Court Opinion

ID: 4195753
Source: CourtListenerOpinion
Date Created: 2017-08-14 23:01:31.036622+00
Date Added: 2024-06-11T09:23:47.048204
License: Public Domain

FILED
                                                          AUG 11 2017
                                                      SUSAN M. SPRAUL, CLERK
 1                         NOT FOR PUBLICATION          U.S. BKCY. APP. PANEL
                                                        OF THE NINTH CIRCUIT
 2
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
                              OF THE NINTH CIRCUIT
 4
 5   In re:                        )      BAP No.   AZ-16-1133-BTaF
                                   )
 6   AIDA AZIZ,                    )      Bk. No.   15-12354-EPB
                                   )
 7                  Debtor.        )
                                   )
 8                                 )
     AIDA AZIZ,                    )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )      AMENDED MEMORANDUM1
11                                 )
     U.S. BANK, NA                 )
12                                 )
                    Appellee.      )
13   ______________________________)
14             Submitted Without Oral Argument on February 23, 2017
15                      Originally Filed - August 3, 2017
                            Amended - August 11, 2017
16
                 Appeal from the United States Bankruptcy Court
17                         for the District of Arizona
18    Honorable Eddward P. Ballinger, Jr., Bankruptcy Judge, Presiding
19
     Appearances:     Appellant Aida Aziz on brief pro se; Mark D.
20                    Chernoff and Patricia A. Premeau of the Chernoff
                      Law Firm, PC on brief for appellee U.S. Bank, N.A.
21
22   Before:     BRAND, TAYLOR and FARIS, Bankruptcy Judges.
23
24
25
26
          1
             This disposition is not appropriate for publication.
27   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
28   Cir. BAP Rule 8024-1.
 1        Chapter 132 debtor Aida Aziz appeals an order overruling her
 2   objection to the claim of U.S. Bank, N.A.   For the reasons set
 3   forth below, we DISMISS the appeal as MOOT.
 4             I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
 5   A.   Prepetition events
 6        In 2008, Debtor's son, Mena Bishara, purchased a residence
 7   in Scottsdale, Arizona ("Property") with an $830,231.00 loan
 8   provided by U.S. Bank.    Bishara executed a promissory note and
 9   deed of trust in favor of U.S. Bank.   The deed of trust was
10   recorded in Maricopa County.
11        U.S. Bank initiated a trustee's sale in 2010, which was
12   continued multiple times due to litigation between the parties
13   that commenced in state court in 2011.   Bishara claimed, among
14   other things, that his signature on the recorded deed of trust
15   was forged and therefore void.   However, Bishara admitted to
16   receiving the funds, purchasing the Property with them, and not
17   making any payments on the loan since May 2009.   The action was
18   later removed to the federal district court.   That court
19   dismissed the suit with prejudice based on Bishara's admissions.
20   Bishara appealed to the Ninth Circuit Court of Appeals, which
21   affirmed the district court's ruling in June 2015.
22        On September 17, 2015, Bishara transferred the Property by
23   quitclaim deed to Debtor.   Together as plaintiffs, Bishara and
24   Debtor then filed a new lawsuit in state court raising the same
25   arguments that were rejected and deemed "futile" in the first
26
27        2
             Unless specified otherwise, all chapter, code and rule
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
28   the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.

                                      -2-
 1   action.   The second lawsuit was dismissed with prejudice in
 2   February 2016; U.S. Bank was awarded attorney's fees.
 3   B.   Postpetition events
 4        Meanwhile, Debtor filed her chapter 13 bankruptcy case on
 5   September 28, 2015, just eleven days after Bishara quitclaimed
 6   the Property to her.
 7        1.     U.S. Bank's initial proof of claim
 8        U.S. Bank filed its initial $1,141,956.75 proof of claim in
 9   Debtor's case in February 2016.    By then, prepetition arrearages
10   on the Bishara loan were $314,155.48.      The initial proof of claim
11   mistakenly stated that Debtor, as opposed to Bishara, executed
12   the note secured by the deed of trust for the Property.      Debtor
13   objected to U.S. Bank's claim, arguing that the attached exhibits
14   contained the alleged forged note and deed of trust.      In reply,
15   U.S. Bank contended that Debtor was precluded from claiming the
16   loan documents were forged; she had already litigated that issue
17   and lost.   In addition, U.S. Bank argued that, because Debtor was
18   not a party to the deed of trust, she lacked standing to
19   challenge its validity.
20        2.     U.S. Bank's amended proof of claim
21        Thereafter, U.S. Bank filed an amended proof of claim.         The
22   amended claim clarified that Debtor was not a party to the note
23   and therefore she did not personally owe the note payments;
24   Debtor only held title to the Property based on the quitclaim
25   deed.   Nonetheless, her ownership interest was subject to the
26   debt and U.S. Bank's lien rights.       U.S. Bank argued that, if
27   Debtor wanted to keep the Property, she had to pay for it, making
28   the bank an implied creditor of her bankruptcy.

