Kline v. Deutsche Bank National Trust Company et al

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: Karen Marie Kline,
Case No. 13-05-12174 JS
Debtor.
Karen Marie Kline,
Plaintiff,
v. 	Adv. No. 09-01035 J
Deutsche Bank National Trust Company,
and Richard Leverick,
Defendants.
MEMORANDUM OPINION
This matter is before the Court on the various motions for summary judgment filed by the
parties. Defendants Deutsche Bank National Trust Company (“Deutsche Bank”) and Richard
Leverick (“Leverick”) filed three separate Motions for Summary Judgment, on March 23, 2009
and August 10, 2009. Karen Marie Kline (“Plaintiff,” “Debtor” or “Kline”), acting pro se, filed
a Motion for Summary Judgment and Memorandum and Affidavit in Support on August 14,
2009.
This adversary proceeding arises from Plaintiff’s claims of alleged stay violations based
on conduct occurring during litigation in a state court foreclosure proceeding brought by
Deutsche Bank, represented by Mr. Leverick, against Plaintiff. On March 5, 2009, Plaintiff filed
her Adversary Proceeding Complaint for Damages for Willful Violation of the Automatic Stay
alleging that Defendants willfully violated 11 U.S.C. §362(a)(1), (3), (4), (5), and (6) in pursuing
foreclosure of her property located at 729 W. Manhattan Avenue #3, Santa Fe, New Mexico, and
alleging that Mr. Leverick engaged in deceit or collusion in violation of NMSA §36-2-17 in his
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conduct during the foreclosure proceeding. Plaintiff seeks recovery of compensatory damages,
damages for emotional distress, punitive damages, costs and interest pursuant to 11 U.S.C.
§362(h) 1 for Defendants’ alleged violation of the automatic stay. Additionally, Plaintiff seeks
treble damages from Mr. Leverick for violation of NMSA §36-2-17.
Defendants filed their Motion for Summary Judgment (“First Motion”) (Docket No. 8)
and accompanying Memorandum in Support (Docket No. 9) asserting that Defendants did not
violate the automatic stay, and that Plaintiff’s claim of a stay violation is barred by res judicata.
Defendants contend that this claim was fully litigated in the state court, and that both the state
district court and state court of appeals found Plaintiff’s claim lacked merit. Plaintiff in her
response to the First Motion does not address the res judicata issue, and reiterates her stay
violation claims. See Plaintiff’s Objection to Motion for Summary Judgment and Memorandum
and Affidavit in Support (Docket No.13).
Defendants’ Second Motion for Summary Judgment (“Second Motion”) (Docket No. 34)
asserts that Defendants are entitled to summary judgment on the stay violation claim under the
doctrine of collateral estoppel. Defendants contend that Ms. Kline seeks to re-litigate ultimate
facts or issues actually and necessarily decided in the state court foreclosure. Ms. Kline in
response asserts that her “federal bankruptcy court issues” were not litigated in the state court
because the state court lacked jurisdiction. See Plaintiff’s Response to Defendants’ Second
Motion for Summary Judgment and Their Memorandum (Docket No. 44).
Defendants’ Third Motion for Summary Judgment (“Third Motion”) (Docket No. 36)
asserts that Defendants are entitled to summary judgment on Plaintiff’s claims against Mr.
Leverick for violation of NMSA §36-2-17 on the ground that Plaintiff has not produced any
1 . The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) re-designated §362(h) as
§362(k). However, revisions to §362 made by BAPCPA do not apply in this case because the alleged stay violation
occurred prior to the effective date of BAPCA as it relates to 11 U.S.C. §362. The Court therefore will cite to
§362(h) in this opinion, not §362(k).
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evidence to support a finding that Mr. Leverick’s conduct was done with “intent to deceive the
court, judge or party,” or that he in fact deceived the state court or that any deceit resulted in the
entry of the foreclosure judgment. In her response, Plaintiff reasserts that she seeks damages
under the statutory provision for Mr. Leverick’s allegedly deceitful conduct during the
foreclosure proceeding. See Plaintiff’s Objection to Defendants’ (sic) Third Motion for
Summary Judgment and Their Memorandum (Docket No.45).
