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refusing to reopen bankruptcy case to permit homeowner to challenge state court mortgage foreclosure judgment
Summary of this case from Pearson v. Bank of N.Y. Mellon (In re Pearson)Opinion
07-10416 (BLS)
10-12-2021
In re NEW CENTURY TRS HOLDINGS, INC, et al., Debtors.
Nancy Alanis Movant Victoria A. Guilfoyle, Esquire Blank Rome LLP Mark S. Indelicato, Esquire Jeffrey Zawadzki, Esquire Hahn & Hessen LLP Co-counsel for the former Trustee of the New Century Liquidating Trust
Nancy Alanis Movant
Victoria A. Guilfoyle, Esquire Blank Rome LLP Mark S. Indelicato, Esquire Jeffrey Zawadzki, Esquire Hahn & Hessen LLP Co-counsel for the former Trustee of the New Century Liquidating Trust
OPINION
BRENDAN LINEHAN SHANNON UNITED STATES BANKRUPTCY JUDGE
Before the Court are two motions: (i) the motion to reopen the chapter 11 bankruptcy case of New Century TRS Holdings, Inc. filed by Nancy Alanis (“Ms. Alanis” or the “Movant”) and (ii) the Motion for Judicial Notice filed by the former 1 Liquidating Trustee of the New Century Liquidating Trust. After a hearing and due deliberation, and for the reasons set forth herein, the Judicial Notice Motion will be granted, and the Motion to Reopen will be denied.
FACTS
A. Background of the New Century Bankruptcy Case
1. On April 2, 2007, New Century TRS Holdings, Inc., and related entities, (the "Debtors") filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in this Court.
2. On July 15, 2008, the Court entered an order (the "Original Confirmation Order") confirming the Second Amended Joint Chapter 11 Plan of the Debtors and the Official Committee of Unsecured Creditors Dated as of April 23, 2008 (the "Original Plan").
3. On August 1, 2008, the Original Plan became effective and, pursuant to its terms, the New Century Liquidating Trust Agreement was executed, thereby creating the New Century Liquidating Trust (the "NCL Trust") and appointing Alan M. Jacobs as Trustee of the Trust (the "New Century Trustee").
4. After the United States District Court for the District of Delaware issued an opinion reversing the Original Confirmation Order, on November 20, 2009, the Court entered an Order confirming the Modified Second Amended Joint 2 Chapter 11 Plan of Liquidation (the “Modified Plan”), which became effective on December 1, 2009
5. The Modified Plan (i) confirmed that all actions taken by the New Century Trustee subsequent to the Original Effective Date were valid and binding; (ii) adopted, ratified and confirmed the formation of the NCL Trust as of the Original Effective Date; (iii) adopted, ratified and confirmed the Trust Agreement as of the Original Effective Date; and (iv) adopted, ratified and confirmed the appointment of Alan M. Jacobs as trustee of the NCL Trust as of the Original Effective Date.
6. On May 18, 2016, the Court entered an order authorizing the New Century Trustee to destroy the Debtors' and the NCL Trust's records and documents (collectively, the "Records") subject to certain procedures in that order (the "Document Destruction Order").
7. On August 25, 2016, the Court entered a Final Decree closing the chapter 11 cases and fully releasing and discharging the New Century Trustee of his duties and obligations as trustee to the NCL Trust (other than certain ministerial obligations related to NCL Trust wind down and Records destruction (the "Trailing Obligations")). 3
8. On September 30, 2016, the New Century Trustee made a final distribution of the NCL Trust assets and completed the disposal of the Records pursuant to the Document Destruction Order.
9. By February of 2017, the New Century Trustee completed the Trailing Obligations and the NCL Trust terminated by operation of its terms and in accordance with the terms of the Final Decree.
