FILED
JUL 6 2021
SUSAN M. SPRAUL, CLERK
NOT FOR PUBLICATION U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. CC-20-1237-GTL
ANIBAL MESALA SILVA,
Debtor. Bk. No. 6:19-bk-10026-SY
ANIBAL MESALA SILVA,
Appellant,
v. MEMORANDUM*
RIVERSIDE COUNTY TAX COLLECTOR;
MIDFIRST BANK, A Federally Chartered
Savings Association,
Appellees.
Appeal from the United States Bankruptcy Court
for the Central District of California
Scott Ho Yun, Bankruptcy Judge, Presiding
Before: GAN, TAYLOR, and LAFFERTY, Bankruptcy Judges.
INTRODUCTION
Chapter 131 debtor Anibal Silva (“Debtor”) appeals the bankruptcy
court’s orders: (1) denying his motion for sanctions against the Riverside
*
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
Bankruptcy Code, 11 U.S.C. §§ 101–1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
County Tax Collector (“Riverside County”) and Midland Mortgage, a
division of appellant MidFirst Bank2 (“MidFirst”) and servicer of the loan;
(2) sustaining MidFirst’s evidentiary objections; and (3) denying his motion
to vacate the order denying the motion for sanctions. Debtor argued that
Midland Mortgage willfully violated the automatic stay by paying
$2,093.57 to Riverside County from an escrow impound account
established by the deed of trust (“Escrow Account”) and Riverside County
willfully violated the stay by accepting the payment.
We agree with the bankruptcy court that the Escrow Account funds
were not property of the estate and MidFirst had authority, as holder of the
note and assignee of the deed of trust, to pay Debtor’s tax obligation
pursuant to the terms of the loan documents. As to the amended motion to
vacate, Debtor did not provide transcripts of the hearing and we are unable
to review the basis of the court’s orders without the transcripts. We
AFFIRM.
Civil Procedure.
2 Debtor argues that Midland Mortgage is the correct party to this appeal, and he
filed a motion requesting that we correct the record to name Midland Mortgage as
appellee and prohibit MidFirst Bank from acting on behalf of Midland Mortgage.
MidFirst presented evidence to the bankruptcy court demonstrating that it is the
secured creditor and servicer of Debtor’s loan through its servicing division, Midland
Mortgage. Additionally, Debtor made this argument to the bankruptcy court but failed
to provide a transcript of the court’s ruling. We deny Debtor’s motion.
2
FACTS 3
A. The Bankruptcy Case And Confirmation Of The Plan
In January 2019, Debtor filed his chapter 13 petition and plan. He
proposed to pay Riverside County’s claim of $2,093.57 as a priority claim
under Class 1. Debtor included Midland Mortgage as a Class 2 secured
creditor and proposed to cure its arrearage claim of $5,200 while making
regular postpetition payments outside of the plan. Although his regular
postpetition mortgage payments were $1,729.36, which included amounts
for taxes and insurance, Debtor proposed non-standard plan provisions to
allow postpetition payments of principal and interest in the amount of
$1,310 per month and a requirement that Debtor separately pay insurance
and taxes.
After Debtor filed his plan, MidFirst filed its proof of claim and
attached the note, deed of trust, and assignments. MidFirst’s claim
evidenced arrears of $5,320.58, comprised of $3,917.04 for principal and
interest, $56 for prepetition fees, and $1,752.01 for a projected escrow
shortage. MidFirst attached an escrow account analysis which showed a
3 Debtor filed a motion, pursuant to Rules 8013(a) and 8009(e)(3), to modify his
designation of the record to add new evidence which was filed on March 15, 2021 in
adversary proceeding 6:20-ap-1142. We decline to consider evidence that was
unavailable to the bankruptcy court at the time it entered the orders on appeal and
therefore deny Debtor’s motion. See Morrison v. Hall,
261 F.3d 896, 900 n.4 (9th Cir.
2001). We also decline to consider documents attached to Debtor’s Reply Briefs which
were not designated as part of the record and which were not before the bankruptcy
court. However, we exercise our discretion to take judicial notice of relevant documents
electronically filed in Debtor’s bankruptcy case. Atwood v. Chase Manhattan Mortg. Co.
3
balance of $1,238.69 on the petition date. Riverside County also filed a
proof of claim of $2,093.57 for prepetition property taxes.
Debtor objected to Riverside County’s claim and argued that his
assessed property tax for fiscal year 2018 was $4,187.14, payable in two
installments of $2,093.57. Debtor contended that the first installment was
paid prepetition and, because the second was not due until April 2019,
Riverside County did not have a prepetition claim.
On March 5, 2019, the bankruptcy court held a hearing on
confirmation of Debtor’s chapter 13 plan. The court continued the hearing
to March 19, 2019 to coincide with Debtor’s objection to Riverside County’s
claim and advised Debtor that it would not confirm a plan with non-
standard provisions.
