N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT VA B ENE TRIST, LLC , a Ne va da lim ite d lia bility c om pa ny , Appe lla

nt, v. W ASHINGTON M UTUAL B ANK; e t a l ., Appe lle e s. No. 12-15169 D.C . No. 2:11-c v-00977-NVW M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the Distric t of Ariz o na Ne il V. W ake , Distric t Judge , Pre siding Argue d a nd Subm itte d Fe brua

ry 12, 2014 San Fran c isc o , C a lifornia B e fore : C ALLAHAN a

nd M . SM ITH, C irc uit Judge s, a nd KOR M AN, Se nior Distric t Judge . ** Va B e ne Trist, LLC (VB T) c ha l le nge s va rious a spe c ts of the ba

nkruptc y judge ’ s orde r finding tha

t W a shington M

utua l Pa ss-Through C e rtific ate s W M ALT



# FIL ED FEB 25 2014 M OLLY C. DW Y ER, CLERK U
. S
. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by 9th C ir. R . 36-3. ** The Honora

ble Edwa rd R . Korm an, Se n i or Distric t Judge for the U.S. Distric t C ourt for the Ea s te rn Distric t of Ne wYork, sitting by de signa tion.Se rie s 2006-8 Trust (W M ALT), he ld a

va lid lie n on re a l prope rty owne d by

VB T (the R anc h), a

n d tha t JPM orga

n C ha se B ank, N.A. (C h a s e , a nd, toge the r with W M ALT, C la im an ts), c ould e nforc e that lie n a s the se rvic e r of W M ALT. VB T c ha lle nge s: (1) se v e ra l e vide ntia ry rulings m a de by

the ba nkruptc y judge ; (2) the finding tha

t C ha se and W M ALT ha d sta nding to e n forc e the lie n; (3) the finding that C ha se and W M ALT he ld a va lid lie n on the R anc h; a n d (4) the finding tha

t W M ALT a

nd C ha se ha d tim e ly

file d proofs of c la im . B e c a use the pa rtie s a re fam ilia r with thefa c t s a

nd proc e dura l history

of the se c a se s , we re p e at only those fa c t s ne c e ssa

ry to re solve the issue s ra ise d on a ppe a l. W e a ffirm . DISCUSSIO N A. E vide ntiar y Challe nge s VB T c ha lle nge s the ba

nkruptc y judge ’ s de c ision to a dm it se ve ra l doc um e nts, a s we ll a s the judge ’ s de c ision to allow Vic ki La ndis, a re pre se ntative of C ha se , te stify

de spite the fa c t tha

t she wa s not spe c ific a l ly

liste d on the pre -tria l witne s s list. The

distric t c ourt did not a

buse its disc re tion, a

nd we a ffirm . Se e C

ity of Long Be a c h v . Standard Oil C o. , 46 F.3d 929, 936 (9th C ir. 1995). B . Standing to E nfor c e the L ie n

“ Whe n indorse d in bla

nk, a n instrum e nt be c om e s pa

y a ble to be are r and m ay be ne gotia

te d by tra nsfe r or posse ssion a lone until spe c ific a lly indorse d.” Ariz . 2R e v. Stat. § 47-3205. Furtherm ore , “ [t] h e tra nsfe r of any

c ontra c t or c ontra c ts se c ure d by

a trust de e d sha ll ope ra t e a s a tran sfe r of the se c urity for suc h c ontra c t or c ontra c t.” Ariz . R e v. Stat. § 33-817. W M ALT holds the

