In re: Guillermina Aguilar

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: December 10, 2014
• Docket: CC-14-1071-PaTaKu CC-14-1073-PaTaKu (Related Appeals)
• Status: Unpublished

Opinion

FILED DEC 10 2014 1 NOT FOR PUBLICATION 2 SUSAN M. SPRAUL, CLERK U.S. BKCY.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. CC-14-1071-PaTaKu ) CC-14-1073-PaTaKu 6 GUILLERMINA AGUILAR, ) (Related Appeals) ) 7 Debtor. ) Bankr. No. 13-28245-BR ______________________________) 8 ) Adv. Proc. 13-02076-BR GUILLERMINA AGUILAR, ) 9 ) Appellant, ) 10 ) v. ) M E M O R A N D U M1 11 ) OCWEN LOAN SERVICING, LLC; ) 12 INDY MAC MORTGAGE SERVICES; ) MORTGAGE ELECTRONIC ) 13 REGISTRATION SYSTEMS, INC.; ) QUALITY LOAN SERVICING ) 14 CORPORATION; PITE DUNCAN, LLP,) ) 15 Appellees. ) ______________________________) 16 ) GUILLERMINA AGUILAR, ) 17 ) Appellant, ) 18 ) v. ) 19 ) OCWEN LOAN SERVICING, LLC; ) 20 INDY MAC MORTGAGE SERVICES, ) MORTGAGE ELECTRONIC ) 21 REGISTRATION SYSTEMS, INC., ) ) 22 Appellees. ) ______________________________) 23 Argued and Submitted on November 20, 2014 24 at Los Angeles, California 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. 28 See 9th Cir. BAP Rule 8013-1. 1 Filed - December 10, 2014 2 Appeal from the United States Bankruptcy Court for the Central District of California 3 Honorable Barry Russell, Bankruptcy Judge, Presiding 4 5 Appearances: Appellant Guillermina Aguilar argued pro se, assisted by translator Victor Rivera; Kerry W. 6 Franich of Severson & Werson PC argued for appellees Mortgage Electronic Registration 7 Systems, Inc., Ocwen Loan Servicing, LLC, and Indy Mac Mortgage Services; Melissa Robbins Coutts of 8 McCarthy & Holthus, LLP argued for appellee Quality Loan Servicing Corporation. 9 10 Before: PAPPAS, TAYLOR, and KURTZ, Bankruptcy Judges. 11 12 These are related appeals by chapter 72 debtor Guillermina 13 Aguilar (“Aguilar”). In No. 14-1071, Aguilar appeals the order 14 of the bankruptcy court dismissing her adversary proceeding 15 against Ocwen Loan Servicing, LLC (“Ocwen”), Indy Mac Mortgage 16 Services (“Indy Mac”), Quality Loan Servicing Corp. (“QLS”), and 17 Mortgage Electronic Registration Systems, Inc. ("MERS"). In 18 No. 14-1073, she appeals the bankruptcy court’s order granting 19 relief from the stay to Ocwen. We AFFIRM both orders. 20 FACTS 21 Because the appeals involve many common facts and the same 22 property, we recite here the relevant facts and, below, set forth 23 a separate discussion of the issues raised concerning the two 24 25 2 Unless otherwise indicated, all chapter and section 26 references are to the Bankruptcy Code, 11 U.S.C. §§ 101–1532, all 27 Rule references are to the Federal Rules of Bankruptcy Procedure, Rules 1001–9037, and all Civil Rule references are to the Federal 28 Rules of Civil Procedure 1–86.

