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1 HARRY A. OLIVAR, JR. (State Bar No. 143089)
DANIELLE L. GILMORE (State Bar No. 171457)
2 QUINN EMANUEL URQUHART & SULLIVAN, LLP
865 South Figueroa Street
3
10th Floor
4 Los Angeles, CA 90017-2543
Telephone: (213) 443-3000
5 Email: harryolivar@quinnemanuel.com
Email: daniellegilmore@quinnemanuel.com
6
MICHAEL S. RILEY (Fla. Bar No. 265918 Pro Hac Vice)
7
THE LAW OFFICES OF MICHAEL S. RILEY
8 401 E. Las Olas Blvd., Suite #130, Fort Lauderdale, FL 33301
Telephone: (818) 877-6423
9 Email: Mriley8@aol.com

10 Attorneys for Reorganized Debtor and Plaintiff Allana Baroni

11

12 UNITED STATES BANKRUPTCY COURT

13 CENTRAL DISTRICT OF CALIFORNIA - SAN FERNANDO VALLEY DIVISION

14
In re Chapter 11 Case
15
Allana Baroni, Bankr. Case No. 1:12-bk-10986-MB
16
Reorganized Debtor. Adv. Proc. No. 1:13-ap-01069-MB
17
NOTICE OF MOTION AND MOTION
18 Allana Baroni, FOR RELIEF FROM THE ORDER
SETTING THE DEADLINE TO
19 Plaintiff,
IDENTIFY EXPERT WITNESSES
20

21 v.

22 NATIONSTAR MORTGAGE, LLC, Hearing Date: October 9, 2018
Time: 2:30pm
23 Defendant.
Place: Courtroom 303
21041 Burbank Blvd., Woodland Hills, CA
24

25

26
27

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1 TO THE HONORABLE MARTIN R, BARASH BANKRUPTCY JUDGE, PARTIES IN

2 INTEREST AND COUNSEL OF RECORD PLEASE TAKE NOTICE THAT ON October 9,

3
2018 at 2:30pm in Courtroom 303 of the United States Bankruptcy Court, located at 21041
4
Burbank Blvd, Woodland Hills, CA the Reorganized Debtor, and Plaintiff Allana Baroni
5
("Plaintiff" or “Baroni”) will and does move for an order RELIEF FROM THE ORDER
6
SETTING THE DEADLINE TO IDENTIFY EXPERT WITNESSES. This motion is brought
7

8 pursuant to Federal Rule of Civil Procedure 60 incorporated into the Bankruptcy Code as Fed. R.

9 Bank. P. 9024, and is based on this notice, on the attached Memorandum of Points and

10 Authorities, the Declaration of Michael S. Riley, on the pleadings and records on file in this

11
action, and on such argument as may be presented at the hearing on this motion.
12
PLEASE TAKE FURTHER NOTICE that this motion is being heard in compliance with the
13
Court's September 13, 2018 bench scheduling order setting out the pretrial motion deadlines. If you
14
wish to oppose this motion, you must file a written response to this motion with the Bankruptcy Court,
15

16 and serve a copy of such response upon the moving party’s attorney at the address set forth above by

17 October 5, 2018. If you fail to timely file and serve a response, the Court may treat such failure as a

18 consent to the Court granting the relief requested
19

20 DATED: September 28, 2018

21 LAW OFFICE OF MICHAEL S. RILEY
22 /s/ Michael S. Riley
23
BY: MICHAEL S. RILEY
24 Attorneys for Reorganized Debtor

25

26
27

28

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1 MEMORANDUM OF POINTS AND AUTHORITIES

2 I.
3 INTRODUCTION
4
The Plaintiff respectfully requests relief from the January 26, 2017 Amended Scheduling
5
Order (Adv. Dkt. No. 173), to identify Lora Jones, as a law enforcement witness with expertise in
6
forgery, fraud and banking best practices, on the grounds of newly discovered evidence, and for
7

8 good cause that justifies relief.

9 II.

10 STATEMENT OF FACTS
11
On September 15, 2012, Nationstar Mortgage, LLC ("Nationstar") filed Claim 9-1 (the
12
"Claim") under penalty of perjury putting forth Nationstar as a secured creditor. Attached to the
13
Claim is a promissory note (the "Claim Note") and a deed of Trust (the "DOT"). The signatory of
14

15 the Claim attested to the accuracy of the Claim Note. Nationstar maintained the Claim in its own

16 name for over two years never asserting it was acting for another party.

17 On September 24, 2014, two years into the case and upon the filing of its motion for
18
summary judgment, Nationstar changed its position and asserted it is not the actual creditor but
19
rather acting as an agent for Wells Fargo Bank N.A. as Trustee for Structured Adjustable Rate
20
Mortgage Loan Trust, Mortgage Pass Through Certificates, Series 2004-5 ("Wells Fargo").
21

22 Through the declarations of Nationstar employee Edward Hyne, and opposing counsel Adam

23 Barasch, both filed in support of Nationstar's September 24, 2014, motion for summary judgment,

24 Nationstar attested to the accuracy of a promissory note with indorsements that is materially

25 inconsistent with the Claim Note (See Barash Decl. Adv. Dkt. No. 50-6) (the "MSJ" Note).

26
27

28

3
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1 On numerous occasions spanning many years, the Plaintiff and her counsel have requested

2 an explanation setting forth why materially inconsistent promissory notes have been filed with the

3
Court under penalty of perjury, to no avail. (Riley Decl ¶2).
4
On May 3, 2017, Nationstar filed its Motion to Exclude Expert Testimony of Meredith
5
Deklab Miller (Adv. Dkt. No. 192). During the May 26, 2017, oral argument on the motion, the
6
Court inquired if there was an explanation for the conflicting indorsements. Defendant did not
7

8 provide an explanation.

9 On August 28, 2018, for the first time after years of inquiry, Defendant's Rule 30(b)(6)
10 witness Mr. Edward Hyne provided Nationstar's explanation concerning the inconsistent

11 indorsements, summarized as --- the promissory note appeared to contain no indorsements,

12 therefore the former servicer Aurora Bank FSB's policy was to create an indorsement page and

13 populate it with executed indorsements years after the underlying transactions purportedly

14 occurred and without permission from the signatories, in order to give the appearance that the

15 Note was duly indorsed to blank. The note, and fabricated indorsements were filed with the Claim

16 for the benefit of Nationstar.

17 True and correct copies of Mr. Hyne's deposition transcript describing the indorsement
18 fabrication practice is excerpted below and attached and incorporated by reference as "Exhibit 1."
19 BY MR. RILEY: Q What is your testimony about the Note, Mr. Hyne?
20 A The Note itself is accurate, but as to the page where the endorsements are, um,
21 there is, actually, um -- the original Note has the endorsements on the backside of the
signature page, and this was an alternate second endorsement sheet that had been
22 prepared by Aurora Bank, it's my understanding. That's why there was a discrepancy
raised relating to the endorsements.
23
MR. OLIVER: Prepared by?
24

25 THE WITNESS: Aurora, the prior servicer.

26 MR. RILEY: Would you, please, read back his answer, if you would.

27 BY MR. RILEY: Q Why would there be an alternate endorsement sheet prepared by
Aurora?
28

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1
A Um, well, I don't have personal knowledge. I didn't work for Aurora. It's my
2 understanding that the, um -- Aurora had an image of the Note that, um, apparently,
when imaging their system, they didn't have the back page with the endorsements on
3
it, and someone at Aurora had gone in and created a separate endorsement sheet, um,
4 for the purposes of having a complete version of the Note with an endorsement, not
knowing that the back of the original Note, um, contained the, um, original
5 endorsements.
6 Q So it's your testimony they prepared an allonge, if you're familiar with the term
"allonge"?
7

8 THE WITNESS: I don't know if you would call it an allonge, um, but they prepared,
um, a sheet that had new endorsements so that it could be imaged, um, with, um, an
9 image of the Note that was, um, different from the original Note that already had the
endorsements on the backside of the signature page.
10

11 Q Let's go back to the document you're referring to and that you're looking at in front
of you. What is that?
12
A This page, um, is a page that has three endorsements on it.
13
Q So is it your testimony this was the endorsement that was prepared by Aurora that
14 was attached to Claim 1?
15
THE WITNESS: Yes.
16
BY MR. RILEY: Q Okay. And how do you have knowledge of how this happened?
17
A We have -- in our imaging system when the loan came across from Aurora to
18 Nationstar to service. We had images with this Note with this endorsement page, and
19 a separate image of the Note as it, actually, appears with the other endorsements. Um,
I've had discussions with Simon Ward-Brown, who --
20
Q I'm sorry, who?
21
A Simon Ward-Brown. He's an employee of Nationstar now, but was previously
22
employed by Aurora when this loan -- before the loan transferred to Nationstar.
23
Q And he's the one that informed you how these signatures came to be on the claim?
24
THE WITNESS: We discussed as to how there might be two different, um,
25 endorsement pages.
26
BY MR. RILEY:Q When would you have had that conversation?
27
A I think it was last year, late last year.
28

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1 Q Why was an amended Proof of Claim not filed, if that wasn't the accurate Note?

2 A I'm not sure why there wasn't an amended Proof of Claim filed. Certainly
Nationstar wasn't aware of the issue until, I believe, it was raised later on in the
3
litigation.
4
BY MR. OLIVAR: Q Now, I think you testified you spoke with Mr. Ward-Brown about an
5 alternate second set of -- alternate second endorsement sheet. Do I have that right?
6
A Yes.
7
Q And the alternate second endorsement sheet, you believe, was prepared by Aurora
8
Bank?
9
A Yes.
10

11 Q Did he know how that was prepared or why that was prepared when you spoke
with him?
12

13 A We had discussed what he believed to have happened, um, to provide an
explanation why there is a second endorsement page.
14

15 Q When you say you discussed what he believed to have happened, were the two of
you just speculating as to possibilities, or did anybody know what had happened?
16
A He didn't say that he was there when it happened physically at the time that it was
17 occurring, um, so he was trying -- he believed that that is what happened based upon
18 his, um, knowledge of the servicing policies and processes at Aurora.

19 Q So based on his knowledge of the general policies at Aurora, he posited some
options as to what might have happened, or was it just one option?
20
A No. I believe that was the one option.
21

22 Q So based on his knowledge of Aurora's general policy, he said he believed that's
what had happened?
23
A Aurora has an imaging system where they image their own documents. An
24 employee of Aurora had looked at the images of the Note and saw that there was not
an endorsement page image with the Note as part of the Note document. Even
25
though the original, um, Note has the endorsements on the back page of the signature
26 page, um, it was Simon's understanding or belief that, um, an employee of Aurora
then prepared, um, a separate endorsement page, um, for the purposes of completing
27 the chain of endorsements for the image of the Note that they had in their system.

28

6
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1 Q What was the name of the employee at Aurora who saw there was no endorsement
page?
2
A Um, he didn't have a name of a person. He believed that's what would have
3
triggered an employee looking at the imaging system.
4
Q When did that unnamed Aurora employee create that second page?
5
A It's not dated, so I'm not sure if he could tell but, um, there's certainly nothing on
6 the document that would indicate when it occurred.
7
Q How did the Aurora employee create a second endorsement page?
8
A I don't know.
9
Q Do you know whether the page was photo shopped?
10

11 A I don't know.

12 Q Do you know whether the page was physically xeroxed with a cut-and-paste
technique?
13
A I don't know.
14 III.
15 ARGUMENT
16 A.
17 THE TESTIMONY SOUGHT IS DIRECTLY RELEVANT TO THE CASE
18
The BAP opinion in this matter held that the Plaintiff rightfully challenged the authenticity
19
of the indorsements, and held that Nationstar must establish the note is duly indorsed to blank. The
20
BAP also held that the issue of authority to indorse the note is relevant to the case, specifically
21

22 whether the indorsements were placed on the note by a third party without authority to indorse the

23 note:

24
"On the other hand, the authenticity of the indorsements is a different matter. Like
25 James’ signature on the note, indorsement signatures on a negotiable instrument
typically are self authenticating. Id. And yet, here, there are genuine and material
26
issues regarding whether the original of the Carmel note was duly indorsed in blank.
27

28

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1 Here, Nationstar itself created a genuine issue of material fact by presenting with its
proof of claim a copy of the note containing a materially different indorsements page
2
than that contained in the Hyne declaration note copy. As we explained above, the
3 indorsements are configured differently in the POC note copy and in the Hyne
declaration note copy.
4

5 More importantly, a reasonable trier of fact also might infer from the divergent
indorsements pages that the original Carmel note never was properly indorsed; rather,
6
an indorsements page might have been placed with the original note by some
7 unknown third party without authority to indorse the Carmel note."

8
BAP Opinion P.23-24, a true and correct copy of which is attached and incorporated
9 by reference as "Exhibit 2."

10 During the September 24, 2015 BAP oral argument, the panel characterized the
11
indorsements filed in the case as "magical," and the filing of the inconsistent indorsements as
12
"magical thinking:"
13
JUDGE KURTZ: Counsel, counsel, there’s one copy of the endorsements. There’s
14
another copy of the endorsements. These are magical endorsements as your copier didn’t
15 move and they changed their relationship to one another.

16 JUDGE TAYLOR: But here’s the problem here. You put one copy in front of the court
17 and you said, this is it. We’re entitled to file proof of claim. And then you put another
copy before the Court and said, this is it. We’re entitled to file this claim and you never
18 explained how both of those are put before the Court. And I’ll tell you, me, I’ve tried
19 those cases and I try it because your client put inconsistent information before the Court
and said both were true and I -- you know, magical thinking is something that I’m not
20 real big on when a financial.

21
A true and correct copy of the BAP transcript is attached and incorporated by reference as
22
"Exhibit 4."
23

24
In light of Nationstar's August 28, 2018 disclosure of Aurora Bank's practice of preparing
25
indorsements, Plaintiff intends to challenge the authenticity of the indorsements, and the authority
26
to indorse the note through expert testimony. The testimony will include clarification that the
27
practice described by Mr. Hyne violates numerous codes and statutes. This testimony is directly
28

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1 relevant to the BAP's holdings concerning the authenticity of the indorsements, and authority to

2 indorse the note.

3
Fed. R. Civ. Proc. 60 (b) provides: Grounds for Relief from a Final Judgment, Order, or
4

5 Proceeding. On motion and just terms, the court may relieve a party or its legal representative

6 from a final judgment, order, or proceeding for the following reasons:

7
(2) newly discovered evidence that, with reasonable diligence, could not have been
8 discovered in time to move for a new trial under Rule 59(b); and
9
6) any other reason that justifies relief.
10 Mr. Hyne testified that Nationstar became aware that the Claim Note indorsements were
11 likely created, "late last year," but failed to disclose this information, or the underlying records to

12 the Plaintiff. Having disclosed this information to Plaintiff just four weeks ago, the Plaintiff could

13 not have timely designated a law enforcement expert to testify to the legal effect of this practice,

14 the nature of a system in place that allows the creation of indorsements in this manner, and to

15 rebut the presumptions concerning the bona fides of the indorsements to the Note in light of the

16 disclosed processes.

17 Defendant prevailed on summary judgment under the theory that Nationstar is in
18 possession of the original note indorsed to blank. Although reversed on appeal, this Court's Scope
19 of Issues on Remand sets out that in order for Nationstar to prevail at trail it can establish:

20 a. Whether the “original Carmel note” (as defined by the Panel in its Memorandum) was
duly endorsed in blank and made payable to the bearer and, therefore, whether Nationstar
21
qualifies as a holder of the note and a person entitled to enforce the note.
22
The Plaintiff is entitled to put forth and support her theory that the low evidentiary
23
requirement of simply being in possession of a note purportedly indorsed to blank is enough to
24
enforce property rights, was the incentive to forge the indorsements to blank. Plaintiff is also
25
entitled to establish that the indorsement creation practices disclosed by Mr. Hyne calls into
26
question the veracity of all of the indorsements.
27

28

9
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1 B.
2 PLAINTIFF'S EXPERT JAY PATTERSON IS NOT QUALIFIED TO TESTIFY
TO ISSUES OF LAW
3

4 The Plaintiff intends to identify Lora Jones as an expert witness. Ms. Jones CV is attached

5 and incorporated by reference as "Exhibit 3." Ms. Jones' experience includes:

6
 25-years experience in Law Enforcement, including the US Department of Homeland
7 Security (DHS) – U.S. Secret Service in Washington DC;
 Secret Service Agent assigned to Headquarters, Criminal Investigative Division, and was
8 the Agency’s Money Laundering and Mortgage Fraud Program Manager;
 Regular member of the Department of Justice Bank Fraud Working Group;
9
 Regular member of the Mid-Atlantic Anti-money Laundering Working Group;
10  Associate Member of the Association of Certified Fraud Examiners;
 Partnered, and was a liaison with members of the Regulatory, Financial, and Banking
11 Industries;
 Worked directly with Federal, State, and local Law Enforcement entities in the
12
Regulatory, Financial, and Banking Industries surrounding “Best Practices,” and
13 formulating solutions in the Regulatory, Enforcement, and Financial Industry
workspaces;
14  A Captain in the U.S. Army Signal Corps; and
 A Fairfax, Virginia County Police Officer.
15

16 For clarification, Plaintiff's securitization expert and certified fraud examiner Jay Patterson

17 is not qualified to testify to legal issues concerning the indorsement fabrication practices described

18 by Mr. Hyne.
19 C.
20
THE PARTIES HAVE MET AND CONFERRED
21
On Monday, September 24, 2018, the parties met and conferred telephonically with respect
22
to this motion but could not agree on the issue. During the meet and confer opposing counsel
23

24 asserted that Plaintiff is time barred from identifying an expert, notwithstanding that the practice

25 to which Plaintiff seeks testimony in connection with was only disclosed four weeks ago.

26 Defendant's position is particularly disingenuous considering that Mr. Hyne testified that
27
Nationstar was aware of the "indorsement preparation" practice at issue "late last year," but failed
28

10
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1 to disclose it to Plaintiff or amend the Claim.

2 III.
3 CONCLUSION
4
For the reasons described above, the Plaintiff respectfully requests relief from the
5

6 scheduling order to indentify a law enforcement expert witness to testify in connection with the

7 indorsement creation practices attested to on August 28, 2018 by Nationstar, through it Rule

8 30(b)(6) witness, Mr. Edward Hyne.

9

10

11

12
DATED: September 28, 2018 LAW OFFICE OF MICHAEL S. RILEY
13

14 /s/ Michael S. Riley

15 BY: MICHAEL S. RILEY
Attorneys for Reorganized Debtor
16

17

18
19

20

21

22

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24

25

26
27

28

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1 DECLARATION OF MICHAEL S. RILEY

2 I, MICHAEL S. RILEY, declare:

3
1. I am special counsel to the Plaintiff, and have been admitted pro hac vice to appear before
4
this Court. I submit this Declaration in support of Plaintiff's motion for relief from the scheduling
5
order to indentify an expert witness. I have personal knowledge of the facts I am about to state
6
and, if called on to do so, I can competently testify to those facts.
7

8 2. On numerous occasions spanning many years, the Plaintiff and counsel have requested an

9 explanation setting forth why materially inconsistent promissory notes have been filed with the
10 Court under penalty of perjury, to no avail.
11
3. True and correct copies of Mr. Hyne's deposition transcript is attached and incorporated by
12
reference as "Exhibit 1."
13
4. A true and correct copy of the November 10, 2015 BAP Opinion is attached and
14

15 incorporated by reference as "Exhibit 2."

16 5. A true and correct copy of Ms. Jones CV is attached and incorporated by reference as

17 "Exhibit 3."

18
6. A true and correct copy of the BAP transcript is attached and incorporated by reference as
19
"Exhibit 4."
20

21
I declare under penalty of perjury of the laws of the United States that the foregoing is true
22

23 and correct.

