In re: Garrette Martin, Sr. and Regina Martin

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: October 5, 2011
• Docket: CC-11-1037-PaDKi
• Status: Unpublished

Opinion

FILED OCT 05 2011 SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL 1 OF THE NINTH CIRCUIT

2 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. CC-11-1037—PaDKi ) 6 GARRETTE MARTIN, SR. and REGINA ) Bk. No. CC-10-57965-PC MARTIN, ) 7 ) Debtors. ) 8 ___________________________________) ) 9 GARRETTE MARTIN, SR.; REGINA ) MARTIN, ) 10 ) Appellants, ) 11 ) v. ) M E M O R A N D U M1 12 ) U.S. BANK, N.A., as Trustee, on ) 13 behalf of the Holders of the ) Structured Asset Securities ) 14 Corporation Mortgage Pass-Through ) Certificates, Series 2007-BC3, ) 15 ) Appellee. ) 16 ___________________________________) 17 Submitted Without Oral Argument on September 23, 2011 18 Filed - October 5, 2011 19 Appeal from the United States Bankruptcy Court for the Central District of California 20 Honorable Peter H. Carroll, Chief Bankruptcy Judge, Presiding 21 22 Appearances: Appellants Garrette Martin, Sr. and Regina Martin, pro se, on brief. Gina L. Albertson, Esq. of 23 Albertson Law on brief for Appellee. 24 Before: PAPPAS, DUNN and KIRSCHER, Bankruptcy Judges. 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 8013-1

-1- 1 Chapter 72 debtors Garrette Martin, Sr. and Regina Martin 2 (the “Martins”) appeal the decision of the bankruptcy court 3 granting relief from the automatic stay to U.S. Bank National 4 Association, on behalf of the holders of the Structured Asset 5 Securities Corporation Mortgage Pass-Through Certificates, Series 6 2007-BC3 (“U.S. Bank”), to enforce an unlawful detainer judgment 7 against the Martins. We AFFIRM. 8 THE MARTINS’ FAILURE TO PROVIDE AN ADEQUATE RECORD ON APPEAL AND U.S. BANK’S REQUEST FOR JUDICIAL NOTICE 9 10 As the appellants in this appeal, the Martins failed to 11 designate a record on appeal, or to provide a statement of issues 12 on appeal, in contravention of Rule 8006. The Martins also failed 13 to provide any excerpts of record, in violation of Rule 8009(b), 14 and consequently, their briefs failed to cite to any excerpts of 15 record in support of their arguments, contrary to Rules 16 8010(a)(1)(D) and (E).3 However, insofar as U.S. Bank has 17 2 18 Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and 19 to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The Federal Rules of Civil Procedure are referred to as “Civil Rules.” 20 3 There were other procedural irregularities attributable to 21 the Martins. First, they submitted their opening brief on April 6, 2011, one day after the deadline set by the Panel’s Conditional 22 Order of Dismissal for failure to prosecute this appeal. Then, on April 22, and without leave of the Panel, they submitted a First 23 Amended Opening Brief, identical to the first, but adding a missing certification. The Panel accepted the First Amended Brief 24 as the Martins’ opening brief in this appeal. After U.S. Bank submitted their responsive brief on April 26, the Martins 25 submitted a Second Amended Opening Brief on May 18, 2011, which is a complete revision of their earlier two briefs, and raises 26 numerous new issues not found in their earlier briefs. Since this brief was filed without the permission of the Panel, it violated 27 Rule 8009(a)(3). Finally, the Martins ignored the order of this Panel dated June 24, 2011, directing them to file a supplemental 28 (continued...)

