Doris Barrett v. 2298 Driftwood Tide Trust

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 28, 2020
• Docket: 19-60043
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION OCT 28 2020 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: DORIS J. BARRETT; WILLIAM No. 19-60043 BARRETT, BAP No. 19-1086 Debtors,

------------------------------ MEMORANDUM*

THE BANK OF NEW YORK MELLON, FKA The Bank of New York, as Trustee for the Certificateholders of CWALT, Inc., Alternative Loan Trust 2005-58, Mortgage Pass-Through Certificates, Series 2005-58,

Appellant,

v.

2298 DRIFTWOOD TIDE TRUST,

Appellee.

Appeal from the Ninth Circuit Bankruptcy Appellate Panel Lafferty III, Taylor, and Faris, Bankruptcy Judges, Presiding

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Submitted October 23, 2020** San Francisco, California

Before: HAWKINS, N.R. SMITH, and R. NELSON, Circuit Judges.

Appellant The Bank of New York Mellon (the “BoNYM”) appeals the

Bankruptcy Appellate Panel of the Ninth Circuit’s (“BAP”) order dismissing the

BoNYM’s appeal of a bankruptcy court order for a lack of standing. Standing is an

issue of law that we review de novo. Palmdale Hills Prop., LLC v. Lehman

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

Cir. 2011). We have jurisdiction under 28 U.S.C. § 158(d), and we affirm.

In Doris and William Barrett’s consolidated Chapter 7 bankruptcy

proceeding, the bankruptcy court granted the motion of a creditor, 2298 Driftwood

Tide Trust (the “Trust”), to retroactively annul the automatic stay related to certain

real property of the debtors located in Henderson, Nevada.1 BoNYM, a creditor

with a deed of trust on the property, appealed the bankruptcy court’s retroactive-

annulment order to the BAP. Relying on Tilley v. Vucurevich (In re Pecan Groves

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). 1 Because the bankruptcy court granted the Trust’s retroactive-annulment motion, the bankruptcy court denied as moot BoNYM’s motion seeking a determination that the foreclosure sale of the property violated the automatic stay. 2 of Ariz.), 951 F.2d 242, 245 (9th Cir. 1991), the BAP dismissed BoNYM’s appeal

for a lack of standing.

The BAP correctly determined that BoNYM does not have independent

standing to appeal the bankruptcy court’s grant of the Trust’s motion for

retroactive relief from the automatic stay. In this circuit, “only a ‘person

aggrieved,’ that is, someone who is ‘directly and adversely affected pecuniarily’ by

a bankruptcy court’s order, has standing to appeal that order.” Harkey v. Grobstein

(In re Point Ctr. Fin., Inc.), 890 F.3d 1188, 1191 (9th Cir. 2018) (quoting

Fondiller v. Robertson (In re Fondiller), 707 F.2d 441, 443 (9th Cir. 1983)).

Applying this standard, we held in In re Pecan Groves of Arizona that “a creditor

has no independent standing to appeal an adverse decision regarding a violation of

the automatic stay.” 951 F.2d at 245. We reasoned that “if the trustee does not seek

to enforce the protections of the automatic stay, [then] no other party may

challenge acts purportedly in violation of the automatic stay,” because 11 U.S.C.

§ 362 “is intended solely to benefit the debtor estate.” Id. Put differently, because

the automatic-stay provisions of the Bankruptcy Code are intended “solely” for the

benefit of the debtor and the debtor’s estate, id., individual creditor’s interests do

not “fall within the zone of interests protected by” the automatic-stay provisions of

the Bankruptcy Code, Sierra Club v. Trump, 929 F.3d 670, 700 (9th Cir. 2019)

3 (quoting Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 129

(2014)).

The BoNYM argues unpersuasively that the “person-aggrieved” test should

not be applied, because courts “generally do not invoke [the person-aggrieved]

doctrine ‘in instances in which the appellant was the party that brought the motion

at issue on appeal.’” In re Palmdale Hills, 654 F.3d at 874 (quoting Sherman v.

SEC (In re Sherman), 491 F.3d 948, 957 n.8 (9th Cir. 2007)). The BoNYM is

appealing the bankruptcy court’s grant of the Trust’s motion for retroactive relief

from the automatic stay. Thus, the BAP properly invoked the “person-aggrieved”

test, because courts regularly invoke the doctrine when the appellant, like the

BoNYM, “is a party other than the moving party.” Id. (quoting In re Sherman, 491

F.3d at 957 n.8).

Next, because the BoNYM was not a party to the motion to retroactively

annul the automatic stay, it must have “independent standing to appeal” the order.

See In re Pecan Groves of Ariz., 951 F.2d at 245. However, In re Pecan Groves of

Arizona forecloses that possibility. The BoNYM, a secured creditor, simply does

not have “independent standing to appeal an adverse decision regarding a violation

of the automatic stay,” because the automatic-stay provisions of the Bankruptcy

4 Code are intended “solely” to benefit the debtor and the debtor’s estate. See id.; see

also Lexmark Int’l, Inc., 572 U.S. at 129.

