                                                            FILED
                                                             JUL 02 2015
 1                         NOT FOR PUBLICATION
                                                         SUSAN M. SPRAUL, CLERK
 2                                                         U.S. BKCY. APP. PANEL
                                                           OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )        BAP No. AZ-15-1013-JuKiPa
                                   )
 6   IVAYLO TSVETANOV DODEV,       )        Bk. No. 2:14-bk-02116-MCW
                                   )
 7                   Debtor.       )
     ______________________________)
 8                                 )
     IVAYLO TSVETANOV DODEV,       )
 9                                 )
                     Appellant,    )
10                                 )
     v.                            )        M E M O R A N D U M*
11                                 )
     THE BANK OF NEW YORK MELLON   )
12   FKA THE BANK OF NEW YORK AS   )
     TRUSTEE FOR THE CERTIFICATE- )
13   HOLDERS OF CWALT, INC.,       )
     ALTERNATIVE LOAN TRUST 2007- )
14   OA7, MORTGAGE PASS-THROUGH    )
     CERTIFICATES, SERIES 2007-OA7 )
15   by and through its servicing )
     agent Select Portfolio        )
16   Servicing, Inc.               )
                                   )
17                   Appellee.     )
     ______________________________)
18
19            Submitted Without Oral Argument on June 19, 2015
                            at Phoenix, Arizona
20
                              Filed - July 2, 2015
21
               Appeal from the United States Bankruptcy Court
22                       for the District of Arizona
23     Honorable Madeleine C. Wanslee, Bankruptcy Judge, Presiding
                        _________________________
24
     Appearances:     Ivaylo T. Dodev on brief pro se; Renee M. Parker
25
26       *
          This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may
   have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8024-1.

                                      -1-
 1                     of Wright Finlay & Zak LLP on brief for appellee
                       The Bank of New York Mellon fka The Bank of New
 2                     York as Trustee for the Certificate-holders of
                       CWALT, Inc., Alternative Loan Trust 2007-OA7,
 3                     Mortgage Pass-Through Certificates, Series 2007-
                       OA7 by and through its serving agent Select
 4                     Portfolio Servicing, Inc.
                         ______________________________
 5
 6   Before:     JURY, KIRSCHER, and PAPPAS, Bankruptcy Judges.
 7
 8           After Ivaylo Tsvetanov Dodev (Debtor) filed his chapter 111
 9   petition, The Bank of New York Mellon (BNYM) fka The Bank of New
10   York as Trustee for the Certificate-holders of CWALT, Inc.,
11   Alternative Loan Trust 2007-OA7, Mortgage Pass-Through
12   Certificates, Series 2007-OA7, by and through its servicing
13   agent Select Portfolio Servicing, Inc. (SPS), filed a proof of
14   claim (POC) asserting a secured claim in the amount of
15   $887,726.66 against Debtor’s residential real property and
16   listing prepetition arrears of $227,413.43.
17           Debtor objected to the POC arguing, among other things,
18   that neither BNYM nor SPS had standing to file the POC or
19   enforce the underlying note.     The bankruptcy court overruled
20   Debtor’s objection on the grounds that: (1) BNYM’s POC was prima
21   facie evidence of the validity and amount of the claim;
22   (2) Debtor failed to advance any argument to overcome the
23   claim’s prima facie validity; (3) the validity or extent of
24   BNYM’s lien could not be litigated in the context of the claim
25
         1
26        Unless otherwise indicated, all chapter and section
   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
27 “Rule” references are to the Federal Rules of Bankruptcy
   Procedure and “Civil Rule” references are the Federal Rules of
28 Civil Procedure.

