TRANSCRIPT: MERS Tells Court It Is The NoteHolder

Case 2:09-cv-00669-LDG-PAL Document 39
Filed 11/13/09 Page 1 of 48
UNITED STATES DISTRICT COURT DISTRICT OF NEVADA LAS VEGAS, NEVADA

In re: LISA MARIE CHONG, ) ) Debtor. ) ) _____________________________) ) JOSHUA SCOTT MITCHELL, et al.) ) Debtors. ) ) _____________________________) ) BARRY ALLEN TRAYNOR, et al., ) ) Debtors. ) ) _____________________________) ) SHEILA MEDINA aka ) SHEILA GOGGIN ) ) Debtor. ) ) _____________________________) ) ROBERT THOMAS ATKERSON, et al) ) Debtors. ) ) _____________________________) ) WILLIAM JAY ZIEGLER, et al., ) ) Debtors. ) ) _____________________________) ) PETER C. ALTMANN, JR. ) ) Debtor. ) ) _____________________________) ) SURJIT SAMRA, ) ) Debtor. ) ) _____________________________) CASE No. 2:09-CV-0661-KJD-LRL
CASE No. 2:09-CV-0668-JCM-RJJ
CASE No. 2:09-CV-0669-LDG-PAL
CASE No. 2:09-CV-0670-KJD-GWF
CASE No. 2:09-CV-0673-RCJ-GWF
CASE No. 2:09-CV-0676-RLH-PAL
CASE No. 2:09-CV-0677-JCM-LRL
CASE No. 2:09-CV-0683-RLH-RJJ
(Continued) _____________________________________________________________________________ 2:09-CV-661-KJD-LRL, et al. MERS - EN BANC HEARING 11/10/09 NW TRANSCRIPTS, LLC - Nevada Division P.O. Box 890 Nampa, Idaho 83653-0890 (208) 466-4148 - gayle@nwranscripts.com
JOSE ANG, et al.,
) ) Debtors. ) ) _____________________________) ) GUILLERMINA CORTES, ) ) Debtor. ) ) _____________________________) ) ELDRIDGE JOSEPH DUFAUCHARD, ) ) Debtor. ) ) _____________________________) ) MICHELE DART, ) ) Debtor. ) ) _____________________________) ) ADAM J. BREEDEN, ) ) Debtor. ) ) _____________________________) ) JEFFREY PILATICH, ) ) Debtor. ) ) _____________________________) ) KATHLEEN ODELL, ) ) Debtor. ) ) _____________________________) ) ROBERT A. BEALER, et al., ) ) Debtor. ) ) _____________________________) ) DEAN MAURER, ) ) Debtor. ) ) _____________________________) ) LONNIE EARL HAWKINS, et al., ) ) Debtor. ) ) _____________________________) And related cases and parties)
CASE No. 2:09-CV-0684-LDG-GWF
CASE No. 2:09-CV-0685-KJD-RJJ
CASE No. 2:09-CV-0691-JCM-LRL
CASE No. 2:09-CV-0874-LDG-LRL
CASE No. 2:09-CV-0889-KJD-PAL
CASE No. 2:09-CV-0890-PMP-PAL
CASE No. 2:09-CV-0891-JCM-GWF
CASE No. 2:09-CV-0892-KJD-GWF LAS VEGAS, NEVADA NOVEMBER 10, 2009 1:33:31 P.M.
(Continued)
_____________________________________________________________________________ 2:09-CV-661-KJD-LRL, et al. MERS - EN BANC HEARING 11/10/09 NW TRANSCRIPTS, LLC - Nevada Division P.O. Box 890 Nampa, Idaho 83653-0890 (208) 466-4148 - gayle@nwranscripts.com
IN RE: MERS BANKRUPTCY APPEAL EN BANC HEARING ON APPEALS FROM BANKRUPTCY COURT
HELD BEFORE THE HONORABLE ROGER L. HUNT, PRESIDING CHIEF DISTRICT JUDGE OF THE U.S. DISTRICT COURT HELD BEFORE THE HONORABLE PHILIP M. PRO, PRESIDING DISTRICT JUDGE OF THE U.S. DISTRICT COURT HELD BEFORE THE HONORABLE KENT J. DAWSON, PRESIDING DISTRICT JUDGE OF THE U.S. DISTRICT COURT HELD BEFORE THE HONORABLE JAMES C. MAHAN, PRESIDING DISTRICT JUDGE OF THE U.S. DISTRICT COURT HELD BEFORE THE HONORABLE ROBERT C. JONES PRESIDING DISTRICT JUDGE OF THE U.S. DISTRICT COURT HELD BEFORE THE HONORABLE LLOYD D. GEORGE, PRESIDING SENIOR DISTRICT JUDGE OF THE U.S. DISTRICT COURT
COURT RECORDER: SUMMER RIVERA U.S. District Court
Proceedings recorded by electronic sound recording, transcript produced by transcription service.

