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ISSUES PRESENTED FOR REVIEW 1.

If Countrywide Bank, FSB and/or BAC Home Loans Servicing, LP

were notified during the pendency of Appellant’s Chapter 7 Bankruptcy proceedings, but did not come forward to make a claim, lift the stay or make a claim on the Promissory Note to the Property, can one or more of them now come forward after the closure of the Bankruptcy estate to sell and/or enforce the Promissory Note? 2.

Can Countrywide Bank, FSB, and/or BAC Home Loans Servicing,

LP, sell the property and collect on the Promissory Note without proving they are the rightful owner of the Note after the closing of the Bankruptcy estate? 3.

Are Countrywide Bank, FSB and/or BAC Home Loans Servicing, LP,

after the Bankruptcy estate has closed, subject to all of the defenses that Appellant would have in any foreclosure during the pendency of the Bankruptcy if one or more of the Appellees has moved to lift the stay to sell the property? 4.

Can Countrywide Bank, FSB and/or BAC Home Loans Servicing, LP,

claim that they were not required to come forward during the pendency of the Bankruptcy to make a claim to the property? In other words, can the Appellees ignore the Bankruptcy proceedings and wait until after Bankruptcy to make a claim to the property?

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5.

If the property was abandoned by the Trustee, and the putative holder

of the Promissory Note secured by the property did not come forward during the pendency of the Bankruptcy, may Appellant reenter the property after abandonment of the property by the trustee and claim ownership thereof and thereafter move to quiet the title solely in her name (Christine E. Springer) after the close of the Bankruptcy estate? 6.

By selling the property after the close of the Bankruptcy estate and

without giving notice to the Appellant in possession of the property as required by the foreclosure statutes of Arizona, have the Appellees violated the Bankruptcy laws or the Fair Debt Collections Practices Act, allowing Appellant to seek damages against them? 7.

Given the facts, can the sale of the property be set aside on grounds or

lack of standing or violation of the Bankruptcy laws, including violation of the stay? 8.

Can any putative claimant to the title of the property sell the home

after the close of the Bankruptcy estate without notice to Appellant in possession? STATEMENT OF JURISDICTION Christine E. Springer (hereinafter “Debtor,” “Plaintiff” or “Appellant”) is the Debtor in the Bankruptcy Case designated In re Christine E. Springer, Case No. 2:09-bk-15521 RJH in the District of Arizona, and the Plaintiff in a lawsuit filed in 2


the Maricopa County Superior Court on June 14, 2011, removed to United States District Court, Case No. 2:11-cv-01284-SRB by the Appellees. The case was dismissed on September 14, 2011. Plaintiff has filed a Writ of Mandamus in the Ninth Circuit requesting that the Order of Dismissal be set aside and the case remanded to Maricopa Superior Court because the District Court failed to rule on a Motion for Remand before dismissing all counts and all Appellees in favor of Appellees, and because Plaintiff pled no federal claims. Appellant petitions the Bankruptcy Appellate Panel of the United States Court of Appeals for the Ninth Circuit to review the Bankruptcy Court’s ruling on her Motion for Declaratory Judgment. The order was issued on July 28, 2011 denying Debtor’s request to reopen the Chapter 7 Bankruptcy case to determine the issues relating to Plaintiff’s property. Appellant Christine E. Springer timely filed the Notice of Appeal on August 11, 2011. (Ex. 1, Excerpt of Records (hereinafter “ER”) ER 2 to ER 6) This Court has jurisdiction to hear appeals from the Bankruptcy Court pursuant to 28 U.S.C. § 158(a)(1), because this appeal is taken from an Order issued by the Bankruptcy judge denying Appellant’s request for declaratory judgment. See In re Nat’l Environ. Waste Corp., 129 F.3d 1052, (9th Cir. 1997) citing In re Conejo Enters., 96 F.3d 346, 351 (9th Cir. 1996).

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This Appeal arises from the following Bankruptcy Court: United States Bankruptcy Court for the District of Arizona Honorable Randall J. Haines 230 N. First Avenue, Suite l0l Phoenix, Arizona 85003 STANDARD OF APPELLATE REVIEW The Appellate Court may review for “abuse of discretion” pursuant to Federal Rule of Bankruptcy Procedure 8013. In the Ninth Circuit, where there are mixed questions of fact and law, the Appellate Court may conduct a “de novo” review. Boone v. United States, 944 F.2d 1489, 1492 (9th Cir. 1991); In re Lee, 179 B.R. 149, 155 (Bankr. 9th Cir. 1995). The abuse of discretion test involves two distinct determinations: first, whether the Court applied the correct legal standard; and second, whether the factual findings supporting the legal analysis were clearly erroneous. United States v. Hinkson, 585 F.3d 1247, 1261-63 (9th Cir. 2009) (en banc). If the Court failed to apply the correct legal standard, then it has “necessarily abused its discretion.” Cooter & Gell v. Hartmarx Corp., 946 U.S. 384, 405 (1990). This Appellant hereby first asks the Court to address whether the Bankruptcy Court abused its discretion in denying Appellant’s Motion for Declaratory Judgment.

