GRANT-COVERT v. WELLS FARGO BANK, N.A.
OPINION. Signed by Judge Noel L. Hillman on 3/9/2016. (tf,n.m. )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DANA N. GRANT-COVERT,
Civil No. 15-6018 (NLH)
WELLS FARGO BANK, N.A.,
DANA N. GRANT-COVERT
69 GREENVALE ROAD
CHERRY HILL, NJ 08034
Pro Se Plaintiff/Appellant
BARBARA K. HAGER
HENRY F. REICHNER
REED SMITH LLP
1717 ARCH STREET
PHILADELPHIA, PA 19103
Attorneys for Appellee
HILLMAN, District Judge
Pending before the Court is the debtor’s appeal of the
bankruptcy court’s order vacating an automatic stay entered on
July 22, 2015.
For the reasons expressed below, the decision of
the bankruptcy court will be affirmed, and the debtor’s appeal
will be dismissed.
On February 27, 2007, debtor/appellant Dana N. Grant Covert
borrowed $265,900 from Weichert Financial Services in connection
with the purchase of her residence on 69 Green Vale Road, Cherry
Hill, New Jersey.
(Mortgage Note, Bankruptcy Docket 15-20394
[Doc. No. 18-1 at 11].)
To secure the note, debtor and her
husband executed a first purchase money mortgage on the
(Mortgage, Bankruptcy Docket 15-20394 [Doc. No. 18-1
The mortgage named Mortgage Electronic Registration
Systems, Inc. (“MERS”) as the mortgagee in a nominee capacity
On September 28, 2008 the mortgage was
assigned to Wells Fargo by an assignment recorded on November
11, 2008. (Assignment of Mortgage, Bankruptcy Docket 15-20394
[Doc. No. 18-1 at 22].)
The Note was indorsed to Wells Fargo
and then indorsed in blank. (Mortgage Note, Bankruptcy Docket
15-20394 [Doc. No. 18-1 at 12].)
Debtor defaulted on the loan on March 1, 2009.
amount due on the home loan as of the date of the bankruptcy
petition was $439,722.84.
(Motion to Vacate at 3, 5, 22,
Bankruptcy Docket 15-20394 [Doc. No. 18-1].)
On May 4, 2015, a
month before the petition was filed, the property had an
appraised value of $195,500.
(Appraisal Report, Bankruptcy
Docket 15-20394 [Doc. No. 18-1 at 7].)
Debtor valued her
property at $167,400 in her July 1, 2015 bankruptcy schedules.
Accordingly, Wells Fargo argues that the debt far exceeds the
value of the property.
On June 2, 2015, debtor filed a voluntarily Chapter 7
bankruptcy petition triggering the automatic stay. (Petition,
Bankruptcy Docket 15-20394 [Doc. No. 1].)
On June 26, 2015,
Wells Fargo moved for relief from the automatic stay to
foreclose on the real property located at 69 Green Vale Road.
(Motion, Bankruptcy Docket 15-20394 [Doc. No. 18].)
opposed the motion and a hearing was held on July 21, 2015.
(Opp., Bankruptcy Docket 15-20394 [Doc. No. 24].)
stated it was unable to attend the hearing due to traffic.
bankruptcy court conducted the hearing without Wells Fargo and
granted its motion to lift the stay to resume the state
(See July 22, 2015 Order, Bankruptcy Docket
15-20394 [Doc. No. 30].)
On July 15, 2015, debtor filed an
adversary complaint against Weichert and Wells Fargo pursuant to
the Truth in Lending Act, 15 U.S.C. 1601, et seq.
Compl., Bankruptcy Docket 15-20394 [Doc. No. 23].)
Appellant filed the instant notice of appeal on August 5,
On August 21, 2015, the Deputy Bankruptcy Clerk filed a
Certification of Failure to File the Designation of Record.
August 26, 2015, appellant opposed the Clerk’s motion to dismiss
and submitted a Statement of Issue and Designation of Record on
The basis of appellant’s motion is whether the
bankruptcy court erred in granting Wells Fargo’s motion for
relief from the automatic stay.
Specifically, Plaintiff alleges
the debt was unsecured, Wells Fargo is not a real party in
interest, and there was no cause for relief under Section
Jurisdiction and Standard
This Court has jurisdiction over the appeal from the
bankruptcy court’s July 22, 2015 Order pursuant to 28 U.S.C. §
158(a), which provides in relevant part: “The district courts of
the United States shall have jurisdiction to hear appeals (1)
from final judgments, orders and decrees
. . . of bankruptcy
judges entered in cases and proceedings referred to the
bankruptcy judges under section 157 of this title.
under this subsection shall be taken only to the district court
for the judicial district in which the bankruptcy judge is
In reviewing a determination of the bankruptcy court, the
district court subjects the bankruptcy court’s legal
determinations to plenary review, reviewing its factual findings
for clear error, and considering its exercise of discretion for
In re United Healthcare Sys., Inc., 396 F.3d
247, 249 (3d Cir. 2005).
Section 362(d) of the Bankruptcy Code mandates relief from
the stay on request of “a party in interest” for “cause” or if
the debtor does not have equity in the subject property and the
property is not necessary to an effective reorganization.