APPEARANCES:
FOR THE DEBTORS/ BANKRUPTCY TRUSTEE:
LENARD E. SCHWARTZER, Esq. Schwartzer & McPherson Law Firm 2850 S. Jones Blvd., Suite 1 Las Vegas, Nevada 89146 lschwartzer@s-mlaw.com
FOR THE APPELLANT/MERS: JEFFREY A. SILVESTRI, Esq. RYAN J. WORKS, Esq. McDonald Carano Wilson LLP 2300 W. Sahara Ave., No. 10, Suite 1000 Las Vegas, Nevada 89102 jsilvestri@mcdonaldcarano.com rworks@mcdonaldcarano.com K. ISSAC DeVYVER, Esq. Reed Smith Centre 225 Fifth Avenue Pittsburgh, PA 15222 kdevyver@reedsmith.com
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LAS VEGAS, NEVADA
TUESDAY, NOVEMBER 10, 2009
PROCEEDINGS BEGAN AT 1:33:31 P.M. THE CLERK: All rise. United States District
Court is now in session. JUDGE HUNT: THE CLERK:
Six judges are sitting en banc.
You may be seated. This is the time set for In Re: MERS
Appeal from Bankruptcy Court. Counsel, please identify yourselves for the record. MR. SCHWARTZER: My name is Lenard Schwartzer. I am
the trustee in most of these cases and the attorney for the Ziegler [unintelligible]. MR. SILVESTRI: Good afternoon, Your Honor. And with
Jeff Silvestri of McDonald Carano Wilson.
me, my associate Ryan Works and co-counsel from Reed Smith, Issac DeVyver. MERS. JUDGE HUNT: MR. DeVYVER: JUDGE HUNT: All right. [unintelligible]. Thank you. Mr. DeVyver will be handling the argument for
Counsel, the Court will give each of you 30 minutes. If the appellants wish to reserve some time for rebuttal you may do that out of the 30 minutes. you. Judge Pro, youre with us? JUDGE PRO: I am. Thank you, Judge Hunt. I can And were ready to hear
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hear you fine. JUDGE HUNT: MR. DeVYVER: JUDGE GEORGE: pad. JUDGE HUNT: Can we get a pad for Judge George? Okay. You may proceed.
Thank you, Your Honor. Chief, Im sorry, but I dont have a
(Off-record colloquy of the Clerk) JUDGE HUNT: JUDGE GEORGE: JUDGE HUNT: MR. DeVYVER: All right. Thank you. You may proceed. Thank you, Your Honors.
We are here today because the Bankruptcy Court erred in two regards, and there are two issues that -- that wed like to address with the Court. First, in the Ziegler case the Bankruptcy Court erred when it excluded MERS evidence that it was the holder of the note for the loan, as well as the beneficiary of the deed of trust. The second issue concerns all 16 cases that are remaining before this Court, and that is the issue of whether MERS is the beneficiary of the deed of trust. If it pleases the Court, Id like to begin with the first issue, and that is whether the Bankruptcy Court erred in excluding MERS evidence. The Bankruptcy Court did not hold that MERS, or any
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other party for that matter, who was a noteholder and is also a beneficiary in a deed of trust, does not have standing to seek relief from stay. And while there were bits and
pieces of that in the briefing, Id just like to be clear about that. There is no issue under the law that a party who
holds the note, a noteholder, who is also a beneficiary in the deed of trust has standing to seek relief from stay. we know that because under Nevada law that party, the noteholder, is the party who has the right to enforce the interest. And so really the issue that was before the Bankruptcy Court -- and again, this concerns only the Ziegler case -- was whether the Bankruptcy Court erred when it excluded MERS evidence, that it was the noteholder and the beneficiary of the deed of trust. The error here was clear and plain. What the It And
Bankruptcy Court did was apply the wrong legal standard.
looked at the evidentiary issue through the wrong prism, if you will, to determine whether the evidence was admissible. What we had were essentially two pieces of evidence, the document evidence, which was the note and the deed of trust, and also some affidavit evidence. What the Bankruptcy Court did and what was clear error was, the Bankruptcy Court looked at it through a prism on whether that evidence was the business record evidence.
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And the Bankruptcy Court specifically said that in its decision, that -- that MERS had met its burden of proving that the note and the deed of trust were business records. clearly are not. As the cases we cited in our briefs [unintelligible] the Ninth Circuit has clearly held that the notes and deeds of trust are contracts, and as a consequence factor [sic]. JUDGE JONES: issue, isnt it? Counsel, this really is just a side They
In other words, its harmless error if we
determine that the Bankruptcy Court was right, that you are not a beneficiary. Its harmless error. We may agree with
you that a note and a deed of trust are establishing documents, theyre not hearsay doc -- statements. But,
nevertheless, its harmless error relative to the core issue, are you really a beneficiary. MR. DeVYVER: Well, I would quibble with you a
little bit there only because in, at least in the Ziegler case MERS was the noteholder. So even if you were to
determine that MERS was not the beneficiary, the noteholder still has standing to seek relief from stay. And so in that
regard, while it may be one of the two issues, its still an important issue because even if you find that MERS is not the -JUDGE JONES: How do you claim? I mean Ziegler
isnt my case, so I -- but how do you claim that MERS is the

