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Lauren Paulson, Pro Se3980 S. W. 170th Ave.Aloha, OR 97007971 219 5859Plaintiff
UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF OREGON, Portland Division
LAUREN PAULSON, ))) Civil Action No. CV
Plaintiff, ) 08-982-PK
))v. )
) .)
FAIRWAY AMERICA )CORPORATION, fka )FAIRWAY COMMERCIAL ) PLAINTIFFS MOTION FORMORTGAGE CORPORATION, )Oregon corporations, FHLF, LLC, )
an Oregon corporation, MATT )BURK, STERLING SAVINGS BANK, ) DECLARATORY JUDGMENTa Washington corporation, )WELLS FARGO FOOTHILLS, a )California corporation, JOAN DOE, )a mortgage broker, ) AND STAY OF ALL PROCEEDINGSFRANKI KEEFE, a real estate broker )and JOEL PARKER )
)Defendants, )
The Plaintiff hereby moves the Court to declare the rights of the
parties in accordance with the following:
14 JUDGES
Aquinas conceives of what is known as the laws of nature. The Laws
of Nature are different from man-made laws such as statutes and case-by-
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Mortimer Adler, Great Ideas, The Lexicon of Western Thought, Macmillan
Publishing Company, Page 417(1952, 1992)
The problem is that the Judiciary has decided that it is free to follow
the Laws of Nature; that is the laws divined by God, rather than the
Common Law. In a word, Judges have decided they are Gods and may
follow their own instincts and do not have to follow Man-Made law. This is
a case in point. It is why 14 different judges have fallen into a black hole of
decision making.
All the while, the Common Law is clear. A lender may not assign a
security instrument (a mortgage or deed of trust) without also assigning
debt instrument) the promissory note. Second, banks (and all lenders)
must maintain a clear chain of title. Just like ownership of a car. If banks
assign the security instrument without also assigning the promissory note
they make a fatal mistake. Once these two documents are separated,
controlled by two separate areas of the law, they cannot enforce the
security instrument. Simple eh? None of the 14 judges, in three years of
litigation have taken notice of these simple principles of Man-Made law.
None of these 14 judges have taken notice of this aspect of Common Law
even though Paulson has repeatedly raised the issue formally in his
Motions and pleadings. They have just ignored Common Law. Not a word
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have they said about this area of the Common Law. Rather, they, all 14 of
them, have divined themselves free to make any decision they want to
make eschewing clear Man-Made law. The problem is they are not Gods,
therefore constrained not to follow their view of natural law. In other words,
they may not make any decision they want motivated by how they feel that
day. They must follow statutes and case (or common) law. They must
follow precedent. See, Appendix for specifics as to how each judge has
assiduously diverted Common Law from their considerations.
UNFAIR FORECLOSURES IN THE REAL WORLD
(Or How I Learned to Love my 14 judges in a Simple, Single Asset
Bankruptcy)
Morton J. Horwitz, in his book, Transformation of American Law, 1870
to (Present), tells us that early law was chiefly for the benefit of the
merchants. So, it is now. It was chilling in my recent appearance in
Bankruptcy Court to learn that the overriding standard for the entire
bankruptcy process is ...for the paramount interests of the creditors.
Because I did not know that, my Bankruptcy Judge Randall Dunn told me
at my last hearing before him that I had a pure heart, but an empty head.
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Thus admonished, I now see the process as it really is. You, as the
debtor, are nothing more than a fly on the wall. The only way that the
public will have a chance against the merchants is to unite.
My website search tells me that could happen, but is not happening
now. But, my research tells me more. Our legal system discovered that
the banks have been doing it wrong since at least 2004. It is essential that
debtors, know what banks have been doing wrong. This knowledge is a
hydrogen bomb in the hands of debtors. It is the end of the world for the
financial institutions (banks and mortgage brokers) who have been doing it
wrong. It has to do with STANDING.
LEGAL STANDING
Judges have a remarkably full tool kit to dispatch disfavored debtors
to the dust bin. In some states that is exactly what judges have been doing
since at least 2004. However, now there is a tsunami that is about to
engulf the financial industry that there is nothing the judges can do to favor
the merchants. It comes in the form of the formidable legal concept of
Constitutional Standing. There is nothing judges can do about it except
rule in favor of the debtors. Debtors either have it and they win. Or they
dont and they lose. There are few areas of the law that are black or white.
