Timothy L. McCandless, Esq. SBN 145577
Law Offices of Timothy L. McCandless
26875 Calle Hermosa Suite A,
Capistrano Beach, CA 92624
Telephone: (925) 957-9797
Attorneys for Defendants
Pierrick Briolette and Yong C. Briolette
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF VENTURA
COASTLINE REAL ESTATE HOLDINGS, INC.
Plaintiff,
vs.
PIERRICK BRILLOUET, an individual;
YONG BRILLOUET, an individual; and DOE 1 through DOE 10, INCLUSIVE;
Defendants.
)
)
) Case No. 56-2014-00461981-CU-UD-VTA
DEFENDANTS’ OPPOSITION TO
PLAINTIFF’S MOTION FOR
ATTORNEY’S FEES AND COSTS, MEMORANDUM OF POINTS AND
AUTHORITIES
DATE: January 6, 2016
TIME: 8:30 a.m.
DEPT.: 41
Defendants Pierrick Brillouet and Yong C. Brillouet respectfully submit their Opposition to Plaintiff’s Motion for Attorney’s Fees and Costs as follows:
MEMORANDUM OF POINTS AND AUTHORITIES
I.
INTRODUCTION AND HISTORICAL PERSPECTIVE
Dates relevant to this matter are as follows:
On December 31, 2014, Plaintiff Coastline Real Estate Holdings, LLC filed the instant unlawful detainer action.
A two hour bench trial was conducted on September 8, 2015, and the court awarded possession to the Plaintiff.
Judgment was entered on October 7, 2015. The time to file an appeal was November 6, 2015, because the matter was filed as a limited action.
Additionally, the deadline to file the present Motion For Attorney’s was November 6, 2015, pursuant to California Rules of Court Rule 3.1702(b)(1). However the Motion was not filed until December 4, 2015. As such, the Motion was filed almost one month after the deadline and for that reason alone must be denied.
Plaintiff now seeks the award of $227,084.50 in attorney’s fees. The Declaration of Attorney Richman at Paragraph 19 specifically alleges that he expended 769.85 hours “in this matter.” However, when you review the charges, the hours were actually incurred for by other parties (Western Commercial Bank, Pacific Western Bank), in entirely different actions. The assertion of 769.85 hours by Plaintiff’s counsel related to this action is an intentional misrepresentation pursuant to California Rules of Professional Conduct 5-200(b).
Additionally, the identical charges were already disallowed in a prior motion in a different action, and therefore are barred by collateral estoppel.
Even worse, Defendant redacted in its Motion what attorney services were performed and the amount of time which was expended in completing those tasks. As a result, even if Plaintiff was entitled to recovery attorney’s fees for this case, based on the information served on Defendant, it is impossible to determine: (1) the nature of the service provided, (2) whether that service was necessary, (3) the amount of time which was expended to complete the service, and (4) is the amount of time and charge a reasonable fees for the “alleged” services. Given the foregoing, the Motion must be denied.
II. THE MOTION IS UNTIMELY FILED.
The unlawful detainer action was filed as a limited action, the Plaintiff paid the filing fee for a limited action, and the defendants likewise paid the filing fees for a limited action. The action was tried as a limited action.
Judgment was entered on October 7, 2015.
The deadline to file the present Motion For Attorney’s was thirty (30) days later, or November 6, 2015, pursuant to California Rules of Court Rule 3.1702(b)(1). Section 3.1702 provides in pertinent part:
(b) Attorney’s fees before trial court judgment
(1) Time for motion
“A notice of motion to claim attorney’s fees for services up to and including the rendition of judgment in the trial court-including attorney’s fees on an appeal before the rendition of judgment in the trial court-must be served and filed within the time for filing a notice of appeal under rules 8.104 and 8.108 in an unlimited civil case or under rules 8.822 and 8.823 in a limited civil case.”
The parties did not enter into a stipulation to extend the time for Plaintiff to file its Motion for Attorney’s Fees.
Plaintiff filed the instant Motion on December 4, 2015.
California Rules of Court Rule 8.822(1)(A) provides in pertinent part:
Rule 8.822. Time to appeal
(a) Normal time
(1) “Unless a statute or rule 8.823 provides otherwise, a notice of appeal must be filed on or before the earliest of:
(A) 30 days after the trial court clerk serves the party filing the notice of appeal a document entitled “Notice of Entry” of judgment or a file-stamped copy of the judgment, showing the date it was served;”
As such, the Motion was filed almost one month after the deadline and for that reason alone must be denied.
III. THE INSTANT MOTION IS NOT SUPPORTED IN CONTRACT OR
STATUTE AND MUST BE DENIED.
Plaintiff Coastline Real Estate Holdings, LLC purchased the position of Pacific Western Bank. Defendants believe that Plaintiff is a wholly owned subsidiary of Pacific Western Bank.
Pacific Western Bank (as successor in interest) became a Defendant in Superior Court of California, County of Ventura Case No. 56-2014-00458447-CU-OR-VTA stylized as:
Pierrick Brillouet and Yong Brillouet v. Western Commerical Bank, brought the identical motion for attorney’s fees. That motion was denied. The court adopted its Tentative Ruling which stated:
The Bank is only entitled to an award of attorney fees in this matter if a contractual provision exists which provides for such an award.
The Bank argues that the construction trust deed contains an attorney provision which provides it with a basis for attorney fees. However, the deed only permits an award of attorney fees by a court “[i]f Lender institutes any suit or action to enforce any of the terms of this Deed of Trust, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys’ fees at trial and upon any appeal.” (Emphasis added). Only actions which the “Lender institutes” are subject to the attorney’s fees provision and this action was not brought by the lender. The Bank has made no argument for the extension of the plain language of the provision which would encompass the current suit and as such it has not demonstrated it is entitled to fees under the construction trust deed.
The Bank claims that it is also entitled to attorney fees under the Promissory Note which provides:
Lender may hire or pay someone else to collect this note. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fee and Lender’s legal expenses, whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower will also pay any court costs, in addition to all other sums provided by law.
This was not a suit brought to collect the note. While “that amount” includes attorney fees and legal expenses, there is no indication that the court is authorized to make an award of these fees and expenses as a result of the current litigation. The Promissory Note does not indicate that the prevailing party in an action such as this is entitled to reasonable attorney fees.
The Bank also points to the assumption agreement as a basis for fees. It allegedly provides that “[i]f any lawsuit, arbitration or other proceedings is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover the reasonable fees and costs of its attorneys in such proceeding.” This lawsuit didn’t involve the interpretation or enforcement of the terms of the assumption agreement. Santisas v. Goodin (1988) 17 Cal.4th 599 is of no help to the Bank as it involved an expansive attorney’s fee clause that clearly applied to the suit and the question was whether Civil Code §1717(b)(2) thwarted its application. That is not the case here.” A true and correct copy of the Tentative Ruling is attached hereto as Exhibit “1” and is incorporated by this reference.
Notwithstanding the court’s prior Order denying the very same attorney’s fees, Plaintiff in the instant action once again argues the identical points and seeks fees which are unsupported, unreasonable, and which are untimely. As such, the Motion for Attorney’s fees must be denied.
IV. MOVANTS HAVE THE BURDEN OF PROVING THE REASONABLE
NATURE OF THE SERVICES ALLEGED.
The Declaration of Attorney Steven N. Richman contains an attachment which purports to be a listing of the attorney services which were provided. However, a summary inspection shows that the listing of services, the time incurred for such service and the amount charged for such services have been redacted.
As such, Plaintiffs cannot determine the propriety of: (1) the nature of the services provided, (2) whether those services were necessary, (3) the amount of time which was expended to complete the services, and (4) whether the amount of time and charge is a reasonable fee for the particular service rendered.
Attorney fee shifting statutes and contractual provisions usually provide only the right to recover “reasonable attorneys’ fees” incurred as a result of the litigation. In order to determine the reasonableness of the fee award requested, courts generally start with the “lodestar amount,” which is the reasonable number of hours spent on the litigation multiplied by the reasonable hourly rate. Serrano v. Priest, 20 Cal.3d 25, 48 (1977); Thayer v. Wells Fargo Bank, N.A., 92 Cal.App.4th 819 (2001).
Once this amount is determined, the court can take into consideration additional factors to adjust the “lodestar” either up or down as appropriate. Such factors include: the novelty or difficulty of the issues involved in the case and the skill required to present those issues; the extent to which the nature of the case precluded the employment of other attorneys; and the fee arrangement of the attorney and the client. Serrano, 20 Cal.3d at 48; Thayer, 92 Cal. App.4th at 833. The party seeking the fees has the burden of proof to establish that the time spent and the hourly fee charged is reasonable. Levy v. Toyota Motor Sales, U.S.A., Inc., 4 Cal.App.4th 807 (1992).
This particular case was an unlawful detainer action, the trial lasted two hours, the trial presented no novel issues, nor did it require herculean efforts. The case was disposed by bench trial within two hours. As such, although Defendants believe that no right to attorney’s fees exists in this matter, if the court is going to award attorney’s fees, then Movant has failed to prove the reasonableness of the fees requested. Given the foregoing the Motion should be denied.
Dated: December 22, 2015 LAW OFFICES OF
TIMOTHY L. MCCANDLESS
By ____________________________
Timothy L. McCandless, Esq.
Attorney for Defendants
Pierrick Brillouet and Yong C. Brillouet
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.
The surprising decision by regulators to scrap a massive and expensive foreclosure review program in favor of a $10 billion settlement with 14 banks — reported by The New York Times Sunday night — came after a year of mounting concerns about the independence and effectiveness of the controversial program.
The program, known as the Independent Foreclosure Review, was supposed to give homeowners who believe that their bank made a mistake in handling their foreclosure an opportunity for a neutral third party to review the claim. It’s not clear what factors led banking regulators to abandon the program in favor of a settlement, but the final straw may have been a pending report by the Government Accountability Office, a nonpartisan investigative arm of Congress, which was investigating the review program.
Rep. Brad Miller, a North Carolina Democrat, told The Huffington Post that the report, which has not been released, was “critical” and that the Office of the Comptroller of the Currency, which administers the review, was aware of its findings. Miller said that that one problem the GAO was likely to highlight was an “unacceptably high” error rate of 11 percent in a sampling of bank loan files.
The sample files were chosen at random by the banks from their broader pool of foreclosed homeowners, who had not necessarily applied for relief. The data suggests that of the 4 million families who lost their homes to foreclosure since the housing crash, more than 400,000 had some bank-caused problem in their loan file. It also suggests that many thousands of those who could have applied for relief didn’t — because they weren’t aware of the review, or weren’t aware that their bank had made a mistake. Some of these mistakes pushed homeowners into foreclosure who otherwise could have afforded to keep their homes.
Miller said the news that a settlement to replace the review was in the works caught him by surprise, and stressed that he had no way of knowing whether the impending GAO report had triggered the decision.
It’s not clear what will happen to the 250,000 homeowners who have already applied to the Independent Foreclosure Review for relief. The Times, citing people familiar with the negotiations, said that a deal between the banks and banking regulators, led by the Office of the Comptroller of the Currency, could be reached by the end of the week. It wasn’t clear how that money would be distributed or how many current and former homeowners who lost their homes to foreclosure — or who were hit with an unnecessary fee — might qualify.
Bryan Hubbard, a spokesman for the OCC, which administers the program, declined to comment on the Times’ story. Hubbard told HuffPost, “The Office of the Comptroller of the Currency is committed to ensuring the Independent Foreclosure Review proceeds efficiently and to ensuring harmed borrowers are compensated as quickly as possible.”
Since the housing market crashed in 2007, thousands of foreclosed homeowners have complained that their mortgage company made a mistake in the management of their home loan, such as foreclosing on someone making payments on a loan modification plan. The Independent Foreclosure Review emerged from a legal agreement in April 2011 between 14 mortgage companies and bank regulators over these abusive “servicing” practices. It was supposed to give homeowners an opportunity to have an unbiased third party review their foreclosure and determine whether they might qualify for a cash payout of up to $125,000.
The initial response was tepid, at best. Homeowners and advocates complained that the application forms were confusing and that information about what type of compensation they might get was missing. Some told HuffPost that they were so disillusioned by the federal government’s anemic response to widely reported bank errors that they weren’t going to bother to apply.
In one instance, Daniel Casper, an Illinois wedding videographer, applied to the program in January after years of combat with Bank of America over his home loan. As The Huffington Post reported in October, he was initially rejected, because, according to the bank, his mortgage was not in the foreclosure process during the eligible review period. Promontory Financial Group, which Bank of America hired to review his loan, apparently did not double check Bank of America’s analysis against the extensive documentation that Chase submitted. That documentation clearly showed that his loan was eligible for review.
In recent months ProPublica, an investigative nonprofit, has issued a series of damning articles about the Independent Foreclosure Review. The most recent found that supposedly independent third-party reviewers looking over Bank of America loan files were given the “correct” answers in advance by the bank. These reviewers could override the answers, but they weren’t starting from a blank slate.
Banks, if they did not find a “compensable error,” did not have to pay anything, giving them a strong incentive to find no flaws with their own work.
“It was flawed from the start,” Miller said of the review program. “There was an inherent conflict of interest by just about everyone involved.”
Also on HuffPost:
Columbine Shooting Survivor Fighting Foreclosure With Occupy LA’s Help
Facing foreclosure, Perry Laspina of Jacksonville, Florida ended up with a home practically for free after his mortgage lender was shut down by parent company Wells Fargo, <a href=”http://realestate.aol.com/blog/2011/04/14/foreclosure-foul-up-wins-man-a-free-home/” target=”_hplink”>AOL Real Estate reports</a>. Laspina got the home “because of the significant decreased value of the property,” a bank spokesman said.
BofA Forecloses On Building With Own Branch Office
A senior couple in Pasco County, Florida faced foreclosure not for missing payments, <a href=”http://www.huffingtonpost.com/2011/08/22/senior-florida-couple-faces-foreclosure-mortgage-early_n_933147.html” target=”_hplink”>but for making one too early</a>. According to a Bank of America representative, they made themselves ineligible for a mortgage modification under the Home Affordable Modification Program when they did not make their payment in the “month in which it [was] due.”
Foreclosure In ‘World’s Richest Apartment Building’
Mother, Disabled Daughter Forced Out Of Home Even After BofA Modification
Dirma Rodriguez and her disabled daughter<a href=”https://editorial.huffingtonpost.com/entry/?blog_id=2&entry_id=1423883″ target=”_hplink”> were forced to flee their home in minutes</a> after Bank of America sold it to a flipper at a foreclosure auction, even though the bank had already modified her loan. But not all hope is lost; Rodriguez may get her home back after the Occupy Fights Foreclosure movement intervened.
ProPublica: The Independent Foreclosure Review is the government’s main effort to compensate homeowners for harm they suffered at the hands of banks — and, as…
MODESTO — Nearly 50,000 Northern San Joaquin Valley homeowners potentially may be owed compensation for financial losses they incurred because of errors made during foreclosure…
Although predatory lending has received far more attention than abusive servicing, a significant percentage of consumer complaints over loans involve servicing, not origination. For example, the director of the Nevada Fair Housing Center testified that of the hundreds of complaints of predatory lending issues her office received in 2002, about 42 percent involved servicing once the loan was transferred
Abusive Mortgage Servicing Defined:
Abusive servicing occurs when a servicer, either through action or inaction, obtains or attempts to obtain unwarranted fees or other costs from borrowers, engages in unfair collection practices, or through its own improper behavior or inaction causes borrowers to be more likely to go into default or have their homes foreclosed. Abusive practices should be distinguished from appropriate actions that may harm borrowers, such as a servicer merely collecting appropriate late fees or foreclosing on borrowers who do not make their payments despite proper loss mitigation efforts. Servicing can be abusive either intentionally, when there is intent to obtain unwarranted fees, or negligently, when, for example, a servicer’s records are so disorganized that borrowers are regularly charged late fees even when mortgage payments were made on time.
Abusive servicing often happens to debtors who have filed a Chapter 13 Bankruptcy Plan and are in the process of making payments under the Plan. If you suspect that your mortgage servicer is abusing your relationship by charging unnecessary fees while you are paying off your Chapter 13 Plan, call us. We can help.
There is significant evidence that some Mortgage servicers have engaged in abusive behavior and that borrowers have frequently been the victims. Some servicers have engaged in practices that are not only detrimental to borrowers but also illegal Such abuse has been documented in court opinions and decisions, in the decisions and findings of ratings agencies, in litigation and settlements obtained by government agencies against prominent servicers, in congressional testimony, and in newspaper accounts of borrowers who claim to have been mistreated by servicers. The abusive servicing practices documented in these sources include improper foreclosure or attempted foreclosure, improper fees, improper forced-placed insurance, and improper use or oversight of escrow funds .
Improper foreclosure or attempted foreclosure
Because servicers can exact fees associated with foreclosures, such as attorneys’ fees, some servicers have attempted to foreclose on property even when borrowers are current on their payments or without giving borrowers enough time to repay or otherwise working with them on a repayment plan Furthermore, a speedy foreclosure may save servicers the cost of attempting other techniques that might have prevented the foreclosure.
Some servicers have been so brazen that they have regularly claimed to the courts that borrowers were in default so as to justify foreclosure, even though the borrowers were current on their payments. Other courts have also decried the frequent use of false statements to obtain relief from stay in order to foreclose on borrowers’ homes. For example, in Hart v. GMAC Mortgage Corporation, et al., 246 B.R. 709 (2000), even though the borrower had made the payments required of him by a forbearance agreement he had entered into with the servicer (GMAC Mortgage Corporation), it created a “negative suspense account” for moneys it had paid out, improperly charged the borrower an additional monthly sum to repay the negative suspense account, charged him late fees for failing to make the entire payment demanded, and began foreclosure proceedings.
Improper fees
Claiming that borrowers are in default when they are actually current allows servicers to charge unwarranted fees, either late fees or fees related to default and foreclosure. Servicers receive as a conventional fee a percentage of the total value of the loans they service, typically 25 basis points for prime loans and 50 basis points for subprime loans In addition, contracts typically provide that the servicer, not the trustee or investors, has the right to keep any and all late fees or fees associated with defaults. Servicers charge late fees not only because they act as a prod to coax borrowers into making payments on time, but also because borrowers who fail to make payments impose additional costs on servicers, which must then engage in loss mitigation to induce payment.
Such fees are a crucial part of servicers’ income. For example, one servicer’s CEO reportedly stated that extra fees, such as late fees, appeared to be paying for all of the operating costs of the company’s entire servicing department, leaving the conventional servicing fee almost completely profit The pressure to collect such fees appears to be higher on subprime servicers than on prime servicers:
Because borrowers typically cannot prove the exact date a payment was received, servicers can charge late fees even when they receive the payment on time Improper late fees may also be based on the loss of borrowers’ payments by servicers, their inability to track those payments accurately, or their failure to post payments in a timely fashion. In Ronemus v. FTB Mortgage Services, 201 B.R. 458 (1996), under a Chapter 13 bankruptcy plan, the borrowers had made all of their payments on time except for two; they received permission to pay these two late and paid late fees for the privilege. However, the servicer, FTB Mortgage Services, misapplied their payments, then began placing their payments into a suspense account and collecting unauthorized late fees. The servicer ignored several letters from the borrowers’ attorney attempting to clear up the matter, sent regular demands for late fees, and began harassing the borrowers with collection efforts. When the borrowers sued, the servicer submitted to the court an artificially inflated accounting of how much the borrowers owed.
Some servicers have sent out late notices even when they have received timely payments and even before the end of a borrower’s grace period Worse yet, a servicer might pocket the payment, such as an extra payment of principal, and never credit it to the borrower Late fees on timely payments are a common problem when borrowers are making mortgage payments through a bankruptcy plan
Moreover, some servicers have also added false fees and charges not authorized by law or contract to their monthly payment demands, relying on borrowers’ ignorance of the exact amount owed. They can collect such fees or other unwarranted claims by submitting inaccurate payoff demands when a borrower refinances or sells the house). Or they can place the borrowers’ monthly payments in a suspense account and then charge late fees even though they received the payment Worse yet, some servicers pyramid their late fees, applying a portion of the current payment to a previous late fee and then charging an additional late fee even though the borrower has made a timely and full payment for the new month Pyramiding late fees allows servicers to charge late fees month after month even though the borrower made only one late payment
Servicers can turn their fees into a profit center by sending inaccurate monthly payment demands, demanding unearned fees or charges not owed, or imposing fees higher than the expenses for a panoply of actions For example, some servicers take advantage of borrowers’ ignorance by charging fees, such as prepayment penalties, where the note does not provide for them Servicers have sometimes imposed a uniform set of fees over an entire pool of loans, disregarding the fact that some of the loan documents did not provide for those particular fees. Or they charge more for attorneys’, property inspection, or appraisal fees than were actually incurred. Some servicers may add a fee by conducting unnecessary property inspections, having an agent drive by even when the borrower is not in default, or conducting multiple inspections during a single period of default to charge the resulting multiple fees
The complexity of the terms of many loans makes it difficult for borrowers to discover whether they are being overcharged Moreover, servicers can frustrate any attempts to sort out which fees are genuine.
Improperly forced-placed insurance
Mortgage holders are entitled under the terms of the loan to require borrowers to carry homeowners’ insurance naming the holder as the payee in case of loss and to force-place insurance by buying policies for borrowers who fail to do so and charging them for the premiums However, some servicers have force-placed insurance even in cases where the borrower already had it and even provided evidence of it to the servicer Worse yet, servicers have charged for force-placed insurance without even purchasing it. Premiums for force-placed insurance are often inflated in that they provide protection in excess of what the loan.
Escrow Account Mismanagement
One of the benefits of servicing mortgages is controlling escrow accounts to pay for insurance, taxes, and the like and, in most states, keeping any interest earned on these accounts Borrowers have complained that servicers have failed to make tax or insurance payments when they were due or at all. The treasurer of the country’s second largest county estimated that this failure to make timely payments cost borrowers late fees of at least $2 million in that county over a two-year span, causing some to lose their homes. If servicers fail to make insurance payments and a policy lapses, borrowers may face much higher insurance costs even if they purchase their own, non-force-placed policy. Worse yet, borrowers may find themselves unable to buy insurance at all if they cannot find a new insurer willing to write them a policy
You can make a claim for mortgage service abuse, and often the court will award actual and punitive damages. If you think you have been a victim of mortgage service abuse, contact us. We can help you make a claim.
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.
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.
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).
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.
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.
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.
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.
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
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.
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.”
Exhibits
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.
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:
There are many bright Real Estate Attorneys out there. Likewise, there are many bright Bankruptcy Attorneys out there. But I don’t think there are that many bright Bankruptcy Real Estate Attorneys out there. And the few that do exist…..well, I don’t think they worked for the Mortgage Companies. Why? Well if they did, the transfer of loans would not have existed the way that it did for the past several years.
Lately, the big news in foreclosures has been the Ohio cases where Judge Boyko dismissed 14 foreclosures on October 31, 2007, and his Colleague, Judge Kathleen O’Malley of the same court, followed suite ordering another 32 dismissals on November 14, 2007. But that’s only the beginning. It gets worse.
Add a bankruptcy filing to the mix and it’s like adding gas to the fire and recipe for disaster. The reason is a little bankruptcy code section called 11 USC 544. Basically, that section allows a Trustee appointed by the Bankruptcy Court to avoid non-perfected liens.Non-perfected liens are liens that exist, but are not fully noticed to everyone, sort of like secret liens. It’s like if someone loans you $50,000 and takes a lien out on your house, but never records their lien with the county recorder. If that house sells, the lien is not paid since escrow was not aware of it. Had it been recorded by a “deed of trust” or “mortgage,” the Title Company and Escrow Company would not have closed once they saw it, unless it was paid.
Because of all the crazy real estate financing, securitization, and reselling of all the mortgages, sort of the same thing has happened with all the mortgages and trust deeds, but on a much larger scale. Normally, most states require that when a mortgage or real estate loan is sold or transferred to another lender, certain things must happen to maintain perfection, that is, in order to make sure that lien gets paid at a later date. Generally, the purchaser of the Mortgage has it recorded at the County Recorders Office. This is usually done thru a recorded assignment of the underlying note and mortgage or a new Mortgage being recorded and transfer of the Note. The Note is the most important part of any Mortgage or Deed of Trust. The Mortgage or Deed of Trust is useless without the Note, and usually can not exist without it. It’s a negotiable instrument, just like a check. So when it’s transferred, it needs to be endorsed, just like a check. So essentially, all real estate has documents recorded to evidence the lien, and which are linked to the “checks.” Well, this is where the problem lies.
In most of the Mortgage Transfers which took place recently, the Mortgage or Deed of Trust was transferred, but not the Note. Whoops! Why? It was just too expensive to track down every note for every mortgage since they were all bundled up together and sold in large trusts, then resold, resold, etc. Imagine trying to find 1 note among thousands, which were sold in different trust pools over time. Pretty hard to do! So shortcuts happened. Soon enough, shortcuts were accepted and since there were very little foreclosure activity during the last 7 year real estate bubble, no one really noticed in the few foreclosures that took place. Until recently. That’s where the Ohio cases come in. Times have now changed. That little shortcut stopped the foreclosures in Ohio since the most basic element of any lawsuit is that the party bringing the lawsuit is the “real party in interest.” That is, they are the aggrieved party, injured party, relief seeking party. So in Ohio, the Judge dismissed all the cases since they did not possess the Notes or Assignments on the date of filing, and technically were not the real party in interest to file the suit at the time.But that maybe only a temporary problem until they find the note or assignment. At that point, they will probably just file the foreclosure lawsuit again. So it’s just a delay.
But the bigger problem exists in Bankruptcy. You see, once a Bankruptcy Case is filed, the Automatic Stay goes into effect. Everything is frozen. Mistakes can no longer be corrected. And if the lender did not have the note or recorded assignment when the bankruptcy case was filed, it was an “unperfected lien” at the time of filing. Unperfected liens get removed in Bankruptcy. So finding the note or recording an assignment after filing will no longer fix the problem! Finding the note or or recording an assignment is now simply too late and futile. That $12 shortcut may now have cost the lender a $500,000 mortgage!The Bankruptcy Trustee now is in charge, puts his 11 USC 544 hat on, and voila, removes the mortgage! Yes, that house that once had no equity worth $450,000 with $500,000 owed on it, is now FREE AND CLEAR! He sells it, and disburses all the proceeds to the creditors.
Scott Pelley reports how problems with mortgage documents are prompting lawsuits and could slow down the weak housing market
Play CBS Video Video The next housing shockAs more and more Americans face mortgage foreclosure, banks’ crucial ownership documents for the properties are often unclear and are sometimes even bogus, a condition that’s causing lawsuits and hampering an already weak housing market. Scott Pelley reports.
Video Extra: Eviction reprieveFlorida residents AJ and Brenda Boyd spent more than a year trying to renegotiate their mortgage and save their home. At the last moment, questions about who owns their mortgage saved them from eviction.
Video Extra: “Save the Dream” eventsBruce Marks, founder and CEO of the nonprofit Neighborhood Assistance Corporation of America talks to Scott Pelley about his “Save the Dream” events and how foreclosures are causing a crisis in America.
(CBS News)If there was a question about whether we’re headed for a second housing shock, that was settled last week with news that home prices have fallen a sixth consecutive month. Values are nearly back to levels of the Great Recession. One thing weighing on the economy is the huge number of foreclosed houses.Many are stuck on the market for a reason you wouldn’t expect: banks can’t find the ownership documents.Who really owns your mortgage? Scott Pelley explains a bizarre aftershock of the U.S. financial collapse: An epidemic of forged and missing mortgage documents.
It’s bizarre but, it turns out, Wall Street cut corners when it created those mortgage-backed investments that triggered the financial collapse. Now that banks want to evict people, they’re unwinding these exotic investments to find, that often, the legal documents behind the mortgages aren’t there. Caught in a jam of their own making, some companies appear to be resorting to forgery and phony paperwork to throw people – down on their luck – out of their homes.
In the 1930s we had breadlines; venture out before dawn in America today and you’ll find mortgage lines. This past January in Los Angeles, 37,000 homeowners facing foreclosure showed up to an event to beg their bank for lower payments on their mortgage. Some people even slept on the sidewalk to get in line.
So many in the country are desperate now that they have to meet in convention centers coast to coast.
In February in Miami, 12,000 people showed up to a similar event. The line went down the block and doubled back twice.
Dale DeFreitas lost her job and now fears her home is next. “It’s very emotional because I just think about it. I don’t wanna lose my home. I really don’t,” she told “60 Minutes” correspondent Scott Pelley.
“It’s your American dream,” he remarked.
“It was. And still is,” she replied.
These convention center events are put on by the non-profit Neighborhood Assistance Corporation of America, which helps people figure what they can afford, and then walks them across the hall to bank representatives to ask for lower payments. More than half will get their mortgages adjusted, but the rest discover that they just can’t keep their home.
For many that’s when the real surprise comes in: these same banks have fouled up all of their own paperwork to a historic degree.
“In my mind this is an absolute, intentional fraud,” Lynn Szymoniak, who is fighting foreclosure, told Pelley.
While trying to save her house, she discovered something we did not know: back when Wall Street was using algorithms and computers to engineer those disastrous mortgage-backed securities, it appears they didn’t want old fashioned paperwork slowing down the profits.
“This was back when it was a white hot fevered pitch to move as many of these as possible,” Pelley remarked.
“Exactly. When you could make a whole lotta money through securitization. And every other aspect of it could be done electronically, you know, key strokes. This was the only piece where somebody was supposed to actually go get documents, transfer the documents from one entity to the other. And it looks very much like they just eliminated that stuff all together,” Szymoniak said.
Szymoniak’s mortgage had been bundled with thousands of others into one of those Wall Street securities traded from investor to investor. When the bank took her to court, it first said it had lost her documents, including the critical assignment of mortgage which transfers ownership. But then, there was a courthouse surprise.
“They found all of your paperwork more than a year after they initially said that they had lost it?” Pelley asked.
“Yes,” she replied.
Asked if that seemed suspicious to her, Szymoniak said, “Yes, absolutely. What do you imagine? It fell behind the file cabinet? Where was all of this? ‘We had it, we own it, we lost it.’ And then more recently, everyone is coming in saying, ‘Hey we found it. Isn’t that wonderful?’”
But what the bank may not have known is that Szymoniak is a lawyer and fraud investigator with a specialty in forged documents. She has trained FBI agents.
She told Pelley she asked for copies of those documents.
Asked what she found, Szymoniak told Pelley, “When I looked at the assignment of my mortgage, and this is the assignment: it looked that even the date they put in, which was 10/17/08, was several months after they sued me for foreclosure. So, what they were saying to the court was, ‘We sued her in July of 2008 and we acquired this mortgage in October of 2008.’ It made absolutely no sense.”
Produced by Robert Anderson and Daniel Ruetenik
Now for the pleading
Timothy L. McCandless, Esq. SBN 147715
LAW OFFICES OF TIMOTHY L. MCCANDLESS
1881 Business Center Drive, Ste. 9A
San Bernardino, CA 92392
Tel: 909/890-9192
Fax: 909/382-9956
Attorney for Plaintiffs
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF ____________
___________________________________,And ROES 1 through 5,000,
Plaintiff,
v.
SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION; AMERICAN HOME MORTGAGE SERVICES, INC.; WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2; DOCX, LLC; and PREMIER TRUST DEED SERVICES and all persons unknown claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to Plaintiff’s title, or any cloud on Plaintiff’s title thereto, Does 1 through 10, Inclusive,
Defendants.
CASE NO:FIRST AMENDED COMPLAINT
FOR QUIET TITLE, DECLARATORY RELIEF, TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNTION AND PERMANENT INJUNCTION, CANCELATION OF INSTRUMENT AND FOR DAMAGES ARISING FROM:
SLANDER OF TITLE; TORTUOUS
VIOLATION OF STATUTE [Penal
Code § 470(b) – (d); NOTARY FRAUD;
///
///
///
///
Plaintiffs ___________________________ allege herein as follows:
GENERAL ALLEGATIONS
1. Plaintiffs ___________ (hereinafter individually and collectively referred to as “___________”), were and at all times herein mentioned are, residents of the County of _________, State of California and the lawful owner of a parcel of real property commonly known as: _________________, California _______ and the legal description is:
2. At all times herein mentioned, SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION (hereinafter SAND CANYON”), is and was, a corporation existing by virtue of the laws of the State of California and claims an interest adverse to the right, title and interests of Plaintiff in the Subject Property.
3. At all times herein mentioned, Defendant AMERICAN HOME MORTGAGE SERVICES, INC. (hereinafter “AMERICAN”), is and was, a corporation existing by virtue of the laws of the State of Delaware, and at all times herein mentioned was conducting ongoing business in the State of California.
4. At all times herein mentioned, Defendant WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2 (hereinafter referred to as “WELLS FARGO”), is and was, a member of the National Banking Association and makes an adverse claim to the Plaintiff MADRIDS’ right, title and interest in the Subject Property.
5. At all times herein mentioned, Defendant DOCX, L.L.C. (hereinafter “DOCX”), is and was, a limited liability company existing by virtue of the laws of the State of Georgia, and a subsidiary of Lender Processing Services, Inc., a Delaware corporation.
6. At all times herein mentioned, __________________, was a company existing by virtue of its relationship as a subsidiary of __________________.
7. Plaintiffs are ignorant of the true names and capacities of Defendants sued herein as DOES I through 10, inclusive, and therefore sues these Defendants by such fictitious names and all persons unknown claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to Plaintiffs’ title, or any cloud on Plaintiffs’ title thereto. Plaintiffs will amend this complaint as required to allege said Doe Defendants’ true names and capacities when such have been fully ascertained. Plaintiffs further allege that Plaintiffs designated as ROES 1 through 5,000, are Plaintiffs who share a commonality with the same Defendants, and as the Plaintiffs listed herein.
8. Plaintiffs are informed and believe and thereon allege that at all times herein mentioned, Defendants, and each of them, were the agent and employee of each of the remaining Defendants.
9. Plaintiffs allege that each and every defendants, and each of them, allege herein ratified the conduct of each and every other Defendant.
10. Plaintiffs allege that at all times said Defendants, and each of them, were acting within the purpose and scope of such agency and employment.
11. Plaintiffs are informed and believe and thereupon allege that circa July 2004, DOCX was formed with the specific intent of manufacturing fraudulent documents in order create the false impression that various entities obtained valid, recordable interests in real
properties, when in fact they actually maintained no lawful interest in said properties.
12. Plaintiffs are informed and believe and thereupon allege that as a regular and ongoing part of the business of Defendant DOCX was to have persons sitting around a table signing names as quickly as possible, so that each person executing documents would sign approximately 2,500 documents per day. Although the persons signing the documents claimed to be a vice president of a particular bank of that document, in fact, the party signing the name was not the person named on the document, as such the signature was a forgery, that the name of the person claiming to be a vice president of a particular financial institution was not a “vice president”, did not have any prior training in finance, never worked for the company they allegedly purported to be a vice president of, and were alleged to be a vice president simultaneously with as many as twenty different banks and/or lending institutions.
13. Plaintiffs are informed and believe and thereupon allege that the actual signatories of the instruments set forth in Paragraph 12 herein, were intended to and were fraudulently notarized by a variety of notaries in the offices of DOCX in Alpharetta, GA.
14. Plaintiffs are informed and believe and thereupon allege that for all purposes the intent of Defendant DOCX was to intentionally create fraudulent documents, with forged signatures, so that said documents could be recorded in the Offices of County Recorders through the United States of America, knowing that such documents would forgeries, contained false information, and that the recordation of such documents would affect an interest in real property in violation of law.
15. Plaintiffs allege that on or about, ____________, that they conveyed a first deed of trust (hereinafter “DEED”) in favor of Option One Mortgage, Inc. with an interest of
If you are considering suing to reverse a foreclosure sale, consider the LONA case for a better understanding on CA non-judicial sales and exceptions to the requirement that you must offer to pay off the loan to title to your home back in your name.
After a nonjudicial foreclosure sale has been completed, the traditional method by which the sale is challenged is a suit in equity to set aside the trustee’s sale. (Anderson v. Heart Federal Sav. & Loan Assn. (1989) 208 Cal.App.3d 202, 209-210.) Generally, a challenge to the validity of a trustee’s sale is an attempt to have the sale set aside and to have the title restored. (Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424 (Onofrio), citing 4 Miller & Starr, Cal. Real Estate (2d ed. 1989) Deeds of Trusts & Mortgages, § 9.154, pp. 507-508.)
The burden of proof is on the former owner:
A nonjudicial foreclosure sale is accompanied by a common law presumption that it ‗was conducted regularly and fairly. This presumption may only be rebutted by substantial evidence of prejudicial procedural irregularity. The mere inadequacy of price, absent some procedural irregularity that contributed to the inadequacy of price or otherwise injured the trustor, is insufficient to set aside a nonjudicial foreclosure sale.
It is the burden of the party challenging the trustee’s sale to prove such irregularity and thereby overcome the presumption of the sale’s regularity.‖ (Melendrez v. D & I Investment, Inc. (2005) 127 Cal. App.4th 1238, 1258 (Melendrez) In addition, under section 2924,6 there is a conclusive statutory presumption created in favor of a bona fide purchaser who receives a trustee’s deed that contains a recital that the trustee has fulfilled its statutory notice requirements. (Melendrez, supra, 127 Cal App.4th at p. 1250.)
Case law instructs that the elements of an equitable cause of action to set aside a foreclosure sale are: (1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust;
(2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and
(3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering. (Bank of America etc. Assn. v. Reidy, supra, 15 Cal.2d at p. 248; Saterstrom v. Glick Bros. Sash, Door & Mill Co. (1931) 118 Cal.App. 379, 383 (Saterstrom) [trustee’s sale set aside where deed of trust was void because it failed to adequately describe property]; Stockton v. Newman (1957) 148 Cal.App.2d 558, 564 (Stockton) [trustor sought rescission of the contract to purchase the property and the promissory note on grounds of fraud]; Sierra-Bay Fed. Land Bank Ass’n v. Superior Court (1991) 227 Cal.App.3d (1991) 227 Cal.App.3d 318, 337 (Sierra-Bay) [to set aside sale, ―debtor must allege such unfairness or irregularity that, when coupled with the inadequacy of price obtained at the sale, it is appropriate to invalidate the sale‖; ―debtor must offer to do equity by making a tender or otherwise offering to pay his debt‖]; Abadallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109 (Abadallah) [tender element]; Munger v. Moore (1970) 11 Cal.App.3d 1, 7 [damages action for wrongful foreclosure]; see also 1 Bernhardt, Mortgages, Deeds of Trust and Foreclosure Litigation (Cont.Ed.Bar 4th ed. 2011 supp.) § 7.67, pp. 580-581 and cases cited therein summarizing grounds for setting aside trustee sale.)
The Tender requirement
Because the action is in equity, a defaulted borrower who seeks to set aside a trustee’s sale is required to do equity before the court will exercise its equitable powers. (MCA, Inc. v. Universal Diversified Enterprises Corp. (1972) 27 Cal.App.3d 170, 177 (MCA).)
Consequently, as a condition precedent to an action by the borrower to set aside the trustee’s sale on the ground that the sale is voidable because of irregularities in the sale notice or procedure, the borrower must offer to pay the full amount of the debt for which the property was security. (Abadallah, supra, 43 Cal.App.4th at p. 1109; Onofrio, supra, at p. 424 [the borrower must pay, or offer to pay, the secured debt, or at least all of the delinquencies and costs due for redemption, before commencing the action].)
The rationale behind the rule is that if [the borrower] could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the [borrower].– (FPCI RE-HAB 01 v. E & G Investments, Ltd. (1989) 207 Cal.App.3d 1018, 1022.)
A series of cases have come down in the last few weeks that have some very serious ramifications for lenders.
The most dramatic case is that of Lona v. Citibank, based on a property right here in my back yard. The fact pattern in Lona is that the bank foreclosed and Lona sued the bank to void the sale on the absurd theory that the lender made him an unconscionableloan he couldn’t possibly afford therefore the loan was void. (Apparently, he’s a mushroom farmer in Hollister making $40k/yr)*.
Lona alleged that he agreed to refinance the home, on which he owed $1.24 million at the time, in response to an ad. The monthly payments were more than four times his income, so unsurprisingly, he defaulted within five months and the home was sold at a trustee’s sale in August 2008.
Lona obtained two re-financed loans: the first being $1.125 million, a 30-year term and an interest rate that was fixed at 8.25% for five years and adjustable annually after that, with a cap of 13.255 and the second loan being $375,000, with a term of 15 years, a fixed rate of 12.25%, monthly payments of nearly $4,000, and a balloon payment of $327,000 at the end of the 15 year term.
Lona testified that English was not his first language, he was 50 years old at the time of the loan and he that he did not understand the loan documents. Of course, he also did not read the loan documents.
After Citibank foreclosed, it filed an unlawful detainer action (“UD”) to evict Lona, but the UD was consolidated with Lona’s lawsuit to void and set aside the foreclosure sale. According to Citibank, Lona had been “living for free” in the house and had not posted bond or paid any “impound funds.” (since 2007!!!)
San Benito County Superior Court Judge Harry Tobias said Lona’s “bare allegations” were not enough to persuade him that the bank or the broker had engaged in misconduct and that it was “hard to believe” that the Lonas weren’t “responsible for their own conduct,” especially since they owned other property that had been foreclosed upon.
Despite the craziness of Plaintiff’s theory, the appellate court rendered a 32 page opinion that discussed in major detail that:
1) The borrower did not have to tender offer (which goes against almost a century of a legal precedent); and
2) The borrower’s allegations of the loan being unconscionable were not wholly disproven by the lenders.
The Court decision stated “Lona had received $1.5 million from the lenders and had not made any payments since June 2007. Meanwhile, he and his wife continued to live in the house for free, without paying rent or any impound funds…” and so it was quite aware of the inequities or injustice of the situation. However, the Court still concluded that the Lenders did not meet their burden of proof on summary judgment and so the case may continue at its snail pace until trial. [Lona v. Citibank No. H036140. Court of Appeals of California, Sixth District. (December 21, 2011.)]
The other case that came down a week before Lona (Dec. 21) was the Bardasian (Dec. 15) case, where the borrower sued because the lender’s trustee did not discuss loan mod options with her as required by Civil Code Section 2923.5. The court granted the borrower’s injunction and like Lona, the borrowers did not tender, nor put up an undertaking or surety for the bond. The lower court had ruled at the injunction hearing that the trustee had not complied with the code and that Bardasian must bond in the amount of $20k. When she failed to do so, the lower court dissolved the injunction.
On appeal, the appellate court concluded that since the injunction had been issued after the court had ruled on the merits stating:
“Plaintiff seeks postponement of the foreclosure sale until the defendants comply with Civil Code [section] 2923.5. Plaintiff has established that BAC Home Loan Servicing did not comply with Civil Code section 2923.5 prior to the issuance of the notice of default on September 15, 2010.” “Plaintiff states under penalty of perjury that no contact was ever made at least 30 days before the notice of default was issued…”
that the injunction was not actually “preliminary” at all, but that the plaintiffs had essentially won their argument showing that the defendants had not complied with Section 2923.5 and so no Notice of Default could successfully issue and the trustee’s sale could not take place until Section 2923.5 had been complied with. (Bardasian v. Santa Clara Partners Mortgage C068488. Court of Appeals of California, Third District. (December 15, 2011).
So in one month, two appellate cases came down where the borrower could either pursue voiding a trustee’s sale or enjoin one without tendering!
2012 will prove to be an interesting year as more decisions stemming from the subprime meltdown start coming down the pipeline.
* The decision contained a footnote that Lona’s loan application that apparently stated Lona made $20k/month, or $240k/yr. Clearly, as stated income loans go, that was a whopper!
The Exceptions to the Tender requirement under LONA
First, if the borrower’s action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. (Stockton, supra,(1957) 148 Cal.App.2d at p. 564) [trustor sought rescission of the contract to purchase the property and the promissory note on grounds of fraud]; Onofrio, supra, 55 Cal.App.4th at p. 424.)
Second, a tender will not be required when the person who seeks to set aside the trustee’s sale has a counter-claim or set-off against the beneficiary. In such cases, it is deemed that the tender and the counter claim offset one another, and if the offset is equal to or greater than the amount due, a tender is not required. (Hauger, supra, (1954) 42 Cal.2d at p. 755.)
Third, a tender may not be required where it would be inequitable to impose such a condition on the party challenging the sale. (Humboldt Savings Bank v. McCleverty (1911) 161 Cal. 285, 291 (Humboldt). In Humboldt, the defendant’s deceased husband borrowed $55,300 from the plaintiff bank secured by two pieces of property. The defendant had a $5,000 homestead on one of the properties. (Id. at p. 287.) When the defendant’s husband defaulted on the debt, the bank foreclosed on both properties. In response to the bank’s argument that the defendant had to tender the entire debt as a condition precedent to having the sale set aside, the court held that it would be inequitable to require the defendant to•pay, or offer to pay, a debt of $57,000, for which she is in no way liable– to attack the sale of her $5,000 homestead.10 (Id. at p. 291.)
Fourth, no tender will be required when the trustor is not required to rely on equity to attack the deed because the trustee’s deed is void on its face. (Dimock, supra, 81 Cal.App.4th at p. 878 [beneficiary substituted trustees; trustee’s sale void where original trustee completed trustee’s sale after being replaced by new trustee because original trustee no longer had power to convey property].)
For a better understanding of how this new case affects your individual situation, contact the Firm and set up an appointment.
Lona v. Citibank Docket
Cal.App. 6th Dist (H036140) 12/21/11TRUSTEE‘S SALES: The court reversed a summary judgment in favor of defendants in an action seeking to set aside a trustee’s sale on the basis that the loan was unconscionable. The court held that summary judgment was improper for two reasons:
1. The homeowner presented sufficient evidence of triable issues of material fact regarding unconscionability. Plaintiff asserted that the loan broker ignored his inability to repay the loan (monthly loan payments were four times his monthly income) and, as a person with limited English fluency, little education, and modest income, he did not understand many of the details of the transaction which was conducted entirely in English.
2. Plaintiff did not tender payment of the debt, which is normally a condition precedent to an action by the borrower to set aside the trustee’s sale, but defendants’ motion for summary judgment did not address the exceptions to this rule that defendant relied upon.
The case contains a good discussion of four exceptions to the tender requirement: 1. If the borrower’s action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. 2. A tender will not be required when the person who seeks to set aside the trustee’s sale has a counter-claim or set-off against the beneficiary. 3. A tender may not be required where it would be inequitable to impose such a condition on the party challenging the sale. 4. No tender will be required when the trustor is not required to rely on equity to attack the deed because the trustee’s deed is void on its face.Pioneer Construction v. Global Investment Corp. Docket
Cal.App. 2nd Dist. (B225685) 12/21/11MECHANICS LIENS: The court held that:
1. A mechanics lien claimant who provided labor and materials prepetition to a debtor in bankruptcy can record a mechanics lien after the property owner files for bankruptcy without violating the automatic stay. (11 U.S.C. §362(b)(3).)
2. A mechanics lienor must, and defendant did, file a notice of lien in the debtor’s bankruptcy proceedings to inform the debtor and creditors of its intention to enforce the lien. (11 U.S.C. §546(b)(2).)
3. The 90-day period to file an action after recording a mechanics lien is tolled during the pendency of the property owner’s bankruptcy. Accordingly, an action to enforce the lien was timely when filed 79 days after a trustee’s sale by a lender who obtained relief from the automatic stay. (The property ceased to be property of the estate upon completion of the trustee’s sale.)Harbour Vista v. HSBC Mortgage Services Docket
Cal.App. 4th Dist., Div. 3 (G044357) 12/19/11QUIET TITLE: Code of Civil Procedure Section 764.010 states that “[t]he court shall not enter judgment by default. . .” The court held that, while default may be entered, Section 764.010 requires that before issuing a default judgment the trial court must hold an evidentiary hearing in open court, and that a defendant is entitled to participate in the hearing even when it has not yet answered the complaint and is in default. Normally, a defendant has no right to participate in the case after its default has been entered.Park v. First American Title Insurance Company Docket
Cal.App. 4th Dist., Div. 3 (G044118) 11/23/11 (Pub. Order 12/16/11)TRUSTEE’S SALES: A trustee’s sale was delayed due to defendant’s error in preparing the deed of trust. However, the court held that plaintiff could not establish damages because she could not prove that a potential buyer was ready, willing and able to purchase the property when the trustee’s sale was originally scheduled. Such proof would require showing that a prospective buyer made an offer, entered into a contract of sale, obtained a cashier’s check, or took any equivalent step that would have demonstrated she was ready, willing, and able to purchase plaintiff’s property. Also, plaintiff would need to show that the prospective buyer was financially able to purchase the property, such as by showing that the prospective buyer had obtained financing for the sale, preapproval for a loan or had sufficient funds to purchase the property with cash.Bardasian v. Superior Court Docket
Cal.App. 3rd Dist. (C068488) 12/15/11TRUSTEE’S SALES: Civil Code Section 2923.5 requires that before a notice of default can be filed, a lender must attempt to contact the borrower and explore options to prevent foreclosure. Where the trial court ruled on the merits that a lender failed to comply with Section 2923.5, it was proper to enjoin the sale pending compliance with that section, but it was not proper to require plaintiff to post a bond and make rent payments. Also, discussions in connection with a loan modification three years previously did not constitute compliance with the code section.Lang v. Roche Docket
Cal.App. 2nd Dist. (B222885) 11/29/11SHERIFF’S SALES: Plaintiff sought to set aside a Sheriff’s sale arising from the execution on a judgment rendered in another action. Defendant had obtained that judgment by default after service by publication even though plaintiff was defendant’s next door neighbor and could easily be found. The court set the sale aside, holding that even though C.C.P. 701.780 provides that an execution sale is absolute and cannot be set aside, that statute does not eliminate plaintiff’s right of equitable redemption where the judgment is void due to lack of personal jurisdiction.Promenade at Playa Vista HOA v. Western Pacific Housing Docket
Cal.App. 2nd Dist. (B225086) 11/8/11CC&R’S: In a construction defect action brought by a condominium homeowners association, the court held that a developer cannot compel binding arbitration of the litigation pursuant to an arbitration provision in the Declaration of Covenants, Conditions, and Restrictions. CC&R’s are not a contract between the developer and the homeowners association. Instead, the provisions in the CC&R’s are equitable servitudes and can be enforced only by the homeowners association or the owner of a condominium, not by a developer who has sold all the units.Alpha and Omega Development v. Whillock Contracting Docket
Cal.App. 4th Dist., Div. 1 (D058445) 11/2/11LIS PENDENS: This is a slander of title and malicious prosecution action brought after defendant’s unsuccessful action to foreclose a mechanics lien. Plaintiff’s slander of title allegation is based on defendant’s recordation of a lis pendens in the prior mechanics lien action. The appellate court upheld the trial court’s granting of defendant’s anti-SLAPP motion and striking the slander of title cause of action, because recording a lis pendens is privileged under Civil Code Section 47(b)(4).Biancalana v. T.D. Service Company Docket Sup.Ct. Docket
Cal.App. 6th Dist. (H035400) 10/31/11 Petition for review by Cal Supreme Ct. filed 12/9/11TRUSTEE’S SALES: Inadequacy of the sale price is not a sufficient ground for setting aside a trustee’s sale of real property in the absence of any procedural errors. The unpaid balance of the loan secured by the subject deed of trust was $219,105. The trustee erroneously told the auctioneer to credit bid the delinquency amount ($21,894.17). Plaintiff was the successful bidder with a bid of $21,896. The court refused to set aside the sale because there were no procedural errors and the mistake was within the discretion and control of the trustee, who was acting as agent for the lender. The court distinguished Millennium Rock Mortgage, Inc. v. T.D. Service Co. because here the mistake was made by defendant in the course and scope of its duty as the beneficiary’s agent, not by the auctioneer as in Millennium Rock.
The case also contains a discussion of the rule that once the trustee’s deed has been delivered, a rebuttable presumption arises that the foreclosure sale has been conducted regularly and properly. But where the deed has not been transferred, the sale may be challenged on the grounds of procedural irregularity.First Bank v. East West Bank Docket
Cal.App. 2nd Dist. (B226061) 10/17/11 Case complete 12/19/11RECORDING: Where two deeds of trust secured by the same real property were simultaneously time-stamped for recording by the County Recorder’s Office but were indexed at different times, the lenders have equal priority. The recording laws protect subsequent purchasers and neither bank was a subsequent purchaser. The court acknowledged that a subsequent purchaser (or lender) who records his interest before the prior interest is indexed has priority, but this rule does not apply when both deeds of trust were recorded simultaneously.Dollinger DeAnza Assoc. v. Chicago Title Insurance CompanyDocket Sup.Ct. Docket
Cal.App. 6th Dist. (H035576) 9/9/11 (Pub. Order 10/6/11 Request for depublication filed 11/4/11TITLE INSURANCE: Plaintiff’s title insurance policy, which was issued in 2004, insured property that originally consisted of seven parcels, but which had been merged into a single parcel pursuant to a Notice of Merger recorded by the City of Cupertino in 1984. The policy did not except the Notice of Merger from coverage. Plaintiff filed this action after Chicago Title denied its claim for damages alleged to result from the inability to sell one of the parcels separately. The court ruled in favor of Chicago, holding:
1. While the notice of merger may impact Plaintiff’s ability to market the separate parcel, it has no affect on Plaintiff’s title to that parcel, so it does not constitute a defect in title. It does not represent a third person’s claim to an interest in the property.
2. Chicago is not barred by principals of waiver or estoppel from denying plaintiff’s claim, after initially accepting the claim, because 1) waiver only applies to insurers that do not reserve rights when accepting a tender of defense and 2) plaintiff failed to show detrimental reliance, which is one of the elements of estoppel.
3. Plaintiff’s claim for breach of the implied covenant of good faith and fair dealing cannot be maintained where benefits are not due under plaintiff’s insurance policy.
