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Wright v. Bayview Loan Services, LLC

United States District Court, Central District of California

November 6, 2014




Proceedings: (IN CHAMBERS): APPEAL FROM BANKRUPTCY COURT (filed December 13, 2011)

The Court finds this appeal appropriate for decision without oral argument. See Fed.R.Civ.P. 78; Local Rule 7-15.


Before the Court is appellant Anthony Wright's appeal from an adversary proceeding in the U.S. Bankruptcy Court for the Central District of California. Appellant appeals the Bankruptcy Court's grants of summary judgment on March 29, 2011 and November 30, 2011. See Appellant's Excerpt of Record, Amended Exhibits on CD (" AER") at 114-27. On Dec 7, 2011, appellant appealed both grants of summary judgment to the district court. See Dkt. No. 2. On November 9, 2012, appellant filed his amended opening brief. Dkt. No. 46. On January 3, 2013, appellee Bayview Loan Servicing LLC (" Bayview") filed its opposition brief. Dkt. No. 50. On February 1, 2013, appellant filed his amended reply brief. Dkt. No. 56.


The adversary proceeding involves properties located at (1) 11254 Berendo Avenue, Los Angeles, California; (2) 12500 Long Beach Boulevard, Lynwood, California; (3) 1040 W 91st Street, Los Angeles, California (collectively " the Bayview Properties"); as well as properties located at 1130-1138 90th Street, Los Angeles, California; 1131-1139 91st Street, Los Angeles California; and 819 Imperial Highway, Los Angeles California. AER at 120. The Bayview Properties were part of the bankruptcy estate of appellant's mother, Lorece Wright, in the underlying bankruptcy action. Bayview's Excerpt of Record (" BER") at 628-31. Lorece Wright filed for Chapter 11 bankruptcy on November 14, 2006. AER at 4403. On November 30, 2007, Lorece Wright's bankruptcy estate was converted to Chapter 7 on the motion of trustee David Gill. AER at 4403-04.

On February 25, 2008, in connection with Bayview's motions for relief from the automatic stay in the underlying bankruptcy action, appellant and Lorece Wright (collectively " the Wrights") entered into a stipulation (the " Stipulation") with Bayview regarding the Bayview Properties. Id. At the time, Bayview had duly recorded liens on all three properties. AER at 4404. This Stipulation, which was approved by the Bankruptcy Court, granted Bayview immediate conditional relief from the automatic stay, and allowed Bayview to " proceed with foreclosure sales of the Bayview Properties in accordance with State law" and " without any further effort by [the Wrights], or any related party to hinder or delay the foreclosure process." Id. Pursuant to the Stipulation, the Wrights had the right to pay off the liens in full for the reduced total price of $2.1 million, or to pay reduced release prices for one or more individual property. AER at 4404-05. They also had the right to extend a foreclosure sale not more than twice by paying a forbearance sum of $50, 000 to forestall a sale of all three properties, or $16, 666.67 to forestall the sale of a single property. AER at 4405. The parties stipulated that they had all " had sufficient time, access, and ability to consult with legal counsel regarding the terms and conditions" of the Stipulation, and that the Bankruptcy Court " shall retain jurisdiction over any dispute arising from or related to this Stipulation." AER at 4405-4407.

No payments were made pursuant to the Stipulation, although appellant has stated that the Wrights attempted to do so and were obstructed by Bayview. See BER at 90, 98 (deposition testimony of appellant); BER at 113-14, 123 (requests for admissions and responses in the adversary proceeding); BER at 231 (declaration of Andrew Ghezzi, Assistant Vice President of Bayview). Bayview moved for unconditional relief from the automatic stay with regard to the Bayview Properties, which the Bankruptcy Court granted at a hearing on September 9, 2008. BER at 712-25. On September 12, 2008, Bayview accepted a payment of $775, 000 from Les Wilson for the Berendo Avenue property. See BER at 91-94, 99, 231. That same day the Wrights and Louise Walden transferred the Berendo Avenue property through gift deed to Quickfix, LLC Investments. BER at 728. Bayview foreclosed on the Long Beach Boulevard and W 91st Street properties. BER at 115, 123, 823-25.

On July 13, 2009, the Wrights filed the adversary proceeding against Bayview; Les and Michelle Wilson as individuals and trustees of the Wilson Family Trust; LDW Investment I, LP; MRA Funding, Inc.; Quickfix, LLC Investments (collectively the " Wilson defendants"); and fifty Does. See BER at 1. On October 27, 2009, the Wrights filed a First Amended Complaint (" FAC"). See AER at 4366. The FAC sought damages for breach of contract, breach of the covenant of good faith and fair dealing, fraud and misrepresentation, negligent misrepresentation, conversion, quantum meruit, unjust enrichment, breach of fiduciary duty, constructive trust and accounting, slander, inducing breach of contract, intentional interference with contractual relations and prospective economic advantage, negligent interference with prospective economic advantage, rescission, and declaratory relief. Id. The FAC alleged that the Bankruptcy Court " has jurisdiction over the subject matter and the parties of this lawsuit based upon the Stipulation, " and that the matter " is a core proceeding." AER at 4367.

In brief, the FAC alleged that appellant and his mother entered into an agreement with Les Wilson and the Wilson Family Trust, pursuant to which the Wilson defendants would pay off the liens on the Bayview Properties in exchange for a fifty percent interest in the properties and net profits therefrom, and that this agreement " provided the basis for" the aforementioned Stipulation. See AER at 4370-71. The FAC further alleged that the Wilson defendants breached their agreement with the Wrights by denying the agreement's existence and taking sole title to the Berendo Avenue property. AER at 4372. The FAC contended that Bayview breached the Stipulation by, among other things, " improperly assigning servicing rights, selling and/or accepting payoff from someone other than as directed or permitted by [the Wrights], and [] engaging in further misconduct and bad-faith actions." AER at 4372-73. More specifically, the FAC alleged that the Wilson defendants and Bayview misrepresented that if the Wrights would agree to allow the reinstatement of the Bayview loans, Bayview would allow the Wrights to retain the properties. AER at 4374.

