1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

*

This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8013-1.

**Hon. M. Elaine Hammond, United States Bankruptcy Judge for

the Northern District of California, sitting by designation.

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-11-1374-MkHHa

 )

JOAN KATHLEEN GREEN, ) Bk. No. ND 09-11614-RR

 )

Debtor. )

_______________________________)

 )

JOAN KATHLEEN GREEN, )

 )

Appellant, )

 )

v. ) MEMORANDUM*

 )

WATERFALL VICTORIA MASTER FUND )

2008-1 GRANTOR TRUST SERIES A; )

QUANTUM SERVICING CORPORATION, )

 )

Appellees. )

_______________________________)

Submitted Without Oral Argument

on September 21, 2012

Filed – October 15, 2012

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Robin L. Riblet, Bankruptcy Judge, Presiding Appearances: Appellant Joan Kathleen Green pro se on brief;

Melissa Robbins Coutts of McCarthy & Hotlhus, LLP

on brief for appellees Waterfall Victoria Master

Fund 2008-1 Grantor Trust Series A and Quantum

Servicing Corporation. 

Before: MARKELL, HOLLOWELL and HAMMOND,** Bankruptcy Judges.

FILED

OCT 15 2012

SUSAN M SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

Unless specified otherwise, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

all “Rule” references are to the Federal Rules of Bankruptcy

Procedure, Rules 1001-9037. All “Civil Rule” references are to

the Federal Rules of Civil Procedure.

2

INTRODUCTION

Through an agent, Waterfall Victoria Master Fund 2008-1

Grantor Trust Series A (“Waterfall”) filed a proof of claim in

the bankruptcy case of debtor Joan K. Green (“Green”). Green

objected to Waterfall’s proof of claim, but the bankruptcy court

overruled that objection. Green then sought rehearing and

reconsideration, which relief the court also denied. Green

appealed. We AFFIRM.

FACTS

Doing business as Cripple Creek Mountain Ranch, LLC, Green

ran what she described as a hospitality business out of a single

family residence located on Melody Mountain Lane in Paso Robles,

California (“Property”). In her bankruptcy schedules, she listed

the Property as worth $1.3 million with roughly $1 million in

encumbrances.

On May 1, 2009, she filed her chapter 111

 bankruptcy

petition. Roughly one year later, in May 2010, Waterfall and its

servicing agent LoanCare, A Division of FNF Servicing, Inc.

(“LoanCare”) filed a motion for relief from the automatic stay

(“Relief From Stay Motion”), seeking to pursue foreclosure

proceedings against the Property. Waterfall asserted, through

its servicing agent LoanCare, that as of April 2010 Green owed it

over $1.1 million and that Green’s indebtedness (“Loan”) was

secured by a first deed of trust against the Property.
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034

(9th Cir. 2011), recently described MERS and its general purpose:

MERS is a private electronic database, operated by

MERSCORP, Inc., that tracks the transfer of the

“beneficial interest” in home loans, as well as any

changes in loan servicers. After a borrower takes out

a home loan, the original lender may sell all or a

portion of its beneficial interest in the loan and

change loan servicers. The owner of the beneficial

interest is entitled to repayment of the loan. For

simplicity, we will refer to the owner of the

beneficial interest as the “lender.” The servicer of

the loan collects payments from the borrower, sends

payments to the lender, and handles administrative

aspects of the loan. Many of the companies that

participate in the mortgage industry – by originating

loans, buying or investing in the beneficial interest

in loans, or servicing loans – are members of MERS and

pay a fee to use the tracking system.

* * *

[The process of recording assignments of deeds of

trust] became cumbersome to the mortgage industry,

particularly as the trading of loans increased. It has

become common for original lenders to bundle the

beneficial interest in individual loans and sell them

to investors as mortgage-backed securities, which may

themselves be traded. MERS was designed to avoid the

need to record multiple transfers of the deed by

(continued...)

3

Waterfall attached to its moving papers the following

documents as exhibits: 

1. A conformed copy of a deed of trust (“Deed of Trust”) dated

May 24, 2007 (recorded as document no. 2007036626 in the San

Luis Obispo County Recorder’s Office) identifying Green as

borrower, Greenpoint Mortgage Funding, Inc. as lender

(“Greenpoint”) and Mortgage Electronic Registration Systems,

Inc. or “MERS”2 as the beneficiary, solely as the “nominee”
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

(...continued)

serving as the nominal record holder of the deed on

behalf of the original lender and any subsequent

lender.

