EDWARD J. EMMONS, CLERK 13 S □□ \o. U.S. BANKRUPTCY COURT fl □□ NORTHERN DISTRICT OF CALIFORNIA re ay □ Se AMM 1 . . □□□□ Signed and Filed: June 26, 2020 □□□□□ ORL 2 sun, hi 4 |) Wnt 5 DENNIS MONTALI U.S. Bankruptcy Judge 6 7 UNITED STATES BANKRUPTCY COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 In re ) Bankruptcy Case 10 ) No. 19-30385-DM ERLINDA ABIBAS ANIEL, ) 11 ) Chapter 11 12 Debtor. ) Date: May 1, 2020 13 ) Time: 10:30 a.m. ) Place: Courtroom 17 14 ) 450 Golden Gate Ave. 15 ) 16th Floor ) San Francisco, CA 16 17 MEMORANDUM DECISION REGARDING DEBTOR’S OBJECTION 18 TO THE CLAIM OF HSBC BANK USA 19 On April 9, 2019, Erlinda Abibas Aniel (“Debtor”) filed the 20 JjJunderlying chapter 11 case. She was previously a joint debtor 21 |jwith Fermin Solis Aniel in Case No. 09-30452 (the “First Case”), 22 ||/which was filed on February 25, 2009 and terminated on January 23 2019. On August 7, 2019, HSBC Bank USA, National 24 ||Association as Trustee for Deutsche Alt-A Securities Mortgage 25 |}Loan Trust, Series 2007-OA5 (“HSBC”) filed a proof of claim (the 26 } }"2019 POC”) asserting a secured claim in the amount of 97 1|$3,660,951.11. See POC No. 3-1. 28

1 On August 27, 2019, Debtor filed an objection (dkt. 64) to 2 the 2019 POC (the “Objection”). On April 2, 2020, HSBC filed a 3 motion for summary judgment (dkt. 94) (“MSJ”) arguing that 4 Debtor’s Objection should be overruled as a matter of law. 5 Debtor opposed the MSJ (dkt. 102). The court held a hearing on 6 the Objection and the MSJ on May 1, 2020, and took the matters 7 under advisement. For the reasons set forth below, the court is 8 overruling Debtor’s Objection to the 2019 POC claim and granting 9 HSBC’s MSJ.1 10 I. THE UNDERLYING LOAN DOCUMENTS 11 In 2007, Debtor executed a Flex Pay Fixed/Adjustable Rate 12 Note (the “Note”) in the amount of $2 million payable to 13 Mortgageit, Inc. See Declaration of Gina Feezer in support of 14 the MSJ (the “Feezer Decn.”) at dkt. 94-2; see also Exhibit A to 15 the Feezer Decn. at dkt 94-2, ECF pg. 6-11). The Note provided 16 that monthly payments were to be sent to GMAC Mortgage, LLC 17 “GMAC”) at a P.O. Box in Waterloo, Iowa. Feezer Decn. at ECF 18 pg. 6. Mortgageit, Inc. is a wholly-owned, indirect subsidiary 19 of DB Structured Products, Inc., which subsequently transferred 20 the Note to HSBC. Feezer Decn. at dkt. 94-2, ¶¶ 5-6; see also 21 Exhs. B1 and B2 to the Feezer Decn. HSBC’s current servicer is 22 PHH Mortgage Corporation and its prior servicers were Ocwen Loan 23 Service (“Ocwen”) and GMAC. Id. at ¶¶ 8 and 9. 24 The Note was secured by a deed of trust (the “DOT”) on 25 Debtor’s residence in Hillsborough. (Claim Dkt. 3-1 at ECF pgs.

26 1 The following discussion constitutes the court's findings of 27 fact and conclusions of law. Fed. R. Bankr. P. 7052(a). 28 2 1 99-114). Mortgageit was the named beneficiary of the DOT. Id. 2 The custodian of the loan documents is Deutsche Bank National 3 Trust Company (“Deutsche”). Id. 4 II. DEBTOR’S FIRST CASE 5 In the First Case, GMAC filed a proof of claim as the 6 servicing agent for HSBC in the amount of $1,105,196.75. See 7 Claim No. 21-1 in the First Case. Several months later, HSBC 8 filed its own secured claim in the First Case, which it amended 9 twice. See Claim Nos. 22-1, 22-2, and 22-3 in the First Case. 10 The last amended claim filed on May 21, 2010, reflected a 11 secured claim in the amount of $2,442,671.39. See Claim 22-3 in 12 the First Case. 13 On October 9, 2009, Debtor and her co-debtor filed a Motion 14 to Object and Dismiss Proof of Claim Filed by GMAC (dkt. 78 in 15 the First Case). The court held a hearing on this motion/claim 16 objection on June 10, 2010. The court was presented with and 17 reviewed the original versions of the Note and DOT. The court 18 determined that the Note and DOT were valid and enforceable:

