Filed: Oct. 11, 2018
Latest Update: Mar. 03, 2020
Summary: 4, Mr. Vallejo argues that there is no evidence that MERS, as the beneficiary under, the Deed of Trust, instructed U.S. Bank to seek relief from the automatic stay. But by the, time the motion was filed, MERS had assigned its beneficial interest (as nominee for, GMAC) to GMAC Mortgage, LLC;
FILED
OCT 11 2018
NOT FOR PUBLICATION
SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. CC-18-1015-FLS
EDUARDO ENRIQUE VALLEJO, Bk. No. 2:16-bk-16833-SK
Debtor.
EDUARDO ENRIQUE VALLEJO,
Appellant,
v. MEMORANDUM*
U.S. BANK TRUST, N.A.,
Appellee.
Argued and Submitted on September 27, 2018
at Los Angeles, California
Filed – October 11, 2018
Appeal from the United States Bankruptcy Court
for the Central District of California
*
This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
Honorable Sandra R. Klein, Bankruptcy Judge, Presiding
Appearances: Appellant Eduardo Enrique Vallejo argued pro se.
Before: FARIS, LAFFERTY, and SPRAKER, Bankruptcy Judges.
INTRODUCTION
Chapter 131 debtor Eduardo Enrique Vallejo appeals from the
bankruptcy court’s order granting relief from the automatic stay to creditor
U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust 13801
(“U.S. Bank”). He argues that U.S. Bank and its servicer, Caliber Home
Loans Inc. (“Caliber”) lacked standing to enforce the deed of trust and that
he has made all of his required loan payments.
The bankruptcy court did not err. We AFFIRM.
FACTUAL BACKGROUND2
A. Prepetition events
On or around November 10, 2004, Mr. Vallejo obtained a $315,000
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure.
2
Mr. Vallejo does not provide excerpts of record. We have exercised our
discretion to review the bankruptcy court’s docket, as appropriate. See Woods &
Erickson, LLP v. Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008).
2
loan from “GMAC Mortgage Corporation DBA ditech.com” (“GMAC”).
The loan was memorialized by a promissory note (“Note”). To secure the
Note, Mr. Vallejo and others executed a deed of trust (“Deed of Trust”)
encumbering residential real property located in Burbank, California (the
“Property”). Mortgage Electronic Registration Systems, Inc. (“MERS”), as
“nominee” for GMAC and its successors and assigns, was the beneficiary
under the Deed of Trust.
On or around June 1, 2010, GMAC (through its nominee, MERS)
assigned the Deed of Trust to GMAC Mortgage, LLC.
In January 2011, Mr. Vallejo entered into a loan modification
agreement with MERS, nominee for the then-current holder of the Note,
GMAC Mortgage, LLC. The modification agreement lowered the monthly
loan payment.
On or around May 15, 2013, GMAC Mortgage assigned the Deed of
Trust to Green Tree Servicing LLC (“Green Tree”). In February 2016, Green
Tree (which was then known as Ditech Financial LLC) recorded a notice of
default. It also recorded a notice of foreclosure sale against the Property,
but to date, the Property has not been sold.
B. Bankruptcy events
On May 23, 2016, Mr. Vallejo filed a chapter 13 petition. Ditech
Financial (which at that time held the Deed of Trust) filed a proof of claim
for $299,256.80.
3
The bankruptcy court confirmed Mr. Vallejo’s amended chapter 13
plan. His payments to Ditech Financial for prepetition arrears were to total
$22,389.73 over fifty-one months.
C. Motion for relief from the automatic stay
Ditech Financial assigned the Deed of Trust to U.S. Bank. In
December 2017, Caliber, as U.S. Bank’s attorney in fact, filed a motion for
relief from the automatic stay (“Motion for Relief”). U.S. Bank asserted that
it “is either (1) named as beneficiary in the security instrument on the
subject property (e.g., mortgage or deed of trust) or (2) is the assignee of the
beneficiary.”