Note , whic h is indorse d in bla

nk. Ac c ordingly , W M ALT is both the be ne fic ia ry of the Note and a se c ure d pa

rty . In re W

e i s band, 427 B .R . 13, 20 n. 5 (B ankr. Ariz . 2010) (“ If the Note wa s e ndorse d in bla nk (a nd the Endorse m e nt wa s prope rly a ffixe d to the Note ), it would be

a be are r instrum e nt a

nd, the re fore , e nforc e a

ble by the pa rty in phy sic a l posse ssion.” ). C. V alidity of the L ie n The ba nkruptc y c o urt prope rly

found tha

t C la im an ts he ld a

va lid lie n on the prope rty unde r the doc t

rine s of e quita

ble subroga

tion, re pla c e m e nt m ortga ge , or re form a t ion. The ba

nkruptc y c ourt prope rly

c onc lude d tha

t the 2006 loa

n wa s inte nde d to inc lude a

se c urity inte re st on theR anc h, a

n d a ny fa ilure to pe rfe c t suc h an inte re s t wa s due e ithe r to m utua l m ista

ke or to fra

ud on be ha l f of M e nke n. In the s e c irc um sta

nc e s, e quita

b le subroga

tion or re pla c e m e nt m ortga ge are ava ila ble . Se e Moshe r v . C

o nw ay , 45 Ariz . 463, 468 (1935); Se e also R e sta te m e nt (Third) of Prope rty : M ortga ge s Se c tion 7.6(a) (“ One who fully pe rform s a

n obliga tion of anothe r, se c ure d by

a m ortga ge , be c om e s by

subroga tion theowne r of the obliga tion a nd the m ortga ge to the e xte nt ne c e ssa ry to pre ve nt unjust enric hm e nt” ); 3C

ont’l Lighting &

C o ntrac ting, Inc . v . Pre mie r Grading &

Utils., LLC

, 227 Ariz . 382, 388–89 (2d Ariz . App. Div. 2011) (finding re pla c e m e nt m o rtga ge ava ila ble be c a use “ [t] he ra tiona le be hind thedoc t rine of re pla c e m e nt is c onsiste nt with the ra tiona le an d polic y

c onside ra tions for e quita ble subroga

t ion” and a

na ly z ing de c isions re ga

rding e q uita ble subroga

tion in orde r to de te rm ine whe t he r re pla c e m e nt m ortga ge is a va ila ble whe re the se c ond m ortga g e is obta ine d by a diffe re nt de btor). Nor m ay VB T ava il itse lf of Se c tion 544(a)(3) of the B ankruptc y C ode , whic h a llows a

truste e or a

de btor to sta

nd in theshoe s of a

bona fide purc ha se r of a de b tor’ s prope rty . 11 U.S.C . § 544. Unde r Ariz o na la w, both theDe e d

of Trust and the Notic e of Truste e ’ s Sa le

— both re c o rde d in M aric opa C ounty

— c onta ine d suffic i e nt inform a tion to give c onstruc tive notic e to the de btor of the se c urity inte re s ts in thePrope rty e v i de nc e d a n d de sc ribe d in the De e d of Trust. The inform a t ion c onta ine d in the De e d of Trust a nd the Notic e of Truste e ’ s Sa le wa s suffic i e nt to “ a

pprise third pa

rtie s of the nature and substa nc e of the rights c la im e d unde r the de e d of trust a

nd the re fore im

pa rte d c o nstruc tive notic e . ” W atson C onstr. C o. v . AMFAC

Mortg. C orp. , 124 Ariz . 570, 576 (1st App. Div. 1979) (c i tations om i tte d). D. T im e line ss of Pr oof of Claim 4Se c ure d c re ditors a

re not re quire d to providea proof of c la im in orde r to pre s e rve the ir lie n. In reBraw de rs , 503 F.3d 856, 867–68 (9th C ir. 2007) (“ Abse nt som e a c tion by

the re pre se ntative of the ba nkruptc y e sta te , lie ns ordina

rily pa ss through ba

nkruptc y una ffe c te d, re ga

rdle ss whe the r the c re ditor holding tha t lie n ignore s the ba

nkruptc y c a se , or file s a

n unse c ure d c la im

whe n it m e ant to filea se c ure d c la im , or file s a

n untim e ly

c la im a fte r the ba

r date ha s pa sse d.” ). B e c a use C la im an ts a

re se c ure d c re d itors, a

ny fa ilure to tim e ly

file proofs of c la im

doe s not ba r the m from

a sse rting the i r inte re st in theR a nc h . AFFIRM E D

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