In re: Cynthia Cynko Zipser

FILED MAR 23 2016 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK 2 U.S. BKCY.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. CC-15-1258-FTaKu ) 6 CYNTHIA CYNKO ZIPSER, ) Bk. No. 14-12827-PC ) 7 Debtor. ) _____________________________ ) 8 ) CYNTHIA CYNKO ZIPSER, ) 9 ) Appellant, ) 10 ) v. ) MEMORANDUM* 11 ) OCWEN LOAN SERVICING, LLC, ) 12 ) Appellee. ) 13 ______________________________) 14 Argued and Submitted on February 19, 2016 at Pasadena, California 15 Filed – March 23, 2016 16 Appeal from the United States Bankruptcy Court 17 for the Central District of California 18 Honorable Peter H. Carroll, Bankruptcy Judge, Presiding 19 Appearances: Steven J. Krause of Ananda & Krause, APLC argued 20 for Appellant Cynthia Cynko Zipser; Leslie Marie Klott of Law Offices of Les Zieve argued for 21 Appellee Ocwen Loan Servicing, LLC. 22 Before: FARIS, TAYLOR, and KURTZ, Bankruptcy Judges. 23 24 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, see 28 9th Cir. BAP Rule 8024-1.

1 INTRODUCTION 2 Appellant/chapter 131 debtor Cynthia Cynko Zipser appeals 3 from the bankruptcy court’s order overruling her objection to 4 Appellee Ocwen Loan Servicing, LLC’s claim. The bankruptcy court 5 determined that Ocwen, as the person in possession of a note 6 endorsed in blank, was a person entitled to enforce the note. 7 Ms. Zipser fails to identify any reversible error. Accordingly, 8 we AFFIRM. 9 FACTUAL BACKGROUND2 10 The facts are not in dispute. (In fact, in their respective 11 briefs, both Ms. Zipser and Ocwen copied virtually verbatim the 12 recitation of facts from the bankruptcy court’s Memorandum 13 Decision.) 14 In 2004, Countrywide Bank, a Division of Treasury Bank, N.A. 15 (“Countrywide”) lent $639,920.00 to Ms. Zipser and Daniel Zipser. 16 The Zipsers executed an adjustable rate note (the “Note”) and a 17 deed of trust (the “Deed of Trust”) encumbering the Zipsers’ real 18 property located in Thousand Oaks, California (the “Subject 19 Property”). 20 21 1 Unless specified otherwise, all chapter and section 22 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules of Bankruptcy 23 Procedure, Rules 1001-9037, and all “Civil Rule” references are to the Federal Rules of Civil Procedure, Rules 1-86. 24 2 Ms. Zipser presents us with a deficient record that is 25 just thirteen-pages long and includes only the court’s memorandum 26 decision, order, and a copy of the last page of the Note with the blank endorsement. We have exercised our discretion to review 27 the bankruptcy court’s docket, as appropriate. See Woods & Erickson, LLP v. Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2 28 (9th Cir. BAP 2008).

1 The Note was endorsed in blank by Treasury Bank, N.A. and 2 transferred to Ocwen Loan Servicing, LLC, as servicer for 3 Christiana Trust, a division of Wilmington Savings Fund Society, 4 FSB, not in its individual capacity but as Trustee of ARLP 5 Trust 3 (“Christiana Trust”). Ocwen represents that, on behalf 6 of Christiana Trust, it is in actual and physical possession of 7 the Note and that Christiana Trust is the noteholder and 8 beneficiary under the Deed of Trust. 9 On November 15, 2010, the Zipsers filed for chapter 7 10 bankruptcy. The Zipsers disclosed that they owned the Subject 11 Property valued at $636,600 and encumbered by two liens totaling 12 $756,831. The Zipsers received their discharge on December 21, 13 2011, and the case was closed on November 18, 2013. 14 On December 30, 2014, Ms. Zipser filed a chapter 13 petition 15 in the bankruptcy case from which this appeal arises. She stated 16 that she owned a community interest in the Subject Property 17 valued at “$0.00” and that secured claims encumbered the Subject 18 Property for “$0.00.” She did not identify any creditor holding 19 a lien against the Subject Property.3 She identified Ocwen as a 20 creditor with the notation “Notice Only.” 21 Ms. Zipser’s proposed chapter 13 plan did not provide for 22 the payment of any secured claim except for a claim held by 23 JP Morgan Chase. The court confirmed the plan on March 19, 2015. 24 On May 11, 2015, Ocwen filed Claim #3 for $829,418.23 25 26 3 Ms. Zipser listed Countrywide as the holder of an 27 unsecured nonpriority claim in the amount of “$0.00.” She included a notation identifying the Subject Property and stating 28 “Discharged - $639,920.00.”