19 Based upon the record, I find that the originals of the note and deed of trust that are presented by 20 counsel at this hearing and shown to the witness are 21 in fact the original notes and deed — note and deed of trust signed by Ms. Aniel. Her evasive answer 22 and her unwillingness to admit that it's her signature, but her unwillingness to deny it is just 23 — is just a pretext to try to avoid her liability. 24 In my experience a person confronted with the original copy of the document that purports to be 25 that person's signature might have a right to question whether it's forged or disputed but has to 26 take a position rather than equivocate about it. And 27 Ms. Aniel was unwilling to deny but she's unwilling to admit. In my opinion, the bank has carried its 28 3 1 b du or cd ue mn e na tn .d Sh oa s I t fo i nm dy ts ha at ti s tf hi ee d n op tr eo v ai nd de d d et eh de oo fr i tg ri un sa tl that are the subject of this objection are in fact 2 authentic. 3 4 See Transcript of Hearing re Motion for Miscellaneous Relief 5 (Motion for Leave of Court to File Adversary Proceeding, Case 6 No. 09-30452, dkt. 336, pgs. 47-49 (emphasis added)). 7 This court further found that Debtor presented “no bona 8 fide challenge” to the Note and DOT. Id. More significantly, 9 this court found that the “operative documents” –- which are the 10 same documents at issue in this case – “constitute an obligation 11 of the [D]ebtor and debtors, and in fact constitute an 12 encumbrance on the property in Hillsborough occupied by [Debtor] 13 and her family.” Id. This court further concluded Debtor owed 14 all unpaid monthly mortgage payments from July 2008 through the 15 time of its ruling. Id. As in the First Case, Debtor still 16 refuses to state that she has made any of those delinquent 17 payments, nor will she state on the record that she has made any 18 payments on the Note since that time and through the hearing on 19 May 1, 2020. 20 Finally, the court found that Debtor had failed to pay 21 property taxes, causing her lender to make those payments. 22 Debtor has not presented any evidence that she has made any 23 subsequent tax payments. 24 After considering all of the relevant documents, the court 25 concluded that the Note and DOT were valid and enforceable: 26 If Ms. Aniel persists in her view that the claim is 27 unsecured and wants to do something about it, you know that's her business. I'm making a determination 28 4 1 t mo y t fh ie n dc io nn gt sr a or ny ta hn ed rw eo cu ol rd d b oe f p tr he ep a mr ie nd i ma an ld ah ma ov ue n tm a od fe which the secured claim is allowable. 2 3 See Transcript of Hearing re Motion for Miscellaneous Relief in 4 the First Case, dkt. 336 at pgs. 47-49 (emphasis added). Before 5 a final order could be entered on this ruling, the First Case 6 was converted to chapter 7 and subsequently closed.2 7 III. DEBTOR’S CURRENT CLAIM OBJECTION 8 In the Objection, Debtor contends that HSBC has provided no 9 evidence that it “has the authority to bring the claim, as 10 required by Federal Rule of Bankruptcy Procedure 3001(c), 11 rendering the claim facially defective.” In particular, Debtor 12 argues that HSBC provided no evidence of current ownership of 13 the Note, challenges the chain of assignment of the Note and 14 DOT, disputes the authenticity of the Note, and asserts that the 15 debt has been paid in full based on a Mortgage Interest 16 Statement from Ocwen, indicating that $2,056,816.02 in principal 17 18