                                      -2-
 1   objection; and (4) Debtor confirmed that the validity of the
 2   lien and the standing issues were currently being litigated in a
 3   civil action pending in the United States District Court for the
 4   District of Arizona (Civil Action).          The bankruptcy court
 5   overruled Debtor’s objection to the POC, and Debtor appealed.
 6   For the reasons set forth below, we DISMISS this appeal as moot.
 7                                  I.   FACTS2
 8   A.       Prepetition Events
 9            On July 16, 2004, Debtor and his non-debtor spouse3
10   acquired an interest in real property located in Gilbert,
11   Arizona (Property).      About two years later, Debtor obtained a
12   loan from First Magnus Financial Corporation (First Magnus) in
13   the amount of $681,750 which was evidenced by a promissory note
14   and secured by a deed of trust against the Property.          After loan
15   inception, First Magnus transferred the note to Countrywide Bank
16   NA, which in turn transferred the note to Countrywide Home Loans
17   Incorporated, and Countrywide Home Loans Incorporated endorsed
18   the note in blank.      BNYM asserts that it has possession of the
19   note.      Through a Corporation Assignment of Deed of Trust
20   Arizona, Mortgage Electronic Registration Systems, Inc. (MERS)
21   assigned all beneficial interest in the deed of trust and the
22
          2
23        We take judicial notice of various pleadings which were
   docketed and imaged by the bankruptcy court in this bankruptcy
24 case and also take judicial notice of various pleadings which
   were docketed and imaged in the United States District Court for
25 the District of Arizona Case No. CV-13-02155-PHX-DLR. Atwood v.
26 Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9
   (9th Cir. BAP 2003).
27
        3
          The non-debtor spouse later executed a quitclaim deed for
28 the Property in favor of Debtor on December 13, 2006.

                                         -3-
 1   note, including the right to monies due under the note, to BNYM.
 2   BNYM subsequently executed a document entitled Substitution of
 3   Trustee Arizona, substituting Recontrust Company, N.A., in the
 4   place of the original trustee under the deed of trust.
 5            Debtor defaulted on the loan on November 1, 2008.   As a
 6   result, BNYM instituted foreclosure proceedings against the
 7   Property.      On January 5, 2009, Debtor filed a chapter 7 petition
 8   that stayed the foreclosure proceedings.      On April 23, 2009,
 9   Debtor received his § 727 discharge.4
10            On August 2, 2013, a Notice of Trustee’s Sale Arizona with
11   a sale date of November 8, 2013, was recorded against the
12   Property in the Official Records for the County of Maricopa.
13            In response to the notice of sale, on October 23, 2013,
14   Debtor commenced the Civil Action against BNYM, SPS, and others
15   in the United States District Court for the District of Arizona
16   (Case No. CV-13-02155-PHX), seeking to quiet title and alleging
17   damages under the Fair Debt Collection Practices Act (FDCPA),
18   Breach of Contract, and RICO.      Prior to his bankruptcy filing,
19   Debtor filed a first amended complaint.      BNYM, SPS and others
20   filed motions to dismiss under Civil Rule 12(b)(6).      Debtor
21   replied and the moving parties filed a response.
22   B.       Postpetition Events
23            Meanwhile, on February 21, 2014, Debtor filed a chapter 11
24   petition.      On April 21, 2014, Debtor filed a notice in the Civil
25   Action that he had filed a bankruptcy petition.      On April 22,
26
          4
27        Debtor later asserted in the claim objection that his
   chapter 7 discharge relieved him of all obligations under the
28 note.

                                       -4-
 1   2014, the district court entered an order staying the Civil
 2   Action for six months and denying the pending motions to dismiss
 3   without prejudice.
 4        Debtor continued his efforts challenging BNYM’s secured
 5   claim against his Property in the bankruptcy court.   In
 6   Schedule A, Debtor listed the Property with a value of $293,000
 7   and listed the amount of the secured claim as zero.   In
 8   Schedule D, Debtor listed First Magnus as holding a secured
 9   claim against the Property in the amount of zero.   Debtor listed
10   himself as a creditor in Schedule D holding a secured claim of
11   $1,053,160 against the Property and an unsecured claim in the
12   amount of $760,160.   Finally, in Schedule F, Debtor listed BNYM
13   as an unsecured creditor with a claim valued at zero.    In an
14   amended Schedule F, Debtor later asserted that BNYM had an
15   unsecured claim in the amount of $681,750.
16        On June 12, 2014, BNYM filed a motion for relief from the
17   automatic stay so that it could continue to foreclose on the
18   Property.   In the same motion, BNYM also requested an order
19   determining that the stay did not apply to the Civil Action that
20   was initiated by Debtor or, alternatively, for an order lifting
21   the stay to allow BNYM to proceed with the litigation.     BNYM
22   argued that relief from the stay was warranted because Debtor
23   had no equity in the Property and that judicial efficiency
24   favored lifting the stay to allow the Civil Action to continue.
25   According to BNYM, the district court case had been ongoing for
26   close to eight months and during that time the parties had fully
27   briefed the motions to dismiss.   Debtor opposed the relief from
28   the stay motion on various grounds, including BNYM’s lack of

