Court Opinion

ID: 4192875
Source: CourtListenerOpinion
Date Created: 2017-08-03 17:03:06.003776+00
Date Added: 2024-06-11T14:40:22.963966
License: Public Domain

FILED
                                                                 JUN 26 2015
 1                         NOT FOR PUBLICATION
 2                                                           SUSAN M. SPRAUL, CLERK
                                                               U.S. BKCY. APP. PANEL
                                                               OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No.    NC-14-1298-TaDKi
                                   )
 6   CINDY YUNKONG IKEOKA,         )      Bk. No.    13-55904
                                   )
 7                  Debtor.        )
     ______________________________)
 8                                 )
     CINDY YUNKONG IKEOKA,         )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )      MEMORANDUM*
11                                 )
     U.S. BANK, N.A.,              )
12                                 )
                    Appellee.      )
13   ______________________________)
14                    Argued and Submitted on May 14, 2015
                          at San Francisco, California
15
                             Filed - June 26, 2015
16
               Appeal from the United States Bankruptcy Court
17                 for the Northern District of California
18       Honorable Charles D. Novack, Bankruptcy Judge, Presiding
19
     Appearances:     Michael James Yesk of Yesk Law argued for
20                    appellant Cindy Yunkong Ikeoka; Donna La Porte
                      argued for appellee U.S. Bank, N.A.
21
22   Before:   TAYLOR, DUNN, and KIRSCHER, Bankruptcy Judges.
23
24
25
26        *
             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.
28   See 9th Cir. BAP Rule 8024-1(c)(2).
 1        Debtor Cindy Yunkong Ikeoka appeals from a bankruptcy court
 2   order granting stay relief to U.S. Bank, N.A. under
 3   § 362(d)(2).1   We AFFIRM the bankruptcy court.
 4                                  FACTS2
 5        In 2004, the Debtor obtained a loan from Chevy Chase Bank,
 6   F.S.B. to purchase real property in Carmel, California (the
 7   “Property”).    The obligation was evidenced by a promissory note
 8   (“Note”) in favor of Chevy Chase Bank and secured by a deed of
 9   trust (“Trust Deed”) creating a lien against the Property.
10        In November 2013, with foreclosure looming, the Debtor
11   filed a skeletal chapter 13 petition.3   It was her fourth
12   bankruptcy case within a three-year period; all three of her
13   prior cases were dismissed for failure to make plan payments or
14   to file required documents.   At the time of petition, the Debtor
15   was roughly five years in payment arrears.
16        When the Debtor eventually filed completed schedules, she
17   valued the Property at $800,000 and scheduled only Bank of
18   America, with a secured claim of $190,000, as holding a lien
19   against the Property.   It soon became apparent that the Debtor’s
20   schedules were underinclusive of secured creditors; U.S. Bank,
21   N.A., as trustee relating to the Chevy Chase Funding LLC
22
          1
23           Unless otherwise indicated, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
24
          2
             We exercise our discretion to take judicial notice of
25   documents electronically filed in the bankruptcy case. See
     Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R.
26
     227, 233 n.9 (9th Cir. BAP 2003).
27        3
             Since this appeal was pending, the Debtor converted to
28   chapter 11.

                                      2
 1   Mortgage Backed Certificates, Series 2005-1 (“U.S. Bank”), also
 2   filed a proof of claim.    Its proof of claim, which attached
 3   copies of the Note and Trust Deed, evidenced a much higher
 4   secured claim in the amount of $1,953,931.91.
 5        U.S. Bank moved for stay relief to foreclose and, in
 6   support of its request, attached the declaration of Stephen
 7   Witkop, Assistant Vice-President of Capital One, N.A.    Witkop’s
 8   declaration, which identified Capital One as the movant,
 9   provided that Capital One was the current owner of the Note and
10   the Trust Deed holder pursuant to a Corrective Assignment of
11   Deed of Trust recorded in 2011 (the “Corrective Assignment”).
12   The copy of the Corrective Assignment authenticated by Witkop’s
13   declaration, however, showed U.S. Bank as the actual assignee.
14        The Debtor, pro se, opposed; among other things, she
15   disputed U.S. Bank’s standing to foreclose.    She also advanced
16   substantive arguments already pending in related state court
17   litigation.
18        At the stay relief hearing, the bankruptcy court expressed
19   concern as to U.S. Bank’s standing and requested evidence, in
20   addition to the Corrective Assignment, that U.S. Bank owned the
21   Note.
22        U.S. Bank then filed a supplemental declaration from Witkop
23   and submitted a copy of an allonge to the Note, which contained
24   an endorsement in blank.
25        After the bankruptcy court expressed continued concern
26   regarding ownership of the Note, U.S. Bank filed the declaration
27   of Huy Pham, Assistant Vice-President for Capital One as
28   servicing agent for U.S. Bank.    Pham attested that the Note was

