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Transcript of Legal Memorandum
LEGAL MEMORANDUM
It has recently come to light to Paulson, by virtue of Judge Garr
King's 2010 ruling in Rineqard cited below, that FHLF, LLC has no
standing before any of the forums mentioned below. The issue of
whether or not a party has standing cannot be waived. 'Constitutional
Standing' is a "threshold jurisdictional requirement, and cannot be
waived". Pershing Park Villas Homeowners Assoc. v. Unified Pac.
lns. Co., 219 F3d 895, 899-900 19th Cir 2000).
PRELIMINARY
The Plaintiff, Lauren Paulson, was represented by Attorney
Matt Arbaugh during the bankruptcy proceedings from April, 2009
until May ,2010 and throughout, from Chapter 1 1, Chapter 7 until the
bankruptcy appeal. Notwithstanding that this is a simple, single asset
case; apparently no one in any of the antecedent proceedings
considered a glaring defect. FHLF, LLC has no standing before any
of these forums because they were not the 'Holder' of the Note. Thus,
FHLF, LLC had no 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
nonj ud icial foreclosure.
FHLF, LLC as the assignee of the trust deeds from Fairway
Commercial Morlgage 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 courls including this court because it never held the debt
instrument.
Such failure is fatal to FHLF, LLC's ability to appear as a party
in any litigation. lt 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 foufieen (1a) judges in six (6) separate
judicial forums involving eight (8) iawyers not to mention a filing by
Paulson with the Oregon Attorney General's Office. It began in August,
2008. It presently pends in the Washington County Circuit Court, the
Oregon Court of Appeals, the U.S. Bankruptcy Appellate Panel for the Ninth
Circuit, the Oregon Federal District Coufl, Poftland Division and the U.S
Courl of Appeals, Ninth Circuit as follows:
1, Oregon Bankruptcy Case No, 09-32439rd77/7
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. 414569
6, Oregon Court of Appeals Case No, A74570
7. Oregon Court of Appeals Case No A14677
B. 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
ISSI]E
Does FIILF, LLC have lega1 standing before any of the forums on
any of the pending matters?
ANSWER
No. State 1aw 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 wasn't 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 the law across the United States says that
when the security instruments (deeds of trust) are separated frorn 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, FI{LF, LLC, and
Skylands Investment Corporation) involved here. The 2005 transaction only
involved Fairway Commercial Morlgage 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 Paulson's attomey,
Matt Arbaugh, both properlies were subsequently quitclaimed to Lauren
Paulson as an individual 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 deiiver 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, LLC's current attomey, CraigRussillo, also represents
Fairway America, Matt Burk and Wells Fargo Foothills. Mr. Russillo was
the attomey 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 CraigRussillo as his agent; conducted a
nonjudicial foreclosure on September 25,2009. This foreclosure was
defective due to multiple other mistakes made by FFILF, LLC and therr
counsel, but those defects are addressed elsewhere.
THE LAW
Absolute Assignment
FHLF, LLC's 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'd 679,623 (Mo Ct App2009). 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:
o The entire debt must be assigned. That did not happen
here.
o The assignment must be in writing.
o 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. Condor Asset Management Ltd
v. Excelsior Eastern Ltd., NSWSC 1139, (2005)
o 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
one's interest in that legal instrument. In other words, one cannot legally
enforce a car sale if that person didn't own the car in the first place. FIILF,
LLC can't 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 govems a major portion of the law with respect to deeds of
trust and accompanying promissory (mortgage) Notes. Article 3 applies to
the negotiation and transfer of promissory Notes as they are 'negotiable
instruments' as defined in that seclion of the UCC. Article 9 of the UCC
governs the sale of promissory notes. Oregon's UCC law is identical to all
UCC references here.
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(I)] 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. IUCC Section 3-301]
Because FHLF, LLC never came into possession of Paulson's promissory
Notes, they are not entitled to enforce the Notes. IORS 73.0301] Therefore,
FI{LF, 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. DeliverJr Requires Endorsement: -- Moreover, 'delivery' requires
endorsement on the Note or on an 'a1longe'(a separate paper permanently
attached to the Note, used in case all the other endorsement spaces are taken
up) by the 'Holder', Fairway,to FIILF,LLC. Actual endorsement on the
document is required so FFILF, LLC can prove it didn't just come into
possession --by stealing the negotiabie instrument, to use an extreme
example. Here, there was no endorsement of Paulson's 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 with the rights of a 'Holder'. IORS 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:
Confl ictins Creditor Claims
All four of Matt Burk's corporations have variously and inconsistently
asserted a creditor's 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 1Il2512008 "Notice of Default and Election to Sell".