1 secured by the Deed of Trust on the Subject Property. Ocwen 2 represented that it services the underlying mortgage loan on the 3 Subject Property for Christiana Trust. It stated that Christiana 4 Trust “directly or through an agent has possession of the 5 promissory note and the promissory note is either made payable to 6 [Christiana Trust] or has been duly endorsed.” 7 Ms. Zipser filed an objection to Ocwen’s Claim #3 8 (“Objection”). She stated that Ocwen is asserting a “fraudulent 9 and invalid claim” at “the eleventh hour.” Essentially, she 10 argued that Ocwen had failed to show that it was the proper 11 holder of the Note, because it could not track the physical 12 transfer between Countrywide, Bank of America, and Ocwen and 13 because a note endorsed in blank does not provide the possessor 14 with a right to enforce it. Ms. Zipser relied upon Veal v. 15 American Home Mortgage Services, Inc. (In re Veal), 450 B.R. 897 16 (9th Cir. BAP 2011), and Kemp v. Countrywide Home Loans, Inc. 17 (In re Kemp), 440 B.R. 624 (Bankr. D.N.J. 2010). 18 Ocwen filed a written opposition to the Objection. In 19 summary, it argued that, as the holder of the Note that is 20 endorsed in blank, it is entitled to foreclose on the Subject 21 Property. Javier Rivera, a Contract Management Coordinator of 22 Ocwen, attested that “Ocwen as the duly authorized and acting 23 loan servicing agent on behalf of [Christiana Trust] has actual 24 and physical possession of the Note.” 25 The court heard this matter on July 23, 2015 and 26 subsequently issued its Memorandum Decision overruling the 27 Objection. The court held that Ocwen had met its burden of proof 28 with respect to Claim #3. The court also held that, as a

1 servicing agent for Christiana Trust and the party with actual 2 and physical possession of the Note, endorsed in blank and 3 secured by the Deed of Trust, “Ocwen had standing to file Claim 4 # 3 . . . .” 5 Ultimately, the court held that “Ocwen’s Claim # 3 6 establishes a valid secured claim. Ocwen is entitled to enforce 7 the Note under the UCC and California law. Ocwen possesses the 8 right to foreclose. . . . Debtor has not offered any evidence to 9 the contrary . . . .” 10 The court thus overruled the Objection. Ms. Zipser timely 11 appealed. 12 JURISDICTION 13 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 14 §§ 1334, 157(b)(1), and 157(b)(2)(A) and (B). We have 15 jurisdiction under 28 U.S.C. § 158. 16 ISSUE 17 Whether the bankruptcy court erred in overruling 18 Ms. Zipser’s objection to Ocwen’s Claim #3. 19 STANDARD OF REVIEW 20 Standing is a legal issue that we review de novo. 21 Wedges/Ledges of Cal., Inc. v. City of Phoenix, 24 F.3d 56, 61 22 (9th Cir. 1994); Kronemyer v. Am. Contractors Indem. Co. 23 (In re Kronemyer), 405 B.R. 915, 919 (9th Cir. BAP 2009). 24 We review “the bankruptcy court’s interpretation of the 25 Bankruptcy Code de novo and its factual findings for clear 26 error[.]” Hedlund v. Educ. Res. Inst. Inc., 718 F.3d 848, 854 27 (9th Cir. 2013) (quoting Miller v. Cardinale (In re DeVille), 28 361 F.3d 539, 547 (9th Cir. 2004)).

