UNITED STATES COURT OF APPEALS
Tenth Circuit
Byron White United States Courthouse
1823 Stout Street
Denver, Colorado 80294
(303) 844-3157
Patrick J. Fisher, Jr. Elisabeth A. Shumaker
Clerk Chief Deputy Clerk
December 4, 1998
TO: ALL RECIPIENTS OF THE ORDER AND JUDGMENT
RE: 98-3142, In re: Spriggs
Filed on November 16, 1998
The order and judgment filed in matter on November 16, 1998, contains a
clerical error. The order and judgment incorrectly listed the lower court case
numbers on page one. The corrected lower court case numbers are as follows:
(District of Kansas)
(Bankr. No. 96-21791)
(BAP No. KS-97-078)
Please see the attached corrected cover page.
Sincerely,
Patrick Fisher, Clerk of Court
By:
Keith Nelson
Deputy Clerk
encl.
F I L E D
United States Court of Appeals
Tenth Circuit
NOV 16 1998
UNITED STATES COURT OF APPEALS
PATRICK FISHER
TENTH CIRCUIT Clerk
In re: LURE DEAN SPRIGGS,
Debtor.
PRO FINANCE, INC., No. 98-3142
Appellant, (District of Kansas)
v. (Bankr. No. 96-21791)
LURE DEAN SPRIGGS, (BAP No. KS-97-078)
Appellee.
ORDER AND JUDGMENT *
Before ANDERSON, McKAY, and LUCERO, Circuit Judges.
After examining the briefs and the appellate record, this panel has
determined unanimously that oral argument would not materially assist the
determination of this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The
case is therefore ordered submitted without oral argument.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
On February 26, 1992, Appellee Lure Dean Spriggs executed a Trust Deed
Note on her residence in favor of Appellant Pro Finance, Inc., to secure the
payment of a note in the amount of $5,200.00. Prior to this action, Appellee filed
two separate Chapter 13 petitions in the United States Bankruptcy Court for the
Western District of Missouri. Both of Appellee’s Missouri petitions subsequently
were dismissed. Seven days after the dismissal of the second Missouri petition,
Appellee filed a Chapter 13 petition in the United States Bankruptcy Court for the
District of Kansas.
Appellee allegedly defaulted on the Trust Deed Note prior to the filing of
her first Missouri bankruptcy petition. However, Appellant was unable to
foreclose on the property due to the stays imposed by virtue of the Missouri
bankruptcy proceedings. During the seven days between the dismissal of
Appellee’s second Missouri petition and the filing of her Kansas petition,
Appellant commenced foreclosure proceedings against Appellee’s residence.
Appellant’s name, address, and zip code all properly appear on the schedules and
plan accompanying Appellee’s petition, and the bankruptcy clerk’s office sent a
notice of commencement via first class mail to Appellant at that address.
Nonetheless, Appellant alleges that it did not receive notice of the Kansas filing
until after it had completed the foreclosure sale of Appellee’s residence and
recorded a Trustee’s Deed on the property. Meanwhile, during the foreclosure
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process, Appellant’s counsel sent several notices to Appellee informing her that
foreclosure proceedings were ongoing, but apparently she did not respond.
After it learned of Appellee’s Kansas bankruptcy proceedings, Appellant
filed a proof of claim in the case asserting a secured claim for $5,027.90. A
portion of this sum, $2,497.71, consisted of the amount due under the note at the
time of foreclosure. The remainder of the secured claim, $2,550.19, consisted of
fees and costs associated with the foreclosure sale. Two months later, Appellant
filed a motion asking the bankruptcy court to modify the stay and to enter an
order validating the foreclosure sale and the recorded Trustee’s Deed. On the
same day, Appellee filed an objection to Appellant’s proof of claim, arguing that
Appellant was not entitled to the fees and costs associated with the foreclosure
because they were incurred in violation of the automatic stay. Appellee also
sought damages pursuant to 11 U.S.C. § 362(h). Appellant responded that it was
entitled to fees and costs under the terms of the Trust Deed Note, that the
foreclosure sale was valid, and that Appellee was not entitled to damages. In
response to an order of the bankruptcy court, each of the parties then filed
summary judgment motions.