-2- 1 appeals. 2 We are hindered in our review in this appeal because Aguilar 3 did not supply the Panel with required excerpts of record, nor do 4 her appellate briefs contain any significant citations to legal 5 authorities. Appellees provided some necessary documents for our 6 consideration in their excerpts. As our motions panel previously 7 advised the parties, to aid in our review, we may take judicial 8 notice of the bankruptcy court’s dockets in the bankruptcy case 9 and adversary proceeding. O’Rourke v. Seaboard Surety Co. 10 (In re E.R. Fegert), 887 F.2d 955, 957-58 (9th Cir. 1988). 11 Prepetition Events 12 On May 2, 2007, Aguilar and her husband borrowed $406,500 13 from Indy Mac to purchase a property in Los Angeles (the 14 “Property”). To secure the loan, they signed a promissory note 15 and deed of trust encumbering the Property. MERS was designated 16 in the deed of trust as beneficiary, solely as nominee for 17 IndyMac. 18 In November 2009, MERS assigned the deed of trust to OneWest 19 Bank, N.A (“OneWest”). Later in November 2009, OneWest 20 substituted QLS as the trustee under the deed of trust. QLS sent 21 Aguilar a Notice of Default for failure to make payments due 22 under the note on November 24, 2009. 23 QLS issued a notice a trustee’s sale of the Property on 24 April 23, 2013, alleging that the unpaid balance on the note was 25 $575,335, and scheduling the trustee’s sale for May 23, 2013. 26 On or about September 19, 2013, OneWest assigned the deed of 27 trust to Ocwen. 28

-3- 1 The Bankruptcy Petitions3 2 Aguilar filed a chapter 7 petition, case no. 13-11933, on 3 January 24, 2013; it was dismissed on February 13, 2013, for 4 failure to file required papers. Aguilar filed another chapter 7 5 petition, case no. 13-14222, on February 19, 2013; it was also 6 dismissed for failure to file information on March 14, 2013. She 7 filed a third chapter 7 petition on March 22, 2013, case 8 no. 13-17436; this bankruptcy case remains open, and entry of 9 Aguilar’s discharge has been withheld because of her failure to 10 file the requisite bankruptcy counseling certificate. 11 Aguilar filed a joint chapter 13 petition with her husband, 12 Jose Joel Aguilar, case no. 13-23380, on May 22, 2013; the 13 bankruptcy court granted the Aguilars’ request for voluntary 14 dismissal of this case on July 24, 2013. 15 Aguilar filed a fourth individual petition under chapter 7, 16 commencing the bankruptcy case out of which these appeals arise, 17 on July 18, 2013. On her Schedules A and D, she listed the 18 Property as an “investment property” with a secured claim of 19 $641,602.37 in favor of Indy Mac, and a current value of 20 $426,176.00. 21 Relief from Stay 22 Ocwen filed a motion for relief from the automatic stay in 23 the bankruptcy case on January 13, 2014 and its amended motion on 24 January 15, 2014. In it, Ocwen sought relief to foreclose the 25 trust deed under § 362(d)(1), alleging that its interest in the 26 27 3 All of the bankruptcy petitions discussed here were filed 28 with the bankruptcy court in the Central District of California.

-4- 1 Property was not adequately protected and that the bankruptcy 2 case was filed in bad faith; under (d)(2), alleging that Aguilar 3 lacked any equity in the Property; and under (d)(4), alleging 4 that Aguilar had engaged in a scheme to hinder, delay, or defraud 5 her creditors by the multiple bankruptcy filings. In response, 6 Aguilar indicated that she had filed an adversary proceeding 7 concerning the Ocwen loan seeking to quiet title to the Property. 8 The bankruptcy court conducted a hearing on the motion for 9 stay relief on February 18, 2014. Aguilar appeared pro se, 10 assisted by a translator; Ocwen was represented by counsel. The 11 court indicated its intention to grant the stay relief motion, 12 commenting: 13 From my standpoint, this is — our records, it’s either the sixth or seventh bankruptcy. I think you’ve abused 14 the bankruptcy system and you haven’t paid anything for at least four years. So I’m going to grant the 15 request. 16 Hr’g Tr. 4:14-17, February 18, 2014. 17 The bankruptcy court entered an order on February 20, 2014, 18 granting relief from stay in Ocwen’s favor under § 362(d)(1), 19 (d)(2) and (d)(4) (the “Stay Relief Order”). Aguilar filed a 20 timely appeal of the Stay Relief Order. 21 The Adversary Proceeding 22 On November 1, 2013, Aguilar filed an adversary complaint 23 against Ocwen, QLS, Indy Mac, and MERS, asserting a claim for 24 declaratory relief and quiet title to the Property. She also 25 alleged violations of Cal. Civ. Code § 2923.5 and Rule 3001; the 26 complaint was amended on December 31, 2013. 27 In both the original and amended complaints, Aguilar listed 28 both herself and the chapter 7 trustee, Rosendo Gonzalez

