Title: U.S. Bank v. Moore

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

U.S. BANK v. MOORE2012 OK 32Case Number: 109763Decided: 04/10/2012THE SUPREME COURT OF THE STATE OF OKLAHOMA
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN 
THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR 
WITHDRAWAL. 

U.S. BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY 
BUT SOLELY AS TRUSTEE ON BEHALF OF GSAA HOME EQUITY TRUST 2006-6, 
Plaintiff/Appellee,v.DAVID F. MOORE, a/k/a DAVID F. MOORE and 
BARBARA MOORE a/k/a BARBARA K. MOORE, Defendants/Appellants.
ON APPEAL FROM THE DISTRICT COURT OF OKLAHOMA 
COUNTYHONORABLE BRYAN C. DIXONDISTRICT JUDGE
¶0 Appeal of a summary judgment granted on May 13, 2011, in favor of Chase 
Home Finance, LLC, and against David F. and Barbara Moore. In a Journal Entry of 
Judgment, filed on August 26, 2011, the trial court found the Appellant was the 
undisputed owner and holder of the Note and Mortgage. The Moores appealed on 
September 23, 2011, arguing standing, and this Court retained the matter on 
November 18, 2011.
REVERSED AND REMANDED WITH INSTRUCTIONS
Gary L. Blevins, GARY L. BLEVINS & ASSOCIATES, PC, Oklahoma City 
Oklahoma, for Defendants/Appellants.Bryan Miles Harrington and A. Grant 
Schwabe, KIVELL, RAYMENT AND FRANCIS, PC, Tulsa, Oklahoma, for 
Plaintiff/Appellee.
COMBS, J.
FACTUAL AND PROCEDURAL HISTORY
¶1 On October 21, 2005, David F. Moore and Barbara Moore, husband and wife 
(hereinafter "Appellants"), executed a Note and Mortgage in favor of Colonial 
Bank, N.A. (hereinafter "Lender"), for property located in Oklahoma County, 
Oklahoma. Mortgage Electronic Registration Systems, Inc. (hereinafter "MERS"), 
was designated as the nominee for the lender pursuant to subsection (C) of the 
Mortgage.1 Within the Mortgage was a security interest provision 
with the following granting clause:
Borrower understands and agrees that MERS holds only legal title to the 
interests granted by Borrower in this Security Instrument, but, if necessary to 
comply with law or custom, MERS (as nominee for Lender and Lender's successors 
and assigns) has the right: to exercise any or all of those interests, 
including. . .the right to foreclose and sell the Property.
¶2 Also contained in the Mortgage was a provision entitled "Sale of Note; 
Change of Loan Servicer." Per the terms of this provision:
The Note or a partial interest in the Note (together with this Security 
Instrument) can be sold one or more times without prior notice to Borrower. 

Thus, the borrower may have difficulty in determining who holds the note and 
mortgage, and to whom the payment is due.
¶3 Appellants defaulted on the Note during August of 2008. U.S. Bank, 
National Association, commenced foreclosure proceedings on December 24, 2008, 
not in its individual capacity, but solely as trustee on behalf of GSAA Home 
Equity Trust 2006-6 (hereinafter "Appellee"). According to the verified 
petition, the Appellee was "the present holder of said Note and Mortgage having 
received due assignment through mesne assignments of record or conveyance via 
mortgaging servicing transfer." The original petition did not attach a copy of 
the note in question sued upon. Appellants answered, pro se, on May 20, 
2009. Appellants disputed all allegations and requested that the Appellee's 
"submit additional documentation to prove their claims including the 
representation that they were the "present holder of said Note." Appellee 
subsequently filed an amended petition and a second amended petition to add 
additional defendants. Neither of these amendments included a copy of the note 
sued upon.
¶4 Appellee submitted its Motion for Summary Judgment (hereinafter the 
"Motion") to the court on November 20, 2009. Again, the Appellee represented 
that it was the holder of the Note. Documentation attached to the Motion 
attempted tosupport this representation: it included the Mortgage, the Note, an 
Assignment of Mortgage, and an Affidavit in Support of Appellee's Motion for 
Summary Judgment. For the first time, Appellee submitted the Note and 
Mortgage to the trial court. The note was indorsed in blank and contained no 
date for the indorsement. 
¶5 Executed on October 21, 2005, the Note designated the Appellants as the 
Borrowers and Colonial Bank, N.A., as the Lender. The following agreement, 
inter alia, was made:
I [Appellants] understand that the Lender may transfer this Note. The Lender 
or anyone who takes this Note by transfer and who is entitled to receive 
payments under this Note is called the 'Note Holder.'