-2- 1 provided a designation of record, statement of issues, and 2 excerpts to which the Martins have not objected, as allowed under 3 Rule 8019, we waive the Martins’ Rule violations. 4 What is missing from the excerpts and the bankruptcy court 5 docket is information relevant to a possible violation of the 6 automatic stay as a result of either an earlier, or the current 7 bankruptcy, and documents relating to the foreclosure. On April 8 26, 2011, U.S. Bank submitted a Request for Judicial Notice 9 (“RJN”) to the Panel dealing with nine documents: five documents 10 from the Official Records of Los Angeles County (“Official 11 Records”) relating to the foreclosure sale of the Martins’ 12 property to U.S. Bank, two PACER docket reports for two prior 13 bankruptcies of the Martins, and two documents from the Los 14 Angeles Superior Court relating to proceedings in that court in an 15 action pending between the Martins and U.S. Bank. The Martins 16 have not objected to the RJN. The sources of all of these 17 documents are government or judicial agencies, and would appear to 18 be accurate records whose reliability cannot reasonably be 19 questioned. FED. R. EVID. 201(b); Mack v. Kuckenmeister, 619 F.3d 20 1010, 1014 n.1 (9th Cir. 2010). We therefore GRANT the RJN as to 21 those documents, and take notice of the existence of the 22 documents, but not for the truth of their contents. 23 FACTS 24 In December 2006, the Martins apparently executed a mortgage 25 26 3 (...continued) 27 brief discussing the implications of an intervening precedential decision of the Panel, Veal v. Am. Home Mortg. Serv., Inc. 28 (In re Veal) 449 B.R. 542 (9th Cir. BAP 2011), in this appeal.

-3- 1 loan note, secured by a deed of trust, to finance the purchase of 2 a residential property in Inglewood, California (the “Property”). 3 The lender was Fieldstone Mortgage Company. The nominee and 4 beneficiary under the Deed of Trust was Mortgage Electronic 5 Registration Systems, Inc. (“MERS”). 6 On May 12, 2008, the Martins were notified that they were in 7 default on mortgage loan payments in the amount of $22,405.56. 8 On July 2, 2008, MERS assigned the Deed of Trust and all 9 beneficial interest therein to Select Portfolio Servicing, Inc. as 10 servicing agent for U.S. Bank. 11 A Notice of Trustee’s sale of the Property was recorded in 12 the Official Records of Los Angeles County on November 17, 2009, 13 with a sale date set for December 16, 2009. 14 Debtor Garrette Martin, Sr. (“Garrette”) filed a chapter 7 15 petition on February 9, 2010. The bankruptcy court ordered that 16 case dismissed on March 4, 2010 for his failure to file proper 17 schedules and statements. 18 Garrette filed a second chapter 7 petition on March 9, 2010. 19 The bankruptcy court dismissed the case on April 2, 2010, again 20 for failure to file schedules and statements. 21 On June 1, 2010, a nonjudicial foreclosure sale was conducted 22 on the Property; a trustee’s deed upon sale conveying the Property 23 to U.S. Bank was recorded in the Official Records of Los Angeles 24 County on June 10, 2010. 25 U.S. Bank commenced an unlawful detainer action in Los 26 Angeles Superior Court on June 29, 2010. Case no. 10L01475. 27 There is no indication in the records submitted that the Martins 28 contested this action. Judgment was entered in favor of U.S. Bank

-4- 1 and against the Martins on September 29, 2010, awarding U.S. Bank 2 possession of the Property; a Writ of Possession was issued on 3 October 15, 2010. 4 On November 8, 2010, the Martins filed a joint petition under 5 chapter 7. On their Schedule A, they claimed ownership of the 6 Property. 7 Thirty days later, on December 8, 2010, U.S. Bank filed a 8 motion for relief from stay to allow it to enforce the unlawful 9 detainer judgment. U.S. Bank argued that the Martins and their 10 bankruptcy estate held no interest in the Property and no right to 11 continued possession, because U.S. Bank had acquired title at the 12 trustee’s foreclosure sale, the unlawful detainer judgment had 13 been entered in favor of U.S. Bank and against the Martins, and a 14 Writ of Possession had been issued. To support the motion, U.S. 15 Bank submitted the following documents: (a) a declaration 16 detailing the foreclosure and unlawful detainer proceedings; (b) a 17 copy of the trustee’s deed upon sale to U.S. Bank; (c) a copy of a 18 “notice for possession” served on the Martins in the unlawful 19 detainer action; (d) a copy of the unlawful detainer complaint; 20 (e) a copy of the clerk’s entry of judgment in the unlawful 21 detainer action; and (f) a copy of the state court Writ of 22 Possession. A hearing on the stay relief motion was set for 23 January 6, 2011. 24 In apparent violation of Bankr. C.D. Cal. Local R. 9013-1(f), 25 requiring that any opposition to a contested motion be filed no 26 later than 14 days before the date set for hearing on the motion, 27 the Martins filed their opposition nine days before the hearing 28 date, on December 28, 2010. Like most of their papers in this

