Allen v. U.S. Bank, Nat'l Ass'n (In re Allen)

Decision Date08 June 2012
Docket NumberBAP No. EW–11–1537–PaDH.,Bankruptcy No. 11–01152.
PartiesIn re Arnold John ALLEN, Jr. and Kimberly Faith Allen, Debtors. Arnold John Allen, Jr.; Kimberly Faith Allen, Appellants, v. US Bank, National Association, Appellee.
CourtBankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Ninth Circuit

OPINION TEXT STARTS HERE

William Jeffrey Barnes argued for Appellants Arnold John Allen, Jr. and Kimberly Faith Allen; Ryan P. McBride of Lane Powell, PC, Seattle, WA, argued for Appellee U.S. Bank, National Association.

Before: PAPPAS, DUNN and HOLLOWELL, Bankruptcy Judges.

MEMORANDUM1

PAPPAS, Bankruptcy Judge.

Chapter 13 2 debtors Arnold John Allen, Jr. and Kimberly Faith Allen (the Allens) appeal the bankruptcy court's order overruling their objection to the claim of U.S. Bank, National Association (USB). We AFFIRM.

FACTS

According to the documentary evidence admitted without objection in the record of the bankruptcy court, the following facts and transactions of relevance to this appeal occurred.

On April 24, 2006, the Allens executed a promissory note (the “Note”) in the amount of $164,000 in favor of Dream House Mortgage Corporation (“DHMC”). An endorsement in blank appears on the third page of the Note, which reads, “Pay to the Order of; Without Recourse, By [signed initial ‘J’] John C. Pointe, President, Dream House Mortgage Corporation.” There is also an allonge attached to the Note reciting substantially the same information, but with the addition of a date, April 28, 2006.

The Note was secured by a recorded deed of trust (“DOT”) executed by the Allens on their property in Newport, Washington (the “Property”). In the DOT, Mortgage Electronic Registration Systems, Inc. (“MERS”) is named as the grantee and nominee for DHMC.

On May 31, 2006, the president of DHMC executed a “Lost Note Affidavit and Agreement” (the “Lost Note Affidavit”). The Lost Note Affidavit recites, among other things, that DHMC “was the current holder of the indebtedness evidenced by the” Note; the original Note had been lost, and attached to the allonge was a photocopy of the original in its files; and pursuant to a Mortgage Loan Sale Agreement (“MLSA”) dated May 3, 2002, DHMC had “assigned all its rights, title and interest in and to the Mortgage Loan identified below [the Loan] to DLJ Mortgage Capital Inc. (“DLJ”).

On September 1, 2006, DLJ entered into a Pooling and Servicing Agreement (“PSA”) that established the CSAB Mortgage–Backed Pass–Through Certificates, Series 2006–1. The parties to the PSA were Credit Suisse First Boston Mortgage Securities Corp. (“Credit Suisse”), the Depositor; DLJ, the Seller; Wells Fargo Bank N.A. (Wells Fargo) as Servicer, Master Servicer and Trust Administrator; Washington Mutual Mortgage Securities Corp. (“WaMu”) as Servicer; Select Portfolio Servicing, Inc. [later known as America's Servicing Co.] (“ASC”) as Servicer; and USB as Trustee. The PSA provided for the transfer of the Note from DLJ to USB as Trustee under the PSA. To implement this transaction, DLJ first transferred the Note to Credit Suisse, the Depositor, and then Credit Suisse assigned the Note to USB, the Trustee. Section 201(a) of the PSA provides in part:

[Credit Suisse] hereby sells, transfers, assigns, delivers, sets over and otherwise conveys to [USB] for the benefit of the Certificateholders and the Certificate Insurer, without recourse, [Credit Suisse's] right, title and interest in and to (a) the Mortgage Loans listed in the Mortgage Loan Schedule [“MLS”].

The MLS attached to the PSA lists the Property, identified by the owner “Allen,” and the same address listed in the Allens' bankruptcy schedules.