                                       -3-
 1        Debtor objected to U.S. Bank's amended proof of claim,
 2   raising essentially the same arguments she did in her objection
 3   to the initial proof of claim.     She requested that the court
 4   disallow the amended claim due to U.S. Bank's failure to provide
 5   appropriate documentation to support it.
 6        In reply, U.S. Bank represented that it was not seeking any
 7   monetary relief from Debtor; rather, it had filed the initial and
 8   amended proofs of claim simply to enforce its lien rights against
 9   the Property.     However, argued U.S. Bank, Debtor would have to
10   pay for the Property if she intended to keep it.
11            The bankruptcy court held a hearing on April 13, 2016.3
12   Debtor has not provided a transcript so we are not certain what
13   took place.     However, that same day, the bankruptcy court issued
14   a Minute Entry/Order for Matter Taken Under Advisement.     In
15   addition to granting U.S. Bank relief from stay, the Under
16   Advisement order stated that Debtor's objection to U.S. Bank's
17   amended proof of claim "was moot in light of the bank's agreement
18   that it seeks no distribution from Debtor's estate (other than
19   for fees and sanctions [requested in U.S. Bank's motion for
20   relief from stay])."     U.S. Bank's request for fees and sanctions
21   was denied.     The Under Advisement order directed counsel for U.S.
22   Bank "to file and serve an appropriate form of order."
23        Before an order was submitted by U.S. Bank and entered by
24   the bankruptcy court, Debtor filed a motion for reconsideration,
25
26
27        3
             This hearing also included U.S. Bank's pending motion for
     relief from stay and Debtor's objection to that motion. That
28   issue is not part of this appeal.

                                       -4-
 1   which the bankruptcy court summarily denied.4
 2   C.   Post-appeal events
 3        Although no order had yet been entered respecting Debtor's
 4   claim objection or U.S. Bank's motion for relief from stay or
 5   request for sanctions, Debtor appealed the bankruptcy court's
 6   Under Advisement order on May 12, 2016.   Thereafter, U.S. Bank
 7   submitted an order, which the bankruptcy court signed and entered
 8   on May 16, 2016.   Curiously, the May 16 order did not dispose of
 9   Debtor's claim objection; it referenced only U.S. Bank's relief
10   from stay motion and the court's denial of sanctions to U.S.
11   Bank.
12        U.S. Bank then moved to dismiss Debtor's appeal, arguing
13   that it was moot because the foreclosure sale had now taken
14   place.   The motions panel determined that the relief from stay
15   issue was moot, but not the claim objection or sanctions issues.
16   Therefore, those two issues remained live and appealable.5    U.S.
17   Bank's request for attorney's fees, costs and sanctions was
18   denied for failure to comply with the separate motion requirement
19   under Rule 8020(a).
20        After briefing by the parties, it was discovered that the
21   Panel lacked a final order from the bankruptcy court on Debtor's
22   claim objection; the Under Advisement order entered on April 13
23   and the May 16 order did not serve as a final order on that
24
25
          4
             Debtor has not argued that the bankruptcy court abused its
26   discretion by denying her motion for reconsideration. In any
     event, based on our decision here, we need not reach that issue.
27
          5
             U.S. Bank has not cross-appealed the bankruptcy court's
28   ruling denying sanctions.

