Tonight! DISAPPEARING LEGAL PRESUMPTIONS on the Neil Garfield Show 6PM EDT With Charles Marshall, Esq. and Bill Paatalo

Just the Facts, Ma’am!

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Charles Marshall, California attorney and Bill Paatalo, private investigator, discuss the implications of two Hawaii cases that are mirroring other decisions across the country.

Hawaii Schranz Case

Hawaii St. John Case

The above links go to two recent Hawaii cases dealing with legal standing. The fundamental fact of law is that standing must be ACTUAL NOT PRESUMED.

Specifically the issue is whether the foreclosing party actually had the original note at the time the foreclosure was commenced. Reasserting that standing is jurisdictional and therefore must be proven (with actual facts) present before a party takes any action, the courts here reversed (not for publication) Summary Judgments in favor of U.S. Bank and BONY Melon respectively.

The basis of the ruling is really that summary judgment could not have been granted based upon the submissions of so-called trustees of the probably nonexistent trust that never owned the debts. These decisions can be read as brushing aside presumptions and requiring actual proof of the facts that were heretofore assumed or presumed. The reason is simple. Standing is jurisdictional. Since any case that proceeds without jurisdictional is void and subject to being vacated, the proof must be actual and not presumed.

The interesting reasoning in these decisions is that many courts, including these decisions in Hawaii are starting to rethink their formal and informal presumptions. At the height of the tidal wave of foreclosures the courts took to the notion that the foreclosing party would not have filed if they were not the creditor or at least the possessor of the note with rights to enforce. The giant leap that came thereafter was a ruling that presumed the foreclosing party had possession of the note and the right to enforce it.

These decisions show that there is more movement toward requiring proof rather than the sue of legal presumptions. In plain language the courts are beginning to distrust the banks who bring these actions on behalf of alleged trusts.

Since there was question of fact, the summary judgment could not be granted. Thus the court decisions lay out the procedure, requiring actual proof of contested facts rather than resolving them strictly on the basis of applying legal presumptions which we all know leads to erroneous factual and legal conclusions.

Summary Judgment by Ambush: Motion to Strike Affirmative Defenses

Posted by  MotionToStrikeAffirmativeDefenses

Attorney Nick Mermiges (Miami, I think) has written an excellent article on motion practice which is very illuminating and extremely clear. In essence he has called out the bank lawyers who are filing motions to strike affirmative defenses and then using the law on summary judgment to argue their case. The result is that most of the homeowner’s affirmative defenses are indeed struck, eventually with prejudice and it is all tied to attorney fees for the benefit of the bank lawyers. The Judges are hearing these motions as though the he or she was hearing evidence, which is obviously not the case. For myself I am considering whether to file interlocutory appeals where the Judge has essentially decided the entire case based legal argument that does not even apply to the motion filed.

the basic thrust of the argument is that the Defendant has asserted “mere legal conclusions,” and that the Affirmative Defenses as pled don’t contain sufficient factual support. Plaintiffs’ counsel contend that the Defendant should have to plead specific facts in its Answer/Affirmative defenses, instead of simply asserting the legal basis for the affirmative defense.

I fell into this trap and reworded the affirmative defenses to provide a long narrative of the facts supporting the affirmative defenses. By doing that I was forced to both disclose specific facts outside of discovery and assume others because I had not received discovery. And THEN adding insult to injury I am prohibited from pursuing discovery on issues that the court has already ruled “irrelevant.”

I’ll admit that it is a clever tactic but it is only working because the Judges are letting it happen. This is summary Judgment by ambush.

these Motions are filed and granted with great frequency. Most of the time, Plaintiffs’ counsel misleadingly cite either (1) cases that discuss the sufficiency of affirmative defenses in the context of summary judgment; or (2) cases that address the pleading requirements when a party asserts an affirmative defense of fraud. See, e.g., Cady v. Chev Chase Sav. And Loan, Inc., 528 So. 2d 136 (Fla. 4th DCA 1988) (an opinion arising from a summary judgment order relating to a foreclosure, which primarily addresses allegations of fraud); Bliss v. Carmona, 418 So. 2d 1017 (Fla. 3d DCA 1982) (an opinion arising from a post­trial final judgment order relating to a foreclosure, which primarily addresses the sufficiency of the appellant’s response); Ridley v. Safety Kleen Corp., 693 So. 2d 934 (Fla. 1996) (an opinion arising from a challenge to a jury verdict on the grounds that the court’s jury instructions relating to the seatbelt defense were improper); Jacobs v Westgate, 766 So. 2d 1175 (Fla. 3d DCA 2000) (an opinion arising from an order granting a directed verdict in a landlord tenant dispute); Langford v. McCormick, 552 So. 2d 964 (Fla. 1st DCA 1989) (an opinion arising from a post­trial final judgment order relating to a probate dispute, which does

not address the standards for properly pleading an affirmative defense); Nash v. Wells Fargo Guard Services, Inc., 678 So. 2d 1262 (Fla. 1996) (an opinion arising from an order on a motion for new trial, which sets out standards for naming a Fabre Defendant).
While all of the aforementioned opinions have little pieces of language that can be misleadingly quoted and then strung together into a motion that someone might fall for if they weren’t paying attention, the common thread that ties them all together is that they consider the sufficiency of Affirmative Defenses after the close of discovery. And, naturally, after discovery has concluded, the Court would be in the proper position to determine whether the Defendant has uncovered evidence and facts which are sufficient to support the Affirmative Defenses as pled. But, it makes no sense to apply this same test at the beginning of discovery, because it presumes that the Defendant already knows everything there is to know.

The author takes dead aim at judges and lawyers who ignore the rules of engagement in litigation. The only basis to strike affirmative defenses is that the stated affirmative defense is not an affirmative defense or is scandalous as worded. Bank lawyers are using this tactic because the court won’t grant summary judgment on the same issues. After getting this order from the court, the Plaintiff pretender lender has clear sailing over the objections and affirmative defenses as properly pled because the order from the court has struck them.

The general umbrella for these spurious motions to strike is “relevance” which is by definition an evidentiary matter not a legal sufficiency matter. If you are challenging the lawsuit filed the purpose of the affirmative defenses is to put the Plaintiff on notice of what you intend to prove — not to provide a target for the Plaintiff to argue matters of evidence or the law of civil procedure for summary judgment.

let’s take a look at the language of the operative rule. Florida Rule of Civil Procedure § 1.140(f) provides that:
“[a] party may move to strike or the court may strike redundant, immaterial, impertinent, or scandalous matter from any pleading at any time.”
Based on the actual language of this rule, a Motion to Strike would only be proper if I asserted the same Affirmative Defense ten times (redundant), if I asserted an Affirmative Defense of Accord and Satisfaction in a Wrongful Death case (immaterial), or if one of my Affirmative Defenses was that the Plaintiff was an alcoholic communist (impertinent, scandalous). I don’t see any language directing the Court to strike allegations which have not yet been factually substantiated.

And while it appears that numerous Trial Courts aren’t inclined to adhere to the actual Rules of Civil Procedure (perhaps because Defense Counsel aren’t actually arguing the law), it turns out that multiple Florida Appellate Courts agree that the rules says what they actually say. Thus, these Courts have held that in the context of a motion to strike (i.e., prior to the close of discovery), the proper inquiry is only whether the affirmative defense is “legally sufficient on its face.” Citizens & S. Realty Investors v. Lastition, 332 So. 2d 357, 358 (Fla. 4th DCA 1976). Indeed, at the beginning of discovery, when a party asserts its Affirmative Defenses, the purpose of same is to establish what the Defendant seeks to prove, thereby putting the opposing party on notice. Thus, in Zito v. Washington Federal Sav. & Loan Asso., 318 So. 2d 175 (Fla. 3d DCA 1975), the Third DCA noted:
As in plaintiff’s statement of claim, the requirement of certainty will be insisted upon in the pleading of a defense; and the certainty required is that the pleader must set forth the facts in such a manner as to reasonably inform his adversary of what is proposed to be proved in order to provide the latter with a fair opportunity to meet it and prepare his evidence.

