Court Opinion

ID: 2757141
Source: CourtListenerOpinion
Date Created: 2014-12-03 19:08:34.944487+00
Date Added: 2024-06-11T12:45:33.598805
License: Public Domain

FILED
                                                            MAR 09 2012
 1
                                                         SUSAN M SPRAUL, CLERK
                                                           U.S. BKCY. APP. PANEL
 2                                                         OF THE NINTH CIRCUIT

 3                   UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                             OF THE NINTH CIRCUIT
 5   In re:                        )         BAP No.   AZ-11-1444-JuPaD
                                   )
 6   CHRISTINE E. SPRINGER,        )         Bk. No.   09-15521
                                   )
 7                  Debtor.        )
     ______________________________)
 8   CHRISTINE E. SPRINGER,        )
                                   )
 9                  Appellant.     )         M E M O R A N D U M*
     ______________________________)
10
                         Submitted Without Oral Argument
11                              February 24, 2012
12                            Filed - March 9, 2012
13                Appeal from the United States Bankruptcy Court
                            for the District of Arizona
14
         Honorable Randolph J. Haines, Bankruptcy Judge, Presiding
15                  ____________________________
16   Appearances:       Christine E. Springer appeared pro se.
                        ______________________________
17
     Before:      JURY, PAPPAS, and DUNN, Bankruptcy Judges.
18
19            Chapter 71 debtor, Christine E. Springer, appeals the
20   bankruptcy court’s order denying her motion to reopen her case.
21   We AFFIRM.
22
23
24        *
            This disposition is not appropriate for publication.
     Although it may be cited for whatever persuasive value it may
25
     have (see Fed. R. App. P. 32.1), it has no precedential value.
26   See 9th Cir. BAP Rule 8013-1.
          1
27          Unless otherwise indicated, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532 and
28   rule references are to the Federal Rules of Bankruptcy Procedure.

                                       -1-
 1                                I. FACTS
 2        Debtor’s motion to reopen her bankruptcy case related to
 3   the alleged wrongful foreclosure of her condominium located in
 4   Phoenix, Arizona, which occurred after she received her
 5   chapter 7 discharge and her case closed.    The facts leading up
 6   to this appeal are as follows.
 7        In 2007, debtor borrowed $192,845 from Countrywide Bank FSB
 8   (“Countrywide”) to purchase her property.   Two notes and deeds
 9   of trust evidenced and secured the loan.    Debtor fell into
10   default and her property was scheduled for sale at a nonjudicial
11   trustee’s sale on July 9, 2009.
12        Three days before the sale, on July 6, 2009, debtor filed
13   her chapter 7 petition.   Upon the filing of her petition, and on
14   the advice of her attorney, debtor moved out of the property.
15   Debtor listed the property in Schedule D and listed Bank of
16   America Corporation Home Loans Servicing (“BAC”) as holding a
17   claim against the property in an amount over $154,000.     In her
18   Statement of Intention, debtor indicated that she surrendered
19   her real property and did not claim it as exempt.   At no time
20   during debtor’s case did BAC or any other entity seek relief
21   from stay to sell her property.    The bankruptcy court granted
22   debtor a discharge on February 11, 2010 and on February 22,
23   2010, her case was closed.
24        After her discharge, in April 2010, BAC sent debtor a
25   letter indicating that her mortgage loan was assigned, sold or
26   transferred to Countrywide Home Loans, Inc.   The letter
27   reflected that BAC was debtor’s loan servicer.
28        On August 4, 2010, debtor filed a complaint about BAC with

