2. RESOURCES — Pleadings, Orders, and Exhibits
On this page you will find descriptions and links to various pleadings, orders, and exhibits filed by attorneys as well as individuals representing themselves. Where the outcome is known, that information is included. These documents are public records and are made available for your information, but their accuracy, competency, and effectiveness have not been verified. Only a judge can rule on a pleading and only an appellate court opinion that is certified for publication can be cited as precedent. That said, it can be both educational and entertaining to see how the great race is unfolding in the historic controversy of People v. Banks. For an entertaining public outing of history’s all-time greatest pickpockets, go see the documentary “Inside Job.”
Federal District Court
Carswell v. JPMorgan Chase, Case No. CV10-5152 GW
George Wu, Judge, U.S. District Court, Central District of California, Los Angeles
Douglas Gillies, attorney for Margaret Carswell
Plaintiff sued to halt a foreclosure initiated by JPMorgan Chase and California Reconveyance Co. on the grounds of failure to contract, wrongful foreclosure, unjust enrichment, RESPA and TILA violations, and fraud. She asked for quiet title and declaratory relief. Chase responded with a Motion to Dismiss. At a hearing on September 30, 2010, Judge Wu granted defendants’ motion to dismiss with leave to amend. Plaintiff’s First Amended Complaint was filed on October 18. It begins:
It was the biggest financial bubble in history. During the first decade of this century, banks abandoned underwriting practices and caused a frenzy of real estate speculation by issuing predatory loans that ultimately lowered property values in the United States by 30-50%. Banks reaped the harvest. Kerry Killinger, CEO of Washington Mutual, took home more than $100 million during the seven years that he steered WaMu into the ground. Banks issued millions of predatory loans knowing that the borrowers would default and lose their homes. As a direct, foreseeable, proximate result, 15 million families are now in danger of foreclosure. If the legions of dispossessed homeowners cannot present their grievances in the courts of this great nation, their only recourse will be the streets.
Chase responded with yet another Motion to Dismiss, Carswell filed her Opposition to the motion, and a hearing is scheduled for January 6, 2011, 8:30 AM in Courtroom 10, US District Court, 312 N. Spring Street, Los Angeles, CA.
- First Amended Complaint 10/18/2010
- Declaration of Margaret Carswell 7/13/2010
- Chase’s Motion to Dismiss First Amended Complaint 10/27/2010
- Chase’s Request for Judicial Notice 10/27/2010
- Plaintiff’s Opposition to Motion to Dismiss 12/03/2010
- Plaintiff’s Request for Judicial Notice 12/03/2010 – Congressional Oversight Panel’s Report
Khast v. Washington Mutual, JPMorgan Chase, and CRC, Case No. CV10-2168 IEG
Irma E. Gonzalez, Chief Judge, U.S. District Court, Southern District of California
Kaveh Khast in pro se
A loan mod nightmare where Khast did everything right except laugh out loud when WaMu told him that he must stop making his mortgage payments for 90 days in order to qualify for a loan modification. As Khast leaped through the constantly shifting hoops tossed in the air, first by WaMu, then by Chase, filing no less than four applications, Chase issued a Notice of Trustee’s Sale.
Khast filed a pro se complaint in federal court. The District Court granted a Temporary Restraining Order to stop the sale. Hearing on a Preliminary Injunction is now scheduled for December 3. The court wrote that the conduct by WAMU appears to be “immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers,” and thus satisfies the “unfair” prong of California’s Unfair Competition Law, Cal. Bus.&Prof.Code §17200. Plaintiff has stated that he possesses documents which support his contention that Defendant WAMU instructed Plaintiff to purposefully enter into default and assured Plaintiff that, if he did so, WAMU would restructure his loan. Accordingly, Plaintiff has demonstrated that he is likely to succeed on the merits of his claim.
The court also relied upon the doctrine of promissory estoppel. Under this doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise. He who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted.
Saxon Mortgage v. Hillery, Case No. C-08-4357
Edward M. Chen, U.S. Magistrate, Northern District of California
Thomas Spielbauer, attorney for Ruthie Hillery
Hillery obtained a home loan from New Century secured by a Deed of Trust, which named MERS as nominee for New Century and its successors. MERS later attempted to assign the Deed of Trust and the promissory note to Consumer. Consumer and the loan servicer then sued Hillery. The court ruled that Consumer must demonstrate that it is the holder of the deed of trust and the promissory note. In re Foreclosure Cases, 521 F. Supp. 2d 650, 653 (S.D. Oh. 2007) held that to show standing in a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time the complaint was filed. For there to be a valid assignment, there must be more than just assignment of the deed alone; the note must also be assigned. “The note and mortgage are inseparable; the former as essential, the latter as an incident…an assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.” Carpenter v. Longan, 83 U.S. 271, 274 (1872).
