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UNITEDSTATESBANKRUPTCYCOURT
SOUTHERNDISTRICTOFNEWYORK
x
Inre:
Chapter13
CynthiaCarrsowFranklin,
CaseNo.1020010(RDD)
Debtor.
x
MEMORANDUMOFDECISIONONDEBTORSOBJECTIONTOCLAIMOFWELLSFARGOBANK,NA
APPEARANCES: Garvey,Tirelli&Cushner,Ltd.,byLindaM.Tirelli,forthedebtor
HoganLovellsUSLLP,byDavidDunnandNocoleE.Schiavo,forWellsFargoBank,NA
HON.ROBERTD.DRAIN,UNITEDSTATESBANKRUPTCYJUDGE
Thedebtorherein(theDebtor)hasobjectedtoaclaimfiledinthiscasebyWellsFargoBank,
NA(WellsFargo),ClaimNo.12,datedSeptember29,2010(amendingClaimNo.11),onthebasis
thatWellsFargoisnottheholderorownerofthenoteandbeneficiaryofthedeedoftrustuponwhich
theclaimisbasedandthereforelacksstandingtoasserttheclaim.1ThisMemorandumofDecision
statestheCourtsreasons,basedontherecordofthetrialheldonDecember3,2013andtheparties
preandposttrialsubmissions,forgrantingtheClaimObjection.
Jurisdiction
TheCourthasjurisdictionoverthiscontestedmatterpursuantto28U.S.C.157(a)(b)and
1334(b).Under28U.S.C.157(b)(2)(B)thisisacoreproceedingwhichtheCourtmaydetermineby
finalorder.
Background
OnJuly15,2010,WellsFargofileditsfirstproofofclaiminthiscase,ClaimNo.11,asserting
indebtednessof$170,072.60,includingprepetitionarrearsof$38,163.16.Theproofofclaimattacheda
SeeObjectiontoProofofClaim#11AsAmendedClaim#12FiledbyWellsFargoBank,NAandRequestfor
AccountingandConditionalMotionforDamagesandFees,datedOctober4,2010(theClaimObjection).
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copyofa30yearnote,datedOctober30,2000,payabletoMortgageFactoryInc.intheamountof
$145,850(theNote),whichwassignedbytheDebtor.TheversionoftheNoteattachedtoClaimNo.
11bearsaspecificindorsementbyMortgageFactoryInc.toABNAmroMortgageGroup,Inc.(ABN
Amro)andnootherindorsements.
ClaimNo.11alsoattachedaDeedofTrustmadeouttoMalcomD.Gibson,astrustee,andan
AssignmentofRents,bothdatedOctober30,2000,whichsecuretheNotewiththeDebtorsinterestin
therealpropertylocatedat2523CrenshawDrive,RoundRockTexas78664andtheothercollateral
describedtherein(theProperty).ThereisnorealdisputethattheDeedofTrustandrelatedsecurity
documentswereproperlyfiledandrecordedunderTexaslaw;theybeartheNovember16,2000file
stampoftheCountyClerkofWilliamsonCounty,Texas.2ClaimNo.11alsoattachedanAssignmentof
Lien,datedOctober30,2000,pursuanttowhichMortgageFactory,Inc.assigneditsrightsunderthe
NoteandrelatedlienstoABNAmro;it,too,bearstheCountyClerksfilestamp,datedNovember16,
2000.
AlsoattachedtoClaimNo.11wasanAssignmentofDeedofTrustbyABNAmro,datedJune20,
2002,pursuanttowhichABNAMROassignedallbeneficialinterestintheDeedofTrustsecuringthe
Note,togetherwiththeNote,toMortgageElectronicRegistrationSystem(MERS)asnomineefor
WashingtonMutualBank,FA,whichbearstheWilliamsonCountyClerksJune28,2002filestamp.
ClaimNo.11alsoattached(a)aLoanModificationTransmittalForm,(b)aLoanModification
AgreementsignedbytheDebtorandanofficerofWellsFargo,datedFebruary12,2008,and(c)an
unsignedform,withtheheadingFreddieMac,addressedtoanofficerofWellsFargo,whichstates
thatFreddieMachasapprovedWellsFargosrequesttoconsideraloanmodificationpertainingtothe
Debtoroncertainconditions.
TexaslawappliestothemeritsoftheClaimObjection.Itisthepartieschoiceoflawunder16oftheDeedof
TrustandwouldapplyinanyeventbecausetheNoteandDeedofTrustwereenteredintobythepartiesinTexas
andpertaintorealpropertylocatedinTexas.
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Finally,ClaimNo.11attachedanAssignmentofMortgagepursuanttowhichMERSassignedto
WellsFargoamortgage(neitherrightsundertheDeedofTrust,northeNote)madebytheDebtor
pertainingtotheNote.ThisAssignmentofMortgageisdatedJuly12,2010,whichisthreedaysbefore
thedateofClaimNo.11,andisexecutedonbehalfofMERSasnomineeforWashingtonMutualBank,
FAbyJohnKennerty,AssistantSecretary,presumablyofMERS.
IntheClaimObjection,theDebtorscounselhasrepresentedwithoutdisputethatafter
reviewingClaimNo.11shecontactedWellsFargosthencounsel,whohadsignedClaimNo.11on
WellsFargosbehalf,withquestionsregardingWellsFargosstandingtoasserttheclaimandfollowed
uponJuly26,2010withaqualifiedwrittenrequestunderRESPA,12U.S.C.2605,andaborrowers
requestunderTILA,15U.S.C.1601,etseq.WellsFargorespondedtotheserequestsinaletter,
datedAugust18,2010,inwhichitstatedthatFreddieMacownedtheNote,whichFreddieMachad
alreadyrepresentedtotheDebtorscounselinaJuly27,2010email.SeeExhibitsNandO,respectively,
totheClaimObjection.
NeithertheemailfromFreddieMac,theletterfromWellsFargo,noranythingelseofferedby
WellsFargosthencounseldealtwiththetwokeyissuesraisedbyClaimNo.11,however:(i)howcould
WellsFargoorFreddieMacassertaclaimundertheNotewhentheNotewasneitherspecifically
indorsedtoeitherofthemnorindorsedinblank(andwasspecificallyindorsedtoABNAmro,although
ABNAmrohadsubsequentlyassigneditsinterestthereintoMERSasnomineeforWashingtonMutual
Bank,FA),and(ii)howcouldWellsFargoproperlyassertanyrightsundertheJuly12,2010Assignment
ofMortgagewhenthepersonwhosignedtheAssignmentofMortgagefromMERSinitscapacityas
nomineeforWashingtonMutualBank,FAtoWellsFargowasanemployeeofWellsFargo(aswellasof
MERS),3andtherewasnoevidencethatWashingtonMutualBank,FAauthorizedMERStoassignits
ItisundisputedthatwhenheexecutedtheAssignmentofMortgageJohnKennertywasanemployeeofWells
Fargo,notofWashingtonMutualBank,FA,aswellasofMERS.SeegenerallyInreSmith,509B.R.260,263n.1
(Bankr.N.D.Cal.2014)(MERSactsasmortgageeofrecordformortgageloansthatareregisteredinMERS
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interestinthePropertytoWellsFargo?WellsFargoandFreddieMacsresponsestotheDebtors
counselsquestionsraisedanotherquestion,though:ifFreddieMacwastheowneroftheloan,asboth
WellsFargoandFreddieMaccontended,whywasClaimNo.11filedbyWellsFargonotasFreddie
Macsagentorservicer,but,rather,initsownname?(Theownership/agencyissuehadpracticalaswell
aspossiblelegalconsequencesbecausecounselforWellsFargocontendedthatFreddieMacguidelines
precludedWellsFargofromconsideringloanmodificationproposalsfortheDebtor.)
Beforetheexpirationofthebardateinthiscase,though,WellsFargofiledanotherproofof
claim,amendedClaimNo.12,datedSeptember23,2010,whichwasthesameasClaimNo.11inall
respectsexceptone:thecopyoftheNoteattachedtoClaimNo12hadasecondindorsement.In
additiontothespecific,orspecialindorsementfromMortgageFactoryInc.toABNAmro,italsohada
blankindorsement,signedbyMargaretA.Bezy,VicePresident,forABNAmro.
Presumably,ClaimNo.12wasintendedtosatisfytheDebtorsquestionsaboutWellsFargos
standingtoassertaclaim:asdiscussedbelow,underTexaslawapersoninpossessionofanote
indorsedinblankmayenforcethenoteandarelateddeedoftrustormortgageevenifthenoteholder
doesnothaveavalidassignmentofthemortgageordeedoftrust.Nevertheless,theDebtorfiledthe
ClaimObjection,assertingseveralreasonswhyClaimNo.12shouldbedisallowedunder11U.S.C.502
andFed.R.Bankr.P.3007,althoughsincethattimesheactivelypursuedonlytwo.4
First,theDebtorcontendedthatWellsFargolackedstandingtoasserttheclaimbecauseit
admittedlydidnotowntheloanuponwhichitwasbasedyetfiledtheclaimonitsownbehalf,notas
system.MortgagelenderssubscribetotheMERSsystemandpayannualfeesfortheelectronicprocessingand
trackingofownershipandtransfersofmortgages.Members(lendersandservicers)contractuallyagreetoappoint
MERStoactastheircommonagentonallmortgagesthememberregistersintheMERSsystem.Tofacilitatethe
executionofassignmentsfromMERS,MERSregularlydesignatescertifyingofficers,whoaretypicallyemployees
ofMERSmemberfirms.MERSauthorizestheseemployeesthroughformalcorporateresolutionstoexecute
assignmentsonitsbehalf.).
4
TheDebtorsobjectiontotheamountofClaimNo.12alsocontinues,asdoestheDebtorsrequestforthe
impositionofsanctions,includingunder28U.S.C.1927.
