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October 22, 2009

Writ of Craving Oyer - I'm not Kidding!

From mega bankruptcy attorney Marc S. Stern marc@hutzbah.com.  Note:  This is a real motion.

Debtor, by and through counsel, hereby responds to the Objection to Confirmation filed by [...] Bank, Requests that matter be continued until the her primary counsel can return from bar meetings out of state and discovery can be completed, and requests this court issue a Writ of Craving Oyer.

1. The debtor operates the property in qustion as a rooming house.
2. The debtor derives revenue from providing room and board to foreign students.
3. The Debtor has done this since before the inception of the loan.
4. The loan being modified herein was obtained using the rental income from the room and board as part of the income considered in granting the loan.
5. This objection was filed on Tuesday of last week. Marc S. Stern, the debtor's primary counsel left on Wednesday morning for Bar Meetings in Los Angeles and Los Vegas and has not had the time necessary to devote to this response. Ms. [Jones] has refused a request for continuance.
6. The debtor is out of state until October 26 and is unavailable to sign a declaration.  The debtor is entitled to adjust the interest rate on the home loan in question because as a rooming-house, the property is not solely the principal residence of the debtor.

The debtor has not had any chance to complete discovery. The decision to make the loan, the collateral relied upon, and the documents received in support of the loan require that the debtor be given time to complete discovery. See, Motion for Craving Oyer, infra.

This Objection was filed at the very last minute, and a continuance was requested, informally. Ms. A refused, as is her right. However, given the important legal issues and the need for a firm factual underpinning for the court's ultimate ruling in this case, the court must continue the hearing until counsel can be present and discovery completed.

II. The Property is Not Solely the Principal Residence of the Debtor
A. Section 1322(b)(2) Does Not Apply  AR has operated use the property herein as a rooming house and income producing property since before the inception of this loan. (she has occasionally suspended renting rooms due to health problems.] [(2) Ms. [R] out of state until October 26th, is unavailable to sign a declaration in support of this reply. 

 At any given time, the property in question houses several, primarily foreign, students. The students receive room and board, with meals prepared by the debtor. This makes the obligation not secured solely by residental real property. This is a question of first impression in this Circuit, however, it is the clear holding of  the 3rd Circuit in. In re Scarborough 461 F.3d 406, 2006 WL 2466859 (C.A.3 2006 (Pa.)) the court held that
 By using the word "is" in the phrase "real property that is the debtor's principal residence," Congress equated the terms "real property" and "principal residence." Put differently, this use of "is" means that the real property that secures the mortgage must be only the debtor's principal residence in order for the anti-modification provision to apply. We thus agree with the reasoning of the Bankruptcy Court for the District of Connecticut when it noted that § 1322(b)(2) "protects claims secured only by a security interest in real property that is the debtor's principal residence, not real property that includes or contains the debtor's principal residence, and not real property on which the debtor resides." In re Adebanjo, 165 B.R. 98, 104 (Bankr.D.Conn.1994). A claim secured by real property that is, even in part, not the debtor's principal residence does not fall under the terms of § 1322(b)(2). Consequently, "real property which is designed to serve as the principal residence not only for the debtor's family but for other families is not encompassed by the clause." Id.; see also In re Maddaloni, 225 B.R. 277, 280 (D.Conn.1998) ("[T]he use of 'is' without any modifier ( e.g., 'in whole' or 'in part') does not evince an intent by Congress to apply the antimodification provision to real property that includes, but is more than, a debtor's residence."); In re McGregor, 172 B.R. 718, 720 (Bankr.D.Mass.1994) (relying on plain language of § 1322(b)(2) to permit modification of claim secured by "the debtor's residence and property which has 'inherently income producing' power"); In re Legowski, 167 B.R. 711, 714 (Bankr.D.Mass.1994) (same). [emphasis supplied]

It is believed that the deed of trust in this case contains a security interest in rent. It is also clear that the rental income was part of the original collateral package and the existence of rent was used in making the determination to make the loan. As the term is defined, the property includes the debtor's residence but is not the debtor's principal residence.

The debtor askes the court for a Writ Directing the bank to Crave Oyer, or, more literally, bring the original document to court. A Motion for Craving Oyer is one of the lesser known Common Law writs. The common law was adopted in the State of Washington and in the United States. Craving Oyer predates the formation of the United States of America. Literally, it requires that the document be read in court.

In today's world, it is impossible to tell who owns the document. Were this a law suit in King County, where the property is located, local rules require hat the Original Document be filed in the court. This court should not be less vigilent than its state court counterpart. In fact, since the plan requires modification of the terms of the Note and Deed of Trust, the original should be produced so that the terms of the Order Confirming Plan can be attached to the document as an allange thus providing notice to future holders that there has been a modification.

In the event that the original can not be produced, with appropriate assignments evidencing that Deutsch Bank is indeed the holder of the instrument, its claim must be denied and its objection over ruled.

This matter is not ripe for a decision. The bank has not demonstrated that it is entitled to any relief. The debtor has requested a continuance and there is still discovery to do. In any event, it is clear that section 1322(b)(2) does not apply to this case because the obligation in question is not secured solely by the debtor's principal residence. This court should continue the matter for 120 days in order to complete discovery or it must overrule the objection.

Response from fellow listmember Dan Press

Well, here in VA we crave oyer all the time. But I would think that because it's purely procedural, it has been superseded by the Rules Enabling Act and the All Writs Act. In Federal Court, if you want the original, just ask for it in discovery.

The reason we crave oyer so much in state court is that there is really no effictive motion for summary judgment (we can only rely on the pleadings and requests for admission), so if the document is not attached to the complaint but is part of the cause of action, craving oyer not only gets the document produced, but it is deemed part of the pleading so that it can be included in a demurrer (the equivalent to a 12(b)(6) motion to dismiss). In Fed. Court (including bk court), you can use the document if they produce it in discovery, so that's not necessary.

Of course, this doesn't relate much to foreclosure litigation in VA (what's that??!!), because our foreclosures are strictly non-judicial.

Dan Press
Chung & Press, P.C.
6718 Whittier Ave. #200
McLean, VA 22101

October 22, 2009 in Current Affairs | Permalink


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