tag:blogger.com,1999:blog-26052256907763719522024-03-15T21:10:23.068-04:00The Home Equity Theft Reporter Cases & ArticlesThis is a companion blog to The Home Equity Theft Reporter, at http://HomeEquityTheft.blogspot.com.Unknownnoreply@blogger.comBlogger7603125tag:blogger.com,1999:blog-2605225690776371952.post-58539361101476635362022-02-20T00:01:00.032-05:002022-02-20T00:01:00.237-05:00Brooklyn Grandmother Says Decades-Long Home Was Swiped Out From Under Her In Sale-Leaseback Foreclosure Rescue Scam; Now Resists Eviction, Refuses To Go Down Without A Legal Fight<p> In Brooklyn, New York, <b><i>The Real Deal (New York)</i></b> reports:<br /></p><ul style="text-align: left;"><li><b><i><a href="https://drive.google.com/file/d/17wgPp1ngDan8LzfdcMg00cPylGiy9OB9/view" target="_blank">A new legal filing</a></i></b> and old mortgage documents shed light on an eviction saga in Crown Heights in which a 98-year-old woman lost ownership and then tenancy of <b><i>her family home of 70 years</i></b>.<br />.</li><li>Last week, city marshals evicted Ida Robinson and her family from the stately row house at 964 Park Place. The Robinsons had in 1951 become the first Black family on the block. But facing foreclosure in 2015, the matriarch <b><i>was tricked into a deal that stripped her of her house’s deed</i></b>, according to her lawyer.<br /><div style="text-align: center;">***</div></li><li>The lawyer, Adam Birnbaum, wrote that the type of title transfer likely used by the LLC buyer targets homeowners “who are almost always Black and usually elderly.”<br /><div style="text-align: center;">***</div></li><li>The <b><i><a href="https://drive.google.com/file/d/17wgPp1ngDan8LzfdcMg00cPylGiy9OB9/view" target="_blank">document filed in housing court</a></i></b> by Birnbaum, a lawyer at Abrams Fensterman referred to Robinson by Attorney General Letitia James, states that the transaction between Robinson and the LLC has many of the elements of a scam used to trick homeowners out of their deeds.<br />.</li><li>In those schemes, Birnbaum wrote, an LLC is often created specifically for the transaction. The LLC <b><i>characterizes the documents that it draws up as a refinancing</i></b>, which Robinson believed her deal was. But they actually transfer the title to the LLC.<br />.</li><li>Once the LLC has secured ownership, <b><i>it transfers the title to a second or third owner to ensure the process is “difficult or impossible to unwind,”</i></b> Birnbaum wrote. The LLC that allegedly bought 964 Park Place from Robinson immediately transferred the title to another LLC. Five days later, Menachem Gurevitch, Robinson’s current landlord, transferred it to himself.<br />.</li><li>The attorney wrote that Robinson is adamant that she never authorized anyone to sell her home and that she never executed any documents transferring the title.<br />.</li><li>Robinson’s granddaughter [Sherease] Torain <b><i><a href="https://www.law360.com/newyork/articles/1465570/judge-to-review-warrant-in-heated-brooklyn-eviction-row" target="_blank">told Law360</a></i></b> that her “<b><i>grandmother never received a dime</i></b>” from the deal. Court records show that Robinson initially “refused to consummate the sale,” which resulted in a lawsuit, settlement and eventually, her transer of the deed, Law360 reported.<br />.</li><li>Torain said her <b><i>grandmother was 92 years old</i></b> when the transaction took place.
“To force this on, that’s elder abuse,” Torain said. “These are white-collar criminals and no one’s talking about it.”<br /><div style="text-align: center;">***</div></li><li>Birnbaum said the transfer that Robinson supposedly agreed to <b><i>should have been void from the get-go</i></b>. Andre Soleil, the attorney who represented her in the transaction, <b><i><a href="https://law.justia.com/cases/new-york/appellate-division-second-department/2019/2018-04713.html" target="_blank">has since been disbarred</a></i></b> after allegations that he took control of a Harlem nonprofit’s buildings and sold one for $1.4 million — funds the group never received, the <b><i><a href="https://nypost.com/2015/04/21/politically-connected-reverend-accused-of-fleecing-nonprofit/" target="_blank">New York Post reported</a></i></b>.</li></ul><p></p><p>For more, see <b><a href="https://therealdeal.com/2022/02/18/documents-shed-new-light-on-crown-heights-eviction-saga/" target="_blank"><i>Documents shed new light on Crown Heights eviction saga</i></a></b><i> (Lawyer makes case for deed theft; owner took out mortgages during subprime bubble</i>).</p><p>See also:<br /></p><ul style="text-align: left;"><li><i>Law360</i>: <b><i><a href="https://www.law360.com/newyork/articles/1465570/judge-to-review-warrant-in-heated-brooklyn-eviction-row" target="_blank">Judge To Review Warrant In Heated Brooklyn Eviction Row</a></i></b>,</li><li><i>Brooklyn Paper: <b><a href="https://www.brooklynpaper.com/crown-heights-eviction/" target="_blank">Crown Heights Family Fights Real Estate Mogul To Keep The Home They Owned For More Than 60 Years</a></b></i>.</li></ul><p></p><p><br /></p>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-2605225690776371952.post-13632488784089909062022-02-19T00:01:00.001-05:002022-02-19T00:01:00.263-05:00Sale Leaseback Arrangement Designed To Pilfer Home Equity Out From Under Elderly Homeowner Facing Foreclosure Goes Haywire For Scam Artist<p>The underlying facts in a 2019 California state appeals court case may serve as a cautionary tale for foreclosure rescue operators who effectively swindle the wrong financially distressed, elderly homeowner out of the title and equity in her home under the guise of a sale leaseback deal.<br /><span style="color: white;">.</span><br />In this case, the victimized homeowner ended up suing the scam artist and a slew of other defendants<b><span style="color: red; font-size: x-small;">(1)</span></b> who had some part in the ripoff transaction. After extensive litigation, the homeowner ended up relinquishing any ownership claim she had in her home <b><i>in exchange for financial settlements</i></b> from various of the defendants for amounts <b><i>totaling $1,050,000</i></b>, and left the defendants to fight amongst themselves in their efforts to salvage something out of a deal that blew up in their face and went haywire for them.<br /><span style="color: white;">.</span><br />For the court case, see <b><i><a href="https://scholar.google.com/scholar_case?case=3364646690064625388&q=leaseback&hl=en&as_sdt=40006&as_ylo=2018" target="_blank">EGB Group, Inc. v. Family Mortgage Options LLC</a></i></b> (2019) No. B272467 (2d Dist., Div. 1) (unpublished).<br /><span style="color: white;">.</span><br />For case access to information from the trial court proceedings, <b><i><a href="https://www.lacourt.org/casesummary/ui/" target="_blank">go here</a></i></b>, then enter Case # YC069066.<br /><span><span style="color: white;">.</span><br /><span style="color: red;"><b>(1)</b></span></span> The victimized homeowner sued the slew of defendants variously for (1) violation of Home Equity Sales Contract Act (Civ. Code, § 1695, et seq.), (2) wrongful foreclosure, (3) violation of Mortgage Foreclosure Consultants Act (id., § 2945, et seq.), (4) declaratory relief, (5) cancellation of deeds, (6) quiet title, (7) intentional fraud, (8) negligent misrepresentation, (9) breach of contract, (10) rescission of contract, (11) financial abuse of an elder, (12) recovery of usurious interest, (13) equitable redemption of plaintiff's interest in property, (14) violation of Business and Professions Code section 17200, (15) intentional interference with contract, and (16) slander of title.</p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-86762657907456962122022-02-15T14:40:00.025-05:002022-02-15T15:32:12.589-05:00Institutional Sale Leaseback Peddlers Facing Equitable Mortgage Re-Characterization Threats?<p><span>There has recently been an apparent influx of companies entering the real estate market that seek to "institutionalize" the business of "peddling" sale leaseback arrangements that, at least in part, target financially-strapped homeowners, homeowners that are " cash poor" but "equity rich."</span><b><span style="color: red; font-size: x-small;">(1)</span></b></p><p><span>The looming question with these arrangements is: Will courts recognize these deals as "true sale-leasebacks," or are they nothing more than disguised equitable mortgages (ie. secured loans), and in some cases, disguised usurious equitable mortgages</span><b><span style="color: red; font-size: x-small;">(2)</span></b><span> that are made in violation of the Federal Truth-in-Lending Act, state usury laws, and other consumer protection laws.</span></p><p><span>Well, there is at least one law firm (I imagine that there may be others), located in Houston, that is apparently going after these types of companies with lawsuits on behalf of Texas homeowners asserting that the arrangements are nothing more than equitable mortgages</span><span><span>.</span><b><span style="color: red; font-size: x-small;">(3)</span></b></span></p><p><span>For more, including a summary of the firm's basis for bringing these lawsuits, see</span><span><span> </span><b><i><a href="https://feldman.law/news/real-estate-fraud-lawsuit-against-easyknock-inc-and-ek-real-estate-services-of-ny-llc/" target="_blank">Real Estate Fraud Lawsuit Against EasyKnock, Inc. and EK Real Estate Services of NY, LLC</a></i></b><span>.</span></span></p><p><span><b><br />Editor's Note</b>:</span></p><p><span>One company that has been targeted by this law firm has apparently taken umbrage at the firm's effort to recharacterize these sale leaseback deals as equitable mortgages, has responded by filing a lawsuit against them for defamation, and has requested a temporary restraining order in connection therewith. This request has subsequently been denied by the court,</span><b><span style="color: red; font-size: x-small;">(4)</span></b><span><span> and a Motion to Dismiss this case is currently pending.</span><b><span style="color: red; font-size: x-small;">(5)</span></b></span></p><p><span><b>Footnotes</b>:</span></p><p><span><b><span style="color: red;">(1)</span></b> See, for example:<br /></span></p><ul style="text-align: left;"><li><span><b><i><a href="https://therealdeal.com/2020/12/15/sale-leasebacks-increasingly-target-struggling-homeowners/" target="_blank">Sale-leasebacks increasingly target struggling homowners</a></i></b> (Companies like EasyKnock and Invitation Homes look to tap that investment option) (may be behind paywall),</span></li><li><span><b><i><a href="https://www.businessinsider.com/easyknock-invitation-homes-wall-street-single-family-landlords-sale-leasebacks-2020-12" target="_blank">Real-estate power players and startups are getting ready to buy thousands of homes and lease them back amid a wave of foreclosures</a></i></b> (may be behind paywall).</span></li></ul><p></p><p><span><b><span style="color: red;">(2)</span></b> See:<br /></span></p><ul style="text-align: left;"><li><span><b><i><a href="http://homeequitytheft-cases-articles.blogspot.com/2014/11/sale-leasebacks-or-disguised-usurious.html" target="_blank">Sale Leasebacks Or Disguised Usurious Loans; Substance vs. Form</a></i></b>,</span></li><li><span><b><i><a href="http://homeequitytheft-cases-articles.blogspot.com/2007/01/usurious-loans-masquerading-as-sale.html" target="_blank">Usurious Loans Masquerading As Sale Leasebacks</a></i></b>?</span></li></ul><div><span><b><span style="color: red;">(3)</span></b> <b><i><a href="http://homeequitytheft-cases-articles.blogspot.com/2014/12/recharacterizing-sale-leasebacks-as.html" target="_blank">Recharacterizing Sale Leasebacks As Equitable Mortgages In Texas</a></i></b>.</span></div><div><span><br /></span></div><div><span><b><span style="color: red;">(4)</span></b> <b><i><a href="https://www.scribd.com/document/559135254/EasyKnock-v-Feldman-and-Feldman-Memorandum-and-Order" target="_blank">Memorandum Opinion And Order</a></i></b> (Denying Application for Temporary Restraining Order).</span></div><div><span><br /></span></div><div><span>See also, <b><i><a href="https://www.law360.com/commercialcontracts/articles/1464717" target="_blank">Judge Blocks TRO Bid Against Law Firm In Defamation Suit</a></i></b> (may be behind paywall).</span></div><div><span><br /></span></div><div><span><b><span style="color: red;">(5)</span></b> <b><i><a href="https://www.scribd.com/document/559135750/EasyKnock-v-Feldman-and-Feldman-Motion-to-Dismiss" target="_blank">Defendants' Motion To Dismiss For Failure To State A Claim, Or Alternatively, To Stay Or Abate This Proceeding</a></i></b>.</span></div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-50010974196879159162020-12-16T18:34:00.000-05:002020-12-16T18:34:51.596-05:00Big Money Wall Street Operators Now Entering Sale Leaseback Rackets Targeting Financially Distressed Homeowners<p> In New York City, <b><i>The Real Deal (New York)</i></b> reports:</p><p></p><ul style="text-align: left;"><li>Sale-leaseback deals are becoming an increasingly popular investment option as homeowners struggle to pay their mortgages, with many facing the prospect of having to sell.
Some companies are investing in that corner of the single-family home rental business, tapping into a property’s value while keeping a steady rent flow by not forcing out the seller, according to Business Insider.
