Opinion
NOT FOR PUBLICATION
Submitted Without Oral Argument June 10, 2011
On June 1, 2011, the Panel issued an order determining preliminarily that this appeal was suitable for submission on the briefs without oral argument pursuant to Fed.R.Bankr.P. 8012. We allowed the parties SEVEN (7) days to file statements setting forth the reasons why oral argument should be allowed. No statements were filed. On June 10, 2011, the Panel issued an order determining that this appeal was suitable for disposition without oral argument. Fed.R.Bankr.P. 8012; 9th Cir. BAP Rule 8012-1.
Appeal from the United States Bankruptcy Court for the Central District of California. Bk. No. RS 09-36534-DJS. Honorable Deborah J. Saltzman, Bankruptcy Judge, Presiding.
Appellant Frank Lira, Jr., Pro se on brief.
Brian A. Paino of Pite Duncan, LLP on brief for Appellee.
Before: KIRSCHER, DUNN, and MARKELL, Bankruptcy Judges.
This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. See 9th Cir. BAP Rule 8013-1.
Appellant, chapter 7 debtor Frank Lira, Jr. (" Lira"), appeals an order from the bankruptcy court granting appellee, Wells Fargo Bank, National Association as Trustee for the Certificateholders of Structured Asset Mortgage Investments II Inc., Bear Sterns Mortgage Funding Trust 2006-AR5, Mortgage Pass-Through Certificates, Series 2006-AR5 (" Wells Fargo"), relief from the automatic stay to proceed with its state law remedies against Lira's residence (" Stay Relief Order"). Lira also appeals the bankruptcy court's order denying his motion to alter/amend the Stay Relief Order (" Rule 9023 Order"). Because this appeal is moot, and because Lira lacks standing, we DISMISS for lack of jurisdiction.
Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. § § 101-1532, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Prepetition Events.
In early October 2006, Lira's son, Frankie Lira (" Frankie"), obtained a loan for $960,000 from Soma Financial to purchase a residence located in Rancho Cucamonga, California (" Property"), which Frankie purchased for $1.2 million. Frankie executed a note, which was secured by a first deed of trust on the Property in favor of Soma Financial. Shortly thereafter, Soma Financial sold its interest under the note to Wells Fargo.
On October 27, 2006, Frankie executed a grant deed purporting to grant the Property to both Frankie and Lira as joint tenants. The grant deed was recorded on November 1, 2006.
On December 1, 2006, Wells Fargo entered into a loan servicing agreement with EMC Mortgage Corporation (" EMC") which authorized EMC to service the obligations under the note and deed of trust for Wells Fargo.
Lira eventually defaulted under the terms of the note. A notice of default was recorded on April 3, 2009, a notice of sale was recorded on July 14, 2009, and a foreclosure sale was set for November 16, 2009. The pending sale was stayed once Lira filed a voluntary chapter 7 petition for relief on November 3, 2009.
The record does not reflect how Lira became obligated on the note to Wells Fargo, but neither Lira nor Wells Fargo disputed Lira's obligation at the bankruptcy court or on appeal. Nonetheless, the record does show that Lira obtained a legal and possessory interest in the Property when Frankie executed the grant deed granting both men an interest in the Property as joint tenants, and that Lira took his interest subject to the debt to Wells Fargo. Therefore, this explains the need for Wells Fargo to seek relief from the stay in Lira's bankruptcy case.
B. Postpetition Events.
According to Lira's Schedule A, at the time of petition the Property had a fair market value of $624,000. Lira's Schedule D reflected that the Property was encumbered by Wells Fargo's first position deed of trust in the amount of $1,100,596, as well as second and third deeds of trust by other parties in the amounts of $240,000 and $75,000, respectively.
On or around November 16, 2009, Angela Fontanini, Esq. (" Fontanini"), counsel for EMC, servicing agent for Wells Fargo, sent Lira a forbearance/reaffirmation agreement proposing that Lira reaffirm his outstanding debt of $1,115,541.29 on the Property. Fontanini requested that Lira, if interested, return a signed copy of the enclosed reaffirmation agreement to her within 10 days. If Lira was not interested in retaining the Property, he could avoid foreclosure with a deed in lieu of foreclosure or a short sale of the Property. For either of those options, however, Fontanini instructed Lira to contact EMC directly. Finally, Fontanini noted that regardless of Lira's decision, Wells Fargo would still proceed with obtaining relief from stay.
On December 21, 2009, the chapter 7 trustee (" Trustee") filed a Report of No Distribution after finding that no property was available for distribution from the estate. In the report, Trustee stated that the estate had been fully administered, and he requested relief from any further duties.