B. Background of Ms. Alanis's Mortgage Loan and the Texas State Court Litigation
10. On or about June 15, 2006, Ms. Alanis executed an adjustable rate balloon note (the "Note") in favor of New Century Mortgage Corporation ("NCMC") in the principal amount of $193, 500 (the "Mortgage Loan") secured by a deed of trust (the "Deed of Trust") executed by Ms. Alanis that granted a lien upon real property located in San Antonio, Texas (the "Real Property"). The Deed of Trust was recorded in the official public records of Bexar County, Texas on June 22, 2006.
11. On September 15, 2006, NCMC notified Ms. Alanis that servicing of the Mortgage Loan was assigned to HomEq Servicing Corporation ("HomEq") effective October 1, 2006.
12. On August 11, 2010, HomEq notified Ms. Alanis that servicing of the Mortgage Loan was assigned to Ocwen Loan Servicing, LLC ("Ocwen"). 4
13. Ms. Alanis made monthly Mortgage Loan payments to HomEq (from January 2010 to August 2010) and to Ocwen (from September 2010 to February 2011).
14. In letters dated September 19, 2010, and October 11, 2010, Ms. Alanis informed Ocwen's Customer Service Department that she disputed a default notice from Ocwen dated September 13, 2010 and wrote of her continuing efforts since January 2009 to correct Ocwen's and HomEq's records claiming that there was "unpaid debt" on her Mortgage Loan account.
15. On October 13, 2010, Ms. Alanis's attorney (Loren Peters, Esquire) wrote a 4-page letter to Ocwen disputing amounts claimed due and demands made by HomEq and Ocwen to Ms. Alanis regarding the Mortgage Loan and explaining ongoing efforts by Ms. Alanis and Peters to communicate with HomEq or Ocwen in connection with Ms. Alanis's account. By letters dated December 21, 2010, Peters again wrote on behalf of Ms. Alanis to Ocwen and HomEq (including sending a copy of the letter to Ocwen's CEO) regarding Ocwen's failure to respond to his earlier letter, objecting to a December 7, 2010 demand letter to Ms. Alanis, and asserting claims by Ms. Alanis pursuant to the Texas Deceptive Trade Practices Act. 5
16. On or about January 13, 2011, Mackie Wolf Zientz & Mann, P.C., attorneys for Ocwen as mortgage servicer for Well Fargo Bank, National Association, as Trustee for the Pooling and Servicing Agreement Dated as of October 1, 2006 Securitized Asset Backed Receivables LLC Trust 2006-NC3 Mortgage Pass Through Certificates Series 2006 NC3 ("Wells Fargo"), sent Ms. Alanis a Notice of Acceleration of Loan Maturity and a Notice of Foreclosure Sale regarding her Mortgage Loan and Property.
17. On February 22, 2011, Ms. Alanis commenced state court litigation against Wells Fargo and other parties in the District Court for the 45th Judicial District of Bexar County, Texas (the "Texas State Court"), Cause No. 2011-CI-02839, challenging Wells Fargo's efforts to foreclose on the Mortgage Loan and Deed of Trust.
18. Wells Fargo filed a counterclaim against Ms. Alanis in the Texas State Court Litigation asserting claims for breach of contract, judicial foreclosure, and equitable subrogation.
19. On or about January 28, 2016, Wells Fargo and Ocwen filed a Motion for Partial Summary Judgment on RESPA, Section 51.002 of the Texas Property 6 Code and Counterclaim for Foreclosure (the “Defendants' Motion for Partial Summary Judgment”).
20. On March 3, 2016, the Texas State Court entered an Order granting the Defendants' Motion for Partial Summary Judgment deciding, among other things, that: (i) "Wells Fargo is the current holder of the Note and beneficiary of the Deed of Trust representing a valid and existing first lien on the Property," (ii) "that Nancy Alanis [is] in breach of her payment obligations under the Note and the Deed of Trust is foreclosed," (iii) that judgment be entered against Nancy Alanis, "which judgment shall be satisfied and paid, in whole or in part, from the proceeds of the judicial foreclosure sale of the Property," and (iv) "this Judgment fully and finally disposes of all remaining parties and claims in this action and may be appealed." (the "Final Judgment").