At a subsequent hearing, the bankruptcy court entered the following rulings
from the bench: (1) the foreclosure sale was void because it was conducted in
violation of the automatic stay; (2) no equitable exception to the rule that actions
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in violation of the stay are void applied in this case; (3) Appellant was not
entitled to the fees and costs associated with the foreclosure sale; and (4) the
Debtor was not entitled to damages under 11 U.S.C. § 362(h). The bankruptcy
court later executed an order incorporating its bench rulings by reference.
Appellant appealed the bankruptcy court’s order directly to the United States
Bankruptcy Appellate Panel of the Tenth Circuit Court of Appeals. In a published
opinion, the BAP affirmed the bankruptcy court’s order. See Pro Finance, Inc. v.
Spriggs (In re Spriggs), 219 B.R. 909 (B.A.P. 10th Cir. 1998). Appellant now
appeals the BAP’s ruling. We exercise jurisdiction pursuant to 28 U.S.C. §
158(d).
In our review of decisions by the BAP, we apply the same standard of
review that the BAP employs in reviewing decisions of the bankruptcy court. See
Phillips v. White (In re White), 25 F.3d 931, 933 (10th Cir. 1994). Thus, we
review legal determinations de novo and factual findings for clear error. See id.
To the extent that the bankruptcy court’s ruling disposed of the parties’ motions
for summary judgment, our review is governed by standards set forth in Federal
Rule of Civil Procedure 56(c). See Fed. R. Civ. P. 56(c) (“The judgment sought
shall be rendered forthwith if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that the moving party is
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entitled to judgment as a matter of law.”); Hollytex Carpet Mills, Inc. v.
Oklahoma Employment Sec. Comm’n (In re Hollytex Carpet Mills, Inc.), 73 F.3d
1516, 1518 (10th Cir. 1996).
Appellant’s central argument is that it should be exempted from the
automatic stay because it was without actual notice of Appellee’s filing of her
Kansas petition and because Appellee remained silent in the face of numerous
attempts by Appellant’s counsel to notify her of the commencement and progress
of foreclosure proceedings on her residence. Appellant also contends that
Appellee’s silence was so unreasonable that it “was the sole contributing cause of
[Appellant’s] plight.” Appellant’s Opening Br. at 14. However, we agree with
the determination of the BAP that mere silence is inadequate to require a court to
retroactively annul the effects of an automatic stay for equitable reasons. We also
agree with the BAP that, in this case, Appellee’s failure to respond to
correspondence concerning the foreclosure was reasonable in light of her reliance
on the protections of the automatic stay. Similarly, we agree that because
Appellant knew of Appellee’s prior bankruptcy filings, Appellee’s silence should
have raised a red flag on the part of Appellant’s counsel.
Appellant also claims that it is entitled to the costs and fees associated with
the foreclosure sale because the specific terms of the Deed of Trust provide for
such costs. However, the BAP’s determination that the foreclosure sale violated
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the stay necessarily implies that the costs and fees associated with the foreclosure
were incurred in violation of the stay. Consequently, we conclude that this
argument is without merit.
Additionally, Appellant contends that Appellee’s failure to pay the costs
and fees, along with all costs and attorneys’ fees associated with the foreclosure,
amounts to a breach of the covenant of good faith and fair dealing that inheres in
every agreement. Appellant also argues that Appellee had a duty to mitigate her
damages by providing notice to Appellant of the Kansas bankruptcy proceeding.
Based on a review of the record before us, Appellant did not raise these
arguments in the bankruptcy court, and accordingly, we decline to address them.
See Rademacher v. Colorado Ass’n of Soil Conservation Dists. Med. Benefit
Plan, 11 F.3d 1567, 1571 (10th Cir. 1993); Walker v. Mathers (In re Walker), 959
F.2d 894, 896 (10th Cir. 1992).
Finally, Appellant argues that the bankruptcy court and the BAP erred in
failing to find that Appellant was protected as a good faith purchaser without
knowledge under 11 U.S.C. § 549(c). The BAP did not address this argument
because Appellant raised it for the first time on appeal. See In re Spriggs, 219
B.R. at 912 n.3. For the same reason, we decline to address Appellant’s section
549(c) argument. See Rademacher, 11 F.3d at 1571; Walker, 959 F.2d at 896.
We AFFIRM the decision of the Bankruptcy Appellate Panel in all
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respects. 1
Entered for the Court
Monroe G. McKay
Circuit Judge
1
We also deny Appellant’s motion for leave to file a supplemental brief.
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