Blas v. Bank of America, N.A.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
LEO BLAS, a/k/a/ LIOR BLAS,
Appellant,
vs.
BANK OF AMERICA N.A. and
KENNETH BATTLEY,
Appellees.
Case No. 3:20-cv-00271-RRB
Bankruptcy Case No. A17-00411-GS
ORDER OF DISMISSAL
Appellant, Leo Blas, appeals an October 2020 order from the Bankruptcy
Court,1 approving a stipulation made between the Bankruptcy Trustee and Creditor, Bank
of America N.A. (hereinafter “BANA”).2 	Appellant previously has filed two appeals in
this Court from orders issued in the bankruptcy case in favor of Defendant, BANA,3 as
well as three appeals to the Alaska Supreme Court from the decisions in superior court.4
1 See Docket 3-6 at 353–54.
2 Docket 1. See Ritzen Group, Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582, 586 (2020) (“Orders
in bankruptcy cases qualify as ‘final’ when they definitively dispose of discrete disputes within the
overarching bankruptcy case.”).
3 Case numbers 3:19-cv-00324-RRB and 3:19-cv-00325-RRB. Mr. Blas also tried to sue BANA
directly in this Court in 2015. See 3:15-cv-124-TMB. This Court determined that the judgement of the
state court case barred an action in this Court challenging the bank’s foreclosure. Id., Docket 6.
4 Blas v. Bank of Am., N.A. (Blas I), 2017 WL 1379317 (Alaska Apr. 12, 2017); Blas v. Bank of
Am., N.A. (Blas II), 2019 WL 1199170 (Alaska Mar. 13, 2019); and Blas v. Bank of Am., N.A. (Blas III),
2019 WL 5061383 (Alaska Oct. 9, 2019).
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 1 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 2
Appellant’s Opening Brief requests a “due process hearing” and seeks an
order to Quiet Title to his property.5 	BANA has responded to the opening brief,6 and
Appellant has replied.7 	This Court has jurisdiction pursuant to 28 U.S.C. § 158(a) and,
finding oral argument unnecessary, enters the following order.
I. 	BACKGROUND8
Appellant entered into an adjustable rate 30-year mortgage loan with BANA,
secured by a deed of trust to his home in Chugiak, Alaska, in February 2008.9 	In 2010,
Appellant defaulted on his mortgage, and filed a lawsuit in state court to prevent
foreclosure, which resulted in a home loan modification. Appellant defaulted on his loan
a second time. 	In January 2014, Appellant brought a second state court action against
BANA in an attempt to stop the non-judicial foreclosure of the real property. The Alaska
Supreme Court ultimately affirmed BANA’s authority to proceed with the non-judicial
foreclosure, finding that even though BANA no longer owned Appellant’s loan, Fannie
Mae’s servicing guidelines explicitly gave servicers the authority to represent Fannie
Mae’s “interests in foreclosure actions,” a procedure permitted under Alaska law.10
Appellant and BANA then entered into a settlement agreement wherein Blas was permitted
to remain on the property six additional weeks, and would then vacate the property, with
5 Docket 8.
6 Docket 13.
7 Docket 14.
8 Factual background not attributed to other sources is taken from Memorandum Opinions of the
Supreme Court of the State of Alaska. See generally Blas I, Blas II, and Blas III.
9 Docket 3-1 at 110.
10 Blas I *5. Appellant later sought relief from judgment in that state court case under Alaska Civil
Rule 60(b), which the superior court denied, as affirmed by the Alaska Supreme Court in Blas II.
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 2 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 3
BANA to have “the unqualified right to enforce its right of possession” and the authority
to “obtain a Writ of Eviction/Restitution if Mr. Blas remained on the Property after the
agreed date of departure.”11 Appellant “agreed to waive his rights to contest the issuance
or enforcement of any such writ,”12 but later testified that he vacated the property for one
week in June 2017, then returned to the property because the settlement agreement did not
expressly state that he could not return after vacating.13
Appellant commenced another lawsuit in state court against BANA in
September 2017, again seeking to stop foreclosure on the real property.14 	The superior
court denied Appellant’s request for an injunction on November 30, 2017,15 and Appellant
filed for bankruptcy the same day.16 	The superior court later dismissed the complaint
against BANA,17 which the Alaska Supreme Court affirmed in October 2019, finding:
[Blas] correctly notes that his current lawsuit relates to a
different attempt, or right, to foreclose than the lawsuit that led
to his first two appeals. But Blas does not appear to allege any
foreclosure improprieties other than those already alleged and
resolved in the earlier lawsuit. 	He instead reargues the many
points resolved in his previous lawsuit and our two decisions
arising from that lawsuit. . . . The fundamental question of
Bank of America’s (and the connected defendants’) right to
conduct a non-judicial deed of trust foreclosure upon the home
subject to Blas’s continued default already has been decided,
adversely to Blas.18
11 Docket 3-6 at 276 (December 17, 2019, Bankruptcy Court Memorandum Decision on Motion
for Relief from the Automatic Stay).