24 Executed on September 28, 2018 at Fort Lauderdale, FL.

25

26 /s/ Michael S. Riley
27 ___________________

28 Michael S. Riley, Esq.

12
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EXHIBIT 1
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In The Matter Of:

Allana Baroni
v.
Nationstar Mortgage

_________________________________

Edward Hyne VOL

August 28, 2018
_________________________________

BH CDR Job # 1085716
number of pages 114
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Edward Hyne - 8/28/2018

Page 1 Page 3
1
UNITED STATES BANKRUPTCY COURT INDEX
2
CENTRAL DISTRICT OF CALIFORNIA WITNESS EXAMINATION
3
SAN FERNANDO VALLEY DIVISION EDWARD HYNE PAGE
4
MR. RILEY 9, 108
5
In re )Chapter 11 Case MR. OLIVER 77, 109
) 6

ALLANA BARONI, )Bankr. Case No.: 7

)1:12-bk-10986-MB 8
9
Reorganized Debtor. ) EXHIBITS
10
)Adv. Proc. No.: EXHIBIT DESCRIPTION PAGE
11
)1:13-ap-010689-MB Exhibit 1 Notice of Deposition of
___________________________________) Nationstar Mortgage, LLC,
12
) 3 pages 12
13
ALLANA BARONI, ) Exhibit 3 Proof of Claim, 39 pages 13
14
) Exhibit 4 Lehman Brothers Holdings, Inc.
Plaintiff, ) Seller and Structured Asset
15
) Securities Corporation Purchaser
v. ) Mortgage Loan Sale and Assignment
16
) Agreement, dated as of
NATIONSTAR MORTGAGE, LLC, ) April 1, 2004, 22 pages 24
) 17

Defendant. ) Exhibit 5 Declaration of Edward Hyne in
18
___________________________________) Support of Nationstar Mortgage,
LLC's Motion for Summary
19
Deposition of EDWARD HYNE, taken before Judgment, 5 pages 29
20
Lexann Cirocco, a Certified Shorthand Reporter for the Exhibit 6 Assignment and Assumption
State of California, with principal office in the County Agreement Among Lehman Brothers
21
of Orange, commencing at 10:32 a.m., Tuesday, August 28, Bank, FSB, as Assignor and
2018, at the office of Severson & Werson, 19100 Von Karman Lehman Brothers Holdings Inc.
22
Avenue, Suite 700, Irvine, California. as Assignee, dated as of
April 1, 2004, 13 pages 33
23
24
25

Page 2 Page 4
1
APPEARANCES OF COUNSEL: 1
I N D E X (CONTINUED)
2
For Plaintiff: 2
EXHIBITS
3
THE LAW OFFICES OF MICHAEL S. RILEY 3
EXHIBIT DESCRIPTION PAGE
BY: MICHAEL S. RILEY, ESQ. 4
Exhibit 7 Mortgage Loan Schedule,
4
401 East Las Olas Boulevard 4 pages 37
Suite 130 5
5
Fort Lauderdale, Florida 33301
Exhibit 8 Structured Adjustable Rate
(818) 877-6423 6
6 Mortgage Loan Trust Mortgage
-and- Pass-Through Certificates
7
7 Series 2004-5, 27 pages 47
8
QUINN EMANUEL Exhibit 10 Escrow Agreement, 38 pages 65
9
8
BY: HARRY A. OLIVER, JR., ESQ. Exhibit 11 Original Note, 9 pages 108
10
865 South Figueroa Street Exhibit 12 Original Mortgage/Deed of
9
10th Floor Trust, 25 pages 108
11
Los Angeles, California 90017
10
(213) 443-3176 Exhibit 13 Pass-Through Trust Agreement,
(213) 443-3100 Facsimile 12
dated as of September 7, 2016,
11
57 pages 67
12 13
13
For Defendants: Exhibit 14 Corporate Assignment of Deed
14
SEVERSON & WERSON 14
of Trust, 2 pages 63
BY: BERNARD KORNBERG, ESQ. 15
Exhibit 15 Plan of Liquidation, 3 pages 73
15
One Embarcadaro Center 16
Suite 2600
Exhibit 16 Release and Assignment, 19 pages 89
17
16
San Francisco, California 94111 Exhibit 17 Assignment Agreement, 5 pages 89
18
(415) 677-5548 Exhibit 18 Loan Assignment - Assignment
17 Agreement, 9 pages 90
18
19

19 Exhibit 19 Loan Assignment - Assignment
20
Also Present: Allana Baroni Agreement, 9 pages 90
21
20 Exhibit 20 Handwritten Notes, 3 pages 62
22
Fred Hicks (From page 4 to page 8)
21
INSTRUCTIONS NOT TO ANSWER
22 23
23
24
PAGE LINE
24
25
15 23
25

1 (Pages 1 to 4)
Ben Hyatt Certified Deposition Reporters
888.272.0022 818.343.7040 Fax 818.343.7119 www.benhyatt.com
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Edward Hyne - 8/28/2018

Page 13 Page 15
1 1
Q Sir, I'm handing you a copy of the notice of the Wernick. They are what was called NBS or National
2 2
deposition. Have you seen that before? Bankruptcy Counsel Services, and they filed the Proof of
3 3
A Yes. Claim on behalf of Nationstar.
4 4
Q And you're prepared to give testimony on the Q Do you know if information or documentation was
5 5
topics? provided to Mr. Edelman to file that Proof of Claim?
6 6
A Yes. A The firm had direct access to Nationstar's
7 7
Q Is that the document you understand Nationstar systems and records, and so they were able to pull the
8 8
filed as Proof of Claim -- information as to the debt and amounts owing to Nationstar
9 9
MR. RILEY: We're going to move right to the Proof of and the documents that were necessary to be filed with the
10 10
Claim as Exhibit 2. POC.
11 11
MS. BARONI: That's Exhibit 3. Q Okay. And the Promissory Note and the Deed of
12 12
MR. RILEY: That's Exhibit 1, no? Trust attached to that claim is true and correct? Take a
13 13
MS. BARONI: The document request. look at that.
14 14
MR. RILEY: I got you. So this is Exhibit 3. A The image of the, um, Note, um, contains an
15 15
(Exhibit 3 was marked for identification.) endorsement page that is, um -- this isn't, um -- this was
16 16
BY MR. RILEY: an issue with the endorsements on the Note.
17 17
Q Have you seen that document before, Mr. Hyne? Q So the endorsements aren't correct, is that your
18 18
A Yes. testimony?
19 19
Q Did you review that in preparation for this MR. KORNBERG: Excuse me. Objection. Don't testify
20 20
deposition? for my client.
21 21
A Yes. Don't answer that question.
22 22
Q And on whose behalf was Claim 91 being filed? MR. RILEY: It was a question.
23 23
A Nationstar Mortgage, LLC. MR. KORNBERG: Don't answer that question. You can
24 24
Q And who authorized that filing? ask questions. You can't testify for him.
25 25
A Nationstar did. MR. RILEY: Would you repeat that question, please.

Page 14 Page 16
1 1
Q And would you read the top of page 1 that (The record was read.)
2 2
identifies the creditor? BY MR. RILEY:
3 3
A "Nationstar Mortgage, LLC." Q What is your testimony about the Note, Mr. Hyne?
4 4
Q And it's your understanding that Ms. Baroni owes A The Note itself is accurate, but as to the page
5 5
money pursuant to the claim to Nationstar? where the endorsements are, um, there is, actually, um --
6 6
A Yes. the original Note has the endorsements on the backside of
7 7
Q And would you point out the agreements in that the signature page, and this was an alternate second
8 8
Proof of Claim that represent Ms. Baroni owing money to endorsement sheet that had been prepared by Aurora Bank,
9 9
Nationstar? it's my understanding. That's why there was a discrepancy
10 10
MR. KORNBERG: Objection. Unclear. Would you raised relating to the endorsements.
11 11
clarify what you mean by "agreements"? MR. OLIVER: Prepared by?
12 12
MR. RILEY: I think he needs to go to whatever THE WITNESS: Aurora, the prior servicer.
13 13
document is in there that obligates Ms. Baroni to MR. RILEY: Would you, please, read back his answer,
14 14
Nationstar, so I would think it would be in the documents if you would.
15 15
in there. (The record was read.)
16 16
THE WITNESS: There's a copy of the original Note MR. RILEY: Thank you.
17 17
with blank endorsements. Nationstar had acquired the BY MR. RILEY:
18 18
servicing of the loan from Aurora Bank July 1st, 2012. Q Why would there be an alternate endorsement
19 19
BY MR. RILEY: sheet prepared by Aurora?
20 20
Q I'm sorry, when? A Um, well, I don't have personal knowledge. I
21 21
A On July 1st, 2012. And payments on the account didn't work for Aurora. It's my understanding that the,
22 22
would be paid to Nationstar as the servicer. um -- Aurora had an image of the Note that, um,
23 23
Q And who is Craig Edelman? I notice he signed on apparently, when imaging their system, they didn't have
24 24
behalf of Nationstar. the back page with the endorsements on it, and someone at
25 25
A He is an attorney at Brice, Vander, Linden & Aurora had gone in and created a separate endorsement

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1 1
sheet, um, for the purposes of having a complete version MR. RILEY: Are you done?
2 2
of the Note with an endorsement, not knowing that the back MR. KORNBERG: That's it.
3 3
of the original Note, um, contained the, um, original BY MR. RILEY:
4 4
endorsements. Q Let's go back to the document you're referring
5 5
Q So it's your testimony they prepared an allonge, to and that you're looking at in front of you. What is
6 6
if you're familiar with the term "allonge"? that?
7 7
MR. KORNBERG: Objection. Can you, please, just A This page, um, is a page that has three
8 8
restate it with a question, rather than telling him what endorsements on it.
9 9
his testimony is? Q Okay. And what was that document used for since
10 10
MR. RILEY: Okay we have two documents? Which document is that?
11 11
Q My question to you is, I'm not clear on what MR. KORNBERG: Objection. Please restate.
12 12
Aurora did. I heard your answer, but I'm going to need to MR. RILEY: Bear with me. Hold on, let me find it.
13 13
delve further, because I'm confused by your response. Q So is it your testimony this was the endorsement
14 14
Is your response that a separate sheet of paper that was prepared by Aurora that was attached to Claim 1?
15 15
was used, which we call an allonge? MR. KORNBERG: Objection. Asked and answered.
16 16
MR. RILEY: Are you all right with that, Bernard? THE WITNESS: Yes.
17 17
MR. KORNBERG: I'm fine with that. BY MR. RILEY:
18 18
BY MR. RILEY: Q Okay. And how do you have knowledge of how this
19 19
Q What we call an allonge, is that what was used happened?
20 20
by Aurora? A We have -- in our imaging system when the loan
21 21
MR. KORNBERG: And I will object and note for the came across from Aurora to Nationstar to service.
22 22
record that the witness has already stated he does not We had images with this Note with this
23 23
have personal knowledge of these facts. endorsement page, and a separate image of the Note as it,
24 24
MR. RILEY: Okay. actually, appears with the other endorsements. Um, I've
25 25
THE WITNESS: I don't know if you would call it an had discussions with Simon Ward-Brown, who --

Page 18 Page 20
1 1
allonge, um, but they prepared, um, a sheet that had new Q I'm sorry, who?
2 2
endorsements so that it could be imaged, um, with, um, an A Simon Ward-Brown. He's an employee of
3 3
image of the Note that was, um, different from the Nationstar now, but was previously employed by Aurora when
4 4
original Note that already had the endorsements on the this loan -- before the loan transferred to Nationstar.
5 5
backside of the signature page. Q And he's the one that informed you how these
6 6
BY MR. RILEY: signatures came to be on the claim?
7 7
Q So for clarity, they signed on a separate sheet MR. KORNBERG: Objection. Asked and answered.
8 8
of paper, is that your testimony? THE WITNESS: We discussed as to how there might be
9 9
MR. KORNBERG: Objection. Asked and answered. two different, um, endorsement pages.
10 10
THE WITNESS: Yes. BY MR. RILEY:
11 11
MR. RILEY: Give me one second, if you would, please. Q When would you have had that conversation?
12 12
MR. KORNBERG: Before we continue, may I, please, A I think it was last year, late last year.
13 13
make a statement? Q Just one second. Mr. Hyne, why wasn't the true
14 14
MR. RILEY: I'm sorry, what? and correct copy of the original Note filed in the amended
15 15
MR. KORNBERG: Before we continue, may I, please, Proof of Claim?
16 16
make a brief statement? It can be on or off the record. MR. KORNBERG: Objection. I didn't think there was
17 17
MR. RILEY: Absolutely. an amended Proof of Claim, so I'm going to instruct my
18 18
MR. KORNBERG: Just very quickly, I would note here client not to answer that question unless you can provide
19 19
that the scope of discovery is limited to the sale of the an amended Proof of Claim.
20 20
Note. As I stated, we will answer questions regarding BY MR. RILEY:
21 21
that earlier, however, should this deposition have to end Q Why was an amended Proof of Claim not filed, if
22 22
without you not completing and it's because you spent four that wasn't the accurate Note?
23 23
hours discussing stuff outside the scope of discovery, we A I'm not sure why there wasn't an amended Proof
24 24
will use that as a basis to assert you're not entitled to of Claim filed. Certainly Nationstar wasn't aware of the
25 25
a continued deposition. issue until, I believe, it was raised later on in the

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1 1
BY MR. OLIVER: Q No, I'm not asking whether you provided them.
2 2
Q And you spent those couple weeks reviewing The question was, do you have any personal
3 3
documents? knowledge regarding the preparation or negotiation or
4 4
A Yeah, in preparation for the deposition, for execution of those pre-2012 documents relating to the
5 5
sure. Baroni loan?
6 6
Q Did you spend any time talking with any A No. Neither me nor Nationstar would have been
7 7
individuals who had personal knowledge of how the involved in the preparation of any documents at that time.
8 8
documents were prepared? Q Now, you said you talked to Simon Ward-Brown,
9 9
MR. KORNBERG: To clarify, you're referring to the and I want to make sure I have his name spelled correctly.
10 10
SARM trust documents? I know how to spell "Simon," but is Ward-Brown, W-a-r-d,
11 11
MR. OLIVER: I'm referring to any documents relating hyphen, B-r-o-w-n, just like it sounds?
12 12
to the Baroni loan. A Yes.
13 13
MR. KORNBERG: Okay. Q What is Mr. Ward-Brown's position?
14 14
THE WITNESS: I've talked to people that worked A Um, he holds the same position at Nationstar
15 15
for -- or work for either NRZ or Fortress, its parent that I do.
16 16
company, on telephone calls about the documents that, um, Q Which is, for the record?
17 17
were prepared by NRZ. A I'm a senior assistant secretary of litigation
18 18
BY MR. OLIVER: support and resolution analyst.
19 19
Q In what time frame were those documents Q Is Mr. Ward-Brown one of the people who
20 20
prepared? testifies for Nationstar?
21 21
A I'm sorry? A Yes.
22 22
Q In what time frame were those documents Q How long has he been with Nationstar?
23 23
prepared, what year? A I think it's coming close to a year. Maybe a
24 24
A Oh, those would have been -- well, the documents year. I'm not sure.
25 25
we've talked about, um, at least 2017 for the majority of Q Before that he was with?

Page 82 Page 84
1 1
them. Some go back to 2014, and then some go back to A Aurora.
2 2
2016. Q For what period was he with Aurora?
3 3
Q Did you spend any time talking with anyone who A I know he was there for years, but I don't know
4 4
had any personal knowledge regarding the preparation of the time period.
5 5
any Baroni loan documents for the pre-2012 time period? Q Did Mr. Ward-Brown have any personal knowledge,
6 6
A The only person I've ever talked to about or does Mr. Ward-Brown have any personal knowledge
7 7
pre-2012 would have been Simon Ward-Brown regarding the regarding any of the Baroni loan documents?
8 8
endorsements on the Note, but other than that, no one. A I can't speak to what Mr. Ward-Brown knows or
9 9
Q Were all the Baroni loan documents that you doesn't know.
10 10
reviewed produced in this case, if you know? Q He may have, he may not have, you're not sure?
11 11
A I'm not sure. I would assume we produced A That's correct.
12 12
everything that we've been requested to produce, um, but Q Did he tell you anything that suggested he had
13 13
no, I don't know of every document that's been produced. any personal knowledge regarding the preparation of any of
14 14
Q So you don't know one way or another, but you the Baroni loan documents?
15 15
believe what you reviewed was produced in the case; is A No, that never came up.
16 16
that fair? Q Now, I think you testified you spoke with
17 17
A Yes. Mr. Ward-Brown about an alternate second set of --
18 18
Q Do you have any personal knowledge -- I think alternate second endorsement sheet. Do I have that right?
19 19
this is clear, but I want to make sure it's clear. A Yes.
20 20
Do you have any personal knowledge of any Baroni Q And the alternate second endorsement sheet, you
21 21
loan documents that predate 2012 in the sense that you believe, was prepared by Aurora Bank?
22 22
signed them, negotiated them, drafted them, anything like A Yes.
23 23
that? Q Did he know how that was prepared or why that
24 24
A I'm not aware of any other Baroni documents that was prepared when you spoke with him?
25 25
predate 2012 that we haven't already provided. A We had discussed what he believed to have

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Page 85 Page 87
1 1
happened, um, to provide an explanation why there is a record.
2 2
second endorsement page. There were some pre-2012 transactions regarding
3 3
Q When you say you discussed what he believed to the Aurora loan that involved Platinum Capital, correct?
4 4
have happened, were the two of you just speculating as to A They were the loan originator.
5 5
possibilities, or did anybody know what had happened? Q And they entered into an agreement or assigned
6 6
A He didn't say that he was there when it happened the loan in some respect to Lehman Brothers Bank, FSB; is
7 7
physically at the time that it was occurring, um, so he that correct? You can refer to Exhibit 20, if you want.
8 8
was trying -- he believed that that is what happened based A Yeah, Lehman Brothers Bank, yes.
9 9
upon his, um, knowledge of the servicing policies and Q Do you have any personal knowledge of any
10 10
processes at Aurora. transactions between Platinum Capital Group and Lehman
11 11
Q So based on his knowledge of the general Brothers Bank with respect to the Baroni loan?
12 12
policies at Aurora, he posited some options as to what A I don't have any personal knowledge. I see that
13 13
might have happened, or was it just one option? there's an original endorsement on the back of the Note
14 14
A No. I believe that was the one option. that has their stamp.
15 15
Q So based on his knowledge of Aurora's general Q Okay. The notes you prepared, that's your
16 16
policy, he said he believed that's what had happened? handwriting in Exhibit 20; is that right?
17 17
A Aurora has an imaging system where they image A Yes.
18 18
their own documents. An employee of Aurora had looked at Q What were those notes intended to show?
19 19
the images of the Note and saw that there was not an A Um, that was just for my benefit, because there
20 20
endorsement page image with the Note as part of the Note are so many documents and, um, transactions regarding the
21 21
document. Baroni loan, that I needed to make sure that I had them in
22 22
Even though the original, um, Note has the order.
23 23
endorsements on the back page of the signature page, um, Q Not a memory test even for people who spent a
24 24
it was Simon's understanding or belief that, um, an couple weeks looking at the documents. That's fair.
25 25
employee of Aurora then prepared, um, a separate What is the source of the information in those

Page 86 Page 88
1 1
endorsement page, um, for the purposes of completing the notes, those three pages?
2 2
chain of endorsements for the image of the Note that they A These would have come from the documents
3 3
had in their system. themselves, the individual documents that are referenced
4 4
Q What was the name of the employee at Aurora who in my notes.
5 5
saw there was no endorsement page? Q So the notes are a summary of transactions that
6 6
A Um, he didn't have a name of a person. He are reflected in larger, underlying documents; is that
7 7
believed that's what would have triggered an employee fair?
8 8
looking at the imaging system. A Yes.
9 9
Q When did that unnamed Aurora employee create Q Did you attempt in the notes to include all the
10 10
that second page? important transactions that related to the Baroni loan?
11 11
A It's not dated, so I'm not sure if he could tell A Yes.
12 12
but, um, there's certainly nothing on the document that Q Similar question regarding transactions between
13 13
would indicate when it occurred. Lehman Brothers Bank and Lehman Brothers Holdings, Inc.
14 14
Q How did the Aurora employee create a second Do you have any personal knowledge regarding
15 15
endorsement page? those transactions?
16 16
A I don't know. A Um, I have no personal knowledge of those
17 17
Q Do you know whether the page was photoshopped? transactions, except that we're in possession of the Note
18 18
A I don't know. that has the blank endorsement on them -- I mean, the
19 19
Q Do you know whether the page was physically endorsements.
20 20
xeroxed with a cut-and-paste technique? Q And for the record, similar question regarding
21 21
A I don't know. transactions between Lehman Brothers Holdings, Inc. and
22 22
Q Did Mr. Simon Ward-Brown talk to anyone who, Structured Assets Securities Corp.
23 23
actually, knew what happened? Any personal knowledge of those transactions, as
24 24
A I'm not aware. they relate to the Baroni loan?
25 25
Q I want to make sure this is clear for the A Um, again, no personal knowledge, but the fact