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Second, this Appellant requests that the Bankruptcy Appellant Panel review whether Countrywide Bank, FSB and/or BAC Home Loans Servicing can ignore a Chapter 7 Bankruptcy proceeding, wait almost two years to foreclose on the subject property while continuing to send debt collection notices, and schedule and conduct a

non-judicial foreclosure

sale

without giving

notice

to

the

Debtor/Appellant as required under Arizona statutes. PROCEDURAL BACKGROUND Appellant filed a Chapter 7 Bankruptcy proceeding in the United States Bankruptcy Court for the District of Arizona on July 6, 2009. Appellant listed as a creditor, among others, the following entities: BAC Home Loans Servicing, LP/Countrywide Bank FSB and Bank of America. These entities appeared on the Schedules to Springer’s Bankruptcy filed with the original Bankruptcy petition. (Ex. 2, ER 8 to ER) Notice was given by the Court to each of the above-named entities. Appellant’s real property, which is located at 17625 N. 7th Street, #1164, Phoenix, Arizona 85022, was part of the Bankruptcy estate. The Note for the property was addressed by the Bankruptcy Court. No alleged Note holder ever came forward to seek satisfaction of the promissory note in whole or in part, even though notice was given to the alleged Note holder, Countrywide Bank, FSB and the servicer of the loan at that time, 5


BAC Home Loans Servicing, LP (which no longer exists as an entity in the State of Arizona) during the Bankruptcy. No Motion to Lift the Stay to sell the home was ever sought by any entity and the Trustee never moved to sell the property to satisfy any of the debts of the Bankruptcy estate. The Bankruptcy was concluded on February 11, 2010 and among the debts discharged was the Note on Springer’s property. (Ex. 3, Appellant’s Bankruptcy Discharge, ER 16 to ER 19) The Promissory Note was discharged. No disposition was made of the property by the final documents filed by the Trustee. The Discharge was entered on February 14, 2010. Appellant moved out of the home with the filing of the Bankruptcy petition. The property was vacant for eighteen months thereafter. No entity came forward to claim the property or to seek to sell the property. On December 26, 2010, Appellant moved back into the property because it had fallen into disrepair and because the condominium association threatened to sue Appellant for past due association fees. (See Ex. 4, ER 87) Appellant continues to live in the property. On or about June 1, 2011, a real estate agent named Kim Panozzo, claiming to be “representing” Bank of America, knocked on the door and told Appellant’s mother that the property had been sold to Mortgage Electronic Registration Systems, Inc. (“MERS”). 6


No notice was given to Appellant prior to the sale by any means, nor was any paperwork provided to Appellant that MERS had purchased the property. In fact, the first Assignment of Deed of Trust was recorded just seven days before the non-judicial trustee’s sale was held. Appellant filed a lawsuit seeking, among other things, to invalidate the Trustee’s Sale and establish quiet title in Appellant’s name. The documents used to non-judicially foreclose by Bank of America, BAC Home Loans Servicing, LP, ReconTrust Company, Countrywide Home Loans and MERS are full of inconsistencies and none of the documents evidence that any of the entities have standing to claim or sell the home. The lawsuit was filed in Maricopa County Superior Court on June 14, 2011 and assigned case number CV-2011-054266. (Ex. 5, Complaint and Exhibits, ER 20 to ER 172) A review of the documents recorded with the Maricopa County Recorder’s Office shows that no filings were recorded by any entity after the Bankruptcy until May 20, 2011, when Appellees recorded an Assignment of Deed of Trust from MERS to BAC at 2011-0429255. (See Ex. 5, ER 151 to ER 152) Adding to the confusion, Appellees filed a second Assignment of Deed of Trust on June 10, 2011, ten days AFTER the purported non-judicial trustee’s sale. (See Ex. 5, ER 174 to ER 175)