U.S. Bank sought relief from the automatic stay under § 362(d)(1)
based on Mr. Vallejo’s failure to make postpetition mortgage payments. It
alleged that its total claim was $305,371.97 as of November 3, 2017 and that
the total postpetition delinquency was $19,877.82. In support of the Motion
for Relief, U.S. Bank submitted copies of the Deed of Trust, the Note, an
accounting of Mr. Vallejo’s postpetition loan payments, the various
assignments of the Deed of Trust, and the loan modification agreement.
Mr. Vallejo objected to the motion on several grounds. He did not
offer his own declaration or any other evidence in support of his legal
arguments.
First, he argued that U.S. Bank did not hold the Note, was not a valid
assignee of the Deed of Trust, and is not the “real party in interest.”
4
Second, he claimed that the Deed of Trust was defective at its
inception because the original lender is listed as “GMAC Mortgage
Corporation dba ditech.com,” but only “GMAC Mortgage Corporation” is
registered in Pennsylvania, while the fictional name “ditech.com” is not.
Third, Mr. Vallejo claimed that the January 2011 modification
agreement was invalid.
Finally, Mr. Vallejo argued briefly that he had not missed any
postpetition payment and “has made all payments as agreed.”
The bankruptcy court held a hearing on the Motion for Relief. The
court granted the motion. It stated at the hearing that the movant had
established its standing and that Mr. Vallejo’s failure to make postpetition
payments was “cause” for relief from stay.
D. The motion for reconsideration
Mr. Vallejo filed a premature notice of appeal. He attached to his
notice of appeal a memorandum entitled “Notice of Appeal Before Entry of
Order,” in which he argued that he was current on his mortgage payments.
He stated that the postpetition mortgage payments were $1,613.41,
beginning June 2016. He represented that he made $1,000 payments on
June 14, 2016, July 20, 2016, and August 23, 2016. He made additional
payments of $613.41 on August 24, 2016, September 8, 2016, and October 5,
2016. These payments were allegedly posted as “unapplied funds,” rather
than regular payments. He stated that the “unapplied funds” were then
5
erroneously applied to prepetition payments (April 1, 2015, May 1, 2015,
and June 1, 2015), rather than as postpetition payments. He also contended
that the monthly payments were posted as $1,510.80, rather than $1,613.41.
He did not offer a declaration or evidence to substantiate these claims.
On February 6, 2018, Mr. Vallejo filed an amended notice of appeal
and request for reconsideration. He essentially repeated the arguments in
the first notice of appeal and attached a copy of a ledger purporting to
show his postpetition payments and balances.
The BAP motions panel construed the amended notice of appeal as a
Civil Rule 60 motion for reconsideration (“Motion for Reconsideration”). It
granted limited remand for the bankruptcy court to consider the motion.
U.S. Bank opposed the Motion for Reconsideration, arguing that it
was not supported by newly discovered evidence and, in any event, the
court properly granted the Motion for Relief based on Mr. Vallejo’s failure
to make postpetition mortgage payments. It attached a ledger showing
Mr. Vallejo’s postpetition loan history and a ledger showing the application
of all postpetition payments. As of January 2018, the postpetition arrears
totaled $22,514.98.
Mr. Vallejo filed a one-page reply memorandum, arguing that the
opposition was “simply not truthful.” He contended that the payment
history provided by Caliber was incorrect and not trustworthy. His only
evidence in support of this argument was a letter and payment history
6
from Caliber that outlined his failure to make payments; the evidence did
not confirm that his payments were just a “few dollars short.”
The bankruptcy court held a hearing on the Motion for
Reconsideration and denied the motion for reasons stated on the record.3
Mr. Vallejo then returned to the BAP to request a resumption of his appeal.
He proceeded to file dozens of briefs, requests, and motions, primarily
seeking to augment the record.
JURISDICTION
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334
and 157(b)(1) and (2)(G). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Did the bankruptcy court err when it granted U.S. Bank relief from
the automatic stay?
STANDARDS OF REVIEW
We review for an abuse of discretion a bankruptcy court’s order
granting relief from the automatic stay. First Yorkshire Holdings, Inc. v.