1 DISCUSSION 2 A. The bankruptcy court did not err in overruling Ms. Zipser’s Objection to Ocwen’s Claim #3. 3 4 Ms. Zipser contends Ocwen did not have the right to enforce 5 the Note, despite its undisputed possession of that Note endorsed 6 in blank. Unpersuaded by her arguments in support of that 7 contention, we hold that the bankruptcy court did not err in 8 overruling her Objection. 9 1. The bankruptcy court did not err in holding that Ocwen is entitled to enforce the Note. 10 11 Ms. Zipser argues (in multiple iterations) that Ocwen failed 12 to establish that it is the party entitled to enforce the Note. 13 None of these arguments is correct. 14 We have repeatedly held that a possessor of a note endorsed 15 in blank is a party entitled to enforce the note and foreclose on 16 any collateral. See Zulueta v. Bronitsky (In re Zulueta), 17 No. NC-10-1459-HPaJu, 2011 WL 4485621, at *6 (9th Cir. BAP 18 Aug. 23, 2011), aff’d, 520 F. App’x 558 (9th Cir. 2013) (“A party 19 in physical possession of an endorsed-in-blank note qualifies as 20 a holder of a note under [California law]. Because [the 21 servicer] appeared at the Hearing with possession of the 22 endorsed-in-blank Note, it was a holder of the Note entitled to 23 enforce it.”); see also Allen v. U.S. Bank, N.A. (In re Allen), 24 472 B.R. 559, 565-67 (9th Cir. BAP 2012); In re Veal, 450 B.R. at 25 902, 910-11. 26 In the present case, the bankruptcy court determined that 27 Ocwen had actual and physical possession of the Note, endorsed in 28 blank and secured by a deed of trust lien. The court held that,

1 “[a]s the entity in actual possession of the Note endorsed in 2 blank and beneficiary under the Deed of Trust securing the Note, 3 Ocwen had standing to file Claim # 3 on May 11, 2015.” 4 Ms. Zipser emphasizes Ocwen’s failure to demonstrate an 5 unbroken chain of possession of the Note and argues that this 6 failure renders its claim unenforceable. As we have previously 7 held, the possessor of a note endorsed in blank is entitled to 8 enforce it under California Commercial Code § 3205(b). There is 9 no requirement that the holder of a note endorsed in blank must 10 additionally prove that it properly came into possession of the 11 note. As the holder of the Note endorsed in blank, Ocwen was 12 entitled to enforce the Note and had standing to assert Claim #3. 13 The bankruptcy court did not err.4 14 In fact, the UCC makes clear that the holder of a note 15 includes anyone in possession of a note, even if he came by it 16 17 4 Ms. Zipser also fails to offer any admissible evidence of any problem with the various assignments of the Note. She 18 insists that she provided the bankruptcy court with the 19 fifty-page declaration of a Countrywide executive, which allegedly proves that it was Countrywide’s policy to retain 20 possession of the notes at the time of sale. However, she does not provide a copy of the declaration in her excerpts of record, 21 and we could not locate the declaration in the bankruptcy court’s docket. 22 23 The Kemp decision, attached to the Objection, references a Countrywide officer’s declaration concerning its lending 24 practices in that case. See In re Kemp, 440 B.R. at 628-29. Ms. Zipser cannot rely on a summary of that declaration as 25 evidence in the present case. 26 In any event, Ocwen has provided declaration testimony that 27 it is in actual and physical possession of the Note in question. Ms. Zipser has failed to rebut that evidence and satisfy her 28 burden of proof.