-5- 1 appeal, the Martins’ arguments are difficult to follow. It would 2 appear, however, that they raised the following points: (a) that 3 MERS did not have legal authority to transfer beneficial ownership 4 of the deed of trust to U.S. Bank; (b) that U.S. Bank lacked 5 standing; (c) that U.S. Bank has unclean hands as the result of 6 various unspecified fraudulent transfers, assignments and 7 substitutions after the fact of a foreclosure; and (d) that the 8 Martins retain an equitable interest in the Property as a result 9 of a UCC financing statement indicating over $300,000 in 10 investments in the Property. 11 The bankruptcy court took the U.S. Bank stay relief motion 12 off calendar on January 6, 2011, granting the motion for relief 13 from stay. Although the court did not directly refer to the 14 opposition of the Martins, the court stated that “the failure of 15 the debtor, the trustee, and all other parties in interest to file 16 written opposition at least 14 days prior to the hearing as 17 required by LBR 9013-1(f) is considered as consent to the granting 18 of the motion. LBR 9013-1(h).” Finding that the submissions of 19 U.S. Bank established a prima facie case for relief from stay, and 20 that the motion was not timely challenged, the bankruptcy court 21 granted the motion. The court also observed that “Debtor filed 22 the bankruptcy petition on November 8, 2010 in an apparent effort 23 to stay enforcement of the unlawful detainer judgment.” 24 The bankruptcy court entered its order granting relief from 25 stay on January 11, 2011. The Martins filed a timely appeal on 26 January 19, 2011. 27 JURISDICTION 28 The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334

-6- 1 and 157(b)(2)(G). We have jurisdiction under 28 U.S.C. § 158. 2 ISSUE 3 Whether the bankruptcy court abused its discretion in 4 granting relief from stay to U.S. Bank to enforce the unlawful 5 detainer judgment. 6 STANDARD OF REVIEW 7 We review orders granting relief from the automatic stay for 8 abuse of discretion. Kronemyer v. Am. Contractors Indem. Co. 9 (In re Kronemyer), 405 B.R. 915, 919 (9th Cir. BAP 2009). In 10 applying an abuse of discretion test, we first "determine de novo 11 whether the [bankruptcy] court identified the correct legal rule 12 to apply to the relief requested." United States v. Hinkson, 13 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc). If the bankruptcy 14 court identified the correct legal rule, we then determine whether 15 its "application of the correct legal standard [to the facts] was 16 (1) illogical, (2)implausible, or (3) without support in 17 inferences that may be drawn from the facts in the record." Id. 18 (internal quotation marks omitted). If the bankruptcy court did 19 not identify the correct legal rule, or if its application of the 20 correct legal standard to the facts was illogical, implausible, or 21 without support in inferences that may be drawn from the facts in 22 the record, then the bankruptcy court has abused its discretion. 23 Id. 24 DISCUSSION 25 The bankruptcy court did not abuse its discretion in granting relief from stay to U.S. Bank to enforce 26 the unlawful detainer judgment. 27 A. There is no showing that U.S. Bank violated the automatic 28 stay.