                                    -5-
 1   standing.
 2        On July 8, 2014, SPS timely filed POC No. 2-1 on behalf of
 3   BNYM, alleging a secured claim in the amount of $887,726.66 and
 4   stating that the amount of the arrears as of the petition date
 5   was $227,413.45.    The POC listed SPS as the entity to receive
 6   notice and payment on the claim.      Attached to the POC was an
 7   itemization of all prepetition fees and charges and the amount
 8   necessary to cure the prepetition default.      Also attached was a
 9   copy of the note which contained three endorsements:      (1) from
10   First Magnus, the loan originator, to Countrywide Bank NA;
11   (2) from Countrywide Bank NA to Countrywide Home Loans
12   Incorporated; and (3) a blank endorsement from Countrywide Home
13   Loans Incorporated without recourse.      The POC also attached a
14   copy of the deed of trust, an assignment of the deed of trust
15   from MERS to BNYM, and proof that the deed of trust was recorded
16   prepetition.    The POC was signed by the attorney for BNYM.
17        Debtor objected to BNYM’s POC, asserting, among other
18   things, that neither BNYM nor its servicing agent, SPS, had
19   standing to file the POC or enforce the lien.
20        BNYM asserted several arguments in response.      First,
21   Debtor did not provide a specific basis under § 502 to have
22   BNYM’s POC disallowed.    Second, if the objection to the POC was
23   sustained, BNYM would not be permitted to participate in the
24   chapter 11 plan, but its lien would pass through the bankruptcy
25   unaffected.    Next, BNYM maintained that it was holder of the
26   note since it was endorsed in blank and BNYM was either in
27   possession or constructive possession of the promissory note.
28   Therefore, BNYM qualified as the holder of the note and was

                                     -6-
 1   entitled to enforce the note under Ariz. Rev. Stat. (ARS)
 2   § 47-3301.5    Fourth, BNYM asserted that as the beneficiary under
 3   the deed of trust, it was entitled to enforce the underlying
 4   obligation.     Finally, BNYM argued that it had both
 5   constitutional and prudential standing and its POC complied with
 6   all the applicable bankruptcy rules.
 7           On August 27, 2014, the district court terminated the stay
 8   that it had imposed on the Civil Action and reinstated the
 9   parties’ motions to dismiss Debtor’s first amended complaint.6
10           On September 10, 2014, the bankruptcy court held a
11   preliminary hearing on BNYM’s motion for relief from the stay.
12   The court directed the attorney for BNYM to file a declaration
13   from his client setting forth the transfers of the loan and
14   attaching the relevant documentation.7    The court also
15   authorized the attorney to upload a form of order lifting the
16   automatic stay and the court stated that the stay would be
17
18       5
             ARS § 47-3301 provides:
19
         ‘Person entitled to enforce’ an instrument means the
20       holder of the instrument, a nonholder in possession of
         the instrument who has the rights of a holder or a
21
         person not in possession of the instrument who is
22       entitled to enforce the instrument pursuant to
         § 47-3309 or § 47-3418, subsection D. A person may be
23       a person entitled to enforce the instrument even though
         the person is not the owner of the instrument or is in
24       wrongful possession of the instrument.
25       6
          Evidently the parties stipulated that the automatic stay
26 under § 362 did not apply to the litigation commenced by Debtor
   prior to his bankruptcy.
27
        7
          The declaration was not filed until October 29, 2014,
28 after the bankruptcy court ruled on the claim objection.

