[00:00:02] Speaker 00:
The next case is Inray Sharp, Rachel Kadivi appearing for Appellant, and David Carl Hill appearing for Appellee.

[00:01:07] Speaker 01:
You're fine, thank you.

[00:01:15] Speaker 01:
All right, Ms.

[00:01:16] Speaker 01:
Kidivi, you may approach and would you like to reserve any time for a reply?

[00:01:20] Speaker 00:
I guess we're on our two minutes.

[00:01:22] Speaker 01:
Two minutes?

[00:01:25] Speaker 01:
And you may proceed when you're ready.

[00:01:27] Speaker 00:
Good morning, Your Honors.

[00:01:28] Speaker 00:
My name is Rachel Cudavy, attorney for Appellant for Trivian Design LLC.

[00:01:32] Speaker 00:
The central issue in this case is whether Ms.

[00:01:36] Speaker 00:
Sharpe retained the right to redeem her property at the time her final bankruptcy plan was confirmed.

[00:01:42] Speaker 00:
Since Ms.

[00:01:43] Speaker 00:
Sharpe failed to redeem within the time prescribed under state law or the extension of time under Section 108B, we respectfully submit that the answer to that question is no.

[00:01:54] Speaker 00:
Exercising a right of redemption created under state law constitutes the curing of a default or performing any other similar act falling within the scope of Section 108B.

[00:02:05] Speaker 00:
Hear Ms.

[00:02:05] Speaker 00:
Sharphead until the original redemption deadline under state law of July 15th, 2023 or the extended deadline of September 10th, 2023 to redeem the property.

[00:02:17] Speaker 00:
Since Ms.

[00:02:18] Speaker 00:
Sharp failed to redeem the property by the original deadline or the extended deadline, the right of redemption was no longer a part of the bankruptcy estate at the time her final plan was confirmed.

[00:02:29] Speaker 01:
Does she not have any ability to affect anything through the remaining provisions of the bankruptcy code?

[00:02:37] Speaker 00:
No, Your Honor.

[00:02:38] Speaker 01:
Why is that?

[00:02:40] Speaker 01:
And that gets us into Fairbanks.

[00:02:42] Speaker 00:
Yes.

[00:02:43] Speaker 00:
The reason for that is that Ms.

[00:02:45] Speaker 00:
Sharpe's legal title interest in the property terminated at the end of the redemption period, which was extended under Section 108B by 60 days from her date of filing.

[00:02:57] Speaker 00:
So the final date that she had to redeem the property was September 10, 2023.

[00:03:00] Speaker 00:
At that point, her legal title interest in the property terminated.

[00:03:05] Speaker 00:
She no longer had equitable interest in the property as that passed to Vitruvian at the foreclosure sale.

[00:03:10] Speaker 01:
And what is your case law or statute for that provision?

[00:03:15] Speaker 01:
And first, I guess, when you say that, are we looking solely to Washington law or are we also looking separately to the Bankruptcy Code?

[00:03:23] Speaker 00:
Your honor, the Ninth Circuit or the Ninth Circuit BAP has not addressed this issue squarely.

[00:03:27] Speaker 00:
Every case that we've cited to in our briefing that has confronted this issue has interpreted 108B as a firm deadline by which the debtor has to confirm the plan.

[00:03:41] Speaker 01:
When you say confirm the plan, you mean?

[00:03:44] Speaker 00:
To redeem the property, excuse me, your honor, and for it to still be considered a right of the bankruptcy estate.

[00:03:49] Speaker 03:
Just to clarify, then.

[00:03:51] Speaker 03:
if she had filed a plan before the 60-day period but didn't provide that the payment would be made within the 60-day period, that wouldn't be sufficient.

[00:04:00] Speaker 00:
No, Your Honor.

[00:04:01] Speaker 00:
The redemption needs to take place within the extended 60-day period under Section 108B.

[00:04:10] Speaker 00:
Despite what Appellee contends, the operative event in this scenario is the termination of the redemption period and not the delivery and recording of a deed.

