Gifty R. Samuels

In re
GIFTY SAMUELS,
Debtor
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
EASTERN DIVISION
Chapter 11
Case No. 06-11656-FJB
MEMORANDUM OF DECISION ON
MOTION OF DEUTSCHE BANK FOR SUMMARY JUDGMENT ON
DEBTOR’S OBJECTION TO ITS PROOF OF CLAIM
By the motion before the Court, Deutsche Bank National Trust Company, as trustee
under a pooling and servicing agreement of a certain mortgage investment trust (“Deutsche
Bank”), seeks summary judgment as to the objection filed by Chapter 11 debtor Gifty Samuels
to its secured claim. Deutsche Bank’s claim is based on the contention that Deutsche Bank is
the present holder of a promissory note given by Samuels to Argent Mortgage Company, LLC
(“Argent”), and the owner of the mortgage given by Samuels to Argent to secure the promissory
note. By her objection, Samuels now challenges not the validity of the underlying note and
mortgage but only Deutsche Bank’s claim to be the holder of the note and owner of the
mortgage and thus its standing to enforce these. Finding the motion for summary judgment to
be well-supported, the Court will grant summary judgment and overrule the objection to claim.
PROCEDURAL HISTORY
Gifty Samuels filed a petition for relief under Chapter 13 of the Bankruptcy Code on June
1, 2006, thereby commencing this bankruptcy case. Upon discovery that her debt exceeded the
eligibility limits for Chapter 13, she moved to convert her case to one under Chapter 11, and the
Court granted that motion on August 10, 2006. She has remained a debtor in possession under
Chapter 11 since that time.
AMC Mortgage Services, Inc., as loan servicer for Argent, filed a proof of a claim in the
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1 The original proof of claim appears on the claims register as number 3-1, the amended
as 3-2.
2
case on June 23, 2006 for $292,206.37, and an amended proof of claim on September 18, 2006
for $294,466.50. 1 Both indicated that the claim in question was secured, but neither included an
attached promissory note or mortgage or identified the property securing the debt.
The property securing this debt was certain real property owned by Samuels and located
at 316B, Essex Street, Lynn, Massachusetts. AMC Mortgage Services, Inc., as loan servicer for
Argent, moved for relief from the automatic stay as to this property on April 2, 2007. [Doc. #143]
After a hearing, the court denied the motion without prejudice to renewal but, in the same order,
expressly permitted AMC Mortgage Services, Inc. to file an affidavit of noncompliance seeking
further court action if the Debtor, commencing in July 2007, failed to make timely monthly
mortgage payments. [Doc. #198]
On November 9, 2007, Citi Residential Lending, Inc. (“Citi Residential”), by Mario
Vasquez, a duly authorized agent, filed such an affidavit of noncompliance. [Doc. #239] In the
affidavit, Mr. Vasquez stated that Citi Residential “is now the servicer for Argent Mortgage
Company” and that Samuels had failed to make her monthly mortgage payments. On
November 23, 2007, the Court held a hearing on the affidavit and the underlying motion for
relief, resulting in entry of an agreed order of that same date, granting Citi Residential relief from
the automatic stay to foreclose, effective January 31, 2008. [Doc. #251]
On February 1, 2008, in an Omnibus Objection to claims, Samuels objected to the
amended claim of AMC Mortgage Services (Claim No. 3-2), stating that “[t]his claim alleges a
security interest but fails to identify the property securing the claim or to attach a copy of any
documentation in support of the claim.” [Doc. #267] Citi Residential Lending filed a response to
the objection [Doc. #294] that identified the property in question as the real property at 316B
Essex Street, Lynn, Massachusetts, and included as attachments the relevant promissory note
and mortgage. Just prior to the preliminary hearing on the objection, the Debtor filed a report
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2 Deutsche Bank also filed a Supplemental Response [Doc. #364].
3
and hearing agenda that, with respect to this claim, stated:
A response was filed by Citi Residential Lending, Inc. regarding
this claim []. The response includes a copy of the Note and
Mortgage, as requested in the objection, but fails to demonstrate
that AMC or Citi Residential is the actual holder of the note and
mortgage, such as by attaching a copy of an assignment(s). The
response also fails to provide a complete Loan History or to
provide an affidavit of the keeper of records regarding the amount
owed as of the date of the response.
The Debtor thus essentially retracted her original grounds for objecting—failure to identify the
property and lack of supporting documentation—and raised new grounds: lack of evidence that
AMC or Citi Residential was the actual holder of the promissory note and mortgage. The court
held a preliminary hearing on the objection as so amended on April 15, 2008 and a continued
hearing on June 20, 2008. The court then issued a procedural order requiring (i) that the
claimant file documentation establishing true ownership of the note and mortgage that form the
basis for its claim and then (ii) that the Debtor file a response indicating whether it accepts the
evidence as establishing the validity of the claim, including (in the event of rejection) an
explanation as to why.
