NAIMO v. U.S. BANK NATIONAL ASSOCIATION, 3:16-cv-07089

Jennifer and Vincent Naimo executed a 2005 note secured by a mortgage on 66 Potter Rd., Freehold, NJ; mortgage was assigned to US Bank in 2006.
Debtors defaulted in 2011 and made no payments thereafter.
Debtors filed Chapter 7 on June 30, 2016 and listed the Property as to be surrendered. An automatic stay then applied.
Trustee filed a Notice of Proposed Abandonment for the Property on August 17, 2016; debtors did not object and the Certificate of No Objection issued September 15, 2016, making abandonment effective.
US Bank moved for relief from the automatic stay; the Bankruptcy Court entered an order on September 27, 2016 granting relief (the court on the record noted abandonment and debtors’ intent to surrender).
Debtors appealed, arguing US Bank lacked standing because the mortgage assignment chain was invalid; the district court dismissed the appeal as moot because the Property had been abandoned and thus was no longer estate property protected by the stay.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether US Bank had standing to obtain relief from the automatic stay because the mortgage assignment chain was allegedly invalid	Naimo: assignment chain to US Bank was invalid, so US Bank lacked a protectable interest and standing to seek relief from stay	US Bank: appeal is moot because Trustee abandoned the Property; also argued Naimos forfeited rights by indicating surrender and that assignments were valid	Appeal dismissed as moot — abandonment removed the Property from the estate before the Bankruptcy Court’s stay-relief order, so district court lacked jurisdiction to grant meaningful relief
Whether the Bankruptcy Court erred by leaving assignment-validity issues for state court rather than resolving them in bankruptcy	Naimo: bankruptcy court should have adjudicated the validity of assignments before lifting stay	US Bank: procedural posture and abandonment made further bankruptcy adjudication unnecessary; state-court resolution appropriate	District court did not reach merits; found issue moot due to abandonment and refused to decide assignment validity

Lewis v. Cont'l Bank Corp., 494 U.S. 472 (recognizing Article III mootness limits on federal courts) (constitutional case-or-controversy principle)
Blanciak v. Allegheny Ludlum Corp., 77 F.3d 690 (3d Cir. 1996) (mootness when developments eliminate plaintiff’s stake)
Am. Bird Conservancy v. Kempthorne, 559 F.3d 184 (3d Cir. 2009) (central question for mootness is whether changed circumstances forestall meaningful relief)
Morlan v. Universal Guar. Life Ins. Co., 298 F.3d 609 (7th Cir. 2002) (abandonment removes property from estate)
Catalano v. Comm'r of Internal Revenue, 279 F.3d 682 (9th Cir. 2002) (same principle regarding abandonment)
In re St. Clair & Karen M. St. Clair, 251 B.R. 660 (D.N.J. 2000) (automatic stay protects property of the estate)