Ismael Almeida

1
UNITED STATES BANKRUPTCY COURT
FOR THE
DISTRICT OF MASSACHUSETTS
~~~~~~~~~~~~~~~~~~~~~~~~~~
In re
ISMAEL ALMEIDA, 	Chapter 7
Debtor 	Case No. 08-17047-JNF
~~~~~~~~~~~~~~~~~~~~~~~~~~
MEMORANDUM
I. INTRODUCTION
The matter before the Court is the Motion filed by Deutsche Bank National Trust
Company, as Trustee, in Trust for the Registered Holders of Argent Securities Inc., Asset
Backed Pass-Through Certificates, Series 2006-W1 and/or its Successors and Assigns
(“Deutsche Bank”) for Relief from the Automatic Stay (the “Motion”), through which it
seeks authority to foreclose a mortgage on property located at 73 Savin Street, Roxbury,
Massachusetts (the “property”), which Ismael Almeida (the “Debtor”) executed in favor
of Argent Mortgage Company, LLC. The holder of a second mortgage on the property,
Jacques Dessin (“Dessin”), filed an Objection.
The Court heard the Motion and the Objection on June 16, 2009 and took the Motion
for Relief from Stay under advisement. The issue presented is whether Deutsche Bank
National has established a colorable claim to property of the estate. See Grella v. Salem Five
Cent Sav. Bank, 42 F.3d 26, 33 (1st Cir. 1994). More specifically, in view of the absence of
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objection by the Chapter 7 Trustee and the Debtor, as well as the Debtor’s stated intention
to surrender the property, coupled with payment defaults under the terms of the note and
mortgage, which have persisted for approximately seventeen months, as well as the lack
of equity in the property and the absence of any prospect of a reorganization, the issue is
whether Dessin, by virtue of his challenge to Deutsche Bank’s standing, has overcome its
colorable claim to seek relief from the automatic stay imposed by 11 U.S.C. § 362(a).
II. FACTS
The Debtor filed a voluntary Chapter 13 petition on September 19, 2008, listing his
address as 325 Freeport St., Boston, Massachusetts. He filed his Schedules of Assets and
Liabilities with his petition together with his Statement of Financial Affairs and other
required documents. See 11 U.S.C. § 521(a). On Schedule A - Real Property, the Debtor
listed the property, indicating that it is a four family home, with a current value of
$450,000, subject to the secured claims of Citi Residential Lending in the sum of $573,795
and Dessin in the sum of $40,301.60.
The Debtor also filed a Chapter 13 plan with his petition. He later moved to amend
his Chapter 13 plan. He did not provide for the secured claim of Citi Residential Lending
(or Deutsche Bank) in either plan. In his amended Chapter 13 plan, the Debtor listed total
unsecured claims in the sum of $196,767.60, including an unsecured deficiency claim for
Citi Residential Lending in the sum of $123,795 and an unsecured claim for Dessin in the
sum of $40,301.60.
On March 12, 2009, the Court confirmed the Debtor’s Amended Plan, which
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provided for monthly payments of $3,432 for 60 months and a 94% dividend to the holders
of unsecured claims. 	Approximately one month after obtaining confirmation of his
Chapter 13 plan, however, the Debtor moved to convert his Chapter 13 case to a case under
Chapter 7. Dessin objected and also filed a Motion to Dismiss the Debtor’s Chapter 13 case.
Noting that he was in the process of foreclosing his second mortgage, Dessin argued that
the Debtor’s failure to make more than one plan payment while in Chapter 13 “strongly
indicates bad faith on the part of the debtor,” citing, inter alia, Marrama v. Citizens Bank
of Massachusetts, 549 U.S. 365 (2007).
The Debtor responded to Dessin’s pleadings, stating that it was his intention to
surrender the property and adding that he desired that “the foreclosure would proceed
expeditiously in order to determine the actual unsecured claims arising from anticipated
deficiency [sic] for the purpose of identifying the need, if any, to modify the Chapter 13
Plan.” 	Additionally, he explained that an unanticipated illness of a family member
required him to dramatically reduce his work hours to provide care, compromising the
feasibility of his plan.
