In RE: Steven H. Lucore and Judy L. Lucore, No. 3:2017cv00308 - Document 21 (S.D. Cal. 2018)
Court Description: ORDER Denying 16 Motion for Rehearing. Signed by Judge Janis L. Sammartino on 5/29/2018. (All non-registered users served via U.S. Mail Service)(mpl)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 STEVEN H. LUCORE, SR., JUDY L. LUCORE, Appellants, 13 14 15 16 17 Case No.: 17-CV-308 JLS (MDD) Bankruptcy Case No.: 13-08534-MM13 ORDER DENYING MOTION FOR REHEARING v. SPECIALIZED LOAN SERVICING LLC, AS SERVICER FOR WELLS FARGO BANK, N.A. AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF THE LMT 2006-9 TRUST, 18 (ECF No. 16) Appellee. 19 20 Presently before the Court is Appellants Steven H. Lucore, Jr. and Judy L. Lucore’s 21 Amended Motion for Re-Hearing.1 (“MTN, ECF No. 16). Appellee Specialized Loan 22 Servcing LLC filed a Response in Opposition to, (ECF No. 17), and Appellants filed a 23 24 25 26 27 28 1 Appellants originally filed their Motion for Rehearing on April 4, 2018, (ECF No. 15), which was thirteen days after this Court entered its Order affirming the bankruptcy court’s decision. Appellants then filed an amended Motion four days later. The Court considers Appellants’ original Motion to have met the timing requirements set forth in the Federal Rules of Bankruptcy Procedure. See Fed. R. Bankr. P. 8022. 1 17-CV-308 JLS (MDD) 1 Reply in Support of, (ECF No. 20), the Motion.2 The Court vacated the hearing on the 2 motion and took it under submission pursuant to Civil Local Rule 7.1(d)(1). (ECF No. 18.) 3 Having considered Appellants’ arguments and the law, the Court rules as follows. 4 BACKGROUND 5 This Court’s prior Order contains a complete and accurate recitation of the relevant 6 portions of the factual and procedural histories underlying Appellants’ Motion. (See “Prior 7 Order,” ECF No. 12, at 1–3.)3 This Order incorporates by reference the background as set 8 forth therein. As relevant to this Order, the Court affirmed the bankruptcy court’s decision 9 on March 22, 2018 and the present Motion for Rehearing followed. 10 LEGAL STANDARD 11 Federal Rule of Bankruptcy Procedure 8022 requires a motion for rehearing to “state 12 with particularity each point of law or fact that the movant believes the district court . . . 13 has overlooked or misapprehended and must argue in support of the motion.” Fed. R. 14 Bankr. P. 8022(a)(2). “Petitions for rehearing are designed to ensure that the appellate 15 court properly considered all relevant information in rendering its decision.” In re Hessco 16 Indus., Inc., 295 B.R. 372, 375 (B.A.P. 9th Cir. 2003) (citing Armster v. U.S. District Court, 17 C.D. Cal., 806 F.2d 1347, 1356 (9th Cir. 1986)). “A petition for rehearing is not a means 18 by which to reargue a party’s case.” Id. (citing Anderson v. Knox, 300 F.2d 296, 297 (9th 19 Cir. 1962)). 20 ANALYSIS 21 Appellants advance two points of law or fact that they argue this Court overlooked 22 or misapprehended. First, that Appellee had the original note and second, that there was 23 insufficient evidence to cast serious doubt on Appellee’s rights. (MTN 7.) The Court 24 25 26 27 28 Federal Rule of Bankruptcy Procedure 8022 provides that “[u]nless the district court or BAP requests, no response to a motion for rehearing is permitted.” Fed. R. Bankr. P. 8022(a)(3). Appellee did not move for leave to file a response, nor did the Court request a response. Therefore, the Court will not consider Appellee’s opposition brief or Appellants’ reply brief. Moreover, the Court’s conclusion would not change were the Court to consider either brief. 3 Pin citations refer to the CM/ECF page numbers electronically stamped at the top of each page. 2 2 17-CV-308 JLS (MDD) 1 discusses each argument in turn. 2 Appellants argue that Appellee did not prove it held the original note because 3 Appellee only provided a copy of the note. (Id.) Appellants advanced this argument for 4 the first time in their answering brief—not their opening brief. The Court noted that 5 Appellants did not include this issue in their original appeal and therefore waived the 6 argument. (Prior Order 12 (citing Fed. R. Bankr. P. 8014(a); and Eberle v. City of Anaheim, 7 901 F.2d 814, 818 (9th Cir. 1990)).) Alternatively, the Court also determined that the 8 record contained sufficient support for the bankruptcy court’s finding that Appellee 9 possessed the Note. (Id.) 10 Here, Appellants do not address the waiver issue and do not offer an argument 11 different from the one included in their answering brief. (Compare MTN 7 (“Appellee did 12 not prove it held the original note because it only provided a copy, and there was no original 13 note properly authenticated and submitted on the red [sic].”), with ECF No. 11-1 (“There 14 is no evidence in the record that [Appellee] had possession of the original note.”).) 15 Appellants advance exactly the same argument as before and it fails for the same reason as 16 before. The bankruptcy court cited In re Veal, 450 B.R. 897 (9th Cir. BAP 2011), and 17 determined that Appellee possessed the Note, endorsed in blank. (Prior Order 11.) 18 The bankruptcy court’s inquiry into standing to seek relief is limited in the context 19 of a relief from stay motion and it does not decide a creditor’s claim or security on the 20 merits. In re Veal, 450 B.R. at 914 (citing Johnson v. Righetti (In re Johnson), 756 F.2d 21 738, 740–41 (9th Cir. 1985)). The stay proceedings are limited in nature because 22 23 24 25 the ultimate resolution of the parties’ rights are often reserved for proceedings under the organic law governing the parties’ specific transaction or occurrence. Stay relief involving a mortgage, for example, is often followed by proceedings in state court or actions under nonjudicial foreclosure statutes to finally and definitively establish the lender’s and the debtor’s rights. 