On December 29, 2009, Wells Fargo moved for relief from the automatic stay (" Stay Relief Motion") against Lira and Trustee under sections 362(d)(1) and (d)(2) in order to proceed with a foreclosure sale of the Property, contending its interest was not adequately protected, and that Lira lacked any equity in the Property and that it was not necessary for an effective reorganization. The Stay Relief Motion was properly noticed to Lira and Trustee. With the Stay Relief Motion, Wells Fargo submitted a declaration from Lori Harp, an employee of EMC. Harp stated that Lira had not made any payments to Wells Fargo on the note since October 31, 2008, that Lira's prepetition arrears were $72,575.68, his postpetition arrears were $5,868.03, and that, as of December 15, 2009, Lira owed Wells Fargo $1,128,031.59 on the note. Wells Fargo included copies of the note, deed of trust, assignment of deed of trust, and Lira's Schedules A and D as exhibits to the Stay Relief Motion. A hearing was set for February 9, 2010, before the Hon. Richard Neiter.
Trustee did not file an opposition to the Stay Relief Motion. However, Lira opposed it contending that the Property was necessary for an effective reorganization and that he would be prejudiced if Wells Fargo was allowed to foreclose. Lira stated that after receiving the reaffirmation agreement in November 2009, he made several attempts to contact Fontanini in order to discuss a loan modification. Lira eventually reached Fontanini in early January 2010, who advised him to contact Wells Fargo directly. Lira then contacted Wells Fargo and was told that all loan modifications must be done through EMC. Lira contacted EMC's Mortgage Bankruptcy Department on January 15, 2010, requesting information about a loan modification. EMC told Lira that it would send him a packet of information within two or three weeks. When Lira did not receive the packet within two weeks, he again contacted EMC on January 28, 2010, and was told that the packet would be sent in two or three weeks, pending the outcome of the February 9 hearing. On that same date, Lira attempted, but was unable, to contact Fontanini and request that she postpone the February 9 hearing so he could work out a loan modification with EMC. However, the paralegal who spoke with Lira stated that she would pass along Lira's request to Fontanini. As of February 4, 2010, Lira had not heard from Fontanini. Notably, Lira did not dispute that no equity existed in the Property, or that he had not made any payments to Wells Fargo on the note since October 31, 2008. Lira also never disputed Wells Fargo's foreclosure rights under the note and deed of trust.
The hearing on Wells Fargo's Stay Relief Motion proceeded on February 9, 2010. Fontanini failed to appear and was not responsive to the bankruptcy court's inquiry to her office. Accordingly, the bankruptcy court (Judge Richard Neiter presiding) continued the hearing to May 11, 2010, to allow Lira the opportunity to work out a loan modification. The court further determined that in the meantime Lira was not required to make adequate protection payments to Wells Fargo.
While the Stay Relief Motion was pending, Lira received his chapter 7 discharge on March 17, 2010.
On April 16, 2010, the bankruptcy court entered an order rescheduling the continued hearing on the Stay Relief Motion to May 12, 2010, and transferring the matter to the Hon. Deborah J. Saltzman. The continued hearing on the Stay Relief Motion proceeded before the court on May 12. Wells Fargo appeared through new counsel, Balpreet Thiara, Esq. (" Thiara"). Thiara stated that EMC needed an additional 30-60 days to review Lira's loan modification documents, so Wells Fargo was willing to cancel the pending sale of the Property set for May 23 and to postpone any foreclosure activity for 60 days. Thiara also stated she would provide Lira with contact information for the proper person at EMC to discuss the loan modification, and that once the Stay Relief Order was entered she would ask EMC to expedite review of Lira's application. To address Lira's inquiry about what would happen if no modification was concluded within 60 days, the court explained that because Lira had already received his discharge, the automatic stay was terminated as to him; thus, Wells Fargo was free to schedule a new sale after the 60 days and Lira could do nothing to stop it. Judge Saltzman asked Thiara to prepare and submit an order granting the Stay Relief Motion providing that Wells Fargo cancel the pending May 23 sale and that Lira be given 60 days to work out a loan modification.
The court's May 12, 2010 tentative ruling on the Stay Relief Motion states:
On May 25, 2010, the bankruptcy court entered the Stay Relief Order terminating the stay as to Trustee under sections 362(d)(1) and (d)(2); any relief as to Lira was moot because he had received his discharge on March 17, 2010. As per the court's oral ruling, the Stay Relief Order prohibited Wells Fargo from conducting a foreclosure sale on the Property until after July 23, 2010.