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EXHIBIT 2
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FILED
1 NOT FOR PUBLICATION NOV 10 2015
SUSAN M. SPRAUL, CLERK
2 U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
4 OF THE NINTH CIRCUIT
5 In re: ) BAP No. CC-14-1578-KuDTa
)
6 ALLANA BARONI, ) Bk. No. 12-10986
)
7 Debtor. ) Adv. No. 13-01069
______________________________)
8 )
ALLANA BARONI, )
9 )
Appellant, )
10 )
v. ) MEMORANDUM*
11 )
NATIONSTAR MORTGAGE, LLC, )
12 )
Appellee. )
13 ______________________________)
14 Argued and Submitted on September 24, 2015
at Malibu, California
15
Filed – November 10, 2015
16
Appeal from the United States Bankruptcy Court
17 for the Central District of California
18 Honorable Alan M. Ahart, Bankruptcy Judge, Presiding
19
Appearances: Louis J. Esbin argued for appellant Allana Baroni;
20 Bernard Kornberg of Severson & Werson argued for
appellee Nationstar Mortgage, LLC.
21
22 Before: KURTZ, DUNN and TAYLOR, Bankruptcy Judges.
23
24
25
26 *
This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may
have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8024-1.
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1 INTRODUCTION
2 The debtor Allana Baroni1 commenced an adversary proceeding
3 against Nationstar Mortgage LLC challenging Nationstar’s proof of
4 secured claim, and the bankruptcy court granted summary judgment
5 in favor of Nationstar. The bankruptcy court determined that
6 there was no genuine factual dispute that Nationstar possessed
7 the original promissory note indorsed in blank, so Nationstar
8 qualified as a person entitled to enforce the note and hence had
9 standing to file the proof of claim. Allana asserts that
10 Nationstar demonstrated neither that it had a right to enforce
11 the note and the deed of trust nor that it had an agency
12 relationship with someone else who did.
13 Our resolution of this appeal largely hinges on our answer
14 to a single question: when a creditor, in the process of
15 supporting a proof of claim based on a promissory note, presents
16 the bankruptcy court with two materially different copies of the
17 indorsements supposedly accompanying the note, can the court on
18 summary judgment correctly determine that there is no genuine
19 dispute that the note has been duly indorsed in blank? We answer
20 this question in the negative. While the bankruptcy court’s
21 summary judgment against Allana on one of Allana’s four claims
22 for relief can be affirmed on alternate grounds, summary judgment
23 on the other three claims for relief must be reversed.
24 Accordingly, we AFFIRM IN PART, REVERSE IN PART AND REMAND
25 FOR FURTHER PROCEEDINGS.
26
27
1
For the sake of clarity, we refer to Allana and her husband
28 James Baroni by their first names. No disrespect is intended.

2
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1 FACTS
2 In February 2004, Allana’s husband James refinanced a parcel
3 of residential real property located in Carmel, California.
4 According to several of Allana’s filings in her bankruptcy case,
5 the Baronis did not actually reside in the Carmel property but
6 instead used it as a rental property. In furtherance of the
7 refinancing, James executed a note in the amount of $1,430,000.00
8 and a deed of trust securing repayment of the note.
9 At the time of the refinancing, James owned the Carmel
10 property as his sole and separate property. But shortly after
11 the refinancing, James executed a grant deed conveying the Carmel
12 property to himself and Allana as husband and wife as joint
13 tenants. Allana does not dispute that she took her interest in
14 the Carmel property subject to the deed of trust and in that
15 sense has admitted that she might be obliged to repay the Carmel
16 note in order to prevent foreclosure of her real property
17 interest. On the other hand, Allana claims that she is not
18 certain who she is obliged to pay. She also claims that the
19 Carmel note and the Carmel deed of trust have been irrevocably
20 split, which has rendered the deed of trust unenforceable.
21 In February 2012, Allana commenced her bankruptcy case by
22 filing a voluntary chapter 132 petition. Later that same month,
23 she voluntarily converted her case from chapter 13 to chapter 11.
24
25 2
Unless specified otherwise, all chapter and section
26 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
all "Rule" references are to the Federal Rules of Bankruptcy
27 Procedure. All “Civil Rule” references are to the Federal Rules
of Civil Procedure, and all “Evidence Rule” references are to the
28 Federal Rules of Evidence.

3
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1 In September 2012, Nationstar filed a proof of claim asserting a
2 claim in Allana’s bankruptcy case in the approximate amount of
3 $1,480,000.00. Nationstar attached to the proof of claim copies
4 of a promissory note and a deed of trust both apparently executed
5 by James in February 2004 (respectively, the “POC Note Copy” and
6 the “POC Trust Deed Copy”). The POC Note Copy identifies James
7 as the borrower and Platinum Capital Group as the lender. The
8 principal amount stated in the POC Note Copy is $1,430,000.00.
9 The POC Note Copy also contains on the signature page what
10 appears to be James’ signature. The page immediately following
11 the signature page is blank, with the exception of what appear to
12 be three indorsements.3 Reading from left to right, the first
13 indorsement appears to be signed by an “assistant secretary” of
14 Platinum Capital Group and appears to make the note payable to
15 “Lehman Brothers Bank FSB.” Immediately to the right of the
16 first indorsement is another indorsement apparently signed by an
17 “authorized signatory” of Lehman Brothers Holdings, Inc. The
18 “pay to the order” line of that indorsement is blank.
19 Immediately beneath the Lehman Brothers Holdings, Inc.
20 indorsement is a third indorsement apparently signed by a “Vice
21 President” of Lehman Brothers Bank, FSB and apparently making the
22 note payable to Lehman Brothers Holdings, Inc.4
23
24 3
A copy of this indorsements page is attached as Appendix A
to this decision.
25
4
26 Of course, reading these undated indorsements in this order
makes no sense except for the purpose of describing their
27 relative positions on the indorsements page. The three
indorsements only can be understood sensibly in the following
28 (continued...)

4
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1 The POC Trust Deed Copy identifies James as the borrower,
2 Platinum Capital Group as the lender, and MERS as the
3 beneficiary, but solely as the nominee of the lender and the
4 lender’s successors and assigns. The recording information on
5 the first page of the POC Trust Deed Copy indicates that the
6 trust deed was recorded in the Monterey County Recorder’s Office
7 in March 2004. The POC Trust Deed Copy further reflects the
8 transfer of an interest in the Carmel property to secure the
9 repayment of the Carmel note.
10 In April 2013, over Nationstar’s objection, Allana obtained
11 an order confirming her second amended reorganization plan. In
12 relevant part, Allana set forth in her disclosure statement and
13 plan that she disputed and objected to Nationstar’s proof of
14 claim but that, to the extent the bankruptcy court ultimately
15 allowed any claim secured by the Carmel property, she would pay
16 the holder of that allowed claim in accordance with the terms of
17 her plan.
18 That same month, Allana filed her complaint against
19 Nationstar. In the complaint, Allana pointed out that neither
20 the Carmel note nor the Carmel deed of trust identify Nationstar
21 in any way. Therefore, Allana posited, nothing in Nationstar’s
22 proof of claim established that Nationstar was entitled to
23 enforce either the Carmel note or the Carmel deed of trust.
24
4
(...continued)
25 order: (1) the indorsement by Platinum Capital Group (the
26 original payee identified in the note) making the note payable to
Lehman Brothers Bank; (2) the indorsement by Lehman Brothers Bank
27 making the note payable to Lehman Brothers Holdings, Inc.; and
(3) the indorsement in blank by Lehman Brothers Holdings, Inc.
28 making the note payable to the bearer.

5
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1 Allana also included in her complaint copies of a number of
2 communications she received from third parties. These
3 communications opine (without actually proving) that the Carmel
4 note was sold to a mortgage securitization trust and that the
5 trust owns the note. The complaint then proceeds to conflate the
6 concept of note ownership with the concept of being a “holder” of
7 the note. The complaint asserts that Nationstar only could prove
8 its standing to file the proof of claim if it demonstrated its
9 title to the Carmel note within the “chain of ownership.”
10 According to the complaint, Allana would be unjustifiably exposed
11 to the risk of having to pay the amount due on the Carmel note
12 multiple times unless the bankruptcy court determined who was the
13 “holder” of the Carmel note and hence had standing to file a
14 proof of claim based on the Carmel note.
15 In addition, Allana’s complaint pointed out that there was
16 no documentation indicating that Nationstar is the beneficiary
17 under the deed of trust or an assignee of the beneficiary.
18 Based on the allegations set forth above, Allana’s complaint
19 included a claim for declaratory relief seeking a judicial
20 determination as to whether Nationstar’s proof of claim should be
21 allowed or disallowed and whether that claim was secured or
22 unsecured. The complaint also included a claim for relief
23 alleging that Nationstar would be unjustly enriched if its claim
24 were allowed in the absence of proof that Nationstar was
25 entitled to enforce the Carmel note and deed of trust. The
26 complaint’s third claim for relief under the Fair Debt Collection
27 Practices Act, 15 U.S.C. § 1692, et seq., alleged that Nationstar
28 falsely represented that it was entitled to enforce the Carmel

6
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1 note and deed of trust by filing the proof of claim.5 Allana’s
2 fourth and final claim for relief, based on all of the same
3 allegations, set forth a claim under California’s unfair
4 competition law, Cal. Bus. & Profs. Code § 17200, et seq.
5 Nationstar sought dismissal of Allana’s complaint under
6 Civil Rule 12(b)(6), but the bankruptcy court denied Nationstar’s
7 dismissal motion. Nationstar then filed an answer to Allana’s
8 complaint in November 2013, and close to a year later, in
9 September 2014, Nationstar filed its summary judgment motion.
10 Even though Nationstar did not so indicate in its proof of claim,
11 Nationstar identified itself in the summary judgment motion as
12 the servicing agent for the owner of the note, Wells Fargo Bank,
13 as trustee of the securitization trust referenced in Allana’s
14 complaint.
15 In order to prove up Wells Fargo’s interest in the Carmel
16 note, Nationstar submitted the declaration of Edward Hyne. Hyne
17 identified himself as a “Litigation Resolution Analyst” employed
18 by Nationstar. By virtue of his employment, Hyne claimed
19 familiarity with the manner in which Nationstar’s business
20 records are prepared and maintained. Hyne further claimed that
21 Nationstar’s records are “prepared” by Nationstar employees and
22 agents with personal knowledge of the facts set forth therein or
23 with information supplied by others with personal knowledge.
24
5
The FDCPA claim also alleged that Nationstar has
25 misrepresented the amount due on the note and has falsely failed
26 to credit Allana for all of the payments she has made. Allana
has abandoned these issues for appeal purposes by not addressing
27 them in her opening appeal brief. Christian Legal Soc'y v. Wu,
626 F.3d 483, 487–88 (9th Cir. 2010); Brownfield v. City of
28 Yakima, 612 F.3d 1140, 1149 n.4 (9th Cir. 2010).

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1 In a bit of a disconnect, Hyne stated that the facts set
2 forth in his declaration were based on “the files and records for
3 [Allana’s] loan,” but he does not identify those loan files and
4 records as Nationstar’s business records. Nor would it seem
5 accurate to characterize them as Nationstar’s business records.
6 There is no reason to suspect let alone conclude that anyone at
7 Nationstar “prepared” any of the documents pertaining to the
8 origination or sale of the Carmel loan. In fact, nothing in the
9 summary judgment record suggests that Nationstar played any role
10 in the origination or sale of that loan, so it makes no sense
11 that Nationstar would have prepared any documents pertaining to
12 the origination or sale of the loan.
13 Based on the above description of the source of his
14 knowledge, Hyne asserted that the note attached as Exhibit A to
15 his declaration was a true copy of the Carmel note and that
16 Exhibit C to his declaration – a mortgage loan sale & assignment
17 agreement between Lehman Brothers Holdings, Inc. as seller and
18 Structured Asset Securities Corp. as buyer – evidences the
19 transfer of the Carmel note to Wells Fargo as Trustee for the
20 Structured Adjustable Rate Mortgage Loan Trust Mortgage Pass-
21 Through Certificates, Series 2004-5.
22 Unfortunately, Hyne did not specify what was purportedly
23 transferred to Wells Fargo: possession of the note, beneficial
24 ownership of the note, mere legal title to the note, or the right
25 to payment under the note. Moreover, the sale and assignment
26 agreement attached as Exhibit C does not evidence or even
27 reference any such transfers to Wells Fargo.
28 Meanwhile, attached to Exhibit C is a single page on which

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1 everything is redacted, except for the following single line of
2 information: “17362807 3 Carmel CA 93923 1430000 1430000.”6
3 Hyne and Nationstar presumably claim that this redacted page
4 attached to Exhibit C evidences the inclusion of the Carmel note
5 in the mortgage pool covered by the sale and assignment
6 agreement. Immediately preceding the redacted page are two
7 schedules that are supposed to identify the loans covered by the
8 sale and assignment agreement, but both of those schedules are
9 blank, except for a type-written notation on the face of each
10 schedule indicating that the actual listing of covered loans is
11 “on file” in the Philadelphia offices of Morgan, Lewis & Bockius
12 LLP. There is no explanation in the sale and assignment
13 agreement of the relationship between the blank schedules and the
14 redacted page immediately following the blank schedules. Nor did
15 Hyne attempt to explain the relationship. More importantly, no
16 one who arguably might have had personal knowledge of what
17 actually is in the completed schedules supposedly held by Morgan,
18 Lewis & Bockius attempted to explain the significance of the
19 redacted page.
20 Finally, Hyne stated that Nationstar is Wells Fargo’s
21 servicing agent for purposes of the Carmel note. In support of
22 this statement, Hyne referenced the limited power of attorney
23 attached to his declaration as Exhibit D. The power of attorney,
24
6
The significance of the number “17362807" is equivocal. It
25 is not the loan number assigned to the Carmel refinancing loan at
26 the time the loan was made. That loan number apparently is
11101490. The summary judgment record reflects that “17362807"
27 was handwritten onto some copies of the Carmel note but not onto
others. Who wrote that number on some copies and what that
28 number purportedly signifies never was addressed by either party.

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1 apparently executed by Wells Fargo as the trustee of certain
2 designated securitization trusts, identified Nationstar as the
3 assignee of Aurora Loan Services LLC’s loan servicing rights and
4 duties and granted Nationstar the authority to, among other
5 things, execute on Wells Fargo’s behalf “all documents and
6 instruments necessary in appearance and prosecution of bankruptcy
7 proceedings . . . .” The limited power of attorney listed the
8 Structured Adjustable Rate Mortgage Loan Trust Mortgage Pass-
9 Through Certificates, Series 2004-5, as one of the securitization
10 trusts covered. But nothing in the limited power of attorney
11 established that ownership of the Carmel note had been
12 transferred to that particular securitization trust, any more
13 than the sale and assignment agreement had.
14 Nationstar further supported its summary judgment motion by
15 filing the declaration of one of its attorneys, Adam Barasch. In
16 relevant part, Barasch stated that, on behalf of his client
17 Nationstar, he was in possession of the original note and
18 original deed of trust executed by James. Barasch further stated
19 that the copy of the Carmel note attached as Exhibit A to the
20 Hyne declaration is a true copy of the original note in his
21 possession.
22 In October 2014, Allana filed her opposition to Nationstar’s
23 summary judgment motion. Allana principally argued that a
24 genuine issue of material fact existed as to whether there were
25 two different original Carmel notes memorializing the same
26 obligation. Allana pointed out that the copy of the Carmel note
27 attached to the Hyne declaration differs in several respects from
28 the POC Note Copy. Most importantly, the indorsements page in

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1 each copy is significantly different. As described above, in the
2 POC Note Copy, the Platinum Capital Group indorsement and the
3 Lehman Brothers Holdings indorsement are side by side and the
4 Lehman Brothers Bank indorsement is beneath the Lehman Brothers
5 Holdings indorsement. In the Hyne declaration copy of the Carmel
6 note, the Lehman Brothers Bank indorsement and the Lehman
7 Brothers Holdings indorsement are side by side and the Platinum
8 Capital Group indorsement is above the Lehman Brothers Bank
9 indorsement.7
10 In support of her opposition, Allana submitted a declaration
11 of a questioned-documents expert by the name of Meredith DeKalb
12 Miller. Miller explained in her declaration that she examined in
13 2011 several different copies of the Carmel note and deed of
14 trust that Allana had provided to her as well as an original note
15 and an original deed of trust, which she examined in person in
16 June 2011 in the Chicago offices of McGinnis Tessitore Wutcher
17 LLP. Miller observed that some of the note copies she examined
18 had marks indicative of hole punches and fasteners while others
19 did not. Miller further observed that some of the note copies
20 she examined had the hand-printed notation “kahrl” and “17362807"
21 in the upper right hand corner while others did not. Meanwhile,
22 one of the four note copies included a stamped notation stating
23 that the copy was certified to be a true and correct copy.
24 Notwithstanding these and other differences, Miller also
25 stated that all of the copies provided to her were
26
27
7
A copy of the indorsements page accompanying the Hyne
28 declaration is attached as Appendix B to this decision.

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1 “representative copies of the same adjustable rate note” and that
2 the signatures of James’ she observed on the original note and on
3 all of the note copies “are consistent.” Miller Decl. at ¶¶ 20,
4 26.
5 In her summary judgment opposition, Allana claimed that a
6 2011 report attached to Miller’s declaration as Exhibit 2 (on
7 which Miller’s 2014 declaration was based) demonstrated that the
8 POC Note Copy and the Hyne declaration note copy are not copies
9 of the same original note.8 However, neither the 2011 Miller
10 report nor the 2014 Miller declaration demonstrate what Allana
11 claims they do. At most, Miller’s declaration and report observe
12 certain minor differences between various copies of the note
13 provided to her long before either Nationstar’s 2012 proof of
14 claim or Hyne’s 2014 declaration even existed.9
15 In addition to her claim that there appeared to exist two
16 different original Carmel notes, Allana asserted that the Hyne
17 declaration and the Barasch declaration did not contain competent
18 evidence regarding who owned the Carmel note and who was the
19 holder of the Carmel note. In conjunction with this assertion,
20 Allana formally made several different evidentiary objections to
21 both declarations, which the bankruptcy court never addressed.
22
8
23 The summary judgment opposition stated at page 9: “As
described in the Forensic Examiner’s report attached as
24 “Exhibit 2,” the Note Mr. Barasch apparently has in his
possession, and attached as Exhibit A to Mr. Hyne’s declaration
25 is not the same Note attached to Claim 9-1 . . . .”
26 9
The indorsement pages included with the note copies
27 provided to Miller are a different matter. Miller duly noted
that the indorsement signatures on some copies were “configured
28 differently” than other copies.

