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FILED

JUL 02 2015

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOTFOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. AZ-15-1013-JuKiPa

)

IVAYLO TSVETANOV DODEV, ) Bk. No. 2:14-bk-02116-MCW

)

Debtor. )

______________________________)

)

IVAYLO TSVETANOV DODEV, )

)

Appellant, )

)

v. ) M E M O R A N D U M*

)

THE BANK OF NEW YORK MELLON )

FKA THE BANK OF NEW YORK AS )

TRUSTEE FOR THE CERTIFICATE- )

HOLDERS OF CWALT, INC., )

ALTERNATIVE LOAN TRUST 2007- )

OA7, MORTGAGE PASS-THROUGH )

CERTIFICATES, SERIES 2007-OA7 )

by and through its servicing )

agent Select Portfolio )

Servicing, Inc. )

)

 Appellee. )

______________________________)

Submitted Without Oral Argument on June 19, 2015

at Phoenix, Arizona 

Filed - July 2, 2015

Appeal from the United States Bankruptcy Court

for the District of Arizona

Honorable Madeleine C. Wanslee, Bankruptcy Judge, Presiding

_________________________

Appearances: Ivaylo T. Dodev on brief pro se; Renee M. Parker

* 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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of Wright Finlay & Zak LLP on brief for appellee

The Bank of New York Mellon fka The Bank of New

York as Trustee for the Certificate-holders of

CWALT, Inc., Alternative Loan Trust 2007-OA7,

Mortgage Pass-Through Certificates, Series 2007-

OA7 by and through its serving agent Select

Portfolio Servicing, Inc.

______________________________

Before: JURY, KIRSCHER, and PAPPAS, Bankruptcy Judges.

After Ivaylo Tsvetanov Dodev (Debtor) filed his chapter 111

petition, The Bank of New York Mellon (BNYM) fka The Bank of New

York as Trustee for the Certificate-holders of CWALT, Inc.,

Alternative Loan Trust 2007-OA7, Mortgage Pass-Through

Certificates, Series 2007-OA7, by and through its servicing

agent Select Portfolio Servicing, Inc. (SPS), filed a proof of

claim (POC) asserting a secured claim in the amount of

$887,726.66 against Debtor’s residential real property and

listing prepetition arrears of $227,413.43. 

Debtor objected to the POC arguing, among other things,

that neither BNYM nor SPS had standing to file the POC or

enforce the underlying note. The bankruptcy court overruled

Debtor’s objection on the grounds that: (1) BNYM’s POC was prima

facie evidence of the validity and amount of the claim;

(2) Debtor failed to advance any argument to overcome the

claim’s prima facie validity; (3) the validity or extent of

BNYM’s lien could not be litigated in the context of the claim

1 Unless otherwise indicated, all chapter and section

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

“Rule” references are to the Federal Rules of Bankruptcy

Procedure and “Civil Rule” references are the Federal Rules of

Civil Procedure.

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objection; and (4) Debtor confirmed that the validity of the

lien and the standing issues were currently being litigated in a

civil action pending in the United States District Court for the

District of Arizona (Civil Action). The bankruptcy court

overruled Debtor’s objection to the POC, and Debtor appealed. 

For the reasons set forth below, we DISMISS this appeal as moot.

I. FACTS2

A. Prepetition Events

On July 16, 2004, Debtor and his non-debtor spouse3

acquired an interest in real property located in Gilbert,

Arizona (Property). About two years later, Debtor obtained a

loan from First Magnus Financial Corporation (First Magnus) in

the amount of $681,750 which was evidenced by a promissory note

and secured by a deed of trust against the Property. After loan

inception, First Magnus transferred the note to Countrywide Bank

NA, which in turn transferred the note to Countrywide Home Loans

Incorporated, and Countrywide Home Loans Incorporated endorsed

the note in blank. BNYM asserts that it has possession of the

note. Through a Corporation Assignment of Deed of Trust

Arizona, Mortgage Electronic Registration Systems, Inc. (MERS)

assigned all beneficial interest in the deed of trust and the

2 We take judicial notice of various pleadings which were

docketed and imaged by the bankruptcy court in this bankruptcy

case and also take judicial notice of various pleadings which

were docketed and imaged in the United States District Court for

the District of Arizona Case No. CV-13-02155-PHX-DLR. Atwood v.

Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9

(9th Cir. BAP 2003).