On April 20, 2009, the Court granted the Debtor’s Motion to Convert, overruled
Dessin’s Limited Objection, and denied Dessin’s Motion to Dismiss. 	The Debtor
subsequently filed his Statement of Intention, indicating that he intended to surrender the
property.
On April 24, 2009, following the conversion of the Debtor’s case to one under
Chapter 7, Deutsche Bank served its Motion for Relief from the Automatic Stay on the
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Chapter 7 trustee. On May 7, 2009, the Court scheduled a hearing for June 16, 2009 on
Deutsche Bank’s Motion for Relief from the Automatic Stay. Deutsche Bank filed a
certificate of service advising parties in interest, including the Chapter 7 trustee and Dessin,
of the date and time of the hearing. Neither the Debtor nor the Chapter 7 trustee filed an
objection to the motion.
In anticipation of the hearing, Deutsche Bank filed the following documents:
1) a Supplemental Memorandum of Law in Support of its Motion,
2) the Declaration of Ronaldo Reyes, a Vice President of Deutsche Bank,
attached to which were:
a) portions of the Pooling and Service Agreement (“PSA”),
dated January 1, 2006 between Argent Securities, Inc., as
Depositor, Ameriquest Mortgage Company as Master Servicer,
and Deutsche Bank National Trust Company as Trustee and
Custodian of the Debtor’s loan,
b) a copy of the original Adjustable Rate Note, executed by the
Debtor in favor of Argent Mortgage Company, LLC, dated
December 1, 2005, endorsed in blank 	by Sam Marzouk,
President and Gregory F. Hanson, C.F.O. of Argent Mortgage
Company, LLC,
c) an Assignment of Mortgage in blank, executed on behalf of
Argent Mortgage Co., LLC by “Rayon Matthews - Agent,”and
d) Schedule I to the PSA , a redacted Mortgage Loan Schedule,
3) the Declaration of Denise Apicella, an Assistant Secretary at ACC Capital
Holdings, Inc., an Assistant Secretary for Argent Mortgage Company, LLC,
and one of the custodians of the records of Argent Mortgage Company, LLC
attached to which were:
a) a copy of the Adjustable Rate Note endorsed in blank at an
unspecified time by Sam Marzouk, President and Gregory F.
Hanson, C.F.O. of Argent Mortgage Company, LLC,
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b) a copy of the Mortgage executed by the Debtor on December
1, 2005, which was recorded with the Suffolk County Registry
of Deeds,
c) a copy of the Assignment of the Mortgage in blank,
d) a copy of a Limited Power of Attorney granted by Argent
Mortgage Company L.L.C. to Citi Residential Lending Inc. as
Servicer, dated October 24, 2007, and
e) 	an 	undated 	“Corporation 	Assignment 	of 	Deed 	of
Trust/Mortgage” to Deutsche Bank National Trust Company,
as Trustee, in trust for the registered holders of Argent
Securities Inc., Asset-Backed Pass-Through Certificates, Series
2006-1, executed by Tamara Price, Vice President on behalf of
Argent Mortgage Company, LLC “By its Attorney In-Fact, Citi
Residential Lending, Inc.,” which assignment was notarized on
February 26, 2008 and was to be effective February 14, 2008,
and
4) the Declaration of Gregory N. Blase , an attorney for the movant, attached
to which were:
a) the Declaration of Diane E. Tiberend, Senior Vice President,
General Counsel and Secretary of ACC Capital Holdings
Corporation, 	the 	parent 	company 	of 	Argent 	Mortgage
Company, LLC, Ameriquest Mortgage Company and AMC
Mortgage Services, Inc., dated December 5, 2008, together with
exhibits, namely
i) 	“[a] 	form 	of 	a 	Mortgage 	Loan 	Purchase
Agreement (“MLPA”) between Ameriquest, as
Seller, and ARSI [Argent Securities Inc.], as
Purchaser, and
ii) a copy of a Limited Power of Attorney
granted by Argent Mortgage Company L.L.C. to
Citi Residential Lending Inc. as Servicer, dated
December 5, 2008.
