Residential Capital, LLC

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
RESIDENTIAL CAPITAL, LLC, et al.,
Debtors.
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NOT FOR PUBLICATION
Case No. 12-12020 (MG)
Chapter 11
(Jointly Administered)
MEMORANDUM OPINION AND ORDER SUSTAINING THE RESCAP BORROWER
CLAIMS TRUST’S OBJECTION TO CLAIM NOS. 3910 AND 4085
FILED BY PHILIP AND SYLIVA EMIABATA
A P P E A R A N C E S:
MORRISON & FOERSTER LLP
Attorneys for the ResCap Borrower Claims Trust
250 West 55th Street
New York, New York 10019
By: 	Norman S. Rosenbaum, Esq.
Jordan A. Wishnew, Esq.
Jessica J. Arett, Esq.
PHILIP AND SYLVIA EMIABATA
Pro Se
508 Evening Grosbeak Drive
Pflugerville, Texas 78660
By: 	Philip and Sylvia Emiabata
MARTIN GLENN
UNITED STATES BANKRUPTCY JUDGE
The ResCap Borrower Claims Trust (the “Trust”) objected (the “Objection,” ECF Doc.
# 8042) 1 to Claim Numbers 3910 and 4085 (the “Claims,” Cunningham Decl. Ex. B) filed by
Philip and Sylvia Emiabata (the “Emiabatas”). The Claims relate to the Emiabatas’ mortgage
loan secured by real property located in the state of Texas and are generally grounded in fraud,
1 	The Trust’s Objection to the Emiabatas’ Claims was originally included in the Trust’s eighty second
omnibus objection to claims. Later, the Trust filed a supplemental objection (the “Supplemental Objection,” ECF
Doc. # 8810), supported by the declaration of David Cunningham (the “Cunningham Declaration,” Supp. Obj. Ex.
1).
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breach of contract, and unfair and deceptive trade practices. The Objection asserts that the
Claims should be disallowed and expunged because the Emiabatas fail to state a viable claim for
relief.
The Court held a hearing on the Objection on September 3, 2015; Philip Emiabata
appeared by telephone. Immediately following the hearing, the Court entered an order sustaining
the Objection to the Claims in its entirety, and indicating that a written opinion explaining the
Court’s decision would follow. (See ECF Doc. # 9104.) This is that Opinion.
I. 	BACKGROUND
A. 	The Emiabatas’ Loan History
Non-debtor Home Loan Corporation (“Home Loan”) originated a $247,400 loan (the
“Loan”) to the Emiabatas on August 29, 2002, evidenced by a note (the “Note,” Cunningham
Decl. Ex. C), secured by a deed of trust (the “Deed of Trust,” id. Ex. D), encumbering real
property located at 508 Evening Grosbeak Drive, Pflugerville, Texas 78660 (the “Property”).
(Obj. Ex. 1-A at 12.) As reflected in two separate endorsements on the Note, Debtor Residential
Funding Company, LLC (“RFC”) purchased the Loan from Home Loan, but then transferred its
interest in the Loan when the Loan was securitized on March 1, 2003, at which time JP Morgan
Chase Bank, NA was appointed as trustee for the securitization trust. (Note at 5.) Debtor
Homecomings Financial, LLC (“Homecomings”) serviced the Loan from January 29, 2003 until
servicing was transferred to Debtor GMAC Mortgage, LLC (“GMACM”) on July 1, 2009. (Obj.
Ex. 1-A at 12–13.) GMACM serviced the Loan from July 1, 2009 through February 16, 2013,
when servicing was transferred to non-debtor Ocwen Loan Servicing, LLC (“Ocwen”). (Id.)
At the time Homecomings obtained the servicing rights in January 2003, the Emiabatas
were only required to escrow funds for taxes—they were not required to escrow funds for
property insurance premiums, which the Emiabatas were responsible for paying themselves,
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although they were required to keep insurance in force. (Id. at 22; Supp. Obj. ¶ 11 (citing
Cunningham Decl. ¶ 10).) Homecomings was not provided with proof of insurance coverage at
the time it began servicing the Loan. (Obj. Ex. 1-A at 22.) As a result, throughout 2003 and
much of 2004, Homecomings requested proof of property insurance directly from the Emiabatas.
