaint. Between October 2021 and July
2023, the Los Angeles Superior Court granted nine motions to compel filed
by Ms. Atlas based on Davidyan's repeated failure to comply with discovery
obligations.
The trial court imposed progressively severe sanctions on Davidyan in
the State Court Action. First, it imposed monetary sanctions, then issue
sanctions on March 28, 2023, and finally terminating sanctions on July 10,
2023, striking Davidyan's answer and cross-complaint. The court found that
Davidyan's noncompliance was willful and that his pro per status did not
excuse his pattern of dilatory conduct. On October 27, 2023, after a prove-up
hearing, the trial court entered a default judgment against Davidyan in the
State Court Action awarding Ms. Atlas $750,000 in damages for mental and
physical distress and $316,066.25 in attorneys’ fees to Neighborhood Legal
Services of Los Angeles County.
The state court judgment declared the October 10, 2016, grant deed
void ab initio due to fraud and misrepresentation, quieted title to the
property in favor of Ms. Atlas, and rescinded the purchase and sale
agreement and release. Davidyan appealed, and the California Court of
Appeal affirmed the judgment in a published opinion filed August 29, 2025.
On March 5, 2024, Davidyan recorded a homestead declaration with
regard to the real property located at 162 East Claremont Street, Pasadena,
California 91103 (the “Property”). (This is not the property that had been Ms.
Atlas's home.) He also recorded a $1.5 million deed of trust against the
Property between himself, Mike Davis, and Nationwide Bank Mortgage, Inc.
on or about the same date.
On April 15, 2025, the Los Angeles Superior Court entered an order
authorizing the sale of the Property to satisfy the judgment in favor of Ms.
Atlas. The court issued an amended sale order on June 5, 2025, making
specific findings. Among those findings was a ruling that Davidyan does not
live at the Property, that the Property does not constitute a dwelling under
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California Code of Civil Procedure section 704.710, and that the Property's
value is $810,000. The state court also found that the $1.5 million deed of
trust recorded on March 5, 2024 is "illegitimate and unenforceable" and that
the homestead declaration that the Debtor recorded the same day "is invalid
and has no value."
The state court ordered that the $1.5 million deed of trust and the
homestead declaration shall not be paid after any sale of the Property. The
court enjoined Davidyan from encumbering the Property, committing waste,
or transferring any interest until further order. The sale was scheduled to
proceed, but Davidyan filed the instant chapter 7 bankruptcy petition on
March 3, 2026, days before the scheduled sale date.
Davidyan filed his Chapter 7 petition on March 3, 2026. The Court has
taken judicial notice of the information that the Debtor provided in his
schedules and statements:
1. The Debtor listed the Property as his address on his bankruptcy
petition and schedules.
2. In Schedule C, he claimed the Property as his homestead pursuant to
California Code of Civil Procedure section 704.730 and claimed as
exempt equity of $661,000 in the Property.
3. In Schedule A/B, the Debtor scheduled the Property with a value of
approximately $800,000, a Suzuki Katana with a value of
approximately $6,000, miscellaneous household goods with an
aggregate value of $16,500 and financial assets of $71,610, including
cash on hand of $40,000, a Charles Schwab account with $25,000 on
deposit and various other accounts making up the balance.
4. The Debtor never filed a schedule D to disclose the identity of any
secured creditors, and the equity calculation on Schedule C appears to
be based on the amount of an available homestead exemption as of
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the petition date and not on the amount of equity left after deduction
of any secured debt.1
5. The Debtor’s Schedule E/F contains nothing but zeros. The Debtor did
not schedule any priority or nonpriority unsecured debts.
6. In his Statement of Financial Affairs (Official Form 107) (docket no. 31),
the Debtor has answered “no” to all questions but items 9 and 10 in
Part 4. In response to question 9, he lists two lawsuits: (a) the one
referenced above filed by Joyce Faye Atlas; and (b) a personal injury
action filed by Angela Walker. In response to question 10, “Within the
1 year before you filed for bankruptcy, was any of your property
repossessed, foreclosed, garnished, attached, seized or levied,” he
describes the Property and checked the box to indicate that it was
“attached, seized or levied” by creditor Joyce Faye Atlas.
