Bevell et al v. Deutsche Bank National Trust Company

Filing 6

ORDER that the Debtors' 4 Motion for Expedited Stay Pending Appeal is denied. Signed by Judge James A Teilborg on 7/10/2012.(LFIG)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Debtors.
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John N. Bevell and Sean A. Bevell,
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Appellants,
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vs.
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Deutsche Bank National Trust Company,)
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Appellee.
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John N. Bevell and Sean A. Bevell,

Dist. Ct.
BK No.

CV 12-1417-PHX-JAT
2:10-bk-24724-RTB

ORDER

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Pending before the Court is the Debtors’ motion for expedited stay pending appeal.

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Doc. 4. Specifically, the Debtors seek to have this Court stay the Bankruptcy Court’s Order

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(BK Doc. 87) in which the Bankruptcy Court granted Appellee’s motion to lift the automatic

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stay. In that Order, the Bankruptcy Court lifted the stay as it relates to a pending Trustee sale

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of the Debtors’ residence. The Debtors claim the sale of their residence is scheduled for July

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12, 2012. Doc. 4 at 1.

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Whether to grant or deny a request for a stay is “an exercise of judicial discretion,”

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the proprietary of which is “dependent upon the circumstances of the particular case.”

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Virginian R. Co. v. United States, 272 U.S. 658, 672-73 (1926). “A stay is not a matter of

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right, even if irreparable injury might otherwise result.” Id. at 672. “The party requesting

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a stay bears the burden of showing that the circumstances justify an exercise of that

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discretion.” Nken v. Holder, 556 U.S. 418, 433-34 (2009).

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In order for this Court to grant or deny a request for a stay, the Court must consider

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four factors: “(1) whether the stay applicant has made a strong showing that he is likely to

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succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3)

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whether issuance of the stay will substantially injure the other parties interested in the

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proceeding; and (4) where the public interest lies.” Hilton v. Braunskill, 481 U.S. 770, 776

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(1987). The first of two of these factors “are the most critical,” and “[i]t is not enough that

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the chance of success on the merits be ‘better than negligible.’” Nken, 556 U.S. at 434

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(quoting Sofinet v. INS, 188 F.3d 703, 707 (7th Cir. 1999)).

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Prior to coming to this Court, the Debtors moved the Bankruptcy Court for a stay

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pending appeal. The Bankruptcy Court denied that request because the Court found that the

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Debtors had not shown any likelihood of success on appeal. BK Doc. 119.

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In the motion to stay before this Court, the Debtors argue

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The “special endorsement” the bankruptcy court relied on to bootstrap
[footnote omitted] “Deutsche Bank” into having standing was effectively
nullified by our First Objections to its amended motion for relief from stay and
by our first Judicial Notice. [footnote omitted] The “special endorsement”
Judge Baum relied on was examined in our Objections’ page 8 under the bold
heading “FOURTH.” As all can see we challenged it as unauthorized,
unauthenticated alteration under Arizona law, and the lost note law should
have been applied.

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Doc. 4 at 3. The Debtors then conclude that the Bankruptcy Court lifting the automatic
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bankruptcy stay in this case was an abuse of discretion. Id. at 5.
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In sum, the Debtors disagree with the Bankruptcy Judge’s conclusion that the note
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was properly indorsed to Appellee. The Debtors then conclude that because the indorsement
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was defective, Appellee does not have standing to have a Trustee sale of the residence.
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It appears that the Debtors argue that the indorsement was defective because it was
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on a copy of the note, rather than on the original note. Id. at 4. Other than their own
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argument, the Debtors offer no evidence that Appellee does not possess the original note.
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However, even if the Debtors’ allegations are true, the Arizona Supreme Court has held that
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a secured lender does not have to produce the original note to conduct a Trustee sale. Hogan

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v. Wash. Mut. Bank, 277 P.3d 781, 782 ¶ 5 (Ariz. 2012) (rejecting the “show-me-the-note”

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argument).

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Thus, because the Debtors’ only claim for relief fails, this Court agrees with the

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Bankruptcy Court that the Debtors have not shown a likelihood of success on appeal.

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Accordingly, under Hilton, their request for a stay of the Bankruptcy Court’s order lifting the

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automatic stay pending appeal will be denied.

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Based on the foregoing,

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IT IS ORDERED that the Debtors’ motion for expedited stay pending appeal (Doc.

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4) is denied.
DATED this 10th day of July, 2012.

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