                                      3
 1   endorsed in blank and came into U.S. Bank’s possession when it
 2   acquired the loan.
 3        Satisfied with the additional evidence, the bankruptcy
 4   court entered an order granting stay relief to U.S. Bank.    The
 5   Debtor timely appealed.
 6                                JURISDICTION
 7        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
 8   §§ 1334 and 157(b)(2)(G).    We have jurisdiction under 28 U.S.C.
 9   § 158.
10                                   ISSUES
11   1.   Whether U.S. Bank had standing to seek stay relief.
12   2.   Whether the bankruptcy court “improperly aligned” itself
13        with U.S. Bank during the stay relief proceeding.
14                             STANDARD OF REVIEW
15        Standing is a legal issue that we review de novo.     Cruz v.
16   Stein Strauss Trust # 1361 (In re Cruz), 516 B.R. 594, 600 (9th
17   Cir. BAP 2014).   Similarly, we review de novo whether a
18   litigant’s due process rights were violated.   DeLuca v. Seare
19   (In re Seare), 515 B.R. 599, 615 (9th Cir. BAP 2014).
20                                DISCUSSION4
21
22
          4
             On appeal, U.S. Bank filed a request for judicial notice
23   of the federal court action that the Debtor commenced against
24   U.S. Bank, Capital One, N.A., and Chevy Chase Bank, FSB, among
     others, for declaratory relief and an accounting, and alleging
25   violations of the Fair Debt Collection Practices Act and Truth
     in Lending Act, among other things.
26        None of these documents were presented to the bankruptcy
27   court, and thus they are not part of the record on appeal. In
     any event, these documents are not necessary to our ruling, and
28   therefore we deny the motion.

                                       4
 1        The Debtor advances only two arguments on appeal: (1) that
 2   U.S. Bank lacked standing to seek stay relief; and (2) that the
 3   bankruptcy court “improperly aligned” itself with U.S. Bank
 4   during the proceedings.   We disagree with both assertions.
 5   A.   U.S. Bank had standing to seek stay relief.
 6        On the request of a party in interest and after notice and
 7   a hearing, the bankruptcy court may terminate, annul, modify, or
 8   condition the automatic stay.   11 U.S.C. § 362(d).   A stay
 9   relief proceeding is limited in nature, as there is no
10   substantive adjudication of rights or liabilities.    Arkison v.
11   Griffin (In re Griffin), 719 F.3d 1126, 1128 (9th Cir. 2013).
12   As a result, “a party seeking stay relief need only establish
13   that it has a colorable claim to the property at issue.”    Id.
14        The threshold to assert a colorable claim for stay relief
15   to allow foreclosure under a deed of trust creating a lien on
16   California real property is not high.   A party need only show
17   that it: (a) owns or has a property interest in the promissory
18   note secured by the real property; (b) is a “person entitled to
19   enforce” the promissory note under California law, see Edwards
20   v. Wells Fargo Bank, N.A. (In re Edwards), 454 B.R. 100, 105
21   (9th Cir. BAP 2011); or (c) has a right to initiate foreclosure
22   under California law, see Rozier v. U.S. Bank, N.A.
23   (In re Rozier), 2013 WL 4428808, at *5 (9th Cir. BAP Aug. 19,
24   2013).   On this record, U.S. Bank established that it had a
25   colorable claim and, thus, standing to seek stay relief, from
26   the standpoint of both the Trust Deed and the Note.
27        California law permits the initiation of nonjudicial
28   foreclosure by a trustee, mortgagee, or beneficiary under a