An Assignment of Mortgage (hereinafter the "Assignment") was attached to the 
motion. MERS, again as nominee for the Lender, assigned the Mortgage, which 
secured "the payment of a certain promissory note" described therein, to the 
Appellee.2 The Assignment was executed and notarized on February 
11, 2009; it was recorded one week later, but made effective "11/27/2008." In 
other words, the Assignment was executed after the foreclosure 
suit commenced, but made effective before the filing of the 
petition as well as any subsequent amendments to the petition.
¶6 Appellants did not respond to Appellee's Motion, and the trial court 
entered a default judgment against them. The trial court entered a final 
judgment, on December 17, 2009, (hereinafter "Judgment") in favor of the 
Appellee. The judgment concluded that Appellee was the owner and holder of the 
Note and Mortgage; the court then approved an Order of Sale. Approximately six 
(6) weeks later, on January 31, 2010, the Appellants filed for protection under 
Chapter 7 of Title XI of the United States Bankruptcy Code, which stayed the 
proceedings. On March 2, 2011, the bankruptcy court granted Appellee's 
Motion to Lift the Automatic Stay. Shortly thereafter, on March 18, 2011, 
with the assistance of counsel, the Appellants filed a Petition to Vacate 
the Judgment. The trial court subsequently dismissed the Appellants Petition to 
Vacate the Judgment.
STANDARD OF REVIEW
¶7 The standard of review3for a trial court's ruling either vacating or refusing 
to vacate a judgment is abuse of discretion. Ferguson Enterprises, Inc. v. 
Webb Enterprises, Inc., 2000 OK 78, ¶ 5, 13 P.3d 480, 482; Hassell v. Texaco, Inc., 
1962 OK 
136, 372 P.2d 233. A clear abuse-of-discretion standard includes appellate review of 
both fact and law issues. Christian v. Gray, 2003 OK 10, ¶ 43, 65 P.3d 591, 608. An abuse of discretion occurs 
when a court bases its decision on an erroneous conclusion of law, or where 
there is no rational basis in evidence for the ruling. Fent v. Oklahoma 
Natural Gas Co., 2001 OK 35, ¶12; 27 P.3d 477, 481. 
ANALYSIS
¶8 The Appellants have questioned the standing of the Appellee to commence 
foreclosure proceedings against them. "Standing refers to a person's legal right 
to seek relief in a judicial forum." Fent v. Contingency Review Board, 
2007 OK 27, ¶ 7, 
163 P.3d 512, 519-520. Foremost, the party seeking relief must prove that they 
suffered an actual and concrete injury. Absent an injury of this nature, the 
party lacks standing. Whether or not such an injury exists is determined at the 
commencement of the lawsuit. Lujan v. Defenders of Wildlife, 
504 U.S. 555, 570, n. 5, 112 S. Ct. 2130, 2142, 119 L. Ed. 351 (1992).
¶9 Countering, Appellee argues that Appellants have forfeited the opportunity 
to question enforcement of the Note. However, a review of the record reveals the 
Appellants, in their pro se Answer, clearly questioned the ability of the 
Appellee to enforce the Note.4 It is settled law in Oklahoma that standing "may be 
raised at any stage of the judicial process by any party or by the court sua 
sponte." Hendrick v Walters, 1993 OK 162, ¶ 4, 865 P.2d 1232, 1234 (emphasis original). Therefore, 
this issue is properly before the Court.
¶10 Article III of the Uniform Commercial Code (hereinafter "U.C.C.") governs 
negotiable instruments and is codified in the Oklahoma Statutes. Promissory 
notes are negotiable instruments. See, 12A OS 2001, § 3-104. The 
Appellee has the burden of showing that it is entitled to enforce the 
instrument. See Reserve Loan Life Ins. Co. v. Simmons, 1929 OK 
669, ¶ 9, 282 P. 279, 281. Unless the Appellee was able to 
enforce the Note at the time the suit was commenced, it cannot maintain 
its foreclosure action against the Appellants. 
¶11 Ownership of the note determines ownership of the mortgage. Engle v. 
Federal Nat'l. Mortg. Ass'n, 1956 OK 176, ¶ 7, 300 P.2d 997, 999. Oklahoma law does not permit the 
bifurcation of the security interest from the note. Deutsche Bank National 
Trust v. Brumbaugh, 2012 OK 3, ___P.3d ___; BAC Home Loans 
Servicing, L.P. v. White, 2011 OK CIV APP 35, ¶ 10, 
256 P.3d 1014, 1017. A party which is assigned a mortgage without the accompanying 
promissory note holds no rights of enforcement. Id. Plainly, a party must 
properly acquire rights to both instruments before such party is able to enforce 
their terms.