Pacifica L 22, LLC (In re First Yorkshire Holdings, Inc.), 470 B.R. 864, 868 (9th
Cir. BAP 2012). Similarly, “[a] bankruptcy court’s denial of a motion for
3
Mr. Vallejo did not order a copy of the transcript, so it is not in the record on
appeal. We assume that he did not think that the transcript was helpful to his appeal.
Gionis v. Wayne (In re Gionis), 170 B.R. 675, 681 (9th Cir. BAP 1994), aff’d,
92 F.3d 1192
(9th Cir. 1996) (Because it is the appellant’s burden to prove error, “[w]e are entitled to
presume that [an appellant who does not order a transcript] does not think the trial
transcript helpful in that regard.”).
7
reconsideration is reviewed for abuse of discretion.” First Ave. W. Bldg.,
LLC v. James (In re Onecast Media, Inc.), 439 F.3d 558, 561 (9th Cir. 2006).
To determine whether the bankruptcy court abused its discretion, we
conduct a two-step inquiry: (1) we review de novo whether the bankruptcy
court “identified the correct legal rule to apply to the relief requested” and
(2) if it did, whether the bankruptcy court’s application of the legal
standard was illogical, implausible, or “without support in inferences that
may be drawn from the facts in the record.” United States v. Hinkson, 585
F.3d 1247, 1261-62 (9th Cir. 2009) (en banc).
Mr. Vallejo primarily challenges U.S. Bank’s standing to enforce the
Deed of Trust. “Standing is a legal issue that we review de novo.” Veal v.
Am. Home Mortg. Servicing, Inc. (In re Veal), 450 B.R. 897, 906 (9th Cir. BAP
2011) (citing Wedges/Ledges of Cal., Inc. v. City of Phoenix,
24 F.3d 56, 61 (9th
Cir. 1994); Kronemyer v. Am. Contractors Indem. Co. (In re Kronemyer),
405
B.R. 915, 919 (9th Cir. BAP 2009)). De novo review is independent and
gives no deference to the trial court’s conclusions. Roth v. Educ. Credit
Mgmt. Corp. (In re Roth),
490 B.R. 908, 915 (9th Cir. BAP 2013).
DISCUSSION
A. Relief from stay requires only a “colorable” claim.
Section 362(d)(1) provides that, “[o]n request of a party in interest
and after notice and a hearing, the court shall grant relief from the stay . . .
for cause . . . .” The person opposing a motion for relief from stay has the
8
burden of proof on all issues except for the debtor’s equity in the subject
property (if a lack of equity is a basis for the motion). § 362(g).
The Bankruptcy Code does not define the term “party in interest,”
but we have held that this status is “determined on a case-by-case basis,
with reference to the interest asserted and how [that] interest is affected by
the automatic stay.” In re Kronemyer, 405 B.R. at 919 (quoting In re
Woodberry,
383 B.R. 373, 378 (Bankr. D.S.C. 2008)); see Cruz v. Stein Strauss
Tr. #1361 (In re Cruz),
516 B.R. 594, 602 (9th Cir. BAP 2014) (“A ‘party in
interest’ can include any party that has a pecuniary interest in the matter,
that has a practical stake in the resolution of the matter or that is impacted
by the automatic stay.”).
“[A] party seeking stay relief need only establish that it has a
colorable claim to the property at issue.” Arkinson v. Griffin (In re Griffin),
719 F.3d 1126, 1128 (9th Cir. 2013) (citing In re
Veal, 450 B.R. at 915); see
Edwards v. Wells Fargo Bank, N.A. (In re Edwards),
454 B.R. 100, 105 (9th Cir.
BAP 2011) (“a movant has a colorable claim sufficient to bestow upon it
standing to prosecute a motion under § 362 if it either: (a) owns or has
another form of property interest in a note secured by the debtor’s (or the
estate’s) property; or (b) is a ‘person entitled to enforce’ . . . such a note
under applicable state law”).
9
B. The bankruptcy court did not abuse its discretion in granting relief
from the automatic stay.
