Recognizing Bankruptcy Fraud and Using Experts to Deal With It

By Griffin Dunham

In a perfect world, a debtor’s bankruptcy would involve timely reporting, good faith filings, and full disclosures. Unfortunately, some debtors either enter the process under a cloud of suspicion or make decisions during the process that suggest the estate has been compromised by fraudulent activity. Whether the alleged fraud is a complex bust-out scheme or a simple unreported asset transfer, the debtor may face a serious investigation. Depending on the extent of the allegations, the investigation could be referred as a criminal matter to federal prosecutors. As the severity of the consequences increases, so does the need to have mindful counsel, and possibly an expert witness.
This article attempts to help the reader identify and react to suspicious activity. It will discuss the basic types of fraudulent activity that can derail a bankruptcy proceeding or result in a criminal indictment. By the time this activity is discovered, all interested parties will be racing for leverage.
I. Bankruptcy Fraud – The Basics
Although bankruptcy fraud schemes can simultaneously violate, or even be just a subset of, many other fraudulent schemes (e.g., tax fraud, wire fraud, mail fraud, credit card fraud, etc.) that violate federal law, this article is limited to the most commonly recognized forms seen in a bankruptcy context: concealment of assets, false filings, and statutory fraud.
A. 18 U.S.C. § 152. Concealment of assets; false oaths and claims; bribery.
This statute consists of nine crimes, all of which require proof of “knowingly and fraudulently” doing something in a bankruptcy context, namely: (1) concealing property of the debtor’s estate from the court; (2) making a false oath; (3) committing perjury; (4) presenting a false proof of claim against a debtor’s estate; (5) receiving property from the debtor’s estate with the intent to circumvent bankruptcy proceedings; (6) taking a kickback for forbearing on a claim against the debtor; (7) while acting as an agent, transferring or concealing property of an individual debtor or corporation; (8) “cooking the books” to hide a debtor’s financial affairs; and (9) withholding property or financial affairs from the United States Trustee or court.
B. 18 U.S.C. § 157. Bankruptcy fraud.
This statute is a product of the Bankruptcy Reform Act of 1994 and was designed to cut down on the amount of “gamers” that were using, or attempting to use, the bankruptcy process as a way to further a fraud scheme. This fraud can come in several forms, such as schemes involving insider depletion of assets over a period of time and the use of the automatic stay to conceal fraudulent activity. The elements of this offense are:
1. The defendant has devised or has intended to devise a scheme or artifice to defraud another; and
2. The defendant, for the purpose of executing or concealing the scheme or artifice or attempting to do so,
(a) files a petition under title 11; or
(b) files a document in a proceeding under title 11; or
(c) makes a false or fraudulent statement in connection with a proceeding under title 11 or a proceeding the defendant falsely asserts is pending under title 11.
II. Will You Know It When You See It?
There are times when bankruptcy fraud allegations are straightforward. For example, whether a debtor or debtor’s agent shredded documents to hide the transfer of unreported property that belonged to the debtor’s estate is not complex. Other situations are trickier, such as a debtor perpetrating an investor pyramid fraud (Ponzi scheme) or a debtor concealing or grossly undervaluing an estate asset. Sometimes fraudulent planning, cover-ups, insider transfers, and long-term asset structuring has been in process for months or years prior to the bankruptcy. Regardless of the complexity of the scheme, counsel must be mindful that suspicious activity is best learned up front, and accordingly handled through the discovery process by way of written documents, depositions, Rule 2004 examinations, and expert consultation. These more “designer” fraud cases include (1) bust-outs, (2) bleed-outs, and (3) looting.
A. Bust-outs.
In a bust-out scheme, a company is set up and builds a decent credit line while holding themselves out to be a reputable business. At first, transactions are small, but by design demonstrate the company can cash flow and reliably service its debts. Once the company’s owners are satisfied that enough reputation and credit building has occurred, vendors are then blitzed with orders for goods, along with a promise of repayment within, for example, 90 days. Once the goods are received, the company sells them and does not appropriate the proceeds to its creditors. The company stalls its creditors for as long as possible, then finally files its bankruptcy petition. The bankruptcy schedules reveal the company to be a low-asset, high-liability operation. This type of scheme is common in connection with distributing consumer products.
B. Bleed-outs.
A bleed-out is most often an inside job, where corporate managers, directors, or officers emaciate a company’s value through insider asset transfers. The company is not necessarily established for the purpose of carrying out a bleed-out, and may not even be in financial distress. However, like any company, its vulnerability is exposed when collusive insiders have control and subordinate the company’s success to their personal gain. Commonly, an insider, or group of insiders, enter into transactions on behalf of the company with the purpose of redirecting a business asset in favor of the insider and to the prejudice of the company. For example, money could be thrown at a fledgling subsidiary that happens to be controlled by an officer who also serves as an officer for the company being depleted. Often these transactions are document-intensive, well-planned, and hidden to reduce the risk of exposure. In other words, simply looking at the statements and schedules will not typically reveal a bleed-out scheme.
C. Looting.
Looting can be one of the most brazen types of bankruptcy fraud. A bankruptcy looting scheme typically involves a debtor’s failing company selling its assets pre-petition to a non-failing company without disclosing to the court the debtor’s involvement in the transaction. The debtor often carries out the fraud by representing that a disinterested buyer has been located, when in fact the buyer is a mere extension, “shell”, or agent of the debtor. By design, the terms of the sale appear legitimate, not unreasonably beneficial to the debtor, and are met with satisfaction by the creditors. The company then either closes its doors or files a Chapter 7 bankruptcy to liquidate and administer any remaining estate. Although looting could theoretically occur during a sale process within a bankruptcy case, Section 363 of the Bankruptcy Code affords a process that should enable creditors to determine whether any sale is reasonable, in good-faith, and proposed at arms’ length.
III. Now That You Have Spotted Fraud (Or Think You Have), Is It Time To Retain An Expert?
Counsel is charged with knowing the law and being able to spot facts that implicate the application of the law. If the facts suggest there would be merit to a fraud investigation, forensics can become the secret weapon to determine whether fraud or criminal activity has occurred. An expert can be an invaluable resource that uncovers previously hidden facts, challenges the proof of the counterparty, and provides an evidentiary roadmap that counsel can use to represent the client. Once the decision is made to reach out to an expert, there are several considerations to process before making the call: (1) who is the right consultant; (2) what will the expert do for the team; (3) how much will the expert cost; and (4) what is the role of counsel once an expert is engaged. Before discussing these considerations in more detail, the absolutely fundamental realization must be that once the facts show an expert is needed, counsel cannot delay in retaining the expert. It is crucial that the expert be on board early and given the time and opportunity to succeed.
A. Who is the right consultant?
There are countless experts that label themselves as “bankruptcy fraud experts.” Some are former law enforcement officers, others specialize within fraud subsets (e.g., real estate equity skimming, theft of employee contributions for health insurance, etc.), and others are credentialed certified fraud examiners. Although not required in every situation, forensic experts are trained to analyze a set of facts with the thought that their actions will be scrutinized in court. When determining who (or which firm) is best for a given situation, it is imperative to find out (a) if the expert has ever handled this type of case before; (b) the resources that will be available to the expert; (c) the expert’s workload and reputation within the community; and (d) if the expert could effectively explain the case in a courtroom and be subject to cross-examination.
B. What will the expert do for the team?
The scope of the services an expert provides entirely depends on the facts of a given case. Although experts are trained to think outside the box and do not strictly adhere to a checklist, there are patterns of behavior or sources of information that have historically yielded results.
Experts have an arsenal of tactics at their disposal, but their ability to deploy them depends on several factors. First, the client’s financial situation may be restrictive. In these situations, it is important to make the expert aware of a cost ceiling and find out how much “bang for the buck” the client will receive. Some experts are willing to provide a role assessment and cost analysis without the client incurring an obligation or fees. In addition to financial limitations, experts cannot use the full range of their skills unless they have a sufficient amount of time to operate. Investigations and requests for information can be time-consuming, so engaging an expert as early in the process as possible can help ensure that the client is given the full benefit of the expert’s abilities.
C. What is the expert’s workload and reputation?
The expert must be able to make the client’s case a top priority. When inquiring about the expert’s workload, this is a great time to discuss communications, frequency of updates, and availability to conduct the investigation in advance of known deadlines in the case. As for reputation, a reliable indicator is always the expert’s former clients and counsel. Any proficient expert will be happy to provide this information. It is often helpful to go one step further and contact the counsel that opposed the expert’s position. This counsel, usually assisted by the opinion of another expert, will have a firm grasp of the expert’s abilities.
D. Can the expert effectively convey the client’s position?
After meeting with the expert, ask yourself if this person is someone that will help the presentation of your case. Not necessarily just with the court, but also in leveraging a settlement by presenting a reasonably acceptable position to the counterparty. The level of education, amount of training, number of cases worked, experience testifying, and mannerisms are all going to be known or visualized by the fact-finder. If these factors will present a problem from a credibility perspective or during cross-examination, continuing the search may be in the client’s best interests.
The decision to hire an expert can be difficult, but if such a decision is made the focus should shift to finding the right person for the client’s needs. There often exists a correlation between the client’s success and the proficiency of the expert. It is therefore incumbent upon counsel to ask questions and spend time researching and performing due diligence to place the facts of the case into the hands of a well-qualified expert.
IV. Conclusion
Bankruptcy fraud is a billion dollar industry. The number of ways debtors defraud creditors and the courts is seemingly countless and growing each year. Although some types of fraud are more complex than others, effective bankruptcy counsel must be able to recognize and react to situations involving fraud. Depending upon the complexity of the situation, recruiting an expert may be a vitally important component to the success of a case.