                                     5
 1   trust deed, or any of their authorized agents.    Cal. Civ. Code
 2   § 2924(a)(1).    Here, U.S. Bank submitted the Corrective
 3   Assignment, which evidenced that it received an assignment of
 4   the beneficial interest under the Trust Deed.5   As a result, it
 5   was entitled to initiate foreclosure of the Property.     Cal. Civ.
 6   Code § 2924(a)(1); Debrunner v. Deutsche Bank Nat. Trust Co.,
 7   204 Cal. App. 4th 433, 440 (2012).    True, U.S. Bank’s
 8   declaratory evidence as initially submitted was less than
 9   precise; Witkop’s declaration identified Capital One as the
10   movant and indicated that Capital One was the current owner of
11   the Note and the Trust Deed holder.    This was untrue.
12   Nonetheless, it eventually submitted the appropriate
13   documentation.   Thus, although the bankruptcy court focused on
14   evidence relating to ownership of the Note, the non-bankruptcy
15
16
          5
             The Debtor makes much of a prior Trust Deed assignment
17   filed by U.S. Bank in her second bankruptcy case, 10-53485.
18   There, the bank attached a copy of an assignment, recorded in
     March of 2010, to its proof of claim, evidencing an assignment
19   of the Trust Deed beneficial interest to U.S. Bank, as trustee
     for CCB Libor Series 2005-1 Trust. The Debtor contends that in
20   the present bankruptcy case, U.S. Bank “bizarrely” attached the
21   Corrective Assignment, dated June 27, 2011, which purportedly
     assigned the Trust Deed interest to it as trustee for Chevy
22   Chase Funding LLC Mortgage Backed Certificates, Series 2005-1 -
     “a completely different trust pool.”
23        The Debtor ignores that the Corrective Assignment was just
24   that - an instrument correcting a prior, but erroneous
     assignment. The Corrective Assignment itself states that it
25   “corrects the previously recorded Assignment of Deed of Trust
     recorded on March 26, 2010 . . . to correct the full Assignee
26   name.” And, once again, a stay relief proceeding is a summary
27   proceeding. To the extent the Debtor wishes to challenge the
     validity of the assignment, she can do so in the litigation
28   pending in other forums.

                                      6
 1   right to initiate foreclosure supplied U.S. Bank with a
 2   colorable claim and independently satisfied the requirement of
 3   standing.
 4        U.S. Bank also submitted evidence that, under state law, it
 5   was entitled to enforce the Note.    Under California law, a
 6   person is entitled to enforce a note if it is the holder of the
 7   note.   See Cal. Com. Code § 3301.   A note, once endorsed in
 8   blank, is payable to bearer.   Id. § 3109.    Thus, a person in
 9   possession of a note endorsed in blank is a person entitled to
10   enforce the note, regardless of whether they own the note.      Id.
11   § 3301.
12        Here, in support of its requested relief, U.S. Bank
13   submitted a copy of an allonge to the Note, containing an
14   endorsement in blank and the Pham declaration.     Pham attested
15   that U.S. Bank was in possession of the Note and that its
16   possession was continuous from the time that it acquired the
17   loan.   Taken together, U.S. Bank showed that it was entitled to
18   enforce the Note.   This, alternatively, established a colorable
19   claim and, thus, standing to seek stay relief.
20   B.   The bankruptcy court did not improperly align itself with
21        U.S. Bank.
22        The Debtor also argues that the bankruptcy court
23   participated in the stay relief proceeding such that it aligned
24   itself with U.S. Bank and, in the process, violated her due
25   process rights.   She contends that the bankruptcy court
26   repeatedly coached U.S. Bank’s counsel and provided detailed
27   instructions and advice as to the information necessary to grant
28   the bank’s requested relief.   We disagree.

                                     7
 1        Our review of the pertinent transcripts did not identify
 2   any impropriety.   The record, instead, reflects that the
 3   bankruptcy court questioned standing, an issue raised by the
 4   Debtor, required an exacting level of proof on this topic, and,
 5   if anything, required more than the minimum as prescribed by
 6   case authority to establish standing.     There is no evidence
 7   whatsoever that the bankruptcy court was hostile, aggressive, or
 8   threatening to the Debtor or that its comments were
 9   non-judicious or snide.    Cf. Reyes Melendez v. I.N.S., 342 F.3d
10   1001, 1006-07 (9th Cir. 2003) (judge’s demeanor towards
11   petitioner violated due process).
12        There is no evidence that the bankruptcy court coached the
13   U.S. Bank attorney as opposed to requiring additional proof from
14   the bank.   There is no authority for the suggestion that the
15   Debtor had the right to a denial of the stay relief motion,
16   without prejudice, when the bankruptcy court required
17   supplemental evidence.    Instead, the record reflects that the
18   bankruptcy court acted appropriately as a neutral arbiter trying
19   to make a fair evaluation of the evidence and law in reaching a
20   decision.
21                                CONCLUSION
22        Based on the foregoing, we AFFIRM the bankruptcy court.
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