Civil Action 12

http://rcxloan.com/Civil_Action_BK_Motion_12.htm

“A good name is more desirable than great riches; to be esteemed is better than silver or gold.” - Proverb 22:1

Praises & Thanks be unto The Lord My God for the wisdom, knowledge and understanding on legal matter because I received countless feedbacks from folks facing foreclosure and bankruptcy around the United States as follows:

Comments: "I have been inundated with TILA questions. So I went out hunting to see if anyone had already written about it in terms that a lay person might be able to understand. What I found is shown below. I believe it to be generally correct and the citations are good citations of law. See this site for the entire write-up. It should give most lay people an idea on how to handle this and it will be valuable to your lawyer if he/she is not totally familiar with the TILA context at the following link:" http://rcxloan.com/Civil_Action_BK_Motion_14.htm. Statement made by Attorney at Law, Neil F. Garfield, M.B.A., J.D.

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United States Bankruptcy Court District of Massachusetts, Pierre Richard Augustin, PRO SE )

Debtor, )

v. ) No. 05-46957

) Chapter 7

DANVERSBANK, ET AL., )

DEBTOR’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO COMMONWEALTH OBJECTION TO THE AMENDMENT OF DEBTOR’S SCHEDULES B and C & MOTION TO CORRECT AMENDED SCHEDULES DUE TO ERROR IN CITING LAW

1. Emancipation Redress
In America, no one is considered to be above the law. The United States Constitution is considered the supreme law of the land both because of its content and because its authority is derived from the people. However, first and foremost, debtor meditates and relies on the divine guidance of the almighty (Exhibit A (1st Amend. Right)) to provide him with wisdom to dissect and to comprehend the meaning of the law of the land.

Debtor strongly believes in the transparency of the judicial system in the to uphold the law in the search of Justice. For, it is the only forum whereby an average ‘Joe’ citizen like himself who never had any infraction with the law, was left with the only viable option of bankruptcy and TILA rescission to protect his property rights as a defense to foreclosure without money, status and political connection in seeking the emancipation and the redress from the violation of the law by powerful corporations with unlimited budget represented by the most savvy lawyers on just about equal term.

Intuitively, debtor recognizes that he is facing lawyers that are well schooled with an in-depth knowledge of the law and various courtroom strategies that he lacks. Although not a lawyer or pretending to be one, debtor’s action is symmetrical to many pro se individual from the early settlers in the state of Massachusetts who could not afford expensive legal representation in the search of fairness, equal protection and justice under the law.

Unequivocally, the paramount reason for debtor’s motion to oppose Commonwealth’s objection and motion to amend schedules rest on the principle of Emancipation and Redress which are intertwined with his property rights as "the guardian of every other right". It is also analogous with the Federal Rule of Civil Procedure that state: “Leave should be freely given to amend complaint unless adverse party can prove prejudice, bad faith or dilatory intent. (Beeck v. Aquaslide, 562 F.2d 537 (8th Cir. 1977)). Also, as a pro se debtor, the court is supposed to judge the case based on its merits even if procedural errors are made.

In addition, Debtor’s motion is analogous to a pro se complaint facing potential dismissal for failure to state a claim (i.e. Rule 12(b)(6), if that (pro se) plaintiff obviously cannot prevail on the facts and , additionally, it would be futile to allow him to amend his complaint (Oxendine v. Kaplan, 241 F.3d 1272, 1275 (10th Cir. 2001); McKinney v. Oklahoma, 925 F.2d 363, 365 (10th Cir. 1991)), (a fair court will always let the plaintiff amend his complaint at least once), or in the case of Debtor, for leave to amend his schedule as authorized under Rule 1009.

Retrospectively, filing in Federal Bankruptcy & Civil Court is an extremely complex tasks that involves the mastery of unfamiliar concepts such as substantive law, procedures, forms, formats, terminology, service and legal research which at first create anxiety, confusion and panic for a pro se person like the Debtor without years of special training which led Debtor to correct motions on several instances due to serious “dumb” mistakes by not having a fully understanding of the meaning and interpretation of law in trying to do his reasonable best under the circumstances. Therefore, the court must give a pro se Debtor, “every favorable inference arising from his pro se status” (Hall v. Dworkin, 829 F. Supp. 1403, 1409 (ND NY 1993)).

Thus, debtor arguments are based on the following Rule of Law and others as deemed appropriate:
1) TILA & Res Judicata (Analogous to Debtor’s situation since he was not a party in any previous court or had ever litigated fully any TILA claims) – A rescission action may not be barred by prior TIL litigation which did not involve rescission (Smith v. Wells Fargo Credit Corp., 713 F. Supp. 354 (D. Ariz. 1989) (state court action involving, inter alia TIL disclosure violations did not bar a subsequent action based on rescission notice violations in conjunction with same transaction which were not alleged or litigated in prior action) (See also In re Laubach, 77 B.R. 483 (Bankr. E.D. Pa. 1987) (doctrine of merger bars raising state and federal law claims arising from a transaction on which a previous successful federal TILA action was based; merger does not bar, however, rescission-based on the same transaction)).

2) TILA Pleading (In reference to Commonwealth’s Motion that mentioned Debtor’s federal pleading) – Under the Federal Rules of Civil Procedures, it may be sufficient to plead that the TILA has been violated. (Fed.R. Civ. P. 8(a)). Specific violations do not necessarily have to be alleged with particularity (Brown v. Mortgagestar, 194 F. Supp. 2d 473 (S.D. W. Va. 2002) (notice pleading is all that is required in TILA case); Herrara v. North & Kimball Group, Inc., 2002 WL 253019 (N.D. Ill. Feb.. 20, 2002) (notice pleading sufficient; response to motion to dismiss can supplement complaint by alleging facts re specific documents assigned); Staley v. Americorp. Credit Corp., 164 F. Supp. 2d 578 (D. Md. 2001) (plaintiff need not specify specific statute or regulations that entitle her to relief; court will examine complaint for relief on any possible legal theory); Hill v. GFC Loan Co., 2000 U.S. Dist. Lexis 4345 (N.D. Ill. Feb. 15, 2000) (complaint was specific enough even though it did not identify the security interest that defendant should have disclosed). The consumer’s complaint need not plead an error exceeded the applicable tolerance, since this is an affirmative defense (Inge v. Rock Fin. Corp., 281 F.3d 613 (6th cir. 2002)).