 

Stay of enforcement after eviction

 

Plaintiffs In Propria Persona

 

 

SUPERIOR COURT OF THE STATE OF CALIFORNIA

 

COUNTY OF LOS ANGELES –

 

 

 

Plaintiff, V. and Does 1-X, Inclusive, Defendants.	CASE NO: EX PARTE APPLICATION FOR STAY OF ENFORCEMENT OF JUDGMENT, MEMORANDUM OF POINTS AND AUTHORITIES, DECLARATION OF _________   Date: Time: Dept:

 

    NOTICE IS HEREBY GIVEN that on _________, 2008, at ___ a.m. in Department ___ of the Superior Court of California, County of Los Angeles located at _________, California 9, Defendant _________ will move the above-entitled court for an Order staying enforcement of the Judgment.

Good cause exists for making the application for two reasons, (1) Defendant has filed a meritorious appeal of the judgment for possession, (2) Defendant _________ has filed a civil action against Plaintiff____________. in Los Angeles Superior Court Case No. _________, as well as, Defendants ______________________ challenging the legality of the non-judicial foreclosure by said Defendants. Additionally, Defendant _________ is prepared to pay a monthly rental value pending resolution.

The Ex Parte Application will be based upon this Application, the Memorandum of Points and Authorities, the Certification of Notice of Ex Parte Application, the Declaration of _________ and other and further oral and documentary evidence to be adduced at the hearing of this Application.

Dated:                    

 

 

                             By _____________________________

    
 

                            

 

 

 

 

 

MEMORANDUM OF POINTS AND AUTHORITIES

I.

INTRODUCTION

    Defendant _________ seeks a stay of enforcement of judgment pending appeal of the judgment entered following Motion for Summary Judgment. Normally, unlawful detainer actions are quickly resolved, with little consideration given to whether the Plaintiff is actually the lawful owner of a given property.

    This however is a different day … and these are different times. In California alone, approximately 20,000 homes have been foreclosed each month in the last six months and owners have been evicted, again, with little or no consideration of whether the title claimed by the Plaintiff has any legal validity.

    Defendant ________ has filed a civil action to set aside the foreclosure of his home based on fraud in the execution of his loan. Additionally, other defenses exist having to do with the assignment and non-judicial foreclosure procedure. Traditionally, there is a tension following a non-judicial foreclosure which exists between the needs of Plaintiffs to perfect their possession of the property and the Defendant owners who are denied due process in a summary proceeding in which evidence is not taken on the issue of the validity of title.

    Defendant believes that Plaintiff __________ will not be prejudiced by the delay in possession of yet another property in its ever growing non-performing portfolio. More particularly, in as much as Defendant is prepared to make reasonable monthly rental payments and post any required undertaking pending resolution of the appeal and civil action.

II.

A STRONG FACTUAL SHOWING SUPPORTS THE CONCLUSION

THAT DEFENDANT WILL PREVAIL AS THE PLAINTIFF IN HIS

CIVIL ACTION AND SET THE FORECLOSURE ASIDE.

    A strong factual showing supports the conclusion that Defendant will prevail as the Plaintiff in his civil action to set aside the foreclosure, either based upon fraud in the execution of the loan, or that there was a lack of consideration due to a failure to have a meeting of the minds.

In either event, the court may rest its discretion on the sworn Declaration of __________ in granting a stay. See the Declaration of ________.     

Here, there are several considerations for the court to resolve. Initially, Defendant has filed Notice of Appeal, and requests a stay of execution of judgment pending the appeal. Defendant is prepared to pay-over the reasonable rental value to the court, and post any required undertaking. Defendant believes that he has a meritorious defense to the summary judgment.

Secondly, Defendant alleges that representatives of ________ committed a fraud in the execution of his loan, whereby, he had an existing first deed of trust which was a fixed loan at (____) percent amortized over thirty years with ________. Defendant sought a second trust deed from _________, which insisted that Defendant make a new fixed __ (___%) percent loan in order to receive the second loan he desired. The payment of the new first loan by _________ was virtually the same payment of $_______ per month. As it turns-out, _________ added a Adjustable Rate Mortgage Rider to his loan which caused the loan to recast after eighteen (18) months, whereupon the payment increased from $____ to $________.

The second loan for $________, had a payment of approximately $_____, and was an adjustable rate loan. Thus, while the first loan was agreed to be a fixed loan, __________ shifted Defendant from a fixed rate loan to an adjustable, without disclosing that the adjustable rate rider applied to the first loan, rather than only the second loan.

    At the time of making the new loans, Defendant had been a commercial banker for more than thirty years, was making approximately $______ per month making commercial loans, and had a FICO score of about “_____”. Thus, Defendant clearly had sufficient income for the six percent fixed loan which he had with __________, and could make the payments for what he believed was a fixed loan with _____. Additionally, the home appraised for $______, at the time of making the new first and second which together equaled $______________________, thus the loan for purposes of underwriting, was not excessive as related to the property value, with a loan to value ratio of about ________ ( __%) to value. This is not a case in which a borrower took on a loan which he simply could not afford. On the contrary, Defendant had a fixed rate loan with __________ when he sought secondary financing with __________. The new first which __________ made for Defendant simply paid-off __________, and a new second loan for $_________, was made. However, the conflict arises in that Defendant understood that only the second loan would be an adjustable rate mortgage, and that the first loan for $________ for be fixed, as his loan with __________ had been.

    __________, however, was too clever for Defendant and massaged the loan documents and made representations that the first loan was fixed for thirty (30) years, just as his loan had been with __________. There was no reason to pay-off the fixed rate __________ except to incur additional commissions and fees for ____________ for an adjustable rate mortgage. Defendant agreed to make the first loan only because it would likewise be a fixed rate loan, amortized for thirty years as the __________. At some point in time, __________ either forged Defendant’s signature to the adjustable rate rider of concealed the nature of the documents in such a manner that Defendant was not aware that he

signed the document. In an event, there was a fraud on the part of __________.

Defendant has filed a civil action in which he seeks to have the foreclosure set aside for several legal reasons including but, not limited to: fraud in the execution, (exchanging a 30 year fixed rate loan for an adjustable rate without disclosing the change), violation of Civil Code section 2932.5, by a failure to record the assignment of the original promissory note. The failure to record the assignment strips the power of sale from the promissory note. Lacking power of sale, the foreclosure could not have proceeded under any viable legal theory. Additionally, Defendant believes that the indorsement of the promissory note was defective and legally rendered the promissory note “non-negotiable” pursuant to the holding of Pribus v. Bush, (1981) 118 Cal.App.3d 1003. Further, Defendant believes that the trustee was not even in possession of the original note and that such note was lost, as such any non-judicial foreclosure would be unfounded. Also, Defendant believes that the alleged beneficiary under the note during the non-judicial foreclosure, was not a holder in due course and had no actual secured interest in the Defendant’s property. See the forged Adjustable Rate Rider which is attached as Exhibit “A” to the Declaration of David Adams III.

III.

A PROCEDURAL MECHANISM EXISTS TO STAY EXECUTION

OF JUDGMENT PENDING AN APPEAL.

    A procedural mechanism exists to stay execution of a judgment pending appeal pursuant to California Code of Civil Procedure section 918.5 which provides as follows:

§ 918.5.

(a) The trial court may, in its discretion, stay the enforcement of a judgment or order if the judgment debtor has another action pending on a disputed claim against the judgment creditor.

(b) In exercising its discretion under this section, the court shall consider all of the following:

(1) The likelihood of the judgment debtor prevailing in the other action.

(2) The amount of the judgment of the judgment creditor as compared to the amount of the probable recovery of the judgment debtor in the action on the disputed claim.

(3) The financial ability of the judgment creditor to satisfy the judgment if a judgment is rendered against the judgment creditor in the action on the disputed claim.