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noteholder unless, in fact, its holding the note -MR. DeVYVER: JUDGE JONES: MR. DeVYVER: JUDGE JONES: Because the evidence showed --- under state law? Oh, I beg your pardon. It makes no difference if the note or
deed of trust says you are a beneficiary or a noteholder, if you are not in fact that animal. In other words, we could We could call
call you the lender in the deed of trust. MERS -- we could call them anything.
But if you are not, in Under state
fact, a beneficiary, youre not a beneficiary.
law beneficiary is defined, and there is -- under common law its defined. You are simply, whether it calls you
beneficiary or agent or nominee; nominee is something that we can take cognizance of, but you hold no beneficial interest in the note, other than legal title. the truth? MR. DeVYVER: with you there. Well, I would -- I would disagree Isnt that
And I do want to talk about that point, but The evidence was that MERS was Thats what the
none of that changes Ziegler. the noteholder. evidence showed.
It did hold the note.
The note was endorsed in blank, and
affidavit testimony established that MERS was in physical possession of the note at the time the motion for relief from stay was filed in Ziegler and under Nevada law that makes MERS the noteholder.
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JUDGE HUNT:
Even if that note had been transferred,
or the beneficial interest in it had been transferred to someone else? MR. DeVYVER: Well, at the time the motion was The beneficial interest, that
filed MERS was the noteholder.
is the investor I guess as I would call it, even if that changed hands, yes, because under Nevada law it is the party who holds the note who is entitled to enforce it. was the case here. The note showed that it was endorsed in blank. The And that
affidavit testimony established that an officer of MERS was holding the note at the time the motion for relief from stay was filed in Ziegler. Nothing else is needed. That
establishes that MERS, at least in the Ziegler case and thats all were talking about at this point, was the party who had standing and was real -JUDGE JONES: I just dont get your point still,
because youre talking about an irreconcilable distinct -irreconcilable position that you put forward in front of the bankruptcy code [sic] -- you said -- court. You said we are
a holder, we hold the note in blank, but we also admit that the owner -- beneficial ownership of the note is in someone else. MR. DeVYVER: JUDGE JONES: Well, its all -Thats an irreconcilable conflict
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you presented in the evidence that you presented to the Bankruptcy Court. We are a holder. We own the note. At the
same time you said -- you admitted that the beneficial ownership, the true ownership of the note is in someone else. MR. DeVYVER: Well, its often the case -- under
Nevada law you dont have to -- under Nevada law the holder of the note can enforce it. It is often the case, as is
cited in many of the cases that both of the parties have put before the Court, that the party who is holding the note isnt the ultimate investor. These notes are secured often
in deeds -- often in trusts, and many, many people own them in their investments. But the noteholder, that party, under the law -- and for a case I would -- I would refer the Court to the Hill case, which is an Arizona case, but which is right on point, provides that the party that can enforce the note is the party that has standing and is the real party in interest to seek relief from stay. That isnt always the investor. In the
Hill case it was a loan servicer, but it was a loan servicer who held the note, it was a note -- a loan servicer that was the beneficiary on the deed of trust and, therefore, the Court correctly found that because it was the party entitled to enforce the interest, it was the party that was entitled to seek relief from stay.
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JUDGE PRO:
Mr. DeVyver, if I could ask, as the
holder of the note in the Ziegler case, or if we extend that beyond looking at the beneficiary status, what injury has MERS suffered by the Bankruptcy Courts rulings that a favorable ruling would redress in this case? As I understand
it, whether in Ziegler, as the holder of the note, or in the other cases, MERS doesnt have a financial interest in the mortgages, loans, or properties at issue. MR. DeVYVER: Am I correct?
In the Ziegler case, as the
noteholder, MERS is the party who is entitled to be redressed for that harm. There are two things in play here. There are MERS
rights vis a vis the lender, and MERS rights in its contractual relationship with its members. As the note -JUDGE PRO: So in Ziegler, MERS has the right to
payments from -- from your perspective on that particular Ziegler note? MR. DeVYVER: enforce the instrument. Yes, sir. MERS is entitled to
It has a contractual agreement with
its members on how it will enforce those rights, and it will take the payments and give the payments to where it decides to put them, based on its contact with its members. But as
the noteholder, under Nevada law, it is the party thats entitled to enforce the instrument.
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JUDGE PRO:
Well, its passing those proceeds
through, isnt it, to others? MR. DeVYVER: Yes. Yes. MERS -- you are absolutely
MERS lends no money and MERS will not keep any of the That is correct. And except for Ziegler, does MERS have
loan proceeds.
JUDGE PRO:
any financial interest whatsoever in any of the notes or loans at issue? MR. DeVYVER: point on it. And I dont mean to put too fine a
If your question is, did MERS loan any money
or is MERS getting -- taking any part of the loan payments, then the answer is no. interest Thats correct. It does have an
in that it has an interest with its members, and so
it has a contractual interest and it is paid pursuant to that contract, that it stands in the shoes of the lender for purposes of being a nominee beneficiary. But you are
correct, Your Honor, that MERS does not get the proceeds from the loan. Yes, sir. All right. So are you -- are you saying that the
JUDGE PRO: JUDGE HUNT:
authority to enforce the note is the same thing as being a beneficiary under the note? MR. DeVYVER: Im not sure I understand your
question, and I apologize. I mean under Nevada law the noteholder enforces it.
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That isnt always the beneficial owner. JUDGE HUNT: I -- well, I believe were quibbling
over words, but were talking about, if I understand, ultimately here whether or not MERS is a beneficiary as opposed to an agent of the beneficiary. MR. DeVYVER: That is certainly the question with
respect -- yes, to all 16 cases, I agree. JUDGE HUNT: Are you -- is it your position that
being -- having the authority to enforce it makes you a beneficiary? MR. DeVYVER: owner. It does not make us the beneficial
No, MERS is a beneficiary by virtue of its contractual
relationship with the borrower. JUDGE HUNT: Doesnt a beneficiary have to have some
sort of financial interest in something? MR. DeVYVER: JUDGE HUNT: No. Just authority to act is -- seems to me
a beneficiary is -- theres a difference between having the authority to act and being able to get the benefit from an act. MR. DeVYVER: Well, MERS, pursuant to the terms of
this contract, there is -- there is no definition of beneficiary under Nevada law like there is under some states. But Nevada law does explain what a beneficiary is and what rights a beneficiary can exercise. And MERS, at least as I
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read this Courts decisions, has those rights, or can exercise those rights. This Court has held, as I read the
decisions, that MERS can initiate a non-judicial foreclosure, the right of a beneficiary. MERS can substitute a trust -What
substitute the trustee, the right as a beneficiary. I -JUDGE DAWSON: that?
What cases are you referring to for
And dont include unopposed cases where -- where we
have a pro se and the motion has been made to dismiss, cause I think those are distinguishable. MR. DeVYVER: Well, what I have -- I can give you Not all of the cases
the specifics of which cases are which. -- I have a long list of them.
The Croce [phonetic] case was
the most recent one, and I believe that there was an opposition in that case. And in that case the borrower
sought a holding from the court that MERS did not have right to seek relief from stay, and also that MERS had engaged in fraud by representing itself as the beneficiary. And what
this court held was that the law is pretty clear, that MERS has the right, as nominee beneficiary, to bring non-judicial foreclosure, and MERS did not make any misrepresentations by saying it was the beneficiary. case. JUDGE DAWSON: MR. DeVYVER: And that was Croce you say? Yes, sir. I believe that was an opposed
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you. case. 08-01612. us --
JUDGE DAWSON: MR. DeVYVER: JUDGE HUNT:
Do you have a cite for it? It was not a published decision. Then I dont know its going to do
MR. DeVYVER: JUDGE HUNT: JUDGE PRO: MR. DeVYVER:
If I could just have one moment. -- a whole lot of good then. Yeah. I can give you a case number, which is
JUDGE DAWSON: MR. DeVYVER:
Thank you. Id be happy to supply you with the
In fact, its probably in my [unintelligible]. JUDGE DAWSON: We can -- we can look it up. Thank
JUDGE GEORGE:
Counsel, just for my clarification,
are you seeking reversal of the Bankruptcy Courts judgment regarding the cases in which MERS did not have possession of the notes, or are you simply seeking review of the unfavorable findings to those cases? MR. DeVYVER: We are seeking a review of the
unfavorable finding of those cases. JUDGE GEORGE: MR. DeVYVER: Okay. Because I agree with you, we are not
asking that the -- the motion for relief from stay. JUDGE GEORGE: I understand.
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MR. DeVYVER:
So if I could jump back into where we
At least with respect to the Ziegler case, its pretty clear at least, it is my argument that the Court should not have discounted the evidence and when the evidence is not discounted, MERS is the holder of the note and the beneficiary and has the right to seek relief from stay. Thats the law. And unless theres any questions Id -- about that particular case, I know that it seems -- everyone wants to talk about the 16 cases, the beneficiary issue, and Id be happy to move on to that. JUDGE HUNT: Why dont you go ahead. We may come
back with questions later, counsel, but why dont you proceed. MR. DeVYVER: The most recent pronouncement that I
am aware of from this Court about this issue, and probably the most clear is the Evoko [phonetic] case, which came out not very long ago. I think it was Judge Jones case. And
thats the case Id like to start by talking about. I think its probably fair to say that in that case what the Court found was that MERS is a nominee, which means that its an agent with limited powers; that MERS is not the true the beneficiary; its not the beneficiary of record, but that MERS may act as the agent for the noteholder, and that
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it can exercise those rights of the beneficiary essentially under the statutory framework. JUDGE JONES: minute. Lets concentrate on that for just a
We will go round and round and round on this issue,
as all the other courts have too, if we just boil this whole thing down to a question of semantics, whether youre a beneficiary or agent or nominee, it seems to me that this case really boils down, under the agency question, as to whether or not youre willing to disclose who your principal is. Thats what Judge Riegle and the other bankruptcy judges
were really objecting to. Theres a policy in the Bankruptcy Code that youre -- and let alone under new current state law which requires mediation in new notes and deeds of trust. Youre supposed
to present your principal, at least the name of the principal, so that the debtor and/or the trustee can negotiate with somebody regarding a motion to lift stay. Thats the whole
context and conceptualization -- context behind the bankruptcy lift stay provisions. And basically what this boils down to is, the bankruptcy judges are frustrated. Youre not -- youre
either not willing or not able, especially in those cases where the beneficial interest has been transferred beyond the members who belong to MERS, youre not willing nor able to reveal who the principals are. It may be a thousand
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people, it may be two or three municipal funds. So it seems to me that, unless were just going to chase semantics around and around, that this question really boils down to your willingness to disclose the basis for your current agency status. If youre willing to do that then the Heres our current
Bankruptcy Court ought to recognize you. authorization.
Its not the designation under the original It is a
note that was sold three times in the markets.
current designation, or a designation by adoption of the agency established in the note and deed of trust. And you
have to be willing to disclose to the Bankruptcy Court heres our principal or principals, so that the debtor and trustee can negotiate with them. down to or no? MR. DeVYVER: When MERS is seeking relief from Is that -- is that what it boils
stay, it is the noteholder, and thats the only time its appropriate under MERSs rules. there isnt anyone to disclose. When its the noteholder As the noteholder, MERS is There isnt anyone
the party thats entitled to enforce it. to disclose. JUDGE JONES:
You have, as noteholder, no authority
to negotiate or mediate the note, right? MR. DeVYVER: JUDGE JONES: No. I -- I would not --
The only authority you have is to
cause the foreclosure to proceed, or as you say, to file a

