In re Grant-Covert

In re Grant-Covert, No. 16-1880 (3rd Cir. October 6, 2016)
Third Circuit affirmed District Court's ruling that creditor had demonstrated standing to request relief from the automatic stay.
Procedural context:
Debtor-appellant filed chapter 7 proceeding in the Bankruptcy Court for the District of Delaware, which granted a motion for relief from the automatic stay filed by a creditor. An appeal taken by Debtor-appellant to District Court for the District of Delaware which affirmed the Bankruptcy Court's ruling that, among other things, the creditor had standing to move for relief from the automatic stay. Debtor-appellant appealed to the Third Circuit Court of Appeals.
Debtor-appellant filed a Chapter 7 bankruptcy proceeding in June of 2015 in the bankruptcy court for the District of Delaware. Wells Fargo Bank moved for relief from the automatic stay provisions of Bankruptcy Code section 362 in order to foreclose on the real property owned by the Debtor-appellant. The Debtor-appellant opposed the stay relief motion on the basis that Wells Fargo Bank did not have standing. At a hearing on Wells Fargo's stay relief motion, the Bankruptcy Court held that Wells Fargo did have standing and granted the stay relief motion. On appeal, the District Court affirmed the Bankruptcy Court's order. The District Court concluded that Wells Fargo had standing as a real party in interest under 11 U.S.C. § 362(d), and held that Wells Fargo had demonstrated cause for stay relief. On appeal to the Third Circuit, the Debtor-appellant raised a number of issues, including Wells Fargo's standing. The Debtor-appellant argued that Wells Fargo was not a real party in interest because it did not show that it was entitled to enforce the Note associated with her mortgage arguing that Wells Fargo cannot show that it was entitled to enforce the associated note because it was “indorsed to Wells Fargo and then indorsed in blank.” However, the Third Circuit found that Wells Fargo made a sufficient showing that it possessed the note as well as the mortgage. The Court noted that Wells Fargo provided evidence that it had been assigned the mortgage, and that it was in possession of the Note indorsed in blank. As a result, the Court held that Wells Fargo produced sufficient evidence to allow the Bankruptcy Court to find that it was a party in interest and had standing to seek relief from the automatic stay.
Vanaskie, Scirica and Fuentes

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