IN RE MENTAG

• Decision Date: 17 June 2010
• Docket Number: No. 09-15012,09-67842.,09-15012
• Citation: 430 B.R. 439
• Parties: In the Matter of John C. MENTAG, Debtor. John C. Mentag, Plaintiff/Appellant, v. GMAC Mortgage LLC, Defendant/Appellee. In the Matter of John C. Mentag, Debtor.
• Court: U.S. District Court — Eastern District of Michigan

430 B.R. 439

In the Matter of John C. MENTAG, Debtor John C. Mentag, Plaintiff/Appellant, v. GMAC Mortgage LLC, Defendant/Appellee In the Matter of John C. Mentag, Debtor.

Nos. 09-15012, 09-67842.

United States District Court, E.D. Michigan, Southern Division.

June 17, 2010.

John Menntag, Pro se.

Brett A. Border, Farmington Hills, MI, for GMAC Mortgage, LLC.

Charles L. McKelvie, Birmingham, MI, for Chrysler Financial Services Americas LLC.

John William Nemecek, Southfield, MI, for Stuart A, Gold.

OPINION AND ORDER

VICTORIA A. ROBERTS, District Judge.

I. INTRODUCTION

This is a bankruptcy appeal in a Chapter 7 case. Pro se Debtor/Appellant John C. Mentag ("Mentag") appeals from Orders of the Bankruptcy Court granting Creditor/Appellee GMAC Mortgage LLC's ("GMAC LLC") motion to lift the automatic stay and denying his motion for reconsideration. See Dkt # 1. Mentag also moves the Court to compel GMAC LLC to present documents and cease foreclosure actions. GMAC LLC moves to dismiss the appeal for lack of subject matter jurisdiction and failure to state a claim. The issue is whether GMAC LLC was the proper party to bring the motion to lift the stay.

For the reasons stated, the Court finds the record before the Bankruptcy Court is unclear on this question. The Court DENIES GMAC LLC's Motion to Dismiss Appeal and DENIES Mentag's Motion to Compel. The Court REVERSES the Bankruptcy Order granting the motion to lift the automatic stay and REMANDS for further proceedings consistent with this Order.

II. FACTUAL BACKGROUND

According to Mentag, in 1980 he purchased a 1,200 square foot home located at 18231 Beverly Road in Beverly Hills, Michigan. Over the years, he expanded the home to 5,514 square feet. He resides there with his wife and five children.

On December 1, 2004, Mentag and his wife executed a mortgage in favor of GMAC Mortgage Corporation ("GMAC Corp.") in the amount of $512,000; Mortgage Electronic Registration Systems, Inc. ("MERS") was mortgagee, acting as nominee for GMAC Corp. See Record on Appeal, No. 9, Exh. 1. The mortgage was recorded with the Oakland County Register of Deeds on February 11, 2005 under Liber Number 34988, page 625. Id. Also on December 1, 2004, Mentag executed an "Adjustable Rate Note" in favor of GMAC Corp. in the amount of $512,000. Id. at Exh. 2.

It appears that GMAC Corp. may have sold Mentag's note and mortgage. Under a "Pooling and Servicing Agreement" ("Agreement") dated February 24, 2005, between Residential Asset Mortgage Products, Inc. ("RAMP") as Company; GMAC Corp. as Servicer; and JPMorgan Chase Bank, NA ("Chase") as Trustee, RAMP assigned to Chase for the benefit of certain unknown investors, all rights, title and interest in multiple mortgage loans. Id. at Exh. 4, p. 45. The 137-page Agreement required that each assigned mortgage loan be endorsed without recourse in blank, or in the name of Trustee as trustee, and signed by an authorized officer of GMAC Corp. Id. Under the Agreement, GMAC Corp. is defined as seller of the mortgage loans to RAMP. Id. GMAC Corp. also agreed to service the loans in accordance with the terms of the respective mortgage loans. Id.

Less than four years after executing the mortgage and note, Mentag experienced financial difficulty; he last made a mortgage payment in November 2008, covering a payment due for August or September 2008. A foreclosure sale was scheduled for September 8, 2009. Mentag presumably filed this action to stave off foreclosure of the home he owned for nearly 30 years.

III. PROCEDURAL BACKGROUND

On September 8, 2009, Mentag filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code. The petition lists GMAC LLC as holder of a 1st secured interest and GMAC Mortgage as holder of a 2nd secured interest in Mentag's Beverly Hills, Michigan residence. Mentag listed an estimated value of $400,000.00 and a total indebtedness of $556,335.47 on the first loan and $94,701.00 on the second loan.

On September 17, 2009, GMAC LLC, as servicer for MERS, filed a Motion for Relief from the Automatic Stay and to Waive the Provisions of F.R.B.P.4001(a)(3). See Record on Appeal, No. 1. GMAC LLC alleged that it was the holder of a mortgage on the above property, and that Mentag defaulted on payments due under the terms of a note secured by that mortgage; a copy of the mortgage was attached to the Motion. Id.