Id. at 1038-39 (citing Jackson v. Mortg. Elec. Reg. Sys., Inc.,

770 N.W.2d 487, 490 (Minn. 2009), and Robert E. Dordan, Mortgage

Electronic Registration Systems (MERS), Its Recent Legal Battles,

and the Chance for a Peaceful Existence, 12 Loy. J. Pub. Int. L.

177, 178 (2010)).

3

In essence, Green’s motion objected to the Proof of Claim. 

Accordingly, we hereinafter refer to this motion as the “Claim

Objection.”

4

for the lender Greenpoint; and

2. An Adjustable Rate Note (“Note”) dated May 24, 2007, in the

amount of $999,900.00, identifying Green as borrower and

Greenpoint as lender.

The bankruptcy court entered an order in July 2010 denying

Waterfall’s Relief From Stay Motion “for lack of cause shown.” 

Meanwhile, LoanCare had filed in December 2009 a proof of

claim (“Proof of Claim”) asserting a secured claim based on the

same Note and Deed of Trust. In the proof of claim, LoanCare did

not state that it was acting as servicing agent for Waterfall,

nor did it even mention Waterfall’s name.

Nonetheless, relying on the information contained in the May

2010 Relief From Stay Motion, Green filed in September 2010 a

motion entitled: “Motion For Proof of Perfected Ownership

Interest and Right to Collect on Proof of Claim” seeking relief 

against both LoanCare and Waterfall with respect to the Proof of

Claim.3

 Even though a conformed copy of the recorded Deed of

Trust was attached to the Proof of Claim, Green asserted that the

Proof of Claim did not satisfy the requirements of Rule 3001(d)
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

because the Proof of Claim contained insufficient evidence

demonstrating perfection of Waterfall’s alleged lien on the

Property. According to Green, there was nothing recorded in the

public records for San Luis Obisbo County indicating that

Waterfall, or anyone else, had taken from Greenpoint an

assignment of the Deed of Trust. Green argued that any interest

Waterfall claimed to have in the Note and the Deed of Trust was

invalid without a duly executed and recorded written assignment

of the Deed of Trust.

Alternately, Green argued that MERS’s involvement in the

Loan transaction rendered unenforceable the lender’s rights under

the Note and the Deed of Trust, regardless of who attempted to

assert those rights. It is difficult to follow Green’s argument

on this point. On the one hand, she stated that, for purposes of

the Claim Objection, she was assuming that MERS held the original

Note. On the other hand, Green argued:

It is the Debtor’s understanding that once a note is

registered with MERS, all subsequent assignments are

done electronically; MERS never acquires actual

physical possession of the note, nor do they acquire

any beneficial interest in the note . . . .

It is the Debtor’s contention that MERS had no

beneficial interest in the note and since MERS was not

the title holder, the chain of title was broken and

consequently no one has standing to sue (obviously, the

servicing company [LoanCare], who filed the Proof of

Claim, has no beneficial interest in the note either).

* * *

As held by the Court in the bankruptcy case In re

Walker cited above, MERS has no authority to foreclose

on the Debtor’s mortgage, since it is a ‘mere nominee’. 

And even more importantly, since MERS had no

beneficial, transferable interest in the Mortgage,

Waterfall cannot collect on the claim.

Claim Objection (Sept. 10, 2010) at p. 7 of 28.
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

Green also generally complained about MERS’s electronic

mortgage registration system. According to Green, MERS’s system

violates “the California Business and Professions Code, as well

as Unfair and Deceptive Acts and Practices . . . .” Id. at p. 8

of 28.

By way of relief, Green essentially asserted that the court

should require Waterfall to establish its “right to collect on

the claim” by demonstrating its “true ownership” of the Note and

the Deed of Trust. Id.

In October 2010, Waterfall and its new servicing agent

Quantum Servicing Corp. (“Quantum”) filed a response to the Claim

Objection, along with a “Supplemental Declaration” of April

Kennedy in support of the response. In the Supplemental

Declaration, Ms. Kennedy declared that she was an employee of

Quantum, and that Quantum was Waterfall’s new servicing agent. 