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1 Allana further contended that she was not given adequate
2 opportunity to conduct discovery. In support of this contention,
3 Allana referenced certain examinations and document requests she
4 had sought under Rule 2004 from Nationstar, Wells Fargo and
5 others before she filed her adversary proceeding against
6 Nationstar. According to Allana, none of the responding parties
7 fully complied with her Rule 2004 examination and document
8 requests. Allana did not identify what efforts, if any, she had
9 made to conduct or compel discovery during the roughly 18 months
10 that elapsed between the filing of her complaint and the filing
11 of her summary judgment opposition.
12 After holding a hearing at which both parties submitted
13 without argument, the bankruptcy court entered an order granting
14 summary judgment to Nationstar. The order set forth the court’s
15 reasoning. According to the court, Allana lacked standing to
16 challenge Nationstar’s proof of claim because only James executed
17 the Carmel note and deed of trust.
18 Alternately, the bankruptcy court explained, Nationstar had
19 established that it had possession of the original Carmel note,
20 indorsed in blank, so Nationstar was a “person entitled to
21 enforce” the Carmel note under Uniform Commercial Code § 3-301
22 and hence had standing to file a proof of claim based on the
23 Carmel note. Even if Nationstar had not qualified as the holder
24 of the note, the court reasoned, Nationstar had established that
25 it possessed the note on behalf of Wells Fargo as trustee of a
26 securitization trust and that Wells Fargo owned the Carmel note
27 as trustee of that trust. Thus the court held that, as Wells
28 Fargo’s servicing agent, Nationstar had alternately established

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1 that it was “a nonholder in possession of the instrument who has
2 the rights of a holder” under Uniform Commercial Code § 3-301.
3 Based on its analysis of Nationstar’s and Wells Fargo’s
4 rights in relation to the Carmel note, the bankruptcy court
5 concluded that, as a matter of law, Allana could not prevail on
6 any of her claims for relief. As an additional ground for
7 denying relief on Allana’s unjust enrichment claim, the
8 bankruptcy court held that Allana’s action was an action based on
9 contract and that unjust enrichment was not available in an
10 action based on contract. As additional grounds for denying
11 relief on Allana’s Fair Debt Collection Practices Act claim, the
12 bankruptcy court held that Nationstar was not a debt collector
13 within the meaning of the Act, that the Act only applied to
14 consumer debts and that the debt secured by the Carmel property
15 was not consumer debt.
16 On December 15, 2014, Allana timely filed her notice of
17 appeal from the bankruptcy court’s summary judgment.
18 JURISDICTION
19 The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
20 §§ 1334 and 157(b)(2)(B) and (C). We have jurisdiction under
21 28 U.S.C. § 158.
22 ISSUES
23 Did the bankruptcy court correctly grant summary judgment in
24 favor of Nationstar?
25 STANDARD OF REVIEW
26 We review de novo the bankruptcy court’s summary judgment
27 ruling. Wank v. Gordon (In re Wank), 505 B.R. 878, 886 (9th Cir.
28 BAP 2014).

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1 SUMMARY JUDGMENT STANDARDS
2 Because we review summary judgment rulings de novo, we
3 utilize the same summary judgment standards as other federal
4 courts use. Kelly v. Okoye (In re Kelly), 182 B.R. 255, 258 (9th
5 Cir. BAP 1995), aff'd, 100 F.3d 110 (9th Cir. 1996). Pursuant to
6 Civil Rule 56(a), which is made applicable in adversary
7 proceedings by Rule 7056, summary judgment may be appropriate "if
8 the movant shows that there is no genuine issue as to any
9 material fact and the movant is entitled to judgment as a matter
10 of law." In re Wank, 505 B.R. at 886. In considering summary
11 judgment, the court is not permitted to weigh the evidence;
12 instead, it only may determine whether a genuine and material
13 factual issue remains for trial. Id. An issue is genuine if
14 there is enough evidence for a reasonable trier of fact to make a
15 finding in favor of the non-moving party, and an issue is
16 material if it might affect the outcome of the case. Far Out
17 Prods., Inc. v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001) (citing
18 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49 (1986)).
19 The initial summary judgment burden rests on the moving
20 party. In re Wank, 505 B.R. at 886. Once the moving party has
21 presented facts as undisputed and has presented admissible
22 evidence in support of those facts, the non-moving party may be
23 deemed to have admitted those facts for summary judgment purposes
24 unless he or she specifically challenges those facts and presents
25 controverting evidence in support of his or her position. See
26 Beard v. Banks, 548 U.S. 521, 527 (2006); see also 10A Charles A.
27 Wright, Arthur R. Miller, et al., FED. PRAC. & PROC. CIV. § 2727
28 (3d ed. 2015) (“If the movant presents credible evidence that, if

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1 not controverted at trial, would entitle him to a Rule 50
2 judgment as a matter of law that evidence must be accepted as
3 true on a summary-judgment motion.”).
4 DISCUSSION
5 A. Allana’s Standing
6 We first address the bankruptcy court’s ruling that Allana
7 lacked standing to pursue her adversary proceeding against
8 Nationstar. Standing typically is jurisdictional.
9 Employers-Teamsters Local Nos. 175 & 505 Pension Trust Fund v.
10 Anchor Capital Advisors, 498 F.3d 920, 923 (9th Cir. 2007)
11 (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
12 (1992)). It is a threshold requirement that must be satisfied in
13 every federal case. Warth v. Seldin, 422 U.S. 490, 498 (1975).
14 The three core components necessary for constitutional
15 standing are: (1) injury in fact, (2) causation, and
16 (3) redressability. See Sprint Commc'ns Co. v. APCC Servs.,
17 Inc., 554 U.S. 269, 273–74 (2008). Even if the the core
18 constitutional components are present, the plaintiff also may
19 need to address certain prudential standing concerns. Veal v.
20 Am. Home Mortg. Servicing, Inc. (In re Veal), 450 B.R. 897,
21 906-07 (9th Cir. BAP 2011). These prudential standing concerns
22 are “‘judicially self-imposed limits on the exercise of
23 jurisdiction.’” Id. (quoting Sprint Commc'ns Co., 554 U.S. at
24 289). One of the more common prudential standing concerns is
25 known as third party standing. Sprint Commc'ns Co., 554 U.S. at
26 289-90. This means that “a plaintiff must assert its own legal
27 rights and may not assert the legal rights of others.” In re
28 Veal, 450 B.R. at 907. In the context of both constitutional and

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1 prudential standing issues, the plaintiff bears the burden of
2 proof to establish its standing as to each claim for relief
3 asserted. Id. at 907 n.11.
4 We disagree with the bankruptcy court’s ruling that Allana
5 lacked standing. Allana’s adversary proceeding was filed in
6 response to the proof of claim Nationstar filed in her bankruptcy
7 case, pursuant to which Nationstar sought to perfect its right
8 (or Wells Fargo’s right) to share in any distributions made by
9 Allana to her creditors in accordance with her proposed
10 reorganization plan. The potential impact of Nationstar’s proof
11 of claim on her plan distributions amply satisfies the core
12 constitutional standing components of injury in fact, causation
13 and redressability. Cf. In re Veal, 450 B.R. at 906 (holding
14 that creditor had satisfied constitutional standing requirements
15 in light of the effect of bankruptcy claim allowance procedures
16 on the creditor’s ability to obtain a distribution on its claim).
17 Nor do we perceive the third party standing doctrine as an
18 impediment to Allana’s entitlement to sue Nationstar. While the
19 bankruptcy court indicated that Nationstar’s proof of claim was
20 based on a debt for which only James was personally liable, the
21 debt was secured by property of Allana’s bankruptcy estate, and
22 in light of the clear impact of Nationstar’s proof of claim on
23 both Allana’s property and on her chapter 11 plan, we hold that
24 she was asserting and protecting her own rights and interests and
25 not those belonging to James.
26 Allana’s position is no different than that of any debtor
27 whose property is encumbered by a non-recourse debt. While she
28 might not be personally liable for repayment of the Carmel note,

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1 her interest in the Carmel property is directly and adversely
2 affected pecuniarily by Nationstar’s claim. Nationstar has not
3 cited any authority to us indicating that a person whose interest
4 in real property is encumbered by a non-recourse debt lacks
5 standing to challenge both the validity of the lien and the
6 validity of the underlying debt. Nor are we aware of any such
7 authority. To the contrary, as indicated by one of our prior
8 decisions, a debtor whose property is subject to a lien securing
9 non-recourse debt may object to a claim filed in his or her
10 bankruptcy case based on that debt. See Simpson v. Deutsche Bank
11 Nat. Trust Co. (In re Simpson), 2013 WL 2350967 (9th Cir. BAP
12 May 29, 2013) (Mem. Dec.).
13 Furthermore, the fact that Allana’s standing arose after
14 James incurred the debt – when James conveyed an interest in the
15 Carmel property to Allana subject to the Carmel deed of trust –
16 does not alter or impair her standing to challenge the lien and
17 the underlying debt. As noted in Sprint Commc'ns Co., 554 U.S.
18 at 290, a party with standing may confer standing on a third
19 party by transferring a property interest to that third party.
20 Accordingly, the bankruptcy court’s standing ruling does not
21 support the court’s summary judgment in favor of Nationstar.
22 B. Nationstar’s Standing
23 Having concluded that Allana had standing to challenge
24 Nationstar’s proof of claim and to assert the claims for relief
25 set forth in her complaint, we next turn our attention to
26 Nationstar’s standing to file its proof of claim, an issue on
27 which resolution of this appeal largely turns.
28 Allana sometimes refers to this as a problem of standing and

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1 sometimes as a problem of who qualifies as the real party in
2 interest under Civil Rule 17(a). In In re Veal, this Panel
3 explained that who has standing and who is the real party in
4 interest are legally distinct issues. See In re Veal, 450 B.R.
5 at 907-08. At the same time, in the context of a proof of claim
6 based on a promissory note, we effectively held in In re Veal
7 that the distinction between the two issues is irrelevant because
8 a claimant who is a person entitled to enforce the note satisfies
9 both the standing and real party in interest requirements, and a
10 claimant who is not a person entitled to enforce the note
11 satisfies neither requirement. Id. at 920.
12 1. Applicable Law
13 Similar standing and real party in interest issues have been
14 addressed in a number of published and unpublished Panel
15 decisions over the last several years. See, e.g., Allen v. U.S.
16 Bank, N.A. (In re Allen), 472 B.R. 559, 565 (9th Cir. BAP 2012);
17 In re Veal, 450 B.R. at 897; see also Rivera v. Deutsche Bank
18 Nat'l Trust Co. (In re Rivera), 2014 WL 6675693, at *6-7 (9th
19 Cir. BAP Nov. 24, 2014) (Mem. Dec.); Green v. Waterfall Victoria
20 Master Fund 2008–1 Grantor Trust Series A (In re Green), 2012 WL
21 4857552, at *6-7 (9th Cir. BAP Oct. 15, 2012) (Mem. Dec.); cf.
22 Edwards v. Wells Fargo Bank, N.A. (In re Edwards), 454 B.R. 100,
23 105 (9th Cir. BAP 2011) (focusing on creditor standing issue in
24 the context of a relief from stay motion). In In re Allen and in
25 In re Veal, we generally held that a party is entitled to file a
26 proof of claim based on a secured promissory note if that party
27 is a “person entitled to enforce” the note under § 3–301 of the
28

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1 Uniform Commercial Code (“UCC”).10 In re Allen, 472 B.R. at 565;
2 In re Veal, 450 B.R. at 902. There are several ways a party may
3 become a person entitled to enforce the note under UCC § 3–301,
4 but one common way is for the person to become a "holder" of the
5 note, as defined in UCC § 1–201(b)(21)(A). In re Allen, 472 B.R.
6 at 565; In re Veal, 450 B.R. at 910–11. As set forth in UCC
7 § 1–201(b)(21)(A), a “holder” includes a “person in possession of
8 a negotiable instrument that is payable . . . to bearer . . . .”
9 And a negotiable instrument is payable to the bearer when it is
10 indorsed in blank. See UCC § 3–205(b) (“If an indorsement is
11 made by the holder of an instrument and it is not a special
12 indorsement, it is a ‘blank indorsement.’ When indorsed in
13 blank, an instrument becomes payable to bearer and may be
14 negotiated by transfer of possession alone until specially
15 indorsed.”); see also In re Allen, 472 B.R. at 567.11
16
17 10
Because the Carmel note and deed of trust apparently were
signed in California, the real property securing the note is
18
located in California and Allana at all relevant times has
19 resided in California, California’s version of the UCC applies
for purposes of determining the parties’ rights and duties with
20 respect to the note. See UCC § 1-301(b); Barclays Discount Bank
Ltd. v. Levy, 743 F.2d 722, 725 (9th Cir. 1984); see also
21 In re Veal, 450 B.R. at 921 n.41 (applying Arizona's counterpart
22 to UCC § 1-301(b) under similar circumstances). For purposes of
resolving this appeal, there is no material difference between
23 the uniform version of the UCC and California’s version of the
UCC. Meanwhile, the deed of trust identifies federal law and the
24 law of the jurisdiction in which the Carmel property is located
as the governing law. Thus, California law also governs
25 interpretation and enforcement of the deed of trust. Id.
26 Moreover, the parties’ papers assume that California law applies.
11
27 The reasoning of the bankruptcy court and the arguments of
both parties have at all times assumed that the Carmel note
28 (continued...)

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1 2. Nationstar’s Alleged Possession of the Original Note
Indorsed in blank
2
3 Nationstar claims to have possession of the Carmel note
4 indorsed in blank and thereby claims to be a holder of the note
5 and hence a person entitled to enforce the note. Allana claims
6 that Nationstar’s possession of the Carmel note indorsed in blank
7 would be insufficient by itself to support the assertion that
8 Nationstar is entitled to enforce the note. According to Allana,
9 Nationstar also must establish who owns the note and whether
10 Nationstar is the owner’s agent. Allana is incorrect. As the
11 plain language of UCC § 3-301 provides, “[a] person may be a
12 person entitled to enforce the instrument even though the person
13 is not the owner of the instrument or is in wrongful possession
14 of the instrument.”
15 As we explained at length in In re Veal, so long as Allana
16 knows that, if she pays Nationstar she has satisfied the debt,
17 Allana should be indifferent as to who ultimately is determined
18 to be the owner of the note and whether Nationstar is the owner’s
19 agent. In re Veal, 450 B.R. at 910, 912 & n.27; see also id. at
20 913, 919 (holding that alleged servicer can establish entitlement
21 to payment and to file proof of claim by showing that it is a
22 person entitled to enforce the note or that it is the agent of a
23 person entitled to enforce the note). Put another way, if
24
25 11
(...continued)
26 qualifies as a negotiable instrument within the meaning of UCC
§ 3-104(a). Consequently, any issue regarding whether UCC
27 Article 3 applies to the Carmel note has been forfeited. See
Golden v. Chicago Title Ins. Co. (In re Choo), 273 B.R. 608, 613
28 (9th Cir. BAP 2002).

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1 Nationstar has established it is a person entitled to enforce the
2 note, then Nationstar has provided Allana with the requisite
3 assurance that her plan payments on account of Nationstar’s claim
4 will satisfy the debt, in accordance with UCC § 3-602. See
5 In re Veal, 450 B.R. at 910.
6 Allana argues that there is a triable issue of fact
7 regarding whether there exist two originals of the Carmel note.
8 We disagree. We have reviewed all of the note copies in the
9 summary judgment record as well as the declaration and expert
10 report of Meredith DeKalb Miller and none of these items support
11 the notion that two original notes exist. Rather, the summary
12 judgment record indicates that there is only one original Carmel
13 note and that Nationstar’s attorney Adam Barasch is in possession
14 of it. Having studied all of the note copies, we agree with
15 Miller’s statement that all of the note copies are representative
16 copies of the same note and that James’ signature on each of the
17 note copies is consistent.
18 Allana attacked Adam Barasch’s declaration on a number of
19 evidentiary grounds including hearsay, lack of foundation and
20 lack of personal knowledge, but these grounds are meritless to
21 the extent Allana seeks to challenge Barasch’s assertion that he
22 is in possession of the original of the Carmel note. Barasch is
23 competent to employ his powers of personal observation to assess
24 whether he is in possession of an original document. See
25 Evidence Rule 602 and accompanying Advisory Committee Notes.
26 Barasch also is competent to compare the original in his
27 possession to the copy attached to the Hyne declaration and to
28 declare whether the Hyne declaration note copy is identical to

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1 the original. Id. Barasch cannot attest to the authenticity of
2 James’s signature on the Carmel note, but he does not need to.
3 Signatures on negotiable instruments are presumed to be authentic
4 and authorized, and Allana has not presented any evidence to
5 overcome that presumption. See In re Stanley, 514 B.R. 27, 39
6 (Bankr. D. Nev. 2012)(citing UCC §§ 1–206 & 3–308).
7 On the other hand, the authenticity of the indorsements is a
8 different matter. Like James’ signature on the note, indorsement
9 signatures on a negotiable instrument typically are self-
10 authenticating. Id. And yet, here, there are genuine and
11 material issues regarding whether the original of the Carmel note
12 was duly indorsed in blank.
13 Barasch indicated in his declaration that the indorsement
14 page attached to the Hyne declaration note copy is identical to
15 the original. However, Barasch did not specify whether the
16 indorsements appear on the back of the note’s signature page or
17 whether they appear on a separate piece of paper attached to the
18 note, which would make the page containing the indorsements an
19 allonge. See In re Veal, 450 B.R. at 911 & n.24. Either way,
20 when as here the debtor legitimately contests the validity of the
21 indorsements, the bankruptcy court is obliged to physically
22 inspect them. Id.
23 Here, Nationstar itself created a genuine issue of material
24 fact by presenting with its proof of claim a copy of the note
25 containing a materially different indorsements page than that
26 contained in the Hyne declaration note copy. As we explained
27 above, the indorsements are configured differently in the POC
28 note copy and in the Hyne declaration note copy. In spite of the

23
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1 statement in the Barasch declaration that the Hyne declaration
2 note copy is identical to the original, the contents of the
3 indorsements page in the POC note copy is controverting evidence
4 that could permit a reasonable trier of fact to discredit
5 Barasch’s statement regarding what the original Carmel note looks
6 like (at least regarding what the indorsements page accompanying
7 the original note looks like). More importantly, a reasonable
8 trier of fact also might infer from the divergent indorsements
9 pages that the original Carmel note never was properly indorsed;
10 rather, an indorsements page might have been placed with the
11 original note by some unknown third party without authority to
12 indorse the Carmel note.
13 As a result, there is a genuine issue of material fact
14 regarding whether the Carmel note was duly endorsed in blank and
15 made payable to the bearer and hence there also is a genuine
16 issue of material fact as to whether Nationstar qualifies as a
17 holder of the note and a person entitled to enforce the note.
18 3. Wells Fargo as Non-holder in Possession of Note with
the Rights of a Holder; Evidentiary Problems
19
20 Alternately, Nationstar claims that it possesses the Carmel
21 note on Wells Fargo’s behalf and that Wells Fargo therefore
22 qualifies as nonholder in possession of the note with the rights
23 of holder, which is another means of qualifying as a person
24 entitled to enforce the note under UCC § 3-301. See In re Veal,
25 450 B.R. at 911. This alternate claim depends upon Nationstar’s
26 dual contentions that Wells Fargo, as trustee of a securitization
27 trust, owns the Carmel note and that Nationstar is Wells Fargo’s
28 agent. As indicated in In re Veal, proving a non-holder claim of

24
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1 this type is harder than proving holder status because the
2 claimant must demonstrate not only possession of the original
3 note but also the transfer of some form of interest in the note –
4 either to the party in possession of the note or to a party on
5 whose behalf the possessor has taken possession of the note. Id.
6 at 911-12.
7 To support these contentions, Nationstar largely relies on
8 the Hyne declaration. But Hyne’s critical declaration testimony
9 lacks adequate foundation as to his personal knowledge of key
10 factual matters, and many of his statements appear to be based on
11 inadmissible hearsay contained in documents attached as exhibits.
12 Generally speaking, in order to establish the admissibility
13 of his declaration testimony, Hyne needed to satisfy the
14 foundational requirement of demonstrating his personal knowledge
15 of the facts set forth in his declaration. Evidence Rule 602;
16 see also United States v. Lopez, 762 F.3d 852, 863 (9th Cir.
17 2014) (“Personal knowledge means knowledge produced by the direct
18 involvement of the senses.”). To the extent Hyne did not
19 properly lay a foundation regarding his personal knowledge or
20 based his testimony on inadmissible hearsay statements contained
21 in documents attached to his declaration as exhibits, his
22 testimony is inadmissible. See Medina v. Multaler, Inc.,
23 547 F.Supp.2d 1099, 1105 n.8 (C.D. Cal. 2007); see also United
24 States v. Snodgrass, 635 F.3d 324, 329 (7th Cir. 2011) (affirming
25 exclusion of witness testimony that was based on inadmissible
26 hearsay).
27 From an evidentiary standpoint, of most concern to us is
28 Hyne’s statement indicating that ownership of the Carmel note was

25
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1 transferred to Wells Fargo as trustee of a securitization trust
2 in April 2004. There is no specific explanation as to how Hyne
3 came by this information. His generic statement that he relied
4 on Nationstar’s books and records in preparing his declaration
5 does virtually nothing to assure us of his personal knowledge
6 regarding ownership of the Carmel note. Nor is there any
7 reliable indication that anyone else at Nationstar had personal
8 knowledge regarding the sale of the Carmel note to Wells Fargo or
9 that anyone at Nationstar prepared business records regarding the
10 sale based on information received from persons known to have
11 personal knowledge.
12 To corroborate his statement regarding Wells Fargo’s
13 ownership of the Carmel note, Hyne apparently relied on the
14 document attached to his declaration as Exhibit C: the mortgage
15 loan sale & assignment agreement between Lehman Brothers
16 Holdings, Inc. as seller and Structured Asset Securities Corp. as
17 buyer. But the statements in Exhibit C that Hyne seems to be
18 relying upon to corroborate his declaration testimony qualify as
19 inadmissable hearsay. For instance, in a passing reference, the
20 sale and assignment agreement refers to Wells Fargo as trustee of
21 certain mortgage note securitization trusts. While Hyne
22 attempted to establish that the contents of the sale and
23 assignment agreement were excepted from the rule against hearsay
24 by the business records exception set forth in Evidence
25 Rule 803(6), Hyne failed to demonstrate that he qualified as the
26 custodian of the sale and assignment agreement or as “another
27 qualified witness” competent to testify regarding the
28 prerequisites for application of the business records exception.