¶12 In the present case, the only instrument attached to Appellee's petition 
was the Mortgage. Appellee did not produce the Note until the summary 
disposition stage. Under the U.C.C., both holders and non-holders in possession 
of a negotiable instrument are permitted to enforce the instrument. 12A OS 
2001, § 3-301. A "holder" is "(A) the person in possession of a negotiable 
instrument that is payable either to bearer5 or to an identified person that is the person in 
possession. 12A OS 2001, § 1-201(21).6 The evidence in the present matter is not clear as to 
whether the Appellee held the Note as a "holder" or as a "non-holder in 
possession with the ability to enforce the Note.
¶13 To enforce a negotiable instrument as a non-holder in possession, the 
moving party must show (i) that the party possessed the negotiable instrument 
when suit was filed; (ii) how possession was achieved; and (iii), if necessary, 
that the purpose of the transfer was to transfer rights of enforcement. 
12A O.S. 2001, § 
3-301. The Appellee has not demonstrated its possession of the Note at the 
time it commenced foreclosure proceedings against Appellants.
¶14 Appellants contend Appellee lacks standing to commence this foreclosure 
action. Appellants further allege the validity of the affidavit offered in 
support of Appellees Motion for Summary Judgment. The dispositive issue is 
whether or not Appellee has standing. Appellants' argument is based on the 
failure of Appellee to establish Appellee was a person entitled to enforce the 
Note at the commencement of the action and the inability to establish the 
effectiveness of the indorsements attached to the Note when the Note was 
ultimately produced as an exhibit to the Appellees Motion for Summary 
Judgment. 
¶15 This Court has previously held:
Standing, as a jurisdictional question, may be correctly raised at any level 
of the judicial process or by the Court on its own motion. This Court has 
consistently held that standing to raise issues in a proceeding must be 
predicated on interest that is "direct, immediate and substantial." Standing 
determines whether the person is the proper party to request adjudication of a 
certain issue and does not decide the issue itself. The key element is whether 
the party whose standing is challenged has sufficient interest or stake in the 
outcome.
Matter of the Estate of Doan, 1986 OK 15, ¶7, 727 P.2d 574, 576. In Hendrick v. Walters, 
1993 OK 
162, ¶ 4, 865 P.2d 1232, 1234, this Court also held:
Respondent challenges Petitioner's standing to bring the tendered 
issue. Standing refers to a person's legal right to seek relief in a judicial 
forum. It may be raised as an issue at any stage of the judicial process by 
any party or by the court sua sponte. (Emphasis original)
¶16 Furthermore, in Fent v. Contingency Review Board, 2007 OK 27, footnote 19, 163 P.3d 512, 519, this Court stated "[s]tanding 
may be raised at any stage of the judicial process or by the court on its own 
motion." Additionally in Fent, this Court stated:
Standing refers to a person's legal right to seek relief in a judicial forum. 
The three threshold criteria of standing are (1) a legally protected interest 
which must have been injured in fact- i.e., suffered an injury which is 
actual, concrete and not conjectural in nature, (2) a causal nexus between the 
injury and the complained-of conduct, and (3) a likelihood, as opposed to mere 
speculation, that the injury is capable of being redressed by a favorable court 
decision. The doctrine of standing ensures a party has a personal stake in the 
outcome of a case and the parties are truly adverse.
Fent v. Contingency Review Board, 2007 OK 27, ¶7, 163 P.3d 512, 519-520. In essence, a plaintiff who 
has not suffered an injury attributable to the defendant lacks standing to bring 
a suit. And, thus, "standing [must] be determined as of the commencement of 
suit; . . ." Lujan v. Defenders of Wildlife, 504 U.S. 555, 570, n.5, 112 S. Ct. 2130, 2142, 119 L. Ed. 351 (1992).
¶17 To commence a foreclosure action in Oklahoma, a plaintiff must 
demonstrate it has a right to enforce the note and, absent a showing of 
ownership, the plaintiff lacks standing. Gill v. First Nat. Bank & Trust 
Co. of Oklahoma City, 1945 OK 181, 159 P.2d 717.7 An assignment of the mortgage, however, is of no 
consequence because under Oklahoma law, "[p]roof of ownership of the note 
carried with it ownership of the mortgage security." Engle v. Federal Nat. 
