-
Glaski v. Bank of America, et al (Void Assignments)
May 30
2014 This white paper reviews, from a layman's perspective, the
California Appellate Decision and its impact on homeowners fight
against corrupt and illegal foreclosure practices specific to VOID
assignments.
Homeowner Victories White Paper Series
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TABLE OF CONTENTS
PREFACE.............................................................................................................................
9
I. WHAT VICTORY DOES GLASKI PRESENT?
...............................................................
10
II. KEY ISSUES AT STAKE IN GLASKI
...........................................................................
10
KEY ONE: Borrower CAN challenge the Assignment if it is VOID.
................... 13
Black's Law (thelawdictionary.org) goes into great detail when
describing VOID: (This is a cut/paste from its
website)......................................................................
14
KEY TWO: Determining if the Assignment is VOID
........................................... 16
A. New York Law Confirms Ultra Vires Act
................................................................
17
B. Internal Revenue Codes Threaten Severe Tax Consequences
............................... 19
KEY THREE: Foreclosure Statutes Violated with VOID Assignment
................20
III. BANKS ARGUMENTS AGAINST GLASKI
.................................................................
22
A. De-publication Efforts
.....................................................................................
22
B. Stare Decisis: Glaski is a PRECEDENT Opinion not a Minority
Opinion! ... 23
Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497
(May 17, 2013) ...... 25
Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149,
(2011) ............... 26
Diunugala v. JP Morgan Chase Bank, N.A. (Case No.
12-cv-02106-WQH-NLS) (October 3, 2013)
........................................................................................................
27
IN RE SANDRI, Bankr. Court, ND California 2013
................................................... 28
Patel v. Mortgage Electronic Registration Systems, Inc., 2013 WL
4029277 (N.D. Cal. Aug. 6, 2013)
..........................................................................................
29
Aniel v. GMAC Mortg., LLC, 2012 WL 5389706 at *4 (N.D. Cal. Nov.
2, 2012) 29
Ganesan v. GMAC Mortgage, LLC, 2012 WL 4901440 at *4 (N.D. Cal.
Oct. 15, 2012)
........................................................................................................................
29
Gilbert v. Chase Home Fin., LLC, 2013 WL 2318890 at *3 (E.D.
Cal. May 28, 2013)
........................................................................................................................
29
Siliga v. Mortgage Electronic Registrations Systems, Inc., 219
Cal. App. 4th 75, 161 Cal. Rptr. 3d 500 (Cal. App. 2d Cir. 2013)
(decided on August 27, 2013) . 30
Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497,
156 Cal. Rptr. 3d 912 (Cal. App. 4th Dist. 2013)
............................................................................
30
Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App. 4th 256, 272,
129 Cal. Rptr. 3d 467 (1st Dist. 2011)
.............................................................................................
30
Yvanova v. New Century Mortgage, et al. April 2014
................................................ 31
C. Alleging Prejudice
............................................................................................
32
IV. DELAWARE VERSUS NEW YORK LAW -Would the Glaski Decision have
been different?
...........................................................................................................................
34
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V. FOLLOW THE LEADER
..............................................................................................
34
MERS Role
...........................................................................................................
34
Assignments from Mortgage Electronic Registration Systems, Inc.
(MERS) as Nominee for a bankrupt entity (or a bankrupt entity that
has a liquidating
trustee).....................................................................................................................................
36
Assignments from MERS in which MERS fails to identify the
principal for whom it is assigning.
.................................................................................................................
37
Assignment of the Deed of Trust without the Note is a Nullity
................................. 38
V. PLEADING THE ELEMENTS OF GLASKI
..................................................................
39
Glaski Second Amended Complaint
.................................................................................
41
Glaski v. Bank of America, Inc., et al RULING (from Google
Scholar) ........................... 42
THOMAS A. GLASKI, Plaintiff and Appellant, v. BANK OF AMERICA,
NATIONAL ASSOCIATION, et al., Defendants and Respondents.
............................................... 42
OPINION
..............................................................................................................
42
INTRODUCTION
.................................................................................................
42
FACTS
..................................................................................................................
43
The Loan
..............................................................................................................
43
Creation of the WaMu Securitized Trust
.............................................................
44
WaMu's Failure and Transfers of the Loan
......................................................... 44
Notice of Default and Sale of the Property
.......................................................... 45
PROCEEDINGS
...................................................................................................
46
DISCUSSION
.......................................................................................................
49
I. Standard of Review
...........................................................................................
49
II. Fraud
...............................................................................................................
50
A. Rules for Pleading Fraud
.................................................................................
50
B. First Cause of Action for Fraud, Lack of Specific Allegations
of Reliance...... 50
C. Second Fraud Cause of Action, Lack of Specific Allegations of
Reliance ....... 51
III. Wrongful Foreclosure by Nonholder of the Deed of Trust
........................... 52
A. Glaski's Theory of Wrongful Foreclosure
........................................................ 52
B. Wrongful Foreclosure by a Nonholder of the Deed of Trust
.......................... 52
C. Borrower's Standing to Raise a Defect in an Assignment
............................... 53
D. Voidness of a Post-closing Date Transfers to a Securitized
Trust .................. 54
E. Application of Gomes
......................................................................................
56
F. Tender
..............................................................................................................
58
G. Remedy of Setting Aside Trustee's Sale
.......................................................... 59
H. Causes of Action Stated
...................................................................................
59
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IV. Judicial Notice
................................................................................................
59
A. Glaski's Request for Judicial Notice
................................................................
59
B. Defendants' Request for Judicial Notice of Assignment
............................... 60
DISPOSITION
......................................................................................................
61
APPENDIX of CASE RULINGS
........................................................................................
65
In the appendix are the following rulings: Saldivar v. JP Morgan
Chase (Glaski cites to this case) Wells Fargo, N.A. v Erobobo
(Glaski cites to this case) Vogan v. Wells Fargo, N.A. (frontrunner
to Glaski) Jenkins v. JP Morgan Chase Diunugala v. JP Morgan Chase
Fontenot v. Wells Fargo, N.A Sandri v. Capital One Gomes v.
Countrywide Home Loans, Inc. Yvanova v. New Century Mortgage, et
al
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Cases Alexander v. Nelson. 42 Ala. 462
......................................................................................
15 Allis v. Billings, 6 Mete. (Mass.) 415, 30 Am. Dec. 744
.................................................... 15 Allison
& Ver Valen Co. v. McNee, 170 Misc. 144, 146 (N.Y. Sup. Ct.
1939) .................... 18 Angelo-American Mortgage Co. v.
Lombard (1904) 132 Fed. 721 ................................... 13
Application of Muratori, 183 Misc. 967, 970 (N.Y. Sup. Ct. 1944)
............................ 19, 28 Bisno v. Sax (1959) 175
Cal.App.2d 714, 720, 346 P.2d.
................................................... 21 Bodell v.
Walbrook (9th Cir. 1997) 119 F. 3d 1411, 1422
................................................... 25 Boskowitz v.
Held, 15 App.Div. 306, 310-311, 44 N.Y.S. 136, affd. 153 N.Y. 666,
48 N.E.
1104
................................................................................................................................
28 Bovard v. Dickenson, 131 Cal. 162 [63 P. 162]; Nakagawa v.
Okamoto, 164 Cal. 718 [130
P. 707]).
..........................................................................................................................
38 Brown v. Brown, 50 N. II. 53S, 552
..................................................................................
14 Cal. Pro-Life Council, Inc. v. Getman, 328 F.3d 1088, 1099 (9th
Cir. 2003) .................. 24 California Bank v. Kennedy (1987)
167 U.S. 362
.............................................................. 13
California Golf v. Cooper, (2008) 163 Cal.App.4th 1053, 1070
........................................ 13 Carpenter v. Longan, 83
U.S. 271, 275 (1872)
..................................................................
39 Cuccia v. Superior Court, 153 Cal. App. 4th 347, 353-354 (2007)
................................... 24 Culhane v. Aurora Loan
Services of Nebraska, supra, 708 F.3d at p. 290
....................... 16 Curtis v. Leavitt, 15 N. Y. 9, 90
..........................................................................................
15 Deutsche Bank National Trust Company as Trustee under Pooling
& Servicing
Agreement Series Index 2006-AR6 v. Maraj, 856 N.Y.S. 2d 497, WL
253926 ............ 37 Deutsche Bank Nat'l Trust Co. v. Adolfo, No.
