FILED
MAY 7 2020
NOT FOR PUBLICATION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-19-1206-LGS
SERGIO LOPEZ MIRANDA; Bk. No. 2:13-bk-20738-ER
ESMERALDA MIRANDA,
Adv. No. 2:19-ap-01079-ER
Debtors.
ESMERALDA MIRANDA; SERGIO
LOPEZ MIRANDA,
Appellants,
v. MEMORANDUM*
BANK OF AMERICA NATIONAL
ASSOCIATION; SHELLPOINT
MORTGAGE SERVICING, LLC,
Appellees.
Submitted Without Argument on March 26, 2020
Filed – May 7, 2020
*
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.
Appeal from the United States Bankruptcy Court
for the Central District of California
Honorable Ernest M. Robles, Bankruptcy Judge, Presiding
Appearances: David A. Akintimoye on brief for Appellants; Jan T.
Chilton and Bernard J. Kornberg of Severson & Werson
on brief for Appellee Bank of America National
Association; Erin M. McCarthy and Mark S. Kraus of ZBS
Law, LLP, on brief for Appellee Shellpoint Mortgage
Servicing, LLC.
Before: LAFFERTY, GAN, and SPRAKER, Bankruptcy Judges.
INTRODUCTION
Sergio and Esmeralda Miranda (“Debtors”) appeal the bankruptcy
court’s orders granting summary judgment to Appellees Bank of America
National Association (“BANA”) and Shellpoint Mortgage Servicing, LLC
(“Shellpoint”), dismissing Debtors’ claims arising from Appellees’ alleged
breaches of Debtors’ confirmed chapter 111 plan. When Debtors filed their
chapter 11 petition, BANA held notes secured by deeds of trust on two of
Debtors’ rental properties. Preconfirmation, BANA assigned the deeds of
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code,
11 U.S.C. §§ 101-1532, “Rule” references are to the Federal Rules of
Bankruptcy Procedure, and “Civil Rule” references are to the Federal Rules of Civil
Procedure.
2
trust to Green Tree Servicing, LLC (“Green Tree”), and Nationstar
Mortgage, LLC (“Nationstar”), respectively, and notified Debtors that those
entities would be servicing the loans in the future. Although Debtors
thereafter made payments to the designated servicers and entered into a
loan modification with Nationstar and a stipulation with Green Tree,
Debtors identified the creditors in their proposed plan as BANA and “BAC
Homes Loans Serv LP aka Bank of America N.A.,” respectively. They
served notice of the confirmation hearing on BANA and Green Tree. The
parties dispute whether Nationstar was served with notice of the
confirmation hearing: no proof of service was filed reflecting such service,
but Debtors contend it was served. No party objected to plan confirmation,
and the bankruptcy court confirmed the plan.
Debtors allege that, about a year after confirmation, they began
receiving mortgage statements from the designated servicers that did not
reflect the terms of the confirmed plan, and they were unsuccessful in
obtaining any explanation from those entities. They sued BANA, Ditech
Financial, LLC (“Ditech”)–Green Tree’s successor-in-interest–and
Nationstar in state court for breach of contract. After the state court
dismissed those claims, Debtors moved to reopen their bankruptcy case to
file an adversary proceeding against BANA and Shellpoint Mortgage
Servicing, LLC (“Shellpoint”), Nationstar’s successor-in-interest, for breach
of contract and declaratory and injunctive relief.
3
BANA and Shellpoint each moved to dismiss the claims against
them. The bankruptcy court converted the motions to motions for
summary judgment and granted both, finding that (1) BANA was not a
creditor at the time of plan confirmation and thus was not bound by the
terms of the confirmed plan, and (2) Nationstar was not listed in the plan
and thus its successor-in-interest, Shellpoint, was not bound by the terms of
the confirmed plan.
We AFFIRM the bankruptcy court’s order granting summary
judgment to BANA. We REVERSE and REMAND the bankruptcy court’s
order granting summary judgment to Shellpoint.