<br /><br />One such company, EasyKnock, is going all in.<br /><br />The firm is now armed with a $500 million credit line that it will use to buy homes then rent them back to sellers, EasyKnock CEO Jarred Kessler told Business Insider. That boosts the company’s buying power significantly. Its portfolio now includes $200 million worth of homes.<br /><br />Richard Hill, an analyst at Morgan Stanley, said that some large single-family rental companies could also use sale-leaseback deals as a way to market to older homeowners who need to tap into their equity for retirement or healthcare spending.<br /><br />Invitation Homes, the largest single-family home landlord, previously said that it will seek to add sale-leaseback deals to its pipeline of acquisitions.</li></ul><div>Source: <i><b><a href="https://therealdeal.com/2020/12/15/sale-leasebacks-increasingly-target-struggling-homeowners" target="_blank">Sale-leasebacks increasingly target struggling homeowners</a></b> (Companies like EasyKnock and Invitation Homes look to tap that investment option)</i>.<br /><br /></div><div>See also, <i>Business Insider: <b><a href="https://www.businessinsider.com/easyknock-invitation-homes-wall-street-single-family-landlords-sale-leasebacks-2020-12" target="_blank">Real-estate power players and startups are getting ready to buy thousands of homes and lease them back amid a wave of foreclosures</a></b></i> (may be behind paywall).</div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-16087379126037555752017-07-28T00:01:00.000-04:002017-07-28T06:53:53.892-04:00Use Of Land Contracts In Sale Of Real Estate In Indiana Generally Treated As Outright Sale & Purchase, Equitable Mortgage Requiring Foreclosure, Not Forfeiture, In Event Of DefaultIn Indianapolis, Indiana, the <b><i>Indianapolis Star</i></b> reports:<br />
<ul>
<li>Indiana law has few protections for people who purchase a house with land contract, a shortcoming that consumer and housing advocates say places vulnerable buyers at risk.<br /><br />Still, the approach is attractive and increasingly common among individuals and families unable to obtain tradition financing, according to Amy Nelson, executive director of the Fair Housing Center of Central Indiana. That’s because buyers often can get into a contract with little or no money down, followed by affordable monthly payments over a set number of years.<br /><br />The gamble is whether the buyer, often financially distressed to begin with, will have the money or be able to obtain a loan when the balloon pay-off comes due. <b><i>If they can’t — and default — the property reverts to the seller. The buyer walks away with nothing. There is no equity for the money they have paid the seller or improvements that were made</i></b>.<b><span style="color: red; font-size: x-small;">(1)</span></b><br /><br />Land contracts have been used for decades by individuals selling their homes or land. But recently, Nelson said, they are being used more often by businesses that sell homes in large-scale variations on rent-to-own deals. For instance, an IndyStar investigation found one such seller, Chart Properties LLC, has issued more than 100 contracts to buy and sell homes in a process that is not covered by Indiana’s real estate licensing law.<br /><br />Nelson said there should be a cap on how many homes a person or business can sell via contracts without a real estate license, which is required in Indiana to sell property a seller does not own<br /><br />“I would hope that maybe … once you are doing so many transactions a year that you would switch from being that mom-and-pop selling your own home, moving and trying to do it yourself, versus somebody who is in the business of so-called selling those homes,” she said.<br /><br />Chart President Robert “Bob” Keck explained to IndyStar that he does not need a real estate license because Chart claims ownership of homes it is buying on contract. He said Chart’s attorneys have thoroughly researched their legal standing and the company also has a supporting opinion issued in by the Indiana Attorney General.<br /><br />With a growing number of people purchasing homes via contracts — without the protections that come with transactions regulated by real estate licensure laws and mortgages — Nelson said the message is “buyer beware.”<br /><br />“<b><i>The central problem with these land installment contract is that they exist in this no-man’s land in between where the potential home buyer has none of the protections of home ownership and none of the protections of being a tenant in a traditional lease</i></b>,”<b><span style="color: red; font-size: x-small;">(2)</span></b> said Sarah Bolling Mancini, of counsel to the National Consumer Law Center and co-author of a 2016 report that called contract sales “toxic” and “predatory.”</li>
</ul>
<div>
For the story, see <b><i><a href="http://www.indystar.com/story/news/investigations/2017/06/25/indiana-has-few-protections-those-who-buy-homes-land-contract/420673001/" target="_blank">Indiana has few protections for those who buy homes with a land contract</a></i></b>.<br />
<div style="text-align: center;">
-------------------------</div>
<b><span style="color: red;">(1)</span></b> While there may not be any statute in Indiana addressing this point, the Indiana case law makes abundantly clear that, except in limited circumstances (for two examples: in the case of <b><i>an abandoning, absconding vendee</i></b>; where the vendee has <b><i>acquired very little, if any, equity in the property</i></b>), a sale of real estate on a land contract <b><i>is treated as an outright sale and purchase</i></b>, with the payments due on the land contract being treated as payments on an equitable mortgage; and upon default, there is no automatic forfeiture of the property, but rather, the remedy for the seller is to bring a foreclosure action in the same way a traditional mortgage lender forecloses on a mortgage, with the buyer having a corresponding right of redemption.<br />
<br />
For a discussion on this principle as it is applied in Indiana, see <b><i><a href="https://scholar.google.com/scholar_case?q=%22301+NE+2d+641%22&hl=en&as_sdt=4,15,112,127,334,335&as_ylo=2013&case=13727434510401748896&scilh=0" target="_blank">Skendzel v. Marshall</a></i></b>, 261 Ind. 226, 301 NE 2d 641 (Ind. 1973), and the <b><i><a href="https://scholar.google.com/scholar?q=Skendzel+Marshall&hl=en&scisbd=2&as_sdt=4,15,112,127,334,335" target="_blank">subsequent cases thereunder</a></i></b>:<br />
<ul>
<li>[U]nder a typical conditional land contract, the vendor retains legal title until the total contract price is paid by the vendee. Payments are generally made in periodic installments. Legal title does not vest in the vendee until the contract terms are satisfied, but equitable title vests in the vendee at the time the contract is consummated. <b><i>When the parties enter into the contract, all incidents of ownership accrue to the vendee</i></b>. Thompson v. Norton (1860), 14 Ind. 187. The vendee assumes the risk of loss and is the recipient of all appreciation in value. Thompson, supra. The vendee, as equitable owner, is responsible for taxes. Stark v. Kreyling (1934), 207 Ind. 128, 188 N.E. 680. The vendee has a sufficient interest in land so that upon sale of that interest, he holds a vendor's lien. Baldwin v. Siddons (1910), 46 Ind. App. 313, 90 N.E. 1055, 92 N.E. 349.<br /><br /><b><i>This Court has held</i></b>, consistent with the above notions of equitable ownership, <b><i>that a land contract, once consummated constitutes a present sale and purchase</i></b>. The vendor "`has, in effect, exchanged his property for the unconditional obligation of the vendee, the performance of which is secured by the retention of the legal title.'" Stark v. Kreyling, supra, 207 Ind. at 135, 188 N.E. at 682. <b><i>The Court, in effect, views a conditional land contract as a sale with a security interest in the form of legal title reserved by the vendor</i></b>. Conceptually, therefore, the retention of the title by the vendor is the same as reserving a lien or mortgage. <b><i>Realistically, vendor-vendee should be viewed as mortgagee-mortgagor</i></b>. To conceive of the relationship in different terms is to pay homage to form over substance. See Principles of Equity, Clark, 4th edition, Sec. 9, p. 23.<br /><br /><b><i>The piercing of the transparent distinction between a land contract and a mortgage is not a phenomenon without precedent</i></b>. In addition to the Stark case, supra, there is an abundance of case law from other jurisdictions which <b><i>lends credence to the position that a land sales contract is in essence a mortgage</i></b>: [...]<br /><div style="text-align: center;">
***</div>
It is also interesting to note that the drafters of the Uniform Commercial Code <b><i>abandoned the distinction between a conditional sale and a security interest</i></b>. Section 1-201 of the UCC (IC 1971, XX-X-X-XXX (Ind. Ann. Stat. § 19-1-201 [1964 Repl.])) defines "security interest" as "an interest in personal property or fixtures which secures payment or performance of an obligation ... retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer is limited in effect to a reservation of `security interest.'" <b><i>We can conceive of no rational reason why conditional sales of real estate should be treated any differently</i></b>.[1]<br /><br />A conditional land contract in effect <b><i>creates a vendor's lien in the property to secure the unpaid balance owed under the contract. This lien is closely analogous to a mortgage — in fact, the vendor is commonly referred to as an "equitable mortgagee</i></b>." D.S.B. Johnston Land Co. v. Whipple, supra; Harris v. Halverson, supra. In view of this characterization of the vendor as a lienholder, it is only logical that such a lien be enforced through foreclosure proceedings. Such a lien "[has] all the incidents of a mortgage" (D.S.B. Johnston Land Co. v. Whipple, supra, 234 N.W. at 61), one of which is the right to foreclose.<br /><br />There is a multitude of cases upholding the vendor's right to foreclose. (See 77 A.L.R. 276, and the cases cited therein.) <b><i>The remedy is most often referred to as a foreclosure of an executory contract</i></b>. (A land contract is "executory" until legal title is actually transferred to the vendee.) A 1924 New York case best describes this remedy:<br /><br />"Out of the nature of the relationship created by a land contract, where the vendee is in possession, there have developed certain equitable remedies, among which is the right of the vendor in a proper case to sell out the interest of the vendee for the purpose of satisfying his lien under the contract, in case of default, and while it seems a misnomer, for convenience this remedy is spoken of as foreclosure, and the action as one to foreclose the contract. 3 Pomeroy's Equity Jurisprudence (4th Ed.) 3046, § 1262." Conners v. Winans (1924), 122 Misc. 824, 204 N.Y.S. 142, 145.<br /><br />See also, Keller v. Lewis (1878), 53 Cal. 113, for another excellent characterization.<br />The foreclosure of a land sale contract is undeniably comprehended by our Trial Rules. TR. 69(C) IC 1971, 34-5-1-1, deals with the foreclosure of liens upon real estate:<br /><br />"Unless otherwise ordered by the court, judicial foreclosure of all liens upon real estate shall be conducted under the same rules and the sale procedures applicable to foreclosure of mortgages upon real estate, including without limitation redemption rights, manner and notice of sale, appointment of a receiver, execution of deed to purchaser and without valuation and appraisement. Judicial lien foreclosures including mortgage foreclosures may be held at any reasonable place stated in the notice of sale. In all cases where a foreclosure or execution sale of realty is not confirmed by the court, the sheriff or other officer conducting the sale shall make a record of his actions therein in his return to be filed promptly with the record of the case and also in the execution docket maintained in the office of the clerk." (Emphasis added.)<br /><br /><b><i>The vendor's interest clearly constitutes a "lien upon real estate" and should, therefore, be treated as one</i></b>. The basic foreclosure statute — that is for mortgages executed after July 1, 1957 — <b><i>provides for a six-month period of redemption</i></b>, commencing with the filing of the complaint. Additionally, it establishes the procedures attendant to the foreclosure sale. The statute reads as follows:<br /><br />"Mortgages executed after July 1, 1957 — Time of issuing execution — Sale — Notices. — In any proceeding for the foreclosure of any mortgage hereafter executed on real estate, no process shall issue for the execution of any such judgment or decree of sale for a period of six [6] months after the filing of a complaint in any such proceeding: Provided, That such period shall be twelve [12] months in any such proceeding for the foreclosure of any mortgage executed prior to July 1, 1957. Thereafter, upon the filing of a praecipe therefor by any judgment creditor in said proceeding a copy of the judgment and decree shall be issued and certified by the clerk under the seal of the court, to the sheriff, who shall thereupon proceed to sell the mortgage premises or so much thereof as may be necessary to satisfy the judgment, interest and costs, at public auction at the door of the courthouse of the county in which said real estate is situated, by advertising the same by publication once each week for three [3] successive weeks in a daily or weekly newspaper of general circulation printed in the English language and published in the county where the real estate is situated, the first of which publications shall be made at least thirty [30] days before the date of sale; and by posting written or printed notices thereof in at least three [3] public places in the township in which the real estate is situated, and at the door of the courthouse of the county: Provided, That if the sheriff be unable to procure the publication of such notice within such county he may dispense with such publication but he shall in his return state his inability to procure such publication and the reason therefor. [Acts 1931, ch. 90, § 1, p. 257; 1957, ch. 220, § 1, p. 476.]"<br /><br />IC 1971, XX-X-XX-X (Ind. Ann. Stat. § 3-1801 (1968 Repl.]).<br /><br /> TR 69(C) requires that the procedures outlined in the above statute be applied "without limitation" to the "judicial foreclosure of all liens upon real estate." <b><i>We believe there to be great wisdom in requiring judicial foreclosure of land contracts pursuant to the mortgage statute</i></b>. Perhaps the most attractive aspect of judicial foreclosure is the period of redemption, during which time the vendee may redeem his interest, possibly through re-financing.<br /><br /><b><i>Forfeiture is closely akin to strict foreclosure</i></b> — a remedy developed by the English courts which did not contemplate the equity of redemption. American jurisdictions, including Indiana, have, for the most part, <b><i>rejected strict foreclosure in favor of foreclosure by judicial sale</i></b>:<br /><br />"The doctrine of strict foreclosure developed in England at a time when real property had, to a great extent, a fixed value; the vastly different conditions in this country, in this respect, led our courts to introduce modifications to the English rules of foreclosure. Generally, in consonance with equity's treatment of a mortgage as essentially a security for the payment of the debt, foreclosure by judicial sale supplanted strict foreclosure as the more equitable mode of effectuating the mutual rights of the mortgagor and mortgagee; and there is at the present time, in the majority of the American states, no strict foreclosure as developed by the English courts — either at law or in equity — by which a mortgagee can be adjudgd absolute owner of the mortgaged property. The remedy of the mortgagee is by an action for the sale of the mortgaged premises and an application of the proceeds of such sale to the mortgage debt, and although usually called an action to foreclose, it is totally different in its character and results from a strict foreclosure. The phrase `foreclosure of a mortgage' has acquired, in general, a different meaning from that which it originally bore under the English practice and the common law imported here from England. In this country, the modern meaning of the term `foreclosure' denotes an equitable proceeding for the enforcement of a lien against property in satisfaction of a debt."<br /><br />55 Am.Jur.2d, Mortgages, § 549 (1971).<br /><br /><b><i>Guided by the above principles we are compelled to conclude that judicial foreclosure of a land sale contract is in consonance with the notions of equity</i></b> developed in American jurisprudence. A forfeiture — like a strict foreclosure at common law — is often offensive to our concepts of justice and inimical to the principles of equity.<br /><br /><b><i>This is not to suggest that a forfeiture is an inappropriate remedy for the breach of all land contracts</i></b>. In the case of <b><i>an abandoning, absconding vendee, forfeiture is a logical and equitable remedy</i></b>.<br /><br />Forfeiture would also be appropriate <b><i>where the vendee has paid a minimal amount on the contract at the time of default</i></b> and seeks to retain possession while the vendor is paying taxes, insurance, and other upkeep in order to preserve the premises. Of course, in this latter situation, <b><i>the vendee will have acquired very little, if any, equity in the property</i></b>. However, a court of equity must always approach forfeitures with great caution, being forever aware of the possibility of inequitable dispossession of property and exorbitant monetary loss. We are persuaded that <b><i>forfeiture may only be appropriate under circumstances in which it is found to be consonant with notions of fairness and justice under the law</i></b>.<br /><br />In other words, <b><i>we are holding a conditional land sales contract to be in the nature of a secured transaction</i></b>, the provisions of which are subject to all proper and just remedies at law and in equity.<br /><br />[...]</li>