12 C759, 2013 WL 4552407 * 3 (N.D. Ill.
Aug. 28, 2013)
................................................................................................................
28 Dimrock v. Emerald Properties, 81 Cal.App.4th 868, 878 (2000)
.................................. 21 Diunugala v. JP Morgan Chase
Bank, N.A. (Case No. 12-cv-02106-WQH-NLS) (October
3, 2013)
...........................................................................................................................
27 Dye v. Lewis, 67 Misc. 2d 426, 324 NYS2d 172 (1971)
............................................... 19, 28 Fisher v.
Salmon
................................................................................................................
37 Ford v. Bushard, 116 Cal. 273 [48 P. 119];
........................................................................
38 Forte v. Nolfi (1972) 25 Cal.App.3d.656, 685-686 [102 Cal.Rptr.
455] ........................... 21 Gomes v. Countrywide Home
Loans, Inc. (2011) 192 Cal.App.4th 1149 [121 Cal.Rptr.3d
819]
.................................................................................................................................
48 Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149,
(2011) ...................... 26 Gustafson v. Stockton etc. R. R.
Co., 132 Cal. 619 [64 P. 995]
......................................... 38 Herrera, supra, 205
Cal.App.4th at p. 1507, 141 Cal.Rptr.3d 326
.................................... 26 In re Correia (1st Cir. BAP
2011) 452B.R. 319, 324–325
.................................................. 26 In re IBJ
Schroder Bank & Trust Co., 271 A.D.2d 322 (N.Y. App. Div. 1st
Dep’t 2000 ... 19 In re New Century TRS Holdings, Inc. Case No.
07-10416 .............................................. 37 In re
New Century TRS Holdings, Inc. v. New Century Liquidating Trust,
407 B.R. 576
(2009)
............................................................................................................................
36 In re Osborne, 76 F. 3d 306, 309 (9th Cir. 1996)
............................................................. 23 In
re Saldivar (Bankr. S.D.Tex., Jun. 5, 2013, No. 11-10689) 2013 WL
2452699, .......... 18 In re Veal (B.A.P. 9th Cir. 2011) 450 B.R.
897, 910 ..........................................................
33 Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497
(May 17, 2013) ............. 25 Johnson v. Frankell, 520 U.S. 911,
916 (1997)
..................................................................
24 Kachlon v. Markowitz , (2008) 168 Cal. App. 4th 316, 334.
............................................ 20
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Kawamata Farms v. United Agri Products, 88 Hawaii 214 (1997) at
[69] [70][ 71][72][ 73][ 74] at
257-258.........................................................................................................
37
Kearney v. Vaugliau, 50 Mo. 2S4
......................................................................................
14 Kelley v. Howarth, 39 Cal. 2d 179, 192 (1952); Johnson v. Razy,
181 Cal. 342, 344 (1919)
........................................................................................................................................
39 Kelley v. Upshaw (1952) 39 Cal.2d 179, 192
.....................................................................
39 Knight v. Knight, 589 N.Y.S.2d 195, 197 (App.Div. 1992)
................................................ 28 LaSalle Bank
Nat'l Ass'n v. Lamy, No. 030049/2005, 2006 NY Slip Op 51534U, slip
op.
2 (N.Y. Sup. Ct. 2006)
....................................................................................................
35 MERS v. Saunders, 2 A.3d 289, 295 (Me. 2010)
.............................................................. 35
National Surety Co. v. Manhattan Mortgage Co., 185 App.Div. 733,
736-737, 174 N.Y.S.9,
affd. 230 N.Y. 545, 130 N.E. 887
...................................................................................
28 Ohlendorf v. American Home Mortg. Servicing (E.D. Cal. 2010) 279
F.R.D. 575 ........... 27 People v. Shall, 9 Cow. (N. Y.) 778, 7S4
............................................................................
15 Polhemus v. Trainer, 30 Cal. 686, 688 (1866)
.................................................................
39 Qualified Patients Ass'n v. City of Anaheim, 187 Cal. App. 4th
734, 764 (2010) ............ 25 Quan Wye v. Chin Lin Hee, 123 Cal.
185 [55 P. 783]
........................................................ 38 Read v.
Buffum, supra, 79 Cal. 77 [21 P. 555, 12 Am.St.Rep. 131]
.................................... 38 Reinagel v. Deutsche Bank
National Trust Co. (5th Cir., July 11, 2013, No. 12-50569)
F.3d [2013 WL 3480207
................................................................................................
15 Shannon v. General Petroleum Corp., 47 Cal. App. 2d 651, 661
(1941) ........................... 35 Svoboda v. Bank of America,
2013 WL 4017904 (W.D. Tex.)
.......................................... 28 System Inv. Corp. v.
Union Bank (1971) 21 Cal.App.3d 137, 152-153, 98 Cal.Rptr. 735 ..
21 United States Trust Co. v First Nat’l City Bank, 57 A.D.2d 285,
295-296, aff’d 45 NY2d
869
.................................................................................................................................
18 Videau V. Griffin
................................................................................................................
37 Vogan v. Wells Fargo Bank, NA, 2011 W.L. 5826016 (2011)
............................................ 40 Wells Fargo Bank,
N.A. v. Erobobo (N.Y.Sup.Ct. 2013) 39 Misc.3d 1220(A) [2013 WL
1831799,
.........................................................................................................................
18
Statutes 26 CFR 1.860F-2 - TRANSFERS TO A REMIC
................................................................ 20
2935
...................................................................................................................................
39 Calif. Civil Code § 47
.........................................................................................................
21 Calif. Civil Code § 2356
....................................................................................................
36 Calif. Civil Code § 2937
....................................................................................................
39 Calif. Civil Code § 2935
....................................................................................................
39 Calif. Civil Code § 2936
....................................................................................................
39 Calif. Civil Code § 2309
.....................................................................................................
37 Calif. Civil Code § 2924
.....................................................................................................
21 Calif. Civil Code § 2924(a)(1)
............................................................................................
26 Calif. Civil Code § 2924, subd. (a)(1)
................................................................................
48 Calif. Civil Code § 2924a(e)
...............................................................................................
21 Calif. Civil Code § 2924h
...................................................................................................
21 Calif. Civil Code § 2934a
...................................................................................................
21 Calif. Civil Code § 3539
.....................................................................................................
25
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Calif. Civil Code §§ 2936;
2924(a)(1)(c)............................................................................
20 California Statute of Frauds § 1624(a)(3)
.........................................................................
37 IRC 26 U.S.C. §860G
.........................................................................................................
19 New York Estate & Power Law (NYEPL) § 7-2.4
.............................................................. 12
Sections 860A through 860G
............................................................................................
17 Sections 860A to 860G
.....................................................................................................
19 UCC § 3–418(b).
................................................................................................................
33
Other Authorities California Mortgage and Deed of Trust Practice
(Cont.Ed. Bar 1979) s 6.40, p. 295 ...... 21 Miller & Harrell,
supra, ¶ 6.03[6][b][ii],
..........................................................................
33 Miller & Starr, Cal. Real Estate (3rd ed. 2000)
................................................................ 37
New York Estates Powers and Trust Law Section 7-2.4
............................................. 19, 28 Restatement
(3d) of Property (Mortgages) § 5.4[“[a]
...................................................... 39
Restatement [Second] of Trusts § 186, comments a, d)
................................................... 18
Footnote 11 Los Angeles County Bar Association Newsletter, April
2008, Vol. 28 No. 4
..................................................................................................................
25
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PREFACE This white paper seeks to break down, in layman's terms
why the Glaski ruling was a huge
win for homeowners and how others can use the same logic, if
applicable, in their own
battle against fraudulent and illegal foreclosure practices.
It requires that the reader have a fundamental, basic
understanding of the key
issues presented in Glaski, which are:
1) Understanding the basics of litigation 101 - why Glaski,
after winning the Appeal on the Demurrer, has not won.
2) Understanding the title records that are recorded against the
title, most specifically an Assignment of Deed of Trust.
3) What a REMIC Trust is and how to source the REMIC Trust
documents (if public).
4) The difference between a Trustee of the Deed of Trust and the
Trustee of the REMIC Trust.