The documentation required by the first prong of this order was 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 2005-W3 (“Deutsche Bank”). In the response
to which the documentation was attached [Doc. # 363], 2 Deutsche Bank claimed to be the
present holder of the mortgage at issue. The Debtor filed a response indicating that she did not
accept the documents adduced as evidence establishing the validity of the lien. [Doc. # 366]
On August 19, 2008, Citi Residential, as loan servicer and attorney-in-fact for Deutsche
Bank, then moved to amend proof of claim No. 3, stating that AMC Mortgage Services, Inc. had
incorrectly named Argent as the creditor in that proof of claim. [Doc. #377] Citi Residential said
in the motion that in fact the loan is held by Deutsche Bank, and therefore that the proof of claim
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3 A motion for summary judgment may appropriately be filed as to an objection to claim.
An objection to claim is a contested matter. Pursuant to F ED. R. BANKR. P. 9014(c), Rule 7056
4
should name Deutsche Bank as the creditor. The motion further stated that effective October 1,
2007, Citi Residential had replaced AMC Mortgage Services, Inc. as servicer of the loan. On
October 21, 2008, and over the Debtor’s objection, the court granted this motion. Accordingly,
on October 24, 2008, Deutsche Bank National Trust Company, as Trustee, in trust for the
registered holders of Argent Securities Inc., Asset-Backed Pass- Through Certificates, Series
2005-W3, filed proof of claim No. 14-2, complete with supporting documents, as an amendment
to claim No. 3-2. The supporting documents, filed as exhibits to the proof of claim, included (i)
the Samuels Note, (ii) the Samuels Mortgage, (iii) on the Samuels Mortgage, a registry stamp
constituting evidence that the Mortgage was recorded on August 23, 2005; (iv) a Confirmatory
Assignment of the Samuels Mortgage and Note from Argent to Deutsche Bank, dated August 4,
2008, bearing a registry stamp constituting evidence that the Confirmatory Assignment was
recorded on August 11, 2008; and (v) a Limited Power of Attorney from Argent to Citi
Residential, dated October 18, 2007 (the “2007 LPA”).
On September 29, 2008, while the motion to amend proof of claim was pending, and
pursuant to F ED. R. BANKR. P. 3001(e)(2), Citi Residential filed evidence—essentially a notice—
of transfer of claim No. 3 (as amended) other than for security [Doc. # 396]. The notice
indicates that Claim No. 3 was transferred from AMC Mortgage Services, Inc., as loan servicer
for Argent, to Citi Residential, as loan servicer and attorney in fact for Deutsche Bank. The
clerk promptly then notified AMC Mortgage Services, Inc. of the evidence of transfer and
established a deadline for the alleged transferor to object, failing which the transferee would be
substituted for the original claimant without further order of the court. AMC Mortgage Services,
Inc. filed no objection, and the time to object has long since passed.
On December 11, 2008, Deutsche Bank then filed the present Motion for Summary
Judgment as to Claim No. 14 [Doc. #415]. 3 Deutsche Bank construes the Debtor’s objection to
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of the Federal Rules of Bankruptcy Procedure applies to contested matters. 	Rule 7056 in turn
makes F ED. R. CIV. P. 56 applicable.
4 In her opposition, the Debtor also asks the court to take judicial notice of the entire
record of this case, but she fails to identify particular documents or parts of the record of which
she would have the court take judicial notice.
5
Claim No. 3 as in fact an objection to Claim No. 14 (because Claim No. 14 is an amendment to
Claim No. 3) and, by its motion for summary judgment, seeks an order overruling the objection
and allowing Claim No. 14. In support of the motion, Deutsche Bank submitted the affidavits of
Ronaldo Reyes, Diane E. Tiberend, and Margarita Guerreo and the exhibits authenticated by
these affiants. The Debtor has filed an opposition to the motion and, in support of her
opposition, an unauthenticated deposition of Tamara Price. 4 Price is a Citi Residential
employee that was deposed in another case. The court held a hearing on the motion on March
31, 2009 and took the matter under advisement.
