Irene Moden v. Ditech Financial, LLC

Case Type:
Case Status:
BAP No. CO-20-062 (10th Circuit, Nov 12,2021) Not Published
The Bankruptcy Court did not err in holding that the debtor failed to meet the standards for pleading fraud and that the debtor had waived her claim for emotional distress. The debtor's standing as a pro se litigant did not entitle her to additional deference by the Bankruptcy Court or to relaxed pleading and evidentiary standards.
Procedural context:
Debtor appealed the Bankruptcy Court's judgment in favor of mortgage loan servicers on Debtor's fraud and emotional distress claims. Additional procedural history is discussed in the Facts section.
Irene Moden filed a Chapter 13 petition after Ditech Financial, LLC and Newer, LLC (together, the "Mortgage Loan Services") commenced foreclosure proceedings. Moden filed an adversary proceeding against the Mortgage Loan Servicers. The bankruptcy court entered a judgment in favor of Moden on one claim and entered judgment in favor of the Mortgage Loan Servicers on the remaining claims. The Mortgage Loan Servicers did not answer Moden's complaint and default was entered. Moden moved for default judgment. Because Moden asked for compensatory damages for emotional distress, the Bankruptcy Court ordered Moden to submit a list of witnesses and exhibits for the evidentiary hearing. The Bankruptcy Court found Moden's exhibits to be disorganized and difficult to review, due in part to Moden's failure to mark the exhibits. The Bankruptcy Court also noted that Moden had not filed a witness list. In response, Moden said she had no witness or any other evidence to support her emotional distress claim. Instead, Moden testified that the amount of her emotional distress claim -- $5,000,000 -- was "pulled out of a hat because... I can't find [an] attorney to help me." The Bankruptcy Court said it was prepared to enter a judgment to extinguish the mortgage lien. In response, Moden said, "I'll forego the damages...." The Bankruptcy Court reiterated that Moden was "waiving the damage claims for emotional distress and the punitive [damages claim]." Moden responded, "Okay, Your Honor." Notwithstanding the default, the Bankruptcy Court entered judgment in favor of the Mortgage Loan Servicers because it could not find that either Mortgage Loan Servicer committed fraud based on the facts alleged in the Complaint and in the Debtor’s exhibits. The Bankruptcy Court entered judgment on three of Moden's five claims. The Bankruptcy Appellate Panel remanded the case to the Bankruptcy Court to amend its order and judgment to address the two unresolved claims. The Bankruptcy Court amended the order and judgment to clarify that it granted judgment in favor of the Mortgage Loan Servicers on the unresolved claims.
SOMERS, JACOBVITZ, and LOYD, Bankruptcy Judges

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