On February 10, 2011, the Wilson defendants moved for summary judgment. U.S. Bankruptcy Court, Central District of California No. 2:09-ap-01834-DS (" BK Dkt.") No. 83. On March 24, 2011, the Wrights filed an ex parte motion for a continuance to respond to the motion for summary judgment, which the Bankruptcy Court denied on March 29, 2011. BK Dkt. Nos. 88, 90. On March 29, 2011, the Bankruptcy Court granted the Wilson defendants' motion for summary judgment in its entirety, finding that the Wrights could not have entered into the alleged agreement with the Wilson defendants because the Wrights were in bankruptcy at the time and did not have the approval of the Bankruptcy Court or Bankruptcy Trustee to enter into such an agreement. Bk Dkt. No. 93; AER at 111. The Bankruptcy Court also found that the properties at issue were abandoned by the Trustee in the Bankruptcy proceeding, and that the Bankruptcy Court had approved the sale of the property at 819 Imperial Highway. AER at 112.

On October 17, 2011, Bayview moved for summary judgment. BK Dkt. No. 136. Pursuant to Local Bankruptcy Rule 7056-1(c)(1), appellant's opposition was due on November 7, 2011. On November 10, 2011, the Wrights filed a request for an extension of time to respond to the motion for summary judgment. BK Dkt. No. 150. On November 14, 2011, the Wrights filed a notice alleging that the motion for summary judgment was not properly served, and renewing their request for a continuance of the hearing scheduled for November 28, 2011. BK Dkt. No. 153. On November 22, 2011, the Wrights filed an ex parte motion requesting an emergency hearing on the request for a continuance, or a transfer to federal district court. BK Dkt. No. 156. On November 28, 2011, the Bankruptcy Court denied the request for a continuance, determining that service was proper. BK Dkt. No. 158. That same day, the Bankruptcy Court denied the motion for an emergency hearing or transfer to District Court. BK Dkt. No. 159. The Bankruptcy Court held a hearing on the motion for summary judgment on November 28, 2011. See BK Dkt. No. 160.

On November 30, 2011, the Bankruptcy Court granted Bayview's motion for summary judgment, dismissing all of the Wright's claims against Bayview with prejudice. BK Dkt. No. 160; AER 114-16. Concurrently, the Bankruptcy Court entered a Statement of Uncontroverted Facts and Conclusions of Law. BK Dkt. No. 161; AER 118-27. Among other facts, the Bankruptcy Court found that the Wrights " did not have any equity remaining in the Bayview Properties at the time of the alleged wrongful conduct by Bayview, and did not have any net income generated by the Bayview Properties." AER at 122. Moreover, the Bankruptcy Court found that no contract existed between the Wilson defendants and the Wrights. AER 127. The Bankruptcy Court also concluded that Bayview did not breach the terms of the Stipulation because the Stipulation was " no longer of any force and effect after the Court granted Bayview unconditional relief from the bankruptcy stay" as to the Bayview Properties, and because the Wrights consented to the payoff of Bayview's lien on the Berendo Property by the Wilson defendants. AER at 125. The Bankruptcy Court additionally concluded that the Wrights had not suffered any damages as a result of Bayview's conduct, that no fiduciary relationship existed between the Wrights and Bayview, and that Bayview did not slander, defraud, or make false representations to the Wrights. AER at 126. The Bankruptcy Court also found no merit in the Wrights' contentions that Bayview had induced the Wilson defendants to breach a contract, and had interfered with the Wrights' economic relations. AER at 127.


A district court has jurisdiction to hear appeals from final judgments, orders or decrees of the bankruptcy court. 28 U.S.C. § 158(a). When reviewing a decision of the bankruptcy court, a district court functions as an appellate court and applies the standards of review generally applied in federal courts of appeal. In re Webb, 954 F.2d 1102, 1103-04 (5th Cir.1992). Federal Rule of Bankruptcy Procedure 8013 provides that " [o]n an appeal the district court or bankruptcy appellate panel may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings." Fed.R.Bankr.P. 8013. The bankruptcy court's " conclusions of law are reviewed de novo, and its findings of fact are reviewed for clear error." In re Taylor, 599 F.3d 880, 887 (9th Cir. 2010). A bankruptcy court's grant of summary judgment is reviewed de novo, In re Raintree Healthcare Corp., 431 F.3d 685, 687 (9th Cir. 2005), and may be affirmed on any ground supported by the record, ACLU of Nevada v. City of Las Vegas, 333 F.3d 1092, 1097 (9th Cir.2003).

Clear error can be found " when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Banks v. Gill Distrib. Ctrs., Inc. (In re Banks), 263 F.3d 862, 869 (9th Cir.2001) (quoting Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985). " The existence of the bankruptcy court's jurisdiction is a question of law subject to de novo review." Marciano v. Fahs (In re Marciano), 459 B.R. 27, 34 (B.A.P. 9th Cir.2011) (citing Reebok Int'l, Ltd. v. Marnatech Enters., 970 F.2d 552, 554 (9th Cir.1992)).


Appellant's broadest ground for relief is that the Bankruptcy Court did not have the constitutional authority to enter a final judgment in the adversary proceeding. As explained below, this argument is without merit because appellant consented to the Bankruptcy Court's adjudication and entry of final judgment in the matter. Appellant also raises several more limited grounds for relief, ...

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