ARGUMENTS OF THE PARTIES
This contested matter has evolved in two significant respects since its inception with the
Debtor’s filing of her objection to Claim No. 3. First, the underlying claim has been amended,
such that the claim in issue is no longer Claim No. 3, filed by AMC Mortgage Services, Inc., as
loan servicer for Argent, but Claim No. 14-2, filed by Deutsche Bank, with Deutsche Bank
claiming to be the successor in interest to Argent as holder of the same promissory note and
mortgage that formed the basis of the Claim No. 3. Second, the grounds of objection have
changed: the Debtor’s original objection—that the proof of claim “alleges a security interest but
fails to identify the property securing the claim or to attach a copy of any documentation in
support of the claim”—has been satisfied, the note and mortgage having been adduced and the
property having been identified. Instead, the objection has now become a challenge to
Deutsche Bank’s contention that it holds the promissory note and owns the mortgage on which
the claim is based. It is this particular objection, as it is leveled against Claim No. 14-2, that is
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presently before the court as the subject of Deutsche Bank’s motion for summary judgment.
Neither party disputes that the issue so framed is properly before the Court, the lack of a formal
objection to Claim No. 14-2 notwithstanding.
Deutsche Bank’s argument in support of summary judgment is as follows. Pursuant to a
certain Mortgage Loan Purchase and Warranties Agreement, the following sequence of
transfers occurred: Argent, as the originator of the loan and payee and original holder of the
note, sold the loan in question to Ameriquest Mortgage Company LLC, which, in turn sold the
loan to Argent Securities, Inc., which deposited the loan into the ARSI Series 2005-W3 Pool
subject to the Pooling and Servicing Agreement (“PSA”) dated as of October 1, 2005 between
Argent Securities, Inc. as Depositor, Ameriquest as Master Servicer, and Deutsche Bank, as
Trustee. Accordingly, Argent endorsed the original promissory note in blank, without
recourse—thus converting it into a bearer instrument, negotiable by transfer of possession
alone—and delivered it to Deutsche Bank as pool Trustee, which has had actual physical
custody of the note since August 18, 2005. The mortgage followed a similar path, twice: first
on August 18, 2005, when Argent Mortgage Company LLC, the original mortgagee, assigned
the mortgage in blank and delivered it to Deutsche Bank as pool Trustee; and a second time on
August 4, 2008, when Citi Residential, acting under a limited power of attorney from Argent,
executed on behalf of Argent a confirmatory assignment of the mortgage to Deutsche Bank as
pool Trustee and recorded the same in the applicable registry of deeds. In addition, Deutsche
Bank argues, Argent ratified the assignment of the mortgage to Deutsche Bank by raising no
objection to the court’s notice of evidence of transfer of claim.
The Debtor argues that Deutsche Bank must show that it is the lawful owner of both the
note and the mortgage. The Debtor does not dispute that the promissory note was indorsed in
blank and transferred to Deutsche Bank and that Deutsche Bank is now, and since August 18,
2005 has been, in possession of the note. The Debtor instead concentrates her opposition on
the mortgage, arguing that there exist several defects in Deutsche Bank’s chain of title, or at
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least in Deutsche Bank’s proof of the chain of title. First, the Debtor argues that Argent’s
original assignment of the mortgage in blank was ineffective because a mortgage is an interest
in land that, under the statute of frauds, requires a conveyance in writing that identifies the
assignee; Argent’s conveyance in blank, though in writing, does not identify an assignee and
therefore, the Debtor concludes, was ineffective.
Second, the Debtor contends that the PSA required that all mortgages acquired
thereunder had to be funneled to Deutsche Bank, as pool trustee, through the entity designated
by the PSA as “depositor,” ARSI. 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 mortgage assignments
described by Deutsche Bank do not indicate that title passed to Deutsche Bank through the
depositor, the assignments of the mortgage must be invalid.
Third, the Debtor argues that the confirmatory assignment is invalid because the vice-
president of Citi Residential who executed that assignment, a Ms. Tamara Price, indicated in a
deposition in an unrelated case that (1) she signs documents presented to her for signing
without knowing what she is signing and (2) she signs these documents outside the presence of
a notary, after which the documents are forwarded to a notary for completion. The Debtor
further argues that Price patently lied when she recited in the Confirmatory Assignment that the
original assignment “was lost”; the assignment in blank was produced in this proceeding and
therefore was not lost. The Debtor does not elaborate on the consequences or import of these
allegations. Nor does he dispute that Ms. Price had authority to execute the assignment and
that she actually did execute it.
Fourth, the Debtor argues very briefly that, because the execution and recording of the
confirmatory assignment occurred after she filed her bankruptcy petition, these acts constituted
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violations of the automatic stay and of 11 U.S.C. § 549 (permitting a trustee to avoid certain
postpetition transfers). In support of this argument, the Debtor cites In re Beaulac, 298 B.R. 31
(Bankr. D. Mass. 2003) without elaboration. She offers no explanation as to how the
postpetition transfer of a mortgage already in existence and previously recorded can constitute
a transfer of an asset of the estate or a violation of the automatic stay. She further suggests
that she has the power to avoid the “unauthorized postpetition conveyance” but does not
explain how or on what grounds and has not moved to avoid the conveyance.
