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UniCredit Bank AG v. Jue-Thompson

United States District Court, Tenth Circuit

November 26, 2013

UNICREDIT BANK AG, NEW YORK BRANCH, f/k/a BAYERISCHE HYPO-UND VEREINSBANK AG, as agent for THE BANK OF NEW YORK MELLON, Plaintiff,
v.
LISA JUE-THOMPSON, et al., Defendants.

MEMORANDUM AND ORDER

ERIC F. MELGREN UNITED STATES DISTRICT JUDGE

In this action, Plaintiff UniCredit Bank AG, New York Branch, formerly known as Bayerische Hypo-und Vereinsbank AG (“UniCredit”), seeks to enforce a securitized promissory note against Defendants Lisa Jue-Thompson and Rickey Thompson (collectively “Defendants”). This matter comes before the Court on Defendants’ Motion to Dismiss Plaintiff’s Amended Complaint (Doc. 9), which seeks dismissal for lack of subject-matter jurisdiction and for failure to state a claim upon which relief may be granted. For the reasons stated below, the Court grants Defendants’ motion in part and denies the motion in part.

I. Factual and Procedural Background [1]

Defendants Lisa Jue-Thompson and Rickey Thompson are individual residents of the State of California. Plaintiff UniCredit is a banking organization organized under the laws of the Federal Republic of Germany with its principal place of business in New York. UniCredit brought this action in its capacity as agent of The Bank of New York Mellon (“BONY”) to enforce various loan agreements executed by Defendants.

A. Defendants’ Loan Documents

On April 29, 2005, Defendant Lisa Jue-Thompson executed a Promissory Note in favor of Brooke Credit Corporation (“Brooke Credit”)[2] for the benefit of People First Insurance Services, an insurance agency she operated. On the same date, Lisa Jue-Thompson executed an Agreement for Advancement of Loan (“Agreement for Advancement”), which governed Jue-Thompson’s relationship with Brooke Credit. Lisa Jue-Thompson also executed a Commercial Security Agreement and Addendum (“Security Agreement”), which granted Brooke Credit a security interest in the assets of Jue-Thompson’s insurance agency. Finally, Rickey Thompson executed a Guaranty to secure the loan extended to Lisa Jue-Thompson.

The Agreement for Advancement, Security Agreement, and Guaranty collectively constitute ancillary agreements (“Ancillary Agreements”) to the Promissory Note. Defendants and Brooke Credit were the only parties to the Promissory Note and Ancillary Agreements (collectively, “Loan Documents”), which represented Loan Number 4516 in the principal amount of $485, 227.99. Brooke Credit underwrote and made the loan in the State of Kansas.

B. Securitization of Defendants’ Indebtedness

Over a period of several years, Brooke Credit sponsored a number of securitizations. To proceed with such securitizations, Brooke Credit would sell groups of its loans to securitization companies in exchange for cash that the securitization company would raise by issuing Notes to investors. The securitization company would then engage a trustee to service and enforce the underlying loans, and to then administer payments to the Noteholders.

On December 1, 2005, Brooke Credit entered into a Sale and Servicing Agreement, under which Brooke Credit sold all of its rights in a group of loans to Brooke Securitization Company V (“Brooke Securitization” or “Issuer”). Defendants’ Loan Documents were among the pool of loans sold to Brooke Securitization under the Sale and Servicing Agreement. To pay for this group of loans, Brooke Securitization issued a series of Notes (the “2005-2 Notes”) to various investors in the market. UniCredit was one of these investors, acquiring 58.25% of the 2005-2 Notes.

Brooke Securitization issued the 2005-2 Notes pursuant to a Floating Rate Asset-Backed Notes Series 2005-2 Indenture (the “Indenture”) between itself, as Issuer, and BONY, as Trustee. Pursuant to the Indenture, Brooke Securitization provided security for its obligation to pay the Notes. This security took the form of a first priority perfected security interest in virtually all of Brooke Securitization’s assets, including all of its interest in the group of loans owned by Brooke Securitization (the “Asset Pool”). Defendants’ Loan Documents were among the group of loans that Brooke Securitization pledged as security to pay the 2005-2 Notes. The security interest in the Asset Pool collateral was granted by Brooke Securitization to BONY, in its capacity as Indenture Trustee, to retain for the benefit of the holders of 2005-2 Notes.

In its capacity as Trustee under the Indenture, BONY was entitled to (1) collect funds generated by the collateral, including loans in the Asset Pool; (2) liquidate the collateral following an event of default under the Indenture or upon default of any underlying Loan Documents, holding the proceeds in trust for the holders of the 2005-2 Notes; and (3) take other measures to protect the collateral under the Indenture. On October 22, 2008, BONY executed a Power of Attorney, designating UniCredit as its agent with full power of substitution to take all actions with respect to the Trustee’s rights and remedies under the Indenture, including the right to pursue collection on any collateral securing the 2005-2 Notes.

When Defendants’ Loan Documents were sold from Brooke Credit to Brooke Securitization, and then transferred to BONY as Trustee, they were transferred by delivery of the Promissory Note and a one-page allonge. The allonge bore two signature endorsements; the first purporting to negotiate the Promissory Note from Brooke Credit to Brooke Securitization, and the second purporting to negotiate the Promissory Note from Brooke Securitization to BONY, as Indenture Trustee. It is ...


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