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agentorservicerforFreddieMac.SeeInreUnioil,Inc.,962F.2d988,992(10thCir.1992)(proofof
claimwhichdidnotevenindicate[claimants]representationalcapacitymuchlessdisclosetheidentity
ofthetruecreditor,wasdefectiveunderFed.R.Bankr.P.3001(b));5cf.InreManvilleForestProducts
Corp.,89B.R.358,37677(Bankr.S.D.N.Y.1988),affd,99B.R.542(S.D.N.Y.1989),affd,896F.2d1384
(2dCir.1990)(applyingFed.R.Bankr.P.3003(c),whichpertainstocasesunderchapters9and11ofthe
BankruptcyCode,toprecludefilingofproofofclaiminunauthorizedcapacity).
Second,theDebtorcontendedthattheblankindorsementthatappearedforthefirsttimeon
theformofNoteattachedtoClaimNo.12wasasimproperasthepurportedJuly12,2010Assignment
ofMortgagetoWellsFargoexecutedonbehalfoftheassignor/nomineebyanemployeeofWellsFargo.
AsallegedbytheClaimObjection,theblankindorsementwasforgedinresponsetoproblemswiththe
documentationofWellsFargosrighttoenforcetheNote,just,astheDebtorcontended,theJuly12,
2010AssignmentofMortgagewasmanufacturedthreedaysbeforeClaimNo.11wasfiledinorderto
falselyleadtheDebtorandtheCourttothinkthatWellsFargohadanindependentrighttoenforcea
mortgageontheProperty.
WellsFargoretainednewcounsel,6andthepartiesengagedindiscoverydisputesthatresulted
inanordercompellingthedepositionofJohnKennerty,whobythennolongerworkedforWellsFargo,
seeKennertyv.CarrsowFranklin(InreCarrsowFranklin),456B.R.753(Bankr.D.S.C.2011),andWells
FargosproductionofawoefullyunqualifiedinitialRule30(b)(6)witness.Withdiscoverystillfarfrom
complete,however,theDebtormovedforsummaryjudgmentunderFed.R.Bankr.P.7056,primarilyon
Fed.R.Bankr.P.3001(b)statesthatAproofofclaimshallbeexecutedbythecreditororthecreditors
authorizedagent[exceptwherepermittedundertheBankruptcyRulestobefiledbythedebtororbankruptcy
trusteeorbyaguarantor,surety,indorserorothercodebtor].
6
StephenJ.Baum,P.C.,whichhadfiledClaimNos.11and12onWellsFargosbehalf,ceaseddoingbusinesson
December31,2011.InMarch,2012thefirmenteredintoa$4millionsettlementwiththeStateofNewYorkover
itshandlingofforeclosureactionsanddocuments,inwhichItdidnotadmittoanywrongdoing.PressReleaseof
AttorneyGeneralEricT.Schneiderman,datedMarch22,2012:A.G.SchneidermanAnnounces$4Million
SettlementwithNewYorkForeclosureLawFirmStevenJ.BaumP.C.andPillarProcessingLLC.
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thebasisthatWellsFargoconcededlydidnotowntheloanyethadnotfiledClaimNo.12ina
representativecapacity.WellsFargorespondedthatitdidnotneedtobetheowneroftheloaninorder
toenforcetheNoteandasecuredclaimforamountsowingunderit.Instead,WellsFargorelied,under
TexasversionofArticle3oftheUniformCommercialCode(theU.C.C.),solelyonbeingtheholder
oftheNoteindorsedinblankbyABNAmrothatappearedforthefirsttimeasanattachmenttoClaim
No.12.7
InabenchrulingonMarch1,2012,memorializedbyanorderdatedMay21,2012,theCourt
agreedwithWellsFargo,concludingthat,underTexaslaw,ifWellsFargowereindeedtheholderofthe
NoteproperlyindorsedinblankbyABNAmro,WellsFargocouldenforcetheNoteandtheDeedofTrust
evenifitwasnottheownerorinvestorontheNoteorproperlyassignedofDeedofTrust,8citingSMS
Fin.,Ltd.Liab.Co.v.ABCOHomes,Inc.,167F.3d235,238(5thCir.1999)(underTexaslaw,[t]orecover
onapromissorynote,theplaintiffmustprove:(1)theexistenceofthenoteinquestion;(2)thatthe
partysuedsignedthenote;(3)thattheplaintiffistheownerorholderofthenote;and(4)thatacertain
balanceisdueandowingonthenote)(emphasisadded),andInrePastran,2010Bankr.LEXIS2237,at
Perhapswaryofrelyingonanassignmentbytheassigneetoitselfwithoutauthorizationbythepurported
assignor,WellsFargohaswaivedrelianceontheJuly12,2010AssignmentofMortgagetoestablishitsrightto
assertClaimNo.12,lookingonlytoitsstatusasaholderoftheNote.ItindeedappearsthatMr.Kennertys
signatureontheAssignmentofMortgagewasimproperineitherofhiscapacities,asanofficerofWellsFargooras
anofficerofMERS,withoutfurtherauthorizationfromWashingtonMutualBank,FA,becauseABNAmroassigned
MERStheDeedofTrustsolelyinMERScapacityasnomineeforWashingtonMutualBank,FA,withoutthepower
offoreclosureandsaleinitsownrightandnotforitsownsuccessorsandassignsaswellasWashingtonMutual
Bank,FAs;andMERS(throughMr.Kennerty)executedtheAssignmentofMortgagesolelyasnomineefor
WashingtonMutualBank,FA.CompareKramerv.FannieMae,540Fed.Appx.319,320(5thCir.2013),cert.
denied,134S.Ct.1310,188L.Ed.2d305(2014)(MERScouldassigndeedoftrustmadeouttoitthatspecifically
grantedMERSthepowertoforecloseandassignitsrights);SilverGryphon,L.L.C.v.BankofAm.NA,2013U.S.Dist.
LEXIS168950,at*1112(S.D.Tex.Nov.7,2013)(same);Richardsonv.CitiMortgage,Inc.,2010U.S.Dist.LEXIS
123445,at*3,*1314(E.D.Tex.Nov.22,2010)(same),andNuecesCountyv.MERSCORPHoldings,Inc.,2013U.S.
Dist.LEXIS93424,at*20(S.D.Tex.July3,2013);InreFontes,2011Bankr.LEXIS1792,at*1113(B.A.P.9thCir.
Apr.22,2011);andInreWeisband,427B.R.13,20(Bankr.D.Az.2010)(MERSasmerenomineeofmortgage
holderlackspowertotransferenforceablemortgage).
8
SeediscussionoftheTexasU.C.C.below.TheCourtalsofoundthattherewasnomeaningfulevidencethatClaim
No.12wasfiledbyWellsFargoasFreddieMacsagentorservicerorthatFreddieMacactuallywasthe
investor/owneroftheloan,and,accordingly,grantedthatportionoftheDebtorssummaryjudgmentmotionfor
anorderdeclaringthatClaimNo.12wasnotfiledinWellsFargoscapacityasserviceroragent.
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*67(Bankr.N.D.Tex.,July13,2010)(same).SeealsoTex.Bus.&Com.Code3.301(2014)(Aperson
maybeapersonentitledtoenforcetheinstrumenteventhoughthepersonisnottheownerofthe
instrument....);Dasv.DeutscheBankNatlTrustCo.,2014Tex.App.LEXIS2541,at*67(Tex.App.
DallasMarch5,2014),petitionforreviewdenied,2014Tex.LEXIS441(Tex.May30,2014)(same);
Martinv.NewCenturyMortg.Co.,377S.W.3d79,845(Tex.App.Houston1stDist.2012)(same);
Robertsv.Roper,373S.W.3d227,232(Tex.App.Dallas2012)(same);BACHomeLoansServicing,LP.v.
Tex.RealtyHldgs.,LLC,901F.Supp.2d884,907(S.D.Tex.2012)(Aholderofanote,aswellasan
owner,mayenforcethenote.);seegenerallyJosephWilliamSinger,ForeclosureandtheFailuresof
Formality,orSubprimeMortgageConundrumsandHowtoFixThem,46Conn.L.Rev.497,526(Dec.
2013)(ForeclosureandFailures)(Theprevailingviewseemstobethatmostmortgagenotesare
negotiableinstrumentsgovernedbyArticle3oftheUniformCommercialCode(U.C.C.)andthat
mortgageobligationsareowedtothepersonentitledtoenforcethenotewithinthemeaningofU.C.C.
section3301;thatpersonmaybedifferentfromthepersonwhoownsthenoteandhastheultimate
righttotheeconomicvalueofthenote.);JamesM.Davis,PaperWeight:Problemsinthe
DocumentationandEnforcementofTransferredMortgageLoans,andProposalforanElectronic
Solution,87Am.Bankr.L.J.305,32223(2013)(discussingthedifferencebetweentherighttoenforce
anoteundertheU.C.C.andownershipofthenote).ForthepropositionthatunderTexaslawthe
holderofanotemayenforceadeedoftrustsecuringthenoteevenifthedeedoftrustisnotassigned
tothenoteholderorinthenoteholdersname,seeKiggunduv.Mortg.Elec.RegistrationSys.,469Fed.
Appx.330,332(5thCir.2012),cert.denied,133S.Ct.210,184L.Ed.2d41(2012).