SUMMARY JUDGMENT STANDARD
A party is entitled to summary judgment only upon a showing that there is no genuine
issue of material fact and that, on the uncontroverted facts, the movant is entitled to judgment
as a matter of law. FED .R. CIV. P. 56(c). Where, as here, the burden of proof at trial would fall
on the party seeking summary judgment, that party must support its motion with evidence—in
the form of affidavits, admissions, depositions, answers to interrogatories, and the like—as to
each essential element of its cause of action. The evidence must be such as would permit the
movant at trial to withstand a motion for directed verdict under FED. R. C IV. P. 50(a). Anderson
v Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). If the motion is properly supported, the burden
shifts to the adverse party to submit evidence demonstrating the existence of a genuine issue
as to at least one material fact. If the adverse party does not so respond, “summary judgment, if
appropriate, shall be entered against the adverse party.” FED. R. CIV. P. 56(e); Jaroma v.
Massey, 873 F.2d 17, 20 (1st Cir. 1989). The court makes no findings of fact but only
determines whether there exists a genuine issue of material fact and, if not, whether, on the
uncontroverted facts, the moving party is entitled to judgment as a matter of law.
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DISCUSSION
a. Burden of Proof
The present motion seeks summary judgment as to a proof of claim. The burdens with
respect to proofs of claim were summarized by Judge Somma in In re Long, 353 B.R. 1, at 13
(Bankr. D. Mass. 2006):
A proof of claim executed and filed in accordance with the Federal
Rules of Bankruptcy Procedure constitutes prima facie evidence
of the validity and amount of the claim. F ED. R. BANKR. P. 3001(f);
see also Juniper Dev. Group v. Kahn (In re Hemingway Transp.,
Inc.), 993 F.2d 915, 925 (1st Cir.1993). In order to rebut this
prima facie evidence, the objecting party must produce
“substantial evidence.” United States v. Clifford (In re Clifford),
255 B.R. 258, 262 (D. Mass.2000) (Hemingway Transport, 993
F.2d at 925). If the objecting party produces substantial evidence
in opposition to the proof of claim and thereby rebuts the prima
facie evidence, the burden shifts to the claimant to establish the
validity of its claim. Hemingway Transport, 993 F.2d at 925 (“Once
the trustee manages the initial burden of producing substantial
evidence . . . the ultimate risk of nonpersuasion as to the
allowability of the claim resides with the party asserting the
claim.”). Where the proof of claim is not filed in accordance with
the Federal Rules of Bankruptcy Procedure, the proof of claim
does not constitute prima facie evidence of the validity and
amount of the claim, and therefore the burden of proof rests at all
times on the claimant.
In order for a proof of claim to be executed and filed in
accordance with the Federal Rules of Bankruptcy Procedure, it
must satisfy (among other things) two requirements set forth in
Rule 3001 itself. First, “when a claim ... is based on a writing, the
original or a duplicate shall be filed with the proof of claim.” F ED.
R. BANKR. P. 3001(c). Second, “[i]f a security interest in property
of the debtor is claimed, the proof of claim shall be accompanied
by evidence that the security interest has been perfected.” F ED. R.
BANKR. P. 3001(d).
Deutsche Bank contends that its amended proof of claim (No. 14-2) enjoys prima facie validity,
and that the Debtor has not rebutted this prima facie validity with substantial evidence or any
evidence at all. The Debtor disagrees, arguing that the proof of claim was not supported by
documents showing a complete chain of title and therefore does not constitute prima facie
evidence of the claim, such that the burden rests from the start on the claimant.
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5 2007 LPA (attached as Exhibit 4 to Proof of Claim No. 14-2), at ¶¶ 6 and 7 (emphasis
added).
6 Judge Feeney reached this same conclusion with respect to identical language in
another limited power of attorney from Argent to Citi Residential. See In re Hayes, 393
B.R. 259, 268, 270 (Bankr. D. Mass. 2008).
10
The Court agrees with the Debtor: the documents attached to Proof of Claim No. 14-
2—in relevant part, the Note, the Mortgage, the Confirmatory Assignment, and the 2007
LPA—do not, by themselves, establish the necessary chain of title. The Note and Mortgage are
in fact the underlying documents on which the claim is based, but they identify Argent as payee
and mortgagee, not Deutsche Bank. Deutsche Bank attempted to show that it now holds the
rights originally given to Argent by attaching the Confirmatory Assignment to its proof of claim.