-7- 1 As an apparent defense to enforcement of an unlawful detainer 2 judgment, the Martins argue in all three of their briefs that U.S. 3 Bank violated the automatic stay by conducting an improper 4 foreclosure. Indeed, this was the only argument made in the 5 Martins’ first two briefs. The precise words used in their 6 original and First Amended Briefs4 are as follows: 7 1. On November 18, 2010, at approx. 2:36 P.M., the Appellant filed a Petition for Bankruptcy Chapter 7 8 protection, by filing with the Los Angeles Central District bankruptcy clerk, the petition and filings 9 fees. 10 2. The Deed of Trust was scheduled to be sold at 3:30 P.M, by the Creditor and Creditor’s Trustee. As such, 11 Noticed properly served the same day, giving Notice a Bankruptcy Petition naming the Creditor and Trustee as 12 such at 2:58 P.M., whereas the Trustee completed the sale in violation of the Automatic Stay of Protection, 13 at 3:30 P.M. 14 Martin’s Original Op. Br. at 3, First Amended Op. Br. at 3. 15 Obviously, there are two factually incorrect statements in 16 the Martins’ allegations. First, the Martins’ bankruptcy petition 17 was filed on November 8, 2010, not November 18, 2010. Second, the 18 deed of trust foreclosure sale did not occur on either November 8 19 or 18, 2010, but over six months earlier, on June 1, 2010, when 20 there was no pending bankruptcy case or automatic stay in effect. 21 Under § 362(a), an automatic stay arises upon the 22 commencement of a bankruptcy case which, 23 operates as a stay, applicable to all entities, of — (1) the commencement or continuation, including the 24 issuance or employment of process, of a judicial, administrative, or other action or proceeding against 25 the debtor that was or could have been commenced before the commencement of the case under this title, or to 26 27 4 The Martins’ Second Amended Opening Brief continued the allegation that U.S. Bank had violated the automatic stay, but 28 without further detail.

-8- 1 recover a claim against the debtor that arose before the commencement of the case under this title; (2) the 2 enforcement, against the debtor or against property of the estate, of a judgment obtained before the 3 commencement of the case under this title[.] 4 The stay under § 362 is extremely broad in scope, and 5 prohibits almost any type of formal or informal collection or 6 legal action against a debtor or the property of the estate. 7 Midlantic Nat’l Bank v. N.J. Dep’t of Envtl. Prot., 474 U.S. 495, 8 503 (1986). The automatic stay prevents continuation of a 9 foreclosure proceeding concerning a debtor’s property, or property 10 of a bankruptcy estate, during the pendency of the bankruptcy 11 case. Countrywide Home Loans, Inc. v. Hoopai (In re Hoopai), 12 581 F.3d 1090, 1093 (9th Cir. 2010). Additionally, the automatic 13 stay bars enforcement of an unlawful detainer judgment or writ of 14 possession while the debtor is in bankruptcy. Edwards v. Wells 15 Fargo Bank, N.A. (In re Edwards), 454 B.R. 100, 2011 WL 3211357 16 * 12 (9th Cir. BAP 2011). 17 An essential element in all this case law, however, is that 18 there must be a pending bankruptcy case for the automatic stay to 19 apply. See § 362(c)(1) and (2) (providing that the automatic stay 20 continues until the bankruptcy case is dismissed); Ung v. Boni 21 (In re Boni), 240 B.R. 381, 384 (9th Cir. BAP 1999). 22 Garrette’s first bankruptcy case was pending from February 9, 23 2010 to March 4, 2010. His second bankruptcy case was open from 24 March 9, 2010 to April 4, 2010. The Martins’ latest bankruptcy 25 case was filed on November 8, 2010, and remains pending. In other 26 words, none of the bankruptcy cases were pending on June 1, 2010, 27 the date of the foreclosure sale; on June 10, 2010, the date of 28 the recording of U.S. Bank’s trustee deed of sale in the Official