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Appellant filed a Notice of Lis Pendens with the Maricopa County Recorder of Deeds on June 14, 2011 at Doc No. 2011-0494009. (See Ex. 6, ER 177 to ER 178) Appellees Bank of America (“BOA”) and BAC have violated Plaintiff’s Bankruptcy discharge on at least five occasions through debt collection telephone calls, sending loan modification packages when Plaintiff no longer owes Appellees a debt, and mortgage statements marked “For Information Purposes Only” while still representing that Plaintiff owed the mortgage debt. (See Loan Modification Package attached to Ex. 5, ER 89 to ER 101, Mortgage Loan Statement, attached to Ex. 5, ER 103, and Ex. 8, a Mortgage Tax Statement dated October 19, 2011, ER 182 to ER 183) These documents have conflicting addresses where BOA/BAC was sending mail to Plaintiff. STATEMENT OF THE CASE A. THE COURT ABUSED ITS DISCRETION IN DENYING APPELLANT’S MOTION FOR THE NON-PAYMENT OF A FILING FEE The Ninth Circuit has a long history of allowing pro se litigants wide latitude in terms of compliance with procedural rules. Pleadings drafted by laymen are to be interpreted by application of less rigid standards than those applied to formal documents prepared by lawyers, and the rights of pro se litigants require careful protection where highly technical requirements are involved, especially when enforcing those requirements might result in a loss of the opportunity to prosecute 8


or defend a lawsuit on the merits. Hansen v. May, 502 F.2d 728, 730 (9th Cir. 1974) Sherman v. Yakahi, 549 F.2d 1287, 1290 (9th Cir.1977); Dewitt v. Pail, 366 F.2d 682, 685 (9th Cir.1966). Appellant understands that pro se litigants are considered a burden on the Courts. However, there is no law that says Appellant must hire an attorney. The Courts are required to have procedural safeguards in place to prevent situations that may erroneously cause a due process issue when a litigant is not represented. In a recent United States Supreme Court decision, the Court stated: “Procedural safeguards which, if employed together, can significantly reduce the risk of an erroneous deprivation of liberty in the absence of counsel…...” Turner v. Rogers, 131 S.Ct. 2507, decided on June 20, 2011. Despite this, Appellant had substantial problems with proceeding. Appellant went to the Clerk’s Office of the Bankruptcy Court on August 11, 2011 to file her Motion for Declaratory Judgment. The clerk staffing the filing window that day was openly confused about the procedures for accepting the documents being filed by Appellant. She made several telephone calls to someone else inside the office about the procedures, and admitted to Appellant the she was new to the position and wanted to ensure she did everything correctly. However, the clerk did not ask for a filing fee from Appellant while she was at the filing window.

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Appellant left the Courthouse under the assumption that the document had been accepted since the clerk took her documents and file-stamped the extra copies. However, the attorney that represented Appellant in the original Bankruptcy proceeding filed in 2009 called Appellant a few days after the Motion was filed and informed Appellant that she had received an electronic notice from the Court related to a missing filing fee. Appellant contacted the Bankruptcy Court and spoke to a case management clerk, who told her that there was no specific rush to file the fee because the Court would not review the Motion until the filing fee was paid. However, before Appellant could return to pay the filing fee, Appellant received the Order denying her Motion. (See Ex. 1, ER 6) Appellant contacted Pat Denk, Judge Haines’ clerk, to ask her for clarification on the Order and left a voice mail message. However, Ms. Denk sent Appellant an e-mail stating, “I am not a lawyer and I cannot give you legal advice.” (See Ex. 7, ER 180) If Appellant is barred by the Court’s own procedures from having access to electronic notifications, and the Court’s staff does not know to ask litigants for a filing fee, and no one from the Court contacted Appellant to advise of the problem, and the judicial staff cannot clarify their Orders because of a concern over the

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unauthorized practice of law, there are clearly no procedures in place at the Bankruptcy Court to prevent these problems from happening. Because Appellant could not get a clear answer from the Court staff, Appellant filed the Notice of Appeal to preserve her rights. From a practical standpoint, the error would have been relatively easy to correct, causing no real harm. Had Appellant been contacted by the Court shortly after the Motion was filed and given clear instruction, the problems experienced by Appellant would have been avoided. B. THE COURT ABUSED ITS DISCRETION IN DENYING APPELLANT’S MOTION TO REOPEN DID NOT REVEAL THE EXISTENCE OF ANY ASSET FOR THE TRUSTEE TO ADMINISTER TO THE BENEFIT OF THE ESTATE The Bankruptcy trustee claims there is no asset that needs addressing. However, the "asset" that needs to be addressed is the home which was named in the Bankruptcy by Debtor. Debtor believed she was discharged of the Note on the home, but the home itself was not addressed specifically in the order. There was no Motion to Lift the Stay by any party during the pendency of the Bankruptcy. It is Appellant's position that absent a motion by any of the Appellees that not only is the Note discharged, but Appellees have no right to claim the right to sell the home or seek any deficiency from Appellant from the sale of the home. They have in effect abandoned all rights they had by not coming forward during the Bankruptcy to preserve what rights they had. 11