Plaintiff filed her own Motion for Summary Judgment and Memorandum and Affidavit in
Support (“Plaintiff’s Motion”) (Docket No.46) asserting that she is entitled to summary
judgment on her claims for damages for willful violation of the automatic stay under 11 U.S.C.
§362(a)(1), (2), (3), (4), (5), and (6) as well as on her claim for deceit or collusion in violation of
NMSA §36-2-17. Plaintiff asserts that the exhibits attached to Plaintiff’s Motion establish that
there are no genuine issues of material fact and that she is entitled to judgment as a matter of law.
She contends that Defendants’ conduct during the foreclosure litigation shows that they willfully
violated the automatic stay, that they failed to take affirmative action to undo or reverse their
violation, and that Mr. Leverick used deceit to accomplish the foreclosure sale. Defendants’
response to Plaintiff’s Motion incorporated by reference their three Motions for Summary
Judgment. Defendants again assert that Plaintiff has already litigated the issues of service and
stay violation in the state court foreclosure action, and that these issues are barred by res judicata
and collateral estoppel.
The Court having reviewed the motions and responses, and being fully sufficiently
advised, finds that the evidence presented is not sufficient to grant summary judgment on the
First Motion, the Second Motion or Plaintiff’s Motion, and therefore will deny those motions.
The Court further finds that it does not have jurisdiction to adjudicate any claims arising from the
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alleged violation under NMSA §36-2-17, and therefore will deny the Third Motion and dismiss
Plaintiff’s claims under NMSA §36-2-17.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate when there are no genuine issues of material fact, and
the moving party is entitled to judgment as a matter of law. Rule 56(c), Fed.R.Civ.P., made
applicable to adversary proceedings by Rule 7056, Fed.R.Bankr.P. The party requesting
summary judgment must demonstrate to the Court that the undisputed facts entitle the movant to
judgment as matter of law. 2 The party opposing summary judgment may not rest upon
allegations or denials contained in its own pleading, but must “set out specific facts showing a
genuine issue for trial.” Rule 56(e)(2), Fed.R.Civ.P. To successfully defend against a motion for
summary judgment, the affidavits and/or other documentation offered by the party opposing
summary judgment must contain probative evidence that would allow a trier of fact to find in
Defendant’s favor. In determining whether summary judgment should be granted, the Court must
view the facts in the light most favorable to the party opposing summary judgment. 3
UNDISPUTED FACTS
Ms. Kline filed her voluntary petition under Chapter 13 of the United States Bankruptcy
Code, 11 U.S.C. § 101 et. seq, on March 21, 2005 commencing a bankruptcy case assigned No.
05-12174 (the “Chapter 13 Case”). Deutsche Bank was the holder of a residential note secured
by a mortgage granted by the Debtor to Deutsche Bank against property having the street address
2 See Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). (“[A] party seeking summary
judgment always bears the initial responsibility of informing the . . . court of the basis for its motion, and . . . [must]
demonstrate the absence of a genuine issue of material fact.”).
3 Harris v. Beneficial Oklahoma, Inc., (In re Harris), 209 B.R. 990, 995 (10 th Cir. BAP 2007)(“When applying this
standard, we are instructed to ‘examine the factual record and reasonable inferences therefrom in the light most
favorable to the party opposing summary judgment.’ ”)); Wolf v. Prudential Ins. Co. of America, 50 F.3d 793, 796
(quoting Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990)(internal
quotation marks omitted); Henderson v. Inter-Chem Coal Co., 41 F.3d 567, 569 (10 th Cir. 1994)(stating that the
court must “view all facts and any reasonable inferences that might be drawn from them in the light most favorable
to the nonmoving party . . .”).
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of 729 W. Manahattan Avenue #3, Santa Fe, New Mexico (the “Condo”). Deutsche Bank filed a
Complaint For Foreclosure (“Complaint”) in Cause No. D-101-CV-2005-0515, Santa Fe County
District Court, New Mexico, on March 9, 2005, to foreclose the mortgage (the “State Court
Action”). Deutsche Bank filed an Amended Complaint (the “Amended Complaint”) for
foreclosure on March 16, 2005 to add parties to the litigation. Deutsche Bank served the original
Complaint on Ms. Kline pre-petition on March 18, 2009 by personal service, and served the
Amended Complaint on Ms. Kline post-petition on March 29, 2009.