[00:04:20] Speaker 00:
Appellee argues that since a sheriff's deed was never recorded, Appellee continues to possess rights in the property which continue into the bankruptcy estate until such recording.

[00:04:30] Speaker 00:
The bankruptcy court seemed to favor this idea.

[00:04:32] Speaker 00:
As you alluded to, it allowed it to analogize to the Fairbanks case.

[00:04:36] Speaker 00:
However, the bankruptcy court and appellee misunderstand the operative events with regard to a judicial foreclosure sale, which we have here, and the redemption statute under RCW 623.

[00:04:47] Speaker 03:
So you distinguish Fairbanks on the basis that it's a different mechanism under law that is in play rather than, in this case, rather than what was in play in Fairbanks?

[00:04:57] Speaker 00:
Correct, Your Honor.

[00:04:59] Speaker 00:
Fairbanks did not involve a redemption period at all.

[00:05:04] Speaker 00:
Section 108B simply wasn't an issue and it wasn't addressed by the court.

[00:05:08] Speaker 03:
It would involve the recording of a deed transferring title of the property after a foreclosure sale.

[00:05:13] Speaker 00:
In Fairbanks, yes.

[00:05:15] Speaker 00:
The debtor still had a legal interest in the property.

[00:05:18] Speaker 00:
So that's why the bankruptcy court was able to address her claim in that way, in the way it did.

[00:05:26] Speaker 01:
So what is the distinction here?

[00:05:29] Speaker 01:
You're saying that upon the expiration of the extended time to redeem the legal interest, which did pass into the estate, did what?

[00:05:43] Speaker 00:
It terminated your honor.

[00:05:45] Speaker 01:
I thought, but you know, as to Fairbanks and some others in Washington law, it requires the actual delivery of the deed.

[00:05:54] Speaker 00:
Right, but the operative events in a judicial foreclosure sale, when there is a statutory redemption period, is not the recording of a deed.

[00:06:02] Speaker 01:
The debtors... Again, that's the difference between the legal and the equitable, right?

[00:06:08] Speaker 01:
Because something did pass into the estate, and you had the redemption, it stopped.

[00:06:14] Speaker 01:
But as in the non-judicial, that actually, the sale was gaveled.

[00:06:20] Speaker 01:
It did not get the deed, and something passed into the estate,

[00:06:24] Speaker 01:
And Fairbanks alludes that something could be done.

[00:06:28] Speaker 01:
Question about what that something is.

[00:06:30] Speaker 01:
So why in this case, where it has concluded redemption is off the table under state law, but bankruptcy generally allows for the payment of a debt.

[00:06:41] Speaker 01:
So why couldn't the debtor in this instance try to save her equity in this house, which appears to be substantial, by paying the debt that was due to your client?

[00:06:53] Speaker 00:
Right.

[00:06:53] Speaker 00:
I understand, Your Honor, but it is our position that the running of the redemption period by the extended downline under Section 108B was a firm cutoff by which Ms.

[00:07:03] Speaker 00:
Sharp had to redeem her plan.

[00:07:06] Speaker 00:
Neither Ms.

[00:07:07] Speaker 00:
Sharp nor the trustee filed a motion to redeem by the deadline.

[00:07:11] Speaker 00:
There's case law, specifically Title Max, that holds that a bankruptcy estate is not static.

[00:07:17] Speaker 00:
It can expand

[00:07:17] Speaker 00:
or contract, depending on state law.

[00:07:20] Speaker 00:
The state law issue here, again, was the running of the redemption period.

[00:07:24] Speaker 00:
So while Ms.

[00:07:24] Speaker 00:
Sharp did have the right to redeem at the time she initially filed her petition, that right terminated at the end of the extended deadline for the redemption period.

[00:07:34] Speaker 03:
So I think Mr. Judge Breaker's question was directed to whether or not your client is actually a creditor of her estate.

