In re: Simone St. Clare ( 2014 )


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  •                                                           FILED
    AUG 19 2014
    1                         NO FO PUBL A IO
    T R     IC T N
    SUSAN M. SPRAUL, CLERK
    2                                                       U.S. BKCY. APP. PANEL
    OF THE NINTH CIRCUIT
    3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
    4                            OF THE NINTH CIRCUIT
    5   In re:                        )        BAP No. NC-13-1507-JuKuD
    )
    6   SIMONE ST. CLARE,             )        Bk. No. NC-12-47701-MEH
    )
    7                  Debtor.        )
    ______________________________)
    8                                 )
    SIMONE ST. CLARE,             )
    9                                 )
    Appellant,     )
    10                                 )
    v.                            )        M E M O R A N D U M*
    11                                 )
    BANK OF AMERICA, N.A.; UNITED )
    12   STATES TRUSTEE; MARTHA        )
    BRONITSKY, Chapter 13 Trustee,)
    13                                 )
    Apellees.      )
    14   ______________________________)
    15                   Argued and Submitted on July 24, 2014
    at San Francisco, California
    16
    Filed - August 19, 2014
    17
    Appeal from the United States Bankruptcy Court
    18                 for the Northern District of California
    19      Honorable M. Elaine Hammond, Bankruptcy Judge, Presiding.
    _________________________
    20
    Appearances:     Michael James Yesk, Esq., argued for appellant
    21                    Simone St. Clare; Tami S. Crosby, Esq., of Miles
    Bauer, Bergstrom & Winters, LLP, argued for
    22                    appellee Bank of America.
    ________________________
    23
    Before:   JURY, KURTZ, and DUNN, Bankruptcy Judges.
    24
    25
    26       *
    This disposition is not appropriate for publication.
    27 Although it may be cited for whatever persuasive value it may
    have (see Fed. R. App. P. 32.1), it has no precedential value.
    28 See 9th Cir. BAP Rule 8013-1.
    -1-
    1           Chapter 71 debtor Simone St. Clare appeals from the
    2   bankruptcy court’s orders (1) overruling her objection to
    3   claim 8-1 filed by Bank of America, N.A. (BANA) and (2) denying
    4   her motion for reconsideration of that ruling.       We AFFIRM.
    5                                 I.   FACTS
    6           In September 2005, debtor obtained a loan from Countrywide
    7   Bank, N.A. in the principal amount of $1,340,000, which was
    8   evidenced by a note and secured by a first deed of trust on her
    9   property located in Martinez, California (the Martinez
    10   Property).
    11           Debtor was in default on the loan when she filed her
    12   chapter 13 petition pro se on September 18, 2012.       In
    13   Schedule A, debtor listed the Martinez Property as unencumbered
    14   with no secured debt.     Debtor listed no secured creditors in
    15   Schedule D.
    16           On February 26, 2013, debtor amended her Schedule A to
    17   state that the Martinez Property was encumbered by a secured
    18   claim in the amount of $1,865,299.       On the same day, debtor
    19   filed an adversary proceeding against BANA and others (Adv.
    20   No. 13-04044) seeking, among other things, to have the
    21   bankruptcy court determine the extent and validity of BANA’s
    22   lien against the Martinez Property and quiet title.       On May 29,
    23   2013, debtor voluntarily dismissed the adversary proceeding
    24   without prejudice.
    25
    26       1
    Unless otherwise indicated, all chapter and section
    27 references are to the Bankruptcy Code, 
    11 U.S.C. §§ 101-1532
    , and
    “Rule” references are to the Federal Rules of Bankruptcy
    28 Procedure.
    -2-
    1        A few months before, on March 15, 2013, BANA timely filed a
    2   proof of claim (POC) designated as claim 8-1, asserting a
    3   secured claim against the Martinez Property for amounts due
    4   under the note in the total amount of $1,894,662.21, including
    5   an arrearage and other charges in the amount of $472,439.20
    6   (representing fifty-two monthly payments for February 15, 2008
    7   through the petition date).
