What Homeowners Need to Know about Lien Stripping in Secured/Valuation of Claims in Bankruptcy & Adversary Proceeding

28 Monday Nov 2016

Posted by BNG in Bankruptcy, Federal Court, Foreclosure Defense, Judicial States, Non-Judicial States, Pro Se Litigation

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SECTION 506 LIEN STRIPPING & VALUATION

11 U.S.C. § 1322 (b): Subject to subsections (a) and (c) of this section, the plan may- (2) modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence… 11 U.S.C. § 506 (a)(1): An allowed claim of a creditor secured by a lien on property in which the estate has an interest, … is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property, … and is an unsecured claim to the extent that the value of such creditor’s interest … is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest.

I. WHAT DOES IT MEAN TO STRIP THE LIEN? 11 U.S.C. § 506 describes how to determine whether a claim is secured. Section 506(a)(1) explains bifurcation (division) of an allowed claim into secured and unsecured parts—the secured part being “secured” by the collateral’s value, the unsecured part being the remaining amount of the claim in excess of the collateral’s value. For example, an allowed claim of $200,000 with collateral valued at $170,000 is bifurcated between a secured claim of $170,000 and an unsecured claim of $30,000, resulting in “lien stripping” of $30,000. If the $170,000 collateral is related to an allowed first claim of $200,000 and an allowed second claim of $10,000, the $10,000 claim can be “stripped” as well. The distinction may be identified as “stripping down” (or a “cramdown” of) the lien to the value of the collateral or “stripping off” the lien completely.

II. CHAPTER 7 CASES – UNSECURED JUNIOR MORTGAGE MAY NOT BE STRIPPED OFF.
Dewsnup v. Timm, 502 U.S. 410 (U.S. 1987) prohibited Chapter 7 debtors from using 11 U.S.C. § 506(d) to void an undersecured lien on real property. Case law has extended Dewsnup to prohibit lien stripping on wholly unsecured liens (in Chapter 7 cases), holding that unless and until there is a claims allowance process, there is no basis for the debtor to avoid a lien under 11 U.S.C. § 506. The legislative history of Section 506 also makes it clear that lien stripping is permissible in reorganization chapters, but not in Chapter 7. See In re Talbert, 344 F.3d 555 (6th Cir. 2003), Concannon v. Imperial Capital Bank (In re Concannon), 338 B.R. 90 (Bankr.Fed.App. 2006).

III. CHAPTER 13 CASES – UNSECURED JUNIOR MORTGAGE MAY BE STRIPPED OFF.
a. Nobelman v. American Savings Bank, 508 U.S. 324 (U.S. 1993). A “strip down” or “cramdown” of claim that is secured by real property that is the debtor’s primary residence is prohibited. The United States Supreme Court held that after applying 11 U.S.C. § 1322(b)(2) and 11 U.S.C. § 506, a lien “strip down” of an undersecured home mortgage lien is impermissible in a chapter 13 case for a claim secured by the debtor’s principal residence, because it modifies the total package of rights for which such a claim holder bargained.

b. 11 U.S.C. § 1322(b), commonly known as the anti-modification clause, prevents debtors from changing the rights of creditors whose claims are secured only by a security interest in real property that is the debtor’s principal residence. Under various Circuit Court decisions interpreting Nobelman in Chapter 13 cases, §1322(b)(2) protections are no longer available to a creditor whose lien is a junior lien, and where the amount due to the senior lienholder(s) is greater than the value of the property pledged as security to that loan. Such creditor’s claims may be treated as an unsecured claim in the plan and paid consistent with other unsecured claimholders.

c. Majority view: While the anti-modification clause in § 1322(b) uses the term “claim” rather than “secured claim” and, therefore, applies to both the secured and unsecured part of a mortgage, the anti-modification clause still states that the claim must be “secured only by a security interest in … the debtor’s principal residence.” 11 U.S.C. § 1322(b)(2) (emphasis added). If valuation of the property under §506(a) determines that a junior mortgage holder’s claim is wholly unsecured, then the bank is not in any respect a “holder of a claim secured by the debtor’s residence” under §1322(b). Accordingly, the junior mortgage holder simply has an unsecured claim and the anti-modification clause does not apply. On the other hand, if any part of the mortgagee’s claim is secured, then, under Nobleman’s interpretation of the term “claim,” the entire claim, both secured and unsecured parts, cannot be modified.

The several Circuit Courts that have ruled on the issue, including the Sixth Circuit, support the majority position allowing lien stripping of wholly unsecured junior mortgage liens. See Pond v. Farm Specialist Realty (In re Pond), 252 F.3d 122 (2nd Cir. 2001); McDonald v. Master Fin., Inc.(In re McDonald), 205 F.3d 606 (3d Cir. 2000), cert. denied, 531 U.S. 822, 121 S.Ct. 66, 148 L.Ed.2d 31 (2000); Bartee v. Tara Colony Homeowners Ass’n (In re Bartee), 212 F.3d 277 (5th Cir.2000); Lane v. W. Interstate Bancorp (In re Lane), 280 F.3d 663 (6th Cir.2002); Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220, (9th Cir. 2002); Tanner v. FirstPlus Fin., Inc. (In re Tanner), 217 F.3d 1357 (11th Cir. 2000). The only variance in this uniformity among the circuits is an Eleventh Circuit opinion, which disagrees with the In re Tanner panel that originally decided the issue, but which followed the Tanner decision as established precedent in that circuit. See In re Dickerson, 222 F.3d 924 (11th Cir.2000). See also Domestic Bank v. Mann (In re Mann), 249 B.R. 831, 833 (B.A.P. 1st Cir. 2000); Griffy v. U.S. Bank (In re Griffey), 335 B.R. 166 (B.A.P. 10th Cir. 2005); Waters v. The Money Store (In re Waters), 276 B.R. 879 (Bankr.N.D.Ill. 2002); In re King, 290 B.R. 641 (Bankr.C.D.Ill. 2003).

d. Minority view: While the Circuit Courts are nearly uniform in support of the majority view, some Bankruptcy Courts take a minority view. They hold that a properly perfected mortgage claim is literally “secured only by a security interest in real property that is the debtor’s principal residence” within the meaning of §1322(b), irrespective of whether the claim is wholly or partially secured, or totally unsecured after the application of §506(a). They reason that this view is consistent with the emphasis in the Nobelman decision on the state law contractual rights bargained for by the mortgagor and mortgagee, and with the legislative history which indicates that §1322(b) was intended to encourage the flow of capital into the home lending market and to exempt such Mortgages from valuations and bifurcations as the result of an application of § 506(a). Cases following minority view include Barnes v. American Gen. Fin. (In re Barnes), 207 B.R. 588 (Bankr.N.D.Ill.1997).

e. The Hon. Keith Lundin has expressed support for the minority view, that Nobleman was concerned about protecting the state law rights of the residential mortgagee and did not consider the issue to be a question of valuation. Lundin’s view and the minority view is there is no justification, following the Nobelman decision, for courts to focus on the value, at the date of the petition, of the real property securing a debt as the threshold of whether the rights of the mortgagee may be modified. In the majority view, a mortgagee with $1.00 in equity receives the anti-modification protection of §1322(b), while the mortgagee with no equity does not. Keith M. Lundin, Chapter 13 Bankruptcy, 3d. Ed. §14.1, p. 221 (2000 & Supp. 2004)

f. Lien stripping in the Seventh Circuit:
i. Although every circuit court of appeals that has considered the question has followed the majority view, the Seventh Circuit Court of Appeals has not directly ruled on the issue; thus, lower courts in the Seventh Circuit may follow either the majority or the minority view.
ii. In the Northern District of Illinois, the cases go both ways. Barnes v. American Gen. Fin. (In re Barnes), 207 B.R. 588 (Bankr. N.D. Ill. 1997) (follows the minority view that 11 U.S.C. §1322(b)(2) prohibits stripping off wholly unsecured mortgages.) Waters v. Money Store (In re Waters), 276 B.R. 879 (Bankr. N.D. Ill. 2002) follows the majority position after a thorough analysis of both views. Also in the Northern District of Illinois, the district court in In re Holloway v. United States, 2001 U.S. Dist. LEXIS 16898 (N.D. Ill. Oct. 16, 2001) follows the majority view.

iii. In the Central District of Illinois, In re King, 290 B.R. 641 (Bankr. C.D. Ill. 2003) adopted Waters, supra.
iv. In In re Black, 2002 Bankr. LEXIS 1752 (Bankr. N.D. Ind. 2002), the Northern District of Indiana provides a comprehensive review of cases following the majority and minority views, and decides that stripping off a wholly unsecured mortgage from the debtor’s residence “represents the most appropriate reading of both [11 U.S.C.] § 1322(b)(2) and Nobelman.”

IV. EXCEPTIONS TO ANTI-MODIFICATION: – NOBELMAN EXCEPTIONS – § 1322(b)(2) provides that the Chapter 13 plan may modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence. §1123(b)(5) says the same thing for Chapter 11 cases.

a. Debtor’s Principal Residence –
Principal Residence defined U.S.C. 101(13A) The term “debtor’s principal residence”–(A) means a residential structure, including incidental property, without regard to whether that structure is attached to real property; and (B) includes an individual condominium or cooperative unit, a mobile or manufactured home, or trailer.

b. Liens on attached property or curtilage?

c. When is the Principal Use determined?
i. Origination date or petition date?
ii. Is pre-petition “use planning allowed?”

d. “Secured Only By” – Effect of lien on residence as well as upon other assets.
i. Additional security interests in mortgage escrow accounts. A majority of courts have ruled that the grant of a security interest in an escrow fund for insurance and taxes by a Chapter 13 debtor’s second mortgage did not convey additional collateral. The anti-modification provision continues to apply. The debtor retained no interest in the funds once placed in escrow and so any grant of a security interest in such funds was meaningless and conveyed essentially no interest at all. 1st 2nd Mortgage Co. of NJ., Inc. v. Ferandos (In re Ferandos), 402 F.3d 147 (3d Cir. 2005). See also Boehmer v. Essex (In re Boehmer), 240 B.R. 837(Bankr. E.D.Pa. 1999); Rodriguez v. Mellon Bank, N.A. (In re Rodriguez), 218 B.R. 764 (Bankr. E.D. Pa. 1998); In re Abruzzo, 245 B.R. 201 (Bankr. E.D. Pa. 1999), vacated In re Abruzzo, 245 B.R. 2000 U.S. Dist. LEXIS 4936 (E.D. Pa. Apr. 7, 2000), on remand In re Abruzzo, 249 B.R. 78 (Bankr. E.D. Pa. 2000)
ii. Other view: Residential mortgage debt was not one secured “only by a security interest in real property” that was debtor’s principal home, within meaning of anti-modification provision of Chapter 13, where mortgagee had also been granted security interest in escrow for taxes and insurance premiums; mortgagee had additional security interest in escrowed funds, notwithstanding that, on petition date, that interest had not been perfected by delivery. Stewart v. U.S. Bank, 263 B.R. 728 (Bankr.W.D. Pa. 2001).
iii. Secured by additional assets other than the residence; cross collateralization clauses, overly broad security agreement?
1. Fixtures: will a security interest in fixtures destroy §1322 antimodification protection?
2. Mortgage extending mortgagee’s security interest to non-fixture appliances, as well as other personalty, removed mortgagee’s claim from category of claims secured only by residential realty, for purpose of preventing Chapter 13 debtor from modifying mortgagee’s rights. In re Caster, 77 B.R. 8 (Bankr. E.D. Pa. 1987).
iv. Valuation- Under § 506 (a)(1), “value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest”(emphasis added). If a valuation of the property under §506(a) determines that a junior mortgage holder’s claim is wholly unsecured, then the mortgagee is not in any respect a “holder of a claim secured by the debtor’s residence” and the jr. mortgage holder’s claim may be modified and treated as an unsecured claim.

Date of Valuation –
a. Loan Origination Date or Date of Bankruptcy Petition?

2. Methodology of Valuation. Market value or liquidation value? When a Chapter 11 debtor or a Chapter 13 debtor intends to retain property subject to a lien, the purpose of a valuation under section 506(a) is not to determine the amount the creditor would receive if it hypothetically had to foreclose and sell the collateral. Neither the foreclosure value nor the costs of repossession are to be considered because no foreclosure is intended. . . . The fair market value is not ‘replacement value’ because the house is not being replaced. The fair market value is the price which a willing seller under no compulsion to sell and a willing buyer under no compulsion to buy would agree upon after the property has been exposed to the market for a reasonable time. Taffi v. United States (In re Taffi), 68 F.3d 306, 309 (9th Cir. 1995)

3. Current use or highest-best use? Should not calculate the value of the property on the value such property could demand if it were converted to some other use. The purpose of the valuation is to determine how much the creditor will receive for the debtor’s continued possession . . .. The foreclosure value is not relevant because no foreclosure is intended by the Plan. . . . Consequently, the value has to be the fair market value of what the debtors are using. Taffi v. United States (In re Taffi), 68 F.3d 306, 309 (9th Cir. 1995) Cannot deduct for hypothetical costs of sale – Huntington Nat’l Bank v. Pees (In re McClurkin), 31 F.3d 401 (6th Cir. 1994)
v. When is the Lien Stripped Off? The unsecured junior lien is not stripped off at confirmation. To allow lien strip at confirmation would encourage “mischief” such as the debtor’s post-confirmation sale of the property to an unsuspecting purchaser. Under BAPCPA section 1325(a)(5)(B)(i)(I)(bb), the plan must provide that the claim holder “retain[s] the lien securing such claim until … discharge under section 1328….”
1. The junior lien is deemed satisfied and lien should be discharged or released only upon conclusion of the bankruptcy case. In re Jones, 152 B.R. 155 (Bankr. E.D. Mich. 1993).

2. The right to avoid a lien has not fully matured in a Chapter 13 context until a discharge is granted upon successful completion of the Chapter 13 Plan. Accordingly, the order confirming the Debtors’ plan will specifically provide that the Debtors’ house shall remain property of the estate, and shall not re-vest in the Debtors, until the Debtors are granted a discharge. Castle v. Parrish, 29 B.R. 869, 874 (Bankr. S.D. Ohio 1983)

3. A plan is inconsistent with the provisions of Chapter 13 when it purports to effectuate irrevocable lien avoidance on plan confirmation. In re McMillan 251 B.R. 484, 490 (Bankr.. E.D. Mich.2000)

4. If the Debtor is ineligible to receive a discharge due to prior discharge under 11 U.S.C. 1328(f) then the Debtor may not benefit from the lien stripoff. See In re Akram, 259 B.R. 371, 378-79 (Bankr.C.D.Cal.2001); In re King, 290 B.R. 641, 651(Bankr. C.D. Ill.2003)
vi. Hardship discharge? If the Debtor receives only a “hardship discharge” under 11 U.S.C. 1328(b) is the debtor entitled to the benefit of the lien strip and a discharge of the junior mortgage lien?
1. One line of cases holds that a creditor’s lien may be extinguished pursuant to the debtor’s plan. These cases use the following two lines of reasoning: First, the creditor’s lien is void upon the payment of the allowed secured claim pursuant to 11 U.S.C. § 506(d); and second, where §1322(b)(2) does not prevent a modification to the creditor’s lien rights, any concern about the debtor dismissing his case after the creditor’s lien is released, but prior to full payment under the plan, is outweighed by the policy of affording the debtor a fresh start. See, e.g., Bank One, NA v. Flowers, 183 B.R. 509 (N.D. Ill. 1995); In re Nicewonger, 192 B.R. 886 (Bankr.N.D.Ohio 1996); In re Hernandez, 175 B.R. 962 (N.D. Ill. 1994); In re Wilson, 174 B.R. 215 (Bankr. S.D. Miss. 1994); McDonough v. Plaistow Coop. Bank (In re McDonough), 166 B.R. 9 (Bankr. D. Mass. 1994); In re Cooke, 169 B.R. 662 (Bankr. W.D. Mo.1994); In re Schultz, 153 B.R. 170 (Bankr. S.D. Miss.1993); In re Lee, 156 B.R. 628 (Bankr. D. Minn.1993).

2. Another line of cases holds that a debtor may not obtain a release of a secured creditor’s lien until he successfully completes the confirmed plan and receives a §1328(a) discharge. See, e.g., In re Zakowski, 213 B.R. 1003 (Bankr. E.D. Wis.1997); In re Pruitt, 203 B.R. 134 (Bankr. N.D. Ind. 1996); In re Scheierl, 176 B.R. 498 (Bankr. D. Minn.1995);In re Jordan, 164 B.R.. 89 (Bankr. E.D. Mo.1994); In re Jones, 152 B.R. 155 (Bankr. E.D. Mich.1993); Gibbons v. Opechee Distribs. (In re Gibbons), 164 B.R. 207 (Bankr. D.N.H. 1993).