21. While the Texas State Court Litigation was pending, Ms. Alanis communicated with the New Century Trustee and, on April 21, 2016, the Trustee 7 provided copies of the Debtors' files regarding the Mortgage Note and Deed of Trust that were held by the New Century Trustee as custodian.
22. Ms. Alanis filed a plea to dismiss the Texas State Court Litigation for want of jurisdiction (the "Plea"), attaching the copies of documents she received from the New Century Trustee. She argued that there were inconsistencies between the documents in the New Century Trustee's file and the documents submitted in support of the Defendants' Motion for Partial Summary Judgment. The Texas State Court denied the Plea at a hearing on May 24, 2016.
23. Ms. Alanis appealed the Final Judgment, as well as other orders of the Texas State Court, to the Fourth Court of Appeals, San Antonio, Texas (the "Texas Appellate Court"). On April 4, 2018, the Texas Appellate Court entered an order affirming, among other things, the Final Judgment.
24. Ms. Alanis asserts that after the Texas Appellate Court's decision, she filed a petition for review and sought sanctions against Wells Fargo in the Supreme Court of Texas. 8
25. On September 4, 2018, the Sheriff of Bexar County, Texas sold the Property to Wells Fargo and issued a Sheriff's Deed to Wells Fargo.
26. On or about November 29, 2018, Wells Fargo obtained judgment on a forcible detainer action and an eviction order against Ms. Alanis.
C. Ms. Alanis's Motion to Reopen the New Century Bankruptcy Case and the New Century Trustee's Motion for Judicial Notice
27. Ms. Alanis filed the Motion to Reopen seeking to file an adversary proceeding in this Court against Wells Fargo and others for allegedly violating the automatic stay by pursuing counterclaims in the Texas State Court Litigation, and to require Wells Fargo to provide evidence that it filed a claim in the New Century bankruptcy case, as well as proof of other actions taken in connection with the transfer of her Mortgage Loan and Deed of Trust
28. The New Century Trustee filed an objection to the Motion to Reopen, and Ms. Alanis timely filed a response to the New Century Trustee's objection.
29. In response to Ms. Alanis's submissions, the New Century Trustee also filed the Motion for Judicial Notice in Consideration of the Motion to Reopen, which asks the Court to take judicial notice of the Order Providing that the Automatic Stay under Section 362(a) of the Bankruptcy Code is Terminated to Permit the Commencement or Continuation of any Action to Foreclose upon or Extinguish an 9 Interest Listed in the Name of the Debtor dated July 14, 2008 (D.I. 8595) (the "Stay Termination Order").
30. Ms. Alanis timely filed a response objecting to the Motion for Judicial Notice. These motions have been fully briefed and argued, and both motions are ripe for disposition.
DISCUSSION
I. The Judicial Notice Motion
The Judicial Notice Motion, being integral to arguments underlying the Motion to Reopen and the New Century Trustee's objection thereto, requires consideration first.
The Trustee notes that Ms. Alanis requests reopening the bankruptcy case to address Wells Fargo's "knowing and willful automatic stay and injunction violations" in connection with Wells Fargo's counterclaim for foreclosure in the Texas State Court Litigation. The Trustee argues that this Court entered the Stay Termination Order over a decade ago to establish a process which terminated the automatic stay "to permit commencement or continuation of any action to foreclose or similarly proceed to foreclose upon or extinguish an interest in real property listed in the title records as being held by a Debtor." Thus, the Trustee claims, a 10 party commencing or continuing an action to foreclose on a mortgage, such as the Alanis Deed of Trust, could not have violated the automatic stay.
Ms. Alanis objects to the Judicial Notice Motion, arguing that the Stay Termination Order should be void ab initio for ignoring the protections of the Bankruptcy Code for the "billions of dollars in mortgage loans" that were "assets belonging to the debtor bankruptcy estate."