Ronaldo Reyes declared under oath that he had personal knowledge of Deutsche
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Bank’s procedures and computer systems relating to the storage of certain documents. He
attested to the following:
In its capacity as Trustee and Custodian under the PSA, and for the benefit
of the certificate holders, Deutsche Bank holds the following:
(a) An original Adjustable Rate Note . . .
(b) An original Mortgage . . .
(c) An assignment in blank . . .
(emphasis supplied). 	He further declared that “Deutsche Bank has held the Note,
Mortgage and Assignment in Blank since approximately January 2006 when Argent
Mortgage delivered same to be held by Deutsche Bank under the PSA.”
Denise Apicella declared under oath the following:
In or around February 2006, Argent Mortgage delivered the Note, Mortgage,
Assignment in Blank and other documents to the Custodian for the Argent
Securities Inc., Asset Backed Pass Through Certificates, Series 2006-W1
(“Securitization Trust”) under the terms of a Pooling and Servicing
Agreement, dated as of January 1, 2006 (“PSA”). 	The Custodian for the
Securitization Trust was Deutsche Bank National Trust Company. . . . In
addition to being the Custodian under the PSA, Deutsche Bank acts as the
Trustee.
Finally, Diane E. Tiberend, attested to the following:
Argent [Mortgage Company, LLC] functioned as a wholesale loan originator.
. . . Prior to 2003, Argent functioned as a division of Ameriquest [Mortgage
Company]. In 2003, Argent was separately incorporated and, to formalize
the preexisting informal arrangement between Argent and Ameriquest, a
written Mortgage Loan Purchase Agreement dated January 2, 2003 was
executed by and between Argent, as Seller, and Ameriquest, as Purchaser. .
. . In 2005, ACH [ACC Capital Holdings Corporation (“ACH”), the parent
company of Argent Mortgage Company, LLC and Ameriquest] was
established as a holding company, and Argent, Ameriquest, and AMS [AMC
Mortgage Services, Inc.] all became affiliated subsidiaries of ACH at that
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time.
***
It has been brought to my attention that, in a separate matter pending before
the United States Bankruptcy Court for the District of Massachusetts, the
Limited Power of Attorney that Argent conferred on Citi was construed to
limit Citi’s authority to execute and record, on behalf of Argent, Assignments
of Mortgages or Deeds of Trust originally granted to and naming Argent as
the Lender and originator of such mortgage loans. Argent has provided a
new Limited Power of Attorney to Citi, expressly ratifying all past
Assignments of Mortgages or Deeds of Trust executed and recorded by Citi
or Argent’s behalf.
In contrast to the declarations and exhibits submitted by Deutsche Bank, Dessin
produced no evidence in support of his Limited Objection.
In summary, the following chronology pertains to the chain of title to the Mortgage:
DATE 	DOCUMENT 	PROVISIONS
Dec. 1, 2005 	Adjustable Rate Note 	Executed 	by 	Ismael 	L. Almeida in favor of
Argent Mortgage Company, LLC
Endorsed in blank:
Pay to the Order of
Without Recourse
Argent Mortgage Company, LLC
By /s/Sam Marzouk, President
By /s/ Gregory F. Hanson, C.F.O.
Dec. 1, 2005 	Mortgage
Dec. 2, 2005 	Mortgage Assignment 	Assignment of Mortgage
Argent 	Mortgage, 	holder 	of 	a 	real 	estate
mortgage from: Ismael L. Almeida, Individually
. . . assigns said mortgage and the Note and
c l a i m 	s e c u r e d 	t h e r e b y 	t o :
__________________________________________
‘LEGAL DESCRIPTION ATTACHED HERETO
AND MADE A PART HEREOF’
Executed and delivered on 12/02/2005
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Section 2.01 of the PSA further provides the following:1
In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, the Trustee the following documents
or instruments with respect to each Mortgage Loan so transferred and
assigned, and the Depositor shall deliver or cause to be delivered to the
Custodian the following documents or instruments (a “Mortgage File”).
