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In re Graham

United States District Court, D. Nevada

July 18, 2018

In re Carlton E Graham and Hyacinth A. Graham Debtors.
v.
PNC MORTGAGE, A Division of PNC BANK, N.A., Appellees. Carlton E. Graham and Hyacinth A. Graham, Appellants,

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This case involves an appeal of a bankruptcy court order. Appellants Carlton and Hyacinth Graham (collectively, “Appellants”) appeal from the (a) Order Granting Motion for Relief from the Automatic Stay (California Property); (b) Order Granting Motion for Relief from the Automatic Stay (Nevada Property) (collectively, the “Stay Relief Orders”); (c) Order Denying Debtors' Motion to Declare PNC Mortgage, a Division of PNC Bank, N.A. an Unsecured Creditor (the “Denial Order”); and (d) Order Overruling Debtors' Objection to Claim 19-1 of PNC Mortgage (“Nevada Claim Allowance Order, ” and together with the Stay Relief Orders and Denial Order, the “Orders”), entered by the U.S. Bankruptcy Court for the District of Nevada (the “Bankruptcy Court”) on February 13, 2015.

         The Notice of Appeal was filed on February 23, 2015. (ECF No. 1). The Opening Brief was filed by Appellants on March 25, 2015. (ECF No. 5). Appellee PNC Mortgage (“Appellee”) filed its Answering Brief concurrently with appendices on April 23, 2015. (ECF Nos. 8-10). The instant Motion to Dismiss Appeal was filed on October 10, 2016. (ECF No. 11). Appellants Responded on October 25, 2016, and Appellee Replied on November 2, 2016. (ECF Nos. 12, 13). Appellants filed a Motion to Stay Order for Temporary Writ of Restitution or Stop Eviction on November 28, 2016. (ECF No. 14). Appellee Responded on December 8, 2016. (ECF No. 15).

         II. FACTUAL BACKGROUND

         The Court finds the following facts relevant to this appeal. In April 2003, Appellants obtained a mortgage loan from National City Mortgage Co. d/b/a Accubanc Mortgage in the original principal amount of $322, 700 (the “Nevada Note”), to finance the purchase of residential property located at 2706 Riceville Drive, Henderson, Nevada 89052 (the “Nevada Property”). The Nevada Note is secured by a first-position Deed of Trust recorded on April 24, 2003 (the “Nevada Deed of Trust”) in the Official Records in the Clark County Recorder's Office (“Official Records”).

         Also in 2003, Appellants obtained another mortgage loan from National City Mortgage Co. d/b/a Accubanc Mortgage in the original principal amount of $296, 000 (the “California Note, ” and together with the Nevada Note, the “Notes”), to finance the purchase of residential property located at 841 South Whitney Court, San Dimas, California (the “California Property, ” and together with the Nevada Property, the “Properties”). The California Note is secured by a first-position Deed of Trust recorded on June 9, 2003 in the Official Records, with National City Mortgage Company serving as trustee thereunder, for the benefit of National City Mortgage Co.

         Appellee, as successor by merger, is the holder of both the Notes and the Deeds of Trust.

         On March 27, 2012, Appellants filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code. On June 11, 2012, Appellee timely filed a secured proof of claim (assigned as Claim 12-1) in the amount of $200, 074.29 relating to the California Property. On August 13, 2012, Appellee timely filed a secured proof of claim (assigned as Claim 19-1) in the amount of $213, 587.90 relating to the Nevada Property. Appellants would eventually object to both proofs of claim filed by Appellee.

         First, on June 18, 2013, Appellants objected to Appellee's proof of claim for the California Property. (App. 46-64). Appellants contended that Appellee did not hold an interest in the California Note and Deed of Trust. (See id.). In response, Appellee demonstrated that, as holder of the Note, it was entitled to enforce the Note. (App. 65-117). On October 21, 2013, the Bankruptcy Court entered an order overruling Appellants' objection to Appellee's proof of claim of the California Property. (App. 121-23).

         Similarly, on November 19, 2014, Appellants objected to Appellee's proof of claim for the Nevada Property on the basis that, among other things, the Nevada Note and Deed of Trust was securitized. (App. 240-251). In response to Appellants' objection, Appellee demonstrated that it could enforce the Nevada Note as the note holder. (App. 251-335). The Bankruptcy Court rejected Appellants' arguments, and on February 13, 2015, entered an order overruling Appellants' objection to Appellee's proof of claim on the Nevada Property. (App. 399-401).

         Prior to filing of the bankruptcy action ultimately giving rise to this appeal, on or about March 12, 2012, the Appellants filed a Petition for Judicial Review in Nevada state court challenging Appellee's authority to foreclose on the Nevada Property. Appellee filed its Response brief to the Petition for Judicial Review in state court on March 27, 2012, the same date Appellants initiated the bankruptcy proceedings ultimately giving rise to this appeal. Appellants then obtained a continuance of final resolution before the Bankruptcy Court at least twenty-nine times, and the Nevada Property languished for three years in the mandatory bankruptcy stay.

         On November 18, 2014, Appellee moved for entry of an order in the Bankruptcy Court, pursuant to 11 U.S.C. § 362(d)(1), terminating the automatic stay to the Nevada Property and the California Property because Appellants had made no post-petition payments to Appellee relating to the Nevada Property under the Nevada Note or relating to the California Property under the California Note. The Appellants had not actually made any payments on the Nevada Property since at least as early as December 2010. On February 17, 2015, the Bankruptcy Court entered its stay relief orders, which lifted the automatic stay of the Nevada Property and the California Property. After the Bankruptcy Court lifted the stay, the state district court resumed the action on the Petition for Judicial Review. On or about April 9, 2015, the state court issued its Findings of Fact and Conclusions of Law and thereby rejected all of Appellants' arguments, many of which are raised in this Court, and found that a foreclosure certificate may issue. On or about April 27, 2015, Appellants filed a notice of appeal of the state court action. The parties briefed the issues before yet another tribunal. On or about December 31, 2015, the Nevada Court of Appeals issued its Order of Affirmance.

         On or about January 28, 2016, Appellee properly recorded a notice of sale on the California Property. On or about May 12, 2016, Appellee conducted a foreclosure sale on the California Property. Non-parties Ninhchau Nguyen and Yen Pham purchased the California Property at the foreclosure sale. On or about May 2, 2016, Appellee recorded its Foreclosure Certificate from the Nevada Mediation Program. On or about July 26, 2016, Appellee recorded a notice of sale of the Nevada Property. On or about August 26, 2016, Appellee conducted a foreclosure sale. Non-party NREI, LLC purchased the ...


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