in re hill transcript of 20 dec 2007 hearing

8/8/2019 In Re Hill Transcript of 20 Dec 2007 Hearing

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UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF PENNSYLVANIA

IN RE: . Case No. 01-22574

.

.SHARON DIANE HILL, .

. USX Tower - 54th Floor

. 600 Grant Street

. Pittsburgh, PA 15219

Debtor, .

. December 20, 2007

. . . . . . . . . . . . . . . . 2:47 p.m.

TRANSCRIPT OF STATUS CONFERENCE

BEFORE HONORABLE THOMAS P. AGRESTI

UNITED STATES BANKRUPTCY COURT JUDGE

APPEARANCES:

For the Debtor: Steidl & Steinberg

By: JULIA STEIDL, ESQ.

Suite 2830 Gulf Tower

707 Grant Street

Pittsburgh, PA 15219

For Countrywide Home Loan, LESLIE E. PUIDA, ESQ.

Inc.: Mellon Independence Center

Suite 5000

701 Market Street

Philadelphia, PA 19106-1532

Audio Operator: Cathy Younker

Proceedings recorded by electronic sound recording, transcript

produced by transcription service.

_______________________________________________________________

J&J COURT TRANSCRIBERS, INC.

268 Evergreen Avenue

Hamilton, New Jersey 08619

E-mail: [email protected]

(609) 586-2311 Fax No. (609) 587-3599


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APPEARANCES (Cont'd.):

For the U.S. Trustee: Office of the U.S. Trustee

By: NORMA HILDENBRAND, ESQ.

1001 Liberty Avenue

960 Liberty CenterPittsburgh, PA 15222

For the Chapter 13 Trustee: Babst, Calland, Clements & Zomnir

P.C.

By: DAVID W. ROSS, ESQ.

MARK A. LINDSAY, ESQ.

Two Gateway Center

Pittsburgh, PA 15222


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THE COURT: All right. The next matter before the1

Court is the matter of Sharon Hill, Case Number 01-22574. This2

is a status conference on a motion to enforce discharge. Would3

counsel please come forward and enter your appearances?4

MS. STEIDL: Julie Steidl for the debtor.5

MS. PUIDA: Leslie Puida on behalf of Country --6

THE COURT: All right. Anybody else?7

MS. PUIDA: Leslie Puida on behalf of Countrywide.8

THE COURT: Okay. Anybody else?9

MS. HILDENBRAND: Norma Hildenbrand on behalf of the10

United States Trustee, Your Honor.11

MR. ROSS: David Ross and Mark Lindsay on behalf of12

the Chapter 13 Trustee, Your Honor.13

THE COURT: Anybody else?14

(No verbal response)15

THE COURT: Okay. Attorney Puida, you can have a16

seat. Now I know why you're here. All right. That's -- okay.17

Attorney Steidl, do you want to tell me about, first of all,18

your motion and where we are with this?19

MS. STEIDL: Our client, Ms. Hill, went through her20

bankruptcy. She did everything right. She made all of her21

payments. The application for approval of completion was22

filed. Nobody objected. An order was -- default ordered was23

granted. An order discharging the debtor was signed. A filing24

report and accounting was signed, and then when she started to25


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make payments on her own, Countrywide sent them back and said1

that they wouldn't take them, because she was in default, and2

that was immediately after she was discharged that that3

started.4

In the process of going back and forth Countrywide5

did supply us with a loan history. They also supplied me with6

some letters that I didn't understand, but I spoke to Attorney7

Puida about it, and she explained to me that there are three8

letters in my file, all with different dates, where they're9

saying Countrywide's mortgage went up during the process of the10

plan.11

The first letter is dated September of '03 that talks12

about the first increase. The problem with that is we weren't13

in our offices in '03. We were at a whole different address,14

and our carbon copy is to Ken Steidl at the new address where15

we are now, which we weren't then. And she explained to me16

that --17

THE COURT: Wait a minute. Wait a minute. Hold it.18

Wait a minute. You're saying that you -- there's a letter19

dated 2003 at a certain address that you weren't in until a20

subsequent time?21

MS. STEIDL: Yes, sir.22

THE COURT: Yet this is a letter that was represented23

to acknowledge or support the first change notice on this24

property?25


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MS. STEIDL: Yes, sir. The letter was dated1

