Wilkinson v. PHH Mortgage Corporation

United States Bankruptcy Court, E.D. California·Decided September 16, 2025·No. 25-02061·Unknown

Opinion

1 NOT FOR PUBLICATION 2 POSTED TO THE WEBSITE 3 UNITED STATES BANKRUPTCY COURT 4 EASTERN DISTRICT OF CALIFORNIA 5 6 In re: Case No. 24-24334-A-13 7 KENNETH G. WILKINSON,

8 9 Debtor. 10 KENNETH G. WILKINSON, et al., Adv. No. 25-02061 11 Plaintiffs, Memorandum Regarding Motions for 12 Order Imposing Sanctions and V. Disqualifying Opposing Counsel, ECF 13 No. 24 14 PHH MORTGAGE CORPORATION, et al.,

15 Defendants.

16 17 18 Argued and submitted on August 19, 2025 19 at Sacramento, California 20 21 Honorable Fredrick E. Clement, Bankruptcy Judge Presiding 22 23 Kenneth Wilkinson, in propria persona; Kelly G. Appearances: Wilkinson, in propria persona; Jillian Benbow, 24 Aldridge Pite LLP for Aldridge Pite LLP; and Kathryn A. Moorer, Wright, Finley & Zalk, LLP for PHH Mortgage 25 Corporation, Western Progressive Trustee, LLC; Bank of New York Mellon Trust Company, N.A.; JP Morgan Chase, 26 as Trustee for Residential Asset Mortgage Products, Inc; Mortgage Asset-Backed Pass-Through Certificates, 27 Series 2003-RP-1; and Wright, Finlay & Zak, LLP 1 Father and son homeowners, acting propria persona, seek to 2 sanction and disqualify two opposing law firms who represent a 3 foreclosing lender, and ancillary players, from acting in the present 4 adversary proceeding. In support of their motion, they cite the 5 firms’ “legally frivolous arguments” and “direct, factual 6 misrepresentations” and their status as “indispensable” witnesses in 7 the action. Should the court grant the motion? 8 I. FACTS 9 Kenneth G. Wilkinson and Kelly G. Wilkinson (“plaintiffs 10 Wilkinson”) are engaged in a dispute with the holders of the note and 11 deed of trust against the home in which they reside, 3961 Nugget Lane, 12 Placerville, California (“the property”). The Wilkinsons reside on 13 the property.1 14 Lei Anne Wilkinson acquired the property. Ex. A & B, Mot. 15 Dismiss Compl. ECF No. 14. In 1999, Lei Anne Wilkinson executed a 16 promissory note in the amount of $136,000 and deed of trust against 17 the property in favor of BYL Bank. Id. at Ex. C. Over time the 18 promissory note and deed of trust were assigned to other financial 19 institutions, terminating with the Bank of New York Mellon Trust 20 Company. Id. at D-I. 21 In 2020, Lei Anne Wilkinson died. Findings and Recommendations 22 2:12, Wilkinson v. PHH Mortgage Corporation et al., No. 2:24-cv-1416 23 (E.D. Cal. February 20, 2025), adopted Order ECF No. 31. Her ashes 24 are scattered on the property. Kelly Wilkinson decl. ¶¶ 4, 6, ECF No. 25

