House Rules: How a “Phantom Home” Gambit Earned a Two-Year Bar

March 4, 2026

Summary

The Ninth Circuit BAP affirmed orders denying a § 362(c)(3) stay extension and then dismissing the Chapter 11 case under § 1112(b), finding the debtor’s bad faith egregious under the Leavitt factors, warranting dismissal and a two-year bar under § 349(a).

To view the full decisions, click here and here.

Facts

“… the [district] court ‘cannot conclude that his litigation history has reached the point of vexatious — though it’s close.’” Van Damme 25-1052, at *9.

Armin Van Damme (“Debtor”) filed more than 20 cases in state courts, U.S. district courts, and U.S. bankruptcy courts, seeking to challenge a lender’s ability to enforce foreclosure remedies against a single-family residence in Las Vegas, Nevada (“Property”).  Since 2009, courts had repeatedly dismissed Debtor’s disputes of U.S. Bank’s secured claim, frequently finding them precluded and time-barred.

By 2018, the U.S. District Court for the District of Nevada dismissed his claims for quiet title, fraud, breach of contract, and breach of the implied covenant of good faith and fair dealing, with several claims dismissed with prejudice.  Adding to the possible vexatiousness of Debtor’s persistent litigation is the fact that Debtor and his ex-wife executed a deed conveying the Property solely to her, a transfer that eliminated his legal interest in the property and thus his standing to object to the foreclosure, yet he continued to litigate.  . Van Damme, 2025 WL 3188018 at *8.  By the time of the BAP decisions being discussed herein, the loan balance increased from $740,000 in 2004 to over $1.8 million by December 2024. 

A foreclosure sale of his Las Vegas residence, scheduled for February 24, 2025, led Debtor to respond with a fourth bankruptcy filing on January 21, 2025. The next day, lender U.S. Bank moved to dismiss his Chapter 11 case. This latest petition came just over two months after Debtor’s third case was dismissed, placing the newest filing squarely in the crosshairs of § 362(c)(3)’s limitation on the automatic stay for repeat filers. The automatic stay was set to expire per the statute on February 20, four days before the sale.

In his fourth bankruptcy, filing pro se and without complete commencement papers, Debtor filed several motions captioned as “urgent,” and without the required notice that might have otherwise caused the motions to be denied outright. The bankruptcy court liberally construed one of his submissions as a motion to extend the automatic stay under § 362(c)(3)(B), relying on the pro se liberality doctrine from In re Kashani, 190 B.R. 875, 883 (B.A.P. 9th Cir 1995). It scheduled a hearing on this construed motion for February 12, less than two weeks before the sale date.

As the hearing approached, Debtor requested a continuance, citing a doctor’s note that he avoid stressful activities for two weeks. Debtor sought to reschedule the hearing up to 120 days later. The court accommodated the Debtor by extending the deadline to complete the filing of his case commencement papers by continuing the hearing from February 12 to February 18. It clarified that § 362(c)(3)(B) allowed no extra time on the 30-day deadline after which the stay terminates.

In response, Debtor filed four un-noticed “emergency” motions without meeting the extended filing deadline. Ten days before foreclosure, he requested expedited review of the stay extension; the court set a February 18 hearing, which Debtor failed to attend. At the uncontested hearing, the court denied his motion for failure to appear and lack of evidence rebutting the statutory presumption of bad faith or to support a finding of good faith under the Leavitt factors. With U.S. Bank’s dismissal motion pending, the court issued the Order Denying Extension on February 20, permitting the automatic stay to terminate by function of § 362(c)(3)(B). The foreclosure sale then proceeded on February 24.

Following the Order Denying Extension, Debtor filed three additional un-noticed “emergency” motions to vacate the order or halt foreclosure, none of which received a hearing or expedited consideration, and were all subsequently denied. With the automatic stay terminated and the property sold, the Motion to Dismiss for cause under § 1112(b) proceeded. The bankruptcy court then applied the same Leavitt factors to evaluate bad faith for dismissal proceedings.

On March 13, the bankruptcy court dismissed Debtor’s bankruptcy for cause, imposing a two-year bar on refiling. Debtor appealed both the stay denial and dismissal orders, both of which the BAP affirmed.

Reasoning

Denial of Stay Extension: the Presumption & 30-Day Clock

Under § 362(c)(3), when individuals file bankruptcy repeatedly, the automatic stay is in place for only thirty days unless extended by court order. Subsection (A) establishes that automatic termination after 30 days for actions involving debts or property securing those debts. Subsection (B) allows extension only through a noticed motion and hearing completed within that window, if the debtor proves good faith specifically as to the creditors being stayed. Subsection (C) creates a rebuttable presumption of bad faith when there’s been a prior case dismissed within the year, or no substantial change in circumstances, or more than one case in the prior year. This presumption requires clear and convincing evidence to overcome.