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motion to lift stay.
You dont have the authority to
compromise the note, to cut it in half, to say well forgive the next 12 months payments, right? MR. DeVYVER: do those things. JUDGE JONES: Contractually you have that right No, I think that the noteholder can
under your MERS agreement with your members? MR. DeVYVER: yes, it does. JUDGE JONES: Youre asking Ziegler to wag this dog, I think you need to realize When MERS is the noteholder -- well,
and its not going to happen.
its the 16 cases and the 200 that are yet to be filed. Ziegler is not going to wag this dog. square on. So you need to address
Youre going to get disagreement from some of us
about your use of semantics. I think the principle question here is, are you willing to disclose to the Bankruptcy Court so it knows whether or not you are a true agent, a true nominee currently, or whether youre not willing to, and if youre not willing to then why shouldnt we just affirm the Bankruptcy Court? MR. DeVYVER: Theres two different things, in my The 16 that youre talking
opinion, that are at play here.
about when MERS is the beneficiary, MERS rules provide that MERS doesnt seek relief from stay when it is only the
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beneficiary.
And so when MERS is in the principal agency
relationship, when its in the principal agency relationship with the noteholder, those arent the cases that are going to be, or should be in front of the Bankruptcy Court. The only
cases that should be in front of the Bankruptcy Court, and the only cases in which at least a judicial foreclosure should be brought, are cases in which MERS is both the noteholder and the beneficiary or the mortgagee. In that
case there isnt any agent that is -- or there isnt any principal to disclose. JUDGE JONES: reverse is Ziegler? MR. DeVYVER: Ziegler should be reversed. Yes. I Okay. So the only case you want us to
am not asking for this Court to find that when MERS is solely the beneficiary it has the ability to seek relief from stay. Do I believe that to be the case? support that? There are. I do. Are there cases to
But we made the decision to not
appeal that, and Im not making that argument today. JUDGE JONES: MR. DeVYVER: JUDGE JONES: So its just when you are the holder? Yes, sir. And unwilling to disclose -- youre
willing to admit that you do not hold the beneficial interest in the note, youve just admitted that to the chiefs question and to Judge Pros question, you just admitted that. So you are willing to admit that you hold no beneficial
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interest in the note.
You are simply the holder.
And you
are unwilling to disclose who the true owners of the note are, and you want us to say that, therefore, you have standing and you can proceed to lift stay? MR. DeVYVER: afoul to the law. JUDGE JONES: MR. DeVYVER: JUDGE JONES: that. JUDGE HUNT: MR. DeVYVER: JUDGE HUNT: asking us to do? here? The question is not what the law is -Yes. -- the question is what is it you are Okay. What the law specifically -I guess we can agree or disagree on Thats the law. That doesnt run
What is it you are asking us to accomplish
And Judge Jones question I think is very, very Are we being asked to reverse these other cases,
pertinent.
or merely to change the ruling about whether you are or are not a beneficiary if you hold the note, or if you dont hold the note? Cause it seems if youre not asking us to
determine whether or not youre a beneficiary if you dont hold the note, then all these other cases except Ziegler, which is the one apparently where you asserted -- that you held the note, the rest of them should be affirmed. MR. DeVYVER: We are asking you in the 16 cases -Absolutely. Im
and Ziegler Im asking you to reverse.
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asking you to reverse the Bankruptcy Court.
And the other 16
cases Im asking you to review the ruling that MERS is not the beneficiary and to -- to -JUDGE HUNT: MR. DeVYVER: And is that all youre asking us to do? It is. Im not asking you to reverse
the denial of the motion for relief from stay. JUDGE HUNT: So what youre saying is we can affirm
their decision if we hold that theyre finding that youre not the beneficiary was incorrect? I just want to make sure
where youre coming from, not what the -- you claim the law is, I want to know where the appellant is coming from, what it is you want us to do and why? MR. DeVYVER: That is where Im coming from. I
would like you to find that the Bankruptcy Court erred when it found that MERS was not the beneficiary. And you are
correct, Im not asking you to change the finding on the motion for relief from stay. JUDGE GEORGE: That is correct.
And youre not asking, for example,
the motion that was made to withdraw your motion, that I think Mr. Schwartzer stipulated to allow you to withdraw and -- but the Court in effect denied that. Youre not asking --
theres nothing in your appeal that asks us to address the propriety of the Court to -- to not allow you to withdraw, are you? MR. DeVYVER: No.
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JUDGE GEORGE: JUDGE HUNT:
Okay. So let me make sure Im getting this
straight as to what it is youre asking us to do, setting the Ziegler case aside. With these other cases youre asking us
to decide that you are the beneficiary, even if you dont hold the note? MR. DeVYVER: Yes, sir. That is exactly what were
And to loop back to a point -- and if I might To loop then back to the reasons that you should do
And what Your Honor said earlier was this is a matter I think thats a fair characterization of what
of semantics.
you said before. And what Im here to do is to urge you that, a matter of semantics or not, that what you should find that MERS is the beneficiary, and theres a couple of reasons why. One, it does no harm to the statutory framework. This Court has held that, if Im not mistaken, and I dont want to overstate it because many of the decisions are Your Honors decisions, but this Court has held that MERS can do the things that a beneficiary can do. statutory framework. Theres no harm to the
Im not asking you to do anything that
youve not already decided, initiate non-judicial foreclosure, substitute a trustee. Those are the things that a beneficiary
can do, and those are the things that this Court has held that
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MERS can do. JUDGE HUNT: But ordinarily a beneficiary doesnt do Thats usually
that -- doesnt initiate the foreclosure. given to someone else to do. MR. DeVYVER:
Isnt that correct? I
But it can under the statute.
dont know -- and I dont -- I dont mean to be flippant, thats not my point. JUDGE HUNT: I understand that, counsel. I dont
want to take your time up.
Go ahead and finish it then Ill
just -- Im going to relate a story to you and explain to you, I guess, where Im coming from in this whole thing. youve got about 4 -- 3 or 4 more minutes. MR. DeVYVER: And Id like to just be quick so I But
have a little bit of time to respond to Mr. Schwartzer. Theres no legal reason, theres no practical reason, and theres no policy reason for this Court to find anything other than that MERS is a beneficiary. It does no
harm to the statutory framework, it does no harm to the deed of trust. Remember, the parties to the deed of trust contract that MERS has these rights. theres nothing unclear. Theres no misrepresentations and
And so what this Court should do,
and what Im urging the Court to do, is find that MERS is the beneficiary. rebuttal.
And Id like to reserve the rest of my time for
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Thank you.
JUDGE HUNT:
All right. I dont remember the
Let me tell you my story.
genesis of it, or whether or not its an apothecial story or a real one. But the story had to do with President Lincoln.
He was in discussion with a man and it caused him to ask the man the question if you call the tail on a dog a leg, how many legs does a dog have? And the man answered five. And
President Lincoln said no, just because you call it a leg doesnt make it a leg. Thats the problem I have with calling this a beneficiary because a beneficiary can [sic] do the same things that an agent can do that that makes the agent a beneficiary. Thats the problem I have. Thank you. Well hear from Mr. Schwartzer. MR. SCHWARTZER: Thank you. Thank you, Your Honors.
My name is Lenard Schwartzer.
Im the Chapter 7
Trustee in all the cases except for Ziegler, and in the Ziegler case I was the attorney for the debtor. And in all
the cases that -- cases, I raised a relatively simple objection to the motion to lift stay. I said that MERS did Coming
not have standing to bring the motion to lift stay.
into a -- into a Bankruptcy Court, you need to identify the actual beneficial owner of the note and deeds of trust. And
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were saying we can act without telling you -- telling you who that -- who that person is. And I think the 18 cases --
these 18 cases just so happen to be the ones that I was the trustee. that on -JUDGE MAHAN: law -MR. SCHWARTZER: JUDGE MAHAN: Well, see the obligation -Wheres that obligation found in the Theres nothing particularly special about that,
-- that the beneficiary is required
to say heres who actually holds the note or the deed of trust? MR. SCHWARTZER: rules. Well, obligation is stated in the
The rules say, and I laid it out I think in my brief.
Rule 4001 [unintelligible] bankruptcy rule that says [unintelligible] motion to lift the automatic stay. the Court, under Rule -- Bankruptcy Rule 9014. Bankruptcy Rule 9014 says that among the rules that are applied equal to the Bankruptcy Rule 7017. Bankruptcy It says