3) Rule 1009. Amendments of Voluntary Petitions, Lists, Schedules and Statements, (a) General right to amend. A voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed. A debtor may amend schedules even after a discharge is granted so long as the case is not yet closed. (In re Michael, 163 F.3d 526, 529 (9th Cir. 1998)).

4) Rule 4003 (c) - Burden of Proof – Because a claimed exemption is presumptively valid, an objecting party must prove the exemption is not proper.

5) Rule 6009 provides Debtor the right to prosecute and defend cases without the need for bankruptcy court approval.

6) 1st Amendment, "Congress shall make no law … abridging … the right of the people … to petition the Government for a redress of grievances."

7) 5th Amendment, “No person shall be … deprived of life, liberty, or property, without due process of law”

8) 7th Amendment, “…The right of trial by jury shall be preserved.”

9) 14th Amendment, “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

10) Natural Rights, “Weakness allures the ruffian, but arms, like laws, discourage and keep the invader and plunderer in awe, and preserve order in the world as well as property. Horrid mischief would ensue were the law-abiding citizens deprived of the use of them, and the weak will become a prey to the strong.” — Thomas Paine

11) Common Law, In Beard v. U.S.(158 U.S. 550, 1895), the Court approved the common law rule that a person "may repel force by force" in self-defense, and concluded that when attacked, a person "was entitled to stand his ground and meet any attack made upon him with a deadly weapon, in such a way and with such force" as needed to prevent "great bodily injury or death."

12) Pro Se Litigants, “Courts are particularly cautious while inspecting pleading prepared by Debtors who lack counsel and are proceeding pro se. Often inartful, and rarely compose to the standards expected of practicing attorneys, pro se pleadings are viewed with considerable liberality and are held to less stringent standards than those expected of pleadings drafted by lawyers”. (Antonelli v. Shehan, 81 F. 3d 1422, 1427 (7th Cir. 1996)). Also, “parties appearing pro se are allowed greater latitude with respect to reasonableness of their legal theories (Patterson V. Aiker, 111 F.R.D. 354, 358 [N.D. GA 1986]) and according to section D of Rule 11 of the Federal Rule of Civil Procedure.

2. Debtor’s property was exempted according to 11 U.S.C. § 541(1), 11 U.S.C. § 522(b)
The facts and circumstances are that Debtor had listed his house as exempt in the bankruptcy filing according to 11 U.S.C. §522(b). Debtor’s property listed as exempt has not been administered by the Trustee. Also, upon a phone conversation held with the office of the Trustee on March 14, 2006, debtor was told that the Trustee has nothing to do with his property and to consult an attorney.

The issue is covered by a Rule of law 11 U.S.C. § 541(1), 11 U.S.C. § 522(b) and based on the Federal Rule of Bankruptcy Procedure of Rule 5009. Closing Chapter 7 Liquidation, which states, If in a chapter 7, chapter 12, or chapter 13 case the Trustee has filed a final report and final account and has certified that the estate has been fully administered, and if within 30 days no objection has been filed by the United States Trustee or a party in interest, there shall be a presumption that the estate has been fully administered.

Analysis – The fact helps to prove the rule since April 17, 2006, the Trustee filed a Trustee’s Report of No Distribution states as follows: “…has received no property nor paid any money on account of the estate except exempt property, and diligent inquiry having been made, Trustee states that there is no nonexempt property available for distribution to creditors. Pursuant to FRB 5009, Trustee certifies that the estate is fully administered and requests that the report be approved and the Trustee discharged from any further duties. (Entered: 04/17/2006 at the Bankruptcy Court, District of Massachusetts)”. Once the Trustee has filed a final report certifying that the estate has been fully administered, if no objection is filed within thirty days, there is a presumption that full administration has taken place regardless of whether the case is closed. Once the presumption is in place, all property scheduled which has not been administered is deemed abandoned. Also, the usual ground for abandonment is that the property is of no value to the estate. No actual hearing is required as long as the Trustee gives proper notice, provided no party in interest makes a timely request for a hearing. Once the property is abandoned, title reverts to the debtor.

Conclusion - From the analysis, debtor comes to the Conclusion that the rules of law mentioned above are in order and the rules do apply to the facts and circumstances. Bankruptcy rules state that (a) After notice and a hearing, the Commonwealth may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate. The exception to that rule reflects Debtor’s situation as stated: (c) Unless the court orders otherwise, any property scheduled under section 521(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title. On April 17, 2006, the Commonwealth filed a Report of No Distribution. Also, if the Commonwealth does not timely object to a claim of exemption, the property will be deemed exempt, even if there is no basis for the exemption. (Taylor v. Freeland & Kronz, 503 U.S. 638, 643-45 (1992)). (see docket # 94) (Fed. R. Bankr. P. 1009; In re Olson, 253 B.R. 73 (B.A.P. 9th Cir. 2000); see also In re Kaelin, 308 F. 3d 885 (8th Cir. 2002) (debtor who promptly amended to exempt cause of action after he first learned about it was permitted to claim exemption). Hence, Commonwealth’s motion to object should be denied.

3. Debtor’s motion to amend schedules should be allowed otherwise it would be an unjustice!
The facts and circumstances are that the Commonwealth concluded his motion by asking the court not to allow Debtor his undeniable right to amend schedules per Rule 1009. Such a request can be classified or rightfully label as an ‘Obstruction of Justice’ that is immoral and contrary to the rational application of the rule of law since if Debtor’s guaranteed rights are usurped, he would fall into the trap of being Judicial Estoppel by the court. The doctrine of judicial estoppel would bar the Debtor from asserting monetary claims if not properly disclosed to the bankruptcy court as Debtor has asserted by listing the claims and exempt it according to rule 4003.

