- 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 DIANNE L. AKZAM, No. 2:16-cv-02274-TLN 12 Appellant, 13 v. ORDER 14 U.S. BANK NA, as Trustee, 15 Appellee. 16 17 This matter is before the Court on Appellee U.S. Bank NA, as Trustee for Wells Fargo 18 Asset Securities Corporation, Mortgage Pass-Through Certificates Series 2006-AR4’s 19 (“Appellee”) Motion to Dismiss Appeal as Moot. (ECF No. 27.) Appellant Dianne L. Akzam 20 (“Appellant”) opposes the Motion (ECF No. 29) and Appellee replied. (ECF No. 34.) For the 21 reasons set forth below, Appellee’s Motion to Dismiss is GRANTED and the appeal is therefore 22 DISMISSED. 23 I. FACTUAL AND PROCEDURAL BACKGROUND 24 On April 7, 2010, Appellant and her brother executed a “Deed Absolute” with the original 25 borrower for the real property located at 802 Ohio Street in Vallejo, California (the “Property”). 26 (ECF No 19-1, Appendix to Appellant’s Brief, at 181.) Between 2010 and 2015, Appellant and 27 her brother initiated multiple bankruptcy proceedings. (Id. at 42‒45.) As is relevant here, on 28 December 11, 2015, Appellant filed for Chapter 13 bankruptcy protection in the Eastern District 1 of California Bankruptcy Court, case number 15-29555-E-13C. (Id. at 5.) Appellant’s 2 bankruptcy petition triggered the protections of 11 U.S.C. § 362(a), which provides for an 3 automatic stay of any action that would affect possession of the Property. On May 17, 2016, 4 Appellee filed a Motion for In Rem Relief from the Automatic Stay. (ECF No 19-1 at 23‒45.) 5 On July 3, 2016, the bankruptcy court granted Appellee’s Motion for Relief from the Automatic 6 Stay regarding the Property pursuant to 11 U.S.C. § 362(d)(1) and § 362(d)(4) (respectively, “§ 7 362(d)(1)” and “§ 362(d)(4)”). (ECF No. 19-1 at 74‒75.) On July 15, 2016, Appellant moved to 8 vacate the court’s order granting relief from the automatic stay (id. at 77‒87), which the court 9 denied on September 20, 2016 (id. at 110‒113). Appellant thereafter filed her notice of appeal 10 and elected to have her appeal heard by the United States District Court rather than by the 11 Bankruptcy Appellate Panel. (Id. at 113.) 12 On September 23, 2016, the present appeal was filed in this Court. (ECF No. 1.) On May 13 25, 2017, after receiving several time extensions, Appellant filed her opening brief. (ECF No. 14 19.) On June 26, 2017, Appellee filed its brief with the Court. (ECF No. 21.) On July 11, 2017, 15 Appellant replied. (ECF No. 22.) On August 28, 2017, the Court took the appeal under 16 submission. (ECF No. 26.) On November 3, 2017, the bankruptcy court dismissed Appellant’s 17 Chapter 13 case. (ECF No. 27-1 at 27‒28.) On January 22, 2019, the Property was sold at a 18 Trustee’s Sale. (ECF No. 27-1 at 30.) On April 16, 2019, Appellee filed a Motion to Dismiss 19 Appeal as Moot, which is presently before the Court. (ECF No. 27.) 20 II. STANDARD OF REVIEW 21 The district courts have jurisdiction to hear appeals from final judgment and order in a 22 bankruptcy proceeding under 28 U.S.C. § 158(a)(1) and (c)(1). A district court reviews the 23 bankruptcy court’s conclusions of law de novo and reviews determinations of fact for clear error. 24 See Motor Vehicle Cas. Co. v. Thorpe Insulation Co. (In re Thorpe Insulation Co.), 677 F.3d 869, 25 879 (9th Cir. 2012). 26 III. STANDARD OF LAW 27 As set forth in Castaic Partners II, LLC v. DACA-Castaic, LLC (In re Castaic Partners II, 28 LLC), 823 F.3d 966, 969 (9th Cir. 2016), "[i]n bankruptcy, mootness comes in a variety of 1 flavors: constitutional, equitable, and statutory." Clear Channel Outdoor Inc. v. Knupfer (In re 2 PW, LLC), 391 B.R. 25, 33 (B.A.P. 9th Cir. 2008). Constitutional mootness is jurisdictional and 3 derives from the case-or-controversy requirement of Article III. Id. Equitable mootness concerns 4 whether changes to the status quo following the order being appealed make it impractical or 5 inequitable to "unscramble the eggs." Id. (quoting Baker & Drake, Inc. v. Pub. Serv. Comm'n (In 6 re Baker & Drake, Inc.), 35 F.3d 1348, 1352 (9th Cir. 1994)). Finally, statutory mootness 7 codifies part, but not all, of the doctrine of equitable mootness. Id. at 35. 8 Article III of the Constitution limits federal court jurisdiction to the consideration of 9 “cases” and “controversies.” See U.S. Const. Art. III, § 2, cl. 1; Pub. Utils. Comm’n v. Fed. 10 Energy Regulatory Comm’n, 100 F.3d 1451, 1458 (9th Cir. 1996). An appeal is constitutionally 11 moot when the appellate court cannot give a successful appellant any effective relief. In re 12 Thorpe Insulation Co., 677 F.3d at 880. Accordingly, “if an event occurs while a case is pending 13 on appeal that makes it impossible for the court to grant ‘any effectual relief whatever’ to a 14 prevailing party, the appeal must be dismissed.” Church of Scientology of Cal. V. United States, 15 506 U.S. 9, 12 (1992) (quoting Mills v. Green, 159 U.S. 651, 653 (1895)). Also, “[i]n a 16 bankruptcy appeal, when the underlying bankruptcy case is dismissed and that dismissal is 17 allowed to become final, there is likely no longer any case or controversy ‘with respect to issues 18 directly involving the reorganization of the estate.’” Castaic Partners II, LLC v. DACA-Castaic, 19 LLC (In re Castaic Partners II, LLC), 823 F.3d 966, 969 (9th Cir. 2016) (citation omitted). 