Mortg. Ass'n, 1956 OK 
176, ¶7, 300 P.2d 997, 999. Therefore, in Oklahoma it is not possible to bifurcate the 
security interest from the note." Deutsche Bank National Trust v. Brumbaugh, 
2012 OK 
3, ___P.3d ___; BAC Home Loans Servicing, L.P. v. White, 
2011 OK CIV APP 
35, ¶ 10, 256 P.3d 1014, 1017. Because the note is a 
negotiable instrument, it is subject to the requirements of the UCC. Thus, a 
foreclosing entity has the burden of proving it is a "person entitled to enforce 
an instrument" by showing it was "(i) the holder of the instrument, (ii) a 
nonholder in possession of the instrument who has the rights of a holder, or 
(iii) a person not in possession of the instrument who is entitled to enforce 
the instrument pursuant to Section 12A-3-309 or subsection (d) of Section 
12A-3-418 of this title." 12A O.S. 2001 §3-301.
¶18 To show you are the "holder" of the Note you must prove you are in 
possession of the note and the note is either "payable to bearer" (blank 
indorsement) or to an identified person that is the person in possession 
(special indorsement).8 Therefore, both possession of the note and an 
indorsement on the note or attached allonge9 are required in order for one to be a "holder" of the 
Note.
¶19 Negotiation is the voluntary or involuntary transfer of an instrument by 
a person other than the issuer to a person who thereby becomes its holder. 
12A O.S. 2001, § 
3-201. Transfer occurs when the instrument is delivered by a person other than 
its issuer for the purpose of giving to the person receiving delivery the right 
to enforce the instrument. 12A O.S. 2001, § 3-203. Delivery of the note 
would still have to occur even though there is no negotiation. Delivery is 
defined as the voluntary transfer of possession. 12A O.S. 2001, § 1-201(b) (15). The 
transferee would then be vested with any right of the transferor to enforce the 
note. 12A O.S. 2001, 3-203(b). Some jurisdictions have held, without 
holder status and therefore the presumption of a right to enforce, the possessor 
of the note must demonstrate both the fact of the delivery and the purpose of 
the delivery of the Note to the transferee in order to qualify as the person 
entitled to enforce. In re Veal, 50 B.R. 897, 912 (B.A.P. 9th Cir. 2011). See also, 12A O.S. 2001, § 3-203. 
¶20 Appellee must also demonstrate it became a "person entitled to enforce" 
prior to the filing of the foreclosure proceeding. We find there 
is no evidence in the record establishing Appellee had standing to commence this 
foreclosure action. The trial court's granting of a default judgment in favor of 
Appellee could not have been rationally based upon the evidence or Oklahoma law. 
Therefore, we find that the trial court abused its discretion by dismissing the 
Appellants Petition to Vacate the default judgment. Because this issue is 
dispositive, we will not address the remaining issues on appeal. The order 
denying Appellant's petition and motion to vacate should be reversed and 
remanded back for further proceedings to determine whether Appellee is a person 
entitled to enforce the Note consistent with this opinion. 
CONCLUSION
¶21 It is a fundamental precept of the law to expect a foreclosing party to 
actually be in possession of its claimed interest in the Note, and to have the 
proper supporting documentation in hand when filing suit, showing the history of 
the Note, so that the defendant is duly apprised of the rights of the plaintiff. 
This is accomplished by showing the party is a holder of the instrument or a 
nonholder in possession of the instrument who has the rights of a holder, or a 
person not in possession of the instrument who is entitled to enforce the 
instrument pursuant to 12A O.S. 2001, § 3-309 or 12A O.S. 2001, § 3-418. Likewise, for the 
homeowners, absent adjudication on the underlying indebtedness, today's decision 
to reverse the dismissal of the petition and motion to vacate cannot cancel 
their obligation arising from an authenticated Note, or insulate them from 
foreclosure proceedings based on proven delinquency. This Court's decision in no 
way releases or exonerates the debt owed by the defendants on this home. See, 
U.S. Bank National Association v. Kimball, 27 A.3d 1087, 75 UCC Rep.Serv.2d 
100, 2011 VT 81 (VT 2011); and Indymac Bank, F.S.B. v. Yano-Horoski, 78 A.D.3d 895, 912 N.Y.S.2d 239 (2010).
REVERSED AND REMANDED WITH INSTRUCTIONS
¶22 CONCUR: TAYLOR, C.J., KAUGER, WATT, EDMONDSON, REIF, COMBS, 
JJ.
