In re: Cindy Yunkong Ikeoka

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: June 26, 2015
• Docket: NC-14-1298-TaDKi
• Status: Unpublished

Opinion

FILED JUN 26 2015 1 NOT FOR PUBLICATION 2 SUSAN M. SPRAUL, CLERK U.S. BKCY.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. 23 24 25 26 27 28