4. Since the court held that the Notice of Merger was not a defect in title, it did not need to consider Chicago’s contention that the Notice of Merger was void because the County Recorder indexed it under the name of the City, rather than the name of the property owner. [Ed. note: This case must have dealt with an ALTA 1992 policy. The ALTA 2006 policy made changes to the Covered Risks.]Sukut Construction v. Rimrock CA Docket Sup.Ct. Docket
Cal.App. 4th Dist., Div. 1 (D057774) 9/30/11 Petition for review by Cal Supreme Ct. DENIED 12/14/11MECHANICS LIENS: Plaintiff could not establish a mining lien under Civil Code Section 3060 for removing rocks from a quarry because a quarry is not a mine and the rocks were not minerals. The court did not address whether plaintiff could establish a regular mechanics lien because it held that plaintiff was judicially estopped from asserting that position after leading defendant to believe that it was asserting only a mining claim.UNPUBLISHED: First American Title Insurance Company v. Ordin Docket
Cal.App. 2nd Dist. (B226671) 9/14/11 Case complete 11/17/11TITLE INSURANCE: An arbitrator found that defendants did not lose coverage under their title policy when they conveyed title to their wholly owned corporation, then to themselves as trustees of their family trust and finally to a wholly owned limited liability company. This conflicts with the holding in Kwok v. Transnation Title Insurance Company and this could have been an interesting case, except that whether the ruling was right or wrong was not before the court. The court held only that the arbitrator’s award could not be overturned, even if the the law was applied incorrectly, because there was no misconduct by the arbitrator.Calvo v. HSBC Bank Docket Sup.Ct. Docket
199 Cal.App.4th 118 – 2nd Dist. (B226494) 9/13/11 Petition for review by Cal Supreme Ct. filed 10/25/11TRUSTEE’S SALES: Notice of the assignment of a deed of trust appeared only in the substitution of trustee, which was recorded on the same date as the notice of trustee’s sale, and which stated that MERS, as nominee for the assignee lender, was the present beneficiary. Plaintiff sought to set aside the trustee’s sale for an alleged violation of Civil Code section 2932.5, which requires the assignee of a mortgagee to record an assignment before exercising a power to sell real property. The court held that the lender did not violate section 2932.5 because that statute does not apply when the power of sale is conferred in a deed of trust rather than a mortgage.Robinson v. Countrywide Home Loans Docket
199 Cal.App.4th 42 – 4th Dist., Div. 2 (E052011) 9/12/11 Case complete 11/15/11TRUSTEE’S SALES: The trial court properly sustained defendant lender’s demurrer without leave to amend because 1) the statutory scheme does not provide for a preemptive suit challenging MERS authority to initiate a foreclosure and 2) even if such a statutory claim were cognizable, the complaint did not allege facts sufficient to challenge the trustee’s authority to initiate a foreclosure.Hacienda Ranch Homes v. Superior Court (Elissagaray) Docket
198 Cal.App.4th 1122 – 3rd Dist. (C065978) 8/30/11 Case complete 11/1/11ADVERSE POSSESSION: Plaintiffs (real parties in interest) acquired a 24.5% interest in the subject property at a tax sale. The court rejected plaintiffs’ claim of adverse possession under both 1) “color of title” because the tax deed by which they acquired their interest clearly conveyed only a 24.5% interest instead of a 100% interest, and 2) “claim of right” because plaintiffs’ claims of posting for-sale signs and clearing weeds 2 or 3 times a year did not satisfy the requirement of protecting the property with a substantial enclosure or cultivating or improving the property, as required by Code of Civil Procedure Section 325. The court also pointed out that obtaining adverse possession against cotenants requires evidence much stronger than that which would be required against a stranger, and plaintiffs failed to establish such evidence in this case.Gramercy Investment Trust v. Lakemont Homes Nevada, Inc. Docket
198 Cal.App.4th 903 – 4th Dist., Div. 2 (E051384) 8/24/11 Case complete 10/27/11ANTIDEFICIENCY: After a judicial foreclosure, the lender obtained a deficiency judgment against a guarantor. The court held that the choice of law provision designating the law of New York was unenforceable because there were insufficient contacts with New York. California is where the contract was executed, the debt was created and guaranteed, the default occurred and the real property is located. Also, Nevada law does not apply, even though the guarantor was a Nevada corporation, because Nevada had no connection with the transaction. The court also held that the guarantor was not entitled to the protection of California’s antideficiency statutes because the guaranty specifically waived rights under those statutes in accordance with Civil Code Section 2856.Hill v. San Jose Family Housing PartnersDocket
198 Cal.App.4th 764 – 6th Dist. (H034931) 8/23/11 Case complete 10/25/11EASEMENTS: Plaintiff, who had entered into an easement agreement with defendant’s predecessor to maintain a billboard on a portion of defendant’s property, filed an action to prevent defendant from constructing a multi-unit building that would allegedly block the view of the billboard. Defendant asserted that the easement was unenforceable because it violated city and county building codes. The court held:
1. The easement was enforceable because the property’s use for advertising purposes is not illegal in and of itself. Although the instrumentality of that use, i.e., the billboard, may be illegal, that is not a bar to the enforcement of the agreement.
2. The easement agreement did not specifically state that it included the right to view the billboard from the street, but the parties necessarily intended the easement to include that right since viewing the billboard by passing traffic is the purpose of the easement.
3. Nevertheless, the trial court improperly denied a motion for a retrial to re-determine damages based on new evidence that the city had instituted administrative proceedings to have the billboard removed. The award of damages was based on plaintiff’s expected revenue from the billboard until 2037, and such damages will be overstated if the city forces plaintiff to remove the billboard.Fontenot v. Wells Fargo Bank Docket Sup.Ct. Docket
198 Cal.App.4th 256 – 1st Dist. (A130478) 8/11/11 Depublication request DENIED 11/30/11FORECLOSURE / MERS: Plaintiff alleged a foreclosure was unlawful because MERS made an invalid assignment of an interest in the promissory note and because the lender had breached an agreement to forbear from foreclosure. The appellate court held that the trial court properly sustained a demurrer to the fourth amended complaint without leave to amend. The court held that MERS had a right to assign the note even though it was not the beneficiary of the deed of trust because in assigning the note it was acting on behalf of the beneficiary and not on its own behalf. Additionally, Plaintiff failed to allege that the note was not otherwise assigned by an unrecorded document. The court also held that plaintiff failed to properly allege that the lender breached a forbearance agreement because plaintiff did not attach to the complaint a copy of a letter (which the court held was part of the forbearance agreement) that purportedly modified the agreement. Normally, a copy of an agreement does not have to be attached to a complaint, but here the trial court granted a previous demurrer with leave to amend specifically on condition plaintiff attach a copy of the entire forbearance agreement to the amended pleading.Boschma v. Home Loan Center Docket
198 Cal.App.4th 230 – 4th Dist., Div. 3 (G043716) 8/10/11 Case complete 10/11/11LOAN DISCLOSURE: Borrowers stated a cause of action that survived a demurrer where they alleged fraud and a violation of California’s Unfair Competition Law (B&PC 17200, et seq.) based on disclosures indicating that borrowers’ Option ARM loan may result in negative amortization when, in fact, making the scheduled payments would definitely result in negative amortization. However, the court also pointed out that at trial in order to prove damages plaintiffs will have to present evidence that, because of the structure of the loans, they suffered actual damages beyond their loss of equity. For every dollar by which the loan balances increased, plaintiffs kept a dollar to save or spend as they pleased, so they will not be able to prove damages if their “only injury is the psychological revelation . . . that they were not receiving a free lunch from defendant”.Thorstrom v. Thorstrom Docket
196 Cal.App.4th 1406 – 1st Dist. (A127888) 6/29/11 Case complete 8/30/11EASEMENTS: Plaintiffs were not able to preclude defendants’ use of a well on plaintiffs’ property. The historic use of the well by the common owner (the mother of the current owners) indicated an intent for the well to serve both properties, and an implied easement was created in favor of defendants when the mother died and left one parcel to each of her two sons. However, the evidence did not establish that defendants were entitled to exclusive use of the well, so both properties are entitled to reasonable use of the well consistent with the volume of water available at any given time.Herrera v. Deutsche Bank Docket
196 Cal.App.4th 1366 – 3rd Dist. (C065630) 5/31/11 (Cert. for pub. 6/28/11) Case complete 8/30/11TRUSTEE’S SALES: Plaintiffs sought to set aside a trustee’s sale, claiming that the Bank had not established that it was the assignee of the note, and that the trustee (“CRC”) had not established that it was properly substituted as trustee. To establish that the Bank was the beneficiary and CRC was the trustee, defendants requested that the trial court take judicial notice of the recorded Assignment of Deed of Trust and Substitution of Trustee, and filed a declaration by an employee of CRC referring to the recordation of the assignment and substitution, and stating that they “indicated” that the Bank was the assignee and CRC was the trustee. The trial court granted defendants’ motion for summary judgment and the appellate court reversed. The Court acknowledged that California law does not require the original promissory note in order to foreclose. But while a court may take judicial notice of a recorded document, that does not mean it may take judicial notice of factual matters stated therein, so the recorded documents do not prove the truth of their contents. Accordingly, the Bank did not present direct evidence that it held the note.
Ed. notes: 1. It seems that the Bank could have avoided this result if it had its own employee make a declaration directly stating that the Bank is the holder of the note and deed of trust, 2. In the unpublished portion of the opinion, the Court held that if the Bank is successful in asserting its claim to the Property, there is no recognizable legal theory that would require the Bank to pay plaintiffs monies they expended on the property for back taxes, insurance and deferred maintenance.Tashakori v. Lakis Docket Sup.Ct. Docket
196 Cal.App.4th 1003 – 2nd Dist. (B220875) 6/21/11 Petition for review by Cal Supreme Ct. DENIED 9/21/11EASEMENTS: The court granted plaintiffs an “equitable easement” for driveway purposes. Apparently, plaintiffs did not have grounds to establish a prescriptive easement. But a court can award an equitable easement where the court applies the “relative hardship” test and determines, as the court did here, that 1) the use is innocent, which means it was not willful or negligent, 2) the user will suffer irreparable harm if relief is not granted and 3) there is little harm to the underlying property owner.Conservatorship of Buchenau (Tornel v. Office of the Public Guardian) Docket
196 Cal.App.4th 1031 – 2nd Dist. (B222941) 5/31/11 (Pub. order 6/21/11) Case complete 8/24/11CONTRACTS: A purchaser of real property was held liable for damages for refusing to complete the purchase contract, even though the seller deposited the deed into escrow 19 days after the date set for close of escrow. The escrow instructions did not include a “time is of the essence” clause, so a reasonable time is allowed for performance. The purchaser presented no evidence that seller’s delay of 19 days was unreasonable following a two-month escrow. Diamond Heights Village Assn. v. Financial Freedom Senior Funding Corp. Docket Sup.Ct. Docket
196 Cal.App.4th 290 – 1st Dist. (A126145) 6/7/11 Petition for review by Cal Supreme Ct. DENIED 9/21/11HOMEOWNERS ASSOCIATION LIENS:
1. A homeowner’s association recorded a notice of assessment lien, judicially foreclosed and obtained a judgment against the homeowners. However, it did not record an abstract of judgment, which would have created a judgment lien, nor did it record a writ of execution, which would have created an execution lien. The court held that a subsequently recorded deed of trust had priority because when an assessment lien is enforced through judicial action, the debt secured by the lien is merged into the judgment. The association’s previous rights were merged into the judgment, substituting in their place only such rights as attach to the judgment.
2. After defendant lender prevailed on summary judgment as to the single cause of action naming the lender, trial proceeded as to the owners of the property, including a cause of action for fraudulent conveyance of a 1/2 interest in the property pertaining to a transfer from the original owner to himself and his mother. The trial court ruled in favor of the Association on the fraudulent conveyance cause of action AND held that defendant lender’s deed of trust was set aside as to that 1/2 interest. The appellate court held that trial of those remaining claims was proper, including trial of the Association’s cause of action against the homeowners for fraudulent conveyance of their condominium unit. It was not proper, however, to void the lender’s security interest in the property (in whole or part) when the lender had not been joined as a party to the fraudulent conveyance cause of action, and final judgment had already been entered in its favor.Hamilton v. Greenwich Investors XXVIModification Docket
195 Cal.App.4th 1602 – 2nd Dist. (B224896) 6/1/11 Case complete 8/17/11TRUSTEE’S SALES:
1. Plaintiff/borrower’s failure to disclose, in earlier bankruptcy proceedings, the existence of his breach of contract and fraud claims against the lender bars the borrower from litigating those claims now. The court distinguished several cases that permitted a debtor in bankruptcy from subsequently pursuing a cause of action that was not disclosed in the bankruptcy pleadings on the basis that in those cases the defendant was not a creditor in the bankruptcy and because the schedules specifically asked the debtor to disclose any offsets against the debts that were listed. This action against the lender amounts to an offset against the loan, so by listing the loan and failing to list this claim, the borrower’s bankruptcy schedules were inaccurate.
2. The borrower’s causes of action for breach of contract and fraud fail in any event because the borrower did not allege the essential fact of payment of sums due from the borrower (i.e. performance by the borrower) or set forth an excuse for performance.
3. The borrower cannot state a cause of action for violations of Civil Code Section 2923.5, which requires lenders to contact borrowers to explore options to avoid foreclosure, because the only remedy for such violations is postponement of the foreclosure sale, and borrower’s house has been sold.***DECERTIFIED*** Ferguson v. Avelo MortgageModification Docket Sup.Ct. Docket
Cal.App. 2nd Dist. (B223447) 6/1/11 Petition for review by Cal Supreme Ct. DENIED & DECERTIFIED 9/14/11FORECLOSURE / MERS:
1. A Notice of Default was defective because it was signed by a trustee before recordation of the substitution of trustee substituting it in place of the original trustee. But the Notice of Sale was properly given because it recorded at the same time as the substitution and included the statutorily required affidavit attesting to the mailing of a copy of the substitution to all persons to whom an NOD must be mailed. Since the NOS was valid, the court held that the sale was merely voidable and not void. Therefore, unlike a void sale (such as where a substitution of trustee is not recorded until after the trustee’s sale is completed), where the sale is merely voidable the plaintiff must tender full payment of the debt in order to bring an action setting aside the sale. The plaintiff did not make such a tender, so the trial court properly refused to set aside the sale.
2. Mortgage Electronic Registration Systems (MERS), as nominee of the original lender had the authority to assign the note and deed of trust to defendant, even if MERS does not possess the original note.Creative Ventures, LLC v. Jim Ward & Associates Docket Sup.Ct. Docket
195 Cal.App.4th 1430 – 6th Dist. (H034883) 5/31/11 Petition for review by Cal Supreme Ct. DENIED 8/10/11USURY:
1. The real estate broker arranged loan exception to the Usury Law does not apply were a corporation was not licensed as a broker, even though the officer who negotiated the loan was licensed, where the officer was acting on behalf of the corporation and not on his own behalf.
2. The payee of the note assigned the note to multiple investors. In order to take free of the borrower’s defenses against the original payee, the assignees would have had to be holders in due course. They were not holders in due course because a) the original payee did not endorse the note and transfer possession of the note to the assignees, both of which are requirements for holder in due course status, and b) each investor was assigned a partial interest and partial assignees cannot be holders in due course.
3. The individual investors did not receive usurious interest because the interest rate itself was not usurious. But since the overall interest was usurious when the payee’s brokerage fee was included, the investors must refund the illegal interest each received.
4. The fact that the investors did not intend to violate the Usury Law is irrelevant because the only intent required is the intent to receive payment of interest.
5. An award of treble damages is within the discretion of the trial court, and the trial court properly exercised its discretion not to award treble damages because the conduct of defendants was not intentional.Ribeiro v. County of El Dorado Docket Sup.Ct. Docket
195 Cal.App.4th 354 – 3rd Dist. (C065505) 5/10/111 Petition for review by Cal Supreme Ct. DENIED 8/24/11TAX SALES: “Caveat emptor” applies to tax sales. Accordingly, plaintiff/tax sale purchaser could not rescind the tax sale and obtain his deposit back where he was unaware of the amount of 1915 Act bond arrearages and where the County did not mislead him.The Main Street Plaza v. Cartwright & Main, LLC Docket
194 Cal.App.4th 1044 – 4th Dist., Div. 3 (G043569) 4/27/11 Case complete 6/27/11EASEMENTS: Plaintiff sought to establish a prescriptive easement for parking and access. The trial court granted a motion for summary judgment against plaintiff because it had not paid taxes on the easement. The appellate court reversed because, while payment of property taxes is an element of a cause of action for adverse possession, payment of taxes is not necessary for an easement by prescription, unless the easement has been separately assessed. A railway easement over the same area was separately assessed, but that is irrelevant because the railway easement and the prescriptive easement were not coextensive in use.Liberty National Enterprises v. Chicago Title Insurance Company Docket
194 Cal.App.4th 839 – 2nd Dist. (B222455) 4/6/11 (pub. order 4/26/11) Case complete 6/28/11NOTE: This case is not summarized because it deals with disqualification of a party’s attorney, and not with issues related to title insurance. It is included here only to point out that fact.Barry v. OC Residential Properties Docket Sup.Ct. Docket
194 Cal.App.4th 861 – 4th Dist., Div. 3 (G043073) 4/26/11 Petition for review by Cal Supreme Ct. DENIED 7/13/11TRUSTEE’S SALES: Under C.C.P. 729.035 a trustee’s sale to enforce a homeowners association lien is subject to a right of redemption for 90 days after the sale, and under C.C.P. 729.060 the redemption price includes reasonable amounts paid for maintenance, upkeep and repair. Defendant purchased plaintiff’s interest in a common interest development at a foreclosure sale of a homeowners association lien. Plaintiff sought to redeem the property and defendant included certain repair costs in the redemption amount. Plaintiff asserted that the costs were not for reasonable maintenance, upkeep and repair. The court held that the costs were properly included because the person seeking to redeem has the burden of proof, and plaintiff failed to carry that burden in this case. Plaintiff also asserted that she should not have to pay the repair costs because the work was performed by an unlicensed contractor. The court held that the cost of the repair work was properly included because plaintiff would receive a windfall if she did not have to reimburse those costs and because this is not an action in which a contractor is seeking compensation.McMackin v. Ehrheart Docket
194 Cal.App.4th 128 – 2nd Dist. (B224723) 4/8/11 Case complete 6/9/11CONTRACTS / PROBATE: This case involves a “Marvin” agreement, which is an express or implied contract between nonmarital partners. Plaintiff sought to enforce an alleged oral agreement with a decedent to leave plaintiff a life estate in real property. The court held that since the agreement was for distribution from an estate, it is governed by C.C.P. Section 366.3, which requires the action to be commenced within one year after the date of death. But the court further concluded that, depending on the circumstances of each case, the doctrine of equitable estoppel may be applied to preclude a party from asserting the statute of limitations set forth in section 366.3 as a defense to an untimely action where the party’s wrongdoing has induced another to forbear filing suit.Ferwerda v. Bordon Docket
193 Cal. App. 4th 1178 – 3rd Dist. (C062389) 3/25/11 Petition for review by Cal Supreme Ct. DENIED 6/8/11CC&R’s
In the published portion of the opinion, the court held:
1. The following language in the CC&R’s gave the Homeowners Association the authority to adopt new design standards pertaining to development of lots in the subdivision: “in the event of a conflict between the standards required by [the Planning] Committee and those contained herein, the standards of said Committee shall govern”; and
2. The Planning Committee could not adopt a rule that allowed for attorney’s fees to be awarded to the prevailing party in a lawsuit because such a provision was not contained in the CC&R’s. Adopting the rule was an attempt by the committee to insert a new provision that binds homeowners without their approval.
In the unpublished portion of the opinion, the court held that the Planning Committee acted properly in denying the plaintiff’s building plans. (The details are not summarized here because that part of the opinion is not certified for publication.)Capon v. Monopoly Game LLC Docket
193 Cal. App. 4th 344 – 1st Dist. (A124964) 3/4/11 Case complete 5/5/11HOME EQUITY SALES CONTRACT ACT: In the published portion of the opinion, the court held that plaintiff was entitled to damages under the Home Equity Sales Contract Act because the purchaser was subject to the Act and the purchase contract did not comply with it. There is an exception in the Act for a purchaser who intends to live in the property. The principal member of the LLC purchase asserted that he intended to live in the property, but the court held the exception does not apply because the purchaser was the LLC rather than the member, so his intent was irrelevant.Gomes v. Countrywide Home Loans Docket Cal. Sup.Ct. Docket U.S. Supreme Ct. Docket
192 Cal. App. 4th 1149 – 4th Dist., Div. 1 (D057005) 2/18/11 Petition for review by Cal Supreme Ct. DENIED 5/18/11, Petition for a writ of certiorari DENIED 10/11/11FORECLOSURE / MERS: A borrower brought an action to restrain a foreclosure of a deed of trust held by MERS as nominee for the original lender. A Notice of Default had been recorded by the trustee, which identified itself as an agent for MERS. The court held that 1) There is no legal basis to bring an action in order to determine whether the person electing to sell the property is duly authorized to do so by the lender, unless the plaintiff can specify a specific factual basis for alleging that the foreclosure was not initiated by the correct party; and 2) MERS has a right to foreclose because the deed of trust specifically provided that MERS as nominee has the right to foreclose.Schuman v. Ignatin Docket
191 Cal. App. 4th 255 – 2nd Dist. (B215059) 12/23/10 Case complete 2/23/11CC&R’s: The applicable CC&R’s would have expired, but an amendment was recorded extending them. Plaintiff filed this action alleging that defendant’s proposed house violated the CC&R’s. The trial court held that the amendment was invalid because it was not signed by all of the lot owners in the subdivision. Since the CC&R’s had expired, it did not determine whether the proposed construction would have violated them. The appellate court reversed and remanded, holding that the defect in the amendment rendered it voidable, not void, and it could no longer be challenged because the four-year statute of limitations contained in C.C.P. 343 had run.Schelb v. Stein Docket
190 Cal. App. 4th 1440 – 2nd Dist. (B213929) 12/17/10 Case complete 2/16/11MARKETABLE RECORD TITLE ACT: In a previous divorce action, in order to equalize a division of community property, the husband was ordered to give the wife a note secured by a deed of trust on property awarded to the husband. In this case (many years later), the court held that under the Marketable Record Title Act, the deed of trust had expired. (Civil Code Section 882.020.) However, under Family Code Section 291, the underlying family law judgment does not expire until paid, so it is enforceable as an unsecured judgment.Vuki v. Superior Court Docket
189 Cal. App. 4th 791 – 4th Dist., Div. 3 (G043544) 10/29/10 Case complete 1/3/11TRUSTEE’S SALES: Unlike section 2923.5 as construed by this court in Mabry v. Superior Court (2010) 185 Cal.App.4th 208, neither Section 2923.52 or Section 2923.53 provides any private right of action, even a very limited one as this court found in Mabry. Civil Code section 2923.52 imposes a 90-day delay in the normal foreclosure process. But Civil Code section 2923.53 allows for an exemption to that delay if lenders have loan modification programs that meet certain criteria. The only enforcement mechanism is that a violation is deemed to be a violation of lenders license laws. Section 2923.54 provides that a violation of Sections 2923.52 or 2923.53 does not invalidate a trustee’s sale, and plaintiff also argued that a lender is not entitled to a bona fide purchaser protection. The court rejected that argument because any noncompliance is entirely a regulatory matter, and cannot be remedied in a private action.Abers v. RounsavellMod Opinion Docket
189 Cal. App. 4th 348 – 4th Dist., Div. 3 (G040486) 10/18/10 Case complete 12/20/10LEASES: Leases of residential condominium units required a re-calculation of rent after 30 years based on a percentage of the appraised value of the “leased land”. The term “leased land” was defined to consist of the condominium unit and an undivided interest in the common area of Parcel 1, and did not include the recreational area (Parcel 2), which was leased to the Homeowners Association. The Court held that the language of the leases was clear. The appraisals were to be based only on the value of the lessees’ interest in Parcel 1 and not on the value of the recreational parcel.UNPUBLISHED: Residential Mortgage Capital v. Chicago Title Ins. Company Docket
Cal.App. 1st Dist. (A125695) 9/20/10 Case complete 11/23/10ESCROW: An escrow holder released loan documents to a mortgage broker at the broker’s request in order to have the borrowers sign the documents at home. They were improperly backdated and the broker failed to provide duplicate copies of the notice of right to rescind. Due these discrepancies, the lender complied with the borrower’s demand for a rescission of the loan, and filed this action against the escrow holder for amounts reimbursed to the borrower for finance charges and attorney’s fees. The Court held that the escrow holder did not breach a duty to the lender because it properly followed the escrow instructions, and it is common for escrow to release documents to persons associated with the transaction in order for them to be signed elsewhere.Starr v. Starr Docket
189 Cal. App. 4th 277 – 2nd Dist. (B219539) 9/30/10 Case complete 12/16/10COMMUNITY PROPERTY: In a divorce action the Court ordered the husband to convey title to himself and his former wife. Title had been taken in the husband’s name and the wife executed a quitclaim deed. But Family Code Section 721 creates a presumption that a transaction that benefits one spouse was the result of undue influence. The husband failed to overcome this presumption where the evidence showed that the wife executed the deed in reliance on the husband’s representation that he would subsequently add her to title. The husband was, nevertheless, entitled to reimbursement for his separate property contribution in purchasing the property.Malkoskie v. Option One Mortgage Corp. Docket
188 Cal. App. 4th 968 – 2nd Dist. (B221470) 9/23/10 Case complete 11/23/10TRUSTEE’S SALES: After plaintiff stipulated to a judgment in an unlawful detainer action, she could not challenge the validity of the trustee’s sale in a subsequent action because the subsequent action is barred by collateral estoppel. Because the action was barred, the court did not reach the question of the validity of the trustee’s sale based on the substitution of trustee being recorded after trustee’s sale proceedings had commenced and based on assignments of the deed of trust into the foreclosing beneficiary being recorded after the trustee’s deed.Lee v. Fidelity National Title Ins. Co. Docket Sup.Ct. Docket
188 Cal. App. 4th 583 – 1st Dist. (A124730) 9/16/10 Petition for review and depublication by Cal Supreme Ct. DENIED 12/1/10TITLE INSURANCE:
1. The insureds could have reasonably expected that they were buying a title insurance policy on APN 22, and not just APN 9, where both the preliminary report and policy included a reference to APN 22, listed exclusions from coverage that were specific to APN 22, and attached an assessor’s parcel map with an arrow pointing to both APN 9 and 22.
2. A preliminary report is merely an offer to issue a title policy, but an insured has the right to expect that the policy will be consistent with the terms of the offer.
3. There was a triable issue of fact as to whether a neighbor’s construction of improvements on APN 22 was sufficient to commence the running of the statute of limitations, where the insureds testified that they did not know the precise location of APN 22 and assumed that the neighbors constructed the improvements on their own property.
4. There was a triable issue of fact as to whether Fidelity National Title Insurance Company acted as escrow holder or whether the escrow was conducted by its affiliate, Fidelity National Title Company (only the insurance company was named as a defendant).Chicago Title Insurance Company v. AMZ Insurance Services Docket Sup.Ct. Docket
188 Cal. App. 4th 401 – 4th Dist., Div. 3 (G041188) 9/9/10 Petition for review and depublication by Cal Supreme Ct. DENIED 12/15/10ESCROW: A document entitled “Evidence of Property Insurance” (“EOI”) constitutes a binder under Insurance Code Section 382.5(a). In this case an EOI was effective to obligate the insurer to issue a homeowner’s policy even though the escrow failed to send the premium check. In order to cancel the EOI the insured has to be given notice pursuant to Insurance Code Section 481.1, which the insurer did not do. The escrow holder paid the insured’s loss and obtained an assignment of rights. The court held that the escrow holder did not act as a volunteer in paying the amount of the loss, and is entitled to be reimbursed by the insurance company under the doctrine of equitable subrogation.Vanderkous v. Conley Docket
188 Cal. App. 4th 111 – 1st Dist (A125352) 9/2/10 Case complete 11/3/10QUIET TITLE: 1) In a quiet title action the court has equitable powers to award compensation as necessary to do complete justice, even though neither party’s pleadings specifically requested compensation. 2) Realizing that the court was going to require plaintiff to compensate defendant in exchange for quieting title in plaintiff’s favor, plaintiff dismissed the lawsuit. However, the dismissal was invalid because it was filed following trial after the case had been submitted to the court.Purdum v. Holmes Docket
187 Cal. App. 4th 916 – 2nd Dist. (B216493) 7/29/10 Case complete 10/22/10NOTARIES: A notary was sued for notarizing a forged deed. He admitted that he knew the grantor had not signed the deed, but the lawsuit was filed more than six years after the deed was signed and notarized. The court held that the action was barred by the six-year limitation period in C.C.P. 338(f)(3) even though plaintiff did not discover the wrongful conduct until well within the six year period.Perlas v. GMAC Mortgage Docket
187 Cal. App. 4th 429 – 1st Dist. (A125212) 8/11/10 Case complete 10/10/10DEEDS OF TRUST: Borrowers filed an action against a lender to set aside a deed of trust, setting forth numerous causes of action. Borrowers’ loan application (apparently prepared by a loan broker) falsely inflated the borrowers’ income. In the published portion of the opinion. The court held in favor of the lender, explaining that a lender is not in a fiduciary relationship with borrowers and owes them no duty of care in approving their loan. A lender’s determination that the borrowers qualified for the loan is not a representation that they could afford the loan. One interesting issue in the unpublished portion of the opinion was the court’s rejection of the borrowers’ argument that naming MERS as nominee invalidated the deed of trust because, as borrower argued, the deed of trust was a contract with MERS and the note was a separate contract with the lender.Soifer v. Chicago Title CompanyModification Docket Sup.Ct. Docket
187 Cal. App. 4th 365 – 2nd Dist. (B217956) 8/10/10 Petition for review by Cal Supreme Ct. DENIED 10/27/10TITLE INSURANCE: A person cannot recover for errors in a title company’s informal communications regarding the condition of title to property in the absence of a policy of title insurance or the purchase of an abstract of title. There are two ways in which an interested party can obtain title information upon which reliance may be placed: an abstract of title or a policy of title insurance. Having purchased neither, plaintiff cannot recover for title company’s incorrect statement that a deed of trust in foreclosure was a first lien.In re: Hastie (Weinkauf v. Florez) Docket Sup.Ct. Docket
186 Cal. App. 4th 1285 – 1st Dist. (A127069) 7/22/10 Petition for review by Cal Supreme Ct. filed late and DENIED 9/21/10DEEDS: An administrator of decedent’s estate sought to set aside two deeds on the basis that the grantees were the grandson and granddaughter of decedent’s caregiver. Defendant did not dispute that the transfers violated Probate Code Section 21350, which prohibits conveyances to a fiduciary, including a caregiver, or the fiduciary’s relatives, unless specified conditions are met. Instead, defendant asserted only that the 3-year statute of limitations had expired. The court held that the action was timely because there was no evidence indicating that the heirs had or should have had knowledge of the transfer, which would have commenced the running of the statute of limitations.Bank of America v. Stonehaven Manor, LLC Docket Sup.Ct. Docket
186 Cal. App. 4th 719 – 3rd Dist. (C060089) 7/12/10 Petition for review by Cal Supreme Ct. DENIED 10/20/10ATTACHMENT: The property of a guarantor of a debt–a debt which is secured by the real property of the principal debtor and also that of a joint and several co-guarantor–is subject to attachment where the guarantor has contractually waived the benefit of that security (i.e. waived the benefit of Civil Code Section 2849).Jackson v. County of Amador Docket
186 Cal. App. 4th 514 – 3rd Dist. (C060845) 7/7/10 Depublication request DENIED 9/15/10RECORDING LAW: An owner of two rental houses sued the county recorder for recording a durable power of attorney and two quitclaim deeds that were fraudulently executed by the owner’s brother. The superior court sustained the recorder’s demurrer without leave to amend. The court of appeal affirmed, holding that the legal insufficiency of the power of attorney did not provide a basis for the recorder to refuse to record the power of attorney under Government Code Section 27201(a) and the recorder did not owe the owner a duty to determine whether the instruments were fraudulently executed because the instruments were notarized.Luna v. Brownell Docket
185 Cal. App. 4th 668 – 2nd Dist. (B212757) 6/11/10 Case complete 8/17/10DEEDS: A deed transferring property to the trustee of a trust is not void as between the grantor and grantee merely because the trust had not been created at the time the deed was executed, if (1) the deed was executed in anticipation of the creation of the trust and (2) the trust is in fact created thereafter. The deed was deemed legally delivered when the Trust was established.Mabry v. Superior Court Docket Sup.Ct. Docket
185 Cal. App. 4th 208 – 4th Dist., Div. 3 (G042911) 6/2/10 Petition for review by Cal Supreme Ct. DENIED 8/18/10TRUSTEE’S SALES: The court answered, and provided thorough explanations for, a laundry list of questions regarding Civil Code Section 2923.5, which requires a lender to explore options for modifying a loan with a borrower prior to commencing foreclosure proceedings.
1. May section 2923.5 be enforced by a private right of action? Yes.
2. Must a borrower tender the full amount of the mortgage indebtedness due as a prerequisite to bringing an action under section 2923.5? No.
3. Is section 2923.5 preempted by federal law? No.
4. What is the extent of a private right of action under section 2923.5? It is limited to obtaining a postponement of a foreclosure to permit the lender to comply with section 2923.5.
5. Must the declaration required of the lender by section 2923.5, subdivision (b) be under penalty of perjury? No.
6. Does a declaration in a notice of default that tracks the language of section 2923.5(b) comply with the statute, even though such language does not on its face delineate precisely which one of three categories applies to the particular case at hand? Yes.
7. If a lender forecloses without complying with section 2923.5, does that noncompliance affect the title acquired by a third party purchaser at the foreclosure sale? No.
8. Did the lender comply with section 2923.5? Remanded to the trial court to determine which of the two sides is telling the truth.
9. Can section 2923.5 be enforced in a class action in this case? Not under these facts, which are highly fact-specific.
10. Does section 2923.5 require a lender to rewrite or modify the loan? No.612 South LLC v. Laconic Limited Partnership Docket
184 Cal. App. 4th 1270 – Cal.App. 4th Dist., Div. 1 (D056646) 5/25/10 Case complete 7/26/10ASSESSMENT BOND FORECLOSURE:
1. Recordation of a Notice of Assessment under the Improvement Act of 1911 imparted constructive notice even though the notice did not name the owner of the subject property and was not indexed under the owner’s name. There is no statutory requirement that the notice of assessment be indexed under the name of the property owner.
2. A Preliminary Report also gave constructive notice where it stated: “The lien of special tax for the following municipal improvement bond, which tax is collected with the county taxes. . .”
3. A property owner is not liable for a deficiency judgment after a bond foreclosure because a property owner does not have personal liability for either delinquent amounts due on the bond or for attorney fees incurred in prosecuting the action.Tarlesson v. Broadway Foreclosure InvestmentsDocket
184 Cal. App. 4th 931 – 1st Dist. (A125445) 5/17/10 Case complete 7/20/10HOMESTEADS: A judgment debtor is entitled to a homestead exemption where she continuously resided in property, even though at one point she conveyed title to her cousin in order to obtain financing and the cousin subsequently conveyed title back to the debtor. The amount of the exemption was $150,000 (later statutorily changed to $175,000) based on debtor’s declaration that she was over 55 years old and earned less than $15,000 per year, because there was no conflicting evidence in the record.UNPUBLISHED: MBK Celamonte v. Lawyers Title Insurance Corporation Docket Sup.Ct. Docket
Cal.App. 4th Dist., Div. 3 (G041605) 4/28/10 Petition for review by Cal Supreme Ct. DENIED 7/21/10TITLE INSURANCE / ENCUMBRANCES: A recorded authorization for a Mello Roos Assessment constitutes an “encumbrance” covered by a title policy, even where actual assessments are conditioned on the future development of the property.Plaza Home Mortgage v. North American Title Company Docket Sup.Ct. Docket
184 Cal. App. 4th 130 – 4th Dist., Div. 1 (D054685) 4/27/10 Depublication request DENIED 8/11/10ESCROW / LOAN FRAUD: The buyer obtained 100% financing and managed to walk away with cash ($54,000) at close of escrow. (Actually, the buyer’s attorney-in-fact received the money.) The lender sued the title company that acted as escrow holder, asserting that it should have notified the lender when it received the instruction to send the payment to the buyer’s attorney-in-fact after escrow had closed. The court reversed a grant of a motion for summary judgment in favor of the escrow, pointing out that its decision is narrow, and holding only that the trial court erred when it determined the escrow did not breach the closing instructions contract merely because escrow had closed. The case was remanded in order to determine whether the escrow breached the closing instructions contract and if so, whether that breach proximately caused the lender’s damages.Garcia v. World Savings Docket Sup.Ct. Docket
183 Cal. App. 4th 1031 – 2nd (B214822) 4/9/10 Petition for review and depublication by Cal Supreme Ct. DENIED 6/23/10TRUSTEE’S SALES: A lender told plaintiffs/owners that it would postpone a trustee’s sale by a week to give plaintiffs time to obtain another loan secured by other property in order to bring the subject loan current. Plaintiffs obtained a loan the following week, but the lender had conducted the trustee’s sale on the scheduled date and the property was sold to a third party bidder. Plaintiffs dismissed causes of action pertaining to setting aside the sale and pursued causes of action for breach of contract, wrongful foreclosure and promissory estoppel. The court held that there was no consideration that would support the breach of contract claim because plaintiffs promised nothing more than was due under the original agreement. Plaintiffs also could not prove a cause of action for wrongful foreclosure because that cause of action requires that the borrower tender funds to pay off the loan prior to the trustee’s sale. However, plaintiffs could recover based on promissory estoppel because procuring a high cost, high interest loan by using other property as security is sufficient to constitute detrimental reliance.LEG Investments v. Boxler Docket
183 Cal. App. 4th 484 – 3rd Dist. (C058743) 4/1/10 Certified for Partial Publication Case complete 6/2/10PARTITION: A right of first refusal in a tenancy in common agreement does not absolutely waive the right of partition. Instead, the right of first refusal merely modifies the right of partition to require the selling cotenant to first offer to sell to the nonselling cotenant before seeking partition. [Ed. note: I expect that the result would have been different if the right of partition had been specifically waived in the tenancy in common agreement.]Steiner v. Thexton Docket
48 Cal. 4th 411 – Cal. Supreme Court (S164928) 3/18/10OPTIONS: A contract to sell real property where the buyer’s performance was entirely conditioned on the buyer obtaining regulatory approval to subdivide the property is an option. Although plaintiffs’ promise was initially illusory because no consideration was given at the outset, plaintiffs’ part performance of their bargained-for promise to seek a parcel split cured the initially illusory nature of the promise and thereby constituted sufficient consideration to render the option irrevocable.Grotenhuis v. County of Santa Barbara Docket
182 Cal. App. 4th 1158 – 2nd Dist. (B212264) 3/15/10 Case complete 5/18/10PROPERTY TAXES: Subject to certain conditions, a homeowner over the age of 55 may sell a principle residence, purchase a replacement dwelling of equal or lesser value in the same county, and transfer the property tax basis of the principal residence to the replacement dwelling. The court held that this favorable tax treatment is not available where title to both properties was held by an individual’s wholly owned corporation. The court rejected plaintiffs’ argument that the corporation was their alter ego because that concept is used to pierce the corporate veil of an opponent, and not to enable a person “to weave in and out of corporate status when it suits the business objective of the day.”Clear Lake Riviera Community Assn. v. Cramer Docket
182 Cal.App. 4th 459 – 1st Dist. (A122205) 2/26/10 Case complete 4/29/10HOMEOWNER’S ASSOCIATIONS: Defendant homeowners were ordered to bring their newly built house into compliance with the homeowners association’s guidelines where the house exceed the guidelines’ height restriction by nine feet. Even though the cost to the defendants will be great, they built the house with knowledge of the restriction and their hardship will not be grossly disproportionate to the loss the neighbors would suffer if the violation were not abated, caused by loss in property values and loss of enjoyment of their properties caused by blocked views. The height restriction was contained in the associations guidelines and not in the CC&R’s, and the association did not have records proving the official adoption of the guidelines. Nevertheless, the court held that proper adoption was inferred from the circumstantial evidence of long enforcement of the guidelines by the association.Forsgren Associates v. Pacific Golf Community Development Docket Sup. Ct. Docket
182 Cal.App. 4th 135 – 4th Dist., Div. 2 (E045940) 2/23/10 Petition for review by Cal Supreme Ct. DENIED 6/17/10MECHANIC’S LIENS: 1. Owners of land are subject to mechanic’s liens where they were aware of the work being done by the lien claimant and where they failed to record a notice of non-responsibility.
2. Civil Code Section 3128 provides that a mechanic’s lien attaches to land on which the improvement is situated “together with a convenient space about the same or so much as may be required for the convenient use and occupation thereof”. Accordingly, defendant’s land adjacent to a golf course on which the lien claimant performed work is subject to a mechanic’s lien, but only as to the limited portions where a tee box was located and where an irrigation system was installed.
3. The fact that adjacent property incidentally benefits from being adjacent to a golf course does not support extending a mechanic’s lien to that property.
4. The owners of the adjacent property were liable for interest, but only as to their proportionate share of the amount of the entire mechanic’s lien.Steinhart v. County of Los Angeles Docket
47 Cal.4th 1298 – Cal. Supreme Court (S158007) 2/4/10PROPERTY TAXES: A “change in ownership”, requiring a property tax reassessment, occurs upon the death of a trust settlor who transferred property to a revocable trust, and which became irrevocable upon the settlor’s death. The fact that one trust beneficiary was entitled to live in the property for her life, and the remaining beneficiaries received the property upon her death, did not alter the fact that a change in ownership of the entire title had occurred.Kuish v. Smith Docket
181 Cal.App.4th 1419 – 4th Dist., Div. 3 (G040743) 2/3/10 Case complete 4/12/10CONTRACTS: 1. Defendants’ retention of a $600,000 deposit designated as “non-refundable” constituted an invalid forfeiture because a) the contract did not contain a valid liquidated damages clause, and b) plaintiff re-sold the property for a higher price, so there were no out-of-pocket damages. 2. The deposit did not constitute additional consideration for extending the escrow because it was labeled “non-refundable” in the original contract.Kendall v. Walker (Modification attached)Docket
181 Cal.App.4th 584 – 1st Dist. (A105981) 12/30/09 Case complete 3/29/10WATER RIGHTS: An owner of land adjoining a navigable waterway has rights in the foreshore adjacent to his property separate from that of the general public. The court held that the boundary in the waterway between adjacent parcels of land is not fixed by extending the boundary lines into the water in the direction of the last course ending at the shore line. Instead, it is fixed by a line drawn into the water perpendicular to the shore line. Accordingly, the court enjoined defendants from allowing their houseboat from being moored in a manner that crossed onto plaintiffs’ side of that perpendicular boundary line.Junkin v. Golden West Foreclosure Service Docket
180 Cal.App.4th 1150 – 1st Dist. (A124374) 1/5/10 Case complete 3/12/10USURY: The joint venture exception to the Usury Law, which has been developed by case law, provides that where the relationship between the parties is a bona fide joint venture or partnership, an advance by a joint venturer is an investment and not a loan, making the Usury Law inapplicable. The court applied the exception to a loan by one partner to the other because instead of looking at the loan in isolation, it looked at the entire transaction which it determined to be a joint venture. The case contains a good discussion of the various factors that should be weighed in determining whether the transaction is a bona fide joint venture. The presence or absence of any one factor is not, alone, determinative. The factors include whether or not: 1) there is an absolute obligation of repayment, 2) the investor may suffer a loss, 3) the investor has a right to participate in management, 4) the subject property was purchased from a third party and 5) the parties considered themselves to be partners.Banc of America Leasing & Capital v. 3 Arch Trustee Services Docket
180 Cal.App.4th 1090 – 4th Dist., Div. 3 (G041480) 12/11/09 Case complete 3/8/10TRUSTEE’S SALES: A judgment lien creditor is not entitled to receive a notice of default, notice of trustee’s sale or notice of surplus sale proceeds unless the creditor records a statutory request for notice. The trustee is required to disburse surplus proceeds only to persons who have provided the trustee with a proof of claim. The burden rests with the judgment creditor to keep a careful watch over the debtor, make requests for notice of default and sales, and to submit claims in the event of surplus sale proceeds.Park 100 Investment Group v. Ryan Docket
180 Cal.App.4th 795 – 2nd Dist. (B208189) 12/23/09 Case complete 2/26/10LIS PENDENS: 1. A lis pendens may be filed against a dominant tenement when the litigation involves an easement dispute. Although title to the dominant tenement would not be directly affected if an easement right was shown to exist, the owner’s right to possession clearly is affected
2.A recorded lis pendens is a privileged publication only if it identifies an action previously filed with a court of competent jurisdiction which affects the title or right of possession of real property. If the complaint does not allege a real property claim, or the alleged claim lacks evidentiary merit, the lis pendens, in addition to being subject to expungement, is not privileged.Millennium Rock Mortgage v. T.D. Service CompanyModification Docket
179 Cal.App.4th 804 – 3rd Dist. (C059875) 11/24/09 Case complete 1/26/10TRUSTEE’S SALES: A trustee’s sale auctioneer erroneously read from a script for a different foreclosure, although the correct street address was used. The auctioneer opened the bidding with the credit bid from the other foreclosure that was substantially less than the correct credit bid. The errors were discovered after the close of bidding but prior to the issuance of a trustee’s deed. The court held that the errors constituted an “irregularity” sufficient to give the trustee the right to rescind the sale.
The court distinguished 6 Angels v. Stuart-Wright Mortgage, in which the court held that a beneficiary’s negligent miscalculation of the amount of its credit bid was not sufficient to rescind the sale. In 6 Angelsthe error was totally extrinsic to the proper conduct of the sale itself. Here there was inherent inconsistency in the auctioneer’s description of the property being offered for sale, creating a fatal ambiguity in determining which property was being auctioned.Fidelity National Title Insurance Company v. Schroeder Docket
179 Cal.App.4th 834 – 5th Dist. (F056339) 11/24/09 Case complete 1/25/10JUDGMENTS: A judgment debtor transferred his 1/2 interest in real property to the other cotenant prior to the judgment creditor recording an abstract of judgment. The court held that if the trial court on remand finds that the transfer was intended to shield the debtor’s property from creditors, then the transferee holds the debtor’s 1/2 interest as a resulting trust for the benefit of the debtor, and the creditor’s judgment lien will attach to that interest. The court also held that the transfer cannot be set aside under the Uniform Fraudulent Transfer Act because no recoverable value remained in the real property after deducting existing encumbrances and Gordon’s homestead exemption.
The case contains a good explanation of the difference between a resulting (“intention enforcing”) and constructive (“fraud-rectifying”) trust. A resulting trust carries out the inferred intent of the parties; a constructive trust defeats or prevents the wrongful act of one of them.Zhang v. Superior Court Docket Sup.Ct. Docket
Cal.App. 4th Dist., Div. 2 (E047207) 10/29/09 Petition for review by Cal Supreme Ct. GRANTED 2/10/10INSURANCE / BAD FAITH: Fraudulent conduct by an insurer does not give rise to a private right of action under the Unfair Insurance Practices Act (Insurance Code section 790.03 et seq.), but it can give rise to a private cause of action under the Unfair Competition Law (Business and Professions Code section 17200 et seq.).Presta v. Tepper Docket
179 Cal.App.4th 909 – 4th Dist., Div. 3 (G040427) 10/28/09 Case complete 1/25/10TRUSTS: An ordinary express trust is not an entity separate from its trustee, like a corporation is. Instead, a trust is merely a relationship by which one person or entity holds property for the benefit of some other person or entity. Consequently, where two men entered into partnership agreements as trustees of their trusts, the provision of the partnership agreement, which required that upon the death of a partner the partnership shall purchase his interest in the partnership, was triggered by the death of one of the two men.Wells Fargo Bank v. NeilsenModificationDocket Sup.Ct. Docket
178 Cal.App.4th 602 – 1st Dist. (A122626) 10/22/09 (Mod. filed 11/10/09) Petition for review by Cal Supreme Ct. DENIED 2/10/10CIRCUITY OF PRIORITY: The Court follows the rule in Bratcher v. Buckner, even though Bratcher involved a judgment lien and two deeds of trust and this case involves three deeds of trust. The situation is that A, B & C have liens on the subject property, and A then subordinates his lien to C’s lien. The problem with this is that C appears to be senior to A, which is senior to B, which is senior to C, so that each lien is senior and junior to one of the other liens.
The Court held that the lien holders have the following priority: (1) C is paid up to the amount of A’s lien, (2) if the amount of A’s lien exceeds C’s lien, A is paid the amount of his lien, less the amount paid so far to C, (3) B is then paid in full, (4) C is then paid any balance still owing to C, (5) A is then paid any balance still owing to A.
This is entirely fair because A loses priority as to the amount of C’s lien, which conforms to the intent of the subordination agreement. B remains in the same position he would be in without the subordination agreement since his lien remains junior only to the amount of A’s lien. C steps into A’s shoes only up to the amount of A’s lien.
NOTE: The odd thing about circuity of priority cases is that they result in surplus proceeds after a foreclosure sale being paid to senior lienholders. Normally, only junior lienholders and the foreclosed out owner are entitled to share in surplus proceeds, and the purchaser takes title subject to the senior liens.Schmidli v. Pearce Docket
178 Cal.App.4th 305 – 3rd Dist. (C058270) 10/13/09 Case complete 12/15/09MARKETABLE RECORD TITLE ACT: This case was decided under the pre-2007 version of Civil Code Section 882.020, which provided that a deed of trust expires after 10 years if the maturity date is “ascertainable from the record”. The court held that this provision was not triggered by a Notice of Default, which set forth the maturity date and which was recorded prior to expiration of the 10-year period. NOTE: In 2007, C.C. Section 882.020 was amended to make it clear that the 10-year period applies only where the maturity date is shown in the deed of trust itself.Nielsen v. Gibson Docket
178 Cal.App.4th 318 – 3rd Dist. (C059291) 10/13/09 Case complete 12/15/09ADVERSE POSSESSION: 1. The “open and notorious” element of adverse possession was satisfied where plaintiff possessed the subject property by actual possession under such circumstances as to constitute reasonable notice to the owner. Defendant was charged with constructive knowledge of plaintiff’s possession, even though defendant was out of the country the entire time and did not have actual knowledge.
2. The 5-year adverse possession period is tolled under C.C.P. Section 328 for up to 20 years if the defendant is “under the age of majority or insane”. In the unpublishedportion of the opinion the court held that although the defendant had been ruled incompetent by a court in Ireland, there was insufficient evidence that defendant’s condition met the legal definition of “insane”.Ricketts v. McCormackDocket Sup.Ct. Docket
177 Cal.App.4th 1324 – 2nd Dist. (B210123) 9/27/09 Petition for review by Cal Supreme Ct. DENIED 12/17/09RECORDING LAW: Civil Code Section 2941(c) provides in part, “Within two business days from the day of receipt, if received in recordable form together with all required fees, the county recorder shall stamp and record the full reconveyance or certificate of discharge.” In this class action lawsuit against the County recorder, the court held that indexing is a distinct function, separate from recording a document, and is not part of section 2941(c)’s stamp-and-record requirement.
The court distinguished indexing, stamping and recording: Stamping: The “stamping” requirement of Section 2941(c) is satisfied when the Recorder endorses on a reconveyance the order of receipt, the day and time of receipt and the amount of fees paid. Recording: The reconveyance is “recorded” once the Recorder has confirmed the document meets all recording requirements, created an entry for the document in the “Enterprise Recording Archive” system, calculated the required fees and confirmed payment of the correct amount and, finally, generated a lead sheet containing, among other things, a bar code, a permanent recording number and the words “Recorded/Filed in Official Records.” Indexing: Government Code Section 27324 requires all instruments “presented for recordation” to “have a title or titles indicating the kind or kinds of documents contained therein,” and the recorder is “required to index only that title or titles captioned on the first page of a document.Starlight Ridge South Homeowner’s Assn. v. Hunter-BloorDocket
177 Cal.App.4th 440 – 4th Dist., Div. 2 (E046457) 8/14/09 (Pub. Order 9/3/09) Case complete 10/19/09CC&R’s: Under Code Civ. Proc. Section 1859, where two provisions appear to cover the same matter, and are inconsistent, the more specific provision controls over the general provision. Here the provision of CC&R’s requiring each homeowner to maintain a drainage ditch where it crossed the homeowners’ properties was a specific provision that controlled over a general provision requiring the homeowner’s association to maintain landscape maintenance areas.First American Title Insurance Co. v. XWarehouse Lending Corp.Docket
177 Cal.App.4th 106 – 1st Dist. (A119931) 8/28/09 Case complete 10/30/09TITLE INSURANCE: A loan policy provides that “the owner of the indebtedness secured by the insured mortgage” becomes an insured under the loan policy. Normally, this means that an assignee becomes an insured. However, where the insured lender failed to disburse loan proceeds for the benefit of the named borrower, an indebtedness never existed, and the warehouse lender/assignee who disbursed money to the lender did not become an insured. The court pointed out that the policy insures against defects in the mortgage itself, but not against problems related to the underlying debt.
NOTE: In Footnote 8 the court distinguishes cases upholding the right of a named insured or its assignee to recover from a title insurer for a loss due to a forged note or forged mortgage because in those cases, and unlike this case, moneys had been actually disbursed or credited to the named borrower by either the lender or its assignee.Wells Fargo v. D & M CabinetsDocket
177 Cal.App.4th 59 – 3rd Dist. (C058486) 8/28/09 Case complete 10/28/09JUDGMENTS: A judgment creditor, seeking to sell an occupied dwelling to collect on a money judgment, may not bypass the stringent requirements of C.C.P. Section 704.740 et seq. when the sale is conducted by a receiver appointed under C.C.P Section 708.620. The judgment creditor must comply with Section 704.740, regardless of whether the property is to be sold by a sheriff or a receiver.Sequoia Park Associates v. County of SonomaDocketSup.Ct. Docket
176 Cal.App.4th 1270 – 1st Dist. (A120049) 8/21/09 Petition for review by Cal Supreme Ct. DENIED 12/2/09PREEMPTION: A County ordinance professing to implement the state mobilehome conversion statutes was preempted for the following reasons: (1) Gov. Code Section 66427.5 expressly preempts the power of local authorities to inject other factors when considering an application to convert an existing mobilehome park from a rental to a resident-owner basis, (2) the ordinance is impliedly preempted because the Legislature has established a dominant role for the state in regulating mobilehomes, and has indicated its intent to forestall local intrusion into the particular terrain of mobilehome conversions and (3) the County’s ordinance duplicates several features of state law, a redundancy that is an established litmus test for preemption.Citizens for Planning Responsibly v. County of San Luis ObispoDocketSup.Ct. Docket
176 Cal.App.4th 357 – 2nd Dist (B206957) 8/4/09 Petition for review by Cal Supreme Ct. DENIED 10/14/09PREEMPTION: The court held that the State Aeronautics Act, which regulates the development and expansion of airports, did not preempt an initiative measure adopted by the voters because none of the following three factors necessary to establish preemption was present: (1) The Legislature may so completely occupy the field in a matter of statewide concern that all, or conflicting, local legislation is precluded, (2) the Legislature may delegate exclusive authority to a city council or board of supervisors to exercise a particular power over matters of statewide concern, or (3) the exercise of the initiative power would impermissibly interfere with an essential governmental function.Delgado v. Interinsurance Exchange of the Auto Club of So. Cal.Docket
47 Cal.4th 302 – Cal. Supreme Court (S155129) 8/3/09INSURANCE / BAD FAITH: The case is not as relevant to title insurance as the lower court case, which held that an insurance company acted in bad faith as a matter of law where a potential for coverage was apparent from the face of the complaint. The Supreme Court reversed, basing its decision on the meaning of “accident” in a homeowner’s policy, and holding that an insured’s unreasonable belief in the need for self-defense does not turn the resulting intentional act of assault and battery into “an accident” within the policy’s coverage clause. Therefore, the insurance company had no duty to defend its insured in the lawsuit brought against him by the injured party.1538 Cahuenga Partners v. Turmeko PropertiesDocket
176 Cal.App.4th 139 – 2nd Dist. (B209548) 7/31/09 Case complete 10/7/09RECONVEYANCE: [This is actually a civil procedure case that it not of much interest to title insurance business, but it is included here because the underlying action sought to cancel a reconveyance.] The court ordered that a reconveyance of a deed of trust be cancelled pursuant to a settlement agreement. The main holding was that a trial court may enforce a settlement agreement against a party to the settlement that has interest in the subject matter of the action even if the party is not named in the action, where the non-party appears in court and consents to the settlement.Lee v. LeeDocket
175 Cal.App.4th 1553 – 5th Dist. (F056107) 7/29/09 Case complete 9/28/09DEEDS / STATUTE OF FRAUDS:
1. The Statute of Frauds does not apply to an executed contract, and a deed that is executed by the grantor and delivered to the grantee is an executed contract. The court rejected defendants’ argument that the deed did not reflect the terms of sale under a verbal agreement.