-5- 1 (“Trustee”), as plaintiffs. On January 29, 2014, Trustee filed 2 a “Trustee’s Notice of Debtor’s Improper Filing of Pleadings” in 3 the adversary proceeding in which he advised the bankruptcy court 4 and other parties that, “at no time has the Trustee authorized, 5 agreed, signed, instructed, or advised the Debtor or anyone in 6 this case to file a pleading purportedly on behalf of the 7 Trustee.” 8 Ocwen, Indy Mac, and MERS filed a motion to dismiss the 9 amended complaint on January 7, 2014, arguing that Aguilar lacked 10 standing to pursue the action because the Property was property 11 of the bankruptcy estate, and that only the chapter 7 trustee 12 could assert the claims made in the amended complaint; the 13 defendants sought dismissal under Civil Rule 12(b)(6), applicable 14 in adversary proceedings via Rule 7012, for failure to state a 15 claim upon which any relief could be granted. QLS joined in the 16 dismissal motion on February 5, 2014. 17 The hearing on the motion to dismiss took place on 18 February 18, 2014. Aguilar was present, aided by a translator. 19 Defendants were represented by counsel. Explaining its intention 20 to grant the motion, the court observed: 21 I am going to dismiss this complaint. []There are a number of things . . . that I agree with in 22 [Defendants’] papers, but it’s not [Aguilar’s] motion to file. . . . [T]his lawsuit is property of the 23 Chapter 7 trustee . . . . There’s simply no ability to bring this cause of action on behalf of 24 [Aguilar]. . . . I am going to grant the motion to dismiss. 25 26 Hr’g Tr. 4:13-21. 27 On March 5, 2014, the bankruptcy court entered the order 28 dismissing the adversary proceeding, without leave to amend, for

-6- 1 the reasons it had recited at the hearing. Aguilar filed a 2 timely appeal. 3 JURISDICTION 4 The bankruptcy court had jurisdiction under 28 U.S.C. 5 §§ 1334 and 157(b)(2)(A) and (G). We have jurisdiction under 6 28 U.S.C. § 158. 7 ISSUES 8 Whether the bankruptcy court abused its discretion in 9 granting relief from the stay. 10 Whether the bankruptcy court erred in dismissing the 11 adversary proceeding under Civil Rule 12(b)(6). 12 STANDARDS OF REVIEW 13 We review a bankruptcy court's order granting relief from 14 the automatic stay for an abuse of discretion. Arneson v. 15 Farmers Ins. Exch. (In re Arneson), 282 B.R. 883, 887 (9th Cir. 16 BAP 2002). To determine whether the bankruptcy court abused its 17 discretion, we conduct a two-step inquiry: (1) we review de novo 18 whether the bankruptcy court "identified the correct legal rule 19 to apply to the relief requested" and (2) if it did, whether the 20 bankruptcy court's application of the legal standard was 21 illogical, implausible or "without support in inferences that may 22 be drawn from the facts in the record." United States v. 23 Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009)(en banc). 24 The bankruptcy court’s dismissal of an adversary proceeding 25 under Rule 7012/Civil Rule 12(b)(6) is reviewed de novo. N.M. 26 State Inv. Council v. Ernst & Young, LLP, 641 F.3d 1089, 1094 27 (9th Cir. 2011); Barnes v. Belice (In re Belice), 461 B.R. 564, 28 572 (9th Cir. BAP 2011).

-7- 1 I. No. 14-1073 2 The bankruptcy court did not abuse its discretion in granting relief from stay. 3 4 The bankruptcy court granted Ocwen’s motion for relief from 5 stay because Aguilar had not made any payments on the secured 6 note in over four years and had filed multiple bankruptcy 7 petitions within the preceding one year, which the court 8 concluded amounted to an abuse of the bankruptcy system. 9 Although we find no abuse of discretion in the court’s order, 10 because of the repeated filings, it appears the order was 11 unnecessary as there was no automatic stay in effect in the 12 bankruptcy case. 13 The court granted relief from stay under § 362(d)(1), (d)(2) 14 and (d)(4), which provide: 15 (d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the 16 stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or 17 conditioning such stay– 18 (1) for cause, including the lack of adequate protection of an interest in property of such party in 19 interest; 20 (2) with respect to a stay of an act against property under subsection (a) of this section, if– 21 (A) the debtor does not have an equity in such property; and 22 (B) such property is not necessary to an effective reorganization; 23 . . . 24 (4) with respect to a stay of an act against real 25 property under subsection (a), by a creditor whose claim is secured by an interest in such real property, 26 if the court finds that the filing of the petition was part of a scheme to delay, hinder, or defraud creditors 27 that involved either– (A) transfer of all or part ownership of, or 28 other interest in, such real property without the