Ms. Kennedy further stated that she had reviewed “business

records” reflecting a chain of transfers of the “beneficial

rights” under the Loan. According to Kennedy, the beneficial

rights were first held by Greenpoint but ultimately ended up with

Waterfall by January 2009. Kennedy also stated that the same

business records reflected a chain of transfers of the “servicing

rights” under the Loan. Kennedy declared that Greenpoint was the

first servicer of the Loan, that LoanCare was the second servicer

of the Loan and that Quantum was the third servicer of the Loan. 

According to Kennedy, LoanCare was the servicing agent for the

Loan between August 2008 and September 2010. Kennedy’s

statements regarding LoanCare and Waterfall are consistent with

Waterfall’s claim that LoanCare filed the Proof of Claim in
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

December 2009 on behalf of Waterfall as the servicing agent under

the Loan.

In addition to Kennedy’s declaration, Waterfall relied upon

all of the papers filed in support of its prior Relief From Stay

Motion. Waterfall argued that these items were sufficient to

establish the standing of its former servicing agent LoanCare to

file the Proof of Claim on Waterfall’s behalf. Alternately,

Waterfall requested additional time to respond to the Claim

Objection so that its new servicing agent Quantum could obtain

and present additional documentation to substantiate Waterfall’s

interest in the Loan.

Green filed a reply in support of her Claim Objection

(“Reply”). In her Reply, Green asserted that Waterfall should be

required to produce the Original of both the Note and the Deed of

Trust. The remainder of Green’s Reply goes into more detail

about her complaints regarding MERS and its electronic

registration system. According to Green, MERS generally is used

by lenders to hide their identity from borrowers, to avoid

payment of recording fees, and to turn pools of loans into ponzi

schemes through the securitization process. 

Significantly, for the first time in the Reply, Green

claimed: (1) that her Loan amounted to a contract of adhesion;

(2) that Waterfall would be unjustly enriched if it were allowed

to enforce its rights (if any) under the Loan; and (3) allowing

enforcement of the Loan would be unconscionable (collectively,

the “Unconscionability Claims”). But Green’s Unconscionability

Claims were based solely on her general, unsubstantiated

allegations against MERS. Green did not in any way tie her 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4Division 3 of the California Commercial Code is

California’s version of Article 3 of the Uniform Commercial Code.

8

Unconscionability Claims to any specific alleged misconduct

concerning her particular Loan.

The bankruptcy court held two hearings on the Claim

Objection in the Fall of 2010. After the second hearing, the

court directed Waterfall to file a supplemental brief by the end

of 2010 in support of its standing to file the Proof of Claim,

and the continued the hearing on the claim objection to

January 11, 2011.

Waterfall and Quantum filed their supplemental brief

(“Supplemental Brief”) on December 30, 2010. In it, Waterfall

admitted that written assignments of the beneficial interest in

the Deed of Trust were never drafted or recorded. According to

Waterfall, the registration information on MERS’s website was

meant to serve as a substitute for the execution and recordation

of written assignments. More importantly, Waterfall claimed it

had standing to file the Proof of Claim because it was a “person

entitled to enforce” the Note within the meaning of § 3301(a) of

the California Commercial Code.4 Waterfall argued that it was a

“person entitled to enforce” under Cal. Com. Code § 3301(a)

because it was a “holder” of the Note. As Waterfall explained

it, pursuant to Cal. Com. Code § 1201(b)(21)(A), its possession

of the original Note indorsed in blank made it a holder of the

Note. Waterfall further argued that paper assignments of the

Deed of Trust were unnecessary either to perfect the lien created

by the Deed of Trust or to convey the beneficial interest under
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5We explain Green’s reference to the lex situs doctrine in

our merits discussion, infra.

9

the Deed of Trust.

Green filed a response to the Supplemental Brief on

January 7, 2011, a few days before the continued claim objection

hearing. Green claimed that Cal. Com. Code § 9109(d)(11)

rendered Division 3 of the Cal. Com. Code inapplicable to

transactions creating or transferring liens on real property. 

