Who Must Prove Standing

Like any other allegation or assertion, it is the party making the allegation or assertion who must prove by a preponderance of the evidence that it is true. Moral of the story — if you knock just one leg off the stool the entire thing collapses.

Bigger moral: YES you can actually win and you ought to win.

Scott Staffne who publishes an endless supply of well researched and well reasoned papers just recently sent me the following:

I shepardised Bank of New York Mellon v. Lane, 2018 Bankr. Lexis 2938 (9th Cir. B.A.P.

2018) and found a case decided last month which holds that if the claimant does not prove standing by a preponderance of the evidence he cannot enforce his claim.
Here is the relevant language from the case. I am also sending you a full copy of the case through Lexis.

The debtors herein (the “Debtors”) filed an objection, dated February 13, 2018 (the “Claim Objection”) under 11 U.S.C. §§ 502(b)(1) and 506(d) and Fed. R. Bankr. P. 3007, to Claim No. 16-1 filed in this case on behalf of U.S. Bank National Association as trustee on behalf of the holders of CSMC Mortgage-Backed Pass-Through Certificates, Series 2007-1 (“U.S. Bank”). The Claim Objection accurately states that in a prior case under the Bankruptcy Code of Debtor Jack Pinnock (Case No. 11-22011 (RDD)), U.S. Bank filed a motion for relief from the automatic stay under 11 U.S.C. § 362(a) that the Court denied by an order dated December 10, 2012 based on U.S. Bank’s failure to produce any evidence (a) that it was the holder of the underlying note or (b) that the underlying mortgage [*2]  on the Debtor’s property in the Bronx, New York (the “Property”) had been properly recorded. See Exhibit B to the Claim Objection. The lift-stay motion attached a note issued by the Debtors to First Meridian Mortgage, A Limited Liability Company (“First Meridian”) that contained no subsequent indorsements (the “Note”), and, notwithstanding being given several months to produce evidence of its standing to enforce the Note, U.S. Bank failed to do so.

In the Debtors’ present case under the Bankruptcy Code, U.S. Bank’s Proof of Claim No. 16-1, dated February 20, 2017, attached the Note along with an undated document titled “Allonge to Promissory Note” purporting to be indorsed in blank by First Meridian (the “Allonge”). Proof of Claim No. 16-1 also attached a Corporate Assignment of Mortgage, dated July 9, 2013, pursuant to which Mortgage Electronic Registration Systems, Inc. (“MERS”), purportedly “as nominee for First Meridian Mortgage Its Successors And Assigns,” assigned the mortgage at issue, “together with all moneys now owing or that may hereafter become due in respect thereof,” to U.S. Bank.

The Claim Objection contends that the Allonge is not a proper allonge under NY U.C.C. § 3-202(2)because it [*3]  was not “firmly affixed” to the Note as required by such section and as evidenced by the fact that it was not attached to the prior lift-stay motion. The Claim Objection further states that the Allonge and the purported assignment of the mortgage were prepared by Richmond Monroe Group, a company whose website states that it “prepares allonge[s]” among other documents for lenders and has a hyperlink to its services for “preparation of missing/intervening assignments,” see Exhibit C to the Claim Objection, and therefore also contends that the Allonge and assignment were fraudulent. Further, the Claim Objection contends that MERS had no authority to assign the underlying debt to U.S. Bank.

Based on these allegations, the Debtors contend that U.S. Bank lacks the ability to enforce the Note and, accordingly, the underlying mortgage under New York law and, therefore, that Claim No. 16-1 should be disallowed and expunged. The Claim Objection further seeks an order declaring the lien securing the Note void pursuant to 11 U.S.C. § 506(d), including as recorded on behalf of the original lender by MERS.