TheCourtthereforedeniedtheDebtorssummaryjudgmentmotionforanorderdeclaringthat
WellsFargolackedstandingtoassertClaimNo.12.Becausediscoverywithrespecttothebonafidesof
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theallimportantblankindorsementappearingontheversionoftheNoteattachedtoClaimNo.12,
wasnotcomplete,however,theCourtscheduledanevidentiaryhearingonthatissue.9
Afterthecompletionofdiscovery,whichincludedthedepositionsofMr.KennertyandMr.Kyle
N.CampbellthethirdwitnessofferedbyWellsFargotocorroborateitspossessionoftheNote
attachedtoClaimNo.12andtheproprietyoftheblankindorsementtheCourtheldanevidentiary
hearinginwhichittooktestimonyfromMr.CampbellandtheDebtor.Thepartiesearlieragreedtothe
admissionofMr.Kennertysdepositiontranscriptinlieuofhistestimony,aswellastotheadmission
intoevidenceoftheexhibitsattachedtoClaimNos.11and12,aswellastheoriginaloftheNotewith
theblankABNAmroindorsement,acopyofwhichwasattachedtoClaimNo.12.
BasedontheCourtsreviewoftheoriginalofthatdocument,theblankABNAmroindorsement
hasbeenstampedonthelastpageoftheNote,althoughitisnotdiscernablewhetherMargaretA.
Bezyssignaturewasseparatelywritteninonthesignaturelineorwaspartofthestamp.SeeDecember
3,2013TrialTranscript(TrialTr.),at56(TheCourt:Sothisisthesecondendorsement,theblank
endorsement,thenisafilestamp?Itsastamp?Mr.Dunn:Ihavenopersonalknowledge,butit
SincethisCourtsMarch1,2012benchrulingontheDebtorssummaryjudgmentmotion,manycourtsapplying
Texaslawhaveheldnotonlythattheholderofanotecanenforceitinaforeclosureproceedingnotwithstanding
thatthenoteholderdoesnotholdthedeedoftrustormortgage(thesocalledmortgagefollowsthenoterule
thatappliesinmostjurisdictionsandtracesbackatleasttoCarpenterv.Longan,83U.S.271,274(1872)),see
Kiggunduv.Mortg.Elec.RegistrationSys.,469Fed.Appx.at332,butalsothatthesecuredpartytoadeedoftrust
mayenforceitagainstthecollateralevenifitdoesnotholdthenotesecuredthereby.SeeMorlock,L.L.C.v.Bank
ofN.Y.,2014Tex.App.LEXIS9135,at*59(Tex.App.Houston1stDist.Aug.19,2014),rehgden.,2014Tex.App.
LEXIS13907(Tex.App.Houston1stDist.Dec.30,2014);Morlock,L.L.C.v.JPMorganChaseBank,N.A.,2014U.S.
App.LEXIS17968,at*45(5thCir.Sept.19,2014);Thomasv.WellsFargoBank,N.A.,2013U.S.Dist.LEXIS113220,
at*1415(N.D.Tex.July16,2013);Calvinov.ConsecoFin.ServicingCorp.,2013U.S.Dist.LEXIS124343,at*1820
(W.D.Tex.Aug.29,2013),andthecasescitedtherein.Notalljurisdictionsfollowthelatterrule,see,e.g.,Eatonv.
FannieMae,969N.E.2d1118,113133(Mass.2012);BankofN.Y.v.Silverberg,926N.Y.S.2d532,539(N.Y.App.
Div.2dDept2011);ForeclosuresandFailures,46Conn.L.Rev.at526.Duringthesameperiodcourtsapplying
Texaslawhaveheldthataborrowerlacksstandingtocontestthefraudulent(asopposedtoforged)assignmentof
adeedoftrustincertaincircumstances,althoughtheextentoftheruleisnotfreefromdoubt.Morlock,L.L.C.v.
BankofN.Y.,2014Tex.App.LEXIS13907,at*25;Reinagelv.DeutscheBankNatlTrustCo.,735F.3d220,22425
(5thCir.2013);Brinsonv.UniversalMortg.Co.,2014U.S.Dist.LEXIS121685,at*1013(S.D.Tex.Sept.2,2014);
Venegasv.U.S.Bank,NatlAssn,2013U.S.Dist.LEXIS66000,at*1316(W.D.Tex.May9,2013).Asnotedabove,
however,WellsFargohasreliedsolelyonbeingaholderoftheNotetosustainClaimNo.12andhasnotraised
theforegoingarguments.
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appearstobe.TheCourt:Well,itappearstobe.Itdoesntlooklikeitsasignature.Mr.Dunn:It
appearstobeaninkedstamp.TheCourt:Right.Mr.Dunn:TheendorsementinblankbyABN
Amrodoesappeartohavebeenappliedbyarepresentative.).
WhileagreeingtotheadmissionoftheoriginalversionoftheNote,theDebtordidnot,of
course,agreetothevalidityoftheblankABNAmroindorsement,continuingtoassertthatitwasforged.
TheDebtoralsoobjectedtotheadmissionofcertainotherproposedexhibitsprintedfromWellsFargos
computerfilefortheloanatissue,whichWellsFargoofferedasbusinessrecordsunderFed.R.Evid.
803(6).
AfterposttrialbriefingontheDebtorsobjectiontotheexhibitsadmission,theDebtoralso
movedtoreopentherecordtotakefurtherdiscoveryofWellsFargobasedonthecontentionthatshe
hadunearthedwithheldevidenceconsistingofaWellsFargoattorneymanualthatsupportedher
contentionthatWellsFargohadanindorsementteamthatimproperlyaddedtheblankindorsement
totheNote.10
TheCourtgrantedthismotion,providedthattheadditionaldiscoverywouldpertainonlytothe
loanandNoteatissue.Severalmonthspasseduntil,aftertheCourtsinquiry,thepartiesrepliedthat
theywerenotgoingtopresentanymoreevidenceandwantedarulingonthemeritsoftheClaim
Objectiononthebasisoftheevidencepreviouslysubmitted.
Discussion
Becauseitisundisputedthat(a)theDebtorsignedtheNote(andreceivedtheloanproceeds)11
and(b)aproperlyrecordedlienonthePropertysecurestheDebtorsobligationundertheNote(albeit
thatWellsFargodoesnotrelyindependentlyontheDeedofTrustassignedtoABNAMROandthen
10
SeeSupplementtoEmergencyMotiontoReopenandforLeavetoPropoundAdditionalDiscoverytoDefendant
forAdditionalEvidenceWithheldPriortoTrial,datedMarch11,2014.
11
SeeTrialTr.at956(testimonyoftheDebtor).
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assignedtoMERSasnomineeforWashingtonMutualBank,FA(noneofwhichhasfiledaproofofclaim)
ortheAssignmentofMortgagetosustainitsclaim),theonlyissueaddressedbythepartiesiswhether
WellsFargohasstandingtoenforcetheNote,and,thus,assertClaimNo.12.12Thisisbecause,as
statedabove,Texasfollowsthemajorityrulethat[w]henamortgagenoteistransferred,themortgage
ordeedoftrustisalsoautomaticallytransferredtothenoteholderbyvirtueofthecommonlawrule
thatthemortgagefollowsthenote.Campbellv.Mortg.Elec.RegistrationSys.,Inc.,2012Tex.App.
LEXIS4030,at*1112(Tex.App.AustinMay18,2012),quotingJ.W.D.,Inc.v.Fed.Ins.Co.,806S.W.2d
327,32930(Tex.App.Austin1991).SeealsoKiggunduv.Mortg.Elec.RegistrationSys.,Inc.,469Fed.
Appx.330,332;Richardsonv.OcwenLoanServicing,LLC,2014U.S.Dist.LEXIS177471,at*13n.4(N.D.
Tex.Nov.21,2014);Nguyenv.FannieMae.,958F.Supp.2d781,790n.11(S.D.Tex.2013);Trimmv.
U.S.Bank.,N.A.,2014Tex.App.LEXIS7880,at*14(Tex.App.FortWorthJuly17,2014).
WellsFargosrighttoenforcetheNote,andthusitsstandingtoassertClaimNo.12,derives
fromtheNotesstatusasanegotiableinstrumentunderTexasversionoftheU.C.C.SeeTex.Bus.&
Com.Code3.104(a).TheDebtorhasnotdisputedthattheNoteisnegotiable,andtheNoteinany
eventsatisfiestherequirementsofanegotiableinstrumentunderTexaslaw,asitisanunconditional
promise...topayafixedamountofmoney...payableto...orderatthetimeit[was]issued;...
payable...atadefinitetime;anddoesnotstateanyotherundertakingorinstructionbytheperson
promisingororderingpaymenttodoanyactinadditiontothepaymentofmoneyexceptaspermitted
bythestatute.Id.SeealsoFarkasv.JPMorganChaseBank,2012U.S.Dist.LEXIS190194,at*67(W.D.
Tex.June22,2012),affd,544Fed.Appx.324(5thCir.2013),cert.denied,134S.Ct.628,187L.Ed.411
12
Onemightargue,althoughWellsFargohasnot,thatthepartiesprebankruptcycourseofdealing,includingthe
LoanModificationAgreementsignedbytheDebtoronFebruary12,2008andattachedtoClaimNo12(Seealso
TrialTr.at96104),wouldindependentlysupportWellsFargosrighttoassertClaimNo.12;however,iftheblank
ABNAmroindorsementwereforged,theLoanModificationAgreementandcourseofdealingwouldultimately
improperlyderivefromWellsFargosfraudulentassertionoftherighttoenforcetheNoteandDeedofTrust.
10
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(2013);Steinbergv.Bank.ofAm.,N.A.,2013Bankr.LEXIS2230,at*1214(B.A.P.10thCir.May30,
2013).
UnderTexaslaw,apersonentitledtoenforceanegotiableinstrumentsuchastheNoteincludes
theholderoftheinstrument,Tex.Bus.&Com.Code3.301(i),andaholderisthepersonin
possessionofanegotiableinstrumentthatispayableeithertobearerortoanidentifiedpersonthatis
thepersoninpossession.Nguyenv.FannieMae,958F.Supp.2dat78788(quotingTex.Bus.&Com.
