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FILED

NOV 17 2015

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NOT FOR PUBLICATION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 No. NC-14-1562-DJuTa

)

BOOKER THEODORE WADE, JR., ) Bk. No. 13-50376

)

Debtor. )

________________________________ )

)

BOOKER THEODORE WADE, JR., )

)

Appellant, )

)

v. ) M E M O R A N D U M1

)

FOREST VILLA HOMEOWNERS’ )

ASSOCIATION, )

)

Appellee. )

________________________________ )

Submitted Without Argument

on October 23, 2015

Filed - November 17, 2015

Appeal from the United States Bankruptcy Court

for the Northern District of California

Honorable Stephen L. Johnson, Bankruptcy Judge, Presiding

 

Appearances: Appellant Booker Theodore Wade, Jr. pro se on brief. 

 

Before: DUNN, JURY, and TAYLOR, Bankruptcy Judges.

1 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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The chapter 112 debtor objected (“Claim Objection”) to the

claim of his homeowners’ association with respect to real property

in which he claimed an exemption. Debtor’s bankruptcy case later

was converted to chapter 7. After the chapter 7 trustee filed a no

asset report and the debtor’s discharge was entered, the bankruptcy

court entered an order overruling the Claim Objection both because 

the debtor lacked standing to prosecute the Claim Objection and

because it lacked jurisdiction to adjudicate the Claim Objection. 

The debtor appealed.

For the reasons stated below, we AFFIRM.

I. FACTUAL BACKGROUND

Booker Theodore Wade, Jr. filed a chapter 11 case (“Bankruptcy

Case”) on January 22, 2013 (“Petition Date”). Mr. Wade included in

his Schedules A and C real property in Palo Alto, California

(“Property”) in which he claimed a $175,000 statutory homestead

exemption under Cal. Code of Civ. Proc. § 704.730. As of the

Petition Date the Property had a value of $710,250 but was

encumbered by a consensual lien in the amount of $674,945 and a

judgment lien in the amount of $739,693.3 Mr. Wade included in his

Schedule F a debt owed to Forest Villa Homeowners Association

2 Unless 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.

3 On September 19, 2014, the bankruptcy court entered an order

avoiding the judicial lien.

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(“HOA”) in the amount of $45,000.

Thereafter, the HOA filed a timely proof of claim (“HOA Claim”)

for HOA assessments in the amount of $60,929.82. Mr. Wade objected

to the HOA Claim, asserting that the amount of the HOA Claim should

be reduced, either based on a prepetition agreement he had with the

HOA or because the HOA Claim was based on excessive charges. The

bankruptcy court conducted preliminary hearings on the Claim

Objection on May 7, 2014 and June 18, 2014. 

On July 14, 2014, the Bankruptcy Case was converted to

chapter 7, and a chapter 7 trustee (“Trustee”) was appointed. The

Trustee filed a no-asset report, as well as a Statement of Position

advising the bankruptcy court that he would not prosecute the Claim

Objection. Mr. Wade, however, continued to pursue the Claim

Objection. As a result, the bankruptcy court ordered briefing

regarding his standing to do so and set a further hearing (“Standing

Hearing”) for argument on this point. Mr. Wade filed a timely

response on the standing issue; neither the HOA nor the Trustee

filed a response.

The day before the Standing Hearing, Mr. Wade’s bankruptcy

discharge was entered, and the bankruptcy court held a hearing on

the HOA’s motion for relief from the automatic stay (“Stay Relief

Motion”). At that hearing, the bankruptcy court ruled that the Stay

Relief Motion was moot as to Mr. Wade, where the automatic stay had

dissolved upon entry of his discharge, but it was granted as to the

bankruptcy estate where the Trustee had not opposed it. This ruling

was reflected in the bankruptcy court’s order (“Stay Relief Order”),

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which stated, inter alia, “such relief will entitle [the HOA to]

immediately move ahead with collection proceedings under the

prevailing CCR’s, including foreclosure proceedings as well as the

recordation of lien and any and all action that becomes necessary to

recover possession of the property and/or outstanding and unpaid

assessments.” Mr. Wade did not appeal the Stay Relief Order.

Mr. Wade appeared in person at the Standing Hearing. The

bankruptcy court experienced technical difficulties with the Court

Call connection through which counsel for the HOA was participating. 

Rather than reschedule the Standing Hearing to provide an

opportunity for the HOA to argue its position, the bankruptcy court

terminated the hearing because it believed that it had heard the

HOA’s position on the issue of Mr. Wade’s standing in earlier

proceedings. 

Following the Standing Hearing, the bankruptcy court entered an

order (“Claim Objection Order”) overruling the Claim Objection on

two bases. First, the bankruptcy court determined that Mr. Wade

lacked standing to pursue the Claim Objection where the bankruptcy

estate was not a surplus estate. Second, and more fundamentally,

the bankruptcy court determined that it lacked jurisdiction where

the HOA Claim raised no substantive bankruptcy issues, and the

issues raised in the Claim Objection had no impact on the bankruptcy

estate.