FACTUAL BACKGROUND2
Debtors filed a chapter 11 petition in April 2013. At that time, they
owned rental properties located at 1118 and 1123-1123½ West 119th Street
in Los Angeles, California (“1118 Property” and “1123 Property”
respectively). As of the petition date, both properties were encumbered by
deeds of trust in favor of BANA, and Debtors were behind on the
corresponding note payments. We provide a short history of relevant
events with respect to those loans:
2
The parties did not supply a complete record. We have therefore exercised our
discretion to examine the bankruptcy court’s docket and imaged papers in Bk. No.
2:13-bk-20738 and Adv. No. 2:19-ap-01079-ER. Woods & Erickson, LLP v. Leonard (In re
AVI, Inc.),
389 B.R. 721, 725 (9th Cir. BAP 2008).
4
Loan Secured by the 1118 Property
In May 2013 BANA notified Debtors that Green Tree would begin
servicing the loan as of June 1, 2013.
On May 29, 2013, BANA filed a proof of claim (No. 2-1) for
$625,164.05, secured by the 1118 Property. On June 20, 2013, Green Tree
filed a Notice of Transfer of Claim No. 2-1 indicating that it had acquired
the claim from BANA and requesting that future notices and payments be
sent to Green Tree at designated addresses. On August 2, 2013, an
assignment of deed of trust from BANA to Green Tree was recorded.
Shortly thereafter, Debtors sought an order valuing the 1118 Property
at $320,000. The bankruptcy court granted the motion over Green Tree’s
objection.
On December 6, 2013, Debtors filed a proposed chapter 11 plan of
reorganization and disclosure statement, serving the notice of hearing for
approval of the disclosure statement on all creditors on the mailing matrix,
including BANA and Green Tree. Despite the fact that the claim secured by
the 1118 Property was held by Green Tree, Debtors identified BANA as the
claimant. In January 2014, Debtors and Green Tree filed a stipulation for
the treatment of Green Tree’s secured claim under the plan that was
consistent with the proposed plan. Green Tree voted to accept the plan (the
only impaired creditor to do so), and the bankruptcy court entered an order
confirming it on August 7, 2014.
5
Loan Secured by the 1123 Property
In April 2013, BANA notified Debtors that it was transferring
servicing of the loan on the 1123 Property to Nationstar. On July 11, 2013,
MERS, acting on behalf of BANA, recorded an assignment of the deed of
trust to Nationstar. No proof of service appears on the bankruptcy court
docket showing that Debtors served Nationstar with notice of the
bankruptcy case.
In August 2013, Debtors filed a motion to value the 1123 Property at
$250,000 and served it on BANA but not Nationstar. No opposition was
filed, and the court entered an order in October 2013 granting the motion.
In late November 2013, Debtors entered into a loan modification
agreement with Nationstar, which identified Nationstar as the lender.
Nevertheless, Debtors’ proposed chapter 11 plan, which was filed less than
two weeks later, identified the claimant for the claim secured by the 1123
Property as “BAC Homes Loans Serv LP aka Bank of America N.A.” and
proposed treatment differing from that specified in the loan modification.
The bankruptcy court docket contains no proofs of service reflecting
that Nationstar was served with notices of hearing on the disclosure
statement or the plan or any other relevant documents. But in July 2019, in
the adversary proceeding that is the subject of this appeal, Debtors
submitted the declaration of Elizabeth Akintimoye, a “volunteer” in
Debtors’ counsel’s law office. She testified in her declaration that in May
6
2013 she spoke with an agent of Nationstar and obtained the address where
notices should be sent. She stated that she remembered mailing several
documents to Nationstar on an unspecified date, including the order
setting bar date and the notice of hearing on confirmation. She further
stated that on May 22, 2014, copies of the approved disclosure statement,
scheduling order, and a ballot for voting on the plan were mailed to
Nationstar. Debtors also submitted a declaration stating that, in May 2013,
they informed Nationstar they were in bankruptcy and provided their
attorney’s contact information to a “representative” of Nationstar.
Nationstar did not file a proof of claim, nor did it submit a vote on the
plan.3
As noted, the bankruptcy court entered an order confirming the plan
in August 2014. The court entered a final decree in February 2015, and the
case was closed.
