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FILED

APR 05 2016

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP Nos. CC-15-1092-KuFTa

) CC-15-1121-KuFTa

MARCELLO CHRISTOPHER ARRIOLA, ) (Related Appeals)

)

Debtor. ) Bk. No. 09-23290

______________________________)

)

MARCELLO CHRISTOPHER ARRIOLA, )

)

Appellant, )

)

v. ) MEMORANDUM*

)

KAREN S. NAYLOR, Trustee, )

)

Appellee. )

______________________________)

Submitted Without Oral Argument

on February 19, 2016

Filed – April 5, 2016

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Erithe A. Smith, Bankruptcy Judge, Presiding

 

Appearances: Appellant Marcello Christopher Arriola, pro se, on

brief; appellee Karen S. Naylor, trustee, did not

appear.

 

Before: KURTZ, FARIS and TAYLOR, Bankruptcy Judges.

*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.
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INTRODUCTION

In 2015, Debtor Marcello Christopher Arriola sought to

reopen his 2009 chapter 71 no-asset bankruptcy case in order to

correct his schedules and collaterally attack certain rulings the

bankruptcy court made in his 2010 bankruptcy case. Those rulings

all concern the secured claim of Bank of America, N.A.2 The

bankruptcy court permitted Arriola to amend his schedules but

denied Arriola’s multiple requests seeking to re-litigate his

dispute with Bank of America. By way of these two appeals,

Arriola challenges those denials. 

The bankruptcy court correctly denied Arriola permission to

re-litigate in the 2009 bankruptcy case his dispute with Bank of

America. Arriola litigated that dispute in his 2010 bankruptcy

case. He also had a full and fair opportunity to appeal. The

bankruptcy court’s rulings against Arriola are now final and nonappealable. 

Accordingly, we AFFIRM.

FACTS

1. The 2009 bankruptcy case is opened and closed.

Arriola commenced two separate bankruptcy cases. First, he

1Unless specified otherwise, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

all “Rule” references are to the Federal Rules of Bankruptcy

Procedure, Rules 1001-9037. All “Civil Rule” references are to

the Federal Rules of Civil Procedure.

2The proof of claim identified BAC Home Loans Servicing,

L.P. as the creditor, but BAC apparently merged into Bank of

America in 2011. For purposes of this decision, the distinction

between BAC and Bank of America is irrelevant, so for ease of

reference, both are jointly referred to herein as Bank of

America.

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filed a chapter 7 petition in November 2009. In that case, the

chapter 7 trustee filed a report in January 2010 reflecting that

Arriola had no assets available for distribution to his

creditors; in May 2010, he received his discharge. There was no

need for creditors to file proofs of claim, and there was no need

for the court to resolve any claims disputes, because there was

nothing of value available to pay anything to any of Arriola’s

creditors. In June 2010, shortly after Arriola obtained his

discharge, that bankruptcy case was closed.

2. The 2010 bankruptcy case is opened, and Arriola fully and

finally litigates Bank of America’s claim therein. 

A few months later, in September 2010, Arriola commenced his

second bankruptcy case. This time, Arriola filed a chapter 13

bankruptcy petition. In his amended chapter 13 schedules,

Arriola listed Bank of America as his sole secured creditor, with

a lien against his home located in Westminster, California; he 

identified this claim as disputed.

In December 2010, Bank of America filed its proof of secured

claim in the approximate amount of $450,000, and in April 2011,

Bank of America filed an amended proof of claim in roughly the

same amount. Also in April 2011, Arriola filed a motion

objecting to Bank of America’s claim. The parties thereafter

engaged in months of claims litigation. After two hearings and

the filing of numerous papers by both sides, the bankruptcy court

entered an order on October 5, 2012, overruling Arriola’s claim

objection. Among other things, the bankruptcy court rejected

Arriola’s argument that his signatures on the underlying note and

deed of trust were forged.

