Sutton et al v. PennyMac Loan Services, LLC

IN THE UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF TENNESSEE
AT NASHVILLE

IN RE: )
) CASE NO. 2:26-bk-00774
JOEL AARON SUTTON, and )
TERRY MELISSA SUTTON, ) JUDGE NANCY B. KING
)
Debtors. ) CHAPTER 7
)
JOEL AARON SUTTON, and )
TERRY MELISSA SUTTON, ) ADV. NO. 2:26-ap-90041
)
Plaintiffs, )
)
v. )
)
PENNYMAC LOAN SERVICES, LLC, )
and RUBIN LUBLIN TN, PLLC, )
)
Defendants. )

______________________________________________________________________________

ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS
AND ABSTAINING FROM HEARING ADVERSARY PROCEEDING
______________________________________________________________________________

This matter is before the Court upon Motions to Dismiss the Complaint for Declaratory
Relief, Injunctive Relief, Rescission, Discovery Accounting, and Disallowance of Claim filed by
Joel Aaron Sutton and Terry Melissa Sutton (“Plaintiffs”). PennyMac Loan Services, LLC
(“PennyMac”) seeks dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6), made
applicable in bankruptcy through Federal Rule of Bankruptcy Procedure 7012, and Rubin Lublin
THIS ORDER HAS BEEN ENTERED ON THE DOCKET.
PLEASE SEE DOCKET FOR ENTRY DATE.
SO ORDERED.
SIGNED 28th day of May, 2026
Nancy B. King
U.S. Bankruptcy Judge
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TN, PLLC (“Rubin Lublin”) seeks dismissal pursuant to Federal Rule of Civil Procedure 12(b)(1),
(2), (4), and (5), also made applicable in bankruptcy through Federal Rule of Bankruptcy
Procedure 7012. For the reasons stated herein, the Court GRANTS both Motions and Dismisses
the Adversary Proceeding.
FACTUAL BACKGROUND
This case arises out of and concerns the real property located at 876 Nichols Road, Dixon
Springs, Tennessee 37057 (“Property”). On February 12, 2019, Plaintiff Joel Aaron Sutton
obtained a residential mortgage loan in the original principal amount of $162,121.00 (the “Loan”)
from Bank of England (“Lender”). In connection with his retention of the Loan, Plaintiff Joel
Aaron Sutton executed a promissory note (“Note”), which set forth the terms of repayment of the
Loan. To secure the Loan, both Plaintiffs executed a Deed of Trust (“Deed of Trust”) conveying
the Property to Mortgage Electronic Registration Systems, Inc. (“MERS”), as nominee for Lender
and its successors and assigns, which Deed of Trust was recorded on February 15, 2019, in
Book 72, Pages 68-80 of the Macon County, Tennessee, real property records.
On June 2, 2020, MERS assigned the Deed of Trust to PennyMac via the Corporate
Assignment of Deed of Trust (“Assignment”) recorded on June 10, 2020, in Book 102, Page 315
of the Macon County, Tennessee, real property records. Thereafter, Plaintiff Joel Aaron Sutton
and PennyMac entered into a Loan Modification which provided for a fixed interest rate (“Loan
Modification Agreement”), which was recorded on March 11, 2021, as Document Number
202101009204 of the Smith County, Texas, real property records. PennyMac appointed Rubin
Lublin as Substitute Trustee in connection with the Deed of Trust on September 6, 2023, which
was recorded on September 28, 2023, with said appointment set forth in Book 192, Page 134,
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Instrument Number 23003329 in the Macon County, Tennessee, Register of Deeds (“Register’s
Office”).
After the Plaintiffs defaulted on the Loan, PennyMac foreclosed on the Property on
November 1, 2023, as evidenced by the Substitute Trustee’s Deed recorded on December 5, 2023,
at Book RB195, Pages 879-881 in the Register’s Office.
Following the November 14, 2023, foreclosure sale of the Property, PennyMac filed an
unlawful detainer action on December 18, 2023, in the Macon County General Sessions Court
(“General Sessions Court”) (Case No. 2023-CV-704) against the Plaintiffs and all others residing
at the Property, as tenants holding over on the Property following the foreclosure sale. On June 3,
2025, the General Sessions Court entered a judgment in favor of PennyMac in the unlawful
detainer action and granted PennyMac possession of the Property. The Plaintiffs appealed that
judgment to the Macon County Circuit Court (“Circuit Court”), which dismissed the Plaintiffs’
appeal on January 16, 2026, for failure to post an appeal bond. The Plaintiffs appealed this
decision, which was dismissed by the Tennessee Court of Appeals. Contemporaneously with their
notice of appeal, the Plaintiffs filed a Motion to Vacate the Dismissal Order in Circuit Court;
however, this motion was denied based on lack of subject matter jurisdiction.
The Plaintiffs have also filed at least three previous lawsuits against PennyMac in the
United States District Court for the Middle District of Tennessee (“District Court”), challenging
PennyMac’s authority to enforce the terms of the Note and Loan and/or to foreclose on the
Property. [Case Nos. 2:23-cv-00064 (“Sutton I”) (filed by Plaintiff Joel Aaron Sutton only), Case
No. 2:24-cv-00014 (“Sutton II”) (initiated by both Plaintiffs), and 2:25-cv-00035 (“Sutton III”)
(filed by both Plaintiffs)]. In Sutton I, the complaint against PennyMac was dismissed based on
the Plaintiffs’ failure to effectuate proper service on PennyMac. See Case No. 2:23-cv-00064,
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Docket No. 108 (M.D. Tenn. Feb. 25, 2025). In Sutton II, the Plaintiffs attempted to remove
PennyMac’s unlawful detainer complaint from Macon County General Sessions Court to federal
court, and the District Court granted PennyMac’s motion to remand. See Case No. 2:24-cv-00014,
Docket No. 34 (M.D. Tenn. Feb. 19, 2025). In Sutton III, the Plaintiffs asserted claims against
PennyMac for alleged violations of 42 U.S.C. § 1983, the Fifth and Fourteenth Amendments to
the United States Constitution, the Truth in Lending Act, the Racketeer Influenced Corrupt
Organizations Act, as well as fraud, all of which were dismissed by the District Court for failure
to state a claim under Federal Rule of Civil Procedure 12(b)(6). See Case No. 2:25-cv-00035,
Docket No. 36 (M.D. Tenn. Feb. 11, 2026).
The Plaintiffs filed a Chapter 7 petition in this Court on February 23, 2026. On April 23,
2026, the Court entered an Order modifying the automatic stay to permit PennyMac to pursue its
eviction remedies against the Property in accordance with applicable state law. [Bankr. No. 2:26-
bk-00774, Docket No. 66]. The Plaintiffs appealed the decision to the Sixth Circuit Bankruptcy
Appeal Panel (“BAP”) on April 21, 2026. That appeal is presently pending.
Prior to the Court’s ruling on stay relief, the Plaintiffs filed this adversary proceeding
against PennyMac and Rubin Lublin on April 14, 2026, and amended their complaint on April 20,
2026. [Adv. No. 2:26-ap-90041, Docket Nos. 1 and 7]. They also filed Motions for Preliminary
Injunctions [Adv. No. 2:26-ap-90041, Docket Nos. 3, 4, and 6] seeking to enjoin PennyMac and
Rubin Lublin from “eviction or transfer of the property.” On April 23, 2026, the Court denied the
Plaintiffs’ motions for injunctive relief. [Adv. No. 2:26-ap-90041, Docket No. 6]. The Adversary
is currently set for a pretrial conference on August 11, 2026.