Code1.201(b)(21)(A)).13
UnderTexasU.C.C.,
(a) Ifanindorsementismadebytheholderofaninstrument,whetherpayabletoan
identifiedpersonorpayabletobearer,andtheindorsementidentifiesapersonto
whomitmakestheinstrumentpayable,itisaspecialindorsement.Whenspecially
indorsed,aninstrumentbecomespayabletotheidentifiedpersonandmaybe
negotiated14onlybytheindorsementofthatperson....
(b) Ifanindorsementismadebytheholderofaninstrumentanditisnotaspecial
indorsement,itisablankindorsement.Whenindorsedinblank,aninstrument
becomespayabletobearerandmaybenegotiatedbytransferofpossessionaloneuntil
speciallyindorsed.
Tex.Bus.&Com.Code3.205.SeegenerallyVenegasv.U.S.BankNatlAssn,2013U.S.Dist.LEXIS
66000,at*7(W.D.Tex.May9,2013):
UnderTexaslaw,aholderisthepersoninpossessionofanegotiableinstrumentthatis
payableeithertobearerortoanidentifiedpersonthatisthepersoninpossession.
Tex.Bus.&Com.Code1.201(b)(21)(A).Apersoncanbecometheholderofan
instrumentwhentheinstrumentisissuedtothatperson,orhecanbecomeaholderby
negotiation.Martinv.NewCenturyMortg.Co.,377S.W.3d79,84(Tex.App.Houston
2012)(citingTex.Bus.&Com.Code3.201cmt.1).Whentheinstrumentispayableto
anidentifiedentity,negotiationrequirestransferofpossessionoftheinstrumentand
itsindorsementbytheholder.Id.(quotingTex.Bus.&Com.Code3.201(b)).An
instrumentispayabletobearerwhenitisindorsedinblank.Tex.Bus.&Com.Code
3.205(b).
13
Thereareotherwaystoenforceanotewithoutbeingaholderinpossession,forexamplebyestablishingthat
oneisanonholderinpossession...withtherightsofaholder(Tex.Bus.&Com.Code3.301(ii)),orthrougha
lostnoteaffidavit(Tex.Bus.&Com.Code3.309),butWellsFargohasnotreliedontheseprovisions.
14
Negotiationmeansatransferofpossession,whethervoluntaryorinvoluntary,ofaninstrumentbyaperson
otherthantheissuertoapersonwhotherebybecomesaholder.Tex.Bus.&Com.Code3.201(a).
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Asdiscussedabove,WellsFargoscounselprovidedtheoriginalNotetotheCourtatthe
evidentiaryhearing,anditwasadmittedintoevidencewiththesolecaveatthattheDebtordisputesthe
bonafidesofABNAmrosblankindorsementthatappearsonit.TrialTr.at47.Thus,itis
uncontrovertedthattheNoteisinWellsFargospossession.Inaccordancewiththeforegoingsections
ofTexasU.C.C.,therefore,iftheblankABNAmroindorsementisbonafide,WellsFargoistheholderof
theNote,entitledtoenforceit.Trimmv.U.S.Bank,N.A.,2014Tex.App.LEXIS7880,at*13;Dasv.
DeutscheBankNatlTrustCo.,2014Tex.App.LEXIS2541,at*6(Aninstrumentcontainingablank
endorsementispayabletothebearerandmaybenegotiatedbytransferofpossessionalone.).Onthe
otherhand,iftheindorsementisforged,itisnotvalid,andtheonlyotherindorsementontheNote
beingaspecificindorsementtoABNAmroWellsFargocouldnotrelyontheforegoingstatutory
provisionstoestablishthatitistheholderoftheNote.SeeInrePastran,2010Bankr.LEXIS2237,at*10
([S]ince[claimant]isinpossessionofapromissorynoteendorsedinblank,itis,bydefinition,a
holderundersection3.201(a).This,ofcourse,assumesthatalloftheindorsementsontheNoteare
authenticandauthorized.).
TexasU.C.C.providesthat,althoughWellsFargohastheultimateburdenofproof,the
indorsementsontheNote,includingABNAmrosallimportantblankindorsementbyMargaretA.Bezy,
VicePresident,arepresumedtobeauthentic:
Inanactionwithrespecttoaninstrument,theauthenticityof,andauthoritytomake,
eachsignatureontheinstrumentareadmittedunlessspecificallydeniedinthe
pleadings.Ifthevalidityofasignatureisdeniedinthepleadings,theburdenof
establishingvalidityisonthepersonclaimingvalidity,butthesignatureispresumedto
beauthentic....
Tex.Bus.&Com.Code3.308(a)(emphasisadded).
TexasU.C.C.definespresumedasfollows:Wheneverthistitlecreatesapresumptionwith
respecttoafact,orprovidesthatafactispresumed,thetrieroffactmustfindtheexistenceofthefact
unlessanduntilevidenceisintroducedthatsupportsafindingofitsnonexistence.Id.1.206(a).Inre
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Pastran,2010Bankr.LEXIS2237,at*1011(Thus,[theclaimant]isnotrequiredtoprovethatthe
indorsementsontheNotearevalidandauthenticunlessanduntiltheDebtorovercomesthe
presumptionbyputtingonevidencethatsupportsafindingthattheindorsementsontheNotewere
somehowforgedorunauthorized.).
Thepresumptionrestsuponthefactthatinordinaryexperienceforgedorunauthorized
signaturesareveryuncommon,andnormallyanyevidenceiswithinthecontrolof,ormoreaccessible
to,thedefendant.15OfficialCommenttoTex.Bus.&Com.Code3.308(Off.Cmt.).The
presumptioniseffectivelyincorporatedintoFed.R.Evid.902(9),whichprovidesthatnoextrinsic
evidenceofauthenticityisrequiredtoadmit[c]ommercialpaper,asignatureonit,andrelated
documents,totheextentallowedbygeneralcommerciallaw,anditislooselyanalogoustothe
rebuttablepresumptionoftheprimafacievalidityofaproperlyfiledproofofclaimunderFed.R.Bankr.
P.3001(f).
WhileTex.Bus.&Com.Code3.308(a)and1.206(a)providethatthepresumptionofan
authenticsignatureappliesunlessanduntilevidenceisintroducedthatsupportsafindingof
nonexistence,theydonotstatethequantumofevidencetoovercomethepresumption.TheOfficial
Commentto3.308,however,referstosomeevidenceandtosomesufficientshowingofthe
groundsforthedenialbeforetheplaintiffisrequiredtointroduceevidence,andthenstates,[t]he
defendantsevidenceneednotbesufficienttorequireadirectedverdict,butitmustbeenoughto
supportthedenialbypermittingafindinginthedefendantsfavor.Off.Cmt.1to3.308.16This
suggeststhattherequiredevidentiaryshowingtoovercomethepresumptionissimilartothatneeded
15
Thissecondrationaleforthepresumptiondoesnotapplyhere:theClaimObjectionispremisednotonthe
forgeryoftheDebtorssignaturebut,rather,ontheforgeryoftheblankABNAmroindorsement.
16
Incontrast,Tex.Bus.&Com.Code.3.302(a)(1)requiresapparentevidenceofforgeryoralterationorisnot
otherwisesoirregularorincompleteastocallintoquestiontheauthenticityofaninstrumentassertedtobeheld
byaholderinduecourse,thusfocusingonthefaceoftheinstrumentitselfasopposedtoawiderrangeof
possibleevidenceofforgery.(Emphasisadded.)
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todefeatasummaryjudgmentmotion:theintroductionofsufficientevidencesothatareasonabletrier
offactinthecontextofthedisputecouldfindinthedefendantsfavor.SeeMatsushitaElec.Indus.Co.,
Ltd.v.ZenithRadioCorp.,475U.S.574,58788(1986);11MooresFed.Prac.3d56.22[2](2014).
BecauseofthegeneralfactualcontextdescribedintheOfficialComment,whichrecognizesthatin
ordinaryexperienceforgedorunauthorizedsignaturesareveryuncommon,Off.Cmt.1to3.308,
courtshaveneverthelessrequiredasignificantamountofevidencetoovercomethepresumption.See
InrePhillips,491B.R.255,273n.37(Bankr.D.Nev.2013)(Thisevidencewasinconclusiveatbest.
Againstthisbackground,thecourtispreparedtobelievethatitismorelikelythat[theclaimant]
negligentlyfailedtocopytheNoteandFirstAllongewhenitfiledits[first]ProofofClaimratherthanit
forgedtheFirstAllongelateron.Inshort,whenbothareequallylikely,thecourtpicksslothover
venality.);seealsoCongressv.U.S.Bank.N.A.,98So.3d1165,1169(Civ.App.Ala.2012)(referringto
requirementofsubstantial,thoughnotclearandconvincing,evidencetorebutthepresumptionunder
U.C.C.3308(a)and1206(a),althoughdirectingtrialcourtonremandtoapplypreponderanceof
theevidencestandardtowhetherthepresumptionwasovercome).
Itisimportanttokeepinmind,however,thatifthepresumptionisovercome,theultimate
burdenofproofunderTex.Bus.&Com.Code3.308(a)and1.206(a)isonWellsFargo.SeePeoplev.
Richetti,302N.Y.290,298(1951)(Apresumptionofregularityexistsonlyuntilcontrarysubstantial
evidenceappears....Itforcestheopposingparty(defendanthere)togoforwardwithproofbut,once
hedoesgoforward,thepresumptionisoutofthecase.).Thus,inInrePhillips,491B.R.at273n.37,
quotedabove,ifthepresumptionhadbeenovercomebyapreponderanceoftheevidenceandthe
burdenshiftedandforgeryandnegligencewerefoundtobeequallylikely,theholderofthenoteshould
lose.
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WhatistheDebtorsevidencethattheblankABNAmroindorsementwasforgedor
unauthorized,andisitsufficienttoovercomethepresumptionunderTex.Bus.&Com.Code3.308(a)
and1.206(a)?