V. IS AN ADVERSARY PROCEEDING REQUIRED? Chapter 13 debtors may not need to file an adversary proceeding to strip the mortgagee’s lien. One court summarized the cases:
[I]t appears that no adversary proceeding is needed simply to value and declare void a totally unsecured claim. The majority of courts therefore hold that “the appropriate procedure for lien avoidance under Section 506 is by motion because lien avoidance is the inevitable byproduct of valuing a claim, which is accomplished by motion pursuant to Bankruptcy Rule 3012.” In re Sadala, 294 B.R. 180, 183 (Bankr. M.D. Fla. 2003) (collecting cases); see also, In re Millspaugh, 302 B.R. 90 (Bankr. D. Idaho 2003); In re Fisher, 289 B.R. 544 (Bankr. W.D.N.Y. 2003) (court allows proceedings to be prosecuted by motion in the absence of a specific objection by the mortgage holder that the proceeding be converted to an adversary proceeding); but see, e.g., In re Kressler, 252 B.R. 632 (Bankr. E.D. Pa. 2000) (espousing the minority view that an adversary proceeding is required); …Once the value of the secured claim is determined, the attendant lien is stripped off automatically under Section 506(d).” In re Sadala, 294 B.R. 180, 183 (Bankr. M.D. Fla. 2003) In re Robert, 313 B.R. 545, 549 (Bankr. N.D. N.Y. 2004).

These Courts have determined that lien stripping is a valuation issue, not a challenge to the “validity, priority, or extent of a lien” of F.R.B.P. 7001, requiring an adversary proceeding.

a. Courts have considered the “lien-stripping” effect of § 506 in the context of:
i. an adversary proceeding. See, e.g., Gaglia v. First Federal Sav. & Loan Asso., 889 F.2d 1304, 1305 (3d Cir. Pa.1989), overruled by Dewsnup v. Timm, 502 U.S. 410 (U.S. 1992); In re Lindsey, 823 F.2d 189, 191 (7th Cir. Ill. 1987); In re Cobb, 122 B.R. 22, 24(Bankr.E.D. Pa.1990); Bellamy v. Federal Home Loan Mortg. Corp., 122 B.R. 856, 857 (Bankr. D. Conn. 1991), aff’d In re Bellamy, 132 B.R. 810 (D.Conn.1991), aff’d In re Bellamy, 962 F.2d 176 (2d Cir. Conn. 1992); Goins v. Diamond Morttg. Corp., 119 B.R. 156, 157 (Bankr. N.D. Ill.1990); In re Garnett, 88 B.R. 123, 124 (Bankr. W.D. Ky.1988), aff’d United States on behalf of Farmers Home Admin. v. Garnett, 99 B.R. 757 (W.D. Ky. 1989); In re Crouch, 80 B.R. 364, 365 (Bankr. W.D. Va.1987); In re O’Leary, 75 B.R. 881, 882(Bankr. D. Or. 1987);
ii. a motion to avoid a lien. See, e.g., In re Jablonski, 88 B.R. 652, 653 (E.D. Pa. 1988); In re Chavez, 117 B.R. 733, 734 (Bankr. S.D. Fla. 1990); In re Marshall, 111 B.R. 325, 326 (Bankr. D. Mont. 1990); In re Demoff, 109 B.R. 902, 903 (Bankr. N.D. Ind.1989); In re Anderson, 88 B.R. 877, 878 (Bankr. N.D. Ind. 1988), In re Robert, 313 B.R. 545 (Bankr. N.D.N.Y. 2004) and,
iii. in an objection to a proof of claim. See, e.g., In re Jablonski, 88 B.R. 652, 653 (E.D. Pa. 1988); In re Chavez, 117 B.R .733, 734 (Bankr. S.D. Fla. 1990); In re Marshall, 111 B.R. 325, 326 (Bankr. D. Mont. 1990); In re Demoff, 109 B.R. 902, 903 (Bankr. N.D. Ind. 1989); In re Anderson, 88 B.R. 877, 878 (Bankr. N.D. Ind.1988).

b. Eastern District Court of Michigan- The Court has not to date required an adversary proceeding in any published opinion. In the case, In re Jones 152 B.R. 155 (Bankr. E.D. Mich. 1993); the Hon. Arthur Spector held that F.R.Bankr.P. 3012 permits § 506 valuations to be requested by motion, and noted that the advisory committee note relating to that rule distinguishes valuation proceedings from those subject to F.R.Bankr.P. 7001, and ruled that the debtor need not file an adversary proceeding to avoid a creditor’s lien under § 506. In re Hoskins, 262 B.R. 693(Bankr. E.D. Mich. 2001)

c. Western District of Michigan- a junior lien which is totally unsupported by any equity in property may be extinguished through Chapter 13 plan confirmation process, without need for adversary proceeding, as long as language in plan is sufficiently clear to put lienholder on notice of debtor’s intentions) (See also, In re Hoskins, 262 B.R. 693(Bankr. E.D. Mich. 2001)(Judge Spector), In re Fuller 255 B.R. 300, 306 (Bankr. W.D. Mich. 2000); In re Hudson, 260 B.R. 421 (Bankr. W.D. Mich. 2001); see also, In re Calvert, 907 F.2d 1069, 1072 (11th Cir. Ala. 1990);
i. Best Practice- Circuits have not specifically ruled. Debtors may wish to be cautious when deciding whether an adversary proceeding is required. If future appellate court decisions decide that an adversary proceeding is required, the lien strip-off may be subject to collateral attack. Cf. Ruehle v. Educ. Mgmt. Corp. (In re Ruehle), 412 F. 3d 679, 680 (6th Cir. 2005) (student loan discharge in plan void because adversary proceeding required).

VI. EFFECT OF DISMISSAL – A dismissal acts to undo bankruptcy and to restore property rights to the position in which they were found at commencement of case, as far as practicable, given facts of each case. Bankr.Code, 11 U.S.C. § 349(b).
i. Unless the court indicates otherwise, the general effect of an order of dismissal is to “restore the status quo ante; “it is as if the bankruptcy petition had never been filed. France v. Lewis & Coulter, Inc. (In re Lewis & Coulter, Inc.), 159 B.R. 188, 190 (Bankr. W.D. Pa. 1993); Lawson v. Tilem (In re Lawson), 156 B.R. 43, 45 (B.A..P. 9th Cir. Cal. 1993)).
ii. The legislative history of 11 U.S.C. § 349 states: The basic purpose of the subsection is to undo the bankruptcy case, as far as practicable, and to restore all property rights to the position in which they were found at the commencement of the case…. Where there is a question over the scope of the subsection, the court will make the appropriate orders to protect rights acquired in reliance on the bankruptcy case. H.R.Rep. No. 595, 95th Cong., 1st Sess., 338 (1977); 1978 U.S.Code Cong. & Admin.News, 5963, 6294.
iii. 11 U.S.C. § 1325(a)(5)(B)(i)(II) requires a plan to provide that if a Chapter 13 case is “dismissed or converted without completion of the plan,” the lien is retained by the lien holder “to the extent recognized by applicable nonbankruptcy law.”

VII. CREDITOR DEFENSES

a. Mortgage is not a “Junior Lien”
i. Failure to record or properly record a senior mortgage. If junior lienholder lacked notice of the prior lien, consider action to determine whether a “junior lien” has priority.
ii. Defective/invalid liens. If a senior lien has defects that render the security instrument void, consider action to determine lien priority (e.g., acknowledgment, signatures, witnesses, description of the property).
iii. Can junior lienholder compel Ch. 13 Trustee or Debtor to avoid a senior lien, thus preserving Jr. lien? No, because any such senior lien avoided would be preserved to the bankruptcy estate to prevent a junior lienholder from improving his position. 11 U.S.C. § 551

b. Valuation of property supports Junior Lien- Appraisals of property may establish that the property actually is worth more than the amount of the senior lienholder’s secured claim.
1. Claims of senior lienholder may be overstated. In a close case, it may be useful to examine the claim of the senior lienholder for components that may improperly inflate the amount of the claim.

Consider objections to the claim for:
a. Fees and costs incurred after the petition was filed;
b. Property taxes, insurance premiums, or property preservation expenses that were incurred after the petition was filed;
c. Fees and costs that are not authorized to be charged to the borrower under the note and mortgage, unless or until notice to the debtor is given;
d. Unlawful fees and costs;
e. Whether funds in escrow account should be credited.
c. Motions to convert case to chapter 7.
i. See note above, regarding §1325(a)(5)(B)(i)(II) (effect of dismissal or conversion)
ii. General grounds to convert case. Strategic reasons to convert to Chapter 7?
The borrower cannot strip lien in Ch. 7 case. Nobelman v. American Savings Bank, 508 U.S. 324 (U.S. 1993); In re Talbert, 344 F.3d 555 (6th Cir. 2003).

VIII. SETTLEMENT CONSIDERATIONS /CREDITOR CONCEDES THAT LIEN STRIP IS AUTHORIZED- WHAT NEXT?
a. Seek a judgment, plan provision, or order that protect junior lienholder until conclusion of the case.
i. Order should confirm lien is preserved until successful completion of all payments and issuance of § 1328(a) Order of Discharge.
ii. The judgment and the order confirming the plan should state that any property encumbered by liens securing an allowed secured claim shall remain property of the estate until the plan is fully performed.
iii. Seek favorable judgment provisions that protect the junior lienholder until the case is concluded, such as “Future Default” provisions , and provisions requiring maintenance of adequate hazard insurance coverage, and prompt payment of property taxes.

b. Make a close examination of Debtor’s Income and Expenses and file timely objections to under reported income, and unsubstantiated, unreasonable and luxury expenditures, to maximize dividends to unsecured creditors.

c. Consider valid objections to untimely or defective claims of other unsecured creditors to maximize junior lienholder’s pro rata share.

d. Monitor plan payments, prompt payment of property taxes, and maintenance of adequate hazard insurance and seek dismissal in appropriate circumstances.

IX. OTHER EXCEPTIONS:
a. Short Term Mortgages – First Union Mortg. Corp. v. Eubanks (In re Eubanks), 219 B.R. 468 (B.A.P. 6th Cir. 1998) (Section 1322(c)(2) creates a statutory exception to the protection from modification for “short term” home mortgages in Chapter 13 cases; debtor can bifurcate undersecured second mortgage and pay allowable secured portion in full with interest consistent with § 1325(a)(5), while paying unsecured portion with other unsecured claims.)

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What Homeowners Should Know About Appeals at the 9th Circuit

28 Monday Nov 2016

Posted by BNG in Appeal, Bankruptcy, Fed, Federal Court, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Landlord and Tenant, Litigation Strategies, Non-Judicial States, Pleadings, Pro Se Litigation, Trial Strategies, Your Legal Rights

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The Ninth Circuit uses a limited en banc system for en banc matters because of its size, with 11 judges comprising an en banc panel;

The Chief Judge is always one of the 11 en banc judges;

The Ninth Circuit currently has 29 active judges and 15 judges on senior status;

Active judges are expected to hear 32 days of oral arguments per year;

Judges are assigned to hear cases by rotation, and no preference is given for judges from those jurisdictions;

Oral argument are scheduled on certain dates;

Filings for are currently down 3% compared to last year;

Pro Se filings account for 51% of the documents filed with the court;

The largest category of pro se litigants are prisoners;

48% of all immigration appeals in the US are filed in the Ninth Circuit;

From the entry of the final order of the lower court or agency to final Ninth Circuit disposition: 32.6 months
From the filing of the law brief to oral argument or submission on briefs: 8.7 months in the Ninth Circuit (4.1 months nationally);

The court is permitted to move cases up in priority;

Priority is set by a staff attorney who assigns a number to each case based on a point system: 1, 2, 3, 5, 7, 10, and 24. Cases assigned 1 or 2 go to the screening panel for disposition. Cases assigned 24 always get oral argument, and involve matters like the death penalty. Cases assigned 3, 5, 7, or 10, will depend on the number of parties, the types of issues, etc. These cases may get oral argument, or be submitted on briefs;

The assignment of the panel of judges is separate from assignment of cases;

Panels are set 1 year in advance;

The clerk’s office assigns cases based on a formula that includes priority 99% of petitions for rehearing en banc are rejected – a judge on the court must initiate the process for en banc rehearing, and a judge may do so even if there is no petition for rehearing en banc filed;

If there is a second appeal to the court in the same case, the case is first presented to the original panel to see if they want to decide the second appeal – usually the panel will take back the case in approximately 1/4 to 1/3 of cases – if you want the same panel, file a motion to ask to have the case assigned to the same panel, but give good reasons why;

Generally, most general civil appeals where the parties are represented by attorneys will get set for oral argument – but about 20-25% that are assigned to oral argument will ultimately be submitted on briefs instead.

Home owners should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender – for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at http://www.fightforeclosure.net “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

How Can Nevada Homeowners Effectively Handle Foreclosure Matters

08 Friday Apr 2016

Posted by BNG in Affirmative Defenses, Appeal, Federal Court, Foreclosure Defense, Pro Se Litigation

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Foreclosure, foreclosure defense, Mortgage loan, Nevada, Nevada Foreclosure, Nevada mortgage loans, Pro se legal representation in the United States

Why Is It Impportant For Nevada Homeowners to Protect their Homes?

In Nevada, homeowners must be aware of mortgage loans and foreclosure laws inorder to be few steps aheads of unscrupulous elements that would do whatever it takes to snatch away your home right under your nose.

Why You Need to Know About Nevada Mortgage Loans

When you take out a loan to purchase residential property in Nevada, you typically sign a promissory note and a deed of trust. A promissory note is basically an IOU that contains the promise to repay the loan, as well as the terms for repayment. The deed of trust provides security for the loan that is evidenced by a promissory note.

How Can you Handle the Issues of Missed Payments

If you miss a payment, most loans include a grace period of ten or fifteen days after which time the loan servicer will assess a late fee. (Loan servicers collect and process payments from homeowners, as well as handle loss mitigation applications and foreclosures for defaulted loans.)

The late fee is generally 5% of the overdue payment of principal and interest based on the terms of the note. To find out the late charge amount and grace period for your loan, look at the promissory note that you signed. This information can also be found on your monthly mortgage statement.

What Are Your Option About Missing Quite a Few Payments

If you miss a few mortgage payments, your mortgage servicer will probably send a letter or two reminding you to get caught up, as well as call you to try to collect the payments. Don’t ignore the phone calls and letters. This is a good opportunity to discuss loss mitigation options and attempt to work out an agreement (such as a loan modification, forbearance, or payment plan) so you can avoid foreclosure.

How Can You Handle Pre-Foreclosure Loss Mitigation Review Period

Under the federal Consumer Financial Protection Bureau servicing rules that went into effect January 10, 2014, the mortgage servicer must wait until you are 120 days delinquent on payments before making the first official notice or filing for any nonjudicial or judicial foreclosure. This is to give you sufficient time to explore loss mitigation opportunities. (If a servicer’s sole purpose of providing a notice is to inform you that you are late on your payments and/or explain what your loss mitigation options are, the servicer can deliver the notice within this pre-foreclosure period.)

What About Deed of Trust, What You Need to Know

Nevada deeds of trust often contain a clause that requires the lender to send a notice, commonly called a breach letter or demand letter, informing you that your loan is in default before it can accelerate the loan and proceed with foreclosure. (The acceleration clause in the mortgage permits the lender to demand that the entire balance of the loan be repaid if the borrower defaults on the loan.)

The letter must specify:

the default
the action required to cure the default
a date (usually not less than 30 days from the date the notice is given to the borrower) by which the default must be cured, and
that failure to cure the default on or before the date specified in the notice may result in acceleration of the debt and sale of the property.

What Types of Foreclosure Procedures Is there In Nevada

In Nevada, most residential foreclosures are nonjudicial. This means the lender can foreclose without going to court as long as the deed of trust contains a power of sale clause.

What is Notice of Default and Election to Sell

In Nevada, Non-judicial proceedings is used to foreclose most home. The Nevada nonjudicial foreclosure process formally begins when the trustee, a third-party, records a Notice of Default and Election to Sell (NOD) in the office of the recorder in the county where the property is located, providing three months to cure the default.