The Confirmatory Assignment, being an assignment in writing from Argent to Deutsche Bank of
all rights under the Note and Mortgage, would suffice but for one problem: its validity is
contingent on the limited power of attorney pursuant to which Citi Residential executed it for
Argent, but the 2007 LPA that was attached to the proof of claim does not authorize the
particular type of mortgage assignment that was involved in the Confirmatory Assignment.
The 2007 LPA expressly authorizes Citi Residential to execute, on behalf of Argent, only
two kinds of mortgage assignment: (i) “the assignment of any Mortgage or Deed of Trust and
the related Mortgage Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby,” and (ii) “the full assignment of a Mortgage or Deed of Trust upon payment
and discharge of all sums secured thereby in conjunction the refinancing thereof.” 5 The
Confirmatory Assignment was not executed in connection with the repurchase of a mortgage
loan or the refinancing of this loan, and the 2007 LPA does not authorize mortgage assignments
of any other kind. A further paragraph in the 2007 LPA authorizing Citi Residential to foreclose
on mortgages is not an authorization to execute assignments of mortgages, even where the
assignment would facilitate a foreclosure of the mortgage. 6 Where the 2007 LPA narrowly
circumscribed the two types of mortgage assignment it did authorize Citi Residential to execute,
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the further grant of authority to foreclose should not be construed broadly to authorize additional
types of mortgage assignment.
Consequently, the documents submitted with the proof of claim do not by themselves
show a valid assignment of rights from Argent to Deutsche Bank and do not fully support the
asserted claim. It follows that the proof of claim is not supported by documents adequate to
establish the assignment of rights on which it is based, and therefore that the claim does not
enjoy prima facie validity. In the alternative, whatever prima facie validity the claim initially
enjoyed was rebutted by the Debtor’s pointing out of the defect in the chain of title that was
evident in the documents submitted with the proof of claim. Either way, for purposes of the
present motion, the proof of claim does not enjoy prima facie validity, and the burden is on the
claimant, Deutsche Bank, to establish that it now holds the rights given by the Debtor to Argent
in the Note and Mortgage.
b. The Factual Record
The evidence adduced in support of summary judgment, when construed in the light
most favorable to Samuels, shows the following. There are no genuine issues as to the material
facts.
On August 18, 2005, Samuels, as owner of the real property located at 316B Essex
Street, Lynn, Massachusetts (“the Property”), executed in favor of Argent Mortgage Company
LLC, as lender, a promissory note (“the Note”) in the original principal amount of $272,000 and,
to secure repayment of the note, a mortgage on the Property (“the Mortgage”). The Mortgage
was recorded with the Essex South Registry of Deeds on August 23, 2005.
On the same day that it originated the Samuels loan, Argent endorsed the Note in blank
and also executed a written assignment in blank—i.e., without designation of an assignee—of
the Note and Mortgage (“the Assignment”). Also on the same day, Argent transmitted the Note,
Mortgage, and Assignment to Deutsche Bank in its capacity as custodian of Argent’s original
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7 Tiberand Affidavit [Doc. 420], Exhibit 1.
8 The Mortgage Loan Purchase Agreement of October 26, 2005 is attached as Exhibit C
to the affidavit of Ronaldo Reyes [Doc. 418].
12
collateral files.
Under a Mortgage Loan Purchase and Warranties Agreement (“MLPWA”)7 dated
January 2, 2003 between Argent and its affiliate, Ameriquest Mortgage Company, Inc., Argent
regularly and systematically sold and transferred the loans that it originated to Ameriquest for
securitization purposes. The MLPWA did not itself effectuate conveyance or sale of any
specific loan; under section 2(a) of the MLPWA, a further act would be necessary to effectuate a
sale pursuant to the MLPWA: specifically, the execution of an Assignment and Conveyance
Agreement. From the affidavit of Diane Tiberand, a senior vice president of ACC Capital
Holdings Corporation, the parent company of both Argent and Ameriquest, it is clear that both
Argent and Ameriquest believe that the Samuels loan was conveyed by Argent through
Ameriquest to Argent Securities, Inc. (“ARSI”) to Deutsche Bank. However, Deutsche Bank has
adduced no evidence that the Samuels loan was among those that Argent sold and transferred
to Ameriquest, either under the MLPWA or otherwise.