7. The Debtor says he is self-employed and has no monthly income on his
Schedule I.
8. On Schedule J, the Debtor lists “rental or homeownership expenses”
of $2,459.17 per month. As the Debtor has not scheduled any secured
creditors or disclosed any liens against the Property (other than that of
Joyce Faye Atlas), it is unclear what this expense is for.
9. The Debtor’s Schedules G and H show that he has no executory
contracts and no codebtors. His Statement of Current Monthly
Income (Official Form 122A-1) shows no income whatsoever.
On May 5, 2026, Judgment Creditors filed a motion for relief from stay
to proceed with the State Court Action. This Court granted that motion by
order entered May 26, 2026 (docket no. 61). That order terminated the
automatic stay to permit the Judgment Creditors to proceed against the
Debtor with regard to any property or earnings that are not Property of the
1 The only reason the Case was not dismissed based on the Debtor’s failure to file a Schedule D is because the
trustee specifically requested that the Case not be dismissed, and the Court granted that request.
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bankruptcy estate and waived the 14-day stay that would otherwise have
been created by Fed. R. Bankr. Proc. 4001(a)(3). The Court granted the
Trustee’s motion to abandon any interest that Davidyan’s bankruptcy estate
would otherwise have had in the Property by order entered July 8, 2026
(docket no. 104). Thus, the Property is no longer property of the Debtor’s
bankruptcy estate and the automatic stay no longer prohibits the Judgment
Creditors from exercising any rights and remedies that they would otherwise
have had with regard to the Property.
The Judgment Creditors also filed an objection to Debtor's claimed
homestead exemption on May 5, 2026 (docket no. 38) (the “Objection”).
They asserted that the Property was uninhabitable, that the Debtor did not
reside there, and that the Los Angeles Superior Court had already found in
the June 5, 2025 amended sale order that the Property was not Debtor's
residence. Judgment Creditors supported their objection with photographs
of the Property showing that it was boarded up and in disrepair, utility
records showing minimal or no electrical and water usage during the months
before and after the petition date, and the state court's findings.
On May 13, 2026, the Debtor filed an opposition supported by a
declaration from Adan Bonilla, who stated that he had been assisting Debtor
with remodeling the property and that the Debtor resides at the property.
Mr. Bonilla's declaration stated that the property was undergoing extensive
renovation involving plumbing, electrical work, roofing, painting, siding,
bathroom work, and laundry work. He stated that a gas generator was used
while electrical work was performed and electricity was disconnected for
safety reasons.
At a hearing held May 26, 2026, the bankruptcy court sustained the
Judgment Creditors objection to the Debtor’s claim of homestead
exemption. The Court found that the state court had already determined
that the Property is not habitable, and that Debtor does not live there. The
court further found that Debtor's evidence of remodeling and residence was
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either dated from 2022 or occurred after the petition date and after
Judgment Creditors filed their objection to his claimed homestead
exemption. The Court determined that the Property was not habitable from
2022 through the petition date, that it was boarded up, and that any
remodeling efforts began only after the motion was filed as part of the
Debtor’s effort to avoid losing the Property.
The Court entered its Order Sustaining Objection to Debtor's
Homestead Exemption on May 27, 2026 (docket no. 63). The Debtor filed a
notice of appeal on June 8, 2026, and an amended notice of appeal on June
16, 2026.
On August 10, 2026, the Debtor filed the instant Motion for a stay
pending appeal. On August 18, 2026, Judgment Creditors filed an opposition
and evidentiary objections to Debtor's declaration in support of the stay
motion.
II
APPLICABLE LEGAL STANDARD
Federal Rule of Bankruptcy Procedure 8007(a) permits a party to move
in the bankruptcy court for a stay of a judgment, order, or decree pending
appeal. A party ordinarily must first move in the bankruptcy court for a stay
before seeking relief from an appellate court.
