Eggerson v. U.S. Bank Tr. N.A. (In re Eggerson)
| Decision Date | 27 March 2020 |
| Docket Number | CASE NO. A19-8021-TLS,CASE NO. BK18-81307-TLS |
| Parties | IN THE MATTER OF: RONNIE JEROME EGGERSON and DEBRA LOUISE EGGERSON , Debtor(s). RONNIE JEROME EGGERSON and DEBRA LOUISE EGGERSON, Plaintiff, v. U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE OF THE PRP II PALS INVESTMENT TRUST and SN SERVICING CORP., Defendants. |
| Court | U.S. Bankruptcy Court — District of Nebraska |
This matter is before the court on the defendants' motion for summary judgment (Fil. No. 46) and resistance by the plaintiffs (Fil. No. 71). The plaintiffs are representing themselves, and L. Bryant Jaquez represents the defendants. Evidence and briefs were filed and, pursuant to the court's authority under Nebraska Rule of Bankruptcy Procedure 7056-1, the motion was taken under advisement without oral arguments.
The motion is granted, for the reasons explained below.
The debtors filed this adversary proceeding against the holder and the servicer of their residential mortgage loan objecting to their proof of claim and alleging the fraudulent assignment of the deed of trust, lack of standing, misapplication of payments, and improper accounting of escrow, fees, and other charges. The defendants filed a motion for summary judgment asserting there is no genuine dispute as to any material fact.
For purposes of this motion, the following facts are uncontroverted or are established by the record:
1. On or about July 8, 1998, the plaintiffs executed a promissory note in favor of WMC Mortgage Corp. in the original principal amount of $98,625.00.
2. The debt described by the promissory note is secured by a deed of trust properly recorded with the Register of Deeds of Douglas County, Nebraska, on July 10, 1998.
3. The recorded deed of trust created a lien against the real property commonly described as 8708 North 52nd Avenue, Omaha, NE 68152, which is legally described as Lot 15, Block 7, in Raven Oaks, an addition to the City of Omaha, as surveyed, platted and recorded, in Douglas County, Nebraska.
4. The original beneficiary under the deed of trust was WMC Mortgage Corp.
5. Defendant U.S. Bank Trust National Association, as Trustee of the PRP II Pals Investment Trust ("U.S. Bank"), is the current holder, and is in actual physical possession, of the original promissory note, which is endorsed in blank by WMC Mortgage Corp.
6. On July 25, 2000, an Assignment of Deed of Trust ("AOM1") was recorded assigning the deed of trust from WMC Mortgage Corp. to The First National Bank of Chicago, as trustee under the pooling and servicing agreement dated September 1, 1998, WMC Series 1998-B.
7. On November 3, 2005, an Assignment of Mortgage ("AOM2") was recorded assigning the deed of trust from The First National Bank of Chicago, as trustee under the pooling and servicing agreement dated September 1, 1998, WMC Series 1998-B, to JPMorgan Chase Bank, successor in interest to Bank One, National Association (f/k/a The First National Bank of Chicago), as trustee, on behalf of the holders of the Mortgage Pass-Through Certificates Series 1998-B.
8. On December 13, 2010, a loan modification of the note and deed of trust was entered into and executed by the plaintiffs and Select Portfolio Servicing, Inc.
9. The loan modification created a new principal balance on the note of $133,552.03 consisting of an interest-bearing principal balance of $70,000.00 and a deferred principal balance of $63,552.03.
10. The loan modification provided for the interest-bearing principal balance to be paid at a 9.90% rate of interest beginning January 1, 2011, over 249 months with a final balloon payment of $60,684.57 due at maturity, which was extended to September 1, 2031.
11. The loan modification provided for the deferred principal balance to be due as a balloon payment at maturity as well.
12. On March 15, 2017, a Corporate Assignment of Deed of Trust ("AOM3") was recorded assigning the deed of trust from Bank of New York Mellon Trust Company, N.A., f/k/a Bank of New York Co. (successor to JPMorgan Chase Bank, N.A., successor to Bank One, N.A. f/k/a The First National Bank of Chicago), as trustee on behalf of the holders of the Mortgage Pass-Through Certificates Series 1998-B, to U.S. Bank Trust National Association, as trustee of the Preston Ridge Partners Investment II Trust.
13. The AOM3 indicates it was executed by Select Portfolio Servicing, Inc., as attorney in fact for Bank of New York Mellon Trust Company, N.A., f/k/a Bank of New York Co. (successor to JPMorgan Chase Bank, N.A., successor to Bank One, N.A., f/k/a The First National Bank of Chicago), as trustee on behalf of the holders of the Mortgage Pass-Through Certificates Series 1998-B.
14. On May 9, 2018, an Assignment of Deed of Trust ("AOM4") was recorded assigning the deed of trust from U.S. Bank Trust National Association as trustee of the Preston Ridge Partners Investment II Trust to the defendant U.S. Bank Trust National Association as trustee of the PRP II Pals Investments Trust.