Ms. Kline listed the Condo on Schedule A of her schedules filed in the Chapter 13 Case on
March 21, 2005 (the “Schedules”) (Docket No. 1 in the Chapter 13 Case)4 . On Schedule D, Ms.
Kline listed the Condo as subject to a lien in favor of Ocwen Federal Bank FSB. Neither
Deutsche Bank nor Richard Leverick are listed as creditors in the Schedules, and neither was
included on the mailing list generated by the Clerk of Court for the Chapter 13 Case when the
case was filed. A Certificate of Service filed of record in the Chapter 13 Case reflects service on
March 25, 2005 of the Notice of Chapter 13 Bankruptcy Case, which gave notice of the
commencement of the Chapter 13 Case, on Ocwen Federal Bank, 12650 Ingenuity Dr., Orlando,
FL 32826-2717 but does not reflect service of the Notice on Deutsche Bank or Richard Leverick.
(Docket No. 4 in the Chapter 13 Case).
On June 1, 2005, “Ocwen Federal Bank FSB, loan servicing agent for Deutsche Bank” filed a
Motion for Relief from Stay to permit it to proceed with the State Court Action. (Docket No. 20
in the Chapter 13 Case). As a result of Ms. Kline having failed to file a timely objection to the
stay motion, the Court entered a Default Order Granting Relief From Stay on July 1, 2005
4 The Court takes judicial notice of the contents of the court file. See In re SAI Holdings Ltd., Slip Copy, 2009 WL
1616663, *1 (Bankr.N.D.Ohio, 2009); St. Louis Baptist Temple Inc. v FDIC, 605 F.2d 1169, 1172(10th
Cir.1979)(“[A] court may take judicial notice whether requested or not of its own records and files, and facts which
are part of its public records…. The doctrine of judicial notice has been utilized, sua sponte, when the defending
party's motion for summary judgment is predicated on affirmative defenses such as res judicata or collateral
estoppel.”)
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modifying the automatic stay to allow Deutsche Bank to proceed with the State Court Action.
(Docket No. 27 in the Chapter 13 Case ). Thereafter, Deutsche Bank prosecuted the foreclosure
action in state court. On July 13, 2005, Plaintiff’s bankruptcy case was dismissed.
DISCUSSION
A. 	Claims For Willful Violation of the Stay.
1. 	Defendants Have Not Established that They Had No Knowledge
of the Chapter 13 Case.
Upon the filing of a voluntary petition under the Bankruptcy Code, 11 U.S.C. § 362
imposes an automatic stay applicable to all entities that prohibits actions against the debtor or
against property of the bankruptcy estate. 11 U.S.C. §362(a). The scope of the automatic stay is
broad5 and specifically prohibits, among other things
the commencement or continuation, including the issuance of employment of process, of a
judicial, administrative, or other action or proceeding against the debtor that was or could
have been commenced before the commencement of the case under this title, or to recover a
claim against the debtor that arose before the commencement of the case under this title[.]
11 U.S.C. §362(a)(1).
Section 362(h) provides that an individual injured by any willful violation of a stay shall
recover actual damages, including costs and attorneys fees and, in appropriate circumstances,
punitive damages. “A debtor alleging a violation of the automatic stay has the burden to
demonstrate, by a preponderance of the evidence, that a violation of the automatic stay has
occurred, that the violation was willfully committed and that the debtor suffered damage as a
result of the violation.”6 A “willful violation” does not require a specific intent to violate the
automatic stay but only that the defendant has knowledge of the bankruptcy case and that the
5 See In re Sullivan, 357 B.R. 847, 853 (Bankr.D.Colo. 2006)(“The scope of the automatic stay is extremely
broad.”)(citing In re Gagliardi, 290 B.R. 808, 814 (Bankr.D.Colo. 2003)).