At the continued hearing, the bankruptcy court overruled Debtor’s
objection to Riverside County’s claim. The court stated that the tax was an
ad valorem secured claim, and it agreed with Riverside County that,
although the second installment could be paid by April 2019 without a
penalty, the entire amount of the tax was assessed on January 1, 2018 and
was therefore a prepetition claim.
The chapter 13 trustee stated that he would support confirmation if
Debtor agreed to reclassify the Riverside County claim as a Class 2 secured
claim and remove the non-standard provisions. Debtor agreed to the
(In re Atwood),
293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
4
modifications, and the court entered the order confirming the plan on April
10, 2019.
On March 28, 2019, prior to entry of the confirmation order, MidFirst
disbursed $2,093.57 to Riverside County for payment of the second
installment of the 2018-2019 property taxes.
B. Debtor’s Motion For Sanctions
In September 2020, Debtor filed a motion for sanctions under
§§ 362(k) and 105(a) against Riverside County and Midland Mortgage,
alleging that payment of the tax obligation on March 28, 2019 was a willful
violation of the automatic stay. He argued that failure to return the funds
constituted a violation of the terms of the confirmed plan under § 1327(a)
because the plan provided for payment of Riverside County’s prepetition
claim from plan payments.
Riverside County opposed the motion and argued that MidFirst’s
payment of property taxes to protect its security interest was not an act to
create, perfect, or enforce a lien, and therefore was not a stay violation.
Additionally, Riverside County maintained that it took no action to collect
the tax and merely received and applied the payment, which could not
support liability for a stay violation under the holding of Zotow v. Johnson
(In re Zotow),
432 B.R. 252 (9th Cir. BAP 2010). Riverside withdrew its proof
of claim and stated that it returned the monthly distributions it received
under the plan to the chapter 13 trustee.
5
MidFirst opposed the motion and argued that the Escrow Account
was established at the time of the loan origination and under the loan
documents MidFirst had a contractual obligation to apply funds to pay
escrow items, including property taxes. MidFirst argued that the funds in
the Escrow Account were not property of the estate and any interest that
Debtor had in the funds was contingent upon payment of all sums secured
by the deed of trust. And MidFirst asserted that Debtor’s confirmed plan
did not modify the contractual payments, which included amounts for
taxes. MidFirst contended that it acted in good faith according to its
contractual arrangement with Debtor and the payment to Riverside County
was not prohibited by the confirmation order.
Debtor replied and argued that MidFirst did not prove its connection
to Midland Mortgage, which was the party who allegedly violated the stay.
He requested that the court strike MidFirst’s opposition and deem
admitted the allegations against Midland Mortgage.
The bankruptcy court issued a tentative ruling denying Debtor’s
motion for sanctions but requiring appearances at the hearing. Two days
before the scheduled hearing, Debtor filed a notice that he would not
attend. He stated that he did not believe he could change the court’s
position, and he asserted that based on the court’s other rulings in the case
he was not being treated fairly and equally under the law.
On September 29, 2020, the bankruptcy court conducted the hearing
and denied Debtor’s motion for sanctions. The court determined that
6
Debtor failed to comply with several procedural requirements in filing and
noticing the motion but denied it on substantive grounds as well.4 The
court held that the funds in the Escrow Account were not property of the
estate and MidFirst did not violate § 362(a) by paying Riverside County. It
also held that Riverside County did not violate the stay by accepting the
payment. The court entered its order denying Debtor’s motion on October
7, 2020.
C. Debtor’s Motion To Vacate
On October 7, 2020, Debtor filed a motion to vacate the order denying
his motion for sanctions pursuant to Civil Rules 59(e) and 60(b), made
applicable by Rules 9023 and 9024. In November 2020, he filed an amended
motion to vacate. He argued that he was deprived of due process because
the court was biased against him and should have recused itself. Debtor
also argued that the court erred by refusing to strike MidFirst’s opposition
and by determining that the Escrow Account funds were not property of
the estate. Debtor attached several documents purporting to show that
MidFirst did not hold a valid interest in the note or deed of trust and that
Riverside County should not have been permitted to withdraw its claim.
Riverside County opposed the motion on the grounds that Debtor
did not present any newly discovered evidence or show that the court
committed a clear error of law. MidFirst also opposed the motion and
4
Because we affirm the court’s denial of the motion on substantive grounds, we
need not address the procedural bases for the court’s decision.
7
argued that Debtor had ample opportunity to be heard on the sanctions
motion but chose to submit the matter without argument.