(Id. at 22–23 (citations omitted); Supp. Obj. ¶¶ 11–12 (citations omitted).) The Emiabatas failed
to provide Homecomings proof of property insurance until September 4, 2004, despite multiple
communications between the parties. (Obj. Ex. 1-A at 22–23 (citations omitted); Supp. Obj. ¶¶
11–12 (citations omitted).) Because of the Emiabatas’ failure to provide proof of insurance,
Homecomings obtained lender-placed property insurance as early as July 24, 2003; this
insurance was cancelled on October 6, 2004, soon after the Emiabatas finally provided proof of
the insurance policy. (Obj. Ex. 1-A at 22–23 (citations omitted); Supp. Obj. ¶¶ 11–12 (citations
omitted).) Homecomings charged the Emiabatas’ escrow account for the cost of the lender-
placed insurance for the period of July 24, 2003 through October 6, 2004, the time during which
the Emiabatas failed to provide proof of their insurance. (Obj. Ex. 1-A at 22–23 (citations
omitted); Supp. Obj. ¶¶ 11–12 (citations omitted).)
The Emiabatas did not make their monthly Loan payments from February 2004 through
May 2005, and they ultimately filed a voluntary petition for relief under chapter 13 of the
Bankruptcy Code (the “First Chapter 13 Case”). (Obj. Ex. 1-A at 13; Cunningham Decl. Exs.
G–H; Supp. Obj. ¶ 13 (citing the “Payment History,” Cunningham Decl. Ex. F; Cunningham
Decl. Ex. H)). Pursuant to consent orders, the Emiabatas made 45 payments toward the Loan
during their First Chapter 13 Case. (See Cunningham Decl. Exs. H–J, L–M; Supp. Obj. ¶¶ 15–
18 (citations omitted); Obj. Ex. 1-A at 18–19; see also Payment History.) The Debtors’ books
and records reflect that $64,199.83 in payments were made to the Emiabatas’ Loan account from
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June 21, 2005 to September 15, 2007; the payments were applied to the oldest delinquent
payment first, beginning with the February 2004 payment. (Supp. Obj. ¶ 18 (citing Payment
History; Cunningham Decl. Ex. M).) Despite these payments, the Emiabatas did not become
current on their Loan; the First Chapter 13 Case was dismissed on September 17, 2007, before
the Emiabatas could finish performing under their chapter 13 plan. (Obj. Ex. 1-A at 15; see also
Cunningham Decl. Ex. L.) The Emiabatas only became current on Loan payments through
September 2005. (Supp. Obj. ¶ 19 (citing Payment History at 12).)
On September 28, 2007, after the First Chapter 13 Case was dismissed, Homecomings
mailed the Emiabatas a breach letter advising them that they were in default. (Obj. Ex. 1-A at
14–15.) From the date of that letter until loan servicing was transferred to Ocwen, the Emiabatas
disputed the delinquency on their account—they asserted that they made payments from 2005
through 2007 that brought their account current and that they provided “proof” of such payments
to Homecomings on multiple occasions. According to the Trust, the Emiabatas’ payments in
2005 through 2007 were made during the Emiabatas’ First Chapter 13 Case but were insufficient
to bring the account completely current. Homecomings examined the “proof” provided by the
Emiabatas and compared the payments to the amounts due, as reflected in the Debtors’ books
and records. That reconciliation of payments demonstrates a significant payment deficiency.
While the dispute regarding Homecomings’ application of the Emiabatas’ payments
remained ongoing, Homecomings, and later GMACM, engaged in loss mitigation negotiations
with the Emiabatas. These negotiations resulted in four loss mitigation attempts that were
ultimately either cancelled or never fully came to fruition.
First, Homecomings approved the Emiabatas’ Loan for a traditional permanent loan
modification on November 2, 2007 (the “November 2007 Modification”). (Id.) The November
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2007 Modification required, among other things, that the Emiabatas make an initial contribution
payment in certified funds. (Id. at 15.) The Emiabatas made the initial contribution payment but
failed to make it in certified funds. (Id.; Supp. Obj. ¶ 21 (citing the “Servicing Notes,”
Cunningham Decl. Ex. E at 44).) Consequently, Homecomings cancelled the November 2007
Modification on December 5, 2007. (Obj. Ex. 1-A at 15–16; Servicing Notes at 43.)
Second, Homecomings approved the Emiabatas’ Loan for a new loan modification on
December 5, 2007 (the “December 2007 Modification”)—the date on which the November 2007
Modification was cancelled. (Obj. Ex. 1-A at 16; Servicing Notes at 43.) The December 2007
Modification was ultimately denied by Homecomings on February 5, 2008 because the
Emiabatas failed to return the signed modification documentation and pay the required initial
contribution. (Obj. Ex. 1-A at 16; Servicing Notes at 42.)