TheDebtorfirstpointsoutthattheversionoftheNoteattachedtoWellsFargosinitialproofof
claim,ClaimNo.11,didnotcontaintheblankABNAmroindorsement.Besidesobservingthatthe
penaltyforfilingafalseproofofclaim,asstatedinOfficialForm10,canbesubstantial,theDebtoralso
observesthat,withtheexceptionoftheversionsoftheNoteattached,ClaimNos.11and12were
otherwiseidenticalandincludedcopiesofmostifnotallofthepotentiallyoperativedocumentsfrom
WellsFargosfiles,which,sheargues,stronglysuggeststhatClaimNo.11wasnotmerelysloppily
preparedbut,rather,reflectedathoroughreviewofthefiles,thussuggestinganefariousreasonwhy
theformofNotewiththeblankABNAmroindorsementwasnotattachedtothatproofofclaimbutwas
attachedtoClaimNo.12.
WerethistheDebtorsonlyevidence,theCourtmightneverthelessholdthatshehadnot
overcomethepresumptioninTex.Bus.&Com.Code3.308(a)and1.206(a).ThatwastheresultinIn
rePhillips,491B.R.at273,17aswellasinInreHunter,466B.R.439,44950(Bankr.E.D.Tenn.2012),and
InreWilson,442B.R.10,15n.6(Bankr.D.Mass2011).SeealsoCasterlinev.OneWestBank,F.S.B.,537
Fed.Appx.314,318(5thCir.2013)(withoutdiscussingTex.Bus.&Com.Code3.308(a)and1.206(a),
courtnotbotheredbyinconsistenciesbetweendifferentformsofnotesubmittedinforeclosure
proceedingandinfederalcourtproceeding);Dasv.DeutscheBankNatlTrustCo.,2014Tex.App.LEXIS
2541,at*78(withoutdiscussingTex.Bus.&Com.Code3.308(a)and1.206(a),courtgranted
summaryjudgmentdeclaringlendertobecurrentholderofnotealthoughadifferentversionofthe
notewasattachedtoproofofclaiminearlierbankruptcycase).ButseeOcwenLoanServicing,LLCv.
17
Itisworthnoting,however,thatthecourtinPhillipsalsofoundthatthecircumstancespertainingtothefilingof
thesecondversionofthenotedidnotleadtotheinferencethatsuchversionwasfiled(andconcocted)in
responsetoaproblemraisedbythedebtorwithregardtothefirstversion.InrePhillips,491B.R.at273.
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Thompson,2014U.S.Dist.LEXIS2109,at*1415(E.D.Wisc.Jan.7,2014)([H]ere,facedwithtwo
materiallydifferentversionsofthesamenegotiableinstrument(onesansallongeandtheother
purportedlymodifiedbyanallonge),thisCourtisobligedtoconcurthatapplicationofFRE902(9)tothe
latterwouldbeoverlymechanistic.);InreTarantola,2010Bankr.LEXIS2435,at*13(Bankr.D.Ariz.July
29,2010)([I]nlightof[claimants]admissionthatitfabricatedtheAllonge,andintheabsenceofany
credibleexplanationforthedifferenceoftheOriginalfromotherfiledversionsoftheNote,theCourt
willnotapplytheusualevidentiarypresumptionstothevalidityoftheEndorsements.).
Inaddition,however,theDebtorreliesontheAssignmentofMortgagefromMERS,asnominee
forWashingtonMutualBank,FAhavingbeenexecutedbyMr.Kennerty,anofficerofWellsFargo(the
assignee),onbehalfoftheassignor.Evenmoretellingly,itappearsclearfromthedateofthe
AssignmentonlythreedaysbeforethedateofClaimNo.11aswellasMr.Kennertysdeposition
testimony,thattheAssignmentwaspreparedbyWellsFargosthencounseltoimprovetherecord
supportingWellsFargosrighttofileasecuredclaim,similartotheimprovementoftherecordinInre
Tarantola,citedabove,onwhichthecourtrelied,alongwiththetwodifferentversionsofthenoteat
issuethere,tofindthatthepresumptionofauthenticitywasrebutted.2010Bankr.LEXIS2435,at*12
13.18(ThetimingofthefilingofClaimNo.12onlyaftertheDebtorpointedoutthedifficultyofWells
FargosabilitytoenforcetheformofNoteattachedtoClaimNo.11alsodistinguishesthismatterfrom
thefactsinInrePhillips,asdiscussedinnote17above.)
ItappearsfromMr.Kennertysdepositiontranscript,althoughhistestimonyonthispointwasat
timesquiteevasive,thatduringtheperiodinquestionin2010hesignedonaveragebetween50and
150originaldocumentsadayinconnectionwithWellsFargosadministrationandenforcementof
defaultedloans.DepositionTranscript,datedOctober15,2012,ofHermanJohnKennerty(Dep.Tr.)
18
ThereisnoevidencethatWashingtonMutualBank,FA,whichinJuly2010wasinthemidstofitsownchapter11
caseandhadmergedwithJPMorganChaseBankinSeptember,2008(ClaimObjectionEx.F)hadanythingtodo
withtheAssignmentofMortgage.Seenote7aboveforadiscussionofMERSlackofauthority,throughMr.
Kennerty,toeffectivelyassignthemortgage/DeedofTrust.
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at8992.ThiswaspartofhisdutiesastheWellsFargomanagerinchargeofdefaultdocuments.Id.at
44.Inotherwords,onadailybasisMr.Kennertyandhisteam,membersofwhichhealsotestified
signedalikenumberofdocumentseachday,id.,processedalargevolumeofloandocumentsfor
enforcementwithverylittlethoughtaboutwhattheyweredoing.ItisnotclearthatMr.Kennertyfully
understoodthelegalconsequencesofsigningthesedocuments;forexample,hetestifiedwhenshown
theAssignmentofMortgagethatheexecuteditnotonbehalfoftheassigningpartybut,rather,on
behalfofthepartyingettingtheassignment,althoughhealsotestifiedthatImImnotan
attorney,butthewayIunderstandthisdocument,itwasassigningthemortgage,takingitoutofMERS
nameandputtingintoWellsFargoBanksname.Id.at934.Itisclear,however,thatheprettymuch
signedwhateveroutsidecounselworkingonthedefaultputinfrontofhimandthatthesedocuments
oftenincludedassignments,includingtheAssignmentofMortgage,draftedbyWellsFargosoutside
enforcementcounseltofillinmissinggapsintherecord.
Thus,indescribingtheworkofhisassignmentteamMr.Kennertystated,[I]ftherewasnot
anassignmentinthere[thatis,inWellsFargosloanfile]thentheywouldexcuseme,theywould
advisetheattorneythatwedidnothaveit,thattheywouldneedtodraftthetheappropriate
assignment.Id.at116.Seealsoid.at76([I]ftheassignmentneededtobecreatedtheywouldhave
advisedtheattorney,therequestingattorneytothatwedidnothavetheassignmentinthecollateral
file,thentheyneededtodrawuptheappropriatedocument.);id.at121(Onceit[thatis,the
collateralfile]wasreceivedthentheywouldchecktoseeifitwassomethingthatcouldbeusedornot
used;and,ifitssomethingthatwasinthefile,butcouldntbeusedthentheywouldadvisethe
requestingattorneytogoaheadanddrafttheactualdocument.).
BecauseWellsFargodoesnotrelyontheAssignmentofMortgagetoproveitsclaim,the
foregoingevidenceishelpfultotheDebtoronlyindirectly,insofarasitgoestoshowthattheblank
indorsement,uponwhichWellsFargoisrelying,wasforged.Neverthelessitdoesshowageneral
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willingnessandpracticeonWellsFargosparttocreatedocumentaryevidence,afterthefact,when
enforcingitsclaims,WHICHISEXTRAORDINARY.19
Moreover,Mr.Kennertystestimonydoesnotstopatdescribingmanufacturedmortgage
assignments.Healsotestifiedthathisassignmentteamsdutieswerenotlimitedtoprocessing
assignments,including,whendeterminednecessary,creatingthem;inaddition,theassignmentteam
includedpeopletaskedwithendorsingnotes.Id.at136.Histestimonyonthisissueiscriticalandwill
bequotedatlength:
Q.
A.
Q.
Okay.Didyourdepartmentendorsenotes?
Yes.
Okay.Andhowwasitthatyourdepartmentwouldcometoendorse
notes?
A.
Idontrecallthespecificprocess,buttothebestofmyrecollection
theresusuallyainusuallyablankendorsementononthenotesandtherewould
andthenbasedonthattheywouldcompletetheendorsement.
Q.
Sowhenyousaytheywouldcompletetheendorsement,whoisthey?
A.
Imsorry.Therewasatherethereweresomeprocessorsthatwould
performthattask.
Q.
Okay.Whenyousaycompletetheendorsement,whatdoyoumeanby
that?
19
Asdiscussedinnote7above,withinthelastfewyearsseveralTexascourtshaveacceptedthegeneral
propositionthatMERShadthepowertotransferinterestsinmortgagesanddeedsoftrust,atleastwhere,aswas
notthecasehere,theoriginaldeedoftrustnamedMERSandspecificallyconferredonitthepowertosellthe
collateralandtransferintereststhereininthenamenotonlyofitsnomineebutalsotoitsownsuccessorsin
interest.Whatthesecourtsdonotaddress,perhapsbecausetheissuewasnotraised,isthattheauthorized
signingofficersofMERS,ifMr.Kennertyisatypicalexample,neveractuallyworkedforthatcompany,neverhad
anagreementwiththatcompany,neverreceivedapaycheckfromthatcompanyandwere,inreality,really
officersandemployeesofthelenderswhowereMERSmembers,Dep.Tr.at99102,and,therefore,thatMERS
couldreadilybeusedasavehicleforselfdealingandfraud.Thatis,undertheguiseofbeingaMERSofficer,an
employeeofBankXcouldpurporttotransferamortgageheldbyMERSasnomineeforBankYwithoutBankY
knowingaboutitorauthorizingitwiththeexceptionofthefactthatMERShadconferredsigningauthorityon
employeesofitsmembers,includingemployeesofBankX.SeeCulhanev.AuroraLoanServs.ofNebraska,826F.