(i) the original Mortgage Note, endorsed in blank, without
recourse, . . .;
(ii) the original Mortgage, with evidence of recording
thereon . . .;
(iii) an original Assignment in blank, without recourse;
(iv) the original recorded intervening Assignment or
Assignments, showing a complete chain of assignment from
the originator to the person assigning the Mortgage to the
Trustee as contemplated by the immediately preceding
clause (iii) or the original unrecorded intervening
Assignments;
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
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Argent Mortgage Co., LLC
By: /s/ Rayon Matthews - Agent
Feb. 22, 2006 PSA 	The 	Depositor 	[Argent Securities, Inc.],
concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and
otherwise 	convey 	to 	the 	Trustee 	without
recourse for the benefit of the Certificate holders
all right, title and interest of the Depositor,
including any security interest therein for the
benefit of the Depositor, in and to the Mortgage
Loans identified on the Mortgage Loan Schedule
. . . The Depositor herewith delivers to the
Trustee an executed copy of the Mortgage Loan
Purchase Agreement . . . . 1
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(vi) the original lender’s title insurance policy . . .
If any of the documents referred to in Section 2.01(ii), (iii) or (iv) above has
as of the Closing Date been submitted for recording but either (x) has not
been returned from the applicable public recording office or (y) has been
lost or such public recording office has retained the original of such
document, the obligations of the Depositor to deliver such documents
shall be deemed to be satisfied upon (1) delivery to the Trustee, or to the
appropriate Custodian on behalf of the Trustee, of a copy of each such
document certified by the Originator in the case of (x) above or the
applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if
such copy is certified by the Originator, delivery to the Trustee, or to the
appropriate Custodian on behalf of the Trustee, promptly upon receipt
thereof of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original. . . .
9
Oct. 24, 2007 Limited Power of Attorney 	That Argent Mortgage Company L.L.C.
. . . hath made and 	constituted and
appointed, and does by these present
make, 	constitute 	and 	appoint 	Citi
Residential Lending Inc., (“Servicer”) . . .
its true and lawful Attorney-in-Fact, with
full power and authority to sign, execute,
acknowledge, deliver, file for record, and
record any instrument on its behalf and to
perform such other act or acts as may be
customarily 	and reasonably 	necessary
and 	appropriate 	to 	effectuate 	the
following 	enumerated 	transactions 	in
respect of any of the mortgages or deeds
of trust . . . and promissory notes secured
thereby . . . .
The Appointment shall apply only to the
following enumerated transactions and
nothing herein or in the Agreements shall
be construed to the contrary: . . . .
Feb. 26, 2008 Assignment 	Corporation Assignment of Deed of Trust
Mortgage
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The Assignment was notarized on February 26, 2008.2
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FOR 	VALUE 	RECEIVED, 	Argent
Mortgage 	Company, 	LLC, 	THE
UNDERSIGNED 	HEREBY 	GRANTS,
ASSIGNS AND TRANSFERS* TO:
Deutsche 	Bank 	National 	Trust
Company, as Trustee, in trust for
the registered holders of Argent
Securities Inc., Asset-Backed Pass-
Through Certificates, Series 2006-
W1 . . .
ALL BENEFICIAL INTEREST UNDER
THAT CERTAIN MORTGAGE DATED
December 1, 2005 EXECUTED BY : Ismael
L. Almeida . . .
*The effective date of this assignment is
February 14, 2008
DATED: 	________ 	Argent 	Mortgage
Company, LLC
By its Attorney In-Fact, Citi Residential
Lending, Inc.
BY: /s/ Tamara Price, Vice President 2
Dec. 5, 2008 	Limited Power of Attorney 	Same language as above, except as set
forth below
The Limited Powers of Attorney are identical in all material respects, except for
section 8(f) and the first paragraph of section 11. 	The Limited Powers of Attorney
permitted Citi Residential Lending Inc. to perform eleven separate actions with respect to
mortgage loans. The actions enumerated in paragraph 8 are the only ones pertinent to the
instant dispute. The following table sets forth a comparison of the relevant language with
emphasis added to the December 5, 2008 Limited Power of Attorney to highlight the
difference.