¶23 DISSENT: WINCHESTER (JOINS GURICH, J.), GURICH (BY SEPARATE WRITING), 
JJ.
¶24 RECUSED: COLBERT, V.C.J.
FOOTNOTES
1 Subsection (C) of the 
Mortgage reads as follows: "'MERS' is Mortgage Electronic Registration Systems, 
Inc. MERS is a separate corporation that is acting solely as a nominee for 
Lender and Lender's successors and assigns. MERS is the mortgagee under this 
security instrument." 
2 Specifically, the assignment was made to "U.S. Bank 
National Association, not in its individual capacity, but solely as trustee on 
behalf of GSAA Home Equity Trust 2006-6." 
3 Summary judgment decisions are reviewed de novo, 
Carmichael v. Beller, 1996 OK 48, ¶ 2, 914 P.2d 1051, 1053, whereas orders denying or 
granting a petition to vacate are reviewed for an abuse of discretion, Patel 
v. OMH Medical Center, Inc. , 1999 OK 33 at ¶ 20. 
4 In relevant part, the Answer states: "The defendants 
hereby dispute the cause and information within the petition and hereby request 
that the plaintiff provide proper documentation of any and all allegations" 
including the allegation that the Appellee was present holder of the Note and 
Mortgage and thereby entitled to enforce its terms. 
5 Bearer" means...a person in possession of an 
instrument, negotiable tangible document of title, or certificated security 
payable to bearer or endorsed in blank. 12A, O.S. 2001§ 1-201(5).
6 Documents of title are not at issue. Therefore, this is 
the only relevant U.C.C. definition of "holder." 
7 This opinion occurred prior to the enactment of the 
UCC. It is, however, possible for the owner of the note not to be the person 
entitled to enforce the note if the owner is not in possession of the note. (See 
the REPORT OF THE PERMANENT EDITORIAL BOARD FOR THE UNIFORM COMMERCIAL CODE, 
APPLICATION OF THE UNIFORM COMMERCIAL CODE TO SELECTED ISSUES RELATING TO 
MORTGAGE NOTES (NOVEMBER 14, 2011)). 
8 12A O.S. 2001, §§ 1-201(b)(21), 3-204 and 
3-205
9 According to Black's Law Dictionary (9th ed. 2009) an allonge is "[a] slip of paper sometimes 
attached to a negotiable instrument for the purpose of receiving further 
indorsements when the original paper is filled with indorsements." It should be 
noted that under 12A O.S. 2001, § 
3-204(a) and its comments in paragraph 2, it is no longer necessary that 
an instrument be so covered with previous indorsements that additional space is 
required before an allonge may be used. An allonge, however, must still be 
affixed to the instrument. 

GURICH, J., with whom WINCHESTER, J. joins dissenting: 
¶1 I respectfully dissent. In this case, the record indicates that attached 
to Plaintiff's Motion for Summary Judgment was an indorsed-in-blank note, the 
mortgage, an assignment of mortgage, and an affidavit in support of the motion 
for summary judgment. Because the Plaintiff was the proper party to pursue the 
foreclosure and because the Plaintiff presented the proper documentation at 
summary judgment to prove such, the trial court did not abuse its discretion in 
denying Defendants' Petition to Vacate. I would affirm the trial court for the 
reasons stated in my dissenting opinions in Deutsche Bank National Trust Co. 
v. Matthews, 2012 OK 
14, ___P.3d___ (Gurich, J. dissenting) and Bank of America, NA v. 
Kabba, 2012 OK 
23, ___P.3d___ (Gurich, J. dissenting).1 
FOOTNOTES
1 Although I originally 
concurred in the majority opinion in Deutsche Bank National Trust v. 
Brumbaugh, 2012 OK 
3, 
___P.3d___, which the majority now cites as authority in this case, after 
further consideration, I disagree with the majority's analysis in that case, and 
my views on the issues in these cases are accurately reflected in J.P. Morgan 
Chase Bank N.A. v. Eldridge, 2012 OK 24, ___P.3d___ (Gurich, J. concurring in part 
and dissenting in part); Kabba, 2012 OK 23, ___P.3d___ (Gurich, J. dissenting); 
CPT Asset Backed Certificates, Series 2004-EC1 v. Kham, 2012 OK 22, ___P.3d___ (Gurich, J. dissenting); 
Deutsche Bank National Trust Co. v. Richardson, 2012 OK 15, ___P.3d___ (Gurich, J. concurring in part 
and dissenting in part); and Matthews, 2012 OK 14, ___P.3d___ (Gurich, J. 
dissenting).