MidFirst maintained that it was the real party in interest and cited the
declaration it supplied with its opposition to the motion for sanctions, in
which it stated that Debtor’s loan was serviced by MidFirst through its
servicing division, Midland Mortgage. Finally, MidFirst disputed Debtor’s
contention that it lacked standing to enforce the note and deed of trust but
noted that Debtor acknowledged that MidFirst’s standing was not related
to the sanctions motion.
MidFirst filed an objection to Debtor’s evidence attached to his
amended motion to vacate on the basis that the evidence was inadmissible
hearsay that did not relate or pertain to Debtor’s loan obligation with
MidFirst or the subject of Debtor’s motion to vacate. Debtor did not
respond to the evidentiary objection.
The bankruptcy court issued a tentative ruling stating its intent to
deny the amended motion to vacate and requiring the parties to appear at
the hearing on December 15, 2020. One day prior to the hearing, Debtor
filed an objection to the bankruptcy court’s tentative ruling and asserted
that oral argument was unnecessary since the court already denied the
requested relief.
Debtor did not appear at the hearing. On January 6, 2021, the
bankruptcy court entered orders sustaining MidFirst’s evidentiary
8
objections and denying Debtor’s amended motion to vacate for the reasons
stated on the record. Debtor timely appealed.
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and
157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158.
ISSUES
Did the bankruptcy court err by denying Debtor’s motion for
sanctions?
Did the bankruptcy court abuse its discretion by sustaining
MidFirst’s evidentiary objections and denying Debtor’s amended motion to
vacate?
STANDARDS OF REVIEW
We review de novo whether a creditor has violated the automatic
stay. In re Zotow,
432 B.R. at 257. Under de novo review, we “consider a
matter anew, as if no decision had been made previously.” Francis v.
Wallace (In re Francis),
505 B.R. 914, 917 (9th Cir. BAP 2014).
We review evidentiary objections for abuse of discretion. United
States v. Parks,
285 F.3d 1133, 1138 (9th Cir. 2002). We also review a
bankruptcy court’s denial of relief under Civil Rules 59 and 60 for abuse of
discretion. Carruth v. Eutsler (In re Eutsler),
585 B.R. 231, 235 (9th Cir. BAP
2017).
A bankruptcy court abuses its discretion if it applies an incorrect
legal standard or its factual findings are illogical, implausible, or without
9
support in the record. TrafficSchool.com, Inc. v. Edriver, Inc.,
653 F.3d 820, 832
(9th Cir. 2011).
DISCUSSION
Debtor argues that MidFirst and Riverside County willfully violated
the automatic stay and the binding obligations of the confirmed plan by
paying the tax obligation from the Escrow Account funds and by accepting
the payment. He also argues that the court abused its discretion by denying
the motion to vacate because he was deprived of a fair hearing, there was
insufficient evidence to justify denial of his motion for sanctions, and the
court made errors of law. Debtor provides no argument in his opening
brief that the court erred by sustaining MidFirst’s evidentiary objections
and he has therefore waived the issue. See Smith v. Marsh,
194 F.3d 1045,
1052 (9th Cir. 1999).
Moreover, Debtor has not provided a sufficient record to permit an
informed review of the orders he appeals.
A. We Have Discretion To Summarily Affirm Orders For Which
Debtor Did Not Provide An Adequate Record For Review.
The orders on appeal do not contain the bankruptcy court’s factual
findings or legal conclusions. Instead, they incorporate the findings and
conclusions made on the record at the September 29, 2020 and December
15, 2020 hearings.
An appellant’s failure to provide necessary transcripts is cause to
dismiss or summarily affirm the appeal. Hall v. Whitley,
935 F.2d 164, 165
10
(9th Cir. 1991); Kyle v. Dye (In re Kyle),
317 B.R. 390, 393 (9th Cir. BAP 2004).
We have discretion to disregard such a failure and decide the appeal on the
merits if, after reviewing the record, we determine that an informed review
is possible. In re Kyle,
317 B.R. at 393.
Notwithstanding Debtor’s failure to include the September 29, 2020
transcript, we exercise our discretion to consider the merits of Debtor’s
appeal of the court’s order denying his motion for sanctions. An informed
review is possible because the transcript is on the bankruptcy court’s
docket, MidFirst designated it as part of the record on appeal, and MidFirst
included it in its excerpts of record.
But the transcript of the December 15, 2020 hearing was not included
in any party’s excerpts of record, and it does not appear on the bankruptcy
court’s docket. The basis of the bankruptcy court’s decision to deny
Debtor’s amended motion to vacate and to sustain MidFirst’s evidentiary
objections was made orally on the record at the December 15, 2020 hearing
and incorporated into its written orders. We cannot determine whether the
court abused its discretion without reviewing the basis of the court’s
decision, and we are unable to do so without the transcript.
Consequently, we summarily affirm the bankruptcy court’s orders
denying the amended motion to vacate and sustaining MidFirst’s
evidentiary objections.