                                      -2-
 1   the Arizona Attorney General’s Office.     Debtor’s complaint was
 2   that she contacted BAC to ask it to foreclose on her property,
 3   which was still in her name.     Although debtor was not living in
 4   the property, her homeowners’ association fees and other
 5   expenses associated with the property continued to accrue.
 6   Debtor complained that she got the “runaround” from different
 7   departments within BAC.2
 8            BAC responded to her complaint, stating that the
 9   foreclosure sale on debtor’s property was scheduled for
10   August 23, 2010.     The letter further stated that debtor had
11   declined a loan modification offer on May 19, 2009.       Rather than
12   a loan modification, debtor wanted to have the debt completely
13   forgiven, which BAC said was not an option.     BAC also stated
14   that they offered debtor a deed in lieu of foreclosure to sign,
15   which debtor did not accept.
16            Debtor responded by writing directly to BAC.    She claimed
17   no deed in lieu of foreclosure was ever offered to her.       Debtor
18   maintained that her bankruptcy attorney attempted to negotiate
19   with Countrywide prior to her bankruptcy, but Countrywide would
20   not reduce the principal on the second mortgage.        Debtor stated
21   that she had no intention of reaffirming the debt and that she
22   continued to receive monthly statements even though she was not
23   personally liable for the debt on her property.     Debtor also
24   alleged that she was receiving phone calls from “debt
25   collectors.”     Finally, debtor stated that unless the loan
26
          2
27          Debtor’s complaint to the Attorney General epitomizes her
     frustration with BAC and the runaround she alleges she received
28   during her quest to have BAC foreclose on her property.

                                       -3-
 1   modification could provide for a $15,000 note at 4.5% interest
 2   for thirty years, she wanted BAC to foreclose on her property.
 3        From what we can tell, the foreclosure sale scheduled in
 4   late August 2010 did not take place.
 5        In September 2010, debtor’s homeowners’ association (“HOA”)
 6   sent her a letter for past due amounts on her association fees,
 7   which totaled $6,783.77.   The letter further stated that the HOA
 8   would commence collection against her unless she brought her
 9   dues current.
10        On December 26, 2010, since the property was vacant and
11   falling into disrepair, and faced with a lawsuit by the HOA,
12   debtor moved back into the property.
13        By February 2011 debtor was still receiving information
14   from BAC about modifying her loan.    In addition BAC continued
15   sending debtor notices about her account.   The notice stated
16   that it was “For Information Purposes” and acknowledged that
17   because debtor had received her discharge, she had no personal
18   obligation to repay her debt.   The notice further stated that
19   “this communication is from a debt collector.”
20        In June 2011, debtor alleges she learned through a real
21   estate agent that Mortgage Electronic Registration Systems, Inc.
22   (“MERS”) had acquired her property in a nonjudicial foreclosure
23   sale on May 27, 2011.   Debtor claimed that she had no notice of
24   this sale.   Upon investigation, debtor learned that BAC had
25   never owned the loans on her property.   Debtor contacted the
26   real estate agent to let her know that debtor would be filing a
27   lawsuit due to the problems she discovered.   Later, the same
28   real estate agent, on behalf of BAC, offered debtor cash to move

                                     -4-
 1   out of the property.
 2            On June 14, 2011, debtor filed a lawsuit against BAC, MERS
 3   and others in the Maricopa County Superior Court.     Debtor sought
 4   to invalidate the trustee’s sale, conducted by Recontrust, and
 5   establish quiet title in her name.      Debtor alleged that none of
 6   the documents showed that the defendants had standing to claim
 7   or sell her home.3     Debtor includes numerous documents in the
 8   record to support her position.
 9            On June 20, 2011, debtor moved for a temporary restraining
10   order in the state court.     The state court scheduled a show
11   cause hearing for July 1, 2011.     On June 29, 2011, the
12   defendants removed the lawsuit to the United States District
13   Court for the District of Arizona on diversity grounds.       BAC
14   then moved to dismiss debtor’s complaint.     In a thirteen page
15   order, the district court found, among other things, that debtor
16   had waived all her claims concerning the trustee’s sale under
17   Arizona law because she did not move for relief prior to the
18   sale taking place.     In addition, the court addressed debtor’s
19   claim that the communications she was receiving violated the
20   discharge injunction.     The district court found that the
21   communications were for informational purposes only and thus
22   there was no violation of the discharge injunction pursuant to
23   the holding in Garske v. Arcadia Fin., Ltd. (In re Garske),
24   287 B.R. 537, 542 (9th Cir. BAP 2002).     Relying on Bisch v.
25   United States (In re Bisch), 159 B.R. 546, 549 (9th Cir. BAP
26
27
          3
            Also on July 14, 2011, debtor filed a notice of lis
28   pendens with the Maricopa County Recorder’s office.