FI{LF, LLC is not mentioned in this recorded document. The
inconsistency is obvious. Why would Fairway Commercial
Mortgage Cor?oration be issuing a 2008 'Notice' in this matter if
they assigned their interest to FHLF.LLC in 2006? Why would
Fairway Commercial Mortgage Corporation be doing anything in
2008 when Fairway America is the replacement cotporation?
l0
B. FHLF. LLC: -- Following Paulson's filing of Chapter I I
bankruptcy in April,2009 the next pleading filed in the
bankruptcy matter is by FFILF, LLC through their attorney, Craig
Russillo on April 22,2009.
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
and2009?
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, Attomey CraigRussillo acting on
behalf of Fairway America filed FHLF, LLC's Memorandurn in
bankruptcy courl in supporl of the Trustee's intent to settle the
11
C.
Paulson's lawsuit. The ApriI27,2010 Memorandum is supporled
by a declaration signed by Fairway America's General Counsel
Greg Blair.
D. Skylands, Who?: -- Throughout the debtor's 2005 loan
transactions with Fairway, there was no mention of Skyland's
Investment Corporation. Skylands is first mentioned in 2008
when a curious document is found in the "chain of title" recorded
in Washington County's Taxation and Assessment Department. In
this 2008 document "Fairway Commercial Mortgage
Corporation", is listed as "Grantor"of 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 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 an), of the
transactions encompassed here. Skylands signs as Manager of
FHLF, LLC.???
12
There was testimony in a court proceeding by Attorney Joel
Parker that there are individual investors on Paulson's loan. These
investors loaned funds to Fairway to finance Paulson's loan and to
whom Fairway may owe about $200,000. These individuals may
have an additional interest in these matters.
Thus, there are al least four creditors who are asserting claims
against the Plaintiff since 2005; Fairway Commercial Mortgage
Corporation, F'airway 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 matters before Judge Durut in the
bankruptcy proceeding were the claims of FHLF, LLC.
FFILF. LLC Is Not A 'Holder'
As discussed above, zfly 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 Oregon's
version of the Uniform Commercial Code . IORS 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
13
with the rights of a 'Holder', or (C) u person not in possession, but who is
entitled to enforce the note when it is, for example, lost or stolen.
A. Holder-This is the person in possession of the note if payable to
that identified person. Since FFILF, LLC was never in physical
possession of the note, it cannot qualifu as the 'Holder' of the note.
B. Nonholder in possession -- FHLF, LLC could otherwise qualifu
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 qualiff under
this rule.
C, Nonholder not in possession -- This applies, among other things,
to lost or stolen notes and is inapplicable here. [See ORS
73.03011
Thus, it is clear that FHLF,LLC was never the 'Holder' of Plaintiff s
promissory Notes under the Uniform Commercial Code (UCC) applicable
here.
Attorney CraigRussillo has written a recent E-mail that purports to
anoint 'Holder' status for both Fairway Commercial Mortgage Corporation
and FHLF,LLC simultaneouslv. That is impossible under the law of
I4
physics, under statutory law (the UCC) and the Common Law. Mr. Russilio
states:
"FHLF. LLC appointed Fairway Commercial MortqageCorporation as tts servicer and held the note andtrust deeds onbehalf of FHLF. LLC". (emphasis supplied)"Boltomline.Flil-F held both the trust deeds and theindebtednes s ... " (.emphasis supplied)"Here. there was no separation of those estates. as FHLF ftoldsboth the note and trust deeds. " (,emphasis supplied\
Under Mr. Russillo's 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,butnot an assignment of the lVote.
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.
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
l5
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 Biair through and including April, 2010. Therefore,
it is clear that Fairway Comrnercial Morlgage Corporation cum Fairway
America are the lender and the servicer of Paulson's loan to this date.
5. The Deeds of Trust follow the Notes. Not the Other Wa)' 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 thatif a
promissory note is assigne d, that the security interest (deeds of trust) follows
the note. The converse is Nor true. The promissory note DoES NoT
follow the morlgage. 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:
o Kemp v. Countrywide, USDC of New Jersey, Case No 08-18700-
JHw (rll16110) {The debtor successfully expunged the proof of
16
claim in bankruptcy adversary proceeding because the Note was
neither endorsed to transferee nor put in transferee's possession)
Schwend v. US Bank. N.A. et al., USDC of Missouri, Case No 4:10
CV 1590 CDP (l2l3ll0) { 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, 7'h Circuit, No 08-2153 (1 015110) {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 a1., District Court of Appeal for State of
Florida, Fourth District, Case No 4DE10-1898 (I0l27lI0) {Holding
that the pafty seeking foreclosure must present evidence that it owns
and holds the note and mortgage in question)
BAC Home Loans Servicing, LP fka Countrvwide v. White, Court of
Civii Appeals of Oklahorna, Case No 108,736, (I2l3lI0) {Court holds
that a mortgage is merely an incident and accessory to the Note.
