Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01161/USCOURTS-azd-2_11-cv-01161-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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1

 Appellees’ request for oral argument is denied because the parties have had an

adequate opportunity to discuss the law and evidence, and oral argument will not aid the

Court’s decision. See Lake at Las Vegas Investors Grp., Inc. v. Pac. Malibu Dev., 933 F.2d

724, 729 (9th Cir. 1991).

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Raymond Joseph Dumont and Kathleen

Ann Dumont, 

Appellants, 

vs.

HSBC Mortgage Corporation, USA,

Federal National Mortgage Association

and Lender Processing Services, Inc., 

Appellees. 

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No. CV-11-1161-PHX-GMS

BK No. 2:10-BK-29498

Adv. No. 2:10-AP-02323

ORDER

Pending before the Court is Debtors’ Appeal from the U.S. Bankruptcy Court’s Order

Granting Motions to Dismiss First Amended Complaint with Prejudice entered on May 10,

2011 (Doc. 1 at 5–6). After reviewing the pleadings and record excerpts submitted for

purposes of this appeal, and having determined that oral argument is unnecessary,1

 the Court

affirms the Bankruptcy Court’s judgment as discussed below.

BACKGROUND

On May 30, 2007, Appellants Raymond and Kathleen Dumont borrowed $412,500

to purchase real property (the “Property”) in Phoenix, Arizona. In connection with this

Case 2:11-cv-01161-GMS Document 35 Filed 02/01/12 Page 1 of 5
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purchase, Appellants executed a Deed of Trust and a Promissory Note. The Deed of Trust

designated Mortgage Electronic Registration Systems, Inc. (“MERS”) as beneficiary to the

interests granted by Plaintiffs in the Deed of Trust. Effective January 21, 2010, MERS

assigned its beneficial interest in the Deed of Trust to Appellee HSBC Mortgage

Corporation, USA. On January 27, 2010, HBSC designated Michael A. Bosco as successor

trustee. On February 3, 2010, Bosco recorded a Notice of Trustee’s Sale, scheduling the

Property for foreclosure. On May 4, 2010, the Dumonts filed a 55-page complaint (the “Prior

Complaint”) in Maricopa County Superior Court alleging seven causes of action against

HSBC, MERS, and Bosco and seeking to enjoin the foreclosure. The action was removed to

the U.S. District of Arizona on May 21, 2010. One week later, HSBC and MERS moved to

dismiss the Prior Complaint for failure to state a claim. On August 2, 2010, the District Court

granted HSBC and MERS’s motion to dismiss and entered judgment against the Dumonts.

See generally Dumont v. HSBC Mortg. Corp., USA, 2010 WL 3023885 (D. Ariz. Aug. 2,

2010). 

On August 4, 2010, the Property was sold via trustee’s sale to the Federal National

Mortgage Association (“Fannie Mae”) as evidenced by a Trustee’s Deed Upon Sale. On

September 15, 2010, the Dumonts filed for Chapter 7 bankruptcy, and a Chapter 7 trustee

was appointed. In that filing, the Dumonts listed the Property as an asset in Schedule A and

identified HSBC in Schedule D as a creditor with a disputed secured claim against the

property. On December 23, 2010, the Dumants filed the bankruptcy court complaint at issue

in the instant action against HSBC, Fannie Mae, and Lender Processing Services. Appellants

subsequently filed a First Amended Complaint. The Amended Complaint brings four causes

of action against Appellees and seeks to have the sale of their Property to Fannie Mae

declared void, alleging that Fannie Mae was not a bona fide purchaser of the property and

did not pay any consideration at the trustee’s sale. On March 5, 2011, the Bankruptcy Court

granted HSBC, Fannie Mae and Lender Processing Services’ motions to dismiss the

Amended Complaint, holding that the Dumonts 1) lack standing to file their complaint

because their claims are now “property of the bankruptcy estate and have not been

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2

 In addition, Appellants did not file a reply brief in which they might have contested

Appellees’ assertion that Appellants lack standing.

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abandoned by the Chapter 7 trustee”; and 2) “are barred by the doctrine of res judicata from

asserting the claims” because of the U.S. District Court’s August 2010 dismissal of the same

claims. (Doc. 1 at 6). The Dumonts now appeal the Bankruptcy Court’s dismissal of their

complaint.

