United States Bankruptcy Appellate Panel of the First Circuit
DARLENE MARIE VERTULLO, a/k/a Darlene M. Marie Underwood, Debtor.
DARLENE MARIE VERTULLO, Appellee. U.S. BANK NATIONAL ASSOCIATION, as Trustee for Credit Suisse First Boston Mortgage Securities Corp., CSFB Mortgage-Backed Pass-Through Certificates, Series 2005-8, Appellant,
Appeals from the United States Bankruptcy Court for the
District of New Hampshire (Hon. Bruce A. Harwood, U.S.
M. Bizar, Esq., and J. Patrick Kennedy, Esq., on brief for
Leonard G. Deming, II, Esq., on brief for Appellee.
Bailey, Hoffman, and Finkle, United States Bankruptcy
Appellate Panel Judges.
Hoffman, U.S. Bankruptcy Appellate Panel Judge
Bank National Association, as Trustee for Credit Suisse First
Boston Mortgage Securities Corp., CSFB Mortgage-Backed
Pass-Through Certificates, Series 2005-8 ("U.S.
Bank" or the "Bank"), appeals from two
bankruptcy court orders: (1) the order denying its motion for
relief from the automatic stay (the "Order Denying Stay
Relief"); and (2) the order confirming the amended
chapter 13 plan filed by the debtor, Darlene Marie Vertullo
(the "Debtor"), as modified in open court (the
"Confirmation Order"). For the reasons set forth
below, we REVERSE both orders and
REMAND to the bankruptcy court for further
The Bankruptcy Filings
Bank was the holder of a mortgage, originally given by the
Debtor and James E. Underwood to SLM Financial Corp., on
certain real property located in Nashua, New Hampshire (the
"Property"). Following the Debtor's default in
her payment obligations under the note secured by that
mortgage, U.S. Bank conducted a foreclosure by public auction
on January 11, 2017, at which a third party purchased the
Property. No foreclosure deed from the Bank to the third
party purchaser was ever recorded in the local land records
9, 2017, about four months after the foreclosure auction, the
Debtor filed a petition under chapter 13 of the Bankruptcy
Code in the New Hampshire bankruptcy court. The bankruptcy
court dismissed that case on March 29, 2018, due to the
Debtor's failure to make plan payments. The Debtor filed
the chapter 13 case from which these appeals arise, pro se,
on April 26, 2018 (the "Current Chapter 13 Case").
The Motion for Relief from Stay and the Debtor's
22, 2018, U.S. Bank filed a motion for relief from the
automatic stay pursuant to Bankruptcy Code § 362(d)(1)
(the "Motion for Stay Relief"). Alleging that the
Debtor continued to occupy the Property "without any
claim of right or ownership," U.S. Bank requested
authorization "to continue its state court rights"
in order to gain possession of the Property. The Debtor filed
an objection to the Motion for Stay Relief, asserting that
the foreclosure sale was void because no foreclosure deed had
been recorded before the filing of the Current Chapter 13
Case. In support, she quoted the following language from N.H.
Rev. Stat. Ann. § 479:26 regarding foreclosure sales:
Failure to record said deed and affidavit within 60 days
after the sale shall render the sale void and of no effect
only as to liens or other encumbrances of record with the
register of deeds said county [sic] intervening between the
day of the sale and the time of recording of said deed and
Debtor urged the bankruptcy court to follow In re
Beeman, 235 B.R. 519 (Bankr. D.N.H. 1999), in which the
court ruled that a foreclosure sale is completed upon
recording of a deed, and until that time a debtor mortgagor
retained rights in the property. She asked the bankruptcy
court to eschew this court's holding in TD Bank, N.A.
v. LaPointe (In re LaPointe), 505 B.R. 589, 595 (B.A.P.
1st Cir. 2014), that a chapter 13 debtor mortgagor no longer
had any rights in the mortgaged property once the
auctioneer's hammer fell irrespective of when or if a
foreclosure deed was recorded.
The Amended Chapter 13 Plan and U.S. Bank's Objection to
amended chapter 13 plan (the "Plan") filed in May
2018, the Debtor proposed to retain the Property, cure
pre-petition defaults in the mortgage to U.S. Bank through
the Plan, and make regular post-petition payments directly to
U.S. Bank. The Bank filed an objection to confirmation of the
Plan (the "Objection to Confirmation"), arguing
that the Property was no longer part of the bankruptcy estate
as it had been sold to a third party at a foreclosure
auction. The Debtor countered by reiterating that U.S. Bank
had failed to comply with N.H. Rev. Stat. Ann. § 479:26
by filing a foreclosure deed even though 470 days had passed
since the auction. She asked the court to overrule the
Objection to Confirmation.
October 1, 2018, the bankruptcy court entered the Order
Denying Stay Relief and a separate order overruling the
Bank's Objection to Confirmation. In its accompanying
memorandum, the court observed that the Motion for Stay
Relief and the Objection to Confirmation raised the same
legal issue: "whether the Debtor has a sufficient
property interest in [the Property] that she may cure
defaults under a mortgage that encumbers the Property and
which U.S. Bank holds." In re Vertullo, 593
B.R. 92, 94 (Bankr. D.N.H. 2018). The court answered that
question in the affirmative, stating: "[T]he Court finds
that the Debtor does have a sufficient interest in the
Property and so will deny the Motion for [Stay] Relief and
schedule a continued confirmation hearing on the Chapter 13
December 4, 2018, the bankruptcy court entered the
Confirmation Order, thereby confirming the Plan as orally
modified in open court.