[00:07:45] Speaker 00:
That is a good question, Your Honor.

[00:07:47] Speaker 00:
He is a third-party purchaser of the property.

[00:07:50] Speaker 00:
It's our position.

[00:07:51] Speaker 00:
He's not a creditor.

[00:07:52] Speaker 00:
He's simply an interested party here.

[00:07:54] Speaker 03:
And who was the creditor?

[00:07:57] Speaker 00:
The creditor would have been the homeowners association.

[00:08:00] Speaker 03:
And was that claim satisfied?

[00:08:03] Speaker 00:
It was by Vitruvian, yes, Your Honor.

[00:08:07] Speaker 00:
They paid the dues that were owed, and then once the sheriff's sale took place, they had one year to redeem the property.

[00:08:16] Speaker 03:
So what passed into the estate was not the claim of Vitruvian against the debtor, it was the redemption right?

[00:08:24] Speaker 00:
Correct, Your Honor.

[00:08:26] Speaker 03:
And is that, you think, distinguishing

[00:08:29] Speaker 03:
this case from the Franklin from the Fairbanks.

[00:08:34] Speaker 00:
Yes, that is the distinguishing point between this case and Fairbanks.

[00:08:39] Speaker 03:
In the Fairbanks case, the natural interest in the property moved in.

[00:08:44] Speaker 03:
She retained title until the transfer of deed occurred.

[00:08:48] Speaker 00:
That is correct, Your Honor.

[00:08:49] Speaker 03:
And in this case, we're dealing with the only the right of redemption.

[00:08:53] Speaker 00:
Only the right of redemption, Your Honor.

[00:08:54] Speaker 00:
Yes.

[00:08:55] Speaker 01:
What title passed in Fairbanks to the estate?

[00:08:58] Speaker 00:
The title, I believe in Fairbanks, the debtor retains legal title to the property.

[00:09:03] Speaker 00:
There was no redemption at issue.

[00:09:07] Speaker 01:
Right, I understand there's no redemption, but it's legal title that passed to the estate.

[00:09:11] Speaker 01:
In Fairbanks, correct.

[00:09:12] Speaker 01:
And in here, you're saying legal title did not pass?

[00:09:16] Speaker 00:
At the time the petition was filed, yes.

[00:09:18] Speaker 00:
Legal title remained in the debtor, but that legal title was terminated at the end of the redemption period.

[00:09:26] Speaker 01:
Operation of Law is what you are talking about.

[00:09:28] Speaker 00:
By Operation of Law, yes, Section 108B.

[00:09:32] Speaker 01:
Well, that's the extension, but then... Oh, yes, sorry.

[00:09:35] Speaker 00:
By Operation of Law, the Washington Redemption Statute RCW 623, yes.

[00:09:41] Speaker 01:
And to be clear, your position is that there is nothing, unlike Fairbanks, there was nothing that this debtor could have done, which means that 1322 does not apply at all.

[00:09:53] Speaker 00:
It does not apply, Your Honor.

[00:09:55] Speaker 00:
The debtor foreclosure sale took place, so debtor was barred from curing and maintaining under 1322B3B5 by operation of 1322C1.

[00:10:07] Speaker 00:
I don't think that is in dispute, Your Honor.

[00:10:09] Speaker 01:
Could she have on the 62nd day, if she tendered the $70,000 that was owed rounding, wouldn't that have satisfied that debt?

[00:10:22] Speaker 00:
Yes, Your Honor.

[00:10:23] Speaker 00:
But again, that was past the redemption period.

[00:10:27] Speaker 00:
So Ms.

[00:10:27] Speaker 00:
Sharp could no longer redeem the property under state law or the extension of time under Section 108B.

[00:10:32] Speaker 01:
And do it under bankruptcy.

[00:10:33] Speaker 00:
Sorry, Your Honor.

[00:10:34] Speaker 01:
She could not do it under the bankruptcy code.

[00:10:36] Speaker 00:
No, Your Honor.