2 Florida Cases Decided in Favor of Borrower

The Wadsworth case clearly shows that the appellate courts are requiring the trial court to scrutinize the claims and filings of would-be forecloser and that things like notice of acceleration and the right to cure are important enough to reverse summary judgment. This is directly contrary to the rulings of many judges who say that the lack of notice is NOT a basis for granting a motion to dismiss. It can be argued that if it is enough to defeat a motion for summary judgment, it ought to be sufficient to dismiss the complaint that does not allege the existence of the loan, the financial injury and the compliance with paragraph 22, with a copy thereof.


The Beaumont decision is especially interesting because it deals with a rather obvious alteration of documents by Bank of America or its “successors” or lawyers. Or I would not be surprised to learn that LPS was involved in this one. They changed the due date and foreclosed. The trial court disregarded the defense that the note was altered and said it wasn’t enough that they alleged these facts on information and belief.  The appellate court that might be true, but the documents of records clearly raise the issue themselves.


Woman Wins Home and Forecloses on Wells Fargo

What’s the Next Step? Consult with Neil Garfield


For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: We have seen some of these stories before. What is disconcerting is that the press is not getting the point — some homeowners are winning their cases and getting their house free and clear. The reason is simple: if you try to make the case that you should get a free house, then you are going to lose. But if you attack the would-be forecloser where it hurts, then your chances of getting a favorable result are immeasurably increased. Mark Stopa got 14 Judges to (a) deny the forecloser’s motion for summary judgment and (b) grant final summary judgment to the homeowner. It does happen.

In the final analysis the strategy and tactics are the same as in any civil case — deny each and every allegation that you know is absolutely true, like your name. If you don’t know if the note and mortgage are legitimate or if they are showing a copy of the note and mortgage (or deed of trust) that might be fabricated, deny it. The burden is on the party seeking affirmative relief. Too many times, I see homeowners and attorneys give away the store when they are asked whether there is any issue about the obligation, note or mortgage. Their reply is no “but”….

The fact is there is no “but.” You either deny their right to foreclose or you admit it. If you admit it, then all the argument in the world won’t allow you to win. The Judge has no choice but to allow the foreclosure if your admission, tacit or expressed, goes to all the elements required for a foreclosure.

For reasons that I do not understand the same lawyer that will summarily deny virtually all allegations in the complaint for anything other than a foreclosure action, will be very timid and uncertain about denying allegations and validity of the exhibits in a foreclosure. If you attack the foreclosure after admitting that the elements are there based upon UCC or other arguments attacking the documentary trail, you will most likely lose — unless you accidentally stumble upon an argument that deals with the money trail.

That is why I am continually pushing lawyers and pro se litigants to get advice from lawyers that allows them to deny the validity of the allegations of a judicial foreclosure and deny the validity and authenticity of the substitution of trustee, notice of default and notice of sale in the non-judicial states.

Say as little as possible. The more you allege, the more the burden is on you to prove things that only the other side has in the way of information. I have previously posted an article about that.

The judicial doctrine applies that where the information is exclusively in the care, custody and control of the the opposing side then the mere allegation from you will be sufficient to shift the burden of persuasion onto the forecloser — and their case generally will collapse.

Jacksonville Business Journal by Michael Clinton, Web Producer

In a strange twist of events, a St. Augustine woman has filed foreclosure on a local branch of Wells Fargo after a judge ruled she could keep her home.

The bank tried to foreclose on Rebecca Sharp’s home, but a judge ruled she could keep it and the bank owed her nearly $20,000 for attorney’s fees — eight months later, the bank still hasn’t paid, Action News Jax reports.

“Foreclosure cases are based on borrowers not paying bills. Now, Wells Fargo has not paid its bills. There’s an irony there,” Sharp’s attorney Tom Pycraft told Action News.

Read the full story and see the video at Action News Jax.

Wells Fargo (NYSE: WFC) is the third-largest bank in Northeast Florida, with $5.5 billion in area deposits and a market share of 12 percent.

Ohio S. Ct: Standing is jurisdictional at the beginning of the foreclosure


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In a well-reasoned and well-written opinion, the Supreme Court of the State of Ohio analyzed the questions of standing and real party in interest — two doctrines that are all too often used interchangeably. They lead to different results. You can fix “real party in interest” but you can’t fix standing, which is a jurisdictional issue. And standing applies at the moment the foreclosure is started — if they don’t have it they must be dismissed.

The question of wrongful foreclosure based upon standing is interesting because the normal doctrine is that jurisdiction can be raised at any time. But at some point the issue of “finality” comes into play. But it would be wise to consider an action where you believe that jurisdiction was lacking even though the case went all the way through foreclosure and eviction. If jurisdiction was lacking, then any orders for or against either party would be void.

Among the interesting parts of this decision is the concept of “injury,” and by that they mean financial injury. If the party attempting to foreclose has not suffered financial damage, they have no right to sue. They lack standing at the commencement of the action and if they try to correct that by showing up with a new assignment AFTER the action was started, that does NOT cure the issue of standing.

The reason is simple, if the court lacked jurisdiction at the beginning of the action because the party starting the foreclosure had not YET suffered any injury than the case MUST be dismissed. The fact that it wasn’t dismissed by the trial judge does not mean that the court had any right to hear the case. The trial court cannot confer jurisdiction upon itself.

If they want to come back in and go for it again, they could conceivably use the new assignment and pass the threshold for the jurisdictional requirement of standing.  BUT that doesn’t mean you should admit or accept the assignment as having any validity. This is where an inquiry into the assignment, why it wasn’t done before and whether any money was paid for the assignment. If there was no money exchanging hands (which in 99% of cases is true) then even the new forecloser fails the financial injury test.

The deeper you dig the more you will find that the assignment is defective either on its face or that the recitations in the assignment are untrue (“for value received”) or that the person signing the assignment lacked authority or even knowledge as to what he or she was signing.

Once you prove the assignment is materially defective YOU (following Stopa’s strategy) should move for summary judgment in favor of the homeowner or file a renewed motion to dismiss for lack of jurisdiction because the document upon which they rely is fabricated, forged, robo-signed and false.

The Achilles heal of the foreclosures is that virtually none of the pretenders can show actual financial injury. It is presumed to be true by borrowers, their lawyers, opposing counsel and the judge.

But in most cases it is not true. The initial closing was funded by investors whose money was commingled and mangled by the investment banks. The documents from closing and the so-called assignments, endorsements and allonges are neither supported y consideration nor is their any evidence of ACCEPTANCE of the assignment by the assignee.

So you have a financial transaction for which there are virtually no documents and you have a set of documents that are used to trade, buy insurance, make claims on credit default swaps and federal bailouts — none of which are based upon any transaction in which money exchanged hands.

If you can prove that none of the documents were supported by consideration then you have proven that there is no financial injury — which means that you could demand either dismissal on standing, a jurisdictional issue or summary judgment that relies on both the jurisdictional issue and the lack of other evidence.

Schwartzwald opinion

2d DCA Fla: Another Bank Loses on Failure to Follow Notice Provisions in Documents


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EDITOR’S ANALYSIS: We all knew that when the appellate courts got hold of these cases, the banks’ cases would fall like dominoes. That is exactly what is happening. The reluctance with which courts had been approaching foreclosures is giving way to an examination of exactly what is provided in the actual documents and exactly what is required by law. Here the bank failed to follow the notice provisions in the documents themselves. The devil is in the details and if you persist, and make a proper record on appeal, you will see an increasing number of cases, including your own, turn the corner. Foreclosure is an extreme remedy and has always regarded as such by the courts because it deprives the homeowner of a roof over his head. Finally the courts are acting like these defenses matter. And as we all know, teh deeper they drill, the weaker the cases become.

These foreclosures should not be  in court — in fact they shouldn’t be anywhere because in most cases, the forecloser is simply an entity that is attempting to convince the court that they should have the house even if they don’t have any interest in the obligation, note or mortgage. In plain language, most of the cases that have been filed can easily be overturned by insistence that the appellate court, or even the trial court take another look and apply basic black letter law.


FL 2DCA Reverses SJ “acceleration letter failed to state the default as required by the mortgage terms”


FL 2DCA Reverses SJ “acceleration letter failed to state the default as required by the mortgage terms” | KONSULIAN v. BUSEY BANK, NA


Case No. 2D10-2163.

District Court of Appeal of Florida, Second District.