Ameriquest securitized its mortgage loans through one of two corporate vehicles; in the
case of the Samuels loan, the vehicle Ameriquest used was ARSI. Pursuant to and through a
Mortgage Loan Purchase Agreement dated October 26, 2005 (“MLPA”) between Ameriquest
and ARSI, 8 Ameriquest sold the Samuels loan—or at least whatever interest Ameriquest had
therein—to ARSI for subsequent deposit by ARSI into the ARSI Series 2005-W3 pool trust. The
sale and transfer of the loan from Ameriquest to ARSI was effectuated by the MLPA itself, which
was not merely an agreement to sell but also the actual written instrument of conveyance.
Thus, section 1 of the MLPA states, “[t]he Seller hereby sells, and the Purchaser hereby
purchases, as of October 28, 2005, certain . . . residential mortgage loans.” The loans in
question were identified in a Closing Schedule executed pursuant to Section 2 of the MLPA.
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The Samuels loan was listed on the closing schedule as Loan No. 83442632, which is the loan
number that appears on both the Note and the Mortgage.
ARSI then deposited the Samuels Loan, or whatever interest ARSI had in that loan, into
the ARSI Series 2005-W3 pool trust by transfer to Deutsche Bank as trustee. The deposit into
the pool trust was done pursuant to a Pooling and Servicing Agreement dated October 1, 2005
(“the PSA”) among ARSI, Ameriquest, and Deutsche Bank. Under the PSA, ARSI, as
Depositor, deposited certain designated mortgage loans, including the Samuels loan, into the
pool; Ameriquest, as Master Servicer, agreed to be responsible for servicing of the loans, either
itself or through one or more subservicers; and Deutsche Bank agreed to serve as trustee to
hold legal title to the pooled mortgage loans for the benefit of investors in the pool. ARSI sold
and deposited the Samuels loan (and 9,909 other mortgage loans) into the ARSI Series 2005-
W3 pool on October 28, 2005. The PSA itself, in conjunction with the schedule of mortgages
deposited through it into the pool trust, served as a written assignment of the designated
mortgage loans, including the mortgages themselves. Thus in section 2.01, the PSA states:
“The Depositor [ARSI], concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey to the Trustee [Deutsche Bank] without
recourse for the benefit of the Certificateholders all the 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[.]” (Emphasis added.) Per Section 2 of the
MLPA, the Mortgage Loan Schedule for the PSA was the same document as the Closing
Schedule executed pursuant to Section 2 of the MLPA, on which was listed the number of the
Samuels Loan.
Except only as set forth in the following sentence, Deutsche Bank has had and
continues to have possession of the Note and Mortgage evidencing the Samuels loan since
August 18, 2005, first as custodian of Argent’s original collateral files and then, from and after
October 28, 2005, as trustee of the ARSI Series 2005-W3 pool for the benefit of certificate
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9 2007 LPA.
10 2007 LPA, ¶¶ 6, 7, and 8.
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holders of the trust. In August 2008, Deutsche Bank relinquished physical custody of the
collateral file, including the Note, to Citi Residential for purposes of an evidentiary hearing
scheduled for August 20, 2008. Citi Residential had by then become servicer of the loan for
Deutsche Bank. The collateral file, including the Note, remains in Citi Residential’s physical
custody for the benefit of Deutsche Bank.
On October 18, 2007, Argent executed a limited power of attorney (“the 2007 LPA”)
under which it made Citi Residential its attorney-in-fact for certain purposes. In relevant part,
the 2007 LPA gave Citi Residential
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
(the “Mortgages” and “Deeds of Trust”, respectively) and
promissory notes secured thereby (the “Mortgage Notes”). 9
The enumerated transactions include, in relevant part:
(6) The assignment of any Mortgage or Deed of Trust and the
related Mortgage Note, in connection with the repurchase of the
mortgage loan secured and evidenced thereby.
(7) The full assignment of a Mortgage or Deed of Trust upon
payment and discharge of all sums secured thereby in conjunction
the refinancing thereof.
(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 . . . . 10
On August 4, 2008, Argent, acting through Citi Residential as attorney in fact for Argent,
executed a confirmatory assignment of the Samuels Mortgage to Deutsche Bank. The
document was signed for Citi Residential by its vice president Tamara Price. The Confirmatory
Assignment states that it was effective as of April 14, 2006. In the confirmatory assignment, Ms.
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11 Aside from this statement, Deutsche Bank has adduced no evidence that an
assignment of the mortgage has been lost; nor does Deutsche Bank allege that there exists a
lost assignment or rely on any lost assignment in this motion. There is evidence of only one
assignment that predates the Confirmatory Assignment: the assignment in blank that was
executed immediately after origination of the loan. That assignment is in evidence here, and
there is no evidence that it was ever lost. There exists a genuine issue as to whether the
original assignment was lost and as to whether Ms. Price’s representation to that effect was
knowingly false, but, as explained below, the Court also concludes that these facts are not
material to resolution of the present controversy. They present no genuine issue of material
fact.