Rule 7017 is similar to Federal Rules of Civil Procedure, Rule 17, which basically says that an action has to be brought by the real party in interest. And if youre not the
real party in interest, its dismissible, but you had the opportunity to bring gratification or join in the real party in interest. MERS motion.
That was what I saw was wrong with the -- with
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If you look at the motion themselves and you each have different ones, but for example in -- in the Cortez case in front of Judge Dawson, it says the motion is brought by MERS solely as nominee for Countrywide -- or Countrywide or Deutsche Bank or somebody. JUDGE JONES: Mr. Schwartzer, Im sorry to
The answer to Judge Mahans question is, theres
nothing in the law that requires a -- an agent, a trust company, for example, in a case in District Court, not arising in bankruptcy, to say were here to foreclose and a pro se who files a case to stop them. The problem is, when
a case is filed in bankruptcy and somebody asks to lift the stay -MR. SCHWARTZER: JUDGE JONES: Youre right.
-- or files under Civil Rule 17 -Youre right. And Im sorry for
MR. SCHWARTZER:
not -- Im sorry for not answering your question. JUDGE JONES: -- then there is a requirement that
you disclose the true party in interest. MR. SCHWARTZER: That is exactly -- you know what,
I have my second line here that says standing required to be in a federal court, bankruptcy court, is not the same as -its not the equivalent to the right to foreclose under state law. Under state law they have a contractual right to do But if theyre going to bring it -- bring an
certain things.
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action in federal court they have to have standing. to be the real party in interest.
They have
Where theres several rulings of this Court that says theres nothing wrong with MERS conducting foreclosure under state law, Im not arguing that. with that rule. Im not disagreeing
Theres a difference of what you can do as Nobody -- you may or may not
an agency outside of court.
have to prove your agency, especially if nobody argues with you about having the right as an agent. prove youre an agent. But in federal court if you bring an action and you say Im somebodys agent, the defendant, or in this case the respondent to the motion has the right to say prove it. You You dont have to
dont have -- you cant come into court just on your pleading and say I am the agent, I am the nominee for Countrywide and everybody has to believe it. in these cases. You have 16 cases where all you have is -- well, we have about 14 cases where MERS says theyre either the nominee or holding the nominee for someone else. said prove that to the real party in interest. [unintelligible]. JUDGE JONES: So youre not asking us to destroy the And weve We dont. Thats what happened
MERS system nationwide, youre just saying in a civil rules context, whether in Federal District Court or Bankruptcy
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Court, you have to show who the true party in interest is and your agency status. MR. SCHWARTZER: And thats exactly correct, because
the rules require, Rule 7017 requires it, Rule 9014 requires it, Rule 4001 requires it. More importantly -JUDGE PRO: So Mr. Schwartzer, how would MERS show,
to the satisfaction of the trustee, that while in the cases where its not the holder of the note, that its a non-holder in possession who has the rights of the holder? In other
words, that it has the right to enforce an act on behalf of the holder. requirement? MR. SCHWARTZER: beneficiary. An affidavit from an officer of the What would they have to put forth to satisfy that
There is someone out there who actually is the Its probably something like
beneficial owner of the note.
US Bank as trustee for a securized bond, fund or something like that, or Deutsche Bank as trustee for a whole group of entities. I dont have a problem with that. And they had -- remember, in these cases MERS had multiple opportunities to do that. This case -- these cases
that continued in front of the Bankruptcy Court months at a time, and they -- they decided -- MERS decided to make this a test case to say we dont believe we have to show you, judges, here, or judges in the Bankruptcy Court who is the actual
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owner of the note. JUDGE JONES: See thats the problem that its The whole idea of
creating for judges across the country.
the MERS system, as I understand it, was to avoid the many differences in state law, some of which require actual recordation of the assignment of the beneficial interest. They wanted to syndicate these notes, make them tradeable through an electronic market. And the way they did it is
they said we wont record assignments of deeds of trust, well have a single designated agent, and we will simply electronically record who the current holder is. So I see nothing wrong with your argument that says thats fine, we recognize your status outside of a litigation context. objects. Go ahead, record the trustees deed, if nobody But in a civil context you must disclose who the
true party in interest is. MR. SCHWARTZER: point of my objection was. Thats what were -- what -- the I was seeing -- and the reason why
thats important in bankruptcy is -- is a particular issue that arises in bankruptcy. Rule 4001(a)(3) of the Bankruptcy Code says before you file a motion to lift stay you have to communicate good faith with the opposing party to see if you can work it out. Well, MERS cant work out anything. beneficial interest in it. It has no
It can never say Ill agree to
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an adequate protection payment.
I can agree to forego some It
of the payments now and add it to the end of the note.
cannot do any of those things because it has no beneficial interest. Someone out there is the owner of the note. And
there may be a thousand owners of the note, I agree, because it could be in a trust where there are a thousand different -- but there is a trustee of that trust who is the person who is part of the beneficial interest of that note, and we dont know who that person is. And that person should communicate
with the debtor or the trustee before the motion to lift stay is filed. And the reason why I filed my objection is because in none of these cases was there are realistic opportunity for anybody to negotiate with regard to the lift stay, adequate protection or modification of the note. And I think in these economic times that became a much more major issue than it was, I guess, three or four years ago. default. arguing. JUDGE GEORGE: to the appeal. Mr. Schwartzer, this doesnt pertain And I didnt want to know that [unintelligible] Thats the reason why were here and that were
But is there some possibility that you may be
satisfied if the other side agreed to identify the party of real interest, as you have requested? Would that possibly
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settle this case?
You dont need to respond -Well, it wouldnt settle this case, But the answer
MR. SCHWARTZER:
but theyve -- theyve made it a test case.
is, if they had presented the beneficial owner and said the beneficial owner is Deutsche Bank as a trustee or whoever it is of the trust that holds these thousand notes, they would have had a ratification by the beneficial owner and, therefore, they could go to forward with it. JUDGE GEORGE: MR. SCHWARTZER: I understand. Just like if they were -- brought
a lawsuit here in federal -- in district court, and you say, oh, by the way, were the nominee for and somebody says, well, show us you have authority in this -- a couple of ways. You
bring in an affidavit, a declaration, or you join the actual beneficial owner as an additional claimant. JUDGE GEORGE: MR. SCHWARTZER: JUDGE GEORGE: MR. SCHWARTZER: But it wouldnt settle this case. It wouldnt settle this. I understand. And I also disagree with opposing
counsel with regard to asking you to hold that theyre the beneficiary. That wasnt what the Court ruled. The Court
ruled they didnt have standing. ruled. JUDGE GEORGE: MR. SCHWARTZER:
Thats what the Court
All right. What the Judge said -- and, you
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know, I wish I had that Abraham Lincoln quote to use in my argument because its on point, that you can call yourself a beneficiary, but if you have no beneficial interest and you agree that you have no beneficial interest, youre not the beneficiary of the deed of trust, and youre not the benefit -- youre not the owner of the note. JUDGE DAWSON: of the dog. MR. SCHWARTZER: Riegle used the duck. JUDGE DAWSON: MR. SCHWARTZER: JUDGE DAWSON: Let me ask you a question. They dont walk like a duck -In the experience Ive had with Right, they -- well, Judge -- Judge They use -- they use the duck instead
foreclosures Ive always taken the note into the title company and they make sure I have the note or I have an affidavit that says the note has been lost. that not happen in this case? Why -- why did
Why was the person who was
seeking to foreclose not required to produce evidence that they had a beneficial interest? MR. SCHWARTZER: That was their position that they Their -- as I understand MERS
did not have to produce that.
position, is their position is that if were named as beneficiary, nominee beneficiary on the deed of trust, we dont have to show you anything else. End of discussion.
Its in the contract, you dont -- we dont have to show

