Residential Capital, LLC
12-12020
Bankr. S.D.N.Y.Dec 16, 2015Background
- Billy Ray Carroll filed a timely proof of claim (originally secured, later reclassified as unsecured against Homecomings) for $80,000 alleging wrongful/non-noticed foreclosure of his Mobile, Alabama property and misapplied payments.
- Loan originated 2003; servicer changed to GMACM in July 2009. Carroll first became delinquent July 1, 2009; multiple notices, repayment plans, cancellations, and referrals to foreclosure occurred between Aug. 2009 and Apr. 2010.
- GMACM published foreclosure notices in the Mobile Register Press on March 1, 8, and 15, 2010 and mailed notices (including Notices of Acceleration); foreclosure sale occurred April 2, 2010; property sold for $24,000.
- Carroll responded to the Trust’s Request Letter, asserted he never received foreclosure notice, and submitted Western Union and bank statements alleging payments not credited.
- The ResCap Borrower Claims Trust produced declarations, proof of publication and mailed notices, and a reconciliation showing Carroll’s alleged payments were properly applied; Trust objected to and sought expungement of the claim.
- The Court found the Trust rebutted the claim’s prima facie validity, Carroll failed to meet his burden, and sustained the objection, expunging the claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Carroll received legally sufficient notice of the non-judicial foreclosure | Carroll: never received notice of foreclosure sale | Trust/GMACM: complied with Alabama law by publishing notice three successive weeks and mailing notices | Court: Notice was sufficient under Ala. Code § 35-10-13; claim fails |
| Whether alleged payments were not applied to Carroll’s account | Carroll: submitted Western Union and bank records showing payments not credited | Trust: servicing records reconcile payments and show proper application | Court: Trust’s reconciliation unrebutted; Carroll failed to prove misapplication |
| Burden-shifting and pleading sufficiency for proof of claim | Carroll: pro se claim and response alleged wrongful foreclosure and payment errors | Trust: produced evidence defeating prima facie validity, shifting burden to Carroll to prove claim plausibly | Court: applied federal pleading standards; Carroll’s submissions insufficient to meet plausibility/preponderance requirement; claim expunged |
Key Cases Cited
- Sherman v. Novak (In re Reilly), 245 B.R. 768 (2d Cir. B.A.P.) (objector must produce evidence to rebut prima facie validity of claim)
- In re W.R. Grace & Co., 346 B.R. 672 (Bankr. D. Del.) (bankruptcy courts look to applicable nonbankruptcy law to determine claim allowability)
- Vaughn v. Air Line Pilots Ass’n, Int’l, 604 F.3d 703 (2d Cir.) (plausibility standard reference)
- Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court) (pleading must state a plausible claim for relief)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Supreme Court) (plausibility standard framework)
- Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir.) (courts assume well-pleaded nonconclusory facts are true)
- Spool v. World Child Int’l Adoption Agency, 520 F.3d 178 (2d Cir.) (pleadings must create more than speculative right to relief)
- Kimber v. GMAC Mortg., LLC (In re Residential Capital, LLC), 489 B.R. 489 (Bankr. S.D.N.Y.) (pro se claimant must still provide specific factual allegations)