Summary
determining that because an unlawful detainer judgment and writ of possession had been obtained by the creditor prepetition, neither the holdover debtor-borrower nor her estate had any ownership interest or right in the property; therefore cause was shown to grant relief from stay
Summary of this case from Eden Place, LLC v. Perl (In re Perl)Opinion
Argued and Submitted at Pasadena, California: January 21, 2011
Appeal from the United States Bankruptcy Court for the Central District of California. Bk. No. 10-27592. Honorable Richard M. Neiter, Bankruptcy Judge, Presiding.
Appellant Adwoa Nyamekye argued Pro se.
Kenneth A. Freedman argued for appellee, Wells Fargo Bank N.A.
Before: KIRSCHER, PAPPAS, and DUNN, Bankruptcy Judges.
This disposition is not appropriate for publication. 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 Cir. BAP Rule 8013-1.
Debtor-Appellant, Adwoa Nyamekye (" Nyamekye"), appeals an order from the bankruptcy court granting appellee relief from the automatic stay to proceed with enforcement of a Writ of Possession, which was issued after the entry of an unlawful detainer judgment against Nyamekye in state court. We AFFIRM.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Prepetition Events.
On or around March 12, 2004, Miriam Gilliam granted to Nyamekye a residence on Gramercy Place in Los Angeles, California (the " Property"). The transfer appears to have been a gift. For reasons unknown, in August 2005, Miriam Gilliam again granted the Property to Nyamekye as a gift.
On August 25, 2010, we issued an order waiving Nyamekye's responsibility for filing and serving an appendix of the record under Fed.R.Bankr.P. 8009(b). Nyamekye did not file an appendix but filed an " Emergency Request for Judicial Notice of Supplemental Excerpts of the Record as a Matter of Law, " which essentially serves the same purpose. It contains certain state court documents that were not before the bankruptcy court. Wells Fargo objects to Nyamekye's submission. We sustain Wells Fargo's objection to the extent that Nyamekye's submission presents documents not before the bankruptcy court.
On February 1, 2007, Worlds Savings Bank (" World Savings") provided a loan to Nyamekye for $871, 500. For this loan, Nyamekye executed a note, which was secured by a first deed of trust on the Property in favor of World Savings. World Savings recorded its deed of trust on February 7, 2007.
On June 10, 2009, Executive Trustee Services, LLC (" ETS"), the substitute trustee under the deed of trust, recorded and served a Notice of Default on the Property. On or about September 21, 2009, ETS recorded and served a Notice of Trustee's Sale on the Property. The sale was scheduled for October 15, 2009. The total amount owed on the note was $999, 155.
A nonjudicial foreclosure sale of the Property occurred on November 25, 2009. Appellee, Wells Fargo Bank N.A., successor by merger to Wells Fargo Bank Southwest, f/k/a Wachovia Mortgage, f/k/a World Savings (" Wells Fargo"), was the successful bidder. No evidence exists in the record that Nyamekye sought any action in state court to prevent the foreclosure. A Trustee's Deed of Sale was recorded conveying the Property to Wells Fargo on December 4, 2009.
On December 16, 2009, Wells Fargo served a Notice to Quit on Nyamekye and any other occupants living on the Property, which ordered all occupants to vacate the Property within three days -December 19.
B. Events During The First Bankruptcy.
To fend off eviction, Nyamekye filed a voluntary chapter 7 petition for relief on December 21, 2009, Case No. 09-46121-VK (the " First Bankruptcy"). Nyamekye filed her initial Schedules and Statement of Financial Affairs (" SOFA") on January 4, 2010. Nyamekye did not list the Property in her Schedule A. No secured creditors were listed in her Schedule D. Her SOFA was completely blank, as were almost all of her other Schedules.
Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. § § 101-1532, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
On January 4, 2010, Wells Fargo filed a motion for an order terminating the automatic stay because: (1) Wells Fargo had acquired title to the Property by foreclosure prepetition and recorded the deed within the requisite time period under California law; and (2) Nyamekye had no equity in the Property and thus it was not necessary for reorganization. Alternatively, Wells Fargo asked for an order confirming that no automatic stay was in effect. Wells Fargo requested stay relief in order to prosecute an unlawful detainer action against Nyamekye in state court. Nyamekye opposed Wells Fargo's motion. In her declaration, Nyamekye contended that she did not receive adequate notice of Wells Fargo's motion. She conceded, however, that Wells Fargo obtained title to the Property by trustee sale on November 25, 2009, but contended that she received no " notification" of the sale. Nyamekye requested a 14-day continuance in order to file an adversary complaint against Wells Fargo.
