Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-14-02459/USCOURTS-ca7-14-02459-1/pdf.json

Parties Involved:
Bank of New York Mellon
Appellee
Patricia Jepson
Appellant

Document Text:

In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 14-2459

IN RE: PATRICIA JEPSON,

Debtor-Appellant,

v.

BANK OF NEW YORK MELLON F/K/A THE BANK OF NEW YORK,

AS TRUSTEE FOR CWABS, INC., ASSET-BACKED CERTIFICATES,

SERIES 2006-1,

Defendant-Appellee.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 1:14-cv-00423 — James F. Holderman, Judge.

____________________

ON MOTION FOR STAY OF MANDATE

APRIL 15, 2016

____________________

RIPPLE, Circuit Judge(in chambers). Patricia Jepson has filed 

a motion requesting that I stay this court’s mandate pending 

final disposition of this litigation in the Supreme Court of the 

United States. She represents that she plans to file a petition for 

a writ of certiorari within the next ninety days. Because I do 

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2 No. 14-2459

not believe that she has presented any issue upon which the 

Court will grant certiorari and because I believe that, even if 

certiorari were granted, a majority of the Court would not reverse our judgment, I deny the motion.

The underlying facts of this litigation are set forth in plenary fashion in our opinion. I will simply summarize them here. 

Patricia Jepson took out a mortgage that was transferred by the 

lender and ultimately assigned to CWABS Trust, a residential 

mortgage-backed securities (“RMBS”) trust that was formed 

and governed by a Pooling and Service Agreement (“PSA”). 

Bank of New York Mellon (“BNYM”) is the trustee for the 

CWABS Trust and possesses the mortgage note. When 

Ms. Jepson defaulted on her monthly payment obligations, the 

bank filed a complaint in the Circuit Court of Cook County to 

foreclose on the mortgage.

Ms. Jepson then filed for bankruptcy under Chapter 7. That 

filing automatically stayed the bank’s foreclosure action, and 

the bank moved to modify the automatic stay in the bankruptcy court. Ms. Jepson opposed the motion and initiated an adversary proceeding against the bank, claiming (1) that the bank 

had no interest in the mortgage because the note could not be 

assigned to the bank under the terms of the PSA, (2) that the 

note was void and not a negotiable instrument because the 

original lender is a fictitious entity, and (3) that the bank did 

not have the authority to foreclose on the property because the 

bank is not a collection agency under Illinois law.

The bankruptcy court concluded that Ms. Jepson lacked 

standing to challenge violations of the PSA. Accordingly, the 

court dismissed the adversary complaint and lifted the automatic stay to allow the bank to proceed with the foreclosure 

action in Illinois state court. The bankruptcy court did not, 

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No. 14-2459 3

however, address Ms. Jepson’s other claims. The district court 

affirmed the bankruptcy court’s judgment but likewise did not 

consider the claims that were not related to alleged violations 

of the PSA.

Ms. Jepson appealed from the district court’s judgment, 

and, after full consideration of the briefs and oral argument by 

the parties, we concluded that “[t]he bankruptcy court and the 

district court correctly held that Ms. Jepson lacks standing to 

raise a challenge based on violations of the PSA because she is 

not a third-party beneficiary under the agreement.” In re Jepson, 

No. 14-2459, slip op. at 6 (7th Cir. Mar. 22, 2016). We also concluded, however, that remand was necessary because neither 

the bankruptcy court nor the district court had addressed the 

claims that were not based on alleged violations of the PSA. Id.

at 11–12. Accordingly, we affirmed in part the judgment of the 

district court and remanded the case for further proceedings 

with respect to the claims that had not been considered by the 

bankruptcy court or the district court. Id. at 12.

After the rendition of our decision, Ms. Jepson filed this 

motion for a stay of our mandate pending the disposition of a 

petition for a writ of certiorari by the Supreme Court. The 

standards that must govern my consideration of this motion 

are well established. A party asking this court to stay its mandate pending the filing of a petition for a writ of certiorari 

“must show that the petition will present a substantial question and that there is good cause for a stay.” Books v. City of 

Elkhart, 239 F.3d 826, 827 (7th Cir. 2001) (Ripple, J., in chambers). To show a reasonable probability of success, the party 

must demonstrate a reasonable probability that four Justices 

will vote to grant certiorari as well as a reasonable possibility 

that five Justices would vote to reverse our judgment. 

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Bricklayers Local 21 of Illinois Apprenticeship & Training Program 

v. Banner Restoration, Inc., 384 F.3d 911, 912 (7th Cir. 2004) 

(Ripple, J., in chambers). 

In an attempt to meet this demanding standard, Ms. Jepson 

states that she intends to raise in her petition for a writ of 

certiorari whether “a mortgage borrower [has] standing to contest an assignment of its note and mortgage to a Real Estate 

Investment Conduit (REMIC) trust based on the assignment 

being void.” In her view, “there is a split between the Circuits 

on this issue”—with the Seventh and Second Circuits on one 

side of the divide and the First Circuit on the other.

I cannot accept Ms. Jepson’s submission. She has demonstrated, at best, that the First and Second Circuits may well 

disagree on whether a mortgagor like Ms. Jepson has constitutional standing under Article III to raise a challenge based on 

violations of an agreement like the PSA. See Rajamin v. Deutsche 

Bank Nat’l Trust Co., 757 F.3d 79, 85–86 (2d Cir. 2014); Culhane v.

Aurora Loan Servs. of Nebraska, 708 F.3d 282, 289–90 (1st Cir. 

2013). But this disagreement is not operative in the present litigation. We simply did not base our decision on whether 

Ms. Jepson had constitutional standing to challenge a violation 

of the PSA. Our focus was on whether Ms. Jepson lacked prudential standing. On that issue, there is no conflict among the 

circuits. The circuits identified by Ms. Jepson have reached different conclusions on prudential standing only because their 

decisions rested on the laws of different states. For instance, in 

this case, we held that Ms. Jepson lacked prudential standing 

on the basis of New York law, which governs Ms. Jepson’s 

claims that the PSA had been violated. (The PSA states that,

“[t]his agreement shall be construed in accordance with and 

governed by the substantive laws of the State of New York.”

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No. 14-2459 5

In re Jepson, No. 14-2459, slip op. at 7 (internal quotation marks 

omitted).) We noted that, on this point, our reading of New 

York law was in accord with that of the Second Circuit. 

Rajamin, 757 F.3d at 86–87. The First Circuit, on the other hand, 

applied Massachusetts law when it concluded in Culhane that

the mortgagor in that case had prudential standing. Indeed, 

that court made clear that it was “hold[ing] only that 

Massachusetts mortgagors, under circumstances comparable to 

those in this case, have standing to challenge a mortgage assignment.” Culhane, 708 F.3d at 290.

Ms. Jepson identifies no other issue that she plans to raise 

in her petition for a writ of certiorari. Instead, the remainder of 

her motion merely repeats arguments that we rejected in our 

opinion without explaining why she believes that those arguments create a reasonable probability that four Justices will 

vote to grant the writ of certiorari and that five Justices will 

vote to reverse this court’s judgment.

Finally, Ms. Jepson also contends that, absent a stay, she 

will suffer irreparable injury because she “will be forced to incur legal fees in both the Bankruptcy Court and the Supreme 

Court while both courts determine if the assignments were 

void.” This is all that Ms. Jepson says about the matter, however, and given her lack of specificity or elaboration, this statement is not sufficient to establish the likelihood of irreparable 

injury.

Accordingly, Ms. Jepson’s motion for a stay of the mandate 

is denied.

Motion for Stay of Mandate Denied

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