Bankruptcy – Stay of proceedings

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7^th Circuit Court of Appeals

Case Name: Patricia Jepson v. Bank of New York Mellon

Case No.: 14-2459

Officials: RIPPLE, Circuit Judge(in chambers)

Focus: Bankruptcy – Stay of proceedings

Motion for stay of mandate denied

“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.” 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.

Motion for Stay of Mandate Denied

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.