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Plaintiffs’ Amended Complaint asserts claims against PennyMac and Rubin Lublin for:
Count Allegations
I Declaratory Judgment (seeking a declaration that PennyMac is not entitled to
enforce the Note and that the November 14, 2023, foreclosure sale of the
Propert
y is “void”).
II Injunctive Relief (seeking preliminary and permanent injunctive relief
preventin
g eviction or transfer of the property).
III Rescission/Set Aside of the November 14, 2023, foreclosure sale of the
Property (alleging that the foreclosure sale was void because there is “no
proof of ownership or authority” and the “Substitute trustee acted without
verified authorit
y”).
IV Failure to Establish Enforcement Rights under the Uniform Commercial
Code (alleging that pursuant to UCC 3-301, Defendants have not proven
possession of the note, valid endorsement, or lawful transfer).
V Failure to Provide Accounting under the Uniform Commercial Code § 9-210
(alleging that UCC § 9-210 “permits a debtor to demand an accounting from
a secured part
y concerning the unpaid obligations and collateral”)
VI Failure to Prove Claim under 11 U.S.C. § 502 (alleging that the claim of
Penn
yMac should be disallowed)
VII Accounting and Federal Reporting Failure” (citing the Sarbanes-Oxley Act
and Regulation S-X).
VIII “Void Foreclosure Sale and Lack of Authority (Agency Liability)” (alleging
Rubin Lublin does not have proof of authority and ownership as substitute
trustee and agent).