Standard - Judicial Notice
"This Court may take judicial notice of its own docket since 'Federal Rule of Evidence 201 authorizes a court to take judicial notice of an adjudicative fact not subject to reasonable dispute . . . [and] so long as it is not unfair to a party to do so and does not undermine the trial court's fact-finding authority.'"
Discussion - Judicial Notice
It is undisputed that the Stay Termination Order was entered in the New Century Bankruptcy Case. The Court may take judicial notice of its own docket.Taking judicial notice of the Stay Termination Order does not prejudice Ms. Alanis, who refers to the Order in her Motion to Reopen when citing to a section of the Modified Confirmation Order.
Id.
Motion to Reopen, ¶ 16.
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[47] Rashid, 2004 WL 2861872, *4 (citing In re Carberry, 186 B.R. 401, 402 (Bankr.E.D.Va.1995) (noting that a bankruptcy case should remain closed “where it appears that [reopening the case] would be futile and a waste of judicial resources”)). See also n. 23, supra. [
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Ms. Alanis challenges the fairness of recognizing the Order, claiming that the Stay Termination Order should be void ab initio. However, there is no basis for 11 concluding that the Stay Termination Order was void or even voidable. Statements in the Joint Motion by the Debtors and the Official Committee of Unsecured Creditors for entry of the Stay Termination Order, filed in 2008, directly contradict the grounds for Ms. Alanis's void ab initio argument:
During the course of the bankruptcy cases, the Debtors sold and disposed of all of their interests in and to any mortgage loans in which they held an economic interest. As a result, the Debtors no longer own any mortgage loans. … As the Debtors have sold all of their interests in mortgage loans and no longer have any obligation to service mortgage loans, the Debtors and the Committee believe that the automatic stay under 11 U.S.C. § 362(a) is no longer needed to remain in place in order to protect the bankruptcy estates' (the "Estates") potential asset or interest in and to any mortgage loan from being foreclosed upon by the holder of a senior mortgage lien. Furthermore, as the Debtors have wound down their operations and the Estates are liquidating, the large number of Foreclosure Notices that are received by the Committee and the Debtors on a weekly basis and the number of motions for relief from the stay that are filed with the Court in connection with efforts to foreclose upon any and all liens still held in the name of a Debtor is placing an unnecessary burden on the Court's and Estate's valuable time and resources.[39]
After a hearing on July 14, 2008, the Court entered the Stay Termination Order. That Order was well-founded at the time of its entry, has been relied upon by parties for more than a decade, and is final and non-appealable. Ms. Alanis's objection to the Judicial Notice Motion is overruled and the Court will take judicial notice of the Stay Termination Order.
II. The Motion to Reopen
Ms. Alanis filed the Motion to Reopen to allow her to "file an adversary proceeding to assert claims seeking damages against Wells Fargo and others 12 working in concert with them" for purportedly violating the automatic stay when Wells Fargo filed a counterclaim in foreclosure and other claims in the Texas State Court Litigation. Ms. Alanis also seeks to compel Wells Fargo to provide evidence that, among other things, Wells Fargo (i) filed timely claims in the bankruptcy case in connection with the Mortgage Loan and Deed of Trust, (ii) negotiated and provided consideration to the New Century Liquidating Trust for the Note and Deed of Trust, and (iii) obtained a "valid conveyance" of the Note and Deed of Trust by providing documentation to support that the February 2, 2011 Transfer of Lien was properly authorized.
The New Century Trustee responds that no valid purpose could be served by reopening the bankruptcy case because the claims Ms. Alanis wants to assert against Wells Fargo and others have been fully and finally litigated in the Texas State Court Litigation. The New Century Trustee also argues that other factors weigh against reopening the bankruptcy case, such as the length of time the bankruptcy case has been closed, potential burden upon and prejudice to the Trust and Trustee, and the lack of any benefit to the Trust or its beneficiaries.