</ul>
<div>
<b><span style="color: red;">(2)</span></b> Ibid.</div>
<div style="text-align: center;">
-------------</div>
</div>
<div>
<b><u>Editor's Note</u></b>: It should be noted that while <b><i><a href="https://scholar.google.com/scholar_case?q=%22301+NE+2d+641%22&hl=en&as_sdt=4,15,112,127,334,335&as_ylo=2013&case=13727434510401748896&scilh=0" target="_blank">Skendzel v. Marshall</a></i></b> was decided over 40 years ago, it appears to continue to be valid case law in Indiana, inasmuch as the case <b><i><a href="https://scholar.google.com/scholar?start=0&q=Skendzel+Marshall&hl=en&scisbd=2&as_sdt=4,15,112,127,334,335&as_ylo=2000" target="_blank">has been cited at least three dozen times by the state supreme court and intermediate appeals court combined since the year 2000</a></i></b>.</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-46547253514031146932017-01-29T00:01:00.000-05:002017-01-29T08:50:28.094-05:00Idaho Supremes Void Foreclosure Purchaser's Tax Deed Where Taxing Authority That Conducted Auction Failed To Serve Written Notice Of Sale On Personal Representative For Deceased Prior Owner's EstateFrom a recent <b><i>Opinion Summary from Justia US Law</i></b>:<br />
<ul>
<li>Eric and Kathryn Bowen purchased property in Caldwell <b><i>through a tax deed sale</i></b> conducted by the Caldwell Irrigation Lateral District (CILD).<br /><br />G. Lance Salladay brought suit arguing that the <b><i>sale was void because the property was part of the Estate </i></b>of Roger Troutner <b><i>(the Estate), and Salladay, as personal representative of the Estate, was entitled to notice of the sale and never received such notice</i></b>.<br /><br />The district court ruled that Salladay was entitled to notice and since he had not received notice of the sale there was no final decision regarding issuance of the deed as required by Idaho Code section 43-719(2). The district court then remanded the case to CILD.<br /><br />On appeal, Bowens argued the district court erred in its determination that Salladay was entitled to notice and that even if Salladay was entitled to notice, his petition to the district court was untimely. The Supreme Court found that the district court erred in remanding the case back to CILD. The Court concluded CILD <b><i>failed to provide written notice to the record owner of the property, so the tax deed was void ab initio</i></b>.</li>
</ul>
<div>
Source: <b><i><a href="http://law.justia.com/cases/idaho/supreme-court-civil/2017/43603.html" target="_blank">Opinion Summary - Salladay v. Bowen</a></i></b>.<br />
<br />
For the court ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=salladay+bowen&hl=en&as_sdt=40006&case=17458017030761159736&scilh=0" target="_blank">Salladay v. Bowen</a></i></b>, 2017 Opinion No. 5 (Id. January 23, 2017).</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-50753530921433405922016-11-17T00:01:00.000-05:002016-11-17T00:01:21.336-05:00Massachusetts Appeals Court Affirms Ruling Restoring Nursing Home-Bound 83-Year Old Widow's Ownership Of Over $2.5 Million In Real Estate, Other Assets Pilfered By Sleazy Son, Daughter-In-Law; Fiduciary Relationship Among Parties Shifted Burden Onto Defendants To Prove Transactions Were Free From Fraud, Undue InfluenceFrom a recent story in <b><i>WealthManagement.com</i></b>:<br />
<ul>
<li>The near epidemic of financial exploitation of the elderly and infirm came into sharp focus in the Massachusetts Appeals Court’s decision on Nov. 2, 2016 involving the guardianship of Alice Migell, a nursing home-bound 83-year-old widow. (<b><i><a href="https://scholar.google.com/scholar_case?q=Guardian+v.+Migell&hl=en&as_sdt=40006&as_ylo=2016&case=9236387311061336068&scilh=0" target="_blank">Guardian v. Migell</a></i></b>, 2016 Mass. App. Unpub. LEXIS 1056 (Nov. 2, 2016)) On behalf of Alice, a complaint in equity was filed against her son and daughter-in-law <b><i>to recover over $2.5 million in assets</i></b> after an investigation by the local protective services agency revealed that <b><i>Alice was the victim of a scheme to strip her of everything</i></b>.<br /><br />Alice’s son, Andrew, and his wife, Kai, failed to win reversal of judgments holding them guilty of criminal contempt of court and recovering real estate and money that they’d taken from her. A <b><i>key aspect of the case was the fiduciary relationship that Andrew and Kai had created toward Alice</i></b>. Andrew was a trustee and acted under a power of attorney for Alice. Both Andrew and Kai boasted about how they did everything for Alice because she couldn’t take care of herself. They tried to use that relationship as a justification for, if not entitlement to, keeping proceeds from selling property held in trust and receiving outright conveyances of other valuable real estate. As discussed below, this <b><i>proved to be their undoing under the Massachusetts rule for burden shifting in transactions that benefit a fiduciary</i></b>.<br /><br /><u><b>Disturbing Basic Facts</b></u><br /><br />Alice’s husband Bruce died in 2006, while she was hospitalized. They’d been married for over 40 years and had amassed a sizeable estate. Alice is the primary beneficiary of Bruce’s estate. The Appeals Court agreed with the trial judge that Andrew “had a plan to obtain transfers of property Alice owned or reasonably expected to inherit.” <b><i>Several valuable real estate properties were owned in a nominee realty trust with Bruce as sole beneficiary</i></b>. Andrew was a trustee but obtained a transfer of beneficial interest from Bruce shortly before his death. Investment properties in New Hampshire and Florida had also been held in the nominee trust, but Andrew sold them and kept the money. Alice held title to a vacation home in her name. Two other properties that Alice owned when Bruce died <b><i>were deeded over to Andrew shortly after Bruce’s death</i></b>, which the guardian was able to recover outside of the lawsuit.<br /><br /><u><b>Appeals Court Ruling</b></u><br /><br />The Appeals Court upheld the trial court’s decision <b><i>to restore title to the real estate and order Andrew to turn over the sale proceeds</i></b>. The court also agreed that the trial judge properly found Andrew’s wife, Kai, to be liable since she received some of the property or use of the sale proceeds. Indeed, Andrew had reconveyed one property to himself and Kai. As a result, <b><i>transfers of title that rendered Alice essentially destitute were reversed</i></b>, so that she’ll benefit from Bruce’s estate as he’d intended.<br /><br /><u><b>Alice’s Standing</b></u><br /><br />Andrew and Kai’ argued on appeal that Alice had no standing because she didn’t own the properties at issue in the trial. The Appeals Court held otherwise, concluding that under Bruce’s estate plan, his widow was intended to be its primary beneficiary. The facts clearly established that Andrew worked continuously on his plan to deprive Alice of her expected inheritance, giving her standing to recover it. Accordingly, the equitable relief to restore these assets was proper. It should also be noted that courts of equity have extraordinary latitude to grant relief for protected persons, such as those under guardianship and conservatorship like Alice.<br /><br /><u><b>Fiduciary Relationship Shifted Burden of Proof</b></u><br /><br />On appeal, just like they did at trial, Andrew and Kai argued that there was insufficient evidence against them for Alice to gain back the property and money. The Appeals Court, however, agreed with the trial judge’s determination that both Andrew and Kai <b><i>stood in a relationship of trust and confidence toward Alice</i></b>. Although they were defendants in this action, and so <b><i>wouldn’t ordinarily bear the burden of proof, the finding of a fiduciary relationship shifted the burden of proof so that Andrew and Kai were required to prove that challenged transactions weren’t the burden of fraud or undue influence</i></b>.<br /><br />Andrew and Kai didn’t appear at trial or offer any testimony concerning the challenged transactions so the record was barren of any evidence that could show these challenged transactions were proper. It was incumbent on the defendants, as a result of burden shifting, to demonstrate the circumstances of the transactions and their intended benefit to Bruce. As a matter of common sense, although the Appeals Court decision is silent on this point, one is left to wonder where such evidence could have been obtained.<br /><br /><u><b>Criminal Contempt</b></u><br /><br />The judgment to recover the assets followed an earlier decision, also affirmed by the Appeals Court, <b><i>sanctioning Andrew and Kai for more than $550,000 in expenses that Alice incurred to defend against the “plan” to divert to Andrew and Kai all that Alice had, and so render her destitute</i></b>. That judgment included an injunction freezing Andrew and Kai’s assets until Alice has been made whole.<br /><br />Andrew filed for bankruptcy shortly after the Appeals Court upheld that judgment in 2014. During the bankruptcy case, which was ultimately dismissed, it became apparent that Andrew transferred ownership in a real estate investment property to Kai and their daughter and that both defendants put a homestead declaration on a second property. The obvious intent was to shield these valuable assets from being reached to satisfy the judgment.<br /><br />Both Andrew and Kai <b><i>were found guilty of criminal contempt, with Andrew receiving a 45-day jail sentence and Kai receiving 250 hours of community service</i></b>. They appealed, essentially arguing that what they did wasn’t so bad, didn’t harm Alice and wasn’t willful. If anything, the argument went, a finding of civil contempt was the most that should have entered against them.<br /><br />The Appeals Court rejected all of these arguments. Clearly, each transaction violated an injunction that forbade any transfer of assets, and the violations were willful because the defendants volitionally committed the acts on which the convictions were grounded. Indeed, both Andrew and Kai showed contempt for the court’s authority, such as by Andrew’s “flippant statements” about the transfer of the investment property to Kai and their daughter and the timing of the homestead declaration that occurred just days after their appeal failed.</li>
</ul>
<div>
For the story, see <i><b><a href="http://www.wealthmanagement.com/estate-planning/estate-plan-protects-widow-sons-breach-fiduciary-duty" target="_blank">Estate Plan Protects Widow From Son's Breach of Fiduciary Duty</a></b> (In Migell, a Massachusetts Appeals Court ordered that real estate and other assets be returned to elderly, infirm woman)</i>.<br />
<br />
For the court ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=Guardian+v.+Migell&hl=en&as_sdt=40006&as_ylo=2016&case=9236387311061336068&scilh=0" target="_blank">O'Regan v. Migell</a></i></b>, No. 16-P-348 (Mass. App. Novenber 2, 2016).</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-14603389350602637822016-09-21T00:01:00.002-04:002022-02-15T20:57:56.160-05:00Tax Court: Sale Leaseback Deal Fails Substance Over Form Test; Transaction An Improper Tax Dodge Treated As A Loan For Income Tax PurposesFrom a recent post in <b><i>CCH Tax Day Report</i></b>:<br />
<ul>
<li>A series of transactions consisting of <b><i>a like-kind exchange, coupled with a sale and leaseback</i></b> between an electricity producer/distributor corporation and two tax-exempt public utilities, <b><i>were disregarded because they failed the substance over form test</i></b>.<br /><br />The <b><i>transactions were recharacterized as loans</i></b> because the taxpayer funded the transactions entirely with its own funds and received the funds back with interest in two payments: the first six months after the closing date and the second at the end of the sublease term in the form of the option cancellation payment. In addition, the taxpayer’s return on investment was predetermined and it did not have an upside potential or much of a downside risk.
<br /><br />
The transactions were similar to traditional sale/leaseback (SILO) and lease-in/lease-out (LILO) transactions <b><i>because they created a circular flow of money accompanied by a transfer of tax benefits from a tax-exempt to a taxable entity</i></b>. In addition, the terms of the transaction ensured that only six months into the deal, the taxpayer was in the same cash position as if it had taken out a loan to finance the transaction.
<br /><br />
Moreover, the taxpayer did not have any obligation regarding the maintenance, operation or insurance of the leased property during the sublease term or the remainder of the headlease. Under the terms of the sublease, the municipal utility accepted all of the risks associated with the operation of the power plant during the sublease term. Further, the taxpayer’s due diligence did not indicate any ownership rights because the taxpayer did not follow up on any of the red flags raised in the engineering reports.</li>
</ul>
<div>
For more, see <b><i><a href="http://news.cchgroup.com/2016/09/20/like-kind-exchange-with-sale-and-lease-back-transactions-were-loans-penalties-imposed-exelon-corp-tc/" target="_blank">Like-Kind Exchange with Sale and Lease-Back Transactions Were Loans; Penalties Imposed</a></i></b>.<br /><br />For the court ruling, see <b><i><a href="https://scholar.google.com/scholar_case?case=10429829598948502308&q=exelon+commissioner&hl=en&as_sdt=40003" target="_blank">Exelon Corp. v. Commissioner</a></i></b>. 147 T.C. 230 (2016), 147 T.C. No. 9 (September 19, 2016).</div><div><br /></div><div>The case was subsequently appealed, and affirmed <b><i><a href="https://scholar.google.com/scholar_case?case=889982011545345073&q=exelon+commissioner&hl=en&as_sdt=40003" target="_blank">Exelon Corp. v. CIR</a></i></b>, 906 F. 3d 513 (7th Cir. 2018).</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-69514696005007358972016-07-18T00:01:00.000-04:002016-07-18T10:59:14.556-04:00Ohio Supreme Court Slams Brakes On Liability Insurer's Attempt To Automatically Deny Coverage To Landlord Sued By Prospective Tenant For Alleged Discrimination Under Fair Housing ActFrom a recent article appearing in the insurance industry publication, <b><i>Claims Journal</i></b>:<br />
<ul>
<li>[T]he Ohio Supreme Court recently considered application of the inferred-intent doctrine<b><span style="color: red; font-size: x-small;">(1)</span></b> <b><i>in a federal fair housing discrimination lawsuit</i></b>. <b><i><a href="https://scholar.google.com/scholar_case?q=%2240+N.E.3d+1110%22&hl=en&as_sdt=40006&case=1183486064237111654&scilh=0" target="_blank">Granger v. Auto-Owners Ins.</a></i></b>, 144 Ohio St.3d 57, 40 N.E.3d 1110 (Ohio 2015).<br /><br />In Granger, the insured [ie. the landlord] <b><i>owned various rental properties</i></b>. Those properties were insured by Auto-Owners Insurance Group with a primary dwelling policy that included landlord-liability coverage and a second umbrella policy. The primary policy was issued by Auto-Owners Mutual Insurance Company and the second policy was issued by Owners Insurance Company.<br /><br />Both policies <b><i>covered personal injuries</i></b>. However, the definition of what constituted a “personal injury” differed between the policies. The primary policy defined “personal injury” in terms of causes of action, i.e., libel, slander, defamation, false arrest, invasion of privacy, wrongful eviction, etc. The definition of “personal injury” contained within the umbrella policy was broader in scope. The umbrella policy definition included reference to particular types of damages rather than only particular types of causes of action. The broader definition of “personal injury” in the umbrella policy <b><i>included within the definition “humiliation.”</i></b><br /><br /><b><i>The insured refused to rent one of the insured properties because the proposed renter was African-American and had a six year old son who would be living with her at the property</i></b>. It was determined that the insured had discriminated against the tenant on the basis of familial status and race in violation of 42 U.S.C. 3604 and R.C. 4112 .02(H). <b><i>Part of the damages sought by the putative tenant was emotional distress</i></b>.<b><span style="color: red; font-size: x-small;">(2)</span></b><br /><br />The umbrella policy also contained an intentional act exclusion. Specifically, <b><i>the policy excluded coverage when “the personal injury … was expected or intended.”</i></b> Auto-Owners asserted that the exclusion was applicable. Auto-Owners argued that “discriminatory intent is inferred as a matter of law for purposes of an intentional act exclusion under an umbrella policy of insurance on <b><i>a claim for pre-leasing housing discrimination</i></b>.” 144 Ohio St.3d at 64, 40 N.E.3d at 1117.<br /><br />Auto-Owners was seeking application of the inferred-intent doctrine. Under the inferred-intent doctrine, “when there is no evidence of direct intent to cause harm and the insured denies the intent to cause any harm, the insured’s intent to cause harm will be inferred as a matter of law in certain instances.” Auto-Owners <b><i>argued that it could be inferred as a matter of law from the nature of the insured’s act—pre-leasing housing discrimination—that the insured intended to cause the putative tenant’s personal injuries and, therefore, the exclusion applied</i></b>.<br /><br />The Ohio Supreme Court in Granger <b><i>disagreed</i></b>.<br /><br />Previously, the Ohio Supreme Court had rejected the “substantially certain” test in inferred-intent cases. 144 Ohio St.3d at 65, 40 N.E.3d at 1118. Under the “substantially certain” test, any harm that was substantially certain to result from an intentional act <b><i>would fall under the intentional act exclusion of the policy</i></b>.<br /><br />The Ohio Supreme Court adopted a different test for application of the inferred-intent doctrine. Under Ohio law, “the doctrine of inferred intent applie[d] only in cases <b><i>in which the insured’s intentional act and the harm caused [were] intrinsically tied so that the act [had] necessarily resulted in the harm</i></b>.” 144 Ohio St.3d at 65, 40 N.E.3d at 1118.<br /><br />The Ohio Supreme Court then <b><i>found that humiliation was not so intrinsically tied to pre-leasing discrimination that the insured’s act necessarily resulted in the harm suffered by the putative tenant</i></b>.<br /><br />While acknowledging that emotional distress damages were available under the law to victims of housing discrimination, the Court found that <b><i>such damages were not automatically awarded</i></b>.<br /><br />Therefore, the Court remanded the case to the trial court so that the trier of fact could determine whether the insurance company was able to demonstrate that the insured intended to cause humiliation to the putative tenant without the benefit of the inferred-intent doctrine removing that burden of proof.</li>