This is one of them. You will have to read further to see how powerful the
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standing to file a proof of claim, obtain relief from stay, appear as a party of
interest in any forum, file any motions herein, much less a motion for
summary judgment, nor conduct a nonjudicial foreclosure.
FHLF, LLC as the assignee of the trust deeds from Fairway
Commercial Mortgage Corporation (Fairway), the lender, did not ever come
into possession of the underlying promissory Notes. The lender, Fairway
Commercial Mortgage Corporation, did not assign, endorse nor transfer
possession of the underlying promissory Notes to FHLF, LLC. Therefore,
FHLF, LLC had no standing before any of the courts including this court
because it never held the debt instrument.
Such failure is fatal to FHLF, LLCs ability to appear as a party in any
litigation. It is fatal to their ability to assert the debt in the bankruptcy forum
or foreclose under the law in Oregon and under the law across the United
States. They have no legal standing to file any pleadings in any court.
PROCEDURAL POSTURE
This matter has been before fourteen (14) judges in six (6) separate judicial
forums involving eight (8) lawyers not to mention a filing by Paulson with the
Oregon Attorney Generals Office. It began in August, 2008. It presently pends in
the Washington County Circuit Court, the Oregon Court of Appeals, the U.S.
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Bankruptcy Appellate Panel for the Ninth Circuit, the Oregon Federal District
Court, Portland Division and the U.S Court of Appeals, Ninth Circuit as follows:
1. Oregon Bankruptcy Case No. 09-32439rd11/7
2.Washington County Circuit Court Case No. C 10084
3.Washington County Circuit Court Case No. C 10085
4.Washington County Circuit Court Case No. C 10086
5.Oregon Court of Appeals Case No. A14569
6.Oregon Court of Appeals Case No. A14570
7.Oregon Court of Appeals Case No A14671
8.United States Bankruptcy Appellate Panel Case No. BAP OR-10-1173
9.Oregon District Court Case No. 3:10-cv-00048-MO
10.United States Court of Appeals Ninth Circuit Case No. 10-35745
11.Oregon District Court Case No. cv-08982-ST/PK
ISSUE
Does FHLF, LLC have legal standingbefore any of the forums on any of
the pending matters?
ANSWER
No. State law requires that when mortgages (here deeds of trust) are
assigned that the promissory Note be transferred to or endorsed to the assignee,
FHLF, LLC. That wasnt done. This means that the security instrument was
separated from the Note between two companies. Fairway held the promissory
Notes and FHLF, LLC held the deeds of trust. The Rinegard case in Oregon and
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the law across the United States says that when the security instruments (deeds of
trust) are separated from the debt obligation, (the promissory Notes) by such a
defective assignment, the security instruments become ineffective. The debt
obligation is no longer secured. (See cases below)
This means that FHLF, LLC, which was only assigned the security
instruments, not the Notes; had no standing in these forums nor had a right to
foreclose because they did not possess nor have an interest in the debt instruments
i.e., the promissory Notes.
THE FACTS
At issue here are two 2005 trust deed transactions with two promissory
Notes between Paulson and Fairway Commercial Mortgage Corporation (Fairway).
Fairway Commercial Mortgage Corporation subsequently morphed into a new
organization yclept Fairway America. Mathew (Matt) W. Burk is the President
of all the creditor entities (Fairway Commercial Mortgage Corporation, Fairway
America, FHLF, LLC, and Skylands Investment Corporation) involved here. The
2005 transaction only involved Fairway Commercial Mortgage Corporation.
Huber-Wheeler Crossing, LLC (with Paulson as the sole member) is the
borrower on one Note and Lauren Paulson, Trustee of his testamentary trust is the
borrower on the other. On the instructions of Paulsons attorney, Matt Arbaugh,
both properties were subsequently quitclaimed to Lauren Paulson as an individual
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prior to and as part of the commencement of the bankruptcy proceedings in April,
2009.
The original lender, Fairway Commercial Mortgage Corporation, assigned
their deeds of trust to FHLF, LLC on February 6, 2006, but failed to assign,
endorse nor deliver the underlying promissory Notes to FHLF, LLC. Fairway
Commercial Mortgage Corporation remained the lender and Holder on the
promissory Notes following this ineffective assignment. It should be noted that
neither Fairway nor FHLF, LLC gave the debtor notice of the 2006
assignment.