                                     -5-
 1   issue. Ross v. Thompson (In re Levine), 162 B.R. 858, 859 (9th
 2   Cir. BAP 1994) (court's "under advisement ruling" was not a final
 3   appealable order because it did not evidence the judge's
 4   intention that the order was the court's final act, as counsel
 5   was directed in that order to lodge an order consistent with the
 6   under advisement ruling).
 7        After a clerk's order, the bankruptcy court entered an
 8   amended order on March 2, 2017, finally disposing of Debtor's
 9   objection to U.S. Bank's amended claim as moot.     Thus, Debtor's
10   premature notice of appeal became timely.     Rule 8002(a).
11        On May 20, 2017, the bankruptcy court entered an order
12   dismissing Debtor's chapter 13 bankruptcy case for failure to
13   make plan payments and barring her from refiling a new bankruptcy
14   case in the District of Arizona for 180 days.
15                              II. JURISDICTION
16        The bankruptcy court had jurisdiction under 28 U.S.C. §§
17   1334 and 157(b)(2)(B).    We discuss our jurisdiction below.
18                                III. ISSUES
19   1.   Is the order on appeal moot now that Debtor's bankruptcy
20   case has been dismissed?
21   2.   Is U.S. Bank entitled to sanctions or costs on appeal?
22                           IV. STANDARD OF REVIEW
23        We review de novo our own jurisdiction, including the
24   question of mootness.    Suter v. Goedert, 504 F.3d 982, 985 (9th
25   Cir. 2007).
26                               V. DISCUSSION
27   A.   The appeal is moot.
28        An appeal is constitutionally moot if it has become

                                      -6-
 1   impossible for the appellate court to fashion meaningful relief.
 2   Ederel Sport, Inc. v. Gotcha Int'l L.P. (In re Gotcha Int'l
 3   L.P.), 311 B.R. 250, 253 (9th Cir. BAP 2004).    If no effective
 4   relief is possible, we must dismiss for lack of jurisdiction.
 5   Ellis v. Yu (In re Ellis), 523 B.R. 673, 677 (9th Cir. BAP 2014).
 6        Secured creditor U.S. Bank filed a proof of claim in
 7   Debtor's case even though it had represented to the bankruptcy
 8   court and to Debtor that it was not seeking a distribution under
 9   her chapter 13 plan; it was seeking only to enforce its lien
10   rights and remedies under state law.    Based on U.S. Bank's
11   representations, the bankruptcy court was satisfied that it was
12   not seeking any money from Debtor.     Accordingly, the court deemed
13   Debtor's claim objection moot.
14        We disagree that, at the time the bankruptcy court ruled on
15   Debtor's claim objection, it was moot.    Despite U.S. Bank's
16   representations otherwise, when the court ruled on Debtor's
17   objection, U.S. Bank had a pending objection to Debtor's first
18   amended chapter 13 plan contending that the plan failed to
19   account for or cure the arrearages on the Bishara loan.    Based on
20   the objection to confirmation, it appeared that Debtor intended
21   to make, and U.S. Bank intended to receive, a distribution from
22   Debtor's chapter 13 plan.
23        However, during the course of this appeal, the claim
24   objection order has become moot due to the dismissal of Debtor's
25   bankruptcy case.   Although dismissal of a debtor's underlying
26   bankruptcy case does not necessarily moot an appeal from an order
27   overruling a claim objection because of the preclusive effect the
28