    8        Attached to the POC was (1) an itemized statement of
    9   interest, fees, expenses and charges; (2) a copy of the note
    10   which contained an endorsement in blank; (3) a copy of the deed
    11   of trust dated September 29, 2005; (4) a copy of the assignment
    12   of the deed of trust dated April 8, 2011, executed by Mortgage
    13   Electronic Registration Systems, Inc. (MERS) in favor of BAC
    14   Home Loans Servicing, LP, fka Countrywide Home Loans Servicing,
    15   LP (BAC); and (5) a copy of the certificate of merger filed in
    16   the Office of the Secretary of State of Texas on June 28, 2011,
    17   evidencing the merger of BAC into BANA.   The assignment shows
    18   that the deed of trust was assigned to BAC by virtue of an
    19   Assignment of Deed of Trust, duly acknowledged on April 8, 2011
    20   and recorded April 15, 2011 as document 2011-0078100-00 in the
    21   Contra Costa, County recorder’s office.   The Certificate of
    22   Merger shows that on June 28, 2011, the Secretary of State of
    23   Texas issued the certificate merging BAC into BANA, effective
    24   July 1, 2011.
    25        On May 16, 2013, debtor filed an objection to the POC.
    26   Stripped to its essence, debtor alleged that the POC was not
    27   accompanied by any evidence that BANA had authority to bring the
    28   claim or standing to enforce the note.    BANA filed a response to
    -3-
    1   the objection and a supplemental opposition.
    2           At the September 12, 2013 hearing on the matter, the
    3   bankruptcy court recited its findings of fact and conclusions of
    4   law on the record and overruled debtor’s objection.     Instead of
    5   providing an official or unofficial transcript of the hearing,
    6   debtor prepared a summary from the digital audio recording which
    7   she included in the record.     According to debtor’s summary, the
    8   bankruptcy court found that BANA’s POC complied with Rule 3001:
    9   the POC was executed by BANA’s attorney and attached to the POC
    10   was (1) a copy of the note with endorsement in blank; (2) an
    11   itemized statement of interest, fees, expenses and charges as
    12   required under Rule 3001(c); and (3) a copy of the deed of trust
    13   which was required under Rule 3001(d).     The bankruptcy court
    14   decided that debtor’s arguments regarding BANA’s standing to
    15   enforce the note were without merit, overruled her objection,
    16   and concluded that BANA’s POC was secured and allowed in the
    17   amount of $1,894,662.21.
    18           After allowing BANA’s secured claim, the bankruptcy court
    19   found debtor’s liquidated secured debt was no longer subject to
    20   dispute.     The court thus concluded that debtor was over the debt
    21   limit stated in § 109(e)2 and no longer eligible for chapter 13
    22   relief.     The bankruptcy court stated its intent to dismiss the
    23   case within ten days of the hearing unless debtor requested
    24   conversion of the case to either chapter 7 or 11 and entered the
    25
    2
    26        Section 109(e) provides that “[o]nly an individual with
    regular income that owes, on the date of the filing of the
    27 petition, noncontingent, liquidated, unsecured debts of less than
    $382,175 and noncontingent, liquidated, secured debts of less
    28 than $1,149,525 . . . may be a debtor under chapter 13 . . . .”
    -4-
    1   order (Conversion/Dismissal Order) consistent with its decision.
    2          Debtor timely moved for reconsideration of this order,
    3   which the bankruptcy court denied.    The court found no new facts
    4   and again explained the reasoning for the court’s decision.     In
    5   a nutshell, the court explained that BANA’s POC was prima facie
    6   valid and debtor’s arguments were not of equal probative force.
    7   Debtor also requested the court to place in writing its oral
    8   findings of fact and conclusions of law made at the
    9   September 12, 2013 hearing.    The court noted that it had stated
    10   its findings of fact and conclusions of law on the record at the
    11   September 12, 2013 hearing, and that debtor could request
    12   through the clerk’s office a transcript of the hearing for her
    13   anticipated appeal.    The bankruptcy court gave debtor an
    14   additional five days to decide whether to convert her case.