There was no evidence that MERS held the promissory note or was given the authority by New Century to assign the note to Consumer. Without the note, Consumer lacked standing. If Consumer did not have standing, then the loan servicer also lacked standing. A loan servicer cannot bring an action without the holder of the note. In re Hwang, 393 B.R. 701, 712 (2008).
- Order Granting Hillery’s Motion to Dismiss dated 12/09/2008
Serrano v. GMAC Mortgage, Case No. 8:09-CV-00861-DOC
David O. Carter, Judge, U.S. District Court, Central District of California, Los Angeles
Moses S. Hall, attorney for Ignacio Serrano
Plaintiff alleged in state court that GMAC initiated a non-judicial foreclosure sale and sold his residence without complying with the notice requirements of Cal. Civil Code Sec. 2923.5 and 2924, and without attaching a declaration to the 2923.5 notice under penalty of perjury stating that defendants tried with due diligence to contact the borrower. Defendants removed the case to federal court on the basis of diversity jurisdiction. The District Court granted defendants’ motion to dismiss without prejudice, and described in detail the defects in the Complaint with directions how to correct the defects. Plaintiff filed his Second Amended Complaint on 4/01/2010.
- Order Granting Motion to Dismiss Without Prejuduce 3/18/2010
- Second Amended Complaint for Wrongful Foreclosure 4/01/2010
Sharma v. Provident Funding Associates, Case No. 3:2009-cv-05968
Vaughn R Walker, Judge, U.S. District Court, Northern District of California
Marc A. Fisher, attorney for Anilech and Parma Sharma
Defendants attempted to foreclose and plaintiffs sued in federal court, alleging that defendants did not contact them as required by Cal Civ Code § 2923.5. In considering plaintiffs’ request for an injunction to stop the foreclosure, the court found that plaintiffs had raised “serious questions going to the merits” and would suffer irreparable injury if the sale were to proceed. Property is considered unique. If defendants foreclosed, plaintiffs’ injury would be irreparable because they might be unable to reacquire it. Plaintiffs’ remedy at law, damages, would be inadequate. On the other hand, defendants would not suffer a high degree of harm if a preliminary injunction were ordered. While they would not be able to sell the property immediately and would incur litigation costs, when balanced against plaintiffs’ potential loss, defendants’ harm was outweighed.
The court issued a preliminary injunction enjoining defendants from selling the property while the lawsuit was pending.
- Complaint for Wrongful Foreclosure 12/21/2009
- Points & Authorities In Support of TRO
- Plaintiff’s Declaration in Support of TRO
- Order Granting Preliminary Injunction 1/08/10
Federal Bankruptcy Court
In re: Hwang, 396 B.R. 757 (2008), Case No. 08-15337 Chapter 7
Samuel L. Burford, U.S. Bankruptcy Judge, Los Angeles
Robert K. Lee, attorney for Kang Jin Hwang
As the servicer on Hwang’s promissory note, IndyMac was entitled to enforce the secured note under California law, but it must also satisfy the procedural requirements of federal law to obtain relief from the automatic stay in a Chapter 7 bankruptcy proceeding. These requirements include joining the owner of the note, because the owner of the note is the real party in interest under Rule 17, and it is also a required party under Rule 19. IndyMac failed to join the owner of the note, so its motion for relief from the automatic stay was denied.
Reversed on July 21, 2010. District Court Judge Philip Gutierrez reversed the Judge Burford’s determination that IndyMac is not the real party in interest under Rule 17 and that Rule 19 requires the owner of the Note to join the Motion.
- Opinion Denying Relief from Automatic Stay 10/29/2008
- District Court Reversal of Judge Burford’s Order 7/21/2010
In re: Vargas, Case No. 08-17036 Chapter 7
Samuel L. Burford, U.S. Bankruptcy Judge, Los Angeles
Marcus Gomez, attorney for Raymond Vargas
- Motion for Stay 7/03/2008
- Order Denying MERS Relief from Stay 10/21/2009
- First Amended Adversary Complaint Case No. 09-01135-SB 1/15/2010
- Opposition to MERS Motion to Dismiss Complaint 2/24/2010
In re: Walker, Case No. 10-21656 Chapter 11
Ronald H. Sargis, Judge, U.S. Bankruptcy Court, Sacramento
Mitchell L. Abdallah, attorney for Rickie Walker
MERS assigned the Deed of Trust for Debtor’s property to Citibank, which filed a secured claim. Debtor objected to the claim. Judge Sargis ruled that the promissory note and the Deed of Trust are inseparable. An assignment of the note carries the mortgage with it, while an assignment of the Deed of Trust alone is a nullity. MERS was not the owner of the note, so it could not transfer the note or the beneficial interest in the Deed of Trust. The bankruptcy court disallowed Citibank’s claim because it could not establish that it was the owner of the promissory note.
