In Re DeShetler
453 B.R. 295
Bankr. S.D. Ohio2011Background
- Debtors filed a joint Chapter 13 petition; Wells Fargo filed a proof of claim on behalf of Wells Fargo Bank, N.A. with a Note endorsed in blank and a Mortgage referenced to Washington Mutual Bank, FA.
- UST sought a Rule 2004 examination of Wells Fargo to verify standing to file the claim and obtain related documents; Wells Fargo objected.
- The 2004 Motion proceeded in the context of widespread foreclosures and mortgage securitization with multiple transfers of loans, creating standing and documentation questions.
- Court identified the UST as a public watchdog with broad authority to monitor bankruptcy processes, including the claims process, under 28 U.S.C. §§ 586 and 307.
- Court held that although the UST has authority and good cause to investigate Wells Fargo’s claim, the scope of production is narrowed to documents establishing Wells Fargo’s entitlement to enforce the Note.
- If documentary production proves insufficient to establish standing, an oral examination may be conducted; otherwise, no further examination is required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| UST authority to conduct a 2004 examination | UST has broad authority under §307 to raise any issue in bankruptcy cases. | UST is limited to enumerated powers in §586 and cannot expand into claims investigations. | UST authority to conduct 2004 examination is acknowledged. |
| Good cause for examination | Exam is needed to verify Wells Fargo’s standing to file the claim and protect the estate. | Attachments to the claim establish standing; further inquiry is unnecessary. | Good cause established to pursue a limited 2004 examination. |
| Scope of the examination and documents | Produce contemporaneous loan history and chain of assignment/endorsement to support standing. | Complete loan history is excessive and unnecessary for standing; limit scope. | Produce original Note and documents establishing holder/entitlement; deny broad loan history; allow narrow scope with potential oral exam if needed. |
| Oral examination after document production | Oral examination should be allowed as necessary to establish standing. | Oral examination not necessary if documents prove standing. | Oral examination only if documents fail to establish Wells Fargo’s entitlement; otherwise not required. |
Key Cases Cited
- Countrywide Home Loans, Inc. v. Countrywide Home Loans, Inc., 384 B.R. 373 (Bankr. W.D. Pa. 2008) (UST authority broader than §586; supports 2004 examinations to monitor claims process)
- Revco D.S., Inc. v. United States Trustee, 898 F.2d 498 (6th Cir. 1990) (UST as watchdog with standing to raise issues in bankruptcy cases)
- In re Wassenaar, 268 B.R. 477 (W.D. Va. 2001) (standing to review claims appropriate; supports UST involvement)
- In re Parsley, 384 B.R. 138 (Bankr. S.D. Tex. 2008) (UST authority to examine loan servicers; balancing good cause and scope)
- In re Michalski, 449 B.R. 273 (Bankr. N.D. Ohio 2011) (UTH authority to obtain claims-related information; confirms 2004 examination utility)