Standard - Motion to Reopen
Pursuant to Section 350(b) of the Bankruptcy Code, a bankruptcy court may reopen a closed case "to administer assets, to accord relief to the debtor, or for other cause." Whether to reopen the case is within the sound discretion of the 13 bankruptcy court. "This discretion depends upon the circumstances of the individual case and accords with the equitable nature of all bankruptcy proceedings."
The movant bears the burden of demonstrating circumstances sufficient to justify the reopening of the bankruptcy case. Courts consider a variety of non-exclusive factors when deciding whether to reopen a case, including:
(i) the length of time that the case was closed;
(ii) whether a non-bankruptcy forum, such as a state court, has the ability to determine the dispute to be posed by the debtor were the case reopened;
(iii) whether prior litigation in bankruptcy court implicitly determined that the state court would be the appropriate forum to determine the rights, post-bankruptcy, of the parties;
(iv) whether any parties would be prejudiced were the case reopened or not reopened;
(v) the extent of the benefit which the debtor seeks to achieve by reopening; and
(vi) whether it is clear at the outset that the debtor would not be entitled to any relief after the case were reopened.14 "Generally, a bankruptcy case should remain closed if no valid purpose would be served if the matter were reopened."
Discussion - Motion to Reopen
1. There is no valid purpose to reopening the New Century bankruptcy case.
The New Century Trustee argues that reopening the bankruptcy case will not assist Ms. Alanis in her quest to further pursue claims against Wells Fargo. The New Century Trustee points out that the core tenet underlying each of Ms. Alanis's proposed adversary proceeding claims against Wells Fargo is that her Mortgage Note and Deed of Trust were never validly transferred from the Debtors to Wells Fargo and, therefore, at all relevant times remained property of the estate. The Trustee argues that the central issue underlying those claims - - whether the Mortgage Note and Deed of Trust were validly transferred to Wells Fargo - - has been decided in the Texas State Court Litigation.
(a) Reopening the Bankruptcy Case to Pursue Sanctions and Damages for Violating the Automatic Stay
Ms. Alanis requests reopening of the New Century bankruptcy case to allow her to file an adversary proceeding seeking damages and sanctions from Wells Fargo and others for pursuing the counterclaims in the Texas State Court Litigation without first getting relief from the automatic stay from this Court. 15
The automatic stay of Bankruptcy Code § 362 prevents any entity from (among other things) taking any action to obtain property of the estate, or to create, perfect or enforce any lien against property of the estate. Ms. Alanis claims that her Mortgage Loan and Deed of Trust were property of the New Century bankruptcy estate that transferred to the NCL Trust upon confirmation of the Original Plan and the Modified Plan and, therefore, she asserts that the defendants' counterclaim for foreclosure and other claims filed in the Texas State Court violated the automatic stay.
But Ms. Alanis's argument is flawed. The Stay Termination Order discussed above negates her argument that Wells Fargo's foreclosure counterclaim violated the automatic stay since that Order expressly granted relief from the stay "to permit the commencement or continuation of any action to foreclose upon or extinguish an interest in real property listed in the title records as being held by a Debtor." The Joint Motion seeking entry of the Stay Termination Order included the Debtors' and the Creditors' Committee's representation that the Debtors had sold or transferred all of their interests in any loans prior to confirmation. The Walker Declaration producing copies of NCL Trust files to Ms. Alanis is evidence of the copies of the Debtors' documents held by the NCL Trust, but those documents 16 do not necessarily prove that the Mortgage Loan was property of the estate at any time relevant to this proceeding.
Finally, the Texas State Court has already determined that Wells Fargo was the current holder of the Mortgage Note and the beneficiary of the Deed of Trust. For reasons discussed in more detail below, principles of collateral estoppel and res judicata prevent this Court from reconsidering those issues.
Finally, there is no evidence that the New Century bankruptcy estate, the NCL Trust, or any creditors could benefit in any respect from a decision on whether the stay was violated in this case. Ms. Alanis has not provided a valid basis for reopening the bankruptcy case to pursue an adversary proceeding based on violations of the automatic stay.