20 IV. ANALYSIS 21 By way of the present appeal, Appellant seeks review of the bankruptcy court’s order 22 granting relief from the automatic stay as to the Property. Appellee argues that the appeal is now 23 moot because the stay relief has expired. As noted above, relief from the automatic stay was 24 granted in the underlying bankruptcy action under two subsections of the Bankruptcy Code: § 25 362(d)(1) and § 362(d)(4). Under § 362(d)(1), the court may grant relief from the automatic stay 26 for cause, while under § 362(d)(4) the court may grant relief if it finds that the filing of the 27 bankruptcy petition was part of a scheme to delay, hinder, or defraud creditors. 11 U.S.C. §§ 28 362(d)(1) and 362(d)(4). Appellee addresses both grounds in its Motion, concluding that under 1 either or both, the appeal is now moot. (ECF No. 27 at 3‒4.) 2 First, Appellee argues that because the underlying bankruptcy case has been dismissed — 3 and Appellant did not appeal that dismissal — the final dismissal of the case vacated the 4 automatic stay thereby mooting the current appeal as it relates to the relief granted under § 5 362(d)(1). (ECF No. 27 at 3.) Further, Appellee asserts the appeal is also moot under § 362(d)(1) 6 because the Property was sold at a non-judicial foreclosure sale on January 5, 2019. (Id. at 4.) 7 As for the relief granted under § 362(d)(4), Appellee asserts the order granting relief was 8 entered on July 3, 2016 and expired on July 4, 2018, and therefore the in rem relief provided by 9 the order under § 362(d)(4) is no longer in effect, rendering the current appeal moot for that 10 reason as well. (Id.) However, Appellee acknowledges that an order granting relief from stay 11 under section 362(d)(4) may survive the dismissal of the bankruptcy in some cases.1 (Id.) 12 In opposition, Appellant argues the appeal is not moot because she has filed a quiet title 13 action in state court, and the outcome of this appeal may have a preclusive effect on that action. 14 (ECF No. 29 at 4.) Appellant specifically argues her circumstances may qualify for an exception 15 to the mootness doctrine. First, Appellant contends that there may be collateral legal 16 consequences to her state court action if this Court does not decide the underlying motion for 17 relief. (Id. at 7‒8.) Second, she asserts it may be possible for this Court to fashion some kind of 18 relief in this case since the real property was sold to a creditor who is party to the appeal, citing In 19 re Sun Valley Ranches, Inc., 823 F.2d 1373, 1374 (9th Cir. 1987) in support thereof. (Id.) Third, 20 Appellant argues the Court may choose to review an otherwise moot case under the public 21 interest exception recognized in the Nebraska Supreme Court case of Davis v. Settle, 266 Neb. 22 232 (2003). (Id.) Finally, Appellant argues the Court may hear the case based on the concept of 23 24 1 Appellee additionally requests the Court take judicial notice of several documents attached in support of its Motion. Pursuant to Federal Rule of Evidence 201, the Court takes 25 judicial notice of the following Orders from the Bankruptcy Court filed in the matter of In re Dianne Akzam, Case No. 15-29555 (Bankr. E.D. Cal. 2015): (1) Order on Motion for Relief from 26 the Automatic Stay; (2) Order on Motion to Vacate; (3) Notice of Appeal; (4) Order on Motion to 27 Dismiss Case. The Court also takes notice of the Trustee’s Deed Upon Sale, No. 201900003644, recorded in the Salon County Assessor/ Recorder’s Office. (ECF No. 27-1.) 28 1 a “self-perpetuating situation,” which the Court understands to be an assertion that this case may 2 fall under the “capable of repetition, but escaping review” exception to the mootness doctrine. 3 (Id. at 10‒11.) 4 In reply,2 Appellee first contends Appellant’s assertion of a hypothetical preclusive effect 5 in her state quiet title action is insufficient to invoke the collateral legal consequences doctrine. 