In re: Rodolfo Velasquez

Opinion

FILED AUG 09 2016 2 SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT 5 In re: ) BAP No. NC-15-1177-TaJuKi ) 6 RODOLFO VELASQUEZ, ) Bk. No. 3:14-bk-30344 ) 7 Debtor. ) ______________________________) 8 ) RODOLFO VELASQUEZ, ) 9 ) Appellant, ) 10 ) v. ) MEMORANDUM* 11 ) BANK OF AMERICA N.A., ) 12 ) Appellee. ) 13 ______________________________) 14 Argued and Submitted on July 28, 2016 at San Francisco, California 15 Filed – August 9, 2016 16 Appeal from the United States Bankruptcy Court 17 for the Northern District of California 18 Honorable Dennis Montali, Bankruptcy Judge, Presiding 19 Appearances: Rodolfo Velasquez argued pro se; Andrea McDonald 20 Hicks of Bryan Cave, LLP argued for Appellee. 21 Before: TAYLOR, JURY, and KIRSCHER, Bankruptcy Judges. 22 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). 2 Chapter 131 debtor Rodolfo Velasquez appeals from an order 3 overruling his objection to Bank of America’s proof of claim. 4 We AFFIRM. 5 FACTS2 6 The Debtor scheduled an interest in real property located 7 in San Francisco, California (the “Property”). Bank of America, 8 N.A. holds an obligation secured by a lien against the Property. 9 Bank of America filed a proof of its secured claim 10 evidencing $35,732.30 in arrearages as of the petition date. 11 The arrearages consisted of $34,379.24 in prepetition delinquent 12 payments and $1,353.06 in prepetition administrative fees. The 13 $34,379.24 of delinquent payments, in turn, consisted of 34 14 monthly payments: 19 payments of $960.48; 14 payments of 15 $1,074.63; and 1 payment of $1,085.30. 16 In response, the Debtor filed a “Motion to Deny Bank of 17 America’s Proof of Claim Filed in the Amount of $35,732.30.” He 18 broadly questioned the amount of the arrearage and even asserted 19 that the bank owed him money as a result of overpayment. More 20 specifically, he challenged the number of allegedly delinquent 21 payments and asserted that Bank of America had improperly 22 23 1 Unless otherwise indicated, all chapter and section 24 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. All “Rule” references are to the Federal Rules of Bankruptcy 25 Procedure. 26 2 We exercise our discretion to take judicial notice of 27 documents electronically filed in the underlying bankruptcy case. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 28 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).

2 1 increased his monthly payment beyond $960.48, the fixed payment 2 amount set forth in his promissory note. He less relevantly 3 pointed out that he made a large postpetition payment of $26,000 4 and asserted that this cured any default. 5 Bank of America responded that its proof of claim, signed 6 and executed in accordance with the Federal Rules of Bankruptcy 7 Procedure, was prima facie evidence as to the legitimacy and 8 amount of the claim. It also acknowledged that the Debtor made 9 payments to the bank prepetition, explained that it applied 10 payments to cure the most remote payment default, and provided a 11 rudimentary spreadsheet regarding the Debtor’s escrow statement 12 and calculation of payments. 13 At a continued hearing on the matter, both the bankruptcy 14 court and the Debtor professed confusion with the documents 15 submitted by Bank of America in support of its claim. The 16 attorney who appeared on behalf of the bank eventually explained 17 the mechanics of a suspense account and how it would have 18 applied to the Debtor’s account. The bankruptcy court then 19 attempted to explain the concept to the pro se Debtor; the 20 Debtor’s concerns were not eliminated. 21 The bankruptcy court then suggested that the parties 22 participate in a third-party mediation. Bank of America 23 tentatively agreed, and the bankruptcy court cautioned the 24 Debtor to set aside his anger and to cooperate with the bank. 25 The bankruptcy court asked the Debtor whether he could 26 reconstruct from his records every payment made to the bank 27 beginning from the inception of his loan; the Debtor responded 28 that he could. It, thus, instructed the Debtor to turn over his