2. While the alteration of an undelivered deed renders the conveyance void, the alteration of a deed after it has been delivered to the grantee does not invalidate the instrument as to the grantee. The deed is void only as to the individuals who were added as grantees after delivery.White v. CridlebaughDocket
178 Cal.App.4th 506 – 5th Dist. (F053843) 7/29/09 (Mod. 10/20/09) Case complete 12/21/09MECHANIC’S LIENS: Under Business and Professions Code Section 7031, a property owner may recover all compensation paid to an unlicensed contractor, in addition to not being liable for unpaid amounts. Furthermore, this recovery may not be offset or reduced by the unlicensed contractor’s claim for materials or other services.Linthicum v. ButterfieldDocketSup.Ct. Docket
175 Cal.App.4th 259 – 2nd Dist. (B199645) 6/24/09 Petition for review by Cal Supreme Ct. DENIED 9/9/09NOTE: This is a new opinion following a rehearing. The only significant changes from the original opinion filed 4/2/09 (modified 4/8/09) involve the issue of a C.C.P. 998 offer, which is not a significant title insurance or escrow issue.
EASEMENTS: The court quieted title to an easement for access based on the doctrine of “balancing conveniences ” or “relative hardship”. Prohibiting the continued use of the roadway would cause catastrophic loss to the defendants and insignificant loss to the plaintiffs. However, the court remanded the case for the trial court to determine the width of the easement, which should be the minimal width necessary. The court reversed the judgment insofar as it awarded a utility easement to the defendants because they did not seek to quiet title to an easement for utilities, even though they denied the material allegations of that cause of action.United Rentals Northwest v. United Lumber ProductsDocket
174 Cal.App.4th 1479 – 5th Dist. (F055855) 6/18/09 Case complete 8/18/09MECHANIC’S LIENS: Under Civil Code Section 3106, a “work of improvement” includes the demolition and/or removal of buildings. The court held that lumber drying kilns are “buildings” so the contractor who dismantled and removed them was entitled to a mechanic’s lien.People v. ShettyDocketSup.Ct. Docket
174 Cal.App.4th 1488 – 2nd Dist. (B205061) 6/18/09 Petition for review by Cal Supreme Ct. DENIED 9/30/09HOME EQUITY SALES CONTRACT ACT: This case is not significant from a title insurance standpoint, but it is interesting because it is an example of a successful prosecution under the Home Equity Sales Contract Act (Civil Code Section 1695 et seq.).Strauss v. HortonModification Docket
46 Cal.4th 364 – Cal. Supreme Court (S168047) 5/26/09SAME SEX MARRIAGE: The California Supreme Court upheld Proposition 8, which amended the California State Constitution to provide that: “Only marriage between a man and a woman is valid or recognized in California.” Proposition 8 thereby overrode portions of the ruling of In re Marriage Cases, which allowed same-sex marriages. But the Court upheld the marriages that were performed in the brief time same-sex marriage was legal between June 17, 2008 (In re Marriage Cases) through November 5, 2008 (Proposition 8).In re Marriage of LundDocket
174 Cal.App.4th 40 – 4th Dist., Div. 3 (G040863) 5/21/09 Case complete 7/27/09COMMUNITY PROPERTY: An agreement accomplished a transmutation of separate property to community property even though it stated that the transfer was “for estate planning purposes”. A transmutation either occurs for all purposes or it doesn’t occur at all.St. Marie v. Riverside County Regional Park, etc.Docket
46 Cal.4th 282 – Cal. Supreme Court (S159319) 5/14/09OPEN SPACE DEDICATION: Property granted to a Regional Park District is not “actually dedicated” under Public Resources Code Section 5540 for open space purposes until the district’s Board of Directors adopts a resolution dedicating the property for park or open space purposes. Therefore, until the Board of Directors adopts such a resolution, the property may be sold by the District without voter or legislative approval.Manhattan Loft v. Mercury LiquorsDocketSup.Ct. Docket
173 Cal.App.4th 1040 – 2nd Dist. (B211070) 5/6/09 Petition for review by Cal Supreme Ct. DENIED 8/12/09LIS PENDENS: An arbitration proceeding is not an “action” that supports the recordation of a notice of pendency of action. The proper procedure is for a party to an arbitration agreement to file an action in court to support the recording of a lis pendens, and simultaneously file an application to stay the litigation pending arbitration.Murphy v. BurchDocket
46 Cal.4th 157 – Cal. Supreme Court (S159489) 4/27/09EASEMENT BY NECESSITY: This case contains a good discussion of the law of easements by necessity, which the court held did not apply in this case to provide access to plaintiff’s property. This means plaintiff’s property is completely landlocked because the parties had already stipulated that a prescriptive easement could not be established.
An easement by necessity arises by operation of law when 1) there is a strict necessity as when a property is landlocked and 2) the dominant and servient tenements were under the same ownership at the time of the conveyance giving rise to the necessity. The second requirement, while not categorically barred when the federal government is the common grantor, requires a high burden of proof to show 1) the intent of Congress to establish the easement under federal statutes authorizing the patent and 2) the government’s lack of power to condemn the easement. Normally, a reservation of an easement in favor of the government would not be necessary because the government can obtain the easement by condemnation.
The court pointed out that there is a distinction between an implied grant and implied reservation, and favorably quotes a treatise that observes: “an easement of necessity may be created against the government, but the government agency cannot establish an easement by necessity over land it has conveyed because its power of eminent domain removes the strict necessity required for the creation of an easement by necessity.”Abernathy Valley, Inc. v. County of SolanoDocket
173 Cal.App.4th 42 – 1st Dist. (A121817) 4/17/09 Case complete 6/22/09SUBDIVISION MAP ACT: This case contains a very good history of California’s Subdivision Map Act statutes. The court held that parcels shown on a 1909 map recorded pursuant to the 1907 subdivision map law are not entitled to recognition under the Subdivision Map Act’s grandfather clause (Government Code Section 66499.30) because the 1907 act did not regulate the “design and improvement of subdivisions”. The court also held that a local agency may deny an application for a certificate of compliance that seeks a determination that a particular subdivision lot complies with the Act, where the effect of issuing a certificate would be to effectively subdivide the property without complying with the Act.Linthicum v. ButterfieldModificationDocketSup.Ct. Docket
172 Cal.App.4th 1112 – 2nd Dist. (B199645) 4/2/09 SEE NEW OPINION FILED 6/24/09
EASEMENTS: The court quieted title to an easement for access based on the doctrine of “balancing conveniences ” or “relative hardship”. Prohibiting the continued use of the roadway would cause catastrophic loss to the defendants and insignificant loss to the plaintiffs. However, the court remanded the case for the trial court to determine the width of the easement, which should be the minimal width necessary. The court reversed the judgment insofar as it awarded a utility easement to the defendants because they did not seek to quiet title to an easement for utilities, even though they denied the material allegations of that cause of action.McAvoy v. HilbertDocket
172 Cal.App.4th 707 – 4th Dist., Div 1 (D052802) 3/24/09 Case complete 5/27/09ARBITRATION: C.C.P. Section 1298 requires that an arbitration provision in a real estate contract be accompanied by a statutory notice and that the parties indicate their assent by placing their initials on an adjacent space or line. The court held that a listing agreement that is part of a larger transaction for the sale of both a business and real estate is still subject to Section 1298, and refused to enforce an arbitration clause that did not comply with that statute.Peak-Las Positas Partners v. BollagModificationDocket
172 Cal.App.4th 101 – 2nd Dist. (B205091) 3/16/09 Case complete 5/27/09ESCROW: Amended escrow instructions provided for extending the escrow upon mutual consent which “shall not be unreasonably withheld or delayed”. The court held that substantial evidence supported the trial court’s determination that the seller’s refusal to extend escrow was unreasonable. The court pointed out the rule that equity abhors a forfeiture and that plaintiff had paid a non-refundable deposit of $465,000 and spent $5 million in project costs to obtain a lot line adjustment that was necessary in order for the property to be sold.Alfaro v. Community Housing Improvement System & Planning AssnModificationDocketSup.Ct. Docket
171 Cal.App.4th 1356 6th Dist. (H031127) 2/19/09 Petition for review by Cal Supreme Ct. DENIED 5/13/09CC&R’s: The court upheld the validity of recorded CC&R’s containing an affordable housing restriction that required property to remain affordable to buyers with low to moderate income. The court reached several conclusions:
1. Constructive notice of recorded CC&R’s is imparted even if they are not referenced in a subsequent deed,
2. CC&R’s may describe an entire tract, and do not need to describe individual lots in the tract,
3. An affordable housing restriction is a reasonable restraint on alienation even if it is of indefinite duration,
4. Defendants had a duty as sellers to disclose the existence of the CC&R’s. Such disclosure was made if plaintiffs were given, prior to close of escrow, preliminary reports that disclosed the CC&R’s.
5. The fact that a victim had constructive notice of a matter from public records is no defense to fraud. The existence of such public records may be relevant to whether the victim’s reliance was justifiable, but it is not, by itself, conclusive.
6. In the absence of a claim that defendants somehow prevented plaintiffs from reading the preliminary reports or deeds, or misled them about their contents, plaintiffs cannot blame defendants for their own neglect in reading the reports or deeds. Therefore, the date of discovery of alleged fraud for failing to disclose the affordable housing restriction would be the date plaintiffs received their preliminary reports or if they did not receive a preliminary report, the date they received their deeds.Kwok v. Transnation Title Insurance Company DocketSup.Ct. Docket
170 Cal.App.4th 1562 – 2nd Dist. (B207421) 2/10/09 Petition for review by Cal Supreme Ct. DENIED 4/29/09TITLE INSURANCE: Plaintiffs did not succeed as insureds “by operation of law” under the terms of the title insurance policy after transfer of the property from a wholly owned limited liability company, of which appellants were the only members, to appellants as trustees of a revocable family trust. This case highlights the importance of obtaining a 107.9 endorsement, which adds the grantee as an additional insured under the policy.Pro Value Properties v. Quality Loan Service Corp.Docket
170 Cal.App.4th 579 – 2nd Dist. (B204853) 1/23/09 Case complete 3/27/09TRUSTEE’S SALES: A Trustee’s Deed was void because the trustee failed to record a substitution of trustee. The purchaser at the sale was entitled to a return of the money paid plus interest. The interest rate is the prejudgment interest rate of seven percent set forth in Cal. Const., Art. XV, Section 1. A trustee’s obligations to a purchaser are based on statute and not on a contract. Therefore, Civil Code Section 3289 does not apply, since it only applies to a breach of a contract that does not stipulate an interest rate.Sixells v. Cannery Business ParkDocketSup.Ct. Docket
170 Cal.App.4th 648 – 3rd Dist. (C056267) 12/29/08 Petition for review by Cal Supreme Ct. DENIED 3/25/09CONTRACTS: The Subdivision Map Act (Gov. Code, Section 66410 et seq.) prohibits the sale of a parcel of real property until a final subdivision map or parcel map has been filed unless the contract to sell the property is “expressly conditioned” upon the approval and filing of a final map (66499.30(e)). Here, the contract satisfied neither requirement because it allowed the purchaser to complete the purchase if, at its election, the subject property was made into a legal parcel by recording a final map or if the purchaser “waived” the recording of a final map. Therefore the contract was void.Patel v. LiebermenschDocket 45 Cal.4th 344 – Cal. Supreme Court (S156797) 12/22/08SPECIFIC PERFORMANCE: The material factors required for a written contract are the seller, the buyer, the price to be paid, the time and manner of payment, and the property to be transferred, describing it so it may be identified. Here, specific performance of an option was granted even though it was not precise as to the time and manner of payment because where a contract for the sale of real property specifies no time of payment, a reasonable time is allowed. The manner of payment is also a term that may be supplied by implication.In re Marriage of Brooks and RobinsonDocketSup.Ct. Docket
169 Cal.App.4th 176 – 4th Dist., Div. 2 (E043770) 12/16/08 Request for review and depublication by Cal Supreme Ct. DENIED 3/25/09COMMUNITY PROPERTY: The act of taking title to property in the name of one spouse during marriage with the consent of the other spouse effectively removes that property from the general presumption that the property is community property. Instead, there is a presumption that the parties intended title to be held as stated in the deed. This presumption can only be overcome by clear and convincing evidence of a contrary agreement, and not solely by tracing the funds used to purchase the property or by testimony of an intention not disclosed at the time of the execution of the conveyance. Because the court found that there was no agreement to hold title other than as the separate property of the spouse who acquired title in her own name, it did not reach the issue of whether a purchaser from that spouse was a BFP or would be charged with knowledge of that the seller’s spouse had a community property interest in the property.The Formula, Inc. v. Superior CourtDocket
168 Cal.App.4th 1455 – 3rd Dist. (C058894) 12/10/09 Case complete 2/10/09LIS PENDENS: A notice of litigation filed in another state is not authorized for recording under California’s lis pendens statutes. An improperly filed notice of an action in another state is subject to expungement by a California court, but not under the authority of C.C.P. Section 405.30, and an order of expungement is given effect by being recorded in the chain of title to overcome the effect of the earlier filing.Ekstrom v. Marquesa at Monarch Beach HOADocketSup.Ct. Docket
168 Cal.App.4th 1111 – 4th Dist., Div. 3 (G038537) 12/1/08 Depublication request DENIED 3/11/09CC&R’s: A provision in CC&R’s requiring all trees on a lot to be trimmed so as to not exceed the roof of the house on the lot, unless the tree does not obstruct views from other lots, applies to palm trees even though topping a palm tree will kill it. All trees means “all trees”, so palm trees are not exempt from the requirement that offending trees be trimmed, topped, or removed.Spencer v. MarshallDocket
168 Cal.App.4th 783 – 1st Dist. (A119437) 11/24/08 Case complete 1/26/09HOME EQUITY SALES: The Home Equity Sales Contract Act applies even where the seller is in bankruptcy and even where the seller’s Chapter 13 Bankruptcy Plan allows the seller to sell or refinance the subject property without further order of the court.Kachlon v. MarkowitzDocket
168 Cal.App.4th 316 – 2nd Dist. (B182816) 11/17/08 Case complete 1/27/09TRUSTEE’S SALES:
1. The statutorily required mailing, publication, and delivery of notices in nonjudicial foreclosure, and the performance of statutory nonjudicial foreclosure procedures, are privileged communications under the qualified, common-interest privilege, which means that the privilege applies as long as there is no malice. The absolute privilege for communications made in a judicial proceeding (the “litigation privilege”) does not apply.
2. Actions seeking to enjoin nonjudicial foreclosure and clear title based on the provisions of a deed of trust are actions on a contract, so an award of attorney fees under Civil Code Section 1717 and provisions in the deed of trust is proper.
3. An owner is entitled to attorney fees against the trustee who conducted trustee’s sale proceedings where the trustee did not merely act as a neutral stakeholder but rather aligned itself with the lender by denying that the trustor was entitled to relief.Hines v. LukesDocket
167 Cal.App.4th 1174 – 2nd Dist. (B199971) 10/27/08 Case complete 12/31/08EASEMENTS: [Not significant from a title insurance standpoint]. The underlying dispute concerns an easement but the case involves only civil procedure issues pertaining to the enforcement of a settlement agreement.Satchmed Plaza Owners Association v. UWMC Hospital Corp.Docket
167 Cal.App.4th 1034 – 4th Dist., Div. 3 (G038119) 10/23/08 Case complete 12/23/08RIGHT OF FIRST REFUSAL: [Not significant from a title insurance standpoint]. The underlying dispute concerns a right of first refusal but the case involves only civil procedure issues pertaining to a party’s waiver of its right to appeal where it has accepted the benefits of the favorable portion of judgment.Gray v. McCormickDocketSup.Ct. Docket
167 Cal.App.4th 1019 – 4th Dist., Div. 3 (G039738) 10/23/08 Petition for review by Cal Supreme Ct. DENIED 1/14/09EASEMENTS: Exclusive easements are permitted under California law, but the use by the owner of the dominant tenement is limited to the purposes specified in the grant of easement, not all conceivable uses of the property.In re Estate of FelderDocket
167 Cal.App.4th 518 – 2nd Dist. (B205027) 10/9/08 Case complete 12/11/08CONTRACTS: [Not significant from a title insurance standpoint]. The case held that an estate had the right to retain the entire deposit upon a purchaser’s breach of a sales contract even though the estate had only a 1/2 interest in the subject property.Secrest v. Security National Mortgage Loan TrustOrder Modifying Opinion DocketSup.Ct. Docket
167 Cal.App.4th 544 – 4th Dist., Div. 3 (G039065) 10/9/08, Modified 11/3/08 Petition for review by Cal Supreme Ct. DENIED 12/17/08LOAN MODIFICATION: Because a note and deed of trust come within the statute of frauds, a Forbearance Agreement also comes within the statute of frauds pursuant to Civil Code section 1698. Making the downpayment required by the Forbearance Agreement was not sufficient part performance to estop Defendants from asserting the statute of frauds because payment of money alone is not enough as a matter of law to take an agreement out of the statute, and the Plaintiffs have legal means to recover the downpayment if they are entitled to its return. In addition to part performance, the party seeking to enforce the contract must have changed position in reliance on the oral contract to such an extent that application of the statute of frauds would result in an unjust or unconscionable loss, amounting in effect to a fraud.FDIC v. DintinoDocket
167 Cal.App.4th 333 – 4th Dist., Div. 1 (D051447) 9/9/08 (Pub. Order 10/2/08) Case complete 12/2/08TRUST DEEDS: A lender who mistakenly reconveyed a deed of trust could not sue under the note because it would violate the one action rule. However, the lender prevailed on its unjust enrichment cause of action. The applicable statute of limitations was the 3-year statute for actions based on fraud or mistake, and not the 4-year statute for actions based on contract. Nevertheless, the action was timely because the statute did not begin to run until the lender reasonably discovered its mistake, and not from the date of recordation of the reconveyance. Finally, the court awarded defendant attorney’s fees attributable to defending the contract cause of action because defendant prevailed on that particular cause of action even though he lost the lawsuit.California Coastal Commission v. AllenDocketSup.Ct. Docket
167 Cal.App.4th 322 – 2nd Dist. (B197974) 10/1/08 Petition for review by Cal Supreme Ct. DENIED 1/14/09HOMESTEADS:
1. The assignees of a judgment properly established their rights as assignees by filing with the clerk of the court an acknowledgement of assignment of judgment.
2. The subject property was not subject to a homestead exemption because the debtor transferred the property to a corporation of which he was the sole shareholder. The homestead exemption only applies to the interest of a natural person in a dwelling.
3. The debtor could not claim that he was only temporarily absent from a dwelling in order to establish it as his homestead where he leased it for two years. This is true even though the debtor retained the right to occupy a single car section of the garage and the attic.In re Marriage of HoltemannDocketSup.Ct. Docket
162 Cal.App.4th 1175 – 2nd Dist. (B203089) 9/15/08 Petition for review by Cal Supreme Ct. DENIED 12/10/08COMMUNITY PROPERTY: Transmutation of separate property to community property requires language which expressly states that the characterization or ownership of the property is being changed. Here, an effective transmutation occurred because the transmutation agreement clearly specified that a transmutation was occurring and was not negated by arguably confusing language in a trust regarding the parties’ rights to terminate the trust. The court also stated that it was not aware of any authority for the proposition that a transmutation can be conditional or temporary. However, while questioning whether a transmutation can be conditional or temporary, the court did not specifically make that holding because the language used by the parties was not conditional.Mission Shores Association v. PheilDocket
166 Cal.App.4th 789 – 4th Dist., Div. 2 (E043932) 9/5/08 Case complete 11/7/08CC&R’s: Civil Code Section 1356 allows a court to reduce a super-majority voting requirement to amend CC&R’s where the court finds that the amendment is reasonable. Here the court reduced the 2/3 majority requirement to a simple majority for an amendment to limit rentals of homes to 30 days or more.Zanelli v. McGrath Docket
166 Cal.App.4th 615 – 1st Dist. (A117111) 9/2/08 Case complete 11/4/08EASEMENTS:
1. The doctrine of merger codified in Civil Code Sections 805 and 811 applies when “the right to the servitude,” and “the right to the servient tenement” are not vested in a single individual, but in the same persons;
2. The doctrine of merger applies regardless of whether the owners held title as joint tenants or tenants in common. Also, the fact that one owner held his interest in one of the properties as trustee for his inter vivos revocable trust does not preclude merger because California law recognizes that when property is held in this type of trust the settlor has the equivalent of full ownership of the property. (If he had held title only in a representative capacity as a trustee for other beneficiaries under the terms of an irrevocable trust, then his ownership might not result in extinguishment by merger because he would only hold the legal title for the benefit of others.) The court cites Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, stating that a revocable inter vivos trust is recognized as simply a probate avoidance device, but does not prevent creditors of the settlers from reaching trust property.
(3) After being extinguished by merger, an easement is not revived upon severance of the formerly dominant and servient parcels unless it is validly created once again.Ritter & Ritter v. The Churchill Condominium Assn. Docket
166 Cal.App.4th 103 – 2nd Dist. (B187840) 7/22/08 (pub. order 8/21/08) Case complete 10/21/08HOMEOWNERS’ ASSOCIATIONS: A member of a condominium homeowners’ association can recover damages from the association which result from a dangerous condition negligently maintained by the association in the common area. However, the court found in favor of the individual directors because a greater degree of fault is necessary to hold unpaid individual board members liable, and such greater degree of fault was not present here.Kempton v. City of Los AngelesDocketSup.Ct. Docket
165 Cal.App.4th 1344 – 2nd Dist. (B201128) 8/13/08 Request for Depublication by Cal Supreme Ct. DENIED 11/12/08NUISANCE: A private individual may bring an action against a municipality to abate a public nuisance when the individual suffers harm that is specially injurious to himself, or where the nuisance is a public nuisance per se, such as blocking a public sidewalk or road. The court held that plaintiff’s assertions that neighbors’ fences were erected upon city property, prevent access to plaintiff’s sidewalk area, and block the sightlines upon entering and exiting their garage were sufficient to support both a public nuisance per se and specific injury.Claudino v. PereiraDocketSup.Ct. Docket
165 Cal.App.4th 1282 – 3rd Dist. (C054808) 8/12/08 Petition for review by Cal Supreme Ct. DENIED 11/12//08SURVEYS: Determining the location of a boundary line shown on a plat recorded pursuant to the 1867 Townsite Acts requires an examination of both the plat and the surveyor’s field notes. Here, the plat showed the boundary as a straight line, but the court held that the boundary followed the center line of a gulch because the field notes stated that the boundary was “down said gulch”.Zack’s, Inc. v. City of SausalitoDocket
165 Cal.App.4th 1163 – 1st Dist. (A118244) 8/11/08 Case complete 10/14/08TIDELANDS / PUBLIC STREETS: A statute authorizing the City’s lease of tidelands does not supersede other state laws establishing procedures for the abandonment of public streets. Because the City failed to follow the normal procedure for abandonment of the portion of the street upon which it granted a lease, the leasehold was not authorized and can therefore be deemed a nuisance.Gehr v. Baker Hughes Oil Field OperationsDocketSup.Ct. Docket
165 Cal.App.4th 660 – 2nd Dist. (B201195) 7/30/08 Petition for review by Cal Supreme Ct. DENIED 10/16/08NUISANCE: Plaintiff purchased from Defendant real property that was contaminated, and Defendant had begun the remediation process. The 3-year statute of limitations for suing under a permanent nuisance theory had expired. So Plaintiff sued for nuisance damages under a continuing nuisance theory, seeking interest rate differential damages based on the difference in the interest rate between an existing loan and a loan that plaintiff could have obtained if not for the contamination.
The court held that plaintiff’s claim for interest rate differential damages is actually a claim for diminution in value, which may not be recovered under a continuing nuisance theory. Damages for diminution in value may only be recovered for permanent, not continuing, nuisances. When suing for a continuing nuisance, future or prospective damages are not allowed, such as damages for diminution in the value of the subject property. A nuisance can only be considered “continuing” if it can be abated, and therefore a plaintiff suing under this theory may only recover the costs of abating the nuisance.
If the nuisance has inflicted a permanent injury on the land, the plaintiff generally must bring a single lawsuit for all past, present, and future damages within three years of the creation of the nuisance. But if the nuisance is one which may be discontinued at any time, it is considered continuing in character and persons harmed by it may bring successive actions for damages until the nuisance is abated. Recovery is limited, however, to actual injury suffered prior to commencement of each action.Witt Home Ranch v. County of SonomaDocketSup.Ct. Docket
165 Cal.App.4th 543 – 1st Dist. (A118911) 7/29/08 Petition for review by Cal Supreme Ct. DENIED 5/28/08SUBDIVISION MAP ACT: This case contains a good history of California’s Subdivision Map Act statutes. The court held that the laws governing subdivision maps in 1915 did not regulate the “design and improvement of subdivisions,” as required by the grandfather clause of Government Code Section 66499.30. The subdivision map in this case was recorded in 1915 and no lots were subsequently conveyed, so the map does not create a valid subdivision.T.O. IX v. Superior CourtDocketSup.Ct. Docket
165 Cal.App.4th 140 – 2nd Dist. (B203794) 7/24/08 Petition for review by Cal Supreme Ct. DENIED 9/10/08MECHANIC’S LIENS: A mechanic’s lien claimant recorded a mechanic’s lien against each of the nine parcels in a project, each lien for the full amount due under the contract. The court held that defendant could record a single release bond under Civil Code Section 3143 to release all of the liens.Kassir v. Zahabi Docket
164 Cal.App.4th 1352 – 4th Dist., Div. 3 (G038449) 3/5/08 (Pub. Order 4/3/08, Received 7/16/08) Case complete 5/9/08SPECIFIC PERFORMANCE: The trial court ordered Defendant to specifically perform his contract to sell real property to Plaintiff, and further issued a judgment ordering Defendant to pay Plaintiff for rents accruing during the time Defendant was able to perform the agreement but refused to do so. The court held that because the property was overencumbered, Defendant would have received nothing under the agreement and no offset was required.
The court explained that because execution of the judgment in a specific performance action will occur later than the date of performance provided by the contract, financial adjustments must be made to relate their performance back to the contract date, namely: 1) when a buyer is deprived of possession of the property pending resolution of the dispute and the seller receives rents and profits, the buyer is entitled to a credit against the purchase price for the rents and profits from the time the property should have been conveyed to him, 2) a seller also must be treated as if he had performed in a timely fashion and is entitled to receive the value of his lost use of the purchase money during the period performance was delayed, 3) if any part of the purchase price has been set aside by the buyer with notice to the seller, the seller may not receive credit for his lost use of those funds and 4) any award to the seller representing the value of his lost use of the purchase money cannot exceed the rents and profits awarded to the buyer, for otherwise the breaching seller would profit from his wrong.Grant v. RatliffDocketSup.Ct. Docket
164 Cal.App.4th 1304 – 2nd Dist. (B194368) 7/16/08 Request for depublication by Cal Supreme Ct. DENIED 10/1/08PRESCRIPTIVE EASEMENTS: The plaintiff/owner of Parcel A sought to establish a prescriptive easement to a road over Parcel B. In order to establish the requisite 5-year period of open and notorious possession, the plaintiff needed to include the time that the son of the owner of Parcel B spent living in a mobile home on Parcel A. The court held that the son’s use of Parcel A was not adverse but was instead a matter of “family accommodation” and, therefore, a prescriptive easement was not established. The court also discussed: 1) a party seeking to establish a prescriptive easement has the burden of proof by clear and convincing evidence and 2) once the owner of the dominant tenement shows that use of an easement has been continuous over a long period of time, the burden shifts to the owner of the servient tenement to show that the use was permissive, but the servient tenement owner’s burden is a burden of producing evidence, and not a burden of proof.SBAM Partners v. WangDocket
164 Cal.App.4th 903 – 2nd Dist. (B204191) 7/9/08 Case complete 9/10/08HOMESTEADS: Under C.C.P. Section 704.710, a homestead exemption is not allowed on property acquired by the debtor after the judgment has been recorded unless it was purchased with exempt proceeds from the sale, damage or destruction of a homestead within the six-month safe harbor period.Christian v. FloraDocket
164 Cal.App.4th 539 – 3rd Dist. (C054523) 6/30/08 Case complete 9/2/08EASEMENTS: Where parcels in a subdivision are resubdivided by a subsequent parcel map, the new parcel map amends the provisions of any previously recorded parcel map made in compliance with the Map Act. Here, although the deeds to plaintiffs referred to the original parcel map, since the intent of the parties was that the easement shown on the amended parcel map would be conveyed, the grantees acquired title to the easement shown on the amended map.Lange v. SchillingDocket
163 Cal.App.4th 1412 – 3rd Dist. (C055471) 5/28/08; pub. order 6/16/08 Case Complete 8/18/08REAL ESTATE AGENTS: The clear language of the standard California real estate purchase agreement precludes an award of attorney’s fees if a party does not attempt mediation before commencing litigation. Because plaintiff filed his lawsuit before offering mediation, there was no basis to award attorney’s fees.Talbott v. HustwitDocketSup.Ct. Docket
164 Cal.App.4th 148 – 4th Dist., Div. 3 (G037424) 6/20/08 Petition for review and depublication DENIED by Cal Supreme Ct. 9/24/08GUARANTEES:
1. C.C.P. 580a, which requires an appraisal of the real property security before the court may issue a deficiency judgment, does not apply to an action against a guarantor.
2. A lender cannot recover under a guaranty where there the debtor and guarantor already have identical liability, such as with general partners or trustees of a revocable trust in which the debtor is the settlor, trustee and primary beneficiary. Here, however, a guarantee signed by the trustees of the debtors’ trust is enforceable as a “true guarantee” because, although the debtors were the settlors, they were a) secondary, not primary, beneficiaries and b) were not the trustees.Mayer v. L & B Real EstateSup.Ct. Docket
43 Cal.4th 1231 – Cal. Supreme Court (S142211) 6/16/08TAX SALES: The one-year statute of limitations for attacking a tax sale does not begin to run against a property owner who is in “undisturbed possession” of the subject property until that owner has actual notice of the tax sale. Ordinarily, a property owner who has failed to pay property taxes has sufficient knowledge to put him on notice that a tax sale might result. However, in this case the property owners did not have notice because they purchased a single piece of commercial property and received a single yearly tax bill. They had no reason to suspect that due to errors committed by the tax assessor, a small portion of their property was being assessed separately and the tax bills were being sent to a previous owner.
NOTE: This creates a hazard for title companies insuring after a tax sale in reliance on the one-year statute of limitations in Revenue and Taxation Code Section 3725.California Golf v. CooperDocketSup.Ct. Docket
163 Cal.App.4th 1053 – 2nd Dist. (B195211) 6/9/08 Petition for review by Cal Supreme Ct. DENIED 9/17/08TRUSTEE’S SALES:
1. A bidder at a trustee’s sale may not challenge the sale on the basis that the lender previously obtained a decree of judicial foreclosure because the doctrine of election of remedies benefits only the trustor or debtor.
2. A lender’s remedies against a bidder who causes a bank to stop payment on cashier’s checks based on a false affidavit asserting that the checks were lost is not limited to the remedies set forth in CC Section 2924h, and may pursue a cause of action for fraud against the bidder.
(The case contains a good discussion (at pp. 25 – 26) of the procedure for stopping payment on a cashier’s check by submitting an affidavit to the issuing bank.)Biagini v. BeckhamDocket
163 Cal.App.4th 1000 – 3rd Dist. (C054915) 6/9/08 Case complete 8/11/08DEDICATION:
1. Acceptance of a dedication may be actual or implied. It is actual when formal acceptance is made by the proper authorities, and implied when a use has been made of the property by the public 1) of an intensity that is reasonable for the nature of the road and 2) for such a length of time as will evidence an intention to accept the dedication. BUT the use in this case was not sufficient because the use was by neighbors whose use did not exceed what was permitted pursuant to a private easement over the same area.
2. A statutory offer of dedication can be revoked as to the public at large by use of the area that is inconsistent with the dedication, but the offer remains open for formal acceptance by the public entity to which the offer was made. Steiner v. ThextonDocketSup.Ct. Docket
Cal.App. 3rd Dist. (C054605) 5/28/08 REVERSED by Cal. Supreme Ct.OPTIONS: A contract to sell real property where the buyer’s performance was entirely conditioned on the buyer obtaining regulatory approval to subdivide the property is an option. An option must be supported by consideration, but was not here, where the buyer could back out at any time. Buyer’s promise to deliver to seller copies “of all information, reports, tests, studies and other documentation” was not sufficient consideration to support the option.In re Marriage CasesDocket
43 Cal.4th 757 – Cal. Supreme Court (S147999) 5/15/08MARRIAGE: The language of Family Code Section 300 limiting the designation of marriage to a union “between a man and a woman” is unconstitutional and must be stricken from the statute, and the remaining statutory language must be understood as making the designation of marriage available both to opposite-sex and same-sex couples.Harvey v. The Landing Homeowners AssociationDocket
162 Cal.App.4th 809 – 4th Dist., Div. 1 (D050263) 4/4/08 (Cert. for Pub. 4/30/08) Case complete 6/30/08HOMEOWNERS ASSOCIATIONS: The Board of Directors of an HOA has the authority to allow owners to exclusively use common area accessible only to those owners where the following provision of the CC&R’s applied: “The Board shall have the right to allow an Owner to exclusively use portions of the otherwise nonexclusive Common Area, provided that such portions . . . are nominal in area and adjacent to the Owner’s Exclusive Use Area(s) or Living Unit, and, provided further, that such use does not unreasonably interfere with any other Owner’s use . . .” Also, this is allowed under Civil Code Section 1363.07(a)(3)(E).Salma v. CaponDocket
161 Cal.App.4th 1275 – 1st Dist. (A115057) 4/9/08 Case complete 6/11/08HOME EQUITY SALES: A seller claimed he sold his house for far less than it was worth “due to the duress of an impending trustee’s sale and the deceit of the purchasers”. The case involves procedural issues that are not relevant to this web site. However, it is included here because it demonstrates the kind of mess that can occur when you are dealing with property that is in foreclosure. Be careful, folks.Aviel v. NgDocket
161 Cal.App.4th 809 – 1st Dist. (A114930) 2/28/08; pub. order 4/1/08 Case complete 5/6/08LEASES / SUBORDINATION: A lease provision subordinating the lease to “mortgages” also applied to deeds of trust because the two instruments are functionally and legally the same. Therefore a foreclosure of a deed of trust wiped out the lease.People v. MartinezDocket
161 Cal.App.4th 754 – 4th Dist., Div. 2 (E042427) 4/1/08 Case complete 6/2/08FORGERY: This criminal case involves a conviction for forgery of a deed of trust. [NOTE: The crime of forgery can occur even if the owner actually signed the deed of trust. The court pointed out that “forgery is committed when a defendant, by fraud or trickery, causes another to execute a document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature.”Pacific Hills Homeowners Association v. PrunDocket
160 Cal.App.4th 1557 – 4th Dist., Div. 3 (G038244) 3/20/08 Case complete 5/27/08CC&R’s: Defendants built a gate and fence within the setback required by the CC&R’s. 1) The court held that the 5-year statute of limitations of C.C.P. 336(b) applies to unrecorded as well as recorded restrictions, so that the shorter 4-year statute of limitations of C.C.P. 337 is inapplicable. 2) The court upheld the trial court’s equitable remedy of requiring the HOA to pay 2/3 of the cost of relocation defendant’s gate based upon the HOA’s sloppiness in not pursuing its case more promptly.Nicoll v. RudnickDocket
160 Cal.App.4th 550 – 5th Dist. (F052948) 2/27/08 Case complete 4/28/08WATER RIGHTS: An appropriative water right established in a 1902 judgment applied to the entire 300 acre parcel so that when part of the parcel was foreclosed and subsequently re-sold, the water rights must be apportioned according to the acreage of each parcel, not according to the prior actual water usage attributable to each parcel. NOTE: This case contains a good explanation of California water rights law.Real Estate Analytics v. VallasDocket
160 Cal.App.4th 463 – 4th Dist., Div. 1 (D049161) 2/26/08 Case complete 5/29/08SPECIFIC PERFORMANCE: Specific performance is appropriate even where the buyer’s sole purpose and entire intent in buying the property was to earn money for its investors and turn a profit as quickly as possible. The fact that plaintiff was motivated solely to make a profit from the purchase of the property does not overcome the strong statutory presumption that all land is unique and therefore damages were inadequate to make plaintiff whole for the defendant’s breach.Fourth La Costa Condominium Owners Assn. v. SeithDocket
159 Cal.App.4th 563 – 4th Dist., Div. 1 (D049276) 1/30/08 Case complete 4/1/08CC&R’s/HOMEOWNER’S ASSOCIATIONS: The court applied CC 1356(c)(2) and Corp. Code 7515, which allow a court to reduce the supermajority vote requirement for amending CC&R’s and bylaw because the amendments were reasonable and the balloting requirements of the statutes were met.02 Development, LLC v. 607 South Park, LLCDocket
159 Cal.App.4th 609 – 2nd Dist. (B200226) 1/30/08 Case complete 4/3/08SPECIFIC PERFORMANCE: 1) An assignment of a purchaser’s rights under a purchase agreement prior to creation of the assignee as an LLC is valid because an organization can enforce pre-organization contracts if the organization adopts or ratifies them. 2) A purchaser does not need to prove that it already had the necessary funds, or already had binding commitments from third parties to provide the funds, when the other party anticipatorily repudiates the contract. All that plaintiff needed to prove was that it would have been able to obtain the necessary funding (or funding commitments) in order to close the transaction on time.Richeson v. HelalDocketSup.Ct. Docket
158 Cal.App.4th 268 – 2nd Dist. (B187273) 11/29/07; Pub. & mod. order 12/21/07 (see end of opinion)Petition for review by Cal Supreme Ct. DENIED 2/20/08CC&R’s / MUNICIPALITIES: An Agreement Imposing Restrictions (“AIR”) and CC&R’s did not properly lend themselves to an interpretation that would prohibit the City from changing the permitted use or zoning and, were they so construed, the AIR and CC&R’s would be invalid as an attempt by the City to surrender its future right to exercise its police power respecting the property. Here, the AIR and CC&R’s did not prohibit the City from issuing a new conditional use permit allowing the continued use of the subject property as a neighborhood market.Bill Signs Trucking v. Signs Family Ltd. PartnershipDocketSup.Ct. Docket
157 Cal.App.4th 1515 – 4th Dist., Div. 1 (D047861) 12/18/07 Petition for review by Cal Supreme Ct. DENIED 4/9/08LEASES / RIGHT OF FIRST REFUSAL: A tenant’s right of first refusal under a commercial lease is not triggered by the conveyance of an interest in the property between co-partners in a family limited partnership that owns the property and is the landlord.Schweitzer v. Westminster InvestmentsDocketSup.Ct. Docket
157 Cal.App.4th 1195 – 4th Dist., Div. 1 (D049589) 12/13/07 Petition for review by Cal Supreme Ct. DENIED 3/26/08EQUITY PURCHASERS:
1) The bonding requirement of the Home Equity Sales Contracts Act (Civil Code Section 1695.17) is void for vagueness under the due process clause and may not be enforced. Section 1695.17 is vague because it provides no guidance on the amount, the obligee, the beneficiaries, the terms or conditions of the bond, the delivery and acceptance requirements, or the enforcement mechanisms of the required bond.
2) Although the bond requirement may not be enforced, the remainder of the statutory scheme remains valid because the bond provisions are severable from the balance of the enactment.
3) The court refused to set aside the deed in favor of the equity purchaser because, first, the notice requirements of Civil Code Section 1695.5 appear to have been met and, second, the seller’s right to rescind applies before the deed is recorded but the statute “does not specify that a violation of section 1695.5 provides grounds for rescinding a transaction after recordation of the deed”.Crestmar Owners Association v. StapakisDocket
157 Cal.App.4th 1223 – 2nd Dist. (B191049) 12/13/07 Case complete 2/15/07CC&R’s: Where a developer failed to convey title to two parking spaces as required by the CC&R’s, the homeowner’s association was able to quiet title even though more than 20 years had passed since the parking spaces should have been conveyed. The statute of limitations does not run against someone, such as the homeowner’s association here, who is in exclusive and undisputed possession of the property.Washington Mutual Bank v. BlechmanDocketSup.Ct. Docket
157 Cal.App.4th 662 – 2nd Dist. (B191125) 12/4/07 Petition for review by Cal Supreme Ct. DENIED 3/19/08TRUSTEE’S SALES: The foreclosing lender and trustee are indispensable parties to a lawsuit which seeks to set aside a trustee’s sale. Therefore, a default judgment against only the purchaser at the trustee’s sale is subject to collateral attack.Garretson v. PostDocketSup.Ct. Docket
156 Cal.App.4th 1508 – 4th Dist., Div.2 (E041858) 11/20/07 Petition for review by Cal Supreme Ct. DENIED 2/27/08TRUSTEE’S SALES: A cause of action for wrongful foreclosure does not fall within the protection of Code of Civil Procedure section 425.16, commonly referred to as the anti-SLAPP statute (strategic lawsuit against public participation).Murphy v. BurchDocketSup.Ct. Docket
Cal.App. 1st Dist. (A117051) 11/19/07 AFFIRMED by Cal Supreme Ct. 4/27/09EASEMENT BY NECESSITY: An easement by necessity arises by operation of law when 1) there is a strict necessity as when a property is landlocked and 2) the dominant and servient tenements were under the same ownership at the time of the conveyance giving rise to the necessity. However, the second requirement is not met when the properties were owned by the federal government because the Government has the power of eminent domain, rendering it unnecessary to resort to the easement by necessity doctrine in order to acquire easements.
The court attempts to distinguish Kellogg v. Garcia, 102 Cal.App.4th 796, by pointing out that in that case the issue of eminent domain did not arise because the dominant tenement was owned by a private party and the servient tenements by the federal government. [Ed. Note: the court does not adequately address the fact that the government does not always have the power of eminent domain. It only has that power if a public purpose is involved. Also, I do not think the court adequately distinguishes Kellogg, which seems to hold that common ownership by the federal government satisfies the requirement of common ownership.]Elias Real Estate v. TsengDocketSup.Ct. Docket
156 Cal.App.4th 425 – 2nd Dist. (B192857) 10/25/07 Petition for review by Cal Supreme Ct. DENIED 2/13/08SPECIFIC PERFORMANCE: Acts of a partner falling within Corp. Code 16301(1) (acts in ordinary course of business) are not subject to the statute of frauds. Acts of a partner falling within Corp. Code 16301(2) (acts not in the ordinary course of business) are subject to the statute of frauds. In this case, a sale of the partnership’s real property was not in the ordinary course of business, so it fell within Corp. Code 16301(2) and plaintiff could not enforce a contract of sale signed by only one partner.Strong v. State Board of EqualizationDocketSup.Ct. Docket
155 Cal.App.4th 1182 – 3rd Dist. (C052818) 10/2/07 Petition for review by Cal Supreme Ct. DENIED 1/3/08CHANGE OF OWNERSHIP: The statute that excludes transfers between domestic partners from property tax reassessment is constitutional.County of Solano v. HandleryDocketSup.Ct. Docket
155 Cal.App.4th 566 – 1st Dist. (A114120) 9/21/07 Petition for review by Cal Supreme Ct. DENIED 12/12/07DEEDS: The County brought an action against grantors’ heirs to invalidate restrictions in a deed limiting the subject property to use as a county fair or similar public purposes. The court refused to apply the Marketable Record Title Act to eliminate the power of termination in favor of the grantors because the restrictions are enforceable under the public trust doctrine.Baccouche v. BlankenshipDocket
154 Cal.App.4th 1551 – 2nd Dist (B192291) 9/11/07 Case complete 11/16/07EASEMENTS: An easement that permits a use that is prohibited by a zoning ordinance is not void. It is a valid easement, but cannot be enforced unless the dominant owner obtains a variance. As is true with virtually all land use, whether a grantee can actually use the property for the purposes stated in the easement is subject to compliance with any applicable laws and ordinances, including zoning restrictions.WRI Opportunity Loans II LLC v. CooperDocket
154 Cal.App.4th 525 – 2nd Dist. (B191590) 8/23/07 Case complete 10/26/07USURY: The trial court improperly granted a motion for summary judgment on the basis that the loan was exempt from the usury law.
1. The common law exception to the usury law known as the “interest contingency rule” provides that interest that exceeds the legal maximum is not usurious when its payment is subject to a contingency so that the lender’s profit is wholly or partially put in hazard. The hazard in question must be something over and above the risk which exists with all loans – that the borrower will be unable to pay.
2. The court held that the interest contingency rule did not apply to additional interest based on a percentage of the sale price of completed condominium units because the lender was guaranteed additional interest regardless of whether the project generated rents or profits.
3. The loan did not qualify as a shared appreciation loan, permitted under Civil Code Sections 1917-1917.006, because the note guaranteed the additional interest regardless of whether the property appreciated in value or whether the project generated profits.
4. The usury defense may not be waived by guarantor of a loan. (No other published case has addressed this issue.)Archdale v. American International Specialty Lines Ins. Co.Docket
154 Cal.App.4th 449 – 2nd Dist. (B188432) 8/22/07 Case complete 10/26/07INSURANCE: The case contains good discussions of 1) an insurer’s liability for a judgment in excess of policy limits where it fails to accept a reasonable settlement offer within policy limits and 2) the applicable statutes of limitation.REVERSED by Cal. Supreme Court 12/22/08
Patel v. LiebermenschDocketSup.Ct. Docket
154 Cal.App.4th 373 – 4th, Div. 1 (D048582) 8/21/07REVERSED: SPECIFIC PERFORMANCE: Specific performance of an option was denied where the parties never reached agreement on the amount of the deposit, the length of time of the escrow or payment of escrow expenses if there were a delay. One judge dissented on the basis that the option contract was sufficiently clear to be specifically enforced and the court should insert reasonable terms in place of the uncertain terms.In Re Marriage of RuelasDocket
154 Cal.App.4th 339 – 2nd Dist. (B191655) 8/20/07 Case complete 10/26/07RESULTING TRUST: A resulting trust was created where a daughter acquired property in her own name and the evidence showed that she was acquiring the property for her parents who had poor credit.Stoneridge Parkway Partners v. MW Housing PartnersDocketSup.Ct. Docket
153 Cal.App.4th 1373 – 3rd Dist. (C052082) 8/3/07 Petition for review by Cal Supreme Ct. DENIED 11/14/07USURY: The exemption to the usury law for loans made or arranged by real estate brokers applies to a loan in which the broker who negotiated the loan was an employee of an affiliate of the lender, but nevertheless acted as a third party intermediary in negotiating the loan. Kinney v. OvertonDocketSup.Ct. Docket
153 Cal.App.4th 482 – 4th Dist., Div. 3 (G037146) 7/18/07 Petition for review by Cal Supreme Ct. DENIED 10/10/07EASEMENTS: Former Civil Code Section 812 provided that
“[t]he vacation . . . of streets and highways shall extinguish all private easements therein claimed by reason of the purchase of any lot by reference to a map or plat upon which such streets or highways are shown, other than a private easement necessary for the purpose of ingress and egress to any such lot from or to a public street or highway, except as to any person claiming such easement who, within two years from the effective date of such vacation or abandonment . . . shall have recorded in the office of the recorder of the county in which such vacated or abandoned streets or highways are located a verified notice of his claim to such easement . . .” [Emphasis added.]
The court held that cross-complainant could not maintain an action against the person occupying the disputed abandoned parcel because it was not necessary for access and he did not record the notice required by C.C. Section 812. The court specifically did not address the state of title to the disputed parcel or what interest, if any, cross-defendant may have in the parcel.Hartzheim v. Valley Land & Cattle CompanyDocketSup.Ct. Docket
153 Cal.App.4th 383 – 6th Dist. (H030053) 7/17/07 Petition for review by Cal Supreme Ct. DENIED 10/10/07LEASES / RIGHT OF FIRST REFUSAL: A right of first refusal in a lease was not triggered by a partnership’s conveyance of property to the children and grandchildren of its partners for tax and estate planning purposes because it did not constitute a bona fide offer from any third party. The court considered three factors: 1) the contract terms must be reviewed closely to determine the conditions necessary to invoke the right, 2) where a right of first refusal is conditioned upon receipt of a bona fide third party offer to purchase the property, the right is not triggered by the mere conveyance of that property to a third party and 3) the formalities of the transaction must be reviewed to determine its true nature.Berryman v. Merit Property Mgmt.DocketSup.Ct. Docket
152 Cal.App.4th 1544 – 4th Dist., Div. 3 (G037156) 5/31/07 Petition for review by Cal Supreme DENIED 10/10/07HOMEOWNER’S ASSOCIATIONS: Fees charged by a homeowner’s association upon a transfer of title by a homeowner are limited by Civil Code Section 1368 to the association’s actual costs. The court held that this limitation does not apply to fees charged by a management company hired by the association.Cal-Western Reconveyance Corp. v. ReedDocket
152 Cal.App.4th 1308 – 2nd Dist. (B193014) 6/29/07 Case complete 8/29/07TRUSTEE’S SALES: After a trustee’s sale, the trustee deposited the surplus proceeds into court under CC 2924j in order to determine who was entitled to the excess proceeds. The court held that:
(1) The distribution of surplus proceeds to satisfy child and spousal support arrearages was proper because the County had properly recorded an abstract of support judgment,
(2) The trial court erred in distributing proceeds to the debtor’s former wife to satisfy her claims for a community property equalization payment and for attorney fees ordered in the dissolution proceeding, because no recorded lien or encumbrance secured those claims, which in any event were discharged in the debtor’s bankruptcy proceeding (because child and spousal support obligations are not dischargeable, but property settlement payments are dischargeable), and
(3) The trial court erred in distributing proceeds to the debtor’s former lawyer, who was retained to assist the debtor in the collection of proceeds from the trustee’s sale, because an attorney’s lien on the prospective recovery of a client must be enforced in a separate action.
(4) The debtor failed to produce sufficient evidence to support his claim that he was entitled to the $150,000 homestead exemption applicable when a debtor is physically disabled and unable to engage in substantial gainful employment (so he was entitled to only the standard $50,000 homestead exemption).Poseidon Development v. Woodland Lane EstatesOrder Modifying OpinionDocket
152 Cal.App.4th 1106 – 3rd Dist. (C052573) 6/28/07 Case complete 8/31/07PROMISSORY NOTES: A penalty that applied to late payments of installments did not apply to a late payment of the final balloon payment of principal. The penalty was 10% of the amount due, which made sense for regular installments, but bore no reasonable relationship to actual damages if applied to the balloon payment.Carr v. KaminsDocket
151 Cal.App.4th 929 – 2nd Dist. (B191247) 5/31/07 Case complete 8/1/07QUIET TITLE: A quiet title judgment was set aside by defendant’s heir four years after being entered because the heir was not named and served. The plaintiff believed the defendant to be deceased, but made no effort to locate and serve the defendant’s heirs. [Even though this case contains some unique facts, the fact that a default judgment can be set aside four years after being entered demonstrates the danger of relying on default judgments and the need to closely examine the court file and surrounding circumstances before doing so.]Estate of YoolDocket
151 Cal.App.4th 867 – 1st Dist. (A114787) 5/31/07 Case complete 7/31/07RESULTING TRUST: A decedent held title with her daughter for the purpose of facilitating financing and did not intend to acquire beneficial title. A probate court properly ordered the Special Administrator to convey title to the daughter based on the Resulting Trust Doctrine. It held that the four-year statute of limitations under C.C.P. 343 applied and not C.C.P. 366.2, which limits actions to collect on debts of the decedent to one year after the date of death.Kalway v. City of BerkeleyDocket
151 Cal.App.4th 827 – 1st Dist. (A112569) 5/31/07 Case complete 8/1/07SUBDIVISION MAP ACT: Plaintiff husband transferred title of a parcel to his wife in order to avoid merger under the Subdivision Map Act of a substandard parcel into their adjoining lot. The court held that plaintiffs could not evade the Map Act in this manner. It also held that the City had no authority to obtain an order canceling the deed, but that the wife also had no right to further transfer title to the substandard lot except back to her husband.Delgado v. Interinsurance Exchange of the Auto Club of So. Cal.DocketSup.Ct. Docket
Cal.App. 2nd Dist. (B191272) 6/25/07 REVERSED BY CALIFORNIA SUPREME COURTBAD FAITH: An insurance company acted in bad faith as a matter of law where a potential for coverage was apparent from the face of the complaint. The insured allegedly assaulted plaintiff and there was a potential for coverage because the insured may have acted in self defense. The case contains a thorough analysis of the duties of defense and indemnity.Blackmore v. PowellDocketSup.Ct. Docket
150 Cal.App.4th 1593 – 2nd Dist. (B185326) 5/22/07 Request for depublication DENIED 8/29/07EASEMENTS: An easement “for parking and garage purposes” includes the exclusive right to build and use a garage. Granting an exclusive easement may constitute a violation under the Subdivision Map act, but here there is no violation because the exclusive use of the garage covers only a small portion of the easement and is restricted to the uses described in the easement deed. Amalgamated Bank v. Superior CourtDocketSup.Ct. Docket
149 Cal.App.4th 1003 – 3rd Dist. (C052156, C052395) 4/16/07 Petition for review by Cal Supreme Ct. DENIED 8/8/07LIS PENDENS:
1. In deciding a writ petition from an order granting or denying a motion to expunge a lis pendens after judgment and pending appeal, an appellate court must assess whether the underlying real property claim has “probable validity”. This is the same test that is used before judgment. “Probable validity” post-judgment means that it is more likely than not the real property claim will prevail at the end of the appellate process.