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Oct. 24, 2007 Limited Power of Attorney
The Appointment shall apply only to the
following enumerated transactions and
nothing herein or in the Agreements shall
be construed to the contrary: . . .
8. With respect to a Mortgage or Deed of
Trust, the foreclosure, the taking of a
deed in lieu of foreclosure, or the
completion of judicial or non-judicial
foreclosure or termination, cancellation
or rescission of any such foreclosure,
including, without limitation, any and all
of the following acts:
a. the substitution of Trustee or
Beneficiary(s) serving under a Deed of
Trust, in accordance with state law and
the Deed of Trust;
b. the preparation and issuance of
statements of breach or non-performance;
c. the preparation and filing of notices of
default and/or notices of sale;
d. the cancellation/rescission of notices
of default and/or notices of sale;
e. the taking of deed in lieu of
foreclosure; and
f. the preparation and execution of such
other documents and performance of
such other actions as may be necessary
under the terms of the Mortgage, Deed of
Trust or state law to expeditiously
complete said transactions in paragraph
8.a through 8.e above.
Dec. 5, 2008 Limited Power of Attorney
The Appointment shall apply only to the
following enumerated transactions and
nothing herein or in the Agreements shall
be construed to the contrary: . . .
8. With respect to a Mortgage or Deed of
Trust, the foreclosure, the taking of a
deed in lieu of foreclosure, or the
completion of judicial or non-judicial
foreclosure or termination, cancellation
or rescission of any such foreclosure,
including, without limitation, any and all
of the following acts:
a. the substitution of Trustee or
Beneficiary(s) serving under a Deed of
Trust, in accordance with state law and
the Deed of Trust;
b. the preparation and issuance of
statements of breach or non-performance;
c. the preparation and filing of notices of
default and/or notices of sale;
d. the cancellation/rescission of notices
of default and/or notices of sale;
e. the taking of deed in lieu of
foreclosure; and
f. the preparation and execution of such
other documents and performance of
such other actions as may be necessary
under the terms of the Mortgage, Deed of
Trust or state law to expeditiously
complete said transactions in paragraph
8, inclusive of paragraphs 8.a through 8.e
above, including, without limitation,
executing assignments of mortgage,
conducting foreclosure proceedings, filing
proofs of claim and seeking relief from the
automatic stay in bankruptcy, obtaining
deficiency judgments, and taking any and all
acts necessary or appropriate to collect on
Mortgage Notes or enforce and realize upon
Mortgages and Deeds of Trust.
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Moreover, Argent Mortgage Company, LLC, through the December 5, 2008 Limited
Power of Attorney, expressly ratified “any and all actions heretofore taken by Servicer
within the scope of the power or powers granted by or under this Limited Power of
Attorney from and after September 1, 2007.”
III. DISCUSSION
There is no dispute as to the value of the Debtor’s property and that it is
unnecessary to an effective reorganization (i.e., that “the property is essential for an
effective reorganization that is in prospect”). See United Sav. Ass’n of Texas v. Timbers of
Inwood Forest Assocs., Ltd., 484 U.S. 364, 376 (1988). Moreover, there is no dispute that
“cause” exists for relief from the automatic stay in view of the Debtor’s history of payment
defaults. The only issue raised by Dessin involves Deutsche Bank’s standing to seek relief
from the automatic stay.
In In re Hayes, 393 B.R. 259, 266-67 (Bankr. D. Mass. 2008), this Court stated:
Standing is a “threshold question in every federal case, determining the
power of the court to entertain the suit.” Warth v. Seldin, 422 U.S. 490, 95
S.Ct. 2197, 45 L.Ed.2d 343 (1975). Hence, “a defect in standing cannot be
waived; it must be raised, either by the parties or by the court, whenever it
becomes apparent.” U.S. v. AVX Corp., 962 F.2d 108, 116 n. 7 (1st Cir.1992).
The inquiry into standing “involves both constitutional limitations on
federal-court jurisdiction and prudential limitations on its exercise.” Warth,
422 U.S. at 498, 95 S.Ct. 2197, 45 L.Ed.2d 343. “In its constitutional dimension,
standing imports justiciability: whether the plaintiff has made out a ‘case or
controversy’ between himself and the defendant within the meaning of Art.
