Judge Karlin

BAP WO-13-029 In Re Thomas

BAP WO-13-029 In Re Thomas, Nov. 13, 2013

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U.S. Bankruptcy Appellate Panel
of the Tenth Circuit
November 13, 2013
Blaine F. Bates







BAP No. WO-13-029

Bankr. No. 10-17039
Chapter 13


Appeal from the United States Bankruptcy Courtfor the Western District of Oklahoma

Before KARLIN, ROMERO, and JACOBVITZ, Bankruptcy Judges.

KARLIN, Bankruptcy Judge.

The sole issue on appeal is whether the bankruptcy court’s finding that the
creditor presented sufficient evidence to establish it had a colorable claim to
enforce a promissory note was clearly erroneous. Because the finding is fully
supported by the evidence, we AFFIRM.1

* This unpublished opinion may be cited for its persuasive value, but is notprecedential, except under the doctrines of law of the case, claim preclusion, andissue preclusion. 10th Cir. BAP L.R. 8018-6.
The parties did not request oral argument, and after examining the briefsand appellate record, the Court has determined unanimously that oral argumentwould not materially assist in the determination of this appeal. See Fed. R.


I. Background
The Appellant, Clarence Thomas (“Debtor”), appeals the bankruptcy

court’s order finding that Appellee, Federal National Mortgage Association

(“FNMA”) had standing, as “a party in interest,” to obtain an order under 11

U.S.C. § 362(j).2 This Court has jurisdiction to hear timely-filed appeals from
“final judgments, orders, and decrees” of bankruptcy courts within the Tenth

Circuit, unless one of the parties elects to have the district court hear the appeal.3

Neither party elected to have this appeal heard by the district court, thus

consenting to review by this Court.4

Debtor’s current appeal follows lengthy litigation in both Oklahoma state

court and the bankruptcy court, and it is Debtor’s second appeal in this case. Our

first order5 supplies much of the necessary background. It essentially recites that

in September 2007, Debtor executed a note and mortgage on a home. The lender

and note payee was Freedom Mortgage Corp. (“Freedom”) and the mortgagee was

1 (...continued)
Bankr. P. 8012. The case is therefore ordered submitted without oral argument.

2 When a debtor files bankruptcy, the automatic stay (11 U.S.C. § 362) stops
most collection actions against the debtor and property of the estate unless and
until a party in interest obtains relief from that stay. When Congress amended the
Bankruptcy Code in 2005, it added a provision (11 U.S.C. § 362(j)) to require
courts to issue comfort orders confirming the automatic stay had either terminated
or never arose in certain instances when successive cases were commenced by
repeat filers. “The orders are entered primarily for a third party’s benefit, often
to help a sister state court attempting to determine whether it can proceed with a
pending action, such as a foreclosure.” In re Hill, 364 B.R. 826, 828 (Bankr.

M.D. Fla. 2007).
3 28 U.S.C. § 158(a)(1), (b)(1), and (c)(1); Fed R. Bankr. P. 8002.

4 Debtor filed a motion for leave to appeal the March 28, 2013 order on April11, 2013, 14 days after its entry, then filed an untimely notice of appeal on April12, 2013, 15 days after the entry. This Court issued an order to show cause for
timeliness, which was resolved by an order on May 29, 2013, construing themotion for leave as a timely notice of appeal, and denying the motion for leave as

5 In re Thomas, 469 B.R. 915, 917-18 (10th Cir. BAP 2012).


MERS, acting as Freedom’s nominee. Debtor defaulted on the loan after making
only 11 payments on the note. Soon thereafter, Freedom endorsed the note in
blank, making it a bearer instrument under Oklahoma law, and transferred
possession to Chase Home Finance, LLC (“Chase”). In February 2009, Chase
filed a state court foreclosure action against Debtor, resulting in a foreclosure
judgment in June 2009. Debtor did not appeal that order. Before the sheriff’s
sale could be completed, however, Debtor filed a previous Chapter 13 petition in
August 2009, but it was dismissed in August 2010.