- Objection to CitiBank Proof of Claim 4/06/2010
- Declaration in Support of Objection 4/06/2010
- Points & Authorities in Support of Objection 4/06/2010
- Order Disallowing CitiBank Claim 5/20/2010
California State Court
Cabalu v. Mission Bishop Real Estate
Superior Court of California, Alameda County
Brian A. Angelini, attorney for Cecil and Natividad Cabalu
- Complaint to Set Aside Trustee’s Sale filed August 2009
Davies v. NDEX West, Case No. INC 090697
Randall White, Judge, Superior Court of California, Riverside County
Brian W. Davies, in pro per
- Complaint for Fraud dated 4/08/2010
Edstrom v. NDEX West, Wells Fargo Bank, et. al., Case No. 20100314
Superior Court of California, Eldorado County
Richard Hall, attorney for Daniel and Teri Anne Edstrom
A 61-page complaint with 29 causes of action to enjoin a trustee’s sale of plaintiffs’ residence, requesting a judicial sale instead of a non-judicial sale, declaratory relief, compensatory damages including emotional and mental distress, punitive damages, attorneys’ fees, and rescission.
Mabry v. Superior Court and Aurora Loan Services
185 Cal.App.4th 208, 110 Cal. Rptr. 3d 201 (4th Dist. June 2, 2010)
California Court of Appeal, 4th District, Division 3
California Supreme Court, Petition for Review filed July 13, 2010.
Moses S. Hall, attorney for Terry and Michael Mabry
The Mabrys sued to enjoin a trustee’s sale of their home, alleging that Aurora’s notice of default did not include a declaration required by Cal. Civil Code §2923.5, and that the bank did not explore alternatives to foreclosure with the borrowers. The trial court refused to stop the sale. The Mabrys filed a Petition for a Writ of Mandate and the Court of Appeal granted a stay to enjoin the sale. Oral argument was heard in Santa Ana on May 18, 2010.
Aurora argued that a borrower cannot sue a lender that fails to contact the borrower to discuss alternatives to foreclosure before filing a notice of default, as required by §2923.5, because §2923.5 does not explicitly give homeowners a “private right of action.” Aurora also argued that a declaration under penalty of perjury is not required because a trustee, who ordinarily files the notice of default, could not have personal knowledge of a bank’s attempts to contact the borrower. Nobody mentioned that the trustee is not authorized by the statute to make the declaration. §2923.5 states that a notice of default “shall include a declaration from the mortgagee, beneficiary, or authorized agent that it has contacted the borrower…”
The Court of Appeal ruled that a borrower has a private right of action under § 2923.5 and is not required to tender the full amount of the mortgage as a prerequisite to filing suit, since that would defeat the purpose of the statute. Under the court’s narrow construction of the statute, §2923.5 merely adds a procedural step in the foreclosure process. Since the statute is not substantive, it is not preempted by federal law. The declaration specified in §2923.5 does not have to be signed under penalty of perjury. The borrower’s remedy is limited to getting a postponement of a foreclosure while the lender files a new notice of default that complies with §2923.5. If the lender ignores the statute and makes no attempt to contact the borrower before selling the property, the violation does not cloud the title acquired by a third party purchaser at the foreclosure sale. Therefore §2923.5 claims must be raised in court before the sale. It is a question of fact for the trial court to determine whether the lender actually attempted to contact the borrower before filing a notice of default. If the lender takes the property at the foreclosure sale, its title is not clouded by its failure to comply with the statute. Finally, the case is not suitable for class action treatment if the lender asserts that it attempted to comply with the statute because each borrower will present “highly-individuated facts.”
In a petition for review to the California Supreme Court, the Mabrys noted that more than 100 federal district court opinions have considered §2923.5 and an overwhelming majority have rejected a private right of action under the statute. The petition for review was denied.
After the case was remanded to the trial court, Mabry’s motion for preliminary injunction was granted. The trial court found that the Notice of Default contained the form language required by the statute, i.e. that the lender contacted the borrower, tried with due diligence to contact the borrower, etc. However, the declaration on the Notice of Default was not made under panalty of perjury, and therefore had no evidentiary value to show whether the defendant satisfied §2923.5
- Court of Appeal’s Stay of Foreclosure Sale 11/25/2009
- Opinion of Court of Appeal, Fourth District 6/2/2010
- Petition for review, California Supreme Court 7/13/2010. Denied 8/18/2010.
- Order granting Preliminary Injunction Orange County Superior Court 11/23/2010.