-8- 1 consent of the secured creditor or court approval; or (B) multiple bankruptcy filings affecting such 2 real property. 3 Section 362(d)(1) enables a creditor to obtain an order 4 terminating the automatic stay to pursue foreclosure proceedings 5 against estate property "for cause." The “cause” explicitly 6 referenced in § 362(d)(1) is lack of adequate protection, but it 7 is only an example, rather than the exclusive grounds for relief, 8 under § 362(d)(1). Ellis v. Parr (In re Ellis), 60 B.R. 432, 435 9 (9th Cir. BAP 1985). What constitutes adequate cause to 10 terminate the automatic stay is determined on a case-by-case 11 basis. Delaney-Morin v. Day (In re Delaney-Morin), 304 B.R. 365, 12 369 (9th Cir. BAP 2003) (citing MacDonald v. MacDonald 13 (In re MacDonald), 755 F.2d 715, 717 (9th Cir. 1985)). The party 14 seeking to preserve the stay, in this instance Aguilar, has the 15 burden of proof to establish that there is no cause to terminate 16 the stay. § 362(g); In re Ellis, 60 B.R. at 435. 17 Here, Ocwen showed that Aguilar had not made any payments on 18 the loan in over four years, which amounted to fifty-three missed 19 payments, totaling $164,128.31. We have held that a debtor’s 20 persistent failure to make payments, standing alone, may 21 constitute adequate cause for relief from the stay. In re Ellis, 22 60 B.R. at 435; see also, Price v. Del. State Police Fed. Credit 23 Union (In re Price), 370 F.3d 362, 373 (3d Cir. 2004) ("A 24 persistent failure to make monthly payments under loan documents 25 can constitute cause for granting relief from the automatic 26 stay."). The bankruptcy court therefore did not abuse its 27 discretion granting relief from stay to Ocwen under § 362(d)(1). 28 Section 362(d)(2) authorizes relief from the stay when the

-9- 1 debtor lacks equity in the property and it is not necessary to 2 effective reorganization. In this context, equity is “the amount 3 or value of a property above the total liens or charges.” 4 Stewart v. Gurley, 745 F.2d 1194, 1195 (9th Cir. 1984). The 5 requirement that the property not be necessary for reorganization 6 is not implicated in a chapter 7 liquidation bankruptcy case 7 since no reorganization is contemplated. In re Vitreous Steel 8 Prods. Co., 911 F.2d 1223, 1232 (7th Cir. 1990). Although the 9 bankruptcy court did not make explicit findings under 10 § 362(d)(2), it was aware from Aguilar’s bankruptcy schedules and 11 the declaration of Ocwen’s agent that both parties valued the 12 Property at $426,176.00, and that Ocwen’s loan balance was 13 $641,602.37. In the absence of other proof, it clearly appeared 14 that Aguilar lacked equity in the Property. The bankruptcy court 15 therefore did not abuse its discretion in granting relief from 16 stay to Ocwen under § 362(d)(2). 17 Section 362(d)(4)(B) allows the bankruptcy court to grant 18 relief from stay to a creditor whose debt is secured by real 19 property where it is shown that the debtor has engaged in a 20 scheme to delay, hinder or defraud creditors through multiple 21 bankruptcy filings. First Yorkshire Holdings, Inc. v. Pacifica 22 L 22, LLC (In re First Yorkshire Holdings, Inc.), 470 B.R. 864, 23 870 (9th Cir. BAP 2012); see also (Behrens v. U.S. Bank, N.A. 24 (In re Behrens), 501 B.R. 351, 355 (8th Cir. BAP 2013). Here, 25 the bankruptcy court found that Aguilar had engaged in such a 26 scheme by making four bankruptcy filings within the past twelve 27 months, most of which were dismissed based upon her failure to 28 prosecute them, and that her conduct constituted an abuse of the