15
Price also stated that the confirmatory assignment was being executed with intent “to replace
the original assignment which due to inadvertence and/or mistake was lost[.]” 11 Citi Residential
recorded this confirmatory assignment in the Essex South Registry of Deeds on August 11,
2008. Though the Mortgage itself had previously been recorded, no earlier assignment of the
Mortgage had been recorded.
On December 5, 2008, Argent executed another limited power of attorney (“the 2008
LPA”) under which it made Citi Residential its attorney-in-fact for certain purposes. The 2008
LPA stated that it was effective retroactively to September 1, 2007, and that Argent ratified any
and all actions theretofore taken by Citi Residential within the scope of the powers granted by
the 2008 LPA from and after September 1, 2007. The 2008 LPA expressly stated that the
powers it conferred on Citi Residential included the power to execute and record the
assignment of any mortgage and the related mortgage note.
Since the recording of the Confirmatory Assignment, record title to the Mortgage has
stood in the name of Deutsche Bank. Neither Argent nor Ameriquest claims any interest in the
Samuels Mortgage and Note.
c. The Promissory Note
The uncontroverted evidence shows, and the Debtor does not dispute, that the Samuels
Note was endorsed in blank by its named payee, that possession of the note was thereafter
transferred to Deutsche Bank, and that Deutsche Bank is now, and since August 18, 2005 has
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been, in possession of the note. As a negotiable instrument, the Note may be transferred in
accordance with Article 3 of the Uniform Commercial Code as enacted in Massachusetts:
“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.”).
d. The Mortgage
In order to establish that it holds not only the Samuels Note but also the Samuels
Mortgage, Deutsche Bank follows two alternate paths. The first relies on showing a chain of
three assignments of the mortgage: from Argent to Ameriquest, then Ameriquest to ARSI, and
then ARSI to Deutsche Bank. The problem with this strategy is that Deutsche Bank has
adduced no writing evidencing the first of these transfers, from Argent to Ameriquest. A
mortgage is an interest in real property, and the statute of frauds accordingly requires that an
assignment of a mortgage be in writing. Warden v. Adams, 15 Mass. 233 (1818) (“By force of
our statutes regulating the transfer of real estates and for preventing frauds, no interest passes
by a mere delivery of a mortgage deed, without an assignment in writing and by deed.”).
Deutsche Bank has adduced evidence of an agreement pursuant to which Argent agreed to
transfer mortgage loans to Ameriquest, but it has adduced no writing evidencing the assignment
of the Samuels Mortgage from Argent to Ameriquest. Consequently, the chain of title is
incomplete, and Deutsche Bank must, as it anticipated, fall back on its alternate strategy.
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In the alternative, Deutsche Bank relies on the Confirmatory Assignment from Argent to
Deutsche Bank, executed for Argent by Citi Residential on August 4, 2008 under a limited
power of attorney. The Confirmatory Assignment expressly and in writing conveys from Argent
to Deutsche Bank both the Samuels Mortgage and the Samuel Note.
The Confirmatory Assignment was not executed by Argent itself but by Citi Residential
purporting to act under a limited power of attorney. Deutsche Bank contends that this action by
Citi Residential should be deemed a valid and effective act by Argent for three independent
reasons: Argent authorized it by the 2007 LPA; Argent ratified it by the 2008 LPA; and Argent
further ratified it by not objecting to the evidence of transfer of claim filed by Citi Residential in
this bankruptcy case. For the following reasons, the Court rejects the first, accepts the second,
and, having accepted the second, does not address the third.
The first is that, prior to the Confirmatory Assignment, Argent had executed a limited
power of attorney, the 2007 LPA, that empowered Citi Residential to execute this assignment
for Argent. This reliance on an already-existing limited power of attorney is unavailing for the
reasons articulated above (in the section on Burden of Proof): the 2007 LPA did not authorize
Citi Residential to execute the Confirmatory Assignment.
Second, and in the alternative, Deutsche Bank relies on the 2008 LPA, executed by
Argent on December 5, 2008, some four months after the confirmatory assignment. The 2008
LPA was expressly retroactive to September 1, 2007, and ratified any and all actions theretofore
taken by Citi Residential within the scope of the powers granted by the 2008 LPA from and after
September 1, 2007. 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. Linkage Corp. v. Trustees of Boston University, 425 Mass. 1, at 18 (1997) (“Where
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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[.]“).