12 Id.
13 Docket 3-6 at 26–28, 32, 276.
14 Docket 3-2 at 8.
15 Id. at 54.
16 See Docket 3-1 at 5.
17 Docket 3-2 at 56–59; Docket 3-4 at 108.
18 Blas III, 2019 WL 5061383at *2.
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 3 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 4
Meanwhile, during the course of the 2017 bankruptcy petition, BANA filed
a Proof of Claim19 and argued that the debt to BANA was nondischargeable under
Section 523(a)(2)(B) of the Bankruptcy Code, alleging fraud and breach of contract for
failure to honor the settlement agreement.20 BANA filed a Motion for Release from Stay
in June 2018 alleging that Appellant had failed to pay his mortgage for over five years, and
had engaged in bad faith in filing bankruptcy.21 Appellant objected to the foregoing, and
the Bankruptcy Judge held multiple evidentiary hearings and took evidence, including a
review the original promissory note.22
On September 10, 2018, Mr. Blas filed a pro se adversary proceeding in the
Bankruptcy Court against BANA.23 The bankruptcy matter was stayed pending attempts
at mediation of the adversary case. On May 31, 2019, the Office of the Bankruptcy Clerk
entered Appellant’s Chapter 7 discharge.24 Following the issuance of the October 9, 2019,
Alaska Supreme Court Opinion affirming the Superior Court’s dismissal of the 2017 state
court lawsuit,25 the Bankruptcy Judge then granted BANA’s motion for relief from the
automatic stay on December 17, 2019,26 permitting BANA to proceed with a non-judicial
foreclosure.
19 Docket 3-2 at 89.
20 Docket 3-4 at 52.
21 Id. at 111.
22 Docket 3-5 at 268; Docket 3-6 at 278.
23 Adversary Case Number 18-AP-90028.
24 Docket 3-6 at 279.
25 Blas III.
26 Docket 3-6 at 275.
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 4 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 5
Before the end of 2019, Appellant filed two appeals from his bankruptcy
petition, which were consolidated before this Court. The Bankruptcy Court decision was
affirmed and the consolidated appeals were dismissed.27 A month after that dismissal, on
September 14, 2020, the Attorney for the Trustee moved in the bankruptcy case for
“Approval of the Stipulation Between trustee and [BANA].”28 The Bankruptcy Court held
a hearing and, on October 16, 2020, issued an order approving the stipulation.29 Four days
later, Mr. Blas filed a Notice of Appeal regarding approval of the stipulation, which was
transferred to this Court.30 Briefing before this Court was completed on June 15, 2021.31
II. 	BANKRUPTCY COURT DECISION
As explained in Appellant’s brief, it is a routine practice for a Trustee to
compromise the claims of a debtor on behalf of the bankruptcy estate, “and there are
procedural protections for debtors under such circumstances, i.e., the opportunity to object
and have a hearing concerning the terms of any compromise.”32 The Trustee reasoned that
in all of the lawsuits regarding BANA’s claim:
the debtor’s efforts to invalidate the mortgage against his
residence have been overruled and denied and the trustee
believes that the note and deed of trust in favor of BOA
executed by the debtor are a valid obligation that BOA is
entitled to enforce and collect through foreclosure of the
deed of trust. 	To put it another way, the trustee does not
believe that the debtor has even a slight chance of prevailing
27 Case numbers 3:19-cv-00324-RRB and 3:19-cv-00325-RRB.
28 Docket 3-6 at 329.
29 Id. at 353.
30 Docket 1. The adversary proceeding was dismissed by the Bankruptcy Court on October 30,
2020, which Blas did not appeal.