Turning to (B), the only element in dispute on appeal was the showing of good faith, and in particular, the rebutting of the presumption of bad faith under (C). The BAP determined that under (B), stay extension requires demonstration of good faith within a strictly enforced 30-day window following a prior dismissal, citing for support In re Flynn, 582 B.R. 25, 31 (B.A.P. 1st Cir. 2018) and In re Moreno, 2007 Bankr. LEXIS 3992(Bankr. E.D. Cal. Nov. 20, 2007). The Panel affirmed that statutory deadlines bind regardless of pro se status.

Given the filing’s timing within one year of dismissal, the rebuttable presumption of bad faith under (C) applied. The bankruptcy court found the bad faith presumption applied because Debtor “falls squarely within the purview of § 362(c)(3)(C)[i](III)” due to the absence of any substantial change in circumstances since his prior dismissal. Van Damme 25-1039 at *21. Debtor offered no evidence of changed circumstances or substantiated good faith, leaving the presumption unrebutted. Id. at *18. The BAP therefore upheld the bankruptcy court’s application of the statute, citing Flynn and Moreno on the inflexibility of the 30-day period, even for pro se debtors.

Showing Good Faith: Totality of Circumstances under Leavitt

Even without the presumption, the court analyzed good faith under the totality of circumstances using the Leavitt factors. This is noteworthy for another reason.  Leavitt v. Soto (In re Leavitt), 171 F.3d 1219 (9th Cir. 1999) was decided pre-BAPCPA and governed dismissal of a bankruptcy case for bad faith and the effect thereof under Section 349,  The BAP, following the bankruptcy court’s lead, utilized the Leavitt factors to determine under Section 362(c)(3)—a BAPCPA addition—whether a debtor has filed a case in good faith, thus warranting an extension of the automatic stay.  Presumably, if the Leavitt factors can show bad faith, a Debtor cannot meet a requirement of good faith.  As such, this case is a documented instance of porting over factors for determining bad faith as to whether there is a showing of good faith. In other provisions of the Bankruptcy Code, where the concept of good faith or bad faith are in play, this decision appears to provide some support for analyzing the Leavitt factors, even if in a slightly different context.

As to Debtor, the BAP agreed that all factors weighed against Debtor: (1) he misused the Code to relitigate barred claims; (2) he had a history of strategic, dismissal-prone filings; (3) his sole purpose was to defeat the foreclosure litigation; and (4) his behavior was egregious, litigating a debt he no longer owed for property he no longer owned. Van Damme 25-1039at *21-22and25-1052at *19-20. The BAP held the bankruptcy court’s finding of bad faith under either standard was not an abuse of discretion. Id. at *23.

The court’s egregiousness finding was anchored by: the 2022 deed transferring the Property solely to his ex-wife, meaning Debtor litigated a debt securing property he didn’t own; a 16-year history of 4 bankruptcies and 3 district court suits all challenging the same debt; and the strategic timing of bankruptcies immediately preceding foreclosure sales. With these factors, the court failed to find any valid bankruptcy purpose. Van Damme 25-1052, at *15.

The court’s good faith analysis relied on both the statutory presumption under (C) and the Leavitt factors. Van Damme 25-1038, at *23, 24. The court found, “The evidence in the record demonstrates that nothing in Debtor’s financial condition has changed since the dismissal of the Third Bankruptcy.” Id. at *23. Because Debtor offered no rebuttal, the BAP had no basis for overturning the lower court. Id. at 23.

Procedural Challenges

The BAP rejected all procedural challenges, including due process claims and arguments that orders were void ab initio, finding them frivolous and inconsistent with controlling precedent. Van Damme 25-1052at *22.

The Two-Year Bar: The Egregiousness Threshold

The BAP affirmed that a finding of bad faith constitutes “cause” for dismissal under § 1112(b). Id. The BAP clarified that while bad faith under Leavitt suffices for dismissal under the dismissal statute, imposing a refiling bar under § 349(a) requires a separate, heightened finding of “egregious” conduct. Id. at *24, citing In re Duran, 630 B.R. 797, 809 (B.A.P. 9th Cir, 2021). The bankruptcy court’s particularized findings of egregiousness, beyond bad faith, justified the extraordinary remedy of a two-year bar. Van Damme 25-1052 at *25.

In sum, the BAP concluded that the bankruptcy court did not abuse its discretion in finding Debtor failed to establish good faith, whether applying or ignoring the statutory presumption. The BAP thereby upheld the stay extension denial and affirmed dismissal with a two-year bar.