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anything further. JUDGE DAWSON: But if John Q. Public went in to
foreclose on a deed of trust that was in -- where a note was in default, he would have to produce the note or a loss note affidavit or some other evidence pursuant to the statute that hes a non-holder in possession of an instrument who has the rights of a holder. case? MR. SCHWARTZER: As far as we know that didnt -And my That apparently didnt happen in this
it certainly didnt happen in the Bankruptcy Court.
experience is similar to yours, Your Honor, is that any time I had to foreclose on a note and deed of trust, I had to bring the note and deed of trust over to the title company, because Im not MERS I guess. JUDGE JONES: The purpose of that, of course, is to
protect the public from free floating notes out there presented fraudulently. In other words, somebody says its
lost or they dont produce it and they dont say that its lost, the deed of trust is foreclosed. We all know the
effect of that under the law, that is, the note is canceled, the obligation is canceled. note -MR. SCHWARTZER: MR. JONES: Yeah. But we still have a free floating
-- that can be used fraudulently, and so
thats the purpose of that requirement.

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MR. SCHWARTZER:
And it makes sense to require
somebody whos going to come into Bankruptcy Court and say Im the -- that I have a right to foreclose, and Im filing a motion to lift stay, heres the documentation. me, I get 2,000 -- I get 40 new cases a week. And believe I dont pick
the ones where they say -- or they have the documentation. Its this one was just a -- clear on its face that it didnt make sense that they had standing, cause theyre saying, I dont have the benefit [unintelligible]. [unintelligible] you have standing? JUDGE HUNT: Ziegler case? MR. SCHWARTZER: JUDGE HUNT: Yes. Can I ask you a question back on the And Im thinking
Its my understanding that there was a
note and it was possessed by MERS, but if I understand correctly, and Im asking you if I do understand correctly initially, that the -- at the time the motion to lift the stay was made, the beneficial interest, that is interest in that note, had been transferred from another -- Im not sure how to pronounce the name, is it Meridias or Meridias -- had been transferred from that beneficial owner to another before the motion was brought. Now is that -- is that accurate? That is my understanding.
MR. SCHWARTZER: JUDGE HUNT:
Did MERS ever provide -- or were they
given an opportunity to provide any documentation indicating