The bankruptcy court held a hearing on Wells Fargo's motion on January 13, 2010. The court entered an order granting Wells Fargo's motion on January 14, 2010. Nyamekye never filed the adversary complaint.
Wells Fargo filed a Complaint for Unlawful Detainer against Nyamekye in Los Angeles Superior Court on January 21, 2010, Case No. 10U00860. Wells Fargo claimed ownership of the Property based on the foreclosure sale and the recording of the Trustee's Deed in its favor. A bench trial was held on March 8, 2010. The state court determined that Nyamekye failed to provide any defense to the Unlawful Detainer action, and a judgment was entered in favor of Wells Fargo on that same date. On April 16, 2010, the state court issued to Wells Fargo a Writ of Possession for the Property. A lockout was scheduled for May 6, 2010.
In connection with Wells Fargo's Unlawful Detainer action, Nyamekye filed in state court a motion to transfer or consolidate that case with an action she filed against Wells Fargo - Case No. BC432882. See Unlawful Detainer judgment. Nyamekye confirmed at oral argument that in Case No. BC432882 she is suing Wells Fargo over a mortgage refinancing issue. In the Unlawful Detainer judgment, the state court determined that Nyamekye's evidence of fraud or conversion by Wells Fargo in Case No. BC432882 was " so weak as not to be credible, " and thus her motion to transfer was denied.
Meanwhile, in the bankruptcy court, Nyamekye filed certain amended schedules and an amended SOFA on January 29, 2010. Nyamekye again did not list the Property in her first amended Schedule A. In her first amended SOFA, item #4, Nyamekye represented that she had a " pending" lawsuit against Wells Fargo in state court for " Wrongful Foreclosure." The chapter 7 trustee filed his Report of No Distribution on March 3, 2010. On April 22, 2010, after the state court issued the Writ of Possession, Nyamekye filed, inter alia, a second amended Schedule A and a first amended Schedule D, this time listing the Property and Wells Fargo as the secured creditor. Nyamekye received her discharge on April 29, 2010. The First Bankruptcy was closed on June 11, 2010.
C. Events During The Second Bankruptcy.
On May 4, 2010, just two days before the scheduled lockout, two creditors filed an involuntary chapter 7 petition against Nyamekye, commencing Case No. 10-27592 (" Second Bankruptcy").
On May 13, 2010, Wells Fargo filed a motion for relief from stay under sections 362(d)(1) and 362(d)(2)(A) and (B), asserting that, prepetition, it had acquired title to the Property by foreclosure, that an Unlawful Detainer judgment had also been entered in its favor, and that Nyamekye had no equity in the Property and that it was not necessary to an effective reorganization. Alternatively, Wells Fargo asked for an order confirming that no automatic stay was in effect. This time, Wells Fargo requested stay relief so it could enforce its Writ of Possession. Nyamekye opposed Wells Fargo's motion, contending (without supporting evidence) that Wells Fargo lacked standing to foreclose on the Property because it failed to produce the note, a different defense than she asserted in her First Bankruptcy. Nyamekye requested that the stay be continued until Wells Fargo demonstrated it had standing to foreclose.
The bankruptcy court held a hearing on Wells Fargo's motion on June 8, 2010. We have no copy of the transcript and no minutes of the hearing are on the docket. The bankruptcy court entered an order granting Wells Fargo's motion under sections 362(d)(1) and (d)(2) on June 16, 2010 (" Stay Relief Order"). Nyamekye appealed.
II. JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. § § 1334 and 157(b)(2)(G). An order granting or denying a motion for relief from the automatic stay is a final, appealable order. Centofante v. CBJ Dev., Inc. (In re CBJ Dev., Inc.), 202 B.R. 467, 469 (9th Cir. BAP 1996). Nyamekye's premature Notice of Appeal filed on June 10, 2010, was deemed timely once the bankruptcy court entered the Stay Relief Order on June 16, 2010. Rule 8002(a).