26 27 Id. (footnote omitted). Thus, a party seeking a bankruptcy stay relief need only establish 28 that it has a colorable claim to enforce a right against the property of the estate. Id. at 914– 3 17-CV-308 JLS (MDD) 1 15 (citing United States v. Gould (In re Gould), 401 B.R. 415, 425 n.14 (9th Cir. BAP 2 2009); and Biggs v. Stovin (In re Luz Int’l, Ltd.), 219 B.R. 837, 842 (9th Cir. BAP 1998); 3 and Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26, 32 (1st Cir. 1994)). 4 In California, assignees of a mortgage or deed of trust generally have a right to 5 commence nonjudicial foreclosure proceedings without an explicit requirement they have 6 an interest in the note. See Cal. Civ. Code § 2924(a); In re Veal, 450 B.R. at 917 n.34; see 7 also Putkkuri v. Recontrust Co., No. 08cv1919, 2009 WL 32567 at *2 (S.D. Cal. Jan.5, 8 2009) (“Production of the original note is not required to proceed with a non-judicial 9 foreclosure.”). The bankruptcy court stated that the essential elements from Veal were that 10 the note be endorsed in blank and that the movant be in possession of the note. (Record on 11 Appeal, ECF No. 4, at 84.) The bankruptcy court found both to be present in the record. 12 (Id.) Therefore, the bankruptcy court did not err in grating Appellee’s motion. 13 Appellants also argue that this Court should have followed In re Hubbel, 427 B.R. 14 789. 790 (N.D. Cal. 2010), by keeping the stay in place. (MTN 7.) This is the same 15 argument advanced in Appellants’ opening brief. (See ECF No. 8-1, at 10 (“This question 16 has already been decided and answered in a bankruptcy court appeal in Hubbel. The 17 Hubbel court made clear that a mortgage lender is not entitled to have an automatic stay 18 lifted where the borrower has transmitted a notice of rescission under the Truth in Lending 19 Act.”).) Hubbel addressed a similar (but not identical) situation as presented to the 20 bankruptcy court, but Hubbel only held that the bankruptcy court decision in that case did 21 not abuse its discretion. Nor is Hubbel controlling on this Court or the bankruptcy court; 22 the bankruptcy court had the discretion to keep the stay in place or remove the stay based 23 on a colorable claim to enforce a right against the property. Hubbel’s reasoning and 24 conclusions are persuasive, but this Court determined there was sufficient factual 25 distinction between this case and Hubbel. (Prior Order 9–10.) Hubbel does not compel a 26 different outcome than what the bankruptcy court determined. 27 Appellants’ second argument is that there was sufficient evidence to cast doubt on 28 Appellee’s rights to bring the motion to lift the bankruptcy stay. (MTN 8.) As before, 4 17-CV-308 JLS (MDD) 1 Appellants argue that the Truth in Lending Act, 15 U.S.C. § 1635(a), allows a borrower to 2 rescind a security interest on real property and Paul Lucore submitted a declaration that he 3 mailed his rescission to the creditor at the time. (Id.) Appellants contend that Appellee 4 did not rebut Mr. Lucore’s rescission and the original creditor did not contest the rescission 5 in Superior Court. (Id.) 6 As the Veal court noted, “stay proceedings are limited in nature because the ultimate 7 resolution of the parties’ rights are often reserved for proceedings under the organic law 8 governing the parties’ specific transaction or occurrence.” 450 B.R. at 914. A party 9 seeking a bankruptcy stay relief need only establish that it has a colorable claim to enforce 10 a right against the property of the estate. Id. at 914–15 (citations omitted). The bankruptcy 11 court determined there was sufficient evidence to find Appellee had a colorable claim. The 12 bankruptcy court also considered Appellants’ TILA evidence and argument when making 13 its finding. (Prior Order 10.) 14 Appellants again raise Hubbel to address the sufficiency of evidence issue. They 15 state, the “Hubbel court made clear that a mortgage lender is not entitled to have an 16 automatic stay lifted where the borrower has transmitted a notice of rescission under the 17 Truth in Lending Act.” (MTN 9.) That statement of the law is not correct; a bankruptcy 18 court has the discretion to lift the “automatic stay under 11 U.S.C. § 362(d)(2) if it finds 19 that the debtor has no equity in the property sought to be foreclosed upon, and that the 20 property is not necessary to an effective reorganization.” In re Bialac, 694 F.2d 625, 626 21 (9th Cir. 1982). Hubbel only held that, based on the facts before that court, the bankruptcy 22 court’s decision to maintain a stay in that case were not an abuse of discretion. Here, the 23 bankruptcy court had different facts before it than Hubbel and determined that those facts 24 did not cast serious doubt on Appellee’s right to relief from the stay. (See Prior Order 10.) 25 In sum, Appellants raise generally the same arguments that they brought on appeal. 26 However, “[a] petition for rehearing is not a means by which to reargue a party’s case.” 27 Hessco, 295 B.R. at 375. Therefore, the Court finds no error in its prior order. 28 /// 5 17-CV-308 JLS (MDD) 1 2 3 4 5 CONCLUSION In light of the foregoing, the Court DENIES Appellants’ Motion for Rehearing, (ECF No. 16). IT IS SO ORDERED. Dated: May 29, 2018 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 17-CV-308 JLS (MDD)
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