In 2017, Debtors filed a lawsuit in state court against BANA, Ditech
(Green Tree’s successor), and Nationstar for breach of contract, based on
the defendants’ alleged failures to comply with the terms of the confirmed
chapter 11 plan. The state court dismissed the claims as to all three
defendants, apparently concluding that it lacked jurisdiction over the
matter based on the confirmed plan’s provision that the bankruptcy court
3
The bankruptcy court docket does not reflect any documents filed on behalf of
Nationstar.
7
would retain jurisdiction until all payments were made.
In late 2018, Nationstar assigned the deed of trust on the 1123
Property to Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust,
as Owner Trustee on Behalf of CSMC 2018-RPL6 Trust, and servicing of the
loan was transferred to Shellpoint.
In March 2019, Debtors obtained an order reopening their chapter 11
case. They then filed an adversary proceeding against BANA and
Shellpoint, seeking against both defendants: (1) damages for breach of
contract; and (2) a declaratory judgment that the defendants were bound
by the terms of the confirmed chapter 11 plan and an order to comply with
those terms. In their complaint, Debtors acknowledged that, post-petition
and pre-confirmation, BANA had “hired” Ditech and “appointed”
Nationstar to service the two loans. Debtors alleged that they made
payments to both servicers in accordance with the confirmed plan, and that
in 2018, after Shellpoint took over the servicing of the loan on the 1123
Property, they made payments to Shellpoint. They further alleged that they
kept receiving mortgage statements from the servicers that did not reflect
the terms of the confirmed plan, including amounts due that differed from
the terms of the plan, different interest rates, and a longer loan term.
BANA and Shellpoint each filed motions to dismiss under Civil Rule
12(b)(6), applicable in bankruptcy via Rule 7012. Because evidence was
submitted with both motions and thus required the court to look beyond
8
the allegations of the complaint, the bankruptcy court issued orders
notifying the parties that the motions to dismiss would be treated as
motions for summary judgment; the orders also set deadlines for the
parties to submit additional briefing and evidence. With respect to
Shellpoint’s motion, the court requested that the parties focus their
additional briefing on whether Nationstar was bound by the plan, i.e.,
whether there was any evidence establishing that Nationstar was identified
in the plan or received appropriate notice.
BANA argued that the claims against it should be dismissed because
it was neither the servicer nor the lender on either loan at the time of plan
confirmation, having assigned all of its rights under the respective deeds of
trust. BANA thus asserted that all of Debtors’ claims against it must be
dismissed with prejudice.
Shellpoint argued that Debtor’s claims were barred by claim
preclusion based on the state court’s dismissal of their complaint, which
alleged the same causes of action against BANA, Nationstar, and Ditech. 4
Shellpoint also argued that neither it nor Nationstar were parties to the
confirmed plan and thus could not be held liable for breach of its terms.
Debtors opposed the motions. In their supplemental briefing, Debtors
argued that Nationstar had constructive and actual notice of the
4
In its ruling on summary judgment, the bankruptcy court rejected this
argument. Shellpoint did not cross-appeal that aspect of the court’s ruling.
9
bankruptcy filing before confirmation and that Shellpoint was thus
equitably estopped from asserting that it was not bound by the confirmed
plan. Debtors filed a declaration stating that they had recorded their
bankruptcy petition in May 2013 and that they had been notified that
Nationstar was the servicer of the loan on the 1123 Property but were
unaware that the deed of trust had been assigned. They also stated that
when they entered into the loan modification with Nationstar, they did not
notice that Nationstar was designated on the agreement as the lender.
In its supplemental briefing, Shellpoint argued that Debtors had
failed to identify Nationstar as a creditor nor had they properly served
Nationstar with notice of the bankruptcy case. It asserted that
Ms. Akintimoye’s declaration was insufficient to establish that Nationstar
had adequate notice. It did not file any contrary evidence.
The bankruptcy court issued tentative rulings granting both motions;
Debtors did not appear at the scheduled hearings to contest the rulings.