11 U.S.C. § 362(d).
Under Section 362(g), the moving party only
has the burden of proof on the issue of the debtor’s equity in
the property; the debtor has the burden of proof “on all other
11 U.S.C. § 362(g).
Appellant argues that the bankruptcy court erred in
granting Wells Fargo relief from the automatic stay because the
debt was unsecured, Wells Fargo is not a real party in interest,
and there was no cause for relief under Section 362.
addresses these arguments in turn.
1. The Debt was Unsecured
Appellant does not seems to dispute that she signed a Note
and Mortgage for her home in 2007.
Instead she alleges that she
received inaccurate disclosures in violation of the Truth in
Lending Act, 15 U.S.C. 1601, et seq., which gave her a right to
rescind the loan, and that she exercised her purported right of
rescission on March 23, 2015.
(Appellant’s Br. at 3.)
debtor presented this defense in opposition to the lifting of
the automatic stay, the Honorable Andrew B. Altenburg, Jr.,
U.S.B.J., informed debtor that this was a defense to the pending
state foreclosure action and not a defense to the relief from
(July 21, 2015 Tr. 3:20-4-11, Bankruptcy Docket 15-
20394 [Doc. No. 37].)
He further questioned debtor about the
equity in her home and debtor admitted there was no equity.
(Id. Tr. 4:22-24.)
The Court agrees with the bankruptcy court that appellant’s
defenses to the foreclosure action did not affect Wells Fargo’s
right to relief from the stay.
Matter of Roloff, 598 F.2d 783,
785 (3d Cir. 1979) (affirming district court determination that
affirmative defenses and counterclaims relating to the merits of
the foreclosure action are not properly raised in a proceeding
for relief from an automatic stay, and that the Bankruptcy Court
has no summary jurisdiction to hear such claims); In re Everton
Aloysius Sterling, 543 B.R. 385, 393 (Bankr. S.D.N.Y. 2015)
(lifting the automatic stay so that the foreclosure action could
continue and noting that the “interests of judicial economy will
be met by lifting the stay and moving forward in the State
Accordingly, the bankruptcy court did not abuse its
discretion in preserving issues related to the pending
foreclosure for the state court handling the foreclosure.
2. Wells Fargo as a Real Party in Interest
Fed. R. Bankr. P. 7017, which incorporates Fed. R. Civ. P.
17 provides, in pertinent part: “[a]n action must be prosecuted
in the name of the real party in interest.”
that Wells Fargo is not the real party in interest because the
mortgage was originally signed by the Mortgage Electronic
Registration System (“MERS”) as “nominee” for the original
lender, Weichert Financial Services.
Wells Fargo argues that it
is a party in interest because it submitted a certified
assignment of the mortgage and note.
It is well established in New Jersey that either possession
of the note or an assignment of the mortgage that predated the
original complaint confers standing on a party.
Trust Co. Americas v. Angeles, 428 N.J. Super. 315, 318, 53 A.3d
673, 675 (App. Div. 2012) (citing Deutsche Bank National Trust
Co. v. Mitchell, 422 N.J. Super. 214, 27 A.3d 1229 (App. Div.
Here, Wells Fargo submitted evidence that it was
assigned debtor’s mortgage on September 24, 2008, before debtor
defaulted in 2009. (Assignment, Bankruptcy Docket 15-20394 [Doc.
No. 18-1 at 22].)
Accordingly, Wells Fargo had standing to
foreclose by virtue of the pre-complaint assignment.
Further, Wells Fargo submitted a certification that
attached a copy of the original Note indorsed in blank.
Bankruptcy Docket 15-20394 [Doc. No. 18-1 at 12].)
has submitted nothing to refute this evidence.
As such, the
Court finds Wells Fargo was a “party in interest” under Section
VFC Partners 25 LLC v. Scranton Ctr. Holdings LP, 541
F. App'x 206, 207 (3d Cir. 2013) (“A mortgage foreclosure action
‘may be maintained by either the original holder of the mortgage
or a subsequent assignee.’ If the mortgage is assigned, the
assignee of the mortgage is the “real party in interest” within
the meaning of Federal Rule of Civil Procedure 17(a).”)
(internal citations omitted).
3. Cause for Relief from Automatic Stay
Appellant also argues there was no cause for relief from
the automatic stay.
This argument was not raised with the
bankruptcy court and is therefore waived.
Buncher Co. v.
Official Comm. of Unsecured Creditors of Genfarm Ltd. P'ship IV,
229 F.3d 245, 253 (3d Cir. 2000) (affirming district court's
determination that an issue was waived on appeal where party did
not raise issue before the bankruptcy court); In re Natale, 280
F. App'x 227, 231 (3d Cir. 2008) (arguments not raised before
the bankruptcy court are waived on appeal).
Even if the
argument was not waived, debtor admitted on the record that
there is no equity in the property.
Further, both the appraisal
and debtor’s bankruptcy schedules evidence the absence of
Accordingly, cause was established by the bankruptcy
court. 11 U.S.C. § 362(d)(2).
Accordingly, the Court finds that the bankruptcy court
committed no error.
The order of the bankruptcy court will be
affirmed, and debtor’s appeal is dismissed.
Order will be entered.
March 9, 2016
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
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