Waldo v. Bank of New York Mellon Trust ( 2022 )

Appellate Case: 21-4050 Document: 010110689967 Date Filed: 05/27/2022 Page: 1
FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT May 27, 2022
_________________________________
Christopher M. Wolpert
Clerk of Court
In re: CHARLES C. WALDO;
ETHANNE S. WALDO,
Debtors.
----------------------------
CHARLES C. WALDO; ETHANNE
S. WALDO,
Appellants,
No. 21-4050
v. (D.C. No. 2:20-CV-00238-DBB)
(D. Utah)
BANK OF NEW YORK MELLON
TRUST COMPANY; OCWEN
LOAN SERVICING, LLC,
Appellees.
_________________________________
ORDER AND JUDGMENT *
_________________________________
Before BACHARACH, EID, and ROSSMAN, Circuit Judges.
_________________________________
*
Oral argument would not help us, so we have decided the appeal
based on the record and the parties’ briefs. See Fed. R. App. P.
34(a)(2)(C); Tenth Cir. R. 34.1(G).
Our order and judgment does not constitute binding precedent except
under the doctrines of law of the case, res judicata, and collateral estoppel.
But the order and judgment may be cited for its persuasive value if
otherwise appropriate. See Fed. R. App. P. 32.1(a); Tenth Cir. R. 32.1(A).
Appellate Case: 21-4050 Document: 010110689967 Date Filed: 05/27/2022 Page: 2
This appeal involves property once owned by Charles and Ethanne
Waldo. The Waldos obtained a mortgage, which was secured by a deed of
trust. The Waldos eventually defaulted on the loan, triggering foreclosure
proceedings. But the Waldos filed bankruptcy. In the bankruptcy
proceedings, the Waldos unsuccessfully tried to prevent a creditor from
enforcing the debt. Our appeal involves the aftermath of those bankruptcy
proceedings.
I. The Waldos challenge the proof of claim involving the mortgage.
In those bankruptcy proceedings, a proof of claim was filed by the
Bank of New York Mellon Trust Company, NA, as Indenture Trustee for
the IMC Home Equity Loan Owner Trust 1998-7, and Ocwen Loan
Servicing, LLC. The Waldos objected, but didn’t deny arrearage on the
mortgage. They instead questioned whether the bank and Ocwen could
enforce the debt. The bankruptcy court overruled the Waldos’ objection
and granted summary judgment to the bank and Ocwen. 1
The Waldos unsuccessfully moved to reopen and later sought
reconsideration of the refusal to reopen, arguing that the bank and Ocwen
1
The bankruptcy court conducted a hearing and issued a written order.
We don’t know whether the bankruptcy court provided an oral explanation
because the bankruptcy court’s docket contains no transcript or audio
recording of the hearing. We thus lack any explanation from the
bankruptcy court for its rulings. But the Waldos never properly appealed
the bankruptcy court’s denial of their objection or grant of summary
judgment to the bank and Ocwen.
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had no right to enforce the debt. In making this argument, the Waldos
again questioned the proof of claim, insisting that the mortgage contract
was no longer valid, Ocwen no longer serviced the loan, and the bank
entity (that filed the proof of claim) no longer existed.
II. The bankruptcy court denies the motions to reopen and
reconsider.
To decide the motion to reopen, the bankruptcy court considered how
long the case had been closed, the possible relief for the Waldos, the
strength of the fraud allegations, the similarity between the current
allegations and earlier allegations, the potential for another court to hear
the issues raised in the motion, the prejudice to Ocwen and the bank, and
the prejudice to the Waldos if the case were to remain closed. The
bankruptcy court concluded that these factors weighed against the Waldos,
so the court denied their motion to reopen.
The Waldos asked the bankruptcy court to reconsider, but the court
treated the request as a motion to alter or amend a judgment and denied
relief.
The district court affirmed, and the Waldos appeal.