5) The servicer versus the beneficiary.
This victory was on the "pleading" stage of the litigation.
Here, Glaski lost at the
Demurrer (California's version of a Motion to Dismiss) stage and
the California Appellate
Court reversed the decision, remanding the case back to the
trial court with the
instruction to overrule the Demurrer on the third, fourth,
fifth, eighth and ninth causes
of action. This means Glaski is now back in court and his
lawsuit is to proceed to trial (or
a Motion for Summary Judgment). This win is HUGE in that in
Federal Courts almost
91% of foreclosure cases are being dismissed at the pleading
stage1(the percentage in state
cases is unknown) and homeowners are getting turned out before
there is any substantive
discovery or litigation of the actual foreclosure issues.
Finally the Courts are beginning to look a little deeper under
the "hood" and beginning
to recognize that homeowner’s claims are not about delaying the
inevitable but about
fighting against massive corruption and fraud being perpetrated
by the Notorious Five2
and their industry.
1 Go to http://infotofightforeclosure.com/?p=1703 to download a
copy of the Motion to Dismiss For Failure to State a Claim, Report
to the Judicial Conference Advisory Committee, March 2011. 2
Notorious Five: Wells Fargo, N.A.; JP Morgan Chase Bank, N.A.; Bank
of America, N.A.; GMAC/Ally Bank; Citibank, N.A.
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I. WHAT VICTORY DOES GLASKI PRESENT?
Glaski sought to bring 9 claims against Bank of America, Chase
Home Finance, LLC;
California Reconveyance Corporation and Doe Defendants. The nine
claims were for
fraud, quiet title, wrongful foreclosure, declaratory relief,
injunctive relief, intentional
infliction of emotional distress, cancellation of instruments,
and unfair business
practices. The original, first amended, and second amended
complaints were met with
Demurrers, which eventually lead to a total dismissal from the
State Court, without leave
to amend. In response to the dismissal, Glaski filed an appeal
with the 5th District Court
of Appeals.
The Court of Appeals overturned the dismissal and remanded the
matter back to the
trial court with instructions to overrule the Demurrer on the
third, fourth, fifth, eighth
and ninth causes of actions. (Quiet Title, Wrongful Foreclosure,
Declaratory Relief,
Cancellation of Instruments, and Unfair Business Practices under
Bus. & Prof. Code §
17200 et. seq.) Key to the reversal was the Court's finding that
a borrower can challenge
an Assignment of Deed of Trust ("Assignment") as void if the
borrower factually and
specifically pleads why the Assignment is void.
The Glaski win represents the first Appellate Court to recognize
a borrower's right to
challenge, as a 3rd party3, a void contract which is the
Assignment that was filed by the
defendants in the public county records and used as the basis to
enter the statutory
framework of Calif. Civil Code § 2924. The battle forming is on
the second key point of
the Glaski ruling, is the assignment actually void?
II. KEY ISSUES AT STAKE IN GLASKI
There are three key issue at stake in the Glaski ruling. The key
issue in Glaski is
a borrower (homeowner) can challenge a VOID assignment. While
Glaski deals
3 It is important to note that U.S. Bank has gone on record
through their website that the "borrower" IS a party to the Pooling
& Servicing Agreement. See
https://www.usbank.com/pdf/community/Role-of-Trustee-Sept2013.pdf.
Please email [email protected] if you need
assistance locating this document, or visit website.
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specifically with late assignments into REMIC Trusts, there are
a variety of reasons why
an Assignment may be void ranging from MERS making assignments
without the Note,
without subscribing the principal or assignment for entities
that are defunct (most are
bankrupt), having 3rd party loan document firms sign as a
servicer employee, or for
entities that are not members of MERS. Across the board, in
almost ALL of the rulings
that are being proclaimed to not follow Glaski the Court AGREES
with Glaski that
if the assignment is void, the borrower can challenge the
assignment.
Where the battle lines are being drawn is what makes the
assignment void. For the
past six or seven years, Banks have been recording Assignments
to a "trustee" for a
REMIC4 trust years after the trust closed and for all intent and
purposes, the trust was
not legally allowed to accept an Assignment after the trust
closed. When homeowners
sought to challenge the Assignment, the oft heard refrain was
the Assignment was a
contract between the parties on the Assignment (the assignee and
the assignor) not the
homeowner; therefore the homeowner was a 3rd party and had no
legal right to challenge
the assignment.
EXAMPLE:
Imagine homeowner 1 has a five year contract with a local
gardening service that
homeowner 1 paid in full at the beginning of the five year term;
the gardener is obligated
to continue the service through the end of the term. Homeowner 1
sells the house to
homeowner 2; and part of that sale includes assigning the
gardening contract over to
homeowner 2. Now the gardening service doesn't want to continue
the service so he
attacks the assignment between the two homeowners. Since the
gardener is not a party
to that assignment, he can't challenge the assignment -
homeowner 2 paid homeowner
1 for the contract; therefore the gardener is obligated to
continue to fulfill the contract.
In essence, the Assignment is the original lender (or its
successor or assign) selling the
loan to another bank (or entity), and assigning the deed of
trust so if the payments are not
made, the property can be liquidated through a foreclosure and
the bank can get the
money back through the trustee sale.
4 Real Estate Mortgage Investment Conduit governed by Internal
Revenue Codes 860A - 860G.
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None of this is rocket science; it is pretty basic contract law
and usually, legal. Here is
where it gets sticky though; and this is where the Glaski Court
recognized the problem
with late Assignments, most specifically into REMIC trusts and,
again, is the second
KEY point (or step) of the Glaski decision. Usually a late
assignment into the REMIC
Trust destroys any tax advantages it may have had and exposes
the investors (the real
owners of the Trust) to substantial losses through taxation. And
when you read the Glaski
ruling, you see the Court spent an interesting amount of time
explaining this financial
impact and dilemma for the investors.
This of course, then lead the Court into examining why a Trustee
could take an act that
would have such devastating consequences; and lo and behold, the
Court found the
Trustee was prohibited from taking such an act! In fact, the act
was what is called ultra
vires.
Investopedia describes ultra vires as:
Any act that lies beyond the authority of a corporation to
perform. Ultra Vires acts fall outside the powers that are
specifically listed in a corporate charter or state law. They can
also be any action that is specifically prohibited by the corporate
charter. Legal Dictionary describes ultra vires as: [Latin, Beyond
the powers.] The doctrine in the law of corporations that holds
that if a corporation enters into a contract that is beyond the
scope of its corporate powers, the contract is illegal. (Emphasis
added)
Ultra vires acts cannot be legally defended in court; and if
there is one state
that has thoroughly examined ultra vires acts, it is New York
State! See New
York Estate & Power Law (NYEPL) § 7-2.4 which states:
"If the trust is expressed in an instrument creating the estate
of the trustee, every sale, conveyance or other act of the trustee
in contravention of the trust, except as authorized by this article
and by any other provision of law, is void."
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What the Glaski Court found is that an Assignment after closing
was prohibited5 and
therefore the act itself was ultra vires. The United States
Supreme Court in Angelo-
American Mortgage Co. v. Lombard (1904) 132 Fed. 721, treated an
ultra vires contract
as absolutely void. The reasoning is that an ultra vires
contract is void not because it is
forbidden but because the corporation had no capacity to make
it. (Banks claim the
Assignment is a contract between the assignee and assignor).
The act thus being void ab initio6 cannot be validated by any
subsequent ratification,
and there can therefore be no ground for the operation of
estoppel. California Bank v.
Kennedy (1987) 167 U.S. 362. In one of the letters requesting
Glaski be depublished to
the California Supreme Court one of the bank's attorneys argued
the act could be ratified.
That is laughable, what investor would ratify an act of the
Trustee that would incur tax
consequences so severe it could wipe out the investors
investment? Ratification also
requires 100% AGREEMENT of all investors; if just ONE investor
disagrees the act cannot
be ratified. The Trustees, servicers and their attorneys are
claiming the act can be ratified,
therefore the late assignment is voidable not void. (That is the
argument used in the Ill.
Opinion Federal courts are relying on). Seems to me that should
be a disputable fact but
the courts are finding that because it is possible that is all
that is required. This is point
I would want to argue, some New York Cases (and US Supreme Court
cases) state that an
ultra vires can NOT be ratified; so the claim to be able to
ratify is one that should be hotly
disputed. (See Banks Arguments below).