1 through involuntary transfer: 2 Negotiation always requires a change in possession of the instrument because nobody can be a holder without 3 possessing the instrument, either directly or through an agent. But in some cases the transfer of 4 possession is involuntary and in some cases the person transferring possession is not a holder. . . . 5 [N]egotiation can occur by an involuntary transfer of possession. For example, if an instrument is payable 6 to bearer and it is stolen by Thief or is found by Finder, Thief or Finder becomes the holder of the 7 instrument when possession is obtained. In this case there is an involuntary transfer of possession that 8 results in negotiation to Thief or Finder. 9 Cal. Com. Code § 3201 cmt. 1 (emphasis added). Thus, Ms. Zipser 10 is patently incorrect that a holder must prove an unbroken chain 11 of custody as a prerequisite to enforcing a note. 12 Ms. Zipser relies on Rivera v. Deutsche Bank National Trust 13 Co. (In re Rivera), BAP No. NC-13-1615-KuPaJu, 2014 WL 6675693 14 (9th Cir. BAP Nov. 24, 2014), for the proposition that a 15 claimant’s failure to prove the chain of possession deprives it 16 of a right to assert a claim. But Rivera was decided in a 17 different factual and procedural context. In Rivera, the debtor 18 filed a complaint alleging specific facts indicating that the 19 endorsement on a note was a sham and void. The defendants filed 20 a motion to dismiss under Civil Rule 12. Noting that “[w]e must 21 accept the truth of the Riveras’ well-pled allegations indicating 22 that the . . . endorsement on the note was a sham and, more 23 generally, that neither [the secured creditor nor the servicer] 24 ever obtained any valid interest in the Riveras’ note or the loan 25 repayment rights evidenced by that note,” id. at *7, we held that 26 the bankruptcy court erred in dismissing some of the claims 27 stated in the complaint. In this case, the pleading standards of 28 Civil Rule 12 do not apply; instead, on an objection to a claim,

1 Ms. Zipser had the burden of offering evidence that the blank 2 endorsement is a sham or void. The bankruptcy court was not 3 required to accept Ms. Zipser’s bald allegations as true. We 4 discern no error in the bankruptcy court’s conclusion that the 5 endorsement and assignment are valid. 6 Similarly, Ms. Zipser misconstrues our holding in Veal. We 7 held in Veal that neither the bank nor its servicer had standing 8 to enforce the note because they did not produce the original 9 note or the relevant endorsement and did not prove that they had 10 possession of the note. See In re Veal, 450 B.R. at 917-18, 921. 11 Contrary to Ms. Zipser’s assertion, Veal does not stand for the 12 propostion that, under California law, a possessor of a note 13 endorsed in blank must always prove an unbroken chain of 14 transfers. As such, Veal does not aid Ms. Zipser’s case. 15 Kemp is also inapposite. In that case, the court held that 16 the bank lacked authority to enforce the note, because (1) the 17 bank did not have and never had possession of the note, and 18 (2) there was no proper endorsement of the note. See In re Kemp, 19 440 B.R. at 630. We are not presented with the same situation in 20 this case. Accordingly, Kemp is not relevant to our analysis. 21 Furthermore, Ms. Zipser failed to offer evidence of any 22 defect in the endorsement. She complains that the court did not 23 require Ocwen “to authenticate the original Note endorsement 24 . . . .” But negotiated instruments are presumed authentic under 25 California law.5 Similarly, under Rule 902(9) of the Federal 26 5 27 Section 3308(a) of the California Commercial Code states:

28 (continued...)

1 Rules of Evidence, the Note is self-authenticating and does not 2 require extrinsic evidence to prove its authenticity.6 3 Ms. Zipser has not put forth any evidence disputing the 4 authenticity or validity of the endorsement. As such, it is 5 undisputed that the endorsement is valid. 6 Ms. Zipser’s only argument against the validity of the 7 endorsement is that “[t]he original Note was payable to 8 ‘Countrywide Bank, A DIVISION of Treasury Bank, N.A.’ A division 9 is not a legal entity in California and therefore Countrywide 10 11 5 (...continued) 12 In an action with respect to an instrument, the authenticity of, and authority to make, each signature 13 on the instrument is admitted unless specifically denied in the pleadings. If the validity of a 14 signature is denied in the pleadings, the burden of 15 establishing validity is on the person claiming validity, but the signature is presumed to be authentic 16 and authorized unless the action is to enforce the liability of the purported signer and the signer is 17 dead or incompetent at the time of trial of the issue of validity of the signature. 18 19 Cal. Com. Code § 3308(a). 6 20 Federal Rule of Evidence 902(9) provides, in relevant part: 21 The following items of evidence are 22 self-authenticating; they require no extrinsic evidence 23 of authenticity in order to be admitted:

24 . . . 25 (9) Commercial Paper and Related Documents. 26 Commercial paper, a signature on it, and related documents, to the extent allowed by general 27 commercial law.