“Mortgage Loans” is a defined term in the PSA Article I; the term includes “related Mortgage Notes.” Section 201(d) of the PSA provides that, “It is the express intent of the parties to this Agreement that the conveyance of the Mortgage Loans by [Credit Suisse] to [USB] be construed as a sale of the Mortgage Loans by [Credit Suisse] to [USB].” In addition, the PSA states in § 12.04(a) that:

It is the express intent of [Credit Suisse], [DLJ], [Wells Fargo, WaMu], and [USB] that (I) the conveyance by [DLJ] of the Mortgage Loans to [Credit Suisse] pursuant to the Assignment and Assumption Agreement and (v) the conveyance by [Credit Suisse] to [USB] as provided for in Section 2.01 of each of [DLJ's] and [Credit Suisse's] right, title and interest in the Mortgage Loans be, and be construed as, an absolute sale and assignment by [DLJ] to [Credit Suisse] and by [Credit Suisse] to [USB].

PSA §§ 201(b)(I) and 206 confirm the actual delivery and receipt of the Lost Note Affidavit from DLJ to Credit Suisse, and to USB. PSA §§ 3.01–3.03 provide that Wells Fargo and ASC have authority to service, administer, enforce and foreclose the Mortgage Loans to protect the interests of the trust “in the same manner as it protects its own interests in mortgage loans in its own portfolio[.] The PSA was signed by officers of each of the parties.

The Allens filed a petition for relief under chapter 13 on March 9, 2011. Their schedules listed no secured creditors, the value of the Property as $180,000, and total unsecured debt of $358,072.31. Two days later, the Allens filed a proposed chapter 13 plan which did not provide for any payment to secured creditors.

Wells Fargo filed a secured proof of claim in the Allens' bankruptcy case on March 31, 2011 in the amount of $204,526.95 (the “Wells Fargo Claim”). The Allens objected to the Wells Fargo Claim, arguing that Wells Fargo was not the lender, that the allonge was not attached to the Note that was attached to the Wells Fargo claim, and consequently, appeared to have been created after the Note, and that Wells Fargo had not established that it was holder of the Note entitled to enforce the Note or the DOT.

USB filed an amended proof of claim on June 7, 2011 (the “USB Claim”) in its capacity as Trustee under the PSA. On June 22, 2011, USB filed a response to the Allens' claim objection, noting that the Wells Fargo claim had been filed by Wells Fargo acting in its capacity as Servicer. USB described the history of the Note and DOT transactions, explaining that the Note had been lost, that USB had standing to file a proof of claim as a “person entitled to enforce the Note,” and pointing out that any issues regarding the allonge were immaterial because an endorsement in blank appeared on the face of the Note.

The Allens objected again, this time to the USB claim, now challenging the “chain of possession” showing transfer of the Note from DHMC to USB.

The bankruptcy court conducted a hearing on the Allens' objection to the USB claim on August 30, 2011. Both the Allens and USB were represented by counsel who were heard. Early in the hearing, the parties agreed to admit all of the documentary evidence offered by USB, including, among others documents, copies of the Assignment of Deed of Trust, the Note, the Lost Note Affidavit, the DOT, the PSA, and the MLS. During the hearing, counsel for USB presented to the bankruptcy court the original Lost Note Affidavit, with a copy of the Note attached to it, and the original DOT. Tr. Hr'g 46:23–25, August 30, 2011. The court verified that the documents had been signed, and that the DOT bore a recording stamp. Counsel for the Allens acknowledged that she had reviewed the original documents presented by USB, and did not object to their admission into evidence. The bankruptcy court took issues raised by the Allens' objection to the USB claim under submission.

On September 15, 2011, the bankruptcy court entered a “Memorandum Decision Re: Debtors' Amended Objection to U.S. Bank National Association's Amended Proof of Claim.” In its decision, the court decided that USB's “Amended Proof of Claim is a valid claim.” Among the bankruptcy court's findings and conclusions were that:

—The Lost Note Affidavit satisfied the requirements of applicable state law, RCW 62A.3–309, and therefore constituted an acceptable substitute for the original Note.