After due notice, the Court held the initial hearing on the [*4]  Claim Objection on May 23, 2018. Although U.S. Bank had not filed a response to the Claim Objection, notwithstanding the passage of over three months since service, at the initial hearing its counsel requested more time to do so. The Court therefore set June 4, 2018 as the objection deadline, adjourned the hearing on the Claim Objection, and informed counsel for U.S. Bank that by the deadline it would need to provide extrinsic evidence supporting its contention that it was the holder or transferee entitled to enforce the Note and, therefore, the mortgage under New York law.

U.S. Bank never filed a response to the Claim Objection. Instead, at the adjourned hearing on the Claim Objection, which was ultimately held on September 26, 2018, counsel for U.S. Bank only (a) handed the Court a separate page that appeared to be the original signed Allonge but which was not firmly attached to the Note, which counsel also handed to the Court, and (b) asserted that U.S. Bank had physical possession of the Note. Counsel made no showing, however, as to how, when or from whom U.S. Bank obtained the Note. Nor did U.S. Bank demonstrate MERS’s authority to act on First Meridian’s behalf with respect to [*5]  any rights under the Note, as opposed to the mortgage. Nevertheless, counsel for U.S. Bank contended that U.S. Bank could enforce the Note and mortgage because it possessed the Note.

This Memorandum of Decision states the Court’s reasons for concluding that U.S. Bank is not entitled to enforce the Note, and therefore the mortgage, under New York law. It also states why the Debtors’ request under 11 U.S.C. § 506(d) is too broad and that the proper relief under that section is to declare U.S. Bank’s lien on the Property void but not to declare void the original mortgage on the Property in the hands of any party other than U.S. Bank, its successors and assigns.

JurisdictionThe Court has jurisdiction over the Claim Objection pursuant to 28 U.S.C. §§ 157(a)-(b) and 1334(b), as a core proceeding under 28 U.S.C. § 157(b)(2)(B) that the Court may determine by a final order under the United States Constitution because it involves the core bankruptcy function of the allowance or disallowance of claims and liens against the Debtors’ estate.

10 Responses

  1. 1. Is anyone here located in a deed-of-trust state?

    2. Also, is there anyone here who is still fighting, has plead lack of standing, and who has not yet had the bankster get an award of summary judgment ?

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  2. STILL FIGHTING…two reasons. first, the attys bid on a package of foreclosures for a fixed price. If things get out of hand billable hour-wise, they can pitch back to the plaintiff. second, the note was sold to another “investor” hiding behind the curtain. this investor likes to use attys that he prefers and has used in the past.

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  3. This requires judges who are not bought off by the racketeering banks with new mortgages satisfied by MERS and reduced balances provided by…..(insert name of Plaintiff Bank here)

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  4. Why do the Plaintiffs (banks) substitute counsel so often?

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  5. @ Iam Lazarus

    The content in the LL post is from Pinnock, including Linda Tirelli, esq., who discovered WELLS’ foreclosure manual.

    Here’s the link to the post’s reference in the October 31, 2018, opinion:

    http://www.nysb.uscourts.gov/sites/default/files/opinions/270262_35_opinion.pdf

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  6. Lack of standing is the main bogey-man here. On almost every case, there is lack of standing.

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  7. We lost our house to an entity that never proved standing and after we won on appeal in california where appellate court reversed and remanded tlwith specific direction to vacate judgement based on bank not having a substitution of trustee, the new judge in case granted bank summary judgemement on remand when bank suddenly produced a substitution of trustee. The.bank has never shown any document or assignment of transfer indicating they have standing.
    We had a 2nd appeal but no lawyer and it was recently dismissed because opening brief late.

    STANDING IS EASY TO PROVE IF NO PROOF REQUIRED,
    Anyone interested in helping us, we have a case that is void on the face plus provable hbor violations, will pay for consult to show you if in turn take payments and have the gutz to fight the banks.
    Thank you

    Liked by 2 people

  8. how is this a 9th Cir. case applying NY law?

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  9. So, what is the “Case Number/ Case Name” that this case refers to in the 9th Circuit BAP? Without [t]hat information, the article above may be correct information but is practically useless?!?

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