IN RE: MICHELIN ALCIDE, Debtor.
Bky. No. 10-15489 ELF
UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF PENNSYLVANIA
Dated: May 27, 2011
• it services a mortgage against the Property;
• the Debtor failed to pay post-petition monthly mortgage payments from August 2010 through November 2010;
• the Debtor lacks equity in the Property; and
• the Property is not necessary to an effective reorganization.
(1) he disputes that either Everbank or Everhome holds a mortgage on the Property (Debtor's Answer to Motion ¶4) (Doc. # 32); and,
(2) he asserts that under the terms of his proposed chapter 13 plan, he is not obliged to make post-petition monthly instalment payments (Debtor's Answer to Motion ¶5).3
(1) MERS, Inc. as Nominee for Everhome Mortgage Co.;8
(2) Michael J. Clark, Esquire; and
(3) Everhome Mortgage Co., Inc.
• Is a creditor's status as a proper party determined not only by principles of constitutional "standing," but also by application of doctrines of "prudential standing," such as the "real party in interest" rule set forth in Fed. R. Bankr. P. 7017 and Fed. R. Civ. P. 17?13
• May a loan "servicer" assert claims against the debtor on behalf of the mortgage holder and, if so, what evidence is necessary to establish its authority to proceed in court on behalf of the mortgage holder?14
• If a mortgage holder's chain of title with respect to the mortgage and/or note includes an assignment to or from MERS, what rights were assigned to MERS "as nominee" and did MERS have the requisite legal authority when it subsequently assigned the notes and/or mortgages to third parties?15
• To what extent, if any, is the creditor's right to relief dependent upon a demonstration of its status as the "holder" of the note or the "non-holder of the note with the right to enforce the note" consistent with Article 3 of the applicable state law version of the Uniform Commercial Code? Or, is it sufficient for the creditor to establish its status as mortgage holder in order to be a proper party before the court?16
• To what extent if any, does the limited scope of a hearing on a motion for relief from the automatic stay affect the court's analysis of any of the issues stated above?17
The District Court described the Bankruptcy Code's "party in interest" standard as "more exacting" than the constitutional injury-in-fact requirement
. . . but we think that is a misunderstanding of the Code. Persuasive authority indicates that Article III standing and standing under the Bankruptcy Code are effectively coextensive.
A party seeking constitutional standing must demonstrate an "injury in fact" that is "concrete", "distinct and palpable", and "actual or imminent." Additionally, the party must establish that the injury "fairly can be traced to the challenged action and is likely to be redressed by a favorable decision."
. . .Standing in bankruptcy cases is also governed by the terms of 11 U.S.C. § 1109(b) . . . . The United States Court of Appeals for the Seventh Circuit has described a party in interest as "anyone who has a legally protected interest that could be affected by a bankruptcy proceeding." That "party in interest" test comports with our own definition of a "party in interest" as one who "has a sufficient stake in the proceeding so as to require representation."
(1) the initiation of the stay relief motion in the bankruptcy court is within the scope of authority delegated to the servicer by its principal and
(2) the principal itself is a party in interest (i.e., its principal is a party with the right to enforce themortgage).
At the pleading stage, plaintiffs in federal court may rely on the allegations of their complaint to establish standing. Similarly, stay relief movants may initially rely upon their motion. But if a trustee or debtor objects to a stay relief motion based upon lack of standing, the movant must come forward with evidence. Additionally, if the stay relief motion itself reveals a lack of standing, movants cannot rest on the pleadings.