According to Green, the transfer of the lender’s rights under the

Deed of Trust was governed by provisions of California’s Civil

Code, particularly Cal. Civil Code § 1091, which required a

writing signed by the transferor. Green further argued that

Waterfall’s attempt to rely solely on its status as a holder of

the original promissory note contravened both the California

Civil Code and the “lex situs” doctrine.5

At the January 11, 2011 continued hearing on the Claim

Objection, Waterfall appeared through its servicing agent

Quantum, which presented the original Note, indorsed in blank,

and the original Deed of Trust, to Green and to the Court. The

bankruptcy court advised Green that it did not receive, and had

not had an opportunity to review, her response to the

Supplemental Brief, but the court allowed Green to make the same

arguments as part of her oral argument at the hearing. 

The bankruptcy court thereafter ruled that Greenpoint had

duly perfected its lien against the Property by recording the

Deed of Trust in the official records for San Luis Obispo County,

California. The court further ruled that Waterfall and its
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10

servicing agent Quantum were in possession of the original Note

indorsed in blank by Greenpoint, which gave them standing to

enforce the Note. Based on these rulings, the court held that it

was going to overrule Green’s Claim Objection. 

Notwithstanding the court’s oral ruling at the January 11,

2011 hearing, there was a substantial delay before entry of an

order overruling the Claim Objection because neither Waterfall

nor Quantum lodged a proposed form of order. Ultimately, the

bankruptcy court entered a final order in July 2011. But before

that order was entered, a number of additional events occurred

that are relevant to this appeal. Foremost among them, Green

filed motions requesting a new hearing and seeking

reconsideration of the court’s oral ruling (collectively, “Posthearing Motions”). According to Green, the bankruptcy court had

not given her adequate time to respond to the Supplemental Brief. 

However, there was nothing particularly new about the Posthearing Motions. Green merely elaborated on the arguments she

had previously made in support of her Claim Objection.

Without holding an additional hearing, the bankruptcy court

entered an order denying the Post-hearing Motions, for

essentially the same reasons that it had stated when it orally

had overruled Green’s Claim Objection.

Green appealed the order denying her Post-hearing Motions

(BAP No. CC-11-1253). But we dismissed that appeal on

jurisdictional grounds, because Green did not timely file her

notice of appeal within fourteen days of entry of that order. 

On July 6, 2011, the bankruptcy court entered an order

overruling Green’s Claim Objection. Green filed a notice of
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11

appeal from that order on July 13, 2011.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(A) and (B). We have jurisdiction under

28 U.S.C. § 158, subject to the discussion set forth immediately

below.

Before we address the merits of this appeal, we first must

address a jurisdictional issue raised by the rather odd

procedural history of this matter. We agree with our prior BAP

panel that Green’s appeal of the Post-hearing Motions was

untimely and should have been dismissed. However, we must

determine the proper scope of the appeal now before us, which was

timely filed after the court entered the order overruling the

Claim Objection. In this instance, the scope of this appeal

hinges on the finality of the bankruptcy court’s orders.

Generally speaking, an order is final, rather than

interlocutory, only when it fully adjudicates the issues raised

and clearly manifests the court’s intent to be its final act in

the matter. Brown v. Wilshire Credit Corp. (In re Brown),

484 F.3d 1116, 1120 (9th Cir. 2007) (quoting Slimick v. Silva

(In re Slimick), 928 F.2d 304, 307 (9th Cir. 1990)). To

ascertain the trial court’s intent, we may look to the content of

the order, as well as the judge’s and the parties’ conduct. 

In re Brown, 484 F.3d at 1120; In re Slimick, 928 F.2d at 308. 

Green’s appeal of the order denying her Post-hearing Motions

was an appeal from an interlocutory order, not final, because the

bankruptcy court did not intend that order to fully and finally

dispose of the entire matter – the Claim Objection. 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12

Here, the bankruptcy court’s comments at a hearing held on

June 29, 2011, reflect that the court had expected Waterfall to

lodge a proposed order memorializing the court’s January 11, 2011

oral ruling overruling the Claim Objection, but that Waterfall

had not done so. In response to the court’s comments at that

hearing, Waterfall and Quantum apparently lodged a proposed form

of order, which the court signed and entered on July 6, 2011. 