26
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1 See Evidence Rule 803(6)(D).
2 If Allana had not objected to this particular portion of
3 Hyne’s declaration testimony on foundation, lack of personal
4 knowledge, hearsay and similar grounds, we might have concluded
5 that Allana had forfeited these evidentiary objections. But
6 Allana did make the requisite evidentiary objections, and the
7 bankruptcy court ignored these objections. Under the
8 circumstances presented here, the bankruptcy court committed
9 reversible error in doing so.
10 Even if Nationstar somehow could overcome Allana’s evidentiary
11 objections, the sale and assignment agreement’s passing reference
12 to Wells Fargo’s role as trustee of certain securitization trusts
13 does not contain admissible evidence that would permit the
14 bankruptcy court to conclude for summary judgment purposes that
15 the Carmel note was included in any of the securitization trusts
16 for which Wells Fargo allegedly serves as trustee.
17 As for Nationstar’s contention that it is Wells Fargo’s
18 servicing agent, Hyne’s statement to that effect appears at first
19 blush to be corroborated by the limited power of attorney
20 attached as Exhibit D to Hyne’s declaration. Nonetheless, even
21 if we were to assume that Allana’s evidentiary objections to this
22 statement are not well taken, the limited power of attorney does
23 not demonstrate that it covers the Carmel note. Nowhere in the
24 limited power of attorney is the Carmel note listed. The limited
25 power of attorney does list the securitization trust that
26 Nationstar asserts included the Carmel note: the Structured
27 Adjustable Rate Mortgage Loan Trust Mortgage Pass-Through
28 Certificates, Series 2004-5.

27
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1 But there is a critical gap in Nationstar’s evidence.
2 Nowhere in the Hyne declaration or in the exhibits attached
3 thereto is there any competent evidence demonstrating that
4 ownership of the Carmel note was transferred to the above-
5 referenced securitization trust. In the absence of such
6 evidence, Nationstar did not establish, for summary judgment
7 purposes or otherwise, that Wells Fargo owned the Carmel note and
8 that Nationstar was Wells Fargo’s agent for purposes of servicing
9 the Carmel note.
10 In short, Nationstar did not meet its summary judgment
11 burden to establish that it qualified as a person entitled to
12 enforce the Carmel note under either of its alternate theories
13 pursuant to UCC § 3-301. This means that the bankruptcy court
14 erred when it granted Nationstar summary judgment with respect to
15 Allana’s declaratory relief claim and her California unfair
16 competition law claim, which rulings wholly relied on
17 Nationstar’s status as a person entitled to enforce the note.
18 C. Alternate Theories in Support of Summary Judgment
19 The bankruptcy court offered an alternate theory for its
20 summary judgment ruling with respect to Allana’s unjust
21 enrichment claim. According to the court, Allana’s complaint
22 against Nationstar sounded in contract, and unjust enrichment
23 does not apply to actions based in contract. See Klein v.
24 Chevron U.S.A., Inc., 202 Cal. App. 4th 1342, 1388 (2012).
25 We are perplexed by the bankruptcy court’s unjust enrichment
26 ruling. We are not aware of any contract between Nationstar and
27 Allana. At most, the summary judgment record reflects that
28 Allana obtained an interest in the Carmel property subject to the

28
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1 lien securing repayment of the Carmel note. We simply don’t
2 perceive any contractual relationship between Allana and
3 Nationstar, nor do we perceive any contract-based claim in
4 Allana’s complaint against Nationstar.
5 Some California courts have held that unjust enrichment is a
6 remedy and is not an independent cause of action. See, e.g.,
7 Jogani v. Superior Court, 165 Cal.App.4th 901, 911 (2008);
8 Melchior v. New Line Prods., Inc., 106 Cal.App.4th 779, 794
9 (2003). Even so, the Ninth Circuit Court of Appeals recently
10 interpreted California law on this point and held that, when
11 faced with a claim for relief alleging unjust enrichment,
12 district courts ordinarily should treat the claim for relief “as
13 a quasi-contract claim seeking restitution.” Astiana v. Hain
14 Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015). Astiana
15 further held that courts should not dismiss such claims as
16 duplicative or superfluous of other claims. Id.
17 As for Allana’s fourth and final claim – her Fair Debt
18 Collection Practices Act (“FDCPA”) claim – the bankruptcy court
19 also offered an alternate theory for its summary judgment ruling
20 on that claim. The bankruptcy court held that, as matter of law,
21 the FDCPA did not apply because Nationstar was not a “debt
22 collector” within the meaning of the FDCPA. The Act provides a
23 specialized and narrow definition of the term “debt collector,”
24 which states in relevant part as follows:
25 (6) The term “debt collector” means any person who uses
any instrumentality of interstate commerce or the mails
26 in any business the principal purpose of which is the
collection of any debts, or who regularly collects or
27 attempts to collect, directly or indirectly, debts owed
or due or asserted to be owed or due another. . . .
28 The term does not include–

29
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1 * * *
2 (F) any person collecting or attempting to collect
any debt owed or due or asserted to be owed or due
3 another to the extent such activity (i) is
incidental to a bona fide fiduciary obligation or
4 a bona fide escrow arrangement; (ii) concerns a
debt which was originated by such person;
5 (iii) concerns a debt which was not in default at
the time it was obtained by such person; or
6 (iv) concerns a debt obtained by such person as a
secured party in a commercial credit transaction
7 involving the creditor.
8 15 U.S.C.A. § 1692a (West).
9 The bankruptcy court did not explain its reasoning for this
10 holding, but it seems to be based on the notion that mortgage
11 servicers generally are not considered debt collectors under the
12 FDCPA, so long as their role as mortgage servicer arose before
13 the borrower defaulted. Perry v. Stewart Title Co., 756 F.2d
14 1197, 1208 (5th Cir. 1985); see also Lal v. Am. Home Servicing,
15 Inc., 680 F.Supp.2d 1218, 1224 (E.D. Cal. 2010) (quoting Perry
16 and stating: “[t]he law is well settled that FDCPA's definition
17 of debt collector ‘does not include the consumer's creditors, a
18 mortgage servicing company, or any assignee of the debt.’”);
19 Mansour v. Cal-Western Reconveyance Corp., 618 F.Supp.2d 1178,
20 1182 (D. Ariz. 2009) (same).
21 Assuming without deciding that Perry, Lal and Mansour have
22 correctly interpreted the FDCPA, we still cannot affirm the
23 bankruptcy court’s ruling on the FDCPA claim on this basis.
24 There are a number of disputed material factual issues that
25 prevent us from doing so, including but not limited to the
26 following: (1) whether the Carmel loan is in default; (2) if so,
27 when that default occurred; (3) whether Nationstar is the
28 mortgage servicer for the Carmel note; and (4) if so, when it

30
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1 became the servicer for that note. The parties contested all of
2 these issues in the adversary proceeding, and the bankruptcy
3 court incorrectly attempted to decide them on summary judgment.
4 As a second alternate theory for granting summary judgment
5 against Allana on her FDCPA claim, the bankruptcy court held that
6 the Carmel refinancing loan was not a “debt” covered by the
7 FDCPA. We agree. Under the FDCPA, a “debt” is defined as:
8 any obligation or alleged obligation of a consumer to
pay money arising out of a transaction in which the
9 money, property, insurance, or services which are the
subject of the transaction are primarily for personal,
10 family, or household purposes. . . .
11 15 U.S.C. § 1692a(5) (emphasis added); see also Miller v.
12 McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C.,
13 214 F.3d 872, 874-75 (7th Cir. 2000); Bloom v. I.C. Sys., Inc.,
14 972 F.2d 1067, 1068 (9th Cir. 1992).
15 Here, the summary judgment record establishes that the
16 Carmel loan was used to refinance the Carmel property, and in her
17 bankruptcy filings, Allana repeatedly admitted that the Carmel
18 property was not used as the Baronis’ residence, but
19 rather was used as a rental property to generate income.12 Under
20 these circumstances, we hold that the bankruptcy court correctly
21 determined that the Carmel refinancing loan was not a debt
22 covered by the FDCPA. Cf. Miller, 214 F.3d at 874-75 (indicating
23 that a loan used to refinance property that at the time of the
24
25 12
The loan documentation for the Carmel refinancing loan
26 further supports the notion that the Carmel property was not used
as the Baronis’ residence at the time James entered into the
27 transaction. The Carmel deed of trust included an assignment of
rents rider that, among other things, relieved James from the
28 obligation of occupying the Carmel property as his residence.

31
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1 transaction is used as a rental property to generate income is
2 not covered by the FDCPA). Thus, on this basis, the bankruptcy
3 court correctly granted Nationstar summary judgment on Allana’s
4 FDCPA claim.13
5 D. Other Arguments and Issues
6 We also must address Allana’s argument that the Carmel note
7 and the Carmel deed of trust have been irrevocably split and,
8 therefore, that the Carmel deed of trust is invalid, so the claim
9 based on the Carmel note should be treated as unsecured. This
10 argument fails because, under California law, the right to
11 enforce the deed of trust automatically follows the note. See
12 Cal. Civ. Code § 2936 (“The assignment of a debt secured by
13 mortgage carries with it the security.”); Cockerell v. Title Ins.
14 & Trust Co., 42 Cal.2d 284, 291 (1954) (“Assuming for the moment
15 that the assignment of the note, secured by the third trust deed,
16 was a valid assignment, no further assignment of the deed of
17 trust was necessary.”); see also Carpenter v. Longan, 83 U.S.
18 271, 275 (1872) (“The transfer of the note carries with it the
19 security, without any formal assignment or delivery, or even
20 mention of the latter.”).
21 Allana additionally argued that the bankruptcy court erred
22 by not giving her more time to conduct discovery before ruling on
23 Nationstar’s summary judgment motion. In support of this
24
13
Allana did not attempt to address this issue regarding the
25 application of the FDCPA until she filed her reply brief on
26 appeal. Her failure to address this issue in her opening appeal
brief provides a separate and independent basis for rejecting her
27 belated contention that the Carmel refinance loan is covered by
the FDCPA. Christian Legal Soc'y, 626 F.3d at 487–88;
28 Brownfield, 612 F.3d at 1149 n.4.

32
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1 argument, Allana contends that Nationstar, Wells Fargo and others
2 never fully complied with the discovery requests she made
3 pursuant to Rule 2004 before she filed her adversary proceeding.
4 Allana further contends that Nationstar violated Civil Rule 26 by
5 not disclosing its alleged servicer role and Wells Fargo’s
6 alleged ownership of the Carmel note.
7 In light of our disposition of this appeal, we decline to
8 resolve Allana’s discovery-related issues. However, we do note
9 that there is no evidence in the summary judgment record that
10 Allana took any affirmative action to conduct or compel discovery
11 during the entire time her adversary proceeding was pending. Nor
12 did she comply with the applicable procedures for requesting
13 additional time to conduct discovery. See Civil Rule 56(d); see
14 also Brae Transp., Inc. v. Coopers & Lybrand, 790 F.2d 1439, 1443
15 (9th Cir. 1986).
16 CONCLUSION
17 For the reasons set forth above, we AFFIRM IN PART, REVERSE
18 IN PART AND REMAND FOR FURTHER PROCEEDINGS.
19
20
21
22
23
24
25
26
27
28

33
Case
Case1:13-ap-01069-MB
1:12-bk-10986-AA
Case: 14-1578, Document:
Doc
Claim
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9-1 29-4,
Part
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Entered Desc
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Appendix A
Case 1:13-ap-01069-AA
1:13-ap-01069-MB
Case: 14-1578, Document:
Doc
Doc50-2
318 29-14,
Filed 09/28/18
09/24/14
Filed: 05/12/2015
Entered 09/28/18
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Page 12
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Exhibit
Document
A-Note Page
Page557 of
of9114

Appendix B

Exhibit A
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EXHIBIT 3
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Lora A. Jones
Curriculum Vitae
15110 Gibbons Terrace
Upper Marlborough, MD 20774
Telephone: (301) 974-5433
Email: LoraAJones8@gmail.com

CURRENT PROFESSIONAL FOCUS

Ms Jones is semi-retired, and performs consulting services from time-to-time. She
conducts background investigations utilizing adjudication guidelines on behalf of a federal
contractor, and for government agency clients - all within established time frames. Jones delivers
written reports, which detail specific and relevant information that is used to assess an
individual’s competencies, qualifications, and character in support of employment with the
Federal Government.

PROFESSIONAL EXPERIENCE

 25-years experience in Law Enforcement, including the US Department of Homeland
Security (DHS) – U.S. Secret Service in Washington DC;
 Secret Service Agent assigned to Headquarters, Criminal Investigative Division, and was
the Agency’s Money Laundering and Mortgage Fraud Program Manager;
 Regular member of the Department of Justice Bank Fraud Working Group while a
government employee;
 Regular member of the Mid-Atlantic Anti-money Laundering Working Group while a
government employee;
 Associate Member of the Association of Certified Fraud Examiners;
 Partnered, and was a liaison with members of the Regulatory, Financial, and Banking
Industries while government employee;
 Worked directly with Federal, State, and local Law Enforcement entities in the
Regulatory, Financial, and Banking Industries surrounding “Best Practices,” and
formulating solutions in the Regulatory, Enforcement, and Financial Industry
workspaces; and
 A Captain in the U.S. Army Signal Corps; and
 A Fairfax, Virginia County Police Officer.
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EDUCATION

University of Illinois – Chicago, Bachelor of Arts in Criminal Justice.

STATEMENT OF QUALIFICATIONS

Lora A. Jones ("LA"), a recent retiree of the US Department of Homeland Security – U.S.
Secret Service Agency, and has amassed 25-years of law enforcement experience. Her
assignments included:

 Presidential, Vice Presidential, & Foreign Dignitary Protection;
 Training;
 Recruitment;
 Protective and Criminal Investigations; as well as
 Supervisory Program Management.

Over the course of her career, LA has conducted numerous white-collar crime
investigations, involving various forms of fraud including:

 Credit Card;
 False Identification;
 False Applications;
 Loan Fraud;
 Counterfeit Currency; and
 Counterfeit financial payment instruments of the government.

Lora's final years in government were spent supervising investigations of more complex
financial crimes such as mortgage fraud, money laundering, investment frauds, and asset
forfeiture.

Assigned to the Headquarters, Criminal Investigative Division for the last few years of
her career, Lora was the agency's Money Laundering and Mortgage Fraud Program Manager,
supervising a small cadre of investigators and analysts, who collectively were responsible for
providing guidance, and resources to field investigators conducting major, organized and trans-
national white-collar criminal activity.

Curriculum Vitae – Lora A. Jones Page | 2
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As Program Manager of this complex financial crime unit, Lora and her team researched,
and then wrote a Proposal recommending a new initiative within Secret Service to enhance
investigations creating, and using the addition of a forensic financial analysis unit to address
complex case investigations, and the unit’s utilization of collected large databases housing mega-
data evidence.

This Proposal established the need for a team of contracted Certified Fraud Examiners,
framing the skills, and compensation requirements; the optimal geographical placement, and
utilization of work locations throughout the U.S. Secret Service network of field offices; and also
specified the resources and tools required for examiners and agents to successfully complete
these challenging assignments.

The Proposal was one (1) of three (3) presented to DHS Leadership through to U.S.
Secret Service Executive Management. The Proposal expressed the added-value of forensically
extrapolating volumes of hidden evidence of fraud, and its use to support arrests, prosecution
rates, and asset forfeiture. The project was subsequently approved and implementation began
with the recruitment and hiring of team members to fill the posts prior to Lora's retirement.

While employed with the government, a significant portion of Lora's time was regularly
spent crafting partnerships and liaisons with members of the Regulatory, Financial and Banking
Industries; and with the Federal, State and local Law Enforcement entities. Initiatives included
specifying “Best Practices;” evaluating risk; and formulating solutions in the Regulatory,
Enforcement and Financial Industry workspaces. Jones was a regular member of the Department
of Justice’s Bank Fraud Working Group, and the Mid-Atlantic Anti-Money Laundering Working
Group. Jones is an Associate Member of the Association of Certified Fraud Examiners.

Also, Lora has lectured and conducted presentations at various government inter-agency,
financial industry meetings, and think-tank engagements on new and emerging fraud trends:

 “Anti-money Laundering: Mobile, Cyber-security and Enforcement;” delivered to
Government Relations Advisory Group, hosted by NACHA, The Electronic Payments
Association - November 2013 in Washington DC.
 “Government Enforcement Roundtable – Perspectives from the Government on AML
and OFAC Enforcement Priorities, Corporate Targets and Coordinated Investigative
Techniques;” delivered to the members of the Financial Services Industry and
Government Representatives – June 2013 in Washington DC.
 Webinar Panel: “Risk Management and Anti-Money Laundering;” delivered to FIS
Global – March 2013.

Ms Jones’ entire professional life has been spent in service to her country. Early in her
career, she served as a Captain in the U.S. Army Signal Corps; and also served in her local

Curriculum Vitae – Lora A. Jones Page | 3
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community as a police officer with the Fairfax, Virginia County Police Department.

Curriculum Vitae – Lora A. Jones Page | 4
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EXHIBIT 4
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1 UNITED STATES COURT OF APPEALS FOR THE 9TH CIRCUIT

2 --oOo--

3 ------------------------------x
ALLANA BARONI, )
4 ) Case No. 14-1578
Plaintiff, )
5 )
v. ) September 24, 2015
6 ) Thursday, 9:00 A.M.
NATIONSTAR MORTGAGE, LLC, )
7 )
Defendant. )
8 ------------------------------X
9

10

11 TRANSCRIPT OF PROCEEDINGS
BEFORE THE HONORABLE LAURA S. TAYLOR
12 BEFORE THE HONORABLE FRANK L. KURTZ
BEFORE THE HONORABLE RANDALL L. DUNN
13

14 APPEARANCES:

15 For Allana Baroni: LOUIS ESBIN, ESQ.
Louis J. Esbin Law Offices
16 25129 The Old Road
Suite #114
17 Santa Clarita, California 91381

18 For Nationstar Mortgage, BERNARD KORNBERG, ESQ.
LLC; Wells Fargo: Severson & Werson
19 1 Embarcadero Center
Suite #2600
20 San Francisco, California 94111

21 Court Transcriptionist: Ruth Ann Hager, C.E.T.**D-641
Ben Hyatt Certified Deposition
22 Reporters
17835 Ventura Boulevard
23 Suite #310
Encino, California 91316
24

25
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Page 2

1 P R O C E E D I N G S

2 --oOo—

3 THE CLERK: In Re: Baroni. Louis J. Esbin
4 appearing for appellant Allana Baroni; Bernard Kornberg

5 appearing for appellee Nationstar Mortgage, LLC, and this

6 is CC-14-1578.

7 JUDGE DUNN: All right. Mr. Esbin, are you ready

8 to go? Now, I realize you requested that we hear the oral
9 arguments, these two appeals together, and we have declined

10 that request because, like it or not, we regard these two

11 appeals as materially different. So that’s the playing

12 field we’re operating under. So in the first 1578, how

13 much time for rebuttal would you like to --

14 MR. ESBIN: Five minutes, Your Honor.

15 JUDGE DUNN: All right. You may proceed.

16 MR. ESBIN: Your Honor, if it please the Court,

17 Louis J. Esbin, Law Offices of Louis J. Esbin, on behalf of

18 the reorganized debtor/plaintiff, Allana Baroni,

19 (indiscernible) Michael Riley is my co-counsel. He is

20 (indiscernible) today as well as the client.