Thereafter, the bankruptcy court entered orders granting BANA’s and
Shellpoint’s motions for summary judgment, dismissing all claims. With
respect to BANA, the bankruptcy court found, in relevant part, that BANA
was not bound by the confirmed plan under principles of claim preclusion
because BANA was not the holder of the notes and deeds of trust for the
properties as of the date of plan confirmation, nor was it the servicer of the
loans.
10
As for Shellpoint, the bankruptcy court found that Debtors had not
established all of the elements required to show equitable estoppel.
Specifically, Debtors could not show that they were ignorant of the fact that
Nationstar was the lender on the debt secured by the 1123 Property
because they had reasonable inquiry notice based on the loan modification
agreement. The court concluded that Shellpoint was entitled to judgment
as a matter of law because Nationstar was not listed as a creditor in the
plan and thus was not a party bound by it.
Debtors timely appealed.
JURISDICTION
The bankruptcy court had jurisdiction under
28 U.S.C. §§ 1334 and
157(a).5 We have jurisdiction under
28 U.S.C. § 158.
5
The parties and the bankruptcy court did not raise the question of the
bankruptcy court’s post-confirmation jurisdiction, apparently relying on the provision
of the confirmed plan that the bankruptcy court retains jurisdiction until all plan
payments have been made. But a plan’s retention of jurisdiction provision does not end
the inquiry. Battle Ground Plaza, LLC v. Ray (In re Ray), 624 F3d 1124, 1136 n.8 (9th Cir.
2010). Rather, the Ninth Circuit instructs that the bankruptcy court must apply the
“close nexus” test for post-confirmation jurisdiction, which “encompasses matters
affecting the interpretation, implementation, consummation, execution, or
administration of the confirmed plan.”Wilshire Courtyard v. Cal. Franchise Tax Bd. (In re
Wilshire Courtyard),
729 F.3d 1279, 1287 (9th Cir. 2013) (citations and internal quotations
omitted). The close nexus test is met if a claim would likely require interpretation of the
confirmed plan or if it could affect the implementation and execution of the plan.
Montana v. Goldin (In re Pegasus Gold Corp.),
394 F.3d 1189, 1194 (9th Cir. 2005) (holding
that bankruptcy court had post-confirmation jurisdiction over breach of contract claims
based on alleged violations of plan provisions). Under a broad reading of this standard,
(continued...)
11
ISSUES
Whether the bankruptcy court erred in granting summary judgment
to BANA on Debtors’ claims against it.
Whether the bankruptcy court erred in granting summary judgment
to Shellpoint on Debtors’ claims against it.
STANDARD OF REVIEW
We review de novo the bankruptcy court’s grant of summary
judgment. Plyam v. Precision Dev., LLC (In re Plyam),
530 B.R. 456, 461 (9th
Cir. BAP 2015). “When we conduct a de novo review, we look at the matter
anew, the same as if it had not been heard before, and as if no decision
previously had been rendered, giving no deference to the bankruptcy
court’s determinations.” Barnes v. Belice (In re Belice),
461 B.R. 564, 572–73
(9th Cir. BAP 2011) (citations and quotations omitted).
We must apply the same legal standards that all federal courts are
required to apply in considering the propriety of summary judgment.
Marciano v. Fahs (In re Marciano),
459 B.R. 27, 35 (9th Cir. BAP 2011), aff’d,
708 F.3d 1123 (9th Cir. 2013). Summary judgment is appropriate “if the
movant shows that there is no genuine issue as to any material fact and the
movant is entitled to judgment as a matter of law.” Wank v. Gordon (In re
5
(...continued)
the claims at issue seem to satisfy the close nexus test, although it is not clear whether
consideration of the merits would “likely” require interpretation of the plan.
12
Wank),
505 B.R. 878, 886 (9th Cir. BAP 2014) (citing Civil Rule 56(a),
applicable in adversary proceedings by Rule 7056). An issue is genuine if
there is enough evidence for a reasonable trier of fact to make a finding in
favor of the non-moving party, and an issue is material if it might legally
affect the outcome of the case. Far Out Prods., Inc. v. Oskar,
247 F.3d 986, 992
(9th Cir. 2001) (citing Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248-49
(1986)).
