CREDITORS ARE NECESSARY AND INDISPENSABLE PARTIES: I think this piece identifies the correct issues in the identification of actual creditors — i.e., parties entitled to receive payment from a homeowner. Inferentially it raises the very issues that foreclosure defense lawyers have been raising for years — without knowing the identity of the real creditor, how can you connect the real creditor to the snowstorm of documents created by the banks, trustees and servicers?
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explains further why the above issues are so important:
The identification of the secured creditor for a claim (or a movant, objector, etc.) serves several important functions. First, it will (presumably) link the creditor, movant or objector to the Schedule A list of real property owned by the debtor. Second, this identification (presumably) links the creditor, movant or objector to the Schedule D list of creditors holding secured claims. Third, this identification permits the judge to determine whether he must recuse himself based on the Code of Conduct for United States Judges (requiring recusal in a variety of circumstances based on the judge’s relationship, if any, to a party seeking relief – i.e. moving party, objecting party, creditor/claimant, etc.) See In re Vargas, 396 BR 511 – Bankr. Court, CD California 2008.U.S. Bank, National Association has alleged to have been appointed as a trustee (without evidence of any kind whatsoever), but none of the beneficiaries have been included or disclosed in Proof fo Claim 2-1 or disclosed in this case at all, despite Debtors repeated objections. The beneficiaries for complex Wall Street financial engineering transactions are typically hedge funds and other large scale investors, including those managing retirements funds, such as those that Federal employees (and Federal judges) may be invested in.The trustee is only an agent for the beneficiaries, and holds only bare legal title to the (alleged) mortgages belonging to the trust. The beneficiaries are the beneficial owners of the trust assets, and are an indispensable party. See Office of the Comptroller of the Currency Interpretive Letter #1016 located on a government website here: https://www.occ.gov/static/interpretations-and-precedents/feb05/int1016.pdf. The note attached to Proof of Claim 2-1 provides the following definition: Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the “Note Holder.” The only parties entitled to payments for this type of “trust” are the beneficiaries.
Pursuant to FRCP Rule 19(a) PERSONS REQUIRED TO BE JOINED IF FEASIBLE, Debtor states that the beneficiaries are required parties, are subject to service of process, and their joinder will not deprive the court of subject matter jurisdiction (to the extent the purported creditor has a valid, legally binding and enforceable claim against Debtor or the estate). With the beneficiaries absent, the court cannot accord complete relief among existing parties. The beneficiaries (allegedly) claim an interest relating to the subject action (claim against Debtor or the estate) and are so situated that disposing of the action in the beneficiary’s absence will: (i) as a practical matter impair or impede the beneficiary’s ability to protect their interest; (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.Pursuant to FRCP Rule 19(b) WHEN JOINDER IS NOT FEASIBLE, Debtor states that to the extent the beneficiaries cannot be joined, the claim should be dismissed or stricken from the record. In equity and good conscience: (i) allowing the claim or denying the claim without determining the beneficiary’s actual pecuniary interest in the claim would prejudice that beneficiary or the existing parties (especially Debtor); (ii) rendering a judgment in the beneficiary’s absence would not be adequate; and/or (iii) the “creditor” does have another remedy if the action were dismissed (i.e. the claim stricken or disallowed) for nonjoinder, as that party could file a judicial action requiring it to prove their case by presenting affirmative claims and asking for affirmative relief (this due process requirement is sorely missing from Proof of Claim 2-1).Finally, the “creditor” has not provided the names of all the indispensable parties (beneficiaries), nor provided evidence of their existence, nor complied with FRCP Rule 19(c) which imposes on the “creditor”: “When asserting a claim for relief, a party must state: (1) the name, if known, of any person who is required to be joined if feasible but is not joined; and (2) the reasons for not joining that person.”CA. Civ. Code 1550 provides the elements of a contract in California, which includes parties capable of contracting. An alleged trustee is only a trustee if there are beneficiaries to act as an agent of. CA. Civ. Code 1558 provides that parties to a contract must not only exist, but must be identifiable. Debtor has consistently, timely, and repeatedly objected to the refusal and failure to disclose the existence of any and all beneficiaries for which U.S. Bank, National Association as a purported trustee is acting on behalf of.The Fourth, Ninth and Tenth Circuits apply an abuse of discretion standard to the district court’s determination for both necessary and indispensable parties. See Washington v. Daley, 173 F.3d 1158 (9th Cir. 1999); NATIONAL UNION FIRE v. RITE AND OF SOUTH CAROLINA, 210 F.3d 246 (4th Cir. 2000); Davis v. US, 192 F.3d 951 (10th Cir. 1999).