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that they were the agent or nominee for the new owner and identify the new owner? MR. SCHWARTZER: They provided an affidavit of Ms.
Mesh [phonetic] which said Im in possession of the note, and the note is endorsed in blank, and I have been certified, as an officer of MERS, by a corporate resolution of MERS, but I dont work for MERS, I work for somebody else. And my
understanding is that Ms. -- worked for a service -- a servicing company because the actual beneficial owners of the note dont usually have physical possession, they leave them in stockpiles with the servicing company so they dont get lost. JUDGE HUNT: no? Did they -MR. SCHWARTZER: the beneficial owner. They -- no, they never identified So is the answer to my question yes or
They never identified the beneficial
owner of the note, they just said we -- the person weve identified, Ms. Mesh, has physical possession of the note, and we have [unintelligible] a corporate resolution saying shes the assistant secretary of MERS and therefore she is an officer of MERS and therefore MERS is now the holder of the note. JUDGE HUNT: Okay. Thank you.
MR. SCHWARTZER: JUDGE MAHAN:
Okay.
Well, you raised a specter that -- of
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somebody separating the note from the deed of trust. familiar with the One Action Rule? MR. SCHWARTZER: JUDGE MAHAN: Yes.
Are you
NRS 40.430.
That presents that
specter from ever becoming a reality, doesnt it? MR. SCHWARTZER: Well, actually in the Ziegler case
it wouldnt, because in the Ziegler case we now -- it -JUDGE MAHAN: Say -- I didnt hear the first part. In the Ziegler case its -- it
MR. SCHWARTZER:
wouldnt, because in the Ziegler case the house has been foreclosed upon by the first mortgagee. an unsecured note. JUDGE MAHAN: So is this -So there is a note out there. But the rest And the note is now
MR. SCHWARTZER: JUDGE MAHAN:
-- it was a second note.
of these I think were all first promissory notes -MR. SCHWARTZER: JUDGE MAHAN: I believe -- I believe they are.
-- deeds of trust. And I agree with you. I dont
MR. SCHWARTZER:
think you could separate the note -- the beneficial interest and the deed of trust from the beneficial interest in the note because if you did, and I think Judge Riegle in her initial opinion made clear that the -- that showed the law that says that you cant have one without the other. That -- if you
only -- if you only received the deed of trust and not the
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note -- the beneficial interest under the note, you have no right to foreclose because youd never have a right to receive the money. And if you separate -- had the note, but not the
deed of trust, then you [unintelligible] foreclose, because you dont have the deed of trust. JUDGE MAHAN: Your -- but your argument is
restricted to bankruptcy arena. MR. SCHWARTZER: Well, actually my argument is
restricted to the idea that anyone who wants to bring a judicial action on a note secured by a deed of trust, for example, a judicial foreclosure would have to show that theyre the real party in interest. JUDGE MAHAN: But typically in non-bankruptcy,
thats a -- thats a mortgage rather than a deed of trust. MR. SCHWARTZER: Thats true. But you know, Ive
had New York lawyers swear to me that we have to bring a judicial foreclosure on their note and deed of trust in commercial transactions and I try to explain to them under Nevada law you dont, but they say, nope, thats what we want you to do. And in those cases, they went into court and we But I had to
filed the action for judicial foreclosure.
prove -- and I dont remember the case having that issue, but I wouldve had to prove, if I went through a judicial foreclosure, that my plaintiff had the beneficial interest in the note and mortgage, because otherwise he wouldnt be the
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real party in interest. JUDGE MAHAN: clear. context. MR. SCHWARTZER: make that clear again. Yes. My argument, and I want to And thats -- but I just want to be
Youre making a narrow argument here in the bankruptcy
Im not arguing that MERS doesnt have
a right to conduct a non-judicial foreclosure outside of a courtroom, because the real party in interest rule doesnt apply except because of Rule 17 and Bankruptcy Rule 70 [sic] [unintelligible]. When you have a rule you apply it. It
applies to my client, it applies to Mr. DeVyvers client, whether youre a multi-national company or a guy who has one note and deed of trust, if you bring a motion to lift stay you have to prove youre the real party in interest. If
youre not the real party in interest youre not supposed to bring a motion to lift stay or, as in the case, should be denied. With regard to the Ziegler matter and just -- I know this is the -- I just want to point out that -- that I think that that case is probably moot, the Ziegler matter, because the first mortgage was granted relief from the automatic stay, and MERS was the movant with regards on the second mortgage, and the first mortgage has already foreclosed. And fortunately I discovered that over the And I found out that
weekend in preparation of the hearing.
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the -- that the first mortgage foreclosed in December of 2008, which was three months before Judge Riegle issued her opinion and that was -- and therefore about three [unintelligible] before the order [unintelligible]. So that case was moot by
the time the judge made the decision when we argued at trial. But by the time we [unintelligible] issue, the property was no longer a property of [unintelligible] to bankruptcy estates or [unintelligible] and if the Court would prefer with regard to that case I could file the motion and attach a copy of the trustees deed upon sale showing that the [unintelligible] foreclosure sale of the first mortgage occurred before the date -- the decision were [unintelligible]. JUDGE HUNT: If you would please. I would that. If you have
MR. SCHWARTZER:
I have no further argument to make. any questions I would be happy to answer em. JUDGE GEORGE:
Counsel, this isnt really at issue,
but youre not suggesting that if circumstances changed, that no matter how this case -- how we rule on this case, that that would necessarily preclude their filing another motion to lift the stay. Youre not suggesting that, are you? No. This would -- this is a
MR. SCHWARTZER: question of standing.
If they to not -- I think Judge Riegle
was very clear in her Mitchell opinion and the other decision to -- adopted it. This was -- their motions were denied for
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lack of standing.
So if the real party in interest files a
motion to lift stay, it would have absolutely no card [sic] to that -- those subsequent motions. JUDGE GEORGE: important? MR. SCHWARTZER: Its a procedural issue, Your I think its important to So this ruling may not be terribly
Honor, that I think is important.
make sure that the party who brings the motion to lift stay has met the prerequisite of Rule 4001(a)(3), which is communicate in good faith with the debtor and the borrower -the debtor about whether something could be worked out with regard to the motion. JUDGE GEORGE: MR. SCHWARTZER: I understand. Thank you.
Thats a real important thing that I mean obviously
we need to have at this point in time.
afterwards they could do the mediation in state court, I guess, but I dont see any reason for not requiring somebody who has a note and deed of trust meeting that requirement, at least talking one time to their debtor before they do the foreclosure -- not foreclosure, before they bring the motion to lift the automatic stay. JUDGE MAHAN: Because thats what the law requires. Because thats what the -- and
MR. SCHWARTZER:
were not expanding the rule or changing the rule, were just saying follow the rule.
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JUDGE GEORGE: MR. SCHWARTZER: JUDGE MAHAN: JUDGE GEORGE: JUDGE HUNT: more time, Mr. DeVyver? MR. DeVYVER:
That is the rule. Thank you.
Mm-hmm.
Thank you. Thank you. I guess I have one -- you wanted some
Right.
I had three minutes, and Id
just like to use em, if thats all right? JUDGE HUNT: You will, and before I start running
the clock on you, come forward. I have a question I guess in clarification. Is the
-- it appears to me that your -- your real critical desire here is to obtain a change in the finding that MERS is not the beneficiary. Is the purpose in doing that so that as a
practice MERS can avoid having to present this documentation in a Bankruptcy Court or other -- in another litigation court setting that other people apparently have to do? MR. DeVYVER: No. No. When MERS developed -- when
MERS developed the mortgages that are used here, we werent trying to do anything other than comply with the statutory framework. The statutory framework provides for a Nobodys
beneficiary, and thats all were trying to do. trying to hide anything. JUDGE HUNT:
Did MERS develop the mortgages or
merely the investment vehicle that MERS seems to facilitate?