6 In re Panek, 402 B.R. 71, 76 (Bankr.D.Mass.2009)
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defendant's actions which violated the stay were intentional. 7 Absent notice or knowledge on
the part of a creditor of the commencement or pendency of the bankruptcy case, there is still a
violation of the stay but the violation is merely “technical,” and no damages are to be awarded.8
“Notice of the commencement or pendency of a bankruptcy case need not be formal in nature
‘where the creditor had sufficient facts which would cause a reasonably prudent person to make
further inquiry’.”9 Even an innocent stay violation (one committed without knowledge of the
stay) becomes willful, if the creditor failed to remedy the violation after receiving notice of the
stay. 10
The threshold issue pertaining to the claim for violation of the automatic stay is whether
Deutsche Bank and Mr. Leverick had notice or knowledge of the Chapter 13 Case at the time
their alleged actions occurred in the prosecution of the foreclosure action prior to modification of
the stay on July 1, 2005 to permit prosecution of the foreclosure action. Deutsche Bank and Mr.
Leverick assert there was no violation of the automatic stay because “notice of the bankruptcy
filing was mailed only to Deutsche Bank’s loan servicer Ocwen, and not to either Defendant, and
the Defendants were unaware of the Chapter 13 Case when service of the Amended Complaint
was made.
Based on the record, the Court cannot conclude that there is no genuine issue of fact as to
whether Deutsche Bank had knowledge of the Chapter 13 Case prior to service of the Amended
Complaint. With certain exceptions not applicable here, knowledge acquired by an agent acting
7 In re Fisher, 194 BR 525, 532 (Bankr.D.Kan.,1996); Panek 402 B.R.at 76(citing Fleet Mortgage Group, Inc. v.
Kaneb 196 F.3d 265, (CA1, 1999)(“the standard for a willfull violation of the automatic stay under 362(h) is met if
there is knowledge of the stay and the defendant intended the actions which constitute the violation”).
8 In re McMullen, 386 F.3d 320,330 (1 st Cir. 2004)(citing In re Will, 303 Br 357, 364(Bankr.N.D.Ill.2003)(noting
that no damages could be awarded under subsection 362(h) where creditor had not been listed, and hence had
received no notice of the bankruptcy case and resultant automatic stay); Shadduck v. Rodolakis, 221 B.R. 573,
575(Bankr.D.Mass.1998)(no damages are allowable for technical violation, even where debtor nonetheless incurred
attorney fees as result of violation).
9 In re Reed, 102 BR 243, 245 (Bankr.E.D.Okl.,1989) (citing In re Bragg, 56 BR 46,49(Bankr.M.D.Ala,1985).
10 Gagliardi, 290 B.R. at 818-819; McMullan 386 F.3d at 330 (Normally, however, a creditor that commits a
technical violation of the automatic stay, due to lack of notice, has an affirmative duty to remedy the violation as
soon as practicable after acquiring actual notice of the stay.)
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within the scope of its agency is imputed to the principal for purposes of determining whether the
principal willfully violated the automatic stay; and under this doctrine, knowledge of a loan
servicer can be imputed to the lender.11 Defendants have submitted no evidence of the
relationship between Deutsche Bank and Ocwen, other than a recitation that Ocwen was a loan
servicer for Deutsche Bank12 , and have submitted no evidence regarding when Ocwen received
the notice of the Chapter 13 Case or otherwise knew the Chapter 13 Case was pending.
Likewise, based on the record, the Court cannot conclude that there is no genuine issue of
fact as to whether Mr. Leverick had knowledge of the Chapter 13 Case prior to service of the
Amended Complaint. 13 Defendants’ statement of material facts asserts that when the Amended
Complaint was served Mr. Leverick was unaware of the Chapter 13 Case and such service was
not done with the intention, on his part, of violating the stay.14 Ms. Kline has not specifically
disputed this fact. However, Mr. Leverick does not refer to any pleadings, affidavits, deposition
transcripts, discovery responses, or any other evidence to support his assertions, and the Court
has found none. Absent any evidence regarding when Mr. Leverick obtained actual knowledge
of the Chapter 13 Case, the Court cannot conclude that there is no genuine issue of fact as to
11 E.g. In re Crawford, 388 B.R. 506, 519 (Bankr. S.D.N.Y. 2008) (notice to loan servicer Owen Federal Bank FSB
imputed to lender HSBC Bank for purposes of determining whether a willful violation of the stay occurred); Haile
V. York, 90 B.R. 51, 55 (Bankr.W.D.N.Y. 1988)(notice to Alan Joseph Law office was imputed to creditor New
York State Higher Educ. Services Corp. for purposes of determining whether a willful violation of the stay
occurred.)