FHLF, LLCs current attorney, Craig Russillo, also represents Fairway
America, Matt Burk and Wells Fargo Foothills. Mr. Russillo was the attorney for
FHLF, LLC in the FED state court cases as well as the attorney for FHLF, LLC in
the bankruptcy proceedings. In addition, Mr. Russillo was formally designated as
the agent for Joel Parker, the successor trustee at the foreclosure sale.
FHLF, LLC, through Schwabe attorney Joel Parker as successor trustee and
Schwabe attorney Craig Russillo as his agent; conducted a nonjudicial foreclosure
on September 25, 2009. This foreclosure was defective due to multiple other
mistakes made by FHLF, LLC and their counsel, but those defects are addressed
elsewhere.
THE LAW
Absolute Assignment
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FHLF, LLCs attorney, Mr. Russillo, has asserted the notion that the Absolute
Assignment in 2006 of the deeds of trust does the job for them. They say this
because there is general Note transfer language found in that document. In other
words, FHLF, LLC would say that the language in the deeds of trust assignment is
enough to include the Note in the deeds of trust assignment. This notion is refuted
by the Rinegard case discussed below among all the others. An attempt to assert a
general transfer of a Note in the mortgage (deeds of trust) assignment was an issue
in Bellistri v. Ocwen Loan Servicing, LLC 284 SW 3 rd 619, 623 (Mo Ct App
2009). The court found as it did in Rinegard, that blanket mortgage assignment
language in an attempt to include the Note is of no force because no actual transfer
of possession of the Note occurs as required by the law.
But, even if such an assignment were enough (which it is not because how
the Note is transferred is governed by the UCC, as is discussed below; NOT by the
law of assignments) there are specific requirements under the law of absolute
assignments which must be followed:
The entire debt must be assigned. That did not happen here.
The assignment must be in writing.
The intention of the parties must be clear.
Written notice of the assignment must be given to the debtor .
That did not happen here. Failure to provide Paulson with notice of
the Note assignment renders it void under the law of assignments.
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Condor Asset Management Ltd v. Excelsior Eastern Ltd., NSWSC
1139, (2005)
Then, under an absolute assignment the assignor, Fairway, must be
joined in any foreclosure and that was not done here.
The Uniform Commercial Code
Before one can legally own a car, a person must physically come into title.
One may not legally transfer ownership of a car to another without signing off on
the title first. One cannot expect money from the transfer of car ownership without
having first been in title and then legally transferring ones interest in that legal
instrument. In other words, one cannot legally enforce a car sale if that person
didnt own the car in the first place. FHLF, LLC cant enforce the debt alleged to
be owed to them by Paulson without owning the Notes first. One cannot refer to
other documents; the endorsements (signatures) must be on the title document
itself or permanently attached.
1. Negotiation and Transfer of Notes: -- The Uniform Commercial Code
(UCC), with state-specific variations, has been adopted as law by all 50 states and
governs a major portion of the law with respect to deeds of trust and accompanying
promissory (mortgage) Notes. Article 3 applies to the negotiation and transferof
promissory Notes as they are negotiable instruments as defined in that section of
the UCC. Article 9 of the UCC governs the sale of promissory notes. Oregons
UCC law is identical to all UCC references here.
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2. Enforcement of Notes Requires Delivery: -- A negotiable promissory
Note is transferred when it is delivered for the purpose of giving the transferee
the right to enforce the note. [See UCC Section 3-203(a), ORS 73.0203(1)]
Fairway never delivered the promissory Notes to FHLF, LLC. Under the UCC if
an entity never came into possession of the Note then they are not entitled to
enforce the Note. [UCC Section 3-301] Because FHLF, LLC never came into
possession of Paulsons promissory Notes, they are not entitled to enforce the
Notes. [ORS 73.0301] Therefore, FHLF, LLC had no standing to appear in the
bankruptcy proceedings, file a proof of claim, obtain a relief from stay, file
motions, nor to foreclose. (See the Kemp case cited and discussed below)
3. Delivery Requires Endorsement: -- Moreover, delivery requires
endorsement on the Note or on an allonge(a separate paper permanently attached
to the Note, used in case all the other endorsement spaces are taken up) by the
Holder, Fairway, to FHLF,LLC. Actual endorsement on the document is required
so FHLF, LLC can prove it didnt just come into possession --by stealing the
negotiable instrument, to use an extreme example. Here, there was no
endorsement of Paulsons promissory Notes by Fairway to FHLF, LLC which is a
complete obstacle to FHLF,LLC becoming a Holder of the Notes.
