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Madison v. MERS et al

Madison v MERS et al

Editor’s Comment:

The Madison decision from the Arizona Appellate Court is an example of two warnings that I have repeatedly stated on these pages, in my books and in my seminars.  First doing an appeal yourself without getting appropriate advice from competent licensed counsel is most likely to result in failure.  It is a rare layman who understands the Rules of Civil Procedure.  And it is even more rare that a layman understands the Rules of Appellate Procedure.

As a result, the Madison decision will be used as yet more ammunition against homeowners, borrowers, and lawyers to “prove” that their defenses are frivolous when in fact the court of appeals decision states the opposite – even while they rule against the borrower.  On appeal the only thing the appellate court is permitted to review are those items on the record.  This is further restricted by the items that are presented as issues on appeal.  The homeowner, appearing on her own behalf, missed two opportunities to force the pretender lenders into a contested adversary position.

Like many other states, Arizona has section 33-811[c]which mandates waiver of all defenses to a trustee’s sale if the objecting party fails to obtain an injunction before the sale date.  The problem here is that the statute is worded improperly but that issue was never raised.  Obtaining an injunction requires a lawsuit filed against the Trustee and the pretender lenders which results in the issuance of a Temporary Restraining Order and which the homeowner will result in the issuance of a permanent restraining order.

Virtually all non-judicial states have a similar provision.  The obvious problem with this provision which violates due process on its face is that it requires the homeowner to first prove his or her case in court before being allowed to assert and pursue defenses and counterclaims. 

This is precisely the issue addressed in the second edition Attorney’s Workbook regarding the realignment of parties.  In a judicial state all that a homeowner is required to do is deny the allegations of the pretender lender.  This puts the matter at issue and allows the homeowner/borrower to proceed with discovery and all other pre-trial motions.  The Arizona statute relied upon by the appellate court requires the homeowner to utilize a crystal ball to determine the allegations of the pretender lender and then win at a preliminary hearing on the merits of the defenses to a claim that has never been filed. 

The issuance of the TRO in non-judicial states is discretionary and not ministerial or mandatory.  Thus the burden of proof is improperly put on the defending party before the proponent seeking affirmative relief (taking the house) is required to file any pleadings or produce any evidence that could be subject to court scrutiny or challenge by the homeowner. 

As applied, Arizona Revised Statue 33-811 [c] is clearly unconstitutional and violates due process.  The homeowner should simply be permitted to deny the factual allegations contained in the Notice of Default and Notice of Sale.  The appropriate party to bring a lawsuit is not the borrower but either the Trustee or Beneficiary.  Once the borrower has denied the factual allegations, the matter should be converted to a judicial foreclosure which is provided for in Arizona Statutes.  In the absence of the beneficiary starting such a lawsuit, it is the trustee who should file an action in interpleader stating that the Trustee is an uninterested party with no stake in the outcome and alleging that there are two parties each of whom allege an interest in the subject matter of the lawsuit and which are in conflict with each other.  The Trustee, not having the power to conduct hearings (the Trustee is not a special master) has no choice but to take unresolved issues to the court and make its claim for attorney’s fees, costs and expenses to having had to file the interpleader.

Naturally Maidson failed to raise any of these issues. So the appellate court was left with a statue which is “on the books” and which operates to waive all defenses of the homeowner to the Trustee’s sale – in the event the homeowner fails to obtain an injunction before the sale date.  In the Madison case, needless to say, the homeowner failed to obtain and apparently failed to seek an injunction prior to the sale.  Therefore the appellate court was perfectly within its right to simply affirm the trial court’s decision that stated that the homeowner had no right in this instance to assert any defenses.

In such cases of such conflicts of obvious due process the ACLU and other such organizations have occasionally been successful in having an appellate court rule on an issue that was never presented in the trial court and may not even have been presented in the initial briefs of the parties on appeal. 

Hence the outcome of this case, like so many others, was a foregone conclusion simply based on the most simple application of statutory law and the rules of civil procedure as they are currently applied in Arizona. 

Failing to obtain the TRO is therefore the same as admitting all of the allegations of fact contained in the Notice of Default and Notice of Sale and all of the allegations that would have been pled in a judicial foreclosure.  The court affirmed the trial court’s decision to dismiss the homeowner’s lawsuit. 

The kicker in this case is that the appellate court went on to overrule the trial court for having declared Madison a vexatious litigant and further restricting her ability to file future lawsuits.  This was not only a violation of due process it was a demonstration of court bias and I invite attorneys who are committed to the movement to assist Madison in attacking the bias of the trail judge and getting the decision of the trial judge vacated thus rendering the appellate decision moot. 

It is plainly outrageous for any judge to declare that a litigant is vexatious or frivolous when they clearly have never been heard on the merits of any of their claims or defenses.  The retired judge who heard this case should be prevented from hearing any further cases involving foreclosures or related evictions or any other such cases. 

Without beating a dead horse the section of the opinion entitled “background” clearly shows that Madison failed to deny the essential elements of the foreclosure and therefore all of the obvious issues regarding the identity of the creditor, the status of the loan, the nature of the actual transaction, the substitution of beneficiary, the substitution of trustee, and all the other claims and defenses were deemed admitted by both the trial court and the appellate court.  If the case can be reopened on the basis of the bias of the judge and the bias can be shown to have predated the decision that was appealed and if that results in vacating the entire order the homeowner might have had an opportunity to obtain the injunction and assert the claims and defenses, and attack the statute as it is applied.

 This is the reason why I reluctantly agreed to start a national law firm to assist homeowners and borrowers and their lawyers.  I have been doing nothing but writing, educating, and consulting for 5 years only to see the work and analysis performed by me or my team to be presented improperly and after which most defenses and claims were waived.  In the GarfieldFirm.com all of the attorneys recruited will be required to follow appropriate professional standards in the research and advocacy of the positions of clients who sign up for representation. 

There is no guarantee of any result when you hire any attorney or any professional.  The only guarantee is that they will apply their best efforts on your behalf.  The GarfieldFirm.com is a operating under a business model which requires a 50-state rollout to oppose all of the foreclosure mills who currently act in concert with each other.  Their opposition will now be an organized and consistent challenge to the fraudulent proffers of false, forged and fabricated facts and evidence in and out of court.  As I have stated before, we are only halfway through this mighty contest.  Until now we have been taking all the punches.  Now it is our turn.

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