 

    Thus, the court may exercise its learned discretion whether to stay this action, order the posting of an adequate undertaking and payment of a reasonably monthly rental value. In the matter of Asuncion vs. Superior Court, (1981) 108 Cal.App.3d 141, 146, 166 Cal.Rptr. 306,

the Fourth District Court of Appeal held in pertinent part, “A possibility, which we understand is frequently utilized in other counties, is for the superior court to stay the eviction proceedings until trial of the fraud action, based on the authority of Code of Civil Procedure section 526 which permits a preliminary injunction to preserve the status quo on such grounds as irreparable injury, multiplicity of legal actions, or unconscionable relative hardship. (See, e. g., Continental Baking Co. v. Katz, 68 Cal.2d 512, 528, 67 Cal.Rptr. 761 and see gen. discussion of subject in 2 Witkin, Cal. Procedure (2d ed. 1970) Provisional Remedies, § 47, p. 1496; § 73, pp. 1511-1512.) Bond would be required to obtain such an injunction (Code Civ.Proc., § 529), which could be waived for an indigent litigant. Conover v. Hall, 11 Cal.3d 842, 851, 853, 114 Cal.Rptr. 642. It has been held where foreclosure of a trust deed would moot a claim of right under a deed, and the deed is attacked as a fraudulent conveyance, a preliminary injunction is permitted to prevent foreclosure pending trial. Weingand v. Atlantic Savings & Loan Assn., (1970) 1 Cal.3d 806, 83 Cal.Rptr. 650. Staying the eviction here is analogous.”

    In Gonzales v. Gem Properties, Inc., (1974) 37 Cal.App.3d 1029, 1036, 112 Cal.Rptr. 884, 889, the Second Appellate District pointed out, “The summary nature of unlawful detainer proceedings suggests that, as a practical matter, the likelihood of the defendant’s being prepared to litigate the factual issues involved in a fraudulent scheme to deprive him of his property, no matter how diligent defendant is, is not great.” Normally, the unlawful detainer action may encompass only a “narrow and sharply focused examination of title” directed at the formal validity of the trustee sale Vella v. Hudgins, (1977) 20 Cal.3d 251, 255, 142 Cal.Rptr. 414, 416.

    Here, ___________ is not a bonified purchaser and had notice of the claims of Defendant. As such, there is no presumption that the trustee’s deed after sale is valid.

    Thus, it would appear that sufficient facts exist of the fraud committed in the execution of Defendant’s loan which would support a stay pending the appeal and/or conclusion of the civil action.

IV.

PLAINTIFF WILL SUFFER NO PREJUDICE BY THE

ISSUANCE OF A STAY PENDING RESOLUTION

OF THE CIVIL ACTION.

    Plaintiff will suffer no prejudice by the issuance of a stay pending resolution of the civil action and/or appeal, because Defendant is prepared to make monthly payments based upon the reasonable rental value and post an adequate undertaking as required.

    In the event that the stay is not issued, the property will be lost forever, and cannot be easily replaced. On the other hand, the subject property will only sit in the non-performing portfolio waiting to be sold in a market in which homes are not selling at any price, even if, the lenders were able to make loans on the property. Thus, in a practical sense, if the stay is granted, Plaintiff will at least have the benefit of receiving regular payments from the defendant on the property pending the appeal and/or civil action.

    “Prejudice is never presumed; rather it must be affirmatively demonstrated by the defendant in order to sustain his burdens of proof and the production of evidence on the issue.” Miller v. Eisenhower Medical Center, (1980) 27 Cal.3d 614, 624, 166 Cal.Rptr. 826. In the absence of prejudice on the part of Plaintiff, the court would properly exercise

 

    CONCLUSION

    For all pleading filed in this matter, the Declaration of _________, the Memorandum of Points and Authorities, Defendant ____________ respectfully requests that the court grant a stay pending appeal and/or resolution of the civil action pending by _________ against the Defendants in that action.

Dated:                     

 

 

 

                             By _____________________________

    
 

 

 

 

 

 

 

 

 

PROOF OF SERVICE

 

STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

 

I am over the age of 18 and not a party to this action. My address is:______, California 9_____, which is located in the county where the mailing described took place.

On ____________, 2008, I served the foregoing document(s) described as: EX PARTE APPLICATION FOR STAY OF ENFORCEMENT OF JUDGMENT, MEMORANDUM OF POINTS AND AUTHORITIES Addressed to:

 

Attorney for Plaintiff:

 

 

 

 

(By Personal Delivery)

 

XXX I personally delivered the foregoing documents to the addressee in the Superior Court, County of _______ Department __. Executed on ________, in ______, California.

 

 

(State) XXXX I declare under penalty of perjury under the laws of the State of California that the above is true and correct.

 

(Federal) ____ I declare that I am employed in the office of a member of the bar of this Court at whose direction the service was made.

 

 

 

 

___________________________

Federal Form

TIMOTHY L. MCCANDLESS, ESQ. SBN 147715

LAW OFFICES OF TIMOTHY L. MCCANDLESS

 

 

 

 

Attorney for Plaintiff(s)

(Plantiff Name(s)

 

SUPERIOR COURT FOR THE STATE OF CALIFORNIA

IN AND FOR COUNTY OF «County»

 

PLAINTIFF(s) Plaintiff, V.   DEFENDANTS and DOES 1 through 50 inclusive Defendants.	CASE NO:   COMPLAINT FOR: DECLARATORY RELIEF CANCELLATION OF DEED DAMAGES ARISING FROM: BREACH OF FIDUCIARY DUTY BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING INJUNCTIVE RELIEF FRAUD DAMAGES ARISING FROM: VIOLATION OF [15 U.S.C. § 1611 et seq.]; VIOLATION OF [26 U.S.C. § 2605 et sq.]; VIOLATION OF [15 U.S.C. § 1602 et seq.]; VIOLATION OF [15 U.S.C. § 1692];

COMES NOW, Plaintiff(s) PLANTIF(s) NAME, hereby

complains and alleges as follows:

ALLEGATIONS COMMON TO ALL COUNTS

1. Plaintiff(s), PLAINTIFF(s) NAME is a resident of the County of «County» and the owner of certain real property (hereinafter referred to as “the Property”) located at ADDRESS and more particularly described as: «Property_Description»
   APN: «APN_Number»
   
2. Defendant ON DEED OF TRUST (hereinafter referred to as “SHORT NAME”.
   
3. Defendant ON DEFAULT (hereinafter referred to as “SHORT NAME”.
   
4. The true names of Defendants named herein as DOES 1 through 50, whether individual, corporate, associate or otherwise, are presently unknown to Plaintiff(s) who therefore, sues said Defendants by such fictitious names; Plaintiff(s) are informed and believes and thereon alleges that each of the Defendants so designated herein proximately caused and contributed to the damages herein alleged, and Plaintiff(s) will ask leave of Court to amend this Complaint to insert the true names and capacity of DOES 1 through 50 when the same have been ascertained and to join such Defendants in this action.
   
5. Plaintiff(s) are informed and believes and thereon alleges that, at all times herein mentioned each of the defendants sued herein in relation to the property they claim an interest in was the agent and employee of each of the remaining defendants thereof and at all times was acting within the purpose and scope of such agency and employment.
   
6. On or about DATE OF DEED, Plaintiff(s) executed an “Adjustable Rate Note” promising to pay PLAINTIFF(s) NAME the sum LOAN AMOUNT FROM DEED? 1^ST DEED? 2^ND DEED? by monthly payment.
   
7. The Adjustable Rate Note was based upon a six-month adjustable rate.
   
8. Plaintiff(s) allege that Defendants and each of them neither explained the workings of the rate, how it is computed nor its inherent volatility.
   
9. Further, on information and belief, Plaintiff(s) allege that the Defendants charged and obtained improper fees for the placement of his loan as “sub-prime” when he qualified for a prime rate mortgage which would have generated less in fees and interest.     
   
10. On information and belief, Plaintiff(s) allege that the service of the purported note was, without his knowledge, by some means transferred from or by Defendant, either completely or by association or other means to DOE 1 who unknown to Plaintiff provided services in various forms to be determined to others which were of such a nature to render them a “Servicer” within the definition found within 26 U.S.C. § 2605.
    
11. In the course of this consumer transaction, Defendants violated 15 U.S.C. § 1635(a) and Regulation Z, § 226, by failing to deliver to Plaintiffs two copies of a notice to rescind (DO WE HAVE ONE? IF NOT, REMOVE) that: Attached her as Exhibit “???“
    
12. Also on DATE OF DEED Plaintiff(s) executed a “Deed of Trust” which cited the lender as LENDER Attached her as Exhibit “???“
    
13. On or about DATE OF DEED, PLAINTIFF(s) NAME transferred the deed of trust to DEFENDANT.
    
14. Also on DATE OF DEED, Plaintiff(s) executed a “Deed of Trust” which cited the lender as LENDER and stating in the definition section that:
    

    (E) “MERS” is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender’s successors and assigns. MERS is the beneficiary under this Security Instrument.
    

