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United States v. Staton

United States District Court, D. Hawaii

April 3, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
RONALD B. STATON, BRENDA STATON, NAVY FEDERAL CREDIT UNION, CAPSTEAD MORTGAGE CORPORATION, and STATE OF HAWAII, Defendants.

          ORDER DENYING DEFENDANT BRENDA L. STATON'S MOTION FOR LEAVE TO FILE AN INTERLOCUTORY APPEAL

          ALAN C. KAY UNITED STATES DISTRICT JUDGE.

         For the reasons discussed below, the Court DENIES Defendant Brenda Staton's Motion for Leave to File an Interlocutory Appeal.

         BACKGROUND

         For purposes of the current motion, the Court discusses only those facts of particular relevance to Defendant Brenda Staton's (“Mrs. Staton”) Motion for Leave to File an Interlocutory Appeal (the “Motion”).[1] ECF No. 297.

         The Court issued an Order Granting Plaintiff's Motion for Summary Judgment on the Third Claim in the Complaint on August 31, 2015. ECF No. 157. That same day, the Court issued an Order of Foreclosure and Judicial Sale (“Foreclosure Order”) of the Staton's home (the “Residence”). ECF No. 158. On September 1, 2015, however, Defendant Ronald Staton (“Mr. Staton”) filed a petition for relief under 11 U.S.C. § 301 in the United States Bankruptcy Court for the District of Hawaii. ECF No. 160-1. In view of Mr. Staton's bankruptcy petition, the Court stayed this case. ECF No. 161. The court reinstated the Foreclosure Order on December 7, 2015, in response to the Bankruptcy Court's Order Granting United States' Motion for Relief from Automatic Stay. ECF No. 168.

         On November 16, 2016, Mr. Staton filed a second petition for relief under 11 U.S.C. § 301 in the United States Bankruptcy Court for the District of Hawaii. ECF No. 208. Again, in view of Mr. Staton's bankruptcy petition, the Court stayed this case. ECF No. 209. Mr. Staton's second petition for relief under 11 U.S.C. § 301 was dismissed, however, and on April 24, 2017, the Court reinstated its Foreclosure Order and directed the parties to proceed in accordance therewith. ECF No. 212.

         The day before the scheduled foreclosure sale auction, on June 20, 2017, Mrs. Staton filed a petition for relief under 11 U.S.C. § 301 in the United States Bankruptcy Court for the District of Hawaii. ECF No. 214. Based on Mrs. Staton's bankruptcy petition, the Court stayed this case. ECF No. 215.

         The following month, on August 7, 2017, the Plaintiff United States (the “Government”) filed a Motion for Relief from Automatic Stay in the Bankruptcy Court. The Bankruptcy Court entered an order on October 6, 2017, granting the Government's Motion for Relief from Automatic Stay. Accordingly, the Court unstayed this case and reinstated its Foreclosure Order, directing the parties to proceed in accordance therewith. ECF No. 219.

         The foreclosure sale of the Residence was set for December 20, 2017. ECF No. 230. But on December 8, 2017, Mr. Staton filed an Emergency Motion to Strike Notice of Lis Pendens (NOPA), ECF No. 226, along with a Supplement to the Emergency Motion, ECF No. 227. Mr. Staton represented that he obtained financing in the amount of $1, 032, 000-sufficient to satisfy all liens on the property-with a closing date set for December 8, 2017. ECF No. 226. The Court held a hearing on this matter on December 11, 2017 and ordered the parties to have a settlement conference with Magistrate Judge Chang. ECF No. 234.

         On December 18, 2017, Magistrate Judge Chang held the settlement conference, which he ended when the Statons could not produce a loan commitment from the lender for the above-described financing. ECF No. 244. The Statons filed an Emergency Motion Regarding Foreclosure and Request for a Hearing and Stay Pending Hearing later that day. ECF No. 241. And- still on December 18, 2017-the Court held a hearing on the Statons' motion, concluding that the foreclosure of the Residence would proceed on December 20, 2017. ECF No. 243.

         The day before the foreclosure sale, on December 19, 2017, the Statons filed a Notice Re: Conditional Loan Approval Letter and requested a stay of the foreclosure sale.[2] ECF No. 245. The Court held a hearing the morning of December 20, 2017 regarding the Statons' Notice.[3] ECF No. 251. The Court denied the request for a stay and ordered the foreclosure sale to proceed. Id.

         The foreclosure sale occurred on December 20, 2017 around 12:00pm on the steps of the United States District Court for the District of Hawaii. Following the foreclosure sale, on December 21, 2017, the Commissioner filed a Notice of Sale, informing the Court that the Residence was sold to a third-party bidder one day earlier for $1, 135, 000.00, subject to confirmation by the Court. ECF No. 254.

