ZULUETA Initial Brief

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PRELIMINARY STATEMENT
In its recent November Oversight Report dated November 16, 2010, the Congressional Oversight Panel specifically addressed the issues concerning the consequence of the irregularities in the mortgage foreclosure process. In it, the
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report states, Clear and uncontested property rights are the foundation of the housing market. If these rights fall into question, that foundation could collapse. Borrowers may be unable to determine whether they are sending their monthly payments to the right people. Judges may block any effort to foreclose, even in
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cases where borrowers have failed to make regular payments. Multiple banks may attempt to foreclose upon the same property. Further, it states, We, the Congressional Oversight Panel emphasize that in no circumstances should lenders or servicers foreclose on any homeowner except in full compliance with the law. In light of the Congressional Oversight Panels findings of irregularities in the mortgage foreclosure process and in view of the recent and prevalent controversies that pertain to the accurateness and truthfulness of the documents provided by lenders and servicers alleging ownership of homeowners
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Promissory Notes, it behooves the Court to require closer scrutiny of mortgage documentation and not simply accept the word of the big banks and their
In Re: Felipe D. Zulueta Jr, Opening Brief of Appellant
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servicers that whatever documents they produce need not be examined as required by law. In the context of Bankruptcy law, Debtors must have a fair opportunity to contest standing and to challenge whatever facts Claimants may put forward in seeking to establish their claim and have the forum to do so, as provided in
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Section 502 of the Bankruptcy Code. Debtor-Appellant sought this forum via an evidentiary hearing held on November 3, 2010. With the expectation that Debtor would be able to fully examine the evidence that Claimant had to prove its claim, the hearing turned
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out to be short-lived, so short that it lasted for 8 minutes, without the Debtor being able to authenticate any of the documents that Claimant was supposed to have brought to the evidentiary hearing. If Claimant is truly the real party in interest and can sufficiently produce all the legal, original and proper documents to establish its Claim as well as produce a qualified witness to substantiate its evidence, then the Bankruptcy Court should have had no trouble in ascertaining these facts. Instead, the Bankruptcy Court erred in disallowing the issue of standing to be heard during the evidentiary hearing, as the transcript of the proceedings will bear.
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Further, no discussion of accounting was undertaken during the evidentiary hearing that would have determined the allowable amount of the claim on Debtors estate by Claimant. This appeal is therefore brought before the BAP, in order that the Panel may provide judicial oversight into the matters that arose in this instant case.
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BASIS OF APPELLATE JURISDICTION Debtor-Appellant, Felipe Zulueta Jr, is appealing the November 22, 2010 final Order issued by the Honorable Edward D. Jellen, overruling Debtors
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Objection to Claim, Claim #1. This Honorable Bankruptcy Appellate Panel (BAP) has jurisdiction of this appeal pursuant to 28 USC 158 (b) (1) which provides that The judicial council of a circuit shall establish a bankruptcy appellate panel service composed of bankruptcy judges of the districts in the circuit who are appointed by the judicial council in accordance with paragraph (3), to hear and determine, with the consent of all the parties, appeals under subsection (a). Subsection (a) reads, The district courts of the United States shall have jurisdiction to hear appeals (1) from final judgments, orders, and decrees;
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STATEMENT OF ISSUES PRESENTED
1. Did the Bankruptcy Court err in overruling Debtors Objection to Claim # 1 by terminating the evidentiary hearing after 8 minutes of its start without allowing Debtor a full and complete opportunity to contest Claimants Standing to bring a claim? 2. Did the Bankruptcy Court err in not allowing Debtor the opportunity to contest the amount of debt listed in Claimants proof of claim and to determine enforceability of the claim as to the Claimant, given that the debt is listed as contingent, unliquidated and disputed?
STANDARD OF APPELLATE REVIEW Appellate courts generally apply de novo review to conclusions of law. A bankruptcy courts determination that a party has standing is a legal conclusion subject to de novo review. Pershing Park Villas
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Homeowners Assoc. v Unified Pac. Ins. Co., 219 F.3d 895, 900 (9th Cir, 2000). De novo review requires that the BAP consider a matter anew, as if no decisions had been previously rendered. United States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988).
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STATEMENT OF THE CASE
FACTUAL BACKGROUND Debtor filed an Objection to Claim, Claim # 1, on May 5, 2010
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(Designation of Record, Item # 7). The basis for the Claim stated that, Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Loan Trust 2006-AR14, Mortgage Pass-Through Certificates, Series 2006AR14, under the Pooling and Servicing Agreement dated October 1, 2006 (the