September 22nd, 2003, directed toward my client, carbon copied2

to Ronda Winnecour and Ken Steidl at the Gulf Tower address,3

but on September 22nd, 2003, we were at 210 Grant Street. So I4

just asked Ms. Puida to explain the two, because I didn't5

understand the discrepancy, and she told me that these letter6

that they sent -- they sent three -- are recreation letters.7

They're not the first letter that was sent. They're just --8

THE COURT: What is a -- never heard of a recreation9

letter. That's a letter that they don't have, and now they've10

recreated to support the allegation that they actually sent a11

prior letter?12

MS. STEIDL: Well, that would be how it sounds. I13

don't mean to mis-characterize it, but that's how it sounds.14

All of these letters were -- there are three of them, and they15

were all recreated.16

THE COURT: All recreated letters.17

MS. STEIDL: That's one in '03, one in '04, and one18

in '05.19

THE COURT: Okay. That's pretty interesting. Go20

ahead.21

MS. STEIDL: Okay, so --22

THE COURT: Well, what were the letters purportedly23

to represent or offer?24

MS. STEIDL: The change -- apparently, some of the25


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problem was, according to Countrywide, that the loan amounts1

changed with escrow changes, because she doesn't have a2

variable rate. It's a fixed rate. So the first letter in3

September 22nd, 2003, and we didn't move to our new office4

until October 27th, so there's like a six-week difference5

there. And it says, "This letter is to advise you that the6

escrow requirement has changed per the escrow analysis. The7

amount of the escrow is now this, 2235.07," and it goes on to8

explain about the escrow. And then it says that they're9

raising her monthly mortgage payment to 603 from approximately10

500. We didn't get that letter.11

THE COURT: All right. Let me -- you said the other12

two are recreation letters, too. It's not the same -- how do13

you know that? Based on a same address issue or for other14

reasons?15

MS. STEIDL: No, Ms. Puida told me.16

THE COURT: All right.17

MS. STEIDL: She said that they put them into18

evidence when it happened, so we could understand that it19

happened. That they were recreated.20

THE COURT: Oh, that's nice. All right, but -- and21

they allege that they actually sent these letters at one time,22

but they don't have the originals? Is that it?23

MS. STEIDL: You would have to ask her. I didn't go24

that far.25


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THE COURT: So that hasn't been -- that -- all right.1

I will ask her. Yes, that's interesting. Go ahead.2

MS. STEIDL: And then today when we were talking, she3

said that she was kind enough to lower what she want -- what4

Countrywide wanted by some number.5

THE COURT: All right. Let me stop. Let me stop you6

there. You said that there was a final -- after the Trustee7

filed its final account and report and a discharge order was --8

our standard discharge order was entered in the normal course?9

MS. STEIDL: Yes, sir, in March of '07.10

THE COURT: All right. Does that discharge order11

have language in it that says that the loans -- the secured12

loans, mortgages, whatever are current as of the date of the13

last distribution of the Trustee?14

MR. STEIDL: It does.15

THE COURT: So why is Countrywide even making a claim16

for pre-discharged claims in light of that discharge order?17

MS. STEIDL: I don't know how to answer that, Your18

Honor.19

THE COURT: All right. I mean you got Attorney Puida20

agreeing to change the amounts, but it sounds like that Court21

order, which I assume became final and no objection was filed,22

already says that Countrywide's current.23

MS. STEIDL: Yes, sir.24

THE COURT: Okay. Go ahead.25


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MS. STEIDL: And the amount has dropped now to 151