Lira's bankruptcy case was inadvertently closed on June 6, 2010. An order reopening the case was entered on June 10, 2010. It remains open to date.
On June 8, 2010, Lira filed a notice of objection to the Stay Relief Order, which the bankruptcy court construed as a timely motion to amend/alter judgment under Fed.R.Civ.P. 59, as incorporated by Rule 9023 (" Rule 9023 Motion"). Although difficult to decipher, it appears Lira thought that an order lifting the stay would not be entered until 60 days after the May 12 hearing, i.e., after July 11, 2010, and thus he contended that the bankruptcy court erroneously entered the Stay Relief Order prematurely on May 25. Lira's Rule 9023 Motion was denied on September 3, 2010. He timely appealed both the Stay Relief Order and the Rule 9023 Order on September 17, 2010.
II. JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. § 157(b)(2)(G). Orders granting or denying relief from the automatic stay are final orders. Nat'l Envtl. Waste Corp. v. City of Riverside (In re Nat'l Envtl. Waste Corp.), 129 F.3d 1052, 1054 (9th Cir. 1997). We have jurisdiction to determine our jurisdiction. Hupp v. Educ. Credit Mgmt. Corp (In re Hupp), 383 B.R. 476, 478 (9th Cir. BAP 2008). We address our jurisdiction under 28 U.S.C. § 158 below.
III. ISSUES
1. Is the appeal moot?
2. Does Lira have standing to prosecute the appeal?
IV. STANDARDS OF REVIEW
Our jurisdiction, including whether an appeal is moot, is a question of law we address de novo. Menk v. Lapaglia (In re Menk), 241 B.R. 896, 903 (9th Cir. BAP 1999). Standing is a legal issue also reviewed de novo. Kronemyer v. Am. Contractors Indemn. Co. (In re Kronemyer), 405 B.R. 915, 919 (9th Cir. BAP 2009) " De novo review requires that we consider a matter anew, as if it had not been heard before, and as if no decision had been previously rendered." B-Real, LLC v. Chaussee (In re Chaussee), 399 B.R. 225, 229 (9th Cir. BAP 2008)(citing United States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988)).
V. DISCUSSION
Lira, who appears pro se, fails to state the issues on appeal, but we gather from his brief that he disputes the bankruptcy court's decision to lift the automatic stay and its subsequent denial of his Rule 9023 Motion. Lira requests that the Panel vacate the Stay Relief Order, grant him time to secure a loan modification, and that Wells Fargo be precluded from foreclosing on the Property. While Lira's situation is unfortunate, we agree with Wells Fargo that because this appeal is moot and Lira lacks standing to prosecute it, we must DISMISS for lack of jurisdiction.
A. The appeal is moot.
We do not have jurisdiction over appeals that are constitutionally moot. Drummond v. Urban (In re Urban), 375 B.R. 882, 887 (9th Cir. BAP 2007). Constitutional mootness derives from Article III of the U.S. Constitution, which provides that the exercise of judicial power depends on the existence of a case or controversy. Clear Channel Outdoor, Inc. v. Knupfer (In re PW, LLC), 391 B.R. 25, 33 (9th Cir. BAP 2008)(citing DeFunis v. Odegaard, 416 U.S. 312, 316, 94 S.Ct. 1704, 40 L.Ed.2d 164 (1974)). In order for a live case or controversy to exist, the parties must have an actual interest in the outcome of the litigation. Id . An appeal is moot if events have occurred that prevent an appellate court from granting effective relief. Focus Media, Inc. v. Nat'l Broad. Co. Inc. (In re Focus Media, Inc.), 378 F.3d 916, 922 (9th Cir. 2004); Ederel Sport, Inc. v. Gotcha Int'l L.P. (In re Gotcha Int'l L.P.), 311 B.R. 250, 253-54 (9th Cir. BAP 2004).
Lira filed a motion to stay the Stay Relief Order pending appeal on September 17, 2010. The matter was never set for hearing, and the bankruptcy court has not ruled on it. If Wells Fargo has since foreclosed on the Property and sold it to a third party, this appeal would also be equitably moot. See, e.g., Clear Channel, 391 B.R. at 33-34. Neither party has stated in their briefs the status of the Property.
Under section 541(a), upon filing a chapter 7 bankruptcy petition an estate is created that comprises essentially all property owned by the debtor. The filing of that petition also creates an automatic stay under section 362(a), which enjoins virtually all acts to create, perfect or enforce any lien against property of the estate and/or to obtain possession of any property of the estate. However, the stay under section 362(a) is not permanent. Section 362(c) provides explicit time limits governing the stay's duration:
(1) the stay of an act against property of the estate under subsection (a) of this section continues until such property is no longer property of the estate; and
(2) the stay of any other act under subsection (a) of this section continues until the earliest of -
. . .