    15          Thereafter, debtor filed a timely notice of appeal of the
    16   Conversion/Dismissal Order and the order denying her motion for
    17   reconsideration.    At the same time, debtor also sought a stay
    18   from the bankruptcy court.    The bankruptcy court denied her
    19   request, but gave debtor additional time to seek a stay from the
    20   BAP.    Debtor filed an Emergency Motion for Stay Pending Appeal
    21   with the BAP which was denied on October 25, 2013.    Debtor went
    22   back to the bankruptcy court to request extension of the
    23   temporary stay of the Conversion/Dismissal Order despite the
    24   fact that it had already expired.     The bankruptcy court granted
    25   debtor’s request by extending the stay of the Dismissal/
    26   Conversion Order through November 7, 2013.
    27          On November 7, 2013, debtor voluntarily converted her case
    28   to chapter 7.    Debtor then made numerous attempts to stay entry
    -5-
    1   of her chapter 7 discharge, all of which either the bankruptcy
    2   court or the BAP denied.      The chapter 7 trustee has since filed
    3   a report of no distribution and debtor received her discharge on
    4   February 12, 2014.
    5                               II.    JURISDICTION
    6        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
    7   §§ 1334 and 157(b)(2)(B).         As discussed below, we have
    8   jurisdiction under 
    28 U.S.C. § 158
    .
    9                                 III.     ISSUES
    10        A.   Does debtor have standing to pursue this appeal?
    11        B.   Did the bankruptcy court err by overruling debtor’s
    12   objection to claim 8-1?
    13                         IV.    STANDARDS OF REVIEW
    14        Standing and mootness are jurisdictional questions that we
    15   review de novo.    Palmdale Hill Prop., LLC v. Lehman Commercial
    16   Paper, Inc. (In re Palmdale Hills Prop., LLC), 
    654 F.3d 868
    , 873
    17   (9th Cir. 2011).
    18        The bankruptcy court’s decision to allow or deny a POC is
    19   reviewed for an abuse of discretion.         Bitters v. Networks Elec.
    20   Corp. (In re Networks Elec. Corp.), 
    195 B.R. 92
    , 96 (9th Cir.
    21   BAP 1996).   A bankruptcy court's denial of a motion for
    22   reconsideration is also reviewed for an abuse of discretion.
    23   Arrow Elecs., Inc. v. Justus (In re Kaypro), 
    218 F.3d 1070
    , 1073
    24   (9th Cir. 2000); Sewell v. MGF Funding, Inc. (In re Sewell),
    25   
    345 B.R. 174
    , 178 (9th Cir. BAP 2007).          In determining whether
    26   the court abused its discretion we first determine de novo
    27   whether the trial court identified the correct legal rule to
    28   apply to the relief requested and then, if the correct legal
    -6-
    1   standard was applied, we determine whether the court’s
    2   application of that standard was “(1) illogical,
    3   (2) implausible, or (3) without support in inferences that may
    4   be drawn from the facts in the record.”     United States v. Loew,
    5   
    593 F.3d 1136
    , 1139 (9th Cir. 2010).
    6                             V.   DISCUSSION
    7   A.   Standing
    8        Due to debtor’s voluntary conversion of this case from
    9   chapter 13 to chapter 7 while this appeal was pending, BANA
    10   contends that debtor does not have standing to pursue to this
    11   appeal.   “In addition to having standing at the outset, a
    12   plaintiff’s stake in the litigation must continue throughout the
    13   proceedings, including on appeal.”    Williams v. The Boeing Co.,
    14   
    517 F.3d 1120
    , 1128 (9th Cir. 2008).   Standing is not subject to
    15   waiver and must be considered by the court at all stages of
    16   litigation.   Because this court’s jurisdiction is limited,
    17   debtor must have standing to continue this appeal.
