In re: Toni Marie Griffin
The Ninth Circuit Bankruptcy Appellate Panel recently affirmed a case where a creditor submitted a copy of a copy of a note to establish standing for relief from the automatic bankruptcy stay.
The trial court granted the U.S. Bank N.A.’s motion to lift stay and the trustee appealed, arguing that the copy of a copy of a promissory note was insufficient to support the lift stay motion. The copy was deemed to be a second-generation copy, because it included a certification affixed to the first-generation copy which stated:
We hereby certify that this is a true & correct copy of the original. CTX Mortgage Company, LLC.
With the copied note, U.S. Bank N.A. submitted a declaration certifying that the original note was in the bank’s files. The trustee argued that a duplicate of a duplicate of the original note did not establish prudential standing.
The bankruptcy court rejected the trustee’s argument and granted the bank’s motion. The Bankruptcy Appellate Panel affirmed the decision, citing United States v. Carroll, 860 F.2d 500, 507 (1st Cir. 1988), which holds that a duplicate of a duplicate is a “duplicate” for purposes of Federal Rule of Evidence 1003.
The court further reasoned that since a proceeding to determine eligibility for relief from a stay only determines whether a creditor should be released from the stay in order to argue the merits in a separate proceeding, the copy of a copy was sufficient, citing Johnson v. Righetti, 756 F.2d 738, 740–41 (9th Cir. 1985).
Because proceedings on a motion to lift stay do not determine the final adjudication of the parties’ rights and liabilities, a party seeking stay relief only needs to establish a colorable claim to the property at issue. (See In re Veal, 450 B.R. 897, 914–15 (B.A.P. 9th Cir. 2011)). For these reasons, a copy of a copy of a promissory note was enough to establish U.S. Bank N.A.’s colorable claim to the debtor’s property.
Creditors who need assistance pursuing property held as collateral when a debtor is in bankruptcy should contact the experienced creditors’ attorneys at Glass & Goldberg. Glass & Goldberg provides high quality and cost-effective legal services and advice for clients in all aspects of business litigation and transactional law. Call us at (818) 888-2220, email us at firstname.lastname@example.org or visit us at www.glassgoldberg.com to learn more about our firm and sign up for future newsletters.