    1. On or about DATE OF DEED, the Deed of Trust was recorded with the «County» County Recorder and DEFENDANT was named as Trustee of the Deed of Trust.
       
    2. On or about «Transfer_Date», Plaintiff(s) received a “Mortgage Loan Statement” from DEFENDANT ON MORTGAGE LOAN for the property address: ADDRESS for loan number.
       
    3. The Mortgage Loan Statement included a coupon for payment with a mailing address for DEFENDANT ON MORTGAGE LOAN.
       
    4. On or about DEFAULT DATE an unknown employee of DEFENDANT ON DEFAULT executed on behalf of the alleged Beneficiary a “Notice of Breach and Default and of Election to Cause Sale of Real Property Under Deed of Trust” (hereinafter referred to as “Notice of Breach”) stating that the payments were due to Mortgage Electronic Registration Systems as Beneficiary. Attached here as Exhibit “???”.
       
    5. 
       On the Notice of Breach, it stated, in part, that Plaintiff(s) as Trustor, to secure certain obligations in favor of Mortgage Electronic Registration Systems, as beneficiary.
       
    6. 
       It further states that:
       

        That by reason thereof of the present Beneficiary under such deed of Trust has executed and delivered to said duly appointed Trustee a written Declaration of Default and Demand for Sale and has deposited with said duly appointed Trustee such Deed of Trust and all documents evidencing obligations secured thereby and has declared and does hereby declared all sums secured thereby immediately due and payable and has elected and does hereby elect to cause the trust property to be sold to satisfy the obligations served thereby.
    

     

    The Notice of Breach also states:
    

    You may have the right to cure the default hereon and reinstate the one obligation secured by such Deed of Trust above described. Section … permits certain defaults to be cured upon the Payment of the amounts required by that statutory section without requiring payment of that portion of principal and interest which would not be due had no default occurred. Where reinstatement is possible, if the default is not cured within 35 days following the recording and mailing of this Notice to Trustor or Trustor’s successor in interest, the right of reinstatement will terminate and the property may thereafter be sold.
    

     

1. Plaintiff(s) are informed and believe and thereupon allege that the NOTE was invalid and unenforceable due to the intentional and willful violations including but, not limited to: provisions contained in the Truth In Lending Act 15 U.S.C. ” 1601, 1640 etc. et seq.; Regulation Z ‘ 226 etc. et seq. by failing and/or refusing to provide plaintiff with two copies of the “Notice to Cancel” ; California Civil Code ‘ 2924b etc. et seq., California Civil Code §§§ 2924b(a), 2924b(d), 2924b(e) by failing and/or refusing to mail the Notice of Default within ten business days to Plaintiffs, by failing and/or refusing to post and mail the Notice of Default; by failing and/or refusing to mail Plaintiffs the Notice of Default within one month pursuant to California Civil Code § 2924b (c)(1), (2); by failing and/or refusing to properly set the sale date pursuant to California Civil Code § 2924f(b); by failing and/or refusing to publish the Notice of Sale twenty days prior to the date set for sale pursuant to California Civil Code § 2924f(b); by failing and/or refusing to record the Notice of Sale pursuant to California Civil Code § 2924g(d).
   

 

FIRST CAUSE OF ACTION

    (Violation of 15 U.S.C. § 1611 et seq.)

    Against all Defendants

 

1. Plaintiff(s) repeats and realleges Paragraphs 1 through 22 as though fully set forth herein.
   
2. On information and belief, Plaintiff(s) allege that Defendants and each of them are directly or indirectly agents or employees or persons actively involved in the extension of credit as the term is defined under the Truth in Lending Statute (TILA).
   
3. On information and belief, Plaintiff(s) allege that Defendants and each of them are subject to the requirements of the Truth in Lending Statute (TILA) and have violated the requirements of the act in that among other things:
   

        A.    They have refused and continued to refuse to validate or otherwise make a full accounting and the required disclosures as to the true finance charges and fees;

        B.    They have improperly retained funds belonging to Plaintiff in amounts to be determined;

        C.    To disclose the status of the ownership of the loans.

1. Plaintiff(s) further alleges that these violations are such as to require rescission or cancellation of the loan herein and return of all funds received by Defendants from Plaintiff.
   
2. Plaintiff(s) further alleges that he is entitled to compensatory damages in an amount to be determined at trial.
   
3. Plaintiff(s) further alleges that he is entitled to attorneys fees according to statute in the event that he retains counsel.
   
4. On information and belief, Plaintiff(s) allege that Defendants have acted in violation of the TILA act, willfully, maliciously, oppressively and fraudulently and in conscious disregard for the rights of Plaintiff and as such, Plaintiff is entitled to punitive damages.
   

    

SECOND CAUSE OF ACTION

    (Violation of 26 U.S.C. § 2605 et seq.)

    Against all Defendants

 

1. Plaintiff(s) repeats and realleges Paragraphs 1 through 29 as though fully set forth herein.
   
2. Based upon information and belief, and on that basis Plaintiff(s) allege that Defendants and each of them are such that they fall within the requirements of the Real Estate Settlement Procedures Act (RESPA).
   
3. Based upon information and belief, and on that basis Plaintiff(s) allege that Defendants and each of them, placed loans for the purpose of unlawfully increasing or otherwise obtaining yield spread fees and sums in excess of what would have been lawfully earned.
   
4. Based upon information and belief, and on that basis Plaintiff(s) allege that Defendants DEFENDANTS NAMES and DOE 1 either individually or jointly as “Servicers” as that term is used with the RESPA act and either individually or jointly violated the requirements of 26 U.S.C. § 2605(B) in that the servicing contract or duties thereunder were transferred or hypothecated without the required notice.
   
5. Plaintiff(s) allegesthat these violations require rescission or cancellation of the loan and a return of all funds received by Defendants from Plaintiff.
   
6. Plaintiff(s) further allege that he is entitled to compensatory damages in an amount to be determined at trial.
   
7. Plaintiff(s) further allege that he is entitled to attorneys fees according to statute in the event that they retain counsel.
   

THIRD CAUSE OF ACTION

    (Violation of 15 U.S.C. § 1602 et seq.)

Against all Defendants.

 

1. Plaintiff(s) repeats and realleges Paragraphs 1 through 29 as though fully set forth herein.
   
2. Based upon information and belief, and on that basis Plaintiff(s) alleges that the mortgage obtained by her through Defendants, by means unknown obtained and enforced by other Defendants herein falls within the purview of 15 U.S.C. § 1602 et seq., commonly known as the “Home Ownership and Equity Protection Act of 1994 (HOEPA).
   
3. Based upon information and belief, and on that basis Plaintiff(s) alleges that the loan was placed in violation of the HOEPA act as it was placed and administered and otherwise utilized without regard to Plaintiff’s income or cash flow and with the intention of inducing a default.
   
4. Plaintiff(s) became aware of this upon the discovery of Defendants’ intent to wrongfully foreclose and sell his property.
   
5. As a direct and a legal consequence of the above actions, Plaintiff(s) have been damaged in a sum to be proven at trial.
   

    

FOURTH CAUSE OF ACTION

    (Violation of 15 U.S.C. § 1692)

    Against all Defendants

    

1. Plaintiff(s) repeats and realleges Paragraphs 1 through 34 as though fully set forth herein.
   
2. Based upon information and belief, and on that basis Plaintiff(s) allege that Defendants and each of them are “debt collectors” either directly or through agents as that term is used in the United States Code.
   
3. Plaintiff(s) alleges that he duly and properly on more than one occasion requested validation of the “debt” under 15 U.S.C. § 1692, the Fair Debt Collection Practices Act (FDCPA).
   
4. Plaintiff(s) further allege that Defendants did not respond to his demands in such a ways as to meet the requirements of the act.
   
5. Plaintiff(s) are entitled to statutory damages under the FDCPA.
   

    

FIFTH CAUSE OF ACTION

    (Breach of Fiduciary Duty)

    Against all Defendants

 

1. Plaintiff(s) repeats and realleges Paragraphs 1 through 39 as though fully set forth herein.
   
2. At all times relevant, Defendants created, accepted and acted in a fiduciary relationship of great trust and acted for and were the processors of property for the benefit of Plaintiff(s).
   
3. Defendants further placed themselves in a position of trust by virtue of the expertise represented by and through his employees.
   
4. Defendants breached his fiduciary duties owed to Plaintiff(s) as they have acted and continue to act for his own benefit and to the detriment of Plaintiff(s).
   
5. Among other things, they have placed and negotiated loans without due care to the best interests of Plaintiff(s) or for the protection of his rights.
   
6. As a direct and proximate result of the breach of the fiduciary duties, Plaintiff(s) have suffered economic damages and loss of funds and payment of fees improperly incurred in an amount to be proved at trial.
   