    18        To have standing to bring this appeal, debtor must
    19   demonstrate that she is directly and adversely affected
    20   pecuniarily by the order of the bankruptcy court.    Fondiller v.
    21   Robertson (In re Fondiller), 
    707 F.2d 441
    , 442 (9th Cir. 1983).
    22   The Ninth Circuit has held that “the allowance or disallowance
    23   of ‘a claim in bankruptcy is binding and conclusive on all
    24   parties or their privies, and being in the nature of a final
    25   judgment, furnishes a basis for a plea of res judicata.’”
    26   Bevan v. Socal Commc’ns Sites, LLC (In re Bevan), 
    327 F.3d 994
    ,
    27   997 (9th Cir. 2003) (quoting Siegel v. Fed. Home Loan Mortg.
    28   Corp., 
    143 F.3d 525
    , 529 (9th Cir. 1998)).    Because the
    -7-
    1   bankruptcy court in a claim objection proceeding makes a
    2   substantive ruling that binds the parties in all other
    3   proceedings and may finally adjudicate the parties’ underlying
    4   rights, an affirmance by us could have preclusive effect if the
    5   debtor subsequently challenged the validity of claim 8-1 in some
    6   other forum.   
    Id.
        Consequently, if we were to reverse, we would
    7   be able to provide the debtor effective relief.     See People of
    8   Village of Gambell v. Babbitt, 
    999 F.2d 403
    , 406 (9th Cir. 1993)
    9   (if there is a present controversy as to which effective relief
    10   can be granted, then the appeal is not moot).     Accordingly,
    11   debtor has standing to pursue this appeal.
    12   B.   The Merits
    13        Initially, we mention that our review in this appeal is
    14   hampered because there is no official transcript in the record
    15   that contains the bankruptcy court’s findings of fact and
    16   conclusions of law overruling debtor’s objection to claim 8-1
    17   at the September 12, 2013 hearing.     Although the bankruptcy
    18   court told debtor to request an official transcript of that
    19   hearing from the Clerk’s Office in the context of the
    20   reconsideration order, she failed to do so, instead providing
    21   her own summary.     
    28 U.S.C. § 753
     provides:
    22        An official transcript in any case certified by the
    reporter or other individual designated to produce the
    23        record shall be deemed prima facie a correct statement
    of the testimony taken and proceedings had. No
    24        transcripts of the proceedings of the court shall be
    considered as official except those made from the
    25        records certified by the reporter or other individual
    designated to produce the record.
    26
    27   Pursuant to this statute, debtor’s summary of the September 12,
    28   2013 hearing cannot be deemed a correct or official statement of
    -8-
    1   the testimony taken and proceedings had.     Further, although
    2   there is precedent for considering unofficial transcripts under
    3   some circumstances, see Gasprom, Inc. v. Fateh (In re Gasprom,
    4   Inc.), 
    500 B.R. 598
    , 602 at n.4 (9th Cir. BAP 2013), there is no
    5   precedent that authorizes us to consider a summary of the
    6   hearing transcript prepared by a litigant.     Such summaries are
    7   inherently unreliable.   For this reason alone, we may summarily
    8   affirm.   See Ehrenberg v. Cal. State Univ., Fullerton Found.
    9   (In re Beachport Entm’t), 
    396 F.3d 1083
    , 1087–88 (9th Cir.
    10   2005); Morrissey v. Stuteville (In re Morrissey), 
    349 F.3d 1187
    ,
    11   1189 (9th Cir. 2003) (failure to provide a critical transcript
    12   may result in summary affirmance).
    13        However, even without the required transcript, we may
    14   affirm the bankruptcy court’s ruling on the merits.      The filing
    15   of a proof of claim in a bankruptcy case is authorized by § 501:
    16   “A creditor . . . may file a proof of claim.” § 501(a).       The
    17   requirements of a proof of claim are provided in Rule 3001,
    18   which mandates, among other things, that a proof of claim be in
    19   writing and conform substantially to the appropriate Official
    20   Form 10, be executed by the creditor or the creditor’s
    21   authorized agent, and, where based on a writing, filed with the
    22   original or a duplicate of that writing.     Rule 3001(a)-(c).      “If
    23   a security interest in property of the debtor is claimed, the
    24   proof of claim shall be accompanied by evidence that the
    25   security interest is perfected.”     Rule 3001(d).