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Claimant) is not the real party in interest. In addition to Debtors stated basis for the Objection, Debtor disputed the amounts listed in Claim # 1, including the non application of Debtors mortgage payments and sought an accounting for all expenses listed by Claimant in their Proof of Claim contained in Debtors Response to Claimants Response to Debtors Objection to Claim (Designation of Record, Item # 14, page __) The Court conducted an evidentiary hearing on the matter on November 3, 2010 (Designation of Record, Item # 15 & Item # 16). No witnesses were provided by the Claimant.
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The transcript of the evidentiary hearing shows that the hearing lasted for a total of 8 minutes (Designation of Record, Item # 21).
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During the Hearing, the Bankruptcy Court overruled Debtors Objection to Claim. The Court signed the Order Overruling the Objection on November 22, 2010 which was then entered into the docket on November 23, 2010, (Designation of Record, Item # 26). On November 8, 2010, the Court held a second Confirmation Hearing
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(Designation of Record, Item # 22) at which time the Court dismissed the instant case on the basis of the Debtors current Chapter 13 Plan being unfeasible. On November 17, 2010, Debtor (prematurely) filed a Notice of Appeal with the Court, appealing the Order Overruling the Objection to Claim entered
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on November 23, 2010 (Designation of Record, Item # 24). This Notice of Appeal was subsequently amended on December 7, 2010.
LEGAL ARGUMENT POINT I
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THE BANKRUPTCY COURT ERRED AS A MATTER OF LAW AND FACT IN NOT ALLOWING DEBTOR TO FULLY EXAMINE AND CONTEST THE EVIDENCE THAT CLAIMANT HAS STANDING TO BRING A CLAIM A. FAILURE TO ESTABLISH STANDING The issue of standing involves both constitutional limitations on federal court jurisdiction and prudential limitations on its exercise. Warth v Seldin,
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422 U.S. 490, 498 (1975). Constitutional standing concerns whether the plaintiffs personal stake in the lawsuit is sufficient to have a case or controversy to which the federal judicial power may extend under the Constitutions Article III. Id, at 498-99; Pershing Park Villas, 219, F.3d at 899. Additionally, the prudential doctrine of standing has come to encompass
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several judicially self-imposed limits on the exercise of federal jurisdiction. Pershing Park Villas, 219 F.3d at 899. Such limits are the prohibition on thirdparty standing and the requirement that suits be maintained by the real party in interest. Gilmartin v. City of Tucson, 2006 WL 5917165, at *4 (D. Ariz. 2006).
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Thus, prudential standing requires the plaintiff to assert its own claims rather than the claims of another. The requirements of Fed. R. Civ. P. 17, made applicable by Rule 9014, generally falls within the prudential standing doctrine. In re Wilhelm, 407 B.R. at 398. The party seeking to file a claim in any Federal Court bears the burden of demonstrating standing and must plead its components with specificity. Coyne v American Tobacco Company, 183 F.3d 488, 494 (6th Cir. 1999). One West Bank (OWB) as servicer of, Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Loan Trust 2006-AR14,
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Mortgage Pass-Through Certificates, Series 2006-AR14 under the Pooling and Servicing Agreement dated October 1, 2006 (Deutsche), states in its
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Evidentiary Hearing Brief (Designation of Record, Item # 19) that OWB has standing because it has actual physical possession of the original Promissory Note. OWB further states that as the Promissory Note is endorsed in blank, negotiation of the Note is satisfied through mere possession. Cal Comm. Code 3205 (b).
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In the exhibits provided by OWB, the only evidence provided by OWB of its purported possession of the note is a photocopy of the note with a blank endorsement through the use of an allonge. Federal Rules of Evidence provide that to prove the content of a writing,
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the original is required. Fed. R. Evid. 1002. Duplicates are permitted unless (1) a genuine question is raised as to the authenticity of the original or (2) in the circumstances it would be unfair to admit the duplicate in lieu of the original. Fed. R. Evid. 1003. Debtor-Appellant has amply raised the issue that Claimant needs to produce the original Promissory Note as contained in Debtors Response to One West Banks Response to Debtors Objection to Claim (Designation of Record, Item # 14, page __ of the Appendix) and that such original Promissory Note be authenticated.
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As the evidentiary hearing was abruptly terminated by the Bankruptcy Court within 8 minutes of its start, Debtor-Appellant was not able to physically
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see and verify that OWB had the original Promissory Note at the hearing nor was the original Promissory Note presented to the Court for verification, as the transcript will bear. As such, the Bankruptcy Court could not have established the issue of standing by virtue of examining mere photocopy images of OWBs documents.
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B. One West Bank Has Not Demonstrated That It Is A Holder Of The Note
1. If OWB is the holder of the Note, OWB would be a party injured by