                                      -7-
 1   order can have in other courts, we do not face that issue here.6
 2   In this case, the bankruptcy court made no dispositive ruling on
 3   the merits of U.S. Bank's claim that could be given preclusive
 4   effect in future litigation between the parties; the court
 5   neither allowed nor disallowed the claim.   In addition, without
 6   an existing estate or chapter 13 plan, it is clear that U.S. Bank
 7   will not be seeking any plan distribution from Debtor respecting
 8   the Property.   Thus, reversal of the claim objection order would
 9   be meaningless.   Accordingly, because we are unable to provide
10   Debtor with any meaningful relief, the appeal is moot and we must
11   dismiss for lack of jurisdiction.7
12
          6
13           Compare Bevan v. Socal Commc’ns Sites, LLC (In re Bevan),
     327 F.3d 994, 996–97 (9th Cir. 2003) (appeal from order overruling
14   claim objection not moot because of potential preclusive effect
     that order might have in future litigation) (citing Siegel v. Fed.
15   Home Loan Mortg. Corp., 143 F.3d 525, 529 (9th Cir. 1998)), with
     Ctr. For Biological Diversity v. Lohn, 511 F.3d 960, 965 (9th Cir.
16   2007) (citing Pilate v. Burrell (In re Burrell), 415 F.3d 994,
     998-99 (9th Cir. 2005)) (potential preclusive effect of order on
17   appeal did not prevent appeal from that order from becoming moot).
          7
18         In her appeal, Debtor also asserted that the bankruptcy
     court erred in denying her request for sanctions against US Bank
19   under 18 U.S.C. §§ 152, 157 and 3571 for filing a false deed of
     trust with its proof of claim. The denial of Debtor’s request for
20   sanctions also is moot. It raises the same issues as the claim
     objection, the validity of the deed of trust included in the proof
21   of claim. We cannot afford meaningful relief to Debtor on this
     issue for the same reason that we cannot do so with respect to her
22   appeal of the Court’s ruling on her claim objection.
23        Even if it is not moot, we would affirm the denial of the
     Debtor’s request for sanctions. Debtor based her request entirely
24   on criminal statutes (18 U.S.C. §§ 152, 157 and 3571) for which
     there is no private right of action. See Diamond v. Charles,
25   476 U.S. 54, 64–65 (1986) (a private citizen cannot compel the
     enforcement of criminal law, as “a private citizen lacks a
26   judicially cognizable interest in the prosecution or
     nonprosecution of another.”); see also Nordeen v. Bank of Am.,
27   N.A. ((n re Nordeen), 495 B.R. 468, 484-85 (9th Cir. BAP 2013)
     (“[a]ny alleged perjury committed in the filing of a claim in a
28                                                        (continued...)

                                     -8-
 1   B.   U.S. Bank's sanctions request is DENIED; however costs are
          appropriate.
 2
 3        In its brief, U.S. Bank requested sanctions under Rule 8020
 4   or Rule 9011; it contends that Debtor's appeal is frivolous.
 5   Because U.S. Bank has not complied with the separate motion
 6   requirement in both Rule 8020 and Rule 9011, that request is
 7   DENIED.   See Rule 8020(a); Rule 9011(c)(1)(A) (motion for
 8   sanctions must "be made separately from other motions or requests
 9   and shall describe the specific conduct alleged to violate
10   Rule 9011(b)").
11        However, U.S. Bank has also requested costs under Rule 8021,
12   which has no separate motion requirement.   Because we are
13   dismissing this appeal, costs are appropriate under
14   Rule 8021(a)(1).   Pursuant to Rule 8021(d), U.S. Bank has 14 days
15   after entry of judgment on appeal to file with the bankruptcy
16   court and serve its itemized and verified bill of costs for those
17
18        7
           (...continued)
     bankruptcy case is subject to criminal sanctions under 18 U.S.C.
19   § 152, not to any private right of action by the Nordeens”);
     Miller v. Carrington Mortg. Servs., 2012 WL 3537056, at *9 (N.D.
20   Cal. Aug. 14, 2012) (“most courts seem to agree that there is no
     private right of action for a violation of § 152") (citing Truong
21   v. Litman, 312 Fed. Appx. 377, 378 (2d Cir. 2009) (“find[ing] no
     ground for disturbing the district court’s holding that the
22   Truongs have not made the difficult case for implying a private
     right of action under 18 U.S.C. § 152, a criminal statute”) and
23   Heavrin v. Boeing Capital Corp., 246 F.Supp.2d 728, 731 (W.D. Ky.
     2003) (stating that “there is no private cause of action under
24   18 U.S.C. § 152(4) for filing a false proof of claim in a
     bankruptcy proceeding”; following the reasoning of a North
25   Carolina bankruptcy court)); Glassey v. Amano Corp., 2006 WL
     889519, 15 *3 (N.D. Cal. Mar. 31 2006), aff’d, 285 F. App’x 426
26   (9th Cir. 2008) (“Glassey lacks standing to enforce any cause of
     action based on Title 18 that he has alleged.”). Debtor could not
27   prevail on a claim for sanctions under Title 18. The bankruptcy
     court did not err in denying an award of sanctions to plaintiff on
28   that basis.

                                     -9-
 1   items allowable under Rule 8021(c).
 2                            VI. CONCLUSION
 3        For the foregoing reasons, we DISMISS the appeal as MOOT.
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