21 Your Honors correctly pointed out that we asked

22 that these be heard together. We understand that Your

23 Honors see it materially different. But I’d like to begin

24 by saying that this appeal and (indiscernible) appeal

25 really are the genesis of progression and evolution of case
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1 law starting with the -- this panel’s decision in appeal

2 and the appeal on one side and we have an unpublished

3 decision In Re: Cordera on the other side.
4 In between we have the Glasky decision from the
5 California Court of Appeals and the Jenkins decision from
6 the California Court of Appeals and is now nova, which the

7 California Supreme Court has taken for review, the cause of

8 conflict between the two California Court of Appeals cases.
9 What’s so important here is --

10 JUDGE TAYLOR: Hasn’t there been a seminal change

11 in the basis of Glasky?
12 MR. ESBIN: I’m sorry, Your Honor?

13 JUDGE TAYLOR: Hasn’t the -- the -- Glasky is a
14 (indiscernible) for that?

15 MR. ESBIN: Glasky is a case applying -- first of
16 all, it’s caused (indiscernible). Found that under New

17 York law the placing of the loan documents into a trust

18 that had closed is a -- under New York law is a void

19 transaction.

20 JUDGE TAYLOR: Doesn’t something have to be in

21 New York -- is undercut in New York law?

22 MR. ESBIN: I’m not aware of it, Your Honor.

23 JUDGE TAYLOR: In Glasky’s comments --
24 JUDGE DUNN: You know, this is kind of a rabbit

25 hole. It’s --
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1 JUDGE TAYLOR: I know, but I --

2 JUDGE DUNN: -- not particularly relevant to the

3 matter --

4 JUDGE TAYLOR: In Glasky I had no --
5 JUDGE DUNN: It’s all right.

6 MR. ESBIN: But really what we’re really looking

7 at what this panel talked about in Overa (phonetic). And
8 what is so critical here today is the issue of prudential
9 standing (phonetic). And has the claim -- has the party

10 that filed the claim established the threshold issue that’s

11 established -- has provided threshold evidence that it had

12 standing to file that claim. What we would say in this

13 appeal and every other appeal is that the evidence does not

14 support that. And as this court so reasoned in --

15 JUDGE KURTZ: Why doesn’t it have standing;

16 because they don’t own the note?

17 MR. ESBIN: Because there’s been no evidence that

18 this creditor properly possesses the note. That

19 evidence -- and what is important here is that the --

20 JUDGE KURTZ: Well, properly presents the note.

21 MR. ESBIN: Well, because what we have here is

22 that a -- in this appeal Nationstar filed a proof of claim

23 and yet in summary judgment they say that they were just

24 the servicer and it holds Fargo is the creditor. And this

25 is a case that’s similar to --
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1 JUDGE DUNN: Well, okay. But their attorney also

2 says he has the original note. And if the servicer has the

3 original note, under the UCC arguably it’s a holder with --

4 entitled to enforce it.

5 MR. ESBIN: Well --

6 JUDGE DUNN: So why don’t they have standing

7 under those circumstances?

8 MR. ESBIN: Well, remember, though, that in the
9 discussion that Judge Markell (phonetic) as the presiding

10 judge will have talked about how if you’re just a holder

11 that you have -- there’s a third element as a transferee

12 that you have to show and that’s how you got

13 (indiscernible).

14 JUDGE DUNN: No, we don’t because if you are a

15 holder for purposes of UCC law, you have the right to

16 enforce it. And (indiscernible) has a right to enforce it

17 has standing.

18 MR. ESBIN: That’s not --

19 JUDGE DUNN: We have held that in published

20 opinion.

21 MR. ESBIN: Well, but --

22 JUDGE DUNN: Read In Re: Edwards.
23 MR. ESBIN: But also in the Beal (phonetic)
24 decision, number 23, you discussed -- the panel discussed

25 the issue that has been raised by appellee that even if
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1 they think we’re the holder and (indiscernible) 23 this

2 panel said, no, a (indiscernible) cannot be a holder

3 because they have to show how they got --

4 JUDGE DUNN: Well, were there any -- did your

5 client release any issue on summary judgment that

6 Nationstar was (indiscernible)?

7 MR. ESBIN: Well, we raised -- we raised the

8 issue that they were not -- they did not present any
9 evidence as to how they came by the note. And as the

10 California Attorney General stated in the (indiscernible)

11 brief, California homeowners have the right to know to whom

12 their money is going.

13 JUDGE KURTZ: Your client’s position is that he’s

14 the holder as a servicer of the note endorsed in blank,

15 endorsed --

16 MR. ESBIN: Correct.

17 JUDGE KURTZ: And if that’s true he would have

18 standing.

19 MR. ESBIN: Well, but --

20 JUDGE KURTZ: I’m not asking you to concede to

21 that’s true. I’m just saying if that’s true, you have

22 standing.

23 MR. ESBIN: Here’s the issue I have with the use

24 of the word “holding.”

25 JUDGE KURTZ: Well, answer my question. Is
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1 that -- if that is true with -- the standing on it

2 disappears.

3 MR. ESBIN: I don’t believe so, Your Honor,

4 because I still believe that under the UCC and under the

5 case law you’d have to be able to show how you came by that

6 paper. And the problem with --

7 THE COURT: In -- Beal dealed (phonetic) with
8 that issue. Didn’t Beal say that if you’re obligated under
9 a note, you have to write payments under that note to

10 someone who is a holder of that note because it was in

11 endorsed by it (phonetic) and it’s in their possession.

12 That debt is discharged so it doesn’t make any difference.

13 MR. ESBIN: Well, but --

14 JUDGE KURTZ: The owner of the note. Even

15 whether they’re probably in possession with the note.

16 MR. ESBIN: Your Honor also brought up the issue

17 that California Attorney General agreed and it’s got over

18 it in the Amica’s brief that if --
19 JUDGE DUNN: What the California Attorney General

20 says in Amica’s brief is irrelevant.
21 MR. ESBIN: Very well. Nevertheless, it is a

22 presentation of what the State of California sees as policy

23 in the state with respect to the treatment of homeowners.

24 But the issue is with that -- that I was raised

25 in Beal, I believe it was also raised in Herrera
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1 (phonetic), is that the homeowner is making payments to as

2 you use the expression holder. And that holder is not

3 entitled to receive those monies, then that debt could --

4 may not be discharged.

5 JUDGE KURTZ: But that’s just the point. It

6 doesn’t make any difference whether the owner is entitled

7 to receive the money. If you’re making payments to someone

8 who’s a holder under the UCC then that’s discharge.
9 MR. ESBIN: But if you’re -- as Footnote 23 in

10 Beal says, let’s say for example, you’re making payments to
11 someone who -- holding (phonetic) and you’re making

12 payment -- if I may, Your Honor.

13 JUDGE KURTZ: Go ahead.

14 MR. ESBIN: You’re making pains to that person,

15 that entity and they’re not entitled to receive those

16 payments, then the entity that comes forth and says that

17 we’re entitled to payment, the borrower is obligated to

18 make those payments. They -- that’s -- that could happen.

19 JUDGE KURTZ: Well, you should --

20 MR. ESBIN: That’s the danger here that --

21 JUDGE KURTZ: Well, that’s an interesting

22 scenario, but as long as they’re in possession of a note

23 endorsed in blank and they present it to you and you pay

24 them, then aren’t you discharging (indiscernible) fees?

25 MR. ESBIN: No, because whoever actually has the
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1 right to pay me can still see a payment. Now, if they --

2 well, I think we fundamentally disagree with what -- all --

3 JUDGE TAYLOR: Can I ask a different question?

4 Okay. Let’s assume that your client, as I understand the

5 fact pattern, your client asked borrower for a million

6 dollars, correct?

7 MR. ESBIN: Yes.

8 JUDGE TAYLOR: It’s a (indiscernible) piece of
9 property, correct?

10 MR. ESBIN: Correct.

11 JUDGE TAYLOR: She (indiscernible) interest in

12 that (indiscernible).

13 MR. ESBIN: Right.

14 JUDGE TAYLOR: I don’t see anything in the record

15 that says she’s in consideration for it, but it was just to

16 get the (indiscernible), correct? Or whatever. It doesn’t

17 really matter. If she’s really concerned -- so there’s no

18 question that there’s over a million-dollar settlement.

19 MR. ESBIN: And payments would have been made.

20 JUDGE TAYLOR: Right. So why didn’t you just

21 enter a plea? There’s such a nice, easy thing. I don’t

22 know who to sell to. I’m going to give notice to the

23 world. I’m going to make all my payments because I’m a

24 good solid citizen and I want to pay my debts.

25 MR. ESBIN: Actually, Your Honor, under the
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1 confirmed Chapter 11 plan Ms. Baroni is making payments

2 into a reserve account.

3 JUDGE TAYLOR: Okay. So you have, in effect,

4 done that?

5 MR. ESBIN: Yes.

6 JUDGE TAYLOR: So the other thing you’re asking

7 us to do is to determine that the deed of trust has somehow

8 gone poof.
9 MR. ESBIN: No. We’re asking this court to

10 overrule summary judgment.

11 JUDGE TAYLOR: You don’t have a qual -- you don’t

12 have -- in your complaint you’re not asking that the

13 determination be made that there is no longer as the

14 (indiscernible).

15 MR. ESBIN: Well, actually, Your Honor, this

16 adversary proceeding arose --

17 JUDGE TAYLOR: That’s a yes-or-no question, so it

18 is either yes or no.

19 MR. ESBIN: It is really objection to claim.

20 That’s what this adversary proceeding is about. I mean,

21 that’s -- I want to get your focus back on that, that we --

22 JUDGE TAYLOR: I know what you want me to focus.

23 I want you to focus on what I asked, which is --

24 MR. ESBIN: It is -- we are asking for a

25 determination that the deed of trust is not enforceable as
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1 to this claim.

2 JUDGE TAYLOR: As to this property or as to

3 this --

4 MR. ESBIN: Claim.

5 JUDGE TAYLOR: You’re saying that it’s been

6 severed from the note such that it’s -- how -- who would it

7 be enforceable as to? How does this all --

8 MR. ESBIN: That’s --
9 JUDGE TAYLOR: It’s a mystery.

10 MR. ESBIN: That is the mystery because we’ve

11 been (indiscernible) in discovery. We’ve not been given

12 information and my client is entitled to know to whom the

13 monies are actually owed and if the deed of trust does not

14 follow the note, then as to an objection to the claim

15 process --

16 JUDGE TAYLOR: Doesn’t it always follow the note?

17 MR. ESBIN: It’s supposed to. But in --

18 JUDGE TAYLOR: Doesn’t it automatically follow

19 the note --

20 MR. ESBIN: Not necessarily. The loan was

21 securitized trusts. There are times when the deed of trust

22 goes here and there’s not been proper documentation that

23 the note follows the deed of trust.

24 JUDGE DUNN: All right. If you’re going to

25 reserve any time for rebuttal you’ll need to --
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1 MR. ESBIN: Thank you very much.

2 JUDGE DUNN: You’re welcome.

3 Mr. Kornberg.

4 MR. KORNBERG: Good morning, Your Honor. It’s

5 nice to be here again. This is just one of -- Ms. Baroni

6 took out five high value loans. She thinks she doesn’t

7 owe --

8 JUDGE TAYLOR: She didn’t take out five.
9 MR. KORNBERG: I’m sorry. She took out four

10 high-value loans. Her husband took out five. This is the

11 one where she’s not actually a party to the loan, but took

12 on the note. She has filed lawsuits against all five of

13 them and fought them to the bitter end or is fighting them.

14 You’re going to have three more of these in the future, so

15 fun to be here.

16 JUDGE DUNN: Well, they’re always interesting.

17 MR. KORNBERG: I don’t have a lot to say based on

18 I think you’re -- we’re very much in agreeance based on

19 your statements. The one thing I’d like --

20 JUDGE DUNN: Well, all right. Then we’d like you

21 to focus. Here’s a big problem from my perspective. There

22 is an affidavit that has been filed in support of the

23 motion for summary judgment which has a copy of the note

24 with endorsements. And that’s one. And then there is a

25 copy of the note with endorsements that’s attached to the
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1 proof of claim and the endorsements aren’t the same.

2 Clearly they’re in different places on the page

3 and how do we resolve that discrepancy on summary judgment.

4 MR. KORNBERG: I understand that, Your Honor. I

5 think -- I mean, as we explained in our papers, their own

6 experts don’t say that’s a fraud. They just say that

7 that’s --

8 THE COURT: Well, my understanding of their
9 expert is that there doesn’t appear to be much of any

10 question as to the signature of the debtor’s husband on the

11 note, but the question that was raised and argued quite

12 ably by Mr. Esbin is that whether the party before the

13 Bankruptcy Court in the adversary is the party withstanding

14 to enforce the note. And at that point if there are

15 discrepancies in the endorsements for assignment purposes,

16 how does that get resolved effectively on summary judgment?

17 MR. KORNBERG: Well, I think the answer to that

18 is, one, I don’t think -- maybe -- the way I read the

19 declaration is it states there that the differences in

20 where the endorsement could be could -- are very

21 (indiscernible). So --

22 (Parties speaking simultaneously.)

23 JUDGE KURTZ: Counsel, counsel, there’s one copy

24 of the endorsements. There’s another copy of the

25 endorsements. These are magical endorsements as your
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1 copier didn’t move and they changed their relationship to

2 one another.

3 MR. KORNBERG: Your Honor --

4 JUDGE KURTZ: I submit -- now, let me finish --

5 if you copy the original note 100 times the endorsements

6 will not move. They’ll always look the same on the copy.

7 I think how can -- the endorsement that’s down here could

8 suddenly move up to here on a copy.
9 MR. KORNBERG: I understand, Your Honor, and I

10 apologize.

11 JUDGE KURTZ: Explain.

12 MR. KORNBERG: The answer is this. As I said,

13 fine, they re-endorsed the note.

14 THE COURT: Excuse me?

15 JUDGE KURTZ: They re-endorsed the note.

16 JUDGE TAYLOR: But here’s the problem here. You

17 put one copy in front of the court and you said, this is

18 it. We’re entitled to file proof of claim. And then you

19 put another copy before the Court and said, this is it.

20 We’re entitled to file this claim and you never explained

21 how both of those are put before the Court. And I’ll tell

22 you, me, I’ve tried those cases and I try it because your

23 client put inconsistent information before the Court and

24 said both were true and I -- you know, magical thinking is

25 something that I’m not real big on when a financial
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1 institution tells me, this is gospel writ. This is the

2 truth. Well, they can’t both be true.

3 MR. KORNBERG: Understood, Your Honor. I

4 understand --

5 JUDGE TAYLOR: I think we should at least have a

6 trial as to how that discrepancy got through.

7 MR. KORNBERG: Well, Your Honor, not necessarily.

8 The answer to that --
9 JUDGE DUNN: But that’s an evidentiary issue.

10 MR. KORNBERG: The answer to that one is simple.

11 As I said, the note could have been re-endorsed at one

12 point.

13 JUDGE TAYLOR: Actually --

14 MR. KORNBERG: Your Honor, all we’re trying to do

15 is enforce the note. We brought a note that’s endorsed.

16 It’s like the original note.

17 JUDGE DUNN: Mr. Esbin’s point is well taken on

18 that one because we don’t have the original vendor here.

19 The notes then transferred at least twice, according to the

20 endorsements, and we have the servicer here and that’s

21 fine, but it appears to me, at least looking at it, and

22 maybe to my colleagues as well that there’s some

23 discrepancies here, there are questions as to how

24 Nationstar got into the picture and where its proper

25 relationship to the holder in its -- whether it’s
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1 (indiscernible) holder or not.

2 Anyway, those seemed to raise some factual issues

3 that are not appropriate to summary judgment.

4 MR. KORNBERG: Your Honor, Nationstar attached to

5 declare -- sorry, attached in the declarations, indicated

6 proof of claims and it has the right to -- you know,

7 showing that it’s been granted --

8 JUDGE KURTZ: You attached a declaration from
9 your litigation analyst, is that right?

10 MR. KORNBERG: Well, it’s -- sorry. It’s a power

11 of attorney which stands on its own face as a business

12 record.

13 JUDGE KURTZ: And you went to file an attorney?

14 MR. KORNBERG: Yes.

15 JUDGE KURTZ: And can you trace that power of

16 attorney to this note? I can’t.

17 MR. KORNBERG: It’s the loan trust.

18 JUDGE KURTZ: Yeah. It says it’s something in

19 this that some note which you can’t identify as this note

20 has been transferred to the loan trust. How would you know

21 that we’re talking about this note?

22 MR. KORNBERG: We attached -- the declaration

23 says that the loan itself is listed in the mortgage loan

24 schedule which we attached to -- also the declaration in

25 unredacted form. I admit that that redacted form, you
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1 know, because it’s a big spreadsheet essentially. It

2 doesn’t necessarily -- isn’t the most easy thing to follow,

3 but we would --

4 JUDGE DUNN: Well, unfortunately, all that counts

5 on it is some numbers and everything else is redacted. And

6 we can’t tell from that whether the numbers that are on

7 that reflect the loan number of this particular loan.

8 MR. KORNBERG: Well, Your Honor, as we also have
9 a declaration from the person that they reviewed business

10 records and was transferred and there were even more on

11 schedule that matches up.

12 JUDGE KURTZ: You think that declaration

13 satisfies the business loan exception? Business record

14 exception?

15 MR. KORNBERG: That there would be business

16 records and the records say that, yes, as long as the note

17 was transferred, yes, it does.

18 JUDGE TAYLOR: And isn’t the transfer

19 (indiscernible) somebody else?

20 JUDGE KURTZ: Is there any custodian on these

21 records?

22 MR. KORNBERG: Well, no. I mean, Nationstar

23 servicer would have all that information there, basically

24 charging --

25 JUDGE TAYLOR: But the point is, there’s a
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1 transfer order and there’s a transferee. And we have the

2 transferee saying stuff from their business records. But

3 isn’t it the intent -- what you’ve done (indiscernible) is

4 you’ve created ambiguity in a world where it’s hard to

5 create ambiguity because you’ve got self-authenticating

6 documents. You’ve got all kinds of things, but by -- so

7 you’ve got to establish. Sure, it was re-endorsed but it

8 was re-endorsed by people who signed things apparently
9 quite a while -- I mean, one -- I don’t think. I’ll be --

10 we should probably take up that. I don’t think this was

11 endorsed on the back of the note itself. It is an allonge.

12 So you’ve got a whole -- obviously different forms of

13 allonges but they’re signed in different ways and you’ve

14 got to establish that it was the intent of the first

15 person, the second person and a third person that these

16 allonges be used the way they are used.

17 You’re saying, yeah, it was (indiscernible)

18 endorsed it but it goes back to the intent of everyone who

19 signed the allonge. I’m not saying you can’t do it, but I

20 just don’t see it in the proof you’ve had and I don’t see

21 it in the situation when you’ve created the ambiguity or

22 your client has.

23 MR. KORNBERG: I mean, again --

24 JUDGE TAYLOR: What’s so hard about just having a

25 document and attaching the allonge and copying it every
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1 time you use it?

2 MR. KORNBERG: I don’t know the answer to that

3 one, Your Honors. And again, I think the issue here is

4 that -- I mean, as we asserted it’s a bare note and you’re

5 allowed to rely on a bare note with a proper endorsement on

6 its face. And that the (indiscernible) and frankly the

7 issue here is it’s been properly endorsed. It has been

8 stolen, all these issues. Those aren’t really the issues
9 for the debtor I’m worried about. You’ve got a problem

10 with the endorsed bare note which we brought. There’s no

11 doubt that my clients brought -- showed to them, gave them

12 copies and showed that we have in our hands a bare note

13 with an endorsement on it from an officer of the endorsee.