C. COUNTRYWIDE BANK, FSB AND/OR BAC HOME LOANS SERVICING, LP CANNOT MAKE A CLAIM TO THE PROMISSORY NOTE POST-DISCHARGE WHEN IT WAS NOTIFIED OF DEBTOR’S BANKRUPTCY PROCEEDINGS BUT DID NOT FILE A PROOF OF CLAIM AND THE TRUSTEE ABANDONED THE PROPERTY. Section I of the Fourteenth Amendment of the United States Constitution is clear that property cannot be taken without due process. The issues raised on appeal are issues of first impression. There is a need for the Panel to address these issues because they have resulted in the deprivation of Appellant’s constitutional right to due process. The Appellees in the underlying lawsuit cannot ignore a Bankruptcy proceeding and wait to foreclose post-discharge because it had deprived Appellant of her due process rights. Appellant has never been given an opportunity to challenge the Appellees’ standing to foreclose on the Property. Because the Appellees did not file a Proof of Claim, attempt to lift the stay during the Chapter 7 Bankruptcy or give Appellant notice of the non-judicial foreclosure proceedings, Appellant has been deprived of the right to challenge the standing of the Appellees. In June 2011, Appellant filed a lawsuit in Maricopa County Superior Court to challenge the standing of the Appellees to foreclose post-discharge. Furthermore, the majority of the cases relied upon by Appellees in their Motion to Dismiss (Ex. 9, Appellees’ Motion to Dismiss, ER 185 to ER 200) were not decided during the foreclosure crisis. The foreclosure problem in the United 12


States is unprecedented and has raised many new questions of law that are still emerging. There are few cases with facts where the creditor did not repossess its secured collateral while a Bankruptcy was pending. Additionally, in the bankruptcy cases cited by the Appellees, the creditor, at a minimum, filed a Proof of Claim at some point during the pendency of the Bankruptcy. Those cases do not apply here because the Appellees failed to file a Proof of Claim. The situation in the instant case is a direct result of the foreclosure crisis and the existing case law does not account for the foreclosure crisis. Until the recent economic downturn, it was unheard of for a bank to wait until post-discharge or a time period of two years to reclaim its collateral. It is intentional and designed to avoid questions of ownership and standing of a loan. The problem is further compounded by the nonjudicial foreclosure statutes in the State of Arizona, where the burden is on the borrower to file a lawsuit to stop the sale of the property. The banks’ practice of routinely removing lawsuits to Federal Court, where the judges routinely dismiss homeowner claims, is obviously favorable because it allows the bank to avoid the real questions about the ownership of the loan. A litigant must survive the dispositive motions before the case is even litigated on the merits and the climate of the District Courts, especially in Arizona, has been to dismiss cases without a meaningful application of the law. The District Courts are bank-friendly, which is

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why these cases are removed as a matter of routine by the banks’ counsel. Plaintiffs are left with few options, which is exactly the way the banks want it. All of the major banks, including Defendant Bank of America, have entered into consent orders with the Office of Comptroller of Currency for the same issues that Appellant has raised here and in the underlying lawsuit. The banks’ are essentially being enabled by our government and the Courts to steal homes right out from under homeowners using fabricated foreclosure documents created by foreclosure mills that are signed by individuals without any personal knowledge and notarized without witnessing the signature of the signer. The banks foreclose on homes that don’t have loans. The banks have foreclosed on members of the military while they are serving our country on active duty outside of the United States. They foreclose on senior citizens who have nowhere else to go. They hire companies to break into homes and change the locks before foreclosure sales have even taken place. They create nightmare loan modification procedures that put homeowners who are desperate to save their homes through a long, nightmarish process that culminates with a foreclosure, regardless of the efforts of homeowners to comply with the banks’ demands. They have sent various parties to Appellant’s home who have looked in the windows, taken photographs and who have made false representations as to Court proceedings that never happened.

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In only a few cases, the Courts have awarded the homes to homeowner as sanctions because of the banks’ outrageous conduct. Thus far, the District Court has refused to allow Appellant a hearing on the merits of the case. Appellant has applied for a Writ of Mandamus to the Ninth Circuit Court of Appeals because the District Court did not rule on a pending Motion for Remand before the Appellees’ Motion to Dismiss. The case was dismissed on September 14, 2011 (See Ex. 10, ER 202 to ER 214) and the Writ of Mandamus was submitted by mail to the Ninth Circuit Court of Appeals on October 11, 2011. The banks’ conduct here is egregious, and in the instant case, the Appellees’ “strategy” has resulted in a foreclosure of all of Appellant’s avenues within which to exercise her constitutional rights and the District Court has allowed this. Appellant therefore relies upon Section I of the Fourteenth Amendment of the United States Constitution, which states: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” (Emphasis added.)