-10- 1 bankruptcy process. The record adequately supports this finding. 2 It is undisputed that Ocwen is a creditor with a secured interest 3 in the Property, and Aguilar has not challenged in this appeal 4 the court’s finding that she was engaged in such a scheme. Thus, 5 the bankruptcy court did not abuse its discretion in granting 6 relief from stay under § 362(d)(4). 7 While we conclude the bankruptcy court had ample cause to 8 terminate the automatic stay, as it turns out, there was no 9 automatic stay in effect for the bankruptcy court to terminate in 10 this case. Our review of the record indicates that Aguilar filed 11 three cases within twelve months before her current petition and 12 that all of these were dismissed for reasons other than abuse 13 under § 707(b). Consequently, under § 362(c)(4)(A), no automatic 14 stay ever arose in the current bankruptcy case. That Code 15 provision states: 16 (4)(A)(I) if a single or joint case is filed by or against a debtor who is an individual under this title, 17 and if 2 or more single or joint cases of the debtor were pending within the previous year but were 18 dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 19 707(b), the stay under subsection (a) shall not go into effect upon the filing of the later case[.] 20 21 § 362(c)(4)(A)(I). 22 The Panel has held that, through § 362(c)(4), Congress 23 intended that, when a debtor commences a third bankruptcy case 24 (i.e., where the debtor has had two pending cases within the 25 previous year that were dismissed for reasons other than under 26 § 707(b)), the automatic stay "shall not go into effect upon the 27 filing of the later case." § 362(c)(4)(A)(I); Reswick v. Reswick 28 (In re Reswick), 446 B.R. 362, 372-73 (9th Cir. BAP 2011). In

-11- 1 contrast to a second filing within the same year, where the 2 automatic stay goes into effect but then terminates on the 3 thirtieth day after the petition date if an extension is not 4 obtained, for a third filing (and, a fortiori, in a fourth filing 5 within one year such as this one), the automatic stay simply does 6 not arise at all. Nelson v. George Wong Pension Trust 7 (In re Nelson), 391 B.R. 437, 452 (9th Cir. BAP 2008) ("Clearly, 8 Congress could, and did, intend the consequences of repeat 9 filings to be different, and potentially more severe, as the 10 number of successive filings increases."). 11 On this record, we conclude that the bankruptcy court did 12 not abuse its discretion in granting relief from stay under 13 § 362(d)(1), (d)(2), and (d)(4). Moreover, as an alternative 14 basis for our holding, it appears that there never was a stay in 15 effect in Aguilar’s current bankruptcy case, such that the 16 bankruptcy court could not err by purporting to terminate it. 17 Further, a fair view of the bankruptcy court’s reasoning is that 18 the court was principally concerned with stopping the abuse of 19 the bankruptcy process by Aguilar’s serial bankruptcy filings and 20 entered its decision under § 362(d)(1), (2) and (4) to prevent 21 the continuing abuse. 22 II. No. 14-1071 23 The bankruptcy court did not err in dismissing Aguilar’s adversary proceeding under Civil Rule 12(b)(6). 24 25 Although very difficult to decipher, Aguilar appears to make 26 one claim for relief in her First Amended Complaint. She seeks 27 to quiet title in the Property, making various allegations of 28 improper procedures in transfer of the note and deed of trust.

-12- 1 We examine that claim and allegations below. But first we 2 examine whether Aguilar has standing to bring any claims related 3 to the Property. 4 A. Aguilar lacked standing to prosecute the adversary proceeding. 5 6 Under Civil Rule 12(b)(6), made applicable in adversary 7 proceedings via Rule 7012, a bankruptcy court may dismiss a 8 complaint if it fails to "state a claim upon which relief can be 9 granted." In reviewing a Civil Rule 12(b)(6) motion, the 10 bankruptcy court must accept as true all facts alleged in the 11 complaint and draw all reasonable inferences in favor of the 12 plaintiff. Maya v. Centex Corp., 658 F.3d 1060, 1068 (9th Cir. 13 2011); Newcal Indus., Inc. v. Ikon Office Solutions, 513 F.3d 14 1038, 1043 n.2 (9th Cir. 2008). However, the trial court need 15 not accept as true conclusory allegations in a complaint, or 16 legal characterizations cast in the form of factual allegations. 17 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007); Warren 18 v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 19 2003). 20 To avoid dismissal under Civil Rule 12(b)(6), a plaintiff 21 must aver in the complaint "sufficient factual matter, accepted 22 as true, to ‘state a claim to relief that is plausible on its 23 face.’" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 24 Twombly, 550 U.S. at 570). A claim cannot be plausible when it 25 has no legal basis. Cedano v. Aurora Loan Servs. (In re Cedano), 26 470 B.R. 522, 528 (9th Cir. BAP 2012). A dismissal under Civil 27 Rule 12(b)(6) may be based on either the lack of a cognizable 28 legal theory, or on the absence of sufficient facts alleged under

