Max Gardner’s Newsletter – Update on Standing.

5 Apr

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, April 05, 2012 5:15 PM
To: Charles Cox
Subject: Max Gardner’s Newsletter – Update on Standing.

Standing Update

By Tiffany Sanders on April 5, 2012

Before we move on to the next category in our series of standing cases collected by Robin Miller, we have some updates and supplemental cases in the categories already covered. If you missed the first two round-ups, you can catch up here:

Attacking Standing in Federal / Bankruptcy Court

MERS in State and Federal Courts

General Federal / Bankruptcy Court Cases

In re Miller, 666 F.3d 1255 (10th Cir., Feb. 1, 2012): While the Bankruptcy Code does not define the term “party in interest” for the purpose of seeking relief from stay under Code § 362(d), courts have concluded that, in order to invoke the court’s power, a party must be either a creditor or a debtor of the bankruptcy estate.

In re Neals, 459 B.R. 612 (Bankr. D. S.C., Oct. 6, 2011): A movant’s status as a “party in interest” under Code § 362(d) must be determined on a case-by-case basis with reference to the interest asserted and how the interest is affected by the automatic stay; additionally, the movant must establish that it is the “real party in interest” under Fed. R. Civ. P. 17(a), which is made applicable to contested matters in bankruptcy proceedings by Bankruptcy Rules 7017 and 9014(c).

In re Smoak, 461 B.R. 510 (Bankr. S.D.Ohio, Sept. 28, 2011): Fed. R. Civ. P. 17, which is applicable to contested matters through Bankruptcy Rules 7017 and 9014(c), requires the real party in interest to file a proof of claim.

Standing of a Mortgage Servicer

In re Neals, 459 B.R. 612 (Bankr. D. S.C., Oct. 6, 2011): There is a general view that a loan servicer is a “party in interest” with standing to move for relief from stay by virtue of its pecuniary interest in collecting payments under the terms of the note and mortgage.

Holder of the Note

In re Robinson, 2011 WL 5854905 (Bankr.E.D.N.C., Nov. 22, 2011): The movant was in possession of the note, which was endorsed in blank, and so the movant was the holder of the note, entitled to enforce it.

In re Mims, 438 B.R. 52 (Bankr. S.D. N.Y., Oct. 2010): Wells Fargo lacked standing to request relief from the automatic stay because it did not show that the note was delivered or assigned to it.

In re Feinberg, 442 B.R. 215 (Bankr. S.D. N.Y., July 30, 2010): An assignee who has received delivery of the relevant note and mortgage has standing to file a proof of claim; the assignee does not need to produce a valid written assignment.

In re Gorman, 2011 WL 5117846 (Bankr.E.D.N.Y., Oct. 27, 2011): Capital One was the holder of a note payable to Chevy Chase Bank, and therefore had standing to seek relief from stay, where Capital One was in physical possession of the note, and Capital One provided the court with a letter dated July 29, 2009, from the Comptroller of the Currency, Administrator of National Banks, authorizing Chevy Chase Bank to be merged into Capital One, and a Certificate of Merger dated October 14, 2009, reflecting that, effective as of July 30, 2009, Chevy Chase Bank merged into Capital One.

In re Jackson, 451 B.R. 24 (Bankr. E.D. Cal., June 6, 2011): The assignment of a note transfers ownership of the note to the assignee, but it does not render the assignee a party entitled to enforce the note.

BAC Home Loans Servicing, LP v. Stentz, Pasco Co. Case No. 51-2009-CA-7656-ES (Fla. 6th Jud.Cir. Ct., Dec. 1, 2010): Producing a note endorsed in blank shows only that the plaintiff is the holder of the note, not the owner, entitled to foreclose.

In re Parker, 445 B.R. 301 (Bankr. D.Vt., March 18, 2011): While the authority of the individual who endorsed the debtor’s promissory note in blank was not demonstrated in the mortgage creditor’s proof of claim, as the proof of claim did not include a copy of the power of attorney under which the individual was acting, the original payee of the note subsequently ratified the endorsement, and under the UCC the ratification rendered the endorsement effective as of the date of the endorsement, even though the ratification occurred post-petition.

In re Martinez, 455 B.R. 755 (Bankr. D.Kan., April 20, 2011): Countrywide Home Loans, Inc. held a secured claim against the debtor, as, while Countrywide had assigned the beneficial interest in the debtor’s note to Fannie Mae, Countrywide remained in possession of the note, which was endorsed in blank, so that Countrywide remained the holder of the note, entitled to enforce it.

In re Wilson, 442 B.R. 10 (Bankr. D.Mass., Nov. 30, 2010): The mortgage creditor was entitled to summary judgment on the Chapter 13 debtor’s claim that the creditor was not the holder of the note, as the debtor contended that the signature in the indorsement on the note may not have been valid, but UCC § 3-308(a) states that “[i]n an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings,” and the debtor’s complaint did not specifically deny the authenticity of the signature.

In re Clark, 2010 WL 4669091 (Bankr. M.D. Fla., Nov. 10, 2010): The party moving for relief from stay had standing to do so, where the party was in possession of the debtor’s note, and the note was endorsed in blank, making it enforceable by the party in possession of the note.

In re Dewberry, 2010 WL 4882016 (Bankr. N.D.Ga., Oct. 21, 2010): The purported mortgage creditor was entitled to enforce the note, where the note was endorsed in blank by the original payee, thereby making it payable to bearer, and the creditor’s servicer submitted the affidavit of an individual who stated under oath that the servicer was in physical possession of the note on behalf of the creditor.

In re Pequignot, 2010 WL 3605326 (W.D. Wash., Sept. 10, 2010): Deutsche Bank was the holder of the debtor’s mortgage note, and was therefore entitled to enforce it by filing a proof of claim in the debtor’s bankruptcy case, where Deutsche Bank had actual possession of the note, and the note, which was payable to “First Franklin, A Division of Nat. City Bank of In.,” was specially indorsed to First Franklin Financial Corporation and thereafter indorsed in blank by First Franklin Financial Corporation.

In re Wilhelm, 407 B.R. 392 (Bankr. D. Idaho, July 7, 2009): Because the “holder” of a note is a person who possesses a note that is payable either to that person or to bearer, and the copy of the note attached to the motion for relief from stay bore no endorsement and was not payable to the movant, the movant could not be a holder of the note.

In re Wells, 407 B.R. 873 (Bankr. N.D. Ohio, June 19, 2009): U.S. Bank did not show that it was entitled to enforce payment of the debtors’ note, as U.S. Bank was not the original lender, and there was no evidence that the original lender had endorsed the note, so as to negotiate it; documents purporting to assign the note from the original lender to U.S. Bank were ineffective to give U.S. Bank a right to enforce the note, which arose only following negotiation of the note.

In re Hernandez, 2009 WL 4639645 (Bankr. S.D.Tex., Dec. 7, 2009): In order to collect on a note in Texas, a creditor must be the legal owner and holder of the note; merely holding a deed of trust, an instrument securing payment of the note, by itself, is insufficient to collect on the note.

FDIC v. Houde, 90 F. 3d 600 (1st Cir. 1996): Mere possession of the mortgage note is not enough to enforce the note; under Maine law, the FDIC had to show how it obtained possession of the note.

FDIC v. Barness, 484 F. Supp. 1134 (E.D. Pa. 1980): Under Article 3 of the Uniform Commercial Code, an instrument which is otherwise negotiable is made nonnegotiable by a term authorizing the confession of judgment before payment is due.

In the next segment, we’ll look at selected state court cases.

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