Karen Michele Rozier v. U.S. Bank N.A. (In re Rozier)

Citation: 
In re Rozier, BAP No. CC-12-1359-KiPaD (BAP 9th Cir. August 19, 2013)
Ruling: 
Ninth Circuit BAP affirmed U.S. Bankruptcy Court for the Central District of California (J. Bauer) grant of relief from stay for cause pursuant to 11 USC 362(d)(1) over objection of Chapter 7 debtor who asserted that creditor lacked standing because it had failed to file a proof of claim in debtor's case and failed to demonstrate it received an assignment from the original holder of the note. The BAP noted that under California law a creditor may foreclose without holding the promissory note and that creditor had demonstrated it had obtained its rights through assignment from assignees that obtained rights from the original holder. In addition to adequate standing, creditor demonstrated cause by showing that debtor had failed to make any payments on the property for 54 months, had failed to pay taxes since 2008, and property had negative equity of approximately $200,000. The BAP found that after the creditor made a prima facie case for cause, the burden shifted to debtor to demonstrate that relief from stay was not warranted. Debtor failed to establish that relief from stay was not warranted.
Procedural context: 
Chapter 7 debtor appealed to 9th Circuit BAP ruling of bankruptcy court granting creditor relief from stay.
Facts: 
Debtor obtained $576k loan from WMC Mortgage Company (WMC) for residence. Debtor executed promissory note and deed of trust (DOT) in favor of lender. DOT named Mortgage Electronic Registration Systems, Inc. (MERS) as beneficiary and nominee for WMC. Debtor defaulted in 2008, and failed to make any further payments on the mortgage for 54 months. Debtor failed to pay real property taxes commencing in 2008. Debtor prevented foreclosure in 2008 by filing bankruptcy under Chapter 13, but case was dismissed before debtor could confirm plan. In 2011, MERS assigned all rights in note and DOT to Bank of America. Subsequently, debtor filed a second Chapter 13, scheduling property as unencumbered. In 2012, Bank of America assigned all rights in note and DOT to U.S. Bank. Subsequently, debtor's Chapter 13 case was converted to Chapter 7. U.S. Bank filed motion for relief from stay. Debtor opposed, arguing that because U.S. Bank failed to file a proof of claim, and failed to present the promissory note in motion, it lacked standing. Debtor further argued that there was equity in property, but did not dispute failure to make payments.
Judge(s): 
Kirscher, Pappas, Dunn