III.” Id. Apart from this minimum constitutional mandate, the Supreme
Court recognizes other limits “. . . on the class of persons who may invoke
the courts’ decisional remedial powers.” Id. at 499, 422 U.S. 490, 95 S.Ct. 2197,
45 L.Ed.2d 343. These prudential limitations are self-imposed rules of judicial
restraint:
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These 	considerations, 	which 	militate 	against 	standing,
principally concern whether the litigant (1) asserts the rights
and interests of a third party and not his or her own, (2)
presents a claim arguably falling outside the zone of interests
protected by the specific law invoked, or (3) advances abstract
questions of wide public significance essentially amounting to
generalized grievances more appropriately addressed to the
representative branches.
In re Hayes, 393 B.R. at 266-67 (citing In re Newcare Health Corp., 244 B.R. 167 (B.A.P. 1st
Cir. 2000), and In re Shamus Holdings, LLC, No. 08-1030-JNF, 2008 WL 3191315 (Bankr. D.
Mass. Aug. 6, 2008)).
Deutsche Bank contends that it is the actual holder of the Mortgage, whether as a
result of the Assignment in Blank by Argent Mortgage and delivery of the Mortgage to
Deutsche Bank in 2006 or the Assignments of Mortgage executed by Citi Residential
pursuant to the Limited Powers of Attorney. It added:
In short, the entity that originated the Almeida Loan, Argent Mortgage,
transferred all of its rights to the Loan to Deutsche Bank, thereby making
Deutsche Bank, as Trustee the current holder of the Mortgage and the proper
entity to seek relief from the automatic stay.
Dessin argues that Deutsche Bank has failed to establish that it is the “lawful owner”
of the Note and Mortgage. He intimates that Deutsche Bank did not establish that the Note
was properly negotiated in accordance with Article 3 of the Uniform Commercial Code,
rejecting the declaration of Apicella and suggesting that Deutsche Bank should have
submitted the affidavits of Sam Marzouk and Gregory Hanson, who endorsed the Note in
blank. Dessin suggests that the note was endorsed after Deutsche Bank filed its proof of
claim on January 7, 2009 because the copy of the note attached to the proof of claim had no
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endorsement.
With respect to the Assignment of the Mortgage, Dessin maintains that in order for
the Almeida loan to be part of the mortgage pool governed by the PSA, “it must first be
owned by the Depositor, Argent [Securities, Inc.], by acquisition from the originator,
whomever that may be.” He further maintains that the PSA required the originator [Argent
Mortgage Company, LLC] to assign the mortgage to the Depositor [Argent Securities, Inc.
or “ARSI”] and then for the Depositor to assign the Mortgage to the Trustee, rejecting the
assertion made by Deutsche Bank that Argent Securities, Inc. caused the Mortgage to
delivered to Deutsche Bank. See the language utilized in the PSA at note 1 supra. Rejecting
Deutsche Bank’s reliance on the existing sequence, namely the direct assignment by Argent
Mortgage Company, LLC to Deutsche Bank, he states that “[t]here was no proof of that fact
[the assignment of the Mortgage to Argent Securities, Inc.] whatsoever,” and in addition
to that
[t]o the extent that the Reyes affidavit or the Apicella declaration purport to
prove it, the effort fails because they are not officers of Argent Securities and
their testimony is inadmissible hearsay. In fact, there is no affidavit from any
officer of Argent Securities, or any proof that Argent Securities ever had
possession of the note and mortgage.
Recognizing Deutsche Bank’s representation that it has had possession of the Note and
Mortgage since February 2006, as well as the existence of the February 2008 of Assignment
of Mortgage by Argent Mortgage Company, LLC, through its Attorney in Fact, Citi
Residential Lending, Inc., to Deutsche Bank executed by Tamara Price pursuant to the
Limited Power of Attorney notarized on February 26, 2008, Dessin states that “mere
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This Court notes that no appeal has been filed with respect to the decision3
granting the Motion for Summary Judgment filed by Deutsche Bank with respect to the
proof of claim, which decision overruled the debtor’s objection to the claim.