The issue is covered or analogous by the Rule of law of 11 USC 522(b) which states notwithstanding section 541 of this title, an individual debtor may exempt from property of the estate the property listed in either paragraph (a)(1) or in the alternative paragraph (a)(2) and 11 USC 522 (c), (g) & (h). An analogous argument can be made according to the [Senate Report. No. 95-989, 95th Cong. 2d Sess. 75 (1978).], subsection (l) which requires the debtor to file a list of property that he claims as exempt from property of the estate.

Rule 4003 requires that debtors claim their exemptions on the official Form, schedule C, property claimed as exempt and explicitly states that the burden of proof is upon the objecting party. Rule 4003(a), Amended Exemptions. Debtor’s amendment of schedules to claim an exemption does not reopen the objection period as to assets already claimed exempt (In re Hickman, 157 B.R. 336 (Bankr. N.D. Ohio 1993)) like the one filed by the Debtor on July 3, 2006 (See Docket # 94). Rule 4003(c) – While the objecting party must prove the exemptions are not properly claimed, the debtor has the initial burden to state the exemptions with sufficient particularity so that all parties are able to ascertain those properties the debtor believes to be exempt. The Rule 6009 as stated above does not requires Debtor to have court approval necessarily to bring what Debtor consider as a natural right. If motion to object is granted, Commonwealth will ultimately retaliate against Debtor’s exempted property rights since Debtor equal protection under the law would be practically nonexistent, the rule of law would be made a mockery and that justice will not be served.

#1) On July 3, 2006, debtor filed a motion to amend schedule B & C which was allowed with “No Objection” by the bankruptcy court (See Docket # 94). Debtor cited his civil suit, case#: 06-10368, as an asset in Schedule B and exempted it in Schedule C. In page 2 (See Exhibit 1) of Debtor’s civil complaint, he stated that TILA was in of the Jurisdiction of all the claims against the creditors or defendants in that civil action. At #6 of page 14 (See Exhibit 2) of civil complaint, Debtor explicitly stated that the New Century Mortgage Note which is now assigned to Chase is in violation of TILA and Regulation Z claims. In page 17 of the civil complaint, Debtor did mention rescission and statutory damages (See Exhibit 3). In retrospect, Debtor states that there was absolutely no creditors objection to the motion to amend schedules and the motion was allowed by the bankruptcy court uncontested. Also, no creditors ever filed an appeal within the 10 days limit or beyond. Hence, the order entered by Judge Rosenthal (See docket #94) on July 19, 2006 was deemed final and unappealable.

Analysis of the above facts based on analogous situations, Res Judicata & Collateral Estoppel…
Debtor noted that res judicata bars the relitigation of previously litigated claims or causes of action and that four factors are examined to determine whether the doctrine of res judicata applies:

(1) identity of parties; (2) identity in subject matter; (3) the issues are the same and relate to the subject matter; and
(4) the capacities of the persons are identical in reference to both the subject matter and the issues between them. Collateral estoppel bars relitigation of previously litigated issues and involves an analysis of four similar factors:
(1) whether the issue decided in the prior adjudication was identical with the issue presented in the present action; (2) whether the prior adjudication resulted in a judgment on the merits; (3) whether the party against whom collateral estoppel is asserted was a party or in privity with a party to the prior adjudication; and (4) whether the party against whom collateral is asserted had a full and fair opportunity to litigate the issue in the prior proceeding.

Federal res judicata and Collateral Estoppel do apply in this instance congruently. Commonwealth or any other party should not be allowed to relitigate claims, which has been the subject of a previous final order. (Possehl v. Ossino, 28 Mass. App. Ct.918 (1989), (FDIC v. Shearson-American Express Inc., 996 F.2d 493 (1st Cir. 1993)). The doctrine of res judicata clearly prohibit Commonwealth from relief to a final judgment that could have been objected by Commonwealth or any other creditors in the motion filed by Debtor on July 3, 2006. (See, In re McIntyre, 328 B.R. 356 (Bankr. D. Mass. 2005). Res Judicata are applicable based on 3 factors: 1) a final judgment on the merits of an earlier suit, 2) sufficient identicality between the causes of action in the earlier action and 3) sufficient identicality between the parties, (In re Iannochino, 242 F.3d 36 (1st Cir. 2001)). Hence, 1) Existence of Final Judgment: Final judgment was issued on July 19, 2006 by Judge Rosenthal which was not appealed timely per Bankruptcy rule 8002 that resulted as being final and unappealable, 2) Identicality of Issues: Rescission and Recoupment claims are an integral part of TILA and Regulation Z. Debtor simply reiterates the same fact cited on July 3, 2006 in its motion to amend schedules on September 21, 2006 which are identical to his civil pleading and [made a harmless error by adding a potential claim against Debtor for housing related issues as an asset and set it as exempt on schedule C by mistake and other related matter which should be classified on Schedule F, 3) Identicality of Parties: Trustee, creditors and Debtor are parties in Debtor’s chapter 7 bankruptcy.

A further analysis will find that:
(1) there is a final judgment on the merits in a prior action (Final judgment was issued on July 19, 2006 by Judge Rosenthal); (2) the second action is based on a different claim, but is based on an issue that was actually litigated an directly determined in a prior action, (Debtor made a harmless error by adding a potential claim against Debtor for housing issues as an asset and set it as exempt on schedule C by mistake which should be classified on schedule F); (3) the party had a full and fair opportunity to litigate the issue in the first action and there are no circumstances that justify affording them a second opportunity to retry the issue. Neither the Commonwealth nor the Creditors objected to the motion to amend schedules filed on July 3, 2006 and rule on by the court on (See docket #94) on July 19, 2006. Also, if the Commonwealth does not timely object to a claim of exemption, the property will be deemed exempt, even if there is no basis for the exemption. (Taylor v. Freeland & Kronz, 503 U.S. 638, 643-45 (1992)). (see docket # 94) (Fed. R. Bankr. P. 1009; In re Olson, 253 B.R. 73 (B.A.P. 9th Cir. 2000); see also In re Kaelin, 308 F. 3d 885 (8th Cir. 2002) (debtor who promptly amended to exempt cause of action after he first learned about it was permitted to claim exemption).