Mr. Wade timely appealed the Claim Objection Order.

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334

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and 157(b)(2)(B). We have jurisdiction under 28 U.S.C. § 158.

III. ISSUES

Whether the bankruptcy court denied Mr. Wade procedural and/or

substantive due process when it terminated the October 22 Hearing

without allowing argument from the HOA’s counsel.

Whether the bankruptcy court erred when it failed to determine

the amount of the HOA Claim.

IV. STANDARDS OF REVIEW

We review de novo whether a litigant's due process rights were

violated. DeLuca v. Seare (In re Seare), 515 B.R. 599, 615 (9th

Cir. BAP 2014).

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

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

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

2011)(“standing is a necessary component of subject matter

jurisdiction.”). Similarly, we review de novo questions of subject

matter jurisdiction. Wilshire Courtyard v. Cal. Franchise Tax Bd.

(In re Wilshire Courtyard), 729 F.3d 1279, 1284 (9th Cir. 2013);

In re G.I. Indus., Inc., 204 F.3d 1276, 1279 (9th Cir. 2000). 

De novo means that we review a matter anew, as if no decision

previously had been rendered. Dawson v. Marshall, 561 F.3d 930, 933

(9th Cir. 2009).

We may affirm the bankruptcy court’s orders on any basis

supported by the record. See ASARCO, LLC v. Union Pac. R. Co.,

765 F.3d 999, 1004 (9th Cir. 2014); Shanks v. Dressel, 540 F.3d

1082, 1086 (9th Cir. 2008).

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V. DISCUSSION

A. The Bankruptcy Court Did Not Deny Mr. Wade Due Process.

We address first Mr. Wade’s issue on appeal that the bankruptcy

court denied him procedural and substantive due process when it

terminated the Standing Hearing without allowing additional argument

from the HOA. In Mr. Wade’s view, not allowing oral argument by the

HOA precluded him from responding. Mr. Wade’s argument on appeal

turns the issue of due process on its head. By refusing to take

further argument from the HOA, the bankruptcy court merely

foreclosed the HOA from raising anything new. Mr. Wade was not

harmed by the bankruptcy court closing the record to any new issue

the HOA might raise in argument.

In any event, no due process issue properly is before us where

Mr. Wade never raised it in the bankruptcy court in the first

instance. 

B. The Bankruptcy Court Lacked Jurisdiction Over the Claim

Objection.

Mr. Wade asserts that the bankruptcy court erred by not

deciding the Claim Objection, because § 502(b) provides that when an

objection to a claim is made, the bankruptcy court “shall determine

the amount of the claim . . . .” However, construing this language

in a vacuum results in a nonsensical interpretation.

Section 501(a) states “[a] creditor . . . may file a proof of

claim. . . .” As addressed in the legislative history,

This subsection is permissive only, and does not require

filing of a proof of claim by any creditor. It permits

filing where some purpose would be served, such as

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where . . . a creditor with a lien is undersecured and

asserts a claim for the balance of the debt owed him (his

unsecured claim, as determined under proposed 11 U.S.C.

506(a)), or in a liquidation case where there will be a

distribution of assets to the holders of allowed claims. 

In other instances, such as in no-asset liquidation cases

. . . filing a proof of claim may simply not be necessary. 

H. Rept. No. 95-595 to accompany H.R. 8200, 95th Cong., 1st Sess.

(1977), at pp. 351, 352. (Emphasis added.)

Recently, the Ninth Circuit discussed in basic terms “The Life

of a Bankruptcy Case.” HSBC Bank USA, National Association v.

Blendheim (In re Blendheim), 803 F.3d 477, 484-85 (9th Cir. 2015). 

We restate a portion of that discussion here to explain the purpose

of the claims process.

A bankruptcy case begins with the filing of a petition and

the creation of an estate, which comprises the debtors'

legal and equitable interests in property . . . . The

filing of the petition triggers an automatic stay,

prohibiting all entities from making collection efforts

against the debtor or the property of the debtor's estate

. . . . To collect [from a bankruptcy estate] on a debt,

a creditor must hold a “claim,” or a right to payment

. . . which has been “allowed” by the bankruptcy

court . . . . Every claim must go through the allowance

process set forth in 11 U.S.C. § 502 before the claim

holder is entitled to participate in the distribution of

estate assets. 

Id. (emphasis added; citations omitted).