In deciding whether to grant a stay pending appeal, courts consider four
factors: (1) whether the stay applicant has made a strong showing that he is
likely to succeed on the merits; (2) whether the applicant will be irreparably
injured absent a stay; (3) whether issuance of the stay will substantially
injure the other parties interested in the proceeding; and (4) where the
public interest lies. The party requesting a stay bears the burden of showing
that the circumstances justify an exercise of the court's discretion.
Courts in the Ninth Circuit apply these factors on a sliding scale, such that a
stronger showing on one element may offset a weaker showing on another. If a
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movant is unable to show a strong likelihood of success on the merits, the movant
must at least demonstrate that the appeal presents a substantial case on the
merits or that there are serious legal questions raised. Under this lower
threshold, however, the movant must demonstrate that the balance of hardships
tips sharply in the movant's favor.
As to the second factor -- irreparable harm -- the standard requires the
movant to demonstrate that irreparable harm is probable, as opposed to merely
possible, if the stay is not granted. The harm must be the more probable or likely
outcome. A stay is not a matter of right, even if irreparable injury might
otherwise result. It is instead an exercise of judicial discretion, and the propriety
of its issue is dependent upon the circumstances of the particular case. The
movant's failure to satisfy one prong of the standard for granting a stay pending
appeal dooms the motion.
IV
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Court makes the following findings of fact and conclusions of law
pursuant to Rule 8007 of the Federal Rules of Bankruptcy Procedure and
Rule 52 of the Federal Rules of Civil Procedure (as incorporated by Rule 7052
of the Federal Rules of Bankruptcy Procedure).
A. Debtor Has Not Demonstrated a Strong Likelihood of Success on the
Merits or Serious Legal Questions.
Debtor has not made a strong showing that he is likely to succeed on
the merits of his appeal from the May 27, 2026 Order sustaining the
objection to his homestead exemption. Whether a debtor has the right to
claim an exemption is a question of law reviewed de novo, and the
bankruptcy court's underlying findings of fact are reviewed for clear error.
Factual findings are clearly erroneous only if they are illogical, implausible, or
without support in the record. A factual finding is clearly erroneous if, after
examining the evidence, the reviewing court is left with the definite and firm
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conviction that a mistake has been committed. The bankruptcy court's
choice among multiple plausible views of the evidence cannot be clear error.
This Court's findings are supported by substantial evidence and are not
clearly erroneous. The Court found that the Los Angeles Superior Court had
already determined in its June 5, 2025 Amended Order for Sale of Real
Property that Debtor does not live at the Property and that the Property
does not constitute a dwelling under California Code of Civil Procedure
section 704.710, subdivisions (a) and (c). The state court made express
findings that "Defendant Mike Davidyan does not live in the property" and
that "the Property does not constitute a dwelling under Code of Civil
Procedure section 704.710, subdivisions (a) and (c)."
The state court also found that the homestead declaration recorded on
March 5, 2024 "is invalid and has no value" and ordered that it "shall not be
paid after any sale of the property." These findings were made in June 2025,
nine months before Debtor filed his bankruptcy petition on March 3, 2026.
This Court properly considered the state court's findings and also
conducted its own evaluation of the evidence presented as of the petition
date. Exemptions from bankruptcy are determined as of the petition date.
This Court found that evidence of alleged occupancy and remodeling
submitted by Debtor was either dated from 2022 or occurred after the
petition date and after Judgment Creditors filed their motion.
The Court specifically found that permits and bids for plumbing and
electrical work were dated 2022, that there was no evidence Debtor actually
signed off on the bids or paid contractors, and that the few invoices provided
were all post-petition. The Court found that utility records showed
"absolutely no electrical use" between November 2025 and the end of
March 2026, and "no water use" from January through March 2026, with the
petition filed on March 3, 2026.