7. On information and belief, Plaintiff(s) alleges that Defendants have acted willfully, maliciously, oppressively and fraudulently and in conscious disregard for the rights of Plaintiff(s) and as such, Plaintiff(s) are entitled to punitive damages.
   

 

SIXTH CAUSE OF ACTION

    (Breach of Covenant of Good Faith and Fair Dealing)

    Against all Defendants

 

1. Plaintiff repeats and realleges Paragraphs 1 through 46 as though fully set forth herein.
   
2. Plaintiff alleges that at all times there existed an implied covenant of good faith and fair dealing requiring Defendants, and each of them, to safeguard, protect, or otherwise care for the assets and rights of Plaintiff(s). Said covenant prohibited Defendants from activities interfering with or contrary to the rights of Plaintiff(s).
   
3. Plaintiff alleges that the commencement of foreclosure proceedings upon the property lawfully belonging to Plaintiff without the production of documents demonstrating the lawful rights for the foreclosure constitutes a breach of the covenant.
   
4. As a direct and proximate result, Plaintiff has been damaged in a sum to be proven at trial.
   

 

 

 

SEVENTH CAUSE OF ACTION

    (Injunctive Relief)

    Against all Defendants

 

1. Plaintiff(s) repeats and realleges Paragraphs 1 through 50 as though fully set forth herein.
   
2. Plaintiff seeks a determination as to the legal status of the parties to the Adjustable Rate Note and the Deed of Trust.
   
3. The Adjustable Rate Note states that the Lender is LENDER NAME.
   
4. It also states, “Lender or anyone who takes this Note by transfer and who is entitled to receive payment under this Note is called the “Note Holder.”
   
5. 
   DEFENDANT TRUSTEE SALE DATE? sent to Plaintiff(s) a statement dated on or around «Transfer_Date»(trustee date) with a coupon asking for payment.
   
6. The Notice of Breach signed on or about DATE and states that MERS is the Beneficiary.
   
7. Plaintiff(s) say they are entitled to the money
   
8. The deed of trust “states that “Mortgage Electronic Registration Systems” is the beneficiary.
   
9. There is a controversy to be decided by this Honorable Court as on or about DATE OF DEED Plaintiff(s) received a Deed of Trust stating that the money is owed to Mortgage Electronic Registration Systems, but on or about DATE OF TRUSTEE SALE? DEED? Plaintiff(s) received notice that the payments were due to Defendants and on NOITCE OF DEFAULT the Notice of Breach states that MERS is the Beneficiary.
   
10. Additionally, based upon information and belief, Mortgage Electronic Registration Systems has not qualified to do business in the State of California and therefore, would not have standing to seek non-judicial remedies as well as judicial remedies.
    
11. Defendants should be required to provide the original note with the appropriate endorsements thereon to Plaintiff(s) or this Honorable Court so that it may determine in accordance with the California Revised Statutes, who owns the right to receive payments on loan number and exercises the rights relating to said ownership.
    
12. Only the Note Holder is authorized to collect payments and, in the event of a default, commence foreclosure proceedings, including authorizing the substitution of a Trustee.
    
13. Until Defendants are able to provide Plaintiff(s) and this Honorable Court the aforementioned documents, this Honorable Court should order that Plaintiff(s) are not required to make any further payments on the Adjustable Rate Note and enjoin any further collection activity on the Note, including staying the count down towards the date a Notice of Trustee’s sale may be filed and served.
    

    

EIGHTH CAUSE OF ACTION

    (Injunctive Relief)

    Against all Defendants

 

1. Plaintiff repeats and realleges Paragraphs 1 through 70 as though fully set forth herein.
   
2. Plaintiff(s) are the owner in fee simple of the real property located at ADDRESS and more particularly described as:«Property_Description» APN: «APN_Number»
   
3. Plaintiff(s) received the fee simple title by virtue of the Grant, Bargain, Sale Deed recorded in the Office of the County Recorder, «County» County, California.
   
4. Defendants ALL DEFENDANTS claim an interest or estate in the Plaintiff (s) property disputing or denying Plaintiff’s rights to ownership and by contending that his ownership is or will be with Defendants by means of a Trustee’s sale.
   
5. Plaintiff alleges that Defendants, ALL
   DEFENDANT have no such right, title or interest in the estate of the Property in that the Trustee’s sale proposed will be fraudulent or otherwise in violation of federal and state law and transfer no rights to Defendants.
   
6. Defendants have wrongfully interfered with or threaten to interfere with Plaintiff’s use and enjoyment of the Property in that they threaten to dispossess them.
   
7. Defendants’ threats to dispossess Plaintiff(s) of his home will continue unless and until enjoined or restrained by this Honorable Court.
   
8. Failure to enjoin or restrain Defendants will cause Plaintiff(s) grave and irreparable harm as they will be deprived of the use and enjoyment of unique property.
   
9. Plaintiff(s) have no adequate remedy at law for the threatened and continuing conduct of the impending Trustee’s sale. The sale of Plaintiff’s home will not be properly compensated by an award of money damages.
   
10. Plaintiff(s) further allege that the conduct herein described is of such a nature and character to give them title to the Property
    

    

NINTH CAUSE OF ACTION

    (For Declaratory Relief)

    Against all Defendants

 

1. Plaintiff(s) repeats and realleges Paragraphs 1 through 80 as though fully set forth herein.
   
2. A dispute has arisen between and among Plaintiff(s) and Defendants and each of them as to the duties and obligations of the respective parties with regard to the loan or the foreclosure.
   
3. These disputes concern but are not limited to the ownership rights and the validity of the commencement of the foreclosure process.
   
4. As to these issues, Plaintiff(s) are required to seek this relief.
   
5. Plaintiff(s) further alleges that a declaration of rights and duties of the parties herein are essential to determine the actual status and validity of the loan, deed of trust, nominated beneficiaries, actual beneficiaries, loan servicers, trustees instituting foreclosure proceedings and related matters.
   

    

TENTH CAUSE OF ACTION

    (Fraud)

    Against all Defendants

 

1. Plaintiff(s) repeats and realleges Paragraphs 1 through 85 as though fully set forth herein.
   
2. Plaintiff(s) seek a determination as to the legal status of MERS as the Deed of Trust states that “MERS is a separate corporation that is acting as Beneficiary for Lender’s successors and assigns.”
   
3. Based upon information and belief and on that basis, Plaintiff alleges that MERS did not pay any consideration for the Adjustable Rate Note and in fact was paid a fee by LENDER to act solely as Beneficiary as lender.
   
4. Based upon information and belief, and on that basis Plaintiff(s) alleges that MERS will only notate on its internal record keeping system the name of the beneficiary of the deeds of trust and will never tell the trustors the name of the true beneficiary.
   
5. As a result, the loan may be transferred from company to company, or bundled together with other loans, pledged to quasi-governmental agencies and then sold as securities on the stock exchange.
   
6. This practice allows the beneficiary to allegedly be changed without the necessity of completing an “assignment of deed of trust”, obtaining the appropriate signatures, and recording the assignment with the «County» County Recorder and otherwise notifying Plaintiff(s) of a change in his beneficiary.
   
7. Courts across the United States have held that MERS, named as a nominee or Beneficiary, does not have the standing of the beneficiary to enforce the Deed of Trust through the foreclosure process.
   
8. Defendants DEFENDANT NAMES and MERS, and each of them, made a representation to Plaintiff on DATE OF DEED that MERS had the rights and standing of a beneficiary under California law.
   
9. This statement was made on the Deed of Trust and presented to Plaintiff(s) at the offices of the Title Company on DATE OF DEED.
   
10. When Defendants and MERS, and each of them made the representation that MERS was the beneficiary under the Deed of Trust, they both knew that the statement was false when made.
    
11. The statement was made to have Plaintiff(s) rely on the misrepresentation by executing the Deed of Trust and Plaintiff did actually rely on the misrepresentation by his signatures affixed to the Deed of Trust on DEED OF TRUST DATE.
    
12. Plaintiff(s) have been damaged as a result of said reliance as they have had the title to the Property slandered as a result of the filing of the Notice of Breach.
    
13. Plaintiff(s) have been further damaged by the necessity of seeking judicial intervention to prevent the foreclosure of the Property.
    
14. On information and belief, Plaintiff(s) alleges that Defendants and MERS have acted willfully, maliciously, oppressively and fraudulently and in conscious disregard for the rights of Plaintiff and as such, Plaintiff are entitled to punitive damages.
    

ELEVENTH CAUSE OF ACTION

(For Fraud)

Against ALL DEFENDANTS

1. Plaintiff(s) repeats and realleges Paragraphs 1 through 99 as though fully set forth herein.
   
2. On or about NOTICE OF DEFAULT an unknown employee of DEFENDANT ON DEFAULT executed on behalf the alleged Beneficiary, DEFENDANT ON DEFAULT,
   a “Notice of Default” which stated that the payments were due to MERS as Beneficiary. “Notice of Breach and Default and of Election to Cause Sale of Real Property Under Deed of Trust” (hereinafter referred to as “Notice of Breach”).
   