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On two alternate grounds, the bankruptcy court also rejected

Arriola’s argument that Bank of America lacked standing and was

not entitled to enforce the note and the deed of trust. First,

the bankruptcy court held that Bank of America’s entitlement to

enforce the note was evidenced by an assignment of deed of trust

dated November 5, 2009 and recorded on December 10, 2009, which

assignment appears on its face to have transferred to Bank of

America all beneficial interest in both the note and the deed of

trust.

And second, the bankruptcy court held that Bank of America’s

entitlement to enforce the note also was evidenced by the

supplemental declaration of Joe Peloso, which in relevant part

stated that Bank of America had in its possession the original

note, indorsed in blank. In support of this statement, Peloso

attached to his supplemental declaration what he declared to be a

true copy of the original note, which was accompanied by an

indorsements page – or allonge – reflecting that the note indeed

had been indorsed in blank.3

Arriola filed an appeal from the October 2012 order

overruling his claim objection, but we dismissed that appeal

based on Arriola’s failure to pay the required appeal filing and

docketing fee. The October 2012 bankruptcy court order and our

3Arriola distrusts the indorsements page because some copies

of the note exist that do not have the indorsements page

attached. But we recently held, under similar circumstances,

that the absence of indorsements on some note copies does not by

itself cast genuine doubt on the authenticity of indorsements

appearing on other copies of the same note. Baroni v. Wells

Fargo Bank, N.A (In re Baroni), 2015 WL 6941625, at *5-6 (9th

Cir. BAP Nov. 10, 2015) (Mem. Dec.).

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order dismissing the appeal therefrom are now both final and nonappealable.

Undeterred, Arriola filed dozens of papers in the bankruptcy

court over the course of the next year repeatedly seeking

reconsideration of the bankruptcy court’s order overruling his

claim objection. On several occasions, the bankruptcy court

entered orders denying Arriola’s reconsideration motions.

In an August 22, 2013 order denying one of Arriola’s

reconsideration motions, the bankruptcy court set forth in detail

its reasoning for denying reconsideration. Among other things,

the court rejected as factually incorrect Arriola’s contention

that he was not given sufficient notice of the continued claim

objection hearing. The court also rejected Arriola’s assertion

that he found “newly discovered evidence” in the form of the

“Affidavit of Beth Chrisman, Forensic Document Examiner,” which

purportedly supported Arriola’s forged documents claim. 

According to the court, Arriola clearly had this “affidavit” at

the time of the original claim objection proceedings, but he

never filed it in his bankruptcy case. The court therefore

reasoned that the affidavit was not newly discovered evidence

upon which Arriola could base a request for relief under Civil

Rule 60(b)(2).

Many of the other points the bankruptcy court rejected

merely duplicated points Arriola had raised in his original claim

objection. The bankruptcy court also entered orders denying

Arriola’s other reconsideration motions. Arriola filed an appeal

from one of the orders denying one of his reconsideration

motions, but we dismissed that appeal based on Arriola’s failure

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to pay the required appeal filing and docketing fee. The

bankruptcy court’s orders denying reconsideration, and our

dismissal of Arriola’s reconsideration order appeal, are all now

final and non-appealable.

Meanwhile, Arriola also commenced an adversary proceeding,

which in relevant part sought to determine the validity of Bank

of America’s lien. On October 16, 2012, the bankruptcy court

entered an order dismissing some of Arriola’s claims for relief

without leave to amend and dismissing the rest of Arriola’s

claims for relief with leave to amend. 

Arriola never filed an amended complaint after the court

entered its October 16, 2012 dismissal order, so the court

ultimately dismissed the entire adversary proceeding by order

entered January 4, 2013. Arriola never appealed the bankruptcy

court’s January 4, 2013 adversary proceeding dismissal order, and

that order is now final and non-appealable.

Finally, in the spring of 2014, when Bank of America filed a

motion for relief from stay seeking authorization to proceed with

nonjudicial foreclosure proceedings, Arriola used his opposition

to the motion as an opportunity to revisit his contention that

Bank of America did not have a valid interest in the note and the

deed of trust. For reasons that are not entirely clear, the

bankruptcy court chose not to rely on its prior rulings, which

overruled Arriola’s claim objection and which determined that

Bank of America was entitled to enforce the note and the deed of

trust secured by Arriola’s residence. Instead, the court ordered

Bank of America to file supplemental papers and to demonstrate

that the bankruptcy filing of the original lender identified in

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the note and the deed of trust – First Magnus Financial

Corporation – did not render invalid the November 2009 assignment

from MERS to Bank of America of the beneficial interest in the

note and the deed of trust.