12 Ocwens’s filing of a stay motion in the Chapter 13 Case in its own name as servicing agent for Deutsche Bank
suggests the existence of an agency relationship between the two in relation to assertion of Deutsche Bank’s claims
against Plaintiff.
13 Even if Deutsche Bank and/or Mr. Leverick had knowledge of the Chapter 13 Case prior to service of the
Amended Complaint, Plaintiff would still need to prove damages resulting from a stay violation. Given the limited
activity that occurred in the foreclosure action between commencement of the Chapter 13 Case and entry of the
order granting relief from the stay to permit prosecution of the foreclosure action to proceed, it is not clear from the
record what actual damages Plaintiff suffered that can be attributed to a stay violation.
14 Ocwen’s knowledge of the Chapter 13 Case would not be imputed to Mr. Leverick because in the relationship, if
any, Mr. Leverick would not be the principal. See Siharath v. Citifinancial Servs. (In re Siharath), 285 B.R. 299,
304 (Bankr. D.Minn.2002) (a principal’s undisclosed knowledge is not imputed to the agent); In re Manzanares, 345
B.R. 779,792-93 (Bankr.S.D.FLA.2006) (agency law generally does not hold agents responsible for knowledge
possessed only by their principal).
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whether he knew of the Chapter 13 Case before service of the Amended Complaint even though
Ms. Kline does not specifically dispute this fact. 15
2. 	Plaintiffs Claims are Not Barred under the Doctrine of Res Judicata
In the First Motion, Defendants also assert that Plaintiff’s claims are barred by res
judicata because Plaintiff raised the issue that the automatic stay was violated during the
foreclosure proceeding, and that the “Plaintiff’s arguments on the alleged violation of the
automatic stay in the bankruptcy were briefed, argued and denied.”16 Res judicata is an
affirmative defense that must be raised and established by a defendant. Fed.R.Civ.P. 8(c).
Under the doctrine of res judicata, a final judgment on the merits precludes the parties or their
privies from relitigating claims.17 For the doctrine to apply, three conditions must be satisfied:
(1) the parties must be identical or in privity; (2) the suit must be based on the same cause of
action; and (3) a final judgment on the merits must have been made in the prior action. 18 “Res
judicata will not apply where the initial forum did not have the power to award the full measure
of relief sought in the later litigation.”19
15 Rule 56(e) provides, in relevant part, that:
Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as
would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the
matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall
be attached thereto or served therewith.
See also D.H. Blair & Co., Inc. v. Gottidiener, 462 F.3d 95, 110 (2 nd Cir. 2006) (“If the evidence submitted in
support of the summary judgment motion does not meet the movant’s burden of production, then summary judgment
must be denied even if no opposing evidentiary matter is presented.”)(quoting Vermont Teddy Bear Co., Inc. v. 1-
800 Beargram Co., 373 F.3d 241, 244 (2 nd Cir. 2004)(emphasis in original)); One Piece of Real Property, 363 F.3d
at 1101-1102 (to the same effect); Jaroma v. Massey, 873 F.2d 17, 20 (1 st Cir. 1989)(per curiam) (“[T]he district
court cannot grant a motion for summary judgment merely for lack of any response by the opposing party, since the
district court must review the motion and the supporting papers to determine whether they establish the absence of a
genuine issue of material fact.”); John v. State of Louisiana (Bd. of Trustees for State Colleges and Universities),
757 F.2d 698, 708 (5 th Cir. 1985)(the movant has the burden of demonstrating the absence of a material fact even if
no response to the summary judgment motion is made).
16 See Memorandum in Support of Defendants’ Motion For Summary Judgment (Doc 9) at page 18 filed herein.
17 In re Thomas, 362 BR 478, 484-85 (10th Cir. BAP. 2007). In re S.N.A. Nut Co., 215 B.R. 1004,1008
(Bankr.N.D.Ill. 1997); In re Miller, 153 B.R. 269, 272 (Bankr.D.Minn. 1993).
18 In re Vigil, 250 BR 394, 396 (Bankr.D.N.M.,2000)(“Res judicata, also known as claim preclusion, requires the
presence of the following elements: 1) a final judgment on the merits in a prior action; 2) same parties in both suits
(or party is in privity with a party to the prior suit); and 3) same cause of action in both suits.”)