                                       -7-
 1   lifted.
 2           On October 6, 2014, the district court granted BNYM’s and
 3   SPS’s motions to dismiss Debtor’s first amended complaint in the
 4   Civil Action without prejudice, except as to his claim for mail
 5   fraud which was dismissed with prejudice.     The district court
 6   gave Debtor fifteen days in which to file a second amended
 7   complaint.8
 8           Meanwhile, the bankruptcy court heard Debtor’s objection to
 9   BNYM’s POC on October 20, 2014.     The bankruptcy court advised
10   Debtor to keep in mind that his objection to BNYM’s POC would
11   not remove or invalidate the lien against his Property in the
12   context of the claim objection.9    Debtor also confirmed to the
13   court that he was seeking that relief in the Civil Action.
14           Debtor argued that, for myriad reasons, BNYM and SPS did
15   not have standing to file the POC or enforce the note.      In
16   response, Bank’s counsel explained that SPS was subservicing the
17   loan and that SPS indicated to his firm that it was in
18   possession of the note and that note was endorsed in blank.
19   The bankruptcy court noted that BNYM had not yet filed an
20   affidavit or declaration in connection with its motion for
21   relief from stay.     BNYM’s counsel represented that the
22   declaration had been drafted and that he would file it sometime
23
24
        8
          BNYM states in its brief that the district court granted
25 the motions to dismiss on December 12, 2013. However, the order
26 is dated October 6, 2014.
         9
27        Debtor did not file an adversary proceeding under
   Rule 7001(2) in order to have the bankruptcy court determine the
28 validity, priority, and enforceability of BNYM’s lien.

                                      -8-
 1   that week.10
 2         The bankruptcy court ruled that BNYM’s POC was prima facie
 3   evidence of the validity of its claim and complied with the
 4   applicable bankruptcy rules.   The court found that Debtor had
 5   not met his burden of proof of overcoming the prima facie
 6   validity of the POC because his arguments failed to raise a
 7   legal basis to sustain the objection or were inapplicable.     The
 8   court further found that BNYM had presented the note which
 9   showed an endorsement in blank.   The court stated that it did
10   not see any information from Debtor to show that the deed of
11   trust was invalidated or discharged or somehow removed from the
12   property in question.   In the end, the bankruptcy court found
13   that “[t]he notes and deed[] of trust appear proper[] and
14   there’s no basis on which to sustain your objection.”
15         The bankruptcy court entered the order overruling Debtor’s
16   objection and allowing Bank’s claim on October 23, 2014.
17   Debtor filed a timely appeal from that order.11
18         On October 23, 2014, the same day the bankruptcy court
19   entered the order overruling his claim objection, Debtor filed
20
        10
           As previously noted, the declaration was filed on
21 October 29, 2014, after the bankruptcy court ruled on the claim
22 objection, and in connection with BNYM’s motion for relief from
   stay. In the declaration, an employee of SPS verified that SPS
23 was BNYM’s subservicer and had actual possession of the note.
          11
24          Debtor also appealed a second order as part of his notice
     of appeal - the bankruptcy court’s order terminating the
25   automatic stay as to BNYM and determining that the automatic stay
26   did not apply to the Civil Action. The Panel issued an order
     informing Debtor that it opened a second appeal, BAP No. 14-1529,
27   and requiring him to pay an additional filing and docketing fee,
     which he did. That appeal has since been dismissed as moot
28   because Debtor’s underlying bankruptcy case was dismissed.

                                    -9-
 1   his second amended complaint in the Civil Action.    Debtor’s
 2   first claim for relief challenged the standing of “all
 3   defendants”, including BNYM and SPS.    Debtor alleged that none
 4   of the defendants had either constitutional or prudential
 5   standing and that they were not the real parties in interest as
 6   a holder in due course or authorized agent of a holder in due
 7   course.   Therefore, Debtor alleged that they could not show
 8   injury in fact as a result.    BNYM, SPS, and others again filed
 9   motions to dismiss Debtor’s second amended complaint.
10        On November 10, 2014, the bankruptcy court entered the
11   order granting BNYM’s motion for relief from stay and
12   determining that the automatic stay did not apply to the Civil
13   Action.
14        On March 13, 2015, Debtor’s bankruptcy case was dismissed.
15        On April 13, 2015, the district court granted the parties’
16   motions to dismiss Debtor’s second amended complaint on all
17   causes of action with prejudice except the quiet title claim for
18   relief.   The district court determined that Debtor’s allegations
19   under his first claim for relief that included his standing
20   arguments failed to state a claim for relief and that further
21   amendment would be futile.    The district court gave Debtor a
22   final opportunity to file a third amended complaint on the quiet
23   title claim.   The order dismissing the other claims made clear
24   that Debtor was prohibited from reasserting any allegations
25   regarding BNYM’s or SPS’s standing in the third amended
26   complaint.   The Civil Action remains open and is ongoing.
27                           II.   JURISDICTION
28        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

