                                                                           FILED
                           NOT FOR PUBLICATION                              FEB 25 2014

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT


VA BENE TRIST, LLC, a Nevada limited             No. 12-15169
liability company,
                                                 D.C. No. 2:11-cv-00977-NVW
              Appellant,

  v.                                             MEMORANDUM*

WASHINGTON MUTUAL BANK; et al.,

              Appellees.


                    Appeal from the United States District Court
                             for the District of Arizona
                      Neil V. Wake, District Judge, Presiding

                     Argued and Submitted February 12, 2014
                            San Francisco, California

Before: CALLAHAN and M. SMITH, Circuit Judges, and KORMAN, Senior
District Judge.**

       Va Bene Trist, LLC (VBT) challenges various aspects of the bankruptcy

judge’s order finding that Washington Mutual Pass-Through Certificates WMALT


        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable Edward R. Korman, Senior District Judge for the U.S.
District Court for the Eastern District of New York, sitting by designation.
Series 2006-8 Trust (WMALT), held a valid lien on real property owned by VBT

(the Ranch), and that JPMorgan Chase Bank, N.A. (Chase, and, together with

WMALT, Claimants), could enforce that lien as the servicer of WMALT. VBT

challenges: (1) several evidentiary rulings made by the bankruptcy judge; (2) the

finding that Chase and WMALT had standing to enforce the lien; (3) the finding

that Chase and WMALT held a valid lien on the Ranch; and (4) the finding that

WMALT and Chase had timely filed proofs of claim. Because the parties are

familiar with the facts and procedural history of these cases, we repeat only those

facts necessary to resolve the issues raised on appeal. We affirm.

                                    DISCUSSION

A. Evidentiary Challenges

      VBT challenges the bankruptcy judge’s decision to admit several

documents, as well as the judge’s decision to allow Vicki Landis, a representative

of Chase, testify despite the fact that she was not specifically listed on the pre-trial

witness list. The district court did not abuse its discretion, and we affirm. See City

of Long Beach v. Standard Oil Co., 46 F.3d 929, 936 (9th Cir. 1995).

B. Standing to Enforce the Lien

      “When indorsed in blank, an instrument becomes payable to bearer and may

be negotiated by transfer or possession alone until specifically indorsed.” Ariz.


                                            2
Rev. Stat. § 47-3205. Furthermore, “[t]he transfer of any contract or contracts

secured by a trust deed shall operate as a transfer of the security for such contract

or contract.” Ariz. Rev. Stat. § 33-817. WMALT holds the Note, which is

indorsed in blank. Accordingly, WMALT is both the beneficiary of the Note and a

secured party. In re Weisband, 427 B.R. 13, 20 n. 5 (Bankr. Ariz. 2010) (“If the

Note was endorsed in blank (and the Endorsement was properly affixed to the

Note), it would be a bearer instrument and, therefore, enforceable by the party in

physical possession.”).

C. Validity of the Lien

      The bankruptcy court properly found that Claimants held a valid lien on the

property under the doctrines of equitable subrogation, replacement mortgage, or

reformation. The bankruptcy court properly concluded that the 2006 loan was

intended to include a security interest on the Ranch, and any failure to perfect such

an interest was due either to mutual mistake or to fraud on behalf of Menken. In

these circumstances, equitable subrogation or replacement mortgage are available.

See Mosher v. Conway, 45 Ariz. 463, 468 (1935); See also Restatement (Third) of

Property: Mortgages Section 7.6(a) (“One who fully performs an obligation of

another, secured by a mortgage, becomes by subrogation the owner of the

obligation and the mortgage to the extent necessary to prevent unjust enrichment”);


                                           3
Cont’l Lighting & Contracting, Inc. v. Premier Grading & Utils., LLC, 227 Ariz.

382, 388–89 (2d Ariz. App. Div. 2011) (finding replacement mortgage available

because “[t]he rationale behind the doctrine of replacement is consistent with the

rationale and policy considerations for equitable subrogation” and analyzing

decisions regarding equitable subrogation in order to determine whether

replacement mortgage is available where the second mortgage is obtained by a

different debtor).

      Nor may VBT avail itself of Section 544(a)(3) of the Bankruptcy Code,

which allows a trustee or a debtor to stand in the shoes of a bona fide purchaser of

a debtor’s property. 11 U.S.C. § 544. Under Arizona law, both the Deed of Trust

and the Notice of Trustee’s Sale—both recorded in Maricopa County—contained

sufficient information to give constructive notice to the debtor of the security

interests in the Property evidenced and described in the Deed of Trust. The

information contained in the Deed of Trust and the Notice of Trustee’s Sale was

sufficient to “apprise third parties of the nature and substance of the rights claimed

under the deed of trust and therefore imparted constructive notice.” Watson Constr.

Co. v. AMFAC Mortg. Corp., 124 Ariz. 570, 576 (1st App. Div. 1979) (citations

omitted).

D. Timeliness of Proof of Claim


                                           4
      Secured creditors are not required to provide a proof of claim in order to

preserve their lien. In re Brawders, 503 F.3d 856, 867–68 (9th Cir. 2007) (“Absent

some action by the representative of the bankruptcy estate, liens ordinarily pass

through bankruptcy unaffected, regardless whether the creditor holding that lien

ignores the bankruptcy case, or files an unsecured claim when it meant to file a

secured claim, or files an untimely claim after the bar date has passed.”). Because

Claimants are secured creditors, any failure to timely file proofs of claim does not

bar them from asserting their interest in the Ranch.

      AFFIRMED




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