-13- 1 a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 2 534 F.3d 1116, 1121 (9th Cir. 2008). Importantly for this 3 appeal, dismissal for lack of standing is a subspecies of 4 dismissal for failure to state a claim under Civil Rule 12(b)(6). 5 Quarre v. Saylor (In re Saylor), 178 B.R. 209, 215 (9th Cir. BAP 6 1995), aff'd, 108 F.3d 219 (9th Cir. 1997). 7 Here, the bankruptcy court’s basis for dismissing Aguilar’s 8 adversary proceeding was that, “[this lawsuit] is property of the 9 Chapter 7 trustee . . . . There's simply no ability to bring 10 this cause of action on behalf of [Aguilar]. . . . I am going to 11 grant the motion to dismiss.” Hr’g Tr. 4:14-20, February 18, 12 2014. In other words, the bankruptcy court concluded that only 13 the chapter 7 trustee in the bankruptcy case had the legal 14 standing to pursue the claims stated in Aguilar’s amended 15 complaint, and that Aguilar did not have standing. We conclude 16 that the bankruptcy court did not err in dismissing the adversary 17 proceeding. 18 Recall, Trustee had explicitly informed the bankruptcy court 19 in the "Trustee's Notice of Debtor's Improper Filing of 20 Pleadings" that, "[A]t no time has the Trustee authorized, 21 agreed, signed, instructed, or advised the Debtor or anyone in 22 this case to file a pleading purportedly on behalf of the 23 Trustee." Legal claims and causes of action held by a debtor 24 against others existing at the time of the bankruptcy filing 25 become property of the bankruptcy estate. City & Cnty. of San 26 Francisco v. PG&E Corp., 433 F.3d 1115, 1126 (9th Cir. 2006); 27 Sierra Switchboard Co. v. Westinghouse Elec. Corp., 789 F.2d 705, 28 708 (9th Cir. 1986). An asset remains property of the estate

-14- 1 while the bankruptcy case remains open, unless explicitly 2 abandoned. Cusano v. Klein, 264 F.3d 936, 946 (9th Cir. 2001). 3 Section 323(g) provides that “[t]he trustee in the case is 4 the representative of the estate.” For this reason, the Ninth 5 Circuit has held “that the bankruptcy code endows the bankruptcy 6 trustee with the exclusive right to sue on behalf of the estate.” 7 Estate of Spirtos v. One San Bernadino Cnty. Super. Ct. Case No. 8 SPR 02211, 443 F.3d 1172, 1175 (9th Cir. 2006); accord, Parker v. 9 Wendy’s Int’l, Inc., 365 F.3d 1268, 1272 (11th Cir. 2004) (the 10 trustee “is the only party with standing to prosecute causes of 11 action belonging to the estate”). 12 Since only Trustee had standing to assert the claims in 13 Aguilar’s amended complaint, and because he had explicitly 14 informed the bankruptcy court that Aguilar’s filing of the 15 complaint naming him as a co-plaintiff was an “improper 16 pleading,” we conclude that the bankruptcy court’s determination 17 that Aguilar did not have standing to prosecute the adversary 18 proceeding is a sufficient finding for dismissal under Civil 19 Rule 12(b)(6).4 20 21 4 The bankruptcy court ruled only on the basis of standing 22 and apparently disregarded Ocwen’s additional jurisdictional arguments. On appeal, Ocwen nevertheless continued its arguments 23 that the bankruptcy court had neither arising under, arising in, nor related to jurisdiction on the quiet title claim, because “it 24 relates to heretofore unidentified property that does not belong 25 to the bankruptcy estate.” The quiet title dispute, however, relates to the rights, liabilities, options, and freedom of 26 action of debtor Aguilar and creditor Ocwen in the Property, 27 which is indisputably property of the estate. Thus, there is, at the very least, related to jurisdiction. Battle Ground Plaza, 28 (continued...)