The Debtor argues that the Confirmatory Assignment should nonetheless be deemed
ineffective for three reasons. First she argues that the confirmatory assignment is invalid
because the vice-president of Citi Residential who executed that assignment, a Ms. Tamara
Price, indicated in a deposition in an unrelated case that (1) she signs documents presented to
her for signing without knowing what she is signing and (2) she signs such documents outside
the presence of a notary, after which the documents are forwarded to a notary for completion.
The Debtor further contends that Price patently lied when she recited in the Confirmatory
Assignment that the original assignment “was lost.” The Debtor does not elaborate on the
consequences or import of these allegations. The Court sees no reason that these alleged
facts, if true, should invalidate the assignment. There is no evidence that Price signed this
Confirmatory Assignment without knowing what she was signing, much less that Citi Residential
did not know what it was doing by having her sign the Confirmatory Assignment on its behalf,
but even if neither Price nor Citi Residential knew what they were doing, that would not
invalidate the assignment. Nor does it matter that Price signed documents outside the
presence of a notary and then forwarded them to the notary for completion, where the Debtor
neither disputes that Price did in fact sign the Confirmatory Assignment nor offers argument that
this practice was contrary to applicable law and constitutes a defect in the assignment. And any
falsity or lie as to the purpose of the confirmatory assignment is immaterial: the Court knows of
no requirement that an assignment contain a statement of purpose, truthful or otherwise.
Second, the Debtor argues that the PSA required that all mortgages acquired thereunder
to be funneled to Deutsche Bank, as pool trustee, through the entity designated by the PSA as
“depositor,” ARSI. 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
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12 The Court does not conclude that the Confirmatory Assignment violates the PSA or
gives rise to unfavorable tax, regulatory, contractual, or tort consequences; the debtor’s
argument is so lacking in detail on all these points as to constitute no real argument at all,
certainly none permitting the conclusions she urges on the Court.
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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, 12 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.
Third and last, the Debtor argues very briefly that, because the execution and recording
of the confirmatory assignment occurred after she filed her bankruptcy petition, these acts
constituted violations of the automatic stay and of 11 U.S.C. § 549 (permitting a trustee to avoid
certain postpetition transfers). In support of this argument, the Debtor cites In re Beaulac, 298
B.R. 31 (Bankr. D. Mass. 2003) without elaboration. She offers no explanation as to how the
postpetition transfer of a mortgage already in existence and previously recorded can constitute
a transfer of an asset of the estate or a violation of the automatic stay. She further suggests
that she has the power to avoid the “unauthorized postpetition conveyance” but does not
explain how or on what grounds and has not moved to avoid the conveyance.
I find no merit in this argument or any of its parts. The postpetition assignment of a
mortgage and the related note from one holder to another is not a transfer of property of the
estate. The mortgage and note are assets of the creditor mortgagee, not of the Debtor. Nor is
the postpetition assignment of a mortgage and the related note an act to collect a debt; the
assignment merely transfers the claim from one entity to another. The Debtor cites no particular
subsection of 11 U.S.C. § 362(a), the automatic stay, that she contends such an assignment
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13 The recording of an assignment of mortgage by the assignee of the mortgagee
creates a record chain of title for anyone taking through the mortgage and protects the assignee
from subsequent transfers by or through the assignor. The Debtor offers no explanation as to
how the recording might be an act to collect a debt or a violation of some other section of the
automatic stay. In Beaulac, which the Debtor cites without discussion, the mortgage in question
had been given to the debtor, not by the debtor; Beaulac is therefore wholly inapposite.
14 The debtor invokes the automatic stay and § 549(a) only defensively.
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violates, and the court is aware of none.
I need not address the Debtor’s further unsupported contention that the postpetition
recording of an assignment of mortgage is a violation of the automatic stay13 or of 11 U.S.C. §
549(a). 14 As the Debtor herself acknowledges, an assignment of mortgage need not be
recorded in order to be valid against the mortgagor or her grantees. Lamson & Co. v. Abrams,
305 Mass. 238, 241-242 (1940); O’Gasapian v. Danielson, 294 Mass. 27, 32 (1933). Therefore,
even if the recording were void and ineffectual, the assignment to Deutsche Bank would still be
valid.
CONCLUSION
For the reasons set forth above, the Court concludes that there are no genuine issues of
material fact and that, on the uncontroverted facts, Deutsche Bank has established that it is in
possession of the note and the owner of the mortgage securing it and therefore is entitled to
summary judgment as a matter of law. A separate order will enter allowing Deutsche Bank’s
Motion for Summary Judgment and overruling the Debtor’s objection to its proof of claim, No.
14-2.
Date: July 6, 2009 	_______________________________
Frank J. Bailey
United States Bankruptcy Judge
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