Whenever a court becomes aware that a contract is illegal, it
has a duty
to refrain from entertaining an action to enforce the contract."
California
Golf v. Cooper, (2008) 163 Cal.App.4th 1053, 1070. (Emphasis
added)
KEY ONE: Borrower CAN challenge the Assignment if it is
VOID.
In my humble opinion, this is probably the most important
element of this
ruling. Borrowers can challenge the Assignment if it is VOID. In
the majority
5 Prohibited acts are detailed in the Pooling & Servicing
Agreement for the REMIC
Trust.
6 Ab initio is a Latin term for "from the beginning".
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of the rulings that have come out over the last six or seven
years, the Courts have soundly
told Borrowers they are not parties to the Assignment and
therefore have no right to
challenge the Assignment....because it is voidable. In the
majority of these rulings the
Courts never even investigated whether the assignment was void
or merely voidable, the
Courts just assumed it was voidable or the borrower alleged the
assignment was invalid
or voidable. (See below Bank's Arguments)
Legal Dictionary describes VOID as: That which is null and
completely without legal force or binding effect.
The term void has a precise meaning that has sometimes been
confused with the more liberal term voidable. Something that is
voidable may be avoided or declared void by one or more of the
parties, but such an agreement is not void per se.
Webster describes VOID as:
law : having no legal force or effect
Black's Law (thelawdictionary.org) goes into great detail when
describing VOID: (This is a cut/paste from its website) Null;
Ineffectual; nugatory; having no legal force or binding effect;
unable,
in law, to support the purpose for which it was intended. “Void”
does not
always imply entire nullity; but it is, in a legal sense,
subject to
large qualifications in view of all the circumstances calling
for
its application, and the rights and interests to be affected in
a given case. Brown v. Brown,
50 N. II. 53S, 552. “Void,” as used in statutes and by the
courts, does not usually mean
that the act or proceeding is in absolute nullity. Kearney v.
Vaugliau, 50 Mo. 2S4.
There is this difference between the two words “void” and
“voidable;” void means that
an instrument or transaction is so nugatory and ineffectual that
nothing can cure it;
voidable, when an imperfection or defect can be cured by the
act
or confirmation of him who could take advantage of it. Thus,
while acceptance
of rent will make good a voidable lease, it will not alter in a
void lease. Wharton. The true
distinction between void and voidable acts, orders, and
judgments is that the former can
always be assailed in any proceeding, and the latter only in a
direct proceeding. Alexander
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v. Nelson. 42 Ala. 462. The term “void” as applicable to
conveyances or other
agreements, has not at all times been used with technical
precision, nor
restricted to its peculiar and limited sense, as
contradistinguished from
“voidable;” it being frequently introduced, even by legal
writers and jurists,
when the purpose is nothing further than to indicate that a
contract was
invalid, and not binding in law. But the distinction between the
terms “void” and
“voidable,” in their application to contracts, is often one of
great practical importance;
and, whenever entire technical accuracy is required, the term
“void” can only be properly
applied to those contracts that are of no effect whatsoever,
such as are a mere nullity, and
incapable of confirmation or ratification. Allis v. Billings, 6
Mete. (Mass.) 415, 30 Am.
Dec. 744. Void in part, void in toto. Curtis v. Leavitt, 15 N.
Y. 9, 90.
Void things are as no things. People v. Shall, 9 Cow. (N. Y.)
778, 7S4.
Law Dictionary:
http://thelawdictionary.org/void/#ixzz2sTpq81TM
As you can see, if the Assignment is VOID it would mean that the
WRONG PARTY is
foreclosing because no ownership rights were established via the
Assignment. (See
Foreclosure Statutes Violated with VOID Assignment below); See
Glaski at Section III,
Part C, below.
GLASKI at 1095:
California's version of the principle concerning a third party's
ability to challenge an
assignment has been stated in a secondary authority as follows:
"Where an assignment
is merely voidable at the election of the assignor, third
parties, and particularly the
obligor, cannot ... successfully challenge the validity or
effectiveness of the transfer." (7
Cal.Jur.3d (2012) Assignments, § 43, p. 70.)
This statement implies that a borrower can challenge an
assignment of his or her
note and deed of trust if the defect asserted would void the
assignment. (See Reinagel
v. Deutsche Bank National Trust Co. (5th Cir., July 11, 2013,
No. 12-50569) F.3d [2013
WL 3480207, p. *3] [following majority rule that an obligor may
raise any ground that
renders the assignment void, rather than merely voidable].) We
adopt this view of the
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law and turn to the question whether Glaski's allegations have
presented a theory under
which the challenged assignments are void, not merely
voidable.
We reject the view that a borrower's challenge to an assignment
must fail once it is
determined that the borrower was not a party to, or third party
beneficiary of, the
assignment agreement. Cases adopting that position "paint with
too broad a brush."
(Culhane v. Aurora Loan Services of Nebraska, supra, 708 F.3d at
p. 290.) Instead,
courts should proceed to the question whether the assignment was
void.
Here is where the Glaski distinction arises. First, Glaski
specifically and factually
alleged the Assignment was VOID; this lead the Glaski Court to
ponder the effect of the
VOID or voidable elements. Upon determining that if the
Assignment is VOID the
borrower could challenge the assignment, then the next step is
to investigate whether it
was void or voidable. This is where the MAJORITY of Courts
stopped! (Mostly because
the borrower did not specifically and factually plead the
Assignment as VOID). So when
you read cases that decline to follow Glaski, you need to read
the ruling and see what the
borrower plead, and what the Court considered. ( See Banks
Arguments below for details
on some of the Cases being argued as of May 2014.) And keep in
mind, that when you
read those rulings almost ALL OF THEM across the board agreed
with the Glaski ruling
that IF the assignment IS void, it can be challenged; where they
depart is whether a late
assignment is void.
KEY TWO: Determining if the Assignment is VOID
Once the Glaski Court decided that a borrower could challenge a
VOID
assignment, the next step was determining IF the Assignment was
indeed
VOID versus VOIDABLE. This is where Glaski gets a little
confusing, but the reasoning
of the Court is still viable and sound.
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The Plaintiff (Glaski) alleged and plead the REMIC Trust was
governed by
New York law, and for some reason the Defendants (Bank of
America, Chase)
never disputed this fact. This was what was in the record and
what the Appeals
Court relied on in reviewing the record. The Court did NOT
assume this, again
this was what was alleged/plead; the defendants had the
opportunity to dispute
this but chose not to for some reason. The arguments and legal
reasoning of the
Court is still sound because even if you apply Delaware law to
the argument, the
outcome is the same. (See Delaware v. New York Law below)
Based on Glaski's specific and factual allegations the
assignment was VOID, the Court
looked at several things in determining whether the Assignment
was VOID or merely
voidable. The three key items investigated were the Pooling
& Servicing Agreement
("PSA") which is the contract between the parties who
established the REMIC Trust; the
Internal Revenue Codes ("IRC") Sections 860A through 860G, which
governs the
formation and management of the REMIC Trust; and New York Law
which the parties
had gone on record as being the governing law of the PSA. (See
Glaski Second Amended
Complaint)
A. New York Law Confirms Ultra Vires Act
Glaski alleged Washington Mutual, F.A. never transferred the
Note and Deed of Trust
to the Depositor (Sponsor) of the Securitized Trust. This is a
very important distinction
in what Glaski alleged versus what other pleadings from
homeowners (borrowers) tend
to say. Here Glaski claims the REMIC Trust never acquired the
Note and Deed of
Trust; a lot of pleadings tend to plead the theory that transfer
of the Note and /or Deed
of Trust into a REMIC Trust somehow renders the Deed of Trust
unenforceable. Not sure
what that logic is but clearly one theory is conceding the
transferred occurred but
invalidated the Deed of Trust in the process; while others, such
as Glaski, are saying no
such transferred occurred. Where the invalidation theory appears
to not be supported
by law; the FAILURE of the REMIC Trust to actually acquire the
Note and Deed of Trust
is in fact, supported by law and is in fact, what happened. The
REMIC Trusts never
acquired the loans and therefore are not the owners.
