Dodev v. The Bank of NY Mellon

Ninth Circuit Bankruptcy Appellate Panel Case No. AZ-15-1013-JuKiPa (July 2, 2015)
In the Ninth Circuit Bankruptcy Appellate Panel's ("BAP") ruling deemed not appropriate for publication, the BAP dismissed the appeal as moot. During the pending appeal, the Debtor's Chapter 11 case was dismissed, and the related civil litigation was still pending. The allowance of BYNM's Proof of Claim was a matter closely connected with Debtor's reorganization.
Procedural context:
The bankruptcy court overruled Debtor’s objection to the Proof of Claim filed on behalf of The Bank of New York Mellon ("BNYM") by its servicing agent, Select Portfolio Servicing ("SPS"), and Debtor appealed.
In 2004 the Debtor and his non-filing spouse purchased real property in Arizona ("Property"). Approximately 2 years later, Debtor obtained a loan from First Magnus Financial Corporation ("First Magnus") in the amount of $681,750 which was evidenced by a promissory note and secured by a deed of trust against the Property. The note was transferred to Countrywide Bank, N.A., and BNYM asserted that it has possession of the note by and through a Corporation Assignment of Deed of Trust Arizona, Mortgage Electronic Registration Systems, Inc. BYNM asserted the right to monies due under the note are due to BYNM. Debtor defaulted on the note in 2008, and BYNM commenced foreclosure proceeding. The Debtor filed Chapter 7 in 2009 and received a discharge. In 2013 a Notice of Trustee Sale was recorded with a sale date of November 8, 2013. In October 2013, Debtor commenced a civil suit against BYNM and others in District Court for the District of Arizona seeking quiet title, damages under FDCPA, breach of contract, and RICO. During the pending civil action, the Debtor filed Chapter 11 on February 21, 2014. BYNM filed a motion to terminate the automatic stay, and the Debtor opposed the same asserting that BYNM lacked standing. SPS timely filed a Proof of Claim on BYNM's behalf. The Proof of Claim included (i) endorsement from First Magnus, the loan originator, to Countrywide Bank NA; (2) from Countrywide Bank NA to Countrywide Home Loans Incorporated; and (3) a blank endorsement from Countrywide Home Loans Incorporated without recourse. The bankruptcy court overruled Debtor's objection to BYNM's Proof of Claim finding that the Debtor had not presented any basis wherein the objection could be sustained.
JURY, KIRSCHER, and PAPPAS, Bankruptcy Judges.

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