DISCUSSION
A. The bankruptcy court did not err in granting BANA’s motion for
summary judgment.
The bankruptcy court found, based on the undisputed evidence
before it, that BANA was neither a creditor of the Debtors nor a servicer of
the subject loans as of the confirmation date. As such, the court concluded
that BANA was not bound by the plan because it had no legal or equitable
interest in the property dealt with by the plan.
Debtors argue that the bankruptcy court erred in this determination
because BANA was a creditor on the petition date and was served with
notice of the hearing on plan confirmation and did not object. Debtors cite
Ground Systems, Inc. v. Albert (In re Ground Systems, Inc.),
213 B.R. 1016, 1020
(9th Cir. BAP 1997), and Nugent v. American Broadcasting Systems, Inc., 1
F. App’x 633, 634 (9th Cir. 2001), for the rule that a creditor cannot object to
a plan post-confirmation. It is correct that a creditor that objects to its plan
13
treatment must formally object or otherwise be bound by the plan terms,
see Trulis v. Barton,
107 F.3d 685, 691 (9th Cir. 1995), but that rule
presupposes that the party in question is actually a creditor. As the
bankruptcy court found, BANA was not a creditor at the time the plan was
confirmed. In fact, the record shows that BANA was no longer a creditor of
the Debtors by no later than August 2, 2013. Debtors filed their proposed
plan and disclosure statement approximately four months later. They cite
no authority for the notion that BANA had a duty to object to a plan that
had absolutely no impact on its rights. Accordingly, Debtors have not
shown that the bankruptcy court erred in granting summary judgment
dismissing all claims against BANA.
B. The bankruptcy court erred in granting summary judgment to
Shellpoint.
In granting Shellpoint’s motion for summary judgment, the
bankruptcy court found that Shellpoint was not bound by the plan because
Nationstar was not listed as a creditor in Debtors’ plan and therefore could
not be considered a party to the confirmed plan or capable of breaching it.
The court also rejected Debtors’ assertion that Shellpoint was equitably
estopped from arguing that it was not bound by the plan.
1. The evidence appears to have raised a genuine issue of
material fact regarding whether Nationstar had adequate
notice of the plan and its right to object.
As noted, the bankruptcy court specifically requested briefing on the
14
issue of whether there was evidence establishing that Nationstar ever
received appropriate notice of Debtors’ plan. But in its decision, the
bankruptcy court did not fully address that issue, finding that Debtors’
failure to list Nationstar in the plan negated any argument that it was a
party to the confirmed plan or capable of breaching it. But this is not the
end of the analysis.
Section 1141(a) provides that the provisions of a confirmed plan bind
the debtor and “any creditor.” There is no dispute that Nationstar was a
creditor at the time of confirmation. Accordingly, if it had notice adequate
to satisfy due process, it (and Shellpoint) would be bound by the plan. M &
I Thunderbird Bank v. Birmingham (In re Consol. Water Utils., Inc.),
217 B.R.
588, 590 (9th Cir. BAP 1998) (“As long as due process is complied with, a
confirmed plan binds all entities that hold a claim or interest, even if they
are not scheduled, have not filed a claim, have not received a distribution
under the plan or are not permitted to retain an interest under such plan.”
(citation omitted)). This is true even if the provisions of the confirmed plan
violate the Bankruptcy Code and Rules. See United Student Aid Funds, Inc. v.
Espinosa,
559 U.S. 260, 272 (2010).
On the other hand, if Nationstar did not receive notice sufficient to
satisfy due process, it would not be bound by the plan terms. Humphries v.
EMC Mortg. Corp. (In re Mack), Nos. CC–06–1123 & 1242–MoDK,
2007 WL
7545163 at *5 (9th Cir. BAP Mar. 28, 2007). See also Levin v. Maya Constr. Co.