3 1 documentation of payments to the bank’s counsel within two 2 weeks; the Debtor agreed. The bankruptcy court continued the 3 matter. 4 Bank of America subsequently filed a supplemental 5 declaration by Henry Longres, an Assistant Vice-President at the 6 bank. Longres attached a spreadsheet, that he attested he 7 personally prepared, detailing the payments received from the 8 Debtor dating retrospectively from September 20, 2013 - the most 9 recent payment received prepetition - and how the payments were 10 applied to the several years of default. He explained that 11 payments received by the bank falling short of a full monthly 12 payment amount were placed in a suspense account. Once 13 sufficient funds were accumulated in the account, the bank made 14 a monthly payment. 15 He further explained that payments were made on account of 16 the most distant default. Thus, the bank applied payments 17 received from the Debtor in 2013 against defaulted payments in 18 2011 or earlier. 19 Finally, Longres explained that the Debtor’s monthly 20 payment of principal and interest was always $960.47 and that 21 the monthly payment increased in January 2013 to $1,047.63 in 22 order to fund a property tax escrow account, required because 23 the Debtor failed to pay property taxes. 24 Counsel for Bank of America also filed declarations, 25 stating that they were not successful in scheduling a mediation 26 on account of counsel’s unavailability one week and the Debtor’s 27 general lack of cooperation. One of the attorneys attached 28 several emails between counsel and the Debtor evidencing his

4 1 alleged lack of cooperation. 2 The Debtor responded to the declarations and objected to 3 several of the statements therein; in particular, he generally 4 contested the calculations of his debt owed and the arrearages. 5 He also asserted that he was not uncooperative and laid blame 6 for the scheduling issue on counsel for Bank of America, 7 asserting erroneously that the bank’s counsel could not meet 8 within two weeks as instructed by the bankruptcy court at the 9 prior hearing. He provided no evidence that he provided the 10 full accounting of his payments to Bank of America as required 11 by the bankruptcy court. 12 At the final hearing, the bankruptcy court expressed 13 disappointment that the Debtor had not provided documentation of 14 payments to Bank of America as he had promised to do and that 15 Debtor was uncooperative in scheduling and attending a mediation 16 with the bank. It found that Bank of America had complied with 17 its instructions, while the Debtor had not. The bankruptcy 18 court ultimately found that it was satisfied with Bank of 19 America’s evidence and that it established that its claim for 20 arrearages was valid. Thus, it overruled the Debtor’s 21 objections to the proof of claim. 22 Following entry of the bankruptcy court’s order overruling 23 the Debtor’s objection, the Debtor timely appealed. 24 /// 25 /// 26 /// 27 /// 28 ///

5 1 JURISDICTION3 2 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 3 §§ 1334 and 157(b)(2)(A) and (B). We have jurisdiction under 4 28 U.S.C. § 158. 5 ISSUE4 6 Whether the bankruptcy court erred in overruling the 7 Debtor’s objection to Bank of America’s proof of claim. 9 In the context of claims objections, we review the 10 bankruptcy court’s legal conclusions de novo and its factual 11 findings for clear error. See Pierce v. Carson (In re Rader), 12 488 B.R. 406, 409 (9th Cir. BAP 2013) (“An order overruling a 13 claim objection can raise legal issues (such as the proper 14 construction of statutes and rules) which we review de novo, as 15 well as factual issues (such as whether the facts establish 16 compliance with particular statutes or rules), which we review 17 for clear error.” (citation omitted)). Whether an evidentiary 18 presumption has been rebutted is a question of fact reviewed for 19 clear error. Litton Loan Servicing, LP v. Garvida 20 3 21 In its brief, Bank of America briefly argues that the appeal is moot given that the bankruptcy court dismissed the 22 chapter 13 case. We disagree. The order dismissing the case is concurrently on appeal and a final determination has not been 23 made. More importantly, the bankruptcy court’s ruling on the 24 Debtor’s objection to claim could have a preclusive effect in other litigation between the parties. See Siegel v. Fed. Home 25 Loan Mortg. Corp., 143 F.3d 525, 528-31 (9th Cir. 1998). We conclude that the appeal is not moot. 26 4 27 The Debtor identifies ten issues on appeal. The majority of these are duplicative, nonsensical, irrelevant, or 28 outside the scope of this appeal.