Opinion filed June 1, 2011.

Gregg Horowitz, Sarasota, for Appellant.

Mark A. Horowitz of Warchol, Merchant & Rollings, LLP, Cape Coral, for Appellee.

BLACK, Judge.

Sarkis Konsulian appeals the trial court’s order granting summary judgment in favor of Busey Bank (“Busey”). On appeal, Konsulian argues that Busey failed to meet a condition precedent to the filing of the complaint. Specifically, Konsulian asserts that Busey filed suit prematurely, giving Konsulian incomplete and inadequate notice and opportunity to cure. In addition to being prematurely filed, Konsulian claims that the acceleration letter failed to state the default as required by the mortgage terms. We agree and reverse. Because our ruling is based on the conditions precedent issue, we do not reach the issue of the accuracy of the damages calculation as challenged in Konsulian’s affidavit.

On October 6, 2008, Busey sent a preacceleration letter to Konsulian. On October 9, 2008, only three days later, the bank filed a mortgage foreclosure action against Konsulian. However, pursuant to paragraph twenty-two of the mortgage, Busey was required to give Konsulian thirty days notice prior to filing suit. Paragraph twenty-two of Konsulian’s mortgage provides as follows:

22. Acceleration; Remedies. Lenders shall give notice to the Borrower prior to acceleration following Borrower’s breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 18 unless Applicable Law provides otherwise). The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than thirty (30) days from the date the notice is given to Borrower, by which the default must be cured; and, (d) that the failure to cure the default on or before the date specified in the notice may result in an acceleration of the sums secured by this Security Instrument, foreclosure by judicial proceeding and sale of the Property. The notice shall inform Borrower of the right to reinstate after acceleration and the right to assert in the foreclosure proceedings the non-existence of a default or any other defense of Borrower to acceleration and foreclosure. If the default is not cured on or before the date specified in the notice, a Lender, at its option, may require immediate payment in full of all sums secured by this Security Instrument by judicial proceeding. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to all attorneys’ fees and costs of title evidence.

Konsulian appropriately raised both the timeliness argument and the sufficiency of the acceleration letter argument in his affirmative defenses. In addition, Konsulian filed an affidavit in opposition to the summary judgment motion contesting the amounts claimed by Busey. Konsulian challenged the interest and late fee calculation, as well as whether all payments were credited. At the time of the summary judgment hearing, the affirmative defenses were still viable.

On April 19, 2010, the trial court entered final judgment of foreclosure, which resulted in the sale of the property to Busey. The final judgment does not address the merits or disposition of Konsulian’s defenses.

Summary judgment cannot be granted unless the pleadings, depositions, answers to interrogatories, and admissions on file together with affidavits, if any, conclusively show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fla. R. Civ. P. 1.510(c). The standard of review for an order granting summary judgment is de novo. See Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000). When reviewing a ruling on summary judgment, an appellate court must examine the record in the light most favorable to the nonmoving party. See Suarez v. City of Tampa, 987 So. 2d 681, 682-83 (Fla. 2d DCA 2008)Garden St. Iron & Metal, Inc. v. Tanner, 789 So. 2d 1148, 1149 (Fla. 2d DCA 2001)). “The party moving for summary judgment has the burden of showing the nonexistence of [a] genuine issue of material fact.” Richardson v. Wal-Mark Contracting Group, LLC, 814 So. 2d 534, 535 (Fla. 2d DCA 2002) (citing Holl v. Talcott, 191 So. 2d 40, 43-44 (Fla. 1966)). A summary judgment must not only establish that no genuine issues of material fact exist as to the parties’ claims, but it also must either factually refute the affirmative defenses or establish that they are legally insufficient. Moroni v. Household Fin. Corp. III, 903 So. 2d 311, 312 (Fla. 2d DCA 2005). (citing

Here, nothing in Busey’s complaint, motion for summary judgment, or affidavits indicates that Busey gave Konsulian the notice which the mortgage required. The language in the mortgage is clear and unambiguous. The word “shall” in the mortgage created conditions precedent to foreclosure, which were not satisfied. See Frost v. Regions Bank, 15 So. 3d 905, 906 (Fla. 4th DCA 2009). Under Florida law, contracts are construed in accordance with their plain language, as bargained for by the parties. Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). Further, Busey did not refute Konsulian’s defenses nor did it establish that Konsulian’s defenses were legally insufficient. Because Busey did not prove that it met the conditions precedent to filing for foreclosure, it failed to meet its burden, and it is not entitled to judgment as a matter of law.

Reversed and remanded.

CASANUEVA, C.J., and WHATLEY, J., Concur.



COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

The fact that the true creditor doesn’t want to collect from homeowners is not a good reason to allow someone else to collect it. — Neil Garfield

FORECLOSURE CASE LAW – HSBC v. MURPHY, Maine Supreme Judicial Court, 2011 ME 59 (May 19, 2011)



“We have also repeatedly emphasized that a party’s assertion of material facts must be supported by record references to evidence that is of a quality that would be admissible at trial...This qualitative requirement is particularly important in connection with mortgage foreclosures where the affidavits submitted in support of summary judgment are commonly signed by individuals who claim to be custodians of the lender’s business records. Thus, the information supplied by the affidavits is largely derivative because it is drawn from a business’s records, and not from the affiant’s personal observation of events.” (e.s.)

“The foundation that the custodian or qualified witness must establish is four-fold:
(1) the record was made at or near the time of the events reflected in the record by, or from information transmitted by, a person with personal knowledge of the events recorded therein;
(2) the record was kept in the course of a regularly conducted business;
(3) it was the regular practice of the business to make records of the type involved; and
(4) no lack of trustworthiness is indicated from the source of information from which the record was made or the method or circumstances under which the record was prepared.

“Because we determine that the affidavits submitted by HSBC are inherently untrustworthy and, therefore, do not establish the foundation for admission of the attached documents as business records pursuant to M.R. Evid. 803(6), we vacate the judgment without reaching the substantive issues raised.”

“In Chase Home Finance LLC v. Higgins, 2009 ME 136, ¶ 11, 985 A.2d 508, 510-11, we stated that at a minimum, in support of any motion for summary judgment in a residential mortgage foreclosure action, the mortgage holder must include the following facts, supported by evidence of a quality that could be admissible at trial, in the statement of material facts:
•    the existence of the mortgage, including the book and page number of the mortgage, and an adequate description of the mortgaged premises, including the street address, if any;
•    properly presented proof of ownership of the mortgage note and the mortgage, including all assignments and endorsements of the note and the mortgage;
•    a breach of condition in the mortgage; •    the amount due on the mortgage note, including any reasonable attorney fees and court
•    the order of priority and any amounts that may be due to other parties in interest, including any public utility easements;
•    evidence of properly served notice of default and mortgagor’s right to cure in compliance with statutory requirements;
•    after January 1, 2010, proof of completed mediation (or waiver or default of mediation), when required, pursuant to the statewide foreclosure mediation program rules; and
•    if the homeowner has not appeared in the proceeding, a statement, with a supporting affidavit, of whether or not the defendant is in military service in accordance with the Servicemembers Civil Relief Act.”

It is, perhaps, stating the obvious that an affidavit of a custodian of business records must demonstrate that the affiant meets the requirements of M.R. Evid. 803(6)7 governing the admission of records…A business’s records kept in the course of its regularly conducted business may be admissible notwithstanding the hearsay rule if the necessary foundation is established “by the testimony of the custodian or other qualified witness.” M.R. Evid. 803(6). “A qualified witness is one who was intimately involved in the daily operation of the [business] and whose testimony showed the firsthand nature of his knowledge.”

EDITOR’S NOTE: There is no point of higher importance than that the evidence be heard and considered — and that it be tested for admissibility as evidence. This case artfully describes the process by which evidence is admitted. It also reveals the way the pretenders are avoiding the rules of evidence and getting away with it — until a court takes a close look.

The mistake in court that is replicated across the country is that lawyers, judges and pro se litigants are assuming evidence rather than going through the process of presenting it. The issue is not some technical two-step to avoid foreclosure. The issue is whether the requirements of law  have been met and therefore whether the party presenting itself as the would-be forecloser is in fact entitled to do so. Specifically, the mistake being made repeatedly is that lawyers are failing to object to affidavits that are inherently defective and failing to object to witnesses that either sign the affidavits or testify in court when they clearly do not possess the elements of a competent witness.