4. Thus, FHLF, LLC is not the Holder of the Notes: -- To enforce a Note
against the borrower, a person must prove that one is a Holder or it is a transferee
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with the rights of a Holder. [ORS 73-0301] Fairway Commercial Mortgage
Corporation is the only Holder of these Notes.
There is a purpose behind these stringent requirements in the UCC. A debtor
is only required to pay money to the Holder of the Note, so he/she does not have
to worry about multiple and conflicting claims against the debtor. Vis:
Conflicting Creditor Claims
At least four of Matt Burks corporations have variously and inconsistently
asserted a creditors interest in this matter:
A. Fairway Commercial Mortgage Corporation: -- This is the only
company that Paulson dealt with in the 2005 loan transactions and with
whom Paulson contracted. (Even this part of the transaction has been
bungled by Fairway. Apparently, there does not exist a loan agreement,
that has been signed by Fairway. Mr. Seidenwurm for whom there is a
signature space, is no longer with the company and did not sign in the
signature space for Fairway.
It is only Fairway Commercial Mortgage Corporation that
issued the 11/25/2008 Notice of Default and Election to Sell.
FHLF, LLC is not mentioned in this recorded document. The
inconsistency is obvious. Why would Fairway Commercial Mortgage
Corporation be issuing a 2008 Notice in this matter if they assigned
their interest to FHLF,LLC in 2006? Why would Fairway Commercial
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Mortgage Corporation be doing anything in 2008 when Fairway America
is the replacement corporation?
B. FHLF, LLC: -- Following Paulsons filing of Chapter 11 bankruptcy in
April, 2009 the next pleading filed in the bankruptcy matter is by FHLF,
LLC through their attorney, Craig Russillo on April 22, 2009.
C. Fairway America: -- There is an undated memorandum on Fairway
America letterhead signed by Mathew W. Burk as President of Skylands
Investment Corporation assigning the rights and interest in the
Assignment of Leases and Rents to FHLF, an Oregon limited liability
company This undated memo states: Fairway America, LLC
successor in interest to Fairway Commercial Mortgage
Corporation.(sic) If Fairway America became a successor in interest to
Fairway Commercial Mortgage Corporation sometime in 2006 why is
Fairway Commercial Mortgage Corporation still filing documents in
this case in 2008 and 2009?
The initial demand to cure letter to the Plaintiff came on
August 12, 2008 from Attorney Joel Parker representing Fairway
America. On April 27, 2010, Attorney Craig Russillo acting on behalf of
Fairway America filed FHLF, LLCs Memorandum in bankruptcy court
in support of the Trustees intent to settle the Paulsons lawsuit. The
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April 27, 2010 Memorandum is supported by a declaration signed by
Fairway Americas General Counsel Greg Blair.
Yet in a pleading filed by Attorney Craig Russillo in the United
States Court of Appeals for the Ninth Circuit on January 5, 2011 Mr.
Russillo states:
(Paulson) incorrectly names Fairway America
Corporation as a defendant-respondent in this appeal. No
such entity exists to the best of defendants-respondents
knowledge. The entity that Plaintiff presumably intended
to name is Fairway Commercial Mortgage Corporation,nka Skylands Investment Corporation.
However, in the same pleading he provides another Declaration
by Greg Blair as general counsel for Fairway America, successor in
interest to the business of Fairway Commercial Mortgage Corporation
(Fairway).
D. Skylands, Who?: -- Throughout the debtors 2005 loan transactions
with Fairway, there was no mention of Skylands Investment
Corporation. Skylands is first mentioned in 2008 when a curious
document is found in the chain of title recorded in Washington
Countys Taxation and Assessment Department. In this 2008 document
Fairway Commercial Mortgage Corporation, is listed as Grantorof
the deed of trust assignment (they probably meant to put Huber-Wheeler
Crossing, LLC as the actual Grantor of the deeds of trust) and this
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document appoints a successor trustee, Joel Parker, who is an attorney
for Schwabe law firm. This document is signed by Mathew W. Burk,
President of Skylands Investment Corporation, an Oregon corporation,
Manager. To this day, the Plaintiff has no idea who Skylands
Investment Corporation is nor what role they have in any of the
transactions encompassed here. Skylands signs as Manager of FHLF,
LLC.???
