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Bank of New York Mellon v. K&P Homes, LLC

United States District Court, D. Nevada

October 5, 2017

BANK OF NEW YORK MELLON, Appellant,
v.
K&P HOMES, LLC, et al. Appellees.

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This case was taken on appeal from the Bankruptcy Court on June 10, 2016. Bank of New York Mellon (“BNYM”) filed its Opening Brief on September 12, 2016. [ECF No. 18]. K&P Homes, LLC (“K&P”), filed an Answering Brief on September 19, 2016. [ECF No. 22]. BNYM filed its Reply Brief on October 3, 2016. [ECF No. 23].

         II. BACKGROUND

         A. Factual Background

         The following factual findings are taken from the bankruptcy court's order. On December 30, 2005, Countrywide KB Home Loans recorded a Deed of Trust with the Clark County recorder. The deed reflected that the debtors, Ursula Moore and Marlon Moore, obtained a loan for the property at issue in this case. On February 29, 2008, the debtors filed their voluntary petition for Chapter 7 bankruptcy, and in the petition stated they intended to surrender the property. The debtors listed Countrywide in the schedules, but did not list Alliante, a Homeowners' Association, in the schedules.

         On March 2, 2008, Countrywide was served with a notice of the Chapter 7 bankruptcy petition. On April 14, 2008, the trustee stated “[t]here are no scheduled assets to administer.” On June 23, 2008, the bankruptcy court entered the discharge order. On December 16, 2008, Alliante recorded a notice of default and an election to sell under the property at issue in this case, pursuant to a homeowners' association lien. Alliante had not sought relief from the automatic bankruptcy stay when it recorded the notice.

         On November 4, 2009, Alliante recorded a notice of trustee's sale regarding the property. On January 23, 2009, the bankruptcy court entered the final decree and closed the case. Sometime in 2010, Alliante recorded a second notice of trustee sale regarding the property.

         On February 17, 2012, Bank of America recorded an assignment of deed of trust with the Clark County recorder. Under the assignment, all beneficial interest in the property was assigned to BNYM. On February 20, 2013, Alliante recorded a notice of foreclosure sale regarding the property.

         K&P purchased the property at a foreclosure sale held March 15, 2013. On March 20, 2013, K&P recorded a foreclosure deed. Under this deed, Alliante granted and conveyed the property to K&P Homes.

         On August 8, 2014, K&P filed a quiet title action in state court. On September 5, 2014, BNYM filed an answer and counterclaim in the state court case. On June 17, 2015, BNYM filed a motion for summary judgment in the state court case and alleged that there had been a violation of the automatic stay in bankruptcy court, by Alliante.

         B. Bankruptcy Court Order

         On July 6, 2015, K&P filed a motion to reopen the bankruptcy case, and for the bankruptcy court to retroactively annul the stay order. The bankruptcy court found that, under In re Pecan Groves of Arizona, 951 F.2d 242 (9th Cir. 1991), BNYM lacked standing to allege the invalidity of the sale and violation of the stay. The bankruptcy court interpreted Pecan Grove to hold that creditors do not have standing to appeal a trustee's unsuccessful motion, and that BNYM lacked standing for purposes of objecting to the motion to annul the stay. Therefore, it addressed K&P's motion and disregarded BNYM's position on the issue.

         The bankruptcy court applied the 12-factor Fjeldsted test from In re Fjeldsted, 293 B.R. 12 (9th Cir. B.A.P. 2003), and determined that annulment of the automatic stay, prior to June 23, 2008, was appropriate. It entered its Annulment Order on May 3, 2016. This then rendered the 2008 ...


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