3. On the Notice of Breach, it stated, in part, that Plaintiff(s) as Trustor, to secure certain obligations in favor of MERS, as beneficiary.
   
4. It further states that: That by reason thereof of the present Beneficiary under such deed of Trust has executed and delivered to said duly appointed Trustee a written Declaration of Default and Demand for Sale and has deposited with said duly appointed Trustee such Deed of Trust and all documents evidencing obligations secured thereby and has declared and does hereby declared all sums secured thereby immediately due and payable and has elected and does hereby elect to cause the trust property to be sold to satisfy the obligations served thereby.
   
   1. This representation was made by these defendants in order to induce reliance by Plaintiff(s).
      
5. Plaintiff(s) did rely on these representations and because of his reliance his property has advanced in the foreclosure stage to a sale and Plaintiff’s reliance was justified.
   
6. Plaintiff(s) is informed and believes that the representation as stated on the Notice of Default were a false representation in the following particular(s)
   

1. Documents were not provided to the trustee that showed that either MERS or any of the Defendants Identified as Does 1-10, were the Beneficiary and entitled to the payments.
   
2. At the time Defendants made the representations they knew they were false and were made for the sole purpose of inducing reliance.
   
   1. Plaintiff(s) has been damaged in having his home wrongfully placed in foreclosure and a slander of his title, and being required to become involved in this litigation all to his damages and injuries the amount of which are subject to proof at the time of trial.
      
   2. That TRUSTEE ON DEED was aware of the false representations of LENDER and remained silent thereby aiding TRUSTEE ON DEED OR BUYER in its misrepresentation.
      
   3. That the actions of these defendants were willful, oppressive and fraudulent so as to justify an award of Exemplary damages.
      

       

III.

TWELVETH CAUSE OF ACTION

VIOLATION OF CALIFORNIA CIVIL CODE §2923.6

(As Against All Defendants)

 

 

1. Plaintiff(s) reallege and incorporate by reference the above paragraphs 1 through 103 as though set forth fully herein.
   
2. Defendants’ Pooling and Servicing Agreement (hereinafter “PSA”) contains a duty to maximize net present value to its investors and related parties.
   
3. California Civil Code 2923.6 broadens and extends this PSA duty by requiring servicers to accept loan modifications with borrowers.
   
4. Pursuant to California Civil Code 2923.6(a), a servicer acts in the best interest of all parties if it agrees to or implements a loan modification where the (1) loan is in payment default, and (2) anticipated recovery under the loan modification or workout plan exceeds the anticipated recovery through foreclosure on a net present value basis.
   
5. California Civil Code 2923.6(b) now provides that the mortgagee, beneficiary, or authorized agent offer the borrower a loan modification or workout plan if such a modification or plan is consistent with its contractual or other authority.
   
6. Plaintiff(s) loan is presently in an uncertain state.
   
7. Plaintiffs(s) are willing, able, and ready to execute a modification of their loan on a reasonable basis
   

       (a)    New Loan Amount: $INSERT LOAN AMOUNT
   

       (b)    New Interest Rate: 4%
   

       (c)    New Loan Length: 30 years
   

       (d)    New Payment: $
   INSERT NEW PAYMENT
   

    

8. The present fair market value of the property is INPUT FAIR MARKET VALUE OF HOME.
   
9. The Joint Economic Committee of Congress estimated in June, 2007, that the average foreclosure results in $77, 935.00 in costs to the homeowner, lender, local government, and neighbors.
   
10. Of the $77,935.00 in foreclosure costs, the Joint Economic Committee of Congress estimates that the lender will suffer $50,000.00 in costs in conducting a non-judicial foreclosure on the property, maintaining, rehabilitating, insuring, and reselling the property to a third party. Freddie Mac places this loss higher at $58,759.00.
    
11. Pursuant to California Civil Code §2823.6, Defendants are now contractually bound to accept the loan modification as provided above and tender is deemed made pursuant to Defendants’ Pooling and Service Agreement, California Civil Code 2923.6(a), and California Civil Code 2923.6(b), taken individually or entirely. Plaintiff(s) invoke the remedies embodied in the aforementioned agreement and/or codes with a willingness to execute a modification of their loan.
    
12. Alternatively, Plaintiff(s) allege that tender, if any, is excused by obstruction or prevention or imposition of unwarranted conditions by the person or corporate entity to whom it was to be made.
    
13. Alternatively, Plaintiff(s) allege that obstruction or imposition of unwarranted conditions by defendants occurred when defendants evaded the plaintiffs’ attempts to provide tender as specified and encouraged by defendants’ pooling agreement, California Civil Code 2923.6(a), and California Civil Code 2923.6(b). [Hudson v. Morton, 231 Ala. 392, 165 So. 227 (1936); Loftis v. Alexander, 139 Ga. 346, 77 S.E. 169 (1913); Kennedy v. Neil, 333 Ill. 629, 165 N.E. 148 (1929); Borden v. Borden, 5 Mass. 67, 1809 WL 989 (1809); Loughney v. Quigley, 279 Pa. 396, 123 A. 84 (1924); Montague Corp. v. E.P. Burton Lumber Co., 136 S.C. 40, 134 S.E. 147 (1926); Stansbury V. Embrey, 128 Tenn. 103, 158 S.W. 991 (1913); Loehr v. Dickson, 141 Wis. 332, 124 N.W. 293 (1910)]
    
14. Alternatively, Plaintiffs further allege that obstruction or imposition of unwarranted conditions by defendants occurred when defendants manifested to the Plaintiffs that tender, if made, will not be accepted, the Plaintiffs are excused from making tender as it would be a futile gesture, and the law will not require the doing of a useless act. [Simmons v. Swan, 275 U.S. 113, 48 S. Ct. 52, 72 L. Ed. 190 (1927); Lee v. Joseph E. Seagram & Sons, Inc., 552 F.2d 447 (2d Cir. 1977); Buckner v. Tweed, 157 F.2d 211 (App. D.C. 1946); Peterson v. Hudson Ins. Co., 41 Ariz. 31, 15 P.2d 249 (1932); Woods-Drury, Inc. v. Superior Court in and for City and County of San Francisco, 18 Cal. App. 2d 340, 63 P.2d 1184 (1^st District 1936); Chesapeake Bay Distributing Co. v. Buck Distributing Co., Inc. 60 Md. App. 210, 481 A.2d 1156 (1984); Issacs v. Caterpillar, Inc., 765 F. Supp. 1359 (C.D. Ill. 1991); Platsis v. Diafokeris, 68 Md. App. 257, 511 A.2d 535 (1986)]
    
15. Alternatively, Plaintiff(s) further allege that obstruction or imposition of unwarranted conditions by defendants occurred when defendants’ objection for want of actual tender of money is waived by defendants’ refusal to receive the money if produced. [Shaner v West Coast Life Ins. Co, 73F.2d 681 (C.C.A. 10^th Cir. 1934); Buell v. White, 908 P.2d 1175 (Colo. Ct. App. 1995) (when party, who is willing and able to pay, offers to pay another a sum of money and is advised that it will not be accepted, offer amounts to tender even though money is not produced); Hall v. Norwalk
    Fire Ins. Co., 57 Conn. 105, 17 A. 356 (1888); Lamar v. Sheppard, 84 Ga. 561, 10 S.E. 10984 (1890); Ventres v. Cobb, 105 Ill. 33, 1882 WL 10475 (1882); Metropolitan Credit Union v. Matthes, 46 Mass. App. Ct. 326, 706 N.E.2d 296 (1999)].
    

     

    WHEREFORE, Plaintiff(s) prays for damages as follows:

1. For compensatory damages, amount to be determined.
   
2. For punitive damages in an amount to be determined.
   

    3.    For any statutory damages according to law;

    4.    For Injunctive Relief including the issuance of a restraining order and thereafter a preliminary injunction to maintain the status quo pending final adjudication;

    5.    For attorney’s fees in the event that counsel is retained;.

    6. For a declaration of the rights of the parties relative to Plaintiff’s Home, including

a declaration that Defendants have no enforceable lien against Plaintiff’s Home;

7.    For a preliminary injunction and permanent injunction enjoining all Defendants, their agents, assigns, and all person acting under, for, or in concert with them, from foreclosing on Plaintiff’s Home or from conducting at trustee’s sale or causing a trustee’s sale to be conducted relative to Plaintiff’s Home.

