Order denying motion for stay pending appeal and to suspend proceedings.

Defendants CitiFinancial and Carrington Mortgage Services, two former holders/servicers of the Plaintiffs' mortgage, requested dismissal of the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, for three separate causes of action. The Plaintiffs alleged that the two Defendants violated § 524(i) with misapplication of payments and an inflated account payoff balance. The Court determined that the Plaintiffs' allegations that CitiFinancial and Carrington both transferred Plaintiffs' mortgage account with an inflated balance due to misapplied payments is sufficient to constitute an act to collect for the purposes of withdtanding a motion to dismiss under Rule 12(b)(6).  Also, the Court found that the Plaintiffs plausibly pleaded the elements required under § 362(k) for violation of the automatic stay. The Plaintiffs' alleged violation of the FDCPA against Carrington is not related to the bankruptcy case and the Court lacks subject matter jurisdiction over that count of the complaint.

Claimant, a former employee of Debtor Bitech Inc., filed a claim in the total amount of $11,113,738.34.  Among the amounts asserted in the claim, Claimant sought to recover $5,945,850.00 for civil penalties under Sections 226 and 1198 of the California Labor Code and the California Labor Code Private Attorneys General Act of 2004.  Claimant asserted that the portion of his claim for civil penalties was entitled to priority under 11 U.S.C. § 507(a)(8).  Debtors objected to the claim in its entirety, but Debtors sought an interim determination as to whether any portion of the claim was entitled to priority under § 507(a)(8).  The Court concluded that no portion of the claim is entitled to priority under § 507(a)(8) and sustained Debtors’ objection to the extent Debtors objected to the priority status of any portion of the claim.

Plaintiff, an attorney, commenced an adversary proceeding against his former clients, Defendants, requesting that the Court either deny the Defendants’ discharge under §§  727(a)(2)(A) and (B), and 727(a)(4)(A), (C), and (D), or determine that the debt owed by the Defendants to Plaintiff is nondischargeable under §§ 523(a)(2)(A) and (B).  Plaintiff moved to amend his complaint and Defendants moved for judgment on the pleadings.  The Court granted the motion to amend in part and denied the motion to amend in part.  The Court granted the motion for judgment on the pleadings in part and denied the motion for judgment on the pleadings in part.  The Court also granted Plaintiff leave to file a further motion to amend consistent with the Court’s Order.