19 Burgos v. Hopkins, 14 F.3d 787, (2nd Cir., 1994)(citing Davidson v. Capuano, 792 F.2d 275, 278 (2d Cir.1986);
McLearn v. Cowen & Co., 48 N.Y.2d 696, 422 N.Y.S.2d 60, 61, 397 N.E.2d 750 (1979).
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Although Defendants assert, in support of the application of res judicata, that the stay
violation issue was briefed, argued and denied in the State Court Action, Defendants have not
cited to anything in the record in the State Court Action demonstrating that Plaintiff asserted a
claim in the state court that she is entitled to damages under 11 U.S.C. §362(h) as a result of a
willful violation of the stay or that such a claim was decided in state court. 20 Since there is no
evidence that such claim was asserted or determined in state court, this Court cannot conclude
that the State Court Action precludes litigation of the claim in bankruptcy court under the
doctrine of res judicata.21 The Court therefore finds that the First Motion should be denied.
3. 	Plaintiffs Claims are Not Barred under the Doctrine of Collateral Estoppel
Issue preclusion or collateral estoppel “is a doctrine that bars relitigation between the
same parties or their privies of issues of ultimate fact that may have been determined by a valid
and final judgment.” 22 The collateral estoppel doctrine serves to protect parties from multiple
lawsuits, prevent inconsistent decisions and to conserve judicial resources. 23 In litigation where
the parties do not have the opportunity to “fully and fairly” litigate an issue, collateral estoppel
may not apply. 24
Defendants assert that collateral estoppel prevents re-litigation of the alleged stay
violation, and in the Second Motion incorporate their Statement of Uncontested Material Facts
contained in the First Motion. Defendants set forth facts that at the various hearings in the
foreclosure proceeding Plaintiff raised the issue that the Defendants violated the automatic stay
20 Id.
21 Further, even if a claim under 11 U.S.C. §362(h) had been adjudicated in state court, it is not at all clear that it
would be binding on this Court. There is substantial authority for the proposition that the Bankruptcy Court has
exclusive jurisdiction to impose sanctions under the Bankruptcy Code for violation of the automatic stay. E.g. In
Eastern Equipment & Services Corp. v. Factory Point Nat'l Bank, 236 F.3d 117, 120-21 (2d Cir.2001); MSR
Exploration, Ltd. v. Meridian Oil, Inc., 74 F.3d 910, 913-16 (9th Cir.1996); In re Theokary, 2008 WL 5329310
(Bankr. E.D. Pa 2008); In re Benalcazar, 283 B.R. 514 (Bankr. N.D. Ill. 2002); Halas v. Platek, 239 B.R. 784, 792
(N.D.Ill.1999). Cf., In re Lucas, 312 B.R. 559, 571 (Bankr.D.Md.2004); In re Startec Global Communications
Corp., 292 B.R. 246, 254 (Bankr.D.Md .2003).
22 In re Putvin, 332 B.R. 619, 624 (10th Cir. BAP 2005).
23 Id. at 624-625.
24 General Signal Corp. v. Rosania (In re Rexotech California, Inc.) 968 F.2d 1224 (10th Cir. 1992);
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by failing to re-serve plaintiff with the amended complaint. Defendants cite to New Mexico case
law for the proposition that collateral estoppel does not require that both suits be based on the
same cause of action,25 and assert that this adversary proceeding is attempting to do just that, re-
litigate “ultimate facts or issues actually decided in a prior suit.”
This Court disagrees. Defendants have not supported the Second Motion with evidence
that the stay violation issue was actually and necessarily litigated in state court. The state court
proceeding focused on the foreclosure of the Plaintiff’s Condo.26 While Plaintiff may have
raised the issue that the automatic stay was violated, the state court did not make specific
findings whether and when Defendants had knowledge of the Chapter 13 Case or whether any
knowledge by Ocwen was imputed to Deutsche Bank. The state court’s finding that Plaintiff
failed to timely answer or file a responsive pleading to the complaint for foreclosure and its
issuance of a default judgment, and the affirmance of that decision on appeal, does not foreclose
Plaintiff’s claim under Bankruptcy Code §362(h).
This Court, therefore, finds Defendants Second Motion should be denied.
