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Jepson v. Bank of New York Mellon

United States Court of Appeals, Seventh Circuit

April 15, 2016

IN RE: PATRICIA JEPSON, Debtor-Appellant,

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:14-cv-00423 -- James F. Holderman, Judge.

         For In the Matter of: PATRICIA JEPSON, Debtor - Appellant: Kenneth E. Kaiser, Attorney, Kenneth E. Kaiser, Palatine, IL.

         For Bank of New York Mellon, Defendant - Appellee: Matthew Reasor Bowman, Attorney, Kluever & Platt, LLC, Chicago, IL; Justin F. Carter, Attorney, Morris Laing Evans Brock & Kennedy, Chtd., Chicago, IL.


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         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 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 re-verse our judgment, I deny the motion.

         The underlying facts of this litigation are set forth in plena-ry 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

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stayed the bank's foreclosure action, and the bank moved to modify the automatic stay in the bankrupt-cy court. Ms. Jepson opposed the motion and initiated an ad-versary 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 auto-matic stay to allow the bank to proceed with the foreclosure action in Illinois state court. The bankruptcy court did not, 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, 816 F.3d 942, at *7 (7th Cir. Mar. 22, 2016). We also con-cluded, 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 *13. 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 *14.

         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 man-date pending the filing of a petition for a writ of certiorari " must show that the petition will present a substantial ques-tion 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 cham-bers). 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 ...

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