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Appellant is entitled to due process under the United States Constitution and must be afforded the opportunity to challenge the Appellees’ standing to nonjudicially foreclose. D. COUNTRYWIDE BANK, FSB AND/OR BAC HOME LOANS SERVICING, LP, CANNOT SELL THE PROPERTY OR COLLECT UNDER THE NOTE WITHOUT PROVING THEY ARE THE RIGHTFUL OWNER OF THE NOTE AFTER THE CLOSING OF THE BANKRUPTCY ESTATE. None of the entities who have sought to non-judicially foreclose have ever proven to anyone that they had the authority to sell the Property. If they had filed a Proof of Claim, they would have had to prove to the Trustee that they had the right to sell and Appellant would have had the right to contest this. If the Appellees had the unequivocal right to sell the property, why didn’t they move to lift the stay during the Chapter 7 Bankruptcy proceedings? It would have been much easier to file a Motion to Lift Stay and demonstrate to the Trustee that they owned the property and obtain Court authority to sell it, but the Appellees did not. Why not? Perhaps the reason the Appellees did not appear in the Bankruptcy proceeding is because they knew they could not prove they owned the loan and therefore authority to sell the property, and to deny Appellant the right to be heard. It appears that the Appellees intentionally sought to deny Appellant’s constitutional rights under federal and state law.

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As mentioned above, Section I of the United States Constitution prohibits the taking of a property without due process. Because the Appellees did not file a Proof of Claim or seek to lift the automatic stay of the Bankruptcy, which deprived Appellant of a hearing, the Appellees have no right to sell the property or collect under the Promissory Note after the closing of the Bankruptcy estate without proving they are the owner of the Note. E. COUNTRYWIDE BANK, FSB AND/OR BAC HOME LOANS SERVICING, LP ARE SUBJECT TO ALL THE DEFENSES THAT DEBTOR WOULD HAVE IN ANY FORECLOSURE DURING THE PENDENCY OF THE BANKRUPTCY HAD THE APPELLEES MOVED TO LIFT THE STAY DURING THE BANKRUPTCY. The Appellees remain subject to all the defenses that Appellant would have had in any foreclosure hearing during the Bankruptcy proceedings if the Appellees had filed a Proof of Claim or moved to lift the automatic stay because they did not give Appellant notice of the non-judicial sale, nor have they proven that they have authority to sell the property. If Appellees have authority to sell the property, they should have moved to lift the automatic stay during the seven month pendency of Appellant’s Bankruptcy proceedings, unless they intentionally wanted to deny Appellant’s constitutional right to raise each and every defense Appellant may have had to the sale. The chain of title is broken and the Appellees cannot prove they have ownership of the Note.

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There are two parts of ownership of a Note: ownership of the actual Note and ownership in the chain of title. Even if Appellees could show the Note, they must still show an unbroken chain of custody of the paper itself. Appellant has not had an opportunity to present evidence as to the issues relating to the documents used to foreclose non-judicially, which are fraudulent concealment, fraud, consumer fraud, false and fraudulent recordings, gross negligence, discharge/payment of debt and res judicata as plead in her Complaint in the underlying lawsuit. If the Appellees have grounds to sell the property, why didn’t they file a Proof of Claim and make a motion to lift the automatic stay? If they in fact have the authority to sell the property, why did they ignore the Bankruptcy, send multiple loan modification packages, fail to record documents evidencing ownership, and wait so long to foreclose without giving Appellant notice of the sale? What were they hiding? The Appellees intentionally sought to deny Appellant’s constitutional rights under federal and state law. F. COUNTRYWIDE BANK, FSB, AND/OR BAC HOME LOANS SERVICING, LP CANNOT CLAIM THAT THEY WERE NOT REQUIRED TO FILE A PROOF OF CLAIM IN A BANKRUPTCY PROCEEDING AND WAIT TO FORECLOSE POST-DISCHARGE.

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A Proof of Claim is not difficult to complete and file properly. The Clerk of the United States Bankruptcy Court will generally send creditors a blank form to complete. Claims that are timely filed are considered prima facie valid in the amount claimed. Claims that are not timely filed may not be valid. Therefore, when a creditor first receives notice of a Bankruptcy filing, it should determine the deadline for filing a claim. If the deadline has not expired and the creditor does not file a Proof of Claim within the bar date, the creditor must be prepared to argue that its failure to file a timely claim was due to excusable neglect. The Supreme Court, in Pioneer Inv. Servs. Co v. Brunswick Assoc. Ltd. P’ship, 507 U.S. 380, 378 (1993) enumerated four factors to determine whether or not neglectful late filings of claims are excusable: 1) whether allowing the late filed claim will prejudice the debtor; 2) the length of the delay in filing the claim and the resulting potential impact on the judicial proceedings; 3) the reason for the delay, including whether the delay was within the reasonable control of the creditor filing the claim; and 4) whether the creditor that filed the claim acted in good faith. The Courts have placed the greatest weight on whether any prejudice to the debtor will occur by allowing the later claim. The party seeking to file a late claim bears the burden of proving a lack of prejudice to the debtor. Courts considering a tardy filing have all examined the relationship between the length of delay and the 19