4. 	Plaintiff Has Not Established She is Entitled to Summary Judgment
Plaintiff’s Motion for Summary Judgment asserts that the Defendants violated the
automatic stay and then proceeded with the foreclosure based on the amended complaint.
Plaintiff repeatedly claims that Defendants should have made efforts to undo their actions that
violated the automatic stay. She contends that the amended complaint seeking foreclosure of her
property should have been re-served on her after the order granting relief from the automatic stay
was entered.
25 Bankruptcy Courts have also held that collateral estoppel precludes relitigation of issues actually litigated where
the second action is based on a different cause of action from the first cause of action. See In re Edie, 314 B.R.6, 11
(Bankr.D.Utah 2004); In re Lewis, 271 B.R. 877, 883 (10th Cir. BAP 2002; In re Schwarten, 194 B.R. 239, 244-245
(Bankr.D.Kan 1996); In re Lindsay, 55 B.R. 569, 572 (Bankr.Okl. 1985).
26 The Summary Judgment, Stipulated Judgment, Default Judgment, Decree of Foreclosure, Order of Sale and
Appointment of Special Maser entered in the state district court on December 15, 2005 grants the relief requested by
Deutsche Bank, foreclosure of the Condo.
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Plaintiff’s statement of material facts set forth in her Memoranda contain no references to
any pleadings, affidavits, deposition transcripts, discovery responses, or any other evidence to
support her assertions that at the time of service of the Amended Complaint either Deutsche
Bank or Mr. Leverick had knowledge of the Chapter 13 Case, that service of the Amended
Complaint was done with the intention of violating the stay, or that re-service of the Amended
Complaint on Plaintiff after the stay relief was granted was required. In fact, the record reflects
that the state court did not require Defendant to re-serve the amended complaint on the
Plaintiff.27 Absent any evidence in the record to support her motion for summary judgment, the
Court cannot find that Plaintiff is entitled to judgment as a matter of law based on facts that are
not in genuine dispute.
B. 	The Court Lacks Jurisdiction to Hear or Determine the Claim for Violation of
NMSA 36-2-17.
Defendants’ Third Motion asserts that Defendants are entitled to summary judgment on
Plaintiff’s claims against Mr. Leverick for violation of NMSA §36-2-17 NMSA 1978.
NMSA§36-2-17, states in pertinent part:
If an attorney is guilty of deceit or collusion or consents thereto with intent to
deceive the court, judge or party, he shall forfeit to the injured party, treble
damages to be recovered in a civil action.
Plaintiff contends that Defendant Leverick was deceitful in the pleadings filed and at hearings
held in the state court foreclosure action and as a result Plaintiff was damaged by the foreclosure
and sale of her condo as well as suffered emotional distress.
27 The Summary Judgment, Stipulated Judgment, Default Judgment, Decree of Foreclosure, Order of Sale and
Appointment of Special Maser entered in the state district court on December 15, 2005 makes a finding that the
Plaintiff, herein, failed to appear or plead in the foreclosure proceeding. Then on June 20, 2006 the state district
court entered orders denying Plaintiff’s Rule 59 Motion for Reconsideration and Rule 60 Motion to Set Aside Order
Approving Foreclosure Sale wherein Plaintiff attempted to vacate the foreclosure judgment by asserting that the
Amended Complaint was served in violation of the automatic stay; was therefore void and Defendants should be
required to be re-serve the complaint.
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This Court lacks jurisdiction to hear or determine this claim.28 The Chapter 13 Case was
dismissed on July 13, 2005. Plaintiff’s claim for violation of NMSA §36-2-17 is governed
entirely by nonbankruptcy law and exists independently of a bankruptcy case. Further, resolution
of the claim would have no impact on the handling or administration of the Chapter 13 Case and
would have no conceivable effect on the bankruptcy estate. As a result, the claim is not a claim
arising under title 11 or arising in or related to a case under title 11, and the Court has no
jurisdiction to hear or determine the claim.29
Although the bankruptcy court has jurisdiction over certain matters after dismissal of a
bankruptcy case, such as jurisdiction over a claim for willful violation of the stay or to interpret
and enforce its orders,30 Ms. Kline’s claim of violation of NMSA§36-2-1 in the conduct of the
state court foreclosure proceeding does not fall under the auspices of the court’s post-dismissal
jurisdiction. Therefore the Court will deny the Third Motion for Summary Judgment, and enter
28 Although no party raised the question of jurisdiction, this Court has an obligation to dismiss a claim sua sponte if
the court has no subject matter jurisdiction. See 1mage Software, Inc. v. Reynolds & Reynolds Co., 459 F.3d 1044,
1048 (10th Cir.2006)( stating “Federal courts ‘have an independent obligation to determine whether subject-matter
jurisdiction exists, even in the absence of a challenge from any party,’ and thus a court may sua sponte raise the
question of whether there is subject matter jurisdiction ‘at any stage in the litigation.’”); Williams v. Life Sav. And
Loan, 802 F.2d 1200, 1202 (10th Cir. 1986)(“It is well settled that a federal court must dismiss a case for lack of
subject matter jurisdiction, even should the parties fail to raise the issue.”)