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the Debtor's failure to pay it, thereby satisfying the constitutional standing requirement. OWB would also be the real party in interest under Fed. R. Civ. P. 17 because under the California UCC, the holder of a note has the right to enforce it. California Uniform Commercial Code 3205 (b) states, If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a "blank indorsement." When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.
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OWB has failed to demonstrate that it is the holder of the Note because, while it claims to have possession of the Note, it failed to demonstrate that the
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Note is properly payable to OWB. In re Weisband, 427 B.R. 13 (Bankr. D. Ariz, 2010). 2. Further, based on the photocopies provided by OWB of the Promissory Note, it appears that the blank endorsement signed by a certain of Bruce Steiz of IndyMac Bank, FSB was in the form of an allonge.
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In an established case law rendered by the California Court of Appeals that specifically addresses the use of allonges, the Court states clearly and in no uncertain terms that the majority view is that the law merchant permits the use of an allonge only when there is no longer room on the negotiable instrument
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itself to write an indorsement. Pribus v Bush, 118 Cal. App. 3d 1003. The Court further states, We believe that inherent in the rationale underlying the majority rule is the concern for preventing fraud. An allonge, even though so firmly affixed as to become a part of the instrument, may be detached more easily than an indorsement on the instrument itself. Additionally, a persons signature, innocently made upon an innocuous piece of paper, could be fraudulently attached to a negotiable instrument as a purported indorsement. The majority rule, while not eliminating these methods of fraud, certainly reduces the opportunities for their use.
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The purported assignment by allonge of Debtors promissory note by IndyMac Bank, FSB to the current bearer was ineffective as an indorsement,
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since there was sufficient space on the note itself for the indorsement . There having been no indorsement of the note, OWB, even if it could produce the original Promissory Note is not a holder in due course and cannot enforce the note. OWB cannot overcome the problems with the allonge by its physical
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possession of the Note because while the Note was endorsed in blank, the indorsement was not on the Note itself as required under California law. As a result, because OWB failed to meet its burden of demonstrating that the Endorsement was proper, it has failed to demonstrate that it is the holder of the
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Note. C. ONE WEST BANK HAS PRODUCED CONFLICTING DOCUMENTS AS TO WHO IS THE PROPER CLAIMANT AND REAL PARTY IN INTEREST
The Proof of Claim, Claim # 1, shows the Claimant as Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Loan Trust 2006-AR14, Mortgage Pass-Through Certificates, Series 2006-AR14
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under the Pooling and Servicing Agreement dated October 1, 2006 (Deutsche). One West Bank (OWB) fails to show anything on the record that it is authorized to act in behalf of Deutsche, as Claimant. Instead it asserts that it is
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in possession of Debtors Promissory Note, while completely failing to provide any explanation as to how it came to possess Debtors Promissory Note in the absence of a clear chain of title of the Note. OWB offers the Pooling and Servicing Agreement (PSA), (Designation of Record, Item # 45, under Exhibit E) to establish its authority as servicer of
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Debtors Promissory Note. Upon close examination of the PSA, there is no direct evidence that Debtors Mortgage Loan was even deposited into the Deutsche Trust. The page entitled Schedule I, Mortgage Loan Schedule is empty (Designation of
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Record, Item # 19, page ___ ) and does not list any mortgage loan as entered into the Trust. The PSA is simply a complex explanation of the intentions of the parties to the Agreement, but it does not clearly establish that the Debtors Promissory Note was included in the transaction. Secondly, the Assignment of Deed of Trust by MERS directly to Deutsche, does not provide OWB or Deutsche with standing as it directly contradicts the prescription of the PSA. The PSA has very strict and narrow guidelines to require all Mortgage Loans to be sold under true sale accounting rules in order for the eventual Trust to avail of specific tax benefits accorded
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through the securitization process (Designation of Record, Item #19, page ___ ).
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The PSA specifies that the Mortgage Loans be first sold by IndyMac Bank, FSB to a IndyMac MBS, Inc, who will then form the Deutsche Trust where the Mortgage Loans were to be deposited (Designation of Record, Item # 19, page _____ ). Mortgage Electronic Registration Systems (MERS) in the Assignment
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of Deed of Trust (DOT), violated these provisions by the PSA, in that it assigned the DOT directly to Deutsche instead of following the chain of title prescribed in the PSA. It is for this reason that the MERS Assignment is defective at best and fraudulent at worst, since its action put the significant tax