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In Glaski, JP Morgan Chase Bank, N.A., claiming to be a
successor in interest to
Washington Mutual7, executed and recorded the Assignment
directly from JP Morgan
Chase Bank, N.A. to Bank of America, N.A. as Trustee of the
REMIC Trust. This
transfer was supposed to occur no later than December 21, 2005
or 90 days after (so
approximately March 21, 2006) but according to the Assignment,
was occurring three
and half years (3 1/2) later.
Glaski specifically challenged the late transfer as VOID
pursuant to New York law
which Glaski alleged (and the Defendants failed to dispute) was
the governing law of the
REMIC Trust. (See Glaski SAC ¶ 7) The Glaski court decided to
follow the New York
statute literally because in this matter (and any REMIC Trust
matter) by following the
statute, the Court was protecting the interest of the investors
from adverse tax
consequences that could, well, pretty much wipe out the entire
investment for the
investors.
The Glaski Court relied on a couple of different rulings that
are under attack, those
being Wells Wells Fargo Bank , N.A. v. Erobobo (N.Y.Sup.Ct.
2013) 39 Misc.3d 1220(A)
[2013 WL 1831799, p. *8 and In re Saldivar (Bankr. S.D.Tex.,
Jun. 5, 2013, No. 11-10689)
2013 WL 2452699, p. *4. You can review the Glaski ruling below
and access those cases
and read in further detail the Court's reasoning. However,
Erobobo and In re Saldivar
are hardly the first cases to address the void acts of a
trustee; there are many cases in New
York that address the impact of a void act.
The failure to convey to a trust per the controlling trust
document is not a matter that
may be cured by the breaching party. New York law is
unflinchingly clear that a trustee has
only the authority granted by the instrument under which he
holds, either deed or will. This
fundamental rule has existed from the beginning and is still
law. Allison & Ver Valen Co. v.
McNee, 170 Misc. 144, 146 (N.Y. Sup. Ct. 1939).
It is settled that the duties and powers of a trustee are
defined by the terms of the trust
agreement and are tempered only by the fiduciary obligation of
loyalty to the beneficiaries.
See, United States Trust Co. v First Nat’l City Bank, 57 A.D.2d
285, 295-296, aff’d 45 NY2d
869; Restatement [Second] of Trusts § 186, comments a, d). See
In re IBJ Schroder Bank &
7 The claim by JP Morgan Chase Bank, N.A. to be a "successor in
interest" is another hotly disputed claim. While Chase relies on
the purchase & assumption agreement; federal law doesn't
support that claim. See our white paper on "JP Morgan Bank's
Purchase & Assumption Scam".
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Trust Co., 271 A.D.2d 322 (N.Y. App. Div. 1st Dep’t 2000) New
York’s law is so well-settled
regarding the limitations of a trustee’s power to act that the
New York Estates Powers and
Trust Law Section 7-2.4 states "every sale, conveyance or other
act of the trustee in
contravention of the trust.... is void. " See Application of
Muratori, 183 Misc. 967, 970 (N.Y.
Sup. Ct. 1944) See also Dye v. Lewis, 67 Misc. 2d 426, 324 NYS2d
172 (1971), mod on other
grounds, 39 App. Div. 2d 828, 332 NYS2d 968 (1972, 4th Dept.)
(finding the authority of a
trustee to whom a mortgage had been delivered under a trust
indenture was subject to any
limitations imposed by the trust instrument, and every act in
contravention of the trust was
void.)
Whether the act is void can also be further supported by taking
a look at the
prohibited acts as detailed in the PSA of the REMIC Trust.
Verbiage typically can be
found under the Trustee Section and often has its own section
called "Prohibited
Transactions and Activities".
B. Internal Revenue Codes Threaten Severe Tax Consequences
The Internal Revenue Codes ("IRC") that govern a REMIC Trust are
Sections 860A to
860G found under 26 U.S.C. and 26 C.F.R. Key in these codes is
that a mortgage must be
a qualified mortgage; all of the mortgage loans, along with the
supporting contracts (Note
and Deed of Trust) must be deposited (transferred) to the REMIC
Trust by the closing
date, with a 90 day "clean up" time to wrap up the paper work;
and the mortgage must
have be acquired and then transferred by the sponsor (or
depositor) of the REMIC Trust.
IRC 26 U.S.C. §860G8
(a) (3) Qualified mortgage
The term “qualified mortgage” means—
(A) any obligation (including any participation or certificate
of beneficial
ownership therein) which is principally secured by an interest
in real property
and which— (i) is transferred to the REMIC on the startup day in
exchange for regular or residual interests in the REMIC, (ii) is
purchased by the REMIC within the 3-month period beginning on the
startup day if, except as provided in regulations, such purchase is
pursuant to a fixed-price contract in effect on the startup day,
or......
8 Information from Legal Information Institute at
http://www.law.cornell.edu/uscode/text/26/860G
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26 CFR 1.860F-2 - TRANSFERS TO A REMIC9
(a) Formation of a REMIC—
(1) In general. For Federal income tax purposes, a REMIC
formation is
characterized as the contribution of assets by a sponsor (as
defined in paragraph
(b)(1) of this section) to a REMIC in exchange for REMIC regular
and residual
interests. If, instead of exchanging its interest in mortgages
and related assets for
regular and residual interests, the sponsor arranges to have the
REMIC issue some
or all of the regular and residual interests for cash, after
which the sponsor sells its
interests in mortgages and related assets to the REMIC, the
transaction is,
nevertheless, viewed for Federal income tax purposes as the
sponsor's exchange of
mortgages and related assets for regular and residual interests,
followed by a sale
of some or all of those interests. The purpose of this rule is
to ensure that the tax
consequences associated with the formation of a REMIC are not
affected by the
actual sequence of steps taken by the sponsor.
(b) Treatment of sponsor—
(1) Sponsor defined. A sponsor is a person who directly or
indirectly exchanges
qualified mortgages and related assets for regular and residual
interests in a
REMIC. A person indirectly exchanges interests in qualified
mortgages and related
assets for regular and residual interests in a REMIC if the
person transfers, other
than in a non-recognition transaction, the mortgages and related
assets to another
person who acquires a transitory ownership interest in those
assets before
exchanging them for interests in the REMIC, after which the
transitory owner then
transfers some or all of the interests in the REMIC to the first
person.
KEY THREE: Foreclosure Statutes Violated with VOID Assignment
Once an Assignment is determined void, all the rest of the
foreclosure
crumbles.
A Notice of Default may only issue based on actual default
incurred by the
beneficiary entitled to payments on the Note. See Calif. Civil
Code §§ 2936; 2924(a)(1)(c).
"When the trustor defaults on the debt secured by the deed of
trust, the beneficiary may
declare a default and make a demand on the trustee to commence
foreclosure." Kachlon
v. Markowitz , (2008) 168 Cal. App. 4th 316, 334. (emphasis
added). In Miller v.
9 Information from Legal Information Institute at
http://www.law.cornell.edu/cfr/text/26/1.860F-2
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Cote, 179 Cal.Rptr. 753, (Ct of App. Fourth Dist. Div. 2 1982),
the Court, in calling the
notice of default fatally defective stated:
“The procedure for foreclosing on security by a trustee’s sale
pursuant to a deed of
trust is set forth in Civil Code section 2924, et seq. The
statutory requirements must be
strictly complied with, and a trustee’s sale based on a
statutorily deficient notice of
default is invalid. (System Inv. Corp. v. Union Bank (1971) 21
Cal.App.3d 137, 152-153,
98 Cal.Rptr. 735; see California Mortgage and Deed of Trust
Practice (Cont.Ed. Bar
1979) s 6.40, p. 295; see also Bisno v. Sax (1959) 175
Cal.App.2d 714, 720, 346 P.2d.
The Substitution of Trustee can only be done by the beneficiary
of the Deed of
Trust pursuant to Calif. Civil Code § 2934a. If a Substitution
of Trustee is not valid, the
resulting sale is VOID with no requirement for “tender”. See
Dimrock v. Emerald
Properties, 81 Cal.App.4th 868, 878 (2000)
An invalid SOT can also lead to the argument for Slander of
Title. It can be argued that
any documents filed by that entity is not subject to privilege
under Calif. Civil Code § 47
or Calif. Civil Code § 2924, but are in fact, slander of title.