                                     -10-
 1   §§ 1334 and 157(b)(2)(B).    During the pendency of this appeal,
 2   the bankruptcy court dismissed Debtor’s chapter 11 case and
 3   Debtor continued to assert his standing arguments in the Civil
 4   Action through the filing of his second amended complaint.         His
 5   constitutional and prudential standing arguments ran their
 6   course along with his other arguments relating to the FDCPA and
 7   challenges to the validity of the assignment of the deed of
 8   trust from MERS to BNYM when the district court dismissed those
 9   claims, among others, with prejudice.         Because of the dismissal
10   of the underlying bankruptcy case, and the presence of the
11   related litigation in the district court, the question arises
12   whether this appeal is moot.    For the reasons set forth below,
13   we conclude that it is.
14                                III.    ISSUES
15          Do we have jurisdiction over this appeal?
16          If we do have jurisdiction over the appeal, did the
17   bankruptcy court err in overruling Debtor’s objections to BNYM’s
18   POC?
19                         IV.   STANDARDS OF REVIEW
20          Our jurisdiction, such as whether an appeal is moot, is a
21   question of law that we address de novo.        Menk v. Lapaglia
22   (In re Menk), 241 B.R. 896, 903 (9th Cir. BAP 1999).
23          Standing is an issue of law which we also review de novo.
24   Palmdale Hills Prop., LLC v. Lehman Commercial Paper, Inc
25   (In re Palmdale Hills Prop., LLC), 654 F.3d 868, 873 (9th Cir.
26   2011).    Factual determinations underlying the standing decision
27   are reviewed for clear error.       Id.
28          An order overruling a claim objection can raise legal