The Court further found that pictures attached to declarations showed
the Property in the exact same condition shortly after the petition date as it
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was in 2024 photographs submitted in the state court sale motion. The Court
concluded that the Property was not habitable from 2022 through the
petition date, that it was boarded up, and that any remodeling efforts began
only after the homestead objection was filed.
These findings are not clearly erroneous. They are supported by
documentary evidence including utility bills showing minimal usage,
photographs showing the Property boarded up and in disrepair, the state
court's express findings, and the timing of Debtor's alleged remodeling
efforts. This Court's conclusion that Debtor was not entitled to claim a
homestead exemption is a plausible view of the evidence and does not
constitute clear error.
While this Court's determination as to the debtor’s ability to assert a
homestead exemption in bankruptcy is an independent federal bankruptcy law
question, the Court properly considered and gave weight to the state court's
factual findings regarding Debtor's residence. The Court applied the correct legal
standard for homestead exemptions under California law and properly evaluated
the evidence as of the petition date.
More importantly, however, as the Court noted at the time of the original
hearing, the only reason the Debtor filed this bankruptcy case was to seek review
and reversal of the state court’s finding that he was not entitled to a homestead
exemption and that the Property should be sold to satisfy the Judgment Creditors’
claims. The Case was a bad faith filing and not one in which the Court should
revisit an earlier state court finding on the theory that the interests of third-party
creditors would be adversely affected if the Judgment Creditors were permitted
to enforce their state court judgment.
As noted above, according to the Debtor’s schedules, there are no other
creditors, either secured or unsecured. Although he purports to have no income,
he has more than $70,000 in liquid assets with which to pay his relatively nominal
living expenses. There is no reason for this Debtor to have filed bankruptcy other
than to revisit the outcome of the State Court Action. As the following colloquy
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from the hearing on the Objection illustrates, that is the only reason the Debtor
filed this bankruptcy case:
MR. DAVIDYAN: I never had a trial.
THE COURT: That is not something I can fix. You didn’t have a trial
because you did not cooperate in discovery and the state court entered
judgment against you.
MR. DAVIDYAN: So I’m going to lose my house without having a trial in
a federal court? That’s why I filed it.
THE COURT: You don’t -- if you -- if you have a trial in state court -- or
have you have a proceeding in state court, the federal court -- I mean, this is
not a fact pattern where the federal courts then step in and oversee what
the state court does.
MR. DAVIDYAN: I’m not asking for that.
THE COURT: I’m not a Court of Appeals for the state court.
MR. DAVIDYAN: I’m not asking for that. I’m asking to have a trial
before they sell my home.
THE COURT: Okay. All right. I’m going to grant the motion objecting to
the debtor’s homestead objection. Ms. Miller, you get me an order to that
effect.
MS. MILLER: Yes, Your Honor.
MR. DAVIDYAN: So while I’m –
THE COURT: And then on the motion for relief from stay I’ll grant that-
MR. DAVIDYAN: So I’m trying to understand what’s going –
THE COURT: Let’s see if there’s a –
MR. DAVIDYAN: -- on. I’m going to have my -- sold my home?
THE COURT: Yeah. I’m going to grant relief from stay so that we can do
what the state court has already found ought to be done here.
MR. DAVIDYAN: So we’re going to sell my home.
THE COURT: That’s right.
MR. DAVIDYAN: Without a trial?
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THE COURT: That’s right.
MR. DAVIDYAN: So why do I need a bankruptcy, then?
THE COURT: Yeah, exactly. It was a bad faith bankruptcy filing
designed simply to undermine what the state court had done.
Transcript of Hearing on Objection, Exhibit 4 to Opposition to the Motion (docket
no. 122), pp. 71-72.
The Los Angeles Superior Court adjudicated the factual issue of Debtor's
residence at the Property in its June 5, 2025 Amended Order for Sale of Real
Property, finding that Debtor does not live there and that the Property is not
a dwelling. That order was entered in an ongoing enforcement proceeding
following a final judgment on the merits that was affirmed on appeal.