The recordation of an
instrument facially valid but without underlying merit will, of
course, give rise to an action
for slander of title. See Forte v. Nolfi (1972) 25
Cal.App.3d.656, 685-686 [102 Cal.Rptr.
455]. ).
The Notice of Trustee Sale must identify the proper trustee
pursuant to Calif. Civil
Code § 2924a(e).
If you are fighting a wrongful foreclosure, and the alleged
beneficiary credit bid, then
the Trustee Deed Upon Sale can be attacked as only the
beneficiary may make a credit
bid. See Calif. Civil Code § 2924h.
Since Bank of America's only claim to ownership was based on the
Assignment, Bank
of America does not appear to be the proper party foreclosing,
and certainly had no right
to credit bid at the Trustee Sale. Therefore not only is the
Assignment void, but all
documents flowing from that Assignment are void including the
Notice of Default, Notice
of Trustee, Substitution of Trustee and Trustee Deed Upon
Sale.
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III. BANKS ARGUMENTS AGAINST GLASKI Now you don't really think
the Notorious Five and their ilk will just
pack up and go away do you? Homeowners won this round but
the
fight is far from being over. The Notorious Five are on a
campaign to discredit Glaski
and attempted to minimize its impact on California law.
Unfortunately they use skilled
lawyers who know how to parse the words and rely on Judges who
don't really dig down
into the cites where the Banks are now claiming that Glaski is a
minority opinion and
not in the majority. It is precedent; precedent is a guide…a
standard… a model. Do
not get lost is this claim that Glaski is not being followed.
Prove the assignment is VOID
for ANY reason…and your argument is supported.
A. De-publication Efforts
The first line of attack by the Notorious Five was their effort
to de-publish Glaski.
Note when the ruling first released in August of 2013 it was
unpublished; through the
efforts of some homeowner advocates, the Appellate Court
published the ruling. In
response, the Notorious Five who had previously sought a
rehearing with the Appellate
Court (which was denied) and failed to take the matter up with
the Supreme Court, felt
their next best effort was to ask the Supreme Court to
de-publish the ruling, rendering it
ineffective. On February 26, 2014 the Supreme Court denied the
Notorious Five's
request. Glaski is and remains Case law.
De-publication is not a common day word or procedure, many
people are not
even aware this is an option or what its impact is. California,
in all its glory, is the ONLY
state that allows this end run around the appellate process. At
its finest, the de-
publication process allows the Supreme Court to stop the impact
of a bad ruling without
investing resources by simply de-publishing the opinion. It is a
process that, again at its
finest, makes sense. For example, say an Appeals Court rules
that December follows
October and there is no November – this is such a blatantly bad
ruling that it would be
silly to spend 1,000′s of dollars in court resources explaining
why this is a bad
ruling. Yet if left to stand, it could and would create chaos in
the lower courts in which
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other Appeals Courts would eventually have to spend money
defeating the ruling in their
own districts. So rather than spend anyone’s time on the bad
ruling, the Supreme Court
simply orders the ruling be de-published and therefore,
preventing anyone from using it
as any form of authority in supporting their arguments. Again,
at its finest it makes
sense.
The Glaski ruling is not a blatantly bad ruling – it is in fact,
a well-reasoned and fair
ruling. For details on the letters submitted by the banks, and
by homeowner advocates
in opposition to the bank's letters, go to
http://infotofightforeclosure.com/?p=1685 . At
the bottom of the blog you can access the letters, and access is
free.
B. Stare Decisis: Glaski is a PRECEDENT Opinion not a Minority
Opinion!
Glaski is a California Appellate Decision and therefore, based
on Stare Decisis10 is
Case law in California. In simple terms, the decisions of higher
courts are binding on
lower courts. Where this gets tricky is are the decisions of
higher state court rulings
binding on lower federal courts; and vice versa? How does this
cross over? This is
important in understanding how banks are starting to argue
Glaski and attempt to
prevent homeowners from using the power of this ruling to
advance their claims.
Most of the Court's have three levels - trial (called district
in Federal Courts),
appellate, and supreme11.
State (California) Federal
United States Supreme Court
California Supreme Court
10 Stare Decisis et non quieta movere, meaning to adhere to a
precedent and not unsettle what is established. See In re Osborne,
76 F. 3d 306, 309 (9th Cir. 1996) 11 For more detailed information
on the hierarchy of the Courts, please go to
www.infotofightforeclosure.com and click on State and/or Federal
Litigation Process and Tools.
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9th Circuit (Covers Western States and
has different Courthouses for each
District)
Court of Appeals (Six Districts, each
district has divisions)
|
Superior Court (also referred to as
"Trial")
District Court (Northern California,
Southern California, Central California,
Eastern etc.)
Where the Federal 9th Circuit rulings only bind those District
Court's within that
particular Appeals Court's geographic territory, California's
Court of Appeals binds ALL
trial courts in California! (This is a common misperception in
that some legal folks,
including judges, don't think they have to follow Stare Decisis
in a Court of Appeals
Ruling that is not from their district/division). Every superior
court must follow any
published decision from any district and any division of any
court of appeal. Cuccia v.
Superior Court, 153 Cal. App. 4th 347, 353-354 (2007). [stare
decisis requires a superior
court to follow a published court of appeal decision even if the
trial judge believes the
appellate decision was wrongly decided.] However, if there are
several different
decisions from different Appellate Courts, then the trial court
is free to pick which of the
decisions to follow. (Ergo why there is a Supreme Court which
decides issues that the
different Appeals Court are not agreeing on).
A federal court, when applying state law is bound by the highest
state
court authority to have ruled. See Johnson v. Frankell, 520 U.S.
911, 916 (1997)
[federal courts must follow state's highest court on question of
state law); Cal. Pro-Life
Council, Inc. v. Getman, 328 F.3d 1088, 1099 (9th Cir. 2003)
[federal courts must
follow state's intermediate appellate courts absent convincing
evidence that the state's
highest court would rule differently). However, federal court
decisions on state law are
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not binding on state courts. Qualified Patients Ass'n v. City of
Anaheim, 187 Cal. App.
4th 734, 764 (2010); Bodell v. Walbrook (9th Cir. 1997) 119 F.
3d 1411, 1422.12
This concept is very important when you start
looking at how courts are not following Stare Decisis
and/or claiming Glaski is a minority opinion. Arguing
Stare Decisis may make the difference between success or
failure in your arguments!
As of February 8, 2014 the following are some Rulings that are
being used to
persuade Courts that Glaski should not be followed. It is our
opinion these arguments
are flawed and it is in your interest to understand the
difference between what the
banks are saying and what the rulings actually say. As you get
further into each of
these rulings you will see that these rulings rely on each other
and they ALL FAIL to
recognize STARE DECISIS. (Each of the rulings are included in
the appendix)
Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497
(May 17, 2013) This ruling came out three months before Glaski. Key
to this ruling is Jenkins
did not plead or allege the Assignment was VOID, she alleged it
was "invalid". Invalid
usually results in a discussion of voidable and a voidable
assignment cannot be
challenged by a 3rd party; only a VOID Assignment can be
challenged.
Time does not confirm a void act. See Calif. Civil Code § 3539
This is not an easy
distinction to make with the Courts – the judges tend to “go
with the flow” and forgive
the banks whatever – borrowers not so much. This appears to be a
major point of
distinction that must be argued clearly and with an eye to
establishing the argument for
appeal. Jenkins continues to gain momentum so busting through
the Judge’s mindset
and shifting that paradigm requires creating some real chaos
that has the judge
scratching their head and then actually doing some independent
thinking. (It does
12 For more details on the different stare decisis please see
the Los Angeles County Bar Association Newsletter, April 2008, Vol.
28 No. 4.
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happen!). It appears the Court also once again, claimed that the
borrower did not allege
any prejudice from the “wrong party” foreclosing (common sense
just doesn’t play in
this argument for some reason.)
[15]Despite these facts, Jenkins’s first cause of action
attempts to construct a dispute
between herself and Defendants with regard to the alleged
improper transfer of the
promissory note during the securitization process. However, even
if the asserted
improper securitization (or any other invalid assignments or
transfers of the
promissory note subsequent to her execution *515 of the note on
March 23, 2007)
occurred, the relevant parties to such a transaction were the
holders (transferors) of the
promissory note and the third party acquirers (transferees) of
the note. “Because a
promissory note is a negotiable instrument, a borrower must
anticipate it can and
might be transferred to another creditor. As to plaintiff, an
assignment merely
substituted one creditor for another, without changing her
obligations under the note.”