    8.    Cancellation of the sale and restitution of the home to the Plaintiffs; and

    9.    For damages as provided by statute;

10.    For an Order enjoining Defendants from continuing to violate the statutes alleged

herein;

11.    For an Order, requiring Defendant to reinstate Plaintiff on title to his Property, and or a restraining order preventing Defendants and his, hers, or its agents, employees, officers, attorneys, and representatives from engaging in or performing any of the following acts: (i) offering, or advertising this property for sale and (ii) attempting to transfer title to this property and or (iii) holding any auction therefore;

12.    For such other and further relief as the court may deem just and proper.

 

    DATED March 28, 2014     

 

                    LAW OFFICES OF TIMOTHY MCCANDLESS ESQ.

 

 

                    ______________________________________________

Timothy L. McCandless, Esq.,

Attorney for Plaintiff(s), NAME

VERIFICATION

 

I, TIMOTHY L. MCCANDLESS, am an attorney at law admitted to practice before all courts of the State of California and have my office in San Bernardino County, California, and am the attorney for the Plaintiff in this action, that all of the officers of the Plaintiff are unable to make the verification because they are absent from said County and for that reason affiant makes this verification on the Plaintiff’s behalf; that I have read the foregoing document and know its contents. I am informed and believe and on that ground allege that matters stated herein are true.

    Executed July 15, 2009, at Victorville, Californa.

I declare under penalty of perjury that under the laws of the State of California that the foregoing is true and correct.

DATED: July 15, 2009

___________________________________

TIMOTHY L. MCCANDLESS, ESQ

 

                                                                                                    

Discovery

TIMOTHY L. MCCANDLESS, ESQ. SBN 147715

LAW OFFICES OF TIMOTHY L. MCCANDLESS

13240 Amargosa Road

Victorville, California 92392

 

(760) 951-3663 Telephone

(909) 382-9956 Facsimile

 

 

Attorneys for Defendant,

ISCHMAEL O. WHITE,

 

 

 

SUPERIOR COURT OF THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF CONTRA COSTA

PITTSBURG BRANCH

 

BLUE MOUNTAIN MORTGAGE LLC, a California Limited Liability Company,   Plaintiff,       vs.   ISCHMAEL O. WHITE,   and DOES I through X, Inclusive   Defendant(s).

Case No.: PS-09-1746     DEFENDANT ISCHMAEL O. WHITE’S SPECIAL INTERROGATORIES TO PLAINTIFF BLUE MOUNTAIN MORTGAGE, LLC., INC., SET ONE

 

PROPOUNDING PARTY:     Defendant, ISCHMAEL O. WHITE

RESPONDING PARTY:    Plaintiff, BLUE MOUNTAIN MORTGAGE, LLC.

SET NO:                 One

 

TO DEFENDANTS AND ITS ATTORNEY OF RECORD:

 

 

 

SPECIAL INTERROGATORIES

 

SPECIAL INTERROGATORIES NO. 1
Please state the date of the first contact between you company and the borrower in the subject loan transaction, the name and address and telephone number of the person(s) in your company who were involved in that contact, the manner of the contact (web, telephone, letter, application, solicitation, advertisement etc.)

 

SPECIAL INTERROGATORIES NO. 2
Please state the Name(s), addresses, email addresses and telephone numbers of all persons having knowledge, possession, custody, control or possession of any documents used by any person on behalf of any of the Defendants in this lawsuit, in connection with or in furtherance of selling or conveying any information about the lender, the mortgage broker, the appraiser, the terms or prospective terms of the note, mortgage, deed of trust, good faith estimate or any other document(s) related to the prospective or actual loan.

 

SPECIAL INTERROGATORIES NO. 3
Please state the name and address and phone number of the person at your company who is the custodian of any media concerning the advertisements, solicitations, scripts, digital or audio or visual media intended to bring new customers to your company.

 

SPECIAL INTERROGATORIES NO. 4
Please state the name of the person(s) involved in the underwriting of the subject loan. “Underwriting” refers to any person who approved the loan, made or confirmed representations, evaluations or appraisals of value of the home, value of the security instruments, ability of the borrower to pay including, with respect to such underwriting person(s), their names, addresses, current employment status, and phone number.

SPECIAL INTERROGATORIES NO. 5
Please state the name and address and phone numbers of any person(s) who had any contact with any third party regarding the securitization, sale, transfer, assignment, hypothecation or any document or agreement, oral, written or otherwise, that would effect the funding of the subject loan, the closing of the subject loan, the receipt of money from a third party in a transaction that referred to the subject loan.

 

SPECIAL INTERROGATORIES NO. 6
Please state the name and address and phone number of any person known or believed by anyone in your company to have received either physical possession of the note, the mortgage, or any document (including but not limited to assignment, endorsement, allonge, Pooling and Service Agreement, Assignment and Assumption Agreement, Trust Agreement, letters or emails or faxes of transmittals including attachments), that refers to or incorporates terms regarding the securitization, sale, transfer, assignment, hypothecation or any document or agreement, oral, written, or otherwise, that would effect the funding of the subject loan, the closing of the subject loan, the receipt of money from a third party in a transaction that referred to the subject loan, and whether such money was allocated to principal, interest or other obligation related to the subject loan.

 

SPECIAL INTERROGATORIES NO. 7
Please state the name and address and phone number of all persons known or believed by anyone in your company to have participated in the securitization of the subject loan including but not limited to mortgage aggregators, mortgage brokers, financial institutions, Structured Investment Vehicles, Special Purpose Vehicles, Trustees, Managers of derivative securities, managers of the company that issued an asset backed security, and the names of any person or entitle that purchased the asset backed security.

 

SPECIAL INTERROGATORIES NO. 8
Please state the name, address of the person(s) in custody of any document that identifies the loan servicer(s) in the subject loan transaction.

 

SPECIAL INTERROGATORIES NO. 9
Please state the name and address of the person(s) or entities that are entitled, directly or indirectly to the stream of revenue from the borrower in the subject loan.

 

SPECIAL INTERROGATORIES NO. 10
Please state the name, address and phone number of any person(s) in custody of any document which refers to any instruction or authority to enforce the note or mortgage in the subject loan transaction.

 

SPECIAL INTERROGATORIES NO. 11
Other than people identified above, please state the name, address and phone number of any person(s) in custody of any document which refers to any instruction or authority to enforce the note or mortgage in the subject loan transaction.

 

SPECIAL INTERROGATORIES NO. 12
Other than people identified above, please state the name, address, phone number and employment status of any and all persons who have or had personal knowledge of the subject loan transaction, underwriting of the subject loan transaction, securitization, sale, transfer, assignment or hypothecation of the subject loan transaction, or the decision to enforce the note or mortgage in the subject loan transaction.

 

SPECIAL INTERROGATORIES NO. 13
Please state the names, addresses and phone numbers of any party, person or entity known or suspected by you or any of your officers, employees, independent contractors or other agents, or servants of your company who might possess or claim rights under the subject loan or mortgage and/or note.

 

SPECIAL INTERROGATORIES NO. 14
Please identify the custodian of the records, including, name, address and phone number that would show all entries regarding the flow of funds regarding the closing on the subject loan transaction. If this person does not have personal knowledge of the transaction, then please identify in like fashion the person who worked for your company and had custody of the accounting or bookkeeping registers or records identifying said flow of funds in the closing of the subject loan transaction. Flow of funds, means(a) any record of money received, (b) any record of money paid out and (c) any bookkeeping or accounting entry, general ledger and accounting treatment of the subject loan transaction at your company including but not limited to whether the subject loan transaction was ever entered into any category on the balance sheet at any time or times, whether any reserve for default was ever entered on the balance sheet, and whether any reserve for default was ever entered on the balance sheet, and whether any entry, report or calculation was made regarding the effect of this loan transaction on the capital reserve requirements of your company. If also includes any item, entry, calculation or note to any category on either the balance sheet or the income statement of your company wheter in draft form, or in final form.

 

SPECIAL INTERROGATORIES NO. 15
Please identify the custodian of the records, including, name, address and phone number that would show all entries regarding the flow of funds regarding the subject loan transaction prior to or after closing of the subject loan transaction. If this person does not have personal knowledge of the transaction, then please identify in like fashion the person who worked for your company and had custody of the accounting or bookkeeping registers or records identify said flow of funds after or before the closing of the subject loan transaction. Flow of funds, means (a) any record of money received, (b) any record of money paid out and (c) any bookkeeping or accounting entry, general ledger and accounting treatment of the subject loan transaction at your company including but not limited to whether the subject loan transaction was ever entered into any category on the balance sheet at any time or times, whether any reserved for default was ever entered on the balance sheet, and whether any entry, report or calculation was made regarding the effect of this loan transaction on the capital reserve requirements of your company.

 

SPECIAL INTERROGATORIES NO. 16
Please identify the name, address and phone number of the auditor and/or accountant of your financial statements or tax returns.

 

SPECIAL INTERROGATORIES NO. 17
Please identify the name, address and phone number of any attorney with whom you consulted or who rendered an opinion regarding the subject loan transaction or any pattern of securitization that may have effected the subject loan transaction directly or indirectly.

