Marques v. Joseph (In re Marques)

Summarized by Lars Fuller , BakerHostetler
9 years 2 months ago

Case Type:

Consumer

Case Status:

Affirmed

Citation:

CC-16-1116-FPaKi (9th Circuit, Dec 09,2016) Not Published

Tag(s):

Ruling:

9th Cir. BAP affirmed ruling of bankruptcy court (CD Cal.) granting relief from stay to creditor to proceed with foreclosure against chapter 7 debtor/appellant. BK court properly confirmed creditor's standing by reviewing "wet ink" promissory note, and based on creditor's status as note "holder," creditor had status to seek relief from stay. Ct properly granted relief from stay based on lack of equity in property, property not being necessary for effective reorganization, and debtors' extensive fraud.

Procedural context:

Creditor filed motion for relief from stay, and chapter 7 debtor opposed. Bankruptcy court granted motion, and debtor filed timely appeal to BAP for 9th Circuit.

Facts:

In 2006, Debtor (Mr. Marques) and wife (Mrs. Marques) borrowed $727k from Washington Mutual Bank, FA (WaMu) under an adjustable rate bearer promissory note. Note was secured by a deed of trust in real property in Dana Point, California. In 2008, FDIC was appointed receiver of WaMu, and transferred note to Chase Bank, NA (Chase). Mr. & Mrs. Marques ceased making payments on note in 2008. In 2009, Chase initiated foreclosure proceedings, substituting a new trustee under the deed of trust. In 2011, Mr. Marques unilaterally executed a fraudulent limited power of attorney, appointing himself as attorney-in-fact for Chase. Mr. Marques then, purportedly on behalf of Chase, transferred and recorded a fraudulent "substitution of trustee" appointing a new trustee, who then purported to execute a "deed" extinguishing the deed of trust. Chase discovered the fraudulent filings and sought to undo them. In 2012, Mrs. Marques filed a chapter 7 bankruptcy, that was dismissed for her failure to appear at the meeting of creditors. She filed a second chapter 7 case shortly thereafter, received a discharge, and the case was closed in 2013. Mr. Marques commenced the chapter 7 case in which this appeal arises in late 2012. He received a discharge, and the case was closed in 2013, but he moved to reopen the case in December 2013 after Chase resumed its foreclosure efforts. He also filed an intermittent chapter 13 case in November 2013 that was dismissed shortly thereafter. While the present chapter 7 case was pending, he filed a second chapter 13 case that he then voluntarily dismissed. As of the opinion, the house was valued at approximately $892,000. It appeared that debtor and his wife continued to reside in the property, despite not having paid any mortgage or other amount since approximately 2008--i.e., over eight years. Notwithstanding this apparent benefaction, Mr. Marques, pro se, continued to vigorously oppose Chase's utilization of due process to foreclose on the property and obtain possession. Mr. Marques asserted that Chase lacked standing to seek relief from stay, since notwithstanding its possession of the bearer note, and notwithstanding the transferability language in the note itself, the note was not transferrable from its original holder (WaMu). He further argued that because the note had a variable interest rate, it was not for a "fixed amount," and thus was not a negotiable instrument governed by the bearer/holder rights under Article 3 of the UCC, as adopted by California.

Judge(s):

Faris, Pappas, Kirscher

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