Supp.2d352,374(D.Mass.2011),decisionreachedonappeal,708F.3d282(1stCir.2013)(Equallytroublingis
theconflictofinterestposedbythesecertifyingofficerswearingtwohatssimultaneously:thatofassignor(as
agentforMERS)andassignee(asemployeeofthenoteholderoritsservicingagent).).
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A.
Theywouldexecuteanoteendorsement,anewnoteendorsementif
therewasablankoneonthere.
Q.
Andtheywoulddothatwiththeoriginalnotefromthecollateralfile?
A.
Tothebestofmyrecollection,yes.
Q.
Okay.Andatwhoserequestwouldtheprocessorsperformthat
function?
A.
Again,tothebestofmyrecollection,itwouldbedoneattheeither
theforeclosureattorneysrequestorthebankruptcyattorneysrequest.
Id.at12931.
Mr.Kennertythentestifiedabouttheprocessforreceivingsuchrequestsfromoutside
enforcementattorneysandhowoneortwopeopleinhisdepartmenthadthejobofendorsingnotes.
Id.at13132.Whenquestionedabouthowoftensuchrequestsweremade,whetheronadailybasisor
onrareoccasions,Mr.Kennertyreplied,Tothebestofmyrecollection,itwasonaregularbasis.Id.at
133.HealsotestifiedabouttheinformationsystemorsystemsatWellsFargowheresuchrequests
mightbemadeandmaintained.20Id.at13334.
Hethentestifiedasfollows:
Q.
Andtheactualprocedureforendorsinganoriginalnote,ifyoucould
justwalkmethroughthatprocess.Whatwouldtheprocessordo?
A.
Tothebestofmyrecollection,theywouldtherequestwouldcomein.
Again,wewouldchecktoseeifwehadthecollateralfile.Ifweifwehaditand
dependingonthestatusoftheoftheloanitself,ifwehadthenotethenwecould
checktosee,youknow,whatwasactuallyonthenotetoseewhatneededtobedone.
Ifwedidnothavethecollateralfilethentheywouldworkthatprocessorwouldwork
withthecollateralfileorderingteamtoreachoutwiththeappropriateattorneyor,Im
sorry,theappropriatecustodiantoobtainthecollateralfile.Andthentheywouldlook
tooncethefilecameintheywouldlooktoensurethattheoriginalnotewasinthere
andchecktoseeiftherewasanyendorsementonthebackofthenote.
Q.
Okay.Andiftherewasnthowwouldtheygoabouthowwouldthe
processorgoaboutendorsingthenote?
A.
Idontrecallspecificallyhowtheycompletedthatparticulartask.
20
Apparentlynorecordofanysuchrequestswasproducedindiscovery.
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Q.
Wasitarubberstamp?Wasitsomebodysigning?Howwasit?
A.
Tothebestofmyrecollection,astampwasinvolvedbutthenithadto
besigned.
Q.
Okay.Andifanendorsementwascomingfromanentitythatnolonger
existedhowwoulditbesigned?
A.
Idonotrecall.
Id.at13536(emphasisadded).
Laterinhisdeposition,Mr.KennertywasshownthetwoformsoftheNoteattachedtoClaim
Nos.11andNo.12,respectively,andtestifiedthathedidnotknowhoworwhentheindorsements
wereplacedonthem.Id.at14244.Hedidhavethistosay,however:
Q.
Now,ifanyoneoftheseendorsementswerearubberstampand
producedbyyourdepartmentwouldtherebearecordofthatsomewhere?
Mr.Cromwell:Objection;misstateshistestimony.
Witness.Ithetermrubberstampisanotaccuratebecausealthoughthe
astamptoproducethepaytoorderofwasused,thetermtome,useofarubber
stamp,meansitwassigned,therewasasignatureontheonthestampitselfandthat
tomyrecollection,thatwasnotthecase.
Id.at14344.Mr.KennertysaidnothingmorethatwasrelevanttotheissueofwhetherWellsFargo
forgedtheblankABNAmroindorsement,withtheexceptionofstatingthatIamnotfamiliarwith
MargaretBezy,id.at143,whohasnotbeenidentifiedaseverhavingbeenanemployeeofWellsFargo
andpresumablywasanemployeeofABNAmro.
IconcludethattheforegoingevidencecumulativelyshiftstheburdentoWellsFargounderTex.
Bus.&Com.Code3.308(a)and1206(a)toshowtheauthenticityoftheblankABNAmro
indorsementtoestablishitsstatusasaholderoftheNoteunderTex.Bus.&Com.Code3.301(i)and
3.201(a).ItconstitutessubstantialevidencethatWellsFargosadministrativegroupresponsibleforthe
documentaryaspectsofenforcingdefaultedloandocumentscreatednewmortgageassignmentsand
forgedindorsementswhenitwasdeterminedbyoutsidecounselthattheywererequiredtoenforce
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loans.Giventhatevidence,WellsFargoshouldhavetheburdentoestablishthebonafidesoftheblank
ABNAmroindorsementthatdidnotappearontheNoteattachedtoClaimNo.11butdidappearonthe
NoteattachedtoClaimNo.12.
ReadingMr.Kennertystestimonycarefully,itisconceivablethatallofWellsFargosnewly
createdmortgageassignmentsandnewlycreatedindorsementswereproper,that,forexample,the
onlytimetheindorsementprocessorswroteinorstampednewnoteindorsements(when,asMr.
Kennertytestified,theywerenotalreadyonthenote)orpreparednewmortgageassignmentswas
whenendorsingnotesfromWellsFargotosomeotherentity,whetherasprincipaloragent,fillinginthe
blankindorsementstoitself,orproperly,withdueauthorization,assigningmortgagestoitfromathird
party.However,thatinterpretationcertainlydoesnotleapoutfromMr.Kennertystestimony.Byno
meansdidhequalifyhistestimonytomakeitclearthathisassignmentteamandindorsement
processerswerelimitedbysuchrestrictions.Frankly,itdoesnotappearthatheunderstoodthe
differencebetweenpreparinglegitimateassignmentsandindorsementsbyWellsFargoandimproper
assignmentsandindorsementstoWellsFargo.
Moreover,itiswidelyrecognizedthatanagentorservicercanenforceanoteandmortgageon
behalfofitsprincipal.See,e.g.,Martinsv.BACHomeLoansServicing,L.P.,722F.3d249,255(5thCir.
2013);seealsoInreMinbatiwalla,424B.R.104,10809(Bankr.S.D.N.Y.2010)(servicerhasstandingto
fileproofofclaim).Italsoiswidelyrecognized,asdiscussedabove,thataholderofanotecanenforce
thenoteandmortgageevenifitdoesnotowntheloan,and,ofcourse,thattheholderofanote
indorsedinblankdoesnothavetofillintheblankwithitsownnameinordertoenforceit.Thus,why
wouldWellsFargosdefaulteddocumentenforcementgroupbecreatingnewassignmentsandadding
indorsementsonaregularbasisfromitselfto,effectively,itself?Itwouldnotneedto.Similarly,why
wouldMr.KennertysgroupWellsFargosdefaulteddocumentgrouponaregularbasisbecreating
newdocumentsandaddingindorsementsfromitselftotruethirdpartiesforthethirdpartiesbenefit?
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Truethirdpartieswerenotenforcingthedocuments;WellsFargowas.21Itismorereasonabletoinfer
fromMr.Kennertystestimonythat,instead,WellsFargowasimprovingitsownpositionbycreating
newdocumentsandindorsementsfromthirdpartiestoitselftoensurethatitcouldenforceitsclaims.
Again,then,theburdenshouldshifttoWellsFargotoshowthatitdidnotforgetheblankABNAmro
indorsement.
WellsFargohasnotcarriedthatburden.Todoso,itofferedonlyMr.Campbellstestimonyand,
throughhim,certainexhibitscopiedfromWellsFargosloanfile.Thattestimonywasnothelpfultoit.
Mr.CampbellwasnotinvolvedintheadministrationoftheDebtorsloanuntilhebecameapotential
witnessin2013.TrialTr.at37.HewasnotinvolvedinthepreparationofClaimNo12.Id.at37.He
hadnothingtosayaboutthecircumstancesunderwhichtheblankABNAmroindorsementappearedon
theNoteattachedtoClaimNo.12,withtheexceptionthathelocatedtheearliestentryinthe
electronicloanfilewherethatversionoftheNotewasrecorded,pulledupitsimageandcompareditto
theoriginalshownhimbyWellsFargoscounsel.Id.at33,36,4950.Hewasoffered,therefore,onlyto
qualifyWellsFargosproposedexhibits,copiedfromWellsFargosloanfile,asfallingwithinFed.R.Evid.
803(6)sbusinessrecordsexceptiontoahearsayobjectionunderFed.R.Evid.802andtotestifythata
copyoftheNotewiththeblankABNAmroindorsementappearsinWellsFargoselectronicrecords
beforethepreparationofWellsFargosinitialproofofclaiminthiscase.
Asnotedabove,theDebtorobjectedtoMr.Campbellstestimonytotheextentthatitwas
intendedtoestablishabusinessrecordsexceptiontoFed.R.Evid.802.Becausetheloanfiledescribed
byMr.Campbellwasanelectronicrecord22andthuspotentiallyeasilyalterable,theDebtorcontended
21
Conceivably,moreover,therewassuchathirdpartyhereFreddieMac,whichWellsFargoandFreddieMac
eachclaimedwastheowneroftheloanyettherewasnoassignmentorindorsementfromWellsFargotoor
fromFreddieMacoranyotherlegallyeffectiveevidenceoftransfertoorfromit.