The BoNYM offers no compelling reason why In re Pecan Groves of

Arizona’s holding should not apply here. First, the BoNYM argues that “Congress

intended to protect both debtors and creditors through the automatic bankruptcy

stay.” However, in In re Pecan Groves of Arizona, we rejected the creditors’

argument that “the purpose of the automatic stay is to protect both the debtor and

creditors,” specifically finding that § 362 “is intended solely to benefit the debtor

estate.” 951 F.2d at 245.

The BoNYM next argues that In re Pecan Groves of Arizona should be

cabined to its precise facts. However, by its plain terms In re Pecan Groves of

Arizona cuts a much wider swath, holding that “a creditor has no independent

standing to appeal an adverse decision regarding a violation of the automatic stay.”

Id. This holding was predicated, in part, on the finding that the automatic stay is

intended “solely” for the benefit of the debtor and the debtor’s estate. Id. Thus,

although the BoNYM attempts to distinguish its facts from those of In re Pecan

Groves of Arizona, it cannot escape the conclusion that the automatic stay is not

intended to benefit individual creditors. See id. Thus, the BoNYM lacks standing,

5 because its interests do not fall within the “zone of interests” intended to be

protected by the automatic-stay provisions of the Bankruptcy Code.

Finally, the BoNYM’s attempts to cast doubt on the continued validity of In

re Pecan Groves of Arizona are unsuccessful. The cases identified by the BoNYM

do not undermine or call into question the continued vitality of In re Pecan Groves

of Arizona’s holding. For example, the BoNYM argues that Schwartz v. United

States (In re Schwartz), 954 F.2d 569 (9th Cir. 1992), supports finding that

creditors have standing to pursue violations of the automatic stay. However, the

sole issue addressed in Schwartz was “whether creditor violations of the

Bankruptcy Code’s automatic stay provision are void or simply voidable.” Id. at

570–71. The court did not consider whether a creditor has standing to enforce

violations of the automatic stay. Simply put, the court’s determination that

“Congress intended violations of the automatic stay to be void rather than

voidable,” id. at 571, does not undermine or somehow alter the holding in In re

Pecan Groves of Arizona. Moreover, the other Ninth Circuit cases identified by the

BoNYM that note that the automatic stay benefits creditors as well as debtors do

not undermine or alter the holding in In re Pecan Groves of Arizona. Indeed, those

6 courts were not attempting to ascertain the “zone of interests” protected by 11

U.S.C. § 362 for appellate standing purposes.2

In sum, for bankruptcy appellate standing purposes, the automatic-stay

provisions in the Bankruptcy Code are intended “solely” for the benefit of the

debtor and the debtor’s estate. See In re Pecan Groves of Ariz., 951 at 245.

Therefore, “a creditor has no independent standing to appeal an adverse decision

regarding a violation of the automatic stay,” id., because the creditor’s interests do

not “fall within the zone of interests protected by” the automatic stay-provisions of

the Bankruptcy Code, see Sierra Club, 929 F.3d at 700 (quoting Lexmark Int’l,

Inc., 572 U.S. at 129). Thus, the BoNYM does not have standing to enforce the

2 Also, contrary to the BoNYM’s argument, In re Leeds, 589 B.R. 186 (Bankr. D. Nev. 2018) is not “directly on point.” Aside from the fact this case is readily distinguishable on its facts, the BoNYM relies heavily on Judge Nakagawa’s stated concerns that the holding in In re Pecan Groves of Arizona “has been misstated,” because there is significant authority supporting the “proposition that the automatic stay is intended to benefit creditors, as well as debtors.” Id. at 198 n.18, 200 n.22 (quoting In re Int’l Forex of Cal., Inc., 247 B.R. 284, 291 (Bankr. S.D. Cal. 2000)). However, in the instant case, Judge Nakagawa recognized that, “[a]lthough this bankruptcy court ha[d] expressed a different view that the automatic stay also protects creditors [in In re Leeds], the Ninth Circuit recently reiterated its view in Pecan Groves that the only parties with standing to object to retroactive relief from stay are the debtor and the bankruptcy trustee.” In re Barrett, No. 08-13570-MKN, 2019 WL 5884234, at *8 n.15 (D. Nev. March 6, 2019) (unpublished) (citing U.S. Bank, N.A. v. SFR Invs. Pool 1, LLC (In re Petrone), 754 F. App’x 590, 591 (9th Cir. 2019) (unpublished)). Thus, in light of his statements in the instant matter, Judge Nakagawa’s concerns in In re Leeds are of diminished import. 7 automatic stay against other creditors, to oppose the motion for retroactive

annulment of the automatic stay, or to appeal the bankruptcy court’s grant of the

retroactive annulment motion. See In re Pecan Groves of Ariz., 951 F.2d at 245.

AFFIRMED.