29 See 28 U.S.C. § 1334(a) and (b) (conferring exclusive jurisdiction on the district courts over all cases under title
11, and original jurisdiction over “all civil proceedings arising under title 11, or arising in or related to cases under
title 11.”); 28 U.S.C. § 157(b) (providing that “[b]ankruptcy judges may hear and determine all cases under title 11
and all core proceedings arising under title 11, or arising in a case under title 11”). See also In re Johnson, 575 F.3d
1079, 1082 (10th Cir. 2009) (bankruptcy courts have jurisdiction to “hear and determine all cases under title 11 and
all core proceedings arising under title 11, or arising in a case under title 11”, and may hear non-core proceedings
that are related to a case under title 11)(quoting 28 U.S.C. § 157(b)(1)); In re Gardner, 913 F.2d 1515, 1518 (10 th
Cir. 1990) (stating that “[b]ankruptcy courts have jurisdiction over core proceedings . . . [which] are proceedings
which have no existence outside of bankruptcy.”); VonGrabe v. Mecs (In re VonGrabe), 332 B.R. 40, 43-44 (Bankr.
M.D.Fla. 2005) (concluding that the Court lacked jurisdiction over an adversary proceeding filed by the Chapter 7
debtor where the claims at issue reverted back to the debtor upon abandonment by the trustee and the asset was no
longer part of the bankruptcy estate; the outcome of the proceeding would have no conceivable impact on the
administration of the bankruptcy estate)(citations omitted).
30 In re Johnson, 575 F.3d 1079, 1083 (10th Cir. 2009)(Even after the dismissal of a bankruptcy case, it is
appropriate for bankruptcy courts to maintain jurisdiction of proceedings involving stay violations); In re Menk,241
B.R. 896, 906 (9 Cir. BAP 1999); Rodriguez v. Volpentesta (In re Volpentesta), 187 B.R. 261, 270-71
(Bankr.N.D.Ill.1995)(“Issues of dischargeability of particular debts survive dismissal”); Elias v. U.S. Trustee (In re
Elias), 188 F.3d 1160, 1162 (9th Cir.1999)(“Issues of compensation and sanctions survive dismissal.”); Beneficial
Trust Deeds v. Franklin (In re Franklin), 802 F.2d 324, 326-27(9th Cir.1986)(“The bankruptcy court retains subject-
matter jurisdiction to interpret orders entered prior to dismissal”).
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an order dismissing Plaintiff’s claim against Mr. Leverick for violation of NMSA §36-2-17
based on lack of subject matter jurisdiction.
CONCLUSION
The Court therefore finds that the parties have failed to provide admissible evidence
sufficient to grant Defendants’ First Motion, Second Motion or Plaintiff’s Motion, and will
therefore deny each of those motions. The Court will deny Defendant’s Third Motion based on
lack of subject matter jurisdiction.
This Memorandum Opinion shall constitute the Court=s findings of fact and conclusions
of law under Rule 7052, Fed.R.Bankr.P. Appropriate orders will be entered.
_______________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
Entered on Docket Date: November 25, 2009
Copies to:
Karen Marie Kline, pro se
3255 Calle de Molina
Santa Fe, NM 87507-9262
Richard Leverick
5120 San Francisco Rd NE
Albuquerque, NM 87109-4610
Attorney for Deutsche Bank National Trust Company
and Richard Leverick
Case 09-01035-j Doc 69 Filed 11/25/09 Entered 11/25/09 15:44:14 Page 14 of 14