hundred, because they audited it. It didn't start as a2

Countrywide loan. It started as a Mellon Bank loan. It was3

then transferred to Countrywide, and Countrywide apparently4

audited payments made to Mellon Bank, and they knocked it down5

to about half -- a little more than half. But I'm wondering if6

there might be other payments that didn't get knocked down, and7

we don't have anything regarding that. So as far as the status8

conference part of this goes, I would like to have discovery,9

so we could see --10

THE COURT: All right. Let me stop you. It's been11

represented that this case was in a settlement posture. Is12

that an --13

MS. STEIDL: From a -- my client doesn't -- well, it14

was in a settlement posture at 33 hundred dollars. Now it's 1515

hundred dollars, but --16

THE COURT: I'm not sure what -- all right. Tell me.17

It was represented by Countrywide at another hearing, which did18

involve this matter and nine other cases, that this particular19

-- unless I misunderstood, and I might have, but I was under20

the impression -- and I believe Attorney Connick (phonetic)21

represented that this matter was going away, because it was22

settled. Are you now backing off a settlement, or did you ever23

have a settlement to begin with, or -- tell me about that.24

MS. STEIDL: We did not -- our client did not approve25


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any kind of settlement, and when we sent it to her for1

approval, she did not want it. She didn't want a settlement.2

She --3

THE COURT: So there was a settlement offer on the4

table, but it had never been approved by your client.5

MS. STEIDL: Correct.6

THE COURT: All right. Well, that explains why I've7

never seen a motion to settle this case then. I was wondering8

what happened. I assumed -- right?9

MS. STEIDL: Correct.10

THE COURT: All right. Okay. I think I understand.11

Attorney Puida, what is going on here? I mean I guess there's12

a couple things on the table I need to know about. What are13

these recreated letters all about?14

MS. PUIDA: Your Honor, the letters --15

THE COURT: How about -- could you -- would you mind16

remaining seated and speak into that microphone? I can't hear17

you. Otherwise, or if you stand -- some lawyers are more18

comfortable standing. Make sure you bend over and talk into19

the microphone. Okay?20

MS. PUIDA: I'm sorry, Your Honor. Is this better?21

THE COURT: Yes, that's fine as long as you're22

comfortable.23

MS. PUIDA: Your Honor, regarding the letters, they24

were never held out to be letters that were sent notifying any25


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one of the payment changes. They were purely generated -- what1

happens is, is they were generated based on what the payments2

were in 2003, 2004, and 2007.3

THE COURT: When were they generated?4

MS. PUIDA: They were generated when we first were in5

settlement negotiations with Mr. Steidl regarding this case.6

There was a question as to what the payments were at various7

times within the bankruptcy. So we -- they were not offered to8

prove that they had been sent. They were merely showing what9

the breakdown was of the PMI and escrow at those various points10

in time.11

THE COURT: Who created these letters?12

MS. PUIDA: A processor at Countrywide.13

THE COURT: Does it say anything on the letters14

themselves that has a disclaimer that these are not actual15

letters sent or simply used to show if a letter had been sent16

what the payment would've been at the time in question?17

MS. PUIDA: No, it does not.18

THE COURT: Boy, that's a strange one. I don't know.19

Why would you -- when did you disclose that these letters were20

not what they purported to be but, in fact, were just memoranda21

of an event created years after the event in order to document22

the event?23

MS. PUIDA: Throughout my discussions with Mr. Steidl24

when we were trying to resolve this matter.25


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THE COURT: From the very beginning you sent him1

copies of letters, and you described the fact --2

MS. PUIDA: I had --3

THE COURT: Go ahead.4

MS. PUIDA: I'm sorry, Your Honor. We had been5

providing him with payment histories, escrow analyses,6

breakdowns of all of the escrow that had been advanced7

throughout the case. It was just one of various things that8

were being sent to him just showing what the case status was at9

the time the discharge was entered, what the status is now, and10

what we were showing as being due on the loan.11

THE COURT: All right. Now, you know, you're here12

representing your client. I want to -- you know, it's -- I13

want you to be totally candid with me, because I'm going to ask14

these questions of Mr. Steidl as well at some point.15

Obviously, it looks like we have to, because this concerns me.16

I'm having trouble with these recreated letters that purport to17

be sent to a number of parties at a date -- prior date well18

into the past and created at a subsequent date to show or19

represent, at least at first blush, the state of a record which20

didn't really exist as such. When was Mr. Steidl informed by21

you or anyone at Countrywide, to your knowledge, that these22

letters are not what they would purport to be on a cold reading23

and view if received in a packet of papers?24

MS. PUIDA: Your Honor, I wouldn't be able to give25


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you an exact date. I had a conversation with Mr. Steidl where1