That was the final order fully disposing of the Claim Objection.

Orders denying motions for new trial and motions for

reconsideration typically are final orders, but that is in part

because they usually are entered after entry of an order

disposing of the underlying dispute. Here, the converse is true.

The May 3, 2011 order denying Green’s Post-hearing Motions was

entered before the court entered its July 6, 2011 order disposing

of the underlying Claim Objection. As a result, the order

denying Green’s Post-hearing Motions was interlocutory, not

final, at the time it was entered.

When a litigant files an untimely appeal from an

interlocutory order, we must dismiss it. See Baldwin v. Redwood

City, 540 F.2d 1360, 1364 (9th Cir. 1976). However, that

interlocutory order ultimately merges into the final order, when

it eventually is entered, and a timely appeal taken from the

final order may cover both the final order as well as any

interlocutory order leading up to the entry of the final order.

Id.; see also U.S. v. Real Property Located at 475 Martin Lane,

Beverly Hills, CA, 545 F.3d 1134, 1140-41 (9th Cir. 2008).

Accordingly, both the order overruling the Claim Objection

and the order denying the Post-hearing Motions are within the
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13

scope of this appeal. To the extent the parties’ briefs address

issues raised by either order, we may consider them. 

ISSUE

Did the bankruptcy court err when it overruled Green’s Claim

Objection?

STANDARDS OF REVIEW

“‘An order overruling a claim objection can raise legal

issues (such as the proper construction of statutes and rules)

which we review de novo, as well as factual issues (such as

whether the facts establish compliance with particular statutes

or rules), which we review for clear error.’ . . . We review de

novo whether a party has standing.” Allen v. U.S. Bank, N.A.

(In re Allen), 472 B.R. 559, 565 (9th Cir. BAP 2012) (quoting

Veal v. Am. Home Mortg. Serv., Inc. (In re Veal), 450 B.R. 897,

906, 918 (9th Cir. BAP 2011)). 

DISCUSSION

As a threshold matter, we note certain key facts that Green

has not disputed. Green has not disputed that Greenpoint loaned

her roughly $1 million and that she executed the Note and the

Deed of Trust in exchange for the Loan. Green also has not

disputed that Greenpoint recorded the Deed of Trust in the

official records of San Luis Obispo County and that Greenpoint

indorsed the Note in blank. Nor has Green disputed that LoanCare

was acting as Waterfall’s servicing agent at the time it filed

the Proof of Claim or that Quantum subsequently succeeded

LoanCare as Waterfall’s servicing agent.

The sole issue raised in Green’s Claim Objection was
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6In the reply she filed in the bankruptcy court in support

of her Claim Objection, Green sought for the first time to add

her Unconscionability Claims for consideration. By way of these

claims, Green apparently sought to have the court rule that

Waterfall should not be permitted to enforce the Note and the

Deed of Trust even if Waterfall established its standing. Green

has elaborated on these claims in her appeal briefs. However, in

addition to belatedly raising her Unconscionability Claims, Green

never offered any evidence to support them. In fact, these

claims were nothing more than unsubstantiated allegations of

general misconduct by MERS and its members, which Green generally

failed to connect to her particular Loan. Consequently, Green’s

Unconscionability Claims cannot and do not support reversal of

the orders on appeal.

7

Rule 9014(c) makes Civil Rule 17 applicable in contested

matters, which include claim objections. In re Allen, 472 B.R.

at 565 n.3.

14

Waterfall’s standing to file the Proof of Claim.6 While there

are a number of different aspects to standing doctrine, Green’s

Claim Objection focused on whether Waterfall was the party

entitled to enforce the Note and the Deed of Trust. This issue

implicated the prudential standing requirement that litigants

must assert their own legal rights and not the rights of others. 

