Tim Varela, Sr. v. Wells Fargo Bank, N.A.
698 F. App'x 520
| 9th Cir. | 2017Background
- Debtor Tim Varela, Sr. filed Chapter 7 bankruptcy and objected to Wells Fargo Bank N.A.’s proof of claim on a mortgage-related note.
- Wells Fargo moved for relief from the automatic stay to pursue the property securing the note.
- The bankruptcy court denied Varela’s objection to the proof of claim and granted Wells Fargo relief from the stay.
- The district court affirmed the bankruptcy court’s orders on appeal.
- Varela appealed pro se to the Ninth Circuit; the Ninth Circuit reviewed legal conclusions de novo and factual findings for clear error.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wells Fargo was entitled to relief from the automatic stay | Varela argued stay relief was improper (challenged Wells Fargo’s claim to the property) | Wells Fargo asserted it had a colorable claim to the property and so stay relief was appropriate | Court: Granting relief was not an abuse of discretion; Wells Fargo showed a colorable claim |
| Whether Wells Fargo’s proof of claim was valid / whether Wells Fargo had standing to enforce the note | Varela argued the proof of claim was invalid or unsupported | Wells Fargo showed it was the holder of the note (endorsement in blank → bearer) and proof of claim is presumptively valid | Court: Proof of claim properly allowed; Wells Fargo had standing and Varela failed to rebut the presumption of validity |
| Whether the bankruptcy judge should have recused | Varela claimed the bankruptcy court erred by not recusing | Wells Fargo defended the court’s proceedings (no new argument presented) | Court: Argument not considered on appeal because it was raised for the first time on appeal |
Key Cases Cited
- Arkison v. Griffin, 719 F.3d 1126 (9th Cir. 2013) (party seeking stay relief need only show a colorable claim)
- Grogan v. Garner, 498 U.S. 279 (U.S. 1991) (state law determines validity of creditors’ claims in bankruptcy)
- In re Thorpe Insulation Co., 677 F.3d 869 (9th Cir. 2012) (standards of review for appeals from bankruptcy court)
- In re JTS Corp., 617 F.3d 1102 (9th Cir. 2010) (de novo review of legal conclusions; clear-error for factual findings)
- Shanks v. Dressel, 540 F.3d 1082 (9th Cir. 2008) (appellate court may affirm on any ground supported by the record)
- In re S. Cal. Plastics, Inc. (Diamant v. Kasparian), 165 F.3d 1243 (9th Cir. 1999) (proof of claim is prima facie evidence; debtor must rebut)
- Dunmore v. United States, 358 F.3d 1107 (9th Cir. 2004) (prudential standing requirements)
- Smith v. Marsh, 194 F.3d 1045 (9th Cir. 1999) (issues raised for first time on appeal generally not considered)