In Re Shapoval
441 B.R. 392
| Bankr. D. Mass. | 2010Background
- Debtor filed Chapter 13 case on February 2, 2010, in the Western Division of the U.S. Bankruptcy Court for the District of Massachusetts.
- Property at 71-73 Beaumont Street, Springfield, MA, listed as owned by Debtor with value $164,000; Wells Fargo holds a first mortgage and there are three nonconsensual liens totaling $143,033.68.
- Wells Fargo filed a proof of claim on February 16, 2010 showing prepetition arrearage of $34,680.62 and objected to Debtor's plan on February 18, 2010; Debtor did not amend the plan or seek reconsideration after the March 9 order sustaining the objection.
- Debtor objected to Wells Fargo's proof of claim, arguing the attached note lacked a valid indorsement; Wells Fargo later attached a blank-indorsed allonge to its response.
- Wells Fargo moved for relief from automatic stay on June 18, 2010, asserting lack of adequate protection, no equity, and lack of necessity for reorganization; Debtor challenged Wells Fargo's standing based on the allonge issue.
- Court held that standing to seek relief hinges on whether the allonge containing the indorsement was affixed to the note; ordered an evidentiary hearing to determine affixment and related facts, consolidated with Debtor's objection to Wells Fargo's claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wells Fargo has standing to seek relief from stay based on an allonge indorsement not affixed to the note | Wells Fargo asserts it is holder via the allonge and thus has standing. | Debtor contends the allonge was not affixed to the note, invalidating holder status. | Affixment required; standing contingent on affixed allonge. |
| Whether Massachusetts law requires the allonge to be affixed to the original note for indorsements to be valid | Allonge indorsements can be valid under existing amendments. | Affixation is required; an unattached allonge fails to transfer indorsement. | Affixment required; unattached allonge cannot confer indorsement. |
| What effect the 1998 Massachusetts amendments to UCC Article 3 have on allonge validity | Amendments liberalized use of allonges independent of space on original note. | Amendments still require physical attachment of allonges to the note. | Amendments liberalized allonge use but maintain attachment requirement. |
Key Cases Cited
- Dyck-O'Neal v. Pungitore, 60 Mass.App.Ct. 1109 (Mass.App.Ct. 2003) (affixed allonge requirement discussed in MA appellate context)
- In re Weisband, 427 B.R. 13 (Bankr. D. Ariz. 2010) (unattached allonge not sufficient for holder status in stay relief)
- Big Builders, Inc. v. Israel, 709 A.2d 74 (D.C. 1998) (language on affixation of allonge in similar statutory context)