</ul>
<div>
For the article, see <b><i><a href="https://www.claimsjournal.com/news/midwest/2016/07/15/272153.htm" target="_blank">Ohio High Court Rejects Inferred-Intent Doctrine in Fair Housing Discrimination Case</a></i></b>.<br />
<br />
For the court ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=%2240+N.E.3d+1110%22&hl=en&as_sdt=40006&case=1183486064237111654&scilh=0" target="_blank">Granger v. Auto-Owners Ins.</a></i></b>, 144 Ohio St.3d 57, 40 N.E.3d 1110 (Ohio 2015).<br />
<br />
See also, <b><i><a href="http://www.law360.com/articles/692360/landlord-owed-defense-in-bias-row-ohio-high-court-says" target="_blank">Landlord Owed Defense In Bias Row, Ohio High Court Says</a></i></b> (may require subscription; if no subscription, <b><i><a href="https://www.google.com/search?num=100&lr=&newwindow=1&hl=en&as_qdr=all&q=%22Landlord+Owed+Defense+In+Bias+Row+Ohio+High+Court+Says%22+humiliation+site%3Awww.law360.com&oq=%22Landlord+Owed+Defense+In+Bias+Row+Ohio+High+Court+Says%22+humiliation+site%3Awww.law360.com&gs_l=serp.3...14643.21925.0.23123.14.13.1.0.0.0.129.766.12j1.13.0....0...1c.1.64.serp..1.0.0.4IVp1higrYs" target="_blank">TRY HERE</a></i></b>, then click the appropriate link for the story).<br />
<div style="text-align: center;">
------------------------</div>
<b><span style="color: red;">(1)</span></b> In Ohio, the inferred-intent doctrine is a judicially-created rule that liability insurers often rely on when <strike>attempting to wiggle their way out of providing coverage</strike> denying coverage to a policy holder when the insurer claims that the conduct of an insured that gives rise to harm was as a result of an intentional act, thereby triggering the <b><i><a href="http://www.insuranceclaimshelpforyou.com/intentional-act-exclusion.html" target="_blank">intentional act exclusion</a></i></b> in the insurance policy (which allows the insurer to deny coverage).<br />
<br />
The court describes the inferred-intent doctrine as follows:<br />
<ul>
<li>Under the inferred-intent doctrine, "when there is no evidence of direct intent to cause harm and the insured denies the intent to cause any harm, <b><i>the insured's intent to cause harm will be inferred as a matter of law in certain instances</i></b>." Campbell, 128 Ohio St.3d 186, 2010-Ohio-6312, 942 N.E.2d 1090, ¶ 9, citing Gearing v. Nationwide Ins. Co., 76 Ohio St.3d 34, 36, 665 N.E.2d 1115 (1996), paragraph one of the syllabus.</li>
</ul>
<div>
<b><span style="color: red;">(2)</span></b> A summary of the facts that led up to the landlords' lawsuit against the insurance company (including a description of their alleged conduct that triggered the fair housing lawsuit against them), as roughly abstracted from the court ruling, follow:<br />
<ol>
<li>In June, 2010, the prospective tenant ("Kozera") first made contact with the landlord.<br /><span style="color: white;">.</span></li>
<li>After being discouraged by the landlord from applying for a vacant apartment available for rental on the subject premises, <b><i>a four-unit property</i></b> in Akron, Ohio, Kozera contacted the <b><i><a href="http://fairhousingakron.org/" target="_blank">Fair Housing Contact Service, Inc.</a></i></b> ("FHCS"), the local non-profit fair housing organization, which investigated her housing discrimination claims by <b><i>using trained testers</i></b> to interact with the landlord ("Granger").<br /><span style="color: white;">.</span></li>
<li>One tester inquired about the property by e-mail, and Granger replied, "Truely [sic] a lovely and large apartment and in a very well keep [sic] apartment house. No pets or children."<br /><span style="color: white;">.</span></li>
<li>Granger later sent an additional e-mail to the same tester, stating, "Yes it is still available as I am selective as to who [sic] I rent to and I run a background check on any possible tenant, just so you know. It is an adult apartment house so it is quite [sic] and very will keep [sic] with no children or pets permitted."<br /><span style="color: white;">.</span></li>
<li>He sent a proposed lease to at least one tester; one of its terms was "No children or pets are permitted—period."<br /><span style="color: white;">.</span></li>
<li>Further, FHCS related that Granger <b><i>told only an African-American tester that he ran background checks</i></b> on prospective tenants because "<b><i>he didn't want a rapist in the building</i></b>"; <b><i>he did not make the same comment to a Caucasian tester</i></b>.<br /><span style="color: white;">.</span></li>
<li>Based on information from Kozera and the testers, FHCS contended that Granger had discriminated against Kozera, an African-American, on the basis of familial status and race in violation of 42 U.S.C. 3604 and R.C. 4112.02(H).<br /><span style="color: white;">.</span></li>
<li>In March, 2011, (nine months after her initial contact with the landlord), Kozera, along with FHCS, <b><i>filed a fair housing lawsuit in federal court</i></b> against Granger and one, Steigerwald, (Granger's partner/co-landlord), individually and in their capacities as trustees of the trust that held title to the subject rental property).<br /><span style="color: white;">.</span></li>
<li>Kozera claimed that she had "experienced out of pocket costs <b><i>and emotional distress</i></b> as a result of Defendants' conduct"; FHCS alleged that it had "expended its resources and was harmed in its mission by Defendants' conduct."<br /><span style="color: white;">.</span></li>
<li>In May, 2011 (two months after getting hit with the fair housing lawsuit), Granger and Steigerwald forwarded the lawsuit to their insurance agent, who then contacted the insurance company, seeking coverage under one of the policies, <b><i>including the providing of a legal defense to the fair housing lawsuit</i></b> (ie. the insurer's "duty to defend"),<br /><span style="color: white;">.</span></li>
<li>A month later, citing various reasons, the insurer denied coverage on one of the policies; they immediately requested coverage under their second policy (the umbrella policy), but they never heard back from the insurer,<br /><span style="color: white;">.</span></li>
<li>On July 11, 2011, Granger and Steigerwald <b><i>settled the federal case with Kozera and FHCS for $32,500</i></b>. Separate payments went to the two plaintiffs: $5,000 to Kozera and $27,500 to FHCS.<br /><span style="color: white;">.</span></li>
<li>On July 22, 2011 (less than two weeks thereafter), the landlords, Granger and Steigerwald, sued the insurance company (unfortunately for the insurance agency and the individual insurance agent, <b><i>they too got roped into the landlord's lawsuit</i></b>) for claims relating to the insurer's failure to provide coverage.</li>
</ol>
</div>
</div>
Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-2605225690776371952.post-66150880254570241542016-03-10T00:01:00.000-05:002016-03-10T00:01:01.289-05:00Void vs. Voidable: Illinois Lawsuit: Failure To Use State-Licensed Private Detective Agency To Serve Foreclosure Lawsuits Violates State Law, Leads To Slew Of Void (Not Merely Voidable) Foreclosure Judgments; Property Owner Seeks Return Of $3.5 Million In Proceeds From 22 SalesIn Chicago, Illinois, the <b><i>Cook County Record</i></b> reports:<br />
<ul>
<li>Trying to take advantage of a “<b><i>procedural windfall</i></b>,” a Chicago-area investment firm is alleging West Suburban Bank owes it almost $3.5 million from the sales of foreclosed properties held as collateral for a $10 million loan the firm defaulted on, because the firm was not legally served with notice of the foreclosures, <b><i>as the process servers did not work for a state-licensed private detective agency as required by law</i></b>.<br /><br />Advantage Financial Partners lodged a one-count restitution complaint Feb. 16 in Cook County Circuit Court against West Suburban Bank, which is headquartered in Lombard and has 19 branches in the suburbs.<br /><br />The case originated in 2005, when Advantage took a $10 million loan from West Suburban Bank, putting up 23 mortgaged properties as collateral, 15 of which were in Cook County, with the rest in DuPage, Will and Kane counties. The bank, however, alleged Advantage defaulted in 2008, and initiated foreclosure proceedings in December that year. The bank used a private detective agency, MPSI, to serve summonses on Advantage for 22 of the cases, and used another process server in the 23rd case. Advantage purportedly never responded.<br /><br />In 2009, default judgments were ordered against Advantage. West Suburban next bought the properties at sheriff’s sales, then sold them to third parties for $3.5 million, according to Advantage.<br /><br />In April 2013, <b><i>Advantage sued to have 22 of the foreclosure judgments vacated, saying MPSI was not licensed with the state at the time its agents served foreclosure notice on Advantage. Specifically, MPSI’s agency license had expired Aug. 31, 2008, and was never renewed</i></b>. Given that MPSI was not licensed, Advantage argued it was never legally served with notice of the foreclosure actions.<br /><br />Advantage did not claim it never received the summonses.<br /><br />West Suburban Bank filed a motion to consolidate the cases, which was granted, with 22 of the cases combined in DuPage County Circuit Court; the 23rd case was from Cook County and remained there. The bank then moved for dismissal of the cases in DuPage County handled by MPSI, contending, although the agency was not licensed as a detective agency, the agency’s employees who served the summonses were licensed. As a consequence, the bank contended the summonses were lawfully served.<br /><br />DuPage County Judge Robert G. Gibson agreed with the bank and dismissed Advantage’s suit in September 2013. Advantage appealed to Second District Appellate Court in Elgin, <b><i>which in November 2014 overturned Gibson’s ruling, voided the foreclosure judgments and reinstated Advantage’s case</i></b>.<b><span style="color: red; font-size: x-small;">(1)</span></b><br /><br /><b><i>The appellate court found the detective agency was the entity authorized to serve process, not the agency’s employees, regardless of whether they were individually licensed</i></b>. Justice Mary Seminara-Schostok, who authored the appellate opinion, noted the opinion was in keeping with judicial principles “<b><i>embedded in Illinois law for over a century</i></b>.”<b><span style="color: red; font-size: x-small;">(2)</span></b><br /><br />However, the court reached this decision with reluctance, having concern about the unjust effect of its ruling.<br /><br />“I invite the reader to step back and set aside, for a moment, the procedural niceties in play here and consider this case with an intuitive sense of justice. I venture that few would find this result at all palatable. Advantage has received an undeserved procedural windfall,” said Justice Joseph E. Birkett, who concurred in the opinion with Justice Schostok, as well as with Justice Ann B. Jorgensen.<br /><br />The case was remanded to DuPage County Circuit Court, where more legal maneuvers were made before the case was closed in July 2015.<br /><br />Advantage lodged a new complaint Feb. 16 in Cook County Circuit Court, <b><i>demanding West Suburban Bank return to Advantage the $3.5 million in proceeds from the sale of 21 of the foreclosed properties</i></b>, plus pre- and post-judgment interest, as well as any damages the judge deems just.<br /><br />Advantage alleged the money the bank received by selling the properties was based upon “unlawful judicial proceedings,” as the appellate court laid out in its ruling.</li>
</ul>
<div>
Source: <b><i><a href="http://cookcountyrecord.com/stories/510668229-foreclosed-land-investors-exploit-technicality-to-demand-3-5-million-procedural-windfall-from-bank" target="_blank">Foreclosed land investors exploit technicality to demand $3.5 million 'procedural windfall' from bank</a></i></b>.<br />
<div style="text-align: center;">
----------------------------</div>
<b><span style="color: red;">(1)</span></b> <b><i><a href="https://scholar.google.com/scholar_case?q=%2223+NE+3d+370+%22&hl=en&as_sdt=40006&case=10126704370824962643&scilh=0" target="_blank">West Suburban Bank v. Advantage Financial</a></i></b>, 23 NE 3d 370 (Ill. App. 2nd Dist. 2014).<br />
<br />
<b><span style="color: red;">(2)</span></b> From the <b><i><a href="https://scholar.google.com/scholar_case?q=%2223+NE+3d+370+%22&hl=en&as_sdt=40006&case=10126704370824962643&scilh=0" target="_blank">2014 appeals court ruling</a></i></b>:<br />
<ul>
<li>¶ 20 WSB argues that MPSI's expired certification is a technical defect that should not result in a lack of personal jurisdiction. However, <b><i>the weight of Illinois law is clearly to the contrary: defects in the service of process are neither "technical" nor insubstantial</i></b>.<br /><div style="text-align: center;">
***</div>
Further, <b><i>strict compliance with the statutes governing the service of process is required before a court will acquire personal jurisdiction over the person served</i></b>. <b><i><a href="https://scholar.google.com/scholar_case?case=4800197387376784717&q=%E2%80%9CI+invite+the+reader+to+step+back+and+set+aside%22&hl=en&as_sdt=40006&scilh=0" target="_blank">Sarkissian v. Chicago Board of Education</a></i></b>, 201 Ill.2d 95, 109, 267 Ill.Dec. 58, 776 N.E.2d 195 (2002); <b><i><a href="https://scholar.google.com/scholar_case?case=4466948466605503605&q=%E2%80%9CI+invite+the+reader+to+step+back+and+set+aside%22&hl=en&as_sdt=40006&scilh=0" target="_blank">C.T.A.S.S. & U. Federal Credit Union v. Johnson</a></i></b>, 383 Ill.App.3d 909, 912, 322 Ill.Dec. 543, 891 N.E.2d 558 (2008).<br /><div style="text-align: center;">
***</div>
¶ 24 WSB <b><i>contends that the defect in service of process merely rendered the judgments voidable, not void</i></b>, [...].<br /><div style="text-align: center;">
***</div>
As we have said, <b><i>the proposition is well established that invalid service results in a judgment that is void for lack of personal jurisdiction</i></b>. <b><i><a href="https://scholar.google.com/scholar_case?case=4800197387376784717&q=%E2%80%9CI+invite+the+reader+to+step+back+and+set+aside%22&hl=en&as_sdt=40006&scilh=0" target="_blank">Sarkissian</a></i></b>, 201 Ill.2d at 109, 267 Ill.Dec. 58, 776 N.E.2d 195; <b><i><a href="https://scholar.google.com/scholar_case?case=10522568402033270829&q=%E2%80%9CI+invite+the+reader+to+step+back+and+set+aside%22&hl=en&as_sdt=40006&scilh=0" target="_blank">Thill</a></i></b>, 113 Ill.2d at 308-09, 100 Ill.Dec. 794, 497 N.E.2d 1156; see also <b><i><a href="https://scholar.google.com/scholar_case?case=13333263776496540273&q=%E2%80%9CI+invite+the+reader+to+step+back+and+set+aside%22&hl=en&as_sdt=40006&scilh=0" target="_blank">Pennoyer v. Neff</a></i></b>, 95 U.S. 714, 732, 24 L.Ed. 565 (1877) ("if the court has no jurisdiction over the person * * * and, consequently, no authority to pass [judgment] upon his personal rights and obligations[,] * * * <b><i>the whole proceeding * * * is <a href="https://en.wikipedia.org/wiki/Coram_non_judice" target="_blank">coram non judice and void</a></i></b>").<br /><br />There is <b><i>no similar support for the idea that lack of personal jurisdiction merely renders a judgment voidable</i></b>.</li>
</ul>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-20831219363651572472016-03-07T00:01:00.000-05:002016-03-07T00:01:09.818-05:00Florida Appeals Court Invokes 'Two Strikes & You're Out!' Rule To Permanently Sink Foreclosure Action; Unanimous Panel Says Banksters Allowed Only One Refiling Per Mortgage Note (Not Per Plaintiff), Then Get The Boot After The 2ndIn West Palm Beach, Florida, the <b><i>Daily Business Review</i></b> reports:<br />
<ul>
