In re Moses

• Court: U.S. Bankruptcy Court — Central District of California
• Writing for the Court: Victoria S. Kaufman United States Bankruptcy Judge
• Decision Date: 07 September 2017
• Docket Number: Case No.: 1:16-bk-10024-VK
• Citation: In re Moses, Case No.: 1:16-bk-10024-VK (Bankr. C.D. Cal. Sep 07, 2017)
• Parties: In re: PAULETTE VONETTA MOSES, Debtor.

In re: PAULETTE VONETTA MOSES, Debtor.

Case No.: 1:16-bk-10024-VK

UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SAN FERNANDO VALLEY DIVISION

September 7, 2017

Chapter 7

ORDER DENYING MOTION TO VACATE ORDER GRANTING RELIEF FROM THE AUTOMATIC STAY RE: DEBTOR'S REAL PROPERTY [20224 Cohasset Street, Unit 20, Winnetka, CA 91306] [doc. 337]

[No hearing held]

On May 15, 2017, Paulette Vonetta Moses (the "Debtor") filed the Motion to Vacate Relief from Stay Request from Purported Beneficiary, U.S. Bank, N.A., as Trustee for the Lehman XS Trust Mortgage Pass-Through Security Certificates, Series 2006-4N of Security Instruments (the "Motion to Vacate") [doc. 337].¹ For the reasons set forth herein, the Court will deny the Motion to Vacate.

I. BACKGROUND

On January 6, 2016, the Debtor filed a voluntary chapter 11 petition. In her schedules, the Debtor listed the real property located at 20224 Cohasset Street, Unit 20, Winnetka, CA 91306 ("Cohasset Property"). On September 26, 2016, the Court converted the Debtor's case to chapter 7 [doc. 121].

On November 23, 2016, the chapter 7 trustee ("Trustee") filed a notice of abandonment as to the Cohasset Property [doc. 227]. On January 13, 2017, the Court entered an order deeming the Cohasset Property abandoned [doc. 267].

On February 19, 2017, U.S. Bank. N.A. ("U.S. Bank") filed a motion for relief from the automatic stay as to the Cohasset Property ("RFS Motion"). In the RFS Motion, U.S. Bank argued that under 11 U.S.C. § 362(d)(1), its interest in the Cohasset Property was not adequately protected. There was a negative equity cushion of ($7,516.29), as established by the value of the Cohasset Property as listed in the Debtor's schedules and the amount of U.S. Bank's claim. In addition, U.S. Bank argued that relief was warranted under 11 U.S.C. § 362(d)(2). There was no equity in the Cohasset Property, and the Cohasset Property was not necessary to an effective reorganization. U.S. Bank further alleged that the Debtor was behind five (5) postpetition payments for a total of $6,582.67 in arrearages. (RFS Motion, at p. 8.) The declaration attached to the motion was prepared by a representative of Nationstar Mortgage, LLC ("Nationstar"), the servicer for U.S. Bank.

On March 22, 2017, the Court held a hearing on the RFS Motion. Although she had not filed a written response, the Debtor appeared at the hearing and stated that she had contacted her secured lender and paid the lender $5,205.78 to cure the delinquency. The Court continued the hearing to May 17, 2017 and instructed the Debtor to file a written opposition, with her proof of payment attached, by April 5, 2017.

On April 5, 2017, the Debtor filed her belated opposition to the RFS Motion ("Opposition") [doc. 320]. In the Opposition, the Debtor alleged the following: (1) Nationstar is a debt collector; (2) Nationstar is not the original lender on the note and deed of trust as to the Cohasset Property; (3) U.S. Bank is not the holder in due course and does not have physicalpossession of a promissory note that either names U.S. Bank as a payee or is indorsed to U.S. Bank, indorsed in blank, or payable to bearer; (4) because U.S. Bank is not a holder in due course, it lacks standing to seek relief from stay; (5) once the Cohasset Property loan was in default and assigned to a debt collector such as Nationstar, the action is governed by the Fair Debt Collection Practices Act ("FDCPA"); (6) Nationstar did not file a proof of claim; (7) the postpetition assignment of the note and deed of trust to Nationstar is invalid; and (8) Nationstar employees Mohameed Hameed and Tim Jackson fraudulently executed the relevant assignment documents. (Opposition, pp. 3-8, Exhs. A, B.)

The Debtor attached to her Opposition a copy of cashier's check dated March 17, 2017, payable to Nationstar Mortgage, in the amount of $3,872.85, that she allegedly mailed. (Opposition, Exh. E.) However, the Debtor did not attest to these facts in her accompanying declaration.

On April 19, 2017, the Court issued a tentative ruling, noting that the postpetition assignment of the note and deed of trust was proper, and that Nationstar had timely filed a proof of claim. In light of the Debtor's allegations in her Opposition, the Court instructed U.S. Bank to file a supplemental declaration no later than May 3, 2017 regarding its standing to bring the RFS Motion. On May 3, 2017, U.S. Bank filed its supplemental declaration [doc. 326].

