Entitlement to Discovery in Foreclosure Cases

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Entitlement to Discovery in Foreclosure Cases

Posted on June 16, 2011 by Mark Stopa
One of the things that frustrates me when I see homeowners back down from a foreclosure lawsuit without a fight, particularly at a hearing on a motion for summary judgment (like I explained, herehttp://www.stayinmyhome.com/blog/?p=1492 ) is my knowledge of just how easy it is to prevent a summary judgment by the bank.

For instance, Florida law is replete with appellate court decisions that reversed a lower court’s entry of summary judgment where the defendant had not had an opportunity to complete discovery. This is really basic law – a homeowner is entitled to a fair chance to procure discovery from the bank prior to entry of adverse summary judgment.

Below are the cases I used to convince a St. Augustine judge to vacate a Final Judgment of Foreclosure, as I explained here. The argument is really this simple:

Judge, it would be reversible error to grant summary judgment because discovery is outstanding. Specifically, my client has served interrogatories and a request for production and the bank has not responded. My client is entitled to this discovery prior to a summary judgment hearing.

See Kimball v. Publix Supermarkets, Inc., 901 So. 2d 293 (Fla. 2d DCA 2005) (“before Publix complied with the discovery order, the trial court granted summary judgment in favor of Publix. This award of summary judgment was error.”); Sanchez v. Sears, Roebuck & Co., 807 So. 2d 196 (Fla. 3d DCA 2002) (“summary judgment was granted before the facts of the case were sufficiently developed to enable the trial court to be reasonably certain that no genuine issue of material fact existed”); St. Fort v. Fla. Dept. of Trans., 688 So. 2d 469 (Fla. 4th DCA 1997) (“at the time of summary judgment, discovery was still ongoing, and the facts were not so crystallized that nothing remained but questions of law”); Henderson v. Reyes, 702 So. 2d 616 (Fla. 3d DCA 1997) (“the trial court erred in granting summary judgment in favor of Reyes while there were depositions that had not been completed and an outstanding request for the production of documents.”); Abbate v. Publix Super Markets, Inc., 632 So. 2d 114 (Fla. 4th DCA 1994) (“We are at a loss to understand how the summary judgment was entered with the plaintiff’s motion to compel still pending.”)

By no means is this an exhaustive list of cases. In fact, I’d estimate there are 50-60 more cases just like this in Florida.

So if you’re trying to prevent a bank from getting summary judgment (and a quickie foreclosure), serve some discovery! Homeowners are perfectly entitled to obtain answers to interrogatories and documents from the bank before a final judgment is entered.

Some people would argue that this discovery is unnecessary and should not preclude summary judgment. That argument goes like this – “it’s undisputed the homeowner is in default; discovery won’t change anything.”

I understand that argument, but I totally disagree. Homeowners aren’t required to accept what the bank says as true. Even if non-payment of the mortgage is undisputed, that doesn’t mean the homeowner doesn’t get to challenge the amount owed. Banks are notorious for including fees and charges that should not be included. This is one legitimate purpose of discovery – to see if the amount the bank says is owed is accurate.

Discovery regarding the bank’s standing to sue is also appropriate. For instance, if a note has an indorsement, homeowners are entitled to ask, via interrogatories and/or depositions, about the circumstances in which the indorsement was signed. Did the bank procure the indorsement from the prior owner/holder in the normal course of business? Or, to use an extreme example, did the bank steal the note and forge an indorsement to create the false impression it could foreclose? That may sound like a ridiculous question, but if you know anything about securitized trusts, you know that interrogatories and even depositions are perfectly appropriate in foreclosure cases … and until such discovery is complete, summary judgment is inappropriate.