Shortly after Debtor’s first bankruptcy case was dismissed, Chase
apparently transferred the original note and mortgage to FNMA. The assignment
of the note and mortgage to FNMA, which indicates an effective date of August
21, 2010, was recorded on September 13, 2010 (but stated the assignment was
from MERS to FNMA rather than from Chase to FNMA).

Debtor then filed the current Chapter 13 bankruptcy in November, 2010.
FNMA filed a proof of claim in the second bankruptcy and attached to its claim
copies of the note (without the endorsement by Freedom) and the recorded
assignment of mortgage from MERS to FNMA. Debtor objected to the claim and
also filed an adversary proceeding against Freedom, Chase, MERS, and FNMA,
seeking a declaration that none of the defendants had any enforceable secured
interest in the property.

Immediately after Debtor filed the adversary proceeding, FNMA sought a
comfort order verifying that the automatic stay had expired. On the same day, the
bankruptcy court entered the comfort order, “finding that [t]he stay imposed
against [FNMA] with regard to its lien on the Property terminated by operation of
law on December 22, 2010,” as Debtor had filed no motion to extend the stay.6

Debtor appealed the comfort order, arguing that the bankruptcy court

Id. at 918 (internal quotation marks omitted).

erroneously granted relief to FNMA without first establishing FNMA had
standing, and that FNMA, in fact, lacked standing to seek the comfort order.
Another panel of this Court agreed that the bankruptcy court had failed to
determine whether FNMA had standing before it issued the comfort order and
remanded the matter to the bankruptcy court to determine FNMA’s standing. In
so doing, we held that a party must be “a party in interest” under § 362(j) in order
to seek a comfort order.

Following remand, the bankruptcy court conducted an evidentiary hearing
concerning FNMA’s standing, both for the purposes of § 362(j) and with respect
to a number of other pending matters between the parties. At the hearing, FNMA
introduced into evidence the mortgage and the original note, blue ink signatures
affixed, along with testimony regarding the note’s admittedly convoluted chain of
title. Debtor argued the note might not be authentic, suggesting color copy
machines could churn out copies and maybe this was one of those. He refused to
verify that the signature on the note admitted into evidence was his signature. By
contrast, his wife testified the signatures on both the note and mortgage appeared
to be hers and her husband’s. In addition, the bankruptcy court required both
Debtor and his wife to produce their driver’s licenses for examination and, after
comparing the signatures on the licenses with the signatures on the note and
mortgage, concluded the signatures were “essentially identical.”7 The court also
compared the Debtor’s signature on pleadings he had filed in his bankruptcy case,
confirming the signatures were the same.8 Debtor produced no evidence to
suggest anyone else had the “real” original. The bankruptcy court ultimately
determined FNMA had physical possession of the original note, endorsed in
blank, and had standing to seek the comfort order. It is that determination Debtor

7 Aplt. App. at 102.
8 Id. at 103-04.


now appeals.

II. Issue and Standard of Review
In addressing Debtor’s last appeal, we held FNMA “must prove that it has a
colorable claim . . . in order to establish its standing to seek a § 362(j) comfort
order. Proof of the existence of a colorable claim in this case necessarily requires
[FNMA] to prove that it has a facially valid security interest under Oklahoma
law.”9 Our prior opinion also makes clear FNMA would be required to show it
had standing as of May 18, 2011, when it sought the comfort order.10

As the parties agree,11 under Oklahoma’s version of the Uniform
Commercial Code a note endorsed in blank is a bearer instrument that may be
enforced by its holder.12 The parties also agree the note submitted into evidence
at the evidentiary hearing was endorsed in blank and was held by FNMA. This
appeal, then, turns on two factual questions: 1) was the note submitted by
FNMA, which it claimed to be the original, authentic; and 2) did FNMA have
possession of the original note when it filed its pleadings on May 18, 2011.

The bankruptcy court’s factual findings underpinning a standing
determination are reviewed for clear error.13 Under the clearly erroneous
standard, we “will reverse the district court’s finding only if it is without factual

In re Thomas, 469 B.R. at 923 (internal quotation marks and footnote

10 Id. at 920.
11 Aplee. Br. at 9, Aplt. Reply Br. at 5.
12 In Oklahoma, one who is in possession of a note endorsed in blank is a

holder. Deutsche Bank Nat’l Trust Co. v. Richardson, 273 P.3d 50, 53 (Okla.