he indicated that he had never received the letter. He had2

checked his file, and I had told him, well, you wouldn't have,3

because this was -- these were not sent out. It's just drawing4

-- the system at Countrywide currently has Mr. Steidl as5

counsel. He was not counsel when this case was initially6

filed. It has the Trustee's information in the system, so when7

they were recreated, it pulled that information in. But the8

point of the letters was to show what the payment changes were9

during the course of the bankruptcy.10

THE COURT: Well, why wouldn't you just show that by11

an in-house document generated by Countrywide? Why would you12

go to the steps of creating a letter that never was sent, which13

appears -- which could be used by a loan processor or somebody14

at Countrywide when a debtor calls up on their own to find out15

the background of a loan, and these letters were forwarded on16

without the benefit of counsel or you and Mr. Steidl talking17

about post-discharge injunction violations? Why would that18

type of document ever even be part of this system?19

MS. PUIDA: Your Honor, I can't speak as to that. I20

don't know the answer.21

THE COURT: All right. Anything else? There's no22

settlement. You've been discussing a proposed resolution, but23

the --24

MS. PUIDA: No, we -- Mr. Steidl and I had been25


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discussing various things. We have been going back and forth,1

but I was apprised as of Tuesday of a number that was2

acceptable to the debtor, and then I understand today that3

there is no number that's acceptable. So there is no4

settlement at this time.5

THE COURT: All right. Well, Attorney Steidl --6

Julie Steidl said they never had the acceptance of the debtor.7

That it was just passed on to the debtor.8

MS. PUIDA: Correct. We were --9

THE COURT: Was your understanding different than10

that?11

MS. PUIDA: No, all along Mr. Steidl indicated that12

he needed his client to sign off on any settlement, and that he13

had forwarded the documentation to her for review.14

THE COURT: Okay. All right. Anything else on this15

issue?16

MS. PUIDA: No, Your Honor.17

THE COURT: All right. Attorney Hildenbrand, do you18

have any comments to make in light of where we're at?19

MS. HILDENBRAND: Thank you, Your Honor. I was here20

today in particular to preserve the status quo. As the Court's21

aware, we have a pending discovery request of Countrywide in22

the miscellaneous matter, and the issues that were told to the23

Court today are of grave concern to the United States Trustee.24

We're not certain where these letters -- these recreated25


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letters, the purpose of them, and I would just reiterate the1

United States Trustee's argument that this is even more reason2

to grant our discovery request in order to in the other case --3

although I'm not arguing that position today, this is just4

another example of why the United States Trustee feels that5

it's important to understand that Countrywide -- to get the6

information regarding this case as well as the other non-7

context cases and to allow us to investigate how all this comes8

about. I appreciate the Court's letting -- giving me an9

opportunity to speak on that.10

THE COURT: Well, you've entered an appearance by11

your appearance today as well as raising this issue in the non-12

context cases even though we consolidated it under a13

miscellaneous number for purposes of administrative14

convenience. In a sense, you have already filed in this case a15

request for your 2004 exam alleging this particular issue, so I16

couldn't proceed.17

And to be honest with you, based on what I -- my18

understanding prior to today, this case was in settlement19

posture, and I thought I would be getting a copy of a proposed20

consent order here. But I see that we're not even close to21

that, so even more reason not -- I can't do anything today, and22

it's good we had the status conference to further alert the23

Court as to the pending issues. Mr. Ross, did you have any24

comments to the Court?25


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MR. ROSS: Thank you, Your Honor. Your Honor, the1