(b) Reopening the Bankruptcy Case to Require Proof of the Valid Transfer of the Mortgage Loan and Deed of Trust to Wells Fargo
Ms. Alanis also seeks to reopen the New Century bankruptcy case so that she can file an adversary proceeding against Wells Fargo and others to demand proof by Wells Fargo that it: (i) filed valid claims in the bankruptcy case regarding the Mortgage Loan and Deed of Trust, (ii) negotiated and provided consideration to the estate in connection with the Mortgage Loan and Deed of Trust, and (iii) has documentation to show that the February 2, 2011 Transfer of Lien was properly authorized. 17
The New Century Trustee objects to reopening the bankruptcy case to allow Ms. Alanis to pursue these claims, arguing that issues regarding whether Wells Fargo obtained a valid transfer of the Mortgage Loan and Deed of Trust have been fully and finally adjudicated in the Texas State Court Litigation. Therefore, the New Century Trustee claims, the principles of collateral estoppel and res judicata prevent this Court's reconsideration of those issues. The New Century Trustee is correct.
(i) Collateral Estoppel
Collateral estoppel (or issue preclusion) bars relitigation of an issue when (i) the identical issue was previously adjudicated; (ii) the issue was actually litigated; (iii) the previous determination was necessary to the decision; and (iv) the party being precluded from relitigating the issue was fully represented in the prior action. The Third Circuit also considers whether the party being precluded "had a full and fair opportunity to litigate the issue in question in the prior action" and "whether the issue was determined by a final and valid judgment."
Ms. Alanis's proposed adversary proceeding claims assert that the Mortgage Note and the Deed of Trust were not properly transferred to Wells Fargo and, therefore, remained property of the New Century bankruptcy estate. This issue was actually litigated and decided in the Final Judgment issued by the Texas State 18 Court, which was upheld on appeal. Ms. Alanis directly participated in the Texas State Court Litigation, including issues related to the transfer of Mortgage Loan. Therefore, Ms. Alanis's proposed claims are barred by collateral estoppel.
(ii) Res Judicata
The doctrine of res judicata (or claim preclusion) "bars repetitious litigation based on the same cause of action." It applies when (i) there was a final judgment on the merits in a prior suit, (ii) involving the same parties or their privities, and (iii) the present suit is based on the same cause of action.
When "deciding whether two suits are based on the same 'cause of action,' [it is proper to] take a broad view, looking to whether there is an essential similarity of the underlying events giving rise to the various legal claims." Courts should consider "(1) whether the acts complained of and the demand for relief are the same (that is, whether the wrong for which redress is sought is the same in both actions); (2) whether the theory of recovery is the same; (3) whether the witnesses and documents necessary at trial are the same (that is, whether the same evidence necessary to maintain the second action would have been sufficient to support the first); and (4) whether the material facts alleged are the same." 19
Each of the foregoing factors are present here. A broad view of the proposed litigation and the Texas State Court Litigation indicates that the wrong alleged at the core of both cases is that Wells Fargo failed to obtain a valid transfer of the Mortgage Loan and Deed of Trust from the Debtors. The theory of the case, material facts and documents involved in both cases will be the same. Ms. Alanis has previously litigated the validity of transfer issues in the Texas State Court Litigation and a final judgment was issued. Res judicata applies to Ms. Alanis's proposed claims.
Ms. Alanis argues, however, that Bankruptcy Courts are courts of equity and case law has recognized that res judicata does not prevent a Bankruptcy Court from exercising its equitable powers and inquiring into the validity of a claim. Ms. Alanis claims that Wells Fargo's judgment against her is based on fraud, by way of an unlawful foreclosure scheme that allegedly included (among other things) sending a notice of default to Ms. Alanis before Wells Fargo had any interest in the Mortgage Loan or Deed of Trust, fabricating lien transfer documents, and including false statements in the Declaration attached to the Partial Summary Judgment Motion.