[00:10:37] Speaker 00:
Section 108B acted as a firm deadline for her redemption right to expire.

[00:10:44] Speaker 03:
That is that she could compel the creditor to accept the money in lieu of taking title of the property.

[00:10:52] Speaker 00:
Yes, Your Honor.

[00:10:53] Speaker 00:
And again, this case is very distinguishable from Fairbanks, but Fairbanks did use the language or some other arrangement that the creditor is willing to accept.

[00:11:03] Speaker 00:
Here, Vitruvian, you know, this was essentially thrust on them to accept this payment in lieu of title to the property.

[00:11:10] Speaker 00:
So I think that's an important distinguishing point to make as well.

[00:11:14] Speaker 00:
Lastly, I just want to point out to your honors, as the parties have jointly stipulated to, counsel for Appellee retains the funds paid by Appellee's father and the surplus funds dispersed from the Mason County Superior Court in his trust account.

[00:11:30] Speaker 00:
Even though Appellee's counsel added redemption language to the order granting dispersal of the funds, I want to point out that no redemption has been effectuated.

[00:11:40] Speaker 00:
Mason County Sheriff has not processed any redemption.

[00:11:43] Speaker 00:
A certificate of redemption has not been issued by the sheriff.

[00:11:47] Speaker 00:
And that issue is pending resolution of this appeal.

[00:11:52] Speaker 03:
And your client has an accepted payment of any of them?

[00:11:54] Speaker 00:
No, Your Honor.

[00:11:55] Speaker 01:
That's the fundamental point here.

[00:11:58] Speaker 01:
Your client believes it bought the property and it wants what it bought.

[00:12:02] Speaker 00:
Correct, Your Honor.

[00:12:05] Speaker 00:
For the foregoing reasons, I respectfully ask that this court find in favor of appellant and reverse the bankruptcy court's denial of appellant's motion for relief from stay and confirmation of Ms.

[00:12:16] Speaker 00:
Sharpe's Chapter 13 plan.

[00:12:19] Speaker 00:
We also ask that you remand with instructions to the bankruptcy court authorizing Vitruvian to obtain the sheriff's deed and possession of the property through appropriate state court processes and the release of funds in appellee's counsel's trust account to appellee.

[00:12:34] Speaker 00:
Thank you, Your Honor.

[00:12:34] Speaker 00:
I'll yield the rest of my time for rebuttal.

[00:12:36] Speaker 01:
Thank you very much.

[00:12:43] Speaker 02:
Good morning, Your Honors.

[00:12:44] Speaker 02:
David Hill appearing on behalf of Aaron Sharp.

[00:12:49] Speaker 02:
In listening to the argument thus far, the question then really becomes down to which rule do we apply?

[00:12:58] Speaker 02:
Do we apply the strict requirements of 108c, or do we look to the broad, more generous language, an appropriate language of 1322?

[00:13:10] Speaker 01:
Well, I think you're absolutely right.

[00:13:13] Speaker 01:
Let's talk about 1322, because why doesn't 1322c1 really

[00:13:20] Speaker 03:
End the discussion.

[00:13:22] Speaker 01:
Yeah.

[00:13:24] Speaker 02:
Well put.

[00:13:24] Speaker 02:
Sorry.

[00:13:25] Speaker 02:
That's a good question.

[00:13:26] Speaker 02:
1322 C1 says that a default with respect to or that gives rise to a lien on the debtor's principal may be cured under paragraphs three and five until such the residence is sold at the foreclosure sale that is conducted in accordance with applicable non-bankruptcy law.

[00:13:50] Speaker 02:
So then the question is, is what constitutes the completion of that sale process?

[00:13:55] Speaker 01:
I think it's even a little more complicated in that we recognize that Fairbanks is not published.

[00:14:02] Speaker 01:
But why would we turn from the clear language of Fairbanks that says as a matter of bankruptcy law,

[00:14:10] Speaker 01:
that happens when the sale is conducted, not when title transfers, which seems to continue the line of cases from Oregon and Hurt and Breaker pre-C1.