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benefits of the Trust at risk. OWB states that it and/or Deutsche has standing to bring the Claim as the assignee of MERS. In this case, MERS is named in the Deed of Trust (DOT) as a beneficiary, solely as the "nominee" of IndyMac Bank, FSB, holding only "legal title" to the interests granted to IndyMac Bank, FSB under the DOT. A number of cases have held that such language confers no economic benefit on MERS. See, e.g., In re Sheridan, 2009 Bankr. LEXIS 552, 2009 WL 631355, *4 (Bankr. D. Idaho 2009); In re Mitchell, 2009 Bankr. LEXIS 876, 2009 WL 1044368, *3-4 (Bankr. D. Nev. 2009); In re Jacobson, 402 B.R. 359, 367
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(Bankr. W.D. Wash. 2009). As noted by the Sheridan court, MERS "collect[s] no money from [d]ebtors under the [n]ote, nor will it realize the value of the
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[p]roperty through foreclosure of the [d]eed of [t]rust in the event the [n]ote is not paid." 2009 Bankr. LEXIS 552, 2009 WL 631355 at *4. Because MERS has no financial interest in the Note, it will suffer no injury if the Note is not paid and will realize no benefit if the DOT is foreclosed. Accordingly, MERS cannot satisfy the requirements of
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constitutional standing. Deutsche, as MERS' assignee of the DOT, "stands in the shoes" of the assignor, taking only those rights and remedies the assignor would have had. Hunnicutt Constr., Inc. v. Stewart Title & Trust of Tucson, Trust No. 3496, 187 Ariz. 301, 304, 928 P.2d 725 (Ct. App. 1996) citing Van
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Waters & Rogers v. Interchange Res., Inc., 14 Ariz. App. 414, 417, 484 P.2d 26 (1971); In re Boyajian, 367 B.R. 138, 145 (9th Cir. BAP 2007). Because Deutsche is MERS' assignee, it cannot satisfy the requirements of constitutional standing either nor can OWB. POINT II
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THE BANKRUPTCY COURT ERRED IN NOT ALLOWING DEBTOR TO EXAMINE AND CONTEST THE ACCOUNTING OF AMOUNTS CONTAINED IN THE PROOF OF CLAIM A. THERE WAS NO WITNESS TESTIMONY AND NO DOCUMENTARY EVIDENCE PRESENTED AT THE EVIDENTIARY HEARING SHOWING DEBTORS MORTGAGE PAYMENTS WERE PROPERLY CREDITED TO HIS LOAN ACCOUNT
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One West Bank did not produce any documentary evidence nor qualified witness to establish that Debtors mortgage payments from October 2008 to March 2009 were properly credited to Debtors loan account. A proof of claim executed and filed in accordance with 501 of the Bankruptcy Code and applicable Bankruptcy Rules constitutes prima facie
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evidence of the amount and validity of the claim. Upon objection to the claim and admission of probative evidence sufficient to rebut the prima facie validity of the claim, the burden shifts to the claimant who bears the ultimate burden of persuasion with respect to the amount and validity of its claim.
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In the instant case, Debtor has filed a timely objection to claim and submitted probative evidence through its Objection to One West Banks Response to Debtors Objection to Claim (Designation of Record, Item # 14). In said Objection, Debtor incorporated an exhibit E, showing unapplied mortgage payments to the claim. In doing so, the burden has therefore shifted to Claimant to prove the validity of its claim. Without the testimony of a witness and the opportunity to examine the Claimants accounting for excessive fees and unapplied mortgage payments, the abrupt and shortened evidentiary hearing did not afford Debtor the ability to contest and confront the submissions of OWB.
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While OWBs Counsel tries to paint a picture of presumptive acceptance by Debtor of his oral explanation of how Debtors payments have been credited
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to Debtors loan account in his Declaration in Support of Evidentiary Hearing (Designation of Record, Item # 19), OWB Counsel should not mistake Debtors courtesy of thanking him for the explanation as acceptance of said explanation. The controlling issue is whether OWB has any documentary evidence to support their assertions that Debtors mortgage payments have been properly applied.
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CONCLUSION
For the foregoing reasons, Debtor respectfully requests the Bankruptcy Appellate Panel to reverse the Order of the Bankruptcy Court, overruling the Debtors Objection to Claim, Claim # 1 and disallow the Claim in its entirety.
Signed by: __________________________________ Felipe D. Zulueta Jr, Debtor & Appellant Date: January 17, 2011
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CERTIFICATE OF SERVICE
On January 19, 2011, I served the foregoing OPENING BRIEF OF APPELLANT on the following entity/individual by depositing true copies thereof in the United States mail in Oakland, California, enclosed in a sealed envelope, with postage paid, Certified Mail with Return Receipt, address as follows: Joseph Chun, Esq. McCarthy & Holthus, LLP 1770 Fourth Avenue San Diego, CA 92101
I declare under penalty of perjury under the laws of the United Stated of America that the foregoing is true and correct. /S/ _________________________________ Felipe D. Zulueta Jr, Debtor & Appellant
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ZULUETA Initial Brief

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ZULUETA Initial Brief

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STATEMENT OF ISSUES PRESENTED

STATEMENT OF THE CASE

FACTUAL BACKGROUND Debtor filed an Objection to Claim, Claim # 1, on May 5, 2010

LEGAL ARGUMENT POINT I

1. If OWB is the holder of the Note, OWB would be a party injured by

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