Russell v. Aurora Bank FSB (In re Russell)

Summarized by Holly Roark , Roark Law Offices
12 years 12 months ago

Citation:

BAP No. CC-12-1312-DKiPa

Tag(s):

Ruling:

The Bankruptcy Appellate Panel ("BAP") affirmed the lower court granting relief from the automatic stay where the Debtors argued (for the first time on appeal) that the creditor had not taken into account several payments prior to submitting its declaration of default under an Adequate Protection Order ("APO"). The BAP ruled that it could not consider the new argument raised for the first time on appeal since the Debtors never raised it in response to the creditor's declaration of default under the APO in the lower court, and in fact never responded to the creditor's declaration of default. The BAP noted, however, that the Debtors still had time to file for relief in the lower court under the Federal Rules of Civil Procedure, Rule 60(b)(1) or (6).

Procedural context:

On appeal from the bankruptcy court for the Central District of California, to the Bankruptcy Appellate Panel for the Ninth Circuit.

Facts:

Creditor filed a motion for relief from the automatic stay which was settled by stipulation (the "Adequate Protection Order", or "APO"). Under the APO the debtor was entitled to a maximum of 3 notices of default and time to cure. After 3 notices of default and time to cure, the APO allowed the creditor to file its declaration of default and submit its order granting relief from the automatic stay and waiving the 14 day provision under Rule 4001(a)(3). The debtors defaulted 3 times under the APO, were provided with notice and time to cure as per the APO, and failed to timely cure. Thereafter, the creditor submitted its declaration of default and order granting relief from the automatic stay. The bankruptcy court entered the order granting relief from the automatic stay 7 days after the declaration of default was filed. The debtors never contested the declaration of default, but on appeal, for the first time raised the issue that the declaration had been "falsified" and that the creditor had not applied certain payments. The BAP declined to consider this new issue raised on appeal, and affirmed the lower court. The BAP noted, however, that the Debtors still had time to file for relief in the lower court under the Federal Rules of Civil Procedure, Rule 60(b)(1) or (6), made applicable through the Federal Rules of Bankruptcy Procedure, Rule 9024.

Judge(s):

Dunn, Kirscher, and Pappas

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