While the appeals were pending, Debtor filed a separate lawsuit against the foreclosure trustee’s law firm to delay the sale; this case remains pending in federal district court following removal. Id. n.18.

AUTHOR’S COMMENTARY:

The Nevada debtor here wasn’t trying to save the house, but trying to win it back through serial filings, even after giving it away to his ex-wife. If insanity is repeating the same act expecting a new result, then a bad-faith bankruptcy is its legal corollary. In the desert of debt, the bankruptcy system is a finite oasis, and this debtor was not seeking sustenance but was instead aiming to drain the well. Debtor was a gambler who kept hitting on 20, and his strategy a delusion that one more filing might finally defy the odds.

Here’s where the lower court showed real skill performing a high-wire act to balance two competing interests: it contorted to liberally construe a pro se litigant’s pleadings under Kashani; on the other hand, it was inflexible on the 30-day deadline of § 362(c)(3). Its 30-day deadline exists for a reason, and the judge was right not to let Debtor’s medical excuse (real or manufactured) turn it into a suggestion. The court adapted for the man, but it could not bend to his strategy.

Debtor’s approach was less a legal strategy than a multi-front campaign of misdirection:

The Phantom House Gambit: After losing an adversary proceeding, he quitclaimed the property to his ex-wife then filed anew, challenging the debt as if he still owned the collateral. He attempted to have his bankruptcy cake and deed it away too. He was, quite literally, fighting over a house that wasn’t his, a legal Ship of Theseus where he insists it’s still his boat even after selling every plank.

Barrage of Emergency Motions: To the doctor’s note advising he avoid stress, he responded by submitting five more “emergency” motions, turning the court into an unwilling participant in his paper-launch therapy. The bankruptcy court’s memorandum decision, at footnote 65, cataloged an astonishing “at least 21” motions filed by Debtor. His approach was a procedural kudzu, a strategy of volume over merit meant to smother the process. For the court, it became a battle with a Hydra; resolving one “emergency” motion only seemed to spawn two more, creating an exhausting cycle of procedural regeneration.

Russian Nesting Dolls of Litigation: This was not an anomaly but the latest matryoshka of litigation in a history of losses: four bankruptcies encasing three district court suits, which encased two adversary proceedings with the same hollow claim. The kicker? Inside it all was a new lawsuit filed against the foreclosing trustee’s law firm after the sale, proving the court’s actions were not only justified, but necessary. 

The Vanishing Act: Most glaring: begging the court for an expedited hearing, he failed to appear. With the stage set and the spotlight on him, his argument was one of pure absence. It was the litigation equivalent of a play with no third act, leaving the court to rule on an empty chair where his “good faith” should have been.

Individually, these were irritants. Collectively, they formed an inescapable mosaic of bad faith and egregiousness. For the bankruptcy court and BAP, it wasn’t even a close call under Leavitt or for “cause” under § 349(a). Instead, it was a textbook example of why courts must vigilantly police the boundary between legitimate reorganization and strategic delay.

This case sharpens the lines between accommodation and accountability. For debtors, § 362(c)(3)’s 30-day bright line is a laser beam, and there must be a substantial change of circumstances since the recent dismissal. For creditors, a debtor’s litigation history is more than evidence; it’s the entire Leavitt exhibit hall. For courts, the path from “bad faith” dismissal to an “egregious” two-year bar is cleared when a phantom claim, a procedural barrage, and a history of losses converge. Judicial patience is deep, but not bottomless.

And so, the tale concludes as it began: with a foreclosure and a new lawsuit. The only difference is the two-year bar ensures the next chapter won’t be written in bankruptcy court. The oasis of the automatic stay is real, but its waters are finite. Once they are drained, the court is under no obligation to refill them. You can bet the house, but you cannot beat it.

These materials were written by Hale Andrew Antico, Chief Counsel of Antico Law Firm, representing consumer debtors in the Central District of California, and Immediate Past President of the Central District Consumer Bankruptcy Attorneys Association, with editorial contributions by Brandon J. Iskander, a Partner at Goe Forsythe & Hodges LLP, and Kathleen A. Cashman-Kramer, a director at Fennemore’s San Diego office.

Thank you for your continued support of the Committee.

Best regards,
Insolvency Law Committee

Co-Chair
Meredith King
Franklin Soto Leeds LLP
mking@fsl.law

Co-Chair
Maggie Schroedter
Robberson Schroedter LLP
maggie@thersfirm.com  

Vice Chair
Joshua Scheer
Scheer Law Group LLP
jscheer@scheerlawgroup.com  

Secretary
Chase Stone
Ervin Cohen & Jessup LLP
cstone@ecjlaw.com