The reason they don’t have a competent witness is that their business records do not qualify for the business records exclusion to the hearsay rule. So they are merely presenting a warm body who tries to give the appearance of being a records custodian of records kept in the ordinary course of business and therefore carry a degree of credibility since they were not prepared for litigation.

That in fact is the opposite of what the banks have — they have only records prepared for litigation and no records that were kept in the ordinary course of business on any level, much less the chain of custody of records and knowledge, based upon actual transactions that were performed by the pretender. All the testimony and affidavits refer to transactions that did NOT involve the pretender forecloser. That is why this court, together with hundreds of courts across the country are coming to the conclusion that the affidavits are inherently defective (not credible), requiring an actual presentation of formal evidence in a trial or evidential hearing.

If the pretenders had the real goods, they would simply go forward with trials and presentation of formal evidence and the defenses and adversarial proceedings would quickly fade away as they won case after case on the evidence. But the truth is that the cases they are “winning” are without evidence and solely based upon presumptions and ignorance of the rules of evidence. Why is this important?

All this is important, because in a real trial, the pretender would have to allege and prove that it is a creditor who stands to lose money if they are not able to sell the home to mitigate their damages. Their problem is that they have no damages, the original transaction with the homeowner was fatally defective BECAUSE the pretenders wanted it to be that way and they figured they could get away with it. So far they are right. In most cases, the homeowner walks away without realizing his mortgage doesn’t exist, and the note is void, and that the obligation arising out of the funding of his loan is either paid, or the true creditor is more interested in collecting from the investment banker who sold garbage mortgage bonds than in trying to collect from individual homeowners. The fact that the true creditor doesn’t want to collect from homeowners is not a good reason to allow someone else to collect it.

Think about it. If the mortgages were valid, if the notes were enforceable, if the loans were properly underwritten, if the obligation of the homeowner was properly disclosed and linked with the investor lender — there would be no issue. In fact, there probably would be no foreclosures because the loans would have been viable and those that were not, would have been modified or settled. If the situation was “just a matter of paperwork” the paperwork would be cleaned up. But it isn’t. There are two primary ways to clean up the paperwork — go to the borrower and get a new signature or go to court and force the borrower to accept the new paperwork since the intent of the parties and the identification of the parties and the terms of transaction are clear as crystal.

The absence of any proceedings that would clean up the supposed paperwork mess gives rise to the obvious presumption that the banks, with their legions of smart lawyers, have not chosen to pursue those easy remedies. The only reason they would not choose a remedy that would clearly remove any doubt as to the validity of the loans and the truth of a default or delinquency is that they know they would lose if they had to present admissible evidence in court. In plain language they obviously know the loans are defective and paid in full and that they can’t win in court except by cheating. So they put a moral tag on it that the obligation is moral issue and that even if it is already paid off, and even if the the obligation a rose as a result of a fraudulent scheme, it should still be paid again. Is this any way to run a country?

Allocating Bailout to YOUR LOAN

Editor’s Note: Here is the problem. As I explained to a Judge last week, if Aunt Alice pays off my obligation then the fact that someone still has the note is irrelevant. The note is unenforceable and should be returned as paid. That is because the note is EVIDENCE of the obligation, it isn’t THE obligation. And by the way the note is only one portion of the evidence of the obligation in a securitized loan. Using the note as the only evidence in a securitized loan is like paying for groceries with sea shells. They were once currency in some places, but they don’t go very far anymore.

The obligation rises when the money is funded to the borrower and extinguished when the creditor receives payment — regardless of who they receive the payment from (pardon the grammar).

The Judge agreed. (He had no choice, it is basic black letter law that is irrefutable). But his answer was that Aunt Alice wasn’t in the room saying she had paid the obligation. Yes, I said, that is right. And the reason is that we don’t know the name of Aunt Alice, but only that she exists and that she paid. And the reason that we don’t know is that the opposing side who DOES know Aunt Alice, won’t give us the information, even though the attorney for the borrower has been asking for it formally and informally through discovery for 9 months.

I should mention here that it was a motion for lift stay which is the equivalent of a motion for summary judgment. While Judges have discretion about evidence, they can’t make it up. And while legal presumptions apply the burden on the moving party in a motion to lift stay is to remove any conceivable doubt that they are the creditor, that the obligation is correctly stated and to do so through competent witnesses and authenticated business records, documents, recorded and otherwise. All motions for lift stay should be denied frankly because of thee existence of multiple stakeholders and the existence of multiple claims. Unless the motion for lift stay is predicated on proceeding with a judicial foreclosure, the motion for lift stay is the equivalent of circumventing due process and the right to be heard on the merits.

But I was able to say that the the PSA called for credit default swaps to be completed by the cutoff date and that obviously they have been paid in whole or in part. And I was able to say that AMBAC definitely made payments on this pool, but that the opposing side refused to allocate them to this loan. Now we have the FED hiding the payments it made on these pools enabling the opposing side (pretender lenders) to claim that they would like to give us the information but the Federal reserve won’t let them because there is an agreement not to disclose for 10 years notwithstanding the freedom of information act.

So we have Aunt Alice, Uncle Fred, Mom and Dad all paying the creditor thus reducing the obligation to nothing but the servicer, who has no knowledge of those payments, won’t credit them against the obligation because the servicer is only counting the payments from the debtor. And so the pretender lenders come in and foreclose on properties where they know third party payments have been made but not allocated and claim the loan is in default when some or all of the loan has been repaid.

Thus the loan is not in default, but borrowers and their lawyers are conceding the default. DON’T CONCEDE ANYTHING. ALLEGE PAYMENT EVEN THOUGH IT DIDN’T COME FROM THE DEBTOR.

This is why you need to demand an accounting and perhaps the appointment of a receiver. Because if the servicer says they can’t get the information then the servicer is admitting they can’t do the job. So appoint an accountant or some other receiver to do the job with subpoena power from the court.

Practice Hint: If you let them take control of the narrative and talk about the note, you have already lost. The note is not the obligation. Your position is that part or all of the obligation has been paid, that you have an expert declaration computing those payments as close as  possible using what information has been released, published or otherwise available, and that the pretender lenders either refuse or failed to credit the debtor with payments from third party sources —- credit default swaps, insurance and other guarantees paid for out of the proceeds of the loan transaction, PLUS the federal bailout from TARP, TALF, Maiden Lane deals, and the Federal reserve.

The Judge may get stuck on the idea of giving a free house, but how many times is he going to require the obligation to be paid off before the homeowner gets credit for the issuance that was was paid for out of the proceeds of the borrowers transaction with the creditor?

Fed Shouldn’t Reveal Crisis Loans, Banks Vow to Tell High Court

By Bob Ivry

April 14 (Bloomberg) — The biggest U.S. commercial banks will take their fight against disclosure of Federal Reserve lending in 2008 to the Supreme Court if necessary, the top lawyer for an industry-owned group said.

Continued legal appeals will delay or block the first public look at details of the central bank’s $2 trillion in emergency lending during the 2008 financial crisis. The Clearing House Association LLC, a group that includes Bank of America Corp. and JPMorgan Chase & Co., joined the Fed in defense of a lawsuit brought by Bloomberg LP, the parent company of Bloomberg News, seeking release of records related to four Fed lending programs.

The U.S. Court of Appeals in Manhattan ruled March 19 that the central bank must release the documents. A three-judge panel of the appellate court rejected the Fed’s argument that disclosure would stigmatize borrowers and discourage banks from seeking emergency help.

“Our member banks are very concerned about real-time disclosure of information that could cause a run on the banks,” said Paul Saltzman, the group’s general counsel, in an interview yesterday. “We’re not going to let the Second Circuit opinion stand without seeking a review.”

Regardless of whether the Fed appeals, the Clearing House will take the next legal step by asking for a review by the full appellate court, Saltzman, 49, said at his office in New York. If the ruling is unfavorable, the bank group will petition the Supreme Court, he said.

Joined Lawsuit

The 157-year-old, New York-based Clearing House Payments Co., which processes transactions among banks, is owned by its 20 members. They include Citigroup Inc., Bank of New York Mellon Corp., Deutsche Bank AG, HSBC Holdings Plc, PNC Financial Services Group Inc., UBS AG, U.S. Bancorp and Wells Fargo & Co.