#2) Debtor stated the following in the 3rd Paragraph of page 2 of that Motion to amend schedules of July 3, 2006 as follows: “the paramount reason for Debtor’s amendment of schedules is in good faith based on a discovery while conducting legal research on Sunday, July 2, 2006 at around 6 p.m.. Thus, debtor’s amendment is analogous to the Equitable tolling which is a principle of tort law stating that a statute of limitations shall not bar a claim in cases where the Debtor, despite use of due diligence, could not or did not discover the injury until after the expiration of the limitations period. Likewise, despite debtor’s due diligence, Debtor was not aware of the fact that he had to amend his schedules to include a claim based on his action at the Massachusetts Federal Court for violations of debtor’s constitutional and federal rights in relation to his property”.

#3) Debtor stated on the 2nd paragraph of page 4 of the motion filed on July 3, 2006 as follows: “Debtor would like to amend Schedule B and C to include his claim at the U.S. District Court of Massachusetts that was authorized technically on April 3, 2006 after the Federal District court has screened the complaint in accordance to 28 USC § 1915 to determine if debtor’s action lacks an arguable basis either in law or in a fact, Neitzke v. Willliams, 490 U.S. 319, 325 (1989), or if the action fails to state a claim on which relief may be granted. Thus, debtor assumed that he had met the subject matter jurisdiction since his filing was not dismissed and he received the summons from the Federal District Court” that were served on the defendants. It is also covered by section 522 (l) on ‘Timely Objection’; which is analogous to Trustee’s & Commonwealth position whereas, if the chapter 7 Commonwealth’s failure to object to exemption within the time provided in Rule 4003, it precludes Commonwealth from later attacking exemptions regardless of whether debtor has a colorable basis for claiming the exemptions. (Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed.2d 280, 26C.B.C.2d 487 (1992)).

The facts above help to prove that the Debtor alleged unequivocally that DanversBank, Ameriquest Mortgage, New Century Mortgage & Commowealth have violated Federal and Massachusetts Law on Predatory Lending, TILA, HOEPA and others law. A debtor may amend schedules even after a discharge is granted so long as the case is not yet closed. (In re Michael, 163 F.3d 526, 529 (9th Cir. 1998)). If claims are not discovered until later, the failure to schedule them initially is not fatal, because schedules may be amended and because there is rarely any prejudice to the creditor if schedules are amended during the case. (See Ryan Operations, Gen. P’ship v. Santiam-Midwest Lumber Co., 81 F. (3d Cir. 1996) (suit on claim not listed in bankruptcy schedules not barred by judicial estoppel, as debtor had not attempted to play fast and loose with rules and failure to list claim had not impact on bankruptcy case); Donato v. Metro. Life Ins. Co., 230 B.R. 418 (N.D. Cal. 1999) (failure to disclose lawsuit as an asset on schedules did not judicially estop debtor from pursuing it); Elliot v. ITT Corp., 150 B.R. 36 (N.D. Ill. 1992) (failure to initially schedule debt as disputed or note cause of action and failure to deal with it in prior chapter 13 cases which had been dismissed did not estop debtors from raising consumer protection claims creditor after those claims were discovered)).

Likewise, Debtor could not have reasonably discovered the concealed fact of TILA violations until September 17, 2006 (excusable neglect, inadvertence) (See Exhibit 4) at about 5 a.m. in reading the Truth-in-Lending book by the National Consumer Law Center whereby Debtor timely filed the schedules to reflect his better understanding of the TILA Act and Regulation Z to invoque the right of rescission. In cases where the debtor-in-possession brings the action, the statute of limitations, if it had not expired as of the filing of the petition, would be extended until two years after the bankruptcy filing, (see Cunningham v. Healthco, 824 F. 2d 461 (5th Cir. 1987), see also Thomas v. GMAC Residential Funding Corp., 309 B.R. 453 (D. Md. 2004)). A number of courts have held that the recovery in such an action must be paid in cash to the debtor/plaintiff and cannot be set off against a debt discharged in the bankruptcy. (In re Riggs, 623 F. 2d 68 (9th Cir. 1980); Newton v. Beneficial Fin. Co., 558 F. 2d 731 (5th Cir. 1977) (holding that Truth in Lending damages are meant to penalize the creditor and thus should always be assessed). Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

Conclusion - From the analysis, Debtor comes to the Conclusion that the rule of law does apply to the fact. Absent a showing of bad faith, the court may not deny leave to amend a schedule. Bad faith does not exist if there is no evidence to hide the asset. When the debtor acted promptly to amend schedules after learning of the cause of action and there was no prejudice to creditors except the economic loss that occurs whenever property is claimed as exempt, in an analogous case, the lower courts erred in denying the debtor the right to amend. (Kaelin v. Bassett (In re Kaelin), 308 F.3d 885 (8th Cir. 2002) and in re Mourer, 287 B.R. 889 (Bankr. W.D. Mich. 2003), denying right to rescind when debtors did not list rescission claim as asset). For the reasons mentioned above, debtor motion to list claim is timely and in line with the rule of law since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. Hence, Commonwealth’s motion to object to debtor’s amendment of schedules should be denied.

