ATTORNEYS FEES AGAINST BAC HOME LOANS SERVICING ON DISMISSAL; BANKRUPTCY COURT GRANTS STAY PENDING APPEAL

December 2, 2011

Today, an Orange County, Florida Circuit Judge granted the homeowner’s Motion for Attorneys’ Fees against BAC Home Loans Servicing incident to BAC’s dismissal of a Complaint to “establish lost mortgage”. BAC claims that it could not find the mortgage and thus filed suit to “re-establish” it, but later found the mortgage and dismissed its Complaint. The homeowner is represented by Jeff Barnes, Esq.

Recent decisional law from the Florida 4th District Court of Appeal, which reversed a trial court’s denial to award attorneys’ fees to a homeowner upon the granting of the homeowners’ Motion to Dismiss for attorney misconduct, was instrumental in the Orange County court’s decision. That case (Valcarcel v. Chase Bank, 54 So.3d 989 (Fla. 4th DCA 2010)) cited another case (Stout Jewelers v. Corson, 639 So.2d 82 (Fla. 2nd DCA 1994)) which expressly provides that a defendant may request an award of attorneys’ fees following a voluntary dismissal of an action by a plaintiff where there is either a statute or a prevailing party attorneys’ fee provision in a contract which is the subject of the (dismissed) action. The Orange County Circuit Judge found that because BAC’s action was based on the mortgage contract which contained an attorneys’ fee provision that the 4th DCA case was on point, and granted the homeowners’ Motion for Attorneys’ Fees.

Separately, the United States Bankruptcy Court for the Eastern District of Washington (Spokane) yesterday granted the homeowner/debtors’ Motion for Stay Pending their Appeal of the BK court’s prior decision which found that the securitized trustee (US Bank National Association as trustee of a 2006 trust), which filed an Amended Proof of Claim, was a “person entitled to enforce” the mortgage obligation. The homeowners have appealed the decision to the 9th Circuit Bankruptcy Appellate Panel asserting that the BK court’s decision was contrary to law (including the requirements to establish that a creditor is a “person entitled to enforce” pursuant to the recent In Re Veal decision of the 9th BAP), and that there was a lack of evidence to support the decision.

The Amended Proof of Claim relied in part upon what was characterized as a mortgage loan purchase agreement, but the creditor failed to produce the subject agreement either as part of its Amended POC or at the hearing on the homeowners’ objection to the Amended POC. The homeowners are represented by Jeff Barnes, Esq., who argued the Motion for Stay yesterday via telephone (as Mr. Barnes was in Florida having just come from the hearing where Citimortgage, Inc.’s Motion for Summary Judgment was defeated [see post below from November 30, 2011]).

We believe that the appeal is a case of first impression in the 9th BAP, as there are no decisions from that court to date which deal with a challenge to a POC where there is a combination of securitization issues, the failure to produce the very evidence upon which the creditor relied in its POC, and where under these facts a creditor is determined to have satisfied the Veal standard.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

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