DISMISSAL UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6)
Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed if it fails
to “state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). To avoid dismissal
under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). See also Laborers’ Local 265 Pension
Fund v. iShares Trust, 769 F.3d 399, 403 (6th Cir. 2014) (citing Ashcroft). “A motion to dismiss
pursuant to Rule 12(b)(6) tests the sufficiency of a complaint.” Smith v. Bank of Am. Corp., 485 F.
App’x 749, 751 (6th Cir. 2012). It is not enough to allege facts that show a “mere possibility of
misconduct” or “that are merely consistent with a defendant's liability.” Ashcroft, 556 U.S. at 678–
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79 (internal citations and quotation marks omitted). A plaintiff must “plead enough ‘factual matter’
to raise a ‘plausible’ inference of wrongdoing.” 16630 Southfield Ltd. P'ship v. Flagstar Bank,
F.S.B., 727 F.3d 502, 504 (6th Cir. 2013) (quoting Ashcroft, 556 U.S. at 678).
When reviewing a motion to dismiss, a court may consider “exhibits attached to the
complaint, public records, items appearing in the record of the case and exhibits attached to the
defendant’s motion to dismiss so long as they are referred to in the complaint and are central to
the claims contained therein, without converting the motion to one for summary judgment.”
Rondigo, L.L.C. v. Township of Richmond, 641 F.3d 673, 680-81 (6th Cir. 2011) (citing Bassett v.
Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008)) (internal quotation marks
omitted); New England Health Care Emps. Pension Fund v. Ernst & Young, LLP, 336 F.3d 495,
501 (6th Cir. 2003) (citations omitted) (“A court that is ruling on a Rule 12(b)(6) motion may
consider materials in addition to the complaint if such materials are public records or are otherwise
appropriate for the taking of judicial notice.”). “[I]f a factual assertion in the pleadings is
inconsistent with a document attached for support, the Court is to accept the facts as stated in the
attached document.” Williams v. CitiMortgage, Inc., 498 F. App’x 532, 536 (6th Cir. 2012)
(citation and internal quotation marks omitted); Prop. Fund 629, LLC v. MEB Loan Trust IV (In
re Connor), 632 B.R. 506, 512 (Bankr. M.D. Tenn. 2021) (citation omitted).
In support of its Motion to Dismiss, PennyMac submitted the following public records
and/or documents that are “otherwise appropriate for the taking of judicial notice” and which the
Court has relied upon in considering the Motion to Dismiss for failure to state a claim:
Exhibit to
the Motion
Public Document and/or Appropriate Document for Judicial Notice
Exhibit A Note: On February 12, 2019, Plaintiff Joel Aaron Sutton obtained a residential
mortgage loan in the original principal amount of $162,121.00 from Bank of
England and executed the Note.
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Exhibit B Deed of Trust: Conveying the Property to MERS, as nominee for Lender, its
successors and assigns, recorded on February 15, 2019, in Book 72, Pages 68-80
of the Macon County, Tennessee, real property records.
Exhibit C Assignment: MERS assigned the Deed of Trust to PennyMac via the Assignment
recorded on June 10, 2020, in Book 102, Page 315, of the Macon County,
Tennessee, real propert
y records.
Exhibit D Loan Modification Agreement (Providing for a Fixed Interest Rate): Recorded
on March 11, 2021, as Document Number 202101009204 of Smith County,
Texas, real propert
y records.
Exhibit E Appointment of Substitute Trustee in connection with the Deed of Trust:
Recorded on September 28, 2023, in Book 192, Page 134, Instrument Number
23003329, in the Re
gister’s Office.
Exhibit F Substitute Trustee’s Deed: PennyMac’s non-judicial foreclosure sale as
evidenced by the Substitute Trustee’s Deed recorded on December 5, 2023, at
Book RB195, Pa
ges 879-881, in the Register’s Office.
Exhibit G Detainer Judgment: General Sessions Court, Case No. 2023-CV-704, June 3,
2025, judgment in favor of PennyMac on its unlawful detainer action granting
Penn
yMac possession of the Property.
Exhibit H Dismissal Order: Circuit Court, Case No. 2025-CV-62, Dismissal of Plaintiffs’
appeal dated Januar
y 16, 2026.
Exhibit I Dismissal Order: Circuit Court, Case No. 2025-CV-62, Dismissal of Plaintiff’s
“Motion to Vacate Void Dismissal” for lack of subject matter jurisdiction
because of the pending appeal.