31 Dockets 8, 13, and 14.
32 Docket 13 at 20 (citations omitted).
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 5 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 6
on the claims he has asserted in the adversary case he filed
against BOA.33
Mr. Blas opposed approval of the stipulation, revisiting settled arguments.34
In determining the fairness, reasonableness and adequacy of a proposed
settlement agreement, the bankruptcy court must consider, if relevant:
(a) The probability of success in the litigation;
(b) the difficulties, if any, to be encountered in the
matter of collection;
(c) the complexity of the litigation involved, and the
expense, inconvenience and delay necessarily attending it; and
(d) the paramount interest of the creditors and a proper
deference to their reasonable views in the premises.35
“The trustee, as the party proposing the compromise, has the burden of persuading the
bankruptcy court that the compromise is fair and equitable and should be approved.”36
The Bankruptcy Court’s written order approving the terms of the stipulation
between the Trustee and BANA referred to “the reasons stated in the motion and those
stated by the court on the record.”37 During that hearing, Mr. Blas objected to the nature
of the hearing, and disputed that the stipulation should have been considered in the main
case rather than the adversary case.38 He objected to the declarations as hearsay, disputed
33 Docket 3-6 at 330 (emphasis added).
34 Id. at 343.
35 In re A & C Properties, 784 F.2d 1377, 1381 (9th Cir. 1986).
36 Id.
37 Docket 3-6 at 353.
38 Bankruptcy Docket 314. BANA complains that Appellant, as the debtor, was responsible for
providing a transcript of the hearing for the appeal. Docket 13 at 22. In light of this omission by the pro
se Appellant, this Court listened to the 25 minute audio recording of the relevant hearing.
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 6 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 7
that multiple cases have ruled against him in favor of BANA, and disputed that there was
even a settlement for the Bankruptcy Judge to approve.39
The Bankruptcy Judge agreed with the Trustee’s analysis, finding that
because BANA was a secured creditor with standing to pursue the foreclosure, there was
no benefit to the estate continuing litigation against BANA. 	He found that there was an
“exceedingly slim” probability of success of prevailing in the adversary case in light of
prior decisions of the Alaska Supreme Court.40 	The Bankruptcy Judge expressed a
“significant and strong belief” that the settlement was in the best interests of the creditors,
including the unsecured creditors, “which is the entire purpose of the bankruptcy under
Chapter 7.” 	He found that the Trustee had “extensive knowledge and experience” based
upon prior service before the Bankruptcy Court. Finally, the Bankruptcy Judge found that
the fact that there were no objections to the settlement by the creditors, paired with the lack
of possibility of success on the merits in the adversary case, compelled approval of the
settlement.41
III. 	STANDARD OF REVIEW
When this Court reviews a decision of the Bankruptcy Court, findings of fact
are reviewed under the clearly erroneous standard, and conclusions of law are reviewed de
novo.42 	Additionally, this Court must affirm the Bankruptcy Court’s approval of a
39 Id.
40 The Bankruptcy Judge also indicated that “exceedingly slim” was being generous.
41 Id.
42 In re Schwarzkopf, 626 F.3d 1032, 1035 (9th Cir. 2010).
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 7 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 8
settlement unless the result is “unjust” amounting to “a clear abuse of discretion.”43 “[W]e
uphold the court’s application of the legal standard to the facts unless it was (1) illogical,
(2) implausible, or (3) without support in inferences that may be drawn from the facts in
the record.”44
IV. 	DISCUSSION
A. 	Standing
BANA questions whether Plaintiff has standing to contest the compromise
and the dismissal of the adversary proceeding, noting that in a Chapter 7 bankruptcy
proceeding, a “debtor ordinarily lacks standing to challenge orders affecting the assets of
the estate unless there is likely to be a surplus after bankruptcy.”45 Appellant suggested at
the hearing that there may be a surplus after the compromise, but this Court lacks sufficient
information to make a definitive ruling on standing. Accordingly, an analysis of the merits
follows.
B. 	Fiduciary Duty of Trustee
Appellant claims that the “local trustee contractor reneged on his fiduciary
duty and on his neutrality commitment by not including the homeowner in the settlement
discussions of the homeowner’s Quiet Title case sale.”46 	In the absence of any further
argument or explanation, BANA agrees that a trustee owes a fiduciary duty in connection
43 In re DVR, LLC, 606 B.R. 80, 84 (D. Colo. 2019) (citing Reiss v. Hagmann, 881 F.2d 890, 891–
92 (10th Cir. 1989)) (citation omitted); see also In re Isom, 836 F. App’x 562, 563 (9th Cir. 2020) (“We
review an order approving a compromise agreement for abuse of discretion.”).