At oral argument, counsel for Wells Fargo informed the Panel that the Property has since been sold to a third party. The sale occurred on December 17, 2010, while this appeal was pending. We lack jurisdiction over appeals that are moot. Baker & Drake, Inc. v. Pub. Serv. Comm'n of Nev. (In re Baker & Drake, Inc.), 35 F.3d 1348, 1351 (9th Cir. 1994). Bankruptcy appeals become moot when events occur that make it impossible for the appellate court to fashion effective relief. Focus Media, Inc. v. Nat'l Broad. Co. Inc. (In re Focus Media, Inc.), 378 F.3d 916, 922 (9th Cir. 2004). " The classic example of mootness in the bankruptcy context is a case in which the debtor has failed to seek a stay of foreclosure and the debtor's property has been sold. The transfer to a third party precludes meaningful relief." Baker & Drake, Inc., 35 F.3d at 1351. The nonjudicial foreclosure occurred prior to Nyamekye's First Bankruptcy. She never sought an injunction in state court to prevent the sale. Nyamekye also never sought a stay of, or appealed, the Unlawful Detainer judgment or the Writ of Possession. Now, according to Wells Fargo, the Property has been sold in good faith, at arms-length, to an independent third party. Accordingly, we lack jurisdiction over this moot appeal. Nonetheless, counsel for Wells Fargo did not, as he promised our clerk of court on December 28, 2010, file the documentation confirming the subsequent sale of the Property. Therefore, we alternatively assume we have jurisdiction over this appeal under 28 U.S.C. § 158 and provide our decision accordingly. We AFFIRM.
Counsel for Wells Fargo contacted our clerk of court on December 28, 2010, prior to oral argument, to inform her that the Property had been sold on December 17, 2010, and that he would be filing documentation to that effect. As explained below, he did not file the promised documents.
Because the foreclosure sale was nonjudicial, Nyamekye retained no post-sale redemption rights in the Property under California law. Vista Del Mar Assocs., Inc. v. W. Coast Land Fund (In re Vista Del Mar Assocs., Inc.), 181 B.R. 422, 425 (9th Cir. BAP 1995).
III. ISSUE
Did the bankruptcy court abuse its discretion in granting relief from stay to Wells Fargo?
IV. STANDARD OF REVIEW
We review the bankruptcy court's decision to grant relief from the automatic stay for an abuse of discretion. Kronemeyer v. Am. Contractors Indem. Co. (In re Kronemeyer), 405 B.R. 915, 918 (9th Cir. BAP 2009). In applying an abuse of discretion test, we first determine de novo whether the bankruptcy court identified the correct legal rule to apply to the relief requested. United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009). If it did, we then determine whether its " application of the correct legal standard [to the facts] was (1) illogical, (2) implausible, or (3) without support in inferences that may be drawn from the facts in the record." Id. (internal quotation marks omitted). If the bankruptcy court did not identify the correct legal rule, or its application of the correct legal standard to the facts was illogical, implausible, or without support in inferences that may be drawn from the facts in the record, then the bankruptcy court has abused its discretion. Id.
V. DISCUSSION
In short, Nyamekye's opening brief does not address the issue on appeal - how the bankruptcy court abused its discretion in granting Wells Fargo relief from stay. Rather, she challenges the propriety of the foreclosure sale that occurred before she filed her First Bankruptcy. The crux of Nyamekye's brief is that Wells Fargo lacked standing at the time of the foreclosure sale, and therefore she is the owner of record on the Property, not Wells Fargo. Wells Fargo contends that Nyamekye raised none of the foreclosure issues before the bankruptcy court. Counsel for Wells Fargo also indicated at oral argument, and Nyamekye confirmed, that the state court considered, and apparently rejected, her allegations of wrongful foreclosure during the trial for Unlawful Detainer. We have no findings from the state court on this matter.
In any event, Nyamekye failed to comply with our August 25, 2010 order to file and serve the June 8, 2010 transcript. At the June 8 hearing, the bankruptcy court announced its decision in favor of Wells Fargo and made its oral findings and conclusions on the Stay Relief Order. The bankruptcy court's oral findings unambiguously qualify as findings of fact and conclusions of law within the meaning of Rule 8006. McCarthy v. Prince (In re McCarthy), 230 B.R. 414, 417 (9th Cir. BAP 1999). They are the findings that are required under Fed.R.Civ.P. 52(a), which applies in contested matters by way of Rules 9014 and 7052. Id. A motion for relief from the automatic stay is a contested matter governed by Rule 9014. See Rule 4001(a)(1).
As appellant, Nyamekye has the responsibility to provide an adequate record on appeal. Kritt v. Kritt (In re Kritt), 190 B.R. 382, 387 (9th Cir. BAP 1995). Without any findings in the record, we cannot properly review the bankruptcy court's decision to determine whether it abused its discretion in granting Wells Fargo relief. Under such circumstances, we are entitled to assume that nothing exists in the transcript that will help Nyamekye's position on her appeal. Gionis v. Wayne (In re Gionis), 170 B.R. 675, 680-81 (9th Cir. BAP 1994). Without the necessary transcript, we are also entitled to dismiss her appeal. Syncom Capital Corp. v. Wade, 924 F.2d 167, 169 (9th Cir. 1991).