Sprint Commc'ns Co. v. APCC Servs., Inc., 554 U.S. 269, 289-90,

128 S.Ct. 2531, 2544 (2008); Warth v. Seldin, 422 U.S. 490, 499,

95 S.Ct. 2197, 2205 (1975). It also implicated the “real party

in interest rule,” Civil Rule 17(a), which provides that “[a]n

action must be prosecuted in the name of the real party in

interest.”7

We have plowed this same ground several times recently, most

notably in two published decisions, In re Allen, 472 B.R. 559, 

and In re Veal, 450 B.R. 897. In those two decisions, we

generally held that a party has standing to file a proof of claim
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8The bankruptcy court’s ruling indicates that it treated

Green’s Note as a negotiable instrument. Green has not

challenged that aspect of the bankruptcy court’s ruling. In any

event, even if we assume that the Note did not meet all the

formal requirements to qualify as a true negotiable instrument

under UCC § 3-104, there were sufficient grounds for the court to

have treated the Note as if it were a negotiable instrument for 

purposes of determining who is entitled to enforce the Note. See

In re Veal, 450 B.R. at 909 & nn. 14, 15.

9

Green has not disputed that Greenpoint indorsed the Note in

blank, nor is there any evidence in the record which would

(continued...)

15

based on a promissory note secured by real property if that party

is a “person entitled to enforce” the note under § 3-301 of the

Uniform Commercial Code (“UCC”). In re Allen, 472 B.R. at 565;

In re Veal, 450 B.R. at 902. In relevant part, a party is a

person entitled to enforce the note if it is a “holder” of the

note, as defined in UCC § 1-201(b)(21)(A). In re Allen, 472 B.R.

at 565; In re Veal, 450 B.R. at 910-11. Under

UCC § 1-201(b)(21)(A), a “holder” includes a “person in

possession of a negotiable instrument8 that is payable . . . to

bearer . . . .” In turn, a negotiable instrument is payable to

the bearer when it is indorsed in blank. See UCC § 3-205(b)

(“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.”); see also In re Allen, 472 B.R. at 567.

Here, the record indicates that Waterfall’s servicing agent

Quantum presented to the bankruptcy court the original Note

indorsed in blank by Greenpoint,9 thereby demonstrating that it
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9(...continued)

support a contrary finding. See generally UCC § 3-308 (providing

a presumption that indorsement signature is presumed to be

authentic and authorized); Cal. Com. Code § 3308 (same).

10The parties to this appeal seem to agree that California

law should be applied to resolve their dispute. Given that the

Note is silent, that Green resides in California and that she

executed the Note and the Deed of Trust in California, we agree. 

See Cal. Com. Code § 1301(b); see also Barclays Discount Bank

Ltd. v. Levy, 743 F.2d 722, 724–25 (9th Cir. 1984); In re Veal,

450 B.R. at 921 n. 41 (applying Arizona’s counterpart to Cal.

(continued...)

16

was in possession of the Note and that the Note was payable to

bearer. Based thereon, the bankruptcy court determined that

Waterfall had standing to file a proof claim based on the Note

and the Deed of Trust. In light of our holdings in Allen and

Veal, we perceive no error in the bankruptcy court’s ruling.

On appeal, Green principally argues that the bankruptcy

court should not have applied UCC Article 3 to determine

Waterfall’s standing. Green claims that Division 3 of the

California Commercial Code – California’s version of UCC Article

3 does not apply. Instead, Green claims that a number of

provisions of California’s Civil Code do apply, and that these

provisions prohibit the transfer of any interest in real

property, including the assignment of a deed of trust, absent an

executed and recorded writing. But Green’s legal contentions are

simply wrong.

Green first argues that Cal. Com. Code Division 3 does not

apply because Cal. Com. Code § 9109(d)(11) expressly excepts from

Division 3's coverage “the creation or transfer of an interest in

or lien on real property.”10 But Green misreads the statute. On
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10(...continued)

Com. Code § 1301(b) under similar circumstances). In any event,

Green has not pointed us to any material distinction for purposes

of this appeal between Division 3 of the Cal. Com. Code and

Article 3 of the UCC. Nor are we aware of any.

11As used by Green, the “lex situs” doctrine generally

requires legal issues involving real property to be determined

according to the laws of the state in which the property is

situated. See Black’s Law Dictionary (9th Cir 2009); see also

Restatement (Second) of Conflict of Laws § 223(1) (1971)(“Whether

a conveyance transfers an interest in land and the nature of the

interest transferred are determined by the law that would be

applied by the courts of the situs.”). Green has not explained

why, under the lex situs doctrine, the Cal. Civil Code would be

entitled to any greater deference than the Cal. Com. Code.