26 1 For the most part, the motions are unsupported by relevant evidence. See Kenneth G. Wilkson decl., ECF No. 29; Kelly G. Wilkinson decl., ECF No. 28. 27 The court has gleaned the following facts from the record and ancillary filings. For the purpose of context only, the court takes judicial notice of 1 28: Kenneth Wilkinson ¶ 2, ECF No. 29. Thereafter, the property 2 passed to the plaintiffs Wilkinson. Findings and Recommendations 3 2:12, Wilkinson, 2:24-cv-1416. 4 In 2021, the loan went into default for non-payment. Id. at 5 2:13-14. Thereafter, Western Progressive, LLC, acting as the trustee 6 for the Bank of New York Mellon, issued a Notice of Default and 7 Election to Sell. Ex. J., Mot. to Dismiss Compl., ECF No. 14. 8 In the spring of 2024, Western Progressive, LLC recorded its 9 Notice of Trustee’s Sale. Ex. K, Mot. Dismiss Compl. ECF No. 14. The 10 sale was scheduled for May 2024. 11 Thereafter, Kenneth G. Wilkinson and Kelly G. Wilkinson filed an 12 action in the United States District Court against PHH Mortgage 13 Corporation and Western Progressive LLC. Compl. ECF No. 1. The 14 complaint contended that defendants PHH Mortgage Corporation and 15 Western Progressive LLC were “attempting to enforce a void mortgage 16 contract” and included causes of action for breach of contract, breach 17 of the covenant of good faith and fair dealing, injunctive relief, and 18 quiet title. Am. Compl., ECF No. 10. Defendants PHH Mortgage 19 Corporation and Western Progressive LLC moved to dismiss the 20 complaint. Kathryn Anne Moorer and Wright Finlay & Zak, LLP were 21 counsel of record for the defendants. Finding a lack of standing on 22 the part of Kenneth G. Wilkinson and Kelly G. Wilkinson, the district 23 court dismissed the complaint without leave to amend. Findings and 24 Recommendations 2:12, Wilkinson v. PHH Mortgage Corporation, No. 2:24- 25 cv-1416 (E.D. Cal. February 20, 2025), adopted Order ECF No. 31. 26 On September 26, 2024, Western Progressive, LLC conducted the 27 foreclosure sale for the property and the holder of the note and deed 1 bidder. Ex. L, Mot. Dismiss Compl. ECF No. 14. 2 On September 27, 2024, the day following the foreclosure sale, 3 Kenneth G. Wilkinson filed a Chapter 13 bankruptcy petition. Schedule 4 A/B listed Single-family home located at 3961 Nugget Lane, Placerville 5 and described its value as $325,000. Schedule A/B, ECF No. 20. 6 Schedule D listed a secured debt against the property of $267,302 in 7 favor of PHH Mortgage Corporation. Schedule D, ECF No. 20. Western 8 Progressive LLC and Bank of New York Mellon were also listed as 9 secured creditors. Notwithstanding the foreclosure sale on the day 10 prior to filing bankruptcy, Kenneth G. Wilkinson answered “No” to the 11 question: “Within 1 year before you filed for bankruptcy, was any of 12 your property repossessed, foreclosed, garnished, attached, seized, or 13 levied?” Statement of Financial Affairs No. 10, ECF No. 21. The 14 debtor has proposed, but not confirmed, a plan. 15 On December 5, 2024, Western Progressive, LLC recorded the 16 Trustee’s Deed Upon Sale in favor of the Bank of New York Mellon Trust 17 Company. Ex. L, Mot. Dismiss Compl. ECF No. 14. 18 Thereafter, the plaintiffs Wilkinson brought the instant 19 adversary proceeding against PHH Mortgage Corporation; Western 20 Progressive, LLC; Wright, Finlay & Zak, LLP, Bank of New York Mellon 21 Trust, and Aldridge Pite LLP. The complaint pleads causes of action 22 for declaratory relief; unconscionable contract, violation of the Fair 23 Debt Collections Practices Act, failure of consideration, and 24 violation of the stay. As to the first four causes of action, i.e. 25 those relating to the 1999 loan against the property, the plaintiffs 26 contend: 27 1.1. COMPLAINANTS KENNETH G. WILKINSON and KELLY G. WILKINSON, private heirs and sole beneficiaries to Lei Anne 1 residential property located at 3961 Nugget Lane, Placerville, California Republic (the "Property"). 2 1.2. This interest includes lawful right of habitation, 3 inheritance, and right of possession, secured under the Civil Rights Act of 1866, the Ninth and Tenth Amendments to 4 the Constitution for the United States of America, and common law heirship. 5 1.3. The non-judicial foreclosure initiated and actions 6 taken by DEFENDANTS constitute an unconscionable deprivation of COMPLAINANTS' substantive right to shelter, 7 unsupported by contract, judicial authority, or verified standing by Defendants. 8 1.4. At its core, this action challenges the extinguishment 9 of COMPLAINANTS' unalienable and substantive right to shelter through an extra-judicial, corporate-driven process 10 based on a transaction alleged to be void and unconscionable from its inception, in direct contravention 11 of fundamental constitutional protections. 12 Compl. ¶¶ 1.1-1.4, ECF No. 1. 13 As to the fifth cause of action, viz., violation of the stay, the 14 plaintiffs Wilkinson contend: 15 6.28.

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