Aniel v. ResCap Borrower Claims Trust (In re Residential Capital LLC

Case Type:
Case Status:
17-1163-bk (2nd Circuit, Apr 04,2018) Not Published
The Second Circuit affirmed the judgment of the district court and bankruptcy court orders disallowing appellants claims.
Procedural context:
Appellant, Erlinda Abibas Aniel, appeals a district court judgment entered on March 29, 2017 affirming the bankruptcy court's decisions issued on June 30, 2015 and April 20, 2016 disallowing her claims against two of the Residential Capital, LLC ("ResCap") debtors: GMAC Mortgage, LLC ("GMACM") and Executive Trustee Services, LLC ("ETS").
Erlinda Abibas Aniel ("Aniel") refinanced her home is 2007. Subsequently, in 2012, her home was the subject of a foreclosure action and, in response, she sued several financial institutions including ResCap debtors GMACM and ETS. Aniel filed proofs of claim in the GMACM and ETS chapter 11 cases asserting the claims set forth in the prepetition state court complaint. Such claims included a claim for wrongful foreclosure based on (i) fact that the note and deed of trust were not transferred to the securitization trust before the closing date for such trust; (ii) the Debtors' engagement of robo-signers to execute foreclosure documents including the Aniel assignment and therefore such documents are invalid; (iii) violations of section 2923.5 and 2934a(b) of the California Civil Code. The ResCap Borrowers Claims Trust (the "Trust"), a trust established under the ResCap plan for the benefit of borrowers who have claims against the ResCap debtors, filed objections to the Aniel claims asserted that Aniel failed to state a claim because the allegations that the assignments were fraudulent were conclusory and Aniel lacked standing to challenge the securitization of the loan because she was not a party to the governing Pooling and Servicing Agreement. The bankruptcy court sustained the Debtors' objections to the Aniel claims. The bankruptcy court held that Aniel lacked standing to challenge any purported defects in the securitization of the note or deed based on California law that provides that "plaintiffs lack standing to challenge noncompliance with a PSA in securitization unless they are parties to the PSA or third party beneficiaries of the PSA." Shkolnikov v. JPMorgan Chase Bank, No. 12-03996 (JCS), 2012 WL 6553988, at *13 (N.D. Cal. Dec. 14, 2012); Sandri v. Capital One, N.A. (In re Sandri), 501 B.R. 369 (Bankr. N.D. Cal. 2013). The bankruptcy court rejected the California case upon which Aniel primarily relied. See Glaski v. Bank of America, 160 Cal. Rptr. 3d 449 (Cal. Ct. Apps. 2013) (postclosing attempts to transfer the deed of trust into a securitization trust are sufficient to state a basis for concluding the attempted transfers were void based on New York law that treats such transfer attempts as void rather then merely voidable). The bankruptcy court, relying upon a later decided Second Circuit decision, questioned the validity of the Glaski decision insofar as it held that defects in the securitization process of a loan render transfer of the loan or deed of trust void, rather than voidable, under New York law.. See Rajamin v. Deutsche Bank National Trust Company, 757 F.3d 79 (2d Cir. 2014) (holding that "even if plaintiffs had standing" to challenge an assignment as "invalid, ineffective, or void," New York trust law did not render assignments void on the basis of no-compliance with the trust instrument, but merely voidable) As to that portion of the Trust's objection addressing the claims that the assignments of the note and deed were improper or fraudulent, the bankruptcy court held an evidentiary hearing. At trial, the bankruptcy court found that the testimony and documentary evidence established that the signatory to the assignment of the deed of trust was an officer of GMACM and had authority to execute assignments and that HSBC (assignor of the deed of trust to GMACM in 2011), had authorized GMACM to make such assignments on its behalf. This finding was based in large part on a 2008 Power of Attorney executed by HSBC granting GMACM the power to execute assignments of deed of trust/ mortgage and other recorded documents on HSBS's behalf. By Memorandum and Order entered March 29, 2017 [16-cv-3704], the United States District Court for the Southern District of New York affirmed the bankruptcy court's decisions and disallowance of the Aniel claims. On appeal, the Second Circuit affirmed the bankruptcy court's decisions for the reasons stated by the district court in its March 29, 2017 order.
Robert D. Sack, Peter W. Hall, Christopher F. Droney

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