2. A judicial foreclosure sale to a third party is absolute, subject only to the right of redemption, and may not be set aside, except that under C.C.P. Section 701.680(c)(1) the judgment debtor may commence an action to set aside the sale within 90 days only if the purchaser at the sale was the judgment creditor. Here, a potential bidder who was stuck in traffic and arrived too late to the sale could not set it aside because only the judgment debtor can do that and because a third party purchased at the sale. L&B Real Estate v. Housing Authority of Los AngelesDocket
149 Cal.App.4th 950 – 2nd Dist. (B189740) 4/13/07 Case complete 6/13/07TAX DEEDS: Because public property is exempt from taxation, tax deeds purporting to convey such property for nonpayment of taxes are void. Two parcels were inadvertently not included in a deed to the State (subsequently conveyed to the Housing Authority of Los Angeles). Accordingly, the tax collector thought that those parcels were still owned by the seller and sold them at a tax sale after real estate taxes were not paid on them. The court also points out that plaintiff was not a good faith purchaser because it had constructive and actual knowledge of the fact that the Housing Authority’s low income housing was partially located on the two parcels sold at the tax sale.Ulloa v. McMillin Real EstateDocket
149 Cal.App.4th 333 – 4th Dist., Div. 1 (D048066) 3/7/07 (Cert. for pub. 4/4/07) Case complete 6/4/07STATUTE OF FRAUDS: The Statute of Frauds requires the authority of an agent who signs a sales agreement to be in writing if the agent signs on behalf of the party to be charged. However, a plaintiff purchaser whose agent signed her name with only verbal authorization is not precluded by the Statute of Frauds from bringing the action because the defendant is the party to be charged.Jordan v. Allstate Insurance CompanyDocketSup.Ct. Docket
148 Cal.App.4th 1062 – 2nd Dist. (B187706) 3/22/07 Petition for review and depublication DENIED 6/27/07BAD FAITH: Where there is a genuine issue as to the insurer’s liability under the policy, there can be no bad faith liability imposed on the insurer for advancing its side of that dispute. However, there can be bad faith liability where an insurer denies coverage but a reasonable investigation would have disclosed facts showing the claim was covered under other provisions of the policy. The court clarified that an insurer’s failure to investigate can result in bad faith liability only if there is coverage. If there is no coverage, then any failure to properly investigate cannot cause the insured any damage.Shah v. McMcMahonDocket
148 Cal.App.4th 526 – 2nd Dist. (B188972) 3/12/07 Case complete 5/16/07LIS PENDENS: Plaintiffs could not appeal an order for attorney’s fees awarded in a hearing of a motion to expunge a lis pendens. The only remedy is to challenge the award by way of a petition for writ of mandate.Sterling v. TaylorDocket
40 Cal.4th 757 – Cal. Supreme Court (S121676) 3/1/07STATUTE OF FRAUDS: If a memorandum signed by the seller includes the essential terms of the parties’ agreement (i.e. the buyer, seller, price, property and the time and manner of payment), but the meaning of those terms is unclear, the memorandum is sufficient under the statute of frauds if extrinsic evidence clarifies the terms with reasonable certainty. Because the memorandum itself must include the essential contractual terms, extrinsic evidence cannot supply those required terms, however, it can be used to explain essential terms that were understood by the parties but would otherwise be unintelligible to others. In this case, the memorandum did not set forth the price with sufficient clarity because it was uncertain whether it was to be determined by a multiplier applied to the actual rent role or whether the price specified was the agreed price even though it was based on the parties’ incorrect estimate of the rent role.Jet Source Charter v. DohertyDocket
148 Cal.App.4th 1 – 4th Dist., Div. 1 (D044779) 1/30/07 (Pub. order and modification filed 2/28/07 – see end of opinion) Case complete 5/1/07PUNITIVE DAMAGES: Parts I, II, III and IV NOT certified for publication: Where the defendant’s conduct only involves economic damage to a single plaintiff who is not particularly vulnerable, an award which exceeds the compensatory damages awarded is not consistent with due process.Dyer v. MartinezDocketSup.Ct. Docket
147 Cal.App.4th 1240 – 4th Dist., Div. 3 (G037423) 2/23/07 Petition for review by Cal Supreme Ct. DENIED 6/13/07RECORDING: A lis pendens that was recorded but not indexed does not impart constructive notice, so a bona fide purchaser for value takes free of the lis pendens. The party seeking recordation must ensure that all the statutory requirements are met and the recorder is deemed to be an agent of the recording party for this purpose.Behniwal v. MixDocket
147 Cal.App.4th 621 – 4th Dist., Div. 3 (G037200) 2/7/07 Case complete 4/13/07SPECIFIC PERFORMANCE: In a specific performance action, a judgment for plaintiff’s attorneys’ fees cannot be offset against the purchase price that the successful plaintiff must pay defendant for the property. A judgment for attorneys’ fees is not an incidental cost that can be included as part of the specific performance judgment, and it is not a lien that relates back to the filing of the lis pendens. Instead, it is an ordinary money judgment that does not relate back to the lis pendens. So, while plaintiff’s title will be superior to defendant’s liens that recorded subsequent to the lis pendens, those liens are nevertheless entitled to be paid to the extent of available proceeds from the full purchase price.Castillo v. Express EscrowDocket
146 Cal.App.4th 1301 – 2nd Dist. (B186306) 1/18/07 Case complete 3/20/07MOBILEHOME ESCROWS:
1) Health and Safety Code Section 18035(f) requires the escrow agent for a mobile home sale to hold funds in escrow upon receiving written notice of a dispute between the parties, even though the statute specifically states “unless otherwise specified in the escrow instructions” and even though the escrow instructions provided that escrow was to close unless “a written demand shall have been made upon you not to complete it”.
2) Section 18035(f) does not require the written notice of dispute to cite the code section, or to be in any particular form, or that the notice be addressed directly to the escrow holder, or that the notice contain an express request not to close escrow. The subdivision requires nothing more than that the escrow agent receive notice in writing of a dispute between the parties. So receiving a copy of the buyer’s attorney’s letter to the seller was sufficient to notify the escrow agent that a dispute existed.Rappaport-Scott v. Interinsurance ExchangeDocket
146 Cal.App.4th 831 – 2nd Dist (B184917) 1/11/07 Case complete 3/14/07INSURANCE: An insurer’s duty to accept reasonable settlement offers within policy limits applies only to third party actions and not to settlement offers from an insured. An insurer has a duty not to unreasonable withhold payments due under a policy. But withholding benefits under a policy is not unreasonable if there is a genuine dispute between the insurer and the insured as to coverage or the amount of payment due, which is what occurred in this case.In re: Rabin
BAP 9th Circuit 12/8/06BANKRUPTCY/HOMESTEADS: Under California law, the homestead exemption rights of registered domestic partners are identical to those of people who are married. Therefore, domestic partners are limited to a single combined exemption, in the same manner as people who are married. In the absence of a domestic partnership or marriage, each cotenant is entitled to the full homestead exemption.Wachovia Bank v. Lifetime IndustriesDocket
145 Cal.App.4th 1039 – 4th Dist., Div. 2 (E037560) 12/15/06 Case complete 2/16/07OPTIONS:
1. When the holder of an option to purchase real property exercises the option and thereby obtains title to the property, the optionee’s title relates back to the date the option was given, as long as the optionee has the right to compel specific performance of the option. But where the optionee acquires title in a transaction unconnected with the option, such as where there has been a breach of the option agreement so that the optionee did not have the right to specific performance, the optionee takes subject to intervening interests just like any other purchaser.
2. Civil Code Section 2906 provides a safe harbor for a lender to avoid the rule against “clogging” the equity of redemption as long as the option is not dependent on the borrower’s default. But even if the lender falls outside the safe harbor because the exercise of the option is dependent upon borrower’s default, it does not automatically follow that the option is void. Instead, the court will analyze the circumstances surrounding the transaction and the intent of the parties to determine whether the option is either void or a disguised mortgage. Also, even if the transaction is a disguised mortgage the optionee (now mortgagee) has a right to judicially foreclose, which will wipe out intervening interests.Wright v. City of Morro BayDocketSup.Ct. Docket
144 Cal.App.4th 767, 145 Cal.App.4th 309a – 2nd Dist (B176929) 11/7/06 Modification of Opinion 12/6/06Petition for review by Cal Supreme Ct. DENIED 2/21/07DEDICATION/ABANDONMENT: C.C.P. 771.010, which provides for termination of an offer of dedication if not accepted within 25 years, did not apply because 1) the statute cannot be applied retroactively to the City’s acceptance occurring more than 25 years after the offer of dedication and 2) the area covered by the dedicated road has never been used by anyone, so the requirement that the property be “used as if free of the dedication” was not met.State Farm General Insurance Co. v. Wells Fargo BankDocket
143 Cal.App.4th 1098 – 1st Dist. (A111643) 10/10/06 Case complete 12/11/06The “superior equities rule” prevents an insurer, who is subrogated to the rights of the insured after paying a claim, from recovering against a party whose equities are equal or superior to those of the insurer. Thus, an insurer may not recover from an alleged tortfeasor where the tortfeasor’s alleged negligence did not directly cause the insured’s loss. The court questioned the continued vitality of the superior equities rule in California, but felt compelled to follow a 1938 Supreme Court case that applied the rule. The court suggests that the Supreme Court should re-address the issue in light of modern day fault principles.Corona Fruits & Veggies v. Frozsun FoodsDocketSup.Ct. Docket
143 Cal.App.4th 319 – 2nd Dist. (B184507) 9/25/06 Petition for review by Cal Supreme Ct. DENIED 12/20/06UCC: A UCC-1 financing statement filed in the name of Armando Munoz is not effective where the debtor’s true name was Armando Munoz Juarez.Warren v. MerrillDocket
143 Cal.App.4th 96 – 2nd Dist. (B186698) 9/21/06 Case complete 11/21/06QUIET TITLE: The Court quieted title in plaintiff where title was taken in the real estate agent’s daughter’s name as part of a fraudulent scheme perpetrated by the agent. This is not a significant title insurance case, but I posted it for reference since it involves quiet title.McKell v. Washington MutualDocketSup.Ct. Docket
142 Cal.App.4th 1457 – 2nd Dist. (B176377) 9/18/06 Request for depublication DENIED 1/17/07RESPA: Washington Mutual (i) charged hundreds of dollars in “underwriting fees” when the underwriting fee charged by Fannie Mae and Freddie Mac to WAMU was only $20 and (ii) marked up the charges for real estate tax verifications and wire transfer fees. The court followed Kruse v. Wells Fargo Home Mortgage (2d Cir. 2004) 383 F.3d 49, holding that marking up costs, for which no additional services are performed, is a violation of RESPA. Such a violation of federal law constitutes an unlawful business practice under California’s Unfair Competition Law (“UCL”) and a breach of contract. Plaintiffs also stated a cause of action for an unfair business practice under the UCL based on the allegation that WAMU led them to believe they were being charged the actual cost of third-party services.Reilly v. City and County of San FranciscoDocketSup.Ct. Docket
142 Cal.App.4th 480 – 1st Dist. (A109062) 8/29/06 Request for depublication DENIED 12/13/06PROPERTY TAX: A change in ownership of real property held by a testamentary trust occurs when an income beneficiary of the trust dies and is succeeded by another income beneficiary. Also, for purposes of determining change in ownership, a life estate either in income from the property or in the property itself is an interest equivalent in value to the fee interest.Markowitz v. FidelityDocketSup.Ct. Docket
142 Cal.App.4th 508 – 2nd Dist. (B179923) 5/31/06 Publication ordered by Cal. Supreme Court 8/30/06ESCROW: Civil Code Section 2941, which permits a title insurance company to record a release of a deed of trust if the lender fails to do so, does not impose an obligation on an escrow holder/title company to record the reconveyance on behalf of the trustee. Citing other authority, the Court states that an escrow holder has no general duty to police the affairs of its depositors; rather, an escrow holder’s obligations are limited to faithful compliance with the parties’ instructions, and absent clear evidence of fraud, an escrow holder’s obligations are limited to compliance with the parties’ instructions. The fact that the borrower had an interest in the loan escrow does not mean that he was a party to the escrow, or to the escrow instructions.Cebular v. Cooper Arms Homeowners AssociationDocketSup.Ct. Docket
142 Cal.App.4th 106 – 2nd Dist. (B182555) 8/21/06 Request for review by Cal Supreme Ct. DENIED 11/15/06; Request to publish Part III, Sec. B filed 10/24/06COVENANTS, CONDITIONS AND RESTRICTIONS: It is not unreasonable for CC&R’s to allocate dues obligations differently for each unit, along with the same allocation of voting rights, even though each unit uses the common areas equally. Although the allocation does not make much sense, courts are disinclined to question the wisdom of agreed-to restrictions.Bernard v. FoleyDocket
39 Cal.4th 794 – Cal. Supreme Court (S136070) (8/21/06)TESTAMENTARY TRANSFERS: Under Probate Code Section 21350, “care custodians” are presumptively disqualified from receiving testamentary transfers from dependent adults to whom they provide personal care, including health services. The Court held that the term “care custodian” includes unrelated persons, even where the service relationship arises out of a preexisting personal friendship rather than a professional or occupational connection. Accordingly, the Court set aside amendments to decedent’s will that were made shortly before decedent’s death, which would have given most of the estate to the care providers.Regency Outdoor Advertising v. City of Los AngelesDocket
39 Cal.4th 507 – Cal. Supreme Court (S132619) 8/7/06 Modification of Opinion 10/11/06ABUTTER’S RIGHTS: There is no right to be seen from a public way, so the city is not liable for damages resulting from the view of plaintiff’s billboard caused by planting trees along a city street. The court pointed out that a private party who blocks the view of someone’s property by obstructing a public way would be liable to someone in plaintiff’s position.Kleveland v. Chicago Title Insurance CompanyDocketSup.Ct. Docket
141 Cal.App.4th 761 – 2nd Dist. (B187427) 7/24/06 Case complete 10/5/06 Request for depublication DENIED 10/25/06TITLE INSURANCE: An arbitration clause in a title policy is not enforceable where the preliminary report did not contain an arbitration clause and did not incorporate by reference the arbitration clause in the CLTA policy actually issued. (The preliminary report incorporated by reference the provisions of a Homeowner’s Policy of Title Insurance with a somewhat different arbitration clause, but a CLTA policy was actually issued.)Essex Insurance Company v. Five Star Dye HouseDocket
38 Cal.4th 1252 – Cal. Supreme Court (S131992) 7/6/06INSURANCE: When an insured assigns a claim for bad faith against the insurer, the assignee may recover Brandt (attorney) fees. Although purely personal causes of action are not assignable, such as claims for emotional distress or punitive damages, Brandt fees constitute an economic loss and are not personal in nature.Peak Investments v. South Peak Homeowners AssociationDocket
140 Cal.App.4th 1363 – 4th Dist., Div. 3 (G035851) 6/28/06 Case complete 8/31/06HOMEOWNER’S ASSOCIATIONS: Where CC&R’s require approval by more than 50 percent of owners in order to amend the Declaration, Civil Code Section 1356(a) allows a court, if certain conditions are met, to reduce the percentage of votes required, if it was approved by “owners having more than 50 percent of the votes in the association”. The Court held that the quoted phrase means a majority of the total votes in the HOA, not merely a majority of those votes that are cast.CTC Real Estate Services v. LepeDocket
140 Cal.App.4th 856 – 2nd Dist. (B185320) 6/21/06 Case complete 8/23/06TRUSTEE’S SALES: The victim of an identity theft, whose name was used to obtain a loan secured by a purchase money deed of trust to acquire real property, may, as the only claimant, recover undistributed surplus proceeds that remained after a trustee sale of the property and the satisfaction of creditors. The Court pointed out that a victim of theft is entitled to recover the assets stolen or anything acquired with the stolen assets, even if the value of those assets exceeds the value of that which was stolen.Slintak v. Buckeye Retirement Co.DocketSup.Ct. Docket
139 Cal.App.4th 575 – 2nd Dist. (B182875) 5/16/06 Request for review by Cal Supreme Ct. DENIED 9/13/06MARKETABLE RECORD TITLE ACT
1) Under Civil Code Section 882.020(a)(1), a deed of trust expires after 10 years where “the final maturity date or the last date fixed for payment of the debt or performance of the obligation is ascertainable from the record”. Here, the October 1992 Notice of Default was recorded and contained the due date of the subject note; thus, the due date is “ascertainable from the record” and the 10-year limitations period of section 882.020(a)(1) applies.
2) Under C.C. Section 880.260, if an action is commenced and a lis pendens filed by the owner to quiet or clear title, the running of the 10-year limitations period is reset and a new 10-year limitations period commences on the date of the recording of the lis pendens. After the expiration of the recommenced 10-year period, the power of sale in the trust deed expires. Preciado v. WildeDocketSup.Ct. Docket
139 Cal.App.4th 321 – 2nd Dist. (B182257) 5/9/06 Request for review by Cal Supreme Ct. DENIED 8/16/06ADVERSE POSSESSION: Plaintiffs failed to establish adverse possession against defendant, with whom they held title as tenants in common. Before title may be acquired by adverse possession as between cotenants, the occupying tenant must impart notice to the tenant out of possession, by acts of ownership of the most open, notorious and unequivocal character, that he intends to oust the latter of his interest in the common property. Such evidence must be stronger than that which would be required to establish title by adverse possession in a stranger.UNPUBLISHEDHarbor Pipe v. Stevens
Cal.App. 4th Dist., Div. 3 (G035530) 4/4/06 Case complete 6/6/06JUDGMENTS: A judgment lien against the settlor of a revocable trust attached to trust property where the identity of the settlor is reflected in the chain of title, so a purchaser takes subject to the judgment lien. NOTE: In other words, title companies need to check the names of the settlors in the General Index when title is held in trust.Aaron v. DunhamDocketSup.Ct. Docket
137 Cal.App.4th 1244 – 1st Dist. (A109488) 3/15/06 Request for review by Cal Supreme Ct. DENIED 6/21/06PRESCRIPTIVE EASEMENTS: 1) Permission granted to an owner does not constitute permission to a successor. 2) Under Civil Code Section 1008, signs preventing prescriptive rights must be posted by an owner or his agent, so signs posted by a lessee without the knowledge of the owner, do not qualify.***DECERTIFIED*** Newmyer v. Parklands RanchDocketSup.Ct. Docket
Cal.App. 2nd Dist. (B180461) 3/23/06 Request for review by Cal Supreme Ct. DENIED; CA opinion DECERTIFIED 6/14/06EASEMENTS: The owner of the dominant tenement possessing over the servient tenement an access easement that includes the right to grant other easements for “like purposes” may convey to an owner of property adjoining the dominant tenement an enforceable easement for access over the servient tenement.Marion Drive LLC v. SaladinoDocketSup.Ct. Docket
136 Cal.App.4th 1432 – 2nd Dist. (B182727) 2/27/06 Request for review by Cal Supreme Ct. DENIED 5/24/06ASSESSMENT LIEN: After a tax sale, the holder of a bond secured by a 1911 Act assessment lien has priority as to surplus tax sale proceeds over a subsequently recorded deed of trust. This is true even though the bond holder purchased the property from the tax sale purchaser. The Court rejected defendant’s argument that fee title had merged with the assessment lien.Barnes v. HussaDocket
136 Cal.App.4th 1358 – 3rd Dist. (C049163) 2/24/06 Case complete 4/26/06LICENSES / WATER RIGHTS: The Plaintiff did not overburden a license to run water in a pipeline across defendant’s property where he extended the pipeline to other property he owned because there was no increase in the burden on the servient tenement and no harm to defendants. A couple of interesting things pointed out by the Court are: 1) A person entitled to use water may use it elsewhere as long as others are not injured by the change, and 2) “An irrevocable license . . . is for all intents and purposes the equivalent of an easement.”***REVERSED***
Mayer v. L & B Real EstateDocketSup.Ct. Docket
Cal.App. 2nd Dist. (B180540) 2/14/06 REVERSED by Cal Supreme Ct. 6/16/08TAX SALES: The one-year statute of limitations for attacking a tax sale applies to preclude an action by a property owner who had actual notice of the tax sale, even where the tax collector’s conduct was egregious. The Court did not reach the question of whether the tax collector satisfied its due process obligations, but refers to a Supreme Court case which held that the limitations period is enforceable even if the defect is constitutional in nature. That case recognized a limited exception where an owner is in “undisturbed possession” such that the owner lacked any reasonable means of alerting himself to the tax sale proceedings.Wright Construction Co. v. BBIC InvestorsDocketSup.Ct. Docket
136 Cal.App.4th 228 – 1st Dist. (A109876) 1/31/06 Request for review by Cal Supreme Ct. DENIED 4/26/06MECHANICS’ LIENS: A mechanic’s lien is premature and invalid under Civil Code Section 3115 if it is recorded before the contractor “completes his contract”. A contract is complete for purposes of commencing the recordation period under section 3115 when all work under the contract has been performed, excused, or otherwise discharged. Here, because of the tenant’s anticipatory breach of the contract, plaintiff had “complete[d] [its] contract” within the meaning of section 3115 the day before the claim of lien was recorded, so the claim of lien was not premature. In a previous writ proceeding, the Court held that the landlord’s notice of nonresponsibility was invalid under the “participating owner doctrine” because the landlord caused the work of improvement to be performed by requiring the lessee to make improvements.Torres v. TorresDocketSup.Ct. Docket
135 Cal.App.4th 870 – 2nd Dist. (B179146) 1/17/06 Request for review by Cal Supreme Ct. DENIED 4/12/06POWER OF ATTORNEY: 1) A statutory form power of attorney is not properly completed where the principal marks the lines specifying the powers with an “X” instead of initials, as required by the form. However, the form is not the exclusive means of creating a power of attorney, so even though it is not valid as a statutory form, it is valid as regular power of attorney. 2) Under Probate Code Section 4264, an attorney in fact may not make a gift of the principal’s property unless specifically authorized to do so in the power of attorney. Here, the principal quitclaimed the property to himself, the other attorney in fact and the principal as joint tenants. However, the court refused to invalidate the conveyance because the plaintiff failed to produce any evidence that the conveyance was not supported by consideration.Ung v. KoehlerOrder Modifying OpinionDocketSup.Ct. Docket
135 Cal.App.4th 186 – 1st Dist. (A109532) 12/28/05 Request for review by Cal Supreme Ct. DENIED 4/12/06TRUSTEE’S SALES:
1. Expiration of the underlying obligation does not preclude enforcement of the power of sale under a deed of trust.
2. A power of sale expires after 60 years or, if the last date fixed for payment of the debt is ascertainable from the record, 10 years after that date.
3. In order to avoid a statutory absurdity, a notice of default that is recorded more than 10 years after “the last date fixed for payment of the debt” does not constitute a part of the “record” for purposes of Civil Code Section 882.020(a).Trust One Mortgage v. Invest America MortgageDocket
134 Cal.App.4th 1302 – 4th Dist., Div. 3 (G035111) 12/15/05 Case complete 2/21/06TRUSTEE’S SALES/ANTI-DEFICIENCY: An indemnification agreement is enforceable after a non-judicial foreclosure where the indemnitor is not the same person as the obligor. If the indemnitor and obligor were the same, the indemnity would be void as an attempt to circumvent antideficiency protections.UNPUBLISHED OPINION Citifinancial Mortgage Company v. Missionary FoundationDocket
Cal.App. 2nd (B178664) 12/14/05 Case complete 2/16/06MARKETABLE RECORD TITLE ACT: (UNPUBLISHED OPINION) Under Civil Code Section 882.020(a)(1), a deed of trust becomes unenforceable 10 years after the final maturity date, or the last date fixed for payment of the debt or performance of the obligation, if that date is ascertainable from the record. Here, the record showed via an Order Confirming Sale of Real Property that the obligation was due five years after close of escrow. The Court held that since “close of escrow” is an event, and not a date certain, Section 882.020(a)(1) did not apply in spite of the fact that escrow must have closed in order for the deed of trust to have been recorded.McElroy v. Chase Manhattan Mortgage Corp.Docket
134 Cal.App. 4th 388 – 4th Dist., Div. 3 (G034588) 11/1/05 Case complete 2/1/06TRUSTEE’S SALES: The Court refused to set aside a trustee’s sale where the lender foreclosed after the trustors tendered payment in the form of a “Bonded Bill of Exchange Order”. The Court determined that “the Bill is a worthless piece of paper, consisting of nothing more than a string of words that sound as though they belong in a legal document, but which, in reality, are incomprehensible, signifying nothing.”***DECERTIFIED*** The Santa Anita Companies v. Westfield CorporationDocketSup.Ct. Docket
134 Cal.App.4th 77 – 2nd Dist. (B175820) 11/17/05 Request for review by Cal Supreme Ct. DENIED and DECERTIFIED 01/25/06DEEDS: The 3-year statute of limitations under C.C.P. 338(d) to seek relief on the ground of mistake does not begin to run until discovery of the mistake or receiving facts that would put a reasonable person on notice of the mistake. The fact that carefully reading the deed would have revealed the mistake is not sufficient to charge the plaintiff with notice, so the statute of limitations did not begin to run until plaintiff actually became aware of the error, and this action was therefore timely.Big Valley Band of Pomo Indians v. Superior CourtDocket
133 Cal.App.4th 1185 – 1st Dist. (A108615) 11/1/05 Case complete 1/4/06INDIANS: An employment agreement with an Indian tribe contained the following clause: “Any claim or controversy arising out of or relating to any provisions of this Agreement, or breach thereof, shall . . . be resolved by arbitration under the rules of the American Arbitration Association in San Francisco, California, and judgment on any award by the arbitrators may be entered in any court having such jurisdiction”. The court held that the effect of the arbitration clause as limited to a consent to arbitrate and enforce any award in state court. But this clause was insufficient to waive the tribe’s immunity from a breach of contract action brought in state court. So plaintiffs are apparently free to bring the same breach of contract claims in an arbitration proceeding.Behniwal v. MixDocket
133 Cal.App.4th 1027 – 4th Dist., Div. 3 (G034074) 9/30/05 Case complete 1/3/06STATUTE OF FRAUDS: A sales contract signed on the sellers’ behalf by their real estate agent did not satisfy the Statute of Frauds because the agent did not have written authority to sign for the sellers. However, a contract which must be in writing can be ratified if the ratification is also in writing. Here the sellers ratified the contract by a sufficient written ratification where they subsequently signed disclosure documents that specifically referred to the contract signed by the real estate agent.Behniwal v. Superior Court Docket
133 Cal.App.4th 1048 – 4th Dist., Div. 3 (G035299) 9/30/05 Case complete 1/3/06LIS PENDENS: (Related to Mix v. Superior Court, several cases below.) Having determined that the plaintiffs have at least a “probably valid” real property claim, the Court issued a peremptory writ of mandate directing the Superior Court to vacate its order expunging the lis pendens. The lis pendens will therefore protect plaintiff’s claim until the time for appeal to the Supreme Court expires or unless the Supreme Court issues its own writ directing that the lis pendens be expunged.Zipperer v. County of Santa ClaraDocket
133 Cal.App.4th 1013 – 6th Dist. (H028455) 9/30/05 (Mod. 10/28/05) Case complete 12/28/05EASEMENTS:
PUBLISHED PORTION: The Solar Shade Control Act provides that “. . . no person owning, or in control of a property shall allow a tree or shrub to be placed, or, if placed, to grow on such property, subsequent to the installation of a solar collector on the property of another so as to cast a shadow greater than 10 percent of the collector absorption area”. The County is exempt from the Act because it adopted an ordinance pursuant to a statute allowing cities and counties to exempt themselves from the Act. The Court did not address the issue of whether the act applies where a tree is not “placed” by a property owner.
UNPUBLISHED PORTION: A common law easement for light and air generally may be created only by express written instrument. A statutory “solar easement” under Civil Code Section 801.5 may be created only by an instrument containing specified terms. The Court held that the County did not have an obligation to trim trees to avoid shading plaintiff’s solar panels, rejecting several theories asserted by plaintiff.Fishback v. County of VenturaDocket
133 Cal.App.4th 896 – 2nd Dist. (B177462) 10/26/05 Case complete 1/9/06SUBDIVISION MAP ACT: Under the 1937 and 1943 Subdivision Map Acts, “subdivision” was defined as “any land or portion thereof shown on the last preceding tax roll as a unit or as contiguous units which is divided for the purpose of sale . . . into five or more parcels within any one year period.” The Court makes numerous points interpreting those statutes, some of the most significant being: 1) Once the fifth parcel is created within a one-year period, all the parcels created within that year constitute a subdivision; 2) Even though a unit of land is defined as a unit as shown on the last tax roll preceding the division, that does not mean the unit shown on the last preceding tax roll is a legal parcel, and legal parcels cannot be created by dividing that illegal parcel; and 3) If land is divided for the purpose of sale, it is irrelevant that the retained parcel is not held for the purpose of sale. Thus, for example, if the owner of a unit of land divides it in half, the unit is divided for the purpose of sale even if the owner intends to sell only one half and keep the other.Attorney General Opinion No. 04-1105
10/3/05ASSESSOR’S RECORDS: County Assessors maintain parcel boundary map data, which is detailed geographic information used to describe and define the precise geographic boundaries of assessor’s parcels. When maintained in electronic format, Assessors must make copies in electronic format available to the public. The fee charged for producing the copy is limited to the direct cost of producing the copy in electronic format, and may not include expenses associated with the county’s initial gathering of the information, with initial conversion of the information into electronic format, or with maintaining the information.Villacreses v. MolinariDocketSup.Ct. Docket
132 Cal.App.4th 1223 – 4th Dist., Div. 3 (G034719) 9/26/05 Request for review by Cal Supreme Ct. DENIED 12/14/05ARBITRATION: Section 1298 requires that an arbitration provision in a real estate contract be accompanied by a statutory notice and that the parties indicate their assent by placing their initials on an adjacent space or line. The arbitration notice, standing alone, does not constitute an arbitration provision. So the Defendants could not compel arbitration where the contract contained only the notice, but did not contain a separate arbitration provision.
The Court has a good sense of humor. The opinion contains the following memorable quotes:
1. “If the first rule of medicine is ‘Do no harm,’ the first rule of contracting should be ‘Read the documents’.”
2. “. . . to paraphrase the immortal words of a former President of the United States, the applicability of this purported arbitration agreement to the instant dispute ‘depends upon what the meaning of the word “it” is.'”Campbell v. Superior Court (La Barrie)DocketSup.Ct. Docket
132 Cal.App.4th 904 – 4th Dist., Div. 1 (D046064) 9/14/05 Request for review by Cal Supreme Ct. DENIED 12/14/05LIS PENDENS: A cause of action for a constructive trust or an equitable lien does not support a lis pendens where it is merely for the purpose of securing a judgment for money damages. [Ed. Note: The Court in this and similar cases make the absolute statement that “an equitable lien does not support a lis pendens”, and explain that the lien is sought merely to secure a money judgment. But it is unclear whether the Court would reach the same conclusion in a pure equitable lien case. For example, where a loan is paid off with the proceeds of a new loan, but the new mortgage accidentally fails to be recorded, an action to impose an equitable lien seeks more than a mere money judgment. It seeks to allow the new lender to step into the shoes of the old lender and, in my opinion, a lis pendens should be allowed.]Fripp v. Walters DocketDocketSup.Ct. Docket
132 Cal.App.4th 656 – 3rd Dist. (C046733) 9/7/05 (ONLY PART I CERTIFIED FOR PUBLICATION)Request for review by Cal Supreme Ct. DENIED 11/16/05BOUNDARIES / SURVEYS: A conveyance referring to a parcel map cannot convey more property than the creator of the parcel map owned. The Court rejected Defendant’s claim that the recorded parcel map was a “government sanctioned survey” which precludes a showing that the boundaries established by the parcel map are erroneous. The court explained that the rule cited by Defendants applies only to official survey maps that create boundaries. Boundary lines cannot be questioned after the conveyance of public land to a private party, even if they are inaccurate.Title Trust Deed Service Co. v. PearsonDocket
132 Cal.App.4th 168 – 2nd Dist (B175067) 8/25/05 Case complete 10/28/05HOMESTEADS: A declared homestead exemption applies to surplus proceeds from a trustee’s sale. [Comment: Applying the declared homestead exemption to trustee’s sales is fine. But the Court also seems to want to pay surplus proceeds to the debtor up to the amount of the exemption before paying the holder of a junior trust deed. This should be wrong since the homestead exemption does not apply to voluntary liens. I think the Court does not adequately address what appears to me to be a circuity of priority problem: The homestead exemption is senior to the judgment lien, which in this case happens to be senior to a junior TD, which is senior to the homestead exemption.]In re Marriage of BensonDocket
36 Cal.4th 1096 – Cal. Supreme Court (S122254) 8/11/05COMMUNITY PROPERTY: The doctrine of partial performance, which is an exception to the Statute of Frauds, is not an exception to the requirement of Family Code Section 852 that an agreement to transmute property be in writing. The concurring opinion points out that the Court does not decide what statutory or equitable remedy would be available to make whole a spouse who has been disadvantaged by an illusory oral promise to transmute property, or what sanction may be employed against a spouse who has used section 852(a) as a means of breaching his or her fiduciary duty and gaining unjust enrichment.First Federal Bank v. FegenDocket
131 Cal.App.4th 798 – 2nd Dist. (B174252) 7/29/05 Case complete 9/29/05JUDGMENTS: The Court dismissed an appeal as being moot where the debtor did not post a bond after a sheriff’s sale of real property. C.C.P. Section 917.4 provides that an appeal of an order directing the sale of real property does not stay enforcement of the order. A sheriff’s sale is final, except that the debtor can commence an action within 90 days to set aside the sale if the judgment creditor is the successful bidder. Here, the debtor failed to file an action within 90 days so the sale is final.Bear Creek Master Association v. EdwardsDocketSup.Ct. Docket
130 Cal.App.4th 1470 – 4th Dist. Div. 2 (E034859) 7/13/05 Request for review by Cal Supreme Ct. DENIED 10/19/05CONDOMINIUMS: The definition of “condominium” in Civil Code Section 1351(f) does not require that an actual structure has been built; rather it only requires that it be described in a recorded condominium plan. (Note, however, that under CC 1352 the condominium does not come into existence until a condominium unit has been conveyed.) The case also contains an extensive discussion of the procedural requirements for foreclosing on an assessment lien recorded by the homeowner’s association.Woodridge Escondido Property Owners Assn. v. NielsenDocketSup.Ct. Docket
130 Cal.App.4th 559 – 4th Dist. Div. 1 (D044294) 5/25/05 (pub. order 6/16/05) Request for review by Cal Supreme Ct. DENIED 8/31/05CC&R’s: A provision in CC&R’s that prohibited construction of a permanent structure in an easement area applied to a deck because it was attached to the house and had supporting posts that were buried in the ground, such that it was designed to continue indefinitely without change and was constructed to last or endure.Beyer v. Tahoe Sands ResortDocket
129 Cal.App.4th 1458 – 3rd Dist. (C045691) 6/8/05 Case complete 8/8/05EASEMENTS: California Civil Code Section 805 provides that a servitude cannot be held by the owner of the servient tenement. The Court held that the term “owner” under Section 805 means the owner of the full fee title, both legal and equitable, such that a property owner who owns less than full title may validly create easements in his own favor on his land. Here, the Court held that the grantor could reserve an easement over property conveyed to a time-share trustee where the grantor held all beneficial interest in the trust and the grantee held just bare legal title.Bank of America v. La Jolla GroupDocketSup.Ct. Docket
129 Cal.App.4th 706 – 5th Dist. (F045318) 5/19/05 Request for review by Cal Supreme Ct. DENIED 9/7/05TRUSTEE’S SALES: A trustee’s sale, which was accidentally held after the owner and lender agreed to reinstate the loan, is invalid. The conclusive presumptions in Civil Code Section 2924 pertain only to notice requirements, not to every defect or inadequacy. The Court points out that the advantages of being a bona fide purchaser are not limited to the presumptions set forth in Section 2924, but does not discuss it further because the defendant did not argue that its bona fide purchaser status supports its position in any way other than the statutory presumptions.Zabrucky v. McAdamsDocket
129 Cal.App.4th 618 – 2nd Dist. (B167590) 5/18/05 Case complete 7/20/05COVENANTS, CONDITIONS & RESTRICTIONS: The Court interpreted a provision in CC&R’s to prohibit an addition to a house which would unreasonably obstruct a neighbor’s view. The Court painstakingly nit-picked through the provisions of the CC&R’s and compared the provisions and the facts to other cases where courts have done the same. The main conclusion I draw is that these cases are each unique and it is very difficult to determine in advance what a court will do. In fact, one judge dissented in this case. This means it can be very dangerous to issue endorsements such as CLTA Endorsement No. 100.6 or 100.28, insuring against this kind of provision in CC&R’s.Anolik v. EMC Mortgage Corp.DocketSup.Ct. Docket
Cal.App. 3rd Dist. (C044201) 4/29/05 (Mod. 5/26/05) Request for review by Cal Supreme Ct. DENIED and DECERTIFIED 8/10/05***DECERTIFIED*** TRUSTEE’S SALES:
1. To be valid, a notice of default must contain at least one correct statement of a breach, and it must be substantial enough to authorize use of the drastic remedy of nonjudicial foreclosure.
2. An assertion in a notice of default of one or more breaches qualified with the words “if any” does not satisfy the requirements of section 2924 because it indicates that the lender has no clue as to the truth or falsity of the assertion.
3. It is not proper to declare a payment in default when the time for imposing a late fee on that payment has not expired because the default is not sufficiently substantial at that point.
4. Under Civil Code Section 2954, a lender cannot force impound payments for property taxes until the borrower has failed to pay two consecutive tax installments.Kangarlou v. Progressive Title CompanyDocket
128 Cal.App.4th 1174 – 2nd Dist. (B177400) 4/28/05 Case complete 6/29/05ESCROW: 1. Under Civil Code Section 1717, plaintiff can recover attorney’s fees after prevailing in an action against the escrow holder, even though the escrow instructions limited attorney’s fees to actions to collect escrow fees.
2. Under Business and Professions Code Section 10138, an escrow holder has a duty to obtain evidence that a real estate broker was regularly licensed before delivering compensation.Paul v. SchoellkopfDocketSup.Ct. Docket
128 Cal.App.4th 147 – 2nd Dist. (B170379) 4/5/05 Request for review by Cal Supreme Ct. DENIED 6/15/05ESCROW: A provision for attorneys’ fees in escrow instructions limited to fees incurred by the escrow company in collecting for escrow services does not apply to other disputes between the buyer and seller.Knight v. Superior CourtDocketSup.Ct. Docket
128 Cal.App.4th 14 – 3rd Dist. (C048378) 4/4/05 Request for review by Cal Supreme Ct. DENIED 6/29/05DOMESTIC PARTNERSHIPS: Family Code Section 308.5, enacted by Proposition 22, 3/7/00, states: “Only marriage between a man and a woman is valid or recognized in California.” This statute did not prohibit the legislature from enacting California’s Domestic Partnership Law, Family Code Section 297, et seq., because Section 308.5 pertains only to marriages, not to other relationships.Estate of SeifertDocketSup.Ct. Docket
128 Cal.App.4th 64 – 3rd Dist. (C046456) 4/4/05 Request for review by Cal Supreme Ct. DENIED 6/22/05ADVERSE POSSESSION: A fiduciary, including an executor, may not acquire title by adverse possession against the heirs. Once the executor was appointed, the statutory period for his adverse possession of the subject property ceased to run.Melendrez v. D & I InvestmentDocketSup.Ct. Docket
127 Cal.App.4th 1238 – 6th Dist. (H027098) 3/29/05 Request for review by Cal Supreme Ct. DENIED 6/22/05 TRUSTEE’S SALES: A trustee’s sale cannot be set aside where the purchaser at the sale is a bona fide purchaser (“BFP”). The elements of being a BFP are that the buyer 1) purchase the property in good faith for value, and 2) have no knowledge or notice of the asserted rights of another. The value paid may be substantially below fair market value. Also, the buyer’s sophistication and experience in purchasing at trustee’s sales does not disqualify him from being a BFP, although in evaluating whether the buyer is a BFP, the buyer’s foreclosure sale experience may be considered in making the factual determination of whether he had knowledge or notice of the conflicting claim.Radian Guaranty v. GaramendiDocketSup.Ct. Docket
127 Cal.App.4th 1280 – 1st Dist. (A105789) 3/29/05 Request for review by Cal Supreme Ct. DENIED 7/20/05TITLE INSURANCE: Radian’s Lien Protection Policy constitutes title insurance pursuant to Insurance Code Section 12340.1. Because Radian does not possess a certificate of authority to transact title insurance, it is not authorized to sell the policy in California or anywhere else in the United States, pursuant to California’s monoline statutes: Ins. Code Section 12360 (title insurance) and Ins. Code Section 12640.10 (mortgage guaranty insurance).Gardenhire v. Superior CourtDocketSup.Ct. Docket
128 Cal.App.4th 426a – 6th Dist. (H026601) 3/22/05 Request for review by Cal Supreme Ct. DENIED 6/8/05TRUSTS: A trust can be revoked by a will where the trust provided for revocation by “any writing” and the will expressed a present intent to revoke the trust. The Court pointed out that a will, which is inoperative during the testator’s life, can nevertheless have a present and immediate effect upon delivery, such as notice of intent to revoke.Jones v. Union Bank of CaliforniaDocketSup.Ct. Docket
127 Cal.App.4th 542 – 2nd Dist. (B173302) 3/11/05 Request for review by Cal Supreme Ct. DENIED 6/8/05When a lender successfully defends an action to set aside or enjoin a foreclosure sale, the antideficiency provisions of C.C.P. Section 580d do not prohibit an award of attorney fees. In addition, Civil Code sections 2924c and 2924d do not limit the amount of fees the court may award.O’Toole Company v. Kingsbury Court HOADocket
126 Cal.App.4th 549 – 2nd Dist. (B172607) 2/3/05 Case complete 4/8/05HOMEOWNER’S ASSOCIATIONS: In a suit to enforce a judgment, the trial court properly appointed a receiver and levied a special emergency assessment when defendant-homeowners association failed to pay. The Court pointed out that regular assessments are exempt from execution, but not special assessments.State of California ex rel. Bowen v. Bank of AmericaDocketSup.Ct. Docket
126 Cal.App.4th 225 – 2nd Dist. (B172190) 1/31/05 Request for review by Cal Supreme Ct. DENIED 5/18/05ESCHEAT: This is a qui tam action filed on behalf of the State Controller. The court held that unused reconveyance fees do not need to be escheated because the obligation to return a specific sum of money is neither certain nor liquidated under Civil Code Section 2941 or under the provisions of the deeds of trust. This case was against lenders and I believe it would not apply in the context of escrow and title insurance.Van Klompenburg v. BergholdDocketSup.Ct. Docket
126 Cal.App.4th 345 – 3rd Dist. (C045417) 1/31/05 Request for review by Cal Supreme Ct. DENIED 5/11/05EASEMENTS: Where the grant of easement states that the right of way shall be “kept open” and “wholly unobstructed”, the normal rule does not apply, which would otherwise allow the owner of the servient estate to erect a locked gate as long as the owner of the dominant estate is given a key and the gate does not unreasonably interfere with the use of the easement.State of California v. Old Republic Title CompanyDocketSup.Ct. Docket
125 Cal.App.4th 1219 – 1st Dist. (A095918) 1/20/05 NOTE: request for order directing republication of court of appeal opinion DENIED 8/16/06.
Overruled in part on issue not significant to title insurance – SEE BELOW.TITLE INSURANCE: Old Republic was found liable for 1) failing to escheat unclaimed funds in escrow accounts, 2) failing to return fees collected for reconveyances which were not used and 3) failing to pay interest collected on escrow funds to the depositing party.
Of particular interest, the Court stated:
“Insurance Code Section 12413.5 provides that interest on escrow funds must be paid to the depositing party ‘unless the escrow is otherwise instructed by the depositing party . . . .’ Any title company is free to draft escrow instructions that, with full disclosure to and agreement from the depositing party, direct that the arbitrage interest differential be paid to the company. It is a matter of disclosing the pertinent costs and benefits to the customer.”
FALSE CLAIMS ACT: A political subdivision may not bring an action under Government Code section 12652, subdivision (c), to recover funds on behalf of the state or another political subdivision.Frei v. DaveyDocket
124 Cal.App.4th 1506 – 4th Dist., Div. 3 (G033682) 12/17/04 Case complete 2/22/05CONTRACTS: Under the most recent version of the CAR purchase contract, the prevailing party is barred from recovering attorney fees if he refused a request to mediate.Mix v. Superior Court DocketSup.Ct. Docket
124 Cal.App.4th 987 – 4th Dist., Div. 3 12/7/04 (G033875) Request for review by Cal Supreme Ct. DENIED 2/16/05LIS PENDENS: (Related to Behniwal v. Superior Court, several cases above.) After the claimant loses at trial, the trial court must expunge a lis pendens pending appeal unless claimant can establish by a preponderance of the evidence the probable validity of the real property claim. Claimants will rarely be able to do this because it requires a trial court to determine that its own decision will probably be reversed on appeal. The court points out that this strict result is tempered by claimant’s ability to petition the appellate court for a writ of mandate, so that the appellate court can make its own determination of the probability of the trial court’s decision being reversed on appeal.D’Orsay International Partners v. Superior CourtDocketSup.Ct. Docket
123 Cal.App.4th 836 – 2nd Dist. 10/29/04 (B174411) Request for review by Cal Supreme Ct. DENIED 1/26/05MECHANIC’S LIENS: The court ordered the release of a mechanic’s lien because there was no actual visible work on the land or the delivery of construction materials. The criteria applicable to a design professional’s lien do not apply where the claimant filed a mechanic’s lien. The court specifically did not address the question of whether a contractor performing design services or employing design professionals may assert a design professionals’ lien.Gibbo v. BergerDocketSup.Ct. Docket
123 Cal.App.4th 396 – 4th Dist., Div. 2 10/22/04 (E035201) Case complete 12/27/04 Req. for Depublication by Cal. Supreme Ct. DENIED 2/16/05USURY: The usury exemption for loans arranged by real estate brokers does not apply where the broker functioned as an escrow whose involvement was limited to preparing loan documents on the terms provided by the parties, ordering title insurance, and dispersing funds, all in accordance with the parties’ instructions. In order to “arrange a loan” the broker must act as a third party intermediary who causes a loan to be obtained or procured. Such conduct includes structuring the loan as the agent for the lender, setting the interest rate and points to be paid, drafting the terms of the loan, reviewing the loan documents, or conducting a title search.Knapp v. DohertyDocket
123 Cal.App.4th 76 – 6th Dist. 9/20/04 (H026670) Case complete 12/21/04TRUSTEE’S SALES:
1. Civil Code Section 2924 requires the trustee to give notice of sale only “after the lapse of the three months” following recordation of the notice of default. The Notice of Sale technically violated this requirement because it was served by mail on the property owner several days prior to the end of three months. However, this did not invalidate the sale because the owner did not suffer prejudice from the early notice.
2. Incorrectly stating the date of the default in the Notice of Default did not invalidate the sale because the discrepancy was not material.Royal Thrift and Loan v. County EscrowDocket
123 Cal.App.4th 24 – 2nd Dist. 10/15/04 (B165006) Case complete 12/16/04TRUSTEE’S SALES:
1. Postponements of a trustee’s sale during an appeal were reasonable, so they do not count toward the 3-postponement limit of Civil Code Section 2924g(c)(1). The postponements fall under the “stayed by operation of law” exception. However, the Court recognized that the better course would have been to re-notice the trustee’s sale after the appeal.
2. The court indicated that an appeal from an action to quiet title against a deed of trust should stay the trustee’s sale proceedings under Code of Civil Procedure Section 916 pending the appeal. However, the court did not formally make that holding because the owner did not appeal and the issues involving the appellants (escrow holder and bonding company) did not require a holding on that issue.Tesco Controls v. Monterey Mechanical Co.Docket
124 Cal.App.4th 780 – 3rd Dist. 12/6/04 (C042184) (Opinion on rehearing) Case complete 2/7/05MECHANIC’S LIENS: A mechanic’s lien release that waives lien rights up to the date stated in the release is effective to waive lien rights up to that date, even if the progress payments did not fully compensate the lien claimant.Gale v. Superior CourtDocket
122 Cal.App.4th 1388 – 4th Dist., Div. 3 10/6/04 (G033968) (Mod. 10/22/04) Rehearing Denied 10/22/04; Case Complete 12/10/04LIS PENDENS / DIVORCE
1. The automatic stay contained in a divorce summons does not apply to the sale by the husband, as managing member of a family-owned management company, of real property vested in the management company.
2. A petition for dissolution of marriage which does not allege a community interest in specific real property does not support the filing of a lis pendens.Nwosu v. UbaDocket
122 Cal.App.4th 1229 – 6th Dist. 10/1/04 (H026182) Case complete 12/01/04The court held that a transaction was a bona fide sale and not an equitable mortgage. The complicated facts provide little of interest to the title insurance business, other than to note the fact that a deed can be held to be a mortgage if the deed was given to secure a debt. The case contains a good discussion of the distinction between legal claims, for which there is a right to a jury trial, and equitable claims, for which there is no right to a jury trial.Moores v. County of MendocinoDocket
122 Cal.App.4th 883 – 1st Dist. 9/24/04 (A105446) Case complete 11/24/04SUBDIVISION MAP ACT: The enactment of an ordinance requiring the County to record notices of merger did not result in the unmerger of parcels that had previously merged under the County’s previous automatic merger ordinance. The County properly sent a subsequent notice under Gov. Code Section 66451.302 notifying property owners of the possibility of a merger. Accordingly, plaintiff’s parcels remain merged.Larsson v. GrabachDocketSup.Ct. Docket
121 Cal.App.4th 1147 – 5th Dist. 8/25/04 (F042675) Request for review by Cal Supreme Ct. DENIED 12/15/04EASEMENTS: An easement by implication can be created when an owner of real property dies intestate and the property is then divided and distributed to the intestate’s heirs by court decree.Felgenhauer v. SoniDocket
121 Cal.App.4th 445 – 2nd Dist. 8/5/04 (B157490) Case complete 10/8/04PRESCRIPTIVE EASEMENTS: To establish a claim of right, which is one of the elements necessary to establish a prescriptive easement, the claimant does not need to believe he is entitled to use of the easement. The phrase “claim of right” has caused confusion because it suggests the need for an intent or state of mind. But it does not require a belief that the use is legally justified; it simply means that the property was used without permission of the owner of the land.Jonathan Neil & Assoc. v. JonesDocket
33 Cal.4th 917 – Cal. Supreme Court (S107855) 8/5/04 (Mod. 10/20/04)INSURANCE: A tort action for breach of the duty of good faith and fair dealing exists only in regard to the issues of bad faith payment of claims and unreasonable failure to settle. It does not pertain to the general administration of an insurance policy or to other contract settings. In this case, a tort cause of action does not lie for the insurer’s bad faith conduct in setting an unfairly high insurance premium.Bello v. ABA Energy CorporationDocket
121 Cal.App.4th 301 – 1st Dist. 8/2/04 (A102287) Case complete 10/6/04RIGHTS OF WAY: A grant of a public right of way includes uses made possible by future development or technology, which are not in existence at the time of the grant. Here, the Court held that a right of way included the right to install a pipeline to transport natural gas.California National Bank v. HavisDocket
120 Cal.App.4th 1122 – 2nd Dist. 7/23/04 (B167152) Case complete 9/22/04DEEDS OF TRUST: A bank holding a deed of trust holder was paid outside of escrow with a check. The bank sent a letter to escrow stating that it had “received payoff funds . . . it is our policy to issue the Full Reconveyance 10 days after receipt of the payoff check. Therefore, a Full Reconveyance will be sent to the County Recorder on or about August 5, 2002”. The escrow relied on the letter and closed escrow without paying off the lender. The check bounced and the lender began foreclosure.
The Court reversed a summary judgment in favor of defendants, holding that the letter did not constitute a payoff demand statement binding on the bank under CC 2943. The Court determined that there was a triable issue of fact as to whether the parties could reasonably have relied on the letter. [Ed. note: The Court exhibited a scary lack of understanding of real estate transactions, and could not come to grips with the fact that reconveyances from institutional lenders never record at close of escrow.]Kirkeby v. Sup. Ct. (Fascenelli)Docket
33 Cal.4th 642 – Cal. Supreme Court 7/22/04 (S117640)LIS PENDENS: An action to set aside a fraudulent conveyance supports the recording of a lis pendens. The court stated that “[b]y definition, the voiding of a transfer of real property will affect title to or possession of real property”. (Ed. note: Several appellate court decisions have held that actions to impose equitable liens and constructive trusts do not support a lis pendens. The Supreme Court did not deal with those issues but it seems that, using the court’s language, it could similarly be said that “by definition imposing an equitable lien or constructive trust will affect title to or possession of real property.”)Tom v. City and County of San FranciscoDocketSup.Ct. Docket
120 Cal.App.4th 674 – 1st Dist. 6/22/04 (A101950) Request for review by Cal Supreme Ct. DENIED 10/13/04TENANCY IN COMMON AGREEMENTS: In order to evade burdensome regulations for converting apartments to condominiums, it has become a common practice in San Francisco for a group of people to acquire a multi-unit residential building and enter into a tenancy in common agreement establishing an exclusive right of occupancy for each dwelling unit. Seeking to end this practice, the People’s Republic of San Francisco enacted an ordinance prohibiting exclusive right of occupancy agreements. The Court held that the ordinance is unconstitutional because it violates the right of privacy set forth in Article I, section I of the California Constitution.California Attorney General Opinion No. 03-1108
6/9/04RECORDING: A memorandum of lease is a recordable instrument.Yeung v. SoosDocket
119 Cal.App.4th 576 – 2nd Dist. 6/16/04 (B165939) (Mod. 7/2/04) Case complete 9/10/04QUIET TITLE: A default judgment after service by publication is permissible in a quiet title action. However, the judgment may not be entered by the normal default prove-up methods; the court must require evidence of the plaintiff’s title, including live witnesses and complete authentication of the underlying real property records. Nevertheless, the judgment is not rendered void because the default prove-up method was used rather than an evidentiary hearing.Villa de Las Palmas HOA v. TerifajDocket
33 Cal.4th 73 – Cal. Supreme Court 6/14/04 (S109123)RESTRICTIONS: Use restrictions in amended declarations are binding on owners who purchased prior to recordation of the amendment. They are also subject to the same presumption of validity as the original declaration.In re Marriage of GioiaDocket
119 Cal.App.4th 272 – 2nd Dist. 6/9/04 (B166803) Case complete 8/11/04BANKRUPTCY: A bankruptcy trustee’s notice of abandonment of property was effective even though it was ambiguous because it did not specifically state that the trustee will be deemed to have abandoned the property 15 days from the date of mailing of the notice. The court also states that an abandonment is irrevocable even if the property later becomes more valuable.Dieckmeyer v. Redevelopment Agency of Huntington BeachDocketSup.Ct. Docket
127 Cal.App.4th 248 – 4th Dist., Div. 3 2/28/05 (G031869) (2nd Opinion) Case complete 5/5/05DEEDS OF TRUST: Where a deed of trust secures both payment of a promissory note and performance of contractual obligations (CC&R’s in this case), the trustor is not entitled to reconveyance of the deed of trust after the note is paid off, but before the contractual obligations are satisfied.Textron Financial v. National Union Fire Insurance Co.DocketSup.Ct. Docket
118 Cal.App.4th 1061 – 4th Dist., Div. 3 5/20/04 (G020323) (Mod. 6/18/04) Req. for rev. and depub. by Cal Supreme Ct. DENIED 9/15/04INSURANCE / PUNITIVE DAMAGES:
1. The amount of attorney’s fees incurred by an insured in obtaining policy benefits and recoverable under Brandt v. Sup. Ct. are limited to the fees under the contingency fee agreement between the insured and its counsel, and not a higher figure based on the reasonable value of the attorney’s services.
2. Punitive damages must be based on compensatory damages awarded for tortious conduct, including breach of the implied covenant of good faith and fair dealing, excluding the sum recovered on the breach of contract claim.
3. When compensatory damages are neither exceptionally high nor low, and the defendant’s conduct is neither exceptionally extreme nor trivial, the outer constitutional limit on the amount of punitive damages is approximately four times the amount of compensatory damages.