The Clearing House Association, a lobbying group with the same members, joined the lawsuit in September 2009, after an initial ruling against the central bank in federal court in Manhattan.

The Fed is “reviewing the decision and considering our options,” said Fed spokesman David Skidmore in Washington. He had no comment on Saltzman’s plans.

Attorneys face a May 3 deadline to file their appeals.

“We’ll wait to see the motion papers,” said Thomas Golden, attorney for Bloomberg who is a partner at New York- based Willkie Farr & Gallagher LLP. “The judges’ decision was well-reasoned, and we doubt further appeals will yield a different result.”

Bloomberg sued in November 2008 under the U.S. Freedom of Information Act, after the Fed denied access to records of four Fed lending programs and a loan the central bank made in connection with New York-based JPMorgan Chase’s acquisition of Bear Stearns Cos. in March 2008.

231 Pages

The central bank contends that 231 pages of daily reports summarizing lending activity, which were prepared by the Federal Reserve Bank of New York for the Fed Board of Governors in Washington, aren’t covered by the FOIA. The statute obliges federal agencies to make government documents available to the press and the public. The suit doesn’t seek money damages.

The Fed released lists on March 31 of assets it acquired in the 2008 bailout of Bear Stearns.

The New York Times Co., the Associated Press and Dow Jones & Co., publisher of the Wall Street Journal, are among media companies that have signed up as friends of the court in support of Bloomberg.

The Fed Board of Governors’ “refusal to disclose the names of borrowers renders public oversight of its actions impossible — it prevents any assessment of the effectiveness of the Board’s actions and conceals any collusion, corruption, fraud or abuse that might have occurred,” the news organizations said in a letter to the appeals panel.

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 09-04083, U.S. Court of Appeals for the Second Circuit (New York).

To contact the reporter on this story: Bob Ivry in New York at

Last Updated: April 14, 2010 00:01 EDT

Florida 2d DCA Gets It — Rules of Evidence Prevail!

See 2D08-3553 Fla 2d DCA BAC v Ginelle Jean-Jacques

This is the reason why I am offering the workshop on Expert Witnesses, i.e. — to highlight the rules of evidence, to coach those who would present opinions as evidence and to hone the skills of the litigator. While apparently narrow in its scope and reasoning, this decision nails down the issue of evidence versus assumptions or presumptions with finality. The case clearly establishes that merely filing papers with “argument” about what they are or what they mean is insufficient to establish anything at all.

The lesson here is not only that you can beat the pretender lenders, but also that YOU must conform to the rules of evidence, establishing a proper foundation and not try to finesse the court. And in non-judicial states the argument is plain: if they could not prevail in a judicial action, why should the court rubber stamp their non-judicial actions?

U.S. Bank filed documents that named other parties along with defective assignments that were not executed in recordable form. They tried to finesse the court by filing “original Note and Mortgage”. The Trial Court granted Summary Judgment, fooled by the appearance of proper documentation and the appellate court said that was an error and reversed the trial court’s summary final judgment.

Notable excerpts follow:

the space for the name of the assignee on this “assignment” was blank, and the “assignment” was neither signed nor notarized. Further, U.S. Bank did not attach or file any document that would authenticate this “assignment” or otherwise render it admissible into evidence.

U.S. Bank failed to meet this burden because the record before the trial court reflected a genuine issue of material fact as to U.S. Bank’s standing to foreclose the mortgage at issue. The proper party with standing to foreclose a note and/or mortgage is the holder of the note and mortgage or the holder’s representative. See Mortgage Elec. Registration Sys., Inc. v. Azize, 965 So. 2d 151, 153 (Fla. 2d DCA 2007); Troupe v. Redner, 652 So. 2d 394, 395-96 (Fla. 2d DCA 1995); see also Philogene v. ABN Amro Mortgage Group, Inc., 948 So. 2d 45, 46 (Fla. 4th DCA 2006)

When exhibits are attached to a complaint, the contents of the exhibits control over the allegations of the complaint. See, e.g., Hunt Ridge at Tall Pines, Inc. v. Hall, 766 So. 2d 399, 401 (Fla. 2d DCA 2000) (“Where complaint allegations are contradicted by exhibits attached to the complaint, the plain meaning of the exhibits control[s] and may be the basis for a motion to dismiss.”); Blue Supply Corp. v. Novos Electro Mech., Inc., 990 So.2d 1157, 1159 (Fla. 3d DCA 2008); Harry Pepper & Assocs., Inc. v. Lasseter, 247 So. 2d 736, 736-37 (Fla. 3d DCA 1971) (holding that when there is an inconsistency between the allegations of material fact in a complaint and attachments to the complaint, the differing allegations “have the effect of neutralizing each allegation as against the other, thus rendering the pleading objectionable”).

U.S. Bank was required to establish, through admissible evidence, that it held the note and mortgage and so had standing to foreclose the mortgage before it would be entitled to summary judgment in its favor. Whether U.S. Bank did so through evidence of a valid assignment, proof of purchase of the debt, or evidence of an effective transfer, it was nevertheless required to prove that it validly held the note and mortgage it sought to foreclose. See Booker v. Sarasota, Inc., 707 So. 2d 886, 889 (Fla. 1st DCA 1998) (holding that the trial court, when considering a motion for summary judgment in an action on a promissory note, was not permitted to simply assume that the plaintiff was the holder of the note in the absence of record evidence of such).

The incomplete, unsigned, and unauthenticated assignment attached as an exhibit to U.S. Bank’s response to BAC’s motion to dismiss did not constitute admissible evidence establishing U.S. Bank’s standing to foreclose the note and mortgage, and U.S. Bank submitted no other evidence to establish that it was the proper holder of the note and/or mortgage. Essentially, U.S. Bank’s argument in favor of affirmance rests on two assumptions: a) that a valid assignment or transfer of the note and mortgage exists, and b) that a valid defense to this action does not. However, summary judgment is appropriate only upon record proof—not assumptions.

Rescission: Equitable Estoppel Validated in 2006 Case

a special relationship may exist between defendants, who possess specialized knowledge and experience in the field of mortgage refinance, and plaintiff, a homeowner without any training or education in mortgage refinance. Based upon the parties’ vast difference in knowledge, there are issues of fact whether plaintiff’s reliance on defendants’ misrepresentations was justified. (See Fresh Direct, LLC v. Blue Martine Software, Inc., 7 AD3d 487 [2nd Dept. 2004].)

Smith v Ameriquest Mtge. Co.
2006 NY Slip Op 52707(U) [25 Misc 3d 1230(A)]
Decided on September 18, 2006
Supreme Court, Queens County
Agate, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on September 18, 2006

Supreme Court, Queens County

Maudline Smith, Plaintiff,


Ameriquest Mortgage Company, Nationscredit Financial Services Corporation, Jason Simms, Daniel Chan, Mark Lindenmann and Neville Golding, Defendants.


Augustus C. Agate, J.

Plaintiff commenced this action for rescission of mortgage loans between plaintiff and defendants Ameriquest Mortgage Company (hereinafter referred to as “Ameriquest”) and Nationscredit Financial Services Corporation as successor-by-merger to EquiCredit of NY (hereinafter referred to as “EquiCredit”), and for compensatory and punitive damages against all defendants.

Plaintiff was the owner of residential property located at 105-20 Farmers Boulevard, Hollis, Queens, which was secured by a mortgage held by Household Finance Realty Corporation of New York (hereinafter referred to as “HFRC”) from September 25, 1996 through March 11, 1998. In 1998, plaintiff spoke with defendant Jason Simms, an employee of HFRC, who discussed refinancing her mortgage. Although plaintiff declined at that time, she later agreed to refinance her mortgage through Simms’ new employer Ameriquest. Plaintiff entered into an agreement with Ameriquest, who paid her mortgage with HFRC and established a new mortgage in the amount of $137,250 at 10.5% interest, and a $20,000 mortgage with defendant EquiCredit at 9.8% interest. This new mortgage also transferred a 1% interest in plaintiff’s property to defendant Neville Golding. The closing for these mortgages took place on March 11, 1998, with defendant Daniel Chan, who represented Ameriquest.