Third, Homecomings set up a temporary repayment plan on the Emiabatas’ Loan account
on May 23, 2008 (the “2008 Repayment Plan,” Cunningham Decl. Ex. N). The purpose of this
repayment plan was to allow time for Homecomings to review the Emiabatas’ dispute regarding
the delinquency of their account. (Obj. Ex. 1-A at 17; Servicing Notes at 36.) The 2008
Repayment Plan was cancelled by Homecomings on July 17, 2008 because the Emiabatas failed
to provide their first of two required payments under the plan in certified funds. (Obj. Ex. 1-A at
17; Servicing Notes at 36; Cunningham Decl. Ex. O.) Homecomings later accepted payments
from the Emiabatas on July 17 and August 4, 2008 because the Emiabatas claimed their initially
insufficient payment was due to their bank’s error; but the Emiabatas never provided proof of the
error. (Supp. Obj. ¶ 26 (citing Cunningham Decl. ¶ 25).)
Fourth, after GMACM obtained the servicing rights to the Loan, GMACM set up a
forbearance plan on November 9, 2009 to allow the Emiabatas to complete and submit a workout
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package for another loan modification review (the “2009 Forbearance Plan,” Cunningham Decl.
Ex. S). (Servicing Notes at 15.) The Emiabatas submitted a complete workout package on
December 16, 2009 (the “December 2009 Workout Package,” Cunningham Decl. Ex. T).
GMACM requested missing documentation from the Emiabatas in March and May 2010, but the
Emiabatas did not send in the needed information, resulting in another rejection of a loan
modification. (Obj. Ex. 1-A at 21; Supp. Obj. ¶ 34; Cunningham Decl. ¶ 34.)
During the period of 2008 through 2010, the Emiabatas made twelve payments on the
Loan totaling $30,271.12. (See Payment History.) The last payment made on October 26, 2010
brought the account current as of December 2005. (Id.) From 2008 through 2013,
Homecomings and later GMACM referred the Property for foreclosure and scheduled
foreclosure sales on more than one occasion. (See Obj. Ex. 1-A at 16, 18, 21; Servicing Notes at
7, 28, 41.) Each time the foreclosure sale or foreclosure process was placed on hold because
either (1) the servicer needed time to undertake an examination of the Emiabatas’ submitted debt
dispute (see Servicing Notes at 37–38; Obj. Ex. 1-A at 19); (2) the Emiabatas filed a chapter 13
bankruptcy case (of which they filed three in addition to the First Chapter 13 Case) (see Obj. Ex.
1-A at 19–21; Supp. Obj. ¶ 31 (citing Cunningham Decl. Ex. Q); id. (citing Servicing Notes);
Servicing Notes at 17; Cunningham Decl. Exs. R, X); or (3) the servicer engaged in reviewing
the Emiabatas’ Loan for a loan modification or other loss mitigation option (see Obj. Ex. 1-A at
17, 20–21; Supp. Obj. ¶ 34; Cunningham Decl. ¶ 34). When servicing of the Emiabatas’ Loan
was transferred to Ocwen in February 2013, there was no active foreclosure pending on the
Property; but the Emiabatas’ Loan account was current only through February 2006.
(Cunningham Decl. ¶ 38.)
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B. 	The Claims
The Emiabatas timely filed their Claims on November 9, 2012. The first claim, Claim
Number 3910, asserts a general unsecured claim in the amount of $228,928.28 and a secured
claim in the amount of $271,071.72 against Debtor Residential Capital, LLC (“ResCap”). (See
Claims at 2–5.) The second claim, Claim Number 4085, asserts a general unsecured claim and a
secured claim in the same amounts against GMACM. (See id. at 6–9.) For both Claims, the
Emiabatas state that the “claim arises out of the property based at 508 Evening,” reference “Case
# 11 CV-11885 at US District Court of Massachusetts Boston Division” (the “Massachusetts
Action”), and attach a handwritten note stating: “Suit or claim creditor have against debtor on
the property. And the injury sustained for not crediting the account properly, the land where the
property is situated on, and their various foreclosure actions.” (See generally Claims.) The
Massachusetts Action complaint (the “Complaint,” Cunningham Decl. Ex. U) was filed against
Homecomings and GMACM on October 25, 2011 in the United States District Court for the
Eastern District of Massachusetts (the “Massachusetts District Court”). The defendants moved
to dismiss the Complaint but no ruling was ever made as the case was stayed because of the
Debtors’ bankruptcy filing. The Massachusetts Action was closed on January 30, 2015 upon a
finding that the issues could be resolved in this Court. (Id. Ex. V.)