E. Fairway America LLC -- Is an entity that registered with Oregons
Corporation Division on . It is the entity that should have been
identified as the successor corporation to Fairway Commercial Mortgage
Corporation instead of the entity that does not exist --- Fairway America.
However, the Plaintiff previously provided the Court with a signature
page by Mr. Russillo dated March 20th, 2009 where he signs himself as the
attorney for Fairway America Corporation. Then as recently as April 10,
2010 Mr. Russillo signs himself as the attorney for Fairway America, the
entity that does not exist. In summary, in addition to the contracting
Fairway entity: -- Fairway Commercial Mortgage Corporation, the actual
lender has variously used the names Fairway America LLC, Fairway America
Corporation and just plain Fairway America. The Oregon Business Registry
identifies the probable proper entity as Fairway America LLC.
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Causing further confusion is the fact that in the same current pleading
Craig Russillo states that Fairway Commercial Mortgage Corporation is now
known as Skylands Investment Corporation. (Def. Res. at fn1, Page 1).
On the other hand, Greg Blair states in his declaration that Fairway
America, LLC is the successor in interest to the business of Fairway
Commercial Mortgage Corporation (Blair Dec#1, Page 1) to this current
day.
Fairway America is the entity designation on all of Fairways
letterhead communications.
On the Motion for Summary Judgment filed in the instant case,
Mr. Russillo signed as the attorney for Fairway America Corporation.
There was testimony in a court proceeding by Attorney Joel Parker
that there are individual investors on Paulsons loan. These investors loaned
funds to Fairway to finance Paulsons loan and to whom Fairway may owe
about $200,000. These individuals may have an additional interest in these
matters.
Thus, there are at least four creditors who are asserting claims against
the Plaintiff since 2005; Fairway Commercial Mortgage Corporation,
Fairway America, FHLF, LLC and Skylands Investment Corporation. Even
the bankruptcy judge, Judge Dunn, was confused. He thought the dispute
was between Paulson and Fairway when in truth and in fact, the only
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matters before Judge Dunn in the bankruptcy proceeding were the claims of
FHLF, LLC.
FHLF, LLC Is Not A Holder
As discussed above, any claim asserted by FHLF, LLC in these matters is
unenforceable against Paulson and his property under Oregon law. The underlying
promissory Notes are negotiable instruments under Oregons version of the
Uniform Commercial Code . [ORS 73.0104]. and according to the specific
language of these loan documents. A party is entitled to enforce a negotiable
instrument if they are (A) the Holder of the Note or (B) under certain
circumstances when they are a nonholder in possession with the rights of a
Holder, or (C) a person not in possession, but who is entitled to enforce the note
when it is, for example, lost or stolen.
A. HolderThis is the person in possession of the note if payable to that
identified person. Since FHLF, LLC was never in physical possession of
the note, it cannot qualify as the Holder of the note.
B. Nonholder in possession -- FHLF, LLC could otherwise qualify under
the UCC under certain circumstances if it had ever come in possession of
the Note before foreclosure. Since FHLF, LLC never came into
possession of the Notes, it cannot qualify under this rule.
C. Nonholder not in possession -- This applies, among other things, to lost
or stolen notes and is inapplicable here. [See ORS 73.0301]
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Thus, it is clear that FHLF, LLC was never the Holder of Plaintiffs
promissory Notes under the Uniform Commercial Code (UCC) applicable here.
Attorney Craig Russillo has written a recent E-mail that purports to anoint
Holder status for both Fairway Commercial Mortgage Corporation and
FHLF,LLC simultaneously. That is impossible under the law of physics, under
statutory law (the UCC) and the Common Law. Mr. Russillo states:
FHLF, LLC appointed Fairway Commercial Mortgage Corporationas its servicerand held the note and trust deeds on behalf of FHLF,LLC. (emphasis supplied)
Bottom line, FHLF held both the trust deeds and theindebtedness (emphasis supplied)
Here, there was no separation of those estates, as FHLF holds boththe note and trust deeds. (emphasis supplied)
Under Mr. Russillos representations he would have BOTH Fairway and
FHLF, LLC be a Holder at the same time. That is silly. There was no
negotiation. There was no transfer. There was no delivery. There was no
endorsement. FHLF, LLC has no Notes in their possession on this matter. The
proof is in the pudding.
A check of the recorded chain of title found in Washington County reflects
an assignment of the mortgage, but not an assignment of the Note. Russillo
provides no proof of his assertions of who is the Holder and will not allow
inspection of his original documents. Proof is essential in order to establish a chain
of title. Proof is essential here to establish standing.