4. Plaintiff’s responses to allegations on page 1 and 2 of Commonwealth’s motion are in point
The facts and circumstances are that Commonwealth cited docket # 23 and 32 which had no ‘LEGAL INFLUENCES’ or ever been litigated by the debtor. At that hearing (the issue was relief from the stay), the judge instructed the counsel of DanversBank “to contact Chase Mortgage to see if resolution of their second priority status can be confirmed”. In the absence of a full adversarial proceeding, see Bankruptcy rule 7001 et seq., a res judicata determination of plaintiff’s motion are inappropriate. See In re Gellert, 55 B.R. 970, 975 (Bankr. D. N.H. 1985).

The additional fact and circumstances against DanversBank are based on ‘causation’ that led to DanversBank’s violation of plaintiff’s constitutional rights (4th, 5th & 14th Amendment) by acting illegally since default obtained and argued upon by the counsel of DanversBank prior the bankruptcy hearing for the seizure of plaintiff’s property was obtained without notice or with a prior hearing and no opportunity to be heard in opposition was given to plaintiff. DanversBank default judgment against plaintiff is clearly erroneous that not only would produce manifest injustice but also violated the rule of law of due process. Plaintiff’s issues or claims raised here or in any previous complaint or memorandum have never been litigated. (FUENTES v. SHEVIN, 407 US 67 (1972)) and Sniadach v. Family Finance Corp, 1969. ( v. Premises and Real Prop. At 4492 S. Livonia Rd., F. 2d 1258, 1263 (2d Cir. 1989) ( requiring notice and adversarial hearing for property forfeiture actions to comply with due process, when the property is a home).

The issue is covered by the Rule of law of the 14th Amendment in regards to DanversBank violations in obtaining an illegitimate judgments. It is also based on the principle of non-core proceedings and rule 9014, contested matters. Automatic Stay, § 362. Subsection 362(d) of the Bankruptcy Code provides as follows: "On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay . . . such as by terminating, annulling, modifying, or conditioning such stay . . . ." 11 U.S.C. § 362(d). A request for relief from the stay is a "contested matter" commenced by a motion and governed by Bankruptcy Rule 9014. Fed. R. Bankr. P. 4001. Contested matter proceedings are generally designed for the adjudication of simple issues, often on an expedited basis. (Matter of Transamerican Natural Gas Corp., 978 F.2d 1409, 1416 (5th Cir. 1992); see 9 Collier on Bankruptcy 9014.05 (15th ed. 1996)

Analysis - The facts helped to prove that the issue of constitutionality and that of relief from the automatic stay are two distinctly different types of issues or claimed. That the Danversbank's claim may be at issue does not mean that the stay relief proceeding is the proper forum to adjudicate the claim. "The validity of the claim or contract underlying the claim is not litigated during the hearing." Johnson v. Righetti (In re Johnson), 756 F.2d at 740; see also Ellis v. Parr (In re Ellis), 60 B.R. 432, 435 (B.A.P. 9th Cir. 1985). The claim against DanversBank for violating plaintiff’s due process in obtaining default judgment of seizure of property that could have been raised as non-core issues in bankruptcy proceedings are not neither barred by res judicata nor has plaintiff been given a full and fair opportunity to litigate the claim(s) or issue(s) in the complaint in any previous court. Bethlahmy, IRA v. Kuhlman (In re ACI-HDT Supply Co.), 205 B.R. 231 (B.A.P. 9th Cir. 1997). (in re Montgomery , 262 B.R. 772 (BAP 8th Cir. 2001)). As a matter of federal practice, a default judgment will not support the application of issue preclusion because none of the issues resolved in the judgment will have been actually litigated. (Simmons Masonry v. Barton (In re Barton), 272 B.R. 61 (N.D.N.Y. 2002) (Debtor’s prior confession of judgment did not preclude him from subsequently litigating issue bearing on breach of fiduciary duty and defalcation because there was no litigation that led to the confession, and, therefore, no identity of issues).

Non-core matters are related matters, which include the plaintiff’s causes of action that could have been brought in state or federal court had there been no bankruptcy case. Bankruptcy judge may hear the proceeding and must submit proposed findings of fact and conclusions of law to district court for final disposition and for de novo review if there is any objection 28 USC §157(c)(1) (any final order or judgment shall be entered by the district judge after considering the bankruptcy judge’s proposed findings and conclusions and after reviewing de novo those matters). Bankruptcy court can’t just enter a final order in these cases because that exceeds the power of the court as a non-Article 3 court.

Separation of core and non-core proceedings creates a distinction between those judicial acts deriving from the plenary Article I bankruptcy power and those subject to general Article III federal court jurisdiction. Lebovits v. Scheffel (In re Lehal Realty Assocs.), 101 F.3d. 272 (2d Cir. 1996) (distinction between core and non-core proceedings is intended to deal with problem of vesting Art. III judicial power in Art. I judges); Hudgins v. Shah (In re Sys. Eng'g & Energy Mgmt. Assocs., Inc.), 252 B.R. 635 (Bankr. E.D. Va. 2000) (discussing importance of "public rights" nature of bankruptcy proceedings to designation of "core" proceedings); Noonan v. Cellu Tissue Corp. (In re Palmer Trucking Co.), 201 B.R. 9 (Bankr. D. Mass. 1996). Action alleging damages from breach of contract and interference with ability of debtor contractor to timely perform under contract, where legitimate dispute existed as to whether debtor was entitled to recover funds claimed due under contract, and resolution of action involved state law determination of defendant's liability under contract, proceeding was not true "turnover" proceeding and therefore did not constitute "core proceeding." Acolyte Elec. Corp. v. City of New York , 69 B.R. 155 (Bankr. E.D.N.Y. 1986), aff'd, 1987 WL 47763 (E.D.N.Y. 1987).

The hearing on a motion for relief from the automatic stay is (1) "merely a summary proceeding of limited effect," (2) "not a proceeding for determining the merits of the underlying substantive claims, defenses, or counterclaims," and (3) "merely a grant of permission from the court allowing the creditor to litigate its substantive claims elsewhere without violating the automatic stay." Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26, 31-35 (1st Cir. 1994); accord In re Vitreous Steel Prods. Co. , 911 F.2d 1223, 1232-34 (7th Cir. 1990); Johnson v. Righetti (In re Johnson), 756 F.2d 738, 740 (9th Cir. 1985).