At the continued hearing on the relief from stay motion, the

bankruptcy court held that Bank of America’s supplemental

response and accompanying declaration had not adequately

addressed the points the bankruptcy court had asked Bank of

America to address. Consequently, the bankruptcy court denied

Bank of America’s relief from stay motion on that basis.

3. The 2009 bankruptcy case is reopened, but the bankruptcy

court denies Arriola’s requests seeking to re-litigate his

dispute with Bank of America.

Having discovered what he believed constituted new grounds

for challenging the validity of Bank of America’s claimed

interest in the note and deed of trust – the First Magnus

Financial Corporation bankruptcy – Arriola filed motions seeking

to reopen his 2009 bankruptcy case and seeking to revisit his

entire dispute with Bank of America in that case. The bankruptcy

court entered orders permitting Arriola to file amended schedules

in his 2009 bankruptcy case (listing Bank of America’s claim as

disputed), but the bankruptcy court denied Arriola’s requests

seeking to re-litigate in the 2009 bankruptcy case his dispute

with Bank of America.

Arriola timely filed notices of appeal from two of the

bankruptcy court’s denial orders.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

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§§ 1334 and 157(b)(2)(A) and (B). We have jurisdiction under

28 U.S.C. § 158.

ISSUE

Did the bankruptcy court commit reversible error when it

denied the motions Arriola filed in the 2009 bankruptcy case

seeking to re-litigate his dispute with Bank of America?

STANDARDS OF REVIEW

Generally speaking, the issue of Arriola’s standing is a

jurisdictional question we may raise sua sponte and review de

novo. Paine v. Dickey (In re Paine), 250 B.R. 99, 104 (9th Cir.

BAP 2000). But the question of whether Arriola qualified as a

“person aggrieved” for appellate standing purposes is a factual

question that requires us to consider whether the orders on

appeal directly and adversely affected Arriola pecuniarily. Id.

(citing Duckor Spradling & Metzger v. Baum Trust (In re P.R.T.C.,

Inc.), 177 F.3d 774, 777 (9th Cir. 1999)).

Arriola’s motions seeking to re-litigate in his 2009

bankruptcy case his dispute with Bank of America defy easy

classification. Nonetheless, for standard of review purposes,

the bankruptcy court’s orders denying those motions are roughly

analogous to orders denying reconsideration of claims-related

orders, which are reviewed for an abuse of discretion. United

Student Funds, Inc. v. Wylie (In re Wylie), 349 B.R. 204, 208

(9th Cir. BAP 2006).

The bankruptcy court abused its discretion only if it

applied an incorrect legal rule or if it made findings of fact

that were illogical, implausible or without support in the

record. United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir.

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2009) (en banc).

DISCUSSION

Most of Arriola’s appeal brief focuses on why he thinks he

should have prevailed in his claims litigation against Bank of

America in the 2010 bankruptcy case. But the correctness of the

bankruptcy court’s claims rulings in the 2010 bankruptcy case is

beyond the scope of this appeal. As we mentioned earlier, those

claims rulings are all now final and non-appealable. These two

appeals only concern the bankruptcy court’s orders denying

Arriola’s requests seeking to re-litigate in the 2009 bankruptcy

case his dispute with Bank of America.

Arriola contends on appeal that the bankruptcy court denied

him due process by not allowing him to file in the 2009

bankruptcy case pleadings and motions against Bank of America. 