14 JUDGE DUNN: Well, then before the Bankruptcy

15 Court you had brought in the bare note with the

16 endorsements, had it authenticated, had a trial on it. And

17 we already ruled that you were entitled to enforce so go by

18 enforcement. You can take Ms. Baroni’s payments. We

19 wouldn’t be here and that’s kind of our problem because

20 we’ve looked very carefully at the endorsements you see

21 there. We’ve got two conflicting sets of endorsements and

22 they’re mixing apples and oranges in the business records

23 because some of them are Nationstar’s and some of them are

24 of the trust. And we have -- we’ve got some unease about

25 that as well.
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1 JUDGE TAYLOR: You’ve got to have a -- the

2 business records to be crisp would you really do what I

3 think you may need to do is the transferees

4 (indiscernible).

5 JUDGE KURTZ: This is a really interesting

6 question. Why would you leave two endorsements containing

7 the same set of endorsements? The allonge under the UCC --

8 you seem to brush aside the UCC’s requirements as if
9 they’re not relevant. They need to be attached to the note

10 and if you had an allonge with the proper set of

11 endorsements attached to the note and it was just one note

12 and one allonge, why would there be a second allonge

13 floating around? Why would you have to re-endorse a note

14 with the same endorsements that were already attached to

15 the note? The logical inference was that this allonge was

16 never attached to this note.

17 MR. KORNBERG: Well, Your Honor, I disagree that.

18 We brought the note with the allonge attached to it and we

19 declared that.

20 JUDGE KURTZ: You brought to this court -- I

21 mean, not specifically to this court, but the Bankruptcy

22 Court, two sets of allonges.

23 MR. KORNBERG: Well --

24 JUDGE KURTZ: Different allonges. How can that

25 be?
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1 MR. KORNBERG: I believe, Your Honor, under the

2 state of the UCC a bare note and allonge attached advised

3 on its face payable to the bearer.

4 JUDGE KURTZ: Not -- and I have no objection or

5 argument with that at all. I’m just asking you to explain

6 how -- why there would be a second allonge with a second

7 set of endorsements if that was true, if we just had a note

8 with an allonge attached.
9 MR. KORNBERG: Your Honor, I don’t have an answer

10 to that.

11 JUDGE KURTZ: I have an answer to that. The

12 answer to that I think logically is the allonges are not

13 attached to the note.

14 JUDGE TAYLOR: The allonge wasn’t attached to the

15 original note firmly as required by the UCC and until it

16 was necessary to use it, found the original note and you

17 slapped something on it. And I don’t know if that’s just

18 okay but there’s a factual issue as to what the intent --

19 JUDGE DUNN: Your client may very well have the

20 right to enforce this, but our concern is we’re dealing

21 with the summary judgment where the Court did not make

22 factfindings based upon evidence in front of it. It ruled

23 on summary judgment based on our view -- the absence of any

24 genuine issue of material fact and with the different

25 endorsements, among other things, we’re just deeply
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1 concerned.

2 MR. KORNBERG: Okay. Let me just say one final

3 thing about this because I don’t really have any arguments

4 beyond it. In my view -- I understand what you’re saying,

5 but in my view even if they had improperly attached the

6 allonge or they tore the allonge off and put it back on, in

7 the end we showed up with a note with an allonge attached,

8 showed it to the other side, attached a copy. That allonge
9 was endorsed properly and on its face proper. Whatever

10 happened in the past there’s no issue there as long as you

11 attach there I don’t think there’s an issue with some

12 issues beforehand. I don’t --

13 JUDGE TAYLOR: I understand that. But isn’t the

14 issue was -- because you’ve created the ambiguity for me

15 and I agree isn’t the issue where the -- if the allonge

16 wasn’t attached originally and if it was attached at some

17 subsequent point of time isn’t there an issue as the intent

18 that you’ve created by not attaching the allonge at the

19 time of the (indiscernible) the original note?

20 MR. KORNBERG: I don’t think an issue has been

21 created in absence of any counter evidence that there was a

22 lack. I mean --

23 JUDGE TAYLOR: Because your client created the

24 (indiscernible).

25 MR. KORNBERG: I disagree, Your Honors. That’s
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1 all I can --

2 JUDGE TAYLOR: So you can put -- I want to really

3 drill down on this. So you don’t see any problem with

4 putting two different versions of a document in front of a

5 federal court?

6 MR. KORNBERG: It’s (indiscernible).

7 JUDGE TAYLOR: And we’re not done in the vacuums.

8 MR. KORNBERG: (Indiscernible)
9 JUDGE TAYLOR: Yeah, well, but my question was,

10 can you look me in the eye and say, that’s just okay?

11 MR. KORNBERG: No, Your Honor. I wouldn’t

12 necessarily -- I’d like to have a better answer for you

13 here and I don’t, but --

14 JUDGE KURTZ: Let’s go to a different issue.

15 What’s the evidence that supports that’s the original note?

16 MR. KORNBERG: It’s the same note that we brought

17 in, Your Honor.

18 JUDGE KURTZ: That’s a certificate signed by the

19 litigation analyst?

20 MR. KORNBERG: What’s the evidence that it’s not

21 (indiscernible)? We provided evidence --

22 JUDGE KURTZ: Well, let --

23 JUDGE TAYLOR: What exhibit (indiscernible)?

24 MR. KORNBERG: What a future note --

25 JUDGE KURTZ: Is the litigation analyst the
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1 custodian of the business records as such?

2 JUDGE DUNN: Let’s clarify again. I thought

3 there was an affidavit from counsel for Nationstar

4 identifying the original note as being in his possession.

5 JUDGE KURTZ: Obviously no. All right. You can

6 say this is the note. I recognize the note. What about

7 the endorsements? What about -- is -- to counsel for the

8 Nationstar, how do you know those are authentic
9 endorsements that have been attached to the note? Do you

10 have any personal knowledge of that?

11 MR. KORNBERG: Your Honor, you’re absolutely

12 (indiscernible) bare note right now. That’s my response to

13 that. If you can’t rely on a bare note with an endorsement

14 from the company I don’t know what the intent of the bare

15 note is. I’m sorry, but that’s kind of my response. Like,

16 yes, I understood what you’re saying, but if the note is

17 endorsed by an officer of the company they’ve brought no

18 evidence that he was in fact not an officer or how they can

19 saying sort of in the pleadings they’ve got notice to the

20 contrary. Beyond that fact, it’s a bare note. You’re

21 entitled to rely on the UCC.

22 And I am concerned that I’m running out of time

23 and I’d like to address one issue if I may.

24 JUDGE DUNN: Sure.

25 MR. KORNBERG: Even if the note -- even if you
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1 find that it’s a disputed issue of fact here and I don’t

2 think there is one as to the bare note status, I think our

3 transferee argument holds up. We attached a copy of the

4 sale agreement to Wells Fargo. We attached a copy of the

5 power of attorney which lists essentially -- if it exists

6 it’s not hearsay (indiscernible) that. That is enough to

7 show that they were the transferee of the note and that

8 Wells Fargo had the power to enforce the note as the
9 transferee, even if they don’t have power to enforce it,

10 that they are as a whole --

11 JUDGE TAYLOR: So you’re not saying that they can

12 enforce it as a non-holder in possession with the rights of

13 a holder. You’re saying they can enforce it as a

14 transferee?

15 MR. KORNBERG: Well, the transferee to the non --

16 to the non-holder --

17 JUDGE TAYLOR: Non-holder of the --

18 MR. KORNBERG: Yeah, exactly. So I think that

19 that is something not to lose track of here. You brought

20 that into question, but we attached a copy of the self-

21 servicing agreement. We attached a copy of the loan

22 schedule. We attached a declaration saying that we were

23 agreeing with this mortgage loan agreement. Our client for

24 the records can see that this -- was trying to chart a loan

25 schedule here. I understand there’s a bunch of numbers not
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1 on its face, but it is competent testimony by the loan

2 servicer who has access to all this information. No

3 question about that. No question about the authenticity of

4 that. No objection to evidence as to those documents.

5 So I just want to say that that is an alternative

6 ground for affirming and I think that it is one that

7 standing in that they do not have any counter-evidence.

8 They have not introduced any issues of fact there. I
9 understand they need to pull (indiscernible) better

10 evidence does it really exist. They may need counter

11 evidence that they don’t have.

12 JUDGE TAYLOR: Let me ask you an easy question.

13 Am I right that Glasky relied on the New York case, which I
14 think was (indiscernible) Bank v. Zerabello (phonetic) and
15 that was reversed?

16 MR. KORNBERG: Yeah. I agree. It’s in the

17 Turner case if you want to look at that. I’ll submit a
18 supplemental there. I’m happy to do again. Also, on the

19 Glasky issue just really quickly, if you look at their
20 opening brief, table authority (indiscernible) Glasky there
21 was raised in their reply. That is not proper -- the issue

22 was not properly raised on appeal.

23 JUDGE KURTZ: The transfer document has

24 everything redacted, except 17362807. What is that?

25 MR. KORNBERG: Can I look at it again, Your
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1 Honor?

2 JUDGE KURTZ: Sure.

3 MR. KORNBERG: (Indiscernible) we can --

4 JUDGE KURTZ: Yeah.

5 MR. KORNBERG: Yeah. Happy to do so.

6 JUDGE KURTZ: The other number is 11901490. It’s

7 not the loan number, so what is that number?

8 MR. KORNBERG: It’s -- Your Honor, I’d have to
9 look at this again.

10 JUDGE KURTZ: Okay.

11 MR. KORNBERG: It’s probably -- it’s their

12 internal referencing numbers. Their numbers that allowed

13 them to -- again, we have the declaration. I’d like to

14 look at this again, but again we have a declaration saying

15 that they --

16 JUDGE KURTZ: You have a declaration --

17 JUDGE DUNN: Would it surprise you that when we

18 were here the declarations -- we couldn’t connect the dots

19 as to the -- the connection between that number and the

20 particular one?

21 MR. KORNBERG: It would not, Your Honors. But

22 again, we also have a separate declaration which I think,

23 you know -- there’s no real basis for saying that, well,

24 Nationstar’s servicer is unable to connect the dots.

25 JUDGE DUNN: All right. Well, thank you very
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1 much. Your time is expired and Mr. Esbin will get some

2 time for rebuttal.

3 And you’ve been listening no doubt probably with

4 that -- with Mr. Kornberg.

5 MR. ESBIN: Yes, Your Honor. It’s -- it was

6 interesting.

7 JUDGE KURTZ: Can you address counsel’s principal

8 argument which seems to make some sense if not UCC sense
9 which is, what difference does it make? Your client signed

10 this note. It’s gone through this sort of complicated

11 process of being assigned to a trust and, as we found in

12 this case and many other cases, the people are -- because

13 it’s really unusual and suspicious sometimes, but

14 ultimately as in all of this process we’re going to find

15 out that this note was assigned to this trust and that’s

16 investors who have an interest in this transaction and need

17 to be paid.

18 So why doesn’t your client just step up and make

19 the payment?

20 MR. ESBIN: Well, she’s been making the payments

21 into the reserve account and what --

22 JUDGE KURTZ: (Indiscernible) satisfactory to

23 your client.

24 MR. ESBIN: It hasn’t been established, Your

25 Honor. And my client has the right to know as a matter of
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1 law to whom the payments are actually owed. I mean, what

2 happens in these transactions is there is law, there are

3 rules, and the law and the rules have been thrown out to a

4 securitized mortgage trust administrator. And then we get

5 here and go, well, she signed the note so she should be

6 paying the note. But we are still -- we still have rules

7 and laws that we’re all held to. And my client, as a

8 matter of law, is entitled to know to whom she -- to whom
9 the money is actually owed because when you dig down into

10 these securitized trusts you also find out that there are

11 credit enhancements and the credit enhancements can lead to

12 the payment of that obligation and then the question

13 becomes, well, if the note has been paid by credit

14 enhancements, then there’s someone else who may be owed the

15 money.

16 So by creating these fictions that they threw

17 onto the public market and created this confusion that

18 we’re all sitting here trying to figure out, the end of the

19 day --

20 JUDGE KURTZ: So you’re just sort of a public

21 interest lawyer just trying to end confusion without the

22 pecuniary interest in the outcome of the litigation?

23 MR. ESBIN: No, Your Honor. What we want to know

24 is, if money is owed to who it’s owed. But if the

25 obligation has actually been paid, for example, by credit
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1 enhancements, then to whom is the money owed. If no one

2 steps up and says, I’m owed money because I paid the credit

3 enhancements, then that person is not owed the money. Then

4 who is owed the money. No, I’m not a public interest

5 attorney, Your Honor. I do have a number of these cases.

6 I am one of the contributing authors of the CB book on

7 mortgage deeds and trusts. But these are important issues

8 to all of us. And to Ms. Baroni, she’s entitled to know.
9 This is a bankruptcy case with a claim that was filed where

10 someone has said, I’m owed the money. But maybe they’re

11 not owed the money because their own documents do not

12 support that they’re actually owed the money. And, in

13 fact, made a very good point about the endorsements and

14 Judge Taylor said you could copy a million times. Those

15 endorsements don’t move around unless you have a different

16 intent and that intent is to put that paper here and there

17 and there and create warehouse fraud and they’re selling

18 these notes multiple times and this is what we believe is

19 going on. Of course, we’ve been thwarted in our discovery

20 to really find out about what’s going on and to find out to

21 whom my client is actually -- who she actually owes the

22 money to.

23 JUDGE KURTZ: Isn’t your best case or maybe your

24 most likely scenario you get summary judgment, get decided

25 on this issue of fact. You go to trial. Counsel brings in
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1 the original mortgage person, say they gave you the money,

2 you sign the note, they bring in someone from the bank

3 saying, yes, we endorsed it over to this person, this

4 person comes in and says, we endorsed it over to that

5 person. There are three endorsements here. And finally

6 someone says, yeah, we endorsed it over to the trust.

7 Don’t you still (indiscernible) the note?

8 MR. ESBIN: Yeah, we know who owes -- who is
9 actually owed the money.

10 JUDGE DUNN: right. So the happy result may be

11 if we end up vacating and remanding that you’ll get that

12 determination?

13 MR. ESBIN: That’s correct.

14 JUDGE DUNN: The world will be a wonderful place.

15 MR. ESBIN: Well, my client is entitled -- she’s

16 entitled to the benefits of the laws of the -- federal

17 bankruptcy laws and state law to know who she owes the

18 money to. That fact -- that fact should not be swept aside

19 because this industry was created and created this

20 confusion and ambiguity as Your Honors have so found in

21 multiple endorsements.

22 JUDGE TAYLOR: Is she really entitled to those

23 (indiscernible) no matter who is -- it’s properly endorsed

24 and if she pays the person presenting the bearer paper she

25 has a certainty that she’s paid it in full. To me that’s
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1 what she’s entitled to.

2 MR. ESBIN: And that person has proven under the

3 Uniform Commercial Code that they’re entitled to be holder

4 in due course. This court has used the word “holder” and

5 holder is --

6 JUDGE TAYLOR: A different concept.

7 MR. ESBIN: They’re a different concept and every

8 time I have to go through this I have to step back and say,
9 the term “holder” is a dangerous, slippery slope. It’s a

10 holder in due course which has its own meaning and we have

11 to make sure that --

12 JUDGE TAYLOR: It’s not what we’re talking about

13 here today. We’re talking about (indiscernible) --

14 MR. ESBIN: Well, we’re talking about possession.

15 JUDGE TAYLOR: We’re talking about bearer paper

16 and holders. We’re not talking about holders in due course

17 and that’s a different concept.

18 MR. ESBIN: Well, we’ve made the argument --

19 JUDGE TAYLOR: Let me ask you a question that I

20 should have asked earlier and I may -- you’ve got -- what

21 is (indiscernible).

22 JUDGE DUNN: Yeah, we’re out of time.

23 MR. ESBIN: I believe counsel got 18 minutes. I

24 got 16, whatever.

25 JUDGE DUNN: You both had more than you’re
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1 allotted in --

2 MR. ESBIN: And I appreciate that, Your Honor.

3 JUDGE KURTZ: I think it’s unfair. Notice I said

4 that with a smile.

5 (Laughter)

6 MR. KORNBERG: (Indiscernible)

7 JUDGE KURTZ: Well, why don’t -- you can take it

8 out of your other -- the second appeal.
9 All right. Let’s move on to the second Baroni

10 deal, number 1579.

11 THE CLERK: Correct. Same counsel

12 (indiscernible).

13 THE COURT: Mr. Esbin, you’re on again. All

14 right. We’ve done that.

15 MR. ESBIN: For the record, Your Honor, if it

16 pleases the Court, Louis J. Esbin Law Offices of Louis J.

17 Esbin on behalf of the plaintiff and reorganized debtor

18 Allana Baroni. Michael Riley, my co-counsel, and

19 Ms. Baroni is here as well.

20 Your Honor, as with the preceding case, what

21 we’re dealing with are issues of (indiscernible). What

22 we’re dealing with is issue of Beal on one side and Rivera
23 (phonetic) on the other side. We’ve got state court cases

24 in between, the most recent of which is the Nova case,
25 which is out in review (indiscernible) District Court.
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1 We’ve got several issues. This is very similar issues.

2 JUDGE KURTZ: Well, it’s not similar in one

3 (indiscernible), but we’ve got a $675,000 note that secures

4 the home mortgage. Again, the note has been assigned to a

5 trust. At least that’s what we think. And so it’s been

6 endorsed on several occasions. But in this instance

7 counsel got a copy of the note and the mortgage and he

8 invited you over to his office to look at it and so you’ve
9 had an opportunity to examine the note, to examine the

10 endorsements, and I don’t see anything from your side

11 challenging those things, other than sort of some generic

12 objections.

13 MR. ESBIN: Well, what we have, Your Honor, is

14 that what was presented in summary judgment was the sale

15 assumption agreement which establishes that Lehman Brothers

16 holdings trans -- intended to transfer the note to

17 structured asset securities and Wells Fargo doesn’t show up

18 anywhere. And so we have an issue of again Wells Fargo

19 saying that it has met its burden of prudential standing on

20 claims. We’re talking about claims here. We’re talking

21 about Rule 3001. And they’ve not established by

22 admissible -- competent admissible evidence that they have

23 standing on -- to --

24 JUDGE DUNN: They’ve established they’re a holder

25 on the bare promissory note that is uncontradicted
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1 (indiscernible) and we don’t have the ambiguities in this

2 case that we have in the other one about the nature of the

3 endorsements. So what’s not to like here?

4 MR. ESBIN: Well, actually in this case it was

5 Bank of America that --

6 JUDGE DUNN: Bank of America. There’s some

7 mistake in the record from Bank of America which appears

8 irrelevant.
9 MR. ESBIN: Bank of America filed a claim,

10 though.

11 JUDGE DUNN: The differential -- in terms of the

12 summary judgment it doesn’t appear to be that it put the

13 disputed issue in the (indiscernible).

14 MR. ESBIN: Well, Your Honor, we believe that the

15 evidence -- the reported evidence that the defendant

16 presented does not establish that Wells Fargo is the

17 rightful party with standing because the sales assumption

18 agreement does not name Wells Fargo as the party, but

19 rather it’s Lehman who (indiscernible) made the note --

20 JUDGE KURTZ: You’re saying that not the owner of

21 the note. Is that what you’re saying?

22 MR. ESBIN: That’s correct, Your Honor.

23 JUDGE KURTZ: Do they need to be the owner of the

24 note? Don’t they just need to be holding the note endorsed

25 in blank and in possession of the note?
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1 MR. ESBIN: Again, if they are a transferee,

2 they’re -- a UCC, they have to show how they came to --

3 JUDGE KURTZ: They turned it over or they

4 attached the allonge correctly this time.

5 MR. ESBIN: If I may --

6 JUDGE KURTZ: The allonge says A to B, B to C, C

7 to D, last one says endorsed in blank to bearer. Isn’t

8 that sufficient? Aren’t those self-executed, those
9 endorsements?

10 MR. ESBIN: Well, first of all, if it’s an

11 allonge -- I know this panel has used the word “attached,”

12 but I believe the Commercial Code uses the word “affixed.”

13 JUDGE KURTZ: Affixed. I’m sorry.

14 MR. ESBIN: And the word “affixed” has a

15 particular meaning. It means it’s part of -- and I’ve

16 litigated the issues. It will have to be stapled to it.

17 And what they do is they come in and go, here’s the note

18 and here’s the allonge. That’s not affixed. And as we

19 found in the other case is you have the note and you have

20 an allonge, you have another allonge. How many allonges

21 are there with various endorsements on them?