15
(In re Maya Constr. Co.),
78 F.3d 1395, 1398 (9th Cir. 1996) (creditor whose
claim was known to debtor but who was not served with notice of the time
fixed for filing objections to the plan, confirmation hearing, and other
relevant notices was not bound by the confirmed plan.). Due process
requires notice “reasonably calculated, under all the circumstances, to
apprise interested parties of the pendency of the action and afford them an
opportunity to present their objections.” Espinosa,
559 U.S. at 272 (quoting
Mullane v. Cent. Hanover Bank & Tr. Co.,
339 U.S. 306, 314 (1950)).
It is undisputed that Debtors never listed Nationstar as a creditor in
their bankruptcy case or plan or added it to the mailing matrix, and there
are no proofs of service on the bankruptcy court docket showing that
Nationstar was served with any notices during the bankruptcy case. But
Ms. Akintimoye testified in her declaration that she sent the notice of
claims bar date and notice of hearing on plan confirmation to Nationstar on
an unspecified date, and on May 22, 2014, copies of the approved
disclosure statement, scheduling order, and a ballot for voting on the plan
“were mailed” to Nationstar. Assuming those documents were sent to the
correct address, they would have been timely under the court’s scheduling
order. Additionally, Debtors testified in their declaration that they had
informed Nationstar in May 2013 that they were in bankruptcy, although
16
they did not give a precise date or state how notice was given or to whom.6
In a footnote to its findings and conclusions, the bankruptcy court
acknowledged Ms. Akintimoye’s declaration as it pertained to the
equitable estoppel analysis and concluded it was irrelevant Even though
the court had specifically asked the parties to address whether Nationstar
had appropriate notice of the plan, the court did not consider whether the
Debtors’ evidence was sufficient to raise a genuine issue of material fact
precluding summary judgment on the merits.7 Admittedly,
Ms. Akintimoye’s declaration is missing some critical information. The
declaration was filed in July 2019, while the events testified to occurred in
2013 and 2014. Ms. Akintimoye did not explain how she had a clear
recollection of those events. Further, it is not clear how she had personal
knowledge that certain documents were mailed on May 22, 2014, as her
declaration states only that those documents were mailed, not that she
personally mailed them. Nor did she explain why no proofs of service
evidencing the purported mailings to Nationstar were filed in the
bankruptcy court. Additionally, Ms. Akintimoye did not provide the
contact name or address to which she sent documents. Finally, the
6
The assignment of deed of trust to Nationstar was executed on May 14, 2013 and
recorded July 11, 2013, so it is not clear whether Nationstar was a creditor, as opposed
to a servicer, when Debtors allegedly informed them of their bankruptcy case.
7
Surprisingly, Debtors did not raise this issue in their appellate brief.
17
declaration is inconsistent with Debtors’ assertion that they did not know
Nationstar was a creditor, i.e., an entity entitled to notice of confirmation
and an opportunity to object and to vote on the plan.
Certainly, Ms. Akintimoye’s declaration is self-serving and
uncorroborated. But this does not necessarily mean that it is insufficient to
create a genuine issue of material fact precluding summary judgment.
Declarations filed in summary judgment proceedings are usually self-
serving because the parties submitting them are attempting to support
their positions; accordingly, this by itself is not a sufficient ground to
disregard that evidence. Nigro v. Sears, Roebuck & Co.,
784 F.3d 495, 497 (9th
Cir. 2015). It may be appropriate to disregard a declaration that states only
conclusions, and not facts that would be admissible evidence, or one that
lacks detailed facts and supporting evidence, or one that contradicts prior
testimony.
Id. at 497-98; Kennedy v. Allied Mut. Ins. Co.,
952 F.2d 262, 266
(9th Cir.1991). Here, although Ms. Akintimoye’s declaration testimony is
less than precise, it consists solely of facts that she asserts are based on her
personal knowledge and does not contradict any other evidence in the
record. Notably, Shellpoint did not provide any evidence to the contrary.
On summary judgment, the trial court is to believe the evidence of
the non-moving party, and all justifiable inferences must be drawn in favor
of that party. Anderson,
477 U.S. at 255. At the same time, if the non-moving
party bears the ultimate burden of proof on an element at trial, that party
18
must make a showing sufficient to establish the existence of that element in
order to survive a motion for summary judgment. Celotex Corp. v. Catrett,
477 U.S. 317, 322–23 (1986). Using these standards, we cannot say that
Ms. Akintimoye’s declaration was insufficient to establish a genuine
dispute of material fact on whether Nationstar had notice of its right to
object to Debtors’ plan. See Nigro, 784 F.3d at 498 (testimony based on
personal knowledge that was legally relevant and internally consistent was
sufficient to establish a genuine dispute of material fact). Accordingly, we
must remand for the bankruptcy court to consider this evidence in light of
the standards recited above.