Debtor has therefore failed to make a strong showing of likelihood of success
on the merits or even to demonstrate that the appeal presents serious legal
questions.
B. Debtor Has Not Shown Probable Irreparable Harm
The Debtor has not demonstrated that irreparable harm is probable
absent a stay. As to irreparable harm, the standard requires the movant to
demonstrate that irreparable harm is probable, as opposed to merely
possible, if the stay is not granted. Debtor argues that denial of a stay could
result in the loss, sale, transfer, or administration of the Property before
appellate review is completed, causing him to lose possession of his claimed
residence. However, this argument fails because the evidence establishes
that the Property is not Debtor's residence and has not been habitable or
occupied as of the petition date.
The Court notes that, even in the declaration that the Debtor has
provided in support of the Motion he does not actually say that he lives at
the Property. He says that the Property is “his residence,” and, as set forth
above, the Court has sustained an evidentiary objection to this testimony on
the ground that it constitutes a legal opinion as to what constitutes a
residence. Further, the text of paragraph 18 of the Debtor’s Declaration (p.
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26 of 31 at line 28 of docket no. 117) is particularly revealing. Here, the
Debtor says, “I have no other residence equivalent to the Property.” So, in
other words, he does have another residence, but that residence is just not
as valuable or desirable as the Property?
This Court found that Debtor was not living at the Property as of March
3, 2026, based on utility records showing no electrical or water usage,
photographs showing the Property boarded up, and the state court's prior
findings. Judgment Creditors will not be selling Debtor's residence, because
the Property is not his residence.
Moreover, title to the Property at 162 East Claremont Street, Pasadena,
California 91103 is encumbered by the judgment in favor of Ms. Atlas and
Neighborhood Legal Services of Los Angeles County in the total amount of
$1,066,066.25 (consisting of $750,000 in damages and $316,066.25 in
attorneys’ fees). The Property is valued at $810,000. The Los Angeles
Superior Court has already ordered the sale of the Property and found that
the $1.5 million deed of trust recorded by Debtor on March 5, 2024 is
illegitimate and unenforceable.
Any harm to Debtor from the sale of the Property is monetary and can
be remedied if he prevails on appeal. If the appellate court were to reverse
the homestead ruling and determine that Debtor was entitled to a
homestead exemption, Debtor could seek relief from the state court or
pursue other remedies. The loss of non-exempt equity in property subject to
a creditor's lien does not constitute irreparable harm warranting a stay.
Debtor has therefore failed to demonstrate that irreparable harm is the
more probable or likely outcome absent a stay. Without satisfying this
critical factor, Debtor cannot meet his burden of justifying a stay.
C. The Balance of Hardships Weighs Against Debtor
The balance of hardships does not favor granting a stay. Debtor argues
that a temporary delay in administration of the Property will preserve the
status quo while causing only temporary inconvenience to Judgment
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Creditors, whereas he faces potentially permanent loss of his residence. This
argument fails for multiple reasons.
First, as discussed above, the Property is not Debtor's residence, so he is
not facing the loss of his home. Second, Judgment Creditors have been
waiting to collect on their judgment since October 27, 2023, when the Los
Angeles Superior Court entered the judgment in the total amount of
$1,066,066.25. The judgment was affirmed on appeal on August 29, 2025.
The sale of the Property was ordered on April 15, 2025 and amended on
June 5, 2025.
The instant bankruptcy case was filed on March 3, 2026, on the eve of
the scheduled sale date, for the express purpose of preventing enforcement
of the state court's sale order. This Court characterized the filing as a bad
faith bankruptcy filing designed simply to undermine what the state court
had done.
Ms. Atlas, the primary judgment creditor, is 72 years old, has significant
mental and physical disabilities, and has only $954 per month in
Supplemental Social Security Income. Her home needs significant repairs and
maintenance that she cannot afford without collecting on her judgment. She
has been prevented from collecting her judgment for almost three years
since it was entered.
Neighborhood Legal Services of Los Angeles County represented Ms.