2012). See also Okla. Stat. tit. 12A, § 1-201(b)(21) (2006). The holder of a note
or a non-holder in possession of the note is entitled to enforce a note. MidFirst
Bank v. Wilson, 295 P.3d 1142, 1144 (Okla. Civ. App. 2012) (citing Okla. Stat.
tit. 12A, § 3-301 (1992)).

Merrill Lynch Bus. Fin. Servs., Inc. v. Nudell, 363 F.3d 1072, 1074 (10thCir. 2004) (holding jurisdictional findings of fact are reviewed for clear error).


support in the record or if, after reviewing all the evidence, we are left with a
definite and firm conviction that a mistake has been made.”14

III. Legal Analysis
Debtor’s arguments essentially boil down to two. First, he argues the
bankruptcy court erred when it determined the note was authentic because he
claims FNMA did not adequately explain how it came to be in possession of the
note, and because the note should not have been admitted into evidence as self-
authenticating under Rule 902(9) of the Federal Rules of Evidence. He next
argues that, absent any additional documentation from FNMA supporting its claim
that the note presented to the Court was, in fact, the original, it might not be the
one he actually signed, so FNMA should not be allowed to enforce it. Neither of
his arguments have merit.15

Both of Debtor’s arguments essentially address the sufficiency of the
evidence received by the bankruptcy court. Although Debtor correctly notes
FNMA did not offer additional documentary evidence beyond the note itself, the
bankruptcy court’s determinations that the note FNMA submitted was authentic
and that FNMA had timely possession of it, are amply supported by the record.
The record shows FNMA produced an apparently original note with blue ink
signatures by Debtor and his wife. And Debtor never denies he signed a note that

14 United States v. Madrid, 713 F.3d 1251, 1256-57 (10th Cir. 2013).

15 Debtor makes an additional argument that the bankruptcy court erred whenit found appellee had standing even though neither the endorsed note nor the statecourt judgment was attached to the proof of claim. He seems to claim that
because the documents attached to the proof of claim did not show FNMA ownedthe note when it filed the proof of claim, FNMA is thus prevented from laterpursuing a comfort order. But this appeal concerns only whether FNMA hadestablished a colorable claim of standing to enforce the note and mortgage at thetime it sought the comfort order. That is all FNMA was required to prove toobtain its § 362(j) comfort order. Whether Debtor could ultimately prevail on hisobjection to that claim is simply immaterial to this analysis. In addition, thisargument is basically just another version of the argument we have addressed andrejected–that the existence of a convoluted chain of title for this note somehowprevents FNMA from enforcing the bearer paper it clearly now possesses.


looked just like the one admitted into evidence, only that he would never be able
to definitively agree that the exhibit is the one he actually signed because of
“sophisticated” copiers. But the bankruptcy judge reviewed the note offered into
evidence, and then carefully verified the signatures by comparing them with
Debtor’s and his wife’s drivers’ licenses and with other court documents. Based
on his careful review, he determined to his own satisfaction that the note was in
fact the original signed by Debtor.

The bankruptcy court’s decision was buttressed by the testimony from an
attorney (Michael George) who represented FNMA in some of its prior dealings
on this note. He testified he was familiar with this case and he had personally
received the original note from the custodian for Chase on or about July 16, 2010.

This extrinsic evidence, taken as a whole, also supports the bankruptcy court’s
factual determination. Nothing in the record convinces us that any error has been
made, let alone clear error.