reason I'm present today is --2

THE COURT: Well, I'm going to stop you right there.3

Now, typically, we'd turn to Mr. Bedford on Chapter 13 matters.4

You represent the Trustee in the miscellaneous Number 203,5

which -- I believe it's 203 with the 293 cases. That was the6

first miscellaneous. Two 0 four is the second miscellaneous.7

So really you represent the Trustee, I thought, for the limited8

purpose of those issues and not necessarily in this case. I9

thought maybe you were here for purposes of information only10

possibly, but if Mr. Bedford is deferring to you to represent11

the Chapter 13 Trustee on this particular matter, then I12

believe your appearance -- I need some clarification here as to13

your role versus Mr. Bedford's traditional role on these types14

of issues.15

MR. ROSS: Your Honor, I'm here today on behalf of16

the Trustee. Mr. Bedford is sitting to my right and has17

deferred to me for purposes of this matter, and I have that18

authority from Ms. Winnecour.19

THE COURT: All right. Okay. Mr. Bedford, that's20

what we're going to do today, and you're out. Okay?21

MR. BEDFORD: Yes, I understand, Your Honor. And22

while I do have the file, I'm certainly able to provide any23

information that Your Honor may wish to have from the file.24

THE COURT: Well, I appreciate that, but I'm going to25


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-- you know the rule. There's no tag team lawyering. I just1

let the one lawyer, and Mr. Ross, you're the man. Go ahead.2

MR. ROSS: Thank you, Your Honor. Your Honor, as3

Your Honor stated, we are counsel to the Trustee in the action4

that consolidated 293 cases. This particular case is one of5

those actions, and this particular case involves one of the6

checks the Trustee alleges that Countrywide has misplaced.7

THE COURT: That's different. That's totally8

different from this post-injunction -- post-discharge9

injunction violation.10

MR. ROSS: Not necessarily, Your Honor. With all due11

respect, the Trustee's concern in the 293 cases -- one of her12

concerns has always been the timely application payments. We13

have a situation in this particular debtor where the Trustee14

believes that or knows that these three checks have been lost.15

Two -- checks have been lost twice. There's been a third check16

issued to Countrywide. Countrywide is now asserting post-17

confirmation post-discharge that there is an arrearage. The18

question --19

THE COURT: But is -- pardon me. Just to cut to the20

quick here, is it related to a change in escrow amounts --21

these three changes in escrow amounts as these letters pre --22

post-created letters reflect, or does it -- your claim in the23

-- you're wearing the hat for the Chapter 13 Trustee in all24

matters, but the other -- I don't want to confuse the issues.25


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The other one related to six or seven checks that weren't1

cashed much later in time than -- I don't think it -- in my2

mind -- and I'm not as close to it as you, but the two seem to3

be unrelated.4

MR. ROSS: Your Honor, I cannot tell you as a matter5

of fact that they're not unrelated. They may very well be6

related. There's two issues, Your Honor, and that's exactly7

why we're here today. It may be that as a result of these8

checks being misplaced or mis -- inappropriately applied, that9

that led to the arrearages.10

Also, Your Honor, with respect to the three letters11

that Ms. Steidl has referenced, what I'd like to bring to the12

Court's attention is that the Chapter 13 Trustee is also13

referenced as a CC on those letters as well. I reviewed the14

Trustee's files. I have met with Mr. Bedford. We have not15

received those letters. Your Honor, the 293 cases are about16

receipt of payments and timely application. This, Your Honor,17

is the same issue, and --18

THE COURT: Well, I don't know if I agree with you on19

that. It's a similar issue with different facts. Totally20

different facts from -- I mean they're talking about -- unless21

you tie it in time -- what's the date of the last letter?22

Attorney Steidl, what's the date of the most recently recreated23

letter, 2007?24

MS. STEIDL: Yes, Your Honor.25


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THE COURT: All right. Well, maybe it is part of it1

then. I'm wrong. I thought it was 2003 and 2005, but maybe2

I'm -- all right.3

MS. STEIDL: It was 2003, 2004, and 2007.4

THE COURT: All right. Two thousand seven gets you5

in the door. All right. Maybe they are related. Go ahead,6

Mr. Ross.7

MR. ROSS: Your Honor, at this point we would join in8

with the debtor's request that we be permitted -- that the9

Trustee be permitted to conduct discovery. Remember, Your10

Honor, in this case, as in all Chapter 13 cases that are11

completed, the Trustee is required to file a final report,12

which the Trustee did. I think based on a large part on that13

Trustee's final report this Court entered an order in this case14

discharging the debtor.15

From the Trustee's standpoint, if, in fact, the16

Trustee's records are incorrect, then we would welcome17

Countrywide to show us why they're incorrect. At this point I18

think it's the Trustee's responsibility to verify that her19

report filed in this case is accurate, and based upon that,20

Your Honor, with respect to the debtor's request to open21

discovery, we would join in that.22

With respect to the U.S. Trustee's request, we do not23

join in with that, because we understand the issues attendant24

thereto. But with respect to the debtor's request, Your Honor,25


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we believe that the debtor has the right and it really makes1

