GRANT-COVERT v. WELLS FARGO BANK, N.A.

Filing 7

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)
Appellant,
OPINION
v.
WELLS FARGO BANK, N.A.,
Appellee.

APPEARANCES:
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
SUITE 3100
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.

I.

BACKGROUND
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
property.
at 13].)

(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
for Weichert.

(Id.)

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.

The total

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].)

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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].)

Debtor

opposed the motion and a hearing was held on July 21, 2015.
(Opp., Bankruptcy Docket 15-20394 [Doc. No. 24].)

Wells Fargo

stated it was unable to attend the hearing due to traffic.

The

bankruptcy court conducted the hearing without Wells Fargo and
granted its motion to lift the stay to resume the state
foreclosure action.

(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.

(Adversary

Compl., Bankruptcy Docket 15-20394 [Doc. No. 23].)
Appellant filed the instant notice of appeal on August 5,
2015.

On August 21, 2015, the Deputy Bankruptcy Clerk filed a

Certification of Failure to File the Designation of Record.

On

August 26, 2015, appellant opposed the Clerk’s motion to dismiss

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and submitted a Statement of Issue and Designation of Record on
Appeal.

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
362(a).
II.

DISCUSSION
A.

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.

An appeal

under this subsection shall be taken only to the district court
for the judicial district in which the bankruptcy judge is
serving.”
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

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abuse thereof.

In re United Healthcare Sys., Inc., 396 F.3d

247, 249 (3d Cir. 2005).
B.

Analysis

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).

See

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
issues.”

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.

The Court

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.)

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When

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
the stay.

(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
Court”).

Accordingly, the bankruptcy court did not abuse its

discretion in preserving issues related to the pending
foreclosure for the state court handling the foreclosure.

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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.”

Appellant contends

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.

Deutsche Bank

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.
2011)).

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.

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(Note,

Bankruptcy Docket 15-20394 [Doc. No. 18-1 at 12].)
has submitted nothing to refute this evidence.

Appellant

As such, the

Court finds Wells Fargo was a “party in interest” under Section
362(d).

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

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equity.

Accordingly, cause was established by the bankruptcy

court. 11 U.S.C. § 362(d)(2).
III. CONCLUSION
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.

An appropriate

Order will be entered.

Date:
March 9, 2016
At Camden, New Jersey

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

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