22
Infact,Mr.CampbelltestifiedthatWellsFargohadtwoelectronicrecordssystems:amortgageservicing
platformandtheimagingsystemofrecord.TrialTr.at401.Althoughitisnotclearhowthetwosystemswere
integrated,itappearsthattheloanfilethatMr.Campbellaccessedwastheimagingsystem.Id.at1316,21.
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that(i)forMr.CampbelltobeaqualifiedwitnessunderFed.R.Evid.803(6)(D),or(ii)toestablish,for
purposesofFed.R.Evid.803(6)(E),thatneitherthepossiblesourceofinformationinthefilenorother
circumstancesindicatealackoftrustworthiness,WellsFargowouldhavetoshowatleasthowdataisor
canbeinsertedintothefileandthatsuchprocedurehasbuiltinsafeguardstoensureaccuracyand
identifyerrors.SeeLorrainev.MarkelAm.Ins.Co.,241F.R.D.534,55758(D.Md.2007);InreVee
Vinhnee,336B.R.437,44546(B.A.P.9thCir.2005);InreVargas,396B.R.511,51819(Bankr.C.D.Cal.
2008).TheVeeVinhneecourtstatedthattheforegoingshowingshouldincludedetailsregarding
computerpolicyandsystemcontrolprocedures,includingcontrolofaccesstothedatabase,controlof
accesstotheprogram,recordingandlogginginofchanges,backuppractices,andauditproceduresto
assurethecontinuingintegrityoftherecords.336B.R.at44647.
Inlargemeasure,Mr.Campbellwasnotuptothattask(andWellsFargoofferednoother
evidencetomeetthatstandard,weretheCourttoimposeit).Mr.Campbelldidnotknowwhether
therewasanypersonoverseeingtheaccuracyofhowtherecordsinthesystemwerestoredand
maintained.Id.at32,40,423.Hedidnotknowwhocontrolledaccesstothesystemortheprocedure
forlimitingaccess,excepttosay[A]ccessisgrantedasneeded.Id.at401.Hedidnotknowofany
proceduresforbackinguporauditingthesystem.Id.at42.Hestated,Iamnotatechnologyperson
andwasnotabletoanswerwhattechnologyensurestheaccuracyofthedateandtimestampingofthe
entryofdocumentsintotheimagingsystem.TrialTr.at22.Inhisdeposition,hetestifiedthathedid
notknowwhetherthedatesandtimesoftheentryofdocumentsinthesystemcouldbechanged,but
attrialhestatedthat,afterhisdeposition,Iattemptedtolookintothis,and,tomyknowledge,Iam
notawareofanywaytochangeorremoveattachmentsintotheimagingsystem,id.at43,which,given
hisgenerallackofknowledgeabouthowthesystemworksandfailuretoexplainthebasisforhis
assertion,didnotinspireconfidence.
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Mr.Campbellalsounderminedhiscredibilitywhenhesupportedhisstatementthatheisa
custodianofWellsFargoselectronicrecordfilesbystating,Ireviewandmaintainthem,yes,id.at38,
aremarkablecontentioninlightofhisothertestimonydiscussedabove.And,indeed,itbecameclear
whenpressedonthisissuethatMr.Campbellwasnotusingthewordmaintaininitsnormalsenseof
ensuringthatthesystemrunsproperlyorevenofauditingitbymonitoringitsinputsandoutputs,but,
rather,simplythatheassertsitsaccuracy:Ireviewandmaintainthattheyreaccurate,yes....I
havetheabilitytoaccessandmaintainrecords.Icanuploaddocumentsintoanimagingsystem.Id.at
38.Thatis(andhisothertestimonyclearlycorroboratedthis),Mr.Campbellvouchedforthesystem
basedonlyonthefactsthatheandotherpeopleassociatedwithWellsFargoregularlyuseitandhecan
finddocumentsonitthatmatchoriginalsthatcounselhasshownhim,id.at33,36,althoughhedoes
notknowwhooriginatedthemandputthemthereandhow,andperhapsexactlywhen,theywereput
there.Id.at3940,435.
Nevertheless,WellsFargodidnothavetomeettheheightenedstandardassertedbytheDebtor
foradmissionofelectronicrecordsunderFed.R.Evid.803(6).IntheSecondCircuit,applicationofthe
businessrecordsexception,includingtoelectronicrecords,requiresonlythataqualifiedwitnesstestify
thatthedocumentwaskeptinthecourseofaregularlyconductedbusinessactivityandthatthemaking
ofsuchrecordwastheregularpracticeofthatactivity.UnitedStatesv.Komasa,767F.3d151,156(2d
Cir.2014);23UnitedStatesv.Williams,205F.3d23,34(2dCir.2000),cert.denied,531U.S.885(2000).
Tobequalified,thewitnessneednothavepersonalknowledgeoftheactualcreationofthe
documents.Id.And[u]singanautomatedprocesstocompiletherecordsinquestion[electronicloan
files]doesnotrenderthedocumentsinadmissible;onlyregularuseinrelianceontherecordsaccuracy
isrequired.Komasa,767F.3dat156;seealsoInreEnronCreditorsRecoveryCorp.,376B.R.442,454
23
KomasaprimarilyanalyzedadmissibilityunderFed.R.Evid.902(11),767F.3dat156,butthecourtshaveapplied
anessentiallyidenticalapproachtothatRuleandFed.R.Evid.803(6).5Weinstein&M.Berger,Weinsteins
FederalEvidence900.06[2][a](2014)(WeinsteinsFederalEvidence).
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(Bankr.S.D.N.Y.2007)(Abusinessrecordmayincludedatastoredelectronicallyandlaterprintedout
forpresentationincourt,aslongastheoriginalcomputerdatacompilationwaspreparedpursuanttoa
businessdutyinaccordancewithregularbusinesspractice....Moreover,ifemployeesregularly
retrievedatafromtheentityscomputersystemandrelyonsuchinformationforcommercialpurposes,
theybearsufficientindiciaoftrustworthiness.)(internalcitationsomitted);InreLoSia,2013Bankr.
LEXIS3559,at*1618(Bankr.D.N.J.Aug.27,2013);5WeinsteinsFederalEvidence900.07[1][b][i](a
companystrustinitscomputerrecordsforroutinebusinessdecisionsisstrongcircumstantialevidence
oftherecordsreliability).Moreover,becauseofthegeneraltrustworthinessofsuchrecordsanda
policyfavoringtheadmissionofevidencewithanyprobativevalue,thebusinessrecordsexceptionhas
beenconstruedgenerously.UnitedStatesv.Williams,205F.3dat34(WehavestatedthatRule803(6)
favorstheadmissionofevidenceratherthanitsexclusionifithasanyprobativevalueatall.)(quoting
InreOllagConstr.Equip.Corp.,665F.2d43,46(2dCir.1981));InreEnronCreditorsRecoveryCorp.,376
B.R.at44445.
Here,Mr.CampbellcrediblytestifiedthatWellsFargowidelyandregularlyuseditselectronic
imagingsystem,TrialTr.at1315,17,andthathewassufficientlyfamiliarwithittouseithimselfona
regularbasis.Id.at1516,523.Healsotestifiedthatgenerallydocumentswereenteredintothe
systemsubstantiallycontemporaneouslywiththeirreceiptorpreparation.Id.at1617,201.Mr.
KennertycorroboratedWellsFargosrelianceonregularlykeptloanfiles,Dep.Tr.at734,11819,148
49,150and154,whichiscertainlyreasonableconsideringthatsuchfilesmaybeusedtoadministerand
enforcealargenumberofloans.Accordingly,theDebtorsobjectiontotheadmissionofMr.Campbells
testimonyandWellsFargosproposedexhibitsAthroughGshouldbeoverruledandthoseexhibits
admittedintoevidence.
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Thisofcourseleavesopenwhether,inthelightofMr.CampbellstestimonyandWellsFargos
ExhibitsAthroughG,aswellastheotherevidenceadmittedsuggestingforgery,WellsFargohascarried
itsburdentosubstantiatetheauthenticityoftheblankABNAmroindorsement.
TheevidenceultimatelyisnothelpfultoWellsFargo.Asnotedaboveandacknowledgedby
bothMr.CampbellandWellsFargoscounsel,theprimarypurposeofhistestimonywastoshowthat
theimageoftheversionoftheNotebearingtheblankWellsFargoindorsementappearsintheloanfile
beforethepreparationofeitherofthetwoproofsofclaimfiledbyWellsFargointhiscase.TrialTr.at
4950(Mr.Campbell:Iwaslookingfortheearliestcopyofthenotethathadalltheendorsementsonit
andthattookmebacktothe[sic]December28thof2009.);id.at68(Mr.Dunn:[T]hequestionis
whetherthenoteinthatformwasinthepossessionofWellsFargopriortothetimetheamendedproof
ofclaim,ortheoriginalproofofclaim,wasfiled,sothescreenshotandthefactthatitdoesappearand
thewitnesswasabletoviewitandverifyitasanentryonthedateidentifiedbackin2009isanindicator
thatitwas,infact,soindorsed.).24SeealsoWellsFargoEx.G,theindextoWellsFargoselectronicloan
file,at6of10(showingtheDecember28,2009entryofaNote,whichMr.Campbelltestifiedwasthe
firstappearanceinthefileoftheversionoftheNotewiththeblankABNAmroindorsement).