[00:14:23] Speaker 01:
So why is that an issue?

[00:14:27] Speaker 01:
Fairbank seems to say strongly that's a matter of federal bankruptcy law, not state law.

[00:14:36] Speaker 02:
However, we have to...

[00:14:41] Speaker 02:
include state law because state law governs the transfer of title to property.

[00:14:46] Speaker 01:
No, we're not worried about transfer of title.

[00:14:48] Speaker 01:
We're worried about what you can do in bankruptcy.

[00:14:50] Speaker 01:
Oh, okay.

[00:14:50] Speaker 01:
Right?

[00:14:51] Speaker 01:
And what you can't do is cure.

[00:14:52] Speaker 01:
You can't cure under B3.

[00:14:55] Speaker 01:
You can't cure and maintain under B5.

[00:14:57] Speaker 01:
There's nothing to cure and maintain here.

[00:14:59] Speaker 02:
Right.

[00:15:00] Speaker 01:
So if you can't cure, if

[00:15:02] Speaker 01:
what can you do?

[00:15:04] Speaker 02:
Then we fall back onto the general approach that this court took in the Fairbanks case and said okay she can't cure because in Fairbanks she couldn't cure because the sale had taken place.

[00:15:17] Speaker 01:
Because it had happened but had not the deed had not transferred.

[00:15:21] Speaker 02:
Exactly so she there was no cure available to her she had to come up with something else and I noted that the court

[00:15:28] Speaker 02:
I recognized that there was a possibility that she could.

[00:15:32] Speaker 02:
However, the court was somewhat, or you were somewhat reluctant to really get excited about it.

[00:15:41] Speaker 02:
Her plan, her opportunities to resolve this through her plan seemed questionable at best, but the court, you sent it down back to Judge Lynch to make that determination.

[00:15:55] Speaker 03:
In contrast... But it said that the only remaining cure or only remaining remedy had to be with the consent of the creditor.

[00:16:05] Speaker 02:
That's not how Judge Lynch interpreted it in our case.

[00:16:08] Speaker 02:
And that becomes a matter of parsing terms.

[00:16:12] Speaker 02:
Well, didn't you seek to cure?

[00:16:13] Speaker 02:
Excuse that?

[00:16:15] Speaker 01:
Didn't your plan seek to cure?

[00:16:17] Speaker 01:
Yes.

[00:16:18] Speaker 01:
I mean, we... And it can't under C-1.

[00:16:21] Speaker 02:
Well, it can if we take it outside of the, if we take it to the more broader approach in Fairbanks, which is just.

[00:16:30] Speaker 01:
But you just, the one, the thing, C1 is clear that you can't cure if the sale occurred.

[00:16:37] Speaker 01:
Under Fairbanks, the sale has occurred.

[00:16:41] Speaker 01:
Therefore, C1 suggests that you cannot cure.

[00:16:44] Speaker 01:
And you're admitting, and I think it's right, that you're trying to cure.

[00:16:50] Speaker 01:
the lack of redemption.

[00:16:53] Speaker 01:
We can get into whether that's a claim or not, but it still seems like you're trying to cure something that did not happen.

[00:17:00] Speaker 03:
Plus, this isn't a lien anymore, is it?

[00:17:03] Speaker 01:
Well, it is a claim against property.

[00:17:06] Speaker 01:
Why is that?

[00:17:09] Speaker 01:
They're not making a claim.

[00:17:10] Speaker 01:
They don't want to make a claim.

[00:17:11] Speaker 01:
Council is very clear that they want the property.

[00:17:13] Speaker 01:
You get to keep your money.

[00:17:16] Speaker 02:
The code is pretty broad in the definition of a creditor claim.

[00:17:22] Speaker 02:
I mean, it can be anywhere from the standard credit card debt to a mortgage to any interest of a third party that

[00:17:32] Speaker 02:
whether it's a non-recourse debt or not.