I realize there are cases which hold that a party’s right to discovery is not without limits. I agree. However, the cases which allow summary judgment with discovery pending stand for the proposition that a party cannot let a case languish for three years, watch the opposing party set a summary judgment motion, and then seek discovery just to delay summary judgment. That’s not appropriate, and that’s not what I’m advocating. What I’m saying is that homeowners can and should force the bank to produce discovery to prove/support the claims in its lawsuit before rolling over and allowing the bank to procure a Final Judgment of Foreclosure. The banks might not like it, and judges may not be thrilled with it, either, but homeowners are absolutely entitled to discovery before a final judgment is entered. Who knows – that discovery may just show that the bank is either not entitled to foreclose or not entitled to the amount it claims.

Mark Stopa Esq.

http://www.stayinmyhome.com
Ann’s note : Here is some Discovery samples at http://www.scribd.com/my_document_collections/3011898

21 Responses

  1. I SERVED DISCOVERY IN THE VERY BEGINNING AND HAVE NOT RECEIVED IT BACK – I HAVE FILED A MOTION REGARDING THIS AND NOTHING NOW THE LENDER FILES A MOTION TO DISMISS WITHOUT GIVING ME MY DISCOVERY BACK – NOW WHAT DO I DO? ALSO DO I ANSWER THE MOTION TO DISMISS WITH PROOF AND ALSO FILE A MOTION TO COMPEL?

  2. […] matter how big (well-financed) the mortgage lender or how small (not-well-financed) the home owner, the rules apply equally to both.  When applied properly, the rules of discovery open the way for your attorney to locate and […]

  3. I’m curious if anyone has any information for Illinois related to this?

    I am in much the same situation as many posters here this discovery issue. Actually I’m having a fun time keeping the lawyers for the Plaintiff busy. I’m about a year and a half into my court process pro se, and in discovery. I’ve been reading these forums for quite some time and have a very good sense of what’s really going on here in terms of fraud and manipulation of the legal process (worked in banking for some time and on public company side), so I get it… However, some information still seems elusive.

    I spent 6 months before i was taken to court requesting the original note and mortgage from the current servicer BAC (note was flipped from the original “lender” MLN to Countrywide when MLN went belly up.) before I finally got into court and learned that WFB was Trustee for my alleged Trust. Lawyers for the WFB, the Trustee produced what they claim to be “the original note and mortgage” a few months back, but months late — and the note is endorsed in Blank. 6 months before they took me to court MERS assigned the mortgage to WFB and the MERS officers/signers are known BOA robo-signers and employees in Texas.

    So, here’s the interesting part — my Trust does not exist in the SEC Edgar db. There is no record of it in NY state corp registration. It’s not registered in the Caymen Islands either (as is every other trusts setup my the same group who allegedly did mine, of which there are several). My Trust was put together I assume (based on research) by Lehman/Aurora/Wells Fargo… But I suspect it may never have completed.

    Therefore my current discovery process is largely focused on getting the Plaintiff to produce documents that evidence that it really exists and has the right to invoke the power of the court — The PSA, SEC filings, NY State registrations, etc… Their lawyers obviously don’t want to comply — they continue to focus on a few things in their attacks on me and in defense of my requests: 1) “This information is not relevant to my default”, 2) it’s private, and 3) Illinois law 810 ILCS 5/3-205 which states “when endorsed in blank an instrument becomes payable to the bearer and may be negotiated by transfer of possession alone until specifically endorsed.” They also continuously site and seem to depend upon this case: “Possession of bearer paper is prima facia evidence of title to it, and sufficient to entitle plaintiff to sue on the instrument.” First Securities Co. of Chicago v. Schroeder, 351 Ill. App. 173. 114 N.E.2d 426 (1st Dist. 1953); see also Joslyn v. Joslyn, 386 Ill. 387; 54 N.E.2d 475 (1944) — both of which are well out of date and long before the current securitization sham was put into place.

    I now get the feeling based on communications with the head lawyer that he is starting to want to move towards a Default Judgment, which should be easy enough to fend off as I am very involved in this process. However I wanted to see if anyone has any ideas, comments or suggestions as to my specific situation.