12Cal. Civil Code § 1091 provides:

Requisites for transfer of certain estates. An estate

in real property, other than an estate at will or for a

term not exceeding one year, can be transferred only by

operation of law, or by an instrument in writing,

subscribed by the party disposing of the same, or by

his agent thereunto authorized by writing.

17

its face, Cal. Com. Code § 9109(d)(11) only governs Division 9;

it simply does not address Division 3 and its coverage of

negotiable instruments such as the mortgage note at issue here.

Green next argues that Waterfall’s standing should not be

based on Cal. Com. Code § 3301 because that statute is

inconsistent with the requirements under the Cal. Civil Code for

transferring an interest in California real property. In making

this argument, Green invokes the “lex situs” doctrine11 and

states that the statutory scheme implemented by the Cal. Civil

Code, particularly Cal. Civil Code § 1091,12 contemplates that

deeds of trust and other transfers of real property cannot be

made except by operation of an executed and recorded writing
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

18

memorializing the transfer. According to Green, because

Waterfall has admitted that there were no written assignments of

the Deed of Trust executed or recorded, any purported transfer to

Waterfall of the Deed of Trust was invalid under Cal. Civil Code

§ 1091, and the purported transfer to Waterfall of the Note

consequently was a nullity.

But Green once again misreads the statute. Cal. Civil Code

§ 1091 on its face explicitly permits transfers of interests in

real property “by operation of law.” And it is settled

California law that a lien on real property is incident to the

underlying obligation and that a valid transfer of the underlying

obligation also carries with it the lien. See Cal. Civil Code

§ 2936 (“The assignment of a debt secured by mortgage carries

with it the security.”). Accord, Cockerell v. Title Ins. & Trust

Co., 42 Cal. 2d 284, 291, 267 P.2d 16, 20 (Cal. 1954); Marx v.

McKinney, 23 Cal.2d 439, 443, 144 P.2d 353, 356 (Cal. 1944);

Lewis v. Booth, 3 Cal. 2d 345, 349, 44 P.2d 560, 562 (Cal. 1935);

Union Supply Co. v. Morris, 220 Cal. 331, 338–40, 30 P.2d 394,

397 (Cal. 1934); Seidell v. Tuxedo Land Co., 216 Cal. 165, 170,

13 P.2d 686, 688 (1932); Ord v. McKee 5 Cal. 515, 516 (Cal.

1855); Domarad v. Fisher & Burke, Inc., 270 Cal. App. 2d 543,

553, 76 Cal. Rptr. 529, 535 (Cal. App. 1969); Santens v. Los

Angeles Fin., 91 Cal. App. 2d 197, 201-02, 204 P.2d 619, 621-22

(Cal. App. 1949); Poe v. Francis 132 Cal. App. 330, 335-36,

22 P.2d 801, 803 (Cal. App. 1933); see also Cal. Comm'l Code

§ 9203(g) (“The attachment of a security interest in a right to

payment or performance secured by a security interest or other

lien on personal or real property is also attachment of a
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13These statutes include Cal. Civil Code §§ 1107, 1169, 1214

and 1215. For the sake of completeness, each of these statutes

is set forth below.

Section 1107 provides: 

Grant, how far conclusive on purchasers. Every grant of

an estate in real property is conclusive against the

grantor, also against every one subsequently claiming

under him, except a purchaser or incumbrancer who in

good faith and for a valuable consideration acquires a

title or lien by an instrument that is first duly

recorded.

Section 1169 provides:

In what office. Instruments entitled to be recorded

must be recorded by the County Recorder of the county

in which the real property affected thereby is

situated.

Section 1214 provides:

Every conveyance of real property or an estate for

(continued...)

19

security interest in the security interest, mortgage, or other

lien.”); Carpenter v. Longan, 83 U.S. 271, 275 (1872) (“The

transfer of the note carries with it the security, without any

formal assignment or delivery, or even mention of the latter.”).

In short, under long-settled California law, the valid

transfer of the Note carried with it an assignment of the Deed of

Trust. Because we already have held above that the Note was duly

negotiated to Waterfall under Cal. Com. Code § 3201, Waterfall

also qualifies by operation of law as the assignee of the Deed of

Trust.