6 (ECF No. 34 at 2.) Second, Appellee argues In re Sun Valley Ranches, Inc., 823 F.2d at 1374, 7 does not apply since the Ninth Circuit has limited this rule to cases in which there is a statutory 8 right of redemption. See Onouli-Kona Land Co. v. Estate of Richards, 846 F.2d 1170, 1173 (9th 9 Cir 1988) (“The exception is available when real property is sold to a creditor who is a party to 10 the appeal, but only when the sale is subject to statutory rights of redemption.”). Appellee further 11 contends that no right of redemption exists after a non-judicial foreclosure sale, and even if the 12 rule did apply, the appeal would still be moot as the relief from stay period has already expired by 13 operation of law. (ECF No. 34 at 3.) Third, Appellee notes that the Ninth Circuit does not 14 recognize the public interest exception. See Pub. Utils. Comm’n v. Fed. Energy Regulatory 15 Comm’n., 100 F.3d at 1460. Finally, Appellee contends that the “capable of repetition, but 16 escaping review” exception only applies when the challenged action is (1) too short in duration to 17 be fully litigated, and (2) there is a reasonable expectation that the same party would be subject to 18 the same action again. Id. at 1459. Appellee argues since Appellant had three years from the 19 filing of the appeal until the foreclosure to seek a stay pending appeal and failed to do so, and 20 since she did not show any indication that Appellee would foreclose on her again, this exception 21 does not apply. (ECF No. 34 at 3.) 22 The Court cannot fashion any effective relief for Appellant when the stay relief has 23 expired under both grounds upon which it was granted. Appellant’s bankruptcy case was 24 dismissed on November 3, 2017, and she did not appeal the dismissal. Under Federal Rule of 25 Bankruptcy Procedure 8002(a)(1), the order of dismissal became final 14 days later on November 26 17, 2017. At that time, the bankruptcy court no longer had jurisdiction to order a stay. See In re 27 28 2 The Court considers Appellee’s Reply despite its untimely filing. (ECF No. 34.) 1 Castaic Partners II, LLC, 823 F.3d at 969. Therefore, this appeal is moot with respect to Section 2 362(d)(1). 3 As Appellee acknowledges, however, the bankruptcy court also granted relief under § 4 362(d)(4), which “shall be binding in any other case under this title purporting to affect such real 5 property filed not later than 2 years after the date of the entry of such order by the court.” 11 6 U.S.C. § 362(d)(4). An order granting relief under this section may survive the dismissal of the 7 bankruptcy in some cases. See In re Benzeen Inc., BAP No. CC-18-1097-TaLS, 2018 WL 8 6627275, at *4 (B.A.P. 9th Cir. Dec. 18, 2018). Here, the order was entered on July 3, 2016 and 9 expired on July 4, 2018. The in rem relief provided by the order is no longer in effect, and the 10 Court therefore has no power to undo an order that has already expired. Consequently, the appeal 11 is moot with respect to § 362(d)(4). 12 Furthermore, Appellant does not demonstrate that she falls under any of the mootness 13 exceptions. The claimed hypothetical preclusive effect on her state court action is insufficient to 14 invoke the collateral legal consequence exception. See Center for Biological Diversity v. Lohn, 15 511 F.3d 960, 965 (2007) (finding no exception when “harm is merely hypothetical or 16 speculative”). Indeed, Appellant does not explain how a mooted judgment in this action would 17 have a preclusive effect on her state court case, and the Court does not otherwise perceive any 18 collateral legal consequences. Next, Appellee is correct that the exception in In re Sun Valley 19 Ranches, 823 F.2d 1373, does not apply unless there is a statutory right of redemption not present 20 here. Onouli-Kona Land Co., 846 F.2d at 1173. Additionally, the Ninth Circuit does not 21 recognize the public interest exception to mootness. See Pub. Utils. Comm’n v. Fed. Energy 22 Regulatory Comm’n., 100 F.3d at 1460; see also Vegas Diamond Props., LLC v. FDIC, 669 F.3d 23 933, 937 (9th Cir. 2012) (holding considerations of public interest, standing alone, are not 24 sufficient to overcome the limitation of the case-or-controversy requirement of Article III). 25 Finally, the “capable of repetition, but escaping review” exception does not apply since Appellant 26 cannot demonstrate that she did not have an opportunity to fully litigate the underlying issues, 27 especially since—to the Court’s knowledge—the state court litigation is continuing. Moreover, 28 Appellant has shown no likelihood that Appellee would foreclose on her again, precluding 1 application of this exception. See Id. at 1459. 2 Consequently, the Court finds it cannot grant effective relief and, because none of the 3 mootness exceptions apply, the Court GRANTS Appellee’s Motion to Dismiss Appeal as Moot. 4 V. CONCLUSION 5 For the reasons set forth above, the Court hereby GRANTS Appellee’s Motion to Dismiss 6 Appeal as Moot. The appeal is hereby DISMISSED and the Clerk of the Court is directed to 7 close this case. 8 IT IS SO ORDERED. 9 DATED: April 7, 2020 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Document Info
Docket Number: 2:16-cv-02274
Filed Date: 4/8/2020
Precedential Status: Precedential
Modified Date: 6/19/2024