In re Phillips
491 B.R. 255
Bankr. D. Nev.2013Background
- Note executed Aug 20, 2007 secured by Deed of Trust with MERS as beneficiary.
- Endorsements chain: Prem Mortgage to AmTrust, then to Fannie Mae; First Allonge contains Logvynets endorsements.
- Seterus, as Fannie Mae’s servicer, possessed the Note and moved for relief from stay.
- Second Allonge endorsed in blank was produced later; issue at evidentiary hearing.
- Phillips objected to the Proof of Claim, challenging standing, enforceability, and securitization concerns.
- Nevada state law (Article 3 of the UCC) governs who may enforce the Note; the court assessed agency and possession.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to enforce the Note | Phillips argues split ownership bars Seterus. | Seterus is holder via possession and agency for Fannie Mae. | Seterus has standing as holder/agent for Fannie Mae. |
| Prima facie validity of the Proof of Claim | Rule 3001(f) presumption not applicable due to missing documentation. | Claim attached Note/First Allonge; presumption applies. | Presumption applies; claim deemed allowed. |
| Secured status of the claim against the Property | Assignment/structure splits note and deed; unsecured debt. | Edelstein permits reunification; Note secured by Deed of Trust. | Claim secured by the Property; Edelstein controls. |
| Authority of the endorsement by Logvynets | Logvynets lacked authority; Statute of Frauds applies to real property. | Endorsements valid; Power of Attorney presumed authentic; statutory presumption. | Endorsements valid; Logvynets authority presumed; Note enforceable. |
| Effect of securitization/ FNMA Trust on enforceability | Note possessed by investors; break in chain undermines enforceability. | Agency/possession through Seterus and MERS reconciles interests; Edelstein supports reunification. | Securitization does not defeat enforceability; reunification accomplished. |
Key Cases Cited
- Edelstein v. Bank of New York Mellon, 286 P.3d 249 (Nev. 2012) (reunification of note and deed of trust by holder and beneficiary; authority of MERS/assignments)
- In re Veal, 450 B.R. 897 (9th Cir. BAP 2010) (standing to enforce note; colorable claim to receive payment)
- Kemp v. Countrywide Home Loans, Inc., 440 B.R. 624 (Bankr. D.N.J. 2010) (court rejected asserted lack of possession; not persuasive here)
- Corporacion Venezolana de Fomento v. Vintero Sales Corp., 452 F.Supp. 1108 (S.D.N.Y. 1978) (constructive possession and delivery by agent; negotiability concepts)
- White & Summers (UCC treatment cited), 2 J. White & Summers, Uniform Commercial Code § 16.4.b (n/a) (holder proof via properly endorsed instrument; presumption of validity)