28 Fed. R. Evid. 902(9).

1 Bank and Treasury Bank N.A. were the same payee.” This does not 2 invalidate the endorsement. Treasury Bank signed the blank 3 endorsement. Even if Countrywide Bank was not a separate entity 4 from Treasury Bank, Treasury Bank was an entity that could sign 5 the endorsement. Accordingly, Ms. Zipser has failed to establish 6 that the endorsement is void.7 7 Thus, as the holder of the Note, Ocwen is entitled to 8 enforce it. The bankruptcy court did not err in overruling 9 Ms. Zipser’s Objection. 10 2. The bankruptcy court did not improperly shift the burdens of proof between Ms. Zipser and Ocwen. 11 12 Ms. Zipser also argues in various ways that the bankruptcy 13 court improperly shifted the burden of proof to her, even though 14 Ocwen did not meet its initial burden. 15 As the bankruptcy court correctly stated, a proof of claim 16 is deemed allowed unless a party in interest objects. See 17 § 502(a). If a creditor properly files a proof of claim, the 18 19 7 Ms. Zipser contended at oral argument that, because she 20 received a letter from Bank of America and a credit report stating that the loan had been paid off, the Note is in dispute. 21 Because Ms. Zipser did not make this argument in her appellate briefs and did not include the relevant documents in her meager 22 excerpts of record, she has waived this argument. 23 Even if Ms. Zipser had preserved the argument, it would not 24 help her case, because it rests on a mischaracterization of the documents. The letter does not say that the Note was paid off; 25 rather, it acknowledges that the debt was discharged in 26 Ms. Zipser’s chapter 7 case. The credit report (which is inadmissible hearsay) says that the “terms” of the loan are 27 “PAID,” but also says “DEBT INCLUDED IN OR DISCHARGED THRU BK . . . .” Thus, neither document suggests any problem with the 28 Note or the endorsement.

1 burden shifts to the objecting party to present evidence to 2 overcome the prima facie case. The objector must come forward 3 with evidence or “facts tending to defeat the claim by probative 4 force equal to that of the allegations of the proofs of claim 5 themselves.” Lundell v. Anchor Constr. Specialists, Inc., 6 223 F.3d 1035, 1039 (9th Cir. 2000). If the objector produces 7 sufficient evidence, then the burden reverts to the claimant to 8 prove the validity of the claim by a preponderance of evidence. 9 Id. 10 Ms. Zipser concedes that, “[a]bsent an objection, a proof of 11 claim constitutes prima facie evidence where it adheres to the 12 requirements of Rule 3001.” Her only argument appears to be 13 that, because Ocwen did not establish that it is a “person 14 entitled to enforce the Note,” the court should not have shifted 15 the burden to her. 16 The bankruptcy court correctly stated the parties’ 17 respective burdens of proof. As discussed above, the bankruptcy 18 court properly held that Ocwen had established a valid secured 19 claim. The burden then shifted to Ms. Zipser, who failed to 20 provide sufficient evidence to rebut Claim #3. Accordingly, 21 because Ms. Zipser could not come forward with “facts tending to 22 defeat the claim[,]” see id., the court held that Ocwen had 23 stated a valid claim. We find no error in the court’s holding. 24 B. The bankruptcy court did not err in not holding an evidentiary hearing on the Objection. 25 26 Second, Ms. Zipser argues that the bankruptcy court erred in 27 not holding an evidentiary hearing on Ocwen’s right to enforce 28 the Note. Although Ms. Zipser identifies this issue as one of