[00:17:35] Speaker 01:
But that's somebody wanting to be paid.

[00:17:37] Speaker 01:
We have a situation where this entity does not want to be paid.

[00:17:41] Speaker 01:
They do not want any money.

[00:17:42] Speaker 01:
And the question is, can you force them to take money to affect something?

[00:17:46] Speaker 01:
And I'm not hearing how you can force them to take $70,000 to revest the debtor and her equitable interest.

[00:17:57] Speaker 01:
What goes back to redemption?

[00:18:01] Speaker 01:
Well, redemption, I think, is gone.

[00:18:07] Speaker 01:
You did not timely affect that.

[00:18:10] Speaker 01:
So you have to look for some relief somewhere else.

[00:18:12] Speaker 01:
That seems to be 1322, except 1322C1 says you can't cure, which seems to be what you're trying to do.

[00:18:20] Speaker 02:
Although if we look at the Frazier case,

[00:18:22] Speaker 02:
which is a BAP case.

[00:18:27] Speaker 02:
In that case it involved a real estate contract forfeiture.

[00:18:33] Speaker 02:
Under the forfeiture rules, I believe in Montana, if I'm not mistaken, once all the steps were taken, it was just a matter of completing the process.

[00:18:48] Speaker 02:
This court in that case looked at the interplay between 108 and 1322 and determined that because 1322 is more specific to bankruptcy law to the Chapter 13 that takes priority over the

[00:19:10] Speaker 02:
108 because 108 is a matter of general Provisions rather than very specific to Chapter 13 there been a foreclosure sale was that had there been a foreclosure sale in the Frasier case Are you in Frasier?

[00:19:30] Speaker 02:
Well, no because there was a different set of rules Well, but then that brings you that that gets you out of the problem, which is 322 C 1.

[00:19:36] Speaker 01:
Mm-hmm, doesn't it?

[00:19:40] Speaker 02:
No, because in Frasier, the debtor had a certain time limit to meet certain obligations.

[00:19:50] Speaker 02:
And that's where 108 is very broad.

[00:19:54] Speaker 01:
But you see, there's the problem I'm having with the legal construct.

[00:19:59] Speaker 01:
There was a debt that the creditor had and had a right to payment.

[00:20:04] Speaker 01:
Right?

[00:20:05] Speaker 01:
It still exists.

[00:20:06] Speaker 01:
It did not do that.

[00:20:09] Speaker 01:
Right?

[00:20:09] Speaker 01:
And whatever opportunity that the debtor had under the real estate contract may have expired, but then you're still under 1322.

[00:20:23] Speaker 01:
Here, 1322C says you are not.

[00:20:26] Speaker 02:
However, well, in the Frazier case, the argument was that 108, the terms of 108 includes, you know, contracts.

[00:20:36] Speaker 01:
But didn't Judge Lynch, I mean, Judge Lynch essentially recognized that the time had gone for redemption.

[00:20:41] Speaker 01:
You cannot redeem.

[00:20:44] Speaker 03:
And he had indicated, I thought, that you couldn't cure.

[00:20:48] Speaker 02:
He did create,

[00:20:52] Speaker 02:
basically another option and that's well essentially he did allow us to cure by saying okay if you pay this amount of money which uh should be noted is substantially more than the amount necessary and that is noted to be fair we we do note that we're not unsympathetic we're just we're struggling to find the legal aspect of this

[00:21:16] Speaker 02:
And I think it comes down to the broad construct of Chapter 13.

[00:21:22] Speaker 02:
The idea of Chapter 13 is to allow a debtor to rehabilitate, but in the process to not deny the creditors the payment or recovery of what they've put out in this case.

[00:21:44] Speaker 02:
And that's what we're doing.

[00:21:46] Speaker 02:
more than compensating the Truvian for their expenditures in bidding at the foreclosure sale, paying the utilities.