creditor’s control over the circumstances causing the delay. For example, if the debtor did not list the creditor on the schedules and the creditor learns of the Bankruptcy after the bar date, the late filing may be excused under the doctrine of excusable neglect. On the other hand, as in the instant case, if the creditor knew about the Bankruptcy case, but failed to file a timely claim, the claim may be denied. If a creditor does not file a Proof of Claim but files other pleadings in the case, the Court may consider those pleadings as an informal Proof of Claim at the discretion of the Bankruptcy judge. In the instant case, the Appellees did not file a Proof of Claim or any other pleadings during the pendency of the Bankruptcy proceedings. Why have Appellees not shown an exemption to any of the four factors under Pioneer? The Appellees cannot claim that they were not required to come forward in the Bankruptcy proceedings because there was no opportunity for Appellant to challenge their standing to foreclose. Waiting to foreclose post-discharge has resulted in the deprivation of Appellant’s constitutional right to challenge the standing to foreclose under Section I of the Fourteenth Amendment of the United States Constitution.

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Appellant can find no case law that supports allowing a creditor to wait two years to foreclose on a property. In fact, the applicable case law suggests that the Appellees should be sanctioned for not repossessing the collateral in a timely manner. See In re Pratt, 462 F.3d 14 (2006) In the Pratt case, as in the instant case, the Debtors surrendered the collateral, a vehicle, and the Creditor failed to repossess it. The Debtors in Pratt gave notice pre-petition that they planned to surrender the vehicle in lieu of reaffirmation. The Court gave the creditor, GMAC, permission to lift the stay and repossess the vehicle to realize on its lien and GMAC gave Debtors notice of their right to cure the default. At some point thereafter, GMAC determined that it was not cost effective to repossess the car because the costs of repossession were higher than the value of the vehicle. GMAC wrote off the loan balance and refused to repossess the vehicle. Three years later, the Debtors were still in possession of the vehicle, which was no longer in good operating condition, and could not dispose of the vehicle because of GMAC’s lien. The Debtors repeatedly contacted GMAC to request that it either repossess the vehicle or release the lien so that they could “junk” the vehicle. GMAC refused and demanded that the Debtors pay the balance in full before they would release the lien. The Bankruptcy Court allowed the Debtors to reopen the Bankruptcy to file an adversary proceeding against GMAC. The Debtors alleged that GMAC’s 21


refusal to either repossess the collateral or release the lien absent payment in full was a violation of the Debtors’ Chapter 7 Bankruptcy discharge injunction prescribed by Bankruptcy Code § 524(a)(2). Cf., e.g., Arruda v. Sears, Roebuck & Co., 310 F.3d 13, 21 (1st Cir.2002) (“Even after the termination of a Bankruptcy case, a discharged debtor who wishes to redeem property pursuant to section 722, but who believes that the terms proposed by the lienholder are unfair, can ask the Bankruptcy Court to reopen the Bankruptcy case and adjudicate the matter.”). The Bankruptcy Court entered judgment for GMAC and the Debtors’ unsuccessfully appealed in District Court. The Debtors appealed to the Appellate Court, which reversed the District Court and remanded the case to the Bankruptcy Court for a determination as to damages. The Appellate Court reasoned in Pratt that the federal Bankruptcy law interest in according debtors a fresh start, free from objectively coercive reaffirmation demands, must be accorded supremacy. In re Groth, 269 B.R. 766, 767-68 (Bankr.S.D.Ohio 2001) [If the secured creditor determines that its collateral is worth less than the cost of taking it into its possession, the creditor must waive the effect of its lien so that the debtor is able to dispose of the collateral.”). According to Groth, when the Appellees determined that the collateral was worth less than the cost of taking it into possession, they should have released the lien on the Property. 22


The Pratt Court also concluded that GMAC’s refusal to release its valueless lien so that the vehicle could be junked - though presumably not made in bad faith was “coercive” in its effect, and thus willfully violated the discharge injunction. The Pratts were therefore entitled to establish and recover their compensatory damages, together with other appropriate relief under Bankruptcy Code § 105(a). Similarly, Appellant attempted to contact the bank to ascertain when it would foreclose, and the bank refused to do so, but Appellees continued to send account statements, loan modification packages and continued to call Appellant in an attempt to collect the debt. Appellant was also required to expend funds to maintain insurance and to pay the past due association that fees that would have been the Appellees’ responsibility (assuming they had authority to foreclose, which Appellant denies). Further, Appellant believes that the title to the Property would have remained in her name for as long as the property was vacant. The Appellees did not come forward to foreclose until after it learned Appellant had moved back into the property. Appellant alleges that all of these actions were in bad faith. However, even if the Panel finds that that these actions were not in bad faith, it should find that like the facts in the Pratt case, they were willful. As a result of the bank’s actions, Debtor is entitled to damages for violation of the Chapter 7 discharge injunction for the bank’s willful violation of the Bankruptcy Code. In assessing violations of the automatic stay and the discharge injunction, the core 23


