469 B.R. 915
10th Cir. BAP2012Background
- Debtor Clarence Thomas executed a $253,000 promissory note and secured his residence with a mortgage in favor of Freedom, with MERS as nominee.
- After partial payments, Freedom endorsed the Note in blank and Chase Home Finance, LLC acquired it; Chase foreclosed in state court with a 2009 judgment.
- Debtor filed a prior Chapter 13 case in 2009; that case stayed foreclosure, was dismissed in 2010, and Chase later transferred the Note/mortgage to Appellee Fannie Mae (Appellee) with an assignment dated August 21, 2010 (recorded September 13, 2010) naming MERS as assignor, not Chase.
- In November 2010, Debtor filed the current Chapter 13 case; Debtor claimed theProperty exempt as Oklahoma homestead; Appellee filed a proof of claim on February 25, 2011.
- On May 17, 2011 Debtor objected to the POC and filed an adversary proceeding; on May 18, 2011 Appellee filed an Application to terminate the automatic stay under § 362(c)(3) and the court issued an Order One finding the stay terminated by operation of law on December 22, 2010, based in part on representations regarding possession of the original Note.
- At a June 28, 2011 hearing, the court ruled in favor of Appellee on the stay issue, Debtor appealed (timely but initially deemed premature), and the case proceeded to a final order on October 6, 2011; the appellate panel remanded for lack of standing analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bankruptcy court properly assessed standing | Thomas argues Appellee had no standing to seek relief or file the POC. | Appellee contends it has a colorable security-interest claim and need not prove full perfection at this stage. | Standing must be established; court reverses and remands for standing determination. |
| Whether Appellee had standing to file the Application for stay relief | Thomas asserts lack of standing to file or obtain relief from stay. | Appellee bears burden to show a colorable, enforceable security interest under state law. | Appellee failed to prove standing; remand required. |
| Whether the automatic stay terminated as to the Property | Thomas argues the stay may still bind property of the estate. | Appellee obtained termination under § 362(c)(3) supposedly based on prior proceedings. | The issue is not resolved on this appeal; remand to determine standing controls. |
Key Cases Cited
- In re Miller, 666 F.3d 1255 (10th Cir. 2012) (standing requires possession of the original bearer note to prove a claim against debtor)
- In re Utah Aircraft Alliance, 342 B.R. 327 (10th Cir. BAP 2006) (entitlement to enforce a note essential to standing to seek foreclosure)
- In re Lippold, 457 B.R. 293 (Bankr.S.D.N.Y.2011) (foreclosure documentation issues; standing concerns in mortgage cases)
- In re Maisel, 378 B.R. 19 (Bankr. D. Mass.2007) (court duty to protect debtors from lack of compliance; standing context)