Moreno v. Ameriquest
Superior Court of California, Contra Costa County
Thomas Spielbauer, attorney for Gloria and Carlos Moreno
Complaint for declaratory relief and fraud against lender for misrepresenting the terms of the loan, promising fixed rate with one small step after two years both orally and in the Truth In Lending Statement. Loan was actually variable rate with negative amortization. Morenos would have qualified for fixed rate 5% for 30 years, but instead received an exploding 7% ARM. Notary rushed plaintiffs through signing of documents with little explanation. Complaint requests a declaration the note is invalid, unconscionable and unenforceable and the Notice of Trustees Sale is invalid.
- Complaint for Fraud dated January 2008
Other State Courts
JPMorgan Chase Bank v. George, Case No. 10865/06
Arthur M. Schack, Supreme Court Judge, Kings County, New York
Edward Roberts, attorney for Gertrude George
- Order Vacating Foreclosure Sale and Dismissing Chase’s Complaint decided 5/04/2010
Florida Judge tosses foreclosure lawsuit
Homeowners dispute who owns mortgage
by Steve Patterson
St. Augustine Record
June 15, 2010
Changing stories about who owns a mortgage and seemingly fresh evidence from a long-closed bank led a judge to throw out a foreclosure lawsuit. It’s the second time in as many months that Circuit Judge J. Michael Traynor has dismissed with prejudice a foreclosure case where homeowners disputed who owns the mortgage. Lawyers representing New York-based M&T Bank gave three separate accounts of the ownership, with documentation that kept changing.
“The court has been misled by the plaintiff from the beginning,” the judge wrote in his order. He added that documents filed by M&T’s lawyers seemed to contradict each other and “have changed as needed to benefit the plaintiff.”
The latest account was that Wells Fargo owned the note, and M&T was a servicer, a company paid to handle payments and other responsibilities tied to a mortgage. To believe that, the judge wrote, the “plaintiff is asking the court to ignore the documents filed in the first two complaints.” He added that Wells Fargo can still sue on its own, if it has evidence that it owns the mortgage.
More and more foreclosure cases are being argued on shaky evidence, said James Kowalski, a Jacksonville attorney who represented homeowners Lisa and Larry Smith in the fight over their oceanfront home. “I think it’s very representative of what the banks and their lawyers are currently doing in court,” Kowalski said.
He said lawyers bringing the lawsuits are often pressed by their clients to close the cases quickly. But it’s up to lawyers to present solid evidence and arguments. “We are supposed to be better than that,” Kowalski said. “We are supposed to be officers of the court.”
Department of Treasury and FDIC Report on WaMu, 4/16/2010
The Offices of Inspector General for Department of the Treasury and Federal Deposit Insurance Corporation released its evaluation of the regulatory oversight of Washington Mutual on April 16. The table of contents tells the story. WaMu pursued a high-risk lending strategy which included systematic underwriting weaknesses. They didn’t care if borrowers could pay back their loans. WaMu did not have adequate controls in place to manage its reckless “high-risk” strategy. OTS examiners found weaknesses in WaMu’s strategy, operations, and asset portfolio but looked the other way.
- Evaluation of Federal Oversight of WaMu released 4/16/2010
OCC Advisory Letters
How could the regulators allow this breakdown to happen? Was it really fraud when banks arranged loans for homeowners who would inevitably go into defrault, sold them to Wall Street to be bundled into securities, then purchased insurance so that the bank would collect the unpaid balances when the borrowers lost their homes? Did anybody really know that repealing Glass-Steagall and permitting Wall Street banks to get under the covers with Main Street banks would cause so many borrowers to lose their homes? The Glass-Steagall Act, enacted in 1933, barred any institution from acting as any combination of an investment bank, a commercial bank, and an insurance company. It was repealed in 1999, and the repercussions have been immense.
The Office of the Comptroller of the Currency (OCC) issued Advisory Letter 2000-7 only months after Glass-Steagall was repealed. It warned regulators to be on the lookout for indications of predatory or abusive lending practices, including Collateral or Equity Stripping – loans made in reliance on the liquidation value of the borrower’s home or other collateral, rather than the borrower’s independent ability to repay, with the possible or intended result of foreclosure or the need to refinance under duress.
Proving fraud is a painstaking process. Getting inside the mind of a crook requires a careful foundation, and admissable evidence is not always easy to obtain. Many courts will take judicial notice of official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States. See Cal Evidence Code Sec. 452(c).
Here is a set of smoking guns in the form of a series of Advisory Letters issued by OCC:
- OCC Advisory Letter 2000-7 July 25, 2000
- OCC Advisory Letter 2000-9 August 29, 2000
- OCC Advisory Letter 2002-3 March 22, 2002
- OCC Advisory Letter 2003-2 February 21, 2003
- OCC Advisory Letter 2003-3 February 21, 2003
- Guidance from OCC, FDIC, OTS, and Federal Reserve October 4, 2005