Thatfact,however,atbestmerelymuddiesthepicture.AsstatedbyMr.Campbellin1ofhis
Affidavit,datedJuly2,2013(CampbellAff.),which,pursuanttotheCourtsdirectionwassubmittedin
lieuofhisdirecttestimony,InFebruary2007certainrightsinandwithrespecttotheloanatissuein
thisproceedingweretransferredtoWellsFargo....ThetransferoftheNoteandMortgagetoWells
24
Mr.DunnalsoarguedthatMr.Kennertystestimonyabouthisindorsementteamonlyrelatestoendorsements
byWellsFargo,TrialTr.at115(emphasisadded),nottoWellsFargo,butWellsFargoofferednoevidenceto
supportthiscontention,whichhasbeendealtwithabove.
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FargoinFebruary2007wasreflectedinWellsFargoscomputerizedbusinessrecords,accessibleonan
AQN1screen,whichreflectsWellsFargosacquisitionoftheloan.25
ItisapparentfromMr.Campbellstestimony,though,thatatthattimeWellsFargodidnothave
theoriginaloftheNotethatboretheblankABNAmroindorsement,andthatitreceived,atbest,only
theNotewithjustthespecialindorsementfromMortgageFactoryInc.toABNAmro:
WhenthemortgageloanwastransferredtoWellsFargo,copiesoftheoriginationfile
wereprovidedtoWellsFargo,andwererecordedinitsdatasystem.Thisfileincludeda
copyoftheNotecontaininganendorsementfromMortgageFactorytoABNAmro,
[which]wasrecordedinWellsFargosimagingsystem.Acopyofthisversionofthe
NotewasplacedintoWellsFargossystemonMarch26,2007andremainsaccessibleto
thepresent.
Id.2.WhatMr.Campbellavoidssayinghere(butisclearfromhisadmissionduringtheevidentiary
hearingthatthefirsttimetheNotewiththeblankABNAmroindorsementappearsinWellsFargos
recordsisDecember28,2009(TrialTr.at4950)),isthatwhentheloanwastransferredtoWellsFargo,
WellsFargodidnotreceivetheNotewiththeblankindorsement,onlytheNotewithaspecial
indorsementthatWellsFargocouldnotenforce.26
Apparently,Mr.Campbellsreferencein2ofhisAffidavittotheoriginationfilewasintended
toprovidearationaleforwhyanallegedlyoutdatedcopyoftheNotewastheonlyversionloggedinto
WellsFargosrecordsbetweenthetransferoftheloantoitandDecember28,2009,thedateidentified
byMr.CampbellasthefirstappearanceinthefileoftheenforceableversionwiththeblankABNAmro
25
ExhibitAtotheCampbellAff.,givesthedateofthetransferasJune21,2007,infact,notFebruary2007,but
ExhibitBtotheCampbellAff.,whichconsistsofahelloletterfromWellsFargototheDebtor,datedFebruary3,
2007,statesthatAsofFebruary16,2007,WashingtonMutualwilltransfertheservicingofyourmortgageloanto
WellsFargoHomeMortgage,adivisionofWellsFargoBank,N.A.BothoftheseexhibitsareinternalWellsFargo
documents;itisworthreiteratingthatthereisnodocumentintherecordthatwasexecutedbyorcomesfrom
WashingtonMutualBank,FAevidencingtransferoftheNoteandDeedofTrust,orservicingrightsand
responsibilitiesrelatedthereto,toWellsFargo.
26
Mr.Campbellreferstothisdocumentasacopy,whichsuggeststhatWellsFargoneverheldanoriginalofthe
Notewithonlythespecialindorsement,butheofferednobasisforthatcharacterization.Everythingintheimage
fileisacopy,animage,includingthelaterappearance,onDecember28,2009oftheversionoftheNotewiththe
blankindorsement.
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indorsement.Mr.CampbellsbasisforstatingthattheNotewithouttheblankindorsementwaspartof
theoriginationfileisshaky,however.TheindexofdocumentsenteredintoWellsFargoselectronic
fileforthisloan,attachedasExhibitGtotheCampbellAff.,doesdesignate,atpage9of10,a51page
batchofdocumentsloggedinonMarch27,2007asOrigination;however,theNote(presumablywith
onlythespecialindorsement)isseparatelyloggedinonthatdatesolelyasaNote.Ex.G,at9of10.
Moreover,inadditiontothefactthatthespeciallyindorsedversionoftheNoteappearsonits
owninthefileonMarch27,2007,andnotaspartofanoriginationfile,WellsFargohasofferedno
explanation,letaloneevidence,ofwhoelse,ifnotWellsFargo,heldtheoriginaloftheNotewiththe
blankABNAmroindorsementbeforeDecember28,2009,if,infact,suchaversionthenexisted.Thefile
providedbythetransferorshouldhaveincludedit,ifitdidexistduringthatperiod,becauseWashington
MutualBank,FAwouldnothavebeenabletoenforcetheNote,either,withouttheblankindorsement,
andtheAssignmentofDeedofTrustattachedtotheproofsofclaimstatesthatboththeNoteandDeed
ofTrustweretransferredtoMERSasnomineeforWashingtonMutualBank,FAonJune20,2002,
effectiveNovember16,2001.Inotherwords,whywouldonlyanoutdatedandunenforceableversion
oftheNotehavebeenloggedinbyWellsFargowhenittookoverthefileinFebruary2007iftheonly
enforceableversionoftheNotehadinfactexistedatthattime(andshouldhaveexistedsince2002)?
Thefarmorelikelyinference,instead,isthatwhentheloanwastransferredtoWellsFargo,theNote
withtheblankABNAmroindorsementdidnotexist.
WhywouldtheNotewiththeblankABNAmroindorsementhaveappearedinWellsFargosfile
onlyonDecember28,2009,twentytwomonthslater?WellsFargohasnotprovidedanexplanation,
supportedbyevidence,replyingonlythatthequestionisirrelevant.Allthatmatters,WellsFargo
contends,isthattheenforceabledocumentwasimagedintoitsrecordsbeforetheDebtorscounsel
startedraisingquestionsaboutClaimNo11.Whatis,infact,atleastequallypertinent,however,isthat
theloanwentintodefaultwellbeforetheappearanceoftheblankindorsedNoteinthefile.Thus,
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WellsFargowouldatthattimehavestartedtofocusontheenforcementofitsrights;thusthedefault
documentsteamwouldthenhavebecomeinvolved;thus,recognizingtheabsenceofanenforceable
Note,someoneonWellsFargosbehalfresponsibleforenforcementshouldthen,consistentwithMr.
Kennertystestimony,haveseenfittoaddthenecessaryindorsement.
Infact,theloanwentintodefaulttwicefirstinOctober,2007(seeEx.CtoCampbellAff.,
consistingofanOctober15,2007defaultletterfromWellsFargototheDebtor)andtheninNovember
2008.Fairlysoonafterthefirstdefault,thepartiesenteredintoaLoanModificationagreement,on
February11,2008.CampbellAff.6.TheDebtorthendefaultedundertheloanmodification
agreement,however,startinginNovember,2008,andremainedindefaultthereafter,makingonly
sporadicpayments.Id.78.ItappearsbothfromseveralentriesonExhibitGtotheCampbellAff.
andtheDebtorstestimonythatworkoutdiscussionscontinuedbetweenWellsFargoanditscounsel,on
theonehand,andtheDebtor,ontheother,afterthisseconddefault,includinguntilshortlybeforethe
Debtorcommencedherbankruptcycase.Ex.Gat2of10;TrialTr.at100101.Itisreasonableto
assumefromtheDebtorstestimony,however,thatduringthisperiodsheappearedlesslikelytobe
abletoperformanewloanmodificationagreementthatwouldbeacceptabletoWellsFargo(she
acknowledgedthatherfinancialconditionworsened,shemovedoutoftheProperty,andtherewas
stormdamagetoitduringthatperiod,TrialTr.at99100),andthatthoseresponsibleforenforcingthe
loanwouldthenhaveseentheneedforablankindorsementontheNoteandhaditforged.
Itisnotconclusivelyproventhatthisiswhathappened,but,asdiscussedabove,inthelightof
theevidencesubmittedbytheDebtorWellsFargohastheburdentoshowthattheindorsementwas
genuine,anditsonlyargument,basedonthetimingoftheappearanceoftheblankindorsedNotein
thefilerecord,doesnotaddressthereasonablecontraryinferencethatWellsFargoforgeditwhenthe
Debtorbecameseriouslyindefault.NoristhereanyevidencethatanyoneatABNAMROcausedthe
originaloftheNotetobestampedandsignedwiththeblankindorsement,noranyevidencethat
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anyonefromWashingtonMutualBank,FAorMERSonitsbehalfheldthatversion,letaloneforwarded
ittoWellsFargoafterWellsFargotookovertheloaninFebruary2007.WellsFargohasnotsatisfiedits
burden.
Finallyitisalsoworthnotingthat,unlesstheDebtorsuccessfullyinvokesaseparatepowerto
transferthePropertyfreeandclear,thePropertyisstillencumberedbytheDeedofTrustassignedto
MERSasnomineeforWashingtonMutualBank,FA,evenifWellsFargohasnotsoughttoindependently
relyonitortheAssignmentofMortgage;inotherwords,thereisaseriouslimitationtothenotionthat
theDebtornowhasafreehouse.Ontheotherhand,therearecertainbareminimumstoproving
onesclaim.Thefailuretotimelyfileaclaiminthiscasewouldhaveprecludedtheenforcementofan
otherwiseallowableclaimagainsttheDebtor,notwithstandingtheDebtorsreceiptofthemoneythat
formedtheultimatebasisfortheclaim.WellsFargosfailuretoestablishthatitistheholderofthe
NotesimilarlyrequirestheClaimObjectiontobegrantedandClaims12and11disallowed.
Conclusion
Fortheforegoingreasons,theClaimObjectionisgranted.CounselfortheDebtorshouldsubmit
aproposedordertochambersconsistentwiththisMemorandumofDecision.
Dated:WhitePlains,NewYork
January28,2015
/s/RobertD.Drain______________
UnitedStatesBankruptcyJudge
30