[00:21:59] Speaker 03:
Aren't you really suggesting that if the state law doesn't permit it and the bankruptcy code doesn't permit it, but it just doesn't seem fair and you're willing to pay, the court ought to affirm that transaction and allow you to do it either way?

[00:22:17] Speaker 03:
Even though.

[00:22:20] Speaker 02:
Well, I think it comes back to the interpretation of 1322C1.

[00:22:26] Speaker 02:
How broad do we take that?

[00:22:29] Speaker 02:
Because it says, if the property was sold, what is the sale process?

[00:22:34] Speaker 02:
And our contention is that the process is not completed until a sheriff issues that deed.

[00:22:40] Speaker 01:
But you've got two decisions from the BAP prior to C-1 saying that's not the situation in Breaker and Hurt.

[00:22:48] Speaker 01:
And then you have C-1, and then you have Fairbanks.

[00:22:52] Speaker 01:
I mean, how is that still an open question for us?

[00:22:57] Speaker 02:
Well, Richter, as Judge Lynch observed, is applicable to California law, but Washington law is a little different.

[00:23:07] Speaker 01:
That's as to the title, not what you can do in bankruptcy.

[00:23:10] Speaker 02:
That's Fairbanks.

[00:23:12] Speaker 01:
Yeah.

[00:23:14] Speaker 02:
Right.

[00:23:15] Speaker 01:
And I think those two concepts get confused or conflated.

[00:23:19] Speaker 01:
We're not talking about title.

[00:23:20] Speaker 01:
Title is the next step.

[00:23:22] Speaker 01:
But if you can't do anything in bankruptcy because of C1, what is there to be done?

[00:23:31] Speaker 02:
So we go back to who's the owner of the property?

[00:23:35] Speaker 02:
Title in Washington is passed by deed.

[00:23:39] Speaker 02:
Ms.

[00:23:40] Speaker 02:
Sharp continues to hold the deed to the property.

[00:23:44] Speaker 02:
And so that's an asset of the bankruptcy estate.

[00:23:47] Speaker 02:
And the bankruptcy court has a right to administer that asset.

[00:23:51] Speaker 01:
But you can't pay them because they don't have a claim.

[00:23:55] Speaker 01:
Well, it's a non-recruitment.

[00:23:56] Speaker 01:
They do have no right to payment.

[00:23:59] Speaker 01:
You have the right to pay, at least you did under the redemption.

[00:24:02] Speaker 01:
But I think Judge Gannon indicated, what makes them required to accept that payment?

[00:24:09] Speaker 01:
Because it's not redemption.

[00:24:10] Speaker 01:
Right.

[00:24:11] Speaker 01:
And then we're struggling with 1322.

[00:24:14] Speaker 01:
So what is the legal basis that you can compel them to take the $70,000 and plus and give and relinquish any

[00:24:25] Speaker 01:
legal or equitable title that they have.

[00:24:29] Speaker 02:
One case, and I didn't cite that, and so I'm not going to address it since I didn't give counsel advance notice of this, but there's one approach to this, and that was to look at the whole concept of

[00:24:45] Speaker 02:
comparing a judicial foreclosure and the relationship between the buyer and the judicial foreclosure versus the owner of the property to that of a mortgagee or a mortgagee, as opposed to taking that approach to that, saying, okay, if we consider the Truvian as a non-recourse mortgagee,

[00:25:14] Speaker 02:
by virtue of the fact that they now bought the debt, then the bankruptcy court can look at that and apply 1322 and allow that to proceed on.

[00:25:35] Speaker 02:
So I grant this is a tough case.

[00:25:37] Speaker 02:
The question, I think, before the court is based upon the Judge Lynch's interpretation of the law, was his interpretation allowable?

[00:25:51] Speaker 02:
And if so, then due deference should be given to his decision.

[00:25:59] Speaker 02:
both as to denying motion for relief from state and confirming a plan which, as I pointed out, more than adequately compensates Vitruvian for the money that they've expended.

[00:26:12] Speaker 02:
Thank you.

[00:26:15] Speaker 02:
Thank you, Your Honor.