Atlas in the underlying fraud and elder abuse action and was awarded
$316,066.25 in attorney fees. The continued delay in collecting this fee
award harms a nonprofit legal services organization that provides
representation to indigent clients.
The harm to Judgment Creditors from further delay is substantial and
ongoing, while the harm to Debtor from proceeding with the sale is primarily
monetary and can be remedied if he prevails on appeal. The balance of
hardships therefore weighs against granting a stay.
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D. The Public Interest Weighs Against a Stay
The public interest does not favor granting a stay. Debtor argues that
the public interest lies in preserving meaningful appellate review and
avoiding irreversible consequences. However, the public interest more
strongly favors prompt enforcement of judgments, particularly judgments
for fraud and financial elder abuse.
The requested stay would reward a judgment debtor adjudicated liable
for fraud and elder financial abuse by postponing satisfaction of the
judgment while allowing the Debtor to continue enjoying the benefits of
wrongful conduct. The California Elder Abuse and Dependent Adult Civil
Protection Act was enacted to protect a particularly vulnerable class and to
encourage private enforcement through enhanced remedies.
The public interest favors prompt compensation of victims of elder
financial abuse, deterrence of such exploitation, and enforcement of
judgments entered after full adjudication. Granting a stay here would
undermine these policies by allowing the Debtor to further delay satisfaction
of a judgment that has already been affirmed on appeal and is over two and
a half years old.
Moreover, this Court found that this case was filed in bad faith to evade
enforcement of the state court's sale order. The public interest does not
favor using bankruptcy procedures to undermine final state court judgments,
particularly where the debtor has already received full appellate review of
the underlying judgment in state court. The public interest therefore weighs
against granting the stay.
E. Debtor Cannot Satisfy the Alternative Sliding-Scale Test
Even under the alternative sliding-scale test applied in the Ninth Circuit,
Debtor cannot obtain a stay. Under this test, if the movant is unable to show
a strong likelihood of success on the merits, the movant must at least
demonstrate that the appeal presents a substantial case on the merits or
that there are serious legal questions raised and must show that the balance
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of hardships tips sharply in the movant's favor. The Debtor has not
demonstrated serious legal questions on the merits. This Court's factual
findings are supported by substantial evidence and are not clearly
erroneous. The state court had already found that Debtor does not live at
the Property and that it is not a dwelling, and this Court's independent
evaluation reached the same conclusion based on utility records,
photographs, and the timing of alleged remodeling.
Moreover, the balance of hardships does not tip sharply in the Debtor's
favor. To the contrary, the balance tips in favor of Judgment Creditors, who
have been waiting almost three years to collect on a judgment for fraud and
elder abuse against a 72-year-old victim with minimal income and significant
disabilities. Debtor's claimed harm is loss of a property he does not occupy
and to which he may have no valid homestead right. Debtor therefore
cannot satisfy the alternative sliding-scale test and is not entitled to a stay
under either formulation of the standard.
V
CONCLUSION
In light of the foregoing,
IT IS HEREBY ORDERED as follows:
1. Debtor's Motion for Order Staying Enforcement of Order Sustaining
Objection to Debtor's Homestead Exemption Pending Appeal [Dkt. No.
117] is DENIED in its entirety.
2. This Court's May 27, 2026 Order Sustaining Objection to Debtor's
Homestead Exemption [Dkt. No. 86] remains in full force and effect.
3. Judgment Creditors Joyce Faye Atlas and Neighborhood Legal Services
of Los Angeles County may proceed in the Los Angeles Superior Court
or otherwise to enforce their rights with respect to the real property
located at 162 East Claremont Street, Pasadena, California 91103,
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subject to applicable law and any orders of the Los Angeles Superior
Court.
4. No bond or other security is required because the stay has been
denied.
5. The denial of this Motion is without prejudice to Debtor's right to seek
a stay from the district court pursuant to Rule 8007(b) of the Federal
Rules of Bankruptcy Procedure.
IT IS SO ORDERED.
# # #
Date: August 19, 2026
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