At the continued hearing on the RFS Motion on May 17, 2017, the Court determined that U.S. Bank had standing and granted the RFS Motion. The Court posted its ruling to the docket as docket no. 339. On June 7, 2017, the Court entered an order granting the RFS Motion ("RFS Order") [doc. 344].

II. DISCUSSION

Although the Debtor does not cite authority supporting the Motion for Vacate, it appears that the Debtor seeks reconsideration of the RFS Order pursuant to Federal Rule of Civil Procedure ("Rule") 59 and Rule 60(b). Pursuant to Rule 59(a)(1)(B), "[t]he court may, on motion, grant a new trial on all or some of the issues—and to any party—. . . . after a nonjury trial, for any reason for which a rehearing has heretofore been granted in a suit in equity in federal court." Rule 59(e) provides that a party may move for alteration or amendment of ajudgment. Motions pursuant to Rule 59(a)(1)(B) or 59(e) must be filed no later than 28 days after entry of judgment. Rules 59(b), (e).

Rule 59(a) "does not specify the grounds on which a motion for a new trial may be granted." Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007) (quoting Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020, 1035 (9th Cir.2003)). Rather, the court is "bound by those grounds that have been historically recognized." Id. The Ninth Circuit Court of Appeals has held that "[t]he trial court may grant a new trial only if the verdict is contrary to the clear weight of the evidence, is based upon false or perjurious evidence, or to prevent a miscarriage of justice." Id. (quoting Passantino v. Johnson & Johnson Consumer Prods., 212 F.3d 493, 510 n.15 (9th Cir. 2000)).

As to Rule 59(e), there are four basic grounds upon which a Rule 59(e) motion may be granted:

First, the movant may demonstrate that the motion is necessary to correct manifest errors of law or fact upon which the judgment is based. Second, the motion may be granted so that the moving party may present newly discovered or previously unavailable evidence. Third, the motion will be granted if necessary to prevent manifest injustice. . . . Fourth, a Rule 59(e) motion may be justified by an intervening change in controlling law.

McDowell v. Calderon, 197 F.3d 1253, 1255 n.1 (9th Cir. 1999) (emphasis removed).

Pursuant to Rule 60(b)—

On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;

(4) the judgment is void;

(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or

(6) any other reason that justifies relief.

Based on the Debtor's assertions in the Motion to Vacate, it appears that the Debtor requests reconsideration under Rule 60(b)(3) on the grounds of fraud, arising from the allegedactions of U.S. Bank and Nationstar. The other subsections of Rules 59(a), 59(e) and 60(b) are inapplicable to the Debtor's arguments in the Motion to Vacate.

To prevail on a motion under Rule 60(b)(3), "the moving party must prove by clear and convincing evidence that the verdict was obtained through fraud, misrepresentation, or other misconduct and the conduct complained of prevented the losing party from fully and fairly presenting the defense." De Saracho v. Custom Food Mach., Inc., 206 F.3d 874, 880 (9th Cir. 2000).

A. Timing of Motion to Vacate

On May 15, 2017, the Debtor filed the Motion to Vacate. On June 7, 2017, the Court entered the RFS Order. When the Debtor filed the Motion to Vacate, no order or judgment had been entered yet. Thus, the Motion to Vacate was premature when filed.

Notwithstanding the foregoing, a court may consider a premature motion for reconsideration. See Fjeldsted v. Lien (In re Fjeldsted), 293 B.R. 12, 18-19 (9th Cir. B.A.P. 2003) (citing Constellation Dev. Corp. v. Dowden (In re B.J. McAdams, Inc.), 999 F.2d 1221, 1223-24 (8th Cir. 1993); Contempo Metal Furniture Co. of Cal. v. E. Tex. Motor Freight Lines, Inc., 661 F.2d 761, 764 n.1 (9th Cir. 1981); McCulloch Motors Corp. v. Or. Saw Chain Corp., 245 F. Supp. 851, 853 (S.D. Cal. 1963)). Accordingly, the Court will consider the Motion to Vacate.

B. Failure to Respond to the Debtor's Opposition

In the Motion to Vacate, the Debtor argues that relief from stay should be vacated because U.S. Bank did not timely respond to the Opposition. (Motion to Vacate, ¶¶ 1-2, 5.) However, on May 3, 2017, U.S. Bank timely filed its supplemental declaration [doc. 326] in response to the Opposition. U.S. Bank clarified that the indorsement attached to the note is an indorsement in blank [doc. 326, at p. 2]. After reviewing the supplemental declaration and the exhibits thereto, the Court granted the RFS Motion.

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C. Holder in Due Course

In the Motion to Vacate, the Debtor argues that U.S. Bank is not a holder in due course of the promissory note and thus lacked standing to bring the RFS Motion. (Motion to Vacate, ¶¶ 6-7.) In its May 17, 2017 ruling, the Court addressed these issues as follows:

In addition, U.S. Bank has established that it has standing to seek relief from stay. In the declaration, Nationstar's

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