Miller v. Deutsche Bank National Trust Co. (In re Miller)
- Summarized by Scottie Kleypas , Scottie S. Kleypas Law, LLC
- 12 years 11 months ago
- Citation:
- No. 11-1232 (10th Cir. February 1, 2012)
- Tag(s):
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- Ruling:
- The Tenth Circuit held that Deutsche Bank failed to establish that it was a "party in interest" for purposes of obtaining relief from the automatic stay. The Bank did not prove that it had actual possession of the original Note and without such proof of possession it was not entitled to obtain relief from the automatic stay. The Court held that neither the bankruptcy court nor BAP conducted a proper statutory standing analysis under 362(d). The Court also found that the BAP incorrectly relied on Rooker-Feldman for preclusive effect of a prior Colorado state court ruling which was not a final judgment on the issue of standing.
- Procedural context:
- Deutsche Bank obtained an order for relief from the automatic stay. Millers appealed the order to the BAP. The BAP’s Order affirmed the bankruptcy court order granting relief from that automatic stay applying the Rooker-Feldman doctrine. Tenth Circuit reversed BAP's order and remanded for further proceedings.
- Facts:
- The Millers executed a promissory note in the amount of $216,236 in favor of IndyMac Bank. The Note was subsequently transferred to Deutsche Bank (“Bank”). The details of the assignment are not part of the record on appeal. The Bank brought a foreclosure action in Colorado state court against the home owed by Millers. The Bank obtained an Order Authorizing Sale from the Colorado Court despite Millers assertions that the Bank did not have standing. Millers filed a petition under Chapter 13 which halted the foreclosure. The Bank filed a motion for relief from the stay. The bankruptcy court held a hearing in which the Bank recited that it was the current owner of the Note and Deed of Trust. Millers objected to the motion for relief from stay asserting that Deutsche Bank was not the proper party in interest and lacked standing to bring the motion. Millers asserted that Deutsche Bank had not produced the original Note or proved that it was in possession of the Note. At the hearing on its motion for relief from stay, Deutsche Bank proffered a copy of the Note indorsed in blank by Indy Mac, along with a copy of the Deed of Trust. The bankruptcy judge asked counsel “where is the original of the note right now?” and counsel for the Bank stated “The original of the note has been requested, and it should be on the way to our firm here shortly.” No further evidentiary hearing was held on the issue of Deutsche Bank’s possession of the Note. Millers appealed the Order granting relief from the automatic stay to the BAP. The BAP relied on the Rooker-Feldman doctrine stating “the bankruptcy court properly declined to revisit the state court’s decision that Deutsche Bank was an “interested person” entitled to an order authorizing sale under Colorado law.” The rationale was Deutsche Bank had standing to proceed with the foreclosure then Deutsche Bank had standing to seek relief from the stay. The BAP affirmed the Order granting relief from the automatic stay. The Millers appealed the BAP’s Order to the Tenth Circuit Court of Appeals. The Tenth Circuit held that the evidence is insufficient to establish that Deutsche Bank is a “party in interest” entitled to seek relief from the automatic stay and the bankruptcy court had abused its discretion by granting Deutsche Bank relief from the stay. Further, the Court held that the Rooker-Feldman doctrine was not applicable because under Colorado case law an Order Authorizing Sale is not a final judgment. Therefore, the state court ruling on the Order Authorizing Sale had no preclusive effect as to the issue of whether the Bank had standing to seek and obtain relief from the automatic stay.
- Judge(s):
- Kelly, Porfilio, and Matheson
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