<li><b><i>One voluntary dismissal too many sank a foreclosure case</i></b> for a lender who acquired a debt that had been sold at least twice before.<br /><br />The Fourth District Court of Appeal <b><i>considered the procedural history and the number of voluntary dismissals tied to the note rather than the dismissals per plaintiff</i></b> to reverse the foreclosure Wednesday and leave homeowner attorneys celebrating.<br /><br />"This has always been the rule … <b><i>but it's interesting in the context of foreclosure where there's this constant shifting of plaintiffs</i></b>," said foreclosure defense attorney Thomas Ice of Ice Legal in Royal Palm Beach, who was not involved in the litigation. "Often the parties are different on paper, but they're related somehow, so it really is the same lawsuit."<br /><br />The appellate court invoked the so-called two-dismissal rule under <b><i><a href="http://www.floridabar.org/TFB/TFBResources.nsf/0/10C69DF6FF15185085256B29004BF823/$FILE/Civil.pdf" target="_blank">Florida Rule of Civil Procedure 1.420(a)(1)</a></i></b>, <b><i>which allows one voluntarily dismissal but not two</i></b>.<b><span style="color: red; font-size: x-small;">(1)</span></b><br /><br />The appeal pitted Loxahatchee property owner Charles Nolan against MIA Real Holdings LLC, a successor lender that sought to foreclose on the same default as its predecessor, Flagstar Bank. <b><i>It was the third foreclosure attempt against Nolan following two voluntary dismissals</i></b>.<br /><br />The first suit came from Flagstar, which filed for foreclosure in 2011 after Nolan reportedly defaulted on the loan.<br /><br />Flagstar dismissed that case and later assigned the note and mortgage to DKR Mortgage, which started its own foreclosure before selling the debt as a trouble mortgage to MIA Real Holdings.<br /><br />MIA sought to be substituted as the real party in interest to take over the case but then voluntarily dismissed the suit before filing a third complaint alleging the same breach.<br /><br />Nolan's lawyers, Brian Korte and Scott Wortman of Korte & Wortman in West Palm Beach, argued the suit — "based on the same mortgage, same note, same default and same damages as the prior two actions" — was barred under the two-dismissal rule.<br /><br />"It's just unfair," Korte told the Daily Business Review. "<b><i>The court wants some finality. You get two bites of the apple</i></b>."<br /><br />MIA attorney Jerome Tepps of Sunrise did not respond to requests for comment by deadline. His client triumphed at trial when Palm Beach Circuit Judge Catherine Brunson counted MIA's voluntary dismissal as the only one applied to the current parties in the litigation.<br /><br />But Nolan successfully challenged that decision.<br /><br />"<b><i>We hold that the two noteholders — the original plaintiff and the subsequent assignee of the note — were the same 'plaintiff' under the rule, so that the second voluntary dismissal triggered an 'adjudication on the merits,' </i></b>" Fourth DCA Judge Robert Gross wrote in a unanimous decision with Judges Martha Warner and Spencer Levine concurring.</li>
</ul>
<div>
Source: <b><i><a href="http://www.dailybusinessreview.com/id=1202750552975/Appeals-Court-Two-Strikes-and-Youre-Out-on-Foreclosure-Dismissals?slreturn=20160125073222" target="_blank">Appeals Court: Two Strikes and You're Out on Foreclosure Dismissals</a></i></b> (may require subscription; if no subscription, <b><i><a href="https://www.google.com/search?num=100&lr=&newwindow=1&hl=en&as_qdr=all&q=%22Appeals+Court+Two+Strikes+and+You+re+Out+on+Foreclosure+Dismissals%22+warner+levine+site%3Awww.dailybusinessreview.com&oq=%22Appeals+Court+Two+Strikes+and+You+re+Out+on+Foreclosure+Dismissals%22+warner+levine+site%3Awww.dailybusinessreview.com&gs_l=serp.3...33206.37718.0.39050.14.12.0.0.0.0.0.0..0.0....0...1c.1.64.serp..14.0.0.oLPVLpDCNTg" target="_blank">TRY HERE</a></i></b>, then click appropriate link for the story).<br />
<br />
For the court ruling, see <b><i><a href="http://www.4dca.org/opinions/Feb%202016/02-24-16/4D15-666.op.pdf" target="_blank">Nolan v. MIA Real Holdings, LLC</a></i></b>, No. 4D15-666 (Fla. App. 4th DCA, February 24, 2016).<br />
<div style="text-align: center;">
--------------------------</div>
<b><span style="color: red;">(1)</span></b> "<i>[A] notice of dismissal <b>operates as an adjudication on the merits when served by a plaintiff who has once dismissed in any court an action based on or including the same claim</b></i>." <b><i><a href="http://www.floridabar.org/TFB/TFBResources.nsf/0/10C69DF6FF15185085256B29004BF823/$FILE/Civil.pdf" target="_blank">Florida Rule of Civil Procedure 1.420(a)(1)</a></i></b>. (Page 124)</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-7565362943165724682016-03-01T00:01:00.000-05:002016-03-01T00:01:02.257-05:00Florida Appeals Court: "Precise Identity Of Each Entity In The Chain Of Transfers Is Crucial" When Bankster Is A 'Nonholder In Possession' Attempting To Foreclose On Note Containing 'Special Indorsement'From a recent client alert from the law firm <b><i>Maurice Wutscher LLP</i></b>:<br />
<ul>
<li>The District Court of Appeal of the State of Florida, Fourth District, recently affirmed the dismissal of a mortgage foreclosure action because the mortgagee failed to present competent, substantial evidence that it had standing to foreclose, <b><i>due to lack of conformity between the name of the plaintiff mortgagee and the names in the transactional documentation by which the plaintiff mortgagee claimed an interest in the note at issue</i></b>. [...] The promissory note contained <b><i>a special indorsement</i></b> in favor of the mortgagee's predecessor in interest, as<nobr>trustee.<b><span style="color: red; font-size: x-small;">(1)</span></b></nobr></li>
</ul>
<div>
For more, see <b><i><a href="http://www.lexology.com/library/detail.aspx?g=297fb370-f0dc-462c-a18a-31da577e5f96" target="_blank">FYI: Fla App Ct (4th DCA) Affirms Dismissal of Foreclosure Because Plaintiff Not Party to Transactional Documents In Evidence</a></i></b>.</div>
<br />
<div>
For the court ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=DENNIS+M.+CONLEY&hl=en&as_sdt=4,10&case=9104115239972074356&scilh=0" target="_blank">Bank of New York Mellon Trust Company, NA v. Conley</a></i></b>, No. 4D14-2430 (Fla. App. 4th DCA, January 6, 2016).<br />
<div style="text-align: center;">
-------------------</div>
<b><span style="color: red;">(1)</span></b> From the court ruling:<br />
<ul>
<li>In this foreclosure case, the trial court granted the borrower's motion for involuntary dismissal because the bank did not present competent substantial evidence of its standing to foreclose. We affirm.<br /><br />The record in this case reveals that, at one time or another, at least six different banking entities claimed ownership of the borrower's note. <b><i>The problem is not the number of entities claiming ownership, but the similarities of their names</i></b>. Two of the entities are:<br /><br />• JP Morgan Chase Bank; and<br />• JP Morgan Chase & Co.<br /><br /> Two others are:<br /><br />• Bank of New York Company, Inc.; and<br />• The Bank of New York Mellon Trust Company, National Association<br /><br /> We write to emphasize that <b><i>when a nonholder in possession attempts to establish its right to enforce a note, and thus its standing to foreclose, the precise identity of each entity in the chain of transfers is crucial</i></b>.<br /><br />At bar, the plaintiff is:<br /><br />The Bank of New York Mellon Trust Company, National Association fka The Bank of New York Trust Company, N.A. as Successor to JPMorgan Chase Bank N.A. as Trustee for RASC 2004KS4 [hereinafter "the Bank of New York Mellon"].<br /><br />In pursuit of this foreclosure, the Bank of New York Mellon presented an original note <b><i>bearing a special indorsement in favor of "JP Morgan Chase Bank, as Trustee."</i></b></li>
</ul>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-9731845730877233512016-02-24T00:01:00.000-05:002016-02-24T00:01:05.372-05:00Reminder To Florida Trial Judges On Reestablishment Of Lost Notes (Both In Foreclosure & Non-Foreclosure Debtor-Creditor Cases): No Entry Of Judgment Allowed Until Person Required To Pay On Instrument Is Adequately Protected Against Risk Of Loss Of Double PaymentA <b><i>recent ruling by a Florida appeals court</i></b> serves as a reminder to all trial judges presiding over debtor-creditor cases (both foreclosure and non-foreclosure cases) that, when a bankster claims to have lost the promissory note it seeks to enforce, and is able to provide sufficient evidence to prove entitlement to reestablish a lost note, <b><i>a trial judge still cannot enter a final judgment in the bankster's favor without first providing adequate protection to the property owner </i></b>as mandated by Fla. Sta. § 673.3091.<br />
<br />
The protection is against the possibility that the lost note turns up in another party's hands, and that party attempts to enforce the note a second time (essentially, making the property owner pay twice).<br />
<br />
From the ruling:<br />
<ul>
<li>(2) A person seeking enforcement of an instrument under subsection (1) must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, s. 673.3081 applies to the case as if the person seeking enforcement had produced the instrument. <b><u><i>The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means</i></u></b>. <b><i><a href="https://www.flsenate.gov/Laws/Statutes/2015/673.3091" target="_blank">§ 673.3091</a></i></b>, Fla. Stat. (2014) (emphasis added).<br /><br />As this statutory language makes clear, and contrary to the Blitches' argument here, adequate protection is not an element of the Bank's prima facie case. Instead, <b><i>it is a post-proof condition of the entry of the final judgment</i></b>. See Fifth Third Bank v. Alaedin & Majdi Invs., Inc., No. 8:11-CV-2206-T-17TBM, 2012 WL 1137104, at *3 (M.D. Fla. Apr. 4, 2012) (noting that after the plaintiff showed that it was entitled to enforce the note at the time it lost the note, "<span style="font-style: italic;">the </span>Court is <b><i>required to address the issue of providing adequate protection to the defaulting party against loss</i></b> that might occur if a claim were brought by another party to enforce the instrument"); see also Correa v. U.S. Bank Nat'l Ass'n, 118 So. 3d 952, 956 n.2 (Fla. 2d DCA 2013) (stating that "<b><u><i>[i]f the court is concerned that another person might attempt to enforce the original note, it may require security in favor of the payor to ensure adequate protection</i></u></b>" (emphasis added)); Beaumont v. Bank of New York Mellon, 81 So. 3d 553, 555 (Fla. 5th DCA 2012) (after discussing the deficiencies in the bank's proof, stating "[t]he trial court was also required to address the issue of providing adequate protection to Beaumont" (emphasis added)).<br /><br />Because the court's consideration of the issue of adequate protection <b><i>is a condition of entering a judgment that reestablishes a lost note</i></b>, its failure to provide adequate protection, or to make a finding that none is needed under the circumstances, requires reversal and remand for the court to consider the issue. See Delia v. GMAC Mortg. Corp., 161 So. 3d 554, 556 (Fla. 5th DCA 2014).<br /><br />Generally this post-proof condition is satisfied through a written indemnification agreement in the final judgment, the posting of a surety bond, a letter of credit, a deposit of cash collateral with the court, or "[s]uch other security as the court may deem appropriate under the circumstances." <b><i><a href="https://www.flsenate.gov/Laws/Statutes/2015/702.11" target="_blank">§ 702.11(1)(e)</a></i></b>, Fla. Stat. (2014).<br /><br />Here, the Bank proved at the bench trial that (1) it was entitled to enforce the note when the loss of possession occurred; (2) the loss of possession was not due to a valid transfer or lawful seizure; and (3) it could no longer reasonably obtain possession of the note because it was lost while in the possession of its first law firm, which is no longer in existence. The Bank also presented evidence to establish the terms of the note and that it had the right to enforce it when it was lost. This evidence was sufficient to show that the Bank was entitled to reestablishment of the lost note.<br /><br />However, <b><i>the trial court made no provision for adequate protection of the Blitches in the final judgment, nor did it determine that adequate protection was unnecessary in this case</i></b>. This omission requires us to reverse the final judgment and remand for further proceedings, at which the court must address the means by which the Bank must satisfy this post-proof condition.</li>
</ul>
<div>
For the ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=blitch&hl=en&as_sdt=40006&as_ylo=2016&case=13979401299131900714&scilh=0" target="_blank">Blitch v. Freedom Mortgage Corporation</a></i></b>, No. 2D14-4398 (Fla. App.2nd DCA, February 5, 2016).<br />
<br />
<u>Editor's Note</u>:<br />
<div style="text-align: center;">
<b><u>Question for the Day</u></b></div>
<br />
For all those past foreclosure judgments that have been entered in "lost note" cases that ended up in a foreclosure sale, where adequate protection against the risk of double payment was neither given to the homeowner, or even addressed by the trial judge, <b><i>are those foreclosure sales VOID, or are they MERELY VOIDABLE???</i></b><br />
<br />
Since there was no foreclosure sale in this case, the point was a non-issue, and accordingly, was unnecessary to address by the court.</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-59569943479747500252016-02-19T08:04:00.001-05:002016-02-19T08:04:20.058-05:00Void vs. Voidable Mortgage Assignments: California Foreclosed-Upon Homeowners Score Big Win Over Sloppy Banksters; "[A]n Allegation That The Assignment Was Void, & Not Merely Voidable At The Behest Of The Parties To The Assignment, Will Support An Action For Wrongful Foreclosure," Say State Supremes In Unanimous (7-0) DecisionIn Sacramento, California, <b><i>National Mortgage News</i></b> reports:<br />
<ul>
<li>The California Supreme Court on Thursday ruled that borrowers <b><i>may challenge a wrongful foreclosure on the grounds that the assignment of the deed of trust was invalid</i></b>.<b><span style="color: red; font-size: x-small;">(1)</span></b><br /><br />The decision in <b><i><a href="http://www.courts.ca.gov/opinions/documents/S218973.PDF" target="_blank">Yvanova v. New Century Mortgage Corp.</a></i></b> has the potential to radically increase the number of lawsuits brought by borrowers, particularly on loans that were pooled into securitized trusts, experts on both sides of the issue said.<br /><br />"<b><i>There will be a flood of litigation only because the lending industry was not diligent in doing its paperwork during the housing finance boom</i></b>," said Richard Antognini, who represented the plaintiff, California homeowner Tsvetana Yvanova.<br /><br />The decision tackles a question that became important after the housing market's collapse in 2008: can a defaulted homeowner contest the validity of the chain of assignments involved in the securitization of loans?<br /><br />In 2012 Yvanova challenged the foreclosure and public auction of her Woodland Hills, Calif., home, alleging there was a four-year break in the chain of title, essentially making it void.<br /><br />Yvanova in 2006 took out a loan for $483,000 from Irvine, Calif.-based New Century Mortgage, which went bankrupt the next year. In 2011 the mortgage servicer Ocwen Loan Servicing executed an assignment of the deed of trust on Yvanova's loan to Deutsche Bank, which served as a trustee of a Morgan Stanley investment trust.<br /><br />But Yvanova alleged that the Morgan Stanley investment trust had a closing date of January 2007 and should never have been assigned the mortgage. But the foreclosure went through, and Yvanova ultimately was evicted in May 2015.<br /><br />Multiple lower courts in California had ruled in high-profile cases such as Jenkins v. JPMorgan Chase that borrowers have no standing to file a claim of wrongful foreclosure because they are not a party to or holder of the debt.<br /><br />However, the state Supreme Court disagreed with those rulings and essentially sided with a 2013 state appellate ruling in Glaski v. Bank of America, <b><i>which held that a borrower has standing to challenge a nonjudicial foreclosure sale based on alleged violations of the terms of a pooling and servicing agreement</i></b>.<br /><br />"The borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security," the Supreme Court stated in a 33-page ruling. "<b><i>A homeowner who has been foreclosed on by one with no right to do so has suffered an injurious invasion of his or her legal rights at the foreclosing entity's hands. No more is required for standing to sue</i></b>."<br /><br />The case now will go back to the state Court of Appeals or a trial court, which would decide on the merits of Yvanova's claim.<br /><br />Frederick Levin, a partner at BuckleySandler, said <b><i>the decision will breathe new life into the foreclosure defense bar</i></b>, which believes that a loan assigned into a securitized trust after the trust's closing date makes the assignment void.<br /><br />"This decision has [the] potential to increase litigation challenging securitized loans," said Levin, who on behalf of banks has long argued that contractual language gives investors and lenders broad latitude to reassign loans.<br /><br />Others said the court was sending a big message to the lending industry.<br /><br />"This was the court in California directing lenders and Wall Street securitizers to be very careful in documenting their instruments and assignments," said Kenneth Styles, a litigator at the law firm Miller Starr Regalia. "<b><i>They've been more than sloppy in the past, and this was a directive to make sure their procedures are clean</i></b>."<br /><br />Antognini, the attorney for Yvanova, put it this way: "if you claim you own a debt, you have to prove it. And if you claim to own a debt, the borrower has the ability to allege and later to prove that you don't own it."</li>
</ul>
<div>
Source: <b><i><a href="http://www.nationalmortgagenews.com/news/servicing/calif-supreme-court-lets-borrowers-challenge-wrongful-foreclosures-1072231-1.html" target="_blank">Calif. Supreme Court Lets Borrowers Challenge Wrongful Foreclosures</a></i></b>.<br />
<br />
For the court ruling, see <b><i><a href="http://www.courts.ca.gov/opinions/documents/S218973.PDF" target="_blank">Yvanova v. New Century Mortgage Corp.</a></i></b>, S218973 (Cal. February 18, 2016).<br />
<br />
<u><b>Editor's Note</b></u>: Having a clear understanding of how this ruling may lead to a flood of litigation against banksters guilty of using sloppy mortgage assignments in their chains of title, the California Supreme Court took great pains in trying to tamp down the excitement this ruling will create within the foreclosure defense bar.<br />
<br />
In that light, the court prefaced its ruling with the following admonition:<br />
<ul>