17
Under Oklahomalaw an assignment of the morlgage 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 09-15098-
TD, BAP No. CC-09-1396-LIPDu , before Hollowell, Dunn and
Perris, Bankruptcy Judges, (3129110) { 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. 1 1 USC Section 362(d) Court holds that
Constitutional standing is a'threshold jurisdictional requirement, and
cannot be waived (citing cases)"' under california law, to qualiS' 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. 10357612010, (1210912010) {Under New York law aparty
foreciosing 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.)
l8
HSBC v. Thompson. et al.. courl of Appeals of ohio, Trial court
case No. 07-cY-9439,2010-4158 (91312010) {Trial courr decision
affirmed granting debtor summary judgment and dismissing
foreclosure action because HSBC 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
courls 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 mort gage, 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 937
(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-
C09 025 1, 20i 0-Ohio-5 42.)
t9
o Country Place Communitlz Association. Inc. J.P. Morgan Mortgage
Acquisition Corp. District Court of Appeal of Florida, Case No.
2Dl0-569, (12129/10) Country Place sued J.P. Morgan for attorney
fees after the circuit court dismissed J.P. Morgan's 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 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(9) which states: "The attachment of
a security interest in a right to payment or performance secured by a security
interest or other lien on...real property is also attachment of a security
interest in the security interest, mortgage, or other lien." IORS 79.0203(7)]
As the following cases demonstrate, the mortgage note does not
follow the mortgage if there is an attempted assignment of the morlgage
alone or if there is an assignment separate from the mortgage note as
happened here. Bellistri v. Ocwen Loan Servicing. LLC 284 SW 3'd 619,
20
623 (Mo Ct App 2009) An assignment of the deed of trust separate from the
note has no 'force'. Saxon Mortgage Serf. Inc v. Hiilery, No C-08 -435i
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 Wilheim,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, 7 66 P2d3g3 (1 ggg)
Where, as here, the note and the trust deed are split, the transfer of
the trust deed is ineffective. Bellistri v. Ocwen Loan Servicing, LLC, 284
SW 3'd 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 foreciose on
FHLF, LLC's 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
2t
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 in2006 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
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 LI.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:
22
In Rinegard the lender, Mortgage Lenders Network (MLN) assigned the deed of trust to LaSalle whoappointed the snccessor trustee
In Paulson, the lender, Fairway Commelcial Mortgage Corpolation (FCMC) assigned the deed of trust toFHLF who appointed the successor trustee
In Rinegard the lender, MLN, physically retained the promissory notes as well as the servicing rights tothe mortgages.
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, Mofigage Lenders Network, USA
In Paulson, payments were to be rnade 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 FFILF, 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.
Constitutional Standing
The issue of standing involves both "constitutional limitations on
federai couft jurisdiction and prudential limitations on its exercise". Warth
v. Seldin. 422IJS 490,498 (1975). In order to have constitutional standing
FHLF, LLC must show that it suffered an actual concrete and parlicularized
injury in fact, caused by the debtor which would result in likely redress.
Luian v. Defenders of Wildlife. 504 lls 555,559-560 (1992). Here, FI{LF,
23
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, FIILF, LLC cannot
demonstrate that it has been injured by the debtor's putative default on the
loan. As such, FIILF, 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 ashell
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 and destroy all of Paulson's personal properly Paulson agarnmoved
for an emergency stay. None of the Courts were wiliing to have a hearing
on these emergency motions. Now, that removal and destruction of
Paulson's property and personal property has occurred. Paulson has no idea
where that property has been taken nor whether that property has been
24
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 retum Pauison's personal properly.
This is probably the only case in history where the Court has
allowed one party to litigation to confiscate all of the other party's litigation
materials, including the computer hard drive of the adversary, while the
iitigation was pending. The Defendants not only have all of Paulson's
personal property, they also have his family irreplaceable heirlooms dating
back over 100 years. That's not all. The Defendant's also have over 2,000
client files and the client list of Paulson's for over 300 ciients. In theory,
one would suppose one business would not be allowed the customer lists of
another business, but that is allowed here. It shouldn't have been allowed.
The Defendants also have confiscated three of Paulson's vehicles
including a classic motor home.
And then there is the other computer hard drive belonging to Paulson
in the custody of Attorney Paul Berg's paralegal who is defending Craig
Russillo by the Professional Liability Fund, Oregon's lawyer malpractice
insurance carrier. This hard drive contains conhdential client information
and confidential financial information belonging to Paulson.
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Paulson has asked for a stay of the Appellate Panel proceedings so the
Portland Bankruptcy Courl 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
doesn't.
Dated this 4th day of January, 20tl
Lauren Paulson
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