DISCUSSION

I. Legal Standard

Under 29 U.S.C. § 158(a)(1), the Court has jurisdiction over appeals from “final

judgments, orders, and decrees” of bankruptcy judges. The Court reviews a bankruptcy

court’s conclusions of law de novo, and its findings of fact under the clearly erroneous

standard. Greene v. Savage, 583 F.3d 614, 618 (9th Cir. 2009); Fed. R. Bankr. P. 8013

(“Findings of fact, whether based on oral or documentary evidence, shall not be set aside

unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy

court to judge the credibility of the witnesses.”). The clearly erroneous standard requires the

Court to accept a bankruptcy court’s findings of fact “unless these findings leave the definite

and firm conviction that a mistake has been committed by the bankruptcy judge.” See Latman

v. Burdette, 366 F.3d 774, 781 (9th Cir. 2004) (citing In re Banks, 263 F.3d 862, 869 (9th

Cir. 2001)). The Court must review the evidence on record in the light most favorable to the

prevailing party. Lozier v. Auto Owners Ins. Co., 951 F.2d 251, 253 (9th Cir. 1991).

II. Legal Analysis

Appellants do not raise the issue of the Bankruptcy Court’s standing determination

in their opening brief.2

 (See Doc. 21). Consequently, the Court need not revisit the

Bankruptcy Court’s determination that Appellants lack standing to bring the claims in their

Amended Complaint. See U.S. v. Montoya, 45 F.3d 1286, 1300 (9th Cir. 1995) (“Issues not

‘specifically and distinctly raised and argued’ in the opening brief need not be considered by

the court.”) (citing Officers for Justice v. Civil Serv. Comm’n, 979 F.2d 721, 726 (9th

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Cir.1992)); Int’l Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1404 (9th Cir.

1985). (“[W]e will not ordinarily consider matters on appeal that are not specifically and

distinctly raised and argued in appellant’s opening brief.”). Even had Appellants disputed the

Bankruptcy Court’s standing determination, however, the Bankruptcy Court did not err in

determining that the claims asserted by Appellants Raymond and Kathleen Dumont are

property of the bankruptcy estate and therefore that Appellants lack standing to file the

Amended Complaint.

Filing a bankruptcy petition creates an estate consisting of “all legal and equitable

interests of the debtor in property at the commencement of the case.” Cusano v. Klein, 264

F.3d 936, 945 (9th Cir. 2001) (quoting 11 U.S.C. § 541(a)). “[T]he bankruptcy code endows

the bankruptcy trustee with the exclusive right to sue on behalf of the estate.” Estate of

Spirtos v. One San Bernardino Cty. Superior Court Case, 443 F.3d 1172, 1176 (9th Cir.

2006). Accordingly, “debtors lose the capacity to sue in their own name unless the trustee

abandons the claim.” Sherman v. Wells Fargo Bank, N.A., 2011 WL 1833090, at *4 (E.D.

Cal. May 12, 2011) (citing Estate of Spirtos, 443 F. 3d at 1175).

There are three sets of circumstances under which property may be considered

abandoned: (1) where the Bankruptcy Court expressly declares such property abandoned; (2)

where the bankruptcy trustee expressly abandons the property “[a]fter notice and a hearing”;

or (3) where the property is “not otherwise administered at the time of the closing of a case.”

11 U.S.C. § 554(a)–(d) (emphasis added). Appellants have never asserted that the

Bankruptcy Court expressly declared their claim against Appellees abandoned, nor that the

trustee abandoned this property right after notice and a hearing. Appellants argued in the

Bankruptcy Court that the trustee “declined taking the property as part of the estate.” (Doc.

33, Ex. I at 11). To the extent, however, that this could be characterized as an assertion that

the property was “not otherwise administered,” such assertion was made during the

bankruptcy proceeding and therefore, by definition, prior to the “closing of the case.” See 11

U.S.C. § 554(c). That the trustee may have evidenced an intent to abandon the property does

not, prior to the closing of the case in bankruptcy court, constitute actual abandonment. See

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In re Reed, 940 F.2d 1317, 1321 (9th Cir. 1991) (“Although filing [by the trustee of] a ‘No

Asset’ report may exhibit the requisite intent to abandon an asset, that report in and of itself

cannot result in abandonment unless the court closes the case.”). And unless and until the

property is abandoned, Appellants lack standing to assert any such property right against

Appellees. In short, because property is not considered abandoned under § 554(c) until after

the closing of the bankruptcy case, the very fact that Appellants brought their claims during

their bankruptcy proceedings precludes them from claiming abandonment under subsection

(c). See 11 U.S.C. § 554(c). Accordingly, the Bankruptcy Court did not err in its

determination that Appellants lacked standing to file the Amended Complaint. This alone is

fatal to their appeal.

CONCLUSION

As discussed above, the Bankruptcy Court’s decision is affirmed.

IT IS THEREFORE ORDERED that the Bankruptcy Court’s Order Granting

Motions to Dismiss First Amended Complaint (Doc. 1 at 5–6) is AFFIRMED.

IT IS FURTHER ORDERED directing the Clerk of the Court to terminate this

action.

DATED this 31st day of January, 2012.

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