<li><b><i>Our ruling in this case is a narrow one</i></b>. We hold only that a borrower who has suffered a nonjudicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment merely because he or she was in default on the loan and was not a party to the challenged assignment.<br /><br /><b><i>We do not hold or suggest</i></b> that a borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit questioning the foreclosing party‘s right to proceed.<br /><br /><b><i>Nor do we hold or suggest</i></b> that plaintiff in this case has alleged facts showing the assignment is void or that, to the extent she has, she will be able to prove those facts.<br /><br /><b><i>Nor, finally</i></b>, in rejecting defendants‘ arguments on standing do we address any of the substantive elements of the wrongful foreclosure tort or the factual showing necessary to meet those elements.</li>
</ul>
<div style="text-align: center;">
-----------------------------</div>
<b><span style="color: red;">(1)</span></b> From the introductory part of the ruling:<br />
<ul>
<li>The collapse in 2008 of the housing bubble and its accompanying system of home loan securitization led, among other consequences, to a great national wave of loan defaults and foreclosures. <b><i>One key legal issue arising out of the collapse was whether and how defaulting homeowners could challenge the validity of the chain of assignments involved in securitization of their loans</i></b>. We granted review in this case to decide one aspect of that question: whether the borrower on a home loan secured by a deed of trust may base an action for wrongful foreclosure on allegations a purported assignment of the note and deed of trust to the foreclosing party <b><i>bore defects rendering the assignment void</i></b>.<br /><br />The Court of Appeal held plaintiff Tsvetana Yvanova could not state a cause of action for wrongful foreclosure based on an allegedly void assignment because she lacked standing to assert defects in the assignment, to which she was not a party. <b><i>We conclude, to the contrary</i></b>, that because in a nonjudicial foreclosure only the original beneficiary of a deed of trust or its assignee or agent may direct the trustee to sell the property, <b><i>an allegation that the assignment was void, and not merely voidable at the behest of the parties to the assignment, will support an action for wrongful foreclosure</i></b>.</li>
</ul>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-27529499692767160442015-12-11T00:01:00.000-05:002015-12-11T18:34:50.924-05:00Florida Appeals Courts Spent A Busy 2015 Reversing Trial Court Screw-ups In Foreclosure CasesAnyone paying attention to the foreclosure litigation going on in the Florida courts knows that the appeals courts have been kept busy having to reverse incorrect rulings issued by the trial courts which have been unfavorable to homeowners (by my rough count, we're looking at around 150-175 reversals in 2015 alone (and counting) - possibly even a little more).<br />
<br />
The following list (not necessarily all-inclusive, and in no particular order) represents what appears to be most of the reversals of homeowner-unfavorable trial court rulings (<b><i>37 in total to date</i></b>) by only one of Florida's five appellate courts - the 4th District Court of Appeal - in 2015.<br />
<br />
Included in the list is the case caption, appellate court case number (those looking for the official citation are left on their own to locate it - sorry), and the guilty trial judge issuing the incorrect ruling. In addition, while most of the cases involved homeowners represented by attorneys, six involved homeowners who represented themselves (ie. <b><i>pro se</i></b>) - at least in the appellate phase of the litigation, and are noted accordingly.<br />
<br />
Finally, in each case, the appeals court reversal was unanimous (3-0 rulings).<br />
<br />
One can only imagine, through extrapolation, how many screwed-over homeowners lost their homes due to incorrect trial judge rulings who, because they (or their attorneys) lacked the knowledge and/or wherewithal, failed to appeal the outcomes of their cases in the lower courts (dozens for every one reversal? maybe 100 or more per reversal?).<br />
<ul>
<li><b><i><a href="http://www.4dca.org/opinions/Jan%202015/01-21-15/4D13-4316.op.pdf" target="_blank">Murray v. HSBC Bank USA</a></i></b>, No. 4D13-4316 (4th DCA, January 21, 2015) (unanimously reversing Palm Beach County Judge Howard Harrison);<br /><br /><b><i><a href="http://www.4dca.org/opinions/March%202015/03-25-15/4D13-4040.op.pdf" target="_blank">Jelic v. LaSalle Bank, Nat'l. Ass'n</a></i></b>, No. 4D13-4040
(4th DCA, March 25, 2015) (unanimously reversing Palm Beach County Judge Kenneth Stern);<br /><br /><b><i><a href="http://www.4dca.org/opinions/May%202015/05-27-15/4D13-3006.op.pdf" target="_blank">Farkas v. US Bank National Association</a></i></b>, No. 4D13-3006 (4th DCA, May 27, 2015) (unanimously reversing Palm Beach County Judge Diana Lewis) (<b><i>pro se homeowner</i></b>);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Aug%202015/8-26-15/4D13-2813.op.pdf" target="_blank">Fiorito v. JP Morgan Chase Bank, Nat'l Ass'n</a></i></b>, No. 4D13-2813 (4th DCA, August 26, 2015) (unanimously reversing Palm Beach County Judge Janis Brustares Keyser);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Aug%202015/8-19-15/4D13-4812.op.pdf" target="_blank">Perez v. Deutsche Bank Nat'l Trust Co.</a></i></b>, No. 4D13-4812 (4th DCA, August 19, 2015) (unanimously reversing Broward County Judge Cynthia G. Imperato);<br /><br /><b><i><a href="http://www.4dca.org/opinions/July%202015/07-29-15/4D13-4036.op.pdf" target="_blank">Snyder v. JP Morgan Chase Bank, Nat'l Ass'n.</a></i></b>, No. 4D13-4036 (4th DCA, July 29, 2015) (unanimously reversing Broward County Judge Jeffrey E. Streitfeld) (<b><i>Editor's Note</i></b>: This judge bent over backwards to help the bankster - allowing it to reopen its case three times - and in the end, the court ruled incorrectly);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Nov.%202015/11-25-15/4D14-2509.op.pdf" target="_blank">Guzman v. Deutsche Bank National Trust Co.</a></i></b>, No. 4D14-2509 (4th DCA, November 25, 2015) (unanimously reversing Broward County Senior Judge Mark E. Polen);<br /><br /><b><i><a href="http://www.4dca.org/opinions/March%202015/03-25-15/4D13-4645.op.pdf" target="_blank">Matthews v. Federal Nat. Mortgage Ass'n</a></i></b>, 160 So. 3d 131 (4th DCA, March 25, 2015) (unanimously reversing Palm Beach County Senior Judge Howard Harrison) (<b><i>pro se homeowner</i></b>);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Aug%202015/8-12-15/4D14-2257.op.pdf" target="_blank">Assil v Aurora Loan Services, LLC</a></i></b>, No. 4D14-2257 (4th DCA, August 12, 2015) (unanimously reversing Palm Beach County Senior Judge Howard H. Harrison);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Sept.%202015/9-09-15/4D15-239.op.pdf" target="_blank">Citibank, NA v. Villanueva</a></i></b>, No. 4D15-239 (4th DCA September 9, 2015) (unanimously reversing Broward County Judge Cynthia G. Imperato);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Oct.%202015/10-14-15/4D14-2757.op.pdf" target="_blank">Peoples v. Sami II Trust 2006-AR6</a></i></b>, No. 4D14-2757 (4th DCA, October 14, 2015) (unanimously reversing Broward County Judge John B. Bowman);<br /><br /><b><i><a href="http://www.4dca.org/opinions/May%202015/05-06-15/4D13-2402.op.pdf" target="_blank">Tremblay v. US Bank, NA</a></i></b>, No. 4D13-2402 (4th DCA, May 6, 2015) (unanimously reversing Broward County Judge Miette K. Burnstein);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Jan%202015/01-07-15/4D12-4137.op.pdf" target="_blank">Joseph v. BAC Home Loans Servicing, LP</a></i></b>, No. 4D12-4137 (4th DCA, January 7, 2015) (unanimously reversing Palm Beach County Judge Diana Lewis);<br /><br /><b><i><a href="http://www.4dca.org/opinions/April%202015/04-08-15/4D13-3616.rhgop.pdf" target="_blank">Tilus v. As Michai LLC</a></i></b>, No. 4D13-3616 (4th DCA, April 8, 2015) (unanimously reversing Palm Beach County Judge Kenneth Stern);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Aug%202015/8-05-15/4D14-2057.reh.pdf" target="_blank">Balch v. LaSalle Bank NA</a></i></b>, No. 4D14-2057 (4th DCA, August 5, 2015) (unanimously reversing Martin County Judge James W. McCann) (<b><i>pro se homeowner</i></b>);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Feb%202015/02-11-15/4D13-1780.op.pdf" target="_blank">Henderson v. Deutsche Bank Nat'l Trust Co.</a></i></b>, No. 4D13-1780 (4th DCA, February 11, 2015) (unanimously reversing Palm Beach County Judge Howard Harrison);<br /><br /><b><i><a href="http://www.4dca.org/opinions/June%202015/06-03-15/4D13-4111.op.pdf" target="_blank">Fanelli v. HSBC Bank USA</a></i></b>, No. 4D13-4111 (4th DCA, June 3, 2015) (unanimously reversing Palm Beach County Senior Judge Susan R. Lubitz) (<b><i>entitlement to homeowner's attorney fees</i></b>);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Aug%202015/8-19-15/4D14-1383.op.pdf" target="_blank">Donado v. PENNYMAC Corp.</a></i></b>, No. 4D14-1383 (4th DCA, August 19, 2015) (unanimously reversing Broward County Judge Cynthia G. Imperato);<br /><br /><b><i><a href="http://www.4dca.org/opinions/June%202015/06-17-15/4D14-991.op.pdf" target="_blank">Jarvis v. Deutsche Bank Nat'l Trust Co.</a></i></b>, No. 4D14-991 (4th DCA, June 17, 2015) (unanimously reversing Palm Beach County Senior Judge William R. Slaughter, II);<br /><br /><b><i><a href="http://www.4dca.org/opinions/March%202015/03-25-15/4D13-3799.op.pdf" target="_blank">Lloyd v. Bank of New York Mellon</a></i></b>, No. 4D13-3799 (4th DCA, March 25, 2015) (unanimously reversing Palm Beach County Judge Kenneth D. Stern);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Sept.%202015/9-24-15/4D13-4165.rhrgop.pdf" target="_blank">Kenney v. HSBC USA, National Association</a></i></b>, 4D13-4165 (4th DCA, September 24, 2015) (unanimously reversing Palm Beach County Senior Judge Judy P. Biebel);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Aug%202015/8-19-15/4D13-3125.op.pdf" target="_blank">Lamb v. Nationstar Mortgage, LLC</a></i></b>, 4D13-3125, (4th DCA, August 19, 2015) (unanimously reversing Palm
Beach County Judge Roger B. Colton) (<b><i>pro se homeowner</i></b>);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Sept.%202015/9-09-15/4D14-54.op.pdf" target="_blank">Harris v. HSBC Bank, USA, N.A.</a></i></b>, 4D14-54 (4th DCA, September 9, 2015) (unanimously reversing Broward County Judge Cynthia G. Imperato);<br /><br /><b><i><a href="http://www.4dca.org/opinions/April%202015/04-08-15/4D13-4825.op.pdf" target="_blank">Schindler v. Bank of New York Mellon Trust Company</a></i></b>, 4D13-4825 (4th DCA, April 8, 2015) (unanimously reversing Palm Beach County Senior Judge Howard H. Harrison) (<b><i>pro se homeowner</i></b>);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Oct.%202015/10-28-15/4D14-351.op.pdf" target="_blank">Ensler v. Aurora Loan Services, LLC</a></i></b>, 4D14-351 (4th DCA, October 28, 2015) (unanimously reversing Palm Beach County Senior Judge Roger B. Colton);<br /><br /><b><i><a href="http://www.4dca.org/opinions/April%202015/04-22-15/4D13-4618.op.pdf" target="_blank">Salmon v. Foreclosed Asset Sales And Transfer Partnership</a></i></b>, 4D13-4618 (4th DCA, April 22, 2015) (unanimously reversing Palm Beach County Senior Judge Howard H. Harrison);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Nov.%202015/11-4-15/4D14-516%20op.pdf" target="_blank">Jelic v. BAC Home Loans Servicing, LP</a></i></b>, 4D14-516 (4th DCA, November 4, 2015) (unanimously reversing Palm Beach County Judge Richard L. Oftedal);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Nov.%202015/11-25-15/4D14-2457.op.pdf" target="_blank">Sanchez v. SunTrust Bank</a></i></b>, 4D14-2457 (4th DCA, November 25, 2015) (unanimously reversing Palm Beach County Judge Jack Schramm Cox);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Aug%202015/8-19-15/4D14-1609.op.pdf" target="_blank">Cardona v. Nationstar Mortgage, LLC</a></i></b>, 4D14-1609 (4th DCA, August 19, 2015) (unanimously reversing Palm Beach County Judge John J. Hoy);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Oct.%202015/10-14-15/4D14-100.op.pdf" target="_blank">Rodriguez v. Wells Fargo Bank, N.A.</a></i></b>, 4D14-100 (4th DCA, October 14, 2015) (unanimously reversing Palm Beach County Senior Judge Howard Harrison) (special concurrence by Judge Connor may be of some interest regarding the establishment of standing to foreclose);<br /><br /><b><i><a href="http://www.4dca.org/opinions/March%202015/03-04-15/4D13-4271.op.pdf" target="_blank">Blum v. Deutsche Bank Trust Company</a></i></b>, 4D13-4271 (4th DCA, March 4, 2015) (unanimously reversing St. Lucie County Senior Judge James W. Midelis);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Jan%202015/01-07-15/4D13-3387.op.pdf" target="_blank">D'Alessandro v. Fidelity Federal Bank & Trust</a></i></b>, 4D13-3387 (4th DCA, January 7, 2015) (unanimously reversing Palm Beach County Judge Lucy Chernow Brown) (<b><i>pro se homeowner</i></b>) (quiet title suit);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Jan%202015/01-28-15/4D13-2101.op.pdf" target="_blank">Holt v. Calchas, LLC</a></i></b>, 4D13-2101 (4th DCA, January 28, 2015) (unanimously reversing Broward County Judge Joel T. Lazarus);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Nov.%202015/11-4-15/4D14-2672.op.pdf" target="_blank">Vera v. Wells Fargo Bank</a></i></b>, N.A., 4D14-2672 (4th DCA, November 4, 2015) (unanimously reversing Palm Beach County Judge Roger B. Colton);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Oct.%202015/10-21-15/4D14-3747.op.Conf.Error.pdf" target="_blank">Wilson v. Deutsche Bank National Trust Company</a></i></b>, 4D14-3747 (4th DCA, October 21, 2015) (unanimously reversing Martin County Judge James W. Midelis);<br /><br /><b><i><a href="http://www.4dca.org/opinions/Jan%202015/01-07-15/4D13-3221.op.pdf" target="_blank">Wright v. Deutsche Bank National Trust Company</a></i></b>, 4D13-3221 (4th DCA, January 7, 2015) (unanimously reversing Broward County Judge Joel Lazarus);<br /><br /><b><i><a href="http://www.4dca.org/opinions/March%202015/03-25-15/4D14-934.op.pdf" target="_blank">Osorio v. U.S. Bank N.A.</a></i></b>, 4D14-934 (4th DCA, March 25, 2015) (unanimously reversing Broward County Judge Cynthia G. Imperato).</li>
</ul>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-50979024845635480562015-11-04T00:01:00.000-05:002015-11-04T09:03:27.201-05:00Homeowners' Standing To Challenge Mortgage Assignments Where They Fail To Comply With Terms Of Trust's Governing Docs: U.S. Supreme Court Denies Homeowner's Petition For ReviewA follow-up on the last post (September 24, 2015), <b><i><a href="http://homeequitytheft-cases-articles.blogspot.com/2015/09/us-supremes-asked-to-address.html" target="_blank">U.S. Supremes Asked To Address Foreclosing Banksters' Claims That Homeowners Lack Standing To Contest Mortgage Assignments (Void or Voidable???) That Fail To Comply With Terms Of Trust's Governing Documents</a></i></b>:<br />
<br />
Regrettably for homeowners, consumer attorneys, and their other advocates, the U.S. Supreme Court made quick work of the case, denying the petition for certiorari on November 2, 2015.<br />
<br />
Go here for the <b><i><a href="http://www.supremecourt.gov/search.aspx?filename=/docketfiles/15-260.htm" target="_blank">November 2, 2015 docket entry</a></i></b>.<br />
<br />
Thanks again to Deontos for the update.<br />
<div style="text-align: center;">
----------------------------------</div>
<br />
<b><u>Editor's Note</u></b>: The crucial question here (where, by its terms, the governing trust documents are controlled by New York state law) involves, not the application of federal substantive law, but the <b><i>application of the substantive law of the state of New York</i></b>. Further, while there is a long list of federal cases deciding this issue, the issue of law here<b><i> appears to be one for which no controlling precedent of the New York Court of Appeals exists</i></b>.<br />
<br />
The next time a case like this one works its way up the federal court system to an appeals court, it may be a good idea for the homeowners' advocates to request that the federal appeals court, before deciding the case, <b><i>first certify the question of law to the New York Court of Appeals</i></b>,<b><span style="color: red; font-size: x-small;">(1)</span></b> the state's highest court and "best authority on its own law", as to whether the failure to comply with the terms of a trust's governing documents renders a mortgage assignment void, or only voidable. (See generally, <b><i><a href="https://en.wikipedia.org/wiki/Certified_question" target="_blank">Certified Question</a></i></b>.)<br />
<br />
As a reminder, and as the U.S. Supreme Court has said in <b><i><a href="https://scholar.google.com/scholar_case?case=7945528639113457101&q=%22the+State%27s+highest+court+is+the+best+authority+on+its+own+law%22&hl=en&as_sdt=6,31" target="_blank">Commissioner v. Estate of Bosch</a></i></b>, 387 U.S. 456 (1967), and followed by the <b><i><a href="https://scholar.google.com/scholar?q=%22highest+court%22+%22best+authority+on+its+own+law%22+bosch&hl=en&as_sdt=6%2C31&as_ylo=1967&as_yhi=" target="_blank">subsequent cases thereunder</a></i></b> on the significance of how the highest courts of each state interpret their own state's substantive (as opposed to procedural) laws, and that the federal courts are to follow these interpretations (generally referred to as a part of the <b><i><a href="https://en.wikipedia.org/wiki/Erie_doctrine" target="_blank">Erie Doctrine</a></i></b>):<br />
<ul>
<li>"This is but an application of the rule of <b><i><a href="https://scholar.google.com/scholar_case?case=4671607337309792720&q=%22the+State%27s+highest+court+is+the+best+authority+on+its+own+law%22&hl=en&as_sdt=6,31" target="_blank">Erie R. Co. v. Tompkins, supra</a></i></b>, <b><i>where state law as announced by the highest court of the State is to be followed</i></b>. This is not a diversity case but the same principle may be applied for the same reasons, viz.,<i> <b>the underlying substantive rule involved is based on state law and the State's highest court is the best authority on its own law</b></i>."</li>