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All lender billings for payments to Paulson have been by Fairway. Only
Fairway has sent income tax information to Paulson. Only Fairway has to account
for the monthly payments sent to them by Paulson which clearly reflects that as of
2008 Fairway Commercial Mortgage Corporation calls itself the lender on the
transaction. Moreover, Fairway America as successor in interest to Fairway
Commercial Mortgage Corporation is being actively represented as the servicer
and lender in these forums by their General Counsel, Greg Blair through and
including April, 2010. Therefore, it is clear that Fairway Commercial Mortgage
Corporation cum Fairway America are the lender and the servicer of Paulsons loan
to this date.
5. The Deeds of Trust follow the Notes, Not the Other Way Around:
-- The law across the United States and the common law for centuries is: The
mortgage (here deeds of trust) follows the Note. This means that if a promissory
note is assigned, that the security interest (deeds of trust) follows the note. The
converse is NOT true. The promissory note DOES NOT follow the mortgage.
Thus, an assignment of the mortgage without the concomitant assignment of the
Note is a nonevent. One can enforce the bare Note, but one cannot enforce the
bare security interest.
The current economic meltdown has disclosed that financial institutions across
the country have made the same mistake Fairway and FHLF, LLC made here:
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Kemp v. Countrywide, USDC of New Jersey, Case No 08-18700- JHW
(11/16/10) {The debtor successfully expunged the proof of claim in
bankruptcy adversary proceeding because the Note was neither endorsed to
transferee nor put in transferees possession}
Schwend v. US Bank, N.A, et al., USDC of Missouri, Case No 4:10 CV
1590 CDP (12/3/10) { A debtor successfully resisted a Motion to Dismiss
her claim for wrongful foreclosure citing Missouri law that a foreclosure is
invalid if the person causing the foreclosure does not actually hold title to
the Note}
Cogswell v. CitiFinancial Mortgage Company, Incorporated, US Court of
Appeals, 7th Circuit, No 08-2153 (10/5/10) {Debtor successfully avoided
foreclosure when CitiFinancial assigned its interest in a mortgage but never
delivered the Note to the assignees. Citing Illinois law, the Court stated that
only the Holder of the Note may foreclose}
Servido v. US Bank N.A. et al., District Court of Appeal for State of Florida,
Fourth District, Case No 4DE10-1898 (10/27/10) {Holding that the party
seeking foreclosure must present evidence that it owns and holds the note
and mortgage in question}
BAC Home Loans Servicing, LP fka Countrywide v. White, Court of Civil
Appeals of Oklahoma, Case No 108,736, (12/3/10) {Court holds that a
mortgage is merely an incident and accessory to the Note. Under Oklahoma
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law an assignment of the mortgage to one other than the holder of the note is
of no effect}
Fawn Ridge Partners, LP v. BAC Home Loans Servicing, LP, U.S.
Bankruptcy Appellate Panel of the Ninth Circuit, Bk. No 09-15088-TD,
BAP No. CC-09-1396-HPDu , before Hollowell, Dunn and Perris,
Bankruptcy Judges, (3/29/10) { Countrywide, the lender, has a practice of
retaining the original Notes. Because Countrywide did not endorse and
transfer the Note to BAC, the latter had no standing to request a relief from
stay. 11 USC Section 362(d) Court holds that Constitutional standing is a
threshold jurisdictional requirement, and cannot be waived (citing cases)
Under California law, to qualify as a Holder, one must be in possession of
the instrument, and the instrument must be properly endorsed.}
LNV CORP v, Madison Real Estate, Supreme Court of New York, Index No.
103576/2010, (12/09/2010) {Under New York law a party foreclosing must
show that they are the owner of the Note as well as the mortgage at the time
the action is commenced. Absent an effective transfer of the debt as well as
the note, the assignment of the mortgage is void and the party may not
foreclose. That party has no standing.}
HSBC v. Thompson, et al., Court of Appeals of Ohio, Trial Court Case No.
07-CV-9439, 2010-4158 (9/3/2010) {Trial Court decision affirmed granting
debtor summary judgment and dismissing foreclosure action because HSBC
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failed to establish that it was the Holder of the promissory Note. Without
that showing HSBC has no standing to bring the foreclosure. Standing is a
threshold issue for the courts to decide for it to proceed to adjudicate the
action. In a foreclosure action the real party in interest is the current holder
of the note and mortgage. Financial institutions, noted for insisting on their
customers compliance with numerous ritualistic formalities, are not
sympathetic petitioners in urging relaxation of an elementary business
practice. For nearly a century, Ohio courts have held that whenever a
promissory note is secured by a mortgage, the note constitutes the evidence
of the debt and the mortgage is mere incident to the obligation. Edgar v.