A copy of the NOD must be sent to each person who has a recorded request for a copy and each person with an interest or claimed interest in the property by registered or certified mail within ten days after the NOD is recorded recordation.

What Are the Requirements for Posting NOD?

If a residential foreclosure, a copy of the NOD must be posted in a conspicuous place on the property 100 days before the date of sale.

Are there Any Affidavit Required

The trustee or beneficiary (lender) must record a notarized affidavit along with the NOD that states, based on a review of business records, including all of the following information.

The full name and business address of the current trustee or the current trustee’s personal representative or assignee, the current holder of the note secured by the deed of trust, the current beneficiary of record and the current servicer of the obligation or debt secured by the deed of trust.
That the beneficiary under the deed of trust, the successor in interest of the beneficiary or the trustee is in actual or constructive possession of the note secured by the deed of trust; or that the beneficiary or its successor in interest or the trustee is entitled to enforce the obligation or debt secured by the deed of trust.
That the beneficiary or its successor in interest, the servicer of the obligation or debt secured by the deed of trust or the trustee, or an attorney representing any of those persons, has sent to the borrower a written statement including the amount needed to cure the default, the principal amount of the debt, the accrued interest and late charges, a good faith estimate of all fees, contact information for obtaining the most current amounts due, and each assignee of the deed of trust.

What Other Alternatives Do I Have to Stop the Foreclosure?

You have 3 alternatives, sometimes 4.

Your alternatives are:

1). Try to call your alleged lender to see if you can get a reasonable person on the phone. Don’t panic, just be prepared as over 90% of the people you speak to on the phone are programmed to act certain way.i.e, if you are lucky as 99.9% you’ll get a recording and will have to leave a message, unfortunately, you have less that 20% of getting a call back response. You’ll know very early that the alleged lender, definitely not with your best interest at heart.

2). Nevada law requires that borrowers who are in foreclosure be given the option to participate in mediation if the property is owner-occupied.

The trustee must mail to the borrower (by registered or certified mail, return receipt requested) an Election to Mediate Form no later than ten days after recording the NOD. If the borrower wants to elect mediation, the form must be completed and returned within 30 days.

3). You can commence litigation to immediately stop the foreclosure, but you have to be prepared to whether the stop as you’ll experience various emotions during the litigation proceedings, but with time, you’ll get used to it.

3) Bamkruptcy is another method to stop foreclosure, but it will not be in your best interest if you just found yourself in foreclosure situation. We recommend Bankruptcy as the last resort and this is why?

If you are a homeowner with a mortgage payment, say like $1000/mth. If you have missed payment that is 1 year or more. Your Chapter 13 bankrupcty payments will be difficult for you to make once in bankrupcty because you will still make the Normal monthly payment and then some portion of the missed payments, which is sometimes, nealy half of the monthly payment. So if you make a payment of $1000 before the foreclosure began, you’ll now have to make ($1500 (Regular + Potion Payments) to catch up. So you ask yourself, if you can’t afford the original payment of $1000, before you went into foreclosure, how can you afford the higher payments.

In Nevada, You Have What is called Danger Notice

At least 60 days prior to the date of the sale, the trustee must provide the borrower(s) with a separate “Danger Notice” stating that they are in danger of losing their home to foreclosure, along with a copy of the original promissory note.

The notice must be:

personally served to the borrower
left with a person of suitable age and discretion (if the borrower is not available) and a copy mailed, or
if a person of suitable age and discretion is not available, then the notice may be posted in a conspicuous place on the property, left with a person residing in the property, and then mailed to the borrower.

What do you need to know about Notice of Sale

After expiration of the three-month period following the recording of the NOD, the trustee must give notice of the time and place of the sale by recording the notice of sale and by:

Providing the notice of sale to each required party by personal service or by mailing the notice by registered or certified mail to the last known address 20 days before sale.
Posting the notice of sale on the property 15 days before the sale.
Posting the notice of sale for 20 days successively in a public place in the county where the property is situated and on the property 15 days before sale.
Publishing a copy of the notice of sale three times, once each week for three consecutive weeks, in a newspaper of general circulation in the county where the property is situated.

Notice to Tenants

If the property is tenant occupied, a separate notice must be posted in a conspicuous place on the property and mailed to the tenant no later than three business days after the notice of sale is given.

Reinstatement Before Sale

In the case of owner-occupied housing, the borrower gets a right to reinstate by paying the arrearage, costs, and fees. This right expires 5 days prior to the date of the foreclosure sale.

The Foreclosure Sale

The foreclosure sale must be between the hours of 9:00 a.m. and 5:00 p.m. All sales of real property must be made:

at the courthouse in the county in which the property or some part thereof is situated (in counties with a population of less than 100,000), or
at the public location in the county designated by the governing body of the county for that purpose (in counties with a population of 100,000 or more).

The property will be:

sold to the highest third-party bidder or
revert to the foreclosing lender and become REO

Deficiency Judgment Following Sale

When a lender forecloses on a mortgage, the total debt owed by the borrower to the lender frequently exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a “deficiency.” In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount from the borrower.

In Nevada, a lender may obtain a deficiency judgment following foreclosure, but the amount of the judgment is limited to the lesser of:

the difference between the total debt and fair market value of the home, or
the difference between the total debt and foreclosure sale price.

For loans taken out after October 1, 2009, deficiencies are prohibited for purchase money loans (that have not been refinanced) held by a bank or other financial institution for single-family residences occupied continuously by the borrowers.

Redemption Period

A redemption period is the legal right of any mortgage borrower in foreclosure to pay off the total debt, including the principal balance, plus certain additional costs and interest, in order to reclaim the property. In Nevada, there is no redemption period following a nonjudicial foreclosure sale.

Eviction Following Foreclosure

If you don’t vacate the property following the foreclosure sale, the new owner will likely:

offer you a cash-for-keys deal (where the new owner offers you money in exchange for you agreeing to move out), or

give you a three-day notice to quit (leave) before filing an eviction lawsuit.

To learn more about foreclosure in general, ways to defend against foreclosure, and programs to help struggling homeowners avoid foreclosure

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Home owners should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender – for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at http://www.fightforeclosure.net “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

Why Homeowners Must Time Correctly Before Appealing Adverse Decisions

03 Sunday Apr 2016

Posted by BNG in Appeal, Federal Court, Foreclosure Defense, Judicial States, Non-Judicial States, Pleadings, Pro Se Litigation, State Court, Your Legal Rights

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Appeal, Appealable, appealable orders, Appealing Adverse Decisions, Law, Lawsuit, Pro se legal representation in the United States

CASE STUDY: 989 F.2d 1074

Effective Foreclosure Defense requires timing. If you time correctly, you can save your home. Homeowners presently in litigation must time correctly when appealling adverse ruling to avoid conflict of Jurisdiction. This case shows how wrong timing before filing a Notice of Appeal resulted to Dismissal of Appeal for Lack of Jurisdiction.

989 F.2d 1074

25 Fed.R.Serv.3d 62

Don Byron REILLY; Mary Lou Reilly, Plaintiffs-Appellants,
v.
Bruce HUSSEY, Attorney; Robert J. Phillips, Attorney;
Federal Land Bank of Spokane, Defendants-Appellees.

No. 91-35903.

United States Court of Appeals,
Ninth Circuit.

Argued and Submitted Nov. 2, 1992.
Decided March 23, 1993.

Don Byron Reilly and Mary Lou Reilly, pro se.

W. Arthur Graham, Cent. Coast Farm Credit, Arroyo Grande, CA, for defendants-appellees.

Appeal from the United States District Court for the District of Montana.

Before: WRIGHT, HUG, and POOLE, Circuit Judges.

EUGENE A. WRIGHT, Circuit Judge:

The Reillys appeal pro se the district court’s order dismissing their adversary complaint. Because their notice of appeal was filed while a motion for rehearing was pending in the district court, we lack jurisdiction to hear their appeal.

FACTS AND PROCEDURAL HISTORY

2 In February 1977, the Reillys negotiated a loan from the Federal Land Bank of Spokane and gave as security a deed of trust to a ten-acre tract of land in Ravalli County, Montana. By February 1986, the Reillys were in default on the loan, having missed two annual payments, and had failed to pay real property taxes. The Bank initiated foreclosure proceedings.

3 The Reillys first attempted to avoid foreclosure by filing a Chapter 11 petition in the U.S. Bankruptcy Court, District of Montana, in January 1986. The court lifted the automatic stay so that the Bank could continue with pending foreclosure proceedings in Montana state court. The property was sold at a nonjudicial foreclosure sale in March 1987. The Reillys’ appeal to the Bankruptcy Appellate Panel for the Ninth Circuit was dismissed as moot.

4 In February 1987, while that appeal was pending, the Reillys sought to prevent foreclosure by filing an adversary proceeding in the bankruptcy court. They sought to void the deed of trust on the ground that the legal description was erroneous. The court dismissed their complaint, finding the deed valid under Montana law and not voidable under the Bankruptcy Code. The Reillys appealed to the U.S. District Court, District of Montana, which dismissed the appeal with prejudice.

5 In June 1988, on a creditor’s motion, the bankruptcy court converted the Reillys’ bankruptcy to a Chapter 7 proceeding. The Reillys appealed. Following the conversion, the bankruptcy court modified its order lifting the automatic stay to allow the Bank to continue an unlawful detainer action in state court. That court found the Reillys guilty of unlawful detainer and issued an order of ejectment. In October 1989, the BAP affirmed the conversion. Five weeks later, the Montana Supreme Court dismissed the Reillys’ appeal of their ejectment, finding that the issues raised were based solely on federal bankruptcy law and had already been decided in the federal proceedings.

6 In May 1989, the Reillys filed a second adversary complaint in the bankruptcy court, which is the basis of this appeal. The Reillys again complained, among other things, that the original order lifting the stay was improper. The bankruptcy court granted the Bank’s motion to dismiss the complaint.

7 The Reillys appealed. In March 1991, they filed an amended brief in which they argued, apparently for the first time, that because Judge Peterson failed to disqualify himself at the outset, all decisions of the bankruptcy court should be set aside.1 On June 4, 1991, the district court affirmed the bankruptcy court on all issues. First, the court held that the Reillys were barred by res judicata and collateral estoppel from challenging the order lifting the stay. Second, they failed to state a claim for relief under the Agricultural Credit Act of 1987 because the Act confers no private right of action. Third, res judicata barred their challenge to the validity of the deed of trust. The district court did not rule on whether Judge Peterson should have been disqualified.

8 Having suffered yet another adverse decision, the Reillys sought a hearing before us. The fate of their appeal is determined by the timing of their filings following the district court order. On June 14, 1991, they filed in the district court a motion to reconsider. On July 3, 1991, while their motion to reconsider was pending, they filed a notice of appeal. On July 29, 1991, the district court entered an order denying the motion to reconsider.

JURISDICTION

9 We have jurisdiction to hear appeals from bankruptcy proceedings in which the district court or bankruptcy panel exercises appellate jurisdiction. 28 U.S.C. § 158(d). Such appeals are governed by the Federal Rules of Appellate Procedure, as amended in 1989. Fed.R.App.P. 6.

10 Rule 4(a)(4) of the Federal Rules of Appellate Procedure provides that a notice of appeal filed before the disposition of a post-trial motion “shall have no effect.” However, Rule 4(a)(4) does not apply in bankruptcy proceedings in which the district court or bankruptcy panel exercises appellate jurisdiction. Fed.R.App.P. 6(b)(1)(i). In contrast, Bankruptcy Rule 8015, which governs motions for rehearing2 by the district court or the bankruptcy appellate panel, is silent on the effect of appeals filed before a motion for rehearing is decided. See Bankr.Rule 8015, 11 U.S.C.A. (West Supp.1992). Rule 6(b)(2)(i) provides that, if a timely motion for rehearing is filed under Rule 8015, the time for appeal to the court of appeals runs from the entry of the order denying the rehearing.

11 The Advisory Committee on Appellate Rules deliberately omitted any provision regarding the effect of an appeal filed before the entry of an order denying a rehearing because it wished to “leave undisturbed the current state of law in that area.” Fed.R.App.P. 6, Advisory Committee Notes, 1989 Amendment, subdivision (b)(2). At the time of the amendment, this circuit had held that a notice of appeal in a bankruptcy case is null if it was filed while a motion for rehearing was pending in the district court. In re Stringer, 847 F.2d 549, 550 (9th Cir.1988). That holding is left undisturbed by the 1989 amendment of Fed.R.App.R. 6, and we reaffirm Stringer in this context.

12 In their zeal to pursue all possible avenues of review, the Reillys filed a notice of appeal while their motion for reconsideration was pending before the district court. Their notice of appeal was premature and a nullity: “[I]t is as if no notice of appeal were filed at all. And if no notice of appeal is filed at all, the Court of Appeals lacks jurisdiction to act.” Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 61, 103 S.Ct. 400, 403, 74 L.Ed.2d 225 (1982) (per curiam). Because the Reillys failed to file a notice of appeal after the district court denied their motion for reconsideration, we are without jurisdiction to hear their appeal.

13 Our holding does not deprive the Reillys of an opportunity to be heard. They have had their day in court; indeed they have had their days in many different courts. Clearly, they continue to feel aggrieved; but just as clearly, an unfavorable decision does not necessarily mean that a court has failed to fairly consider their arguments.

14 This appeal is dismissed for lack of jurisdiction.

15 DISMISSED.

1Bankruptcy Judge John L. Peterson presided over the chapter 11 proceedings and both adversary proceedings in the bankruptcy court. In June 1986, in the original bankruptcy hearing, Judge Peterson advised the parties of his wife’s minority stock interest in a creditor of the bankruptcy estate. He gave the parties the option of signing a remittal of disqualification or waiting for another bankruptcy judge. Both parties voluntarily signed the remittal

Under 28 U.S.C. § 455(e), a judge is not allowed to “accept from the parties to a proceeding a waiver of any ground for disqualification” based on the financial interest of the judge’s spouse. The Reillys did not seek review of the disqualification issue, however, until some five years and numerous proceedings later. While § 455 contains no explicit timeliness requirement, we have required that a motion to disqualify or recuse a judge under this section must be made in a timely fashion. Molina v. Rison, 886 F.2d 1124, 1131 (9th Cir.1989).

Moreover, in August 1990, while the present action was pending in district court, the Reillys filed a complaint with the Judicial Council of the Ninth Circuit alleging misconduct by Judge Peterson. We issued an order concluding that “[i]f the judge’s failure to recuse himself, despite the parties’ remittal, was conduct prejudicial to the effective and efficient administration of the business of the courts, appropriate and corrective action has been taken and this complaint therefore should be closed.” In re Charge of Judicial Misconduct, No. 90-80054, at 4 (9th Cir. Jan. 11, 1991).

2The Reillys filed a motion for “reconsideration.” The terms “rehearing” and “reconsideration” are used interchangeably. See In re Shah, 859 F.2d 1463, 1464 (10th Cir.1988); In the Matter of X-Cel, Inc., 823 F.2d 192, 194 (7th Cir.1987)

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

What Homeowners Must Know About Jurisprudential Exceptions to the Final Judgment

02 Saturday Apr 2016

Posted by BNG in Appeal, Federal Court, Foreclosure Defense, Judicial States, Litigation Strategies, Non-Judicial States, Pro Se Litigation, State Court, Trial Strategies, Your Legal Rights

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Appeal, Appealable, appealable orders, collateral order doctrine, non-appealable, non-appealable order, Orders

Manu Homeowners in foreclosure litigations are confused as to what Court Orders should or should not be appealled. This post is designed to help clear those confusions as to what is appealable.

The primary gatekeeper at the door to the federal courts of appeals is the rule that only final judgments are appealable. The final judgment rule has performed this role well, for the most part. In certain cases, however, a trial court’s error on an interlocutory issue is effectively unreviewable on appeal from a final judgment. To deal with this type of injustice, the courts and Congress have created a patchwork of exceptions to the final judgment rule.

A. Collateral Order Doctrine:

The collateral order doctrine is sometimes called the Cohen collateral order doctrine, named for the landmark United States Supreme Court decision, Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949). When we talk about an order being final and appealable under the collateral order doctrine, we are still talking about an order that is appealable under section 1291.
The general rule is that “a party is entitled to a single appeal, to be deferred until final judgment has been entered, in which claims of district court error at any stage of the litigation can be ventilated.” Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863 (1994). Accordingly, as noted in the preceding section, a decision is ordinarily considered final and appealable under section 1291 only if it “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Catlin v. United States, 324 U.S. 229, 233 (1945); see Digital Equip., 511 U.S. at 863 (quoting Catlin). The Supreme Court has recognized, however, “a narrow class of collateral orders which do not meet this definition of finality, but which are nevertheless immediately appealable under § 1291.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996). “Since Cohen, [the Supreme Court has] had many opportunities to revisit and refine the collateral-order exception to the final-judgment rule.” Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 276 (1988).