issue is whether the creditor acted in such a way as to coerce or harass the debtor improperly. 11 U.S.C. §524 (a)(2) states: “A discharge in a case under this title - 2) operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived…” The language in this section is intended to insure that once a debt is discharged, the debtor will not be pressured in any way to repay it. In effect, the discharge extinguishes the debt, and creditors may not attempt to avoid that. Attempting to foreclose post-discharge when the Appellees did not file a Proof of Claim is “an act to collect, recover or offset any such debt” under 11 U.S.C. §524 (a)(2). The multiple loan modification packages, loan statements and telephone calls were harassing, especially given the amount of time that had elapsed and the circumstances. The Appellees continued this conduct for over a year after Appellant’s discharge from Bankruptcy. This conduct is even more egregious given that none of the Appellees have demonstrated authority to sell the property. The Appellees have waived their claims for their failure to timely file a Proof of Claim during the Bankruptcy proceedings pursuant to Pioneer. Appellees should be sanctioned and Appellant awarded damages for the Appellees’ conduct 24


pursuant to Pratt. G. IF THE PROPERTY WAS ABANDONED BY THE TRUSTEE AND THE PUTATIVE HOLDER OF THE NOTE DID NOT COME FORWARD DURING THE PENDENCY OF THE BANKRUPTCY, DEBTOR MAY REENTER THE PROPERTY AND MOVE TO QUIET TITLE IN HER SOLE NAME AFTER THE CLOSE OF THE BANKRUPTCY ESTATE. Because the Appellees ignored the Bankruptcy proceedings and failed to file a Proof of Claim or attempt to lift the automatic stay of Bankruptcy, the title remained in Appellant’s name. When the Appellees did not record any documents evidencing ownership after the Bankruptcy or take any other actions, it appeared that the Appellees were simply “walking away” from the loan on the property because it the value had decreased so much that the cost to foreclose and make all the necessary repairs would exceed the value of the property. Appellant had attempted multiple times to ascertain the status of the foreclosure on the Property and never received any clear answers from any of the Appellees. Appellant further concluded that if the Appellees were concerned about protecting their interest in the property, they would have at least filed a Proof of Claim in the Bankruptcy proceedings. Next, all of the major banks, including Bank of America, have entered into consent agreements with their regulator, the Office of the Comptroller of Currency, for their foreclosure practices. The problems with Bank of America’s foreclosure processes are well documented in mainstream media and other Court cases. The 25


inconsistencies in the documents used to non-judicially foreclose post-discharge in the instant case are set forth in detail with supporting evidence in the Complaint (Ex. 5, ER 32 to ER 43) in the underlying lawsuit. Simply put, the documents used by the Appellees to non-judicially foreclose do not evidence a clear chain of title. It would seem reasonable to conclude that if the Appellees were at all concerned about preserving their rights, they would have taken care to ensure that the recorded documents actually made sense and evidenced their ownership, in addition to filing a Proof of Claim. The title to the property is most likely unmarketable because of the fabricated foreclosure documents created by Appellees. Finally, from an equitable standpoint, the Appellees’ conduct is simply unfair. The Appellees refused to finalize an accurate loan modification before Appellant filed Bankruptcy. They delayed the non-judicial foreclosure sale, but did not cancel the sale. They did not file a Proof of Claim in the Bankruptcy proceedings or attempt to lift the automatic stay, nor did they attempt to foreclose for fourteen months after Appellant’s discharge. Appellant spent thousands of dollars on insurance, COA dues, repairs, costs to move multiple times, multiple disconnection/reconnection costs and multiple disruptions in her business as a result of the Appellees’ conduct. And, on May 20, 2011, without any notice to Appellant, the Appellees recorded paperwork that contains errors and inaccuracies, 26