Debtor argues the bankruptcy court erred by admitting the note into
evidence as a self-authenticating document under Rule 902(9); this argument fails
for two reasons. First, the note is a self-authenticating document. Under Rule
902(9), commercial paper, signatures on commercial paper, and related
documents are self authenticating to the extent allowed by general commercial
law.16 The relevant portion of the Oklahoma version of the Uniform Commercial
Code provides in pertinent part:

In an action with respect to an instrument, the authenticity of, andauthority to make, each signature on the instrument is admittedunless specifically denied in the pleadings. If the validity of asignature is denied in the pleadings, the burden of establishingvalidity is on the person claiming validity, but the signature ispresumed to be authentic and authorized unless the action is toenforce the liability of the purported signer and the signer is dead orincompetent at the time of trial of the issue of validity of the

Fed. R. Evid. 902(9).


The note is an instrument.18 Here, Debtor cannot point to any denial of the
authenticity of the signatures on the note in his pleadings, and so the authenticity
of the signatures to the note are deemed admitted, rendering the note itself
authentic. And second, even if the note were not self-authenticating, the record
offers ample basis for its admission under Rule 901(a). As discussed above,
FNMA”produce[d] evidence sufficient to support a finding that the item is what
the proponent claims it is.”19 Accordingly, the bankruptcy court did not err in
admitting the note.

Finally, Debtor argues the bankruptcy court’s decision relies on a chain of
title to the note that conflicted with FNMA’s evidence and past filings. In
particular, Debtor focuses on how Chase Bank fits into the evidence, contending
FNMA asserted it took possession of the note in 2007, while a 2009 state court
judgment determined Chase was the owner of the note at that time and an
assignment of the note and mortgage recorded on September 13, 2010, states
(apparently incorrectly)20 that the assignment was from MERS to FNMA.
Without a doubt, this history is convoluted, and, in some aspects, contradictory.
But nothing about the chain of title convinces us the court erred when it
determined the note admitted into evidence was the original and FNMA possessed
the original note when it sought the comfort order. Debtor simply cannot explain
how Chase’s prior involvement detracts from the fact that FNMA now holds the
original note and, as the holder of bearer paper, has the right to enforce the note.

17 Okla. Stat. tit. 12A, § 3-308(a) (1992).
18 Okla. Stat. tit. 12A, § 3-104 (1992).
19 Fed. R. Evid. 901(a).
20 In re Thomas, 469 B.R. at 918 (stating the assignment listed MERS but

should have listed Chase).


Under any of the various histories offered by FNMA, it was in possession
of the original note by, at the latest, July 2010—eleven months before it sought
the comfort order, and Debtor presented no evidence remotely suggesting any
other potential note holders have made any claim to the note or demand upon
him.21 As the Tenth Circuit has recently confirmed, FNMA need only “satisf[y]
the low threshold showing that it possessed a colorable claim of a lien on property
of the estate,”22 and the creditor’s conflicting positions regarding the note’s chain
of title does not diminish the fact that FNMA is in possession of the facially valid
original note.23 Mere physical possession of the authentic note is all that is
required for a colorable claim of standing to enforce the note and mortgage and
all that is required to seek a § 362(j) comfort order. The ambiguities in the note’s
chain of title are simply immaterial in this context.

At their core, Debtor’s arguments all assert that although the note produced
by FNMA looks real and the signature looks like his signature, and he did in fact
execute an identical note and mortgage with the same terms, and no one has
sought to collect the note from him other than FNMA (and before it, Chase), the
current note could be fake, or FNMA may have obtained it in such a way that it
cannot enforce it. But these claims, weak as they are, are more appropriately
raised in state court. As we stated in our prior decision, “stay proceedings only
determine whether the party seeking relief has a colorable claim, which is then

21 Chase, the only party that might be in a position to argue for an interest,
has specifically denied any current interest in the note and mortgage, stating ithad transferred possession of those documents to FNMA between Debtor’s 2009and 2010 bankruptcy filings. Aplt. App at 113.

22 In re Castro, 503 F. App’x 612, 615 (10th Cir. 2012) (internal quotationmarks omitted).

23 Id.


fully adjudicated in the state court.”24 Here, it is clear FNMA has established at
least a colorable claim of standing.

IV. Conclusion
Based on the foregoing analysis, the bankruptcy court did not err in finding
FNMA had standing to seek a comfort order. Accordingly, we AFFIRM.

In re Thomas, 469 B.R. at 922-23 (internal quotation marks omitted).


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