Although the bankruptcy court is not an Article III court, its jurisdiction is limited by the constitutional standing requirement. United States V. Amoskeag Bank Shares, Inc. (In re Amoskeag Bank Shares, Inc.), 239 B.R. 653, 657 n.3 (D.N.H. 1998). This hearing will not be the appropriate time at which to bring in other issues, such as counterclaims against the creditor on largely unrelated matters. Those counterclaims are not to be handled in the summary fashion that the preliminary hearing under this provision will be. In re Vitreous Steel Prods. Co. , 911 F.2d 1231 (quoting H.R. Rep. No. 595, 95th Cong., 1st Sess. 344 (1977), U.S. Code Cong. & Admin. News, 1978, pp. 5787, 6300).

According to the Advisory committee note, relief from the automatic stay is classified as a ‘contested matter’ under rule 9014. An action to avoid lien under section 522(f) is a ‘contested matter’. In re William, 1666 B.R. 615 (Bankr. E.D. Va. 1994). The Supreme Court has also stated that authority given to the Bankruptcy courts under § 105 must be done within the limits of the bankruptcy code. (Gouveia v. Tazbir, 37 F.3d 295, 301 (7th Cir. 1994)) In regards to the hearing that led to the relief from the automatic stay, it is not the appropriate time to cite other issues. The claim validity or contract related to the claim is not litigated during the hearing (Johnson v. Righetti (In re Johnson), 756 F. 2d at 740. (“legislative history of § 362(e) makes clear that counterclaims against creditor seeking to lift stay on largely unrelated matters are not to be handled in the summary fashion required by the expedited nature of the ‘hearing’ proceeding”).

Plaintiff’s claims are NOT Res Judicata - Plaintiff’s property was exempted from the estate. A request for relief from the stay is a “A hearing on a request for relief from automatic stay is a ‘contested matter’ brought on by a motion not by adversary proceeding. (Grella v. Salem Five Cents Savings Bank, 42 F.3d26, 32 C.B.C. 2d 1303 (1st Cir. 1994). “In D-1 Enterprises, Inc. v. Commercial State Bank, 864 F.2d 36 (5th Cir. 1989), noting the two forms of adversary proceedings and contested matters, the court concluded that res judicata does not apply to ‘contested matters’ which employ a ‘quick motion-and-hearing’ style.” The Seventh and Fifth Circuits have held that non-core proceedings cannot be given res judicata effect because the bankruptcy court cannot enter a final judgment. (Barnett v. Stern, 909 F.2d 973, 978-79 (7th Cir. 1990); Howell Hydrocarbons, Inc. v. Adams , 897 F.2d 183, 189-90 (5th Cir. 1990), see also I.A. Durbin, Inc. v Jefferson Nat'l Bank, 793 F.2d 1541, 1548 n.8 (11th Cir. 1986). In the case of a judgment entered by confession, consent or default, none of the issues is actually litigated. Only a final judgment that is sufficiently firm can be issue preclusive. (Luben Indus. V. U.S., 707 F. 2d 1037, 40 (9th Cir. 83).

IRS v. Palmer (In re Palmer), 207 F.3d 566 (9th Cir. 2000) (taxpayer who failed to respond to IRS' allegations of fraud in Tax Court was not collaterally estopped from contesting the fraud in taxpayer's subsequent bankruptcy case; in essence, debtor defaulted in Tax Court, and issue of fraud was not "actually litigated"). In FCC v. NextWave Personal Communications, Inc. (In re NextWave Personal Communications, Inc), 200 F.3d 43, 54 (2d Cir. 1999), cert. denied, 531 U.S. 924 (2000), the Second Circuit reversed the bankruptcy court's holding that the FCC could not cancel certain licenses. On NextWave's further challenge to the cancellations, the D.C. Circuit held that claim preclusion was no bar because the Second Circuit's decision was based on the bankruptcy court's lack of jurisdiction rather than on the merits of the underlying dispute.

Conclusion - From the analysis, plaintiff comes to the Conclusion that the rule of law as cited and outlined above does apply to the fact. Once again, when hearing non-core cases bankruptcy courts may not enter final judgments; they may only offer proposed findings of fact and recommendations of law to federal district court judges. Because bankruptcy courts’ non-core decisions lack finality, actions involving claims that could have been raised as non-core issues in bankruptcy proceedings are not barred by res judicata. (See Sarno, 239 Ill. App.3d at 1046, 608 N.E.2d at 19,; Barnett v. Stern, 909 F.2d 973, 979 (7th Cir. 1990)). Also, the collateral estoppel bar is inapplicable when the claimant did not have a “full and fair opportunity to litigate” the issue decided by the state court. Accordingly, plaintiff can file a federal suit to challenge the adequacy of state procedures. In re A.W. Lawrence & Co., Inc), 289 B.R. 20 (N.D.N.Y. 2003) (commenting that in no event can issue preclusion be invoked against one who was not a party, or otherwise represented, in the prior proceeding [plaintiff does not meet the just mentioned requirement]), citing Thomas v. General Motors Corp, 522 U.S. 238 n.11 (1998). Also, citing Martin v. Ring, 401 Mass. 59, 514 N.E. 2d 663 (1987)(“Preclusive effect should not be given to issues or claims that were not actually litigated in a prior action”).

In 2005, the Supreme Court revisited the doctrine in Exxon Mobil Corp. v. Saudi Basic Industries Corporation, 544 U.S. 280 (2005). In Exxon Mobil decision, it was stated that the lower courts have at times extended Rooker-Feldman “far beyond the contours of the Rooker and Feldman cases, overriding Congress’ conferral of federal-court jurisdiction concurrent with jurisdiction exercised by state courts and superseding the ordinary application of preclusion law pursuant to 28 U.S. § 1783. The Court affirmed that the Rooker-Feldman doctrine was statutory (based on the certiorari jurisdiction statute, 28 U.S.C. § 1257), and not jurisdictional, holding that it applies only in cases "brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments."