4. The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award.Blackburn v. CharnleyDocketSup.Ct. Docket
117 Cal.App.4th 758 – 2nd Dist. 4/8/04 (B166080) Request for review by Cal Supreme Ct. DENIED 7/21/04SPECIFIC PERFORMANCE: Specific performance is available even though the contract referred to lots which had not yet been subdivided. This violation of the Subdivision Map Act made the contract voidable at the option of the buyer, who chose to enforce the contract instead. The requirement in the standard CAR contract to mediate in order to collect attorney’s fees does not apply where an action is filed in order to record a lis pendens and where mediation was conducted pursuant to the court’s own practices.Hedges v. CarriganDocket
117 Cal.App.4th 578 – 2nd Dist. 4/6/04 (B166248) Case complete 6/11/04ARBITRATION: The Federal Arbitration Act preempts C.C.P. Section 1298, which requires that an arbitration clause in a real estate contract contain a specified notice and be in a specified type size. Preemption requires that the transaction affect interstate commerce, which the court found existed because the anticipated financing involved an FHA loan, and the purchase agreement was on a copyrighted form that stated it could only be used by members of the National Association of Realtors. [Ed. note: the form does not say that!] However, in the unpublished portion of the opinion, the court held that the arbitration clause could not be enforced because it required that the parties initial it in order to acknowledge their agreement to arbitration, and they did not all do so. [Ed. note: the concurring opinion makes much more sense than the majority opinion!]Kapner v. Meadowlark Ranch Assn.Docket
116 Cal.App.4th 1182 – 2nd Dist. 3/17/04 (B163525) Case complete 5/25/04ADVERSE POSSESSION / PRESCRIPTIVE EASEMENTS: A prescriptive easement cannot be established where the encroacher’s use is exclusive. The Court affirmed the trial court’s order requiring the property owner to sign an encroachment agreement or remove the encroachment.Harrison v. WelchDocketSup.Ct. Docket
116 Cal.App.4th 1084 – 3rd Dist. 3/12/04 (C044320) Request for depublication DENIED 6/23/04ADVERSE POSSESSION / PRESCRIPTIVE EASEMENTS:
1) In the uncertified Part I of the opinion, the court rejected Defendant’s claim of adverse possession because real property taxes were not paid on any area outside of Defendant’s lot. The court rejected defendant’s creative argument that real property taxes were paid on all land within the setback area where defendant’s house was 3-1/2 feet from the property line, and a zoning ordinance required a 5-foot setback.
2) A prescriptive easement cannot be established where the encroacher’s use is exclusive. The opinion contains an excellent discussion of the case law on this issue.
3) The 5-year statute of limitations in C.C.P. Sections 318 and 321, within which a plaintiff must bring an action to recover real property, does not commence until the encroacher’s use of the property has ripened into adverse possession.Brizuela v. CalFarm Insurance CompanyDocketSup.Ct. Docket
116 Cal.App.4th 578 – 2nd Dist. 3/3/04 (B160875) Review by Cal Supreme Ct. DENIED 6/9/04INSURANCE: Where an insurance policy requires an insured who has filed a claim to submit to an examination under oath, that obligation is a condition precedent to obtaining benefits under the policy. The insurer is entitled to deny the claim without showing it was prejudiced by the insured’s refusal.Hanshaw v. Long Valley Road Assn.DocketSup.Ct. Docket
116 Cal.App.4th 471 – 3rd Dist. 3/2/04 (C041796) Review by Cal Supreme Ct. DENIED 5/19/04PUBLIC STREETS: An offer of dedication of a public street that is not formally accepted may, nevertheless, be accepted by subsequent public use. This is known as common law dedication. However, counties have a duty to maintain only those roads that are “county roads”, and a public road does not become a county road unless specifically accepted as such by the appropriate resolution of the Board of Supervisors.Miner v. Tustin Avenue InvestorsDocket
116 Cal.App.4th 264 – 4th Dist., Div.3 2/27/04 (G031703) Case complete 5/4/04LEASES / ESTOPPEL CERTIFICATES: A lease contained an option to renew for 5 years, but the tenant signed an estoppel certificate stating that the lease was in full force and effect, and that the tenant had no options except the following: (blank lines that followed were left blank). The Court held that the tenant was not bound by the estoppel certificate because it was ambiguous as to whether it referred only to options outside of the lease or whether the tenant had somehow given up his option rights.Tremper v. QuinonesDocket
115 Cal.App.4th 944 – 2nd Dist. 2/17/04 (B165218) Case complete 5/3/04GOOD FAITH IMPROVER: Attorney’s fees and costs may be included in the calculation of damages awarded against a person bringing an action as a good faith improver under C.C.P. Section 871.3, regardless of whether the costs and fees were incurred in prosecuting a complaint or defending against a cross complaint, and even where the good faith improver issues are part of a quiet title action which would not ordinarily support an award of attorney’s fees and costs.Kertesz v. OstrovskyDocket
115 Cal.App.4th 369 – 4th Dist., Div.3 1/28/04 (G030640) Case complete 4/2/04JUDGMENTS / BANKRUPTCY: The time for renewing a judgment was 10 years from entry of the judgment, plus the amount of time between the debtor’s filing of a bankruptcy petition and the date of the Bankruptcy Court’s order of nondischargeability, plus an additional 30 days under Bankruptcy Code Section 108(c). The court reached this conclusion even though the judgment was entered before the bankruptcy petition was filed, and the 10-year period for renewing the judgment expired long after the bankruptcy was closed.
NOTE: I believe the judge misunderstood the automatic stay and Bankruptcy Code Section 108(c). I do not believe the automatic stay applies when a period of time for taking an action commences prior to bankruptcy, and expires after the bankruptcy case is closed.Rancho Santa Fe Association v. Dolan-KingDocketSup.Ct. Docket
115 Cal.App.4th 28 – 4th Dist., Div.1 1/7/04 (D040637/D041486) Pet. for Review by Cal Supreme Ct. DENIED 4/28/04HOMEOWNER’S ASSOCIATIONS: Regulations adopted and interpreted by a Homeowner’s Association must be reasonable from the perspective of the entire development, not by determining on a case-by-case basis the effect on individual homeowners.Gray Cary Ware & Freidenrich v. Vigilant Insurance Co.Docket
114 Cal.App.4th 1185 – 4th Dist., Div.1 1/12/04 (D041811) Case complete 3/15/04INSURANCE: Civil Code Section 2860(c) provides for the arbitration of disputes over the amount of legal fees or the hourly billing rate of Cumis counsel, but does not apply to other defense expenses.
I attended the Attorney General and state Bar hearing as to the intervention of the state bar into the law practice of Mitchell Stein and the K2 mass Joinder cases in Los Angeles in front of Judge Johnson. The tentative was a scathing implication of Mitchell Stein and his purported involvement with the “marketing companies” and the allegations of unfair business practices all needed for the AG and the State Bar to step in and confiscate 1.6 million in various accounts.
I was there to opine the status of the case itself and the merits of the cases and as to the victims rights as against the banks. If the Bar took over the practice would they defend the cases would they protect the victims right. No they are not; right now they the State Bar are telling the victims they are on there own.
Once again these suits I have been following and hoping could get past the Demur stage the Banks would be forced to answer. Then there would be motions for Summary Judgement and if the Victims could survive the Summary Judgement and thousands of requests for admissions and interrogatories propounded on the thousands of plaintiffs. It could be done I would have to associate about 10 other lawyers and 30 paralegals but it could be done for about $700,000.00. Then I believe the Banks would enter settlement negotiations with the victims witch I calculate to be about 6500 victims to date.
Mandelman characterized the case as follows:
The case at the core of the Kramer and Kaslow mass joinder lawsuit is: Ronald vs. Bank of America. Basically, the case accuses Countrywide (subsequent cases being filed include Citibank, One West, GMAC/Ally Bank, and perhaps others) of perpetrating a massive fraud upon homeowners by knowingly inflating appraisals, creating a bubble the bank knew would pop and leave homeowner equity devastated, violate privacy statutes, and then Civil Code sections when they refused to modify… you get the idea.
The case says that Countrywide execs knew and did it anyway in order to make zillions of dollars securitizing the loans and therefore only others would incur the future losses.
Here’s an overview of what the third amended complaint says in its Introduction section:
2. This action seeks remedies for the foregoing improper activities, including a massive fraud perpetrated upon Plaintiffs and other borrowers by the Countrywide Defendants that devastated the values of their residences, in most cases resulting in Plaintiffs’ loss of all or substantially all of their net worths.
6. Hand-in-hand with its fraudulently-obtained mortgages, Mozilo and others at Countrywide hatched a plan to “pool” the foregoing mortgages and sell the pools for inflated value. Rapidly, these two intertwined schemes grew into a brazen plan to disregard underwriting standards and fraudulently inflate property values – county-by- county, city-by-city, person-by-person – in order to take business from legitimate mortgage-providers, and moved on to massive securities fraud hand-in-hand with concealment from, and deception of, Plaintiffs and other mortgagees on an unprecedented scale.
7. From as early as 2004, Countrywide’s senior management led by Mozilo knew the scheme would cause a liquidity crisis that would devastate Plaintiffs’ home values and net worths. But, they didn’t care, because their plan was based on insider trading – pumping for as long as they could and then dumping before the truth came out and Plaintiffs’ losses were locked in.
9. It is now all too clear that this was the ultimate high-stakes fraudulent investment scheme of the last decade. Couched in banking and securities jargon, the deceptive gamble with consumers’ primary assets – their homes – was nothing more than a financial fraud perpetrated by Defendants and others on a scale never before seen. This scheme led directly to a mortgage meltdown in California that was substantially worse than any economic problems facing the rest of the United States. From 2008 to the present, Californians’ home values decreased by considerably more than most other areas in the United States as a direct and proximate result of the Defendants’ scheme set forth herein.
This massive fraudulent scheme was a disaster both foreseen by Countrywide and waiting to happen. Defendants knew it, and yet Defendants still induced the Plaintiffs into their scheme without telling them.
10. As a result, Plaintiffs lost their equity in their homes, their credit ratings and histories were damaged or destroyed, and Plaintiffs incurred material other costs and expenses, described herein. At the same time, Defendants took from Plaintiffs and other borrowers billions of dollars in interest payments and fees and generated billions of dollars in profits by selling their loans at inflated values.
14. Since the time Plaintiffs filed the initial Complaint herein, Defendants’ improper acts have continued, including, inter alia: (i) issuing Notices of Default in violation of Cal. Civil Code §2923.5; (ii) misrepresenting their intention to arrange loan modifications for Plaintiffs, while in fact creating abusive roadblocks to deprive Plaintiffs of their legal rights; and (iii) engaging in intrinsic fraud in this Court and in Kentucky by stalling in addressing Plaintiffs’ legitimate requests to cancel notices of default and for loan modifications, and by refusing to respond, in any way, to Plaintiffs’ privacy causes of action.
Now, there’s no question… this is a real lawsuit. Some attorneys believe it will be a very difficult case to win, while others think it’s quite viable and likely to settle. I can see both sides of that argument.
On one hand, it would seem difficult to prove that Countrywide caused the housing bubble; there were certainly many parties involved and numerous other contributing factors as well. On the other hand, the case has numerous aspects that are unquestionably true and certainly wrong.
Then there’s what’s known as “the banker factor.” Actually, I’m making that up, but you know what I mean. The banks aren’t going to lay down for this as it would open an enormous can of litigating worms… so they have to fight… or is there no percentage in that either? Well, now you’ve seen first hand why I chose not to go to law school.
I really haven’t the foggiest idea what’s going to happen… and neither does anyone else.
But then, Columbus couldn’t exactly stop and ask for directions either, which, it’s worth noting is why, when sailing for The New World, he landed in the Bahamas and named them San Salvador, but assumed he had found the Indies so he named the native people Indians (leading me to always wonder what he would have named them had he not gotten so hopelessly lost.)
(What if his favorite word was “Jujubees,” and he had named the natives “Jujubees?” Then I would have grown up playing Cowboys & Jujubees?)
So, since no one can know what’s going to happen in the future of this case, I thought I’d take a look at where it is today. From a review of the Los Angeles Superior Court’s online records database we find these events have transpired to-date or are set for the near future…
1. Original complaint was filed in March 2009.
2. First amended complaint was in June of 2009.
3. Second amended complaint March 2010.
4. August 2010: the banks try to remove the case to federal court, but fail.
5. Third amended complaint was filed July 7, 2010.
6. The defendant banksters have demurred again, but it doesn’t appear that the demurs filed in December have been heard.
7. Status conference set for Thursday, February 3rd, 2011.
8. There is a hearing date scheduled for March 29, 2011, but it’s not clear to me what will be happening at that hearing.
So, this is their third “amended complaint.” That means the defendants… the banks… have demurred twice. That means that the banks have come to court claiming that the mass joinder plaintiffs don’t state a cause of action… or in other words saying the plaintiffs have no case… and the court has allowed the plaintiffs to amend the complaint three times so far.
Like almost everything in the law, I guess you could read that a couple of different ways. On one hand it seems positive… the case brought by the mass joinder plaintiffs has not been tossed out by the judge yet. That’s good, right?
On the other hand… the court could “sustain the demur without leave to amend,” in which case the mass joinder suit would be over and done.
And that’s why litigating is always a gamble, and by no means a sure thing.
Here’s an oversimplified look at the mass joinder’s causes of action.
First Cause of Action… Fraudulent Concealment – This is saying that the bank was hiding things from the borrowers.
Second Cause of Action… Intentional Misrepresentation – This is lying when you knew you were lying. In other words, you knew an appraisal was wrong… it came in at $500,000, but you knew it was worth $400,000 and you passed it off anyway.
Third Cause of Action… Negligent Misrepresentation – This is like saying that you’re lying but it wasn’t intentional. Let’s say that you ordered an appraisal but never really looked at the appraisal to make sure it was done correctly. You include this cause of action in case the conduct doesn’t rise to the level of intentional misrepresentation, and perhaps because some insurance policies don’t cover intentional acts.
Fourth Cause if Action… Invasion of Constitutional Right to Privacy – This is saying that the banks disclosed personal information… perhaps when selling the loans to another investor.
Fifth Cause of Action… Violation of California Financial Information Privacy Act – See above or read the actual complaint.
Sixth Cause of Action… Civil Code 2923.5 – Defendants are prohibited by statute from recording a Notice of Default against the primary residential property of any Californian without first making contact with that person as required under § 2923.5 and then interacting with that person in the manner set forth in detail under § 2923.5. Nothing special here, but its been upheld by other courts in California.
Seventh Cause of Action… Civil Code 1798 – When they gave away your private information, they didn’t tell you they did it? Defendants failed to timely disclose to Plaintiffs the disclosure of their personal information as required under California Civil Code § 1798.82
Eighth Cause of Action… Unfair Competition Against All Defendants – Defendants’ actions in implementing and perpetrating their fraudulent scheme of inducing Plaintiffs to accept mortgages for which they were not qualified based on inflated property valuations and undisclosed disregard of their own underwriting standards and the sale of overpriced collateralized mortgage pools, all the while knowing that the plan would crash and burn, taking the Plaintiffs down and costing them the equity in their homes and other damages, violates numerous federal and state statutes and common law protections enacted for consumer protection, privacy, trade disclosure, and fair trade and commerce.
In Conclusion…
Attorney Phillip Kramer, in his own words, made it quite clear that his firm was not responsible for the mailer I received or the telemarketing about which I’ve been notified. Once again, he says…
“I know of no outbound calling. If asked, I would not approve of that. I knew that some law firms wanted to send out mailers. I have insisted that everyone comply with State Bar rules and that anything with my name must be pre-approved. As of this date, no one has submitted any proposed marketing for my review. That piece was done without my knowledge.
I am happy to pay a referral fee to other law firms. I do not split fees, pay commissions, nor do I pay referral fees to non-lawyers. I do not use cappers, and have never authorized anyone to robocall, telemarket, spam email, or undertake any mass marketing on my behalf.”
With that said I was going to apply to the Bar to take over the cases if they would relinquish the 1.6 to pay for the work to be done for the victims. Before making such a wild leap into this caos I called my State bar lawyer. He informed me that I should not even go close to these cases that all lawyers involved will be DISBARRED. I said wow but what about the merits of the cases the judge in the case had already overruled the demur as to some of the causes of action. The State Bar (by their actions in not finding a lawyer to protect the victims) is recommending that case be dismissed the Attorney General IS NOT PURSUING THE RIGHTS OF THE VICTIMS . I persisted with my lawyer. To which he exclaimed ” DON’T YOU GET IT MCCANDLESS THE AG AND THE BAR ARE WORKING FOR THE BANKS”.
Homeowners in Northern California have questioned the practices of Fannie Mae and Freddie Mac in foreclosure proceedings. If you are facing a foreclosure, you may be able to keep the property by filing for bankruptcy. You should consult with an attorney regarding your legal options.
After news reports in mid-2010 began to describe the dubious practices, like the routine filing of false pleadings in bankruptcy courts, Fannie Mae’s overseer started to scrutinize the conduct of its attorneys. The inspector general of the Federal Housing Finance Agency severely criticized the FHFA’s oversight of Fannie Mae and the practices of its foreclosure attorneys in a report issued Tuesday. “American homeowners have been struggling with the effects of the housing finance crisis for several years, and they shouldn’t have to worry whether they will be victims of foreclosure abuse,” Inspector General Steve Linick told the New York Times. “Increased oversight by F.H.F.A. could help to prevent these abuses.”
According to the New York Times, the report is the second in two weeks in which the inspector general has outlined lapses at both the Federal Housing Finance Agency and the companies it oversees Federal National Mortgage Assn (Fannie Mae) and Federal Home Loan Mortgage Corp (Freddie Mac). The agency has acted as conservator for the companies since they were taken over by the government in 2008. Its duty is to ensure that their operations do not pose additional risk to the taxpayers who now own them. The companies have tapped the taxpayers to cover mortgage losses totaling about $160 billion. The new report from the inspector general tracks Fannie Mae’s dealings with the law firms handling its foreclosures from 1997, when the company created its so-called retained attorney network. At the time, Fannie Mae was a highly profitable and powerful institution, and it devised the legal network to ensure that borrower defaults would be resolved with efficiency and speed.
The law firms in the network agreed to a flat-rate fee structure and pricing model based on the volume of foreclosures they completed. The companies that serviced the loans for Fannie Mae, were supposed to monitor the law firms’ performance and practices, the report noted
After receiving information from a shareholder in 2003 about foreclosure abuses by its law firms, Fannie Mae assigned its outside counsel to investigate, according to the report. That law firm concluded in a 2006 analysis that “foreclosure attorneys in Florida are routinely filing false pleadings and affidavits,” and that the practice could be occurring elsewhere. “It is axiomatic that the practice is improper and should be stopped,” the law firm said.
The inspector general’s report said that it could not be determined whether Fannie Mae had alerted its regulator, then the Office of Federal Housing Enterprise Oversight, to the legal improprieties identified by its internal investigation.
The inspector general said that both Fannie Mae and its regulator appear to have ignored other signs of problems in their foreclosure operations. For example, the Federal Housing Finance Agency did not respond to borrower complaints about improper actions taken by law firms in foreclosures received as early as August 2009, even though foreclosure abuse poses operational and financial risks to Fannie Mae.
The report cited a media report from early 2008 detailing foreclosure abuses by law firms doing work for Fannie Mae. Nevertheless, a few months later and just before its takeover by the government, Fannie Mae began requiring the banks that serviced its loans to use only those law firms that were in its network. By then, 140 law firms in 31 jurisdictions were in the group. Fannie Mae, the mortgage finance giant, learned as early as 2003 of extensive foreclosure abuses among the law firms it had hired to remove troubled borrowers from their homes. But the company did little to correct the firms’ practices,.
Finally last fall, after an outcry over apparently forged foreclosure documents and other improprieties, the Federal Housing Finance Agency began investigating the company’s process. In a report issued early this year, it determined that Fannie Mae’s management of its network of lawyers did not meet safety and soundness standards. Among the reasons: the company’s controls to prevent or detect foreclosure abuses were inadequate, as was the company’s monitoring of the law firms. “If a law firm self-reported no issues as it processed cases,” the inspector general said, “then Fannie Mae presumed the firm was doing a good job.” The agency is still deciding how to handle the lawyer network, the inspector general said.
Officials at the housing agency have agreed with the recommendations in the inspector general’s report. Corinne Russell, a spokeswoman for F.H.F.A. said the agency was concluding its supervisory work in this area and would direct Fannie Mae to take necessary action when the work was completed.
In a response, the agency said that by Sept. 29, 2012, it would review its existing supervisory practices and act to resolve “deficiencies in the management of risks associated with default-related legal services vendors.”
If you are having problems with a loan or foreclosure, we provide free legal consultations for bankruptcy in San Francisco County, Sacramento County, Alameda County, Contra Costa County, San Mateo County, Santa Clara County, Stanislaus County, San Joaquin County, Marin County, Solano County and throughout Northern California. Contact us for a free legal consultation today.925-957-9797
Millions of current and former homeowners will have a chance to get their foreclosure cases examined to determine whether they should be compensated for banks’ mistakes, under a wide-ranging review being planned by federal regulators. Ssoo let’s see 6 Million foreclosures 50,000.00 each that’s 300 BILLION I think they are going to sweep this under the carpet just like the Countrywide deal and say they fixed it. I believe that the only way to get compensated is through litigation although this is a great admission and could be used in future litigation.
The review process, which could be unveiled in the next few weeks, will be open to borrowers who were in some stage of foreclosure in 2009 or 2010. Estimates prepared by the Office of the Comptroller of the Currency, which will oversee the review, indicate that 4.5 million borrowers could be eligible for review.
John Walsh, acting head of the OCC, unveiled some aspects of the plan in a speech last month to banking executives, when he said the agency was exploring “the best means of ensuring that injured homeowners had the opportunity to seek relief,” when they were harmed by lender improprieties.
WSJ’s Nick Timiraos has details of a plan by which 4.5 million homeowners who faced foreclosure in 2009 and 2010 could face a review of their foreclosure procedures due to errors by banks. Photo by John Moore/Getty Images
The process will include a broad public-outreach campaign, including direct mail to eligible borrowers and a single website and toll-free number. The reviews will be conducted by independent third-party companies that were hired earlier this year by 14 banks that signed consent orders in April with the OCC and the Federal Reserve. The regulators had to sign off on the selection of these companies.
“It’s a substantial undertaking at great expense to the banks,” said Tim Rood, a partner at Collingwood Group, a housing-finance consulting firm.
Borrowers who are determined to have suffered “financial injury” could be eligible for compensation that would be determined on a case-by-case basis by the third-party firms. Borrowers will have to request reviews before a cutoff date, likely to fall near the end of the first quarter of 2012. It hasn’t been determined whether borrowers that accept restitution would have to agree to surrender related legal claims.
Regulators declined to provide estimates of the amount of money that injured borrowers might receive or how much the program might cost lenders.
However, few if any borrowers are expected to have foreclosures overturned.
The review process is one of several continuing efforts to address disclosures that surfaced a year ago over banks’ use of “robo-signers,” bank employees who signed off on huge numbers of legal foreclosure filings daily and falsely claimed in the documents to have personally reviewed each case. The disclosures prompted some judges to question the veracity of other bank foreclosure practices.
The process is separate from the months-long talks between federal agencies, state attorneys general and banks to reach a multibillion-dollar settlement over foreclosure abuses. That effort took a big step backwards Friday, when California Attorney General Kamala D. Harris called the deal “inadequate” and pulled out of the settlement talks.
The loss of California could cripple any settlement because the state has among the nation’s highest volumes of foreclosures. Banks are less likely to agree to the $25 billion price tag pushed by federal and state officials without the participation of California. Banks, federal officials and state attorneys general are set to resume meetings in Washington on Tuesday.
Representatives for both sides said they still hope to reach an agreement despite Friday’s setback. The banks “remain committed to the dialogue and continue to believe that a global settlement would be an effective means of supporting the recovery of the housing market and helping to strengthen the economy,” said one person familiar with the banks’ thinking.
“We are still full-steam ahead,” said a spokesman for Iowa Attorney General Tom Miller, who is spearheading the 50-state negotiations. “With or without some states, we are still moving forward.”
Bloomberg NewsBorrowers who suffered ‘financial injury’ could be eligible for compensation. Here, a foreclosure sign hangs in front of a house in Canton, Mich., in March.
In the OCC review process, financial injury could cover a wide range of misrepresentations or errors committed by mortgage companies, according to people familiar with the process.
Banks could be liable if they miscalculated mortgage payments or applied impermissible fees or penalties. A handful of borrowers have alleged that mortgage-servicing companies, for example, improperly placed expensive insurance coverage onto their mortgage, pushing them into default and preventing them from becoming current with their payments.
Borrowers may be able to receive compensation if the review finds that the bank moved a borrower to foreclosure while the bank was receiving partial payments as part of a trial or permanent loan modification. Compensation might also be due if borrowers provide evidence that they provided the necessary documentation required to qualify for a modification but were denied the modification.
A separate report to be released on Tuesday raises new questions over Fannie Mae‘s oversight of the attorneys that conduct foreclosures on its behalf. The report, from the inspector general for the Federal Housing Finance Agency, faulted Fannie for inadequate oversight of those firms
Since 2008, Fannie has required its mortgage servicers to use designated law firms that are part of its “retained attorney network.” The network arrangement allows Fannie to negotiate discounted rates with approved firms, which in turn can lock in business from the nation’s largest mortgage investor.
The report said that in June 2010, the FHFA conducted a two-day field visit to Florida, where it found that “documentation problems were evident and law firms…were not devoting the time necessary to their cases due to Fannie Mae’s flat fee structure and volume-based processing model.”
FHFA staff subsequently informed senior Fannie officials that its attorneys were “increasingly unprepared when they enter the courtroom,” leading to a larger backlog of foreclosures.
Finally, after trillions in fraudulent activity, trillions in bailouts, trillions in printed money, billions in political bribing and billions in bonuses, the criminal cartel members on Wall Street are beginning to get what they deserve. As the Eurozone is coming apart at the seams and as the US economy grinds to a halt, the financial elite are starting to turn on each other. The lawsuits are piling up fast. Here’s an extensive roundup:
Collapse Roundup #5: Goliath On The Ropes, Big Banks Getting Hit Hard, It’s A “Bloodbath” As Wall Street’s Crimes Blow Up In Their Face
Time to put your Big Bank shorts on! Get ready for a run… The chickens are coming home to roost… The Global Banking Cartel’s crimes are being exposed left & right… Prepare for Shock & Awe…
Well, well… here’s your Shock & Awe:
First up, this shockingly huge $196 billion lawsuit just filed against 17 major banks on behalf of Fannie Mae and Freddie Mac. Bank of America is severely exposed in this lawsuit. As the parent company of Countrywide and Merrill Lynch they are on the hook for $57.4 billion. JP Morgan is next in the line of fire with $33 billion. And many death spiraling European banks are facing billions in losses as well.
FHA Files a $196 Billion Lawsuit Against 17 Banks
The Federal Housing Finance Agency (FHFA), as conservator for Fannie Mae and Freddie Mac (the Enterprises), today filed lawsuits against 17 financial institutions, certain of their officers and various unaffiliated lead underwriters. The suits allege violations of federal securities laws and common law in the sale of residential private-label mortgage-backed securities (PLS) to the Enterprises.
Complaints have been filed against the following lead defendants, in alphabetical order:
1. Ally Financial Inc. f/k/a GMAC, LLC – $6 billion
2. Bank of America Corporation – $6 billion
3. Barclays Bank PLC – $4.9 billion
4. Citigroup, Inc. – $3.5 billion
5. Countrywide Financial Corporation -$26.6 billion
6. Credit Suisse Holdings (USA), Inc. – $14.1 billion
7. Deutsche Bank AG – $14.2 billion
8. First Horizon National Corporation – $883 million
9. General Electric Company – $549 million
10. Goldman Sachs & Co. – $11.1 billion
11. HSBC North America Holdings, Inc. – $6.2 billion
12. JPMorgan Chase & Co. – $33 billion
13. Merrill Lynch & Co. / First Franklin Financial Corp. – $24.8 billion
14. Morgan Stanley – $10.6 billion
15. Nomura Holding America Inc. – $2 billion
16. The Royal Bank of Scotland Group PLC – $30.4 billion
17. Société Générale – $1.3 billion
These complaints were filed in federal or state court in New York or the federal court in Connecticut. The complaints seek damages and civil penalties under the Securities Act of 1933, similar in content to the complaint FHFA filed against UBS Americas, Inc. on July 27, 2011. In addition, each complaint seeks compensatory damages for negligent misrepresentation. Certain complaints also allege state securities law violations or common law fraud. [read full FHFA release]
BofA sued over $1.75 billion Countrywide mortgage pool
Bank of America Corp (BAC.N) was sued by the trustee of a $1.75 billion mortgage pool, which seeks to force the bank to buy back the underlying loans because of alleged misrepresentations in how they were made. The lawsuit by the banking unit of US Bancorp (USB.N) is the latest of a number of suits seeking to recover investor losses tied to risky mortgage loans issued by Countrywide Financial Corp, which Bank of America bought in 2008. In a complaint filed in a New York state court in Manhattan, U.S. Bank said Countrywide, which issued the 4,484 loans in the HarborView Mortgage Loan Trust 2005-10, materially breached its obligations by systemically misrepresenting the quality of its underwriting and loan documentation. [read more]
Bank of America kept AIG legal threat under wraps
Top Bank of America Corp lawyers knew as early as January that American International Group Inc was prepared to sue the bank for more than $10 billion, seven months before the lawsuit was filed, according to sources familiar with the matter. Bank of America shares fell more than 20 percent on August 8, the day the lawsuit was filed, adding to worries about the stability of the largest U.S. bank…. The bank made no mention of the lawsuit threat in a quarterly regulatory filing with the U.S. Securities and Exchange Commission just four days earlier. Nor did management discuss it on conference calls about quarterly results and other pending legal claims. [read more]
Nevada Lawsuit Shows Bank of America’s Criminal Incompetence
As we’ve stated before, litigation by attorney general is significant not merely due to the damages and remedies sought, but because it paves the way for private lawsuits. And make no mistake about it, this filing is a doozy. It shows the Federal/state attorney general mortgage settlement effort to be a complete travesty. The claim describes, in considerable detail, how various Bank of America units engaged in misconduct in virtually every aspect of its residential mortgage business. [read more]
Nevada Wallops Bank of America With Sweeping Suit; Nationwide Foreclosure Settlement in Peril
The sweeping new suit could have repercussions far beyond Nevada’s borders. It further jeopardizes a possible nationwide settlement with the five largest U.S. banks over their foreclosure practices, especially given concerns voiced by other attorneys general, New York’s foremost among them…. In a statement, Bank of America spokeswoman Jumana Bauwens said reaching a settlement would bring a better outcome for homeowners than litigation. “We believe that the best way to get the housing market going again in every state is a global settlement that addresses these issues fairly, comprehensively and with finality. [read more]
FDIC Objects to Bank of America’s $8.5 Billion Mortgage-Bond Accord
The Federal Deposit Insurance Corp. is objecting to Bank of America Corp. (BAC)’s proposed $8.5 billion mortgage-bond settlement with investors, joining investors and states that are challenging the agreement. The FDIC owns securities covered by the settlement and said it doesn’t have enough information to evaluate the accord, according to a filing today in federal court in Manhattan. Bank of America has agreed to pay $8.5 billion to resolve claims from investors in Countrywide Financial mortgage bonds. The settlement was negotiated with a group of institutional investors and would apply to investors outside that group. [read more]
Fed asks Bank of America to list contingency plan: report
The Federal Reserve has asked Bank of America Corp to show what measures it could take if business conditions worsen, the Wall Street Journal said, citing people familiar with the situation. BofA executives recently responded to the unusual request from the Federal Reserve with a list of options that includes the issuance of a separate class of shares tied to the performance of its Merrill Lynch securities unit, the people told the paper. Bank of America and the Fed declined to comment to the Journal. Both could not immediately be reached for comment by Reuters outside regular U.S. business hours. [ read more]
Bombshell Admission of Failed Securitization Process in American Home Mortgage Servicing/LPS Lawsuit
Wow, Jones Day just created a huge mess for its client and banks generally if anyone is alert enough to act on it. The lawsuit in question is American Home Mortgage Servicing Inc. v Lender Processing Services. It hasn’t gotten all that much attention (unless you are on the LPS deathwatch beat) because to most, it looks like yet another beauty contest between Cinderella’s two ugly sisters. AHMSI is a servicer (the successor to Option One, and it may also still have some Ameriquest servicing).
AHMSI is mad at LPS because LPS was supposed to prepare certain types of documentation AHMSI used in foreclosures. AHMSI authorized the use of certain designated staffers signing with the authority of AHSI (what we call robosinging, since the people signing these documents didn’t have personal knowledge, which is required if any of the documents were affidavits). But it did not authorize the use of surrogate signers, which were (I kid you not) people hired to forge the signatures of robosigners. The lawsuit rather matter of factly makes a stunning admission… [read more]
Fraudclosure: MERS Case Filed With Supreme Court
Before readers get worried by virtue of the headline that the Supreme Court will use its magic legal wand to make the dubious MERS mortgage registry system viable, consider the following:
1. The Supreme Court hears only a very small portion of the cases filed with it, and is less likely to take one with these demographics (filed by a private party, and an appeal out of a state court system, as opposed to Federal court). This case, Gomes v. Countywide, was decided against the plaintiff in lower and appellate court and the California state supreme court declined to hear it
2. If MERS or the various servicers who have had foreclosures overturned based on challenges to MERS thought they’d get a sympathetic hearing at the Supreme Court, they probably would have filed some time ago. MERS have apparently been settling cases rather than pursue ones where it though the judge would issue an unfavorable precedent
3. The case in question, from what the experts I consulted with and I can tell, is not the sort the Supreme Court would intervene in based on the issue raised, which is due process (14th Amendment). But none of us have seen the underlying lower and appellate court cases, and the summaries we’ve seen are unusually unclear as to what the legal argument is. [read more]
Iowa Says State AG Accord Won’t Release Banks From Liability
The 50-state attorney general group investigating mortgage foreclosure practices won’t release banks from all civil, or any criminal, liability in a settlement, Iowa Attorney General Tom Miller said. [read more]
Fed Launches New Formal Enforcement Action Against Goldman Sachs To Review Foreclosure Practices
The Federal Reserve Board has just launched a formal enforcement action against Goldman Sachs related to Litton Loan Services. Litton Loan is the nightmare-ridden mortgage servicing unit, a subsidiary of Goldman, that Goldman has been trying to sell for months. They penned a deal to recently, but the Fed stepped in and required Goldman to end robo-signing taking place at the unit before the sale could be completed. Sounds like this enforcement action is an extension of that requirement. [read more]
Goldman Sachs, Firms Agree With Regulator To End ‘Robo-Signing’ Foreclosure Practices
Goldman Sachs and two other firms have agreed with the New York banking regulator to end the practice known as robo-signing, in which bank employees signed foreclosure documents without reviewing case files as required by law, the Wall Street Journal said. In an agreement with New York’s financial-services superintendent, Goldman, its Litton Loan Servicing unit and Ocwen Financial Corp also agreed to scrutinize loan files for evidence they mishandled borrowers’ paperwork and to cut mortgage payments for some New York homeowners, the Journal said. [read more]
Banks still robo-signing, filing doubtful foreclosure documents
Reuters has found that some of the biggest U.S. banks and other “loan servicers” continue to file questionable foreclosure documents with courts and county clerks. They are using tactics that late last year triggered an outcry, multiple investigations and temporary moratoriums on foreclosures. In recent months, servicers have filed thousands of documents that appear to have been fabricated or improperly altered, or have sworn to false facts. Reuters also identified at least six “robo-signers,” individuals who in recent months have each signed thousands of mortgage assignments — legal documents which pinpoint ownership of a property. These same individuals have been identified — in depositions, court testimony or court rulings — as previously having signed vast numbers of foreclosure documents that they never read or checked. [read more]
JPMorgan fined for contravening Iran, Cuba sanctions
JPMorgan Chase Bank has been fined $88.3 million for contravening US sanctions against regimes in Iran, Cuba and Sudan, and the former Liberian government, the US Treasury Department announced Thursday. The Treasury said that the bank had engaged in a number of “egregious” financial transfers, loans and other facilities involving those countries but, in announcing a settlement with the bank, said they were “apparent” violations of various sanctions regulations. [read more]
This Is Considered Punishment? The Federal Reserve Wells Fargo Farce
What made the news surprising, of course, was that the Federal Reserve has rarely, if ever, taken action against a bank for making predatory loans. Alan Greenspan, the former Fed chairman, didn’t believe in regulation and turned a blind eye to subprime abuses. His successor, Ben Bernanke, is not the ideologue that Greenspan is, but, as an institution, the Fed prefers to coddle banks rather than punish them.
That the Fed would crack down on Wells Fargo would seem to suggest a long-overdue awakening. Yet, for anyone still hoping for justice in the wake of the financial crisis, the news was hardly encouraging. First, the Fed did not force Wells Fargo to admit guilt — and even let the company issue a press release blaming its wrongdoing on a “relatively small group.”
The $85 million fine was a joke; in just the last quarter, Wells Fargo’s revenues exceeded $20 billion. And compensating borrowers isn’t going to hurt much either. By my calculation, it won’t top $20 million. [read more]
U.S. securities regulators have taken the unprecedented step of asking high-frequency trading firms to hand over the details of their trading strategies, and in some cases, their secret computer codes. The requests for proprietary code and algorithm parameters by the Financial Industry Regulatory Authority (FINRA), a Wall Street brokerage regulator, are part of investigations into suspicious market activity, said Tom Gira, executive vice president of FINRA’s market regulation unit. [read more]
And here’s part of the Collapse Roundup I wrote on August 25th, referenced in the beginning of this report – as you will see, I would probably make a lot more money as an investment adviser:
Collapse Roundup #5: Goliath On The Ropes, Big Banks Getting Hit Hard, It’s A “Bloodbath” As Wall Street’s Crimes Blow Up In Their Face
Time to put your Big Bank shorts on! Get ready for a run…
The chickens are coming home to roost. Reality is catching up with the market riggers (Fed, ECB, PPT, CIA) and the “too big to fail” banks are getting whacked. Trillions of dollars in bailouts and legalized (FASB) accounting fraud cannot save these insolvent zombie banks any longer. The Grim Reaper is on the horizon and his sickle will do what paid off politicians won’t, cut ‘em down to size. So get your silver stake ready, time to plunge it into their vampire squid hearts….
What about Warren Buffet? He saved Goldman Sachs with a bailout in 2008. Can he save Bank of America?…
Warren’s bailout will help BofA over the short run, but $5 billion is just a drop in the bucket when it comes to their problems. The only thing his $5 billion will accomplish is a temporary run up in stock value so everyone who has been killed on the plummeting stock price can then jump out without complete loss….
Trouble a-comin’…
Goldman Sachs TANKS After CEO Lloyd Blankfein Hires Famous Defense Lawyer
Is the Goldman Sachs CEO facing a new lawsuit?
The market seems to think so. Goldman Sachs just tanked in minutes before the close after news that Lloyd Blankfein hired a lawyer famous for defending vilified execs. It’s back up a bit since dropping over 5%, but the news is still concerning.
It’s unclear whether the lawyer is for him, Goldman Sachs, or both, but Goldman Sachs’s CEO Lloyd Blankfein hired Reid Weingarten, a high profile defense attorney who says “I’m used to these monstrously difficult cases where everybody hates my clients,” according to Reuters.
Reuters says the hire might have something to do with accusations of Blankfein’s committing perjury. Or something else:
One former federal prosecutor, who was not authorized to speak publicly, said Blankfein may have hired outside counsel after receiving a request from investigators for documents or other information. [read full report]
Speaking of hiring lawyers…
The Global Banking Cartel’s Crimes Are Being Exposed Left & Right…
Blowing Up In Their Face… Prepare for Shock & Awe…
BOOM! Moody’s exposed:
MOODY’S ANALYST BREAKS SILENCE: Says Ratings Agency Rotten To Core With Conflicts
A former senior analyst at Moody’s has gone public with his story of how one of the country’s most important rating agencies is corrupted to the core.
The analyst, William J. Harrington, worked for Moody’s for 11 years, from 1999 until his resignation last year.
From 2006 to 2010, Harrington was a Senior Vice President in the derivative products group, which was responsible for producing many of the disastrous ratings Moody’s issued during the housing bubble.
Harrington has made his story public in the form of a 78-page “comment” to the SEC’s proposed rules about rating agency reform….
Here are some key points:
* Moody’s ratings often do not reflect its analysts’ private conclusions. Instead, rating committees privately conclude that certain securities deserve certain ratings–but then vote with management to give the securities the higher ratings that issuer clients want.
* Moody’s management and “compliance” officers do everything possible to make issuer clients happy–and they view analysts who do not do the same as “troublesome.” Management employs a variety of tactics to transform these troublesome analysts into “pliant corporate citizens” who have Moody’s best interests at heart.
* Moody’s product managers participate in–and vote on–ratings decisions. These product managers are the same people who are directly responsible for keeping clients happy and growing Moody’s business.
* At least one senior executive lied under oath at the hearings into rating agency conduct. Another executive, who Harrington says exemplified management’s emphasis on giving issuers what they wanted, skipped the hearings altogether. [read full report]
BOOM! The SEC Caught Covering Up Wall Street Crimes:
Matt Taibbi Exposes How SEC Shredded Thousands of Investigations
An explosive new report in Rolling Stone magazine exposes how the U.S. Securities and Exchange Commission destroyed records of thousands of investigations, whitewashing the files of some of the nation’s largest banks and hedge funds, including AIG, Wells Fargo, Lehman Brothers, Goldman Sachs, Bank of America and top Wall Street broker Bernard Madoff. Last week, Republican Sen. Chuck Grassley of Iowa said an agency whistleblower had sent him a letter detailing the unlawful destruction of records detailing more than 9,000 information investigations. We speak with Matt Taibbi, the political reporter for Rolling Stone magazine who broke this story in his latest article….
KA-BOOM! The Fed And All Their Crony-Capitalist Cartel Members Exposed, Yet Again:
Wall Street Pentagon Papers Part III – Are The Federal Reserve’s Crimes Still Too Big To Comprehend?
Another day, another trillion plus in secret Federal Reserve “bailouts” revealed. Bloomberg News exposes this latest Fed “deal” after winning a long Freedom of Information Act (FOIA) legal battle to get the details on what was done with the American people’s money. Their report runs with an AmpedStatus style headline: “Wall Street Aristocracy Got $1.2 Trillion From Fed.”
The aristocracy is alive and well… thanks to the Fed, of course.
Keep in mind, this $1.2 trillion is in addition to the $16 trillion the Government Accountability Office (GAO) audit revealed and the over $2 trillion in Quantitative Easing the Fed dished out, not to mention the now continued promise of the Zero Interest Rate Policy (ZIRP). This is also separate from the $700 billion TARP program that Congress approved. This is yet another unknown secret program, throwing another mere $1.2 trillion in public money at the Wall Street elite (global banking cartel), just being revealed now.
Those of us paying attention over the past three years have had Fed crony-capitalism on steroids fatigue for awhile now. Nonetheless, this is deja vu all over again as another mindbogglingly huge story that must be covered comes to light.
BOOM! GAO audit exposed, missing some vital details:
More on how the GAO’s Fed audit failed to disclose some dirty secrets about BlackRock and JP Morgan
In its review of the Fed’s outsourcing practices, it failed to mention the most damaging and suspicious sole-source (no bid) contract awarded to BlackRock, which was for handling the New York Fed’s toxic Bear Stearns portfolio, otherwise known as Maiden Lane. This contract would generate $108,000,000 in fees and was one of the largest awarded during the bailout period, but it might also have saved JP Morgan $1.1 billion in losses from its Bear Stearns acquisition….
Also, BlackRock was also one of the managers of the NY Fed’s separate $1.25 trillion MBS purchase program as part of QE1. Contrary to the lie on the NY Fed’s webpage (that the MBS auctions were conducted via competitive bidding), the NY Fed’s own purchasing manager, Brian Sack, admitted in a paper that, “the MBS purchases were arranged with primary dealer counterparties directly, [and] there was no auction mechanism to provide a measure of market supply.”
Putting it all together, it looks like Jamie Dimon signed off on hiring BlackRock for no justifiable reason to trade the very Maiden Lane portfolio that could have caused his bank, JP Morgan, to lose up to $1.1 billion. And, it was entirely possible that BlackRock saved the portfolio by trading the MBS portion of ML with the New York Fed directly as QE1 was underway. [read full report]
BOOM! Bear Stearns exposed:
Report Says Bear Stearns Executives Sold Illegal RMBS and Covered It Up
Former back office employees from Bear Stearns are coming out of the woodwork to explain how Tom Marano’s mortgage group cheated their own clients out of billions. This week I reported at The Distressed Debt Report, EMC insiders say they were told to make up the classification for whole loans, packaged into mortgage securities, to get them switched out of the trust. By classifying the loans as ‘prepaid’ or having ‘subsequent recoveries’ Bear employees were able to fool the trustee into giving them back loans they were not able to legally service. A move New York Attorney General Eric Schneiderman is actively investigating now.
In my latest DealFlow story we hear from EMC staffers who describe how subprime loans, that would have been sold by Bear Stearns trader Jeff Verschleiser’s team, never had a proper servicing license in West Virginia when they were packaged into the residential mortgage backed security. In 2003 Bear/EMC put $100 million of subprime loans from West Virginia into a few RMBS transactions. EMC, the banks wholly owned mortgage servicing shop, would service all of Bear’s RMBS after they were sold.
A year latter, when senior executies realized the mishap instead of Bear going out and informing their regulator and applying for a license, they orchestrated a cover up and even threaten EMC employees not to talk about it. [read full report]
Let’s end with this video. We need to keep in mind that the Federal Reserve has known about all of this criminal activity from the start. Yet, they have done everything they could, and are still trying, to keep this criminal operation up and running. As all these criminal banks begin to blow up, let’s not forget who their central bank is and what they have done to the American people.
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The Eighth Circuit BAP found that a chapter 13 debtor may strip off a wholly unsecured lien on his principal residence even where the debtor is otherwise not entitled to discharge. In re Fisette, 11-6012 (B.A.P. 8th Cir., August 29, 2011). In so holding the court joined the majority of Circuit and BAP courts that have held that the reasoning in Nobelman v. Am. Savings Bank, 508 U.S. 324 (1993) establishes the right to strip off wholly unsecured residential liens. Turning to the issue of whether ineligibility for discharge under section 1328(f)(1) precludes the otherwise permissible lien stripping, the court stated: “We hold that the strip off of a wholly unsecured lien on a debtor’s principal residence is effective upon completion of the debtor’s obligations under his plan, and it is not contingent on his receipt of a Chapter 13 discharge.” Unlike the courts that have found that section 1325(a)(5) precludes lien-stripping in a chapter 20, the Fisette court found that, pursuant to the statutory language, the requirements of section 1325(a)(5) were not applicable to a lien which was unsecured. The court concluded its analysis with a finding that the creditors whose liens were stripped would be entitled to distribution of the estate along with the other unsecured creditors.