</ul>
<div>
<div style="text-align: center;">
-----------------------------------</div>
<br />
<b><span style="color: red;">(1)</span></b> <b><i><a href="http://www.courts.state.ny.us/ctapps/500rules.htm#Disc" target="_blank">See New York Court of Appeals Rule 500.27 - Discretionary Proceedings to Review Certified Questions from Federal Courts and Other Courts of Last Resort</a></i></b>:<br />
<ul>
<li>(a) Whenever it appears to the Supreme Court of the United States, any United States Court of Appeals, or a court of last resort of any other state that determinative questions of New York law are involved in a case pending before that court <b><i>for which no controlling precedent of the Court of Appeals exists, the court may certify the dispositive questions of law to the Court of Appeals</i></b>.</li>
</ul>
<div>
Note that the certification process is strictly discretionary, both on the part of the certifying court and the New York Court of Appeals. That is, the New York Court of Appeals is not required to accept any question of law certified to it; likewise, the court being requested by a party to certify a question of law to New York's highest court (or the highest court of any state, for that matter) is not required to certify the question of law.</div>
</div>
<div>
<br /></div>
<div>
It should be noted the United States Supreme Court has encouraged (but not mandated) the lower federal courts to make use of the certification process where available, which "<b><i>in the long run save[s] time, energy, and resources and hel[ps] build a cooperative judicial federalism</i></b>." <b><i><a href="https://scholar.google.com/scholar_case?case=9911936483702375073&q=%22416+U.S.+386%22+%22in+the+long+run+save+time,+energy,+and+resources+and+helps+build+a+cooperative+judicial+federalism%22&hl=en&as_sdt=40003" target="_blank">Lehman Brothers v. Schein</a></i></b>, 416 U.S. 386, 391 (1974), and which has been addressed by <b><i><a href="https://scholar.google.com/scholar?q=certification+%22time%2C+energy%2C+and+resources%22+%22cooperative+judicial+federalism%22&btnG=&hl=en&as_sdt=40003&as_ylo=1974" target="_blank">this list of cases thereunder</a></i></b>.<br />
<br />
See also, <b><i><a href="https://scholar.google.com/scholar_case?case=10948441452628753393&q=certification+%22time,+energy,+and+resources%22+%22cooperative+judicial+federalism%22&hl=en&as_sdt=40003&as_ylo=1974" target="_blank">Arizonans for Official English v. Arizona</a></i></b>, 520 U. S. 43, 77 (1997) ("Through certification of <b><i>novel or unsettled questions of state law for authoritative answers by a State's highest court</i></b>, a federal court may save `time, energy, and resources, and hel[p] build a cooperative judicial federalism'" (brackets in original)).</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-63531240135281194102015-09-24T00:01:00.000-04:002015-09-24T02:11:34.701-04:00U.S. Supremes Asked To Address Foreclosing Banksters' Claims That Homeowners Lack Standing To Contest Mortgage Assignments (Void or Voidable???) That Fail To Comply With Terms Of Trust's Governing DocumentsIn New York City, <b><i>Law 360</i></b> reports:<br />
<ul>
<li>Property owners have asked the U.S. Supreme Court to review their suit against several banks, saying the Second Circuit did not appropriately determine whether they had standing to claim that mortgage-backed securities trusts managed by the banks did not own the petitioners' mortgages.<br /><br /><b><i><a href="http://www.scribd.com/doc/282495376" target="_blank">In an Aug. 31 petition</a></i></b>, the property owners said that their mortgages were transferred to 37 MBS trusts that the banks — Bank of New York Mellon Corp., HSBC Bank NA, US Bank NA, Deutsche Bank National Trust Co. and Wells Fargo Bank NA — were trustees for, but that those transactions were invalid.<br /><br /><b><i>The appeals courts are split on how to determine the standing of property owners who challenge mortgage transfers, and the Second Circuit conflated standing with the merits of the instant case by way of an analysis that “swallows its own tail and makes no sense,”</i></b> according to the petition.<br /><br />“The Second Circuit effectively reached the merits of an issue while simultaneously claiming that the parties before it were not suitable to present those issues to it in the first place,” the petition said. “The contradiction in such an approach is palpable and calls into question the integrity of the decision-making process.”<br /><br />The Racketeer Influenced and Corrupt Organizations Act suit alleged the banks have collected mortgage payments and initiated foreclosure proceedings based on the assumption that they own the mortgages. However, the petition contended that the banks do not own the mortgages and have been fraudulently collecting payments and foreclosing on properties.<br /><br /><b><i>The issue of whether the banks own the mortgages turns primarily on whether the mortgages were validly transferred from the originating banks to the trusts. The petition argued that the transactions did not comply with the terms of the agreements that created the trusts because the trusts already closed at the time of the attempted transfers, meaning that New York law renders those transfers void</i></b>.<br /><br />The New York federal court dismissed the case with prejudice, saying the petitioners lacked standing to challenge the validity of the transfer. <b><i>The district court agreed with the banks that the property owners were neither parties to, nor third-party beneficiaries of, the agreements they claimed the banks did not comply with, and that the owners thus had no right to assert that the agreements were breached</i></b>.<br /><br />In reaching that conclusion, the district court addressed a disputed issue about the merits of the case — <b><i>whether the banks' failure to comply with the agreements rendered the transactions completely void under New York law or merely voidable if a party to, or third-party beneficiary of, the transactions wanted to void them</i></b>.<br /><br />The district court ruled that the latter was true, a decision the Second Circuit upheld, saying the claims were indistinguishable from the claims in the circuit's own 2014 decision in Rajamin v. Deutsche Bank National Trust Co.<br /><br />However, the circuit's 2014 decision conflicts with the First Circuit's 2013 ruling in Culhane v. Aurora Loan Services of Nebraska, the petition said.<br /><br />The Rajamin court reasoned that the alleged injuries were merely hypothetical because the petitioners did not dispute the underlying debt, did not say they were not in default and did not claim they paid more than they owed.<br /><br /><b><i>In Culhane, the First Circuit found that an appellant facing foreclosure had constitutional standing to challenge the validity of her mortgage assignment, as well as foreclosure, even when she was not a party to or beneficiary of that transaction, because the “essence of standing is that a petitioner must have a personal stake in the outcome of the litigation</i></b>.”<br /><br />Regarding prudential standing, the Second Circuit in Rajamin looked at the merits of the petitioners' argument and concluded that unauthorized actions were not void but merely voidable.<br /><br />Meanwhile, the First Circuit in Culhane said that decisions finding mortgagers lacked prudential standing to challenge mortgage assignments because they were not parties or third-party beneficiaries painted “with too broad a brush.”<br /><br />By deciding the question of prudential standing on a superficial consideration of the merits of the claim, the Second Circuit paid little attention to state-law issues better addressed fully on the merits, the Aug. 31 petition said.<br /><br />The banks could not be reached for comment Tuesday.<br /><br />The petitioners are represented by Erik S. Jaffe of Erik S. Jaffe PC.<br /><br />Counsel information for the banks was not available Tuesday.<br /><br />The case is Tran et al. v. Bank of New York, et al., case number 15-260, in the Supreme Court of the United States.</li>
</ul>
<div>
Source: <b><i><a href="http://www.law360.com/articles/699755/row-over-mortgage-transfers-to-mbs-trusts-hits-high-court" target="_blank">Row Over Mortgage Transfers To MBS Trusts Hits High Court</a></i></b>.<br />
<br />
Foe the homeowner's petition to the U.S Supreme Court, see <b><i><a href="http://www.scribd.com/doc/282495376" target="_blank">Anh N. Tran, Et Al. v. Bank of New York</a></i></b> (August 31, 2015).<br />
<br />
Thanks to Deontos for the heads-up on this litigation.</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-42006381740873841642015-09-18T00:01:00.000-04:002015-09-18T10:40:40.507-04:00Court Nixes Feds' Attempted Forfeiture Snatch Against Recipient Of Quit Claim Deed, Despite Grantor's Subsequent Wire Fraud Indictment; Grantee's Release Of Claims In Exchange For Property Transfer, Lack Of Knowledge Of Seller's Use Of Embezzled Cash To Originally Buy Premises Enough To Trigger "Innocent Owner" ProtectionFrom a news release, from the law firm <b><i>Bryan Cave LLP</i></b>:<br />
<ul>
<li>In a rare defeat for the United States, Bryan Cave persuaded a federal judge in the Middle District of Florida to enter summary judgment against the government in a civil forfeiture case.<br /><br />The case concerned the validity of a quit claim deed to real property in New York. The deed’s grantor conveyed the property as part of a settlement of disputed fraud claims with the grantee. One month later, <b><i>the United States sued to invalidate the quit claim deed and to forfeit the grantee’s interest in underlying property</i></b>. Shortly thereafter, a grand jury indicted the grantor for wire fraud.<br /><br />Bryan Cave <b><i>successfully argued that the grantee was an "innocent owner"</i></b> under 18 U.S.C. § 983. <b><i><a href="https://scholar.google.com/scholar_case?q=dansville+livingston+county&hl=en&as_sdt=40006&as_ylo=2015&case=9466470147604658046&scilh=0" target="_blank">The court’s forty-page opinion</a></i></b>, [...], is noteworthy for three reasons.<br /><br />First, the court found that the <b><i>innocent owner defense applied so long as the grantee did not know that the property at issue was purchased with money obtained through fraud</i></b>. Knowledge of the grantor’s criminal activity in general does not defeat the innocent owner defense.<br /><br />Second, the court found that the <b><i>grantee had given value in exchange for the deed simply by releasing claims for fraud against the grantee. No exchange of money was necessary for the grantee to qualify as a purchaser for value</i></b>.<br /><br />Third, the court held that the <b><i>grantee’s inability to record the quit claim deed was of no consequence</i></b>. The innocent owner defense applies even where the ownership interest is founded upon a deed that has not yet been recorded.<br /><br />Further, the grantee had standing to defend against forfeiture even though he never maintained possession of the property. The grantee exercised sufficient "dominion and control" over the property by, among other things, negotiating for the quit claim deed and hiring counsel to enforce his rights under that deed and to defend against forfeiture.</li>
</ul>
<div>
Source: <b><i><a href="http://www.lexology.com/library/detail.aspx?g=d47b3786-6443-4282-9bad-b1af81e00536" target="_blank">Florida federal court addresses the scope of the innocent owner defense in civil forfeiture</a></i></b>.<br />
<br />
For the court ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=dansville+livingston+county&hl=en&as_sdt=40006&as_ylo=2015&case=9466470147604658046&scilh=0" target="_blank">U.S. v. Real Property</a></i></b>, Including All Improvements Thereon And Appurtenances Thereto, Located At 246 Main Street, Dansville, Livingston County, New York, Case No. 3:13-cv-1210-J-39PDB (M.D. Fla. July 13, 2015).</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-33825152373478419752015-09-14T00:01:00.000-04:002015-09-15T06:33:35.373-04:00Florida Appeals Court Slams Brakes On Sloppy Foreclosing Lender's Attempt To Enforce Mortgage Where Only One Of Four Co-Owners Signed The Paperwork; Rejects Assertion That Non-Signatory Owners Ratified Mortgage Through Their ConductIn a recent ruling by <b><i>Florida's Third District Court of Appeal</i></b>, the court denied a lender's attempt to foreclose a residential mortgage that was signed by only one of the four owners of the home when the loan was closed.<br />
<br />
In bringing the foreclosure action, the lender attempted to circumvent this problem (obviously caused by sloppy loan origination, closing and title underwriting procedures, and occurring at a time in recent real estate history - late 2005 to early 2006 - <b><i>that the trial court observed was one where "everybody was hoodwinking everybody"</i></b>) by asking the court to <b><i>establish the existence of an equitable lien against property interest of all four owners by asserting the legal doctrine of ratification</i></b>, and then foreclose against them on the basis of that lien.<br />
<br />
Quoting from <b><i><a href="https://scholar.google.com/scholar_case?case=15613205609181784715&q=Clavero&hl=en&as_sdt=40006&scilh=0" target="_blank">Citron v. Wachovia Mortgage Corp.</a></i></b>, 922 F.Supp. 2d 1309 (M.D. Fla. 2013), the court <b><i>described ratification as follows</i></b>:<br />
<ul>
<li>"Ratification is conduct that indicates an intention, with full knowledge of the facts, <b><i>to affirm a contract which the person did not enter into or which is otherwise void or voidable</i></b>."</li>
</ul>
The court described the application of this legal doctrine in the context of a mortgage in this excerpt:<br />
<ul>
<li>Ratification of a mortgage by a non-signatory property owner has been upheld in Florida in two distinct types of cases: (a) when the nonsignatory owner <b><i>has received the benefit of the mortgage loan proceeds</i></b>; or (b) when the non-signatory owner <b><i>has authorized an attorney-in-fact to execute the mortgage</i></b> on behalf of the owner.</li>
</ul>
<div>
For the reasons set forth in its ruling,<b><span style="color: red; font-size: x-small;">(1)</span></b> the appeals court rejected the application of the doctrine ratification under the facts and circumstances of this case, and declared that the property interest of the non-signing owners of the property was free of any lien.</div>
<div>
<br /></div>
<div>
For the ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=Clavero&hl=en&as_sdt=40006&case=6615333617467030845&scilh=0" target="_blank">Wells Fargo Bank, N.A. v. Clavero</a></i></b>, Case No. 3D14-520 (Fla. 3d DCA September 2, 2015).<br />
<br />
For earlier posts on the legal doctrine of ratification, see:<br />
<ul>
<li><b><i><a href="http://homeequitytheft.blogspot.com/2015/06/nj-appeals-court-oks-forged-deed-used.html" target="_blank">NJ Appeals Court OKs Forged Deed Used By Hubby To Swipe Estranged Wife's Interest In Marital Home Where Her Subsequent Conduct (Coupled With Title Transfer To Bona Fide Purchaser) Was Deemed To Constitute Ratification Of The 'Dirty Deed'</a></i></b>,<br /><span style="color: white;">.</span></li>
<li><b><i><a href="http://homeequitytheft.blogspot.com/2011/07/voidable-or-void-ab-initio-or-void.html" target="_blank">Voidable Or Void Ab Initio (Or "Void Unless & Until Later Ratified")?</a></i></b>.<br /><span style="color: white;">.</span></li>
<li><b><i><a href="http://homeequitytheft.blogspot.com/2011/10/sneaky-lender-uses-loan-modification.html" target="_blank">Sneaky Lender Uses Loan Modification 'Pre-Negotiation' Agreement To Dupe Borrower Into Inadvertently Ratifying Void Mortgage, Waiving All Rights</a></i></b>.</li>
</ul>
<div style="text-align: center;">
-----------------------------------------</div>
<br />
<b><span style="color: red;">(1)</span></b> From the court's ruling:<br />
<ul>
