United States Bankruptcy Appellate Panel of the Ninth Circuit
In re: DALE NORMAN HARMS, Debtor.
BANK OF NEW YORK MELLON, Appellee. DALE NORMAN HARMS, Appellant,
and Submitted on June 20, 2019 at Sacramento, California
from the United States Bankruptcy Court for the Northern
District of California Honorable Charles D. Novack, Chief
Bankruptcy Judge, Presiding.
T. Imperiale argued for appellant;
M. McCartney of Zieve, Brodnax & Steele, LLP argued for
Before: SPRAKER, TAYLOR, and BRAND, Bankruptcy Judges.
SPRAKER, Bankruptcy Judge.
debtor Dale Norman Harms appeals from an order granting the
motion of the Bank of New York Mellon ("BONYM") for
relief from the automatic stay and permitting BONYM to
proceed with a nonjudicial foreclosure proceeding. BONYM
completed its foreclosure and argues that the appeal is now
moot. Even though BONYM is correct that reversal of the
bankruptcy court's order would not affect the completed
nonjudicial foreclosure, the relief from stay order also
permitted BONYM to pursue unlawful detainer proceedings to
recover possession of the property from Harms and his spouse.
Because there is nothing in the record to establish that
BONYM already has exercised its unlawful detainer remedy, we
may afford some relief to Harms if we were to reverse the
relief from stay order and reinstate the automatic stay.
Accordingly, this appeal is not moot.
appeal, Harms disputes BONYM's standing. But BONYM
sufficiently proved its standing in the bankruptcy court. Its
agents presented the bankruptcy court with a copy of the
subject promissory note indorsed in blank. The agents also
presented evidence that the original of the note was within
their custody and control and specified the address where the
original note is kept. Harms presented no contrary evidence
regarding possession of the original note. Nor was there any
evidence indicating that anyone else has asserted a competing
right to enforce the note. Under these circumstances, we
The Underlying Dispute Between The Parties.
dispute between the parties arose from a promissory note in
the principal amount of $392, 000.00 and a deed of trust,
both dated April 14, 2005. The note and the deed of trust
identify Harms and his wife Laurie as the borrowers and Ampro
Mortgage Corporation as the lender. The deed of trust further
identifies Ampro as the trustee under the deed of trust.
Mortgage Electronic Registration Systems, or MERS, is
identified as the beneficiary under the deed of trust
"solely as nominee" for Ampro, its successors and
deed of trust states that it secures repayment of the loan
memorialized in the note. The collateral for the loan is a
single-family residence on West Cypress Road in Oakley,
California. The deed of trust was recorded on April 22, 2005,
in the Contra Costa County Recorder's Office. In April
2010, MERS assigned to BONYM its beneficial interest under
the deed of trust.
the note, the copy presented to the bankruptcy court has
three indorsements affixed on the reverse side of the last
page: (1) an indorsement by Ampro in favor of Countrywide
Document Custody Services; (2) an indorsement by Countrywide
Document Custody Services in favor of Countywide Home Loans,
Inc.; and (3) an indorsement in blank by Countywide Home
Harms' History Of Bankruptcy Filings And His
Transfer Of The Property.
underlying bankruptcy was the fourth involving Harms, his
spouse, and the property within an eight-year time span. In
July 2010, Harms and his spouse commenced a chapter 13
bankruptcy case. That case was dismissed in October 2010. In
October 2015, Harms commenced a chapter 7 bankruptcy case.
Harms received a discharge in that case in January 2016. That
case was closed the day after the court entered its discharge
order. In September 2016, Harms' spouse commenced a
chapter 7 bankruptcy case. Harms' spouse received a
discharge in that case in December 2016. That case also was
closed the day after the court entered its discharge order.
Harms and his spouse commenced their current chapter 13
bankruptcy case in April 2018.
in September 2013, Harms and his spouse transferred the
property to an entity known as "The Resting Place
Eleemosynary Trust." In their current bankruptcy
schedules, Harms and his spouse identified themselves as
co-trustees of this trust and claimed that they only hold
legal title to the property for the trust's benefit.
BONYM's Motion For Relief From Stay.
August 2018, BONYM moved for relief from the automatic stay.
BONYM sought modification of the stay to permit it to
exercise its remedies under state law to foreclose on and
recover possession of the property.
with its relief from stay motion, BONYM presented the court
with copies of the note, the deed of trust, the assignment of
the deed of trust, and the deed the Harms executed to
transfer title to the property from themselves to the Resting
Place trust. BONYM also presented the court with a relief
from stay cover sheet, which provided basic information
regarding the property and the loan. The cover sheet
indicated that the loan was 104 months in arrears prepetition
and 4 months in arrears postpetition. The cover sheet further
indicated that the aggregate balance of the loan was $548,
848.47, whereas the value of the property securing the loan
was only $435, 128.00.
moving papers also included the declaration of Katisha Gill.
Gill identified herself as a bankruptcy case manager for
Shellpoint Mortgage Servicing. According to Gill, Shellpoint
subserviced the loan on behalf of BONYM. Gill stated she had
personal knowledge of the types of business records
Shellpoint maintained in the ordinary course of business and
the procedures Shellpoint followed in creating those records,
including those records maintained for the subject loan. Gill
explained that the information set forth in her declaration
was derived from Shellpoint's business records. As Gill
put it, the records were made by persons with personal
knowledge of the information contained in the records or from
information transmitted by persons with personal knowledge.
relevant part, Gill stated that BONYM had confirmed that it
was in possession of the original promissory note. A copy of
the note was attached to the declaration as Exhibit 1. Gill
further stated that BONYM confirmed that the original note
was housed at Bank of New York Fullerton on Burning Tree Road
in Fullerton, California. But Gill did not specify how BONYM
confirmed this information, other than her general reference
to her knowledge derived from Shellpoint's business
opposed the relief from stay motion. Harms disputed every
aspect of the alleged loan transaction. Among other things,
he claimed that Ampro never loaned him any money. He also
denied he signed the note and the deed of trust. Alternately,
Harms claims that the alleged loan transaction actually was
an "investment contract" and that he is entitled to
a share of the proceeds from the investment vehicle in which
his note was invested. As a result, Harms maintains that
BONYM is indebted to him, "not the other way
further contended that BONYM has not and cannot establish
that it has any rights, interests or entitlements under the
note or the deed of trust. Specifically, he argued that BONYM
had not presented admissible or sufficient evidence to
support its claim that it possessed the original note or
otherwise was entitled to enforce the note. In particular,
Harms contended that Gill's declaration testimony
regarding possession of the original note did not qualify for
the business records exception to the hearsay rule and hence
September 21, 2018, the bankruptcy court held a hearing on
the relief from stay motion. Neither of the parties to this
appeal have provided us with a transcript from this hearing.
However, the bankruptcy court's hearing minutes entered
on the bankruptcy docket indicate that the court directed
BONYM to file a supplemental declaration "satisfying the
federal rules of evidence" to support its relief from
stay motion. The court also provided Harms with an
opportunity to submit evidentiary objections, if any, to
BONYM's supplemental declaration.
September 28, 2018, BONYM filed the required supplemental
declaration. The declarant, Nichole Renee Williams,
identified herself as an Assistant Vice President for Bank of
America, N.A. Williams identified Bank of America as the
servicing agent for BONYM with respect to the subject note