3 The non-debtor spouse later executed a quitclaim deed for

the Property in favor of Debtor on December 13, 2006.

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note, including the right to monies due under the note, to BNYM. 

BNYM subsequently executed a document entitled Substitution of

Trustee Arizona, substituting Recontrust Company, N.A., in the

place of the original trustee under the deed of trust. 

Debtor defaulted on the loan on November 1, 2008. As a

result, BNYM instituted foreclosure proceedings against the

Property. On January 5, 2009, Debtor filed a chapter 7 petition

that stayed the foreclosure proceedings. On April 23, 2009,

Debtor received his § 727 discharge.4 

 On August 2, 2013, a Notice of Trustee’s Sale Arizona with

a sale date of November 8, 2013, was recorded against the

Property in the Official Records for the County of Maricopa. 

In response to the notice of sale, on October 23, 2013,

Debtor commenced the Civil Action against BNYM, SPS, and others

in the United States District Court for the District of Arizona

(Case No. CV-13-02155-PHX), seeking to quiet title and alleging

damages under the Fair Debt Collection Practices Act (FDCPA),

Breach of Contract, and RICO. Prior to his bankruptcy filing,

Debtor filed a first amended complaint. BNYM, SPS and others

filed motions to dismiss under Civil Rule 12(b)(6). Debtor

replied and the moving parties filed a response. 

B. Postpetition Events 

Meanwhile, on February 21, 2014, Debtor filed a chapter 11

petition. On April 21, 2014, Debtor filed a notice in the Civil

Action that he had filed a bankruptcy petition. On April 22,

4 Debtor later asserted in the claim objection that his

chapter 7 discharge relieved him of all obligations under the

note.

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2014, the district court entered an order staying the Civil

Action for six months and denying the pending motions to dismiss

without prejudice. 

Debtor continued his efforts challenging BNYM’s secured

claim against his Property in the bankruptcy court. In

Schedule A, Debtor listed the Property with a value of $293,000

and listed the amount of the secured claim as zero. In

Schedule D, Debtor listed First Magnus as holding a secured

claim against the Property in the amount of zero. Debtor listed

himself as a creditor in Schedule D holding a secured claim of

$1,053,160 against the Property and an unsecured claim in the

amount of $760,160. Finally, in Schedule F, Debtor listed BNYM

as an unsecured creditor with a claim valued at zero. In an

amended Schedule F, Debtor later asserted that BNYM had an

unsecured claim in the amount of $681,750. 

On June 12, 2014, BNYM filed a motion for relief from the

automatic stay so that it could continue to foreclose on the

Property. In the same motion, BNYM also requested an order

determining that the stay did not apply to the Civil Action that

was initiated by Debtor or, alternatively, for an order lifting

the stay to allow BNYM to proceed with the litigation. BNYM

argued that relief from the stay was warranted because Debtor

had no equity in the Property and that judicial efficiency

favored lifting the stay to allow the Civil Action to continue. 

According to BNYM, the district court case had been ongoing for

close to eight months and during that time the parties had fully

briefed the motions to dismiss. Debtor opposed the relief from

the stay motion on various grounds, including BNYM’s lack of

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standing. 

On July 8, 2014, SPS timely filed POC No. 2-1 on behalf of

BNYM, alleging a secured claim in the amount of $887,726.66 and

stating that the amount of the arrears as of the petition date

was $227,413.45. The POC listed SPS as the entity to receive

notice and payment on the claim. Attached to the POC was an

itemization of all prepetition fees and charges and the amount

necessary to cure the prepetition default. Also attached was a

copy of the note which contained three endorsements: (1) from

First Magnus, the loan originator, to Countrywide Bank NA;

(2) from Countrywide Bank NA to Countrywide Home Loans

Incorporated; and (3) a blank endorsement from Countrywide Home

Loans Incorporated without recourse. The POC also attached a

copy of the deed of trust, an assignment of the deed of trust

from MERS to BNYM, and proof that the deed of trust was recorded

prepetition. The POC was signed by the attorney for BNYM. 

Debtor objected to BNYM’s POC, asserting, among other

things, that neither BNYM nor its servicing agent, SPS, had

standing to file the POC or enforce the lien. 