Based on a review of the foregoing, the Court finds that the Plaintiffs’ adversary proceeding
against PennyMac should be dismissed for failure to state a claim pursuant to Federal Rule of Civil
Procedure 12(b)(6).
DISMISSAL PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(b)(1)

Rubin Lublin asserts in its motion to dismiss that the Plaintiffs lack standing to pursue this
cause of action. Pursuant to Federal Rule of Civil Procedure 12(b)(1), lack of subject-matter
jurisdiction is a basis for dismissal of a complaint. Rule 12(b)(1) is frequently relied upon by
federal courts to dismiss claims for a lack of standing. See, e.g., Stalley v. Methodist Healthcare,
517 F.3d 911, 916 (6th Cir. 2008) (citation omitted) (“We review de novo a district court’s
dismissal of a case for lack of standing—lack of subject matter jurisdiction—under Fed. R. Civ.
P. 12(b)(1).”); Allstate Ins. Co. v. Global Med. Billing, Inc., 520 F. App’x. 409, 410-11 (6th Cir.
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2013) (citations omitted) (“the issue of standing ... is more properly considered an attack on the
court’s subject-matter jurisdiction under Rule 12(b)(1).”). For the following reasons, the Court
finds that the Plaintiffs lack standing.
When a debtor files a bankruptcy petition, the bankruptcy estate becomes the owner of all
the debtor’s property as of the commencement of the case. See 11 U.S.C. § 541(a)(1). This includes
any potential causes of action accrued prior to the filing of the debtor’s bankruptcy petition. Auday
v. Wet Seal Retail, Inc., 698 F.3d. 902, 904 (6th Cir. 2012). In a Chapter 7 liquidation case, a
bankruptcy trustee is appointed to administer that estate. 11 U.S.C. §§ 701–703. As the
administrator of the estate, the trustee, rather than the debtor, is responsible for any potential
claims. See 11 U.S.C. § 704(a)(1). See also 11 U.S.C. §§ 323 and 363.
As such, it is for the Chapter 7 trustee to determine whether to pursue any potential pre-
petition wrongful foreclosure action for the benefit of all the Plaintiffs’ creditors.
1
In re Moreno,
622 B.R. 903, 910 n.6 (Bankr. C.D. Cal. 2020) (“[T]he cause of action [for wrongful foreclosure]
... was property of the bankruptcy estate of the husband. Therefore, only the chapter 7 trustee
could pursue the claim.”); Jones v. MTGLQ Invs., L.P., No. 6:17-CV-522, 2019 WL 3806070, at
*2 (E.D. Tex. June 24, 2019) (“The [wrongful foreclosure] cause of action asserted in this lawsuit
existed when the bankruptcy action was commenced and was, therefore, property of the
bankruptcy estate.”); Magana-Lopez v. JPMorgan Chase Bank, N.A. (In re Magana-Lopez),
Bankr. No. 6:10-bk-50387-SC, Adv. No. 6:11-ap-01170-SC, 2012 WL 1355553, at *4 (Bankr.

1 At this point, any potential cause of action has not been abandoned. The Chapter 7 case is not closed, and the trustee’s
Report of No Distribution does not constitute a deemed abandonment. See 11 U.S.C. § 554. Accordingly, any causes
of action remain property of the Plaintiffs’ bankruptcy estate, and the Plaintiffs lack standing to prosecute the claims.
See In re Arana, 456 B.R. 161, 170 (Bankr. E.D.N.Y. 2011) (citations omitted) (“[D]uring the pendency of a
bankruptcy case, the debtor does not have standing to initiate or pursue an action based on a prepetition claim unless
the trustee abandons it back to the debtor.”). Additionally, because the Plaintiffs did not disclose the potential wrongful
foreclosure action in their petition, they cannot claim standing through abandonment. Rankin v. Brian Lavan and
Assocs., P.C. (In re Rankin), 438 F. App’x 420, 425 (6th Cir. 2011).
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C.D. Cal. Apr. 18, 2012) (internal citations and quotation marks omitted) (“We therefore reaffirm
our previous reasoning and that of our sister circuits and hold that the bankruptcy code endows the
bankruptcy trustee with the exclusive right to sue on behalf of the estate. . . Here, the Debtors
failed to schedule their pre-petition cause of action for wrongful foreclosure against Washington
Mutual. As a result, this cause of action remains unadministered property of the estate. The
Chapter 7 trustee alone has the exclusive right to pursue the cause of action in question on behalf
of the bankruptcy estate.”); Samayoa v. Encore Credit Corp. (In re Samayoa), Bankr. No. 10-
20405-JNF, Adv. No. 11-1308, 2011 WL 5041756, at *3 (Bankr. D. Mass. Oct. 24, 2011) (“To
the extent that Deutsche Bank obtained relief from the automatic stay improperly or its foreclosure
sale may be void, and the Property and any claims related to the wrongful foreclosure sale are
property of the bankruptcy estate, the proper party to assert those claims to relief is the Chapter 7
Trustee.”).
Accordingly, the Court finds that the Plaintiffs lack standing to pursue this cause of action,
thus warranting dismissal of this Adversary Proceeding as to both Defendants.
DISMISSAL PURSUANT TO FEDERAL RULE OF CIVIL
PROCEDURE 12(b)(2), (4), (5)