Green also incorrectly relies on several other Cal. Civil

Code statutes.13 As a group, these other statutes deal with the
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13(...continued)

years therein, other than a lease for a term not

exceeding one year, is void as against any subsequent

purchaser or mortgagee of the same property, or any

part thereof, in good faith and for a valuable

consideration, whose conveyance is first duly recorded,

and as against any judgment affecting the title, unless

the conveyance shall have been duly recorded prior to

the record of notice of action.

Section 1215 provides:

Conveyance defined. The term “conveyance,” as used in

Sections 1213 and 1214, embraces every instrument in

writing by which any estate or interest in real

property is created, aliened, mortgaged, or incumbered,

or by which the title to any real property may be

affected, except wills.

20

rights of competing transferees of the same real property. They

do not address the question of who Green must pay on account of

her Loan obligations, which is the basic question raised by her

Claim Objection. Put another way, it simply is irrelevant to the

resolution of Green’s standing issues who, among competing

claimants, might be entitled to the economic value underlying the

Note and the Deed of Trust. See In re Veal, 450 B.R. at 912. So

long as Green knows that, to the extent she pays Waterfall, her

Loan obligations legally will be considered satisfied under Cal.

Com. Code § 3602(a), Green should be content. See id.

Alternately, Green argues that Greenpoint impermissibly

“split” the Note and the Deed of Trust, by designating itself as

payee in the Note while allowing MERS to be named as the

“beneficiary” in the Deed of Trust. According to Green, this

split effectively rendered both the Note and the Deed of Trust

unenforceable.
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

21

Green’s splitting argument ignores the plain language of the

Deed of Trust. That language nominally designates MERS as

“beneficiary” but further specifies that MERS serves as 

beneficiary “solely as nominee” for the “lender” – in this case

Greenpoint and its successors. Based on the same deed of trust

language, the Ninth Circuit has held that MERS’s nominal

beneficiary status, as nominee for the lender, does not

irreparably split the Note the from the Deed of Trust, so long as

MERS continues to serve as the nominee or agent for the lender or

its successors. See Cervantes, 656 F.3d at 1044. Cervantes’

holding is consistent with a number of published decisions within

this circuit opining that MERS merely serves as the agent for the

true beneficiary. See, e.g., Cedano v. Aurora Loan Servs., LLC

(In re Cedano), 470 B.R. 522, 531 (9th Cir. BAP 2012)

(identifying MERS as nominal beneficiary and agent/nominee for

lender); Weingartner v. Chase Home Fin., LLC, 702 F.Supp.2d

1276, 1279-81 (D. Nev. 2010) (same); see also Gomes v.

Countrywide Home Loans, Inc., 192 Cal. App.4th 1149, 1156 n.7,

121 Cal.Rptr.3d 819, 825 n.7 (Cal. App. 2011) (identifying MERS

as the nominee, or agent, of the noteholder).

In light of the decisions cited above, we are not persuaded

that the Note and the Deed of Trust have been irreparably split

in a manner that would render the Loan documents unenforceable.

Finally, Green complains that she was not given sufficient

time to respond to Waterfall’s Supplemental Brief. Green further

points out that the bankruptcy court admitted that it did not

have an opportunity to review her written response to the

Supplemental Brief before the court orally announced its decision
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

22

to overrule the Claim Objection, on January 11, 2011.

Nonetheless, the record reflects that the bankruptcy court

did not enter its final order disposing of the Claim Objection

until six months later, in July 2011. During the intervening six

months, Green made the same arguments in her Post-hearing

Motions, which the court explicitly addressed and rejected in its

May 3, 2011 order denying the Post-Hearing Motions. Under these

circumstances, Green cannot establish that she was prejudiced by

the so-called insufficient amount of time she had to respond to

Waterfall’s Supplemental Brief. See generally Rosson v.

Fitzgerald (In re Rosson), 545 F.3d 764, 775-77 (9th Cir. 2008)

(holding that inadequate notice was harmless error unless the

appellant demonstrated prejudice).

CONCLUSION

For all of the reasons set forth above, we AFFIRM the

bankruptcy court's order overruling Green’s Claim Objection and

its order denying Green’s Post-hearing Motions.