SEE 42-in RE Cruz vs Aurora AURORA LOAN SERVICES LLC, SCME MORTGAGE BANKERS INC, ING BANK FSB, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS ALL BITE THE DUST, SUBJECT TO LIABILITY AND NO ABILITY TO FORECLOSE WITHOUT COMPLYING WITH LAW. Salient points of Judge Mann’s Decision: TRUTH IN LENDING was dismissed because they were time-barred. LESSON: Don’t ignore […]
Posted on August 7, 2011 by Neil Garfield EDITOR’S NOTE: We know the foreclosures were gross misrepresentations of fact to the Courts, to the Borrowers and to the Investors. This article shows the crossover between the MegaBanks — sharing and diluting the responsibility for these fabrications as they went along. If you are talking about […]
I looked into the records for that entity in the SEC EDGAR online database and discovered that the last annual report was filed in 2007, contemporaneously with a FORM 15 filing.That Form 15 filing claimed a standing under 15d-6 of the 1934 SEC regulations which exempts the entity of filing an annual report, whereby the […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE Submitted on 2011/08/24 at 9:08 pm Norwest and Alt-A Land Title & Fidelity National Insurance morpted into Microsoft open platform on CLOUD and portals now through which new GMAC Mortgage & State of Maryland in the pass-thru-agency state portal funded to access FIS, […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: It is comforting to know that at least some people are paying attention. From one of the largest servicers in the country comes an admission that securitization of mortgage loans was an illusion. The facts alleged by AHMSI in its lawsuit […]
Finality versus good and evil. In the battlefield it isn’t about good and evil. It is about winner and losers. In military battles around the world many battles have been one by the worst tyrants imaginable. Just because you are right, just because the banks did bad things, just because they have no right to […]
“If you’re allowed to foreclose and kick someone out of his or her home without being the party that either owns the loan or represents the person who owns the loan… if you can ignore those laws, why can’t you ignore other laws too? Which laws apply, when one of the parties didn’t make his […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE see VIDEO $1.2 Trillion in EXTRA BAILOUT MONEY FROM FED SECRETLY GIVEN TO DOMESTIC AND FOREIGN BANKS Of course the figure is much higher, but the secrecy surrounding the money given by the Fed to the banks is something to enrage any tea […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: Here is a good place to start — the devil is in the details. You will find that the more you probe the more people and bad documents emerge. Persistence pays. Here is a letter that one homeowner just sent to […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE The boys are playing rough now, but US Bank, failing to take its queues from Deutsch is plunging ahead with CalWestern by its side, using forged, fabircated, faked documents that wouldn’t be valid even if they were properly executed. The securitizers tricked and […]
SAN FRANCISCO — Attorney General Kamala D. Harris today announced that the California Department of Justice, in conjunction with the State Bar of California, has sued multiple entities accused of fraudulently taking millions of dollars from thousands of homeowners who were led to believe they would receive relief on their mortgages. Attorney General Harris sued […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE IF THE BANKS DON’T OWN THE PROPERTY OR THE MORTGAGE, WHO DOES? EDITOR’S NOTE: My figures tracking thousands of foreclosures indicate the same thing that the New York Post found. There are a scattered few foreclosures that are good old-fashioned foreclosures of valid […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S COMMENT: I was talking with an expert in landlord tenant law and I received an interesting suggestion. The case involved someone who has just been served with a writ of restitution where the owner had to peaceably leave her home — or […]
Wednesday, August 17th, 2011, 2:49 pm A controversial case challenging the ability of Mortgage Electronic Registration Systems to foreclose on a California man was filed with the Supreme Court Monday, making it the first major MERS case to reach the nation’s highest court. If the Supreme Court agrees to hear Gomes v. Countrywide, Gomes’ attorney, […]
by KERRI PANCHUK Proposed Illinois Legislation Would Freeze Evictions for Four Months California AG Wants Pay Option ARM Answers Does the Senate’s housing bill encourage foreclosures? California Law Freezes Foreclosures, Burns Servicers Short Sales Cost Lenders $310m More Than Necessary, CoreLogic Study Finds Thursday, August 4th, 2011, 7:31 am A California man is on a […]
So you have denied the claims of the pretenders and put that in issue. You have even alleged fraud, forgery and fabrication and the catch-word “robosigning”. But the Judge, alleging that he did not want to “make new law” (which wasn’t true) or allegedly because he didn’t want to start an avalanche of litigation interfering […]
Contact Us: MortgageReductionLaw.com Dear Homeowner, It’s been widely reported around the country, via internet, blogs and newspapers, how the lenders used the foreclosure mills and other legal ways, to fabricate fraudulent documents to record in the county recorder offices and pretend they have legal standing to initiate the foreclosure procedure. Neil Garfield in his blog […]
TIMOTHY L. MCCANDLESS, ESQ. SBN 147715 LAW OFFICES OF TIMOTHY L. MCCANDLESS 820 Main Street, Ste. 1 Martinez, CA (925) 957-9797 Telephone (909) 382-9956 Facsimile Attorney for Defendant Zenkarla S. Salazar SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA GMAC MORTGAGE, LLC FKA GMAC MORTGAGE CORPORATION, Plaintiff, vs. […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: We know the foreclosures were gross misrepresentations of fact to the Courts, to the Borrowers and to the Investors. This article shows the crossover between the MegaBanks — sharing and diluting the responsibility for these fabrications as they went along. If […]
posted by Katie Porter As challenges to whether a “bank” (usually actually a securitized trust) has the right to foreclose because it owns the note and mortgage become more common, rumors swirl about the ability to use such tactics to get a “free house.” There are a few instances of consumer getting a free house, […]
From LivingLies: I think that everyone is missing the #1 problem MERS has in CA. MERS is a Non-Authorized Agent and cannot legally assign the Promissory Note, making any foreclosure by other than the original lender wrongful, for the following reasons. 1) Under established and binding Ca law, a Nominee can’t assign the Note. Born […]
Posted on August 1, 2011 by Neil Garfield I WRITE THIS BECAUSE WITH SO MANY PRO SE LITIGANTS AND UNINFORMED LAWYERS WEIGHING IN IT IS SOMETIMES NECESSARY TO CLARIFY THE ISSUES. Quiet Title is not a defense. If used defensively you will most likely lose your case and also unintentionally waive rights that you might […]
Pro Per Debtor Stops Attorneys for US Bank – in RE Deamicis Posted: 31 Jul 2011 10:21 PM PDT Pro Per Debtor Stops Attorneys for US Bank – in RE Deamicis By Daniel Edstrom DTC Systems, Inc. She has been fighting tooth and nail. Nobody was listening. The current bankruptcy judge was skeptical when she […]
Recent Consent Orders Consent Order, Sovereign Bank, Wyomissing, Pennsylvania, 04410, NE-11-17, April… Order shall be directed to the Comptroller of the Currency, or to the individual, … or office designated by the Comptroller of the Currency. Sovereign Bank Consent Order Page http://www.mortgagedaily.com/forms/OccConsentOrderSovereign041311.pdf Consent Order, OneWest Bank, FSB, Pasadena, California, 18129, WN-11-011,
A Bakersfield homeowner is taking on a bank, in a battle that could have sweeping implications for people facing foreclosure. Mark Demucha wants Wells Fargo to prove it owns his home loan. And, if his lawsuit is successful, it could set a legal precedent that slows or even stops foreclosures across the state. “Filled out the […]
A. Standing The party seeking to invoke federal jurisdiction has the burden of establishing standing.28 Constitutional standing analysis includes three elements: (1) the plaintiff must have suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) there must […]
(1) Notaries Public § 1–Disciplinary Proceedings–Time for Instituting. Disciplinary action taken by the Secretary of State against a notary public was not barred by the fact that the proceeding was instituted more than three years after the notary’s alleged improper act and more than one year after its discovery. Statutes of limitation barring civil actions […]
SEPARATION OF DEED OF TRUST FROM NOTE: Bellistri Opinion Posted on April 28, 2010 by Neil Garfield There is a lot of conflicting opinions about this. My opinion is that the confusion arises not from the law, not from application of the law and not from what is written on the note or deed of Trust. […]
Brand New, Hot Off The Presses MERS Policy Bulletin July 24th, 2011 | Author: Matthew D. Weidner, Esq. After years of claiming that assignments don’t matter and the date of assignment certainly doesn’t matter, the MERS Monster has finally changed its tune, effective July 21, 2011: The Certifying Officer must execute the assignment of the […]
Stay of Execution and Appeal The defendant may request a stay of execution of the judgment whether or not an appeal is taken. [CCP §918(a), (c).] You may stay execution of the judgment for up to 40 days without the landlord’s consent in a limited civil case (or up to 70 days in an unlimited […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE factual issues for Unlawful Detainer case NFG 7-15-11 Various states have two levels of jurisdiction that make it difficult to raise the proper issues in eviction even if there has been no preceding judicial action or if the preceding judicial action has been […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE The Free House Myth posted by Katie Porter As challenges to whether a “bank” (usually actually a securitized trust) has the right to foreclose because it owns the note and mortgage become more common, rumors swirl about the ability to use such tactics […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: The battle is heating up. BOA, for example, is stepping up efforts to cause as much trouble as possible for those foreclosure defense lawyers who are getting traction in the courts. This started some time ago as some people were actually […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE No Punishment = Continued Misconduct Posted on July 19, 2011 by Mark Stopa Esq. http://www.stayinmyhome.com/blog/?p=1565 In Maine, a group of drug dealers was caught distributing drugs to local middle schoolers. They confessed, yet the District Attorney declined to press charges, so the drug […]
Recently Discovered Flaw in Recording System Clouds Titles on Previously Foreclosed Properties The modern system of mortgage refinancing and assignments created during the housing boom has left behind a wave of title defects on properties that have ever had a foreclosure in their history, due to a loophole in the property records recording system. […]
The brief below as circulated by the California Bar’s: Insolvency Law Committee: Herrera vs. Deutsche Bank National Trust Co., 2011 Westlaw 2547979 (Cal.App.) Facts: A married couple (“the homeowners”) purchased a home at a foreclosure sale. Supposedly, unbeknownst to them, their interest in the home was subject to a prior (and perhaps unrecorded) deed […]
If the court follows the rules of evidence (and they do) if proper objections are filed. No eviction of a secuitized loan should ever prevail on an eviction; they cannot produce the foundation to authenticate the Trustees Deed it is based upon preliminary facts that they are unable and unwilling to bring to court. The […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: Anyone who has entered into mortgage modification process with BOA or any other bank acting as servicer or otherwise knows the story. The Bank does everything it can to delay the process until the borrower gets into serious trouble and then […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE JUDGES ARE STARTING TO EXAMINE DOCUMENTS AND THEY DON’T LIKE WHAT THEY ARE SEEING “Thus, while A.R.S. §33-807(E) may operate to dismiss a trustee in certain instances, if one of the allegations of a complaint is that the entity purporting to act as […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE The Allonge- Billions of Dollars in Commerce Hangs on A Single Scrap of Paper EDITOR’S NOTE: If you wrote a check to your next door neighbor, you would expect that he would either cash it or deposit it. But what if your neighbor […]
All banks love to use judicial notice to establish their position but with all the robo signing the evidence is being excluded. ROBERT HERRERA et al., Plaintiffs and Appellants, v. DEUTSCHE 1 BANK NATIONAL TRUST COMPANY et al., Defendants and Respondents. No. C065630. Court of Appeals of California, Third District, El Dorado.Filed May 31, 2011. […]
False Statements 06/28/2011 California Bankruptcy Judge Laura Stuart Taylor has joined the ranks of judges who will not tolerate fraudulent documents produced by banks to foreclose. Judge Taylor entered an Order To Show Cause why OneWest Bank, FSB, should not incur “a significant coercive sanction intended to deter any future tender of misleading evidence to […]
From ChaseChase.org: Federal District Court Javaheri v. JPMorgan Chase, Case No. CV10-8185 ODW Otis D. Wright II, Judge, U.S. District Court, Central District of California, Los Angeles Douglas Gillies, attorney for Daryoush Javaheri Plaintiff sued to halt a foreclosure initiated by JPMorgan Chase and California Reconveyance Co. Chase responded with a Motion to Dismiss. Two […]
By Niel Garfield EDITOR’S NOTE AND COMMENT: LAWYERS BEWARE! Starting up an anti-foreclosure venture and making comments criticizing the system has reportedly caused some investigations to begin and may result in bar discipline for technical infractions. From what I can see, the Bar is focused on UPL — unauthorized practice of law. The use of […]
Each day I get calls from desperate people hoping against hope the there is a magic document that can be filed or recorded the will magically give them their home free and clear without recourse. I tell them if it sounds to good to be true it probably is. That’s not to say that I […]
Ohio Judge Steven Terry Found Guilty of Rigging Foreclosure and Mail Fraud Corruption Case AKRON, Ohio – The Cuyahoga County judge charged in the county corruption investigation for allegedly fixing a foreclosure case has been found guilty on three of the five charges he was facing. The federal jury returned the verdict
Abigail C. Field- The $8.5 billion settlement that Bank of New York and Bank of America hope will resolve all (or almost all) mortgage backed securities claims between them has faced a lot of opposition. The attorneys general of New York and Delaware oppose the deal, as do various investors not involved […]
Lets not get to excited just yet as this comes as a complete surprise. What does this mean for the AG’s who are pursuing their own investigations and how will this help homeowners? Or is this another bailout waiting to happen? NYT- The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set […]
In case you missed it.. I put together Special Events that Happened in 1999 …Welcome to the 99 Club. It’s incomplete but it was a start to the mess we have today. AP- By PALLAVI GOGOI, AP Business Writer Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more […]
They can start here: Deposition Transcript of Litton Loan Servicing Litigation Manager Christopher Spradling CNN- NEW YORK (CNNMoney) — The Federal Reserve issued an enforcement action Thursday against Goldman Sachs, saying the investment bank must investigate questionable lending and foreclosure practices in its mortgage unit. The action orders Goldman to hire an independent consultant to investigate […]
American Banker did an outstanding, superb job with this article. Please read. American Banker- Some of the largest mortgage servicers are still fabricating documents that should have been signed years ago and submitting them as evidence to foreclose on homeowners. The practice continues nearly a year after the companies were caught cutting corners in […]
Commonwealth of Massachusetts Southern Essex District Registry of Deeds Shetland Park 45 Congress Street Suite 4100 Salem, Massachusetts 01970 NEWS FOR IMMEDIATE RELEASE Salem, MA August 30, 2011 Contact: John O’Brien, Register of Deeds 978-542-1722 jl.obrien@sec.state.ma.us . John O’Brien, Southern Essex District Register of Deeds in Salem, […]
WSJ– The mortgage industry will take a step toward cleaning up some of its most controversial practices under a deal between a New York regulator and three financial firms, including Goldman Sachs Group Inc. Under the agreement with the state’s financial-services superintendent, Benjamin M. Lawsky, the three firms—Goldman, its Litton Loan Servicing […]
WSJ- From: Home Loan News Sent: Wednesday, August 31, 2011 4:19am Subject: Important Message From Barbara DeSoer To All IMS Associates I wanted to provide this team with information about a strategic announcement our Home Loans business will make today that is consistent with our ongoing efforts to align the business to […]
Aug 31 (Reuters) – Bank of New York Mellon Corp said Robert Kelly, who has held the company’s top job since 2008, has stepped down as chairman and chief executive officer, following differences in approach to managing the company. The company, one of the world’s largest custody banks, said it named board member Gerald Hassell as chairman […]
Bloomberg- New York Attorney General Eric Schneiderman’s office has taken testimony from 53 witnesses in its investigation into Bank of America Corp. (BAC)’s 2008 acquisition of Merrill Lynch & Co., a federal judge said. U.S. District Judge Kevin Castel in Manhattan said in an order today that “there have been 53 examinations under oath by the […]
UPDATE: It was announced that he’s left to spend more time with his family. According to the Yahoo Message boards: Greg Whitworth FIRED If you do a google search under cached it brings you to his info, but when clicked on the message board link it brings you or redirects one to a 404 NOT FOUND. Mysteriously his info […]
False Statements Limited Purpose Corporate Officers Action Date: August 31, 2011 Location: TALLAHASSEE, FL A STATEMENT ON MORTGAGE FRAUD THAT EVERY ATTORNEY GENERAL COULD ISSUE TODAY There has been widespread, well-documented abuse of corporate officer titles by banks, mortgage companies and mortgage servicing companies on mortgage-related documents. Individuals who are not corporate officers have been directed to […]
Hagens Berman Sobol Shapiro LLP today announced that it is investigating concerns by hedge funds and institutional investors who believe Bank of America Corp. (NYSE: BAC) may have failed to disclose to investors the risk associated with a $10 billion lawsuit threat from American International Group (“AIG”) (NYSE: AIG). According to […]
It’s going to tank! WSJ- Bank of America Corp. intends to sell its correspondent mortgage business, as the troubled lender looks to narrow its focus and bolster its financial strength, said people familiar with the situation. Employees could be notified as soon as Wednesday that the lender has decided to exit the […]
H/T David Dayen SURE DID! . For immediate release — Monday, October 6, 2008. Contact Bob Brammer – 515-281-6699 . Miller: AGs Reach Agreement with Countrywide Financial that Will Help Almost 400,000 Borrowers Facing Foreclosure The Iowa Attorney General says the settlement will offer mortgage loan modifications to more than 1,100 Iowans that will help many avoid […]
NEVADA vs. BANK OF AMERICA CORP. | Second Amended Complaint “The Breach, Trusts Never Became Holders of These Mortgages”” NY TIMES- The attorney general of Nevada is accusing Bank of America of repeatedly violating a broad loan modification agreement it struck with state officials in October 2008 and is seeking to rip up the deal so […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SEE Corrective+Assignment[2] CHUTZPAH: Look it up if you are not familiar with the term. Here is a document that states on its face that Linda Green had no authority to to sign anything on behalf of MERS. So there goes thousands of documents […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE WHY DID THE LOAN SERVICER CLEAR THE LOAN OBLIGATION DOWN TO ZERO? Monday, August 29, 2011 Who owns the loan? The Ohio Supreme Court is taking up the question of what a bank needs to prove to force someone from his home. Story […]
MOST POPULAR ARTICLES CLICK HERE TO RESERVE SEATING AT HAWAII WORKSHOP GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SEE US BANK OCC ORDER AND COMMENTARY It will be up on the store soon and on the American Homeowners Cooperative at http://www.Americanhomeownerscoop.com. Based upon an in depth analysis of our title and securitization combo […]
MOST POPULAR ARTICLES CLICK HERE TO RESERVE SEATING AT HAWAII WORKSHOP GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE Homeowner Associations Wake Up to Collections and Profit!! FORECLOSING ON THE BANK!! EDITOR’S COMMENT: Becker and Poliakoff in South Florida is probably the largest law firm representing homeowner associations in the U.S. Once upon a […]
MOST POPULAR ARTICLES CLICK HERE AND RESERVE SEATING NOW AT HAWAII WORKSHOP OCTOBER 14 GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE THEY WANT YOUR HOUSE!!! “The banks don’t care whether you made your payments or not. They want your house. They don’t care if someone else made your payments. They want your house. […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: IT ALL COMES DOWN TO THIS: DO YOU WANT TO SAVE THE BANKS OR DO YOU WANT TO SAVE THE COUNTRY? Submitted on 2011/08/27 at 9:20 am by Nancy Drewe National Mortgage News sign up for your own subscription first 2 […]
MOST POPULAR ARTICLES CLICK HERE TO RESERVE SEATING AT HAWAII WORKSHOP GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE KISS: KEEP IT SIMPLE STUPID Finality versus good and evil. In the battlefield it isn’t about good and evil. It is about winner and losers. In military battles around the world many battles have been […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE “bank is suddenly open to unlimited downside capital risk” BofA’s $8.5 Billion Settlement Could Fall Apart After Request Made To Move Mortgage Case From State To Federal Court As most know by now, the ridiculously low $8.5 billion putback settlement, which was supposed […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: It is comforting to know that at least some people are paying attention. From one of the largest servicers in the country comes an admission that securitization of mortgage loans was an illusion. The facts alleged by AHMSI in its lawsuit […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE “If you’re allowed to foreclose and kick someone out of his or her home without being the party that either owns the loan or represents the person who owns the loan… if you can ignore those laws, why can’t you ignore other laws […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE REFUNDABLE RESERVATION NOW TO RESERVE SEATING CLICK HERE FOR ONE DAY PASS JOIN LIVINGLIES MEMBERSHIP NOW AND GET THE AUDIO-FILE ON LAST NIGHT’S 90 MINUTE BROADCAST WITH MANDELMAN MATTERS AND LIVINGLIES WRITERS. BLOG MEMBERSHIP SUBSCRIPTION We have twice monthly teleconferences, questions and answers […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE Bank Of America’s No-Good, Very Bad Enablers By Halah Touryalai | Forbes – Mon, Aug 22, 2011 What’s the worse than Bank of America acting as if it deserves immunity from all its bad foreclosure behavior? A presidential administration that agrees. President Obama’s administration is […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE TRANSFER TO POOL AFTER FORECLOSURE INITIATED: VOID “ The fact that Deutsche had possession of the mortgage, however, is irrelevant to its status as mortgagee. While a promissory note endorsed in blank may be enforced by the party in possession of the note, […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE TENNESSEE FEDERAL COURT DENIES BANK OF AMERICA’S MOTION TO DISMISS DECLARATORY JUDGMENT ACTION CHALLENGING ALLEGED OWNERSHIP OF LOAN Today, August 23, 2011, 6 hours ago | Jeff Barnes August 23, 2011 A Tennessee Federal court has issued an Order and Memorandum denying a […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE see VIDEO $1.2 Trillion in EXTRA BAILOUT MONEY FROM FED SECRETLY GIVEN TO DOMESTIC AND FOREIGN BANKS Of course the figure is much higher, but the secrecy surrounding the money given by the Fed to the banks is something to enrage any tea […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SEE 42-in_RE_Cruz_vs_Aurora AURORA LOAN SERVICES LLC, SCME MORTGAGE BANKERS INC, ING BANK FSB, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS ALL BITE THE DUST, SUBJECT TO LIABILITY AND NO ABILITY TO FORECLOSE WITHOUT COMPLYING WITH LAW. Salient points of Judge Mann’s Decision: TRUTH IN LENDING was […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE ROBO-SIGNING IS NOW CALLED SURROGATE SIGNING AHMSI SUIT CONFIRMS PRACTICE IS WRONG, UNAUTHORIZED AND INVALID EDITOR’S NOTE: I find it interesting that LPS continued to fabricate and forge documents after AHMSI told them to stop. It could only mean that they were really […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: THE ONLY THING MISSING IS THE LARGEST QUESTION OF ALL: WERE THE MORTGAGE LIENS EVER PERFECTED? DO THEY EXIST? I also contest the issue of whether the banks were ever intending to do things right. I know from interviews I conducted […]
MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SETTLEMENT TARGET: LABOR DAY!! “They wanted to be released from everything, including original sin,” said a U.S. official involved in the discussions. From today’s Wall Street Journal…. FORECLOSURE TALKS SNAG ON BANK LIABILITY By RUTH SIMON, VANESSA O’CONNELL and NICK TIMIRAOS Efforts to […]
Finality versus good and evil. In the battlefield it isn’t about good and evil. It is about winner and losers. In military battles around the world many battles have been one by the worst tyrants imaginable.
Just because you are right, just because the banks did bad things, just because they have no right to do what they are doing, doesn’t mean you will win. You might if you do it right, but you are up against a superior army with a dubious judge looking on thinking that this deadbeat borrower wants to get out of paying.
The court system is there to mediate disputes and bring them to a conclusion. Once a matter is decided they don’t want it to be easy to reopen a bankruptcy or issues that have already been litigated. The court presumably wants justice to prevail, but it also wants to end the dispute for better or for worse.
Otherwise NOTHING would end. Everyone who lost would come in with some excuse to have another trial. So you need to show fundamental error, gross injustice or an error that causes more problems that it solves.
These are the same issues BEFORE the matter is decided in court. Foreclosures are viewed as a clerical act or ministerial act. The outcome is generally viewed as inevitable.
And where the homeowner already admits the loan exists (a mistake), that the lien is exists and was properly filed and executed (a mistake) and admits that he didn’t make payments — he is admitting something he doesn’t even know is true — that there were payments due and he didn’t make them, which by definition puts him in default.
It’s not true that the homeowner would even know if the payment is due because the banks refuse to provide any accounting on the third party payments from bailout, insurance CDS, and credit enhancement.
That’s why you need reports on title, securitization, forensic reviews for TILA compliance and loan level accounting. If the Judges stuck to the law, they would require the proof first from the banks, but they don’t. They put the burden on the borrowers —who are the only ones who have the least information and the least access to information — to essentially make the case for the banks and then disprove it. The borrowers are litigating against themselves.
In the battlefield it isn’t about good and evil, it is about winners and losers. Name calling and vague accusations won’t cut it.
Sure you want to use the words surrogate signing, robo-signing, forgery, fabrication and misrepresentation. You also want to show that the court’s action would or did cloud title in a way that cannot be repaired without a decision on the question of whether the lien was perfected and whether the banks should be able to say they transferred bad loans to investors who don’t want them — just so they can foreclose.
But you need some proffers of real evidence — reports, exhibits and opinions from experts that will show that there is a real problem here and that this case has not been heard on the merits because of an unfair presumption: the presumption is that just because a bank’s lawyer says it in court, it must be true.
Check with the notary licensing boards, and see if the notaries on their documents have been disciplined and if not, file a grievance if you have grounds. Once you have that, maybe you have a grievance against the lawyers. After that maybe you have a lawsuit against the banks and their lawyers.
But the primary way to control the narrative or at least trip up the narrative of the banks is to object on the basis that counsel for the bank is referring to things not in the record. That is simple and the judge can understand that.
Don’t rely on name-calling, rely on the simplest legal requirements that you can find that have been violated. Was the lien perfected?
If the record shows that others were involved in the original transaction with the borrowers at the inception of the deal, then you might be able to show that there were only nominees instead of real parties in interest named on the note and mortgage.
Without disclosure of the principal, the lien is not perfected because the world doesn’t know who to go to for a satisfaction of that lien. If you know the other parties involved were part of a securitization scheme, you should say that — these parties can only be claiming an interest by virtue of a pooling and servicing agreement. And then make the point that they are only now trying to transfer what they are calling a bad loan into the pool that the investors bought — which is expressly prohibited for multiple reasons in the PSA.
This is impersonation of the investor because the investors don’t want to come forward and get countersued for the bad and illegal lending practices that were used in getting the borrower’s signature.
Point out that the auction of the property was improperly conducted where you can show that to be the case. Nearly all of the 5 million foreclosures were allowed to be conducted with a single bid from a non-creditor.
If you are not a creditor you must bid cash, put up a portion before you bid, and then pay the balance usually within 24-72 hours.
But instead they pretended to be the creditor when their own documents show they were supposed to be representing the investors who were not part of the lawsuit nor the judgment.
SO they didn’t pay cash and they didn’t tender the note. THEY PAID NOTHING. In Florida the original note must actually be filed with the court to make sure that the matter is actually concluded.
There is a whole ripe area of inquiry of inspecting the so-called original notes and bringing to the attention the fraud upon the court in submitting a false original. It invalidates the sale, by operation of law.
So you have denied the claims of the pretenders and put that in issue. You have even alleged fraud, forgery and fabrication and the catch-word “robosigning”. But the Judge, alleging that he did not want to “make new law” (which wasn’t true) or allegedly because he didn’t want to start an avalanche of litigation interfering with judicial economy (and therefore allowing fraud and theft on the largest scale ever known to human history) has not only denied your claims and motions, but refused to even put the matter at issue, thus enabling you to at least use discovery to prove your point.
So the pretenders have their way: no evidence has been introduced into the record. You have proffered, they have proffered, but somehow their proffer means something more than your proffer even though no proffer is evidence.
Attorneys recognize this as low hanging fruit on appeal, where the trial judge is going to get the case back on remand with instructions to listen to the evidence and allow each side to produce real evidence, not proffers from counsel, and allow each side to conduct discovery. It’s not guaranteed but it is very likely. And the pretenders know that if it ever gets down to real evidence as opposed to arguments of counsel, they are dead in the water, subject to sanctions and liability for slander of title and other claims.
So they have come up with this strategy of setting supersedeas bond higher and higher so that the order appealed from goes into effect and they are able to kick the can down the road with a foreclosure sale, more transfers etc in the title chain, thus enabling them to argue the deed is done and the “former” homeowner must be relegated to only claiming damages, not the home itself. People can be kicked out by eviction proceedings that typically are conducted in courts of limited jurisdiction where in most states you are not allowed to even allege that the title is not real or that it was illegally obtained.
Initially supersedeas bond was set at levels that could be met by homeowners — sometimes as little as $500 or a monthly amount equal to a small fraction of the former monthly payment. Now, Judges who are heavily influenced by banks and large law firms, especially chief Judges who stick their noses into cases not assigned to them, are making sure that the case does NOT go to jury trial and essentially influencing the presiding Judge ex parte, to set a high supersedeas bond thus preventing the homeowner from obtaining a stay of execution on the eviction or the final judgment regarding title.
Of course it is wrong. But it is happening. You counter this by (1) making the record on appeal as to the merits of the appeal (2) adding to the record actual affidavits and testimony as to value, rental value etc. and (3) of course demanding and evidential hearing on the proper amount of the bond. Here you want to search out and produce the bond set in similar cases in the county in which your case is pending. Make sure you have a court reporter and a transcript on appeal and that the record on appeal is complete. It is not uncommon for certain documents to get “lost” or allegedly not “introduced” so when the appellate court gets it you can be met with the question of “what document?”
The other reason they are increasing supersedeas bond is because of a misconception by many pro se litigants and even some attorneys. They have the impression that the appeal is over if the bond is NOT posted with the clerk. And they have the impression that they can’t challenge the amount of bond set, or even go to the appellate court just on that issue and ask the appellate court to set bond — something they might not do but when they remand it, it is usually with instructions to the trial judge to hear evidence on the relevant issues — again something the pretenders don’t want.
Supersedeas bond ONLY applies to execution of the order or judgment that you are appealing. You can AND should continue with the appeal and if you win, the Judgment might be overturned — which means by operation of law you probably get your house back.
All these things are technical matters. Listening to other pro se litigants or even relying upon this other sites intended to help you is neither wise nor helpful. Before you act or fail to act, you should be in close contact with an attorney licensed in the jurisdiction in which your property is located. Local rules can sometimes spell the difference between the life or death of your case.
Pro Per Debtor Stops Attorneys for US Bank – in RE Deamicis
Posted: 31 Jul 2011 10:21 PM PDT
Pro Per Debtor Stops Attorneys for US Bank – in RE Deamicis
By Daniel Edstrom
DTC Systems, Inc.
She has been fighting tooth and nail. Nobody was listening. The current bankruptcy judge was skeptical when she showed up in bankruptcy. But now his ruling on a motion for relief from stay blows the doors off her case. It seems that bank attorneys are confused by something that should be very simple for an attorney. The issue is who is the real party in interest? Many have failed to comprehend what is in a name. If a very large bank is included in the name, most just glaze over it and go right to the pleadings. Here it is in a nutshell: US Bank, NA as Indenture Trustee is MEANINGLESS. This is because when a trust is involved, the trust is the real party, not the bank. US Bank is a trustee of hundreds if not thousands of trusts. Naming them as Trustee does not identify an entity that is real. In the debtors case, the bank foreclosed on her home in the name of US Bank as Indenture Trustee of [some Terwin Trust]. This was a non-judicial foreclosure. In the UD (unlawful detainer), which is a judicial case to evict her, the name used was US Bank as Indenture Trustee. The lawyers did not specify a specific trust. She lost that case in state court and before she was evicted she filed bankruptcy. She had to keep objecting and protesting. Eventually the judge came to the realization that something was wrong. In fact the judge ruled as follows:
“The defect cannot be cured, either directly or implicitly, by any ruling this court can make on behalf of the Terwin Trust in the Second 362 Motion.”
I almost fell out of my chair when I read that. If they put the wrong name, they have to cure the problem. Based on my research, in a very large number of cases the wrong party is named. Including yours truly. Have a nice day, I know I will.
Download the case here: http://dtc-systems.net/wp-content/uploads/2011/08/in-RE-Deamicis-Real-Party-in-Interest-For-Publication.pdf
The financial disaster of continuing to bailout commercial real estate through the shadows of Federal Reserve jargon. Why you haven’t heard of this trillion dollar bailout.
The financial disaster of continuing to bailout commercial real estate through the shadows of Federal Reserve jargon. Why you haven’t heard of this trillion dollar bailout.
The media has done a fantastic job painting over the enormous sinkhole of a problem that is commercial real estate (CRE). U.S. banks hold over $3 trillion in commercial real estate loans on properties that were once valued at over $6 trillion. Today those values are down to roughly $3 to $3.5 trillion depending on what metric you believe. How is it possible for a market that has lost $2.5 to $3 trillion to become largely hidden in the dark from the mainstream media? We constantly hear about $3 billion deficits or other issues but is the trillion dollar figure just so enormous that they don’t even bother investigating? It is probably more likely that the Federal Reserve has concealed massive failures in CRE by allowing banks to play a game of extend and pretend that continues today. The shadowy problems of empty shopping centers, vacant car dealership lots, and misplaced strip malls is largely a taxpayer problem now. Banks made these irresponsible loans but had the Fed hand over taxpayer loot in exchange for worthless real estate.
empty strip mall
“Another empty strip mall”
CRE bringing down FDIC banks
commercial real estate mit
Source: MIT
CRE values are still hovering near their trough and are likely to move lower. The only reason these prices haven’t moved lower is because banks are more generous with the borrowers of CRE debt since these holders are grappling with multi-million dollar cuts in each deal. Banks would rather pretend a mall is valued at $100 million instead of marking it to a real value of $40 million or less. The fact that the Federal Reserve allows this to happen is financial chicanery. Can you pretend to the government that you really don’t make $100,000 a year so instead you will act as if you make $30,000 a year and act accordingly? This is what is happening here. Banks are essentially allowing these toxic loans to be laundered through the system in exchange for taxpayer dollars. The Fed is betting that the public doesn’t wake up to this scam.
CRE is a giant and pernicious problem. With residential real estate it hits directly home and many American families are considered home owners. This bubble has garnered most media attention as it should. Yet CRE debt is enormous, larger than every state budget deficit combined by many times! In fact, the losses on CRE loans is larger than the state budget issues. Of course the Fed wants the public to look away from the real culprit behind the decline of the American middle class. The scheme was to build junk and pawn off the loans to average Americans whether they wanted to accept the debt or not.
The cost of CRE problems
commercial loans
Banks have no faith in this recovery. Look at the above regarding commercial loans. Banks continue to claim that the reason for the taxpayer bailouts was to help the American public weather the economic storm and for banks to continue lending to average Americans. Instead, as you can see above, commercial loan lending has collapsed and banks have hoarded money and speculated on the stock market casino on the taxpayer dime. This money was used to shore up bad balance sheet problems and for gambling on the stock market to boost profits. In short it was one giant swindle perpetrated on the public.
And think about the supposed recovery we are experiencing. If we were truly growing and expanding don’t you think there would be healthy demand for loans as businesses expand their workforce? Wouldn’t it be logical to conclude that commercial loans would reflect the supposed increased demand from a booming American economy? Of course the only boom occurring is for the top 1 percent who are siphoning off the wealth from average Americans to spin their continuing speculation in the stock market. Many are starting to wake up from this collective sleepwalk where taxpayers were robbed in open daylight.
The problems are coming up
Source: ZeroHedge
What is even more problematic is many of the CRE loans are going bad in the next few years. Just like residential real estate is now experiencing a second collapse, CRE will have another move lower. Banks can only carry fantasy paper for so long. So far we have been paying for it through QE1, QE2, TARP, and other convoluted programs to launder money and devalue the U.S. dollar and decrease the quality of life of average Americans. The public did not sign up for this. The banks talk about shared responsibility and many are paying for it by losing their homes and going bankrupt. Millions are facing this economic “responsibility” on a daily basis. What penalty for the banks? Instead, they get bailouts and continue to pretend the junk loans they made on concrete disasters are worth inflated values only to shovel them off to taxpayers. How is it that there are no buyers for these supposedly highly priced items?
CRE debt exposes the worst aspect of the bubble. Pure profit motive by supposed sophisticated investors on both sides of the coin with no financial responsibility or ownership. This isn’t some poor family in a low-income neighborhood taking out a subprime loan. This is actually a supposed responsible bank and a supposed financially savvy investor. There is no justification for one penny of a bailout here. Yet the Federal Reserve continues with their hidden bailout where they support malls in Oklahoma to Chick-fil-A. Don’t expect to hear about this on your nightly news
With all of the press robo-signing has gotten, it is a bit surprising that everyone is having such a hard time concluding whether these practices effect California foreclosures. My assistant even said to me today, “but the banks say that it doesn’t matter because California is non judicial.”
Because the topic has not gotten the treatment it deserves, I will gladly do the job. The following are by no means a complete list, but are the most clear LEGAL reasons (setting aside pure moral questions and the U.S. Constitution) that the Robo-Signer Controversy will lead to massive litigation in California.
In short, Robo Signers are illegal in California because good title cannot be based on fraud, robo signed non judicial foreclosure sales are void as a matter of law, the documents are not able to be recorded in California if they are not notarized, which we know was often not done properly, and finally, because they robo signed forgeries ARE intended for judicial proceedings, including evictions and bankruptcy relief from stay motions.
1. Good Title Cannot Be Based on Fraud (Even as to a 3d Party).
In the case of a fraudulent transaction California law is settled. The Court in Trout v. Trout, (1934), 220 Cal. 652 at 656 made as much plain:
“Numerous authorities have established the rule that an instrument wholly void, such as an undelivered deed, a forged instrument, or a deed in blank, cannot be made the foundation of a good title, even under the equitable doctrine of bona fide purchase. Consequently, the fact that defendant Archer acted in good faith in dealing with persons who apparently held legal title, is not in itself sufficient basis for relief.” (Emphasis added, internal citations omitted).
This sentiment was clearly echoed in 6 Angels, Inc. v. Stuart-Wright Mortgage, Inc. (2001) 85 Cal.App.4th 1279 at 1286 where the Court stated:
“It is the general rule that courts have power to vacate a foreclosure sale where there has been fraud in the procurement of the foreclosure decree or where the sale has been improperly, unfairly or unlawfully conducted, or is tainted by fraud, or where there has been such a mistake that to allow it to stand would be inequitable to purchaser and parties.” (Emphasis added).
Hence, if forged Robo Signed signatures are used to obtain the foreclosure, it CERTAINLY makes a difference in California and other non-judicial foreclosure states.
2. Any apparent sale based on Robosigned documents is void – without any legal effect – like Monopoly Money.
In Bank of America v. LaJolla Group II, the California Court of Appeals held that if a trustee is not contractually empowered under the Deed of Trust to hold a sale, it is totally void. It has no legal effect whatsoever. Title does not transfer. No right to evict arises. The property is not sold.
In turn, California Civil COde 2934a requires that the beneficiary execute and notarize and record a substitution for a valid substitution of trustee to take effect. Thus, if the Assignment of Deed of Trust is robo-signed, the sale is void. If the substitution of trustee is robo-signed, the sale is void. If the Notice of Default is Robo-Signed, the sale is void.
3. These documents are not recordable without good notarization.
In California, the reason these documents are notarized in the first place is because otherwise they will not be accepted by the County recorder. Moreover, a notary who helps commit real estate fraud is liable for $25,000 per offense.
Once the document is recorded, however, it is entitled to a “presumption of validity”, which is what spurned the falsification trend in the first place. Civil Code section 2924.
Therefore, the notarization of a false signature not only constitutes fraud, but is every bit intended as part of a larger conspiracy to commit fraud on the court.
4. The documents are intended for court eviction proceedings.
A necessary purpose for these documents, AFTER the non judicial foreclosure, is the eviction of the rightful owners afterward. Even in California, eviction is a judicial process, albeit summary and often sloppily conducted by judges who don’t really believe they can say no to the pirates taking your house. However, as demonstrated below, once these documents make it into court, the bank officers and lawyers become guilty of FELONIES:
California Penal Code section 118 provides (a) Every person who, having taken an oath that he or she will testify, declare, depose, or certify truly before any competent tribunal, officer, or person, in any of the cases in which the oath may by law of the State of California be administered, willfully and contrary to the oath, states as true any material matter which he or she knows to be false, and every person who testifies, declares, deposes, or certifies under penalty of perjury in any of the cases in which the testimony, declarations, depositions, or certification is permitted by law of the State of California under penalty of perjury and willfully states as true any material matter which he or she knows to be false, is guilty of perjury. This subdivision is applicable whether the statement, or the testimony, declaration, deposition, or certification is made or subscribed within or without the State of California.
Penal Code section 132 provides: Every person who upon any trial, proceeding, inquiry, or investigation whatever, authorized or permitted by law, offers in evidence, as genuine or true, any book, paper, document, record, or other instrument in writing, knowing the same to have been forged or fraudulently altered or ante-dated, is guilty of felony.
The Doctrine of Unclean Hands provides: plaintiff’s “unclean hands” bar injunctive relief when the plaintiff’s misconduct arose from the transaction pleaded in the complaint. California Satellite Sys. v Nichols (1985) 170 CA3d 56, 216 CR 180. The unclean hands doctrine demands that a plaintiff act fairly in the matter for which he or she seeks a remedy. The plaintiff must come into
court with clean hands, and keep them clean, or he or she will be denied relief, regardless of the merits of the claim. Kendall-Jackson Winery Ltd. v Superior Court (1999) 76 CA4th 970, 978, 90 CR2d 743. Whether the doctrine applies is a question of fact. CrossTalk Prods., Inc. v Jacobson (1998) 65 CA4th 631, 639, 76 CR2d 615.
5. Robo Signed Documents Are Intended for Use in California Bankruptcy Court Matters.
One majorly overlooked facet of California is our extremely active bankrtupcy court proceedings, where, just as in judicial foreclosure states, the banks must prove “standing” to proceed with a foreclosure. All declarations submitted in support of standing to file a proof of claim, objections to a plan and most importantly perhaps Relief from Stays are fraud upon bankruptcy court if signed by robo-signers.
Conclusion
Verified eviction complaints, perjured motions for summary judgment, and all other eviction paperwork after robo signed non judicial foreclosures in California and other states are illegal and void. The paperwork itself is void. The sale is void. But the only way to clean up the hundreds of thousands of effected titles is through litigation, because even now the banks will simply not do the right thing. And that’s why robo signers count in non-judicial foreclosure states. Victims of robosigners in California may seek declaratory relief, damages under the Rosenthal Act; an injunction and attorneys fees for Unfair Business practices, as well as claims for slander of title; abuse of process, civil theft, and conversion.Timothy McCandless Esq. and Associates
Offices Statewide
Acts Taken in Violation of the Stay
If a party has received actual notice of the stay, violation of it is contempt, leading to fines, attorney’s fees and in some courts, damages, fin re Zartun (Bank. App. 9th Cir. 1983) 30 B.R. 543.] Under 362(h), an individual injured by a willful (knowing, but not necessarily malicious) violation of the stay can sue for damages, costs, and attorney’s fees. A violation which is initially innocent becomes willful if the violator proceeds or refuses to correct the situation after receiving notice of the filing of the petition.
The majority of the cases and the major commentators state that acts taken in violation of the automatic stay are void. [In re Posner (9th Cir. 1983) 700 F.2d 1243, cert, den. 464 U.S. 848.] The acts are void whether or not the violator had notice of the stay. Collier on Bankruptcy (15th Ed.) § 362.11 at 362-73.] However, in the Ninth Circuit the sale may only be “voidable” if the violation of the stay is a “technical” violation. in re Brooks (Bank. App. 9th Cir. 1987) 79 B.R. 479.] In Brooks, the defendant re-recorded a deed of trust to correct a mistake in the legal description without knowledge that one of the property owners had filed a petition under Chapter 7. When the other property owner attempted to void the lien in her later bankruptcy, the court held that the re-recording was only voidable at the discretion of the first debtor’s trustee and that the trustee had not opted to
IV-14
void the transaction.
This is critical in the foreclosure context because a void sale could be set aside even against a bona fide purchaser if made in violation of the stay. Section 549(c) creates an exception when a good faith purchaser without knowledge of the bankruptcy purchases the property for a fair equivalent value and the transfer has been perfected prior to the filing of notice of the bankruptcy petition in the county recorder’s office where the property is located.
Negotiating away your bills is legal, but it may not be your best solution. And sometimes, hiring a professional to help you isn’t as good an idea as doing it yourself.
If you’re drowning in unpaid bills and desperately looking for a way out, chances are you’ve come across an offer that sounds something like this: For a fee, a professional debt-settlement company will help rid you of your debt for as little as half the amount you owe.
Sounds like a scam? Or like you’re finally getting the break you deserve?
The answer may surprise you. Debt settlement is, in fact, a perfectly legal solution for consumers who are in deep and seeking an alternative to bankruptcy. But having a debt-settlement company do the legwork for you is fraught with risk, not to mention outrageous fees.
Here’s what you need to know about debt settlement and the companies that claim to do it for you:
The basics
It’s a little-known fact that when you fall further and further behind on your payments, creditors would much rather agree to settle your debts than have you file bankruptcy and not get paid at all, says debt expert Gerri Detweiler, author of “The Ultimate Credit Handbook”.
In exchange for an agreed-upon one-time payment — typically, between 20% and 75% of what you owe — the creditor forgives the rest of your debt and starts reporting it to the credit bureaus as settled. Meanwhile, you’ll need to put money aside toward the settlement and stop making payments to your creditors. On your credit reports, the balances of settled debts will show $0. However, any previous history of delinquent payments or charge-offs will remain on your report.
Not surprisingly, creditors don’t like to advertise debt settlement. They also make it an extremely difficult solution to pursue. As a rule, creditors won’t negotiate with consumers who are current on their bills, often refusing to discuss settlements unless you’re at least three to six months behind, explains Detweiler. That means dodging collections calls while trying to save up the cash for a settlement.
If you’re working with several creditors — you’d typically tackle the debts one at a time as you collect the money to pay them off — it’s hard, if not impossible to know which creditor might agree to settle earlier than others. “There’s an art to it,” Detweiler notes.
The problem with debt-settlement companies
With that in mind, it would be great to have an experienced, knowledgeable debt-settlement company hold your hand through the process, right? Not really.
Once you sign up with a company, chances are you’ll pay dearly for its services, says Deanne Loonin, a staff attorney with the National Consumer Law Center (NCLC) who has investigated the practices of debt-settlement companies.
Outrageous fees
Just how much will you pay? Good luck finding that out.
“I’ve never seen a company that’s given a straight answer,” says Loonin. The industry’s fees and fee structures are all over the place. Some companies charge a percentage of the total debt — typically 15% or 18% — that’s paid before you start accumulating savings. Others charge a percentage of the debt savings — usually 25% — once you settle, plus an initial sign-up fee and monthly service charges. Then there are those that charge a flat monthly fee throughout the length of the program.
Even the industry admits figuring out the costs is a challenge. “I have seen every kind of (fee) model you can think of,” says Jenna Keehnen, the executive director of the U.S. Organizations for Bankruptcy Alternatives (USOBA), an industry trade group. “It’s very confusing.”
Worse than confusing, it’s prohibitively expensive, says Katie Porter, a professor of bankruptcy law at the University of Iowa. She recently came across an offer to settle $33,551 in debt that projected a $5,032 service fee that was to be paid in monthly installments. Only after the service fee was paid off, two years later, did the client actually start saving for the settlement.
“That $5,000 buys a substantial amount of attorney time,” she says. “You can get a consumer (or bankruptcy) attorney to represent you and help with your debt problems for a lot less than that.”
Questionable services
What does a debt-settlement company do for you? In theory, it’s supposed to help you negotiate your debts. In practice though, that doesn’t really happen, says Porter. During the two or more years that you’re saving money — typically in an escrow account that the debt-settlement company has access to — the company does nothing but withdraw fees.
“A lot of consumers think they’ve taken care of the problem after contacting a company, but the reality is the debt-settlement company hasn’t settled anything in the beginning,” Porter says.
The companies also claim that they’ll help you dodge collections calls. But referring collections calls to your debt-settlement company often backfires, says Leslie Linfield, the executive director at the Institute for Financial Literacy, an organization that provides pre-bankruptcy counseling.
“Many creditors, once they know a client is working with a debt-settlement company, will escalate the account,” she notes. That means sending it to a collections agency sooner or even suing you. And when a creditor takes legal action, the debt-settlement companies drop the account: They don’t have the right to give legal advice or represent you in court.
High dropout rates
While there’s no independent research on the average success rate of debt-settlement programs, anecdotal evidence shows many consumers drop out before the company reaches a settlement with their creditors, Linfield says. “As you talk to bankruptcy attorneys you’ll hear horror stories of clients who paid thousands of dollars to a company and they’re still in the exact same place,” she says.
Consider what happened at National Consumer Council, which was shut down by the Federal Trade Commission in 2004 on accusations of falsely claiming nonprofit status. The company’s court records show that only 1.4% of the consumers who signed up for the program ever completed it. Nearly half — 42.9% — dropped out, paying an average of $1,780 in fees and saving $966 in their escrow accounts.
Secrets of the trade
Here’s what debt-settlement companies might not tell you:
Debt settlement may not be right for you. Debt settlement is a niche solution that’s right only for a small segment of the population. You could be a good candidate for debt settlement if you’re heading toward bankruptcy but don’t qualify for filing Chapter 7, Phelan explains. (Under Chapter 7, most of your unsecured debts are written off, but you’ll most likely have to sell some property including your home). “Most people who can qualify for Chapter 7 in all likelihood lack the cash flow to make debt settlement work for them,” he says. Debt settlement, in other words, might be a viable alternative to Chapter 13, which sets up a three- to five-year schedule with your creditors to repay your debts.
Likewise, if you can scrape up the cash to pay off your debts in a debt-management program where you work with a debt-management company to pay off your balances in full but with lower interest rates, then debt settlement isn’t the best solution.
Your credit will suffer. Creditors don’t settle unless you’re severely behind on your payments. That means one thing: Debt settlement is damaging to your credit. Just how damaging it is depends on your track record. If you’re already behind on payments, your credit will suffer less than if you’ve managed to avoid delinquencies and credit charge-offs.
You could get sued. With bankruptcy, creditors have to stop collections efforts as soon as you file. That’s not the case with debt settlement. Even if you inform your creditors of your efforts to settle, they won’t stop trying to collect, Phelan says. Worst-case scenario, they could sue you for the amounts you owe. Should that occur the only way to avoid a black mark on your credit record would be to pay off the debt in full.
There are tax consequences. Debt settlement is a taxable event. Any forgiven balance that exceeds $600 is taxable income, says Linfield. “Sometimes that tax event can put people in worse shape than they were in to begin with,” she says. Consider this: If your tax rate is 15%, $5,000 of forgiven debt will carry a $750 tax liability. That’s a debt that the Internal Revenue Service won’t forgive. One exception: If you’re insolvent — namely your assets are less than your liabilities — you can petition the IRS to waive that tax liability by filing Form 982.
Their services might be illegal. Though the laws regulating debt-settlement companies vary greatly by state, it’s worth noting that 12 states prohibit for-profit debt management. Since debt-settlement companies are for-profit entities, they’re not allowed to practice there. Those states are Arizona, Georgia, Hawaii, Louisiana, Maine, Mississippi, New Jersey, New Mexico, New York, North Dakota, West Virginia and Wyoming.
If you live in one of those states, remember: It is illegal for for-profit debt-settlement companies to contact you and work with you, even if they’re based in another state. “Many companies do it anyway,” Linfield says. “And that’s a big red flag.”
During the housing boom, millions of homeowners got easy access to mortgages. Now, some mortgage lenders and government officials are taking action after discovering that many mortgage documents were mishandled.
ST PATCHOGUE, N.Y. – A year ago, Long Island Judge Jeffrey Spinner concluded that a mortgage company’s paperwork in a foreclosure case was so flawed and its behavior in negotiations with the borrower so “repugnant” that he erased the family’s $292,500 debt and gave the house back for free.
The judgment in favor of the homeowner, Diane Yano-Horoski, which is being appealed, has alarmed the nation’s biggest lenders, who say it could establish a dramatic new legal precedent and roil the nation’s foreclosure system.
It is not the only case that has big banks worried. Spinner and some of colleagues in the New York City area estimate they are dismissing 20 to 50 percent of foreclosure cases on the basis of sloppy or fraudulent paperwork filed by lenders.
Their decisions illustrate the central role lower court judges will have in resolving the country’s foreclosure debacle. The mess came to light after lawsuits and media reports showed lenders were routinely filing shoddy or fraudulent papers to seize the homes of borrowers who had missed payments.
In millions of cases across the United States, local judges have wide latitude to impose sanctions on banks, free homeowners from their mortgage debts or allow the companies to proceed with flawed foreclosures. Ultimately, the industry is likely to face a messy scenario – different resolutions by courts in all 50 states.
The foreclosure dismissals in this area of New York have not delivered free homes for borrowers. With so much at stake, lenders in this part of New York are aggressively appealing foreclosure dismissals, which is likely to keep the legal system bogged down, foreclosed homes off the market, and homeowners like the Yano-Horoski family in legal limbo for years.
“We believe the Yano-Horoski ruling, if allowed to stand, has sweeping and dangerous implications for the entire mortgage lending industry,” said OneWest Bank, the family’s mortgage servicer.
The situation in Suffolk and Nassau counties on Long Island and Kings County in Brooklyn- which have among the highest rates of foreclosure in the state and where the 81 judges handling foreclosures have become infamous over the past few years for scrutinizing paperwork for errors – provides a window into how the crisis could unfold across in the country.
While the level of tolerance for document mistakes varies from judge to judge, the group as a whole has a reputation for ruling against mortgage companies when paperwork issues or other problems arise. At least one bank, J.P. Morgan Chase, requires document processors to separate foreclosures cases from these three counties from those in the rest of the country. A high-ranking executive of the company is specially assigned to sign off on the area’s foreclosure filings.
Judge Dana Winslow of Nassau County says he’s thought a lot about why judges in his area are more apt to question filings. He said it comes down to one thing: Lack of trust for Wall Street. In this region, judges have seen a lot of inaccurate filings from the financial sector.
Trust “of the lending institutions and Wall Street has eroded in some areas of the country more than others,” Winslow said.
Craig D. Robins, a foreclosure defense attorney who authors the Long Island Bankruptcy blog, said of the Yano-Horoski case: “I think we’re going to see more decisions like this across the country. Many judges are finding their court calendars clogged with cases that have all these flaws in them that never should have been brought in the first place or should never have been brought without more due diligence.”
Going forward, mortgage companies trying to foreclosure in the state of New York will face stiffer requirements. On Oct. 20, the state’s chief judge said attorneys for lenders will have to vouch personally for the accuracy of documents.
“We can’t have the process being a fraud,” New York State Chief Judge Jonathan Lippman said in announcing the new procedure. “It has to be real and based on credible information.”
Even before Lippman’s order, however, lower court judges were already raising questions about faulty paperwork in foreclosures.
On June 17, for example, Judge Karen Murphy of Nassau County ruled that Wachovia Bank lacked standing to foreclose on a home because the document used to prove ownership of the mortgage was incomplete.
On Sept. 21, Judge Peter Mayer of Suffolk County delayed a foreclosure by Ally Financial’s GMAC mortgage unit after noticing that the paperwork transferring the mortgage to the bank was dated two days after the foreclosure was initiated.
And on Oct. 21, Judge Arthur Schack of Kings County dismissed a OneWest foreclosure motion because the bank had not adequately documented how the mortgage had been sold and resold to investors. He also questioned why the employee who signed many of the documents claimed to be a vice president of several different mortgage companies at the same time.
In a different case in May, Schack ruled that HSBC Bank could not foreclose on a home because the paperwork that assigned the mortgage to HSBC from the original lender, Cambridge, was “defective.”
That didn’t mean the borrower, Lovely Yeasmin, a 28-year-old cashier who immigrated from Bangladesh, got her three-story townhouse in Brooklyn’s Bushwick neighborhood for free. Wells Fargo, the mortgage servicer for HSBC, has not appealed the case. Instead, it has offered to temporarily lower her monthly payment from $4,700 to $3,000.
Yeasmin’s eldest brother, Mohammed Parpez, 35, said that before the judge’s order, Wells Fargo was resistent to a loan modification. “The banks are crooks. They tell everyone they are trying to help people like us, but they are really doing the opposite,” Parpez said.
Tom Goyda, a Wells Fargo spokesman, said that although the company “disagrees with the court’s findings,” it is continuing to try to work out a longer-term solution with the family.Members of the Yano-Horoski family said they struggled similarly to get their lender to modify their loan after Greg Horoski fell ill in 2005 and his online business selling specialty dolls suffered. After he underwent a triple bypass surgery, two stents and two hip replacements, he and his wife, Diane – who teaches an online English composition course – found themselves unable to pay the bills.
Despite his pleas, Horoski said, he failed to get OneWest to come to an agreement, even though he became able to pay the debt after his company’s sales picked up.
In his November 2009 ruling, Judge Spinner of Suffolk County blasted OneWest for negotiating with an “opprobrious demeanor and condescending attitude.” He also cited the bank’s “duplicity” in offering a forbearance agreement with a deadline that had already passed and for presenting contradictory paperwork claiming different amounts for what the family owed.
With their case under appeal, the Yano-Horoskis now find themselves in a tricky position, wary of putting more money into a house that an appeals court could take away from them. While the other houses on their quiet suburban street are meticulously maintained, their front-porch light remains shattered and the paint on their house is peeling.
They’ve shelled out $3,000 for a new hot-water system. They paid $2,000 for tree trimming after a neighbor complained. But they’ve let the $10,000 property tax bill become delinquent, and they worry an appeals court could not only reverse the earlier ruling but demand that the family pay back the mortgage for every month that has passed since.
Nonetheless, Horoski remains optimistic.
“People thought people who didn’t pay their mortgages were automatically deadbeats,” he said. “People are educated now. They are realizing all of a sudden how many hundreds of thousands of these homes that were foreclosed may have been done so with fraudulent documents.”
Staff researchers Julie Tate, Alice Crites and Magda Jean-Louis contributed to this report. Faye Crosley forwarded this article to me and I have posted it for my readers. It would appear that some judges are beginning to thaw to the idea that this “bailout” is for the banks and the victims are being pushed aside by the foreclosure machine
As Southern Californians deal with the fallout from the mortgage crisis, many homeowners and families have found themselves saddled with debt they cannot afford. As a result of this unfortunate situation, individuals are increasingly turning to bankruptcy to get their financial lives back on track. A majority of individuals file a Chapter 7 bankruptcy to help wipe out most, if not all, of their unsecured debts, including credit card bills, medical bills and judgments. For those individuals who do not qualify for a Chapter 7 bankruptcy, a Chapter 13 bankruptcy is beneficial where the debtor has significant property and/or wants to eliminate a second mortgage on the residence.
At the McCandless Law Firm, we are committed to providing personalized service and our team of professionals will help you obtain a fresh start for you and your family. Contact us today to arrange a free office consultation. Documents to Collect Before filing, the following documents will be necessary to complete your bankruptcy petition:
1. Copy of each debtor’s social security card and bring original with you to your hearing
2. Copy of each debtor’s drivers’ license and bring original with you to the hearing
3. Documentation of any wage garnishments, wage assignments or other legal actions, including lawsuits
4. Copy of recent real estate appraisal, if any
5. Copy of most recent real estate tax bill
6. Pay stubs for each debtor for prior 6 months
7. Documentation of other income i.e. child support, social security, pension, disability, unemployment for prior 6 months
8. Copies of federal and state tax returns complete with all schedules including W-2’s for the prior 4 years
9. Copies of checking account, savings account, and money market account bank statements complete with copies of canceled checks for the prior 6 months (you will be asked to supplement this at a later date)
10. Copy of any life insurance policies except ones through employment including a statement regarding the current cash value
11. Copy of most recent brokerage account statement
12. Copy of most recent individual retirement account statement
13. Copy of most recent pension/retirement account statement
14. Copy of most recent 401K, 401B or 401E account statement
15. Copy of any contract for deed in which you are a buyer or seller
16. Copy of divorce decrees and/or domestic support obligation orders (child support or alimony)
While creditors must follow specific laws when it comes to collecting on debts, creditors often resort to unscrupulous collection practices which violate the Fair Debt Collection Act and risk being fined, or sued, depending upon the severity of the violation by attempting to take advantage of consumers who are ignorant when it comes to debt collection practices.
Fair Debt Collection Practices
Creditors must follow fair debt collection practices if attempting to collect on a debt. There are several laws in place governing creditor communication, including:
• Creditors cannot call and harass you throughout the day. One phone call per day is allowed, provided that they actually speak with you.
• Creditors cannot misrepresent themselves to be a lawyer, police or other governmental entity.
• Creditors cannot threaten, harass, or annoy you. They may not use profanity or threaten to sue you, garnish your wages or take other actions that they do not really plan to take.
• Creditors cannot call at inconvenient times, or contact you by telephone after you have requested that they stop calling.
Automatic Stay Violations
If you have filed for bankruptcy protection, creditors cannot attempt to collect on a debt for as long as the automatic stay is in place. Creditors that violate the automatic stay may be subject to legal action, and monetary damages. An automatic stay goes into place as soon as your paperwork is accepted by the bankruptcy court. If you are contacted by creditors after they have been informed of your bankruptcy, you may be able to pursue the creditors in court.
Bankruptcy Discharge Violations
If a debt is listed as discharged on your bankruptcy filing and a creditor still attempts to collect on the debt, you may be entitled to damages. Speak with a reputable San Bernardino County Bankruptcy Attorney and get the representation that you need in this case.
Even though creditors have a right to collect the debts they are owed, they have to collect them within the boundaries of the law. Fair debt collection practices were put into place to protect consumers like you, and you may have the right to seek damages if creditors employ abusive collection techniques. Contact us to speak to an experienced bankruptcy attorney if you have contacted in violation of the Fair Debt Collection Practices Act, and get the legal representation you need to recover damages and prevent further abuse.
There are several common causes which lead to filing for bankruptcy. These included, but are not limited to the following:
1. Lawsuits/Garnishments
Nobody wants to be sued and brought to judgment. Nobody wants to have 10%-25% of their hard earned wages deducted from their pay. In many cases, the taking of 10%-25% of one’s wages leads to the inability of that person to pay his rent, utilities or auto payment. Just the thought of the employer potentially having to garnish wages leads many to panic. Debtors do not want their employers or co-workers knowing of their financial troubles.
2. Auto Repossessions
Imagine waking one morning, heading out the door to work, only to find that your car is not where you parked it. Sure you were a little late on the auto payment, but you thought the finance company would wait for you to get current on your own. Auto lenders will do whatever it takes to get you financed, regardless of whether you are actually capable of affording the car. They realize that if you can’t pay the installment, they can take back their vehicle and re-sell it before it fully depreciates. They do this through the use of auto auctions where the vehicle sells for substantially less than what is owed. This leads to a deficiency amount which the lender seeks to recover from the debtor, you. Talk about insult to injury, the debtor first loses possession of the vehicle and then gets sued for the outstanding deficiency balance. Who wants to pay for something that they no longer have?