Rubin Lublin also seeks dismissal based on lack of personal jurisdiction, insufficient
process, and insufficient service of process. See Fed. R. Civ. P. 12(b)(2), (4), and (5). Even though
the Plaintiffs listed Rubin Lublin as a defendant on their adversary cover sheet, they failed to list
Rubin Lublin as a party on the docket.
2
Based on the Plaintiffs’ error in opening this adversary
proceeding, a Summons was only issued to PennyMac, and there is no indication that the Plaintiffs
served Rubin Lublin with a copy of the Summons.

2 The Court’s website provides CM/ECF step-by-step instructions for litigants on how to open an adversary
proceeding. See https://www.tnmb.uscourts.gov/sites/tnmb/files/DOCKETING_AP.pdf.

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“In the absence of proper service of process, consent, waiver, or forfeiture, a court may not
exercise personal jurisdiction over a named defendant. And without personal jurisdiction, a federal
court is powerless to proceed to an adjudication.” Boulger v. Woods, 917 F.3d 471, 476 (6th Cir.
2019) (internal citations and quotation marks omitted). Here, the record shows that a Summons
was never issued to Rubin Lublin. Accordingly, even if the Plaintiffs had served the Summons on
Rubin Lublin, it would not have created personal jurisdiction. For these reasons, dismissal of the
complaint as to Rubin Lublin is required under Federal Rule of Civil Procedure 12(b)(2), (4),
and (5).
ABSTENTION IS WARRANTED
In addition, or perhaps in the alternative, PennyMac requests that this Court, in its
discretion, abstain from hearing this Adversary Proceeding. The Court agrees that discretionary
abstention is appropriate.
The Plaintiffs’ complaint in this Court cannot be an attempt to review a decision by the
state court.
3
However, Federal law does not prohibit the debtors from bringing suit in this Court to
have the foreclosure set aside even if they could try the same question in the appeal to the Circuit
Court. See York v. Bank of Am., N.A. (In re York), 291 B.R. 806, 811 (Bankr. E.D. Tenn. 2003).
The question is whether this Court must or should abstain and allow the state court to decide the
question.
Mandatory abstention requires a pending proceeding that can be timely adjudicated. 28
U.S.C. § 1334(c)(2). See Med. Educ. & Health Servs, Inc. v. Indep. Mun. of Mayaguez (In re Med.

3 The Plaintiffs filed an appeal of the General Sessions Court Judgment on June 3, 2025. The appeal was dismissed
on January 16, 2026, prior to the Plaintiffs’ filing bankruptcy. Post-bankruptcy, the Circuit Court denied the Plaintiffs’
Motion to Vacate the dismissal of the appeal, finding it lacked subject matter jurisdiction to rule on the Plaintiffs’
Motion. It is this action which Plaintiffs insist keeps their unperfected appeal viable. On April 23, 2026, the Court
entered an Order modifying the automatic stay to permit PennyMac to pursue its eviction remedies against the property
in accordance with applicable state law. Plaintiffs appealed that decision to the Sixth Circuit BAP.