    All input is welcome! Thanks!

    Bruce in Illinois.

  4. @Buyer: dude, you better find the FRCP and start reading. Discovery is a dish best served “cold”, as in calculated. Go to “foreclosure defense forms” on the home page and find “great discovery from India”.
    You would propound discovery on the plaintiff as part of your answer to the foreclosure suit. Get the book “How to defend yourself in court” (NOLO) for the basics. But you better skip the part about the judge trying to bring the parties together to find a resolution. Won’t happen. Then get on SCRIBD and search discovery served on bank plaintiffs (defendants).
    I don’t know where you live, but find a lawyer. You can’t do this at home. I’m 3 years into it and the practice of law is best left to a lawyer. Unless…………..

  5. I’m sorry, I’ve been reading quite awhile and I still haven’t figured out how exactly to initiate Discovery. The Court has to allow it, right? So, what does one submit to engage Discovery? Sorry

  6. What if they lost your note and your mortgage?

  7. Maher, appreciate your input and glad to see you back!
    Roger

  8. M. Soliman ,

    Your opinion (and reasoning) please …

    I am in an identical position to the Veal case except I have (it seems) more information than they had at the start…

    Would it be better to (A) file QT naming only Option One and allow them to construct a false chain of ownership before hitting them with the funding fax showing they never were the lender ..(B) File a RESPA/TILA suit coming out with that info at the start or (C) would it be better to wait them out for a foreclosure filing and do everything in discovery (I have the trustees report from last month showing no losses/defaults in my SPV/TRUST) … I am still scraping up cash for a lawyer and the attack on Matt Weidner seems to have put a chill on attorneys taking new QT clients in Orlando FL …

  9. In our circumstance, there is NOTHING with HSBC’s name on it. No assignment, no endorsement (allonge is still blank)

    HSBC is a trustee and creditor.***Material*** It looks to guarnatees for collateral !

  10. asked my attorney the same question when BAC “transferred” my loan to BOA in the middle of our suit.

    No loans are ever ever ever transferred . . .NEVER . {your account was placed under new trustee and registration…) Hint – The vultures were put out of business by the trust enrollment procedures. . . If you can’t get a robust condition ….then make one.

    msoliman
    expert.witness@live.com

  11. Does anyone know if the Dodd-Frank Reform Act has went in to effect yet?

    Yes – huge issue here – Winner of comment of the day – NO REPEAL OF THE SAFE HARBOR RULE – GOV PREMPTION FAILS. If the Depositors desposit assets that are uninsured then the FDIC is between a rock and a hard place. Sorry Uncle Albert – no claims under the Doenche doctrine . . . .your losing cases with arguments underneath your nose. .

  12. Tender – you cannot tender an endorsed note. MERS does only one assignment for Gods sake. Your accusing them of multiple assigments on one hand and want an endorsed note on the other. From the judges mouth to your ears its bearer paper – wrong focus here – leave the note out of this.

  13. The place you attack is the “blank allonge.” I can assure you the allonge is defective (they all are).

  14. Does anyone know if the Dodd-Frank Reform Act has went in to effect yet?

  15. Christine:

    “CAN THE BANK BUY THE MORTGAGE IN THE MIDDLE OF THIS?”

    I asked my attorney the same question when BAC “transferred” my loan to BOA in the middle of our suit. He said, “Its perfectly ‘legal’ to transfer it, although it might not be very smart.” I’ll try to get him to elaborate, but I’m content for now. BOA is so far ignoring our discovery too.