III. Article III Standing
Before reviewing the bankruptcy court’s rulings, we assess Article
III standing, which entails a jurisdictional issue. See Lee v. McCardle (In
re Peeples), 880 F.3d 1207, 1212 (10th Cir. 2018). The Waldos deny that
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the bank has Article III standing in the appeal. But it is the Waldos, not the
bank, who have invoked federal jurisdiction. So it’s the Waldos who must
show Article III standing. See Spokeo, Inc., v. Robins, 578 U.S. 330, 338
(2016). The Waldos do have Article III standing, and no one contends
otherwise.
We need not address whether the bank had Article III standing in the
bankruptcy court. The bank’s standing in bankruptcy court could bear on
summary judgment, but the Waldos didn’t properly appeal the summary-
judgment ruling.
IV. Discretion to Reopen or Reconsider
The bankruptcy court did not err in declining to reopen the
proceedings or to reconsider that ruling.
A. Standard of Review
Despite the district court’s ruling, we independently review the
bankruptcy court’s decisions without deferring to the district court’s
analysis. WD Equip., LLC v. Cowen (In re Cowen), 849 F.3d 943, 947
(10th Cir. 2017). In conducting this review, we apply the abuse–of–
discretion standard. See Nelson v. City of Albuquerque, 921 F.3d 925, 929
(10th Cir. 2019) (motion to alter or amend the judgment); Woods v. Kenan
(In re Woods), 173 F.3d 770, 778 (10th Cir. 1999) (motion to reopen). The
bankruptcy court abuses its discretion if the decision is “arbitrary,
capricious, whimsical, or manifestly unreasonable.” Rocky Mountain
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Christian Church v. Bd. of Cnty. Comm’rs, 613 F.3d 1229, 1239 (10th Cir.
2010) (internal quotation marks omitted).
B. Motion to Reopen
In seeking reopening, the Waldos presented numerous theories. Most
stemmed from alleged trickery by the bank and Ocwen in filing the proof
of claim in bankruptcy court.
Duration. The Waldos contend that the bankruptcy court focused too
heavily on how long the case had been closed. The bankruptcy court did
label the passage of time the “most influential” factor. Suppl. R. at 549.
And the Waldos correctly say that no time bar prevents the setting aside of
a judgment for fraud on the court. United States v. Buck, 281 F.3d 1336,
1341–42 (10th Cir. 2002). But the passage of time is a proper factor for a
bankruptcy court to consider when deciding whether to reopen a case. See
Redmond v. Fifth Third Bank, 624 F.3d 793, 798 (7th Cir. 2010). The
bankruptcy court did not treat the passage of time as conclusive; the court
considered this as just one of several factors. In doing so, the court acted
within its discretion. See id.Prejudice. The bankruptcy court also acted within its discretion
when finding that reopening would prejudice Ocwen and the bank by
forcing them to relitigate the validity of their proof of claim. In the
Waldos’ view, Ocwen and the bank shouldn’t have participated in this
case, so reopening the case would not have prejudiced them. The Waldos’
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argument ignores the interest of Ocwen and the bank in defending their
judgment. Although the Waldos downplay the expected costs for Ocwen
and the bank, the bankruptcy court could reasonably consider those costs
prejudicial.
Consideration of the Waldos’ arguments. The Waldos assert that
the bankruptcy court ignored their arguments and evidence. We disagree.
The bankruptcy court denied the Waldos’ motion to reopen and explained
the decision. The Waldos do not point to anything in the record showing
that the bankruptcy court ignored any arguments or evidence.
Standing. The Waldos imply that the bankruptcy court overlooked
their challenge to Article III standing for Ocwen and the bank. But the
Waldos’ motion to reopen did not challenge Article III standing of Ocwen
or the bank.
