On November 28, 2007, several months after this Court scheduled an evidentiary hearing and directed Chase Home Finance to submit the Policy Affidavit, a letter was filed on the Court docket in this case addressed to the Clerk of the Court from a legal assistant acting on behalf of “Pillar Processing, LLC,” an entity unknown to the Court that appeared to have no connection with this case or these Debtors. The letter stated:
Dear Sir or Madam:
Respecting captioned bankruptcy matter, please be advised that the 362 motion scheduled for December 7, 2007, at 10:30am [sic] has been
Very Truly Yours,
PILLAR PROCESSING, LLC.
By: Robin L. Brown
ECF Docket No. 23. Though no relationship was identified or explained in the body or
letterhead, Pillar Processing and Chase Home Finance’s bankruptcy counsel, Steven J.
Baum, P.C., share the same address and telephone number, and ECF reflects that the
letter was filed using a password issued to “Dennis Jose [a Steven J. Baum, P.C. attorney]
on behalf of CHASE HOME FINANCE, LLC.” Chase Home Finance’s bankruptcy
counsel, Steven J. Baum, P.C., has made no effort to address or explain this act, or the
propriety of this action on the record.
Finally, the Attorney Affirmation made no effort to explain the relationship between the Steven J.
Baum, P.C. law firm and Pillar Processing, LLC, the non-legal entity that attempted to
withdraw the Lift-Stay Motion.
The Court will issue a separate order denying the Lift-Stay motion and directing
that neither Chase Home Finance, the current holder or owner of the note and mortgage,
nor any of their successors-in-interest shall in any way seek or charge any attorneys’ fees
or other charges against Debtors, their property, or the mortgage, whether now or at the
end of the mortgage, if such fees or charges are in any manner connected with the Lift-
Stay Motion, the Order to Show Cause, or the Evidentiary Hearing.
This decision is published as a warning, not just to Chase Home Finance and
other mortgage servicers, but to all individuals and entities involved in the process, along
the line – analysts, supervisors and other personnel employed by mortgage servicers;
third-party vendors; regional law firms; and local counsel – that the conduct identified
here, in this Court’s view, constitutes an abuse of process. Although the Court’s focus in
this case was on the mortgage servicer’s conduct and did not order all of the participants
to appear and respond to this Order to Show Cause, they will be included in future orders
if such abusive conduct continues, and the Court will assume familiarity with this
The Lift-Stay motion, which originated with a notation on an analyst’s computer
screen, has generated a 60-page decision and stress on the Debtors for the nine-month
period that the Lift-Stay Motion was pending. The Court is not compensated according
to time spent on a particular case, but this Order to Show Cause has drawn time and
resources away from other, meritorious cases. Judicial resources do not permit such a
thorough examination of every case. This decision sanctions Chase Home Finance only
for the actual costs incurred by the Debtors. In the Court’s view, the sanction is an
extremely mild one, because the Supreme Court instructs that a bankruptcy court should
exercise its Section 105 powers with restraint and discretion. The Court does not regard
the exercise of restraint in this case to be a limitation on the sanctions that might be
imposed in the future against Chase Home Finance or another mortgage servicer if this
abuse occurs again. If Chase Home Finance, other mortgage servicers and any
employees, third-party vendors, or any attorneys involved in the process at any level
exhibit the same type of abusive conduct in the future, this Court believes that Section
105(a) authorizes sanctions of increasing severity.
Dated: Poughkeepsie, New York
April 10, 2008
/s/ Cecelia Morris .
. CECELIA G. MORRIS
UNITED STATES BANKRUPTCY JUDGE
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