                                       -5-
 1   1993), the district court further found that, contrary to
 2   debtor’s belief, a secured creditor did not have to file a proof
 3   of claim in order for it to enforce its lien.   In the end, the
 4   court dismissed debtor’s complaint with prejudice by order filed
 5   on September 13, 2011.
 6        Prior to the dismissal of her district court case, on
 7   July 19, 2011, debtor moved to reopen her bankruptcy case, but
 8   did not pay the required fee.   In her motion, debtor maintained
 9   that the bankruptcy court was the only court that should or
10   could answer questions relating to the defendants’ right to sell
11   her home because none of the defendants (1) moved for relief
12   from stay during her case or (2) preserved their right to the
13   property in the bankruptcy proceeding by filing a proof of
14   claim.   In essence, debtor maintained that the defendants had no
15   claim to her property and that the bankruptcy court should quiet
16   title in her name.   Our review of the docket shows that debtor
17   did not serve any of the defendants named in her district court
18   complaint with her motion to reopen.
19        On July 20, 2011, the bankruptcy court sent a notice to
20   debtor’s bankruptcy attorney for nonpayment of the filing fee.
21   The notice stated that no further action would be taken on
22   debtor’s motion to reopen until the filing fee was paid.
23   Debtor’s attorney contacted debtor regarding the notice.
24   According to debtor, she called the clerk’s office and was told
25   that no further action would be taken until she paid the fee.
26        On July 28, 2011, the bankruptcy court denied debtor’s
27   motion on two grounds:   first, her failure to pay the filing fee
28   and second, debtor’s request did not reveal any asset that could

                                     -6-
 1   be administered for the benefit of her estate.            This timely
 2   appeal followed.4
 3            On August 11, 2011, debtor paid the filing fee.
 4                                 II.    JURISDICTION
 5            The bankruptcy court had jurisdiction to reopen the case
 6   under 28 U.S.C. § 1334 and § 157(b)(2)(A).            We have jurisdiction
 7   under 28 U.S.C. § 158(a)(1) because we view the order on appeal
 8   as final.
 9                                       III.    ISSUE
10            Whether the bankruptcy court abused its discretion by
11   denying debtor’s motion to reopen her case.
12                           IV.    STANDARDS OF REVIEW
13            The bankruptcy court’s decision whether or not to reopen a
14   bankruptcy case under § 350 is reviewed for an abuse of
15   discretion.     Cisneros v. United States (In re Cisneros),
16   994 F.2d 1462, 1464–65 (9th Cir. 1993).             We apply a two-part
17   test to determine whether the bankruptcy court abused its
18   discretion: (1) we review de novo whether the bankruptcy court
19   “identified the correct legal rule to apply to the relief
20   requested” and (2) if it did, whether the bankruptcy court’s
21   application of the legal standard was illogical, implausible or
22   “without support in inferences that may be drawn from the facts
23   in the record.”     United States v. Hinkson, 585 F.3d 1247,
24   1261–63 (9th Cir. 2009) (en banc).
25
26        4
            We observe that debtor’s notice of appeal did not name any
27   appellees. Further, none of the defendants named in her district
     court complaint, including BAC, were served with the notice of
28   appeal.