On October 15, 2009, Judge Walter Shapero conducted a hearing on GMAC's motion. At that hearing, Mentag questioned whether GMAC LLC was the holder of the note and mortgage, and whether it was the proper party to pursue relief. See Record on Appeal, No. 4, p. 6. Mentag also questioned whether GMAC LLC adequately proved that Mentag had no equity in the property. Id. at pp. 4, 6. GMAC LLC's counsel did not have the note, but represented that a servicing agreement between GMAC LLC and MERS permitted GMAC LLC to pursue the motion to lift the stay. Id. at pp. 9-10. Judge Shapero scheduled an evidentiary hearing, stating that "the only additional requirement for standing is the servicing agreement and the note." Id. at p. 11.

On December 2, 2009, Judge Shapero held an evidentiary hearing. Mentag submitted three exhibits, which the court entered into evidence: (1) Exhibit A—a map that identified comparable properties sold within the previous 12 months; (2) Exhibit B—listings of comparable properties; and (3) Exhibit C—county records and photos evidencing the subject property. See Record on Appeal, No. 8. GMAC LLC also submitted four exhibits, which the court entered into evidence: (1) Exhibit 1—the mortgage; (2) Exhibit 2—the note; (3) Exhibit 3—the Oakland County state equalized valuation for the subject property; and (4) Exhibit 4—the Agreement. See Record on Appeal, No. 9.

At the hearing, Mentag again disputed GMAC LLC's standing to pursue the motion for relief, primarily because GMAC LLC did not provide an original copy of the note. Judge Shapero overruled Mentag's objection to the admission of a copy of the note. See Record on Appeal, No. 5, pp. 7-17. GMAC LLC's legal counsel argued that the contractual obligation was evident on `the face of the mortgage and provided GMAC sufficient constitutional standing to bring the motion for relief. Id. at p. 8. He also represented that the servicing agreement authorized MERS, on behalf of GMAC, to collect and service many mortgage notes and mortgages. Id. at p. 12. Judge Shapero decided that standing was no longer at issue. Id. at p. 17.

On the issue of valuation, GMAC LLC argued the fair market value of the property was $405,405.00, based on the state equalized value ("SEV") provided in Exhibits 3 and C. Id. at p. 18. GMAC LLC also said Mentag owed a balance of $512,699.90 on the note and had an arrearage of $64,179.38 for missed payments, escrow advances for taxes and insurance, late fees, penalties and attorney fees. Id. at 18-19. Thus, GMAC LLC said it was not adequately protected because Mentag had little to no equity. Id. at 41. Mentag said the property was valued at between $550,000 and $575,000. Id. at 25. Judge Shapero took the matter under advisement.

On December 7, 2009, Judge Shapero entered an Opinion granting relief from the automatic stay. See Record on Appeal, No. 6. Although Judge Shapero agreed that SEV was not particularly credible evidence of value in light of the current market conditions, he noted that even at Mentag's value figure, Mentag would have little or no equity in the property after sales commission, taxes and other closing fees were paid. Id. at p. 2. Additionally, Judge Shapero found that no adequate protection, such as proffered monthly payments, were made. Id.

On December 8, 2009, Judge Shapero entered an Order granting relief from the automatic stay and waiving the provisions of Fed. R. Bankr .P. 4001(a)(3) as to GMAC LLC as servicer for MERS. The Order was to become effective 30 days after entry.

On December 9, 2009, Mentag filed a document which stated that Judge Shapero received incomplete and inaccurate information at the evidentiary hearing. The Bankruptcy Court apparently construed that document as a motion for rehearing. On December 15, 2009, Judge Shapero entered an Order Denying What the Court Construes as a Request for Rehearing. On December 24, 2009, Mentag filed a Notice of Appeal. On February 2, 2010, GMAC LLC filed its Motion to Dismiss Appeal Pursuant to Fed.R.Civ.P. 12(b).

IV. STANDARD OF REVIEW

A. Motions to Dismiss

Federal Rule of Civil Procedure 12(b)(1) provides that a complaint may be dismissed for lack of subject matter jurisdiction. Fed. R. Bankr.P. 7012(b) (incorporating Fed.R.Civ.P. 12(b)). Under Rule 12(b)(1):

a motion can either attack the claim of jurisdiction on its face, in which case all allegations of the plaintiff must be considered as true, or it can attack the factual basis for jurisdiction, in which case the trial court must weigh the evidence and the plaintiff bears the burden of proving that jurisdiction exists.

DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th Cir.2004).

Likewise, Rule 12(b)(6) provides that a party may assert the defense of "failure to state a claim upon which relief may be granted" by motion:

Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defenses by motion:

. . .

(6) failure to state a claim upon which relief can be granted

Fed.R.Civ.P. 12(b)(6).

In deciding such a motion, the court "must `construe the complaint in the light most favorable to the plaintiff, accept all the factual allegations as true, and determine whether the plaintiff can prove a set of facts in support of its claims that would entitle it to relief." Power & Tel. Supply Co. v. SunTrust Banks, Inc. 447 F.3d 923, 929-30 (6th Cir.2006) (quoting Bovee v. Coopers & Lybrand CPA., 272 F.3d 356, 360 (6th Cir.2001)). "A complaint will survive a motion to dismiss if it contains either direct or...