The Claims incorporate by reference the Complaint filed in the Massachusetts Action.
The Complaint alleges: (1) “deceptive trade practices, fraud, non-disclosure;” (2) one of the
Debtors gave the Emiabatas a “sub-prime” loan when they wanted a different loan; (3) the
Debtors broke their promise that the Loan would convert to a 30-year fixed rate loan after one
year; (4) the Debtors failed to properly credit the Emiabatas’ account with payments made by the
Emiabatas; (5) in 2010, the Debtors failed to provide the Emiabatas with a Form 1099 despite the
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Emiabatas’ requests; (6) the Debtors mishandled the Emiabatas’ escrow account and wrongfully
required escrow for insurance when the Emiabatas were paying their own insurance; (7) the
Emiabatas did not receive title to all of the land they were supposed to acquire, presumably in
connection with their Loan; (8) wrongful foreclosure; and (9) wrongful denial of loan
modifications. (Obj. Ex. 1-A at 13–14; see generally Compl.)
The Trust requested that the Emiabatas provide more information supporting their
Claims; the Emiabatas submitted a letter (the “Diligence Response,” Cunningham Decl. Ex. A),
referencing the Massachusetts Action again and alleging “deceptive trade practices, various
fraudulent foreclosures,” damage to their credit, wrongful refusal to give credit for payments,
and that “creditor was not given exactly the acreage of the land which creditors paid for.” (See
id.)
C. 	Procedural History
After the Objection was originally filed in January 2015, the Emiabatas did not submit a
response and, on April 1, 2015, the Court sustained the Objection to the Emiabatas’ Claims. (See
ECF Doc. # 8400.) Subsequently, the Emiabatas advised the Court that the Objection was served
at the incorrect address and they therefore did not receive proper notice. (See ECF Doc. # 8563.)
The Court entered an order vacating the prior order sustaining the Objection as to the Emiabatas’
Claims and directed the Trust to re-serve the Objection. (Id.) The Trust re-served the Emiabatas
and noticed the Objection to the Claims for a hearing on June 23, 2015. (See ECF Doc. # 8568.)
The Emiabatas filed a timely opposition to the Objection (the “Opposition,” ECF Doc. # 8726).
The Trust then filed its Supplemental Objection.
The Emiabatas then filed two motions: one to compel discovery (the “Motion to
Compel,” ECF Doc. # 8821) and the other to extend their time to respond to the Supplemental
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Objection in order to conduct the requested discovery (the “Motion to Extend,” ECF Doc.
# 8822). The Court denied the motions as premature and moot, respectively. (See ECF Doc.
# 8854.)
The hearing on the Objection was adjourned from July 30, 2015 to September 3, 2015 on
consent of the parties. (See ECF Doc. # 8911.) The Emiabatas filed a response to the
Supplemental Objection on August 20, 2015 (the “Supplemental Opposition,” ECF Doc.
# 9049). On August 26, 2015, the Emiabatas also filed the Expedited Motion for Conference/
Clarity of Issue of Discovery and Interrogatories; and Adjournment of Omnibus Objection
Hearing to December 3, 2015 on Claims Nos. 3910 & 4085 – Philip Emiabata and Sylvia
Emiabata (the “Motion for Conference,” ECF Doc. # 9065). The following day the Court
entered an order denying the Motion for Conference, ordering that the hearing on the Objection
go forward as scheduled on September 3, 2015 (the “Conference Order,” ECF Doc. # 9066).
The Trust thereafter filed a supplemental reply in support of its Objection and Supplemental
Objection (the “Supplemental Reply,” ECF Doc. # 9069).
On September 2, 2015, the Emiabatas filed a notice of appeal (the “Appeal,” ECF Doc.
# 9110) of the Conference Order as well as a motion to stay the resolution of the Objection
pending the outcome of their Appeal (the “Motion to Stay,” ECF Doc. # 9102). 2 The Motion to
Stay is hereby DENIED. The Court will address the merits of the Emiabatas’ Claims.
Familiarity with the parties’ arguments in the Objection, Opposition, Supplemental
Objection, Supplemental Opposition, and Supplemental Reply is assumed.
2 	The Emiabatas also filed a motion for relief from the stay. (ECF Doc. # 9103.) The Emiabatas have not
paid the filing fee for this motion and the Court therefore does not consider it in this Opinion.