Rooker-Feldman is inapplicable where the party against whom the doctrine is invoked was not a party to the underlying state-court proceeding. (Johnson v. De Grandy, 512 U.S. 997 (1994)). Plaintiff was not a party (or losers in any state court proceedings) with any secured creditors in any previous state court. Courts recognize exceptions to the bar of the Rooker-Feldman doctrine when a party had no reasonable opportunity to raise the federal claim in the state proceeding. The doctrine does not bar review of a state court judgment that was procured through fraud, deception, accident or mistake. A federal suit is not barred when brought by a party who was not a party in the state court suit which is plaintiff position. Federal jurisdiction over an action does not terminate automatically o the entry of judgment in the state court, nor does §1257 stop a district court from exercising subject-matter jurisdiction. “And today, the Court quite properly disapproves of the District Court’s resuscitation of a doctrine that has produced nothing but mischief for 23 years.” (Supreme Court, No. 05-555, decided February 21, 2006).

The Sixth Circuit recognizes an exception to Rooker-Feldman when the state court judgment was "procured through fraud, deception, accident, or mistake . . . " Sun Valley Foods Co. v. Detroit Marine Terminals, Inc. (In re Sun Valley Foods Co.), 801 F.2d 186, 189 (6th Cir. 1986). Moreover, it has been determined that the Rooker-Feldman rule does not bar a suit in federal court brought by an individual who was not a party to the state court action. See Snider v. City of Excelsior Springs, Mo., 154 F.3d 809, 812 (8th Cir. 1998) (citing Johnson v. De Grandy, 512 U.S. 997 (1994)); v. Owens, 54 F.3d 271, 274. Several circuits have also recognized an exception to Rooker-Feldman when a federal statute specifically authorizes federal review of a final state court decision. See Plyer v. Moore, 129 F.3d 728, 732 (4th Cir. 1997) (finding Rooker-Feldman does not touch the writ of habeas corpus); Young v. Murphy, 90 F.3d 1225, 1230 (7th Cir. 1993); Ritter v. Ross, 992 F.2d 750, 753 (7th Cir. 1993) ; Blake v. Papadakos, 953 F.2d 68, 71 n.2 (3d Cir. 1992); see also 28 U.S.C. § 2241 (2000) (authorizing federal district courts to review state court decisions in habeas corpus proceedings).

Although the doctrine of Judicial estoppel is conceptually distinct from claim and issue preclusion, (affirmative defense), that doctrine does not apply since plaintiff allegations, issues and claims are not intended to make a mockery of justice by asserting inconsistent pleadings, convinced the court to adopt position that are inconsistent or deriving an unfair advantage. If anything, plaintiff is the party facing a milestone in a strange and unfamiliar environment. Lastly, at issue is Debtor’s undeniable right of rescission (see #5 below) which defendants are trying to circumvent. Hence, defendant motion to object should be denied.

5. Debtor’s Notice of Rescission is the paramount issue for Commonwealth’s objection to circumvent the fact
The facts and circumstances that Debtor filed a copy of the notice of rescission as a defense to foreclosure (see docket #100) in the bankruptcy court notifying the attorneys representing DanversBank, Ameriquest Mortgage, New Century Mortgage, Chase & Commowealth as well as having certified receipt return of proof of delivery to the Chases/Lawyers including Ameriquest Mortgage are proof of notification according to the Official Staff Commentary, 226.2(a)(22)-2 as authorizing service on attorney. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

Upon serving the notice of rescission, the TILA statute and Regulation Z state that by operation of the law, the security interest automatically becomes void and the debtor is relieved of any obligation to pay any finance or other charge (15 U.S.C. § 1635(b), Reg. Z §§ 226.15(d)(1), 226.23(d)(1)). (In re Moore , 117 B.R. 135 (Bankr. E.D. Pa. 1990) (security interest eliminated upon effective rescission, reducing creditor to status of unsecured creditor). Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

The issue is covered by a Rule of law of the Truth-in-Lending which empower Debtor to exercise his right in writing by notifying creditors of his cancellation by mail and filed at the bankruptcy court on September 21, 2006 (see docket #100) to rescind the mortgage loan transactions per (Reg. Z §§ 226.15(a)(2), 226.23(a)(2), Official Staff Commentary § 226.23(a)(2)-1) and 15 U.S.C. § 1635(b). Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. This action is also based on Massachusetts TILA law, which has a statute of limitations of 4 years. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. The filing of Bankruptcy tolls or extends the rescission time as Debtor had filed for bankruptcy on September 26, 2005 and obtained a discharge on September 26, 2006. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

The principle of equitable tolling does apply to TILA 3 years period of rescission since despite due diligence, Debtor could not have reasonably discovered the concealed fact of TILA violations in-depth and explicitly until September 17, 2006 at about 5 a.m. in reading the Truth-in-Lending book by the National Consumer Law Center and timely filed the amendment of schedules on September 21, 2006. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. The equitable tolling principles are to be read into every federal statute of limitations unless Congress expressly provides to the contrary in clear and ambiguous language, (See Rotella v. Wood, 528 U.S. 549, 560-61, 120 S. Ct. 1075, 145 L. Ed. 2d 1047 (2000)). Since TILA does not evidence a contrary Congressional intent, its statute of limitations must be read to be subject to equitable tolling, particularly since the act is to be construed liberally in favor of consumers. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

In an analogous case, the District Court reversed the Bankruptcy court holding that section 108(b) guards against the expiration of the underlying right by extending the period to exercise the right of rescission, as long as the right had not expired when the bankruptcy case has not been fully administered. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