Here, we will exercise our discretion to examine what small record exists - the Stay Relief Order, the moving papers submitted by Wells Fargo, and what Nyamekye submitted in her opposition. In reviewing the record, " we look for any plausible basis upon which the bankruptcy court might have exercised its discretion to do what it did. If we find any such basis, then we must affirm." McCarthy, 230 B.R. at 417.
The Stay Relief Order granted Wells Fargo relief from stay under sections 362(d)(1) and (d)(2). Those sections provide:
(d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay -
(1) for cause, including the lack of adequate protection of an interest in property of such party in interest;
(2) with respect to a stay of an act against property under subsection (a) of this section, if -
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization[.] (emphasis added).
Bankruptcy courts must look to state law to determine whether and to what extent the debtor has any legal or equitable interests in property as of the commencement of the case. Butner v. United States, 440 U.S. 48, 54-55, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979). Under California law, a trustee's sale is deemed final upon the acceptance of the last and highest bid. CAL. CIV. CODE § 2924h(c). The successful bidder " at a nonjudicial foreclosure sale receives title under a trustee's deed free and clear of any right, title or interest of the trustor." Wells Fargo Bank v. Neilsen, 178 Cal.App.4th 602, 100 Cal.Rptr.3d 547, 554 (Cal.Ct.App. 2009).
Here, the bankruptcy court had uncontroverted evidence that Wells Fargo was the successful bidder at a nonjudicial foreclosure sale of the Property held on November 25, 2009, and that Wells Fargo recorded its Trustee's Deed on December 4, 2009, all of which occurred prior to Nyamekye's First Bankruptcy. Nyamekye even conceded this fact in her opposition to Wells Fargo's motion for relief from stay in her First Bankruptcy. As such, under California law, title to the Property passed to Wells Fargo free and clear of any right, title or interest of Nyamekye's about three weeks before she filed her First Bankruptcy, and almost five months before the involuntary petition was filed against her. The evidence also showed that Wells Fargo obtained a judgment against Nyamekye for Unlawful Detainer. No evidence exists that Nyamekye sought a stay of, or appealed, that judgment. Further, the state court had issued a Writ of Possession ordering Nyamekye and all other occupants to vacate the Property. Therefore, at the time Wells Fargo filed its motion, neither Nyamekye nor her estate had any ownership interest or right in the Property. This clearly provided " cause" for the bankruptcy court to grant Wells Fargo's motion under section 362(d)(1):
Prepetition loss of an ownership interest in property constitutes cause for relief from stay. Where the debtor (or the estate) no longer has a right to the property, there is no reason not to allow the creditor to repossess because filing a bankruptcy petition after loss of ownership cannot reinstate the debtor's title.
Kathleen R. March and Alan M. Ahart, California Practice Guide: Bankruptcy ¶ 8:1195-96 (2009). Moreover:
Where a real property nonjudicial foreclosure was completed and the deed recorded prepetition, the debtor has neither legal nor equitable title to the property at the time the bankruptcy petition is filed. Although the debtor may still be in possession of the premises, his or her status is essentially that of a " squatter." The mortgagee (or purchaser at the foreclosure sale) is entitled to the property and thus relief from the stay should be granted.
Id. at ¶ 8:1196 (emphasis in original).
Nothing in the bankruptcy court's Stay Relief Order is illogical, implausible, or without support in inferences that may be drawn from the facts in the record. Accordingly, we conclude that the bankruptcy court did not abuse its discretion when it granted Wells Fargo's motion for relief from stay to proceed with enforcement of its Writ of Possession against Nyamekye.
VI. CONCLUSION
Based on the foregoing reasons, we AFFIRM.
Because the bankruptcy court had cause to grant Wells Fargo's motion for relief from stay under section 362(d)(1), we need not address its decision also to grant the motion under section 362(d)(2).
Nyamekye's Emergency Request also contains documents Wells Fargo submitted in its moving papers to the bankruptcy court which the Panel does need to review and Wells Fargo did not submit on appeal. As for those documents not presented to the bankruptcy court, we reviewed them strictly to determine the background of this case as Nyamekye's opening brief provides few relevant facts. These documents do not affect our disposition of this appeal.