1. Three-prong test for the collateral order doctrine.

The Supreme Court has articulated a threeprong test to determine whether an order that does not finally resolve litigation is nonetheless appealable under section 1291. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978).
First, the order must “conclusively determine the disputed question.” Id. Second, the order must “resolve an important issue completely separate from the merits of the action.” Id. Third and finally, the order must be “effectively unreviewable on appeal from a final judgment.” Richardson-Merrell Inc. v. Koller, 472 U.S. 424, 431 (quoting Coopers & Lybrand, 437 U.S. at 468); accord Cunningham v. Hamilton County, 527 U.S. 198, 202 (1999) (“[C]ertain orders may be appealed, notwithstanding the absence of final judgment, but only when they ‘are conclusive, . . . resolve important questions separate from the merits, and . . . are effectively unreviewable on appeal from the final judgment in the underlying action.’” (quoting Swint v. Chambers County Comm’n, 514 U.S. 35, 42 (1995))); see also Doleac ex rel. Doleac v. Michalson, 264 F.3d 470, 490-91 (5th Cir. 2001) (restating the Cohen test as a four-step analysis: the decision (1) cannot be tentative, informal, or incomplete; (2) must deal with claims of right separable from, and collateral to, rights asserted in the action; (3) must be effectively unreviewable on the appeal from final judgment; and (4) must involve an issue too important to be denied review).

Under the first prong—that the order conclusively determine the disputed question—the Supreme Court has observed that there are two kinds of nonfinal orders: those that are “inherently tentative,” and those that, although technically amendable, are “made with the expectation that they will be the final word on the subject addressed.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12 n.14 (1983). The latter category of orders meets the first prong of the collateral order doctrine.
Under the second prong—that the issue be separate from the merits—the Court has described it as a “distillation of the principle that there should not be piecemeal review of ‘steps towards final judgment in which they will merge.’” Moses H. Cone, 460 U.S. at 12 n.13 (quoting Cohen, 337 U.S. at 546). A classic case meeting the third p r o n g of the c o l l a t e r a l o r d e r doctrine—unreviewable on appeal from a final judgment—are denials of immunity from suit. As the Fifth Circuit explained in a recent case involving an appeal from a district court order denying a sheriff’s motion for summary judgment in an “official capacity” suit,

Official-capacity suits, in contrast [to
personal-capacity suits], ‘generally
represent only another way of pleading
an action against an entity of which an
officer is an agent.’” . . . [T]he plea
[here] ranks as a ‘mere defense to
liability’” [rather than immunity from
suit]. Because an erroneous ruling on
liability may be reviewed effectively on
appeal from final judgment, the order
denying the Sheriff’s summary
judgment motion in this “official
capacity” suit was not an appealable
collateral order.

Burge v. Parish of St. Tammany, 187 F.3d 452, 476-77 (5th Cir. 1999) (citations omitted); see Cunningham, 527 U.S. at 202. As its stringent requirements indicate, the collateral order doctrine is not to be applied liberally. “Rather, the doctrine “is ‘extraordinarily limited’ in its application.” Pan E. Exploration Co. v. Hufo Oils, 798 F.2d 837, 839 (5th Cir. 1986). Moreover, appealability under the collateral order doctrine must be determined “without regard to the chance that the litigation might be speeded, or a ‘particular injustice’ averted by a prompt appellate court decision.” Digital Equip., 511 U.S. at 868.

2. Examples of orders appealable under the collateral order doctrine.

A. Orders denying claims of immunity from suit asserted in a motion to dismiss or motion for summary judgment when the order is based on a conclusion of law:

Qualified immunity. Swint, 514 U.S. at 42 (citing Mitchell v. Forsyth, 472 U.S. 511, 526 (1985)); Gentry v. Lowndes County, 337 F.3d 481, 484 (5th Cir. 2003); Martinez v. Tex. Dep’t of Crim. Justice, 300 F.3d 567, 576 (5th Cir. 2002).
Immunity under the Foreign Sovereign Immunities Act. Byrd v. Corporacion Forestal y Industrial de Olancho S.A., 182 F.3d 380, 385 (5th Cir. 1999); Stena Rederi A.B. v. Comision de Contratos, 923 F.2d 380, 385-86 (5th Cir. 1991).
Absolute immunity. Swint, 514 U.S. at 42 (citing Mitchell, 472 U.S. at 526, and Nixon v. Fitzgerald, 457 U.S. 731 (1982)).
Eleventh Amendment immunity. Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139 (1993); Martinez v. Tex. Dep’t of Crim. Justice, 300 F.3d 567, 573 (5th Cir. 2002); Reickenbacker v. Foster, 274 F.3d 974, 976 (5th Cir. 2001); see also Sherwinski v. Peterson, 98 F.3d 849, 851 (5th Cir. 1996) (denial of state’s motion to dismiss is appealable even if the district court’s order is not based on an express finding of no immunity if the end result is the same).
Refusal to rule on a claim of immunity from suit. Helton v. Clements, 787 F.2d 1016, 1017 (5th Cir. 1986).
Successive appeal of denial of qualified immunity defense. Behrens v. Pelletier, 516 U.S. 299 (1996) (holding that there can be two interlocutory appeals under the collateral order doctrine of denials of qualified immunity defenses in the same case: one appeal from the denial of a motion to dismiss, and a second appeal from the denial of a motion for summary judgment).

B. Abstention-based stay, dismissal, and remand orders:

Under Colorado River abstention. Moses H. Cone, 460 U.S. at 9 (abstention-based stay order).
Under Burford abstention. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996) (abstention-based remand order).
Under Pullman abstention. Moses H. Cone, 460 U.S. at 9 & n.8 (citing Idlewild Liquor Corp. v. Epstein, 370 U.S. 713, 715 (1962)).

A district court order abstaining may take the form of an abstention-based stay order or an abstentionbased remand order. The Supreme Court addressed the appealability of abstention-based remand orders in Quackenbush. Most “remand” orders—those remanding removed cases back to state court for lack of subject-matter jurisdiction—are not reviewable by appeal or otherwise because of the bar to appellate review embodied in 28 U.S.C. § 1447(d). See Quackenbush, 517 U.S. at 714. If, on the other hand, a district court remands a case to state court for a reason other than lack of subject-matter jurisdiction, for example, in the interest of docket congestion, the bar to review in section 1447(d) does not apply, and the decision is reviewable. Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 352-53 (1976).

C. Pre-remand decisions made by a district court if that decision is “separable” from the remand order and independently reviewable through a mechanism such as the collateral order doctrine.

Dahiya v. Talmidge Int’l, Ltd., No. 02-31068, 2004 WL 1098838 (5th Cir. May 18, 2004) (citing City of Waco v. United States Fid. & Guar. Co., 293 U.S. 140 (1934); Heaton v. Monogram Credit Card Bank, 297 F.3d 416, 421 (5th Cir. 2002); Doleac ex rel. Doleac v. Michalson, 264 F.3d 470, 486 (5th Cir. 2001); Arnold v. State Farm Fire & Cas. Co., 277 F.3d 772, 776 (5th Cir. 2001); Linton v. Airbus Industrie, 30 F.3d 592, 597 (5th Cir. 1994); Angelides v. Baylor Coll. of Med., 117 F.3d 833, 837 (5th Cir. 1997)); Soley v. First Nat’l Bank, 923 F.2d 406, 410 (5th Cir. 1991); see also In re Benjamin Moore & Co., 318 F.3d 626 (5th Cir. 2002) (addressing the separable order doctrine to determine if collateral order doctrine conferred jurisdiction on the court to review the order of remand in a mandamus proceeding).

D. Order denying motions to intervene. Edward v. City of Houston, 78 F.3d 983, 992 (5th Cir. 1996) (en banc). But see Stringfellow v. Concerned Neighbors in Action, 480 U.S. 370 (1987) (order granting motion to intervene but conditioning or restricting it is not immediately appealable; appeal must await final judgment).

E. Order deciding that plaintiff is not required to post security for payment of costs. Cohen, 337 U.S. at 547.

F. Order denying appointment of counsel to litigants who cannot afford counsel. Robbins v. Maggio, 750 F.2d 405 (5th Cir. 1985).

G. Order remanding action to state court pursuant to a contract between the parties. McDermott Int’l, Inc. v. Lloyds Underwriters, 944 F.2d
1199 (5th Cir. 1991).

H. Discovery orders directed to third parties. Church of Scientology v. United States, 506 U.S. 9, 18 n.11 (1992) (Although discovery orders are normally reviewed by mandamus or on appeal from a contempt order, “A discovery order directed at a disinterested third party is treated as an immediately appealable final order because the third party presumably lacks a sufficient stake in the proceeding to risk contempt by refusing compliance.”).

I. Pre-contempt appeals by the President of the United States to avoid unnecessary constitutional confrontations between two coordinate branches of government. See United States v. Nixon, 418 U.S. 683 (1974). (Watch out for the United States Supreme Court’s decision in Cheney v. United States District Court (No. 03-475), in which one of the issues before the Supreme Court is “whether the court of appeals had mandamus or appellate jurisdiction to review the district court’s unprecedented discovery orders in this litigation” that, unlike United States v. Nixon, accepted a claim of executive privilege? Cheney v. United States Dist. Court, 124 S. Ct. 1391 (2004) (denying motion to recuse); see Cheney v. United States Dist. Court, 124 S. Ct. 958 (2003) (No. 03-475) (granting certiorari)).

J. Order requiring turnover of documents claimed to be privileged as attorney work product when the documents are already in the court’s possession because, “if the court already has lawful possession of the documents, a subsequent turnover order will be immediately enforceable without the necessity of holding the subpoenaed party in contempt.” In re Grand Jury Proceedings, 43 F.3d 966, 970 (5th Cir. 1994) (citing Perlman v. United States, 247 U.S. 7 (1918)).

K. Turnover order allowing a receiver to take possession of and sell corporate assets of nonparties. Maiz v. Virani, 311 F.3d 334, 339 n.4 (5th Cir. 2002).

L. Order approving receiver’s plan to distribute assets of investment company whose assets were frozen after the SEC investigated it for securities fraud. SEC v. Forex Asset Mgmt. LLC, 242 F.3d 325, 330 (5th Cir. 2001).

M. Order refusing to modify a prior consent decree where enforcement of the consent decree ran afoul of the State’s Eleventh Amendment Immunity. Frazar v. Gilbert, 300 F.3d 530, (5th Cir. 2002) (finding order also reviewable under 28 U.S.C. § 1291(a) because it was an order “refusing to dissolve or modify” an injunction), rev’d on other grounds, Frew ex rel. Frew v. Hawkins, 124 S. Ct. 899 (2004).

N. Order determining that former Department of Justice attorneys were eligible to act as fact and expert witnesses for private party in civil rights suit brought by government. EEOC v. Exxon Corp., 202 F.3d 755, 757 (5th Cir. 2000).

O. Orders affecting the media’s First Amendment rights. United States v. Brown, 250 F.3d 907, 913 n.8 (5th Cir. 2001) (orders protecting juror anonymity (citing United States v. Gurney, 558 F.2d 1202, 1206-07 (5th Cir. 1977)); Ford v. City of Huntsville, 242 F.3d 235, 240 (5th Cir. 2001) (court closure orders or confidentiality orders (citing Davis v. E. Baton Rouge Parish Sch. Bd., 78 F.3d 920, 926 (5th Cir. 1996)); see also United States v. Brown, 218 F.3d 415, 420 (5th Cir. 2000) (gag order that applied to attorneys, parties, and witnesses and prohibited them from discussing case with any public communications media was appealable under the collateral order doctrine by criminal defendant in whose trial the gag order was issued). But see United States v. Edwards, 206 F.3d 461, 462 (5th Cir. 2000) (per curiam) (collateral order doctrine did not apply to criminal defendant’s motion to lift gag order).

3. Examples of orders not appealable under the collateral order doctrine.

A. Order denying a motion to stay or dismiss federal court litigation under Colorado River abstention. Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 275 (1988).

B. Order denying summary judgment motion based on Noerr-Pennington doctrine.
Acoustic Sys., Inc. v. Wenger Corp., 207 F.3d 287, 290 (5th Cir. 2000).

C. Order denying claim of immunity from liability (as opposed to immunity from suit). Swint, 514 U.S. at 42 (citing Mitchell, 472 U.S. at 526).

D. Order denying claim of immunity from suit that turns on factual determinations. Stena Rederi A.B. v. Comision de Contratos, 923 F.2d 380, 385-86 (5th Cir. 1991). But cf. Mitchell, 472 U.S. at 528 (the resolution of legal issues which are appealable under the collateral order doctrine often will entail some “consideration of the factual allegations that make up the plaintiff’s claim for relief”).

E. Order denying claim of immunity from suit based on sufficiency of the evidence, i.e., whether there is a genuine issue of fact. Johnson v. Jones, 515 U.S. 304 (1995); Kinney v. Weaver, No. 00-40557, 2004 WL 811724, at *6 n.9 (5th Cir. Apr 15, 2004); Martinez v. Tex. Dep’t of Crim. Justice, 300 F.3d 567, 576 (5th Cir. 2002) (“For a qualified immunity appeal, however, our review of any factual disputes is limited to their materiality, not their genuineness.”).

F. In rare instances, denial of claims of immunity on the eve of trial. Edwards v. Cass County, 919 F.2d 273, 276 (5th Cir. 1990) (“If every denial of a motion for leave to file a summary judgment motion asserting qualified immunity were immediately appealable, defendants would have a guaranteed means of obtaining last-minute continuances. We read Mitchell v. Forsyth as affording defendants a reasonable opportunity to obtain review of their qualified immunity claims without losing part of their immunity rights by having to stand trial. However, Mitchell is not designed as an automatic exemption from the orderly processes of docket control.” “To hold otherwise would be to open the floodgates to appeals by defendants seeking delay by asserting qualified immunity at the last minute (or even, as here, following jury selection).”).

G. Order denying the summary judgment of government officials sued in their personal or individual capacities is not an appealable collateral order. Burge v. Parish of St. Tammany, 187 F.3d 452, 476-77 (5th Cir. 1999) (citing Swint, 514 U.S. at 42).

H. Order denying or granting stays pending arbitration. Rauscher Pierce Refsnes, Inc. v. Birenbaum, 860 F.2d 169 (5th Cir. 1988).

I. Order denying certification of a class. Coopers & Lybrand, 437 U.S. at 935 (now appealable by permission under Rule 23(f)).

J. Order denying motion to disqualify counsel. Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 375 (1981).

K. Order granting motion to disqualify. Richardson-Merrell, Inc. v. Koller, 472 U.S. 424 (1985)

L. Order refusing to enforce a settlement agreement claimed by a party to protect it from suit. Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863 (1994).

M. Order denying a motion to dismiss based on the invalidity of service of process claiming immunity from such process. Van Cauwenberghe v. Baird, 486 U.S. 517, 521 (1988).

N. Orders concerning post-judgment discovery. Piratello v. Philips Elecs. N. Am. Corp., 360 F.3d 506, 508 (5th Cir. 2004) (order compelling party to appear at a deposition by a particular date, to answer questions regarding assets, and to produce documents requested, over a claim of self-incrimination; no jurisdiction over district court’s order under 1291 or collateral order doctrine; instead, the remedy was by appealing a contempt order)

Piratello, 360 F.3d at 508 (“This court has indicated its agreement with the Fourth Circuit’s view that the availability of an appeal through a contempt order renders the collateral order doctrine inapplicable to discovery orders. See A-Mark Auction Galleries, 233 F.3d at 898-99 (noting, with approval, the holding of MDK, Inc. v. Mike’s Train House, Inc., 27 F.3d 116, 119 (4th Cir. 1994)).”). In MDK, the Fourth Circuit said: “Courts have long recognized that a party sufficiently exercised over a discovery order may resist that order, be cited for contempt, and then challenge the propriety of the discovery order in the course of appealing the contempt citation. [citations omitted] Indeed, the Supreme Court has pointed to this path to appellate review as a reason why discovery orders are not appealable under Cohen.” MDK, Inc., 27 F.3d at 121

O. As a general matter, pre-trial discovery orders do not constitute final decisions under § 1291, and therefore, are not immediately appealable. See A-Mark Auction Galleries, Inc. v. Am. Numismatic Ass’n, 233 F.3d 895, 897 (5th Cir. 2000) (citing Church of Scientology v. United States, 506 U.S. 9, 18 n.11 (1992)); see Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 377 (1981).
The Supreme Court has held that a party that wishes to immediately appeal a discovery order “must [first] refuse compliance, be held in contempt, and then appeal the contempt order.” Church of Scientology, 506 U.S. at 18 n.11 (citing United States v. Ryan, 402 U.S. 530 (1971)). See infra p. 43 (mandamus may also be available when the discovery order requires disclosure of information claimed to be privileged).