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Educ. & Health Servs., Inc.), 459 B.R. 527, 546–47 (Bankr. D.P.R. 2011) (citations omitted) (“The
language of the statute is clear that one of the prerequisites for mandatory abstention is that an
action must have been initiated in a state forum with jurisdiction.”). Of course, this means a
pending proceeding that can deal with the issue raised by the complaint—whether the foreclosure
can be set aside under Tennessee law. The Plaintiffs’ position is that the allegations of wrongful
foreclosure can be pursued in the Circuit Court because the March 6, 2026, Order of the Circuit
Court is non-final.
4
The Court cannot take for granted that there is a pending proceeding and
therefore cannot abstain pursuant to 28 U.S.C. § 1334(c)(2), but the Court can and does
permissively abstain pursuant to 28 U.S.C. § 1334(c)(1).
As to discretionary abstention, courts generally consider numerous factors, including, but
not limited to:
(1) the effect of abstention on the administration of the bankruptcy case;
(2) the extent to which state law issues predominate over bankruptcy law issues;
(3) the difficulty or unsettled nature of the applicable law;
(4) the existence of a related proceeding in another court;
(5) whether there is a basis for federal jurisdiction other than bankruptcy;
(6) the degree to which the proceeding is related to the bankruptcy case;
(7) the substance, rather than the form, of an asserted core proceeding;
(8) the feasibility of severing state law claims so that they can be tried in the state court
with enforcement left to the bankruptcy court;
(9) the burden on the bankruptcy court’s docket;
(10) the likelihood that commencement of the case in the bankruptcy court involves forum
shopping;
(11) whether there is a right to a jury trial; and
(12) the presence in the proceeding of non-debtor parties other than the defendant.

Beneficial National Bank v. Best Reception Sys., Inc. (In re Best Reception Sys., Inc.), 220 B.R.
932, 953 (Bankr. E.D. Tenn. 1998).

4 The Court makes no findings about the entry of the March 6, 2026, Order by the Circuit Court but notes that on
April 23, 2026, this Court found that the subject property was not property of the estate, and moreover, the Circuit
Court’s March 6, 2026, Order states it does not have jurisdiction to grant Plaintiffs’ Motion to Vacate the Dismissal
of the Plaintiffs’ appeal.

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In this instance: (1) the question of whether the foreclosure can be set aside appears to be
governed mostly if not entirely by Tennessee law; (2) there may be the existence of a proceeding
in another court; (3) there is no basis for federal jurisdiction other than the bankruptcy;
5
(4) this
Court ruled in the context of the stay relief motion that the subject Property was not property of
the estate; (5) the Plaintiffs’ lawsuit has no relation to the administration of their Chapter 7
bankruptcy estate (a “no asset” Chapter 7); (6) there is a high likelihood that forum shopping is
involved given that the Plaintiffs received unfavorable rulings in the state court and in the federal
district court prior to coming to bankruptcy court; and (8) as discussed earlier, the Plaintiffs have
no standing to pursue the wrongful foreclosure cause of action in their Chapter 7 bankruptcy. The
Court concludes that discretionary abstention is in the best interest of the estate and therefore
ABSTAINS from hearing this adversary proceeding.
IT IS, THEREFORE, ORDERED that the Court, in its discretion, ABSTAINS from
hearing this proceeding and DISMISSES this adversary proceeding against PennyMac and Rubin
Lublin.
6

THIS ORDER WAS SIGNED AND ENTERED ELECTRONICALLY
AS INDICATED AT THE TOP OF THE FIRST PAGE.

5 In Count VI, the Plaintiffs object to the claim of PennyMac. The Plaintiffs do not have standing to object to
PennyMac’s claim. A claim objection must be made by a party with standing, and standing is determined based upon
the impact to the party. Chapter 7 debtors “rarely have such a pecuniary interest because no matter how the estate’s
assets are disbursed by the trustee, no assets will revert to the debtor.” Lunan v. Jones (In re Lunan), 523 F. App’x
339, 340 (6th Cir. 2013) (quoting Cult Awareness Network, Inc. v. Martino (In re Cult Awareness Network, Inc.), 151
F.3d 605, 607 (7th Cir. 1998)). “Because standing is jurisdictional, a dismissal for lack of standing has the same effect
as a dismissal for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1).” White v. U.S. Dept. of Edu. (In re
White), Bankr. No. 13-21977, Adv. No. 21-2038, 2022 WL 1656708, at *3 (Bankr. E.D. Mich. May 24, 2022) (citation
and internal quotation marks omitted).

6 Abstention and Dismissal are appropriate. See e.g., Ottoman v. Walkley (In re Ottoman), 665 B.R. 64, 66 (Bankr.
E.D. Mich. 2024) (sua sponte permissively abstaining and dismissing adversary proceeding); Hall v. Hall (In re Hall),
633 B.R. 350, 357 (Bankr. N.D. Ill. 2021) (permissively abstaining and dismissing adversary proceeding); LM Waste
Serv. Corp. v. Municipio De Juana Diaz (In re LM Waste Serv. Corp.), 562 B.R. 845, 853 (Bankr. D.P.R. 2016)
(same).
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