Bank timely appealed both the Order Denying Stay Relief and
the Confirmation Order. As in the proceedings below, the
issue is binary. U.S. Bank insists that LaPointe is
correct, while the Debtor urges us to overturn
LaPointe and follow Beeman.
to 28 U.S.C. §§ 158(a) and (b), the Panel may hear
appeals from 'final judgments, orders, and decrees,'
§ 158(a)(1), or 'with leave of the court, from
interlocutory orders and decrees.' §
158(a)(3)." Fleet Data Processing Corp. v. Branch
(In re Bank of New Eng. Corp.), 218 B.R. 643, 645
(B.A.P. 1st Cir. 1998); see also Bullard v. Blue Hills
Bank, 135 S.Ct. 1686, 1692, 1695 (2015). Orders
confirming plans of reorganization are final for purposes of
appeal. See Whaley v. Tennyson (In re Tennyson), 611
F.3d 873, 875 (11th Cir. 2010) (citation omitted);
AmeriCredit Fin. Servs., Inc. v. Padgett (In re
Padgett), 408 B.R. 374, 377 (B.A.P. 10th Cir. 2009)
(citation omitted); In re D2 Abatement, Inc., No.
10-45074, 2010 WL 4961705, at *5 (Bankr. E.D. Mich. Aug. 9,
2010). In this circuit, however, orders denying requests for
relief from the automatic stay are not necessarily final and
appealable. See Raymond C. Green, Inc. v. DeGiacomo (In
re Inofin, Inc.), 466 B.R. 170, 174 (B.A.P. 1st Cir.
2012); Caterpillar Fin. Servs. Corp. v. Braunstein (In re
Henriquez), 261 B.R. 67, 70 (B.A.P. 1st Cir. 2001).
Because the First Circuit Court of Appeals has rejected an
absolute rule with respect to the finality of orders denying
stay relief, see Pinpoint IT Servs., LLC v. Landrau
Rivera (In re Atlas IT Exp. Corp.), 761 F.3d
177, 185 (1st Cir. 2014), the Panel ordered U.S. Bank to show
cause why the appeal should not be dismissed as
interlocutory. After due consideration of U.S. Bank's
response, the Panel concluded that, while the Order Denying
Stay Relief was indeed interlocutory, it nonetheless
satisfied the criteria for discretionary review under 28
U.S.C. § 1292(b). Accordingly, the Panel accepted
jurisdiction over the appeal of the Order Denying Stay
Relief. Thus, we have jurisdiction over both orders on
Panel reviews the bankruptcy court's findings of fact for
clear error and its conclusions of law de novo. Jeffrey
P. White & Assocs., P.C. v. Fessenden (In re
Wheaton), 547 B.R. 490, 496 (B.A.P. 1st Cir. 2016)
(citation omitted). "Issues of statutory interpretation
are reviewed de novo." In re LaPointe,
505 B.R. at 593 (citation omitted). The appeal of the Order
Denying Stay Relief presents a question of law; so, too, does
the appeal of the Confirmation Order. The applicable standard
of review pertaining to both orders, therefore, is de novo.
See id. (reviewing denial of stay relief de novo);
see also Viegelahn v. Essex, 452 B.R. 195, 199 (W.D.
Tex. 2011) (stating the standard of review for confirmation
orders is de novo); Kronemyer v. Am. Contractors Indem.
Co. (In re Kronemyer), 405 B.R. 915, 919 (B.A.P. 9th
Cir. 2009) ("We review de novo contentions that present
an issue of law regarding stay relief.") (citation
appeal presents us with the two-fold task of examining the
legal principles governing the bankruptcy court's orders
and determining the extent to which we are bound by our own
court's precedent in reviewing those orders. We begin
with the legal principles.
The Relevant Standards Regarding the Order Denying
The Automatic Stay, Generally
362(a)(1) provides that the filing of a bankruptcy petition
automatically stays all acts against a debtor and property of
the bankruptcy estate, subject to limited exceptions."
In re LaPointe, 505 B.R. at 593 (citing 11 U.S.C.
§ 362(a)(1)). "For property to be protected by the
automatic stay, it must be property of the bankruptcy
estate." Id. (citing 11 U.S.C. §
362(c)(1); Donarumo v. Furlong (In re Furlong), 660
F.3d 81, 89 (1st Cir. 2011)). "Property of the
bankruptcy estate includes all legal and equitable interests
of the debtor in property as of the commencement of the case,
subject to certain exceptions not applicable here."
Id. (citing 11 U.S.C. § 541(a)(1)).
"Statutory or equitable rights of redemption are
included in the concept of property of the estate under
§ 541." Id. (citing 4 Collier on
Bankruptcy, § 541.04 (Alan N. Resnick &
Henry J. Sommer eds., 16th ed. 2013)). "Generally, state
law determines whether the debtor has any legal or equitable
interest in property that is included in the bankruptcy
estate, unless federal law requires a different result."
Id. (citing Butner v. United States, 440
U.S. 48, 55 (1979); NTA, LLC v. Concourse Holding Co. (In
re NTA, LLC), 380 F.3d 523, 528 (1st Cir. 2004)).
Relief from the Automatic Stay
362(d) governs relief from the automatic stay. That section
On request of a party in interest and after notice and a
hearing, the court shall grant relief from the stay provided
under subsection (a) of this section, such as by terminating,
annulling, modifying, or conditioning such stay-
(1) for cause, including the lack of adequate protection of
an interest in property of such party in interest;
(2) with respect to a stay of an act against property . . ...