P. Order granting or denying a motion to transfer venue under section 1404(a). Brinar v. Williamson, 245 F.3d 515, 517-18 (5th Cir. 2001); La. Ice Cream Distribs. v. Carvel Corp., 821 F.2d 1031, 1033 (5th Cir. 1987).

Q. Order of civil contempt. FDIC v. LeGrand, 43 F.3d 163, 168 (5th Cir. 1995); Lamar Fin. Corp. v. Adams, 918 F.2d 564, 566 (5th Cir. 1990).

R. Order of an agency review board remanding to an ALJ for further factfinding and consideration before final agency decision is rendered. Exxon Chems. Am. v. Chao, 298 F.3d 464, 469-70 (5th Cir. 2002).

B. Other Common-Law Doctrines of Finality

1. Gillespie “pragmatic finality” doctrine

Under the Gillespie doctrine, the requirement of finality is to be given a practical rather than a technical construction in determining the appealability in marginal cases of an order falling within what the Gillespie decision called the “twilight zone” of finality. Gillespie v. United States Steel Corp., 379 U.S. 148, 152-53 (1964). Counsel should avoid relying on the Gillespie doctrine.

The Supreme Court has distinguished Gillespie on grounds that, according to Professor Wright and his collaborators, “bury it quietly.” 15A CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3913, at 479 (2d ed. 1992). In Coopers & Lybrand v. Livesay, the Supreme Court refused to apply the Gillespie doctrine to permit appeal from an order
decertifying a class action, even on the assumption that the result would be termination of the litigation. Rather than expanding Gillespie, the Court wrote that permitting such appeals under section 1291 would be plainly inconsistent with the policies underlying section 1292(b) and that “[i]f Gillespie were extended beyond the unique facts of that case, § 1291 would be stripped of all significance.” Coopers & Lybrand v. Livesay, 437 U.S. 463, 477 n.30 (1978) (noting that Gillespie concerned a marginally final order disposing of an unsettled issue of national significance and that review of the issue “unquestionably implemented the same policy Congress sought to promote in §1292(b)”).

In fact, the most recent pronouncement from the Fifth Circuit about the vitality of the Gillespie doctrine is that the Fifth Circuit “no longer recognizes the exception.” Kmart Corp. v. Aronds, 123 F.3d 297, 300 (5th Cir. 1997); see Sherri A.D. v. Kirby, 975 F.2d 193, 202 n.12 (5th Cir. 1992) (calling practical finality more chimerical than real); United States v. Garner, 749 F.2d 281, 288 (5th Cir. 1985) (pragmatic finality approach has been virtually limited to facts of Gillespie). As the Fifth Circuit explained, Gillespie’s case-by-case approach to determining pragmatic finality is in fundamental conflict with the values and purposes of the final-judgment rule. See Pan E. Exploration Co. v. Hufo Oils, 798 F.2d 837, 841-42 (5th Cir. 1986); Newpark Shipbuilding & Repair, Inc. v. Roundtree, 723 F.2d 399 (5th Cir. 1984) (en banc).

If counsel finds a case supporting finality that sounds like it is based on practical or pragmatic finality, counsel should carefully trace the cases supporting the theory of finality to make sure that Gillespie is not the ultimate source of authority for that theory. An opinion’s pedigree is important. Counsel should make an informed decision about relying on those cases that rely on or are indirect progeny of Gillespie.

2. “Death knell” doctrine

Under the “death knell” doctrine, which is sometimes equated with the Gillespie doctrine, a case is final when a party is “effectively out of court.” Idlewild Liquor Corp. v. Epstein, 370 U.S. 713, 715 (1962); see McKnight v. Blanchard, 667 F.2d 477, 479 (5th Cir. 1982). The doctrine provides that any decision forcing a plaintiff to give up his claim, in effect, sounds the “death knell,” making it final for purposes of appeal. Coopers & Lybrand, 437 U.S. at 465-69.

Like the Gillespie doctrine, many commentators have argued that the death knell doctrine is all but a dead letter. Although the Fifth Circuit in the past noted that the Supreme Court did not actually overrule the death knell doctrine in Coopers & Lybrand, see McKnight, 667 F.2d at 479, the Fifth Circuit noted that the U.S. Supreme Court’s post-Cooper decision “in Deposit Guaranty National Bank v. Roper, 445 U.S. 326 (1980), declared that its prior decision in Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978), sounded the death knell to that doctrine.” Save the Bay, Inc. v. United States Army, 639 F.2d 1100, 1103 n.3 (5th Cir. Feb. 1981).

And, more recently, the Fifth Circuit observed that the Supreme Court did “limit the death knell exception” in Coopers & Lybrand and in its later decision, Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 10 n.11 (1983). See Kmart Corp. v. Aronds, 123 F.3d 297, 300 (5th Cir. 1997).

In Moses H. Cone, the Supreme Court held that Idlewild’s reasoning was limited to abstention or similar doctrines where all or an essential part of the federal suit goes to a state forum. Aronds, 123 F.3d at 300. Further, even in cases involving stays, the Fifth Circuit has stated that while it liberally construed the death knell exception in the past, it could no longer do so because the exception was limited to cases where the stay requires all or essentially all of the suit to be litigated in state court. See Aronds, 123 F.3d at 300 (citing United States v. Garner, 749 F.2d 281, 288 (5th Cir. 1985), and Kershaw v. Shalala, 9 F.3d 11, 14 (5th Cir. 1993)). And even in cases involving abstention doctrines, resort to the death knell doctrine is usually unnecessary; direct reliance may be placed on Moses H. Cone and the Supreme Court’s more recent decision in Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996).

3. Forgay “hardship–irreparable injury” exception

The Forgay doctrine, or, as it is sometimes called the “hardship and irreparable injury” exception to the final-judgment rule, grew out of Forgay v. Conrad, 47 U.S. (6 How.) 201 (1848). Today, the Forgay doctrine—if it has any continuing validity—is viewed a narrow exception to the final-judgment rule; it allows immediate appellate court review of district court orders that adjudicate part of one claim by directing the immediate delivery of property from one party to another, when there is the possibility that the losing party will experience irreparable harm or hardship if appeal of the execution is not allowed. Jalapeno Prop. Mgmt., LLC v. Dukas, 265 F.3d 506, 512 n.8 (6th Cir. 2001) (citing Forgay, 47 U.S. at 204); see also 15A CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3910, at 328 (2d ed. 1992) (noting that the Forgay doctrine “is likely to be applied only to orders that improvidently direct immediate execution of judgments that involve part of the merits of a claim and are outside the limits of Rule 54(b)”).

Although the Forgay doctrine is occasionally cited, it—like the Gillespie and death knell doctrines—is probably a dead letter. Petties v. Dist. of Columbia, 227 F.3d 469, 473 (D.C. Cir. 2000) (“[W]e are not at all sure that Forgay has continuing vitality apart from the collateral order doctrine . . . .”); see Digital Equip., 511 U.S. at 868 (appealability under the collateral order doctrine must be determined “without regard to the chance that the litigation might be speeded, or a ‘particular injustice’ averted by a prompt appellate court decision”); see, e.g., Maiz v. Virani, 311 F.3d 334, 339 n.4 (5th Cir. 2002) (holding that it had appellate jurisdiction under the collateral order doctrine over an order directed at two nonparty corporations to turnover property “worth tens of millions of dollars”).
In fact, the two most recent Fifth Circuit cases citing the Forgay doctrine as a possible jurisprudential exception to finality were decided more than a decade ago. Goodman v. Lee, 988 F.2d 619, 626 (5th Cir. 1993) (citing Forgay for a narrow proposition, but distinguishing it); Lakedreams v. Taylor, 932 F.2d 1103, 1107 n.7 (5th Cir. 1991) (citing it in dicta).

The Forgay category of hardship finality is narrow, and according to the Wright & Miller treatise, has not generated a large number of appeals. 15A CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3910 (2d ed. 1992). The most common, and the most expansive, jurisprudential exception to the finaljudgment rule is the collateral order doctrine.
Despite its stringent requirements and arguably limited applicability, the collateral order doctrine is the best chance of establishing appellate jurisdiction on a jurisprudential exception. Pan E. Exploration Co. v. Hufo Oils, 798 F.2d 837, 839 (5th Cir. 1986). But, if the facts of your case fit into the narrow and specific facts of the Forgay doctrine, counsel may wish to consider citing both the collateral order and Forgay doctrines and reviewing the Wright & Miller treatise’s treatment of the doctrine, which argues that “within its restricted sphere it provides a highly desirable elaboration of the final judgment rule.” 15A WRIGHT ET AL., supra, § 3910, at 329 (2d ed. 1996).

C. Procedure for Appealing Under the Collateral Order Doctrine

“An appeal taken under the collateral order doctrine is subject to all the usual appellate rules and time periods, including Rule 4 of the Federal Rules of Appellate Procedure.” United States v. Moats, 961 F.2d 1198, 1203 (5th Cir. 1992); see also Byrd v. Corporacion Forestal y Industrial de Olancho S.A., 182 F.3d 380, 386 (5th Cir. 1999) (“While we said in Moats that appeals taken pursuant to the collateral order doctrine are subject to all of the usual appellate rules governing interlocutory appeals, we also specifically identified Rule 4.”). A party seeking to appeal under the collateral order doctrine should follow the appeal procedures under FED. R. APP. P. 4 that apply to appeals “as of right” from traditional final judgments (e.g., invoke the appellate court’s jurisdiction by filing a notice of appeal in the district court within the time specified by FED. R. APP. P. 4).

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Effective Use of Injunctions Can Make or Break Homeowner’s Foreclosure Case

02 Saturday Apr 2016

Posted by BNG in Appeal, Case Laws, Case Study, Federal Court, Foreclosure Defense, Judicial States, Litigation Strategies, Non-Judicial States, Pleadings, Pro Se Litigation, State Court, Your Legal Rights

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CASE STUDY: 5 F.3d 539 Unpublished Disposition

Effective Foreclosure Defense requires timing. If you time correctly, you can save your home. Homeowners presently in litigation must use injunctions to their advantage. Ignorance will not be to your advantage.

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

In re Evalyn PREBLICH, Debtor.
Evalyn PREBLICH, Appellant,
v.
Kenneth W. BATTLEY; Dennis Sammut, Appellees.

No. 92-36540.

United States Court of Appeals, Ninth Circuit.

Submitted Aug. 11, 1993.*
Decided Aug. 24, 1993.

Appeal from the United States District Court for the District of Alaska; No. CV-91-419-HRH, H. Russel Holland, Chief District Judge, Presiding.

D. Alaska

AFFIRMED.

Before PREGERSON, BRUNETTI and RYMER, Circuit Judges.

MEMORANDUM**

Chapter 7 debtor Evalyn Preblich appeals pro se from the district court’s affirmance of a bankruptcy court order authorizing the sale of certain bankruptcy estate property near Hope, Alaska to appellee Dennis Sammut by appellee-trustee Kenneth W. Battley. The district court held that because Preblich had failed to obtain a stay pending appeal, her challenge to the sale was moot under 11 U.S.C. Sec. 363(m). Preblich also petitions this court to stay the present appeal pending resolution by the Ninth Circuit Bankruptcy Appellate Panel of an allegedly related matter arising from the same bankruptcy. Sammut, meanwhile, moves this court to strike Preblich’s Reply Brief.

We have jurisdiction under 28 U.S.C. Sec. 1291. We affirm the order of the district court, and deny the motions of both parties.

I. MOOTNESS

The district court ruled that Preblich’s challenge to the bankruptcy court’s authorization of the sale of the subject property was moot under 11 U.S.C. Sec. 363(m) because she had failed to obtain a stay pending appeal. Preblich does not dispute the fact that she did not obtain a stay, but instead offers reasons why this situation should be excepted from the stay requirement. After careful consideration of these arguments, we conclude that all of them lack merit.

Section 363(m) provides that an appeal from the bankruptcy court’s authorization of the sale of certain property cannot affect the rights of a good faith purchaser, unless the debtor stays the sale pending an appeal.1 We have applied this statute strictly, and have recognized only two situations in which failure to obtain a stay will not render an appeal moot: “(1) where real property is sold to a creditor subject to the right of redemption and (2) where state law would otherwise permit the transaction to be set aside.” In re Mann, 907 F.2d 923, 926 (9th Cir.1990) (internal citations omitted). We have done so in the interest of promoting finality in bankruptcy. See In re Onouli-Kona Land Co., 846 F.2d 1170, 1172 (9th Cir.1988).

Preblich argues that her appeal of the sale authorization order is not moot because she holds a statutory right of redemption in the subject property which would authorize the setting aside of the sale under state law. Preblich fails, however, to explain either the factual or statutory basis of this claim. Indeed, she cites no Alaska law whatsoever for the proposition that the trustee’s sale of the property in this case may be set aside for any reason. Our own research, reveals that Alaska statutes do recognize a right of redemption, but only where property is sold to satisfy a judgment or other lien. See Alaska Stat. Secs. 09.35.250 (redemption by judgment debtor or successor), 09.45.190 (redemption after foreclosure of lien) (1983). The sale at issue here falls into neither of these categories; it was an ordinary sale of estate assets for the purposes of bankruptcy liquidation.

Preblich also argues that section 363(m) is not applicable to her appeal because Sammut did not purchase the property in “good faith” within the meaning of the statute. Specifically, Preblich contends that the sale price was not adequate, that the auction was not adequately advertised, and that the trustee agreed to pay for unnecessarily expensive environmental cleanup measures. We have defined a lack of good faith under this statute to constitute “fraud, collusion … or an attempt to take grossly unfair advantage of other bidders.” Onouli-Kona Land Co., 846 F.2d at 1173.

After reviewing Preblich’s contentions, we conclude that none are sufficient to establish a lack of good faith on the part of Sammut. First of all, we have explicitly held that good faith does not depend on the value paid for the subject property. Id. at 1174. Preblich’s contentions that Sammut did not pay a sufficiently high purchase price are therefore unavailing. Second, the fact that advertisement of the property was not as extensive as Preblich wished, does not render the sale fraudulent, collusive or unfair. According to the district court, the property was advertised in the Hope-Sunrise area, and was ultimately sold at an auction in which Sammut and one other individual bid against each other. Under these circumstances, we are unable to conclude that the sale lacked good faith. Third, the fact that the trustee may have paid more than necessary for environmental cleanup in connection with the sale is entirely irrelevant to Sammut’s good faith. Although these expenditures may have effectively lowered the purchase price, the inadequacy of that price will not establish that Sammut lacked good faith.

Finally, Preblich argues that her appeal should not be adjudicated moot under section 363(m), because the trustee unlawfully exercised control over the subject property. According to Preblich, the trustee recovered the property from Preblich’s husband and son as a fraudulent conveyance, under a judgment of the bankruptcy court. Preblich contends, however, that the fraudulent conveyance judgment was in error and that the trustee did not have a right to sell the property to Sammut.

However true Preblich’s contentions may be, the fraudulent conveyance issue was the subject of a separate bankruptcy court order which was separately appealable and is not presently before this court. Moreover, a finding that the trustee had improperly recovered the subject property for the bankruptcy estate would not overcome section 363(m). In the absence of a stay, section 363(m) renders moot any action which might affect the rights of a good faith purchaser. Although we have recognized narrow exceptions to this rule, see In re Mann, 907 F.2d at 926, an erroneous fraudulent conveyance holding on the part of the bankruptcy court would satisfy none of them.

II. MOTION TO STAY THE APPEAL

Subsequent to filing the present appeal, Preblich petitioned this court to stay this proceeding pending the resolution of another matter which is pending before the Ninth Circuit Bankruptcy Appellate Panel, BAP No. 92-1861. Preblich contends that “[i]f this case should be decided favorably for the appellant, the Ninth Circuit case would become moot. If it is decided unfavorably, then it will be [appealed] and consolidated with the current appeal so there will be just one appeal.” Preblich, however, gives no description of the issues involved in the BAP case or any explanation of why a favorable BAP decision would render the present appeal moot. For this reason we are not persuaded that staying the present appeal is necessary and accordingly deny Preblich’s motion.2

III. MOTION TO STRIKE

Sammut has moved to strike the Preblich’s Reply Brief on the ground that it raises matters not within the scope of her opening brief and introduces evidence which is not a part of the record. Because we reach the merits of Preblich’s appeal and reject it, we deny Sammut’s motion as moot.

