In Re Washington
468 B.R. 846
Bankr. W.D. Mo.2011Background
- Plaintiffs borrowed $200,000 on January 13, 2006, securing the loan with a Deed of Trust on 1301 Sawgrass Drive, Grain Valley, Missouri.
- Argent endorsed the Note in blank and Assignment of Deed of Trust in blank, transferring possession to Deutsche Bank.
- The loan was part of Argent Securities Asset-Backed Pass-Through Certificates, Series 2006-W3 under a Pooling and Servicing Agreement (PSA).
- Deutsche Bank acquired the Note and Deed of Trust via assignments in 2007 and 2009; AHMSI is the current loan servicer.
- Washington filed multiple Chapter 13 cases; a First Stay Relief Order in 2008 found Deutsche Bank had a security interest and relieved the stay, but was not appealed.
- In 2011, the Court issued a Second Stay Relief Order finding a security interest and delinquency, conditioning foreclosure on ongoing default; Plaintiffs filed the current adversary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Counts I and II are barred by preclusion | Washington/Pls contend DB lacks standing due to PSA violations. | Deutsche Bank argues law of the case, res judicata, and collateral estoppel preclude re-litigation. | Counts I and II barred; preclusion applies. |
| Whether Deutsche Bank has standing to enforce the Note and Deed of Trust | Pls assert PSA violations defeat standing to enforce. | DB is holder/enforcer under UCC; in possession of the Note, blank-endorsed, and thus entitled to enforce. | Deutsche Bank has standing to enforce the Note and Deed of Trust. |
| Whether Count III (automatic stay violations) survives | Plaintiffs allege stay violations by DB in collection efforts. | Plaintiffs fail to identify specific conduct violating the stay; claim insufficiently pleaded. | Count III dismissed for lack of specific stay-violation allegations. |
| Whether the PSA violations affect Deutsche Bank's rights | PSA noncompliance could affect enforceability of the mortgage. | PSA violations do not affect enforceability of the Note/Deed of Trust under Missouri UCC; standing unaffected. | PSA violations do not defeat standing or enforceability. |
Key Cases Cited
- In re Smoak, 461 B.R. 510 (Bankr.S.D.Ohio 2011) (trustee standing unaffected by PSA; note enforcement owed under UCC)
- Correia v. Deutsche Bank Nat'l Trust Co. (In re Correia), 452 B.R. 319 (1st Cir. BAP 2011) (lacks standing to enforce PSA terms for debtors)
- In re Almeida, 417 B.R. 140 (Bankr.D.Mass.2009) (debtors not parties to PSA lack standing)
- Bittinger v. Wells Fargo Bank, 744 F. Supp. 2d 619 (S.D.Tex.2010) (obligor cannot sue for breach of PSA to which not a party)
- In re Tucker, 441 B.R. 638 (Bankr.W.D.Mo.2010) (notes holder rights enforceable under Missouri law)