    26        “A proof of claim executed and filed in accordance with
    27   these rules shall constitute prima facie evidence of the
    28   validity and amount of the claim.”     Rule 3001(f).   Upon
    -9-
    1   objection, the proof of claim provides “some evidence as to its
    2   validity and amount” and carries over a “mere formal objection.”
    3   Lundell v. Anchor Constr. Specialists, Inc. (In re Lundell),
    4   
    223 F.3d 1035
    , 1039 (9th Cir. 2000).      The objector must produce
    5   sufficient evidence “tending to defeat the claim by probative
    6   force equal to that of the allegations in the proofs of claim
    7   themselves.”    
    Id.
       “The ultimate burden of persuasion remains at
    8   all times upon the claimant.”    
    Id.
        Debtor acknowledges and
    9   relies on these principles in this appeal.
    10        Debtor contends that the bankruptcy court clearly erred
    11   when it applied an incorrect legal standard in overruling her
    12   objection.   Specifically, debtor maintains that in “direct
    13   contravention” to Rule 3001, claim 8-1 was not “executed by the
    14   creditor or the creditor’s authorized agent” and no box was
    15   checked to indicate the authority to file the POC.      Due to this
    16   alleged deficiency, debtor argues that claim 8-1 was not
    17   entitled to the prima facie validity found by the bankruptcy
    18   court.
    19        Contrary to debtor’s assertion, the bankruptcy court did
    20   not apply the wrong legal standard in finding that BANA’s POC
    21   was entitled to prima facie validity.      First, a POC that
    22   substantially complies with Rule 3001 is prima facie valid.
    23   Rule 3001(a).    Debtor fails to recognize that Ms. Jones signed
    24   the POC as “Attorney for Creditor” and BANA is named as the
    25   creditor on the face page.    Despite the obvious connection
    26   between Ms. Jones and BANA, debtor simply argues that Ms. Jones
    27   did not check the box that says she was acting as BANA’s agent.
    28   In addition, the documents attached to the POC detail the
    -10-
    1   underlying debt.   In short, the record shows that the POC was
    2   executed and filed in accordance with the Rules and Official
    3   Form 10 and was prima facie valid.
    4        The burden then shifted to debtor to present evidence to
    5   overcome the prima facie case, In re Lundell, 
    223 F.3d at 1039
    ,
    6   which she did not do.   “The objector must produce evidence
    7   which, if believed, would refute at least one of the allegations
    8   that is essential to the claim’s legal sufficiency.”    
    Id.
     at
    9   1040.    Debtor makes no argument on appeal that her evidence was
    10   of sufficient probative weight to overcome the prima facie
    11   validity of BANA’s POC.   Indeed, she does not tell us how the
    12   bankruptcy court erred in either its findings of fact or
    13   conclusions of law stated at the September 12, 2013 hearing.
    14        Notwithstanding the absence of an official transcript for
    15   the September 12, 2013 hearing, the bankruptcy court made
    16   several findings and conclusions in its order denying debtor’s
    17   motion for reconsideration.     Debtor does not make any arguments
    18   on appeal that the bankruptcy court’s factual findings or legal
    19   conclusions contained in the reconsideration order were
    20   erroneous.   Those arguments are deemed waived for purposes of
    21   this appeal.   Smith v. Marsh, 
    194 F.3d 1045
    , 1052 (9th Cir.
    22   1999).
    23                             VI.   CONCLUSION
    24        For the reasons stated, we AFFIRM the bankruptcy court’s
    25   orders (1) overruling debtor’s objection to BANA’s POC and
    26   (2) denying her motion for reconsideration on the grounds that
    27   BANA’s POC was prima facie valid and debtor’s arguments were not
    28   of equal probative force.
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