Haines, 109 Ohio St. 159, 164, 141 NE 837 (1923) Moreover, a financial
institution cannot cure its lack of standing by subsequently obtaining an
interest in the mortgage or Note. Accord Bank of New York v. Gindele,
Hamilton App. No. C-C090251, 2010-Ohio-542.}
Country Place Community Association, Inc. J.P. Morgan Mortgage
Acquisition Corp, District Court of Appeal of Florida, Case No. 2D10-569,
(12/29/10) Country Place sued J.P. Morgan for attorney fees after the
circuit court dismissed J.P. Morgans mortgage foreclosure action. J.P.
Morgan never produced any evidence that it owned the note and mortgage
that were subject to the previous proceeding. Thus, Country Place
successfully dismissed the case on summary judgment and now seeks their
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attorney fees. The court agreed that without proof that it owned the note,
J.P. Morgan had no standing. The court holds that if a ruling of a trial court
is not worthy of support then J.P. Morgan should confess error.
The common law rule that the mortgage follows the note is codified in
Article 9 of the UCC, Section 9-203(g) which states: The attachment of a security
interest in a right to payment or performance secured by a security interest or other
lien onreal property is also attachment of a security interest in the security
interest, mortgage, or other lien. [ORS 79.0203(7)]
As the following cases demonstrate, the mortgage note does not follow the
mortgage if there is an attempted assignment of the mortgage alone or if there is an
assignment separate from the mortgage note as happened here. Bellistri v. Ocwen
Loan Servicing, LLC 284 SW 3rd 619, 623 (Mo Ct App 2009) An assignment of
the deed of trust separate from the note has no force. Saxon Mortgage Serf. Inc
v. Hillery, No C-08-4357 EMC, 2008 WL5170180, at 4-5(ND Cal Dec 9 2008).
For there to be a valid assignment, there must be more than just an assignment of
the deed of trust alone; the note must also be assigned. In re Wilhelm, 407 BR
392, 400-05 (Bankr D Idaho 2009). Oregon cases support the concept that the
security, here the Deed of Trust, is merely an incident to the debt. West v. White,
307 Or 296, 300, 766 P2d 383 (1988)
Where, as here, the note and the trust deed are split, the transfer of
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the trust deed is ineffective. Bellistri v. Ocwen Loan Servicing, LLC, 284 SW 3rd
619, 623-24 (Mo Ct App 2009) A putative transfer of the note in the trust deed
assignment is ineffective because the UCC governs the transfer of a promissory
Note. Because Fairway Commercial Mortgage Corporation never physically
transferred the Notes to FHLF, LLC, Joel Parker as successor trustee on the
security interests did not have a legally cognizable interest in the property.
Therefore, Parker had no standing to foreclose on FHLF, LLCs behalf. Saxon
Mortg. Serv., Inc v. Hillery, No C-08-4357 EMC, 2008 WL 5170180. That
Fairway Commercial Mortgage Corporation remained the lender on the transaction
is evidenced by the fact that only Fairway Commercial Mortgage Corporation, as
lender, continued to collect on and enforce the debt following the putative
execution of the Notes in 2005. Further, only Fairway Commercial Mortgage
Corporation, as beneficiary, issued the 2008 Notice of Default and Election to Sell.
This is a clear break in the chain of title. Fairway had supposedly assigned their
interests to FHLF, LLC in 2006 according to the official records. Yet in 2008
Fairway is representing itself as the real party at interest in the trust deeds while
two years earlier Fairway had assigned their trust deed interests to FHLF, LLC.
This Notice contains no mention of FHLF,LLC. Then, as discussed above,
Fairway then morphed into Fairway America and participated variously in these
proceedings as described.
It is clear that FHLF,LLC did not have standing in this Court, nor
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standing to either seek relief from the bankruptcy stay, seek an FED, nor
move forward with foreclosure because FHLF, LLC was never in possession
of the promissory Notes. The other Fairway entities were just hopelessly
confused.