1 her primary issues on appeal, she does not identify where in the 2 record she requested the evidentiary hearing. She only asserts 3 in her opening brief that “Debtor requested an Evidentiary 4 Hearing[,]” but does not provide any citation to the record. We 5 have independently reviewed the bankruptcy court’s docket, and we 6 found no such request. Because Ms. Zipser elected not to provide 7 the Panel with a copy of the hearing transcript, we cannot 8 determine whether she made an oral request. 9 In her reply brief, Ms. Zipser argues for the first time 10 that her bankruptcy counsel, Mr. Steven J. Krause, called the 11 court prior to the hearing on the Objection and spoke with a 12 clerk in the judge’s chambers to request an evidentiary hearing. 13 He says that the clerk said that he would place a note in the 14 file. 15 We are unpersuaded by this late argument. First, 16 Mr. Krause’s request to the clerk is not in the record (and the 17 clerk’s statement is hearsay), and Ms. Zipser cannot introduce 18 new evidence to augment the record on appeal. See Graves v. 19 Myrvang (In re Myrvang), 232 F.3d 1116, 1119 n.1 (9th Cir. 2000) 20 (Except in rare cases where “the interests of justice demand it, 21 an appellate court will not consider evidence not presented to 22 the trial court[.]” (citations and internal quotation marks 23 omitted)). Second, even accepting Mr. Krause’s statement as 24 true, an ex parte communication with the court’s staff is not a 25 proper way to request an evidentiary hearing. 26 Furthermore, even if Ms. Zipser had properly preserved this 27 error on appeal, the bankruptcy court did not abuse its 28 discretion. Ms. Zipser does not explain what evidence she would

1 have offered at an evidentiary hearing and how it might have 2 altered the outcome. Ms. Zipser presents absolutely no authority 3 requiring the bankruptcy court to hold an evidentiary hearing 4 based on the facts of this case. 5 As such, we do not find any reversible error in the 6 bankruptcy court’s decision to not hold an evidentiary hearing. 7 C. The Panel will not consider Ms. Zipser’s final two points, which are not supported by any cogent argument. 8 9 Finally, two of Ms. Zipser’s arguments (that the court erred 10 when it sustained Ocwen’s objections to the Zipsers’ direct 11 testimony and that the court erred by overruling Ms. Zipser’s 12 objection to Ocwen’s proof of claim) are each nothing more than a 13 heading and a one-sentence statement of law. Ms. Zipser does not 14 offer any reasoned argument as to the supposed errors, nor does 15 she identify where the errors are found in the record. 16 As a general rule, a party’s brief “must make specific 17 references to the relevant portions of the record. Opposing 18 parties and the court are not obliged to search the entire 19 record, unaided, for error.” Tevis v. Wilke, Fleury, Hoffelt, 20 Gould & Birney, LLP (In re Tevis), 347 B.R. 679, 686 (9th Cir. 21 BAP 2006) (internal citations omitted). Moreover, we “will not 22 consider a matter on appeal that is not specifically and 23 distinctly argued in [an] appellant’s opening brief. Id. at 690 24 (citing Affordable Housing Dev. Corp. v. Fresno, 433 F.3d 1182, 25 1193 (9th Cir. 2006); Price v. Lehtinen (In re Lehtinen), 26 332 B.R. 404, 410 (9th Cir. BAP 2005)). 27 Ms. Zipser’s final two arguments are neither “specifically 28 and distinctly argued” nor do they “make specific references to

1 the relevant portions of the record.” Moreover, Ms. Zipser’s 2 decision to not provide us with a copy of the hearing transcript 3 deprives us of the opportunity to review the court’s alleged 4 error in sustaining Ocwen’s objection to direct testimony. As 5 such, we will not consider these points of alleged error. 6 CONCLUSION 7 For the reasons set forth above, we conclude that the 8 bankruptcy court did not err in overruling Ms. Zipser’s Objection 9 to Claim #3. Accordingly, we AFFIRM. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28