(Herrera, supra, 205 Cal.App.4th at p. 1507, 141 Cal.Rptr.3d
326.) As an unrelated
third party to the alleged securitization, and any other
subsequent transfers of the
beneficial interest under the promissory note, Jenkins lacks
standing to enforce any
agreements, including the investment trust’s pooling and
servicing agreement, relating
to such transactions. (See In re Correia (1st Cir. BAP 2011)
452B.R. 319, 324–325
[debtors lacked standing to raise violations of pooling and
service agreement].)
Keep in mind that Jenkins failed to allege with specific facts
the Assignment was
VOID and attacked failure to comply with governing documents
rather than by
operation of law-- this is a major distinction with Glaski who
not only alleged it was
VOID, he used New York law in his arguments to support this
claim that the Trust was
prohibited from accepting the late transfer; and therefore by
law the act was void.
Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149,
(2011)
Gomes, a pre-foreclosure not post foreclosure complaint, held
that Calif. Civil Code §
2924(a)(1) does not provide for a judicial action to determine
whether the person initiating
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the foreclosure process is indeed authorized by the proper
party. But the issue in Gomes
was not whether the wrong entity had ordered the foreclosure,
Gomes involved whether
the party selling the foreclosed property (MERS as nominee of
the Lender) was authorized
to do so by the owner of the promissory note, not whether there
was some infirmity in the
assignment leading to the wrongful foreclosure. Id. at 1155
(rejecting the argument a
plaintiff may test whether the person initiating the foreclosure
has the authority to do so).
Thus, Gomes explicitly avoided the scenario plead in Glaski, in
which the "plaintiff's
complaint identified a specific factual basis for alleging that
the foreclosure was not
initiated by the correct party (emp. in original)" Id at 1156.
Gomes is therefore inapposite
when evaluating it against Glaski.
Similarity, in distinguishing the facts before the Court in
Ohlendorf v. American Home
Mortg. Servicing (E.D. Cal. 2010) 279 F.R.D. 575, the Gomes
court noted that its decision
did not involve facts concerning whether an "assignment[....] of
the deed of trust had been
improperly backdated, and thus the wrong party had initiated the
foreclosure process." Id.
at 1155. Importantly the Gomes Court held that "no such
infirmity [was] alleged" by
plaintiff.
The fundamental difference was that Gomes questioned whether
MERS (the nominee)
had the authority; where in Glaski he specifically and factually
plead that Bank of America
was NOT the proper party, and provided the basis of those
allegations. (i.e. the Assignment
was void, thereby showing that Bank of America was not the
lender and Chase and
California Reconveyance Corp. as Bank of America's agents, had
no authority).
Diunugala v. JP Morgan Chase Bank, N.A. (Case No.
12-cv-02106-WQH-NLS) (October 3, 2013) First, Diunugala is a
federal district court ruling; go back to the above chart. It
is
a lower court than the Court of Appeals. Any state court judge
relying on Federal
District Court decisions should be respectfully reminded that
stare decisis would render
any decision in contravention to Glaski an appealable error. If
it is a Federal District
Court, then there are plenty of other cases demonstrating that
the Illinois court ruling
this district court judge relied on ignored the higher New York
State cases that find the
assignment void.
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In this ruling, the district court relied on another federal
district court's ruling,
Deutsche Bank Nat'l Trust Co. v. Adolfo, No. 12 C759, 2013 WL
4552407 * 3 (N.D. Ill.
Aug. 28, 2013) in which that Court held that a late transfer is
voidable and not void.
Apparently, relying on yet another district court ruling,
Svoboda v. Bank of America,
2013 WL 4017904 (W.D. Tex.) in which that federal district court
held "[B]ecause New
York law permits a beneficiary to ratify a trustee's ultra vires
transactions, 'such
transactions are, accordingly, voidable".
No. That is not true. It appears the Court was looking at a
family trust; not a
business/investment trust. First, ultra vires acts are those
acts that cannot be ratified.
New York’s law is so well-settled regarding the limitations of a
trustee’s power to act that
the New York Estates Powers and Trust Law Section 7-2.4 states
"every sale, conveyance
or other act of the trustee in contravention of the trust.... is
void. " See Application of
Muratori, 183 Misc. 967, 970 (N.Y. Sup. Ct. 1944) See also Dye
v. Lewis, 67 Misc. 2d
426, 324 NYS2d 172 (1971), mod on other grounds, 39 App. Div. 2d
828, 332 NYS2d
968 (1972, 4th Dept.) (finding the authority of a trustee to
whom a mortgage had been
delivered under a trust indenture was subject to any limitations
imposed by the trust
instrument, and every act in contravention of the trust was
void.) See Knight v. Knight,
589 N.Y.S.2d 195, 197 (App.Div. 1992) (suggesting that a "void
assignment" cannot be
ratified); See also National Surety Co. v. Manhattan Mortgage
Co., 185 App.Div. 733,
736-737, 174 N.Y.S.9, affd. 230 N.Y. 545, 130 N.E. 887;
Boskowitz v. Held, 15 App.Div.
306, 310-311, 44 N.Y.S. 136, affd. 153 N.Y. 666, 48 N.E. 1104.
(holding that the
conveyance made in contravention of the trust, the transaction
is void).
IN RE SANDRI, Bankr. Court, ND California 2013 This is a case
out of the United States District Court, Northern California.
Judge
Montali (who also sits on the Bankruptcy Appellate Panel)
rendered this ruling in
November of 2013, after Glaski. The Court first looked at the
borrowers right to challenge
a void Assignment and agreed, based on state law, that Sandri
could challenge an
Assignment on the basis that it was void. Where Montali departed
from the Glaski ruling
was whether the Assignment was void.
First, Montali relied on the following cases in making his
analysis:
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Patel v. Mortgage Electronic Registration Systems, Inc., 2013
WL
4029277 (N.D. Cal. Aug. 6, 2013) ("[T]he securitization process
did not break
the chain of title; MERs [sic] does have authority to assign the
DOT . . .; Plaintiffs
have failed to plead breach of the DOT and do not have standing
to assert a breach
of any PSA; and the robo-signing allegations have not been
properly pled.")
(emphasis added). (COMMENT: here it appears Patel argued the
effect of
securitization; not that the REMIC failed to acquire the
loan).
Aniel v. GMAC Mortg., LLC, 2012 WL 5389706 at *4 (N.D. Cal. Nov.
2,
2012) (plaintiffs lacked standing to challenge assignment of
deed of trust based
on noncompliance with pooling and service agreements) (COMMENT:
The ruling
is unclear if Aniel was factually stating the transfer as void
but one would think the
argument should have been the assignment was void as a matter of
law; not
voidable as a matter of equity – and it is unclear if that
argument was made. This
is also a concern with Ganesan below).
Ganesan v. GMAC Mortgage, LLC, 2012 WL 4901440 at *4 (N.D. Cal.
Oct. 15, 2012) (citing cases) ("[T]o the extent Plaintiff bases her
claim on the
theory that Defendants allegedly failed to comply with the terms
of a Pooling and
Servicing Agreement, the Court notes that she lacks standing to
do so because she
is neither a party to, nor a third party beneficiary of, that
agreement.")
Gilbert v. Chase Home Fin., LLC, 2013 WL 2318890 at *3 (E.D.
Cal. May 28, 2013) (listing numerous federal district cases holding
that borrowers
lack standing to challenge their liability under a note and
security instrument by
alleging that the assignment of such instruments did not comply
with a PSA)
(COMMENT: This ruling appears to be one in which Gilbert may
have been
arguing the effect of the securitization rather than the
acquisition never took
place).
For starters, ALL of these are district courts (trial) - a
California Court Appellate Ruling
has more authority than lower district court rulings; and all of
the above cases were
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decided pre - Glaski. Remember, stare decisis. But to justify
his rationale, he then
looks to California Appellate Rulings:
Siliga v. Mortgage Electronic Registrations Systems, Inc., 219
Cal.