Courts have recognized that "the bankruptcy trustee may collaterally attack a judgment offered as a claim against the estate for the purpose of showing that it 20 was obtained by collusion of the parties or is founded upon no real debt." This principle, however, is not applicable here. First, Ms. Alanis is arguing for the review of Wells Fargo's claim against her; there is no claim asserted against the bankruptcy estate for either this Court or the New Century Trustee to review. Second, courts are equally reluctant to apply equitable relief to judgments entered after a full trial on the merits, when a party's defense has already been litigated and decided by the prior court.
Ms. Alanis argues that she did not have an adequate opportunity to a full and fair trial on her claims because the Texas State Court rejected her arguments and motions, including her attempts to admit the documentation received from the New Century Trustee after the Final Judgment. However, denial of her motions does not establish that the Texas State Court failed to consider her arguments. This matter 21 has been litigated, decided, and upheld on appeal. As the Supreme Court stated in Heiser v. Woodruff:
[W]e are aware of no principle of law or equity which sanctions the rejection by a federal court of the salutary principle of res judicata, which is founded upon the generally recognized public policy that there must be some end to litigation and that when one appears in court to present his case, is fully heard, and the contested issue is decided against him, he may not later renew the litigation in another court.
There is no valid reason to renew Ms. Alanis's litigation in another court. Because Ms. Alanis's proposed claims are barred by collateral estoppel and res judicata, the Court concludes that no valid purpose will be served by reopening the bankruptcy case.
2. The Motion to Reopen fails to demonstrate other circumstances to justify reopening this Chapter 11 case
An analysis of other applicable factors that courts consider when deciding whether to reopen a bankruptcy case also weigh heavily against granting the Motion to Reopen.
(1) The length of time that the case was closed
The Court entered a final decree closing the Chapter 11 cases on August 25, 2016. The New Century Trustee made a final distribution of NCL Trust assets on September 30, 2016. All records of the NCL Trust have been disposed of pursuant to the Document Destruction Order entered by the Court and the New Century Trustee has been fully released and discharged of his duties. Reopening this Chapter 11 case would provide no 22 benefit to the estate or its creditors. This factor weighs against reopening the case.
(2) Whether a non-bankruptcy forum, such as a state court, has the ability to determine the dispute to be posed by the debtor were the case reopened
A non-bankruptcy forum (i.e., the Texas State Court) has already heard and determined the dispute Ms. Alanis seeks to bring before this Court. On March 3, 2016, the Texas State Court entered an Order deciding (among other things) that Wells Fargo was the holder of the Note and the beneficiary of the Deed of Trust representing a valid and existing first lien on the Property. The Texas Appellate Court affirmed that decision on April 4, 2018. This factor also weighs against reopening the Chapter 11 case.
(3) Whether any parties would be prejudiced were the case reopened or not reopened
The New Century Trustee would be prejudiced by reopening the case since he has been discharged from his duties and could incur costs by monitoring or participating in any litigation involving the estate. This factor also weighs against reopening the case.
(4) The extent of the benefit which the debtor seeks to achieve by reopening/ whether it is clear at the outset that the debtor would not be entitled to any relief after the case were reopened
Neither the Debtors nor the New Century Trustee are seeking to reopen the Chapter 11 case and it is apparent that the estate will not 23 benefit from reopening the case. This factor also weighs against granting the Motion to Reopen.
CONCLUSION
Accordingly, for the reasons set forth above, the Judicial Notice Motion will be granted and the Motion to Reopen will be denied. The Court will enter an appropriate Order. 24
65 Courts generally use their equitable powers in cases involving default judgments or confessed judgments - - the type of judgments that are more susceptible to foul play. Margolis, 249 F.2d at 224 ("The doctrine of res judicata in bankruptcy courts 'is subject to the paramount equitable powers of bankruptcy courts to prevent the perpetration of fraud and collusion. This principle [is] … applicable especially to judgments by default or pro confesso' … since the danger of fraud in such judgments is far greater than in adversary proceedings.") (quoting 3 Collier, Bankruptcy, Sec. 63.07 at 1800-01 (14th ed. 1940)).