Mr. Vallejo argues that U.S. Bank never established that it was a
“party in interest” or a “real party in interest,” or that it had standing to
enforce the Deed of Trust. U.S. Bank offered evidence that it was the
beneficiary of the Deed of Trust, in other words, that it had a claim against
Mr. Vallejo’s property. Mr. Vallejo offered no evidence to the contrary; his
speculations are inadmissible and his legal arguments are meritless.
1. The Deed of Trust
Mr. Vallejo contends that the Deed of Trust is invalid because the
lender is identified as “GMAC Mortgage Corporation dba ditech.com” but
the fictitious business name “ditech.com” is not registered in Pennsylvania
or California. Mr. Vallejo offers no authority, however, for the proposition
that the failure to register a fictitious business name affects a lender’s
ability to make and enforce loans or carry on its business.
2. The Note endorsement
Mr. Vallejo argues that the endorsement of the Note is invalid for
various reasons.
He contends that the endorsement, signed by “D. Harkness,” is
invalid because it appears to have a “stamped” signature instead of a
“live” signature. Mr. Vallejo only offers his conjecture that the signature
“appears” to be stamped. In any event, it makes no difference, because the
10
endorsement of a negotiable instrument does not require a “live” or “wet”
signature. See U.C.C. § 3-204(a) (“‘Indorsement’ means a signature” made
for specified purposes); U.C.C. § 1-201 (“‘Signed’ includes any symbol
executed or adopted with present intention to adopt or accept a writing.”);
id. cmt. 37 (“The symbol may be printed, stamped or written . . . .”).
He complains that MERS never endorsed the Note. But MERS never
held the Note; rather, it was the named original beneficiary under the Deed
of Trust as nominee for the holder of the Note.
Mr. Vallejo also complains that “the blank and undated endorsement
of the note proves that the note did not follow the deed of trust per the
recorded chain of title and the alleged assignments are therefore a nullity.”
This sentence is legal nonsense. The fact that the Note was endorsed in
blank proves nothing of the sort.
3. The assignment from Ditech Financial to U.S. Bank
Mr. Vallejo questions the validity of the January 31, 2017 assignment
of the Deed of Trust from Ditech Financial to U.S. Bank. He contends that
the assignment is ineffective because it was created by Caliber, which acted
as attorney in fact for both U.S. Bank and Ditech Financial; he also argues
that Caliber did not corroborate those statuses.
Mr. Vallejo fails to explain why it was improper for Caliber to act as
attorney in fact for both U.S. Bank and Ditech Financial. Furthermore, he
presents no evidence to carry his burden of proof that Caliber was not the
11
authorized servicer or agent for either party.
4. U.S. Bank’s authority
Mr. Vallejo contends that the bankruptcy court should have required
U.S. Bank to produce the governing documents of the LSF9 Master
Participation Trust 13801 in order to establish its authority to file the
Motion for Relief and enforce the Note and Deed of Trust. But the
declaration filed in support of the motion stated that U.S. Bank was the
trustee of the trust, and Mr. Vallejo failed to provide any evidence to the
contrary. The bankruptcy court did not err in declining to force U.S. Bank
to corroborate its uncontroverted declaration testimony.
5. Caliber’s authority as U.S. Bank’s servicer
Finally, Mr. Vallejo challenges Caliber’s standing to prosecute the
Motion for Relief on U.S. Bank’s behalf. He argues that the Caliber
employee who signed the declaration to the motion did not offer evidence
that Caliber is U.S. Bank’s attorney in fact or that she was authorized to
sign the declaration on behalf of Caliber. He also argues that there is no
evidence of a trust agreement that would empower Caliber to manage trust
assets for U.S. Bank.
In Veal, we considered the debtors’ argument that a servicer lacked
standing to enforce a promissory note. We noted that “[a] servicer, for
example, might be delegated all its principal’s rights, or it could simply be
asserting its separate right to be paid out of the mortgage payments. . . .
12
[T]he servicer has standing to request some relief from the automatic stay.”
450 B.R. at 914.
In the declaration attached to the Motion for Relief, the declarant
stated under penalty of perjury that she was “employed as an Assistant
Vice President by Caliber Home Loans, Inc., as attorney in fact and servicer
for U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust.”