                                                -7-
 1        We may affirm on any ground supported by the record.
 2   Stevens v. Nw. Nat’l Ins. Co. (In re Siriani), 967 F.2d 302, 304
 3   (9th Cir. 1992).
 4                             V.   DISCUSSION
 5        Section 350(b) provides that a bankruptcy case “may be
 6   reopened in the court in which such case was closed to
 7   administer assets, to accord relief to the debtor, or for other
 8   cause.”   Reopening a case generally involves “‘only a narrow
 9   range of issues:   whether further administration appears to be
10   warranted; whether a trustee should be appointed; and whether
11   the circumstances of reopening necessitate payment of another
12   filing fee.’”   Lopez v. Specialty Restaurants Corp. (In re
13   Lopez), 283 B.R. 22, 26 (9th Cir. BAP 2002) (quoting Menk v.
14   LaPaglia (In re Menk), 241 B.R. 896, 916–17 (9th Cir. BAP
15   1999)).   In considering these narrow issues, the proper focus is
16   on the benefit to creditors.   In re Lopez, 283 B.R. at 27.     A
17   bankruptcy court may properly deny a motion to reopen where the
18   chance of any substantial recovery for creditors appears “‘too
19   remote to make the effort worth the risk.’”   Id.
20        Debtor’s motion to reopen disclosed no asset that could be
21   administered for the benefit of her estate nor did it provide a
22   basis for according her relief.   Instead, debtor’s motion raised
23   numerous issues relating to the wrongful foreclosure of her
24   property, all of which were previously raised in her district
25   court complaint.   That complaint was dismissed with prejudice,
26   and debtor states in her brief that she has appealed that order
27   to the Ninth Circuit.   Consequently, we do not have jurisdiction
28

                                     -8-
 1   over those issues in this appeal.5
 2              The only remaining basis for reopening debtor’s case would
 3   be “for other cause.”       Debtor’s motion alleged violations of the
 4   discharge injunction and also alleged that the creditor holding
 5   a lien on her property had waived its lien by not participating
 6   in her case.       The district court addressed these concerns in its
 7   order.       Moreover, Debtor misunderstands the treatment of secured
 8   claims in a bankruptcy case vis-a-vis her discharge.       A
 9   lienholder’s failure to file a secured proof of claim means only
10   that the lienholder will not receive a distribution from her
11   estate; it does not waive the lien.       In re Bisch, 159 B.R. at
12   549.       Therefore, although debtor’s personal liability on the
13   note was discharged in her bankruptcy, the lien against her
14   property remained in force.       Accordingly, her lien creditor
15   could enforce its lien against her property after debtor
16   received her discharge.       See Johnson v. Home State Bank,
17   501 U.S. 78 (1991) (“[A] bankruptcy discharge extinguishes only
18   one mode of enforcing a claim — namely, an action against the
19   debtor in personam — while leaving intact another — namely, an
20   action against the debtor in rem.”).
21
22          5
            Debtor requests us to review (1) whether Countrywide or
23   BAC could sell the property and collect on the promissory note
     without proving they are the rightful owner of the note after the
24   closing of the bankruptcy case; (2) whether Countrywide or BAC
     could sell debtor’s home without giving her notice as required by
25   the foreclosure statutes of Arizona; (3) whether “appellees” have
26   violated the Fair Debt Collection Practices Act; and (4) whether
     the sale can be set aside on grounds of lack of standing. Even
27   if we did have jurisdiction, debtor may be precluded from raising
     these issues in the bankruptcy court. However, we need not make
28   that determination in light of the order on appeal.

                                         -9-
 1        Finally, debtor contends that the bankruptcy court abused
 2   its discretion in denying her motion to reopen her case on the
 3   grounds that she did not pay the filing fee.    Debtor relies on
 4   her pro se status and the clerk’s office “confusion” over the
 5   procedure for accepting debtor’s pleadings.    She states that
 6   once she learned about the unpaid fee from her attorney, she
 7   immediately called the court and was told that the court would
 8   not act on her motion until the fee was paid.   This advice was
 9   incorrect since the court then denied the motion to reopen.
10   The record shows that debtor clearly had the means to pay the
11   fee because she eventually paid it, albeit after the court
12   issued its order.   Under these circumstances, to the extent the
13   court erred in denying debtor’s motion to reopen her case for
14   failing to pay the filing fee, we conclude that error was
15   harmless because we affirm the bankruptcy court’s decision on
16   other grounds.   See In re Siriani, 967 F.2d at 304 (the court
17   may affirm on any ground supported by the record).
18                            VI.   CONCLUSION
19        For the reasons stated, we AFFIRM.
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