BNYM asserted several arguments in response. First, 

Debtor did not provide a specific basis under § 502 to have

BNYM’s POC disallowed. Second, if the objection to the POC was

sustained, BNYM would not be permitted to participate in the

chapter 11 plan, but its lien would pass through the bankruptcy

unaffected. Next, BNYM maintained that it was holder of the

note since it was endorsed in blank and BNYM was either in

possession or constructive possession of the promissory note. 

Therefore, BNYM qualified as the holder of the note and was

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entitled to enforce the note under Ariz. Rev. Stat. (ARS)

§ 47-3301.5 Fourth, BNYM asserted that as the beneficiary under

the deed of trust, it was entitled to enforce the underlying

obligation. Finally, BNYM argued that it had both

constitutional and prudential standing and its POC complied with

all the applicable bankruptcy rules.

On August 27, 2014, the district court terminated the stay

that it had imposed on the Civil Action and reinstated the

parties’ motions to dismiss Debtor’s first amended complaint.6

On September 10, 2014, the bankruptcy court held a

preliminary hearing on BNYM’s motion for relief from the stay. 

The court directed the attorney for BNYM to file a declaration

from his client setting forth the transfers of the loan and

attaching the relevant documentation.7 The court also

authorized the attorney to upload a form of order lifting the 

automatic stay and the court stated that the stay would be

5 ARS § 47-3301 provides:

‘Person entitled to enforce’ an instrument means the

holder of the instrument, a nonholder in possession of

the instrument who has the rights of a holder or a

person not in possession of the instrument who is

entitled to enforce the instrument pursuant to

§ 47-3309 or § 47-3418, subsection D. A person may be

a person entitled to enforce the instrument even though

the person is not the owner of the instrument or is in

wrongful possession of the instrument.

6 Evidently the parties stipulated that the automatic stay

under § 362 did not apply to the litigation commenced by Debtor

prior to his bankruptcy.

7 The declaration was not filed until October 29, 2014,

after the bankruptcy court ruled on the claim objection.

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lifted.

On October 6, 2014, the district court granted BNYM’s and

SPS’s motions to dismiss Debtor’s first amended complaint in the

Civil Action without prejudice, except as to his claim for mail

fraud which was dismissed with prejudice. The district court

gave Debtor fifteen days in which to file a second amended

complaint.8 

Meanwhile, the bankruptcy court heard Debtor’s objection to

BNYM’s POC on October 20, 2014. The bankruptcy court advised

Debtor to keep in mind that his objection to BNYM’s POC would

not remove or invalidate the lien against his Property in the

context of the claim objection.9 Debtor also confirmed to the

court that he was seeking that relief in the Civil Action. 

Debtor argued that, for myriad reasons, BNYM and SPS did

not have standing to file the POC or enforce the note. In

response, Bank’s counsel explained that SPS was subservicing the

loan and that SPS indicated to his firm that it was in

possession of the note and that note was endorsed in blank. 

The bankruptcy court noted that BNYM had not yet filed an

affidavit or declaration in connection with its motion for

relief from stay. BNYM’s counsel represented that the

declaration had been drafted and that he would file it sometime

8 BNYM states in its brief that the district court granted

the motions to dismiss on December 12, 2013. However, the order

is dated October 6, 2014.

9 Debtor did not file an adversary proceeding under

Rule 7001(2) in order to have the bankruptcy court determine the

validity, priority, and enforceability of BNYM’s lien.

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that week.10 

The bankruptcy court ruled that BNYM’s POC was prima facie

evidence of the validity of its claim and complied with the

applicable bankruptcy rules. The court found that Debtor had

not met his burden of proof of overcoming the prima facie

validity of the POC because his arguments failed to raise a

legal basis to sustain the objection or were inapplicable. The

court further found that BNYM had presented the note which

showed an endorsement in blank. The court stated that it did

not see any information from Debtor to show that the deed of

trust was invalidated or discharged or somehow removed from the

property in question. In the end, the bankruptcy court found

that “[t]he notes and deed[] of trust appear proper[] and

there’s no basis on which to sustain your objection.” 

The bankruptcy court entered the order overruling Debtor’s

objection and allowing Bank’s claim on October 23, 2014. 

Debtor filed a timely appeal from that order.11

On October 23, 2014, the same day the bankruptcy court

entered the order overruling his claim objection, Debtor filed

10 As previously noted, the declaration was filed on

October 29, 2014, after the bankruptcy court ruled on the claim

objection, and in connection with BNYM’s motion for relief from

stay. In the declaration, an employee of SPS verified that SPS

was BNYM’s subservicer and had actual possession of the note.

