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Lucore v. Specialized Loan Servicing LLC

United States District Court, S.D. California

May 29, 2018

STEVEN H. LUCORE, SR., JUDY L. LUCORE, Appellants,
v.
SPECIALIZED LOAN SERVICING LLC, AS SERVICER FOR WELLS FARGO BANK, N.A. AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF THE LMT 2006-9 TRUST, Appellee.

          ORDER DENYING MOTION FOR REHEARING (ECF, 16)

          HON. JANIS L. SAMMARTINO UNITED STATES DISTRICT JUDGE

         Presently before the Court is Appellants Steven H. Lucore, Jr. and Judy L. Lucore's Amended Motion for Re-Hearing.[1] (“MTN, ECF No. 16). Appellee Specialized Loan Servcing LLC filed a Response in Opposition to, (ECF No. 17), and Appellants filed a Reply in Support of, (ECF No. 20), the Motion.[2] The Court vacated the hearing on the motion and took it under submission pursuant to Civil Local Rule 7.1(d)(1). (ECF No. 18.) Having considered Appellants' arguments and the law, the Court rules as follows.

         BACKGROUND

         This Court's prior Order contains a complete and accurate recitation of the relevant portions of the factual and procedural histories underlying Appellants' Motion. (See “Prior Order, ” ECF No. 12, at 1-3.)[3] This Order incorporates by reference the background as set forth therein. As relevant to this Order, the Court affirmed the bankruptcy court's decision on March 22, 2018 and the present Motion for Rehearing followed.

         LEGAL STANDARD

         Federal Rule of Bankruptcy Procedure 8022 requires a motion for rehearing to “state with particularity each point of law or fact that the movant believes the district court . . . has overlooked or misapprehended and must argue in support of the motion.” Fed.R.Bankr.P. 8022(a)(2). “Petitions for rehearing are designed to ensure that the appellate court properly considered all relevant information in rendering its decision.” In re Hessco Indus., Inc., 295 B.R. 372, 375 (B.A.P. 9th Cir. 2003) (citing Armster v. U.S. District Court, C.D. Cal., 806 F.2d 1347, 1356 (9th Cir. 1986)). “A petition for rehearing is not a means by which to reargue a party's case.” Id. (citing Anderson v. Knox, 300 F.2d 296, 297 (9th Cir. 1962)).

         ANALYSIS

         Appellants advance two points of law or fact that they argue this Court overlooked or misapprehended. First, that Appellee had the original note and second, that there was insufficient evidence to cast serious doubt on Appellee's rights. (MTN 7.) The Court discusses each argument in turn.

         Appellants argue that Appellee did not prove it held the original note because Appellee only provided a copy of the note. (Id.) Appellants advanced this argument for the first time in their answering brief-not their opening brief. The Court noted that Appellants did not include this issue in their original appeal and therefore waived the argument. (Prior Order 12 (citing Fed.R.Bankr.P. 8014(a); and Eberle v. City of Anaheim, 901 F.2d 814, 818 (9th Cir. 1990)).) Alternatively, the Court also determined that the record contained sufficient support for the bankruptcy court's finding that Appellee possessed the Note. (Id.)

         Here, Appellants do not address the waiver issue and do not offer an argument different from the one included in their answering brief. (Compare MTN 7 (“Appellee did not prove it held the original note because it only provided a copy, and there was no original note properly authenticated and submitted on the red [sic].”), with ECF No. 11-1 (“There is no evidence in the record that [Appellee] had possession of the original note.”).) Appellants advance exactly the same argument as before and it fails for the same reason as before. The bankruptcy court cited In re Veal, 450 B.R. 897 (9th Cir. BAP 2011), and determined that Appellee possessed the Note, endorsed in blank. (Prior Order 11.)

         The bankruptcy court's inquiry into standing to seek relief is limited in the context of a relief from stay motion and it does not decide a creditor's claim or security on the merits. In re Veal, 450 B.R. at 914 (citing Johnson v. Righetti (In re Johnson), 756 F.2d 738, 740-41 (9th Cir. 1985)). The stay proceedings are limited in nature because

the ultimate resolution of the parties' rights are often reserved for proceedings under the organic law governing the parties' specific transaction or occurrence. Stay relief involving a mortgage, for example, is often followed by proceedings in state court or actions under nonjudicial foreclosure statutes to finally and definitively establish the lender's and the debtor's rights.

Id. (footnote omitted). Thus, a party seeking a bankruptcy stay relief need only establish that it has a colorable claim to enforce a right against the property of the estate. Id. at 914- 15 (citing United States v. Gould (In re Gould), 401 B.R. 415, 425 n.14 (9th Cir. BAP 2009); and Biggs v. Stovin (In re Luz Int'l, Ltd.), 219 B.R. 837, 842 (9th Cir. BAP 1998); and Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26, 32 (1st Cir. 1994)).

         In California, assignees of a mortgage or deed of trust generally have a right to commence nonjudicial foreclosure proceedings without an explicit requirement they have an interest in the note. See Cal. Civ. Code § 2924(a); In re Veal, 450 B.R. at 917 n.34; see also Putkkuri v. Recontrust Co., No. 08cv1919, 2009 WL 32567 at *2 (S.D. Cal. Jan.5, 2009) (“Production of the original note is not required to proceed with a non-judicial foreclosure.”). The bankruptcy court stated that the essential elements from Veal were that the note be endorsed in blank and that the movant be in possession of the note. (Record on ...


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