Court Opinion

ID: 4193450
Source: CourtListenerOpinion
Date Created: 2017-08-04 17:02:05.660482+00
Date Added: 2024-06-11T14:13:10.432666
License: Public Domain

FILED
                                                            AUG 03 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 1                         NOT FOR PUBLICATION            U.S. BKCY.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.                            )      M E M O R A N D U M1
11                                 )
     U.S. BANK, NA                 )
12                                 )
                    Appellee.      )
13   ______________________________)
14             Submitted Without Oral Argument on February 23, 2017
15                           Filed - August 3, 2017
16               Appeal from the United States Bankruptcy Court
                           for the District of Arizona
17
      Honorable Eddward P. Ballinger, Jr., Bankruptcy Judge, Presiding
18
19   Appearances:     Appellant Aida Aziz on brief pro se; Mark D.
                      Chernoff and Patricia A. Premeau of the Chernoff
20                    Law Firm, PC on brief for appellee U.S. Bank, N.A.
21
     Before:     BRAND, TAYLOR and FARIS, Bankruptcy Judges.
22
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 in
 7   Scottsdale, Arizona ("Property") with an $830,231.00 loan provided
 8   by U.S. Bank.   Bishara executed a promissory note and deed of
 9   trust in favor of U.S. Bank.   The deed of trust was recorded in
10   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 was
15   forged and therefore void.   However, Bishara admitted to receiving
16   the funds, purchasing the Property with them, and not making any
17   payments on the loan since May 2009.   The action was later removed
18   to the federal district court.   That court dismissed the suit with
19   prejudice based on Bishara's admissions.    Bishara appealed to the
20   Ninth Circuit Court of Appeals, which affirmed the district
21   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 the
 6   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 the
12   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 challenge
19   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; Debtor
24   only held title to the Property based on the quitclaim deed.
25   Nonetheless, her ownership interest was subject to the debt and
26   U.S. Bank's lien rights.    U.S. Bank argued that, if Debtor wanted
27   to keep the Property, she had to pay for it, making the bank an
28   implied creditor of her bankruptcy.

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 1        Debtor objected to U.S. Bank's amended proof of claim,
 2   raising essentially the same arguments she did in her objection to
 3   the initial proof of claim.     She requested that the court disallow
 4   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 pay
10   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 a
14   Minute Entry/Order for Matter Taken Under Advisement.     In addition
15   to granting U.S. Bank relief from stay, the Under Advisement order
16   stated that Debtor's objection to U.S. Bank's amended proof of
17   claim "was moot in light of the bank's agreement that it seeks no
18   distribution from Debtor's estate (other than for fees and
19   sanctions [requested in U.S. Bank's motion for relief from
20   stay])."     U.S. Bank's request for fees and sanctions was denied.
21   The Under Advisement order directed counsel for U.S. Bank "to file
22   and serve an appropriate form of order."
23        Before an order was submitted by U.S. Bank and entered by the
24   bankruptcy court, Debtor filed a motion for reconsideration, which
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.

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 1   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. Bank.
11        U.S. Bank then moved to dismiss Debtor's appeal, arguing that
12   it was moot because the foreclosure sale had now taken place.       The
13   motions panel determined that the relief from stay issue was moot,
14   but not the claim objection or sanctions issues.    Therefore, those
15   two issues remained live and appealable.5    U.S. Bank's request for
16   attorney's fees, costs and sanctions was denied for failure to
17   comply with the separate motion requirement under Rule 8020(a).
18        After briefing by the parties, it was discovered that the
19   Panel lacked a final order from the bankruptcy court on Debtor's
20   claim objection; the Under Advisement order entered on April 13
21   and the May 16 order did not serve as a final order on that issue.
22   Ross v. Thompson (In re Levine), 162 B.R. 858, 859 (9th Cir. BAP
23   1994) (court's "under advisement ruling" was not a final
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   appealable order because it did not evidence the judge's intention
 2   that the order was the court's final act, as counsel was directed
 3   in that order to lodge an order consistent with the under
 4   advisement ruling).
 5        After a clerk's order, the bankruptcy court entered an
 6   amended order on March 2, 2017, finally disposing of Debtor's
 7   objection to U.S. Bank's amended claim as moot.     Thus, Debtor's
 8   premature notice of appeal became timely.     Rule 8002(a).
 9        On May 20, 2017, the bankruptcy court entered an order
10   dismissing Debtor's chapter 13 bankruptcy case for failure to make
11   plan payments and barring her from refiling a new bankruptcy case
12   in the District of Arizona for 180 days.
13                              II. JURISDICTION
14        The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
15   and 157(b)(2)(B).   We discuss our jurisdiction below.
16                                III. ISSUES
17   1.   Is the order on appeal moot now that Debtor's bankruptcy case
18   has been dismissed?
19   2.   Is U.S. Bank entitled to sanctions or costs on appeal?
20                           IV. STANDARD OF REVIEW
21        We review de novo our own jurisdiction, including the
22   question of mootness.   Suter v. Goedert, 504 F.3d 982, 985 (9th
23   Cir. 2007).
24                               V. DISCUSSION
25   A.   The appeal is moot.
26        An appeal is constitutionally moot if it has become
27   impossible for the appellate court to fashion meaningful relief.
28   Ederel Sport, Inc. v. Gotcha Int'l L.P. (In re Gotcha Int'l