         On December 21, 2017, however, the Government filed a Notice of Defendant Ronald Staton's Bankruptcy Case, which stated that: (1) Mr. Staton filed a new bankruptcy case on December 20, 2017 and (2) the Government intended to seek relief from the stay in that case so that the Commissioner's sale could be confirmed. ECF No. 253.

         On December 22, 2017, Mrs. Staton filed a Notice of Pendency of Action (“notice of lis pendens”), asserting that she was contesting the validity of the foreclosure sale as having been filed in violation of Mr. Staton's bankruptcy, which she contended was filed at 11:54 a.m. before the foreclosure sale. ECF No. 255. She also asserted that the foreclosure sale failed “to protect defendant interests in the property.” ECF No. 255 at 2. The Court entered a minute order on January 5, 2018, setting a hearing on Mrs. Staton's claim for January 31, 2018 and directing the parties to file briefs. ECF No. 258.

         On January 17, 2018, the Statons filed a Brief in Support of Claim of Failure to Protect Defendant Interests in Real Property. ECF No. 260. On January 23, 2018, the United States filed a Memorandum in Response to the Statons' December 22, 2017 and January 17, 2018 briefs. ECF No. 261. On January 24, 2018, Defendants Navy Federal Credit Union and Capstead Mortgage Corporation (together, the “Lender Defendants”) filed a Response to Brenda Staton's Brief in Support of Claim of Failure to Protect Defendant Interests in Real Property. ECF No. 262.

         The Bankruptcy Court granted the Government's Motion for Relief from Automatic Stay on January 31, 2018, and applied the lifting of the stay retroactively to December 20, 2017. This Court continued the hearing on Mrs. Staton's claim originally scheduled for January 31, 2018 until February 16, 2018 because the Government: (1) did not seek a waiver of the 14-day stay provided under Fed.R.Bankr.P. 4001(a)(3) in Mr. Staton's bankrupty case; and (2) failed to record the Bankruptcy Court's Order in Mrs. Staton's prior bankruptcy case granting relief from the stay, which provided for “‘in rem' relief, i.e. this order is binding with respect to the subject property for 240 days after the date of the entry of this order in any other bankruptcy case that has been or may be filed.” ECF No. 268. The Government subsequently recorded the Bankruptcy Court's in rem Order with the Hawaii Bureau of Conveyances. ECF No. 296 at 3 (citing ECF No. 294-1).

         On February 12, 2018, Mr. Staton filed a Motion to Vacate, Alter, or Amend Order Granting Relief from Automatic Stay Retroactive to December 20, 2017 in the Bankruptcy Court. On February 15, 2018, the Bankruptcy Court denied this Motion. On that same date, Mr. Staton filed a Notice of Appeal of the Bankruptcy Court's Order and its subsequent denial of his Motion to Vacate, Alter, or Amend.

         The Court held a hearing on February 16, 2018 (after expiration of the 14-day stay provided under Fed.R.Bankr.P. 4001(a)(3)) to consider Defendant Brenda Staton's assertion that there has been a failure “to protect defendant interests in the property.” Following the February 16, 2018 hearing, the Court entered an Order Finding Defendant Brenda Staton's Claim that the Foreclosure Sale Fails to Protect Her Interest in the Property to be Without Merit (the “February 16, 2018 Order”). ECF No. 276.

         On March 19, 2018, Mrs. Staton filed a notice of appeal, ECF No. 297, appealing from the Court's February 16, 2018 Order, ECF No. 276. The Court entered a minute order on March 21, 2018, construing Mrs. Staton's notice of appeal as a motion for leave to file an interlocutory appeal, as well as setting a briefing schedule and hearing on the Motion. ECF No. 299. The Government filed its Opposition to the Motion on March 23, 2018, ECF No. 303, to which the Lender Defendants and Defendant State of Hawaii joined, ECF Nos. 304, 305. The Statons filed a Memorandum in Support of Brenda L. Staton's Motion to Certify Interlocutory Appeal (“Staton Mem.”) on March 27, 2018. ECF No. 312. Lender Defendants then filed an opposition to Mrs. Staton's memorandum in support on March 29, 2018. ECF. No. 317.

         Separately, on March 26, 2018, the Statons filed a Motion for Continuance of Hearings Scheduled for March 29, 2018 and April 6, 2018. ECF No. 307. The Government filed an opposition on March 28, 2018. ECF No. 309. By Minute Order entered March 28, 2018, the Court denied the Statons' motion for a continuance and directed that the hearings set for March 29, 2018, and April 6, 2018, would be held as scheduled. ECF No. 311. The Court, however, granted Mrs. Staton permission to appear at the March 29, 2018 hearing by telephone. Id. The ...


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