IV. CONCLUSION

For the foregoing reasons, we affirm the district court’s affirmance of the bankruptcy court’s order authorizing the sale of the subject property, deny Preblich’s motion to stay the present appeal and deny Sammut’s motion to strike Preblich’s Reply Brief.

AFFIRMED.

*The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a); 9th Cir.R. 34-4

**This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3

1 The statute explicitly provides that:

The reversal or modification on appeal of an authorization under subsection (b) or (c) of this section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale or lease were stayed pending appeal.

11 U.S.C. Sec. 363(m).

2 Sammut suggests that the BAP case referred to by Preblich involves an attempt to reopen the adversary proceeding in which the bankruptcy court held that Preblich’s conveyance of the subject property to her husband and son was fraudulent. As we explained above, however, a finding that the conveyance was not fraudulent would not overcome the strict requirement in section 363(m) that a stay be obtained if an appellate court is to provide any relief affecting the rights of a good faith purchaser

Why Homeowners Must Effectively Use Court Injunctions To Save Their Homes

01 Friday Apr 2016

Posted by BNG in Appeal, Bankruptcy, Case Laws, Case Study, Federal Court, Foreclosure Defense, Judicial States, Litigation Strategies, Non-Judicial States, Pro Se Litigation, Your Legal Rights

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CASE STUDY: 893 F.2d 1338 Unpublished Disposition

In re James MILLER, Jr. and Pamala F. Miller,
James MILLER, Jr. and Pamala F. Miller, Appellants,
v.
LINCOLN TITLE COMPANY, Appellee.

No. 88-5687.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 30, 1989.
Decided Jan. 12, 1990.

Before WILLIAM A. NORRIS, REINHARDT and TROTT, Circuit Judges.

I. MEMORANDUM*

1 The Millers (“Debtors”) seek reversal of an order of the Bankruptcy Appellate Panel (“BAP”) denying the Debtors’ Ex Parte Motion for Order Setting Aside Default Order and dismissing as moot the Debtors’ appeal of the dismissal of their Chapter 11 petition. The Debtors base their appeal on two arguments: (1) the BAP erred in denying the Debtors’ Rule 60(b) motion to set aside the default judgment; and (2) the BAP erred in dismissing the Debtors’ appeal of the bankruptcy court’s order dismissing their Chapter 11 case on the grounds of mootness. We affirm the BAP’s order dismissing the Debtors’ appeal insofar as it relates to the automatic stay and the sale of the property, due to the mootness of that issue, and we remand to the BAP the issues of timeliness of the Debtors’ appeal to the BAP and whether dismissal of the Debtors’ Chapter 11 petition for lack of prosecution of their earlier Chapter 13 petition was proper.

II. STATEMENT OF FACTS

2 The Debtors filed a Chapter 11 petition on June 12, 1986. On March 9, 1987, the U.S. Trustee filed a motion to dismiss the Chapter 11 case or, alternatively, to convert it to a Chapter 7 case. On March 31, 1987, Lincoln Title Company (“Lincoln”) filed a motion to join in the motion to dismiss and its own motion for dismissal. Lincoln based its motion to dismiss on the Debtors’ previous Chapter 13 case that was dismissed for failure to prosecute.1 Lincoln asked the court to take judicial notice of the fact that the Chapter 13 was dismissed pursuant to section 109(g)(1) of the Bankruptcy Code.2 On May 12, 1987, the bankruptcy court dismissed the Debtors’ Chapter 11 case based on the Debtors’ ineligibility to file the Chapter 11 case under section 109(g)(1). The order of dismissal was entered on May 15, 1987, and the Debtors filed their notice of appeal to the BAP on May 28, 1987, two days after the ten-day deadline prescribed by Bankruptcy Rule 8002. The respondent objected on the ground that the appeal was untimely and the BAP filed a conditional order of dismissal on July 22, 1987, inviting the Debtors to file a written explanation showing legal cause why the appeal should not be dismissed. On July 23, 1987, the Debtors filed a motion in opposition to the respondent’s objection. On September 9, 1987, the BAP issued an order denying the motion to dismiss. The order did not specify the BAP’s reasons for denial.
3 While the Chapter 11 case was pending, Creditway of America (“Creditway”) filed a motion for relief from the automatic stay. On September 17, 1986, the bankruptcy court entered an order modifying the automatic stay. This order denied Creditway’s motion to lift the stay subject to the following conditions to be performed by the Debtors: (1) Submission of proof of insurance on the subject property; (2) filing of schedules and statements by August 27, 1986; and (3) filing of a plan and disclosure statement on or before September 29, 1986. The order also stated that if the Debtors failed to perform any of these conditions, Creditway could file a declaration of default or order for relief from stay.
4 The Debtors complied with the first two requirements, but did not file a plan and disclosure statement by the prescribed deadline. However, the Debtors delivered a request for an extension of time to the trustee on September 26, 1986. The Trustee filed the request on September 30, 1986. On October 9, 1986, Creditway filed a document styled, “Declaration of Jeffrey A. Paris and Order Terminating Automatic Stay,” based on the Debtors’ noncompliance with the order to file a plan and disclosure statement by September 29. The Debtors claim to have received this declaration/order on October 20, 1986. On October 24, 1986, the court granted the Debtors’ request for an extension of time to file the plan and disclosure statement until October 27, 1986. On November 24, 1986, Judge Fenning signed Creditway’s proposed order terminating the automatic stay, and on December 16, 1986, entered a default order terminating the stay. The Debtors allege that neither the court nor Creditway provided them with a copy of any signed order. The Debtors did not appeal the November or December order.
5 On January 7, 1987, Creditway conducted a Trustee’s Sale of the property. The property was purchased by an independent third party. The Debtors then filed numerous papers in the state courts as well as the bankruptcy court seeking to set aside the sale. All actions were unsuccessful. In the meantime, the municipal court granted a Writ of Execution, Money Judgment for and Writ of Possession of Real Property on the foreclosed property.
6 On July 27, 1987, the bankruptcy court declined to hear the Debtors’ Complaint to Invalidate Sale of Real Property filed June 1, 1987, due to lack of subject matter jurisdiction since the bankruptcy case had been dismissed. The Debtors then filed with the BAP, on December 2, 1987, an ex parte motion to set aside the default order under Rule 60(b). The BAP denied the Debtors’ motion and dismissed their appeal as moot on January 11, 1988. The panel clarified this order at the request of the Debtors on March 11, 1988, and explained that because the order lifting the automatic stay was never appealed and the property was subsequently sold, the appeal was rendered moot. Debtors then filed a notice of appeal to the Ninth Circuit on February 10, 1988.

III. ANALYSIS

7 The court of appeals reviews a decision of the BAP de novo. Both the court of appeals and the BAP apply the same standard of review to the bankruptcy court judgment, reviewing findings of fact under the clearly erroneous standard and questions of law de novo. See In re Burley, 738 F.2d 981 (9th Cir.1984).

i. The Automatic Stay.

8 We affirm the order of the BAP denying the Debtors’ Rule 60(b) motion and dismissing their appeal insofar as it affects the automatic stay. The issue of the automatic stay and the sale of the Debtors’ residence has been rendered moot by the sale of the property to an independent third party.
9 This circuit has held that where a stay pending appeal is not requested or is not granted, a party risks losing its ability to realize the benefit of a successful appeal. See In re Combined Metals Reduction Co., 557 F.2d 179 (9th Cir.1977); In re Sun Valley Ranches, Inc., 823 F.2d 1373, 1374 (9th Cir.1987) (“We have generally held that where an automatic stay is lifted, the debtor’s failure to obtain a stay pending appeal renders an appeal moot after assets in which the creditor had an interest are sold.”). Where the property has been sold to an independent third party, this circuit has held that the appeal is moot, because the court cannot grant effective relief, at least in the absence of the third party. See In re Royal Properties, Inc., 621 F.2d 984, 987 (9th Cir.1980) (“Once the orders have been performed, an appeal attacking the order is moot. Nor may the appellants attack the validity of the sale or the deed in this appeal. The purchasers of the property have not been made parties to the appeal, and we cannot grant effective relief in their absence.”).
10 In the instant case, the default order was not appealed and a stay was not requested. The Debtors claim that they did not appeal because they were not served with the signed default order within the time period for appeal. Nonetheless, because the subject property was sold to an independent third party pursuant to a bankruptcy court order, we cannot grant effective relief in a proceeding to which the purchaser is not a party. Thus, we affirm the BAP’s denial of the Debtors’ Rule 60(b) motion and its order dismissing the Debtors’ appeal insofar as it affects the automatic stay.

ii. Dismissal of the Debtors’ Chapter 11 Petition

A. Extent of Property Involved

11 The BAP dismissed the Debtors’ appeal of the order dismissing their Chapter 11 case based on the sale of the Debtors’ residence rendering the appeal moot. However, it appears that the BAP mistakenly believed that the only property involved in the Debtors’ Chapter 11 case was the Debtors’ residence. Because other property appears to be involved, we reverse the BAP’s dismissal. On remand, the BAP should determine whether the Chapter 11 case involved other property.

B. Dismissal Under 11 U.S.C. Sec. 109(g)(1).

12 The bankruptcy court dismissed the Debtors’ Chapter 11 petition under section 109(g)(1). This section bars an individual who was a debtor in a previous Title 11 case pending in the preceding 180 days from being a debtor under Title 11 if the previous case was dismissed “for willful failure to abide by orders of the court, or to appear before the court in proper prosecution.” The Debtors’ earlier Chapter 13 case was dismissed for “failure to prosecute” and their subsequent Chapter 11 petition was filed within 180 days of that dismissal. The appellees argue that the dismissal for lack of prosecution of the Chapter 13 proceeding acts as a bar to the Debtors’ Chapter 11 filing. The appellants vigorously disagree, arguing that the Chapter 13 dismissal was not based on a willful failure to prosecute and that since section 109(g)(1) requires the element of willfulness, they are not barred from filing the Chapter 11 petition. The BAP did not consider this issue because it dismissed the appeal as moot. Thus, on remand if the BAP concludes that the appeal is timely (see section C infra ) and that property other than the house is involved, it should also consider the issue of whether the dismissal of the Debtors’ Chapter 13 case for failure to prosecute served to trigger the 180-day filing bar of section 109(g)(1).

C. Timeliness of the Appeal to the BAP.

13 The untimely filing of a notice of appeal is jurisdictional. In re Nucorp Energy, Inc., 812 F.2d 582 (9th Cir.1987). However, Bankruptcy Rule 8002 avoids potential hardship by allowing deadline extensions. If a party does not file the notice of appeal or an extension within the ten-day filing period, he may still receive an extension upon request within twenty days of the deadline if he can show “excusable neglect.” 11 U.S.C. Sec. 8002(c). The Debtors did not actually request an extension of time to file the appeal before the BAP and the BAP order did not indicate whether or not the Debtors had shown excusable neglect. Thus, on remand the BAP should reconsider the issue of the timeliness of the Debtors’ appeal or provide an explanation of the basis for its earlier determination.

AFFIRMED in part, REVERSED in part, and REMANDED for further proceedings consistent with this disposition.
*

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
1 The Millers filed a Chapter 13 petition on November 7, 1985. On November 13, 1985, the court filed an order for the Millers to file a plan and statement, and an order to show cause why the case should not be dismissed. On December 2, 1985, a show cause hearing was held and the court dismissed the Chapter 13 petition for “failure to prosecute.” The Millers did not attend this hearing
2 Section 109(1)(g) states that an individual may not be a debtor under Title 11 if he has been a debtor in a Title 11 case pending at any time in the preceding 180 days if “the case was dismissed by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution.” 11 U.S.C. Sec. 109(g)(1)

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Wrongful Mortgage Foreclosure Monetary Awards – Case in Review

30 Wednesday Mar 2016

Posted by BNG in Federal Court, Foreclosure Defense, Judicial States, Legal Research, Litigation Strategies, Loan Modification, Non-Judicial States, State Court

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Case in Review, Foreclosure, Law, Lawsuit, Monetary Awards, Mortgage loan, Pro se legal representation in the United States, Wrongful Mortgage Foreclosure

CASE IN REVIEW 1:

Jury awards $5.4 million to couple after finding fraud in foreclosure case

Houston Chronicle | December 9, 2015 Jury awards couple $5.4 million in foreclosure case against Wells Fargo and its mortgage servicer. David and Mary Ellen Wolf were several payments behind on their home mortgage and knew that foreclosure loomed. They were puzzled, though, when a foreclosure notice came early in 2011 from Wells Fargo because they hadn’t done business with that bank. Click Here to Read More

CASE IN REVIEW 2:

NY Federal judge slams Wells Fargo for forged mortgage docs

Judge Robert Drain has a message for Wells Fargo: “Forged” foreclosure documents don’t cut it in New York’s federal courts. Click Here to Read More

What Maryland Homeowners Needs to Know About Withdrawal Of The Reference Of Bankruptcy Matters From The United States Bankruptcy Court To The United States District Court In Maryland

29 Tuesday Dec 2015

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This post is intended to be a useful guide to the procedures and practice involved in withdrawal of the reference of bankruptcy matters from the United States Bankruptcy Court to the United States District Court in Maryland. It is, however, not intended to be an exhaustive treatment of the subject and should not be used as a substitute for Pro se Homeowners or attorneys doing their own research and reviewing carefully all applicable statutes, rules and case law.

Background
Congress vested all original jurisdiction over bankruptcy cases in the United States District Court. 28 U.S.C. § 1334(a). Congress further provided that the District Court could refer all cases in bankruptcy and any and all proceedings arising under, in, or related to cases in bankruptcy, to the Bankruptcy Court. 28 U.S.C. § 157(a). The United States District Court for the District of Maryland has referred all cases under the Bankruptcy Code and all proceedings arising under the Bankruptcy Code or arising in or related to cases under the Bankruptcy Code to the United States Bankruptcy Court. Rule 402, Rules of the United States District Court (Maryland) (hereinafter referred to as “District Court Local Rule”). Accordingly, until and unless the reference of jurisdiction to the Bankruptcy Court is withdrawn by an Order of the District Court, all jurisdiction over bankruptcy
matters resides with the Bankruptcy Court.

Statutory and Rule Provisions With
Respect to Withdrawal of Reference

28 U.S.C. § 157(d) provides as follows:

(d) The district court may withdraw, in whole or in part, any case or proceeding referred under this section, on its own motion or on timely motion of any party, for cause shown.
The district court shall, on timely motion of a party, so withdraw a proceeding if the court determines that resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce.

As set forth in § 157(d), the District Court has the authority to
withdraw the entire bankruptcy case, or any part thereof, or any proceeding in the bankruptcy case or part thereof. The District Court can exercise its authority to withdraw cases or proceedings on its own motion or on timely motion of any party, for cause shown. This authority is sometimes referred to as discretionary withdrawal of the reference.

28 U.S.C. § 157(d) also provides for what is often called mandatory
withdrawal of the reference. Pursuant to the second sentence of § 157(d), the District Court shall, on timely motion of a party, withdraw a proceeding if the court determines that resolution of the proceeding requires consideration of both the Bankruptcy Code and other federal laws regulating organizations or activities affecting interstate commerce. Note that the mandatory withdrawal of reference is only applicable to proceedings in the bankruptcy case and only on timely motion of a party, not on the District Court’s own motion.

Bankruptcy Rule 5011 (“Withdrawal and Abstention from Hearing a
Proceeding”) provides in pertinent part as follows:

(a) Withdrawal. A motion for withdrawal of a case or proceeding shall be heard by a district judge.

(c) Effect of Filing of Motion for Withdrawal or Abstention.
The filing of a motion for withdrawal of a case or proceeding or for abstention pursuant to 28 U.S.C. §1334(c) shall not stay the administration of the case or any proceeding therein before the bankruptcy judge except that the bankruptcy judge may stay, on such terms and conditions as are proper, proceedings pending disposition of the motion. A motion for a stay ordinarily shall be presented first to the bankruptcy judge. A motion for a stay or relief from a stay filed in the district court shall state why it has not been presented to or obtained from the bankruptcy judge. Relief granted by the district judge shall be on such terms and conditions as the judge deems proper.