                                      -6-
 1   L.P.), 311 B.R. 250, 253 (9th Cir. BAP 2004).   If no effective
 2   relief is possible, we must dismiss for lack of jurisdiction.
 3   Ellis v. Yu (In re Ellis), 523 B.R. 673, 677 (9th Cir. BAP 2014).
 4        Secured creditor U.S. Bank filed a proof of claim in Debtor's
 5   case even though it had represented to the bankruptcy court and to
 6   Debtor that it was not seeking a distribution under her chapter 13
 7   plan; it was seeking only to enforce its lien rights and remedies
 8   under state law.   Based on U.S. Bank's representations, the
 9   bankruptcy court was satisfied that it was not seeking any money
10   from Debtor.   Accordingly, the court deemed Debtor's claim
11   objection moot.
12        We disagree that, at the time the bankruptcy court ruled on
13   Debtor's claim objection, it was moot.   Despite U.S. Bank's
14   representations otherwise, when the court ruled on Debtor's
15   objection, U.S. Bank had a pending objection to Debtor's first
16   amended chapter 13 plan contending that the plan failed to account
17   for or cure the arrearages on the Bishara loan.   Based on the
18   objection to confirmation, it appeared that Debtor intended to
19   make, and U.S. Bank intended to receive, a distribution from
20   Debtor's chapter 13 plan.
21        However, during the course of this appeal, the claim
22   objection order has become moot due to the dismissal of Debtor's
23   bankruptcy case.   Although dismissal of a debtor's underlying
24   bankruptcy case does not necessarily moot an appeal from an order
25   overruling a claim objection because of the preclusive effect the
26
27
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 neither
 5   allowed nor disallowed the claim.     In addition, without an
 6   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.
10        Accordingly, because we are unable to provide Debtor with any
11   meaningful relief, the appeal is moot and we must dismiss for lack
12   of jurisdiction.
13   B.   U.S. Bank's sanctions request is DENIED; however costs are
          appropriate.
14
15        In its brief, U.S. Bank requested sanctions under Rule 8020
16   or Rule 9011; it contends that Debtor's appeal is frivolous.
17   Because U.S. Bank has not complied with the separate motion
18   requirement in both Rule 8020 and Rule 9011, that request is
19   DENIED.   See Rule 8020(a); Rule 9011(c)(1)(A) (motion for
20   sanctions must "be made separately from other motions or requests
21   and shall describe the specific conduct alleged to violate
22   Rule 9011(b)").
23
24        6
             Compare Bevan v. Socal Commc’ns Sites, LLC (In re Bevan),
     327 F.3d 994, 996–97 (9th Cir. 2003) (appeal from order overruling
25   claim objection not moot because of potential preclusive effect
     that order might have in future litigation) (citing Siegel v. Fed.
26   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.
27   2007) (citing Pilate v. Burrell (In re Burrell), 415 F.3d 994,
     998-99 (9th Cir. 2005)) (potential preclusive effect of order on
28   appeal did not prevent appeal from that order from becoming moot).

                                     -8-
 1        However, U.S. Bank has also requested costs under Rule 8021,
 2   which has no separate motion requirement.   Because we are
 3   dismissing this appeal, costs are appropriate under
 4   Rule 8021(a)(1).   Pursuant to Rule 8021(d), U.S. Bank has 14 days
 5   after entry of judgment on appeal to file with the bankruptcy
 6   court and serve its itemized and verified bill of costs for those
 7   items allowable under Rule 8021(c).
 8                              VI. CONCLUSION
 9        For the foregoing reasons, we DISMISS the appeal as MOOT.
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