The point here is that the primary purpose for the claims

adjudication process in a bankruptcy case is to determine whether

and to what extent a creditor is allowed to share in any

distribution that will be made from the bankruptcy estate. Serving

that objective is meaningless in the context of a no-asset chapter 7

case. “In no-asset chapter 7 liquidation cases, the filing of a

proof of claim serves no practical purpose since there will be no

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distribution from the estate in which to participate.” 4 Collier on

Bankruptcy ¶ 501.01[3][b] (Alan N. Resnick & Henry J. Sommer, eds.,

16th ed. rev.). 

The fact that there will be no distribution from the estate

impacts the bankruptcy court’s jurisdiction over the dispute between

Mr. Wade and the HOA regarding the amount of HOA assessments and

other charges that Mr. Wade might owe. As we are ever mindful,

bankruptcy courts are courts of limited jurisdiction. See Stern v.

Marshall, 564 U.S. 2 (2011). By statute, the bankruptcy court’s

core jurisdiction extends only to the “allowance or disallowance of

claims against the estate . . . .” 28 U.S.C. § 157(b)(2)(B)

(emphasis added).4 

The jurisdiction of the bankruptcy court evaporated when the

4 Absent the chapter 11 case in which the HOA Claim actually

was filed, we doubt there ever would have been a claim to adjudicate

in the bankruptcy case. 

[F]or creditors holding liens secured by property, filing

a proof of claim and participating in the allowance

process — indeed, participating in the bankruptcy process

as a whole — is completely voluntary. A creditor with a

lien on a debtor's property may generally ignore the

bankruptcy proceedings and decline to file a claim without

imperiling his lien, secure in the in rem right that the

lien guarantees him under non-bankruptcy law: the right of

foreclosure.

Blendheim, 803 F.3d at 485, citing U.S. Nat'l Bank in Johnstown v.

Chase Nat'l Bank of N.Y.C., 331 U.S. 28, 33 (1947) (a secured

creditor “may disregard the bankruptcy proceeding, decline to file a

claim and rely solely upon his security if that security is properly

and solely in his possession”).

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Stay Relief Order, which authorized the HOA to exercise its in rem

state law rights vis à vis the Property outside of the bankruptcy

case, was entered. The Trustee did not oppose stay relief, having

previously filed a no-asset report, determining that he would not

liquidate the Property for the benefit of the estate. As a result,

entry of the Stay Relief Order had no impact on the bankruptcy

estate.

C. Mr. Wade Lacked Standing to Prosecute the Claim Objection.

"[O]rdinarily [the chapter 7 trustee] would be the party with

standing to litigate the allowance or disallowance of claims." 

Heath v. Am. Express Travel Related Svcs. Co., Inc. (In re Heath),

331 B.R. 424, 429 (9th Cir. BAP 2009), citing In re Jorczak,

314 B.R. 474, 479 (Bankr. D. Conn. 2004)(debtors only have standing

to object to claims where there is "a sufficient possibility" of a

surplus to give them a pecuniary interest). See also 4 Collier on

Bankruptcy ¶ 502.02[2][c] (Alan N. Resnick & Henry J. Sommer, eds.,

16th ed. rev.).

Because this was a no asset case, Mr. Wade did not have a

pecuniary interest in defeating any claim asserted against his

bankruptcy estate. He therefore lacked standing to prosecute the

Claim Objection.

On appeal, Mr. Wade asserts that the mere fact that the HOA

Claim was filed in an amount in excess of the amount Mr. Wade

believed he owed necessarily implicates his pecuniary interest,

because it could serve to diminish the amount of any exemption to

which he might be entitled. We disagree. 

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First, in the absence of a timely objection to Mr. Wade’s claim

of exemption in the Property, the bankruptcy court allowed the

exemption for purposes of the bankruptcy case only. In a separate

decision we reject Mr. Wade’s assertion that the bankruptcy court

erred when it refused, in effect, to determine that the allowance of

the exemption was binding in subsequent state court proceedings. 

Second, the entry of Mr. Wade’s discharge served to bar the HOA from

seeking to collect any amounts owed directly from Mr. Wade

personally, as opposed to in rem against the Property. Accordingly,

the bankruptcy court correctly determined that Mr. Wade, personally,

had no standing to pursue an objection to the HOA Claim in the

bankruptcy case context. 

VI. CONCLUSION

The bankruptcy court took no action in violation of Mr. Wade’s

due process rights with respect to the Claim Objection proceedings. 

The bankruptcy court appropriately determined it lacked jurisdiction

over the dispute regarding the amount of the debt to the extent the

HOA claimed a lien against the Property, because the Stay Relief

Order removed the dispute from the bankruptcy case altogether. 

Further, entry of the discharge imposed a bar to collection by the

HOA of its debt directly from Mr. Wade. That, together with the

fact that the bankruptcy case was a no asset case, demonstrate that

Mr. Wade had no pecuniary interest to protect with respect to his

bankruptcy estate in connection with the Claim Objection.

We therefore AFFIRM.

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