44 In re Isom, 836 F. App’x at 563 (internal citations and quotations omitted).
45 Docket 13 at 21 (citing Marlow v. Hoffmeier Zamora (In re Marlow), No. BAP CC-10-1143,
2011 WL 3299024, *3 (B.A.P. 9th Cir. Feb. 1, 2011)).
46 Docket 8, page 1 at ¶ 1.
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 8 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 9
with negotiating compromises, but asserts that the fiduciary duty is “to maximize the assets
of the bankruptcy estate” for the benefit of creditors.47
The Barton doctrine48 “precludes suit against a bankruptcy trustee for claims
based on alleged misconduct in the discharge of a trustee’s official duties absent approval
from the appointing bankruptcy court.”49 	The Barton doctrine “does not shield trustees
from lawsuits. Rather, the doctrine requires the bankruptcy court to determine where the
suit may be brought, not whether the trustee may be sued.”50 	The doctrine “strips all
courts—except 	the 	bankruptcy 	court 	that 	appointed 	the 	trustee—of 	subject-matter
jurisdiction to hear a lawsuit against the trustee unless the appointing court gives its
permission to sue the trustee elsewhere. 	Only if the Debtors’ proposed complaints pass
through Barton’s jurisdictional gate will the Debtors be able to file suit against the Trustee
outside of [bankruptcy] Court.”51
Accordingly, this Court lacks jurisdiction to adjudicate Appellant’s claims of
breach of fiduciary duty by the Trustee.
47 Docket 13 at 29, citing In re Doublas J. Roger, M.D., Inc., APC, 393 F. Supp. 3d 940, 962 (C.D.
Cal. 2019).
48 Barton v. Barbour, 104 U.S. 126, 137, 26 L. Ed. 672 (1881) (holding that without leave of the
court by which the receiver was appointed, no other court has jurisdiction to hear a suit against the receiver
for a cause of action arising from his performance of his duties).
49 In re Christensen, 598 B.R. 658, 664 (Bankr. D. Utah 2019) (citations omitted).
50 Id.
51 Id. at 665.
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 9 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 10
C. 	Additional Issues Alleged
Appellant sets forth 37 other overlapping “Points on Appeal,” claiming
violations of: the automatic stay;52 the Supremacy Clause;53 and Due Process (Fannie Mae
as federal actor).54 	Appellant further alleges that: 	the note was not negotiable;55 Fannie
Mae is the real party in interest;56 the Bankruptcy Court misapplied res judicata and the
Rooker-Feldman doctrine;57 the Truth in Lending Act (“TILA”) Rescission letter precludes
a challenge to recission;58 Appellant has not been permitted to inspect BANA’s books and
financial records to verify basis, rendering the contract unenforceable;59 BANA has not
produced evidence that it retained servicing rights after the note was transferred to Fannie
Mae;60 the 2011 contract amended and superseded all terms and maturity dates from the
original note;61 BANA has “unclean hands”;62 a statute of limitations has lapsed;63 and the
Bankruptcy Court did not address the affirmative defense of recoupment.64
D. 	Analysis
This Court, and others, previously have addressed most of these issues.65
Moreover, Appellant’s arguments are internally inconsistent. He argues that any reference
