In re Adana Mortg. Bankers, Inc., Bankruptcy No. 80-00324A

• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Georgia
• Writing for the Court: WILLIAM L. NORTON, Jr.
• Citation: 12 BR 973
• Parties: In re ADANA MORTGAGE BANKERS, INC., Debtor. UNITED STATES of America, Plaintiff, v. ADANA MORTGAGE BANKERS, INC., Defendant.
• Docket Number: Bankruptcy No. 80-00324A,Adv. No. 80-0273A.
• Decision Date: 14 August 1981

12 B.R. 973 (1981)

In re ADANA MORTGAGE BANKERS, INC., Debtor.
UNITED STATES of America, Plaintiff,
v.
ADANA MORTGAGE BANKERS, INC., Defendant.

Bankruptcy No. 80-00324A, Adv. No. 80-0273A.

United States Bankruptcy Court, N.D. Georgia, Atlanta Division.

August 14, 1981.

12 BR 974

David Epstein, Kenneth Oestreicher, Attys., Civ. Div., Dept. of Justice, Washington, D.C., for plaintiff.

Carr, Abney, Tabb & Schultz, Benjamin C. Abney, Atlanta, Ga., for defendant.

ORDER

WILLIAM L. NORTON, Jr., Bankruptcy Judge.

Following hearings, evidence, briefs, and oral indication of the ruling by this Court in the debtor's motion to find the Government National Mortgage Association (hereinafter "GNMA") and several of its agents in contempt of the automatic stay provided by 11 U.S.C. 362(a), this action was first filed on March 17, 1980. Following dismissal for failure to provide service of summons, this adversary proceeding was filed.

Thus, on March 31, 1980, the United States of America brought this action seeking relief from the stay so as to "allow it to exercise its rights to terminate its contracts with Adana and to recover its mortgages and related accounts."

The debtor moved to dismiss for three reasons:

(1) failure to state a claim;

(2) failure to name the real party in interest; and

(3) failure to join indispensible parties.

This opinion is limited to the debtor's motion to dismiss. The merits of the case will be addressed in a later opinion, if the United States of America complies with this order.

FINDINGS OF FACT

1.

The joinder of all the holders of Government National Mortgage Association (hereinafter "GNMA") securities issued by the debtor is not necessary for complete relief to be accorded to the present parties.

2.

The absence of the holders of all GNMA securities issued by the debtor will not, as a practical matter, impair or impede their ability to protect their interest in their right to payment under the securities issued by the debtor.

3.

The absence of the holders of all GNMA securities issued by the debtor will not expose any of the parties presently before the court to any risk of double, multiple, or otherwise inconsistent obligations.

4.

All of the rights the complaint seeks to enforce arose out of a contract between the debtor and GNMA.

5.

GNMA delivered a letter to the debtor on February 7, 1980 which purported to terminate the debtor's servicing and issuing contract with GNMA.

CONCLUSIONS OF LAW

1.

The holders of all of the GNMA securities assessed by the debtor are not indispensable parties.

The debtor has argued that all of the holders of all of the GNMA securities issued by the debtor (hereinafter "the Certificate Holders") are indispensable parties to this adversary proceeding. The debtor bases this argument upon its contention that: (a) if the relief sought by the Government

12 BR 975

is granted, the debtor "will be forced" to bring preference actions and post-petition transfer actions with respect to payments made to the Certificate Holders since November 1979; and (b) if such actions by the debtor are successful, the Certificate Holders would lose "millions of dollars for which no reimbursement would be available," because the Government guaranty of payment is not broad enough to cover the situation in which an otherwise proper and timely payment is later avoided by the operation of the Bankruptcy Code. Neither part of the debtor's argument is persuasive

First, whether the plaintiff is granted relief from the stay to terminate its guaranty agreements with the debtor would have no effect upon the characterization of payments heretofore made by the debtor, and the debtor's threat to bring actions for recovery of such payments, in the event the relief sought by the Government is granted, is irrelevant to the issues raised in the debtor's motion to dismiss.

Second, the GNMA guaranty is broad enough by its own terms to require GNMA to reimburse any loss suffered by a Certificate Holder as a result of an issuer's timely and accurate payment being recovered by the debtor as a preferential transfer or avoidable post-petition transfer. The GNMA guaranty guarantees timely and accurate payment of all amounts due under the GNMA securities; there is no qualification to this guaranty, which guarantees complete payment. If a payment were to be later pulled back into the estate, there would be a failure to complete payment to the Certificate Holders, who would, therefore, have recourse against GNMA under the guaranty. Perry v. Van Norden Trust Co., 118 A.D. 288, 103 N.Y.S. 543, 545; Swarts v. Fourth National Bank, 117 F. 1 (8th Cir. 1902). This interpretation of the guaranty...