and held a non-judicial foreclosure sale just seven days later, on May 27, 2011. (See Ex. 5, the Complaint, ER 151 to ER 152) There is no Notice of Trustee’s Sale for the May 27, 2011 sale recorded. Appellant learned of the sale date from Appellee Recon’s website. (See Ex 5, ER 111) Given the foregoing, a lawsuit to quiet title to prove that the Appellees are entitled to payment is necessary under the circumstances to determine whether the Appellees have standing to non-judicially foreclose. Too much time has elapsed, the non-judicial foreclosure documents are inaccurate, and any future purchaser of the Property at foreclosure would be purchasing a property with title problems. H. BY SELLING THE PROPERTY AFTER THE CLOSE OF THE BANKRUPTCY ESTATE AND WITHOUT GIVING NOTICE TO DEBTOR IN POSSESION AS REQUIRED BY THE ARIZONA FORECLOSURE STATUTES, APPELLEES HAVE VIOLATED FEDERAL BANKRUPTCY LAW AND THE FAIR DEBT COLLECTIONS PRACTICES ACT ALLOWING DEBTOR TO SEEK DAMAGES AGAINST THEM. Because the Appellees did not file a Proof of Claim or seek to lift the automatic stay, the Appellees’ conduct deprived Appellant of an opportunity to challenge the Appellees’ standing to foreclose. Because there has been no determination as to the Appellees’ standing, they do not have the authority to sell the property post-discharge and without giving notice to Appellant as required by Arizona foreclosure statutes. Additionally, the multiple loan modification packages, loan statements and debt collection telephone calls after the discharge are a violation of Federal Bankruptcy Law because there was no determination as 27


to the standing of any of the Appellees to foreclose on the property or to collect on the Promissory Note. I. THE SALE OF THE PROPERTY SHOULD BE SET ASIDE ON GROUNDS OF LACK OF STANDING AND VIOLATION OF BANKRUPTCY LAWS, INCLUDING VIOLATION OF THE STAY. Because there has been no determination as to the Appellees’ standing to foreclose on the Property or collect under the Promissory Note, the sale should be set aside on the grounds of lack of standing and for violation of the automatic stay of Bankruptcy. Appellant believes that the proper jurisdiction for a determination as to quiet title of the property is in Arizona state Courts. Appellant filed the underlying lawsuit in the state Court and the Appellees removed the case to the District Court for Arizona, which dismissed all counts and all Appellees on September 14, 2011. However, the District Court erred in dismissing the case because it did not first rule on Appellant’s Motion for Remand. Appellant filed a Writ of Mandamus with the Ninth Circuit Court of Appeals on October 11, 2011. Appellant plead no federal claims, the amount in controversy is less than $75,000 and several abstention doctrines apply. In the alternative, if the Panel believes that the issue of title should have been determined in Bankruptcy Court, Appellant requests that the Panel remand the case with instructions to reopen the Bankruptcy proceedings to determine the issue of standing. A decision in the Bankruptcy Court could determine collateral 28


estoppel or res judicata of the quiet title action which Appellant believes belongs in Arizona state Court for the aforementioned reasons. J. A PUTATIVE CLAIMANT TO THE TITLE OF THE PROPERTY MAY NOT SELL THE HOME AFTER THE CLOSE OF THE BANKRUPTCY PROCEEDING WITHOUT NOTICE TO THE DEBTOR IN POSSESSION. Assuming arguendo that the Appellees have the right to proceed to sell the home without filing a Proof of Claim, that does not mean that they can do so without providing Appellant with the right to raise affirmative defenses. Appellees have not shown why, absent a Proof of Claim in the Bankruptcy Court, that they have the right to proceed in opposition to the Arizona statutes and the Fourteenth Amendment to the United States Constitution and the Appellees should be made to prove to the Bankruptcy Court why they have that right. CONCLUSION Appellant surrendered the collateral with the filing of the bankruptcy petition. The owner of the Note never filed a Proof of Claim or any other pleadings, nor did they attempt to lift the stay during the seven month Bankruptcy proceedings, leaving the burden on Appellant to care for the property at a financially vulnerable time, but without the “privilege� of living in it. After the property had been vacant for a substantial period of time and the Appellees showed no interest in repossessing the property, Appellant moved back in. When Appellees learned that Appellant was living in the property, they created documents to take 29


the Property, without ever having demonstrating during Appellant’s Bankruptcy that they had any interest in the Property. This conduct has deprived Appellant of her due process rights afforded under the United States Constitution and is intentional to avoid questions of ownership of the loan. Appellant has never had a hearing to challenge the Appellees’ standing to sell the Property post-discharge and the Appellees have never demonstrated standing to sell the property. The Appellees continued to willfully harass Appellant with debt collection calls, loan modification packages and loan statements when the debt had been discharged. Appellant respectfully requests that the Panel find that Appellees should be sanctioned for their conduct and Appellant entitled to damages for a violation of the Bankruptcy discharge, and that the case be remanded to Bankruptcy Court with instructions to reopen the Bankruptcy proceedings to determine the issue of standing. Respectfully submitted on October 20, 2011.

Christine E. Springer Appellant Pro Se 2942 N. 24th Street, Suite 114 Phoenix, Arizona 85016 602-350-2151

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Springer brief to Bankruptcy Appellate Panel  

Springer brief to Bankruptcy Appellate Panel