—The endorsement in blank on the face of the Note complied with the applicable requirements of the Bankruptcy Code to evidence transfer, and therefore, the allonge was superfluous.

—The contents of the Lost Note Affidavit demonstrated that the transfer from DMHC to DLJ included the right to enforce the Note, and that such right could thereafter be transferred by DLJ to another.

—There was no evidence to indicate, or from which it could be inferred, that the transfer of the Note by DLJ was a transfer of less than all rights under the Note.

In summary, the bankruptcy court stated:

The Court finds that the Lost Note Affidavit is sufficient to replace the original Promissory Note. The endorsement in blank on the face of the Note was legally sufficient pursuant to RCW 62A.3–204. Wells Fargo d/b/a [ASC] is the agent of U.S. Bank and would have standing to file the claim so long as U.S. Bank is the person entitled to enforce the Note. The transfer of the Note from Dream House to DLJ was for the purpose of enforcing the Note. The evidence introduced by U.S. Bank satisfies its burden of demonstrating that it is the person entitled to enforce the Note. Therefore, U.S. Bank and/or [ASC] has standing to file the Proof of Claim. Debtor's Amended Objection (Docket no. 49) is OVERRULED. The Amended Proof of Claim filed on June 7, 2011 is proof of a valid claim.

The bankruptcy court entered an Order overruling the Allens' objection to the USB claim on September 15, 2011. The Allens filed a timely notice of appeal.

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and 157(b)(2)(B). The Panel has jurisdiction under 28 U.S.C. § 158.

ISSUES

Whether the bankruptcy court erred overruling the Allens' objection to the USB claim.

STANDARD OF REVIEW

“An order overruling a claim objection can raise legal issues (such as the proper construction of statutes and rules) whic...

To continue reading

Request your trial
45 cases
  • Investors Bank v. Torres
    • United States
    • New Jersey Supreme Court
    • 1 Julio 2020
    ...under a note lost prior to the assignment. In re Caddo Parish-Villas S., Ltd., 250 F.3d 300, 302 (5th Cir. 2001) ; In re Allen, 472 B.R. 559, 566-67 (9th Cir. BAP 2012) ; Atl. Nat'l Tr., LLC v. McNamee, 984 So. 2d 375, 376-79 (Ala. 2007) ; YYY Corp. v. Gazda, 145 N.H. 53, 761 A.2d 395, 398-......
  • Pierce v. Carson (In re Rader)
    • United States
    • Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Ninth Circuit
    • 8 Marzo 2013
    ...Cir.BAP2011). “De novo review is independent, with no deference given to the trial court's conclusion.” Allen v. U.S. Bank, N.A. (In re Allen), 472 B.R. 559, 564 (9th Cir. BAP 2012). Review under the clearly erroneous standard is “significantly deferential,” with reversal requiring “a defin......
  • Sterba v. PNC Bank (In re Sterba), BAP No. NC–13–1590–KuDJu.
    • United States
    • Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Ninth Circuit
    • 27 Agosto 2014
    ...certain specific circumstances, the forum state's choice of law rules should be applied. See, e.g., Allen v. U.S. Bank, N.A. (In re Allen), 472 B.R. 559, 565 n. 4 (9th Cir. BAP 2012) ; Veal v. Am. Home Mortg. Serv., Inc. (In re Veal), 450 B.R. 897, 921 n. 41 (9th Cir. BAP 2011). However, in......
  • Bradley R. Kirk & Assocs., Inc. v. Spellman (In re Spellman), CV 15-507 PA
    • United States
    • U.S. District Court — Central District of California
    • 17 Septiembre 2015
    ...Standard of Review The Bankruptcy Court's ruling on an objection to a claim may raise legal or factual issues. In re Allen, 472 B.R. 559, 564 (B.A.P. 9th Cir. 2012). The Bankruptcy Court's legal conclusions are reviewed de novo and factual findings are reviewed for clear error. Id. "A court......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT