Veal v. American Home Mortgage Servicing, Inc. (In Re Veal)
450 B.R. 897
| 9th Cir. BAP | 2011Background
- Veals executed a promissory note to GSF in Arizona and a mortgage on Springfield, Illinois property to secure it.
- Debtors filed Chapter 13; AHMSI was listed as secured creditor with a lien on the property and plans not yet confirmed.
- AHMSI filed a proof of secured claim on July 18, 2009, asserting Wells Fargo as servicing agent and attaching the Note, Mortgage, assignments, and a Dorchuck Letter.
- Veals objected Nov. 5, 2009, contending AHMSI/Wells Fargo lacked standing; Wells Fargo moved for relief from stay Oct. 21, 2009; subsequent post-petition assignments were not authenticated.
- A joint hearing on Feb. 3, 2010 led the bankruptcy court to grant stay relief, finding Wells Fargo had a colorable claim and that AHMSI’s standing was not addressed; the court did not make AHMSI standing findings.
- The panel reversed/ remanded, holding standing must be proved as a real party in interest under UCC analysis and that Illinois law generally treats the note secured by a mortgage as inseparable, with Arizona law governing the Note for enforcement; remand to determine AHMSI’s status and to possibly an evidentiary hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to seek relief from automatic stay | Veals contended Wells Fargo lacked standing. | Wells Fargo asserted a colorable claim evidenced by documents. | Wells Fargo lacks standing; stay-relief order reversed. |
| Standing to file a proof of claim by AHMSI | Veals argued AHMSI failed to prove it was a person entitled to enforce the Note or an agent of such a person. | AHMSI claimed it was Wells Fargo’s servicing agent with entitlement. | AHMSI’s standing not established; claim objection order vacated and remanded for findings. |
| Application of UCC to identify who is entitled to enforce | Real party in interest must be determined under Article 3 and 9; possessing the note is not dispositive. | The court should treat the assignments as showing rights to enforce. | Real party in interest determined under UCC rules; requires showing person entitled to enforce the note or ownership interest. |
Key Cases Cited
- Katchen v. Landy, 382 U.S. 323 (1966) (bankruptcy claim objections and effects of res judicata in bankruptcy)
- U-Haul Int'l, Inc. v. Jartran, Inc., 793 F.2d 1038 (9th Cir. 1986) (real party in interest and standing principles in bankruptcy)
- Campbell v. Verizon Wireless (In re Campbell), 336 B.R. 430 (9th Cir. BAP 2005) (evidentiary weight of debtor schedules; standing not resolved by schedules)
- In re Weisband, 427 B.R. 13 (Bankr. D. Ariz. 2010) (analysis of standing where servicer/agent status is contested)