On March 14, 1998, plaintiff signed a notice of right to cancel the mortgage, but later reinstated the mortgage on March 16, 1998. However, plaintiff became unable to make the payments [*2]on the mortgage and on December 20, 2002, commenced this action for rescission of the mortgage and to recover damages. On July 15, 2004, Ameriquest commenced a foreclosure action against plaintiff.

Defendants Ameriquest, Simms and Mark Lindemann move for summary judgment and dismissal of plaintiff’s Complaint, arguing that plaintiff cannot as a matter of law proceed on her claims. Defendants argue that all of plaintiff’s claims are based upon oral statements she alleges occurred with defendants. However, the Statute of Frauds precludes oral modification of the written mortgage agreement between the parties. Further, plaintiff’s claims are belied by defendants’ evidence, including documents plaintiff received prior to closing detailing the terms of the mortgage. Therefore, plaintiff had an opportunity to address her concerns prior to closing, but failed to do so and accepted the terms of the mortgage by signing defendants’ papers.

Plaintiff’s claim of fraud should be dismissed because there were no material misrepresentations upon which plaintiff relied to her detriment. Rather, plaintiff was familiar with the process of refinancing a mortgage, as she had done numerous times in the past. She had a duty to read the loan documents and signed the written disclosures demonstrating her knowledge and acceptance of the mortgage terms. Further, any oral misrepresentations cannot be asserted to invalidate the contract under the Statute of Frauds. Plaintiff’s claim of negligent misrepresentation should be dismissed because there was no special relationship between plaintiff and defendants upon which plaintiff can present a valid cause of action. Plaintiff’s claim of promissory estoppel should be dismissed because there was no unconscionable injury that would permit recovery under this theory. Plaintiff’s claim of punitive damages should be dismissed because there was no evidence of egregious conduct by defendants aimed at the public. There is also no evidence to impute liability on Ameriquest or its employee Lindemann for the alleged tortious actions of Simms. Plaintiff cannot rescind the mortgage under the Truth in Lending Act (hereinafter referred to as “TILA”) because the statute of repose has expired. Further, plaintiff is unable to repay the principal amount to permit rescission of the mortgage. Plaintiff’s claim of civil conspiracy must be dismissed based upon prior court decisions in this matter where the Court held that there is no independent cause of action for civil conspiracy.

Plaintiff opposes defendants’ motion and cross moves for partial summary judgment. Plaintiff argues that defendants’ motion should be dismissed because there is no affidavit of merit from defendant Simms as to the facts in this case. There are also issues of fact that preclude summary judgment, particularly since discovery is outstanding. Further, defendants failed to properly authenticate their exhibits, as none of the affiants had sufficient knowledge of the business practices necessary to authenticate the documents.

Plaintiff argues that punitive damages are warranted against Ameriquest, who recently settled a class action suit for predatory lending practices. Plaintiff’s affidavit of merit described the events between the parties and how they form the basis of plaintiff’s Complaint. Plaintiff states that she only refinanced her mortgage in order to receive a lower monthly payment, consolidate her bills and receive $10,000. While she intended for defendant Golding to co-sign her mortgage, she did not agree to transfer 1% ownership interest in her property to him. She also did not agree to a mortgage with EquiCredit, nor was she aware that EquiCredit was part of the mortgage with Ameriquest. At [*3]the closing, there were no lawyers but merely an unidentified man and defendant Chan. Plaintiff was uncomfortable with the closing and purposely failed to date her signature, expecting that to invalidate the mortgage. When it did not, she signed a notice of cancellation of mortgage. However, she spoke with Simms, who assured her that the $10,000 check was being sent to her and that she could not receive it unless she reinstated her loan. She then reinstated the loan but quickly discovered that her monthly payments were higher than her original mortgage. She was unable to pay the higher mortgage payments and also never received any check for $10,000 or even $2,233.04, as claimed by defendants.

Plaintiff also argues that her claim of fraud is valid, as defendants misrepresented the balloon payment she must make to EquiCredit, they failed to pay plaintiff $10,000 as promised, and failed to inform her that her monthly mortgage payments would be higher than they had been under the mortgage with HFRC. Based upon the facts are presented, defendants’ motion for summary judgment should be denied and plaintiff’s cross-motion for rescission of the mortgage should be granted.

Defendant EquiCredit cross-moves dismissing plaintiff’s fourth cause of action for civil conspiracy[FN1]. Equicredit argues that plaintiff is not an unsophisticated homeowner, but had a long history of borrowing or mortgaging her property. Further, the court has already determined that there is no independent cause of action for civil conspiracy in the decisions dated September 9, 2003 by Justice Golar and by this court on June 9, 2006.

The proponent of a motion for summary judgment carries the initial burden of presenting sufficient evidence to demonstrate as a matter of law the absence of a material issue of fact. (Alvarez v. Prospect Hospital, 68 NY2d 320 [1986].) Once the proponent has met its burden, the opponent must now produce competent evidence in admissible form to establish the existence of a triable issue of fact. (See Zuckerman v. City of New York, 49 NY2d 557 [1980].) It is well settled that on a motion for summary judgment, the court’s function is issue finding, not issue determination. (Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395 [1957]; Pizzi by Pizzi v. Bradlee’s Div. of Stop & Shop, Inc., 172 AD2d 504, 505 [2nd Dept. 1991].) However, the alleged factual issues must be genuine and not feigned. (Gervasio v. DiNapoli, 134 AD2d 235 [2nd Dept. 1987].)

Defendants Ameriquest, Simms and Lindemann’s motion for summary judgment is granted in part and denied in part. Defendants’ motion for summary judgment is granted as to defendant Lindemann, as there has been no evidence presented that he engaged in any tortious activity. Rather, it is undisputed that any involvement by Lindemann took place subsequent to the mortgage and is insufficient to impute liability on him. As plaintiff failed to oppose this branch of defendants’ motion or present any evidence that Lindemann engaged in tortious conduct that damaged her, summary judgment is warranted as to Lindemann.

Ameriquest and Simms’ motion and EquiCredit’s cross-motion for summary judgment as to [*4]civil conspiracy is granted. This Court has already determined that no independent cause of action for civil conspiracy exists. (See Monsanto v. Electronic Data Systems Corp., 141 AD2d 514 [2nd Dept. 1988].) Plaintiff’s arguments to support this cause of action are without merit, as the law of the case requires dismissal of this claim.

Defendants’ motion for summary judgment as to fraud is denied, as there are issues of fact in dispute. Defendants failed to present a prima facie case of entitlement to summary judgment by failing to submit an affidavit from defendant Simms, the defendant who clearly possessed the most information with regard to the communications between plaintiff and defendants. (See Hirsch v. Hirsch, 134 AD2d 485 [2nd Dept. 1987].) The affidavits of merit submitted do not address the factual questions with regard to solicitation of plaintiff to refinance and the circumstances of the closing. While defendants argue that the written documentation precludes any recovery for fraud by plaintiff, there are significant issues of fact with regard to the circumstances of the closing, who appeared on behalf of defendants, and the understanding between the parties, that precludes summary judgment. (See Joy v. Brower, 107 AD2d 1028 [4th Dept. 1985];Bankers Trust Co. of California v. Payne, 188 Misc 2d 726 [Sup. Kings 2001].)

Defendants’ motion for summary judgment as to negligent misrepresentation is denied. To recover on a theory of negligent misrepresentation, plaintiff must establish that defendants had a duty to use reasonable care to impart correct information because of some special relationship between the parties, that the information was incorrect or false, and that plaintiff reasonably relied upon the information provided. (Grammar v. Turits, 271 AD2d 644 [2nd Dept. 2000].) Defendants presented a prima facie case that there was no special relationship between plaintiff and defendants to support a claim of negligent misrepresentation, as this was a mere financial transaction between the parties that plaintiff had engaged in previously. (See Burroughs Corp. v. Datacap, Inc., 124 AD2d 622 [2nd Dept. 1986].) However, plaintiff raised an issue of fact in dispute, as she stated that she was promised $10,000 from and a consolidation of her bills if she refinanced with defendants. As defendants failed to present an affidavit of merit regarding the factual representations made by Simms on behalf of Ameriquest, there are issues of fact as to whether any false statements were made by defendant that were relied upon by plaintiff. Further, a special relationship may exist between defendants, who possess specialized knowledge and experience in the field of mortgage refinance, and plaintiff, a homeowner without any training or education in mortgage refinance. Based upon the parties’ vast difference in knowledge, there are issues of fact whether plaintiff’s reliance on defendants’ misrepresentations was justified. (See Fresh Direct, LLC v. Blue Martine Software, Inc., 7 AD3d 487 [2nd Dept. 2004].)