-9- 1 Records; on June 29, 2010, when U.S. Bank commenced its unlawful 2 detainer action; on September 29, 2010, when the state court 3 granted judgment in the unlawful detainer action in favor of 4 U.S. Bank; or on October 15, 2010, when the state court issued the 5 Writ of Possession. Simply put, none of the critical actions 6 taken by U.S. Bank against the Martins or the Property violated 7 any automatic stay. 8 B. The bankruptcy court did not abuse its discretion in 9 relying on the local bankruptcy rules. 10 The bankruptcy court based its decision to grant relief from 11 stay in favor of U.S. Bank, at least in part, on the failure of 12 any party in interest to object to the motion. In doing so, the 13 court relied on two provisions of the local bankruptcy rules, 14 LBR 9013-1 (f) and (h): 15 LBR 9013-1. MOTION PRACTICE AND CONTESTED MATTERS 16 . . . . 17 (f) Opposition, Joinders, and Responses to Motions. Except as set forth in [provisions not relevant here] 18 each interested party opposing, joining, or responding to the motion must file and serve on the moving party 19 and the United States trustee not later than 14 days before the date designated for hearing either: 20 (1) A complete written statement of all reasons in 21 opposition thereto or in support or joinder thereof, declarations and copies of all photographs and 22 documentary evidence on which the responding party intends to rely, and any responding memorandum of points 23 and authorities. The opposing papers must advise the adverse party that any reply to the opposition must be 24 filed with the court and served on the opposing party not later than 7 days prior to the hearing on the 25 motion; or 26 (2) A written statement that the motion will not be opposed. 27 . . . 28 (h) Failure to File Required Papers. Papers not timely

-10- 1 filed and served may be deemed by the court to be consent to the granting or denial of the motion, as the 2 case may be. 3 We “afford a high level of deference to local rules.” Guam Sasaki 4 Corp. v. Diana’s, Inc., 881 F.2d 713, 715 (9th Cir. 1989); Moncur 5 v. Apricredit Accept. Co. (In re Moncur), 328 B.R. 183, 191 (9th 6 Cir. BAP 2005) (“[W]e defer to the bankruptcy court's construction 7 and interpretation of its own orders and local rules[.]”). The 8 Ninth Circuit has held that failure to comply with a local rule 9 requiring timely opposition to a motion is proper grounds for 10 granting that motion. Ghazil v. Moran, 46 F.3d 52, 53 (9th Cir. 11 1995) (upholding a similar local rule in Nevada that provided “the 12 failure of the opposing party to file a memorandum of points and 13 authorities in opposition to any motion shall constitute a consent 14 to the granting of the motion.").5 15 Of course, the bankruptcy court did not rely solely on the 16 local bankruptcy rules in granting relief from stay. U.S. Bank 17 presented ample evidence to show that it had properly completed a 18 nonjudicial foreclosure sale on the Property prepetition, that it 19 5 In a recent opinion, the Ninth Circuit commented on the 20 rule applicable in the District Court of the Central District of California that apparently is the model for the bankruptcy court’s 21 LBR 9013-1. Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253, 1259 n.6 (9th Cir. 2010). Like the bankruptcy rule, C.D. Cal. 22 Local R. 6-1 provides that any opposition papers must be filed no later than fourteen days before the hearing. The court of appeals 23 found this rule “unusual” because it would allow a movant to file a motion twenty-one days before a scheduled hearing, leaving the 24 opposing party only seven days to file the opposition. Id. The Ninth Circuit noted that all other districts of the Ninth Circuit 25 allowed the opposing party a minimum of fourteen days to file an opposition. While Ahanchian could reflect the Ninth Circuit’s 26 potential concern regarding the bankruptcy court’s LBR 9013-1, there is no cause for alarm under the facts of this case, since 27 the Martins were given at least fourteen days notice of the U.S. Bank motion and to file a timely opposition. They failed to do 28 so.

