Bevell et al v. Deutsche Bank National Trust Company

Filing 8

ORDER denying 5 Appellants' request for judicial notice. ORDER denying 7 Motion for Reconsideration. Signed by Judge James A Teilborg on 7/26/2012.(TLB)

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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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On July 10, 2012, this Court issued the following Order:

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Pending before the Court is the Debtors’ motion for expedited stay
pending appeal. Doc. 4. Specifically, the Debtors seek to have this Court stay
the Bankruptcy Court’s Order (BK Doc. 87) in which the Bankruptcy Court
granted Appellee’s motion to lift the automatic stay. In that Order, the
Bankruptcy Court lifted the stay as it relates to a pending Trustee sale of the
Debtors’ residence. The Debtors claim the sale of their residence is scheduled
for July 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,” the proprietary of which is “dependent upon the circumstances of
the particular case.” Virginian R. Co. v. United States, 272 U.S. 658, 672-73
(1926). “A stay is not a matter of right, even if irreparable injury might
otherwise result.” Id. at 672. “The party requesting a stay bears the burden
of showing that the circumstances justify an exercise of that 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

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must consider four factors: “(1) whether the stay applicant has made a strong
showing that he is likely to succeed on the merits; (2) whether the applicant
will be irreparably injured absent a stay; (3) whether issuance of the stay will
substantially injure the other parties interested in the proceeding; and (4)
where the public interest lies.” Hilton v. Braunskill, 481 U.S. 770, 776 (1987).
The first of two of these factors “are the most critical,” and “[i]t is not enough
that the chance of success on the merits be ‘better than negligible.’” Nken, 556
U.S. at 434 (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 pending appeal. The Bankruptcy Court denied that request because
the Court found that the 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
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 bankruptcy stay in this case was an abuse of discretion. Id. at 5.
In sum, the Debtors disagree with the Bankruptcy Judge’s conclusion
that the note was properly indorsed to Appellee. The Debtors then conclude
that because the indorsement 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 on a copy of the note, rather than on the original note. Id. at 4.
Other than their own argument, the Debtors offer no evidence that Appellee
does not possess the original note. However, even if the Debtors’ allegations
are true, the Arizona Supreme Court has held that a secured lender does not
have to produce the original note to conduct a Trustee sale. Hogan v. Wash.
Mut. Bank, 277 P.3d 781, 782 ¶ 5 (Ariz. 2012) (rejecting the “show-me-thenote” argument).
Thus, because the Debtors’ only claim for relief fails, this Court agrees
with the Bankruptcy Court that the Debtors have not shown a likelihood of
success on appeal. Accordingly, under Hilton, their request for a stay of the
Bankruptcy Court’s order lifting the automatic stay pending appeal will be
denied.

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Based on the foregoing,
IT IS ORDERED that the Debtors’ motion for expedited stay pending
appeal (Doc. 4) is denied.

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Doc. 6.
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Appellants move to reconsider the July 10, 2012, Order arguing that this Court: (1)

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failed to consider any bankruptcy cases,1 (2) failed to apply the law of negotiable

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instruments,2 and (3) failed to read all of the Appellants’ filings with the Bankruptcy Court,

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distill from those filings Appellants’ arguments,3 and discover the errors of the Bankruptcy

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Court in ruling on those arguments.4 In their motion for reconsideration, Appellants still fail

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to actually make their arguments, but continue to direct this Court to go review the arguments

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made to the bankruptcy court.5

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This Court has adopted the following test for reconsidering interlocutory orders:

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(1) There are material differences in fact or law from that presented to the
Court and, at the time of the Court’s decision, the party moving for
reconsideration could not have known of the factual or legal differences
through reasonable diligence;
(2) There are new material facts that happened after the Court’s decision;
(3) There has been a change in the law that was decided or enacted after the
Court’s decision; or
(4) The movant makes a convincing showing that the Court failed to consider
material facts that were presented to the Court before the Court’s decision.
No motion for reconsideration shall repeat in any manner any oral or written
argument made in support of or in opposition to the original motion.

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Motorola, Inc. v. J.B. Rodgers Mechanical Contractors, Inc., 215 F.R.D. 581, 586 (D. Ariz.

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2003).

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“We point out here that none of the cases Judge Teilborg cited to slap down our
motion for stay were bankruptcy cases.” Doc. 7 at 3.
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“[O]ur Objection...was actually based on substantive Arizona law, including the
‘Uniform Commercial Code — Negotiable Instruments....’” Doc. 7 at 3.
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“If Judge Teilborg had actually read and [sic] the parts of the record our Motion for
Stay pointed him to, he would have seen we our [sic] Objection to the relieve [sic] Appellees
from the stay was ....” Doc. 7 at 3.
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Notably, none of the record of the Bankruptcy Court has been filed with this Court.
However, as the Court’s prior Order shows, the Court on its own initiative logged into the
Bankruptcy Court’s docket and found and reviewed the relevant portions of the record.
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“Relief Requested - That this Court rehear and review its Order de novo, actually
read our authorities and the record, then order a stay of the bankruptcy court’s “Order
Terminating Automatic Stay” pending final outcome of appeal ... .” Doc. 7 at 7.
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Although Appellant’s do not articulate any standard they are moving under, the Court

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presumes they must be seeking relief for the fourth reason. However, the Court finds

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Appellants have failed to meet this prong because Appellants do nothing more than re-urge

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their prior arguments.

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Further, even if the Court were to again reach the merits of Appellants’ arguments,

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Appellants have failed to show they are entitled to a stay pending appeal. For example,

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Appellants contend that their arguments are based on substantive Arizona law, but

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nonetheless complain that this Court failed to apply any bankruptcy law. Regardless of this

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inconsistency, the Arizona Supreme Court has applied the substantive Arizona law of deeds

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of trust and trustee sales in the bankruptcy context and reached a conclusion that is consistent

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with this Court’s July 10, 2012, Order.6 See In re Vasquez, 266 P.3d 1053 (Ariz. 2011).

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Next, considering Appellants’ argument that they have a claim under the Arizona law

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of Negotiable Instruments, Hogan v. Wash. Mut. Bank, N.A., 277 P.3d 781, 783 (Ariz. 2012)

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rejected their theory. Hogan held, “The UCC does not government liens on real property.

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[citation omitted.] The trust deed statutes do not require compliance with the UCC before a

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trustee commences a non-judicial foreclosure [citation omitted].” Id. Thus, Appellants UCC

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claim also fails.
Finally, as indicated in footnote 4, the Court has reviewed the record and Appellants’

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arguments and does not find Appellants are entitled to relief. Accordingly,
IT IS ORDERED that the motion for reconsideration (Doc. 7) is denied.

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It is possible that Appellants are actually attempting to argue that the bankruptcy
law of secured creditors somehow completely trumps and/or preempts the Arizona nonjudicial foreclosure statutes. However, because the Court cannot find that this argument was
ever presented to or ruled on by the bankruptcy court, nor presented clearly to this Court, the
Court is not reaching any claim in this regard.
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IT IS FURTHER ORDERED that Appellants’ request for judicial notice (Doc. 5)
is denied.7
DATED this 26th day of July, 2012.

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Specifically, Appellants seek to have this Court consider objections that they filed
with the bankruptcy court after that court ruled on the issues on appeal. The objections are
irrelevant because they object to the transfer of this case from the Bankruptcy Appellate
Panel to the District Court.
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