11 Debtor also appealed a second order as part of his notice

of appeal - the bankruptcy court’s order terminating the

automatic stay as to BNYM and determining that the automatic stay

did not apply to the Civil Action. The Panel issued an order

informing Debtor that it opened a second appeal, BAP No. 14-1529,

and requiring him to pay an additional filing and docketing fee,

which he did. That appeal has since been dismissed as moot

because Debtor’s underlying bankruptcy case was dismissed.

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his second amended complaint in the Civil Action. Debtor’s

first claim for relief challenged the standing of “all

defendants”, including BNYM and SPS. Debtor alleged that none

of the defendants had either constitutional or prudential

standing and that they were not the real parties in interest as

a holder in due course or authorized agent of a holder in due

course. Therefore, Debtor alleged that they could not show

injury in fact as a result. BNYM, SPS, and others again filed

motions to dismiss Debtor’s second amended complaint.

On November 10, 2014, the bankruptcy court entered the

order granting BNYM’s motion for relief from stay and

determining that the automatic stay did not apply to the Civil

Action. 

On March 13, 2015, Debtor’s bankruptcy case was dismissed. 

On April 13, 2015, the district court granted the parties’

motions to dismiss Debtor’s second amended complaint on all

causes of action with prejudice except the quiet title claim for

relief. The district court determined that Debtor’s allegations 

under his first claim for relief that included his standing

arguments failed to state a claim for relief and that further

amendment would be futile. The district court gave Debtor a

final opportunity to file a third amended complaint on the quiet

title claim. The order dismissing the other claims made clear

that Debtor was prohibited from reasserting any allegations

regarding BNYM’s or SPS’s standing in the third amended

complaint. The Civil Action remains open and is ongoing.

II. JURISDICTION

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

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§§ 1334 and 157(b)(2)(B). During the pendency of this appeal,

the bankruptcy court dismissed Debtor’s chapter 11 case and

Debtor continued to assert his standing arguments in the Civil

Action through the filing of his second amended complaint. His

constitutional and prudential standing arguments ran their

course along with his other arguments relating to the FDCPA and

challenges to the validity of the assignment of the deed of

trust from MERS to BNYM when the district court dismissed those

claims, among others, with prejudice. Because of the dismissal

of the underlying bankruptcy case, and the presence of the

related litigation in the district court, the question arises

whether this appeal is moot. For the reasons set forth below,

we conclude that it is. 

III. ISSUES

Do we have jurisdiction over this appeal? 

If we do have jurisdiction over the appeal, did the

bankruptcy court err in overruling Debtor’s objections to BNYM’s

POC?

 IV. STANDARDS OF REVIEW

Our jurisdiction, such as whether an appeal is moot, is a

question of law that we address de novo. Menk v. Lapaglia

(In re Menk), 241 B.R. 896, 903 (9th Cir. BAP 1999).

Standing is an issue of law which we also review de novo. 

Palmdale Hills Prop., LLC v. Lehman Commercial Paper, Inc

(In re Palmdale Hills Prop., LLC), 654 F.3d 868, 873 (9th Cir.

2011). Factual determinations underlying the standing decision

are reviewed for clear error. Id. 

An order overruling a claim objection can raise legal

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issues (such as the proper construction of statutes and rules)

which we review de novo, as well as factual issues (such as

whether the facts establish compliance with particular statutes

or rules), which we review for clear error. Veal v. Am. Home

Mortg. Servicing, Inc. (In re Veal), 450 B.R. 897, 918 (9th Cir.

BAP 2011).

V. DISCUSSION

Debtor argues on appeal that the bankruptcy court erred in

overruling his objection for numerous reasons which we summarize

here: (1) SPS did not have standing to file the POC on behalf

of BNYM; (2) SPS failed to establish an agency relationship with

BNYM; (3) BNYM had not produced evidence that SPS was in

possession of the note until after his claim objection had been

ruled upon; (4) BNYM is in violation of the FDCPA; (5) the

validity of the endorsements on the copy of the note is

questionable; (6) BNYM has failed to establish that it had a

secured claim; (7) the assignment of the deed of trust from MERS

to BNYM was deficient; (8) the claim was unenforceable under

non-bankruptcy law; (9) the bankruptcy court failed to hold an

evidentiary hearing; and (10) the debt is time-barred by ARS

§ 12-548.