3. Unpaid Medicals
With more and more Americans going without medical insurance (45.8 million, per the U.S. Census Bureau press release dated 8/30/05), they risk losing whatever they have earned throughout their lifetime should a major medical problem occur. Most claim that they can’t afford to carry medical insurance. In reality, they can’t afford not to. The rising cost of health care could significantly deplete one’s savings should a serious illness or injury occur. Even those with co-payment coverages are having a difficult time meeting their burden of the bill.
4. High Interest Loans
There have always been high interest personal loans from many sources. In recent times, the advent of the payday loan has surfaced. These loans have exorbitant interest, which is often carried over to extend the loan. People who cannot survive until their next payday are giving up a huge portion of their paycheck to get the money in advance. This dangerous cycle leads to further borrowing with less and less money actually going into the worker’s pocket.
6. Foreclosures
The pride and joy of being a homeowner can be easily tempered by the hard work and cost of maintaining the home. Calling the landlord to make repairs is not an option; you are your own landlord. When the water is not flowing to the main sewer, you have no option, but to make the repairs. Additionally, the mortgage needs to be timely paid no matter what your special circumstance may be. Real estate taxes and homeowner’s insurance are also required to be paid regularly or you face a foreclosure suit. Changes in employment, health, income and marital status can lead to one’s failure to make timely payments. Many take second mortgages or lines of credit which simply create an additional, financial burden on the homeowner. When faced with the reality that they cannot afford the home, debtors can vacate the home and extinguish any mortgage liability through bankruptcy.
7. Overzealous Lending
How many credit card applications have you received in the mail this year? If you are like many Americans, the applications continue to appear regularly. Have you received convenience checks or offers for additional lines of credit? If so, you may have taken advantage of the use of the credit without any feasible way of repaying the debt. Many people are receiving pre-approved credit applications when they are in fact, not credit worthy. The credit card lenders point fault at the debtors for accepting the credit without the means to repay it. It seems more logical to fault lenders who do not undertake to check the credit worthiness of particular debtors.
8. Consumer Overspending
Many people see what they want, acquire it, and decide later how they will pay for it. People want to possess the latest clothing, jewelry, electronics, etc. Most stores now offer the ability to take the product home through the use of store credit cards or outside financing. You may even get a modest percentage discount off the purchase price if you open or use the store charge card. Many people charge their groceries, restaurant and transportation expenses believing that if they just make the minimum payments everything will be alright.
While many clients are excited to get a fresh financial start through bankruptcy, the McCandless Law Firm understands the apprehension and fear of losing one’s assets. Whether it is your home, vehicle or prized personal possessions, implementing a solution for your debts does not mean that you have to lose the things your family values most. Our team of professionals will provide you with the information necessary to protect your assets and advise which exemptions may be available.
Asset Protection
While bankruptcy laws are federal statutes, the court will look to state exemptions to determine which assets you can protect from creditors.
Since the passage of new bankruptcy legislation in years past, the laws have become so complex that it is virtually impossible for lawyers who do not handle bankruptcy cases, much less a paralegal or document preparer, to be able to properly analyze a debtor’s situation, recognize the applicable exemptions and handle the debtor’s case from petition through discharge. In addition to completing the debtor’s petition, an experienced bankruptcy lawyer can advise which banks are quicker to freeze deposited funds when bankruptcy is filed or which lenders will immediately repossess your car despite timely payments by a debtor.
While an individual could save money by hiring a less qualified individual to assist with their bankruptcy case, the old adage of “you get what you pay for” is good advice. While it is possible to pay too much if a lawyer’s fees are exorbitant, you can also pay too little as the cheapest bankruptcy can often turn into the most expensive as mistakes in preparing the petition could be costly. While paralegals may charge low fees, he or she cannot give legal advice which could result in the loss of certain assets or a denial of discharge by the Court. By hiring an experienced lawyer you can get peace of mind knowing whether filing bankruptcy is really in your best interests and that foregoing some savings will save you money in the long run. If your eyesight was bad and you needed laser surgery (LASIX™) would you trust your vision to the cheapest doctor? Probably not. While past mistakes may have left you in the position where filing bankruptcy is necessary, do not make another mistake when it comes to your financial future and hire an experienced bankruptcy attorney.
The McCandless Law Firmoffers free initial consultations to individuals and families who are struggling financially and seek relief afforded by the Bankruptcy Code. Whether you are contemplating filing for bankruptcy or have received a foreclosure notice and are having difficulty with creditors, in Southern California (909)890-9192 in Northern California(925)957-9797 if you want to get past difficult times and get the fresh start you need.
Chapter 7 is designed to erase consumer debts and bankruptcy statistics show is the quickest and most straightforward type of bankruptcy and works best for individuals with large credit card debts or medical bills. Gaining a better understanding of Chapter 7 bankruptcy will help you determine whether it is suitable for your circumstances.
Should You File For Chapter 7 Bankruptcy?
In determining whether to file for Chapter 7 an individual should evaluate their financial situation with an experienced bankruptcy lawyer. In assessing the viability of a Chapter 7 case, the amount of debt is not as important as the client’s inability to repay it. Whereas some debtors file for bankruptcy with a relatively small amount of debt, others wait until massive amounts of debt accumulate before filing. With the assistance of an experienced bankruptcy attorney, the client’s debt, income, expenses and assets will be examined to help determine whether Chapter 7 is advisable.
The Bankruptcy Code requires debtors to disclose all of their monthly income and expenses. In addition to wages earned, debtors must disclose all other sources of income and are subjected to a means test. If an individual passes the means test, they are presumed to qualify for Chapter 7. Debtors who do not qualify for Chapter 7 pursuant to the means test may still be able to file for a Chapter 13 bankruptcy.
How a Chapter 7 Bankruptcy Works
The bankruptcy process begins with a petition filed in bankruptcy court that triggers an automatic stay which prohibits further collection efforts of creditors. While the court appoints a trustee to liquidate assets to pay existing creditors, most assets are subject to existing liens or are be exempt from liquidation. Generally, things like household goods, clothing and personal items are fully exempt. Property which is particularly valuable, such as oil paintings, coin collections, or rare items may have higher value than what can be protected under the exemption rules. In those circumstances, the debtor could be required to turn over the property to the trustee or offer to buy the trustee out of his interest in the non-exempt property. Once the trustee collects any nonexempt assets and pays creditors from their proceeds, any remaining debt is discharged, subject to certain limitations such as secured debt, taxes, Student loans, alimony and fraudulent acts.
If the debtor is concerned about losing certain assets in a Chapter 7 bankruptcy, he or she may be able to reaffirm certain assets, which permits them to keep the property outside of the bankruptcy by entering into a reaffirmation agreement if the debtor has sufficient disposable income and is relatively current on payments and the creditor agrees to reaffirm.
While filing for bankruptcy is often a difficult decision to make, debtors overwhelmingly feel relieved after they have filed for bankruptcy. At the McCandless Law Firm, we are committed to providing personalized service and our team of professionals want to help you get a fresh start. Southern California (909)890-9192 in Northern California(925)957-9797 today in Southern California (909)890-9192 in Northern California(925)957-9797today to arrange a free office consultation.
Stop using your credit cards and don’t incur any additional credit. Once you have made the decision to file bankruptcy, you should not use your credit cards nor incur any additional credits from that point forward. Any recent purchases or advances can be held as still due and owing after you file bankruptcy. The rational is that you never intended to pay those debts back and is similar to fraud. If you’re seeking a fresh start, do your best to insure that you will in fact receive that fresh start. The credit card issuers are very aware of attempts to run-up the charges on credit cards. This also applies to cash advances. If you take a cash advance too close to filing bankruptcy, you are likely to see an objection from the credit card issuer. The objection comes in the form of an adversarial complaint. If the creditor is successful in their objection, the amount of the recent advance(s) will be held due and owing after your bankruptcy case.
Take the required credit counseling briefing Before a Chapter 7 bankruptcy case can be filed, a person must take a credit counseling briefing from an approved credit counseling agency. This credit counseling briefing can be done on the internet or by telephone. The entire briefing typically takes less than one hour and at the time of this writing, costs approximately $50.00. The credit counseling briefing requires the debtor to provide information as to their monthly income and expenses as well as a listing of their creditors. This briefing must be completed within 180 days prior to filing bankruptcy.
File your taxes You must file your most recent year’s taxes to qualify for Chapter 7 bankruptcy relief. Although this seems like a simple requirement, you would be amazed at the number of individuals who have not filed their most recent taxes. A copy of the return will be forwarded to your assigned bankruptcy trustee after your case is filed. You must also provide your most recent tax return to any creditor who requests it.
Provide your most recent paychecks You must provide the most recent 60 days worth of paycheck stubs at the time your case is filed. These will be forwarded to your assigned bankruptcy trustee or may be filed with the clerk of the bankruptcy court. This measure is in place to make sure that the amount listed on the petition for monthly income is in fact accurate. If a person receives income from a source other than employment, evidence of that income must be provided just as if a paycheck stub. Once you are aware that you are likely going to file bankruptcy, keep copies all of your paycheck stubs in an organized manner.
Get Your Paperwork in Order Collect all statements from bill collectors. Go online and get complete addresses of creditors who may have stopped billing you. Check the balances at financial institutions where you bank. Look at your recent tax returns to provide your gross income over the past three years. Basically, get to know your assets and liabilities and have them written out and organized for your lawyer to prepare your case. Gather a listing of all of all of your debts.
The more complete you can be in providing a list of your creditors, the less problems or headaches you will have from creditors after your bankruptcy case is over. Once you know that you are going to file, start to save all correspondence that arrives from creditors, collection agencies or others who are trying to collect on a debt. The disclosure requirements have become more stringent so you want to make sure that your have forwarded all of your creditor information to your attorney. If you are unsure of exactly who you may owe, you may want to consider acquiring a copy of your most recent credit reports. Each year you may request a free copy of your credit reports from the three major credit bureaus reporting companies. Those are TransUnion, Equifax and Experian and they can be obtained by going to www.annualcreditreport.com. Even if you are unaware of the creditors listed on your reports, provide those to your attorney anyway. When you seek credit, after your filing, for a mortgage, auto loan, or personal loan, you want to be able to show that all of the items on your credit report were listed and discharged in your bankruptcy case. The rule to remember is to list everybody and their grandmother on your bankruptcy petition and schedules. This way you can be assured that you are not leaving anyone out of the bankruptcy.
Check and review your petition for accuracy Your attorney will prepare your bankruptcy petition and schedules primarily based upon the information and disclosures that you have provided. The petition and schedules will then need to be reviewed and signed by you. Do not take this step lightly. You are verifying that the information is true and correct to the best of your knowledge and that all of your assets and liabilities are listed. This is the time to double check the itemized list of creditors shown on the petition and schedules with your known list of creditors. You also want to make sure that your home, vehicle or other assets are properly listed and exempted to the full extent of the chosen law. Remember, your petition and schedules are a legal document signed under oath. Take the time to insure that they are true and accurate.
Pay your attorney or make payment arrangements Most attorneys will want to be paid in full before they file your case. If they don’t, there is a chance that their fees may be discharged in the bankruptcy. All attorneys’ fees come under the scrutiny of the United State’s Trustee’s office and the bankruptcy court judges. They will monitor whether the fees charged in a Chapter 7 bankruptcy case are excessive. They will also determine whether or not the attorney had collected fees from his client when the debt was discharged. A debtor should be aware that there might be additional fees charged for filing amendments to the petition and schedules and for missed court dates. It is a good idea to get the attorney fee issue out of the way as early as possible. It is often the main reason why in certain circumstances, a case never gets filed.
Throughout history, there have been a number of successful people who have built great fortunes. Many of these people were able to enjoy their riches, while leaving enough for future generations to enjoy. There have also been others who have earned vast amounts of money, only to be squandered away, ending in bankruptcy. Similarly, companies have been built into opulent empires that have been later reduced to rubble with a simple turn of tides. In this article are eight examples of some of the worst personal and corporate bankruptcies in history.
Historical personal bankruptcies
1. Jakob Fugger
Jakob Fugger is a 15th and 16th century merchant and banker who amassed such a fortune that he came to be known as Jacob The Rich. Throughout the Renaissance, Fugger played an important role in supporting major political and religious figures. He contributed over 540,000 (over 1,500 kilograms worth of gold) florins to help Charles V win the title of Holy Roman Emperor by paying off the electors.(1) Fugger also funded the construction of what is known today as Vatican City.(2) While Jakob was able to accrue enough riches to last for generations, many of his descendants would squander away the wealth and not much is left of it today.(3)
2. Henry Ford
Henry Ford is well-known as the founder and owner of Ford Motor Company. Many of Ford’s inventions reshaped and revolutionized the entire transportation industry and the history of America as a whole.(4) Before getting things right with the Ford Motor Company, however, Henry Ford had troubles with debt. Ford borrowed money from a few politicians and started the Detroit Automobile Company in 1899. Two years later, the company went bankrupt, almost forcing Ford himself into bankruptcy.(5) After leaving the Detroit Automobile Company, which would later develop into the Cadillac Automobile Company, Ford founded the Ford Motor Company and became one of the richest and most well-known people in the world.(4)
3. Mike Tyson
In more recent years, another sizable case of bankruptcy occurred when Michael Gerard Tyson filed for bankruptcy in 2003. Mike Tyson is one of the most popular, well-known and notorious figures in professional boxing. He fought his way to to the top of the boxing world, becoming the youngest person to win and hold the title of heavyweight champion.(6) Some of Tyson’s most lucrative boxing matches earned him over $30 million each. It is estimated that he earned between $300 million and $400 million throughout his career, but he ended up filing for bankruptcy in 2003 as a result of poor money management.
4. Charles M. Schwab
Charles Michale Schwab was a powerful and extremely rich man who helped lead a large steel corporation to success. Schwab’s career began as a stake driver in a steelworks company, which he later became the president of. He negotiated the sale of the company and became the president of the newly formed corporation known as U.S. Steel. Later on, Schwab ended up leaving the company to become the president and chairman of the board for Bethlehem Steel Corporation.(7) The company became one of the largest steel producers in the world and Schwab became extremely rich.(8) Schwab had a hankering for excessive spending on extravagant parties, gambling and extramarital affairs, which would cause his fortune to dwindle. In 1929, the stock market crash forced Schwab into bankruptcy. His fortunes were estimated at around $25 million to $40 million, which would have been equivalent to around $500 million to $800 million today.(7)
Historical corporate bankruptcies
1. Lehman Brothers
One of the most recent corporate bankruptcies, which occurred in 2008, holds the title as the largest bankruptcy case in history.(9) Lehman Brothers Holdings Inc. is a firm that offered financial and investment services worldwide.(10) Before filing for bankruptcy on September 15, 2008, the firm was worth over $600 billion in assets. Causes for the bankruptcy date back over seven years, during the 9/11 attack, but the biggest cause was the financial crisis of 2008.(11)
2. WorldCom
WorldCom Inc., known today as MCI, Inc., was forced to file for bankruptcy in 2002. The WorldCom Inc. bankruptcy stands as the second-largest bankruptcy case in the history of the United States. The company’s pre-filing assets amounted to over $100 billion.(12) The main cause for the fallout was the numerous fraud cases that the company and its executives had to face. Since declaring corporate bankruptcy bankruptcy, WorldCom Inc. has merged with MCI Communications to form MCI, Inc.(13)
3. Enron
Enron Corp. currently holds the record for the third-largest bankruptcy filing in US history.(14) The American energy company was founded in 1985, and quickly became a large tycoon worth revenues approximated at around $101 billion in 2000.(15) Enron Corp. filed for bankruptcy in 2001, with their total assets amounting to about $66 billion before filing.(14) Cases of accounting fraud and business fraud that became known as the “Enron scandal” were the main causes for the bankruptcy.(15)
4. Conseco, Inc.
Before filing for bankruptcy in late 2001, Conseco, Inc.’s assets were estimated at over $60 billion.(16) Conseco was an insurance organization that offered life insurance, supplemental health insurance, annuity and other financial products and services. The company’s debt amounted to $8 billion, forcing them to file for bankruptcy.(17) The company was not able to rebound until 2003.
These historical riches-to-rags stories can be seen as large, red, flashing warning signs of what to look out for in order to avoid bankruptcy. Sure, some bankruptcies are caused by bad and perhaps even uncontrollable circumstances, but there are a number of ways that your can safeguard yourself or your company from bankruptcy:(18)(19)
1. Understand how personal bankruptcy and corporate bankruptcy works.
2. Make sure to have good legal and financial advisors with great track records, especially for corporate dealings.
3. Keep accurate and honest accounting records that will help you make accurate and honest decisions with regard to finance, legal, and bankruptcy matters.
One of the biggest lessons to be learned by these historical bankruptcies is that there can only be two bankruptcy fates: 1) stay bankrupt, or 2) earn back your fortune. Even if you fall and go bankrupt, it is not the end. With determination, hard work and clear goals anyone can rebound from a bankruptcy.
Celebrities from around the world are often admired for their fame and their fortune. Let’s face it, practically anyone would love to live in the lap of luxury, with millions to spend on some of the world’s most extravagant and opulent treats. Whether it’s John Travolta’s Boeing 707 private jet(1), Donald Trump’s high-end real estate ventures(2), or Ryan Seacrest’s magnificent home theater(3), celebrities certainly know how to spend a pretty penny. Every now and then, however, stories of celebrities gone bankrupt come about. Whether they make it back on top or not, celebrity bankruptcies are some interesting stories to follow. Here are 10 celebrity bankruptcies that you might want to learn from on your way to making your own fortune.
Mike Tyson(4)
Michael Gerard Tyson, otherwise known as “Iron Mike” Tyson, is one of the most popular and controversial figures in boxing history. As the youngest-ever winner of a heavyweight boxing title, Mike Tyson gained fame and a fortune amounting to an estimated $300-million. In August of 2003, after being convicted of rape and getting back into the ring again, Tyson filed for bankruptcy due to uncontrolled spending and bad financial advice.
Kim Basinger(5)
Kimila Ann “Kim” Basinger was a model turned film actress who became famous for her roles in “Never Say Never Again,” “The Natural,” “L.A. Confidential,” and “Batman.” Winner of a Golden Globe Award, Academy Award, and Screen Actors Guild Award, Basinger had a promising career. In 1989, Basinger and a few other investors put up $20 million dollars to buy a small town in Georgia called Braselton. After spending such a hefty amount, she was sued for $8-million for backing-out of the film “Boxing Helena,” ultimately leading to her filing for bankruptcy.
Burt Reynolds(6)
Burton Leon “Burt” Reynolds, Jr. is an actor who has become well-known for the hundreds of film appearances that he has made throughout his ongoing career. Reynolds had to file for bankruptcy in 1996, because of his lavish expenses, a failed business venture and a divorce from Loni Anderson. He rebounded from the bankruptcy within a couple of years.
Toni Braxton(7)
Toni Mechelle Braxton has gained much of her popularity as a singer and songwriter of R&B music, as well as a few acting roles. In line with a $3.9-million debt, Braxton had to file for bankruptcy in 1998, forcing her to sell many of her posessions to pay-off creditors. After filing for bankruptcy, she was offered a Broadway role in “Beauty and the Beast”, which helped her get back on track. She soon released a chart-topping album that catapulted her back into fame and out of bankruptcy.
MC Hammer(8)
Stanley Kirk Burrell, best known by his stage name MC Hammer, became famous during the 1980s and 1990s as a rapper and dancer. In 1996, Hammer had to file for bankruptcy after acruing a debt of $13 million. His extravagant lifestyle and decreasing album sales led to the bankruptcy. Since declaring bankruptcy, Hammer has released a number of albums and, in 2008, became host and CEO of a television show.
Wayne Newton(9)
Carson Wayne Newton, also known as Mr. Las Vegas, is an actor and entertainer who has had over 30,000 solo shows in Las Vegas. Despite his success as an entertainer, Newton had to file for bankruptcy in 1992, with a debt of about $20 million. The debt was largely due to a libel case that he filed against NBC. It was not until 1999 that Newton would be able to build his fortunes once again.
Marvin Gaye(10)
Marvin Pentz Gaye, Jr. is an iconic image in the soul and R&B music who became famous during the 1960s and 1970s. In 1979, Gaye had to file for bankruptcy due to tax problems, overdue alimony payments, and drug addiction. He moved to Hawaii and, later on, to Europe. Touring Europe and later returning to the US, Gaye began to regain fame until he was shot and killed by is father.
Meat Loaf(11)
Michael Lee Aday is a musician, stage actor and screen actor who is best known by his stage name Meat Loaf. Meat Loaf has been very successful as a rock musician, but he has had to endure two major bankruptcies during the 1980s. The first bankruptcy was caused when Meat Loaf found out that his managers, Dellentash and Sonenberg, were stealing money from him. Meat Loaf changed managers and was sued for breach of contract, leading him to file for bankruptcy. The second bankruptcy happened during 1986, when Meat Loaf’s new album failed to become a hit. Since filing for the 1986 bankruptcy, Meat Loaf has been able to rebound, touring and producing new albums.
Cyndi Lauper(12)
Cynthia Ann Stephanie “Cyndi” Lauper is an actress and singer-songwriter who has won an American Grammy and an Emmy award. Before becoming successful, Lauper was in a band called Blue Angel, which released an album that didn’t do well. The band broke up and fired their manager, who later sued them for breach of contract. The $80,000 lawsuit caused Lauper to declare bankruptcy in 1980. She later went on to success and fame in the mid-1980s. Lauper has released a total of 11 albums and more than 40 singles, with her total record sales amounting to over $25 million.
Gary Coleman(13)
Gary Wayne Coleman became popular during the late 1970s up to the mid-1980s as an actor in an American sitcom named “Diff’rent Strokes.” Coleman filed for bankruptcy in 1999, due to the mismanagement of his trust funds. Since declaring bankruptcy, Coleman has made a number of appearances on television and in movies, but he has never regained the fame that he had in the 80s.
While some of these celebrity bankruptcies may be inspiring “rags-to-riches” stories, others have not ended so well. It can be difficult to maintain one’s fortune after making it, which is why it’s important to learn from these stories of bankruptcies. Most of the celebrities who have filed for bankruptcy have been forced to do so due to uncontrolled spending, lavish lifestyles, legal matters, or mishandled fortunes. It is easy to get caught up trying to make money, but it’s essential to know how to manage money once you have it, to avoid bankruptcy.
Here are some simple things you can do to avoid bankruptcy:(14)
1. Try to negotiate with your creditors for extensions on debt payments.
2. Make sure you get sound advise from financial and legal experts who have a good track record.
3. Manage your resources well and keep track of your expenses and income.
No matter what you do, always hold on to the things in life that are more meaningful than money, like family, friends, laughter, and love.
Stop using your credit cards and don’t incur any additional credit. Once you have made the decision to file bankruptcy, you should not use your credit cards nor incur any additional credits from that point forward. Any recent purchases or advances can be held as still due and owing after you file bankruptcy. The rational is that you never intended to pay those debts back and is similar to fraud. If you’re seeking a fresh start, do your best to insure that you will in fact receive that fresh start. The credit card issuers are very aware of attempts to run-up the charges on credit cards. This also applies to cash advances. If you take a cash advance too close to filing bankruptcy, you are likely to see an objection from the credit card issuer. The objection comes in the form of an adversarial complaint. If the creditor is successful in their objection, the amount of the recent advance(s) will be held due and owing after your bankruptcy case.
Take the required credit counseling briefing Before a Chapter 7 bankruptcy case can be filed, a person must take a credit counseling briefing from an approved credit counseling agency. This credit counseling briefing can be done on the internet or by telephone. The entire briefing typically takes less than one hour and at the time of this writing, costs approximately $50.00. The credit counseling briefing requires the debtor to provide information as to their monthly income and expenses as well as a listing of their creditors. This briefing must be completed within 180 days prior to filing bankruptcy.
File your taxes You must file your most recent year’s taxes to qualify for Chapter 7 bankruptcy relief. Although this seems like a simple requirement, you would be amazed at the number of individuals who have not filed their most recent taxes. A copy of the return will be forwarded to your assigned bankruptcy trustee after your case is filed. You must also provide your most recent tax return to any creditor who requests it.
Provide your most recent paychecks You must provide the most recent 60 days worth of paycheck stubs at the time your case is filed. These will be forwarded to your assigned bankruptcy trustee or may be filed with the clerk of the bankruptcy court. This measure is in place to make sure that the amount listed on the petition for monthly income is in fact accurate. If a person receives income from a source other than employment, evidence of that income must be provided just as if a paycheck stub. Once you are aware that you are likely going to file bankruptcy, keep copies all of your paycheck stubs in an organized manner.
Get Your Paperwork in Order Collect all statements from bill collectors. Go online and get complete addresses of creditors who may have stopped billing you. Check the balances at financial institutions where you bank. Look at your recent tax returns to provide your gross income over the past three years. Basically, get to know your assets and liabilities and have them written out and organized for your lawyer to prepare your case. Gather a listing of all of all of your debts.
The more complete you can be in providing a list of your creditors, the less problems or headaches you will have from creditors after your bankruptcy case is over. Once you know that you are going to file, start to save all correspondence that arrives from creditors, collection agencies or others who are trying to collect on a debt. The disclosure requirements have become more stringent so you want to make sure that your have forwarded all of your creditor information to your attorney. If you are unsure of exactly who you may owe, you may want to consider acquiring a copy of your most recent credit reports. Each year you may request a free copy of your credit reports from the three major credit bureaus reporting companies. Those are TransUnion, Equifax and Experian and they can be obtained by going to www.annualcreditreport.com. Even if you are unaware of the creditors listed on your reports, provide those to your attorney anyway. When you seek credit, after your filing, for a mortgage, auto loan, or personal loan, you want to be able to show that all of the items on your credit report were listed and discharged in your bankruptcy case. The rule to remember is to list everybody and their grandmother on your bankruptcy petition and schedules. This way you can be assured that you are not leaving anyone out of the bankruptcy.
Check and review your petition for accuracy Your attorney will prepare your bankruptcy petition and schedules primarily based upon the information and disclosures that you have provided. The petition and schedules will then need to be reviewed and signed by you. Do not take this step lightly. You are verifying that the information is true and correct to the best of your knowledge and that all of your assets and liabilities are listed. This is the time to double check the itemized list of creditors shown on the petition and schedules with your known list of creditors. You also want to make sure that your home, vehicle or other assets are properly listed and exempted to the full extent of the chosen law. Remember, your petition and schedules are a legal document signed under oath. Take the time to insure that they are true and accurate.
Bankruptcy attorneys frequently get asked whether student loans are dischargeable in bankruptcy. As the Bankruptcy Code is very broad in defining what constitute a student loan, not only are government backed student loans such as Stafford, Direct, or Perkins loans normally non-dischargeable, but the Bankruptcy Code goes further and excepts “any indebtedness incurred…solely to pay higher education expenses” from being discharged.
Notwithstanding the general prohibition against discharging student loans, only two instances exist in which a debtor can eliminate student loans in bankruptcy. The first situation is where it can be shown that requiring the debtor to repay his or her student loans would impose an undue hardship. To qualify for a hardship discharge, a debtor must prove that they will never be able to pay back their student loans, whether it is an inability to repay due permanent disability, or some other reason which would establish undue hardship. To be eligible to receive this type of discharge, usually the debtor must be found to be totally disabled and would be require to supply sufficient documentation that he or she is unable to work due to life threatening illness or injury. If, however, the debtor was afflicted with the illness or condition at the time he or she obtained the student loans, the hardship discharge would be inapplicable. The second instance is where a debtor lists his or her student loans in a Chapter 13 plan and the lender fails to object. This issue has been the subject of great controversy however, and the law in this regard may change in the near future as bankruptcy practitioners anxiously await the United States Supreme Court decision in United Student Aid Funds, Inc. v. Espinosa, argued in December 2009.
The offers free initial consultations to individuals and families who are struggling financially and seek relief afforded by the Bankruptcy Code. Whether you are contemplating filing for bankruptcy or have received a foreclosure notice and are having difficulty with creditors, Southern California (909)890-9192 in Northern California(925)957-9797 if you want to get past difficult times and get the fresh start you need.
Bankruptcy attorneys frequently get asked whether student loans are dischargeable in bankruptcy. As the Bankruptcy Code is very broad in defining what constitute a student loan, not only are government backed student loans such as Stafford, Direct, or Perkins loans normally non-dischargeable, but the Bankruptcy Code goes further and excepts “any indebtedness incurred…solely to pay higher education expenses” from being discharged.
Notwithstanding the general prohibition against discharging student loans, only two instances exist in which a debtor can eliminate student loans in bankruptcy. The first situation is where it can be shown that requiring the debtor to repay his or her student loans would impose an undue hardship. To qualify for a hardship discharge, a debtor must prove that they will never be able to pay back their student loans, whether it is an inability to repay due permanent disability, or some other reason which would establish undue hardship. To be eligible to receive this type of discharge, usually the debtor must be found to be totally disabled and would be require to supply sufficient documentation that he or she is unable to work due to life threatening illness or injury. If, however, the debtor was afflicted with the illness or condition at the time he or she obtained the student loans, the hardship discharge would be inapplicable. The second instance is where a debtor lists his or her student loans in a Chapter 13 plan and the lender fails to object. This issue has been the subject of great controversy however, and the law in this regard may change in the near future as bankruptcy practitioners anxiously await the United States Supreme Court decision in United Student Aid Funds, Inc. v. Espinosa, argued in December 2009.
The offers free initial consultations to individuals and families who are struggling financially and seek relief afforded by the Bankruptcy Code. Whether you are contemplating filing for bankruptcy or have received a foreclosure notice and are having difficulty with creditors, Southern California (909)890-9192 in Northern California(925)957-9797 if you want to get past difficult times and get the fresh start you need.
Help With Repossessions If you are aware that you are behind on car payments and a repo man is looming or have been threatened with a repossession a bankruptcy stay will delay the repossession and a Chapter 13 plan will provide for a repayment plan to make up the back payments and avoid the repossession altogether.
Help With Foreclosure If you have been given a notice of default and a foreclose sale is scheduled a bankruptcy stay will delay the foreclosure and a Chapter 13 plan will provide for a repayment plan to make up the back payments.
Help With Judgments If you have been sued by a creditor and have had a judgment issued, the creditor may file an Abstract of Judgment asserting a lien on all real property you own, not unlike another mortgage. As long as the judgment goes unpaid, it usually increases as the creditor has a right to interest on the unpaid balance.
Subject to certain exemptions, a judgment creditor can also try to collect on other things you may own, such as a car, household goods, money in the bank, tools, equipment, etc. The judgment against you will appear on your credit report which may result in a more difficult time obtaining credit and may also has some negative effects with respect to employment.
While dealing with the effects of a judgment can be devastating, contact one of our bankruptcy attorneys today to see if filing Chapter 7 or a Chapter 13 bankruptcy will eliminate the debts before they can become judgments. In some instances, your creditors can be completely eliminated, and in others, you may be able to negotiate a repayment plan up to five years in duration for what amounts to pennies on the dollar.
Understanding that each debtor’s circumstances are unique, results will vary depending on your individual situation. The McCandless Law Firm has helped many individuals in similar situations out of the financial holes they have found themselves in. Contact us today to see how we can assist you in getting the fresh start you deserve.
Are you worried back taxes owed to the IRS? If you owe State, Federal, or local taxes and you are also behind in other payments to creditors, Federal Laws can give you assistance.
Filing Bankruptcy Can Stop Tax Garnishment
If you file for a Chapter 7 or Chapter 13 bankruptcy, all collection activities, including tax garnishments must cease. While you may still owe the tax, the automatic stay will put you in a better position to deal with repaying the tax, if it is not one that can be discharged completely. Certain taxes, specifically income taxes (depending on their age) may not have to be repaid should you declare bankruptcy. If you file for bankruptcy under Chapter 13, you may get up to 60 months to pay back taxes which are non-dischargeable under bankruptcy.
Understanding that each debtor’s circumstances are unique, results will vary depending on your individual situation. The McCandless Law Firmhas helped many individuals in similar situations out of the financial holes they have found themselves in. Contact us today to see how we can assist you in getting the fresh start you deserve.
Are you worried back taxes owed to the IRS? If you owe State, Federal, or local taxes and you are also behind in other payments to creditors, Federal Laws can give you assistance.
Filing Bankruptcy Can Stop Tax Garnishment
If you file for a Chapter 7 or Chapter 13 bankruptcy, all collection activities, including tax garnishments must cease. While you may still owe the tax, the automatic stay will put you in a better position to deal with repaying the tax, if it is not one that can be discharged completely. Certain taxes, specifically income taxes (depending on their age) may not have to be repaid should you declare bankruptcy. If you file for bankruptcy under Chapter 13, you may get up to 60 months to pay back taxes which are non-dischargeable under bankruptcy.
Understanding that each debtor’s circumstances are unique, results will vary depending on your individual situation. The McCandless Law Firmhas helped many individuals in similar situations out of the financial holes they have found themselves in. Contact us today to see how we can assist you in getting the fresh start you deserve.
We provide strong thorough protection. We give you solid solutions and fast answers. Our fiduciary responsibility is you. Your house. Your car. Your hard work. We legally guard your financial assets.
With a phone call, we can begin a process that within only a day or two can stop your creditors in their tracks and give you peace of mind. Contact us today in Southern California (909)890-9192 in Northern California(925)957-9797today to arrange a free office consultation. Here is the process in a nutshell.
What We Do:
We meet to determine what is best for you
We stop bill collectors from contacting you
We protect your assets
We stop the foreclosure process
We counsel you on your rights
We guide you, making as simple as possible
We file your petition
We stand by you at the court hearing
We believe in accountability. Our philosophy is simple…vertical accountability to our Creator ensures horizontal accountability to our clients. Here are some of the credit question most commonly asked by our clients. What about :
Past Due Taxes
Are you worried back taxes owed to the IRS? If you owe State, Federal, or local taxes and you are also behind in other payments to creditors, Federal Laws can give you assistance.
Filing Bankruptcy Can Stop Tax Garnishment
If you file for a Chapter 7 or Chapter 13 bankruptcy, all collection activities, including tax garnishments must cease. While you may still owe the tax, the automatic stay will put you in a better position to deal with repaying the tax, if it is not one that can be discharged completely. Certain taxes, specifically income taxes (depending on their age) may not have to be repaid should you declare bankruptcy. If you file for bankruptcy under Chapter 13, you may get up to 60 months to pay back taxes which are non-dischargeable under bankruptcy.
Understanding that each debtor’s circumstances are unique, results will vary depending on your individual situation. The McCandless Law Firmhas helped many individuals in similar situations out of the financial holes they have found themselves in. Contact us today to see how we can assist you in getting the fresh start you deserve.
Judgments
Help With Judgments If you have been sued by a creditor and have had a judgment issued, the creditor may file an Abstract of Judgment asserting a lien on all real property you own, not unlike another mortgage. As long as the judgment goes unpaid, it usually increases as the creditor has a right to interest on the unpaid balance.
Subject to certain exemptions, a judgment creditor can also try to collect on other things you may own, such as a car, household goods, money in the bank, tools, equipment, etc. The judgment against you will appear on your credit report which may result in a more difficult time obtaining credit and may also has some negative effects with respect to employment.
While dealing with the effects of a judgment can be devastating, contact one of our bankruptcy attorneys today to see if filing Chapter 7 or a Chapter 13 bankruptcy will eliminate the debts before they can become judgments. In some instances, your creditors can be completely eliminated, and in others, you may be able to negotiate a repayment plan up to five years in duration for what amounts to pennies on the dollar.
Understanding that each debtor’s circumstances are unique, results will vary depending on your individual situation. The McCandless Law Firm has helped many individuals in similar situations out of the financial holes they have found themselves in. Contact us today to see how we can assist you in getting the fresh start you deserve.
Foreclosures
Help With Foreclosure If you have been given a notice of default and a foreclose sale is scheduled a bankruptcy stay will delay the foreclosure and a Chapter 13 plan will provide for a repayment plan to make up the back payments.
Repossessions
Help With Repossessions If you are aware that you are behind on car payments and a repo man is looming or have been threatened with a repossession a bankruptcy stay will delay the repossession and a Chapter 13 plan will provide for a repayment plan to make up the back payments and avoid the repossession altogether.
Student Loans and Bankruptcy
Bankruptcy attorneys frequently get asked whether student loans are dischargeable in bankruptcy. As the Bankruptcy Code is very broad in defining what constitute a student loan, not only are government backed student loans such as Stafford, Direct, or Perkins loans normally non-dischargeable, but the Bankruptcy Code goes further and excepts “any indebtedness incurred…solely to pay higher education expenses” from being discharged.
Notwithstanding the general prohibition against discharging student loans, only two instances exist in which a debtor can eliminate student loans in bankruptcy. The first situation is where it can be shown that requiring the debtor to repay his or her student loans would impose an undue hardship. To qualify for a hardship discharge, a debtor must prove that they will never be able to pay back their student loans, whether it is an inability to repay due permanent disability, or some other reason which would establish undue hardship. To be eligible to receive this type of discharge, usually the debtor must be found to be totally disabled and would be require to supply sufficient documentation that he or she is unable to work due to life threatening illness or injury. If, however, the debtor was afflicted with the illness or condition at the time he or she obtained the student loans, the hardship discharge would be inapplicable. The second instance is where a debtor lists his or her student loans in a Chapter 13 plan and the lender fails to object. This issue has been the subject of great controversy however, and the law in this regard may change in the near future as bankruptcy practitioners anxiously await the United States Supreme Court decision in United Student Aid Funds, Inc. v. Espinosa, argued in December 2009.
The offers free initial consultations to individuals and families who are struggling financially and seek relief afforded by the Bankruptcy Code. Whether you are contemplating filing for bankruptcy or have received a foreclosure notice and are having difficulty with creditors, Southern California (909)890-9192 in Northern California(925)957-9797 if you want to get past difficult times and get the fresh start you need.
Things You Must Do Prior to Filing
Stop using your credit cards and don’t incur any additional credit. Once you have made the decision to file bankruptcy, you should not use your credit cards nor incur any additional credits from that point forward. Any recent purchases or advances can be held as still due and owing after you file bankruptcy. The rational is that you never intended to pay those debts back and is similar to fraud. If you’re seeking a fresh start, do your best to insure that you will in fact receive that fresh start. The credit card issuers are very aware of attempts to run-up the charges on credit cards. This also applies to cash advances. If you take a cash advance too close to filing bankruptcy, you are likely to see an objection from the credit card issuer. The objection comes in the form of an adversarial complaint. If the creditor is successful in their objection, the amount of the recent advance(s) will be held due and owing after your bankruptcy case.
Take the required credit counseling briefing Before a Chapter 7 bankruptcy case can be filed, a person must take a credit counseling briefing from an approved credit counseling agency. This credit counseling briefing can be done on the internet or by telephone. The entire briefing typically takes less than one hour and at the time of this writing, costs approximately $50.00. The credit counseling briefing requires the debtor to provide information as to their monthly income and expenses as well as a listing of their creditors. This briefing must be completed within 180 days prior to filing bankruptcy.
File your taxes You must file your most recent year’s taxes to qualify for Chapter 7 bankruptcy relief. Although this seems like a simple requirement, you would be amazed at the number of individuals who have not filed their most recent taxes. A copy of the return will be forwarded to your assigned bankruptcy trustee after your case is filed. You must also provide your most recent tax return to any creditor who requests it.
Provide your most recent paychecks You must provide the most recent 60 days worth of paycheck stubs at the time your case is filed. These will be forwarded to your assigned bankruptcy trustee or may be filed with the clerk of the bankruptcy court. This measure is in place to make sure that the amount listed on the petition for monthly income is in fact accurate. If a person receives income from a source other than employment, evidence of that income must be provided just as if a paycheck stub. Once you are aware that you are likely going to file bankruptcy, keep copies all of your paycheck stubs in an organized manner.
Get Your Paperwork in Order Collect all statements from bill collectors. Go online and get complete addresses of creditors who may have stopped billing you. Check the balances at financial institutions where you bank. Look at your recent tax returns to provide your gross income over the past three years. Basically, get to know your assets and liabilities and have them written out and organized for your lawyer to prepare your case. Gather a listing of all of all of your debts.
The more complete you can be in providing a list of your creditors, the less problems or headaches you will have from creditors after your bankruptcy case is over. Once you know that you are going to file, start to save all correspondence that arrives from creditors, collection agencies or others who are trying to collect on a debt. The disclosure requirements have become more stringent so you want to make sure that your have forwarded all of your creditor information to your attorney. If you are unsure of exactly who you may owe, you may want to consider acquiring a copy of your most recent credit reports. Each year you may request a free copy of your credit reports from the three major credit bureaus reporting companies. Those are TransUnion, Equifax and Experian and they can be obtained by going to www.annualcreditreport.com. Even if you are unaware of the creditors listed on your reports, provide those to your attorney anyway. When you seek credit, after your filing, for a mortgage, auto loan, or personal loan, you want to be able to show that all of the items on your credit report were listed and discharged in your bankruptcy case. The rule to remember is to list everybody and their grandmother on your bankruptcy petition and schedules. This way you can be assured that you are not leaving anyone out of the bankruptcy.
Check and review your petition for accuracy Your attorney will prepare your bankruptcy petition and schedules primarily based upon the information and disclosures that you have provided. The petition and schedules will then need to be reviewed and signed by you. Do not take this step lightly. You are verifying that the information is true and correct to the best of your knowledge and that all of your assets and liabilities are listed. This is the time to double check the itemized list of creditors shown on the petition and schedules with your known list of creditors. You also want to make sure that your home, vehicle or other assets are properly listed and exempted to the full extent of the chosen law. Remember, your petition and schedules are a legal document signed under oath. Take the time to insure that they are true and accurate.
Pay your attorney or make payment arrangements Most attorneys will want to be paid in full before they file your case. If they don’t, there is a chance that their fees may be discharged in the bankruptcy. All attorneys’ fees come under the scrutiny of the United State’s Trustee’s office and the bankruptcy court judges. They will monitor whether the fees charged in a Chapter 7 bankruptcy case are excessive. They will also determine whether or not the attorney had collected fees from his client when the debt was discharged. A debtor should be aware that there might be additional fees charged for filing amendments to the petition and schedules and for missed court dates. It is a good idea to get the attorney fee issue out of the way as early as possible. It is often the main reason why in certain circumstances, a case never gets filed.
Chapter 7 Bankruptcy
Chapter 7 is designed to erase consumer debts and bankruptcy statistics show is the quickest and most straightforward type of bankruptcy and works best for individuals with large credit card debts or medical bills. Gaining a better understanding of Chapter 7 bankruptcy will help you determine whether it is suitable for your circumstances.
Should You File For Chapter 7 Bankruptcy?
In determining whether to file for Chapter 7 an individual should evaluate their financial situation with an experienced bankruptcy lawyer. In assessing the viability of a Chapter 7 case, the amount of debt is not as important as the client’s inability to repay it. Whereas some debtors file for bankruptcy with a relatively small amount of debt, others wait until massive amounts of debt accumulate before filing. With the assistance of an experienced bankruptcy attorney, the client’s debt, income, expenses and assets will be examined to help determine whether Chapter 7 is advisable.
The Bankruptcy Code requires debtors to disclose all of their monthly income and expenses. In addition to wages earned, debtors must disclose all other sources of income and are subjected to a means test. If an individual passes the means test, they are presumed to qualify for Chapter 7. Debtors who do not qualify for Chapter 7 pursuant to the means test may still be able to file for a Chapter 13 bankruptcy.
How a Chapter 7 Bankruptcy Works
The bankruptcy process begins with a petition filed in bankruptcy court that triggers an automatic stay which prohibits further collection efforts of creditors. While the court appoints a trustee to liquidate assets to pay existing creditors, most assets are subject to existing liens or are be exempt from liquidation. Generally, things like household goods, clothing and personal items are fully exempt. Property which is particularly valuable, such as oil paintings, coin collections, or rare items may have higher value than what can be protected under the exemption rules. In those circumstances, the debtor could be required to turn over the property to the trustee or offer to buy the trustee out of his interest in the non-exempt property. Once the trustee collects any nonexempt assets and pays creditors from their proceeds, any remaining debt is discharged, subject to certain limitations such as secured debt, taxes, Student loans, alimony and fraudulent acts.
If the debtor is concerned about losing certain assets in a Chapter 7 bankruptcy, he or she may be able to reaffirm certain assets, which permits them to keep the property outside of the bankruptcy by entering into a reaffirmation agreement if the debtor has sufficient disposable income and is relatively current on payments and the creditor agrees to reaffirm.
While filing for bankruptcy is often a difficult decision to make, debtors overwhelmingly feel relieved after they have filed for bankruptcy. At the McCandless Law Firm, we are committed to providing personalized service and our team of professionals want to help you get a fresh start. Southern California (909)890-9192 in Northern California(925)957-9797 today in Southern California (909)890-9192 in Northern California(925)957-9797today to arrange a free office consultation.
Deed in Lieu
A deed in lieu agreement is another option for individuals who do not have the financial means to continue making payments on their mortgage but seek to avoid foreclosure. A deed in lieu is an arrangement in which the deed to property is surrendered and any remaining balance on the mortgage is forgiven. This is a good option for some individuals who have substantial equity in their home, but who cannot find a buyer for a short sale.
With a deed in lieu, a timeline will be established regarding turning over the deed and vacating the property. The homeowner may also be expected to pay fees associated with transferring the property to the mortgage lender, and as with short sales, any forgiven principal balance may be subject to a forgiveness tax. This can create an additional tax burden for some individuals, therefore the decision to go through with a deed in lieu arrangement is one that must be carefully evaluated.
If you are considering a deed in lieu arrangement with your mortgage lender, talk to one of our bankruptcy attorneys today. The McCandless Law Firmoffers professional advice and a free, no-obligation case evaluation, so that you can complete information about your legal rights and any choices you may have when it comes to avoiding foreclosure. Contact us in Southern California (909)890-9192 in Northern California(925)957-9797 today to learn about bankruptcy law, deed in lieu arrangements, and your rights and obligations under the law.
Why Hire An Attorney for Bankruptcy
Since the passage of new bankruptcy legislation in years past, the laws have become so complex that it is virtually impossible for lawyers who do not handle bankruptcy cases, much less a paralegal or document preparer, to be able to properly analyze a debtor’s situation, recognize the applicable exemptions and handle the debtor’s case from petition through discharge. In addition to completing the debtor’s petition, an experienced bankruptcy lawyer can advise which banks are quicker to freeze deposited funds when bankruptcy is filed or which lenders will immediately repossess your car despite timely payments by a debtor.
While an individual could save money by hiring a less qualified individual to assist with their bankruptcy case, the old adage of “you get what you pay for” is good advice. While it is possible to pay too much if a lawyer’s fees are exorbitant, you can also pay too little as the cheapest bankruptcy can often turn into the most expensive as mistakes in preparing the petition could be costly. While paralegals may charge low fees, he or she cannot give legal advice which could result in the loss of certain assets or a denial of discharge by the Court. By hiring an experienced lawyer you can get peace of mind knowing whether filing bankruptcy is really in your best interests and that foregoing some savings will save you money in the long run. If your eyesight was bad and you needed laser surgery (LASIX™) would you trust your vision to the cheapest doctor? Probably not. While past mistakes may have left you in the position where filing bankruptcy is necessary, do not make another mistake when it comes to your financial future and hire an experienced bankruptcy attorney.
The McCandless Law Firmoffers free initial consultations to individuals and families who are struggling financially and seek relief afforded by the Bankruptcy Code. Whether you are contemplating filing for bankruptcy or have received a foreclosure notice and are having difficulty with creditors, in Southern California (909)890-9192 in Northern California(925)957-9797 if you want to get past difficult times and get the fresh start you need.
Repair your Credit Score
One of the best things about getting a fresh start by declaring bankruptcy is that it allows you a chance to rebuild your credit score. The first step in re-building your credit is to eliminate debt. With less debt, meeting your remaining financial obligations should be easier, provided you manage your finances well. Second, you should make sure to remove any negative information that remains on your credit reports with the three major credit reporting agencies. After your bankruptcy is complete, any debt discharged therein should be listed on your credit report as included in the bankruptcy with a zero balance. If the information regarding these debts is not updated, the accounts could still appear to be active, which could limit your ability to get credit.
In order to check the accuracy of your credit reports, you should order a copy of them to make sure all your discharged debts are listed as being included in your bankruptcy case and now show only zero balances. You can contact the three major credit reporting agencies online at:
• Trans Union: http://www.transunion.com
• Equifax: http://www.equifax.com
• Experian: www.experian.com
Other valuable tips to help rebuild your credit after bankruptcy include:
1. Establish accounts that will report positive information on you. Get a single credit card with a small credit limit, use it sparingly and pay the entire balance each month.
2. Repay all bills in a timely manner. Most credit cards and utilities report late payments. After your bankruptcy, late payments will continue to paint you as a bad credit risk to creditors.
Asset Protection
While many clients are excited to get a fresh financial start through bankruptcy, the McCandless Law Firm understands the apprehension and fear of losing one’s assets. Whether it is your home, vehicle or prized personal possessions, implementing a solution for your debts does not mean that you have to lose the things your family values most. Our team of professionals will provide you with the information necessary to protect your assets and advise which exemptions may be available.
Asset Protection
While bankruptcy laws are federal statutes, the court will look to state exemptions to determine which assets you can protect from creditors.
Discharge Violations
Once your bankruptcy has been discharged, debts listed in your petition will be discharged. While you will not have to repay these debts and creditors will not be able to contact you and demand payment, some creditors continue to pursue discharged debt. This is a violation of bankruptcy discharge laws, and you may be entitled to monetary damages. It is crucial that your bankruptcy petition was complete to make certain that all dischargeable debt was included in your filing.
If debts that have been properly discharged, demands for payment are rare but if this does happen to you, rest assured that our team of professionals will seek justice for you in court and recover any damages that you may be owed as a result of the creditor’s violations. Proper legal representation is essential in order for you to take advantage of the full protection that the law provides. If you have concerns about a bankruptcy discharge violation, contact us Southern California (909)890-9192 in Northern California(925)957-9797 as we can help answer your questions and give you the information you need to make an informed choice about your particular situation.
What is Causing All of These Bankruptcy Filings?
There are several common causes which lead to filing for bankruptcy. These included, but are not limited to the following:
1. Lawsuits/Garnishments
Nobody wants to be sued and brought to judgment. Nobody wants to have 10%-25% of their hard earned wages deducted from their pay. In many cases, the taking of 10%-25% of one’s wages leads to the inability of that person to pay his rent, utilities or auto payment. Just the thought of the employer potentially having to garnish wages leads many to panic. Debtors do not want their employers or co-workers knowing of their financial troubles.
2. Auto Repossessions
Imagine waking one morning, heading out the door to work, only to find that your car is not where you parked it. Sure you were a little late on the auto payment, but you thought the finance company would wait for you to get current on your own. Auto lenders will do whatever it takes to get you financed, regardless of whether you are actually capable of affording the car. They realize that if you can’t pay the installment, they can take back their vehicle and re-sell it before it fully depreciates. They do this through the use of auto auctions where the vehicle sells for substantially less than what is owed. This leads to a deficiency amount which the lender seeks to recover from the debtor, you. Talk about insult to injury, the debtor first loses possession of the vehicle and then gets sued for the outstanding deficiency balance. Who wants to pay for something that they no longer have?
3. Unpaid Medicals
With more and more Americans going without medical insurance (45.8 million, per the U.S. Census Bureau press release dated 8/30/05), they risk losing whatever they have earned throughout their lifetime should a major medical problem occur. Most claim that they can’t afford to carry medical insurance. In reality, they can’t afford not to. The rising cost of health care could significantly deplete one’s savings should a serious illness or injury occur. Even those with co-payment coverages are having a difficult time meeting their burden of the bill.
4. High Interest Loans
There have always been high interest personal loans from many sources. In recent times, the advent of the payday loan has surfaced. These loans have exorbitant interest, which is often carried over to extend the loan. People who cannot survive until their next payday are giving up a huge portion of their paycheck to get the money in advance. This dangerous cycle leads to further borrowing with less and less money actually going into the worker’s pocket.
6. Foreclosures
The pride and joy of being a homeowner can be easily tempered by the hard work and cost of maintaining the home. Calling the landlord to make repairs is not an option; you are your own landlord. When the water is not flowing to the main sewer, you have no option, but to make the repairs. Additionally, the mortgage needs to be timely paid no matter what your special circumstance may be. Real estate taxes and homeowner’s insurance are also required to be paid regularly or you face a foreclosure suit. Changes in employment, health, income and marital status can lead to one’s failure to make timely payments. Many take second mortgages or lines of credit which simply create an additional, financial burden on the homeowner. When faced with the reality that they cannot afford the home, debtors can vacate the home and extinguish any mortgage liability through bankruptcy.
7. Overzealous Lending
How many credit card applications have you received in the mail this year? If you are like many Americans, the applications continue to appear regularly. Have you received convenience checks or offers for additional lines of credit? If so, you may have taken advantage of the use of the credit without any feasible way of repaying the debt. Many people are receiving pre-approved credit applications when they are in fact, not credit worthy. The credit card lenders point fault at the debtors for accepting the credit without the means to repay it. It seems more logical to fault lenders who do not undertake to check the credit worthiness of particular debtors.
8. Consumer Overspending
Many people see what they want, acquire it, and decide later how they will pay for it. People want to possess the latest clothing, jewelry, electronics, etc. Most stores now offer the ability to take the product home through the use of store credit cards or outside financing. You may even get a modest percentage discount off the purchase price if you open or use the store charge card. Many people charge their groceries, restaurant and transportation expenses believing that if they just make the minimum payments everything will be alright.
Debtor Laws
Once you have decided to file for bankruptcy, you must be truthful about your financial situation in order to take advantage of bankruptcy protections. While this does not pose a problem for a majority of individuals, it is often unwise for a debtor undergoing a bankruptcy to seek to secrete or hide assets.
When you file bankruptcy, expect that the trustee will perform a thorough investigation of your assets and your financial transactions for a year or more prior to the bankruptcy. If the trustee determines that you have sold or given away valuable items before filing for bankruptcy protection, this can cause your case to be dismissed. If this happens, you will have to re-file and may not benefit from the protection afforded by the automatic stay which means that creditors will be free to pursue their collection attempts. Additionally, debtors who attempt to hide assets may be guilty of fraud, accordingly, it is important to disclose any and all financial activities in your initial petition.
Despite innocent intentions, certain actions may require that you to have to wait in order to file for bankruptcy in order to avoid dismissal. If you have recently sold or given away valuable property, you may have to wait for a year before you file, which is why it is important that you speak with a reputable bankruptcy attorney if you are considering filing for bankruptcy. The McCandless Law Firmoffers legal advice for anyone who may be considering filing for bankruptcy, contact us today to set up a free, no-obligation case evaluation.
Creditor Laws
While creditors must follow specific laws when it comes to collecting on debts, creditors often resort to unscrupulous collection practices which violate the Fair Debt Collection Act and risk being fined, or sued, depending upon the severity of the violation by attempting to take advantage of consumers who are ignorant when it comes to debt collection practices.