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II. 	DISCUSSION
A. 	Claims Objections
Correctly filed proofs of claim “constitute prima facie evidence of the validity and
amount of the claim . . . . To overcome this prima facie evidence, an objecting party must come
forth with evidence which, if believed, would refute at least one of the allegations essential to the
claim.” Sherman v. Novak (In re Reilly), 245 B.R. 768, 773 (2d Cir. B.A.P. 2000). By
producing “evidence equal in force to the prima facie case,” an objector can negate a claim’s
presumptive legal validity, thereby shifting the burden back to the claimant to “prove by a
preponderance of the evidence that under applicable law the claim should be allowed.” Creamer
v. Motors Liquidation Co. GUC Tr. (In re Motors Liquidation Co.), No. 12 Civ. 6074 (RJS),
2013 WL 5549643, at *3 (S.D.N.Y. Sept. 26, 2013). If the objector does not “introduce[]
evidence as to the invalidity of the claim or the excessiveness of its amount, the claimant need
offer no further proof of the merits of the claim.” 4 COLLIER ON BANKRUPTCY ¶ 502.02 (Alan N.
Resnick & Henry J. Sommer eds., 16th ed. 2014).
Bankruptcy Code section 502(b)(1) provides that claims may be disallowed if
“unenforceable against the debtor and property of the debtor, under any agreement or applicable
law.” 11 U.S.C. § 502(b)(1). To determine whether a claim is allowable by law, bankruptcy
courts look to “applicable nonbankruptcy law.” In re W.R. Grace & Co., 346 B.R. 672, 674
(Bankr. D. Del. 2006).
Although “[claims] drafted by pro se [claimants] are to be construed liberally, [] they
must nonetheless be supported by specific and detailed factual allegations sufficient to provide
the court and the defendant with ‘a fair understanding of what the [claimant] is complaining
about and . . . whether there is a legal basis for recovery.’” Kimber v. GMAC Mortg., LLC (In re
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Residential Capital, LLC), 489 B.R. 489, 494 (Bankr. S.D.N.Y. 2013) (ellipsis in original)
(quoting Iwachiw v. New York City Bd. of Elections, 126 F. App’x 27, 29 (2d Cir. 2005)).
The Court finds and concludes that the Trust adequately shifted the burden of proof to the
Emiabatas by way of its Objection and Supplemental Objection and that the Emiabatas thereafter
failed to satisfy their burden in establishing the viability of their Claims. The specific factual
allegations and legal arguments raised by the parties are addressed below. The Objection to the
Emiabatas’ Claims is SUSTAINED in its entirety.
B. 	Wrongful Foreclosure
The Emiabatas base their Claims in part on a cause of action for wrongful foreclosure.
The Trust asserts that this cause of action fails because the Debtors at all relevant times followed
the terms of the Note, Deed of Trust, and applicable law.
Under Texas law, the elements of a wrongful foreclosure claim include: “(1) a defect in
the foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a causal
connection between the defect and the grossly inadequate selling price.” Sauceda v. GMAC
Mortg. Corp., 268 S.W.3d 135, 139 (Tex. Ct. App. 2008). “A party who has lost property
through a wrongful foreclosure is entitled to either the property or its value, but not both.”
Durkay v. Madco Oil Co., 862 S.W.2d 14, 21 (Tex. Ct. App. 1993) (citing cases). Based on
these elements, a foreclosure sale has to actually occur in order to give rise to a wrongful
foreclosure claim—otherwise no property has been “los[t].” See id. When GMACM transferred
servicing rights of the Emiabatas’ Loan to Ocwen, a non-debtor, no foreclosure sale had been
conducted. Thus, the Emiabatas’ wrongful foreclosure claim fails to state a viable claim for
relief and the Objection is SUSTAINED as to this cause of action.
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C. 	Loan Origination Allegations
The Emiabatas make a handful of allegations in support of their Claims that relate to the
origination of their Loan: (1) the Debtors provided the Emiabatas with a “sub-prime” loan when
the Emiabatas wanted a different type of loan; (2) the Debtors broke their promise that the Loan
would convert to a 30-year fixed rate loan after one year; and (3) the Emiabatas did not receive
title to all of the land they were supposed to acquire, presumably in connection with their Loan.
The Trust correctly argues that the Debtors were not involved in the origination of the
Emiabatas’ Loan because the originating lender was Home Loan. Without involvement, the
Debtors cannot be liable for any claims arising out of the origination. As such, the Court
SUSTAINS the Objection to the Claims relating to the origination of their Loan.