While BNYM responds to these arguments, as an initial

matter, it asserts that this appeal is moot because the

bankruptcy court dismissed Debtor’s chapter 11 case after he

filed this appeal and the order dismissing the case is now

final. Accordingly, we first consider our jurisdiction. 

Ordinarily we have jurisdiction over appeals of final

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orders under 28 U.S.C. § 158 but we lack jurisdiction to hear a

moot appeal. I.R.S. v. Pattullo (In re Pattullo), 271 F.3d 898,

901 (9th Cir. 2001). “Our mootness inquiry focuses upon whether

we can still grant relief between the parties.” Id. “‘If an

event occurs while a case is pending on appeal that makes it

impossible for the court to grant any effectual relief whatever

to a prevailing party, the appeal is moot and must be

dismissed.’” Id. That said, an appeal is not moot “if the

court can fashion some form of meaningful relief” for the

appellant in the event it decides the appeal on the merits in

its favor. Id. 

It is well settled that the dismissal of a bankruptcy case

may render moot those matters closely connected with a Debtor’s

reorganization, such as allowing a proof of claim. Bevan v.

Socal Commc’ns Sites, LLC (In re Bevan), 327 F.3d 994, 997 (9th

Cir. 2003). Since only claimants with allowed claims may

participate in a distribution under a Debtor’s plan, allowing

BNYM’s POC is undoubtedly a matter closely connected with

Debtor’s reorganization. Here, the dismissal occurred because

Debtor could not confirm a plan; no creditor, including BNYM or

SPS, will receive distributions since his case was dismissed. 

Moreover, the deed of trust passed through Debtor’s

bankruptcy and continues to encumber his Property. Upon

dismissal, the Property revested in Debtor and Debtor was

restored to all of the rights he possessed immediately prior to

the filing of his petition. See § 349. Indeed, Debtor

continues to pursue those rights in the Civil Action. Under

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these circumstances, we fail to see how we could provide any

meaningful relief to Debtor within the confines of the

bankruptcy case itself. See In re Pattullo, 271 F.3d at 901-902

(“To have jurisdiction, we must be able to grant effective

relief within the boundaries of the present case.”).

Generally, “a claims objection proceeding in bankruptcy

takes the place of the state court lawsuit or other action

because such actions are presumptively stayed by operation of

§ 362.” In re Veal, 450 B.R. at 918. However, the bankruptcy

court may defer to a nonbankruptcy court to liquidate and settle

the parties’ claims and contentions under appropriate

circumstances. Here, the record shows that the bankruptcy court

implicitly abstained from making a merits ruling within the

context of the claim objection pertaining to issues that were

repeated in the Civil Action. Indeed, the parties continued to

litigate the standing issues and others in the Civil Action

prior to the bankruptcy court’s ruling on the claim objection

and prior to the bankruptcy court’s ruling on BNYM’s motion for

relief from the stay. During the pendency of this appeal

Debtor’s constitutional and prudential standing arguments

relating to BNYM and SPS ran their course in the Civil Action

along with his other arguments alleging violations under the

FDCPA and challenges to the validity of the assignment of the

deed of trust from MERS to BNYM. These claims, among others,

were dismissed with prejudice which means Debtor had no

opportunity to cure the pleading defects in his second amended

complaint. In addition, although the district court gave Debtor

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one final opportunity to file a third amended complaint on the

quiet title cause of action, the district court made perfectly

clear in its dismissal order that Debtor could not re-plead his

“standing to enforce,” “holder of the note,” or UCC arguments

and allegations or any reformulation of them: 

If Dodev submits a Third Amended Complaint that repleads any claim dismissed with prejudice by this

order, rehashes his ‘standing’ arguments, or fails to

comply with [Civil] Rule 8, the Court will not wait

for a motion to dismiss to be filed, but will instead

strike the amended pleading and dismiss this action

entirely. 

 

Given this background, a potentially preclusive order on

the standing issues has already been rendered. See Bevan,

327 F.3d at 997 (“The allowance . . . of ‘a claim in bankruptcy

is binding and conclusive on all parties or their privies, and

being in the nature of a final judgment, furnishes a basis for a

plea of res judicata.’”). Accordingly, even if we were to

reverse the bankruptcy court’s ruling that BNYM had standing,

the district court has already finally decided that issue.

VI. CONCLUSION

Because we can grant no effective relief, we DISMISS this

appeal as moot.

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