Tamir v. United States Trustee, 566 B.R. 278

Background

Debtor Shai Shawn Tamir filed Chapter 11 and listed mortgaged apartment buildings; HSBC and Citibank filed proofs of claim asserting secured claims.
Tamir objected, arguing (based on Maine Law Court’s decision in Bank of Am. v. Greenleaf) that each bank lacked standing to foreclose because they held mortgages only by assignment from MERS.
The Bankruptcy Court overruled Tamir’s objection and allowed the banks’ amended proofs of claim as secured, reasoning beneficial ownership of the note was sufficient for secured status.
Tamir appealed; district court reviewed legal questions de novo and factual findings for clear error.
The parties do not dispute that the banks hold the original promissory notes and that the properties are encumbered by mortgages.
No state-court foreclosure was pending, no relief-from-stay motions were filed, and the banks had not demonstrated inability to obtain proper mortgage assignments if needed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Tamir has standing to appeal the Bankruptcy Court order allowing secured claims	Tamir: order affects his reorganization and pecuniary interests, so he is a "person aggrieved"	Banks: standing not contested below but appellate review should be limited	Court: Tamir has standing because classification as secured vs unsecured materially affects Chapter 11 reorganization
Whether Greenleaf’s rule (MERS-only assignments do not confer foreclosure standing) requires disallowance of banks' claims under 11 U.S.C. § 502(b)(1)	Tamir: Greenleaf makes banks’ mortgage interests unenforceable against debtor/property, so claims must be disallowed	Banks: they hold and can enforce the notes; Greenleaf addresses foreclosure standing, not enforceability of note or secured status in bankruptcy	Court: Greenleaf does not bar allowance of secured claims in bankruptcy here; enforceability of the note exists and secured status determined under § 506
Whether possession/holding of the note alone suffices to establish a secured claim in Chapter 11 when mortgage assignment chain involves MERS	Tamir: mortgage must be properly assigned to foreclose and thus to constitute a secured claim	Banks: UCC and equity principles mean the security follows the debt; noteholder’s beneficial ownership protects mortgage interest	Court: For bankruptcy secured-claim purposes, the mortgage follows the note; noteholder beneficial ownership is sufficient to establish secured status absent a present foreclosure or loss of enforceability
Whether a present inquiry into enforceability of mortgage is required to determine secured status under § 506	Tamir: present enforceability (standing to foreclose) is relevant to secured status	Banks: present enforceability not necessary; § 506 looks to existence/value of lien, not immediate ability to foreclose	Court: Inquiry into present enforceability is not necessary to recognize a secured claim; § 506 governs secured status and the banks’ liens exist for present purposes

Key Cases Cited

Bank of Am., N.A. v. Greenleaf, 96 A.3d 700 (Me. 2014) (Maine Law Court: MERS-as-nominee lacked authority under the mortgage to assign, so an assignee relying solely on MERS assignment lacked foreclosure standing)
Travelers Cas. & Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549 U.S. 443 (2007) (federal bankruptcy claims generally look to state law for substance of rights to payment)
F.C.C. v. NextWave Pers. Commc’ns Inc., 537 U.S. 293 (2003) (plain meaning of a right to payment as an enforceable obligation)
RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639 (2012) (illustrates protections and remedies of secured creditors in Chapter 11 cramdown context)
Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir. 2013) (mortgagor has standing to challenge mortgage assignment as invalid outside bankruptcy)
Davis v. Cox (In re Cox), 356 F.3d 76 (1st Cir. 2004) (standard of review: factual findings for clear error, legal conclusions de novo)