52 Docket 8, pages 1–4 at ¶¶ 3, 13.
53 Id. at ¶¶ 2, 11, 29.
54 Id. at ¶¶ 6, 8, 10, 27.
55 Id. at ¶¶ 9, 28.
56 Id. at ¶¶ 5, 6, 10, 24, 26, 36, 37.
57 Id. at ¶¶ 14, 15, 30.
58 Id. at ¶¶ 16, 17, 18.
59 Id. at ¶¶ 19, 20, 21, 31, 32, 33, 34; Docket 14.
60 Docket 8 at ¶ 22.
61 Id. at ¶ 23.
62 Id. at ¶¶ 25, 38.
63 Id. at ¶¶ 12, 35.
64 Id. at ¶ 7.
65 See 3:19-cv-00324-RRB, Docket 24.
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 10 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 11
to a “mortgage loan” is a misnomer, as BANA has “never produced any evidence of a loan
transaction, or any recorded receivable from their books of business, and have never
claimed in court on a loan transaction.”66 Elsewhere, he argues that BANA sold the note
and mortgage to Fannie Mae in 2008, then “illegally accelerated a fictitious balance,”67
even though the “‘loans’ have already been paid-off (by Fannie Mae).”68 He believes that
a three-year Alaska Statute of Limitations was triggered in December 2010 when BANA
“accelerated the balance,” which has since run, and that BANA therefore failed to execute
foreclosure timely.69 Alternatively, he believes that his TILA Rescission letter eliminated
any mortgage as of October 2017, because BANA failed to respond to it.70 He also alleges
that the “so called ‘personal mortgage note’ was discharged in the uncontested Bankruptcy
Discharge dated May 31 2019.”71
Despite 33 pages of briefing by Appellant,72 BANA correctly notes that “the
actual issue before this Court is quite narrow: Whether the Bankruptcy Court erred in its
decision to approve a compromise of claims between BANA and the Trustee, Kenneth
66 Docket 14, ¶ 26.
67 Id. at ¶¶ 13, 17.
68 Id. at ¶ 30.
69 Id. at ¶¶ 19, 28. A novel argument, considering BANA first attempted to foreclose in 2010.
70 Docket 8 at ¶¶ 16, 17, 18; Docket 14 at ¶¶ 20–24, citing Jesinoski v. Countrywide Home Loans,
Inc., 574 U.S. 259 (2015). The Jesinoski Court held that “rescission is effected when the borrower notifies
the creditor of his intention to rescind,” and that a borrower need not file a lawsuit. Id. at 262. But it also
reiterated that in the case of a borrower’s attempt to rescind in the course of a foreclosure proceeding
initiated six years after the loan’s consummation . . . , “there was ‘no federal right to rescind, defensively
or otherwise, after the 3-year period of [15 U.S.C.] § 1635(f) has run.” Id. (citing Beach v. Ocwen Fed.
Bank, 523 U.S. 410, 419 (1998).
71 Docket 14 at ¶ 18.
72 The bulk of Appellant’s brief focuses on his theory that mortgage notes are essentially bait-and-
switch scams by the banks, where no real money is loaned. 	Appellant cites a number of questionable
sources to support his arguments, including “Modern Money Mechanics,” “Your Money booklet,” and
“Money and Banking,” as well as the autobiography of Ben Franklin. Docket 8.
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 11 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 12
Battley.73 This Court finds that the Bankruptcy Court made no errors in determining the
facts or the law. Moreover, the Bankruptcy Judge’s application of the legal standard to the
facts was logical, plausible, and fully supported by the facts of this case. This Court finds
no abuse of discretion, nor does it find an unjust result.
As this Court has stated previously, Appellant has “failed to proffer any
evidence contradicting BANA’s claims . . . and presented no evidence that the loan was
transferred to another entity, that payments are being made to another entity, or that any
other entity has attempted to collect the mortgage debt or filed a claim in the bankruptcy
matter related to the loan. 	Nor has [Appellant] alleged that he has paid off this loan.”74
Appellant has had his day in court. Moreover, it is worth noting that Appellant has never
disputed that he defaulted on his mortgage, stating in his most recent filing: “It is through
no doing of the homeowner that the obligation has been extinguished without payment
from the homeowner. And there is no legal or moral reason to pay it again.”75 Rather, he
has sought to avoid the obligation through a series of legal gymnastics that ultimately fail.
The Court agrees with BANA that “the Trustee and the Bankruptcy Court
properly discharged their respective duties and complied with legal and procedural
requirements concerning the crafting and approval of a stipulated compromise” between
the Trustee and creditor, BANA.76
73 Docket 13 at 2.
74 3:19-cv-00324-RRB, Docket 24 at 7 (August 17, 2020).
75 Docket 14 at ¶ 33.
76 Docket 13 at 29.
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 12 of 13

Blas v. Bank of America, N.A. 	Case No. 3:20-cv-00271-RRB
Order of Dismissal 	Page 13
III. 	CONCLUSION
In 	light 	of 	the 	foregoing, 	the 	decision 	of 	the 	Bankruptcy 	Court 	is
AFFIRMED.
IT IS SO ORDERED this 27th day of September, 2021, at Anchorage,
Alaska.
/s/ Ralph R. Beistline
RALPH R. BEISTLINE
Senior United States District Judge
Case 3:20-cv-00271-RRB Document 19 Filed 09/27/21 Page 13 of 13