22 JUDGE DUNN: Well, then, Mr. Esbin, your client

23 has looked at this note and was given the opportunity to

24 examine the original and there’s nothing in the record

25 before the Bankruptcy Court saying that they made any of
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1 these mistakes from yourself.

2 MR. ESBIN: Well, what we said is that -- and I

3 go back to it is that the sale and assumption agreement

4 upon which they relied to establish their chain of title --

5 JUDGE DUNN: They’re not relying on it. They’re

6 relying on the fact that their holding bearer paper and it

7 is the original bearer paper. And under the California UCC

8 on that basis they’re a party entitled to enforce the
9 obligation.

10 JUDGE TAYLOR: I think this goes back to what

11 she’s entitled to know. She’s entitled to know that when

12 she pays their paper because she’s paid the obligation and

13 no one else is (indiscernible), that’s the holder. There’s

14 a question may throw in (indiscernible). We’re not. It

15 can be recognized as there’s a UCC for what, the 16th

16 (indiscernible), I don’t know what (indiscernible) in, but

17 the whole concept is that we -- something needs to be

18 negotiable. Your client needs to know if she pays that,

19 that no one else can make her pay that.

20 MR. ESBIN: That’s correct.

21 JUDGE TAYLOR: And if it’s properly endorsed.

22 But the fact that she pays it to party A doesn’t mean that

23 she knows who’s ultimately going to get the party. The

24 fact that there’s some deal behind the note where Party A

25 is electing it for Party C, D, Q is not something that the
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1 UCC thinks is a problem.

2 MR. ESBIN: I don’t think the UCC ever

3 contemplated the complexities of secured prioritized

4 mortgage market which came about in the 19 -- late 1990s as

5 a means --

6 JUDGE DUNN: I certainly wondered why it was over

7 retained (indiscernible).

8 JUDGE TAYLOR: And I was going to say, having
9 worked with some people at my old law firm who were

10 intimately involved with creating this law it’s -- but

11 that’s, you know -- you know --

12 MR. ESBIN: Yeah, I --

13 JUDGE TAYLOR: I think at least some of the

14 people involved very much saw this law and I think they use

15 this law to do that. And at the -- you know, so I don’t

16 think any of us speculate what every person --

17 MR. ESBIN: Right.

18 JUDGE TAYLOR: -- to remand in whatever

19 legislative body formally adopted it and to a man and woman

20 and everybody who would -- so let’s not go there. The

21 question is, as written the concept of bearer of paper,

22 here we’re talking about a disciplined thing, but we all

23 want to be able to negotiate documents --

24 MR. ESBIN: Sure.

25 JUDGE TAYLOR: -- and have them be payable.
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1 MR. ESBIN: What we also asked for and we were

2 not provided in discovery and that was an issue of summary

3 judgment that we were not -- that we were thwarted in our

4 discovery efforts is if the paper as a securitized trust

5 wasn’t paid, that’s always an issue that we raise that we

6 don’t know because when we read the securitized trust

7 instruments there are bearer enhancements. And what --

8 JUDGE TAYLOR: If Glasky goes to Washington and
9 Glasky -- I don’t think -- I don’t see how you can -- if
10 you rely on this (indiscernible) trust loan, correct?

11 MR. ESBIN: Well, I may have a different issue.

12 JUDGE TAYLOR: Okay.

13 MR. ESBIN: Glasky said that under New York trust
14 law if the instruments were attempted to put in after it’s

15 more --

16 JUDGE TAYLOR: It’s a problem --

17 MR. ESBIN: Absolutely.

18 JUDGE TAYLOR: Okay. You’re right.

19 MR. ESBIN: What I’m saying is that if the

20 instruments went in properly, which is questionable because

21 I think, you know, earlier this panel talked about the

22 remnant. Okay. And under a remnant it’s supposed to go

23 within 90 days, otherwise they lose the tax benefit of the

24 remnant and then the question is, why would they be

25 putting -- intended to put these in if not to invoke
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1 Jenkins and the inability of us to make this argument.
2 But let’s say it went into the trust, right, it

3 went into the trust. And the trust has credit

4 enhancements. It says if the loan is in default, credit

5 enhancements kick in and then the investors are paid by

6 these credit enhancements, then who’s owed the money?

7 JUDGE TAYLOR: But why is that an issue --

8 MR. ESBIN: Because --
9 JUDGE TAYLOR: -- to even get to because, again,

10 it’s bearer paper and if your client pays it so it’s

11 properly bearer paper and the client pays it --

12 MR. ESBIN: Well, let’s --

13 JUDGE TAYLOR: -- then your client has no

14 additional risk. That’s what the UCC is set up to pay and

15 all that back story stuff, which is complicated and they

16 get all the (indiscernible) --

17 MR. ESBIN: Right.

18 JUDGE TAYLOR: She doesn’t have standing.

19 MR. ESBIN: Correct.

20 THE COURT: Let’s --

21 JUDGE TAYLOR: There may be some intellectual

22 interest in that right, but in terms of a legal right I

23 just don’t see it.

24 JUDGE DUNN: Let’s use Judge Kurtz’s example. It

25 was from A to B to C to -- D gets paid on a credit
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1 (indiscernible). Okay. Now, is everything getting paid a

2 second time by Ms. Baroni?

3 MR. ESBIN: As long as Ms. Baroni does not have

4 any obligation to pay anything on the note --

5 JUDGE DUNN: They get paid twice.

6 MR. ESBIN: It doesn’t matter. That’s a --

7 JUDGE DUNN: Why isn’t it between those parties

8 who are separate that as long as her obligation to pay once
9 is respected she’s done because under California law if an

10 obligation is exonerated then the deed of trust is no

11 longer enforceable.

12 JUDGE TAYLOR: It’s not exonerated. It wasn’t

13 exonerated from the -- no one is exonerated her in her

14 husband’s debt -- well, this one is her debt -- no one has

15 exonerated her obligation to pay. In the back they’re

16 making profit and doing things between them. Nobody has

17 made her a third-party beneficiary of their contract which

18 is what you’re trying to do.

19 JUDGE KURTZ: No, we’re trying to establish who

20 it is that’s actually owed the money.

21 JUDGE TAYLOR: Right.

22 JUDGE DUNN: And when the proof of claim is

23 allowed as it was on summary judgment she’s done. Have a

24 nice day, Ms. Baroni.

25 JUDGE TAYLOR: She’s done.
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1 MR. ESBIN: And that’s why we’re here.

2 JUDGE DUNN: Right.

3 MR. ESBIN: Because we believe that --

4 JUDGE DUNN: Isn’t the (indiscernible) --

5 MR. ESBIN: -- (indiscernible) used the wrong

6 (indiscernible).

7 JUDGE KURTZ: Isn’t the concept of bearer paper

8 to say a note endorsed from blank someone is holding it,
9 you can name that person without having to investigate

10 ownership, isn’t that why they make down paper bearer paper

11 so you don’t have to figure out what you’re trying to

12 argue, have to find out who owns the note?

13 MR. ESBIN: I believe there was -- in the Rivera
14 case where this panel questioned the bearer bonds and

15 bearer bonds were eliminated. Those holds this exact

16 reason that anybody can get a hold of it right -- wrongly

17 and go to the borrower and enforce it. And then a person

18 who is truly entitled to be paid says, well, I’m entitled

19 to be paid because that’s my right. And so it’s an issue

20 today and I think it’s --

21 JUDGE DUNN: In her plan -- confirmed plan, I

22 hadn’t looked at this. When she’s made all appeal and

23 obligation to the plan does she get a discharge?

24 MR. ESBIN: I’m sorry, Your Honor?

25 JUDGE DUNN: When she’s paid all her obligations
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1 under the plan does she get a discharge?

2 MR. ESBIN: This is an individual debtor filing a

3 Chapter 11 under BAP CPA, so when she’s completed all of

4 her plan payments there’ll be a motion for final decree and

5 entry of discharge, correct.

6 JUDGE DUNN: Correct. So she’ll then discharge

7 so no one can come back and get it.

8 MR. ESBIN: Except that the Ninth Circuit says
9 that a lien rights through and so the question becomes --

10 JUDGE DUNN: She’ll have paid all the claims that

11 are secured by the lien. That’s what the allowance of the

12 proof of claim will deal with it.

13 JUDGE TAYLOR: Will continue to secure the

14 arrearage under the plan.

15 JUDGE DUNN: Right.

16 MR. ESBIN: Well, the impression is to -- you

17 know --

18 JUDGE DUNN: These are factual issues.

19 MR. ESBIN: And that’s why we didn’t think

20 that -- that’s why we’re here because there’s sufficient

21 factual issues at summary judgment granted outstanding

22 discovery on some of these issues we are entitled --

23 JUDGE DUNN: Your final motion to compel.

24 MR. ESBIN: I believe we did in this case, Your

25 Honor.
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1 JUDGE DUNN: We didn’t see it in the record.

2 JUDGE TAYLOR: (Indiscernible)

3 MR. ESBIN: I’m sorry?

4 JUDGE TAYLOR: (Indiscernible) there’s a dispute

5 in California about whether that’s really a cause of action

6 or just a remedy. What law are you relying on in pleading

7 that that’s an independent cross-match?

8 MR. ESBIN: No, it’s not unusual that
9 (indiscernible) are --

10 JUDGE TAYLOR: Enough.

11 MR. ESBIN: -- plans as claims for relief.

12 And --

13 JUDGE TAYLOR: You were of the belief -- I mean,

14 you’ve alleged to (indiscernible) the fact. There really

15 isn’t -- this was decided as though that’s a specific

16 thing.

17 MR. ESBIN: Right.

18 JUDGE TAYLOR: Rather than just a remedy that

19 would go away when the other things (indiscernible).

20 MR. ESBIN: I believe that the body of case law

21 dealing with the unjust enrichment has -- constructive

22 trust is a remedy. Very often -- very often by careful

23 counsel we plead that that’s a claim for relief

24 notwithstanding because it has its own elements.

25 JUDGE TAYLOR: Okay.
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1 MR. ESBIN: I will reserve the balance of the

2 time.

3 JUDGE DUNN: All right. Thank you.

4 MR. ESBIN: Thank you, Your Honor.

5 JUDGE DUNN: Mr. Kornberg.

6 MR. KORNBERG: Well, thank you. Thank you, Your

7 Honors.

8 One quick thing to touch on both issues
9 (indiscernible) I just reviewed the attachment to both the

10 sales services agreement for both of them. Both of them

11 identified the property, at least the city it’s in, the

12 loan balance, (indiscernible). One of them had been

13 (indiscernible) the exact address. The other just says the

14 city and the ZIP Code.

15 JUDGE KURTZ: What document are you referring to?

16 MR. KORNBERG: What?

17 JUDGE KURTZ: What documents are you referring

18 to?

19 MR. KORNBERG: Oh, I’m sorry. I’m referring

20 to --

21 MR. ESBIN: (Indiscernible) or --

22 MR. KORNBERG: The sale agreements for both of

23 them have been mortgage loan schedule statement attached to

24 both of them. Both of them identified enough information

25 in the loan that we could clearly -- you might not be able
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1 to -- the MLS, sorry, mortgage loan schedule, gee, blank

2 and said find the property here. Maybe he couldn’t find

3 it, but in terms of referencing the fact that the loan is

4 at issue is very clear (indiscernible) to the same loan.

5 So I -- just because that refers to (indiscernible) respond

6 to that issue.

7 In terms of this one, I think Your Honors have

8 more or less hit the issue on the head. The discrepancy
9 raised in the other one doesn’t appear here. I don’t think

10 there’s any real question that only one endorsement has

11 shown up anywhere on the record and this one is a bare

12 note. Again to enforce it we need to dot all our I’s and

13 cross all our T’s on this one.

14 As to the discovery issue we raised in both of

15 them -- in both of them, as I stated, he had mentioned no

16 documents were produced. Our clients (indiscernible) that

17 they complied with those orders. He may not be, but there

18 is no motion on the record. Otherwise, the (indiscernible)

19 no discovery or motion to compel in the bankruptcy case.

20 He just admits this over and over again that she complied

21 with that.

22 A motion to compel as to Bank of America, N.A.,

23 which he asserts applies to some of these loans was filed

24 on the bankruptcy docket. This was after this appeal was I

25 think (indiscernible). So regardless, it was well after
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1 summary judgment (indiscernible).

2 So there is no real outstanding discovery issue.

3 He did not attach declaration to his opposition in what

4 discovery was necessary to comply with the rules. And

5 frankly, discovery wouldn’t have helped anyway.

6 JUDGE DUNN: Just to close that off, how long has

7 this adversary proceeding been entered?

8 MR. KORNBERG: Sorry, say that again.
9 JUDGE DUNN: How long has this proceeding been

10 pending.

11 MR. KORNBERG: The adversary?

12 JUDGE DUNN: Yeah.

13 MR. KORNBERG: I think it’s a 2013 case.

14 JUDGE DUNN: Yeah.

15 MR. KORNBERG: So no motion to -- I mean, it was

16 open for quite a while to enforce. I mean, through all the

17 phases there was plenty of time to seek discovery and never

18 saw (indiscernible).

19 One other thing I want to raise, Your Honor.

20 It’s a little off point so it’s going back to the last one,

21 so I’ll just say this. I looked through the record again.

22 I think that the non-conforming -- and I may be wrong about

23 this -- the non-conforming endorsements were not introduced

24 by us. They were introduced by --

25 JUDGE DUNN: They’re on the docket.
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1 MR. KORNBERG: I understand that. I understand

2 that. The statement said we (indiscernible).

3 JUDGE KURTZ: Oh, “we” being your firm.

4 MR. KORNBERG: Yes. And I don’t believe we

5 did --

6 JUDGE KURTZ: No. If that’s -- if we --

7 indicating -- but the concern is that there’s a proof of

8 claim filed with one allonge if that’s what it is and
9 there’s an affidavit filed by -- I think -- is it your

10 firm? No, by --

11 MR. KORNBERG: Yeah.

12 JUDGE KURTZ: It’s attached to the affidavit

13 filed by -- suit declaration filed by the litigation

14 analyst?

15 MR. KORNBERG: I believe the --

16 THE COURT: In support of the motion for summary

17 judgment.

18 MR. KORNBERG: The -- I think that the proof of

19 claim and the summary judgment one, which I just looked

20 at -- maybe I need to go look at again -- are the same.

21 The non-conforming ones were entered in their declaration,

22 the documents and sources that were introduced by their

23 expert.

24 JUDGE KURTZ: We’ll check that out.

25 MR. KORNBERG: Maybe -- I apologize. I just
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1 looked at that very hurriedly, so I didn’t get a whole lot

2 that we introduced our own issue of fact. Maybe we did. I

3 just -- in my very brief review is that was not something I

4 believe was the case. I was sort of familiar with this.

5 JUDGE DUNN: My memory is they introduced it --

6 that they introduced it, that arguably they all presented

7 declaration of material facts.

8 MR. KORNBERG: I understand that. I’m just
9 simply stating that that is -- if I’m right here, then

10 there was no statements that (indiscernible) not

11 communicated that. I just wanted to clarify, but --

12 JUDGE KURTZ: And somebody in the state court

13 will fix it before we do the final --

14 MR. KORNBERG: Yeah, I -- that may be accurate.

15 JUDGE KURTZ: My own discovery was one was

16 offered in connection with the motion for summary judgment.

17 One was attached to the proof of claim.

18 MR. KORNBERG: I’m sure we’ll be -- I’ve no

19 worries about that we’ll (indiscernible).

20 I have no further statements on this case

21 (indiscernible).

22 JUDGE DUNN: Thank you, Mr. Kornberg.

23 MR. KORNBERG: That’s appropriately phrased.

24 MR. ESBIN: Thank you, Your Honor. I do want to

25 point out something that there is in the appellate record
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1 at docket numbers 110 to 113, the note dated May 19, 2005.

2 The lender is Countrywide Home Loans. It contains a

3 purported endorsement blank. It does not contain a

4 prepayment. And attached as -- for the record -- a

5 separate record, page 116 to 123, is the note that was

6 provided to Ms. Baroni under FDCPA, a RESPA qualified

7 different class. And that does not contain an endorsement,

8 but does have a prepayment addendum. And so again we have
9 a conflict in the record about the issue that raises -- we

10 raised in summary judgment and we brought back to this

11 court an appellate argument.

12 One other issue that is important is this issue

13 of the holder (indiscernible), the holder in due course.

14 The holder (indiscernible) --

15 JUDGE DUNN: You insist on trying to move away

16 from it, but one of the definitions of holder under the

17 subject provision of the UCC --

18 JUDGE TAYLOR: (Indiscernible) --

19 JUDGE DUNN: Right, but --

20 MR. ESBIN: I believe it’s a whole new -- if I

21 may, a holder in due course requires --

22 JUDGE DUNN: No, we’re not talking about holder

23 in due course.

24 JUDGE TAYLOR: (Indiscernible) --

25 MR. ESBIN: Correct.
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1 JUDGE TAYLOR: Holder in due course.

2 MR. ESBIN: Correct.

3 JUDGE TAYLOR: And that requires, as you say,

4 consideration --

5 MR. ESBIN: Yes.

6 JUDGE TAYLOR: -- (indiscernible) for value.

7 That’s what a whole --

8 MR. ESBIN: Yes.
9 JUDGE TAYLOR: -- (indiscernible). You can also

10 be a holder not in due course in terms of this

11 (indiscernible) and that is but still a holder, a

12 capitalized holder.

13 MR. ESBIN: Right.

14 JUDGE TAYLOR: But if -- it was right so that

15 (indiscernible) and that’s what I think we’re talking about

16 here is a holder under the definition of essentially just

17 1201 --

18 JUDGE DUNN: 1201(b)(2)(A), a holder includes a

19 “person in possession of (indiscernible) rulings holding

20 that this (indiscernible) was in error.”

21 JUDGE TAYLOR: And (indiscernible) says what

22 holder is and they are person entitled in due course and

23 then additionally (indiscernible) --

24 MR. ESBIN: Right.

25 JUDGE TAYLOR: -- is a holding in due course,
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1 which has to provide certain protections for that holding.

2 So a mere holder in a payment certainly --

3 MR. ESBIN: And --

4 JUDGE TAYLOR: -- (indiscernible), because they

5 haven’t proved (indiscernible). That’s how I understand

6 it.

7 MR. ESBIN: And if the Bar asserts that -- says

8 the evidence that they’re not -- they’re going in due
9 course the burden shifts to the other party to prove that

10 they are holder in course. And that’s --

11 JUDGE TAYLOR: But they don’t argue they’re a

12 holder in course. They don’t --

13 JUDGE KURTZ: They’re not a holder in due course.

14 They’re a representative agency that services the note and

15 they’re just simply saying that a note is endorsed in blank

16 and can service this note.

17 MR. ESBIN: And that then leads to the next issue

18 of have they proven that they have the rights to collect

19 and enforce the note. That’s what we’ve been saying all

20 along. And who is it that my client is -- actually owes

21 the money to. That is an evidentiary issue that we

22 believe --

23 JUDGE KURTZ: Can you say we have to prove

24 that -- have to prove that they’re the holder of the note

25 and entitled to receive payment? I guess that’s our
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1 fundamental disagreement. Your client’s client on business

2 (indiscernible) --

3 MR. ESBIN: I’m sorry, Your Honor?

4 JUDGE KURTZ: It will take counsel’s client out

5 of business if you do that.

6 MR. ESBIN: Maybe he should be.

7 If Your Honors have no further questions, I’ll

8 rest.
9 JUDGE DUNN: Thank you very much.

10 MR. ESBIN: Thank you very much, Your Honors.

11 JUDGE DUNN: As you can tell on these two appeals

12 we are engaged and we do think they’re materially

13 different. But our -- you’ll see the dispositions in due

14 course and we’ll see where it goes from there. Fortunately

15 it won’t come back to us.

16 MR. ESBIN: Thank you very much, Your Honor.

17 JUDGE DUNN: You’re welcome. All right. Those

18 appeals will stand submitted. We’ll call the next case.

19 * * * * * * *

20 I certify that the foregoing is a correct

21 transcript from the electronic sound recording of the

22 proceedings in the above-entitled matter.

23

24 _____________________________ Date: 4/29/2017

25 RUTH ANN HAGER, C.E.T.**D-641