District Court Local Rule 405 (“Rules of procedure for withdrawal of reference”) provides as follows:

1. General rule. When a case or proceeding has been referred by this Court to the Bankruptcy Court, all documents and pleadings in or related to such case or proceeding shall be filed with the Clerk in the Bankruptcy Court.

2. Withdrawal of reference of bankruptcy case or proceeding.

a. Filing of motion for withdrawal of reference with bankruptcy clerk. A motion pursuant to 28 U.S.C. § 157(d) and Bankruptcy Rule 5011 to withdraw the reference of any bankruptcy case, contested matter or adversary proceeding referred to the Bankruptcy Court pursuant to 28 U.S.C. § 157(a) and Local Rule 402 shall be filed with the Clerk in the Bankruptcy Court. If the motion requests withdrawal of only a portion of the case, a contested matter, or a portion of an adversary proceeding, the motion shall be accompanied by the filing of a designation of the documents and pleadings filed in the case or proceeding to which the motion relates.

b. Withdrawal of reference of bankruptcy cases. A motion to withdraw the reference of a case to the Bankruptcy Court must be timely filed, and in any event, before the case is closed.

c. Withdrawal of reference of adversary proceeding or contested matter. A motion to withdraw an adversary proceeding or a contested matter in a case which has been referred to the Bankruptcy Court must be filed by the earlier of eleven (11) days before the date scheduled for the first hearing on the merits; and

i. in the case of an adversary proceeding, within twenty (20) days after the last pleading is permitted to be filed pursuant to Bankruptcy Rule 7012; or
ii. in the case of a contested matter, within twenty

(20) days after the last responsive pleading or memorandum in opposition is permitted to be filed pursuant to Local Bankruptcy Rule 9013-1(b)(3).

3. Filing of pleadings after reference withdrawn.

a. If the reference of an entire case has been withdrawn from the Bankruptcy Court to the District Court, all pleadings and documents in or related to such case shall be thereafter filed with the Clerk in the District Court.

b. Where the reference of only a portion of an entire case has been withdrawn, pleadings and documents with respect to the case (including any parts thereof that have been withdrawn or transferred) shall continue to be filed with the Clerk in the Bankruptcy Court. Any pleadings and documents which relate to any parts of the case which have been withdrawn or transferred to the District Court shall also be filed with the Clerk of the District Court. The Clerk of the Bankruptcy Court
shall keep a separate docket sheet of those pleadings and documents filed in the portion of the case that has been transferred to the District Court.

c. Upon withdrawal or transfer of any complaint to the District Court, the plaintiff may forward to the defendant a notice and request to waive service of summons or the Clerk shall issue a District Court summons pursuant to Fed. R. Civ. 4(d) unless either of the aforementioned has already occurred pursuant to the Bankruptcy Rules.

d. This subsection (d) governs personal injury tort and wrongful death claims which must be tried in the District Court pursuant to 28 U.S.C. § 157(b)(5). Except for the procedures contained within this subsection, personal injury tort and wrongful death proceedings shall be filed with the Clerk in the Bankruptcy Court. However, beneath the bankruptcy number, the pleading or other document shall designate the pleading or document as a “SECTION 157(b)(5) MATTER.” When filing a complaint a completed District Court civil cover sheet (A.O. Form JS-44c) should be submitted beneath the Bankruptcy Court cover sheet required by Local Bankruptcy Rule 7003-1. No summons shall be issued until the proceeding
is transferred to the District Court. Upon filing the complaint, the Clerk in the Bankruptcy Court shall immediately transfer the proceeding to the District Court and plaintiff may send to the defendant(s) a notice and request to waive service of summons pursuant to Fed. R. Civ. P. 4(d) or the Clerk of the District Court shall issue a summons.

4. Motions concerning venue in bankruptcy cases and proceedings. All motions concerning venue in cases arising under Title 11 or arising in or related to cases under Title 11 shall be determined by the Bankruptcy Court, except in those cases to be tried in the District Court pursuant to 28 U.S.C. § 157(b)(5).

See also Local Bankruptcy Rule 5011-2, which provides in pertinent part as
follows:

A motion for withdrawal of reference is governed by Local Rule 405.2 of the United States District Court for the District of Maryland.

Filing of Pleadings Before Withdrawal of Reference

In accordance with District Court Local Rules 402 and 405.1, all papers and pleadings in, or related to a bankruptcy case or proceeding, shall be filed with the Clerk of the Bankruptcy Court. Until an Order is entered by the District Court removing the reference from the Bankruptcy Court for all or part of a matter, the Clerk of the District Court will not accept the filing of any pleadings or papers in any bankruptcy-related matter. Unless the party filing a paper or pleading in the Bankruptcy Court is exempt from electronic filing,1 all papers and pleadings should be filed in the Bankruptcy Court electronically through the CM/ECF system.

Filing of a Motion to Withdraw Reference

A party on timely motion or the District Court upon its own motion may withdraw, in whole or in part, any case or proceeding pending in the Bankruptcy Court for cause shown. The party’s motion to withdraw the reference must be filed in the Bankruptcy Court. If the motion requests withdrawal of only a portion of the case, contested matter or adversary proceeding, the motion shall be accompanied by the filing of a designation of the documents and pleadings filed in the case or proceeding to which the motion relates. After the filing of a response or the expiration of the response time period, if no response is filed, the Bankruptcy Clerk shall transmit the motion to the District Clerk’s office. The transmittal shall include copies of the motion and any response thereto and the transmittal form for a motion for withdrawal of reference. As set forth in Bankruptcy Rule 5011(a), the motion for withdrawal of reference will be decided by the District Court.

_____________________________

1 Parties who are representing themselves (pro se), other than those who are members of the Bar of the Bankruptcy Court, are exempt from the electronic filing requirements and should file their papers and pleadings with the Clerk of the Bankruptcy Court in paper format.

Unless and until the motion for withdrawal of reference is granted by Order of the District Court, the only matter over which the District Court will exercise jurisdiction is the motion for withdrawal of reference. Until the reference is actually withdrawn, the original referral of jurisdiction (District Court Local Rule 402) remains in place. Accordingly, while the motion for withdrawal of reference is pending, pleadings and papers in or related to the bankruptcy case shall continue to be filed with the Bankruptcy Court. After the motion to withdraw reference has been transmitted to the District Clerk, the Bankruptcy Clerk shall send copies of any additional filings concerning the motion to withdraw reference to the District Clerk. Until the reference is withdrawn, the Bankruptcy Court shall continue to handle all matters in the bankruptcy case including adversary proceedings and contested matters in such case.

Timeliness of Motion to Withdraw Reference

As set forth in 28 U.S.C. §157(d) and District Court Local Rule 405.2.b, a party’s motion to withdraw the reference must be timely filed. With respect to motions to withdraw the reference of the bankruptcy case itself, the District Court Local Rule further provides that the motion must be filed before the case is closed. With respect to motions to withdraw the reference of adversary proceedings or contested matters, District Court Local Rule 405.2.c provides that such motion must be filed by the earlier of eleven (11) days before the date scheduled for the first hearing on the merits and, in the case of an adversary proceeding, within twenty (20) days after the last pleading is permitted to be filed pursuant to Bankruptcy Rule 7012, or, in the case of a contested matter, within twenty (20) days after the last responsive pleading or memorandum in opposition is permitted to be filed pursuant to Local Bankruptcy Rule 9013-1(b)(3).

Mandatory and Discretionary Withdrawal of Reference

As noted above, pursuant to 28 U.S.C. § 157(d), the authority for a District Court to withdraw the reference is divided into two parts, mandatory withdrawal of the reference (“if the court determines that resolution of the proceeding requires consideration of both title 11 [the Bankruptcy Code] and other laws of the United States regulating organizations or activities affecting interstate commerce”) and discretionary withdrawal of the reference (“for cause shown”).

With respect to mandatory withdrawal of the reference, the statutory language appears to be quite broad. Nevertheless, it has been observed that “[t]he great weight of the case law interpreting § 157(d) holds that this seemingly broad language concerning mandatory withdrawal should be narrowly read. . . . The fact that resolution of the matters in question calls merely for consideration or application of both bankruptcy law and other federal laws is plainly insufficient, in that mandatory withdrawal should only be made where substantial and material consideration of non-bankruptcy statutes is necessary in the case.” In re Merryweather Importers, Inc., 179 B.R. 61, 62 (D. Md. 1995). Thus, mandatory withdrawal has been denied in cases involving “straightforward application of federal statutes to a particular set of facts. . . . By contrast, cases involving federal questions that are complex or are of first impression must be withdrawn from reference.” Id. at 62.

With respect to discretionary withdrawal of the reference (sometimes called permissive withdrawal), the statutory test is “for cause shown.” Cases have recognized that the District Court has broad discretion in deciding whether the reference should be withdrawn for cause shown. See In re Millennium Studios, Inc., 286 B.R. 300, 303 (D. Md. 2002). Among the factors to be considered by the court are whether the matter at issue between the parties is “core” within the meaning of 28 U.S.C. § 157(b)(2) and “the uniformity of bankruptcy administration, forum shopping and confusion of fora, conservation of creditor and debtor resources, expediency of the bankruptcy proceeding, and the fact that only equitable issues are posed, not requiring a jury trial but falling within the traditional equitable powers of the bankruptcy judge as chancellor.” In re Millennium Studios, Inc., 286 B.R. at 303; In re EquiMed, Inc., 259 B.R. 269, 273 (D. Md. 2001); In re Merryweather Importers, Inc., 179 B.R. at 63. Additional factors identified also include whether withdrawal “would promote judicial economy and the economic use of the parties’ resources.” In re EquiMed, Inc., 254 B.R. 347, 351 (D. Md. 2000). Finally, it has been stated that it is the movant’s burden to show cause for discretionary withdrawal of the reference. See In re Millennium Studios, Inc., 286 B.R. at 303-304.

Procedure in the Event that Entire Matter is Withdrawn

If the District Court grants the motion for withdrawal of reference, it shall enter an order providing for the same. A copy of said order shall immediately be transmitted to the Clerk of the Bankruptcy Court. If the reference of jurisdiction for the entire bankruptcy case or adversary proceeding is withdrawn by the District Court’s Order, all pleadings and papers in or related to such case or adversary proceeding shall thereafter be filed exclusively with the Clerk of the District Court. District Court Local Rule 405.3.a.

Procedure in the Event that Part of a Matter is Withdrawn

If the Order of the District Court withdraws the reference for less than the entire case or less than an entire adversary proceeding (for example, resolution of a contested matter), all pleadings and papers with respect to that bankruptcy case or adversary proceeding (specifically including those pleadings relating to the withdrawn matter) must continue to be filed with the Clerk of the Bankruptcy Court. In addition, counsel shall electronically file copies of all pleadings and documents relating to any parts of the case which have been withdrawn with the Clerk of the District Court through the CM/ECF system.2 Local District Court Rule 405.3.b.

Personal Injury and Wrongful Death Claims

Any personal injury or wrongful death claim filed in a bankruptcy case, or related to a bankruptcy case, shall be filed in the Bankruptcy Court. Local District Court Rule 405.3.d. The pleading shall contain a designation: “SECTION 157(b)(5) MATTER” and, if such pleading is a complaint, shall be accompanied by both a Bankruptcy Cover Sheet and a District Court Civil Cover Sheet. After docketing the initial pleading, the Clerk of the Bankruptcy Court shall forthwith transmit the matter to the Clerk of the District Court including a copy of the pleading, the District Court Civil Cover Sheet and a transmittal form. The Clerk of the District Court shall issue any necessary summons and the matter shall thereafter proceed in the District Court.

Final Orders of the District Court

If the District Court denies the motion to withdraw the reference, the Clerk of the District Court shall docket such order and forthwith transmit a copy of the docketed order to the Clerk of the Bankruptcy Court, after which the District Court file shall be closed. The Clerk of the Bankruptcy Court shall docket the order upon receipt from the Clerk of the District Court in the bankruptcy case or adversary proceeding in which the motion was filed.

With respect to a matter where reference has been withdrawn by the District Court, at such time as the District Court by final order decides such matter, the Clerk of the District Court shall docket the order of the District Court and forthwith transmit a copy of the docketed order to the Clerk of the Bankruptcy Court. The Clerk of the Bankruptcy Court shall docket the order in the case or adversary proceeding in which the motion to withdraw reference was filed.

__________________________________

2 The District Court also requires counsel to submit a paper courtesy copy of any document which, including attachments, is fifteen pages or longer.

Jury Adversary Proceedings That Must be
Tried by the District Court

With respect to jury trials, 28 U.S.C. § 157(e) provides as follows:

(e) if the right to a jury trial applies in a proceeding that may be heard under this section by a bankruptcy judge, the bankruptcy judge may conduct the jury trial if specially designated to exercise such jurisdiction by the district court and with the express consent of all the parties.

In addition, 28 U.S.C. § 1411 (Jury trials) provides as follows:

(a) Except as provided in subsection (b) of this section, this chapter and title 11 do not affect any right to trial by jury that an individual has under applicable nonbankruptcy law with regard to a personal injury or wrongful death tort claim.

(b) The district court may order the issues arising under section 303 of title 11 to be tried without a jury.

A discussion of the circumstances in which a right to a jury trial exists in a
particular adversary proceeding or other matter is beyond the scope of this
Memorandum.

With respect to the procedure applicable to jury trials, Bankruptcy Rule 9015(b) provides as follows:

(b) Consent to Have Trial Conducted by Bankruptcy Judge. If the right to a jury trial applies, a timely demand has been filed pursuant to Rule 38(b) F.R.Civ. P., and the bankruptcy judge has been specially designated to conduct the jury trial, the parties may consent to have a jury trial conducted by a bankruptcy judge under 28 U.S.C. § 157(e) by jointly or separately filing a statement of consent within any applicable time limits specified by local rule.

Local Bankruptcy Rule 9015-1 provides as follows:

A statement of consent to have a jury trial conducted by a bankruptcy judge under 28 U.S.C. § 157(e) must be filed before the conclusion of the initial pretrial conference.

With respect to the procedure for requesting a jury trial in a
bankruptcy proceeding, Local District Court Rule 406 (Jury trial) provides as follows:

1. Demand. In any bankruptcy proceeding any party may demand a trial by jury of any issue triable of right by jury by (1) serving upon the other parties a demand therefor in writing at any time after the commencement of the action and not later than ten days after the service of the last pleading directed to such issue, and (2) filing the demand as required by Bankruptcy Rule 9015. Such demand may be indorsed upon a pleading of the party. If the adversary proceeding is one that has been removed from another court, any demand previously made under the rules of that court shall constitute a demand for trial by jury under this rule.

2. Specification of issues. In the demand a party may specify the issues which the party wishes so tried; otherwise the party shall be deemed to have demanded trial by jury for all the issues so triable. If the party has demanded trial by jury for only some of the issues, any other party within ten days after service of the demand or such lesser time as the Court may order, may serve a demand for trial by jury of any other or all of the issues of fact in the action.

3. Waiver. The failure of a party to serve and file a demand as required by this rule constitutes a waiver by the party of trial by jury. A demand for trial by jury made as herein provided may not be withdrawn without the consent of the parties.

4. Consent to jury trial before the United States Bankruptcy Judge. Pursuant to 28 U.S.C. 157(e), with the consent of the parties, a District Judge may designate a Bankruptcy Judge to conduct a jury trial.

A. No Motion to Withdraw Filed.

When an adversary proceeding is filed in which a party rightfully claims a right to trial by jury and the bankruptcy judge is not designated, or the parties have not consented to have the jury trial conducted by the Bankruptcy Judge, unless the complaint is accompanied by a motion to withdraw the reference, all jurisdiction over the adversary proceeding remains with the Bankruptcy Court until the reference is later withdrawn.

Accordingly, all pleadings must continue to be filed with the Clerk of the
Bankruptcy Court and all matters to be resolved within the adversary
proceeding, short of trial, remain before the Bankruptcy Judge. Included in
such matters to be resolved by the Bankruptcy Court, are disputes between
the parties as to the right to trial by jury.

