FILED
DEC 20 2022
NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. CC-22-1094-LFT
ALDA M. LUTZ,
Debtor. Bk. No. 1:21-bk-10143-VK
ALDA M. LUTZ,
Appellant,
v. MEMORANDUM∗
J.P. MORGAN MORTGAGE
ACQUISITION CORPORATION,
Appellee.
Appeal from the United States Bankruptcy Court
for the Central District of California
Victoria S. Kaufman, Bankruptcy Judge, Presiding
Before: LAFFERTY, FARIS, and TAYLOR, Bankruptcy Judges.
INTRODUCTION
Alda Lutz appeals the bankruptcy court’s order denying her motion
to order her mortgage lender to modify its proof of claim to remove certain
attorneys’ fees and costs from the arrearage to be paid through her chapter
131 plan and instead add those amounts to the loan balance. Shortly after
∗ This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
1 Unless specified otherwise, all chapter and section references are to the
that order was entered, the bankruptcy court dismissed Ms. Lutz’s case.
We DISMISS this appeal as moot.
FACTS
Pre-petition, Ms. Lutz sued the servicer of the loan secured by her
residence to prevent foreclosure. Although she initially obtained a
preliminary injunction, that injunction was later dissolved. She then filed a
chapter 13 petition. The lender, J.P. Morgan Mortgage Acquisition
Corporation (“JPM”), filed a proof of claim that included in its arrearage
claim $75,340.90 of attorneys’ fees and costs incurred in the pre-petition
litigation and the foreclosure process. Ms. Lutz objected on the ground that
she had not received notice of those fees and costs, nor was there an
accounting. After JPM provided a detailed accounting of the fees and costs,
the bankruptcy court entered an order overruling Ms. Lutz’s objection.
Ms. Lutz then filed a “Motion to Request an Order that a Portion of
J.P. Morgan Mortgage Acquisition Corp.’s Proof of Claim Be Added to the
Loan Balance.” Ms. Lutz argued that the attorneys’ fees and costs should
not be part of the arrearage to be paid through her plan but instead should
be added to the principal balance of the loan. The bankruptcy court
disagreed and denied the motion.2 On September 14, 2022, the bankruptcy
court dismissed the case.
Bankruptcy Code,
11 U.S.C. §§ 101–1532.
2 The bankruptcy court based its ruling on its interpretation of Paragraph 9 of the
deed of trust, which provides in relevant part:
If . . . (b) there is a legal proceeding that might significantly affect
2
JURISDICTION
The bankruptcy court had jurisdiction under
28 U.S.C. §§ 1334 and
157(b)(2)(B). As discussed below, we lack jurisdiction over this appeal.
ISSUE
Is this appeal moot?
DISCUSSION
In determining whether an appeal is moot, we focus upon whether
we can fashion meaningful relief. I.R.S. v. Pattullo (In re Pattullo),
271 F.3d
898, 901 (9th Cir. 2001). Reversal of the order on appeal would not confer
any relief on Ms. Lutz because there is no longer any pending chapter 13
reorganization.
In the bankruptcy context the determination of whether a
case becomes moot on the dismissal of the bankruptcy hinges
on the question of how closely the issue in the case is connected
to the underlying bankruptcy. When the issue being litigated
directly involves the debtor’s reorganization, the case is mooted
by the dismissal of the bankruptcy.
Id. (cleaned up).
Lender’s interest in the Property and/or rights under this Security
Instrument[,] . . . Lender’s action can include . . . (c) paying reasonable
attorneys’ fees to protect its interest in the Property and/or rights under
this Security Instrument . . . .
Any amounts disbursed by Lender under this Section 9 shall
become additional debt of Borrower secured by this Security Instrument.
These amounts shall bear interest at the Note rate from the date of
disbursement and shall be payable, with such interest, upon notice from
Lender to Borrower requesting payment.
3
In her response to the BAP Clerk’s order for briefing explaining why
the appeal was not moot, Ms. Lutz stated that the appeal is not moot
because she intends to file a new chapter 13 case, and “[t]o have to go
through the effort for all parties in a new case would create unnecessary
redundancy.” She argues that the Panel can fashion effective relief because
the outcome of this appeal will determine the required plan treatment in
the new case.
The Ninth Circuit Court of Appeals rejected a similar argument in
Pattullo. There, the IRS moved to dismiss the debtors’ chapter 13 case for
lack of eligibility. The bankruptcy court denied the motion, finding that the
IRS was bound by a prior settlement in which it had stipulated to the
amount of the debtors’ unsecured debt. In the absence of that ruling,
debtors’ unsecured debts would have been over the eligibility limit. While
the appeal of the bankruptcy court’s order was under submission to the
Ninth Circuit, the bankruptcy court dismissed the debtors’ case.
The Ninth Circuit held that the appeal was moot because it was
“entirely dependent” on the existence of the original chapter 13 case. The
debtors argued that effective relief could be granted because they had filed
a new chapter 13 case, and if the Ninth Circuit affirmed the bankruptcy
court, that decision would preclude relitigation of whether the IRS was
bound by its stipulation. The Circuit rejected this argument, noting that it
lacked jurisdiction over a moot appeal: “[W]e may not issue a decision
simply to preclude similar arguments being raised by the IRS in the new
4
Chapter 13 proceeding. To have jurisdiction, we must be able to grant
effective relief within the boundaries of the present case, and we lack that
ability.”
Id.
As in Pattullo, this appeal is dependent on the existence of the
original chapter 13 case. The bankruptcy court’s decision determined the
treatment of JPM’s claim under the plan, but there is no longer a claim or a
plan. Moreover, Ms. Lutz’s argument that she lacked notice of the
attorneys’ fees and costs is no longer viable. And Ms. Lutz does not argue
that anything in the bankruptcy court’s ruling would impact the parties’
rights outside of bankruptcy. Accordingly, we lack jurisdiction over this
appeal.
CONCLUSION
Because we cannot fashion any effective relief, we DISMISS this
appeal as moot.
5