Defendants’ motion for summary judgment as to promissory estoppel is denied. The purpose of invoking the doctrine of equitable estoppel is to prevent the infliction of unconscionable injury and loss upon a plaintiff who has relief upon a defendant’s promise. (American Bartenders School, Inc. v. 105 Madison Co., 59 NY2d 716 [1983].) In this matter, there are issues of fact with regard to the propriety of defendants’ actions in soliciting the mortgage that preclude summary judgment. Specifically, if plaintiff can demonstrate that defendants knowingly and consciously defrauded her into signing a mortgage that she could not pay, then the loss of her residential property could be [*5]considered an unconscionable injury. (See Skillgames, LLC v. Brody, 1 AD3d 247 [1st Dept. 2003].) While plaintiff bears a heavy burden to prove this cause of action, the presence of issues of fact require denial of summary judgment.

Defendants’ motion for summary judgment as to punitive damages is denied as to Ameriquest and Simms. Punitive damages may be awarded when there is evidence that defendants’ fraud was aimed at the public generally, was gross and involved a high moral culpability. (See Crispino v. Greenpoint Mortg. Corp., 2 AD3d 478 [2nd Dept. 2003]; Guardian Mortg. Acceptance Corp. v. Bankers Trust Co., 259 AD2d 358 [1st Dept. 1999].) Plaintiff’s claims against defendants involve defendants’ actions in soliciting mortgages to unsuspecting customers, as there has never been any claim that defendants acted with a personal animus against plaintiff. Should plaintiff prevail on her claims, she may be entitled to punitive damages based upon the evidence with regard to predatory lending and soliciting practices.

Defendants’ motion for summary judgment as to rescission of the mortgages is granted. Rescission is an equitable doctrine designed to return the parties to the status held prior to the agreement. As a doctrine rooted in equity, the court may condition plaintiff’s right of rescission upon her tender to defendants of the principal of the loan. (Berkeley Federal Bank & Trust, FSB v. Siegal, 247 AD2d 498 [2nd Dept. 1998].)As plaintiff admits she is unable to repay the mortgages to place the parties in their original positions, rescission is not warranted.

Plaintiff’s motion for partial summary judgment is denied, as plaintiff failed to present sufficient evidence to determine as a matter of law that there are no issues of fact in dispute. Plaintiff did not specifically state the grounds for summary judgment, nor did she present sufficient evidence to award her summary judgment on any of her causes of action.

Accordingly, Ameriquest Mortgage Company, Jason Simms and Mark Lindemann’s motion for summary judgment and dismissal is granted as to Mark Lindemann, and all causes of action relating to Lindemann are dismissed. Ameriquest and Simm’s motion for summary judgment is granted as to plaintiff’s fourth cause of action for civil conspiracy, but denied as to plaintiff’s first, second and third causes of action for fraud, negligent misrepresentation and promissory estoppel and for punitive damages. Plaintiff’s cross-motion for partial summary judgment is denied. Defendant EquiCredit’s motion for summary judgment and dismissal of plaintiff’s fourth cause of action is granted.

Dated:September 18, 2006


Augustus C. Agate, J.S.C.


Footnote 1:Equicredit also cross-moved to compel depositions at the courthouse, but later submitted a letter withdrawing its request.

Foreclosure Defense: Motion to Vacate Final Default Summary Judgment


Case No.:
vs.                                DIVISION: 02

Comes now the defendant, xxxxxxxxxxxxxxx, PRO SE DEFENDENT, and hereby files their motion to vacate foreclosure judgment, pursuant to Rules 1.540(b) Fla. R. Civ. P., states:
Florida Rule of Civil Procedure 1.540(b) provides in pertinent part:
On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, decree, order, or proceeding for the following reasons:… (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) that the judgment or decree is void; This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, decree, order, or proceeding or to set aside a judgment or decree for fraud upon the court.

