Densmore v. Litton Loan Servicing, L.P. (In Re Densmore)
445 B.R. 307
| Bankr. D. Vt. | 2011Background
- Debtor signed a promissory note to Washington Mutual on Aug 28, 2001 for $172,000 to finance property at 410 Colefax Road, Cambridge, NY; Debtor also executed a mortgage securing the loan on that property.
- Original Note is in Litton’s possession and endorsed in blank by Washington Mutual’s VP; Washington Mutual assigned the Mortgage to Wells Fargo as trustee of the Trust on May 21, 2008.
- The Trust’s servicing was delegated to Litton under the Oct 1, 2006 PSA, with Wells Fargo appointing Litton as attorney-in-fact via an April 21, 2009 LPA.
- Debtor filed a voluntary Chapter 13 petition on July 11, 2008; Litton filed an amended proof of claim on Sept 4, 2009 on behalf of Wells Fargo as trustee.
- Litton seeks to enforce the Note through its claim; the court must assess standing, and notes a material fact about the date of endorsement is missing, leading to denial of summary judgment.
- Court’s decision: summary judgment denied due to unresolved endorsement-date issue, requiring trial to determine Litton’s standing to file the claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Litton has standing to enforce the Note as servicer. | Densmore argues Litton lacks standing if the Note was never properly transferred. | Litton, as servicer for Wells Fargo as trustee, possesses the Note endorsed in blank and is authorized to file the claim. | Litton has standing only if the endorsement date shows holder status as of bankruptcy filing; material fact unresolved. |
| Whether PSA and LPA authorize Litton to file a proof of claim for Wells Fargo. | Densmore contends lack of clear authorization to file claim. | PSA grants broad servicing powers; LPA authorizes Litton to execute documents for Wells Fargo, including claims. | Litton authorized under PSA and LPA to file the proof of claim on Wells Fargo’s behalf. |
| Whether timing of endorsement affects Litton's standing to enforce the Note. | Endorsement timing creates genuine issue of material fact about holder status. | Litton’s possession and blank endorsement suggest holder status; timing should not bar standing if transfer to Trust occurred. | Endorsement date is material; unresolved endorsement timing prevents summary judgment. |
| Whether the Note’s transfer into the Trust is relevant to Litton’s standing. | Question of transfer into the Trust affects authenticity of title to enforce. | Transfer to Wells Fargo as trustee is established; PSA’s details are immaterial to standing for enforcement. | Transfer into the Trust is not dispositive; standing depends on endorsement date and possession. |
Key Cases Cited
- Samuels v. Bank, 415 B.R. 8 (Bankr.D. Mass. 2009) (holder of note with blank endorsement; disputes about chain of title do not negate holder status)
- In re Minbatiwalla, 424 B.R. 104 (Bankr.S.D.N.Y. 2010) (servicer has standing to file a claim on behalf of the creditor)
- In re Conde-Dedonato, 391 B.R. 247 (Bankr.E.D.N.Y. 2008) (servicer standing to file claim)
- Butner v. United States, 440 U.S. 37 (Supreme Court, 1979) (applicable non-bankruptcy law governs enforcement of notes)