[00:26:19] Speaker 01:
Counsel, you have about... Four minutes.

[00:26:22] Speaker 01:
Four minutes left, just under.

[00:26:24] Speaker 00:
Thank you, Your Honor.

[00:26:25] Speaker 00:
We believe the law is clear here.

[00:26:28] Speaker 00:
The debtor was barred from curing and maintaining under Section 1322C1 and the period by which she had to redeem the property expired under state law by operation of RCW 623 and the extended deadline under Section 108B of the Bankruptcy Code.

[00:26:50] Speaker 00:
Debtors' Council does talk about the equities here, but our Supreme Court is clear that the equitable powers of this court cannot override specific code provisions.

[00:27:03] Speaker 01:
That's true, but it seems almost too simplistic to say the reason you filed bankruptcy is to reorganize your financial affairs, and that's what Judge Lynch seems to have done.

[00:27:15] Speaker 00:
Yes, Your Honor, yes.

[00:27:16] Speaker 01:
To be fair, it seems like your client's buying a lot of equity

[00:27:20] Speaker 01:
And, you know, however you think of that, that's the situation.

[00:27:25] Speaker 01:
And now the debtor has come up with sufficient funds to make payment in full.

[00:27:32] Speaker 01:
And Judge Lynch was very clear that it had to be completely in full and your client's not accepting it.

[00:27:38] Speaker 01:
That's kind of where we are.

[00:27:40] Speaker 01:
But bankruptcy generally allows that to be done.

[00:27:42] Speaker 01:
And that's the problem we're having with this.

[00:27:44] Speaker 00:
Yes, your honor.

[00:27:45] Speaker 00:
And the filing of bankruptcy did give the debtor breathing room in that regard.

[00:27:50] Speaker 00:
She had an extended deadline of 60 days from the date of filing to pay the redemption price.

[00:27:56] Speaker 01:
Under the redemption, right?

[00:27:58] Speaker 00:
Yes.

[00:27:58] Speaker 01:
That's under redemption.

[00:27:59] Speaker 00:
Under redemption, correct, your honor.

[00:28:00] Speaker 01:
But bankruptcy also gives, generally gives Chapter 13 debtors three to five years to do it.

[00:28:06] Speaker 01:
So why doesn't the debtor have the three to five years?

[00:28:11] Speaker 00:
Yes, I think you correctly pointed out that Vitruvian does not have a claim that could be addressed by the plan.

[00:28:19] Speaker 00:
They are not a creditor in this action.

[00:28:21] Speaker 00:
They are a third-party purchaser.

[00:28:23] Speaker 00:
In fact, legislative history for section 1322C1 specifically says that that provision is meant to protect third-party purchasers.

[00:28:32] Speaker 00:
like Vitruvian.

[00:28:35] Speaker 00:
And again, going back to the language of Fairbanks, those alternative options were something that the creditor, again, Vitruvian isn't a creditor, but something the creditor would be willing to accept, not something forced upon them.

[00:28:48] Speaker 00:
So for the foregoing reasons, we do respectfully request that you find in favor of appellants and grant the relief that we're seeking.

[00:28:54] Speaker 00:
Thank you so much.

[00:28:56] Speaker 01:
Thank you.

[00:28:57] Speaker 01:
All right.

[00:28:57] Speaker 01:
Thank you both for a very interesting oral argument.

[00:29:00] Speaker 01:
This is a difficult case.

[00:29:03] Speaker 01:
We appreciate your comments and analysis.

[00:29:05] Speaker 01:
The matter will be submitted, and again, we will try to endeavor to get a decision out as quickly as possible on that.

[00:29:10] Speaker 01:
We have one other matter, but that matter is submitted on the brief.

[00:29:12] Speaker 01:
So, Madam Clerk, I believe that concludes our oral argument and will be adjourned.

[00:29:17] Speaker 01:
Thank you very much.

[00:29:18] Speaker 01:
Thank you both.