Fair Debt Collection Practices
Creditors must follow fair debt collection practices if attempting to collect on a debt. There are several laws in place governing creditor communication, including:
• Creditors cannot call and harass you throughout the day. One phone call per day is allowed, provided that they actually speak with you.
• Creditors cannot misrepresent themselves to be a lawyer, police or other governmental entity.
• Creditors cannot threaten, harass, or annoy you. They may not use profanity or threaten to sue you, garnish your wages or take other actions that they do not really plan to take.
• Creditors cannot call at inconvenient times, or contact you by telephone after you have requested that they stop calling.
Automatic Stay Violations
If you have filed for bankruptcy protection, creditors cannot attempt to collect on a debt for as long as the automatic stay is in place. Creditors that violate the automatic stay may be subject to legal action, and monetary damages. An automatic stay goes into place as soon as your paperwork is accepted by the bankruptcy court. If you are contacted by creditors after they have been informed of your bankruptcy, you may be able to pursue the creditors in court.
Bankruptcy Discharge Violations
If a debt is listed as discharged on your bankruptcy filing and a creditor still attempts to collect on the debt, you may be entitled to damages. Speak with a reputable San Bernardino County Bankruptcy Attorney and get the representation that you need in this case.
Even though creditors have a right to collect the debts they are owed, they have to collect them within the boundaries of the law. Fair debt collection practices were put into place to protect consumers like you, and you may have the right to seek damages if creditors employ abusive collection techniques. Contact us to speak to an experienced bankruptcy attorney if you have contacted in violation of the Fair Debt Collection Practices Act, and get the legal representation you need to recover damages and prevent further abuse.
California Bankruptcy Statistics
As Southern Californians deal with the fallout from the mortgage crisis, many homeowners and families have found themselves saddled with debt they cannot afford. As a result of this unfortunate situation, individuals are increasingly turning to bankruptcy to get their financial lives back on track. A majority of individuals file a Chapter 7 bankruptcy to help wipe out most, if not all, of their unsecured debts, including credit card bills, medical bills and judgments. For those individuals who do not qualify for a Chapter 7 bankruptcy, a Chapter 13 bankruptcy is beneficial where the debtor has significant property and/or wants to eliminate a second mortgage on the residence.
At the McCandless Law Firm, we are committed to providing personalized service and our team of professionals will help you obtain a fresh start for you and your family. Contact us today to arrange a free office consultation. Documents to Collect Before filing, the following documents will be necessary to complete your bankruptcy petition:
1. Copy of each debtor’s social security card and bring original with you to your hearing
2. Copy of each debtor’s drivers’ license and bring original with you to the hearing
3. Documentation of any wage garnishments, wage assignments or other legal actions, including lawsuits
4. Copy of recent real estate appraisal, if any
5. Copy of most recent real estate tax bill
6. Pay stubs for each debtor for prior 6 months
7. Documentation of other income i.e. child support, social security, pension, disability, unemployment for prior 6 months
8. Copies of federal and state tax returns complete with all schedules including W-2’s for the prior 4 years
9. Copies of checking account, savings account, and money market account bank statements complete with copies of canceled checks for the prior 6 months (you will be asked to supplement this at a later date)
10. Copy of any life insurance policies except ones through employment including a statement regarding the current cash value
11. Copy of most recent brokerage account statement
12. Copy of most recent individual retirement account statement
13. Copy of most recent pension/retirement account statement
14. Copy of most recent 401K, 401B or 401E account statement
15. Copy of any contract for deed in which you are a buyer or seller
16. Copy of divorce decrees and/or domestic support obligation orders (child support or alimony)
NCLC
NATIONAL CONSUMER
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1. Autofraud (Contact: Jon Sheldon) To join: owner-autofraud@lists.nclc.org
This is one of the oldest and most active consumer law e-mail groups with over 350 members, and much email traffic each day. The group focuses on many different issues related to motor vehicles, from financing to sales practices to lemons to repossessions. Like all NCLC e-mail groups, you can perform key-word searches in the archives for past e-mails.
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To join: manufacturedhomes-request@lists.nclc.org and CC: owilliamson@nclc.org
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To join: studentloan-request@lists.nclc.org
(dloonin@nclc.org if experiencing technical problems)
This is NCLC’s first group, dating back over 10 years. The discussion covers student loan collections, offsets, vocational schools, and related topics.
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To join: cwu@nclc.org
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This is the e-mail group for anyone concerned with the electronic payment of food stamps and other state benefits.
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Covers issues of utility terminations, energy affordability, payment sources for utility bills, and low-income utility programs FOR MASSACHUSETTS ONLY.
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Provides a forum for sharing of information on consumer law activities in California. Open to nonprofit attorneys and to NACA members willing to partner with or mentor nonprofit attorneys.
11. Carchange- Auto Ownership, Finance, and Policy (Contact John Van Alst)
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A new group for advocates seeking to improve the ability of low-income families to get, keep, and use a reliable, affordable car. Includes topics of car finance, sales, and ownership as well as anyone working on broader issues that affect access to transportation for low-income workers and their families (e.g., insurance, driver’s licenses, maintenance, etc.).
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12. Mortgage (Contact: Jeff Dillman) To apply for admission: jdillman@thehousingcenter.org
This NACA group has over 600 members and covers all aspects of protecting a homeowner against foreclosure, from predatory lending to servicer abuses.
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The place to be if your office handles class actions, if you are interested in co-counseling with other NACA offices experienced in class cases, or if you just want to learn more about the class action remedy.
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CASE INTERPRETATION BY ATTORNEY NEIL GARFIELD of livinglies:
“The real party in interest in relief from stay is whoever is entitled to enforce the obligation
sought to be enforced. Even if a servicer or agent has authority to bring the motion on
behalf of the holder, it is the holder, rather than the servicer, who must be the moving
party, and so identified in the papers and in the electronic docketing done by the moving
party’s counsel.”
For 2 years I have been saying “stick with the basics.” Black Letter Law will set you free. But
time and again attorneys, pro se litigants and judges go astray and find themselves in never-never
land. Most attorneys and Judges take preliminary motions with a grain of salt. Virtually all
foreclosures would be eliminated if lawyers and judges paid attention to the very beginning of
the case. Gator Bradshaw in Florida delivers a nice piece at our seminar on motion practice.
Your job is to immediately focus the Judge’s attention on the fatal defects presented by the
actions of the intermediaries in the securitization process and more specifically, whoever is
attempting to foreclose. By failing to challenge this at the outset you have effectively waived the
issue and now face an uphill battle. This case reported below shows that a mere objection from
the Trustee in BK Court caused the entire claim of the forecloser to completely collapse.
Seven (7) months ago, before any of the landmark decisions reported on these pages, Federal
Bankruptcy Judge Myers in Idaho was presented with an objection from the Trustee to Motion
for Relief From Stay.
The fact that the Trustee took up the cause is reason enough to note this case. What the Court did
with it, in an articulate, well-reasoned memorandum of decision, is nothing short of startling in
its clarity.
One by one, this Judge takes down the arguments and tactics of the intermediaries in the
securitization chain and basically says that none of them has a right to make a claim.
In short, just as in these pages, the Judge doesn’t say who CAN assert and enforce the claim; he
just says that none of these nominees, intermediaries, conduits, bookkeepers, servicers, MERS,
or pretender lenders has any pecuniary interest in the outcome and therefore they lack standing to
be in court. On jurisdictional grounds, therefore, the case is closed and these interlopers are
thrown out of court. Will the REAL Lender please stand up? Maybe, maybe not.
The Judge points out that “The Motion further alleges that Debtors were indebted at filing “to
Movant” and that the debt arose out of a promissory note and a deed of trust dated September 20,
2006 “naming Movant as beneficiary.”
Judge Myers calmly and correctly points out that this was a total lie. When pressed, the
attorney acknowledged that the movant was not owed any money and that MERS was
merely an agent for an undisclosed principal for an undisclosed purpose acting
purportedly for the real party in interest. But the Judge says quite clearly and correctly
that the rules require the real party in interest to be the movant.
This Judge also addresses the issue of burden of proof, a sticking point for many readers of this
blog. He states that the burden is on the movant to prove standing, not on the homeowner or
petitioner to prove lack of standing. In fact, pointing to the rules again, he says that the pleading
must “[p]rovide the details of the underlying obligation or liability upon which the motion
is based;”
In a stroke of his pen, this Judge ends the issue over who has the burden of proof and even
provides grounds BEFORE DISCOVERY for dumping fraudsters out of court. They must plead
the allegations, and they must attach documentation that shows their pleadings are true and
correct.
This Judge is telling fraudsters to stop coming to court with attorney affidavits that are not
evidence (see his memorandum) and to stop submitting affidavits, notes, revisions to notes, late
indorsements, assignments that don’t match up with the pleadings or the requirements of
pleading.
Edited by MSFraud.org
1 All chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532,
unless otherwise indicated.
2 In 2008, this Court saw over 2,300 stay relief motions in the 5,224 cases filed.
3 See Local Bankruptcy Rule 4001.2 (addressing substantive and procedural
requirements for stay relief motions, and providing for entry of orders upon absence of objection
after notice).
MEMORANDUM OF DECISION – 1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF IDAHO
IN RE )
) Case No. 08-20381-TLM
DARRELL ROYCE SHERIDAN, )
SHERRY ANN SHERIDAN, )
) Chapter 7
Debtors. )
________________________________ )
MEMORANDUM OF DECISION
________________________________________
INTRODUCTION
In this Chapter 7 case, the trustee, Ford Elsaesser (“Trustee”), objects to a
motion under § 362(d) for relief from the § 362(a) automatic stay.1 Motions under
§ 362(d) are common in bankruptcy cases.2 Most stay relief requests proceed
promptly to entry of an order, after proper notice, without any objection.3
However, changes in mortgage practices over the past several years have
created a number of new issues. The one highlighted in this case is the standing of
4 There was no objection, and the exemption was therefore allowed. Taylor v. Freeland
& Kronz, 503 U.S. 638, 643-44 (1992); Rainsdon v. Farson (In re Farson), 387 B.R. 784, 797
(Bankr. D. Idaho 2008). Debtors indicated in their § 521 statement of intention that they would
(continued…)
MEMORANDUM OF DECISION – 2
the moving creditor. Serial assignments of the mortgagee’s interest(s) and the
securitization of mortgages have complicated what was previously a generally
straight-forward standing analysis. Though many creditors provide in their
motions adequate explanation and documentation of their standing to seek relief
on real estate secured debts, Trustee challenges the adequacy of the subject motion
in this case.
Following hearing and consideration of the arguments of the parties, the
Court determines that Trustee’s objection is well taken and the same will be
sustained. The motion for stay relief will be denied.
BACKGROUND AND FACTS
On June 24, 2008, Darrell and Sherry Ann Sheridan (“Debtors”) filed their
joint chapter 7 bankruptcy petition, schedules and statements. They scheduled a
fee ownership interest in a residence located in Post Falls, Idaho. See Doc. No. 1
at sched. A (the “Property”). Debtors asserted the Property’s value was
$225,000.00. Id. They indicated secured claims existed in favor of “Litton Loan
Servicing” ($197,000.00) and “Citimortgage” ($34,000.00). Id. at sched. D.
While this left no apparent equity in the Property, Debtors nevertheless claimed
the benefit of an Idaho homestead exemption. Id. at sched. C.4
4 (…continued)
reaffirm the secured debts on the Property.
5 Closing of the case as a no asset chapter 7 would constitute an abandonment of the
Property as a scheduled but not administered asset, see § 554(c), and the automatic stay would
terminate, see § 362(c)(1).
6 Mortgage Electronic Registration Systems, Inc. refers to itself, and is generally referred
to by others and in the case law, as “MERS.”
MEMORANDUM OF DECISION – 3
The § 341(a) meeting of creditors occurred on July 31, 2008. Debtors
received a discharge on October 3, 2008. While the case was noticed to creditors
as a “no asset” chapter 7, and though Trustee concedes there will be no anticipated
distribution to creditors, Trustee has not yet filed his final report of no distribution
which would allow the case to close.5
On October 16, 2008, the subject motion for relief from stay was filed. See
Doc. No. 21 (the “Motion”). It was filed by “Mortgage Electronic Registration
Systems, Inc. as nominee HSBC Bank USA, National Association, as Indenture
Trustee of the Fieldstone Mortgage Investment Trust Series 2006-3.” Id. at 1 (the
“Movant”).6 The Movant characterized itself as a “secured creditor and
Claimant.” Id. The Motion further alleges that Debtors were indebted at filing “to
Movant” and that the debt arose out of a promissory note and a deed of trust dated
September 20, 2006 “naming Movant as beneficiary.” Id.
Attached to the Motion is a promissory note (the “Note”) executed by
Debtors. It is payable to “Fieldstone Mortgage Company” as the “Lender.” See
7 The documents attached to the Motion were admitted into evidence at the final hearing,
by stipulation of the parties, as “Exhibit 1.”
8 A “final hearing” is contemplated under § 362(d) and (e). That it would be an
evidentiary hearing is a result of the presence of material, disputed facts, which under Fed. R.
Bankr. P. 9014(d) requires testimony in the same manner as in an adversary proceeding.
MEMORANDUM OF DECISION – 4
Ex. 1.7 A portion of the Note states: “I understand Lender may transfer this Note.
Lender or anyone who takes this Note by transfer and who is entitled to receive
payments . . . is called the Note Holder.”
The Note is secured by a deed of trust dated September 20, 2006 and
recorded in the real property records of Kootenai County, Idaho, on September 22,
2006 (the “Deed of Trust”). The Deed of Trust at paragraph (C) identifies and
defines the “Lender” as “Fieldstone Mortgage Company, a Maryland corporation.”
Paragraph (E) of the Deed of Trust recites:
MERS is a separate corporation that is acting solely as nominee for
Lender and Lender’s successors and assigns. MERS is the beneficiary
under this Security Instrument.
Ex. 1.
Trustee objected to the Motion, contending that the Movant failed to
establish its interest in the Property or its standing to seek stay relief. Doc. No. 23.
At a preliminary hearing on November 4, 2008, the parties requested a final
hearing because the question of standing remained unresolved.8 A final hearing
was held on December 16, 2008, at which Trustee and counsel for Movant made
argument, but no evidence was presented other than the documents that, as noted
9 The Code establishes time frames for preliminary hearing, final hearing and ruling.
See § 362(e)(1), (2). In this case, the Motion was originally filed October 16, 2008. Under
§ 362(e)(2), the stay generally “shall terminate on the date that is 60 days after a request is made
by a party in interest” if the case is one under chapters 7, 11 or 13 and the debtor is an individual.
However, that period may be extended by either agreement of the parties or by the Court for good
cause. See § 362(e)(2)(B). Here, the scheduling of the hearings resulted in a final hearing on
December 16, 2008, about the 60th day after the request. This delay was by or with concurrence
of the parties. The Court concludes that additional delay to the date of this Decision was required
to address the contentions of the parties.
10 Another ground for stay relief with respect to acts against property is an absence of
equity in such property coupled with a lack of necessity of such property for an effective
reorganization. See § 362(d)(2). The Motion indicated a lack of equity in the Property and, in
light of the fact that this is a chapter 7 liquidation, the Property is not required for reorganization.
MEMORANDUM OF DECISION – 5
above, were admitted by agreement.9
DISCUSSION AND DISPOSITION
A. Stay relief requires a motion by a party in interest with standing
The Bankruptcy Code, Bankruptcy Rules and this District’s local rules
govern stay relief requests.
Under the Code, relief from the § 362(a) stay is authorized “[o]n request of
a party in interest and after notice and a hearing, . . . .” See § 362(d) (emphasis
added). See also § 362(e)(1) and (2), § 362(f), § 362(j) (all referring to requests
made by a “party in interest.”) One ground for stay relief is “cause, including the
lack of adequate protection of an interest in propertyof such party in interest[.]”
§ 362(d)(1) (emphasis added). The Motion here alleged “cause” based on
delinquent payments, see Doc. No. 21 at 2, thus implicating § 362(d)(1) even
though no specific citations to § 362(d)(1) are made.10
MEMORANDUM OF DECISION – 6
The Rules require that a stay relief request be made by a motion. See Fed.
R. Bankr. P. 9013 (“A request for an order, except when an application is
authorized by these rules, shall be by written motion, unless made during a
hearing.”) (emphasis added); Fed. R. Bankr. P. 4001(a)(1) (“A motion for relief
from an automatic stay provided by the Code . . . shall be made in accordance with
Rule 9014[.]”) (emphasis added).
In addition to the Bankruptcy Rules, this District’s local rules require, inter
alia, that:
– the request shall be made by a “party in interest” and by “motion;”
– the motion shall “[p]rovide the details of the underlying obligation or
liability upon which the motion is based;” and
– the motion shall have attached “accurate and legible copies of all
documents evidencing the obligation and the basis of perfection of
any lien or security interest[.]”
LBR 4001.2(a), (b)(2), and (b)(5).
1. Party in interest, and standing
While the term “party in interest” is not defined by the Code, this Court has
held that such a party must have a “pecuniary interest” in the outcome of the
dispute before the Court. See In re Simplot, 2007 WL 2479664 at *9 n.45 (Bankr.
D. Idaho Aug. 28, 2007) (citing In re Elias, 05.2 I.B.C.R. 41, 42, 2005 WL
4705220 (Bankr. D. Idaho 2005), and In re Stone, 03.2 I.B.C.R. 134, 135 (Bankr.
MEMORANDUM OF DECISION – 7
D. Idaho 2003)). See also Brown v. Sobczak (In re Sobczak), 369 B.R. 512, 517-
18 (9th Cir. BAP 2007) (noting that a “party in interest” may be one who has an
actual pecuniary interest in the case, one who has a practical stake in the outcome
of the case, or one who will be impacted in any significant way in the case).
Simplot not only defined party in interest, it addressed “standing” issues.
The question there was whether the J. R. Simplot Company, which was not a
creditor with a claim against the debtor or estate, “had sufficient party in interest
standing to be heard[.]” 2007 WL 2479664 at *9. This Court stated:
Hasso v. Mozsgai (In re La Sierra Fin. Servs.), 290 B.R. 718 (9th Cir.
BAP 2002), explained that the doctrine of standing encompasses both
constitutional limitations on federal court jurisdiction (i.e., the case or
controversy requirements of Article III), and prudential limitations on
the court’s exercise of that jurisdiction. Constitutional standing
requires an injury in fact, viz. an invasion of a judicially cognizable
interest. 290 B.R. at 726-27. Prudential standing requires that the
party’s assertions fall within the zone of interests protected by the
statute and, further, requires that the litigant assert only its own rights
and not those of another party. Id. at 727 (citing Bennett v. Spear, 520
U.S. 154, 162, 167-68 (1997). The party asserting standing exists has
the burden of proving it. Id. at 726. Though sometimes articulated in
the cases as principles applicable to standing on appeal, the same
propositions apply to a party at the bankruptcy court level.
Id. (footnote citations omitted). In Simplot, the Court concluded that “parties may
not assert . . . objections that relate solely to others, or that go to issues that do not
directly and adversely affect them pecuniarily.” Id. at *10 (footnote citations
omitted). These same standing requirements were recently highlighted in a stay
relief context by the court in In re Jacobson, ___ B.R. ___, 2009 WL 567188 at
MEMORANDUM OF DECISION – 8
*5-6 (Bankr. W.D. Wash. Mar. 6, 2009).
2. Real party in interest
Under Rule 9014, which by virtue of Rule 4001(a)(1) governs stay relief
requests, certain “Part VII” rules are applicable. See Rule 9014(c). Among those
incorporated rules is Rule 7017, which in turn incorporates Fed. R. Civ. P. 17, and
Rule 17(a)(1) provides that “An action must be prosecuted in the name of the real
party in interest.”
Jacobson notes that its moving party, who claimed to be a servicer for the
holder of the note, “neither asserts beneficial interest in the note, nor that it could
enforce the note in its own right.” 2009 WL 567188 at *4. It concluded that Fed.
R. Civ. P. 17 applied, requiring the stay relief motion to be brought in the name of
the real party in interest. Id. (citing In re Hwang, 396 B.R. 757, 767 (Bankr. C.D.
Cal. 2008)); see also In re Vargas, 396 B.R. 511, 521 (Bankr. C.D. Cal. 2008). As
Jacobson summarized:
The real party in interest in relief from stay is whoever is entitled to
enforce the obligation sought to be enforced. Even if a servicer or
agent has authority to bring the motion on behalf of the holder, it is the
holder, rather than the servicer, which must be the moving party, and
so identified in the papers and in the electronic docketing done by the
moving party’s counsel.
Id.
The upshot of these several provisions of the Code, Rules, local rules and
case law is this: to obtain stay relief, a motion must be brought by a party in
interest, with standing. This means the motion must be brought by one who has a
11 The Ninth Circuit’s recent decision in Reusser v. Wachovia Bank, 525 F.3d 855 (9th
Cir. 2008) does not require a different conclusion. Reusser held that a lender, Wachovia Bank,
did not violate the automatic stay by seeking to foreclose on the debtors’ property after the
bankruptcy court granted the loan servicer’s (Washington Mutual) § 362(d) motion. Id. at 861-
62. Although Wachovia did not join in the motion or separately seek stay relief, the court held
that the order entered “as to Washington Mutual” was effective as to Wachovia. Id. at 857, 861.
Notably, however, the Reussers never challenged Washington Mutual’s standing in bankruptcy
court; instead, they launched that attack in a subsequently filed district court action. Id. at 861-
62. The Ninth Circuit held that “a final order lifting an automatic stay is binding as to the
property or interest in question—the res—and its scope is not limited to the particular parties
before the court.” Id. at 861. The difference here is that Trustee has timely objected to Movant’s
standing and, of course, no final order has been entered.
MEMORANDUM OF DECISION – 9
pecuniary interest in the case and, in connection with secured debts, by the entity
that is entitled to payment from the debtor and to enforce security for such
payment. That entity is the real party in interest. It must bring the motion or, if
the motion is filed by a servicer or nominee or other agent with claimed authority
to bring the motion, the motion must identify and be prosecuted in the name of the
real party in interest.11
B. The present Motion
Under the documents attached to the Motion and later admitted at hearing
as Ex. 1, Fieldstone Mortgage Company, a Maryland corporation, would certainly
appear to be a party in interest and have standing. It has an economic interest
according to the Note attached to the Motion and an interest in Debtors’ Property
according to the Deed of Trust that is also attached.
However, the Motion was not brought by Fieldstone Mortgage Company.
12 Idaho Code § 45-1502(1) defines beneficiary for purposes of the trust deed statute as
“the person named or otherwise designated in a trust deed as the person for whose benefit a trust
deed is given, or his successor in interest, and who shall not be the trustee.” Idaho Code § 45-
1502(3) defines trust deed as “a deed executed in conformity with this act and conveying real
property to a trustee in trust to secure the performance of an obligation of the grantor or other
person named in the deed to a beneficiary.” Id. (emphasis added).
MEMORANDUM OF DECISION – 10
1. MERS as “nominee” or “beneficiary”
Counsel for Movant argues that MERS, given its titular designation of
“beneficiary” under the Deed of Trust, is or should be able to prosecute the
Motion under the Code, Rules and Local Rules. Counsel conceded, however, that
MERS is not an economic “beneficiary” under the Deed of Trust. It is owed and
will collect no money from Debtors under the Note, nor will it realize the value of
the Property through foreclosure of the Deed of Trust in the event the Note is not
paid.12
Further, the Deed of Trust’s designation of MERS as “beneficiary” is
coupled with an explanation that “MERS is . . . acting solely as nominee for
Lender and Lender’s successors and assigns.” Ex. 1 (emphasis added). Movant’s
briefing suggests that a “nominee” is synonymous with an “agent.” See Doc. No.
26 at 2.
The Motion was filed by MERS “as nominee [for] HSBC Bank USA,
National Association, as Indenture Trustee of the Fieldstone Mortgage Investment
Trust Series 2006-3.” Even assuming that MERS as a “nominee” had sufficient
rights and ability as an agent to advance its principal’s stay relief request, there
13 The Motion uses several terms (Movant, Claimant, Petitioner) without definition or
evident consistency. The Motion commenced as follows:
“COMES NOW Mortgage Electronic Registration Systems, Inc. as nominee
HSBC Bank USA, National Association, as Indenture Trustee of the Fieldstone
Mortgage Investment Trust Series 2006-3, a secured creditor and Claimant
herein, and moves the Court for its Order granting relief from the automatic
stay[.]”
Thus, the “Claimant” and evidently the “Movant” (i.e., the party who “COMES NOW . . . and
moves”) are one and the same, and this entity also purports to be a “secured creditor.” Since
MERS is acting as nominee, the Claimant/Movant and secured creditor appears by these
allegations to be HSBC Bank USA (in its role as indenture trustee for others). The Motion
continues by asserting that “Debtor was on the date of filing the petition herein, indebted to
Claimant arising out of [the Note] and a Deed of Trust dated September 20, 2006, naming
Movant as beneficiary.” Contrary to these assertions, the Deed of Trust does not name HSBC
Bank USA or the Fieldstone Mortgage Investment Trust as its beneficiary. Nor is there
explanation of how Debtors came to owe HSBC Bank USA.
14 This language appears in the Deed of Trust only. There is no mention of MERS in the
Note.
MEMORANDUM OF DECISION – 11
remains an insuperable problem. The Motion provides no explanation, much less
documentation or other evidence, to show that the Fieldstone Mortgage
Investment Trust Series 2006-3 (as an entity) or HSBC Bank USA (as that entity’s
“indenture trustee”) has any interest in the subject Note or the subject Deed of
Trust.13
In light of Trustee’s objection on this score, Movant argues that MERS’
role as “nominee for Lender [i.e., Fieldstone Mortgage Company] and Lender’s
successors and assigns” gives it ample authority to assert the stay relief request
under the Deed of Trust for whatever successor in interest or assignee might have
the beneficial interest.14 Even if the proposition is accepted that the Deed of Trust
15 Some courts have indicated that the stay relief request should explain the serial
assignments resulting in the movant becoming the holder of the note. See, e.g., In re Hayes, 393
B.R. 259, 269 (Bankr. D. Mass. 2008) (“The Court and the Debtor are entitled to insist that the
moving party establish its standing in a motion for relief from stay through the submission of an
accurate history of the chain of ownership of the mortgage.”); In re Maisel, 378 B.R. 19, 22
(Bankr. D. Mass. 2007) (“‘If the claimant acquired the note and mortgage from the original lender
or from another party who acquired it from the original lender, the claimant can meet its burden
through evidence that traces the loan from the original lender to the claimant.’”) (quoting In re
(continued…)
MEMORANDUM OF DECISION – 12
provisions give MERS the ability to act as an agent (“nominee”) for another, it
acts not on its own account. Its capacity is representative.
2. Documentation
This District’s Local Bankruptcy Rule 4001.2 requires copies of “all
documents evidencing the obligation and the basis of perfection of any lien or
security interest.” The sole documentation provided with the Motion here
evidences the interests in the Note and Deed of Trust held by Fieldstone Mortgage
Company, a Maryland corporation. This submission does not answer the key
question — Who was the holder of the Note at the time of the Motion?
Several movants for stay relief have argued that the holder of a note secured
by a deed of trust obtains the benefit of the deed of trust even in the absence of an
assignment of the deed of trust, on the theory that the security for the debt follows
the debt. Under this theory, it would appear that when bankruptcy intervenes, and
somewhat like a game of Musical Chairs, the then-current holder of the note is the
only creditor with a pecuniary interest and standing sufficient to pursue payment
and relief from stay.15
15 (…continued)
Parrish, 326 B.R. 708, 720 (Bankr. N.D. Ohio 2005)). The court in Jacobson decided that it
“need not here go so far” as to require such tracing, because of the paucity of proof presented in
that case. 2009 WL 567188 at *6. The same is true here. Movant’s proof does not even show
who presently holds the Note. That alone provides sufficient basis to deny the Motion.
MEMORANDUM OF DECISION – 13
The Motion here certainly suggests that the Fieldstone Mortgage
Investment Trust Series 2006-3 (or perhaps HSBC Bank USA in its capacity as
indenture trustee for that trust) was the holder of the note on the June 24, 2008,
petition date. But at the time of the final § 362(e) evidentiary hearing herein, the
parties discussed and Movant ultimately conceded that (I) the Note contained
nothing indicating its transfer by Fieldstone Mortgage Company, (ii) the Motion
was devoid of allegations regarding the details of any such transfer, and (iii) the
record lacked any other documents related to the issue.
3. The supplemental affidavit
Subsequent to the closing of the hearing and after the Court took the
dispute under advisement, Movant filed a “supplemental affidavit” of its counsel.
See Doc. No. 28 (filed January 2, 2009). This affidavit alleges that Movant’s
counsel obtained on such date the “original” Note and that the same contains an
indorsement. Counsel states that his “affidavit is presented to supplement the
record herein and for the Court’s consideration in the pending motion[.]” Id. at 2.
The filing and consideration of this supplemental affidavit are improper for
several reasons.
16 Accord Jacobson, 2009 WL 567188 at *6-8 (discussing inadequacies of evidentiary
submissions).
MEMORANDUM OF DECISION – 14
First, the record was closed, and the Court did not authorize the reopening
of that record, nor did it indicate any post-hearing submissions would be accepted.
Second, Trustee did not have the opportunity to address this “newly
obtained” document at hearing, and nothing shows his consent to the post hoc
supplementation of the evidentiary record.
Third, disputed factual issues in contested matters may not be resolved
through testimony in “affidavits” but rather require testimony in open court. See
Fed. R. Bankr. P. 9014(d). Under the circumstances, the identity of the holder of
the Note certainly appears to be a fact in dispute falling within the ambit of this
rule.
Fourth, the affidavit is insufficient to establish that counsel, as affiant, has
the ability to testify regarding or lay the foundation required to admit the
document. See Esposito v. Noyes (In re Lake Country Invs., LLC), 255 B.R. 588,
594-95 (Bankr. D. Idaho 2000).16 The assertion that the newly possessed note is
the “original” appears to be based not on the affiant’s (counsel’s) personal
knowledge but on the assertions of someone else.
Fifth, the proffer of this “new” note as the “original” note directly
contradicts Movant’s prior representations that the Note attached to the Motion
17 See generally Idaho Code § 28-3-205(2) (“When indorsed in blank, an instrument is
payable to the bearer and may be negotiated by transfer of possession alone until specially
indorsed.”); § 28-3-301 (providing that the holder of the instrument may enforce it). These
provisions make identification of the current holder significant.
MEMORANDUM OF DECISION – 15
was “true and correct” and the operative document in this matter. See Doc. No. 21
at 1.
Sixth, even were it considered, the “new” Note’s asserted indorsement
states: “Pay To The Order Of [blank] Without Recourse” and then purports to be
signed by Fieldstone Mortgage Company through a named assistant vice
president. There is no date nor indication of who was or is the transferee.
Fieldstone Mortgage Company may have indorsed the Note in blank, but this
document does not alone establish that either HSBC Bank USA or Fieldstone
Mortgage Investment Trust is the Note’s holder.17
Thus, even if a “nominee” such as MERS could properly bring a motion for
stay relief in the name of and on behalf of the real party in interest – the entity that
has rights in and pecuniary interest under the Note secured by the Deed of Trust –
nothing of record adequately establishes who that entity actually is. Under the
evidence submitted at the § 362(e) final hearing, which consists solely of Exhibit
1, the only entity that MERS could conceivably represent as an agent/nominee
would be Fieldstone Mortgage Company. But MERS does not represent that party
according to the Motion and, in fact, its contentions are to the effect that
18 For this reason, Movant’s reliance on In re Huggins, 357 B.R. 180 (Bankr. D. Mass.
2006) is misplaced. Huggins held that MERS, which was named in a mortgage as the lender’s
nominee, had standing to seek stay relief. Id. at 184-85. But in Huggins, the original lender
continued to hold the note, and the mortgage had not been transferred. Id. at 182, 184.
19 See Fed. R. Bankr. P. 9011(b) (providing inter alia that a motion’s filing or other
presentation constitutes a certification that there has been an “inquiry reasonable under the
circumstances” and that factual allegations made “have evidentiary support or, if specifically so
identified, are likely to have evidentiary support after a reasonable opportunity for further
investigation or discovery”). Trustee here was clear, though, that he asserted no Rule 9011
claims against Movant or its counsel.
MEMORANDUM OF DECISION – 16
Fieldstone Mortgage Company is no longer a party in interest.18
At the time of that final hearing, counsel for Movant conceded that he had
no documentation provided to him by his “client” which indicated the interests
under the Note or Deed of Trust were held by either HSBC Bank USA or the
Fieldstone Mortgage Investment Trust. Counsel filed the Motion and
characterized the Movant’s identity therein based solely on undocumented
representations made to him. This would appear to be a problematic approach
generally.19 And, in this particular case, Trustee’s objection to the Motion put the
matter at issue and Movant to its proof.
CONCLUSION
When Trustee challenged the Motion’s bare assertions, Movant failed to
provide an adequate record showing it was a party in interest with standing
entitled to seek such relief. On the record presented, the Court finds and
concludes Trustee’s objection is well taken. That objection will be sustained. The
Motion will be denied. The Trustee will provide a form of order for the Court’s
MEMORANDUM OF DECISION – 17
review and entry.
DATED: March 12, 2009
TERRY L. MYERS
CHIEF U. S. BANKRUPTCY JUDGE
California Court Rules: MERS Can’t Foreclose, Citibank Can’t Collect
“Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is VOID under California Law.”
If you read that sentence and thought… “MERS,” then you’re already in the club. If you’ve never heard of MERS, and have no idea what is meant by being “in the club,” don’t worry, this is a club that just about every homeowner is invited to join. In fact, you may already be a member and not even know it.
MERS is the acronym used to describe Mortgage Electronic Registration Systems, Inc. Best I can tell, our friends in the mortgage banking industry created MERS to make it easier for banks and servicers to sell and transfer our mortgages at the speed of light during the real estate bubble. According to the company’s Website:
MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper. Our mission is to register every mortgage loan in the United States on the MERS®System.
MERS acts as nominee in the county land records for the lender and servicer. Any loan registered on the MERS®System is inoculated against future assignments because MERS remains the nominal mortgagee no matter how many times servicing is traded.
I have to tell you… I hate these guys already. Their attitude alone bothers me. I looked at pictures of their three top executives on their Website and thought to myself… “No way I’d be friends with these guys.” Probably not very fair of me, but as far as I’m concerned, when it comes to anything that talks like that and was created by the mortgage banking industry… “fair,” is where you go on Sunday to have popcorn and cotton candy. Just so we’re clear.
MERS, which is a company that I hear doesn’t even have employees, has been about as controversial as you get ever since houses started dropping like flies into foreclosure back in 2007-08. God forbid you find yourself losing your home to foreclosure, you’ll very likely find a representative from MERS looking smug and acting like the owner of your mortgage. But, MERS is not the owner of your mortgage, of course, and now a bankruptcy court judge in the Eastern District of California has officially said that he agrees.
MERS is a relatively new development in the mortgage world, and as the foreclosure crisis began the courts pretty much let them do whatever they wanted to do, as the party in interest in a foreclosure action.
But, that was before the foreclosures became a full fledged tsunami, and homeowners watched the bankers first get bailed out, and then pay out billions in bonuses before treating every single American homeowner/taxpayer who applied for a loan modification like insignificant garbage.
In response, homeowners, having been trained for over 200 years in the fine art of pushing back when shoved, went to their lawyers, and those lawyers started asking questions, as they are prone to do. Many started with questions like: “Who the heck is this MERS guy and why does he think he has any right to be foreclosing on my client’s home?”
For almost two full years, it seemed to me that judges, who frankly weren’t used to foreclosures being challenged, basically yawned and gave the house back to the bank. Then, starting about a year ago, give or take, things started to change. Judges started to listen to the points being raised as related to MERS showing up as the party in interest ready to foreclose, and the more the judges learned, the more they saw problems with what MERS was doing. As time went on the tide seemed to shift a bit and several decisions weren’t falling as MERS would have liked for one reason or another.
According to the company’s Website, MERS “is a proper party that can lawfully foreclose as the mortgagee and note-holder of a mortgage loan.” Here’s what it says on the MERS Website:
FORECLOSURES
(“MERS”) is In mortgage foreclosure cases, the plaintiff has standing as the holder of the note and the mortgage. When MERS forecloses, MERS is the mortgagee and it is the holder of the note because a MERS officer will be in possession of the original note endorsed in blank, which makes MERS a holder of the bearer paper.
But, in this latest decision, the bankruptcy judge in California didn’t agree, writing in his opinion:
“Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.”
Did you get that? Since MERS didn’t own the underlying note, it couldn’t transfer the beneficial interest of the Deed of Trust to Citibank.
According to several attorneys, this opinion should serve as legal basis to challenge a foreclosure in California that has been based on a MERS assignment. It could also be used when seeking to void any MERS assignment of the Deed of Trust, or the note, to a third party for purposes of foreclosure; and should be sufficient for a borrower to obtain a TRO against a Trustee’s Sale, and a Preliminary Injunction preventing any sale, pending litigation filed by the borrower that challenges a foreclosure based on a MERS assignment.
In this decision the court found that MERS was acting “only as a nominee,” under the Deed of Trust, and that there was no evidence of the note being transferred. The judge’s opinion in this case also said that “several courts have acknowledged that MERS is not the owner of the underlying note and therefore could not transfer the note, the beneficial interest in the deed of trust, or foreclose on the property secured by the deed”, citing cases of: In Re Vargas, California Bankruptcy Court; Landmark v. Kesler, Kansas decision as to lack of authority of MERS; LaSalle Bank v. Lamy, a New York case; and In Re Foreclosure Cases, the “Boyko” decision from Ohio Federal Court.
And the court concluded by stating:
“Since the claimant, Citibank, has not established that it is the owner of the promissory note secured by the trust deed, Citibank is unable to assert a claim for payment in this case.”
Oh my… well, that really is something. MERS can’t foreclose and Citibank can’t collect? I believe you would have to say that MERS and Citibank were already in a hard place when the judge inserted a rock. MERS can’t foreclose and Citi can’t collect… I am absolutely loving this, I have to say, but I suppose giddy would be an inappropriate response, so I’ll just say, “how interesting”.
This decision means that if a foreclosing party in California, that is not the original lender, claims that payment is due under the note, and that they have the right to foreclose on the basis of a MERS assignment, they’re wrong… based on this opinion. The bottom line is that MERS has no authority to transfer the note because it never owned it, and that’s a view that even seems to be supported by MERS’ own contract, which says that “MERS agrees not to assert any rights to mortgage loans or properties mortgaged thereby”.
What this may mean to California’s homeowners in bankruptcy court…
· It should serve as a legal basis to challenge any foreclosure in California based on a MERS assignment.
· It should serve as the legal basis for voiding a MERS assignment of the Deed of Trust, or the note, to a third party for purposes of foreclosure.
· It should be an adequate basis for obtaining a TRO against a Trustee’s Sale
· It should be the basis for a Preliminary Injunction barring any sale pending litigation filed by the borrower that challenges a foreclosure based on a MERS assignment.
In addition, some lawyers believe that this ruling is relevant to borrowers across the country as well, because the court cited non-bankruptcy cases related to the lack of authority of MERS, and because this opinion is consistent with prior rulings in Idaho and Nevada Bankruptcy courts on the same issue.
I don’t know about you, but I feel like watching a marching band. 76 trombones, baby, 76 trombones.
“Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is VOID under California Law.”
The Proof of Claim at issue, listed as claim number 5 on the court’s official
claims registry, asserts a $1,320,650.52 secured claim. The Debtor objects to
the Claim on the basis that the claimant, Citibank, N.A., did not provided any
evidence that Citibank has the authority to bring the claim, as required by
Federal Rule of Bankruptcy Procedure 3001(c), rendering the claim facially
defective.
The court’s review of the claim shows that the Deed of Trust purports to have
been assigned to Citibank, N.A. by Mortgage Electronic Registration Systems,
Inc. as nominee for Bayrock Mortgage Corporation on March 5, 2010. (Proof of
Claim No. 5 p.36-37, Mar. 19, 2010.) Debtor contends that this does not
establish that Citibank is the owner of the underling promissory note since the
assignor, Mortgage Electronic Registration Systems, Inc. (“MERS”), had no
interest in the note to transfer. Debtors loan was originated by Bayrock
Mortgage Corporation and no evidence of the current owner of the promissory
note is attached to the proof of claim. It is well established law in the
Ninth Circuit that the assignment of a trust deed does not assign the
underlying promissory note and right to be paid, and that the security interest
is incident of the debt. 4 WITKIN SUMMARY OF CALIFORNIA LAW, SECURED TRANSACTIONS IN REAL
PROPERTY §105 (10th ed).
MERS AND CITIBANK ARE NOT THE REAL PARTIES IN INTEREST
Under California law, to perfect the transfer of mortgage paper as collateral
the owner should physically deliver the note to the transferee. Bear v. Golden
Plan of California, Inc., 829 F.2d 705, 709 (9th Cir. 1986). Without physical
transfer, the sale of the note could be invalid as a fraudulent conveyance,
Cal. Civ. Code §3440, or as unperfected, Cal. Com. Code §§9313-9314. See ROGER
BERNHARDT, CALIFORNIA MORTGAGES AND DEEDS OF TRUSTS, AND FORECLOSURE LITIGATION §1.26 (4th
ed. 2009). The note here specifically identified the party to whom it was
payable, Bayrock Mortgage Corporation, and the note therefore cannot be
transferred unless the note is endorsed. See Cal. Com. Code §§3109, 3201, 3203,
3204. The attachments to the claim do not establish that Bayrock Mortgage
Corporation endorsed and sold the note to any other party.
TRANSFER OF AN INTEREST IN THE DEED OF TRUST ALONE IS VOID
MERS acted only as a “nominee” for Bayrock Mortgage under the Deed of Trust.
Since no evidence has been offered that the promissory note has been
transferred, MERS could only transfer what ever interest it had in the Deed of
Trust. However, the promissory note and the Deed of Trust are inseparable.
“The note and the mortgage are inseparable; the former as essential, the later
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); accord Henley v. Hotaling, 41 Cal. 22, 28 (1871); Seidell v.
Tuxedo Land Co., 216 Cal. 165, 170 (1932); Cal. Civ. Code §2936. Therefore,
if on party receives the note an another receives the deed of trust, the holder
of the note prevails regardless of the order in which the interests were
transferred. Adler v. Sargent, 109 Cal. 42, 49-50 (1895).
Further, several courts have acknowledged that MERS is not the owner of the
underlying note and therefore could not transfer the note, the beneficial
interest in the deed of trust, or foreclose upon the property secured by the
deed. See In re Foreclosure Cases, 521 F. Supp. 2d 650, 653 (S.D. Oh. 2007);
In re Vargas, 396 B.R. 511, 520 (Bankr. C.D. Cal. 2008); Landmark Nat’l Bank
v. Kesler, 216 P.3d 158 (Kan. 2009); LaSalle Bank v. Lamy, 824 N.Y.S.2d 769
(N.Y. Sup. Ct. 2006). Since no evidence of MERS’ ownership of the underlying
note has been offered, and other courts have concluded that MERS does not own
the underlying notes, this court is convinced that MERS had no interest it
could transfer to Citibank.
Since MERS did not own the underling note, it could not transfer the beneficial
interest of the Deed of Trust to another. Any attempt to transfer the
beneficial interest of a trust deed with out ownership of the underlying note
is void under California law. Therefore Citibank has not established that it
is entitled to assert a claim in this case.
MULTIPLE CLAIMS TO THE BENEFICIAL INTEREST IN THE DEED OF TRUST AND OWNERSHIP
OF PROMISSORY NOTE SECURED THEREBY
Debtor also points out that four separate entities have claimed beneficial
ownership of the deed of trust. (Obj. to Claim 3-5, Apr. 6, 2010.) The true
owner of the underling promissory note needs to step forward to settle the
cloud that has been created surrounding the relevant parties rights and
interests under the trust deed.
DECISION
11 U.S.C. §502(a) provides that a claim supported by a Proof of Claim is
allowed unless a party in interest objects. Once an objection has been filed,
the court may determine the amount of the claim after a noticed hearing. 11
U.S.C. §502(b). Since the claimant, Citibank, has not established that it is
the owner of the promissory note secured by the trust deed, Citibank is unable
to assert a claim for payment in this case. The objection is sustained and
Claim Number 5 on the court’s official register is disallowed in its entirety,
with leave for the owner of the promissory note to file a claim in this case
by June 18, 2010.
The court disallowing the proof of claim does not alter or modify the trust
deed or the fact that someone has an interest in the property which can be
subject thereto. The order disallowing the proof of claim shall expressly so
provide.
The court shall issue a minute order consistent with this ruling.
Posted 14 hours ago by Neil Garfield on Livinglies’s Weblog
29248253-Mers-May-Not-Foreclosure-for-Fannie-Mae
Editor’s Note: Their intention was to get MERS and servicers out of the foreclosure business. They now say that prior to foreclosure MERS must assign to the real party in interest.
Here’s their problem: As numerous Judges have pointed out, MERS specifically disclaims any interest in the obligation, note or mortgage. Even the language of the mortgage or Deed of Trust says MERS is mentioned in name only and that the Lender is somebody else.
These Judges who have considered the issue have come up with one conclusion, an assignment from a party with no right, title or interest has nothing to assign. The assignment may look good on its face but there still is the problem that nothing was assigned.
Here’s the other problem. If MERS was there in name only to permit transfers and other transactions off-record (contrary to state law) and if the original party named as “Lender” is no longer around, then what you have is a gap in the chain of custody and chain of title with respect to the creditor’s side of the loan. It is all off record which means, ipso facto that it is a question of fact as to whose loan it is. That means, ipso facto, that the presence of MERS makes it a judicial question which means that the non-judicial election is not available. They can’t do it.
So when you put this all together, you end up with the following inescapable conclusions:
* The naming of MERS as mortgagee in a mortgage deed or as beneficiary in a deed of trust is a nullity.
* MERS has no right, title or interest in any loan and even if it did, it disclaims any such interest on its own website.
* The lender might be the REAL beneficiary, but that is a question of fact so the non-judicial foreclosure option is not available.
* If the lender was not the creditor, it isn’t the lender because it had no right title or interest either, legally or equitably.
* Without a creditor named in the security instrument intended to secure the obligation, the security was never perfected.
* Without a creditor named in the security instrument intended to secure the obligation, the obligation is unsecured as to legal title.
* Since the only real creditor is the one who advanced the funds (the investor(s)), they can enforce the obligation by proxy or directly. Whether the note is actually evidence of the obligation and to what extent the terms of the note are enforceable is a question for the court to determine.
* The creditor only has a claim if they would suffer loss as a result of the indirect transaction with the borrower. If they or their agents have received payments from any source, those payments must be allocated to the loan account. The extent and measure of said allocation is a question of fact to be determined by the Court.
* Once established, the allocation will most likely be applied in the manner set forth in the note, to wit: (a) against payments due (b) against fees and (c) against principal, in that order.
* Once applied against payments, due the default vanishes unless the allocation is less than the amount due in payments.
* Once established, the allocation results in a fatal defect in the notice of default, the statements sent to the borrower, and the representations made in court. Thus at the very least they must vacate all foreclosure proceedings and start over again.
* If the allocation is less than the amount of payments due, then the investor(s) collectively have a claim for acceleration and to enforce the note — but they have no claim on the mortgage deed or deed of trust. By intentionally NOT naming parties who were known at the time of the transaction the security was split from the obligation. The obligation became unsecured.
* The investors MIGHT have a claim for equitable lien based upon the circumstances that BOTH the borrower and the investor were the victims of fraud.
CA Civil Code 2932.5 – Assignment”Where a power to sell real property is
given to a mortgagee, or other encumbrancer, in an instrument intended
to secure the payment of money, the power is part of the security and
vests in any person who by assignment becomes entitled to payment of the
money secured by the instrument. The power of sale may be exercised by
the assignee if the assignment is duly acknowledged and recorded.”
Landmark vs Kesler – While this is a matter of first impression in
Kansas, other jurisdictions have issued opinions on similar and related
issues, and, while we do not consider those opinions binding in the
current litigation, we find them to be useful guideposts in our analysis
of the issues before us.”
“Black’s Law Dictionary defines a nominee as “[a] person designated to
act in place of another, usu. in a very limited way” and as “[a] party
who holds bare legal title for the benefit of others or who receives and
distributes funds for the benefit of others.” Black’s Law Dictionary
1076 (8th ed. 2004). This definition suggests that a nominee possesses
few or no legally enforceable rights beyond those of a principal whom
the nominee serves……..The legal status of a nominee, then, depends
on the context of the relationship of the nominee to its principal.
Various courts have interpreted the relationship of MERS and the lender
as an agency relationship.”
“LaSalle Bank Nat. Ass’n v. Lamy, 2006 WL 2251721, at *2 (N.Y. Sup.
2006) (unpublished opinion) (“A nominee of the owner of a note and
mortgage may not effectively assign the note and mortgage to another for
want of an ownership interest in said note and mortgage by the
nominee.”)”
The law generally understands that a mortgagee is not distinct from a
lender: a mortgagee is “[o]ne to whom property is mortgaged: the
mortgage creditor, or lender.” Black’s Law Dictionary 1034 (8th ed.
2004). By statute, assignment of the mortgage carries with it the
assignment of the debt. K.S.A. 58-2323. Although MERS asserts that,
under some situations, the mortgage document purports to give it the
same rights as the lender, the document consistently refers only to
rights of the lender, including rights to receive notice of litigation,
to collect payments, and to enforce the debt obligation. The document
consistently limits MERS to acting “solely” as the nominee of the
lender.
Indeed, in the event that a mortgage loan somehow separates interests of
the note and the deed of trust, with the deed of trust lying with some
independent entity, the mortgage may become unenforceable.
“The practical effect of splitting the deed of trust from the promissory
note is to make it impossible for the holder of the note to foreclose,
unless the holder of the deed of trust is the agent of the holder of the
note. [Citation omitted.] Without the agency relationship, the person
holding only the note lacks the power to foreclose in the event of
default. The person holding only the deed of trust will never experience
default because only the holder of the note is entitled to payment of
the underlying obligation. [Citation omitted.] The mortgage loan becomes
ineffectual when the note holder did not also hold the deed of trust.”
Bellistri v. Ocwen Loan Servicing, LLC, 284 S.W.3d 619, 623 (Mo. App.
2009).
“MERS never held the promissory note,thus its assignment of the deed of
trust to Ocwen separate from the note had no force.” 284 S.W.3d at 624;
see also In re Wilhelm, 407 B.R. 392 (Bankr. D. Idaho 2009) (standard
mortgage note language does not expressly or implicitly authorize MERS
to transfer the note); In re Vargas, 396 B.R. 511, 517 (Bankr. C.D. Cal.
2008) (“[I]f FHM has transferred the note, MERS is no longer an
authorized agent of the holder unless it has a separate agency contract
with the new undisclosed principal. MERS presents no evidence as to who
owns the note, or of any authorization to act on behalf of the present
owner.”); Saxon Mortgage Services, Inc. v. Hillery, 2008 WL 5170180
(N.D. Cal. 2008) (unpublished opinion) (“[F]or there to be a valid
assignment, there must be more than just assignment of the deed alone;
the note must also be assigned. . . . MERS purportedly assigned both the
deed of trust and the promissory note. . . . However, there is no
evidence of record that establishes that MERS either held the promissory
note or was given the authority . . . to assign the note.”).
What stake in the outcome of an independent action for foreclosure could
MERS have? It did not lend the money to Kesler or to anyone else
involved in this case. Neither Kesler nor anyone else involved in the
case was required by statute or contract to pay money to MERS on the
mortgage. See Sheridan, ___ B.R. at ___ (“MERS is not an economic
‘beneficiary’ under the Deed of Trust. It is owed and will collect no
money from Debtors under the Note, nor will it realize the value of the
Property through foreclosure of the Deed of Trust in the event the Note
is not paid.”). If MERS is only the mortgagee, without ownership of the
mortgage instrument, it does not have an enforceable right. See Vargas,
396 B.R. 517 (“[w]hile the note is ‘essential,’ the mortgage is only ‘an
incident’ to the note” [quoting Carpenter v. Longan, 16 Wall. 271, 83
U.S. 271, 275, 21 L. Ed 313 (1872)]).
* MERS had no Beneficial Interest in the Note,
* MERS and the limited agency authority it has under the dot does
not continue with the assignment of the mortgage or dot absent a
ratification or a separate agency agreement between mers and the
assignee.
* The Note and the Deed of Trust were separated at or shortly
after origination upon endorsement and negotiation of the note rendering
the dot a nullity
* MERS never has any power or legal authority to transfer the note
to any entity;
* mers never has a beneficial interest in the note and pays
nothing of value for the note.
Bankr. Code 547 provides, among other things, that an unsecured
creditor who had won a race to an interest in the debtor’s property
using the state remedies system within 90 days of the filing of the
bankruptcy petition may have to forfeit its winnings (without
compensation for any expenses it may have incurred in winning the race)
for the benefit of all unsecured creditors. The section therefore
prevents certain creditors from being preferred over others (hence,
section 547 of the Bankruptcy Code is titled “Preferences).” An
additional effect of the section (and one of its stated purposes) may be
to discourage some unsecured creditors from aggressively pursuing the
debtor under the state remedies system, thus affording the debtor more
breathing space outside bankruptcy, for fear that money spent using the
state remedies system will be wasted if the debtor files a bankruptcy
petition.
. Bankr. Code 547(c) provides several important exceptions to the
preference avoidance power.
Bankr. Code 547 permits avoidance of liens obtained within the 90 day
(or one year) period: the creation of a lien on property of the debtor,
whether voluntary, such as through a consensual lien, or involuntary,
such as through a judicial lien, would, absent avoidance, have the same
preferential impact as a transfer of money from a debtor to a creditor
in payment of a debt. If the security interest was created in the
creditor within the 90 day window, and if other requirements of section
547(b) are satisfied, the security interest can be avoided and the real
property sold by the trustee free of the security interest (subject to
homestead exemption). All unsecured creditors of the debtor, including
the creditor whose lien has been avoided, will share, pro rata, in the
distribution of assets of the debtor, including the proceeds of the sale
of the real estate
Defendants Pierrick Brillouet and Yong C. Brillouet respectfully submit their Opposition to Plaintiff’s Motion for Attorney’s Fees and Costs as follows:
![[Mortgage]](https://i0.wp.com/si.wsj.net/public/resources/images/MI-BL544_Mortga_NS_20111003183320.jpg)
Finally, after trillions in fraudulent activity, trillions in bailouts, trillions in printed money, billions in political bribing and billions in bonuses, the criminal cartel members on Wall Street are beginning to get what they deserve. As the Eurozone is coming apart at the seams and as the US economy grinds to a halt, the financial elite are starting to turn on each other. The lawsuits are piling up fast. Here’s an extensive roundup:
Time to put your Big Bank 
Is the Goldman Sachs CEO facing a new lawsuit?
Another day, another trillion plus in secret Federal Reserve “bailouts” revealed. Bloomberg News exposes this latest Fed “deal” after winning a long Freedom of Information Act (FOIA) legal battle to get the details on what was done with the American people’s money. Their report runs with an AmpedStatus style headline: “Wall Street Aristocracy Got $1.2 Trillion From Fed.”
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Mortgage Asistance 877-227-4341 