  16. Hey, maybe someone out there can give me a few clues. All of my discovery submissions were effectively ignored. I neglected to submit an actual answer to wells fargo bank na’s actual foreclosure motion and the bank got me on default. Now I have a motion to vacate the default. I submitted an amended answer and an affidavit. Now I wait to see what the judge says.
    believe it or not, in the middle of all this, I get a notice from WF that ‘my mortgage was purchased by wells fargo bank na (themselves..???) 0n 6/12/2011 and today I receive there answer as to why the judge deny my request to vacate the default and allow my amended answer to be considered.
    Anyone have any ideas? CAN THE BANK BUY THE MORTGAGE IN THE MIDDLE OF THIS? ISN’T THIS AN ADMISSION THAT THEY WERE NOT THE OWNER/DID NOT HAVE STANDING, ETC. ETC PREVIOUSLY? WHAT MIGHT BE THE BEST ACTION I SHOULD TAKE RIGHT NOW?
    CHRISTINE….THANKS IN ADVANCE .
    ***THIS IS A NEW JERSEY MATTER****
    messagetoskiba@gmail.com

  17. to Donna:

    The place you attack is the “blank allonge.” I can assure you the allonge is defective (they all are). The Rules for transfer of a NOte are 400 years old; each party signs off to the next in sequence on the area of the Note underneath where you signed it, until there is no more room, then they continue onto the blank back page, and when all that is taken up, then they “attach” another piece of paper, “firmly affixed,” and that is called the “allonge” [French for “the lengthening”]. Now when these bums go manufacture an allonge (done by the tens of thousands in blank in a bit pile, then some clerk sometimes years later goes and conveniently attaches one to your Document, or sometimes it is not even attached at all), it is without validity. These guys wave it around as if it was a religious icon; it is a worthless document, but you have to convince the Judge.

    All this assumes that the Note even properly describes the transaction in the first place. If your loan was “table funded” then the entity on the Note that says it is the “lender” is not really a lender, it was a fee-based loan brokerage disguised as a lender, and the entire Note and associated documents do not describe the transaction – and become unenforceable. [Burden on you to demonstrate that, but that is becoming easier as defendants get the hang of it).

    You have a status conference coming up. A status conference should not stop you from filing for Discovery or from filing further Motions. If you are pro-se the rule book pretty much goes out the window in any event, for you (the other side still has to follow the rules carefully). If you are in New York you are in even better shape, due to the very restrictive Rules now set upon bank counsel in NYS. You are going to be at it for a while yet!

  18. I recognize that Mark Stopa is much more skilled at, and practiced in, the intricacies of foreclosure combat than I ever will be. I would still challenge the observation that summary judgment with discovery pending is “appropriate” when a case has languished for three years and the Discovery is propounded responsive to the motion for summary judgment. In my experience, a wealth of new assertions are made contained within the plaintiff MSJ – typically, affidavits are introduced alleging the chain of title and also allegations of default and amounts owed. Since these are “new evidence” (or what is claimed as evidence) and new assertions, issuing discovery (and depositions of the affiants and their notaries) is entirely appropriate. In my experience, the affidavits are typically untruthful, made by people with no personal knowledge, and are buttressed with supporting documents attached as exhibits, that in turn were manufactured for the express purpose of the litigation. Where the MSJ is “blown up,” and especially if the Court makes a Finding that the affiant is “not credible,” then you have driven a major stake into the heart of the opposition.

    It makes good sense to vigorously oppose a MSJ. Some judges do not ever grant them. Some judges grant them freely (and in error, so you have to appeal, of course). Either way, I can state absolutely that I have never seen a MSJ that was without some fabrication. Tear them apart.

  19. The Deed of trust recordiing, the HUD-1 and the ABA wire. The Notes the last thing you want to bring into an equitable court. !

    MSoliman
    expert.witness@live.com

  20. The note is not endorsed – it would lose its ability to act as “bearer” and tender back in and out of the mix for business trust purposes. It is negotiable instrument upon it not having been cashed and where a third party beneneficary .exists.

    Way off

    MSoliman

  21. Discovery regarding the bank’s standing to sue is also appropriate. For instance, if a note has an indorsement, homeowners are entitled to ask, via interrogatories and/or depositions, about the circumstances in which the indorsement was signed. Did the bank procure the indorsement from the prior owner/holder in the normal course of business?

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