-11- 1 was the holder of recorded title to the Property, and that it 2 sought and obtained an unlawful detainer judgment and Writ of 3 Possession against the Martins from the state court before the 4 Martins filed their bankruptcy petition. The bankruptcy court 5 therefore had an adequate basis to conclude that U.S. Bank had 6 presented a prima facie case for relief from stay. 7 A creditor meets its burden of presenting a prima facie case 8 for stay relief when it shows that it is the title holder on a 9 property under a recorded trustee’s deed of sale. In re Edwards, 10 2011 WL 3211357 * 9. The bankruptcy court correctly determined 11 that a lawful foreclosure sale had extinguished the Martins’ 12 rights of ownership and possession of the Property. Moeller v. 13 Lien, 25 Cal. App.4th 822, 831 (Cal. Ct. App. 1994). The court 14 found that the unlawful detainer judgment had been entered 15 prepetition, and that “Debtor[s] filed the bankruptcy petition on 16 November 8, 2010 in an apparent effort to stay enforcement of the 17 unlawful detainer judgment.” 18 Based on this record, the bankruptcy court did not abuse its 19 discretion in granting relief from the stay. 20 C. The Martins’ other arguments in the bankruptcy court and 21 on appeal lack merit. 22 As noted above, the Martins submitted a late opposition to 23 the motion for relief from stay in the bankruptcy court that was 24 not considered by the court. Then, in this appeal, they have 25 submitted three “opening” briefs, the third of which was submitted 26 without permission of the Panel, and reiterated arguments that 27 they made in the late opposition in the bankruptcy court. As 28 discussed above, we affirm the bankruptcy court’s decision to

-12- 1 consider only timely motion oppositions. Out of respect for that 2 decision, we could strike the Second Amended Brief and its 3 arguments as submitted in violation of Rule 8009(a)(3). However, 4 even were we to consider the arguments the Martins made in the 5 late opposition filed in the bankruptcy court, or in the late and 6 improperly filed Second Amended Opening Brief, those arguments are 7 without merit. 8 The thrust of the Martins’ arguments is that the foreclosure 9 sale was improper, because neither MERS nor U.S. Bank had 10 authority to conduct it, and that U.S. Bank was not a holder in 11 due course of the note or deed of trust and lacked standing to 12 seek relief from stay in the bankruptcy court. 13 A recent Opinion of the Panel touches on the Martins’ 14 arguments, In re Edwards. Despite the Martins’ arguments, the 15 issue in this appeal is not whether U.S. Bank was the holder of 16 the note at the time of the foreclosure sale, but rather whether 17 U.S. Bank has some cognizable property interest under state law 18 that would allow it to prosecute a motion for relief from stay to 19 enforce an unlawful detainer judgment. Or more specifically, in 20 light of In re Edwards, the issue here is whether, when taken 21 together, U.S. Bank’s recorded trustee’s deed of sale and the 22 unlawful detainer judgment demonstrate that U.S. Bank held a 23 colorable interest in the Property. In re Edwards, 2011 WL 24 3211357 * 9. 25 Analyzing California law in In re Edwards, the Panel 26 concluded that the specific combination of a recorded deed of sale 27 with a subsequent unlawful detainer judgment satisfied the 28 colorable interest requirement for standing to seek relief from

-13- 1 the automatic stay to enforce an unlawful detainer judgment and 2 Writ of Possession. In re Edwards, 2011 WL 3211357 * 11. In 3 other words, the Panel has already determined that, under facts 4 similar to those in this appeal, U.S. Bank indeed had standing to 5 ask the bankruptcy court for stay relief to recover possession of 6 the Property.6 7 CONCLUSION 8 The bankruptcy court did not abuse its discretion in granting 9 U.S. Bank relief from stay to enforce the unlawful detainer 10 judgment. We AFFIRM the order of the bankruptcy court. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6 The Martins’ other arguments are equally unpersuasive. That the Martins made substantial improvements to the Property is 26 simply not probative that they retained an equity interest in the Property post-foreclosure. And their various allegations that, in 27 other cases, MERS has improperly transferred interests in trust deeds or property, even if true, do not prove that MERS may have 28 acted improperly in this case.

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