-15- 1 B. Aguilar’s claim for quiet title lacks merit. 2 Even if Aguilar had the necessary standing to prosecute the 3 adversary proceeding, the claim stated in her amended complaint 4 is without merit. 5 Although less than a model of clarity, Aguilar’s claim is 6 for declaratory relief and quiet title. She first alleges that 7 the “true beneficiary [of the deed of trust] is not identified in 8 the foreclosure documents against debtor and, thus, no power of 9 sale is conferred upon the foreclosing parties since they are not 10 the lien holders of the note.” 11 This statement lacks a basis in law because California does 12 not require a foreclosing party to have possession of the note or 13 even a beneficial interest in it. Debrunner v. Deutsche Bank 14 Nat’l Trust Co., 204 Cal.App.4th 433, 440 (2012); Lane v. Vitek 15 Real Estate Indus. Grp., 713 F.Supp.2d 1092, 1099 (E.D. Cal. 16 2010)("There is no stated requirement in California's 17 non-judicial foreclosure scheme that requires a beneficial 18 interest in the Note to foreclose.”). Nevertheless, Ocwen 19 presented detailed documentary evidence of all transfers 20 demonstrating that QLS was trustee under the deed of trust with 21 authority to foreclose on the Property. Specifically, Ocwen 22 presented documents evidencing MERS as the original beneficiary, 23 solely as nominee for IndyMac. MERS assigned the deed of trust 24 to OneWest. OneWest assigned the deed of trust to Ocwen. Ocwen 25 is the present holder and beneficiary of the deed of trust. As 26 4 27 (...continued) LLC v. Ray (In re Ray), 624 F.3d 1124, 1134 (9th Cir. 2010). 28 Ocwen’s other jurisdictional arguments are equally misplaced.

-16- 1 Ocwen is the present beneficiary under the deed of trust and QLS 2 is the current trustee, they are either or both authorized to 3 initiate a nonjudicial foreclosure in California. CAL. CIV. CODE 4 § 2924. 5 In support of the claim for quiet title, Aguilar makes 6 several other arguments. First, Aguilar asserts that Cal. Civ. 7 Code § 2932.5 was violated because Appellees failed to record the 8 assignments of the deeds of trust. Ocwen provided documentary 9 evidence that each assignment was in fact recorded. In any case, 10 Cal. Civ. Code § 2932.5 does not apply to deeds of trust and 11 there is no requirement that they be recorded. In re Salazar, 12 470 B.R. 557 (S.D. Cal. 2011). Finally, Aguilar argues that the 13 deed of trust was never perfected. Aguilar’s argument is 14 pointless, because even an unperfected lien still binds the party 15 who entered into it. Gribble v. Mauerhan, 188 Cal.App.2d 221, 16 228 (1961). 17 In other general arguments in her First Amended Complaint, 18 Aguilar alleged that her rights under Cal. Civ. Code § 2923.5 19 were violated when she was denied a loan modification. We have 20 examined this lengthy statute and have found no requirement in 21 its text that a lender offer a borrower a loan modification. 22 Regardless, the only fact Aguilar pled to support this allegation 23 was the bankruptcy court’s order stating that Aguilar could enter 24 into loan modification discussions without exposing lenders to 25 violation of the stay. 26 Finally, Aguilar argues that Ocwen and the other defendants 27 violated Rule 3001 when they failed to file a proof of claim in 28 the bankruptcy case. However, Ocwen as a secured creditor is not

-17- 1 required to file a proof of claim in a chapter 7 case in order to 2 preserve its security interest or liens; such interests pass 3 through the bankruptcy unaffected despite the absence of a proof 4 of claim. § 501(a); Rule 3002(a); Dewsnup v. Timm, 502 U.S. 410, 5 418 (1992); Brawders v. Cnty. of Ventura (In re Brawders), 6 503 F.3d 856, 872 (9th Cir. 2007). 7 We conclude that the bankruptcy court did not err in 8 determining that Aguilar lacked legal standing to prosecute the 9 adversary proceeding. Aguilar’s arguments in this appeal lack 10 merit. 11 CONCLUSION 12 We AFFIRM the bankruptcy court’s orders in both appeals. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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