11
B. The Bankruptcy Court Did Not Err By Denying Debtor’s Motion
For Sanctions.
Debtor takes the position that payment of prepetition taxes from the
Escrow Account constitutes a willful violation of the stay by MidFirst and
Riverside County and is a violation of the binding terms of the plan.
Because Debtor has a remedy for the alleged stay violation under § 362(k),
no additional remedy is available under § 105(a). Snowden v. Check Into Cash
of Wash. Inc. (In re Snowden),
769 F.3d 651, 661 (9th Cir. 2014) (citing Adler v.
Roman (In re Roman),
283 B.R. 1, 14-15 (9th Cir. BAP 2002)). And, because
the alleged violation occurred prior to confirmation of the plan, it cannot be
a violation of the confirmed plan under § 1327(a).
A claim under § 362(k) requires a showing that an individual debtor
was injured by a willful violation of the stay. Fernandez v. G.E. Cap. Mortg.
Servs. (In re Fernandez),
227 B.R. 174, 180 (9th Cir. BAP 1998). Debtor has the
burden on each of these elements.
Id. at 181. The payment does not
constitute a violation of the stay if, as the bankruptcy court held, the funds
in the Escrow Account were not property of the estate. Debtor offers no
argument why the funds were estate property and instead attempts to shift
the burden by arguing that the creditors failed to present evidence that the
funds were not property of the estate.
Whether an interest claimed by Debtor is “property of the estate”
under § 541(a) is a question of federal law, but bankruptcy courts must
look to state law to determine “whether and to what extent the debtor has
12
any legal or equitable interests in property” as of the petition date.
McCarthy, Johnson & Miller v. N. Bay Plumbing, Inc. (In re Pettit),
217 F.3d
1072, 1078 (9th Cir. 2000).
The deed of trust provides that, in addition to principal and interest
payments, Debtor shall pay a sum to provide for payment of taxes,
insurance premiums, and other items related to the property. It specifies
that the lender may collect and hold such funds in an amount not to exceed
the maximum allowed under the Real Estate Settlement Procedures Act, 12
U.S.C. §§ 1201-2617 (“RESPA”), and provides that if there is a surplus of
such funds the lender shall account to Debtor as required by RESPA. The
deed of trust also requires the lender to refund any funds held by lender
only upon payment in full of all sums secured by the deed of trust.
The deed of trust is consistent with California law, which permits a
lender to require an impound, trust, or other account as a condition of a
loan secured by a deed of trust where, as in this case, the loan is
guaranteed or insured by a state or federal governmental agency. Cal. Civ.
Code § 2954. California law limits the amount a lender can require a
borrower to pay into such account to the amount permitted by RESPA5 and
5 12 U.S.C. § 2609(a) provides:
A lender, in connection with a federally related mortgage loan, may not require
the borrower or prospective borrower-
...
(2) to deposit in any such escrow account in any month beginning with the first
full installment payment under the mortgage a sum (for the purpose of assuring
payment of taxes, insurance premiums and other charges with respect to the property)
13
requires a lender to refund excess amounts within 30 days. Cal. Civ. Code
§ 2954.1.
Debtor’s interest in the Escrow Account funds was contingent on the
account having a surplus on the petition date. But Debtor acknowledges
that the Escrow Account was deficient on the petition date. He scheduled
the debt and proposed payments under the plan to cure the arrearage to
MidFirst, which included an Escrow Account shortage of $1,752.01.
Debtor did not have a right to refund of any of the Escrow Account
funds on the petition date under the deed of trust or California law. As a
result, the funds in the Escrow Account on the petition date were not
property of the estate and MidFirst’s payment of the taxes did not violate
the automatic stay.
Riverside County similarly did not violate the stay because it merely
accepted payment from MidFirst and did nothing to enforce its lien or
collect a prepetition debt from Debtor. See In re Zotow,
432 B.R. at 260.
in excess of the sum of (A) one-twelfth of the total amount of the estimated taxes,
insurance premiums and other charges which are reasonably anticipated to be paid on
dates during the ensuing twelve months which dates are in accordance with the normal
lending practice of the lender and local custom, provided that the selection of each such
date constitutes prudent lending practice, plus (B) such amount as is necessary to
maintain an additional balance in such escrow account not to exceed one-sixth of the
estimated total amount of such taxes, insurance premiums and other charges to be paid
on dates, as provided above, during the ensuing twelve-month period: Provided,
however, That in the event the lender determines there will be or is a deficiency he shall
not be prohibited from requiring additional monthly deposits in such escrow account to
avoid or eliminate such deficiency.
14
CONCLUSION
Based on the foregoing, we AFFIRM the bankruptcy court’s orders
denying Debtor’s motion for sanctions, denying Debtor’s amended motion
to vacate, and sustaining MidFirst’s evidentiary objections.
15