19 2 Two years after this court held that HSBC was in possession of 20 a valid note and DOT executed by Debtor, she (with her spouse and son) filed two claims in the chapter 11 case of Residential 21 Capital, LLC (Case No. 12-12020 in the United States Bankruptcy 22 Court for the Southern District of New York (“SDNY-BK”)). Following a trial, the SDNY-NY held that the DOT is not void and 23 that HSBC had the authority to commence foreclosure proceedings against the property. The SDNY-BK further observed that while 24 Debtor “alleged, in generalized terms, that [GMAC] engaged in 25 the practice of fabricating documents, no evidence supports this claim.” See SDNY-BK’s Memorandum Opinion and Order filed by 26 Debtor in this case at dkt. 113, ECF pg. 10. The SDNY-BK also concluded that GMAC “lawfully possessed the right to initiate 27 foreclosure proceedings against [Debtor} and did no wrong by doing so.” Id. at ECF pg. 13. 28 5 1 and $7,503.94 in interest had been paid in 2013. See Exhibit B 2 to Objection to Claim at dkt. 64. 3 At a status conference held on February 28, 2020, HSBC once 4 again presented the original Note and DOT to the court. The 5 court examined and made copies of these documents and told 6 HSBC’s counsel that he would not be required to bring the 7 original documents to any future hearing. See Declaration of 8 Adam Barasch in support of the MSJ at dkt. 94-3 at ¶ 8. 9 IV. HSBC’s MOTION FOR SUMMARY JUDGMENT 10 In its MSJ, HSBC contends that Debtor’s claims and causes 11 are barred under the doctrine of issue preclusion, also known as 12 collateral estoppel, citing rulings adverse to Debtor by both 13 this court and the SDNY-BK. While HSBC asserts that Debtor’s 14 claim objection is precluded, at least in part, by the SDNY-BK’s 15 decision, this court need not reach that issue, as this court’s 16 factual findings and legal conclusions reached in the First Case 17 are still applicable. No grounds have been demonstrated for 18 revisiting the settled issues as to the legitimacy of the Note 19 and DOT. 20 As noted previously, this court has examined the Note and 21 DOT in both this case and the First Case. In the First Case, 22 following an evidentiary hearing at which the original documents 23 were presented, the court concluded that both documents were 24 valid and enforceable. Even though the current case was filed 25 shortly after the First Case was closed and thus is not the same 26 case, the disputes over the validity of HSBC’s proof of claim in 27 each case involve the same parties, the same legal issues, and 28 6 1 the same factual issues. Having already reviewed the Note and 2 DOT and determining their validity, this court does not need to 3 examine them once again to reach the same conclusion. Debtor 4 presents no new or intervening facts or applicable law that 5 would justify the court departing from its prior holdings, apart 6 from Debtor’s argument that the underlying debt has been paid in 7 full based on a 2013 Mortgage Interest Statement from Ocwen. 8 The only apparent support for that contention is found in para. 9 17 of the Objection. There, Debtor states that the HSBC “debt 10 has been paid in full, cancelled and discharged in 2013 based on 11 the reported 1098 IRS Form (See Ex. B).” Then she calls HSBC’s 12 efforts “bad faith to collect a paid-off, cancelled and 13 discharged debt.” 14 The unauthenticated IRS form is of no probative value. Its 15 presence in the record does not establish a material factual 16 dispute. Nothing states the debt has been paid in full, that it 17 has been cancelled or that it has been discharged (Debtor’s 18 personal discharge in the First Case is irrelevant to HSBC’s 19 enforcement of its secured claim against Debtor’s residence). 20 That argument is not well-taken, as Debtor refused to state 21 on the record at the hearing on May 1, 2020, that she or anyone 22 acting on her or her co-borrower’s behalf has made a single 23 payment on the Note since August 2008. Further, Ms. Feezer is 24 unequivocal in her statement that Debtor has been in default on 25 the Note since 2008. Feezer Decn, at dkt. 94-2, at para. 14. 26 Debtor has repeatedly and incorrectly argued that 27 assignments of the Note and DOT are ineffective. Both this 28 7 1 court and the SDNY-BK have rejected this contention. But even 2 if this court concluded that the assignments were invalid, the 3 assignor would still retain its rights and be able to pursue its 4 in rem remedies against the property. See Lane v. The Bank of 5 New York Mellon (In re Lane),

(9th Cir. June 1, 6 2020)(disallowance of a proof of claim due to the claimant’s 7 lack of standing does not justify voiding a lien; the lien 8 rights of the assignor who has not appeared in the case survive 9 the disallowance of the claim of the assignee). 10 V. CONCLUSION 11 For the reasons stated above, the court will overrule 12 Debtor’s Objection and grant the MSJ. Counsel for HSBC should 13 upload an order allowing its POC, consistent with and for the 14 reasons stated in this memorandum decision. Counsel should file 15 a separate declaration indicating that he has complied with 16 B.L.R. 9021-1(c) prior to uploading the order. 17 ***END OF MEMORANDUM DECISION***

18 19 20 21 22 23 24 25 26 27 28 8 1 COURT SERVICE LIST Erlinda Abibas Aniel 2 75 Tobin Clark Drive 3 Hillsborough, Ca 94010 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9