2. The bankruptcy court did not err in rejecting Debtors’
equitable estoppel argument.
The bankruptcy court rejected Debtors’ argument that Shellpoint was
equitably estopped from arguing that Nationstar was not bound by the
plan. The court applied California equitable estoppel law and found that
Debtors could not establish that they were ignorant of the truth because
they had inquiry notice that Nationstar was a creditor.8
The bankruptcy court applied the California standard for equitable
8
In California, the party asserting equitable estoppel must prove five elements:
“(a) a representation or concealment of material facts; (b) made with knowledge, actual
or virtual, of the facts; (c) to a party ignorant, actually and permissibly, of the truth;
(d) with the intention, actual or virtual, that the ignorant party act on it; and (e) that
party was induced to act on it.” Simmons v. Ghaderi,
44 Cal. 4th 570, 584 (2008) (citing 13
Witkin, Summary of Cal. Law, Equity, § 191 at 527-528 (2005)).
19
estoppel because that was the law cited to it by the Debtors, and Shellpoint
did not dispute that it was the correct law to apply. But while the adversary
proceeding involved state law breach of contract claims, the issue being
decided in the equitable estoppel context was whether Nationstar (and
thus Shellpoint) was bound by the plan under § 1141. Accordingly, federal
equitable estoppel principles apply, which differ somewhat from
California’s.
In the Ninth Circuit, “[t]he doctrine of equitable estoppel, often
referred to as fraudulent concealment, is based on the principle that a party
‘should not be allowed to benefit from its own wrongdoing.’” Estate of
Amaro v. City of Oakland,
653 F.3d 808, 813 (9th Cir. 2011) (quoting Collins v.
Gee W. Seattle LLC,
631 F.3d 1001, 1004 (9th Cir. 2011)). The party asserting
equitable estoppel carries the burden of pleading and proving the
following elements: (1) knowledge of the true facts by the party to be
estopped, (2) intent to induce reliance or actions giving rise to a belief in
that intent, (3) ignorance of the true facts by the relying party, and (4)
detrimental reliance.
Id. (citing Bolt v. United States,
944 F.2d 603, 609 (9th
Cir. 1991)). Although these elements are not facially distinguishable from
those required under California law, courts applying the federal standard
to the question of the asserting party’s ignorance have focused on whether
that ignorance resulted from the other party’s fraudulent concealment or
misrepresentation.
Id. Put another way, even if the party asserting
20
equitable estoppel knows the true facts, the doctrine may still apply if that
party reasonably relied on the other party’s statement or conduct in failing
to act.
Id. (citing Stitt v. Williams,
919 F.2d 516, 522 (9th Cir. 1990)).
This error, however, was harmless. Under the federal standard,
Debtors would have needed to submit, at a minimum, evidence that could
reasonably be construed to support a finding that Nationstar had concealed
or misrepresented facts in an attempt to fraudulently mislead them. See
Aronsen v. Crown Zellerbach,
662 F.2d 584, 595 (9th Cir. 1981) (reversing and
remanding grant of summary judgment to defendant, in part due to factual
disputes relevant to equitable estoppel, noting, “[o]n review of a grant of
summary judgment, it must appear that the facts as alleged could not
reasonably be construed as permitting equitable estoppel or tolling.”)
(citations omitted)). The record contains no evidence that would support
such a finding.
CONCLUSION
For the reasons explained above, Debtors have not shown that the
bankruptcy court erred in granting summary judgment to BANA. We thus
AFFIRM that order. But because there was potentially an issue of fact
precluding summary judgment with respect to Shellpoint’s motion, the
bankruptcy court erred in granting it. We thus REVERSE and REMAND
for further proceedings in accordance with this disposition.
21