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possession of a mortgage does not grant the possessor any rights under the mortgage, such
as the right to foreclose it.” He also states the “[p]recisely when Deutsche Bank became the
owner of the mortgage appears to be a disputed material fact, requiring an evidentiary
hearing.” Citing Agin v. Mortgage Electronic Registration Sys., Inc. (In re Giroux), No. 08-
1261, 2009 WL 1458173 (Bankr. D. Mass. May 21, 2009), Dessin concludes:
[T]he assignments from Argent Mortgage LLC to Deutsche Bank are not
valid. This does not mean that Argent Mortgage is still the mortgagee. Since
it is necessary for the trust (or the trustee) to pay valid consideration for the
mortgage in order for the transaction to be a bankruptcy -remote “true sale”,
. . . it must be presumed (absent evidence to the contrary) that Deutsche Bank
did pay consideration, and thus Argent no longer has any enforceable legal
interest in the note and mortgage. The result is that Deutsche Bank’s title to
the mortgage is defective and it cannot enforce the rights granted by the
mortgage.
The Court finds its decision in Giroux, is inapposite as it involved the consequences
of a defective acknowledgment of a mortgage. 	Moreover, Dessin’s arguments were
considered and rejected by the bankruptcy court in In re Samuels, No 06-11656-FJB, 2009
WL 2032121 (Bankr. D. Mass. July 6, 2009), a case in which the debtor objected to a proof3
of claim filed by AMC Mortgage Services, Inc. as loan servicer for Argent Mortgage
Company, LLC.
With respect to the Note, Dessin submitted no evidence to contradict the declaration
of Ronaldo Reyes that Deutsche Bank has had possession of the Note since approximately
January of 2006. Although the copy of the Note attached to the proof of claim filed in the
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Debtor’s Chapter 13 case, prior to its conversion to Chapter 7, was not endorsed in blank,
the copy of the Note attached to Reyes’s declaration was so endorsed. According to the
court in Samuels:
When indorsed in blank, an instrument becomes payable to bearer and may
be negotiated by transfer of possession alone until specially indorsed.” G.L.
c. 106, § 3-205(b). By virtue of its possession of a note indorsed in blank,
Deutsche Bank is the holder of the note and as such has standing in this case
to seek payment thereof. G.L. c. 106, § 3-301 (“Person entitled to enforce” an
instrument includes the holder of the instrument.”); First National Bank of
Cape Cod v. North Adams Hoosac Savings Bank, 7 Mass.App.Ct. 790, 797
(1979) (“As the holder of the note, [plaintiff] also would be entitled to all
payments to be made by the mortgagors on the note.”).
Id. at *10.
With respect to the validity of the Assignment from Argent Mortgage Company,
LLC to Deutsche Bank notarized on February 26, 2008, which Assignment was made
through Citi Residential Lending pursuant to the Limited Power of Attorney dated October
24, 2007, the Samuels court considered the effect of the ratification contained in the
subsequent Limited Power of Attorney dated December 5, 2008. It stated:
The 2008 LPA expressly conferred on Citi Residential the
power to execute and record the assignment of any mortgage
and the related mortgage note, which powers, I conclude,
include the power to execute the Confirmatory Assignment. By
its ratification through the 2008 LPA of actions undertaken
before it was issued, Argent remedied any lack of authority
that may have existed when Citi Residential executed the
Confirmatory Assignment.
Id. at 11 (citing Linkage Corp. v. Trustees of Boston University, 425 Mass. 1, at 18 (1997)
(“Where an agent lacks actual authority to agree on behalf of his principal, the principal
may still be bound if the principal acquiesces in the agent's action[.]”)).
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The Court notes that Dessin is not a third party beneficiary of the PSA, and,4
ironically, he would appear to lack standing to object to any breaches of the terms of the
PSA. It would appear to this Court that the investors who bought securities based upon
the pooled mortgages would be the parties with standing to object to any defects in
those mortgages resulting from any failure to abide by the express provisions of the
PSA.