(C) if the case is a case under chapter 7 . . . the time a discharge is granted or denied (emphasis added).
Here, the automatic stay under section 362(a) expired as to Lira and any interest he had, or may have had, in the Property when he was granted a discharge on March 17, 2010, which was two months prior to entry of the Stay Relief Order. Section 362(c)(2)(C). As a result, even if we were to reverse the Stay Relief Order, we could not provide effective relief to Lira because the stay had been dissolved as to him as a matter of law; a reversal on appeal cannot alter that outcome. Further, since the Stay Relief Order affected only Trustee and Lira's estate, Lira has no actual interest in the outcome of the litigation. Likewise, the same is true for the Rule 9023 Order; reversal of that order would not accomplish the relief Lira seeks.
Accordingly, the appeal is moot, and we must DISMISS for lack of jurisdiction.
B. Lira lacks standing to prosecute the appeal.
Even if the appeal were not moot, because Lira lacked standing to oppose the Stay Relief Motion and, likewise, lacks standing to challenge the Stay Relief Order and the Rule 9023 Order, we have no jurisdiction over this appeal.
We lack jurisdiction over appeals when the appellant lacks standing. Paine v. Dickey (In re Paine), 250 B.R. 99, 104 (9th Cir. BAP 2000). " Standing represents a jurisdictional requirement which remains open to review at all stages of the litigation." Nat'l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 255, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994). Whether an appellant is a person aggrieved is a question of fact reviewed for clear error. McClellan Fed. Credit Union v. Parker (In re Parker), 139 F.3d 668, 670 (9th Cir. 1998), overruled on other grounds by Dumont v. Ford Motor Credit Co. (In re Dumont), 581 F.3d 1104 (9th Cir. 2009)(recognizing BAPCPA superseded " ride through" provision of section 521(a)(2)(A)). If, however, the trial court did not make a factual finding on the issue, and the relevant facts and evidence are before this court, we may determine the issue ourselves. Id .
" To have standing to appeal a decision of the bankruptcy court, an appellant must show that it is a 'person aggrieved' who was 'directly and adversely affected pecuniarily by an order of the bankruptcy court.'" Id . (quoting Fondiller v. Robertson (In re Fondiller), 707 F.2d 441, 442-43 (9th Cir. 1983)). A " person aggrieved" is someone whose interest is directly affected by the bankruptcy court's order, either by a diminution in property, an increase in the burdens on the property, or some other detrimental effect on the rights of ownership inherent in the property. Fondiller, 707 F.2d at 442-43. Generally, only a bankruptcy trustee or a debtor-in-possession has standing on appeal to pursue or defend the rights of the bankruptcy estate. A chapter 7 debtor lacks standing on appeal unless: (1) the debtor is pursuing or defending his or her own personal rights (such as the right to a discharge); or (2) the bankruptcy estate might be a surplus estate. Duckor Spradling & Metzger v. Baum Trust (In re P.R.T.C., Inc.), 177 F.3d 774, 778 n.2 (9th Cir. 1999).
Here, only Trustee had standing to oppose Wells Fargo's Stay Relief Motion. Since Lira had been granted a discharge, he was not defending his own personal right; his estate is insolvent as demonstrated by Trustee's Report of No Distribution; and his bankruptcy case has not been closed. It is undisputed that no equity existed in the Property to benefit the estate and, because Lira is a chapter 7 liquidation debtor, no reorganization was in process for which the Property could be necessary. Accordingly, Trustee did not defend against the Stay Relief Motion, and the Stay Relief Order was entered against Trustee. The bankruptcy court correctly determined that any relief as to Lira was moot.
Therefore, because Lira is not the " person aggrieved" by the Stay Relief Order, he lacks standing to appeal it, and we must DISMISS for lack of jurisdiction.
VI. CONCLUSION
For the foregoing reasons, we DISMISS Lira's appeal for lack of jurisdiction and do not reach the merits of whether the bankruptcy court abused its discretion in granting Wells Fargo relief from the automatic stay, or denying Lira's Rule 9023 Motion.
As to Debtor: DENY as moot; discharge was entered on 3/17/10.As to Estate: GRANT under 11 U.S.C. § 362(d)(1) and (d)(2). GRANT as binding despite conversion. GRANT waiver of FRBP 4001(a)(3) stay (emphasis added).