App. 4th 75, 161 Cal. Rptr. 3d 500 (Cal. App. 2d Cir. 2013)
(decided on
August 27, 2013) (borrowers lacked standing to complain about
loan servicer's
and assignee's alleged lack of authority to foreclose on deed of
trust where
borrowers were in default under the note, absent evidence that
the original lender
would have refrained from foreclosure) (COMMENT: I have to admit
this
argument from the courts escapes my logic. It appears the Court
is saying doesn’t
matter who forecloses – stranger or not, the borrower is in
default so the
foreclosure can go forward?);
Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497,
156 Cal. Rptr. 3d 912 (Cal. App. 4th Dist. 2013)(borrower does not
have the
right to bring a preemptive judicial action to determine
defendants' standing to
foreclose; foreclosing party need not have beneficial interest
in promissory note
and deed of trust) (COMMENT: We know that Jenkins did not argue
that the
REMIC Trust had failed to acquire it by operation of law;
Jenkins argued failure
to comply with the governing documents– this is a key difference
between Glaski
and Jenkins – see above);
Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App. 4th 256, 272,
129
Cal. Rptr. 3d 467 (1st Dist. 2011) (to recover on wrongful
foreclosure claim,
borrower must demonstrate that the alleged imperfection in the
foreclosure
process was prejudicial; no prejudice exists where borrower was
in default and
the assignment of the loan did not interfere with the borrower's
ability to pay).
(COMMENT: Prejudice must be alleged!)
Once again relying on pre- Glaski rulings, it appears that
Montali is reviewing the
claim of the Assignment being voidable as a "technicality"
rather than void as a matter of
law and the basis of fraud. Only the proven mortgagee may
maintain a foreclosure action.
The requirement that a foreclosure action be brought only by the
actual mortgagee is at the
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heart of the issues with foreclosure irregularities. If the
homeowner or the court challenges
the claim of the party bringing a foreclosure action that it is
the mortgagee (and was when
the foreclosure was filed), then evidentiary issues arise as to
whether the party bringing the
foreclosure can in fact prove that it is the mortgagee. The
issues involved are highly complex
areas of law, but despite the complexity of these issues, they
should not be dismissed as mere
technicalities. Rather, they are legal requirements that must be
observed both as part of due
process and as part of the contractual bargain made between
borrowers and lenders13. And
this is where I think Montali gets it wrong.
The Court relies on the fact the borrower is not denying she is
in default; again, since the
homeowner will lose the house anyway, therefore anybody can
steal the house? That is the
logic being propounded here.
Under these circumstances, she cannot show that the assignment
of the note or DOT after
the effective date of the PSA interfered with her ability to pay
or that the original lender
would not have foreclosed. She therefore cannot show prejudice
from the purportedly
defective assignments.
Wrong! What the Court is not looking at (and perhaps because the
borrower did not
allege it), if the real creditor WAS involved, there would be an
effort to resolve the issues
surrounding the loan to get it back to a performing loan.
Foreclosure is NOT the way of a
true creditor; it is the way of Walls Street thugs and the banks
that collect on their behalf.
Not only that, this idiocy flies in the face of basic California
law. (See below.)
Yvanova v. New Century Mortgage, et al. April 2014 Oh my. I am
not sure what fascinates me more about this opinion – the fact that
it
drives home the point of how a pro se can hurt all of us by not
understanding the basic
rules of civil procedure and law; or that the Court actually
relies on lower federal district
court rulings to support its decision not to follow Glaski. This
case is just simply wrong,
13 Restatement (Third) of Prop. (Mortgages) § 5.4(c) (1997).
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wrong, wrong. Not because it is not right in the reasoning, but
because now the Banks
will use this in arguing against Glaski.
On page 8, the Court confirms the Glaski court finding that “a
borrower may
challenge a nonjudicial foreclosure based on allegations that
one or more transfers in
the chain of title of a trust deed is void. She is correct.”
Point 1 of Glaski is once
again confirmed.
Point 2 – what makes the assignment “void” is where once again,
the Court refuses
to follow Glaski – “noncompliance with the terms of a pooling
and servicing agreement
would render an assignment void”. Citing to three lower federal
rulings (so much for
stare Decisis!) the Court pointedly follows Jenkins (which never
investigated the
assignment as void) – and it appears that the borrower failed to
allege the assignment
was void as a matter of law.
As a quick side note, because I see this time and time again,
many pro se’s appear to
misinterpret the rulings that state that pro se rulings are not
to be held to the same
standard as that of an attorney. Being held to the same standard
is NOT the same as
being responsible for following basic rules of civil procedure
and law. The analogy that
comes to mind of that of a high school baseball team and a
professional baseball team;
while the standards of performance for the high school team are
lower than those of a
professional ball team, BOTH teams follow the SAME RULES and
PROCEDURES for
playing the game.
C. Alleging Prejudice
One of the challenges in the Bank's argument is whether the
homeowner /borrower
alleges prejudice. In fact, the Courts continue to make
statements similar to the
following:
"The validity of the assignment does not affect whether the
borrower owes its obligations, but only to whom the borrower is
obligated"
In other words, it appears the Courts are saying that the
borrower is in default, and
would lose their house anyways. Who conducts the foreclosure
does not change the fact
that the homeowner was subject to the foreclosure. Put another
way, this would be like
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your falling behind on your car payment; a thief steals your car
and you sue the thief to
recover your car. The thief's defense, and court's reasoning to
allow the thief to keep your
car is..." you were behind in your payments and would have lost
the car anyways so how
were you prejudice?? "
Identifying the true lender, the true "creditor" entitled to the
borrower's payments is
not only one of simple Article III standing; different REMIC
Trusts have different
incentives and ability to settle issues. PSA terms, liquidity,
capital requirements, credit
risk exposure, and compensation differ between
servicers/trustees and portfolio lenders.
If the loans weren't properly transferred via the
securitization, then they are still held in
portfolio by someone. This means borrowers have a strong
interest in litigating against
the real party in interest. The parties, who may be foreclosing
for the wrong entity, may
have more incentive to foreclose than to work towards having a
performing loan. (Such
as pretending one party owns it because they really don’t know
who owns it.)
The other issue is if the entity that the banks are foreclosing
for is the wrong entity,
who have they been sending the payments to? If, however, the
maker pays someone other
than a “person entitled to enforce”—even if that person
physically possesses the note the
maker signed—the payment generally has no effect on the
obligations under the note. The
maker still owes the money to the “person entitled to enforce,”
Miller & Harrell, supra, ¶
6.03[6][b][ii], and, at best, has only an action in restitution
to recover the mistaken
payment. See UCC § 3–418(b). In re Veal (B.A.P. 9th Cir. 2011)
450 B.R. 897, 910.
Borrowers are prejudiced and harmed in many different ways.
Arguing the clouding
of title is a particular harm; as is the potential for
duplicative claims. Whether other
claims have been made against the borrower is NOT the issue; the
potential of duplicative
claims should be enough to argue harm; both California and
Federal law are clear a
borrower should only have to pay one satisfaction and therefore,
clear and positive
evidence of the "creditors" claim must be without question.
So when you consider what the prejudice is from a void
assignment, it would be
entirely appropriate to question the servicer's interest as
being in direct conflict with both
the borrower and real creditors goal of a performing loan; and
that any payments made
to date to the wrong entity leaves the borrower open to
potential future claims – and
potential is harm. "the trustor must pay the debt . . .
according to its terms to protect the
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property from loss by foreclosure." (4 Miller & Starr, Cal.
Real Estate, supra, Deeds of
Trust and Mortgages, § 10:71, pp. 216-217, fn. omitted.)
IV. DELAWARE VERSUS NEW YORK LAW -Would the Glaski Decision have
been different?
CHAPTER 38. TREATMENT OF DELAWARE
STATUTORY TRUSTS as referenced by the banks’ attorneys
falls under Chapter 12 Decedents’ Estates and Fiduciary
Relations - Fiduciary
Relations as does CHAPTER 35. TRUSTS - Subchapter III.
General
Provisions. Chapter 35. which incorporates Statutory Trusts
states in § 3536:
“Every direct or indirect assignment, or act having the effect
of an
assignment, whether voluntary or involuntary, by a beneficiary
of a trust of
the beneficiary’s interest in the trust or the trust