She also stated that she was “authorized to execute this declaration on
behalf of Movant.” Mr. Vallejo only offered speculation to the contrary. The
declarant’s statements under penalty of perjury are sufficient, even without
corroboration, in the absence of any countervailing evidence. (Moreover, a
witness does not need authority from a party to testify; the only
requirement is that the witness be able to provide admissible evidence.)
The bankruptcy court did not err.4
C. Mr. Vallejo’s argument about misapplied payments is unavailing.
Mr. Vallejo also argues that Caliber misapplied his payments and
that he has not missed any postpetition payments. Neither argument is
supported by the evidence.
4
Mr. Vallejo argues that there is no evidence that MERS, as the beneficiary under
the Deed of Trust, instructed U.S. Bank to seek relief from the automatic stay. But by the
time the motion was filed, MERS had assigned its beneficial interest (as nominee for
GMAC) to GMAC Mortgage, LLC; GMAC Mortgage, LLC assigned its beneficial
interest to Green Tree; then Ditech Financial (Green Tree’s successor entity) assigned its
beneficial interest to U.S. Bank. MERS was not involved when U.S. Bank sought relief
from stay.
13
Mr. Vallejo did not adequately present this issue to the bankruptcy
court. His memorandum in opposition to the Motion for Relief contained a
single, conclusory sentence stating that he had “made all payments as
agreed.” He did not elaborate on this argument until he filed the two
notices of appeal that we treated as a motion for reconsideration. By then, it
was too late.
A party may not use a motion for reconsideration “to present a new
legal theory for the first time or to raise legal arguments which could have
been raised in connection with the original motion . . . [or] to rehash the
same arguments presented the first time or simply to express the opinion
that the court was wrong.” Wall St. Plaza, LLC v. JSJF Corp. (In re JSJF Corp.),
344 B.R. 94, 104 (9th Cir. BAP 2006), aff’d and remanded, 277 F. App’x 718
(9th Cir. 2006) (internal citations omitted). The court did not err in denying
the Motion for Reconsideration.
Even considering the new evidence and arguments presented by
Mr. Vallejo on reconsideration, the bankruptcy court did not abuse its
discretion. The ledgers provided by U.S. Bank show that Caliber accounted
for Mr. Vallejo’s payments. His confusion arises because Caliber did not
credit a particular month as paid in full until it received the entire amount
due. In the meantime, it held his partial payments in a suspense account.
The loan documents specifically authorize this treatment of partial
payments. Because Mr. Vallejo routinely made payments less than the
14
monthly amount due (sometimes skipping months or just making a $100
payment), he fell further into arrears. In any event, Caliber’s ledgers clearly
show that Mr. Vallejo had postpetition arrears exceeding $19,000 as of
November 2017. The evidence does not support Mr. Vallejo’s contention
that he has not missed any payments.
D. Mr. Vallejo’s multitudinous motions lack merit.
Mr. Vallejo has filed dozens of requests to supplement the record, for
judicial notice, for evidentiary hearings and subpoenas, and for other relief.
He also conceded at oral argument that this new evidence was not
presented to the bankruptcy court. These are obvious attempts to have us
consider evidence and argument that were not before the bankruptcy court
and to supplement the opening brief. We will not consider any of this new
evidence in the first instance on appeal or permit Mr. Vallejo to file
multiple appellate briefs. See Raich v. Gonzales, 500 F.3d 850, 868 (9th Cir.
2007) (“It is a long-standing rule in the Ninth Circuit that, generally, ‘we
will not consider arguments that are raised for the first time on
appeal.’”(citation omitted)); In re
Edwards, 454 B.R. at 104 (“Evidence, or
purported evidence, that was not properly before the bankruptcy court is
not part of the record on appeal.”). All motions that Mr. Vallejo has filed to
date are DENIED. We caution him that filing additional motions, other
than any motions that the applicable rules authorize at this stage, may
subject him to sanctions.
15
CONCLUSION
The bankruptcy court did not err. We AFFIRM.
16