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MR. DeVYVER:
I dont -- I think that MERS probably
had some small role in developing, because the mortgages use - usually say MERS at the bottom. I think MERS had some role
in developing to use the right language to designate beneficiary, again, only to comply with the statutes.
MERS as And
remember, it is MERS position to seek relief from stay, but you have to be the noteholder and the beneficiary. When -- there is one thing Id like to clarify, and Im not sure exactly if I understood Mr. Schwartzer, but I do want to be clear for purposes of making this record, which is when MERS seeks relief from stay, under its own rules, Rule 8, it should be the noteholder and the beneficiary. theres no principal to disclose. And so
MERS is the party that --
MERS is the party to exercise the right. And I would direct the Court to Nevada statute. says the person entitled -- and this is 104.3301. The person entitled to enforce an instrument is the holder. And then it goes on to say: A person may be a -- a person entitled to enforce the instrument, even though the person is not the owner of the instrument. JUDGE MAHAN: MR. DeVYVER: JUDGE MAHAN: Now what statute is that? That is 104.3301. Thats Uniform Commercial Code. It
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MR. DeVYVER: JUDGE MAHAN: real property? MR. DeVYVER:
It is. Now what does that have to do with
Security -- because a note is bearer Mr. Schwartzer seemed to be
paper I guess is my point. saying -JUDGE MAHAN: about deeds of trust. MR. DeVYVER: JUDGE HUNT:
But that the -- I mean were talking
Well, what Mr. Schwartzer seems to -Yeah, it seems to me that what youre
suggesting is that you can separate those two documents -MR. DeVYVER: JUDGE HUNT: MR. DeVYVER: No. -- enforcing [unintelligible]. No. All Im saying is Mr. Schwartzer
seemed to be saying that when MERS comes to the Bankruptcy Court and is the noteholder and is the beneficiary, it has some duty to disclose someone, and my point is just that it doesnt. JUDGE MAHAN: MR. DeVYVER: Well -When it -- when it has both of those
pieces of paper its the party under both Nevada law, as well as many Bankruptcy Court decisions that Ive cited in my brief, its the party entitled to seek relief from stay. There are no cases that Mr. Schwartzer or anyone has ever cited that I have ever seen that says a noteholder and a
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beneficiary has to disclose anybody else. exist. JUDGE DAWSON:
Those cases dont
What you just read out of 104.3301
sub (2), the person may be a person entitled to enforce the instrument, even though the person is not the owner of the instrument, or is in wrongful possession of the instrument, does not obviate the provisions of Subsection (1) which still requires possession. MR. DeVYVER: point. It does, and thats precisely my
When MERS seeks relief from stay it literally, under
its own rules, must be in possession of that piece of paper. And when it is there isnt -- my only point is Mr. Schwartzer seems to think that theres someone else that needs to be disclosed, and that isnt the case. JUDGE HUNT: But here, in the mortgage situation,
arent we dealing with two pieces of paper, the note and the trust deed? MR. DeVYVER: Yes. JUDGE HUNT: MR. DeVYVER: Okay. And as long as it has both of those That is my Yes. The note and deed of trust.
pieces of paper it can seek relief from stay. only point.
I mean I would -- I would love to talk more
about the beneficiary issue, but I know that Im out of time. But I did want to make that point. Mr. Schwartzer seemed to
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think that something else was needed when MERS is the noteholder and the beneficiary, either to seek relief from stay or even initiate any action. under the law. Thank you. JUDGE HUNT: All right. Thank you. The matter will be taken Nothing else is needed
And thank you, counsel. under submission. THE CLERK: All rise.
PROCEEDINGS CONCLUDED AT 2:27:33 P.M. * * * * * * * * * *
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TRANSCRIPT: MERS Tells Court It Is The NoteHolder

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TRANSCRIPT: MERS Tells Court It Is The NoteHolder

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Case 2:09-cv-00669-LDG-PAL Document 39

Filed 11/13/09 Page 1 of 48

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA LAS VEGAS, NEVADA

CASE No. 2:09-CV-0668-JCM-RJJ

CASE No. 2:09-CV-0669-LDG-PAL

CASE No. 2:09-CV-0670-KJD-GWF

CASE No. 2:09-CV-0673-RCJ-GWF

CASE No. 2:09-CV-0676-RLH-PAL

CASE No. 2:09-CV-0677-JCM-LRL

CASE No. 2:09-CV-0683-RLH-RJJ

Case 2:09-cv-00669-LDG-PAL Document 39

Filed 11/13/09 Page 2 of 48

JOSE ANG, et al.,

CASE No. 2:09-CV-0684-LDG-GWF

CASE No. 2:09-CV-0685-KJD-RJJ

CASE No. 2:09-CV-0691-JCM-LRL

CASE No. 2:09-CV-0873-KJD-GWF

CASE No. 2:09-CV-0874-LDG-LRL

CASE No. 2:09-CV-0888-KJD-GWF

CASE No. 2:09-CV-0889-KJD-PAL

CASE No. 2:09-CV-0890-PMP-PAL

CASE No. 2:09-CV-0891-JCM-GWF

Case 2:09-cv-00669-LDG-PAL Document 39

Filed 11/13/09 Page 3 of 48

COURT RECORDER: SUMMER RIVERA U.S. District Court

Proceedings recorded by electronic sound recording, transcript produced by transcription service.

Case 2:09-cv-00669-LDG-PAL Document 39

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FOR THE DEBTORS/ BANKRUPTCY TRUSTEE:

Case 2:09-cv-00669-LDG-PAL Document 39

Filed 11/13/09 Page 5 of 48

LAS VEGAS, NEVADA

TUESDAY, NOVEMBER 10, 2009

Court is now in session. JUDGE HUNT: THE CLERK:

Six judges are sitting en banc.

Jeff Silvestri of McDonald Carano Wilson.

Case 2:09-cv-00669-LDG-PAL Document 39

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Thank you, Your Honor. Chief, Im sorry, but I dont have a

Case 2:09-cv-00669-LDG-PAL Document 39

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Bankruptcy Court did was apply the wrong legal standard.

Case 2:09-cv-00669-LDG-PAL Document 39

Filed 11/13/09 Page 8 of 48

In other words, its harmless error if we

isnt my case, so I -- but how do you claim that MERS is the

Case 2:09-cv-00669-LDG-PAL Document 39

Filed 11/13/09 Page 9 of 48

But if you are not, in Under state

fact, a beneficiary, youre not a beneficiary.

none of that changes Ziegler. the noteholder. evidence showed.

It did hold the note.

The note was endorsed in blank, and

Case 2:09-cv-00669-LDG-PAL Document 39

Filed 11/13/09 Page 10 of 48

Even if that note had been transferred,

filed MERS was the noteholder.

Case 2:09-cv-00669-LDG-PAL Document 39

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Case 2:09-cv-00669-LDG-PAL Document 39

Filed 11/13/09 Page 12 of 48

Mr. DeVyver, if I could ask, as the

In the Ziegler case, as the