                                         -11-
 1   issues (such as the proper construction of statutes and rules)
 2   which we review de novo, as well as factual issues (such as
 3   whether the facts establish compliance with particular statutes
 4   or rules), which we review for clear error.    Veal v. Am. Home
 5   Mortg. Servicing, Inc. (In re Veal), 450 B.R. 897, 918 (9th Cir.
 6   BAP 2011).
 7                              V.   DISCUSSION
 8        Debtor argues on appeal that the bankruptcy court erred in
 9   overruling his objection for numerous reasons which we summarize
10   here:    (1) SPS did not have standing to file the POC on behalf
11   of BNYM; (2) SPS failed to establish an agency relationship with
12   BNYM; (3) BNYM had not produced evidence that SPS was in
13   possession of the note until after his claim objection had been
14   ruled upon; (4) BNYM is in violation of the FDCPA; (5) the
15   validity of the endorsements on the copy of the note is
16   questionable; (6) BNYM has failed to establish that it had a
17   secured claim; (7) the assignment of the deed of trust from MERS
18   to BNYM was deficient; (8) the claim was unenforceable under
19   non-bankruptcy law; (9) the bankruptcy court failed to hold an
20   evidentiary hearing; and (10) the debt is time-barred by ARS
21   § 12-548.
22        While BNYM responds to these arguments, as an initial
23   matter, it asserts that this appeal is moot because the
24   bankruptcy court dismissed Debtor’s chapter 11 case after he
25   filed this appeal and the order dismissing the case is now
26   final.    Accordingly, we first consider our jurisdiction.
27        Ordinarily we have jurisdiction over appeals of final
28                                    -12-
 1   orders under 28 U.S.C. § 158 but we lack jurisdiction to hear a
 2   moot appeal.    I.R.S. v. Pattullo (In re Pattullo), 271 F.3d 898,
 3   901 (9th Cir. 2001).     “Our mootness inquiry focuses upon whether
 4   we can still grant relief between the parties.”      Id.   “‘If an
 5   event occurs while a case is pending on appeal that makes it
 6   impossible for the court to grant any effectual relief whatever
 7   to a prevailing party, the appeal is moot and must be
 8   dismissed.’”    Id.   That said, an appeal is not moot “if the
 9   court can fashion some form of meaningful relief” for the
10   appellant in the event it decides the appeal on the merits in
11   its favor.    Id.
12        It is well settled that the dismissal of a bankruptcy case
13   may render moot those matters closely connected with a Debtor’s
14   reorganization, such as allowing a proof of claim.      Bevan v.
15   Socal Commc’ns Sites, LLC (In re Bevan), 327 F.3d 994, 997 (9th
16   Cir. 2003).    Since only claimants with allowed claims may
17   participate in a distribution under a Debtor’s plan, allowing
18   BNYM’s POC is undoubtedly a matter closely connected with
19   Debtor’s reorganization.     Here, the dismissal occurred because
20   Debtor could not confirm a plan; no creditor, including BNYM or
21   SPS, will receive distributions since his case was dismissed.
22        Moreover, the deed of trust passed through Debtor’s
23   bankruptcy and continues to encumber his Property.      Upon
24   dismissal, the Property revested in Debtor and Debtor was
25   restored to all of the rights he possessed immediately prior to
26   the filing of his petition.     See § 349.   Indeed, Debtor
27   continues to pursue those rights in the Civil Action.       Under
28                                    -13-
 1   these circumstances, we fail to see how we could provide any
 2   meaningful relief to Debtor within the confines of the
 3   bankruptcy case itself.   See In re Pattullo, 271 F.3d at 901-902
 4   (“To have jurisdiction, we must be able to grant effective
 5   relief within the boundaries of the present case.”).
 6        Generally, “a claims objection proceeding in bankruptcy
 7   takes the place of the state court lawsuit or other action
 8   because such actions are presumptively stayed by operation of
 9   § 362.”   In re Veal, 450 B.R. at 918.   However, the bankruptcy
10   court may defer to a nonbankruptcy court to liquidate and settle
11   the parties’ claims and contentions under appropriate
12   circumstances.   Here, the record shows that the bankruptcy court
13   implicitly abstained from making a merits ruling within the
14   context of the claim objection pertaining to issues that were
15   repeated in the Civil Action.   Indeed, the parties continued to
16   litigate the standing issues and others in the Civil Action
17   prior to the bankruptcy court’s ruling on the claim objection
18   and prior to the bankruptcy court’s ruling on BNYM’s motion for
19   relief from the stay.   During the pendency of this appeal
20   Debtor’s constitutional and prudential standing arguments
21   relating to BNYM and SPS ran their course in the Civil Action
22   along with his other arguments alleging violations under the
23   FDCPA and challenges to the validity of the assignment of the
24   deed of trust from MERS to BNYM.   These claims, among others,
25   were dismissed with prejudice which means Debtor had no
26   opportunity to cure the pleading defects in his second amended
27   complaint.   In addition, although the district court gave Debtor
28                                   -14-
 1   one final opportunity to file a third amended complaint on the
 2   quiet title cause of action, the district court made perfectly
 3   clear in its dismissal order that Debtor could not re-plead his
 4   “standing to enforce,” “holder of the note,” or UCC arguments
 5   and allegations or any reformulation of them:
 6        If Dodev submits a Third Amended Complaint that re-
          pleads any claim dismissed with prejudice by this
 7        order, rehashes his ‘standing’ arguments, or fails to
          comply with [Civil] Rule 8, the Court will not wait
 8        for a motion to dismiss to be filed, but will instead
          strike the amended pleading and dismiss this action
 9        entirely.
10        Given this background, a potentially preclusive order on
11   the standing issues has already been rendered.   See Bevan,
12   327 F.3d at 997 (“The allowance . . . of ‘a claim in bankruptcy
13   is binding and conclusive on all parties or their privies, and
14   being in the nature of a final judgment, furnishes a basis for a
15   plea of res judicata.’”).   Accordingly, even if we were to
16   reverse the bankruptcy court’s ruling that BNYM had standing,
17   the district court has already finally decided that issue.
18                           VI.   CONCLUSION
19        Because we can grant no effective relief, we DISMISS this
20   appeal as moot.
21
22
23
24
25
26
27
28                                  -15-