 

SPECIAL INTERROGATORIES NO. 18
Please identify the name, address and phone number of any person who served as an officer or director with your company commencing with 6 months prior to the closing of the subject loan transaction through the present. This interrogatory is limited only to those people who had knowledge, responsibility, or otherwise made or received reports regarding information that included the subject loan transaction, and/or the process by which solicitation, underwriting and closing of residential mortgage loans, or the securitization, sale, transfer or assignment or hypothecation of residential mortgage loans to third parties.

 

SPECIAL INTERROGATORIES NO. 19
Please state the name, address, telephone number, email address and fax number of nay person known to you, your agents, servants or employees to have acted in the capacity of a mortgage aggregator in which any document relating to the subject loan was transferred, assigned pledged or hypothecated to a third party (i.e. a party other than the borrower, the lender, the trustee or any other party specifically identified by name in the instruments presented at the closing of the subject loan. This request specifically refers to any Trustee operating within or outside the boundaries of the United States either as Trustee, officer, employee, agent, servant or affiliate, including but not limited to any entity commonly referred to which fits the description of a structured investment vehicle.

 

SPECIAL INTERROGATORIES NO. 20
Please state the Name(s), addresses, email addresses and telephone numbers of all persons having knowledge, possession, custody, control or possession of any script used by any person on behalf of any of the Defendants in this lawsuit, in connection with or in furtherance of selling or conveying any information about the lender, the mortgage broker, the appraiser, the terms or prospective terms of the note, mortgage, deed of trust, good faith estimate or any other document(s) related to the prospective or actual loan.

 

SPECIAL INTERROGATORIES NO. 21
Please state the Name(s), address, telephone number, email address and fax number of any person known to you, your agents, servants or employees to have acted in the capacity of a trustee of any aggregation or pool of assets in which any document relating to the subject loan was transferred, assigned, pledged or hypothecated to a third party (i.e. a party other than the borrower, the lender, the trustee or any other party specifically identified by name in the instruments presented at the closing of the subject loan. This request specifically refers to any Trustee operating within or4 outside the boundaries of the United States either as Trustee, officer, employee, agent, servant or affiliate, including but not limited to any entity commonly referred to or which fits the description of a structured investment vehicle.

 

SPECIAL INTERROGATORIES NO. 22
Please state the name of the person(s) involved or having knowledge of any analysis or creation of spreadsheets, notes, memoranda or other media, whether electronic or in hard copy, wherein the composition of a pool or other aggregation of assets was created or described and which included or referred to the subject loan. “Analysis” refers to any person who suggested or approved the composition of the pool or aggregation, made or confirmed representation, evaluations or appraisals of value of the home, value of the security instruments, ability of the borrower to pay including, with respect to such analysis person(s), their names, address, current employment status, and phone number.

 

SPECIAL INTERROGATORIES NO. 23
Please state printed source(s) of any analysis standards used to perform due diligence or analysis and whether any independent verification or due diligence was performed utilizing such printed source(s).

 

SPECIAL INTERROGATORIES NO. 24
Please the name of the person(s) involved or having knowledge of any analysis or creation of spreadsheets, notes, memoranda or other media, whether electronic or in hard copy, wherein the composition of a pool or other aggregation of assets was created or described and which included or referred to the subject loan and wherein a description of the pool or aggregation was transmitted, transferred, assigned, pledged or hypothecated to any investment banking entity including but not limited to any special purpose vehicle or any entity that could be described as a special purpose vehicle. A person who “transmitted, transferred, assigned, pledged or hypothecated” refers to any person who suggested, approved, received or accepted the composition of the pool or aggregation, made or confirmed representations, evaluations or appraisals of value of the home, value of the security instruments, ability of the borrower to pay including, with respect to such analysis.

 

SPECIAL INTERROGATORIES NO. 25
Please the name of the person(s) involved or having knowledge of any analysis or creation of spreadsheets, notes, memoranda or other media, whether electronic or in hard copy, wherein the composition of a pool or other aggregation of assets was created or described and which included or referred to the subject loan and wherein a description of the pool or aggregation was allocated, transmitted, transferred, assigned, pledged or hypothecated to any part, or division of an entity or investment banking entity including but not limited to any subsidiary, affiliate or company or entity including but not limited to any special purpose vehicle or any entity that could be described a special vehicle. A person who “allocated, transmitted, transferred, assigned, pledged or hypothecated” refers to any person who suggested, approved, received or accepted the composition of the pool or aggregation, made or confirmed representations, evaluations or appraisals of value of the home, value of the security instruments, evaluations or appraisals of value of the home, value of the security instruments, ability of the borrower to pay including, with respect to such analysis person(s), their names, addresses, current employment status, and phone number.

 

SPECIAL INTERROGATORIES NO. 26
Please state the name of the person(s) involved or having knowledge of any analysis or creation of any offering circular, spreadsheets, notes, memoranda or other media, whether electronic or in hard copy, wherein the composition of a pool or other aggregation of assets was created or described and which included or referred to the subject loan and wherein a description of the pool or aggregation was transmitted, transferred, assigned, pledged or hypothecated to any buyer or prospective buyer, investor or prospective investor including any entity including but not limited to any subsidiary, affiliate or company or entity created at the direction of said buyer or prospective buyer, investor or prospective investor and/or investment banking firm including but not limited to any special purpose vehicle or any entity that could be described as a special purpose vehicle. A person who “transmitted, transferred, assigned, pledged or hypothecated” refers to any person who suggested, approved, received or accepted the composition of the pool or aggregation, made or confirmed representations, evaluations or appraisals of value of the home, value of the security instruments, ability of the borrower to pay including, with respect to such analysis person(s), their names, addresses, current employment status, and phone number.

 

SPECIAL INTERROGATORIES NO. 27
Please state the name of the person(s) involved or having knowledge of any rating or evaluation of any securities or certificates, or any entity acting as an issuer of any securities or certificates and describe with specificity the name, address, telephone number, fax number, and email address of the person(s) as such rating entity (which might include Moody’s, Fitch or Standard and Poor’s) based upon an analysis or creation of spreadsheets, composition of a pool or other aggregation of assets was created or described and which included or referred to the subject loan and wherein a description of the pool or aggregation was transmitted, transferred, assigned, pledged or hypothecated” refers to any person who suggested, approved, received or accepted the composition of the pool or aggregation, made or confirmed representations, evaluations or appraisals of value of the home, value of the security instruments, ability of the borrower to pay including, with respect to such analysis person(s), their names, addresses, current employment status, and phone number.

 

SPECIAL INTERROGATORIES NO. 28
Please state the name of the person(s) involved or having knowledge of any credit default swap or other instrument hedging the risk of default as to any person or entity acting as an issuer of any securities or certificates and describe with specificity the name, address, telephone number, fax number, and email address of the person(s) of the parties to such instrument and whether such instrument was based upon an analysis or creation of spreadsheets, notes, memoranda or other media, whether electronic or in hard copy, wherein the composition of a pool or other aggregation of assets was created or described and which included or referred to the subject loan and wherein a description of the pool or aggregation was transmitted, transferred, assigned pledged or hypothecated to any entity or buyer. A person who “transmitted, transferred, assigned, pledged or hypothecated” refers to any person who suggested, approved, received or accepted the composition of the pool or aggregation, made or confirmed representations, evaluations or appraisals of value of the home, value of the security instruments, ability of the borrower to pay including, with respect to such analysis person(s), their names, addresses, current employment status, and phone number.

 

SPECIAL INTERROGATORIES NO. 29
Please state the name of the person(s) involved or having knowledge of any insurance policy or product, plan or instrument describing overcollateralization, cross collateralization or guarantee or other instrument hedging the risk of default as to any person or entity acting as an issuer of any securities or certificates and describe with specificity the name, address, telephone number, fax number, and email address of the person(s) of the parties to such instrument and whether such instrument was based upon an analysis or creation of spreadsheets, notes, memoranda or other media, whether electronic or in hard copy, wherein the composition of a pool or other aggregation of assets was created or described and which included or referred to the subject loan and wherein a description of the pool or aggregation was transmitted, transferred, assigned, pledged or hypothecated” refers to any person who suggested, approved, received or accepted the composition of the pool or aggregation, made or confirmed representations, evaluations or appraisals of value of the home, value of the security instruments, ability of the borrower to pay including, with respect to such analysis person(s), their names, addresses, current employment status, and phone number.

 

SPECIAL INTERROGATORIES NO. 30
Please state printed source(s) of any analysis standards used to perform due diligence or analysis and whether any independent verification or due diligence was performed utilizing such printed source(s).

 

Dated: September 11, 2009         _____________________________

         Timothy L. McCandless, Esq.                 Attorney for Defendant,

ISCHMAEL O. WHITE