Analysis – The fact helps to prove the statute and regulation specify that the security interest, promissory note or lien arising by operation of law on the property becomes automatically void. (15 U.S.C. § 1635(b); Reg. Z §§ 226.15(d)(1), 226.23(d)(1)). Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. As noted by the Official Staff Commentary, the creditor’s interest in the property is “automatically negated regardless of its status and whether or not it was recorded or perfected.” (Official Staff Commentary §§ 226.15(d)(1)-1, 226.23(d)(1)-1.) Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

The security interest is void and of no legal effect irrespective of whether the creditor makes any affirmative response to the notice. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. Also, strict construction of Regulation Z would dictate that the voiding be considered absolute and not subject to judicial modification. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

This requires canceling documents creating the security interest and filing release or termination statements in the public record. (Official Staff Commentary §§ 226.15(d)(2)-3, 226.23(d)(2)-3.). Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. Allowing rescission of Ameriquest refinanced loan or loan paid off is also consistent with TIL’s protective attitude toward borrowers’ rescission rights generally and the general requirement that TIL be interpreted liberally for the consumer. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

Conclusion - From the analysis, Debtor comes to the Conclusion that both the statute and Regulation Z make it clear that, if the Debtor has the extended right and chooses to exercise it, the security interest and obligation to pay charges are automatically voided. (Cf. Semar v. Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 704-05 (9th Cir. 1986) (courts do not have equitable discretion to alter substantive provisions of TILA, so cases on equitable modification are irrelevant).

Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. The statute, section 1635(b) states: “When an obligor exercises his right to cancel…, any security interest given by the obligor… becomes void upon such rescission”. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. Also, it is clear from the statutory language that the court’s modification authority extends only to the procedures specified by section 1625(b). The voiding of the security interest is not a procedure, in the sense of a step to be followed or an action to be taken. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

The statute makes no distinction between the right to rescind in three day or extended in three years for federal and four years under Mass. TILA, as neither cases nor statute give courts equitable discretion to alter TILA’s substantive provisions. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. Since the rescission process was intended to be self-enforcing, failure to comply with the rescission obligations subjects Ameriquest Mortgage and other Chases to potential liability. Non-compliance is a violation of the act which gives rise to a claim for actual and statutory damages under 15 USC 1640. Therefore, in arguing that the strict TILA and Regulation Z voidance of security be applied, Debtor does in any way waive its right to pursue his right to seek the enforcement of TILA & Regulation Z mandated remedies in his Federal Civil Action (06-10368). Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

TIL rescission does not only cancel a security interest in the property but it also cancels any liability for the Debtor to pay finance and other charges, including accrued interest, points, broker fees, closing costs and that the lender must refund to Debtor all finance charges and fees paid. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection. It is prematured to determine jurisdiction since Debtor has the option of enforcing the rescission right in federal district, state or bankruptcy court (See S. Rep. No. 368, 96th Cong. 2 Sess. 28 at 32 reprinted in 1980 U.S.C.A.N. 236, 268 (“The bill also makes explicit that a consumer may institute suit under section 130 [15 U.S.C., 1640] to enforce the right of rescission and recover costs and attorney fees in a successful action”). Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

TILA & Res Judicata (Analogous to Debtor’s situation since he was not a party in any previous court or had ever litigated fully any TILA claims) – A rescission action may not be barred by prior TIL litigation which did not involve rescission (Smith v. Wells Fargo Credit Corp., 713 F. Supp. 354 (D. Ariz. 1989) (state court action involving, inter alia TIL disclosure violations did not bar a subsequent action based on rescission notice violations in conjunction with same transaction which were not alleged or litigated in prior action) (See also In re Laubach, 77 B.R. 483 (Bankr. E.D. Pa. 1987) (doctrine of merger bars raising state and federal law claims arising from a transaction on which a previous successful federal TILA action was based; merger does not bar, however, rescission-based on the same transaction)).

TILA Pleading (In reference to Commonwealth’s Motion that mentioned Debtor’s federal pleading) – Under the Federal Rules of Civil Procedures, it may be sufficient to plead that the TILA has been violated. (Fed.R. Civ. P. 8(a)). Specific violations do not necessarily have to be alleged with particularity (Brown v. Mortgagestar, 194 F. Supp. 2d 473 (S.D. W. Va. 2002) (notice pleading is all that is required in TILA case); Herrara v. North & Kimball Group, Inc., 2002 WL 253019 (N.D. Ill. Feb.. 20, 2002) (notice pleading sufficient; response to motion to dismiss can supplement complaint by alleging facts re specific documents assigned); Staley v. Americorp. Credit Corp., 164 F. Supp. 2d 578 (D. Md. 2001) (plaintiff need not specify specific statute or regulations that entitle her to relief; court will examine complaint for relief on any possible legal theory); Hill v. GFC Loan Co., 2000 U.S. Dist. Lexis 4345 (N.D. Ill. Feb. 15, 2000) (complaint was specific enough even though it did not identify the security interest that defendant should have disclosed). The consumer’s complaint need not plead an error exceeded the applicable tolerance, since this is an affirmative defense (Inge v. Rock Fin. Corp., 281 F.3d 613 (6th cir. 2002)).

Hence, Commonwealth motion of objection should be denied and Debtor’s motion to amend schedules to reflect both Chase and Commonwealth as an unsecured creditor as prescribed by Regulation Z should be allowed. Thus, since the security interest is automatically voided per TILA and Regulation Z upon rescission, the secured mortgage note is no longer secured and must be classified as unsecured in Debtor’s unsecured schedules of debts as well as be discharged as mandated under Debtor’s chapter 7 bankruptcy protection.

CERTIFICATE OF SERVICE

I hereby certify that a true copy of the above document was delivered in person October 27, 2006 to US Bankruptcy Court, District of Massachusetts and served by United States Postal Mail, postage upon counsel for the creditors and defendants mailed on October 27, 2006.
X ____________________________________ Pierre R. Augustin

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