Deutsche Bank National Trust Co. Ex Rel. Ameriquest Mortgage Securities, Inc. v. Carmichael (In Re Carmichael)
448 B.R. 690
| Bankr. E.D. Pa. | 2011Background
- Debtors Carmichael contested Deutsche Bank's foreclosure-adverse interests in bankruptcy court.
- Court granted Deutsche Bank summary judgment based on holder in due course protections for a note secured by a mortgage.
- Defendants moved for reconsideration arguing prejudice and legal error in the summary judgment ruling.
- Defendants asserted Deutsche raised the holder in due course defense late and that an improper affidavit was used.
- Court analyzed whether a mortgage-documented debt can be treated as a negotiable instrument enabling holder in due course status, influencing the mortgage.
- Court reaffirmed that a note secured by a mortgage may be governed by holder in due course principles under controlling authorities.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether reconsideration is warranted. | Carmichael argues courts use reconsideration to relitigate. | Carmichael contends prejudice and legal error justify reconsideration. | Denied; no clear error or injustice established. |
| Whether holder in due course can apply to a mortgage-secured note. | Deutsche asserts note secured by mortgage qualifies as negotiable; holder in due course protects the note and mortgage. | Carmichael disputes applicability to mortgage; argues misapplication of authority. | Deutsche's status as holder in due course affirmed; protections extend to mortgage. |
| Whether prejudice from late-filing of defenses and affidavit affected outcome. | Record shows timely issues were raised; no prejudice from affidavit timing. | Defendants claim they were prejudiced by late arguments and unauthorised affidavit. | Prejudice not established; arguments raised in state court and responses followed. |
Key Cases Cited
- Mellon Bank, N.A. v. Ternisky, 999 F.2d 791 (4th Cir.1993) (note secured by mortgage is negotiable instrument; holder in due course protections extend to mortgage)
- Carpenter v. Longan, 83 U.S. 271 (1872) (note and mortgage benefits apply to mortgage securing the note when holder in due course)
- Twitchell v. McMurtrie, 77 Pa. 383 (1875) (mortgage notes may refer to mortgages; does not invalidate negotiability)