D. 	Allegedly Misapplied Payments
The Emiabatas assert, as they did throughout their relationship with the Debtors, that
payments they made toward their Loan account were misapplied by the Debtors. The Trust
provides evidence that the payments of which the Emiabatas have provided proof were payments
they made during their First Chapter 13 Case in 2005 through September 2007.
Under Texas law, breach of contract, fraud, and deceptive trade practices claims are
subject to a four year statute of limitations. TEX. CIV. PRAC. & REM. CODE ANN. § 16.004
(2014); TEX. BUS . & COMM. CODE § 17.565 (2015). The Massachusetts Action was filed on
October 25, 2011, more than four years after the Emiabatas made these allegedly misapplied
Loan payments. Thus, any allegations relating to payments made or misapplied four years prior
to that date are time-barred and not actionable. The Emiabatas have not put forth any allegations
or evidence demonstrating that payments were misapplied after October 25, 2007. The Court
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therefore SUSTAINS the Objection to the Claims as they relate to allegations of misapplied
payments.
E. 	Insurance Escrow
The Emiabatas allege that during 2003 and 2004, the Debtors improperly placed
insurance on the Property and charged the costs of such extra insurance to their escrow account
when they already had property insurance for which they were paying. The Trust argues that the
placement of the insurance on the Property was not wrongful because the Emiabatas failed to
promptly provide proof of their property insurance when Homecomings requested it, the lender-
placed insurance was immediately cancelled upon the eventual receipt of proof, and the only
charges the Emiabatas incurred were for coverage during the months for which no proof of the
Emiabatas’ insurance was provided. The Trust further asserts that any claim arising out of the
insurance escrow allegation is time-barred.
The Court SUSTAINS the Objection to the Claims to the extent they are based on
Homecomings’ placement of insurance on the Property. First, any breach of contract, fraud, or
deceptive trade practices claim, which again would be subject to a four year statute of
limitations, is time-barred as these insurance-related allegations arose in 2003 and 2004. Second,
the Trust has put forth sufficient evidence that the placement of insurance on the Property was
proper and due to the Emiabatas’ failure to provide proof of insurance. This evidence is
sufficient to shift the burden to the Emiabatas; in response, the Emiabatas have provided no
evidence or argument establishing the viability of their allegations.
F. 	Alleged Wrongful Denial of Loan Modifications
The Emiabatas also allege that the Debtors wrongfully denied them loan modifications,
but they do not specify why or how those denials were wrongful. The Trust argues that the
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Debtors followed the guidelines of the Loan’s investor and of the government and denied the
loan modifications due to the Emiabatas’ failures to comply with certain terms of initially
agreed-upon modifications.
The Objection to the Claims as they relate to the denial of loan modifications is
SUSTAINED. The Trust has provided sufficient evidence establishing that the Debtors
approved the Emiabatas for more than one loan modification over the course of their
relationships with the Emiabatas and that the modifications were ultimately cancelled due to the
fault of the Emiabatas. For example, one loan modification was cancelled because the Emiabatas
failed to make their initial contribution payment in certified funds, as expressly required in the
loan modification agreement. The Emiabatas have failed to put forth any evidence or argument
establishing that their Claims of wrongful denials of loan modifications are viable, thereby
failing to meet their burden.
G. 	The Form 1099
Lastly, the Emiabatas allege that the Debtors failed to provide them with a copy of a
“1099 form” in 2010. The Trust asserts that the Debtors’ books and records do not reveal that
any cancellation of debt was ever made with respect to the Emiabatas’ Loan (and the Emiabatas
do not allege any cancellation of debt), nor is there any entry reflecting that the Emiabatas made
a request for such a form.
Form 1099 is filed with the Internal Revenue Service by a financial entity to cancel a debt
of $600 or more owed to it by a debtor. See Form 1099-C, Cancellation of Debt, Internal
Revenue Service, http://www.irs.gov/uac/Form-1099-C,-Cancellation-of-Debt (last visited
September 3, 2015). The Trust provided sufficient evidence establishing that there was no
cancellation of debt, which in turn establishes that no Form 1099 would have needed to be
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produced or provided to the Emiabatas. Therefore, the Court SUSTAINS the Objection to the
Claims as they relate to the purported failure to provide a Form 1099.
III. 	CONCLUSION
For the above reasons, the Objection is SUSTAINED in its entirety and the Claims are
DISALLOWED and EXPUNGED.
Dated: September 4, 2015
New York, New York
_____Martin Glenn____________
MARTIN GLENN
United States Bankruptcy Judge
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