sense with what we've -- what the Court has learned today.2

THE COURT: Well, there's definitely a need for3

discovery here. These letters are a smoking gun that something4

is not right in Denmark. I just -- I can't get over what I'm5

being told here about these recreations and what the purpose is6

or was and what was intended by them. It just -- I don't see7

any credible reason for doing that other than to create a8

perception that notices were timely sent. But maybe there is,9

and that's why there's a need for discovery, obviously.10

Attorney Puida, anything -- any response here?11

MS. PUIDA: Yes, Your Honor. Again, the -- we were12

doing nothing more than providing counsel with a history of13

what escrow was received and payments during the course of the14

bankruptcy, what was paid out, what difference between the two15

there may have been. The letters again were never offered as16

being something that was sent out to debtor's counsel or to the17

Trustee. It was just a starting point to show this is the18

breakdown for that particular year's escrow.19

THE COURT: All right. I appreciate that. This is20

your understanding of what you did, but when I asked some21

rather pointed questions to further explain the purpose behind22

these letters, you couldn't respond. You could not answer, and23

I can appreciate that, and that's just more reason why there24

has to be some discovery here to find out what is going on and25


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why it was done, because that will determine -- you know, if it1

can't otherwise be settled or resolved, that will be an item of2

concern for this Court in assessing the appropriate damage or3

remedy. So it's highly, extremely relevant, and important for4

a decision in this matter, so I'm going to -- Attorney Steidl,5

how much time do you need?6

MS. STEIDL: Sixty days.7

THE COURT: All right. I'm going to grant -- I'm8

going to schedule an evidentiary hearing on this matter. I'll9

issue a general pretrial order, so that discovery can commence10

for a 60-day period, and I assume there's no problem with that11

from Chapter 13 Trustee?12

MR. ROSS: No, Your Honor. Would the Chapter 1313

Trustee have the ability to be part of the discovery?14

THE COURT: Absolutely. Absolutely. Yes, you're a15

party in interest as will the U.S. Trustee. This -- I mean16

you're all involved in this case. The U.S. Trustee's entitled17

to be heard and involved in any matter pending before the18

Court, and in a very broad reading of the statute even raise19

matters. We still haven't determined that, but definitely. We20

have a proceeding in progress here that even Countrywide in the21

related matters admitted that the Trustee had the right to be22

heard and involved -- the U.S. Trustee. Definitely, a Chapter23

13 Trustee. Countrywide's admitted that in related matters.24

Definitely, the debtor.25


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And the Court's concerned about this. The Court's1

very concerned. Again, I'm totally surprised at what I'm2

hearing. I didn't anticipate this at all today, but it's3

definitely a matter that needs to be vetted further through4

discovery and assuming a resolution cannot otherwise be had.5

All right. I'll issue the order. We'll have an6

evidentiary hearing to be scheduled according to the Court's7

schedule. I'll have to be down there for that I assume, and8

we'll go forward, and I'll issue that order in -- probably by9

tomorrow. Definitely by tomorrow. I doubt if it will be10

today, but we'll issue a standard pretrial order in this11

matter. All right. Anything else? Anything else, counsel?12

MS. STEIDL: That's all.13

THE COURT: All right. Thank you. We'll recess.14

THE CLERK: All rise.15

* * * * *16

CERTIFICATION17

I, PATRICIA C. REPKO, court approved transcriber,18

certify that the foregoing is a correct transcript from the19

official electronic sound recording of the proceedings in the20

above-entitled matter to the best of my ability.21

22

/s/ Patricia C. Repko Date: January 3, 200823

PATRICIA C. REPKO24

J&J COURT TRANSCRIBERS, INC.25

in re hill transcript of 20 dec 2007 hearing

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