17
Finally, the court in Samuels addressed the arguments made by Dessin with respect
to the invalidity of the Mortgage Assignments because there was no intermediate
assignment of the Mortgage to Argent Securities, Inc. The court stated:
A failure to follow this protocol-such as by direct assignment of the mortgage
from the loan originator to the pool trustee, bypassing the depositor-would,
the Debtor contends, constitute a breach of the PSA, a breach of fiduciary
obligations under the PSA to investors, a breach of federal regulations, and
an act giving rise to unfavorable tax consequences for the investors. The
Debtor argues that because the Confirmatory Assignment is a direct
assignment from Argent to Deutsche Bank that bypasses the depositor, it
must be invalid. This argument falls far short of its goal. Even if this direct
assignment were somehow violative of the PSA, giving rise to unfavorable
tax, regulatory, contractual, and tort consequences, neither the PSA nor those
consequences would render the assignment itself invalid. In fact, under the
Debtor’s own argument, the unfavorable consequences could and would
arise only if, and precisely because, the assignment were valid and effective.
Id. at *12. 4
This Court does not disagree with the reasoning and conclusions reached by the
court in Samuels. As in Samuels, the Court concludes that the December 5, 2008 Limited
Power of Attorney authorized and ratified Citi Financial Residential Lending, Inc. to
executed Assignments. 	Thus, the Assignment dated February 26, 2008 from Argent
Mortgage Company, LLC to Deutsche Bank was sufficient to confer standing on Deutsche
Bank to seek relief from the automatic stay.
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B. Deutsche Bank’s Motion for Relief from the Automatic Stay
Because neither the Debtor nor the Chapter 7 trustee contested the facts as
represented in Deutsche Bank’s Motion for Relief from Stay and Dessin’s only challenge
to allowance of the Motion was Deutsche Bank’s standing, the Court finds that Deutsche
Bank has advanced a colorable claim to relief under the standard articulated by the Court
in Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26, 33 (1st Cir. 1994). Deutsche Bank has
established not only “cause” for relief from the automatic stay, but the absence of equity
in the property, which is unnecessary for an effective reorganization where the Debtor is
a Chapter 7 debtor who has elected to surrender the property.
Without filing a complaint as required by Fed. R. Bankr. P. 7001(2), Dessin seeks to
avoid the mortgage granted by the Debtor to Argent Mortgage Company, LLC based upon
the arguments summarized above which implicate the trustee’s avoidance powers. The
Trustee, however, has neither elected to contest the merits of the Motion for Relief from
the Automatic Stay nor to exercise his strong arm powers under 11 U.S.C. §§ 544.
Although the trustee has not formally abandoned the property and there is no evidence
that the Debtor effectuated his intention to surrender the property by providing Deutsche
Bank with, for example, a deed in lieu of foreclosure, the conclusion is inescapable that the
Chapter 7 trustee does not believe that pursuit of any type of avoidance action is
meritorious or would yield any benefit to the bankruptcy estate. Moreover, it likely that
Dessin would not have derivative standing to attempt to avoid the mortgage, see generally,
In re Cooper, 405 B.R. 801 (Bankr. N.D. Tex. 2009). 	Assuming that this Court were to
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espouse the view that derivative standing is permissible in Chapter 7 under extraordinary
circumstances, it is abundantly clear that this is not such a case as neither the trustee nor
Dessin has sought approval of such an arrangement.
IV. CONCLUSION
Upon consideration of the foregoing, the Court shall enter an order granting
Deutsche Bank relief from the automatic stay. Having determined that relief from stay is
warranted, the Court’s allowance of the Motion shall be without prejudice to the assertion
of any and all claims Dessin may assert against Deutsche Bank in the appropriate state
court forum.
By the Court,
______________________________
Joan N. Feeney
United States Bankruptcy Judge
Dated: July 24, 2009
cc: Gregory N. Blase, Esq., Charles A. Dale, III, Esq., David G. Baker, Esq., Harold B.
Murphy, Esq., Kathleen Cruickshank, Esq.
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