However, Arriola cannot prevail on his due process theory in the

absence of prejudice. Rosson v. Fitzgerald (In re Rosson),

545 F.3d 764, 776-77 (9th Cir. 2008). 

Here, the record on appeal establishes that Arriola was not

prejudiced by the bankruptcy court’s denials. Arriola had no

need for an adjudication of Bank of America’s claim in his 2009

bankruptcy case. That case was a closed, no-asset chapter 7

case. As such, there was nothing available to distribute to

Arriola’s creditors, and thus no need to determine who those

creditors were or to determine the validity or amount of their

claims for purposes of that bankruptcy case.

In addition, Arriola had more than ample opportunity to

contest Bank of America’s claim in his 2010 bankruptcy case. In

fact, Arriola in that case was afforded an abundance of due

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process. To meet the constitutional requirement of due process,

litigants only must be given notice “reasonably calculated under

all of the circumstances to apprise interested parties of the

pendency of the action and afford them an opportunity to present

their objections.” Mullane v. Cent. Hanover Bank & Trust Co.,

339 U.S. 306, 314 (1950).

In Arriola’s 2010 bankruptcy case, the bankruptcy court,

over the course of more than two years, permitted Arriola to file

numerous papers in which he attacked both Bank of America’s proof

of claim and the validity of Bank of America’s asserted interest

in the note and the deed of trust. The bankruptcy court duly

considered Arriola’s papers, held hearings and ultimately

overruled Arriola’s claim objection (and his multiple requests

for reconsideration), in the process holding that Bank of America

qualified as a person entitled to enforce the note and the deed

of trust and, hence, had standing to file a proof of claim.

Moreover, the bankruptcy court’s claims adjudication should be

entitled to preclusive effect in any future proceedings in which

Arriola attempts to contest Bank of America’s claim or the

validity of its asserted interest in the note and in the deed of

trust. See Veal v. Am. Home Mortg. Servicing, Inc. (In re Veal),

450 B.R. 897, 918 (9th Cir. BAP 2011) (describing preclusive

effect of claims rulings).

In his appeal brief, Arriola relies heavily on the relief

from stay proceedings that took place in the 2010 bankruptcy

case. According to Arriola, Bank of America admitted during the

relief from stay proceedings the invalidity of the “first

assignment” (the November 2009 assignment from MERS to Bank of

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America of the beneficial interest in the note and the deed of

trust) and impermissibly attempted to rely instead on a “second

assignment” (Bank of America’s possession of the original note

indorsed in blank). Arriola contends that he had no opportunity

to investigate or challenge the so-called second assignment and

that Bank of America should be estopped from relying upon the

second assignment.

Arriola’s contentions are both factually and legally

meritless. Bank of America’s position that it held the original

note indorsed in blank was asserted early on during the claim

objection proceedings, and the bankruptcy court’s order

overruling Arriola’s claim objection included a finding that Bank

of America held the original note, which was indorsed in blank. 

As a result, any question regarding the validity of the November

2009 assignment from MERS to Bank of America of the beneficial

interest in the note and the deed of trust is irrelevant. Bank

of America’s status as the holder of the note is sufficient to

support its claim of entitlement to enforce the note and its

standing to file a proof of claim. See In re Veal, 450 B.R. at

920-21. Bank of America’s noteholder status also is sufficient

to support Bank of America’s interest in the deed of trust

because, under California law, the right to enforce the deed of

trust automatically follows the note. See Cal. Civ. Code § 2936;

Cockerell v. Title Ins. & Trust Co., 42 Cal. 2d 284, 291 (1954);

Willis v. Farley, 24 Cal. 490, 497-98 (1864).

In sum, the bankruptcy court did not violate Arriola’s due

process rights by denying his motions filed in the 2009

bankruptcy case seeking to re-litigate his dispute with Bank of

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America.

 CONCLUSION

For the reasons set forth above, the bankruptcy court’s

orders denying Arriola’s multiple requests seeking to re-litigate

his dispute with Bank of America are AFFIRMED.4

4On March 10, 2016, Arriola filed a motion requesting that

this Panel suspend this appeal and grant a limited remand to the

bankruptcy court so that the bankruptcy court could consider a

new motion seeking relief under Civil Rule 60. All relief

requested in Arriola’s March 10, 2016 motion is denied.

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