As stated above, Judge Garr King in Rinegard-Guirma v. Bank of
America, et al U.S. District Court, District of Oregon, Portland Division Civil
Case No 10-1065-PK decision dated October 6, 2010, Held: that when the
lender splits the trust deed from the promissory notes, any foreclosure is
ineffective. That is exactly what happened here. In short:
In Rinegard the lender, Mortgage Lenders Network (MLN) assigned the deed of trust to LaSalle who appointed thesuccessor trustee
In Paulson, the lender, Fairway Commercial Mortgage Corporation (FCMC) assigned the deed of trust to FHLFwho appointed the successor trustee
In Rinegard the lender, MLN, physically retained the promissory notes as well as the servicing rights to themortgages.
In Paulson, the lender FCMC physically retained the promissory notes as well as the servicing rights to themortgages.
In Rinegard payments were to be made to the lender, Mortgage Lenders Network, USA
In Paulson, payments were to be made to the lender, Fairway Commercial Mortgage Corporation.
Fairway Commercial Mortgage Corporation split the trust deeds from the
promissory Notes when they made the 2006 assignments of the trust deeds to
FHLF, LLC, but did not assign nor transfer possession of the promissory Notes to
FHLF, LLC. Therefore, all proceedings with them as a party or participant in any
forum including the foreclosure leading to the FED action was defective and void
because FHLF, LLC had no standing in any judicial forum.
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Constitutional Standing
The issue of standing involves both constitutional limitations on federal
court jurisdiction and prudential limitations on its exercise. Warth v. Seldin, 422
US 490, 498 (1975). In order to have constitutional standing FHLF, LLC must
show that it suffered an actual concrete and particularized injury in fact, caused by
the debtor which would result in likely redress. Lujan v. Defenders of Wildlife,
504 US 555, 559-560 (1992). Here, FHLF, LLC can show no interest in the
underlying debt instrument nor that it paid anything for this transaction. FHLF,
LLC cannot show that it was either the transferee or assignee of the Note.
Therefore, FHLF, LLC cannot demonstrate that it has been injured by the debtors
putative default on the loan. As such, FHLF, LLC did not have constitutional
standing to file anything, foreclose, much less for a relief from Stay or to
participate in these proceedings at all.
Prudential standing requires that FHLF, LLC assert its own claims rather
than the claims of another. Dunmore v. United States, 358 F3d 1107, 1112 (9th Cir.
2004). It is clear that FHLF, LLC is nothing more than a shell company attempting
to assert the claims of Fairway. As such it has no financial interest and no standing
under any doctrine.
PERSONAL PROPERTY
Paulson previously asked the Courts for an emergency Stay to protect
the property. In August, 2010 when the Defendants were threatening to remove
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and destroy all of Paulsons personal property Paulson again moved for an
emergency stay. None of the Courts were willing to have a hearing on these
emergency motions. Now, that removal and destruction of Paulsons property and
personal property has occurred. Paulson has no idea where that property has been
taken nor whether that property has been destroyed. In light of the current issue of
constitutional standing, Paulson is again asking the courts to issue a preliminary
injunction and stay requiring the Defendants to return Paulson to the premises and
requiring the Defendants to return Paulsons personal property.
This is probably the only case in history where the Court has
allowed one party to litigation to confiscate all of the other partys litigation
materials, including the computer hard drive of the adversary, while the litigation
was pending. The Defendants not only have all of Paulsons personal property,
they also have his family irreplaceable heirlooms dating back over 100 years.
Thats not all. The Defendants also have over 2,000 client files and the client list
of Paulsons for over 300 clients. In theory, one would suppose one business
would not be allowed the customer lists of another business, but that is allowed
here. It shouldnt have been allowed.
The Defendants also have confiscated three of Paulsons vehicles
including a classic motor home.
And then there is the other computer hard drive belonging to Paulson in the
custody of Attorney Paul Bergs paralegal who is defending Craig Russillo by the
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Professional Liability Fund, Oregons lawyer malpractice insurance carrier. This
hard drive contains confidential client information and confidential financial
information belonging to Paulson.
Paulson has asked for a stay of the Appellate Panel proceedings so the
Portland Bankruptcy Court may consider the issue of standing at the bankruptcy
trial court level. The Portland Bankruptcy Court has been asked to schedule an
evidentiary hearing to determine chain of title and to determine if the putative
creditor, FHLF, LLC has constitutional standing. It doesnt.
Dated this 10th day of January, 2011
_________________________Lauren Paulson