Wegesend v. Onewest Bank (In re Wegesend)

Summarized by David Hercher , U.S. Bankruptcy Court, District of Oregon
11 years 5 days ago

Citation:

In re Wegesend, No. HI-14-1236-KuJuKi (9th Cir. B.A.P. Feb. 20, 2015).

Tag(s):

Ruling:

Bankruptcy court improperly granted motion to dismiss, treated as motion for summary judgment, without giving nonmovant opportunity for discovery. (Not-for-publication memorandum.)

Procedural context:

In this chapter 13 case, the debtors commenced an adversary proceeding against a creditor objecting to its proof of claim. The creditor moved to dismiss. The bankruptcy court treated the motion to dismiss as a motion for summary judgment and granted the motion. The debtors appealed to the BAP, which reversed and remanded.

Facts:

The debtors’ objection to the creditor’s claim was based on the allegation that the creditor held no interest in the note and mortgage described in the claim. The creditor’s motion to dismiss under FRCP 12(b)(6) relied on facts that the debtors did not allege in the complaint, including that the creditor possessed the original note, endorsed in blank. At the hearing, the creditor’s lawyer represented to the court that he had brought the original note with him so that the court and opposing counsel could inspect it if they so desired. The debtors' lawyer claimed that the supposedly original note was just a copy. If a motion under FRCP 12(b)(6) or 12(c) is based on matters outside the pleadings, the court must treat the motion as one for summary judgment, and the court must give all parties a reasonable opportunity to present all pertinent material. The nonmoving party is entitled to a full and fair opportunity to ventilate the issues involved in the motion. Here, the debtors were not fairly apprised that the court might dispose of their action by summary judgment, and they did not have a full and fair opportunity to ventilate the controlling issue regarding the creditor’s possession of the original note. They were not given any chance to conduct discovery or present evidence supporting their allegation that the creditor did not possess the original note.

Judge(s):

Frank L. Kurtz, Meredith A. Jury, and Ralph B. Kirscher, Bankruptcy Judges.

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!