15. Defendant U.S. Bank is the current beneficiary of the deed of trust.
16. SN Servicing Corporation is the servicer of the subject loan on behalf of U.S. Bank.
17. On September 4, 2018, the plaintiffs filed a Chapter 13 bankruptcy petition commencing Case No. BK18-81307 wherein the property is identified as the plaintiffs' principal residence.
18. On September 18, 2018, the plaintiffs filed their Schedule D in the bankruptcy case identifying a secured claim against the property in the amount of $98,625.00 in favor of Statebridge Company, Locher Pavelka Dostal, and SN Servicing.
19. On September 18, 2018, the plaintiffs filed their Chapter 13 plan providing for the secured claim against the property to be paid within Class 6.A. by curing pre-petition arrearages and maintaining post-petition mortgage payments. The plan was confirmed on November 13, 2018.
20. On November 9, 2018, U.S. Bank filed its proof of claim (No. 6-1) in the bankruptcy case, which evidenced a total claim of $105,505.69 and pre-petition arrearages of $47,364.43.
21. The claim includes a copy of the note endorsed in blank, a copy of the deed of trust, copies of AOM1, AOM2, the loan modification, AOM3, AOM4, and an escrow analysis as of the date the bankruptcy petition was filed.
22. On the petition date, the plaintiffs were delinquent and due for 31 monthly payments for March 1, 2016, through September 1, 2018, at $588.91 each, for a total principal and interest balance of $18,256.21.
23. On the petition date, the plaintiffs owed $26,264.84 in pre-petition escrow advances for taxes and insurance for the property.
24. On the petition date, the plaintiffs also owed $2,843.38 in pre-petition fees and charges, which included late fees, advances, NSF fees, foreclosure expenses, and attorneys' fees.
25. The total pre-petition arrearages due at the time the plaintiffs filed their bankruptcy case were as follows:
Monthly payments due 3/1/16 through 9/1/18 31 x $588.91 $ 18,256.21 Late charges $ 530.10 Foreclosure expenses $ 341.30 Attorneys' fees $ 1,330.00 Prior servicer corporate advance 2/1/17 $ 112.92 Prior servicer late charges 2/1/17 $ 494.06 Prior servicer NSF fees 2/1/17 $ 35.00 Escrow deficiency for funds advanced $ 26,264.84 TOTAL DUE FOR REINSTATEMENT $47,364.43
26. U.S. Bank filed a motion for relief from the automatic stay on August 2, 2019.
27. The plaintiffs filed a resistance to the motion for relief from stay on August 16, 2019, acknowledging the post-petition delinquency to U.S. Bank and seeking the ability to cure within a reasonable time.
28. The plaintiffs filed a further resistance to the motion for relief from stay on September 26, 2019, contesting U.S. Bank's standing.
29. A stipulated order settling the motion for relief was filed on October 24, 2019. In that stipulated order, the plaintiffs acknowledged that U.S. Bank has a valid perfected security interest in the property.
In resisting the motion for summary judgment, the debtors deny that U.S. Bank has any right to enforce the note because it is not the real party in interest, and they dispute the accounting provided by SN Servicing.
The debtors' challenge to the assignment of the note to U.S. Bank fails for two reasons. First, the debtors lack standing to insert themselves into the contractual arrangements between the original lender and any subsequent holders of the note, absent proof of harm. "The party injured by an improper or fraudulent assignment is the mortgagee-assignor (mortgage holder), not the mortgagor (homeowner)." Quale v. Aurora Loan Servs., LLC, 561 F. App'x 582, 583 (8th Cir. 2014). "As long as no creditor of the assignor questions the validity of the assignment, a debtor of the assignor cannot do so." Blackford v. Westchester Fire Ins. Co., 101 F. 90, 91 (8th Cir. 1900). "The Debtors have not claimed that they did not take out this debt or that there is not a mortgage on their home or that they have suffered any injury based on the allegedly defective assignment (such as collection efforts by two separate creditors on the same debt)." In re Baber, 523 B.R. 156, 161 (Bankr. E.D. Ark. 2014). Likewise, the debtors here do not allege an injury based on the assignment of the note and deed of trust. They question the amount of money they allegedly owe on the debt, but they do not dispute the existence of the debt itself based on the note and security document.
Second, the debtors have already agreed that U.S. Bank's security interest in their residence is valid and perfected. Paragraph 1 of the parties' Stipulated Order in Settlement of the Motion for Relief from the Automatic Stay (Fil. No. 111 in Case No. BK18-81307) states: "Debtors have granted, and the parties hereto acknowledge, that Movant has a valid perfected security interest in certain real property commonly known as 8708 N 52nd Avenue, Omaha, NE 68152." The legal doctrine of judicial estoppel prevents a party who successfully proceeds on a particular position from later...
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