B. Motion to Withdraw Reference Filed, but Denied at Outset of
Adversary Proceeding.

If the complaint or answer is accompanied by a timely filed motion to
withdraw reference under District Court Local Rule 405.2.c, the procedures
discussed above shall be followed for the disposition of the motion to
withdraw reference. An early motion to withdraw the reference may be
denied without prejudice to refiling the motion when the case is trial ready.
See In re Stansbury Poplar Place, Inc., 13 F.3d 122 (4th Cir. 1993); Furniture Rentors of America v. NYNex Information Resources Co., 162 B.R. 728 (D. Md. 1994). If the motion for withdrawal of the reference is denied at an early stage in the adversary proceeding and therefore the adversary
proceeding remains for pre-trial purposes with the Bankruptcy Court, all
jurisdiction over the adversary proceeding remains with the Bankruptcy
Court until a motion is granted withdrawing the reference of the adversary
proceeding.

C. Pre-Trial Phase.

The pre-trial phase of the adversary proceeding shall encompass the
period of time allowed for discovery and the filing of and decision on all
dispositive motions. At the time that discovery has been completed, any
dispositive motions ruled upon, and the adversary proceeding is otherwise
ready to be scheduled for trial, the pre-trial phase of the adversary
proceeding is completed.

D. Withdrawal of Reference for Trial

If the reference has not been withdrawn by Order of the District Court
prior to the completion of the pre-trial phase of the adversary proceeding, at the end of the pre-trial phase of the adversary proceeding the Bankruptcy Court shall issue a summary report and recommendation to the District Court, recommending that the reference be withdrawn so that the trial by jury may go forward in the District Court. This report and recommendation shall be docketed in the adversary proceeding by the Clerk of the Bankruptcy Court and a copy transmitted to the Clerk of the District Court for action by the District Court upon the report and recommendation. If the District Court agrees that the reference should be withdrawn at that time, the District Court will enter an Order withdrawing the reference and transmit a copy of the Order to the Clerk of the Bankruptcy Court. Upon entry of an Order withdrawing the reference, all jurisdiction over the adversary proceeding shall be in the District Court and the Bankruptcy Court shall have no further authority to act in the adversary proceeding. All pleadings thereafter shall be filed with the Clerk of the District Court.

Miscellaneous

The transmission of a motion for withdrawal of the reference should not be delayed by the Clerk of the Bankruptcy Court pending the issuance of any report and recommendation by the Bankruptcy Court. Where it deems it appropriate, the Bankruptcy Court may provide such a report and recommendation to the District Court, or the District Court may request such a report and recommendation from the Bankruptcy Court, for any motion for withdrawal of the reference.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Why Homeowners Must Know these Important Points of Bankruptcy Appeal

23 Wednesday Sep 2015

Posted by BNG in Appeal, Bankruptcy, Federal Court, Foreclosure Defense, Judicial States, Non-Judicial States

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Bankruptcy, bankruptcy appeal, bankruptcy court, homeowners, Plaintiff, Pro se legal representation in the United States

Every appeal requires an appellate advocate to understand and follow
a series of rules. When an appeal is from a decision by a federal
bankruptcy court, there is yet another layer of rules and complexity
to consider. This article briefly identifies a dozen important points
about bankruptcy appeals.

1. The Time for Filing a Notice of Appeal in a Bankruptcy Appeal Is Generally Shorter Than in Other Appeals.

Under 28 U.S.C. § 158(c)(2) and Federal Rule of Bankruptcy Procedure (“Bankruptcy Rule”) 8002(a), a party seeking to appeal a decision by a bankruptcy court has 14 days to file its appeal.1 This is 16 days less than the 30 days a party generally is given under the Federal Rules of Appellate Procedure (“F.R.A.P.”) to appeal from district court to a federal appellate court.2 As with F.R.A.P. 4(a)(5), the Bankruptcy Rules permit some leeway if an appellant misses its deadline. Under the Bankruptcy Rules, a bankruptcy court may allow an appellant who fails to timely file up to 20 additional days to file where that appellant can demonstrate “excusable neglect.”3 After 30 days, however, a bankruptcy appellant loses its right to appeal even if there is excusable neglect.4 Factors to be considered in determining whether there is excusable neglect include the danger of prejudice to the appellee; the length of delay and its impact on the judicial proceeding; the reason for the delay; whether the delay was in the movant’s control; and the movant’s good faith.5

2. An Appellant May Waive an Issue Not Raised at the Outset of its Bankruptcy Appeal.

Under Bankruptcy Rule 8006, within 14 days of filing its Notice of
Appeal, an appellant must file and serve a designation of the items to be
included in the record on appeal and a statement of issues to be presented
on appeal. If an appellant fails to include an issue in this Statement, the
issue is waived even if this had been raised and/or decided by the bankruptcy
court.6

3. Those Who Ignore Deadlines and Procedural Rules May Forfeit Their Appeal.

Bankruptcy Rule 8001(a) authorizes dismissal of a bankruptcy appeal when a party fails to take any required step other than filing its Notice of Appeal. Courts adjudicating bankruptcy appeals may dismiss appeals when a party fails to take a necessary step, such as filing its record designations, statement of issues or its brief.7
While the Bankruptcy Rules permit dismissal, however, certain circuits require the appellate court to weigh a series of factors before it dismisses a case in its entirety. For example, the Third Circuit requires the balancing of six factors before a case is dismissed. These are:
• The extent of the party’s personal responsibility;
• The prejudice to the adversary caused by the failure to meet scheduling
orders;

• A history of dilatoriness;
• Whether the conduct of the party or the attorney was willful or in bad
faith;
• The effectiveness of sanctions other than dismissal, which entails an
analysis of alternative sanctions;
• The meritoriousness of the claim or defense.8

4. In Five Circuits, Bankruptcy Appeals May Be Heard in the First Instance by Two Different Types of Courts.

Under 28 U.S.C. § 158(c)(1), an appellant in an appeal from bankruptcy court may choose in the first instance to appeal either to a district court acting as an appellate court or, if the relevant circuit provides for one, to a Bankruptcy Appellate Panel (“BAP”). Even if the appellant chooses a BAP, however, any other party to the appeal may, no later than 30 days after service of the notice of appeal, ask to have the appeal heard by the relevant district court. The First, Sixth, Eighth, Ninth and Tenth Circuits each have a BAP. If an appeal is to a BAP, then the Bankruptcy
judge’s decision will be reviewed by fellow sitting bankruptcy judges.
Usually a BAP consists of three sitting bankruptcy judges in the circuit who are assembled for a particular day of argument. By their very nature, BAPs will consist of judges who have special expertise regarding bankruptcy issues, while district courts may not. The BAP may sit in different places in the circuit. For example, the Eighth Circuit BAP conducts hearing in Omaha, St. Louis, Kansas City, and other locations where its bankruptcy courts sit.

5. BAP Rules Vary by Circuit.

Just like the individual federal circuit courts of appeal, the various BAPs each have their own rules. These vary between each circuit. Any party in a BAP appeal, therefore should know the specifics and particularities of the specific BAP’s rules and should follow these.
Among these specialized rules, for example, are that, in the Eighth Circuit BAP, parties are limited to opening briefs of 6500 words.9 The Ninth Circuit BAP Rules provide that only those portions of transcripts included in the excerpts of the record will be considered in an appeal and that these must include excerpts necessary for the BAP to apply the required standard of review to a matter.10 The First Circuit BAP Rules generally limit argument to 15 minutes per side.11 The Tenth Circuit BAP requires that a brief include a statement of related cases—i.e., one that includes the same litigants and substantially the same fact pattern or legal issues – that are
pending in any other federal court.12 The Sixth Circuit BAP Rules provide
for a possible pre-argument conference and mediation.13

6. The Bankruptcy Rules Generally Govern Appeals to the District Court.

As noted in the prior section, BAPs have elaborate rules that govern all aspects of appeals before them. By the terms of the Bankruptcy Rules, these specific rules can supersede conflicting terms in the Bankruptcy Rules. However, when an appeal is to the district court, the Bankruptcy Rules generally apply in the absence of a local rule or district court rule specifically addressing bankruptcy appeals, which are much less common.
While not as comprehensive as the F.R.A.P., the Bankruptcy Rules have 20 provisions governing all aspects of appeals.14 These rules addresses appellate issues, including, among others, the filing and service of appellate papers;15 the filing and service of briefs and appendices;16 the form of briefs and their length;17 motions;18 oral argument;19 disposition of the appeal;20 costs;21 and rehearing,22 among others. (These rules also provide for the accelerated filing of district court appeals, as an appellant is to serve and file its brief within 15 days after entry of the appeal on the docket; the appellant is to serve its brief within 15 days after service of the appellant’s brief and the appellant is to serve its reply within 10 days after service of the appellee’s brief.)23 In the absence of rules to the contrary, opening briefs may be up to 50 pages and reply briefs up to 25 pages.
Under Bankruptcy Rule 8012, oral argument is to be generally allowed in all cases. In practice, however, oral argument is much less common before district courts. When an appeal is before district court, there is some question about whether its decision has precedential effect.24

7. Bankruptcy Appeals Often Include an Extra Tier of Review.

Generally, before an appeal reaches a federal circuit court of appeals, it is adjudicated by either a BAP or a district court. The findings of these first tier courts are not binding on the circuit court of appeals and, the appellate court owes no deference to the decisions by the BAP or district court.
Review by the circuit court of appeals is plenary.25 Nonetheless, some circuit courts have noted that the first tier of appeal acts as a helpful filter.26
An appellate court may reach issues brought up before but not decided by the district court or BAP.27

8. Direct Appeal to the Circuit Court of Appeals Is Allowed in Limited Instances.

Pursuant to Section 1233 of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), a circuit court of appeals has discretion to permit a direct appeal frombankruptcy court where there is uncertainty in the bankruptcy court, either due to the absence of a controlling legal decision or a conflicting decision on the issue and the issue is of great importance, or where the court finds it is patently obvious that the bankruptcy court’s decision either was correct or incorrect, such that the first tier of review in the district court or BAP is less efficient and helpful.28

9. At Each Tier of the Appeal, The Bankruptcy Court Is Given the Same Level of Deference and Same Form of Scrutiny.

Courts in bankruptcy appeals review issues of law de novo and findings of fact for clear error.29 Courts of appeal apply the same standard of review as do BAPs and district courts.30 Courts of appeal generally review issues of procedure under an abuse of discretion standard. These include motions to compromise or to lift a stay, for example.31

10. This Is a Greater Threat of Mootness in Bankruptcy Appeals Than in Other Federal Appeals.

A bankruptcy appeal may become constitutionally moot where events may occur that make it impossible for the appellate court to fashion effective relief.32 Thus, for example, if, while an appeal is pending, a plan is confirmed pursuant to which all assets are distributed, all creditors with allowed claims are paid in full, and the bankruptcy case is closed such that the debtor no longer exists, an appeal against that debtor is moot because there is no meaningful relief that may be granted.33 An appeal may also be considered “equitably moot” where a change in circumstances makes it inequitable for a court to consider the merits of an appeal.34
However, if there remains any possibility that an appeal may result in a tangible benefit to the appellant, it is not moot.35

11. Only Those Persons Aggrieved Have Standing to Bring a Bankruptcy Appeal.

Only those whose rights or interests are directly and adversely affected pecuniarily by an order of the bankruptcy court have standing to bring an appeal.36

12. Appellate Courts Take a Broader Notion of “Finality” in Bankruptcy Appeals Than in Other Appeals.

Because of the length of many bankruptcy proceedings and the waste of time and resources that may result if the court denied immediate appeals, federal courts of appeal apply a broader concept of “finality” when considering bankruptcy appeals under 28 U.S.C. § 1291 than in considering non-bankruptcy appeals.37 Courts apply a number of factors in determining whether to assert appellate jurisdiction. These include:
1) the impact on the assets of the bankruptcy estate;
2) the necessity for further fact-finding on remand;
3) the preclusive effect of the court’s decision on the merits in further litigation,
and
4) the interest of judicial economy.38
Each of these issues, of course, could justify an article in itself. I hope
these provide some helpful thoughts and issues to consider when participating
in a bankruptcy appeal.

NOTE

1 Certain types of motions toll this time for filing until the last such motion
is disposed of. See Bankruptcy Rule 8002(b).
2 See F.R.A.P.4(a).
3 Bankruptcy Rule 8002(c)(2); Bankruptcy Rule 9006(b). Of course where
an appeal is from a district court to a federal circuit court on a bankruptcy
issue, F.R.A.P. 4’s 30-day rule applies.
4 See Shareholders v. Sound Radio, Inc., 109 F.3d 873, 879 (3d Cir. 1997).
The law is unsettled as to whether bankruptcy appellate deadlines are “jurisdictional,”
such that objections to untimeliness may be waived if not promptly
made. See In re Fryer, 2007 WL 1667198 (3d Cir. June 11, 2007) (citing
Kontrick v. Ryan 540 U.S. 443 (2004), and Eberhart v United States, 546 U.S.
12 (2005)).
5 See Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’Ship, 507 U.S. 380,
395 (1993).
6 See In re GGM, P.C., 165 F.3d 1026, 1032 (5th Cir. 1999). Of course, one
may not first raise new issues on appeal that were not presented before the
bankruptcy court. See In re Ginther Trusts, 238 F.3d 686, 689 & n.3. (5th Cir.
2001).
7 See, e.g., In re Lynch, 430 F.3d 600 (Cir. 2005); In re Braniff Airways, Inc.,
774 F.2d 1303, 1305 n.6 (5th Cir. 1985).

8 Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 868 (3d. Cir. 1984).
See also In re Harris, 464 F.3d 263 (2d Cir. 2006) (failure to include required
transcript of oral argument did not warrant dismissal of appeal where lesser
sanctions were available); In re Beverly Mfg. Corp., 778 F.2d 666, 667 (11th
Cir. 1985) (“Dismissal typically occurs in cases showing consistently dilatory
conduct or the complete failure to take any steps other than the mere filing
of a notice of appeal.”).
9 8th Cir. BAP Rule 8010A.
10 9th Cir. BAP Rule 8006-1.
11 1st Cir. BAP Rule 8012-1.
12 10th Cir. BAP Rule 8010-1.
13 6th Cir. BAP Rule 8080-2.
14 Bankruptcy Rules 8001-8020.
15 Bankruptcy Rule 8008.
16 Bankruptcy Rule 8009.

17 Bankruptcy Rule 8010.
18 Bankruptcy Rule 8011.
19 Bankruptcy Rule 8012.
20 Bankruptcy Rule 8013.
21 Bankruptcy Rule 8014.
22 Bankruptcy Rule 8015.
23 Bankruptcy Rule 8009.
24 See In re Shattuck Cable Corp., 138 B.R. 557, 565 (Bankr. N.D. Ill. 1992).
25 See In re Best Prods. Co., 68 F.3d 26, 30 (2d Cir. 1995).
26 See Weber v. United States Trustee, 484 F.3d 154 (2d Cir. 2007) (“In many
cases involving unsettled areas of bankruptcy law, review by the district court
would be most helpful. Courts of appeal benefit immensely from reviewing
the efforts of the district court to resolve such questions”).
27 See Hartford Courant Co. v. Pellegrino, 380 F.3d 83, 90 (2d Cir. 2004).
28 See Weber, 484 F.3d at 157 (citing BAPCPA § 1233, 28 U.S.C.
§ 158(d)(2)(a)(i)-(iii)).
29 See In re ABC-Naco, Inc., 483 F.3d 470, 472 (7th Cir. 2007).
30 See In re Senior Cottages of Am., 482 F.3d 997, 1000-1001 (8th Cir. 2002)
31 See In re Martin, 222 Fed. Appx. 360, 362 (5th Cir. 2007).
32 See In re Focus Media Inc., 378 F.3d 916, 922 (9th Cir. 2004).
33 See In re State Line Hotel, Inc., 2007 WL 1961935 (9th Cir. July 5, 2007);
see also Gardens of Cortez v. John Hancock Mut. Life Ins. Co., 585 F.2d 975,
978 (10th Cir. 1978) (dismissal of bankruptcy petition moots appeal to lift
stay).

34 See Ederel Sport v. Gotcha, Int’l, L.P., 311 B.R. 250, 254 (9th Cir. BAP
2004).
35 See In re Howard’s Express, Inc., 151 Fed. Appx. 46 (Oct. 5, 2005) (conversion
from Chapter 11 to Chapter 7 did not moot appeal because liquidation
was not complete and preference actions remained to be tried, which
could generate assets to satisfy claims of appellants).
36 See In re PWS Holding Corp., 228 F.3d 224, 249 (3d Cir. 2000).
37 See In re Owens Corning, 419 F.3d 196, 203 (3d Cir. 2005).
38 Id.

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Why Is It Impportant For Nevada Homeowners to Protect their Homes?

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Jury awards $5.4 million to couple after finding fraud in foreclosure case

NY Federal judge slams Wells Fargo for forged mortgage docs

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