The Plaintiff has committed a fraud upon this court which has only become apparent to the Defendant within the last day, upon discovery that the “lender” bank and others have engaged in a pattern of fraud and deception across the country and the state of ————- in attempting to foreclose residential properties AFTER it has already been paid in full PLUS a fee for standing for an undisclosed lender.
Plaintiff’s allegations that the Plaintiff has not been paid are false is easily ascertainable by the 10k and 8k filings with Plaintiff’s sworn filings with the SEC, wherein the description of the instant loan transaction fits exactly with ALL loans that were securitized and eventually sold in shares to investors around the world. It was not until the last day that Defendant consulted with a knowledgeable consultant and attorney who informed him and demonstrated the fraud. Defendant assumed that because the Plaintiff refused to accept payment that the allegation they were making was that they had not received any payment on the note, when in fact, they had already been paid in full long before this action was commenced and contemporaneously with the loan closing. Plaintiff did not disclose that the loan had been paid, and did not disclose that the true holder in due course and the parties in possession of indorsement or the note itself have long since been owners of these mortgage documents, and in fact mislead this Defendant and the Court to believe the contrary. Defendant was only able to discover this fact upon consulting with an expert who advised me that the pattern and policy of Plaintiff was to treat ALL loans in this manner and that by granting Plaintiff the right to foreclose the court was essentially giving Plaintiff the money AND the property.
In fact, based upon the sworn filings of the Plaintiff with a Federal Agency under the Securities and Exchange Act of 1933, Plaintiff admits payment and it is clear that Payment occurred either PRIOR to the loan closing or within days after the loan closing took place. According to those filings full payment PLUS a fee of 2.5% was paid to Plaintiff by a mortgage aggregator, the “lender” never entered the loan on its balance sheet or in its filings with the FDIC, or any regulatory agency or even to its shareholders, because the transaction was classified as a service transaction represented solely on Plaintiff’s income statement.
In plain language, Plaintiff has been paid in full and wants the real property too and is about to get it unless this court allows the case to be tried on its merits.
In plain language, the Plaintiff’s own confusion as to what role they play is apparent in the names of entities used in the complaint, only one of which received judgment. This confusion is easily understood.
Plaintiff filed the foreclosure action and now is intent on taking title to the property in addition to having been paid in full PLUS a fee for standing in for the mortgage aggregator, who was the real lender, unregistered in the State of Florida to do business as an investment  bank.
The aggregator took title as Trustee of a mortgage pool to which many loans were assigned, not necessarily all real estate.
The aggregator purportedly assigned but did not record some interest in the note and mortgage in the instant action to a Special Purpose Vehicle which was owned and operated by an investment bank.
The SPV was established by a CDO (collateralized debt obligation) manager employed by the investment bank.
The CDO manager established what are known as tranches within the SPV and assigned parts of each pool to each tranche within the SPV.
The hierarchy of tranches guarantees and requires a misapplication of funds out of and contrary to compliance with the terms of the subject mortgage security instrument and note.
The subject pieces of the pool, that includes pieces of the subject mortgage and note, were then pledged to the buyers of certificates of debt instruments that were backed by and in substance convertible into equity shares of ownership of the subject mortgage and note.
Each buyer received a share of the subject mortgage and note along with a share of thousands of other mortgages and notes.
Each buyer was shown a AAA securities rating, insurance from AMBAC or similar entity and a credit default swap that guaranteed payment of the revenue flow.
Thus co-obligors were created, which Plaintiff failed to disclose at any time to this Defendant or this Court and failed to plead that the holder of the note had not been paid despite overcollateralization of the negotiable instruments and the creation of a reserve pool to make payment, insurance, guarantees, and credit default swaps.
This motion is filed because Defendant verily believes he will and should prevail on the merits, that the Plaintiff has been paid, that the holder in due course has been paid, and that the affidavits and representations of counsel were false, known to be false when made, and have been found to be false repeatedly in other cases around the country.
Defendant intends to file affirmative defenses for set off violations to the Truth in Lending Act, and a counterclaim for damages for RICO, TILA violations, usury, fraud in the inducement and fraud in the execution, damages for appraisal fraud, quiet title, and malicious abuse of process among other causes of action.
The failure to disclose the real parties, and all the fees paid to the undisclosed parties is a violation on the face of TILA, the contract between the parties, the Good Faith Estimate provided to Defendant, and fair dealing, in addition to a breach and in fact  total abdication of the fiduciary duty owed by a lender to its borrower in which underwriting standards were reduced to zero because the nominal lender did not perceive itself to be at risk.
This includes the undisclosed purchase of insurance that qualifies as mortgage insurance, credit default swaps that qualify as mortgage insurance, and guarantees from third parties, including but not limited to the mortgagors whose negotiable instruments were also assigned to tranches that had lower priority than that which the subject loan transaction was assigned, and the payments made by Defendant were in fact allocated and given not to the holder in due course of the subject mortgage and note, but to the CDO manager for allocation to tranches and securities which held a higher place in the hierarchy of the tranches within the SPV.
The entire scheme was intended to trick investors into investing their capital into securities that were unregistered and unregulated, using the Defendant’s signature as the issuer of the negotiable instrument which was perceived to give an inflated value to the derivative security purchased by those victimized investors.
This inflation of value was an exact reflection of the inflation of value that Plaintiff and its co-conspirators paid for when they hired an appraiser for the loan closing. Thus the borrower and the investor, the only real parties in interest to the transaction were both tricked, cheated and now, to add insult to injury, are being sued as the villains in someone else’s scheme.
The plaintiff ’s complaint fails to contain sufficient facts to establish who the plaintiff is and its relationship to the defendant and to the claim for foreclosure of a promissory note, including the date of the alleged assignment of the mortgage and note, and the identity of the owner of the subject promissory note. The complaint fails to sufficiently identify who the plaintiff is and fails to allege facts sufficient to determine the standing of the plaintiff.
Florida Rule of Civil Procedure 1.130(a) provides in pertinent part:
“All bonds, notes, bills of exchange, contracts, accounts, or documents upon which action may be brought or defense made, or a copy thereof or a copy of the portions thereof material to the pleadings, shall be incorporated in or attached to the pleading.”
Plaintiff attaches documents to its complaint that conflict with the allegations of material facts in the complaint in which the plaintiff claims that it “owns the Note” and
Mortgage by virtue of an unrecorded assignment that does not allege when the assignment occurred. These allegations conflict with the mortgage attached to the complaint that identifies MERITAGE MORTGAGE CORPORATION, as the lender with the security interest. These allegations therefore constitute serious misrepresentations and could be construed as a fraud upon the court.
Additionally plaintiff makes allegations in its complaint that conflict with the documents attached thereto as to who owned the subject note at the time the note was allegedly lost.
When exhibits are inconsistent with the plaintiff ’s allegations of material fact as to whom the real party in interest is, such allegations cancel each other out. Fladell v. Palm Beach County Canvassing Board, 772 So.2d 1240 (Fla. 2000); Greenwald v. Triple D Properties, Inc., 424 So. 2d 185, 187 (Fla. 4th DCA 1983); Costa Bella Development Corp. v. Costa Development Corp., 441 So. 2d 1114 (Fla. 3rd DCA 1983).
Florida Rule of Civil Procedure 1.130(b) provides in pertinent part: “Any exhibit attached to a pleading shall be considered a part thereof for all purposes.”
Because the facts revealed by Plaintiff ’s exhibit are inconsistent with Plaintiff ’s allegations as to its ownership of the subject note and mortgage, those allegations are neutralized and Plaintiff ’s complaint is rendered objectionable. Greenwald v. Triple D Properties, Inc., 424 So. 2d 185, 187 (Fla. 4th DCA 1983).
Florida Rule of Civil Procedure 1.210(a) provides in pertinent part:
“Every action may be prosecuted in the name of the real party in
interest, but a personal representative, administrator, guardian, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party expressly
authorized by statute may sue in that person’s own name without
joining the party for whose benefit the action is brought.”
The Plaintiff in this action meets none of those criteria. Because the exhibit attached to Plaintiff ’s complaint is inconsistent with Plaintiff ’s allegations as to ownership of the subject promissory note and mortgage, and because the allegations and exhibits are inconsistent with sworn filings with a Federal Agency (SEC), Plaintiff has failed to establish itself as the real party in interest and has failed to state a cause of action.
In Florida, the prosecution of a foreclosure action is by the owner and holder of
the mortgage and the note. Your Construction Center, Inc. v. Gross, 316 So. 2d 596 (Fl. 4th DCA 1975)
The Defendants recognize the precedent set in WM Specialty Mortgage, LLC v.
Salmon, 874 So.2d 680 (Fla 4th DCA 2004) regarding the assignment of a mortgage. However as the Second District Court of Appeals noted, standing requires that the party prosecuting the action have a sufficient stake in the outcome and that the party bringing the claim be recognized in the law as being a real party in interest entitled to bring the claim as of the date of the commencement of the action.
The plaintiff ’s failure to meet the standing requirements as of the commencement of this foreclosure action renders the complaint fatally defective and, therefore constitutes misrepresentation as to who the Plaintiff really is.
Further, the failure to join indispensable and necessary parties, those being the real holders in due course of the subject loan documents, Citi wishes to place the borrower and innocent third parties in untenable situations:
The borrower can AGAIN be sued on the same note by a third party who has not been given notice of this lawsuit (john Does 1-1000)
The borrower has no proper entity against which he can assert affirmative defenses and claims regarding predatory loan practices, fraud and other causes of action.
If the note was separated from the mortgage then the mortgage is unenforceable by definition. If the mortgage is unenforceable by definition then any “foreclosure sale” is either void or voidable. Thus a cloud on title exists even in the presence of the Court’s Judgment to the contrary.
Bidders and third parties without notice could easily be sued in foreclosure by the real holders in due course thus either encumbering their property with the mortgage which the Court had intended to extinguish through the foreclosure sale, or losing the property for which they paid out of their own funds or through the lending and mortgage of yet another financial institution who will also be subject to losing its security and suffer a partial or complete loss on a loan where the risks were not apparent because of the fraud of Citi.
The assignment cannot post date the filing of this action if assignment does not relate back to the commencement of the litigation. Progressive Express Insurance Company v. McGrath Community Chiropractic, 913 So.2d 1281 (Fla. 2nd DCA 2005). where there is no assignment document presented and the indorsement is suddenly produced during litigation without a date, it must be presumed that the indorsement was made after the attempt to enforce the instruments in the subject loan transaction, or at the very least that the burden falls on the Defendants to allege and prove that the indorsement was timely made with proper authorization, that the assignor had title to the instruments, and that the assignee retained title to the instruments.
In short, Citi must allege that it is a holder in due course, an allegation which Plaintiff already knows to be untrue and inconsistent with Citi’s sworn filings with the Securities and Exchange Commission in its 10K and 8K filings.
The Plaintiff, in its complaint alleges that it “owns the Note and Mortgage” however it has failed to produce any material evidence to support its claim. In the absence of this evidence the Plaintiff is clearly misrepresenting themselves as the real party in interest and the holder in due course with legal standing to bring this cause of action against the defendant.
The Plaintiff alleges that it is the holder in due course on the subject mortgage and note Defendant has learned, as aforesaid, that this is inconsistent with Citi’s sworn disclosures tot he contrary with the SEC, to wit: that the note was part of larger securitization process and sold to several 6-named parties and beneficial owners and any claims by Plaintiff, in the absence of the original note endorsed to Plaintiff, are a clear misrepresentation of the actual facts.
If the courts were to allow a Plaintiff to bring a cause of action in a scenario where the Plaintiff alleges that it owns a certain note and mortgage but fails to provide any evidence to the courts that this, in fact true, the courts would open the door to incredible harm to any homeowner whose home is secured by a mortgage.
If the court were to allow the Plaintiff in this case to prevail in light of serious misrepresentation and fraud upon the court, it would result in a major injustice to the Defendant.

WHEREFORE, Defendant requests this court grant Defendant’s motion for
vacating judgment and for all other relief to which these defendants prove themselves


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