6 1 (In re Garvida), 347 B.R. 697, 703 (9th BAP Cir. 2006). 2 Factual findings are clearly erroneous if illogical, 3 implausible, or without support in inferences that may be drawn 4 from the facts in the record. See TrafficSchool.com, Inc. v. 5 Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011). 6 We may affirm the decision of the bankruptcy court on any 7 basis supported by the record. See Hooks v. Kitsap Tenant 8 Support Servs., Inc., 816 F.3d 550, 554 (9th Cir. 2016). 10 “A proof of claim executed and filed in accordance with 11 [the Federal Rules of Bankruptcy Procedure] shall constitute 12 prima facie evidence of the validity and amount of the claim.” 13 Fed. R. Bankr. P. 3001(f). This evidentiary presumption is a 14 rebuttable one. In re Garvida, 347 B.R. at 706. “The mechanics 15 of what it takes to rebut the Rule 3001(f) presumption are 16 driven by the nature of the presumption as ‘prima facie’ 17 evidence of the claim’s validity and amount.” Id. at 706-07. 18 Thus, a properly executed proof of claim constitutes prima facie 19 evidence, and “[o]ne rebuts evidence with counter-evidence.” 20 Id. 21 Here, the record shows that Bank of America executed and 22 filed the proof of claim in accordance with the Federal Rules of 23 Bankruptcy Procedure. Thus, its proof of claim provided prima 24 facie evidence as to the validity and amount of its claim. The 25 burden then shifted to the Debtor to supply sufficient counter- 26 evidence. The bankruptcy court implicitly found that he did not 27 do so. On this record, its finding was not clearly erroneous. 28 The Debtor’s only relevant counter-evidence were copies of

7 1 checks made payable to Bank of America over the course of a two- 2 year period preceding the chapter 13 filing and a short time 3 thereafter. The Debtor argues that these checks prove that he 4 made payments to Bank of America that would negate its claim of 5 arrears. 6 First, there is no dispute that the Debtor was in default 7 as of the petition date. His postpetition payment of $26,000 8 evidences his awareness that he owed the bank money beyond his 9 required postpetition monthly payments. Moreover, although Bank 10 of America filed its proof of claim several months after the 11 case was commenced, the document correctly calculated the 12 arrearages as of the petition date. Thus, while the Debtor’s 13 large postpetition payment decreased the arrearages that he owed 14 to Bank of America, the proof of claim remained valid and 15 accurate because it evidenced the amount owed when the Debtor 16 commenced his chapter 13 case. 17 Second, Bank of America supplied additional evidence 18 supporting its proof of claim and accounting for the limited 19 payment evidence supplied by the Debtor. The supplemental 20 declaration of Henry Longres authenticated detailed spreadsheets 21 showing the receipt and application of payments preceding and 22 immediately following the Debtor’s bankruptcy filing. The 23 spreadsheets accounted for the payment evidence supplied by the 24 Debtor and established that the Debtor was in arrears for the 25 June, 2011 payment as of the petition date. Longres also 26 explained how Bank of America used a suspense account to hold 27 partial payments until there were sufficient funds to clear a 28 past due payment. He finally explained that the monthly payment

8 1 increased because the Debtor failed to pay real property taxes. 2 Ultimately, the bankruptcy court found that Bank of 3 America’s evidence adequately supported its proof of claim and 4 fully addressed the limited counter-evidence supplied by Debtor. 5 On this record, we cannot say that its findings were clearly 6 erroneous. 7 On appeal, the Debtor argues that an evidentiary hearing or 8 a trial is warranted, “where more time is available to 9 scrutinize the evidences [sic] and to make sure that the money 10 is owed.” But the record shows that, in effect, the bankruptcy 11 court granted a summary adjudication in favor of Bank of 12 America. The bankruptcy court may sua sponte grant a summary 13 adjudication in the absence of a genuine dispute of material 14 fact and where the movant is entitled to judgment as a matter of 15 law. See Fed. R. Civ. P. 56(a) & (f)(3) (incorporated into 16 bankruptcy proceedings by Rules 7056 and 9014); Arce v. Douglas, 17 793 F.3d 968, 976 (9th Cir. 2015) (federal court may grant 18 summary judgment sua sponte where the party against which 19 summary judgment is granted has a “full and fair opportunity to 20 ventilate the issues.”) (citation omitted). 21 Here, the Debtor advanced no evidence that, even if assumed 22 as true, would have justified a trial. His generalized 23 allegations of fraud against Bank of America were insufficient, 24 and he had a full and fair opportunity to ventilate the issue of 25 whether he owed the arrearages as claimed by Bank of America. 26 Again, his payment evidence was not disputed by Bank of America; 27 instead, it accounted for these payments and established that 28 its petition date arrearage calculation was accurate

9 1 notwithstanding their receipt. As the bankruptcy court 2 concluded, there remained no genuine issue of material dispute 3 that justified a trial. 5 Based on the foregoing, we AFFIRM. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28