Fraud on the court. The motion instead attacked the grant of
summary judgment based on fraud on the court. In arguing that Ocwen and
the bank had committed a fraud on the court, the Waldos asserted that
“there was never the requisite [s]tanding to file a [c]laim.” Suppl. R. at
539. Rejecting this assertion, the bankruptcy court pointed out that the
Waldos had already raised nearly identical challenges. This
characterization fell within the bankruptcy court’s discretion, and the
Waldos have not shown an abuse of discretion in the denial of their motion
to reopen.
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C. Motion to Reconsider
Nor did the bankruptcy court err when denying the Waldos’ motion to
reconsider.
The bankruptcy court could reconsider when the controlling law has
changed, new evidence becomes available, or correction is needed because
of a clear error or manifest injustice. Servants of Paraclete v. Does,
204 F.3d 1005, 1012 (10th Cir. 2000). Applying these factors, the
bankruptcy court concluded that nothing had substantially changed since
the ruling on the motion to reopen.
The Waldos argue that the bankruptcy court ignored some of their
arguments. We disagree. The court said that it had considered all of the
arguments, and we have no reason to think otherwise.
Granted, the bankruptcy court did not address the Waldos’ references
to Article III standing. But even if these references had constituted an
argument based on a lack of Article III standing, the bankruptcy court
would have acted within its discretion by declining to consider the
argument: The Waldos had not presented the argument in their motion to
reopen, and the bankruptcy court didn’t need to consider arguments that
could have been presented earlier. See Banister v. Davis, 140 S. Ct. 1698,
1708 (2020).
The Waldos contend that the attorney for Ocwen and the bank
“should not have been allowed to participate” in the proceedings.
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Appellant’s Opening Br. at 3a. 2 For this contention, the Waldos cite
perceived deficiencies in the attorney’s entry of appearance:
1. The attorney never filed an entry of appearance for Ocwen or
its successor.
2. The attorney’s appearance form identified the bank by its old
name.
This argument is invalid under Federal Rule of Bankruptcy Procedure
9010(b): “An attorney appearing for a party in a case under the Code shall
file a notice of appearance with the attorney’s name, office address and
telephone number, unless the attorney’s appearance is otherwise noted in
the record.” This rule applies because the record otherwise clarifies that
the attorney represented both Ocwen and the bank. For example, the
attorney’s brief for summary judgment identifies the clients as Ocwen and
the bank under its new name. So any perceived deficiencies in the entry of
appearance wouldn’t matter. 3 For this contention, the Waldos have not
shown that the bankruptcy court abused its discretion when denying
reconsideration.
2
The attorney did not participate in the proceedings related to the
motion to reopen, so we understand this argument to address the denial of
reconsideration.
3
We deny the Waldos’ request to strike the entry of appearance filed
here by counsel for Ocwen and the bank. The entry of appearance complies
with Tenth Circuit Rule 46.1.
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D. The Waldos’ Additional Arguments
The Waldos challenge the bankruptcy court’s award of attorney’s
fees. The bankruptcy court ordered the fees more than a month after the
Waldos had filed their notice of appeal. The Waldos did not file a
supplemental notice of appeal, a step necessary to give us “jurisdiction
over an attorneys’ fees issue that becomes final subsequent to the initial
notice of appeal.” EEOC v. Wal-Mart Stores, Inc., 187 F.3d 1241, 1250
(10th Cir. 1999). So we lack jurisdiction to consider the award of
attorney’s fees.
The Waldos make several claims that appear to challenge the
bankruptcy court’s ruling on summary judgment. But that ruling isn’t at
issue, so we cannot consider the Waldos’ challenge to the grant of
summary judgment. See Lang v. Lang (In re Lang), 414 F.3d 1191, 1195-96
(10th Cir. 2005).
The Waldos allege many problems with the district court’s analysis.
They argue, for example, that the district court erred by ignoring evidence
and by taking judicial notice of several documents. We have independently
reviewed the bankruptcy court’s rulings, disregarding the documents
noticed by the district court, and we find no abuse of discretion.
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Affirmed.
Entered for the Court
Robert E. Bacharach
Circuit Judge
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