<li>A. <b>Receipt of Benefit</b><br /><br />The non-signatory's receipt of mortgage loan proceeds, or receipt of a benefit from the application of those funds, may cure the failure to sign the mortgage as a matter of equitable subrogation, see <b><i><a href="https://scholar.google.com/scholar_case?case=10178918319985449997&q=Clavero&hl=en&as_sdt=40006&scilh=0" target="_blank">Palm Beach Sav. & Loan Ass'n v. Fishbein</a></i></b>, 619 So. 2d 267 (Fla. 1993), or ratification, see <b><i><a href="https://scholar.google.com/scholar_case?q=%22707+So.+2d+949%22&hl=en&as_sdt=40006&case=5835059576653531829&scilh=0" target="_blank">Fleet Fin. & Mortg., Inc.</a></i></b>, 707 So. 2d 949 (Fla. 4th DCA 1998).<br /><br />In the present case, however, <b><i>neither the Parents nor the 3789 Property received a financial benefit from the loan proceeds</i></b>. It is undisputed that all of the loan proceeds were utilized by the sole signatory to start the day care business. The Parents were not owners or employees of that business.<br /><br />We find no Florida case extending the principle of ratification to a parent's expression of a general intention to help a family member secure a loan for purposes of benefiting the family member. At oral argument, this type of indirect benefit was advanced by Wells Fargo as a worthy rationale for binding the Parents to the mortgage loan procured by Maria. We see no legal basis for extending the legal principle of ratification in such an instance, and on this record. The Washington Mutual loan circumvented the institutional lending process whereby the property owners/mortgagors sign documents informing them of the terms of the transaction, including the amount of the loan procured, federal Truth-in-Lending rights, interest rates, monthly payment amounts, and subjection of the homestead to the mortgage loan—all in a transaction in which the non-signatory owners themselves and the mortgaged property have received no benefit.<br /><br />Wells Fargo's reliance on the case of <b><i><a href="https://scholar.google.com/scholar_case?case=15613205609181784715&q=Clavero&hl=en&as_sdt=40006&scilh=0" target="_blank">Citron v. Wachovia Mortgage Corp.</a></i></b>, 922 F.Supp. 2d 1309 (M.D. Fla. 2013), is unwarranted. In that case, Mr. Citron was a Florida-licensed mortgage broker. Mrs. Citron worked with him in a mortgage company, and the two had brokered some 47 mortgage loans for the lender that originally loaned money to the Citrons, World Savings. Wachovia Mortgage was the successor by merger to World Savings. The Citrons obtained hundreds of thousands of dollars of loan proceeds and invested those funds in a home later conveyed to their family trust.<br /><br />The Citrons sued Wachovia Mortgage in an attempt to rescind the loan for Truth-in-Lending violations and other alleged defects in the loan documents. The trial court denied any such relief because (among a number of facts in the record) the Citrons had received and had not promptly disgorged all of the direct benefits of the loan. Additionally, the Citrons had made monthly payments on the loan for over a year after learning of the alleged defects in the loan documents. "<b><i>Ratification is conduct that indicates an intention, with full knowledge of the facts, to affirm a contract which the person did not enter into or which is otherwise void or voidable</i></b>." 922 F.Supp. 2d at 1321 (quoting <b><i><a href="https://scholar.google.com/scholar_case?case=13565860662394463199&q=Clavero&hl=en&as_sdt=40006&scilh=0" target="_blank">Still v. Polecat Indus., Inc.</a></i></b>, 683 So. 2d 634 (Fla. 3d DCA 1996)).<br /><br />In the present case, the Parents neither received loan proceeds, nor otherwise benefited from the application of those proceeds, nor made any monthly payments, nor acquired full knowledge of the material details of the mortgage loan.<br /><br />B. <b>Attorney-in-Fact</b><br /><br />Section 695.01(1), Florida Statutes (2005), <b><i>provides protection to creditors and purchasers who accept a conveyance or lien signed by an attorney-in-fact on behalf of a property owner</i></b> (and then recorded), so long as the power of attorney itself is also recorded before the accrual of rights by "creditors or subsequent purchasers for a valuable consideration and without notice." <b><i>Washington Mutual Bank could have required, but did not, such a power of attorney as a condition to the loan</i></b>. And such a power of attorney is only effectual to the extent of the specific powers granted. <b><i><a href="https://scholar.google.com/scholar_case?case=3284957685883850420&q=Clavero&hl=en&as_sdt=40006&scilh=0" target="_blank">Him v. Firstbank Fla.</a></i></b>, 89 So. 3d 1126 (Fla. 5th DCA 2012).<br /><br />Execution of the mortgage by an agent "previously unauthorized" may also be subject to ratification in certain instances. <b><i><a href="https://scholar.google.com/scholar_case?about=13745048468396741167&q=Clavero&hl=en&as_sdt=40006&scilh=0" target="_blank">Branford State Bank v. Howell Co.</a></i></b>, 102 So. 649 (Fla. 1924). In that case, however, the Supreme Court of Florida held: "No rule of law is better settled than this: That the <b><i>ratification of the act of an agent previously unauthorized must, in order to bind the principal, be with full knowledge of all the material facts</i></b>." Id. at 650. In the present case, there was no evidence that Maria (or anyone else) informed the Parents or Hubert of all of the material facts relating to the Washington Mutual Bank loan and mortgage.<br /><br /><u>Proceedings on Remand</u><br /><br />We affirm the trial court's findings that (a) Maria Castellon signed the promissory note, obtained the loan proceeds, and remains liable under the terms of the promissory note, (b) the defective Washington Mutual Bank promissory note and mortgage did not subject the Parents' homestead property to the lien of the mortgage and to sale, and (c) Wells Fargo does have an equitable lien to the extent of disbursements for property taxes and reasonable costs of insurance paid by Wells Fargo during the pendency of the foreclosure action, recoverable when the 3789 Property is no longer the Parents' homestead.<br /><br />We reverse that portion of the final judgment imposing and foreclosing an equitable lien for the principal or interest on the loan made by Washington Mutual Bank, with respect to the ownership interest of the Parents in the 3789 Property. On remand, the trial court should clarify that the Parents and Hubert are not personally liable for unpaid principal and interest due under the promissory note signed only by Maria.<br /><br />Affirmed in part, reversed in part, and remanded for further proceedings in accordance with this opinion.</li>
</ul>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-63882064169676712422015-08-04T00:01:00.000-04:002016-03-01T08:38:44.221-05:00Homeowners' Standing To Challenge Chain Of Title To Mortgage Being Foreclosed: Void vs. Voidable Mortgage AssignmentsIn a 2013 court ruling (<b><i><a href="https://scholar.google.com/scholar_case?q=miller+homecomings&hl=en&as_sdt=4,110,125&as_ylo=2012&case=9453396623856839433&scilh=0" target="_blank">Reinagel v. Deutsche Bank Nat'l Trust Co.</a></i></b>, 735 F.3d 220 (5th Cir. 2013)) involving a homeowner's challenge of the chain of title to a mortgage being foreclosed that allegedly involved robosigned assignments of mortgage, the 5th Circuit Court of Appeals ruled that, given the facts of the case, the homeowner lacked standing to challenge the assignments. The court applied the rule that<b><i> one cannot challenge the validity of a contract to which it is neither a party nor a third-party beneficiary</i></b>.<br />
<br />
It should be noted (and emphasized), however, that (notwithstanding the propaganda put out by the banksters and their attorneys<b><span style="color: red; font-size: x-small;">(1)</span></b>) the court also reaffirmed the principle that<b><i> there is an exception to this rule</i></b> (regrettably for the homeowners in this case, an exception that the court, for the reasons set forth in its ruling, was unpersuaded was applicable to the particular facts of this case).<br />
<br />
The exception the court reaffirmed (and one that has been recognized by other courts) was one <b><i>where the homeowner alleges and proves that the assignment(s) of mortgage was(were) absolutely void</i></b> (ie. void <i>ab initio</i>, void from inception, invalid, ineffective, a nullity, etc.), <b><i>and not merely voidable</i></b> (ie. an instrument that, while defective, is not so fatally defective as to make it invalid, and therefore is nevertheless binding on the parties to the assignment until challenged by the injured assignor or assignee, and set aside by the court).<br />
<br />
The appeals court made this point in the following excerpt of its opinion ("The Reinagles" are the homeowners making the challenge):<br />
<ul>
<li>Deutsche Bank urges that "the law is well settled that a stranger to a contract lacks standing to challenge [that] contract," and that "[n]umerous federal district courts have recognized that plaintiffs lack standing to challenge the assignment of security instruments in cases similar to the present."<br /><br />The Reinagels rejoin that "<b><i>Texas state and federal courts routinely allow a homeowner to challenge the chain of assignments by which a party claims a right to foreclose</i></b>," dismissing the cases relied upon by Deutsche Bank as incorrectly decided.<br /><br /><b><i>We agree with the Reinagels</i></b>. To be sure, Texas courts have held that a non-party to a contract cannot enforce the contract unless she is an intended third-party beneficiary,[6] occasionally couching this principle in terms of "standing."[7] Here, however,<b><i> the Reinagels are not attempting to enforce the terms of the instruments of assignment; to the contrary, they urge that the assignments are void ab initio</i></b>.<br /><br />Though "the law is settled" in Texas that <b><i>an obligor cannot defend against an assignee's efforts to enforce the obligation on a ground that merely renders the assignment voidable at the election of the assignor, Texas courts follow the majority rule that the obligor may defend "on any ground which renders the assignment void."</i></b>[8] A contrary rule would lead to the odd result that Deutsche Bank could foreclose on the Reinagels' property though it is not a valid party to the deed of trust or promissory note, which, by Deutsche Bank's reasoning, should mean that it lacks "standing" to foreclose.</li>
</ul>
<div>
They cited the following authority for its basis for this exception in <b><i><a href="https://scholar.google.com/scholar_case?q=miller+homecomings&hl=en&as_sdt=4,110,125&as_ylo=2012&case=9453396623856839433&scilh=0#[7]" target="_blank">footnote 8 of its opinion</a></i></b>:</div>
<div>
<ul>
<li><b><i><a href="https://scholar.google.com/scholar_case?case=15927954019147872966&q=miller+homecomings&hl=en&as_sdt=4,110,125&as_ylo=2012&scilh=0" target="_blank">Tri-Cities Const., Inc. v. Am. Nat. Ins. Co</a></i></b>., 523 S.W.2d 426, 430 (Tex. Civ. App. 1975) (citing <b><i><a href="https://scholar.google.com/scholar_case?case=12171654365865169846&q=miller+homecomings&hl=en&as_sdt=4,110,125&as_ylo=2012&scilh=0" target="_blank">Glass v. Carpenter</a></i></b>, 330 S.W.2d 530, 537 (Tex. Civ. App. 1959)); see also, e.g., 6A C.J.S. ASSIGNMENTS § 132 (2013) ("A debtor may, generally, assert against an assignee ..., any matters rendering the assignment absolutely invalid ..., such as[] the nonassignability of the right attempted to be assigned, or a prior revocation of the assignment."); <b><i><a href="https://scholar.google.com/scholar_case?case=8968590652584393948&q=miller+homecomings&hl=en&as_sdt=4,110,125&as_ylo=2012&scilh=0" target="_blank">Murphy v. Aurora Loan Servs., LLC</a></i></b>, 699 F.3d 1027, 1033 (8th Cir.2012) (recognizing that mortgagors can defend against foreclosure by <b><i>establishing a fatal defect</i></b> in the purported mortgagee's chain of title).</li>
</ul>
<div style="text-align: center;">
--------------------------</div>
</div>
<div>
<br /></div>
<div>
Lest one believe the type of propaganda put out by the banksters and their lawyers that there is a growing chorus of courts throughout the country holding that homeowners can't challenge mortgage assignments,<span style="color: red; font-size: x-small;"><b>(2)</b></span> it is important to emphasize that, at best, such propaganda constitutes:</div>
<div>
<ul>
<li>an overemphasis of the general rule that states a stranger or a non-third-party beneficiary to a contract (ie. the mortgage assignment) cannot challenge the validity of said contract, and<br /><span style="color: white;">.</span></li>
<li>a complete failure by the banksters and friends to acknowledge that courts have found that a non-party can challenge a contract that is absolutely void (and not merely voidable).<b><span style="color: red; font-size: x-small;">(3)</span></b></li>
</ul>
</div>
<div>
For the ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=miller+homecomings&hl=en&as_sdt=4,110,125&as_ylo=2012&case=9453396623856839433&scilh=0" target="_blank">Reinagel v. Deutsche Bank Nat'l Trust Co.</a></i></b>, 735 F.3d 220 (5th Cir. 2013).</div>
<div style="text-align: center;">
---------------------------</div>
<div>
<br /></div>
<div>
<b><span style="color: red;">(1)</span></b> See, for example, this misleading headline in post by one lender-favoring lawyer: <b><i><a href="http://www.jdsupra.com/legalnews/borrowers-cannot-challenge-mortgage-assi-97227/" target="_blank">Borrowers Cannot Challenge Mortgage Assignments, Says Nebraska Joining Other States</a></i></b>).<br />
<br />
<b><span style="color: red;">(2)</span></b> Ibid.<br />
<br />
<b><span style="color: red;">(3)</span></b> For earlier posts providing examples of courts acknowledging the exception to the rule precluding homeowners from challenging mortgage assignments, see:<br />
<ul>
<li><b><i><a href="http://homeequitytheft-cases-articles.blogspot.com/2015/07/failure-to-allege-void-as-opposed-to.html" target="_blank">Failure To Allege: Void (As Opposed To Merely Voidable) Transfer, Risk Of Double Payment Or Other Prejudice Is Fatal To Borrowers' Foreclosure Defense As Nebraska High Court Says Homeowners Lacked Standing To Challenge Allegedly Faulty Mortgage Assignment From One Bankster To Another</a>,<br /><span style="color: white;">.</span><br /><a href="http://homeequitytheft.blogspot.com/2012/10/homeowners-have-standing-to-challenge.html" target="_blank">Homeowners Have Standing To Challenge Faulty Mortgage Assignments From One Bankster To Another, But Only Where Defects Render Conveyance Absolutely Void, Not Merely Voidable</a></i></b>,<br /><span style="color: white;">.</span><br /><b><i><a href="http://homeequitytheft.blogspot.com/2013/02/1st-circuit-borrower-has-standing-to.html" target="_blank">1st Circuit: Borrower Has Standing To Challenge Mortgage Assignments When Invalid, Ineffective, Or Void; Transfers That Are Merely Voidable Are Immune From Protest</a></i></b>,<br /><span style="color: white;">.</span><br /><a href="http://homeequitytheft.blogspot.com/2013/01/michigan-trial-court-oks-homeowner.html" style="font-style: italic; font-weight: bold;" target="_blank">Michigan Trial Court OKs Homeowner Challenge To Validity Of Mortgage Assignment Where Assignee's Lack Of Title Is Raised As A Defense</a> (reversed on other grounds, <b><i><a href="https://scholar.google.com/scholar_case?q=hsbc+young&hl=en&as_sdt=4,23&as_ylo=2013&case=14843567347243779372&scilh=0" target="_blank">HSBC Bank USA, NA v. Young</a></i></b>, No. 313212 (Mich. App. 2014) (unpublished) (appeal denied <b><i><a href="https://scholar.google.com/scholar_case?q=hsbc+young&hl=en&as_sdt=4,23&as_ylo=2013&case=10127861003829747970&scilh=0" target="_blank">HSBC v. Young, 2015</a></i></b>).</li>
</ul>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-48842298396659030872015-08-01T00:01:00.000-04:002015-08-01T09:10:52.085-04:00Banksters Dodge 'Ticking Time Bomb' Of Crappy Massachusetts Real Estate Titles; State High Court Says Lenders Failing To Strictly Comply w/ Conditions Precedent To Exercise Of Power Of Sale Will Result In Void (As Opposed To Voidable) Foreclosure Sales, But Refuses To Apply Ruling To Past SalesFrom a comment on the website of Massachusetts law firm <b><i>Johnson & Borenstein, LLC</i></b>:<br />
<div>
<ul>
<li>Mortgagees beware – the Supreme Judicial Court has ruled that a foreclosing entity must strictly comply with the provisions of the mortgage which delineate the notice of default to homeowners. <b><i>This case extends the rule</i></b>, set out in <b><i><a href="https://scholar.google.com/scholar_case?case=4569784280786262124&q=pinti+emigrant&hl=en&as_sdt=40006&scilh=0" target="_blank">United States Bank Nat'l Ass'n v. Ibanez</a></i></b>, 458 Mass. 637 (2011), <b><i>that strict compliance with the power of sale provisions and the statutory notice requirements is necessary to result in a valid foreclosure</i></b>.<br /><br />Lesley Phillips and Linda Pinti (“Pinti”) brought suit in Superior Court seeking to prevent their eviction as a result of Harold Wilion’s summary process action against them. Wilion purchased the property at a foreclosure sale, conducted by Emigrant Mortgage Company, Inc. by exercise of the power of sale contained in the Pinti mortgage. Pinti sought a declaratory judgment that the foreclosure sale was void because Emigrant failed to comply with paragraph 22 of the mortgage, which concerns the mortgagee's provision of notice to the mortgagor of default and the right to cure, and also the remedies available to the mortgagee upon the mortgagor's failure to cure the default, including the power of sale.<br /><br /><div style="text-align: center;">
***</div>
<br />The Superior Court granted summary judgment in favor of Wilion, concluding that there was no requirement that Emigrant strictly comply with paragraph 22 of the mortgage, because the provision has no direct relationship to the power of sale, and dismissed Pinti’s complaint. Pinti appealed, and the SJC opted to take the case for itself.<br /><br />A majority of the Court interpreted a long line of mortgage foreclosure cases to stand for the proposition that a mortgagee “<b><i>must strictly comply not only with the terms of the actual power of sale in the mortgage, but also with any conditions precedent to the exercise of the power that the mortgage might contain</i></b>.”<br /><br />Relying upon an old case, Foster, Hall & Adams Co. v. Sayles, 213 Mass. 319 (1913), the SJC determined that “the sending of the prescribed notice of default is essentially a prerequisite to use of the mortgage's power of sale,” and that “the ‘terms of the mortgage’ with which strict compliance is required -- both as a matter of common law under this court's decisions and under § 21 -- include not only the provisions in paragraph 22 relating to the foreclosure sale itself, but also the provisions requiring and prescribing the preforeclosure notice of default.”<br /><br />The concern, the SJC said, is that the notice sent by Emigrant did not inform the homeowners that they must initiate a lawsuit to challenge the foreclosure – <b><i>the notice seems to say that the homeowners will have an opportunity to raise any valid defenses in a later foreclosure action. Because Massachusetts is a nonjudicial foreclosure State, that “later” action never arrives</i></b>, thereby depriving a homeowner of the opportunity to contest the foreclosure. The Court also noted that <b style="font-style: italic;">it is “hardly unfair or burdensome” to require a mortgagee to comply with the terms of its own mortgage document</b>.<br /><br />The Court distinguished its decision in <b><i><a href="https://scholar.google.com/scholar_case?case=8265430601541129175&q=pinti+emigrant&hl=en&as_sdt=40006&scilh=0" target="_blank">U.S. Bank Nat'l Ass'n v. Schumacher</a></i></b>, 467 Mass. 421 (2014), on the grounds that G.L. c. 244, § 35A, the statute at issue in Schumacher, is not related to the exercise of the power of sale, but concerns the provision of a sufficient period of time to permit a homeowner to cure a default. Therefore, <b><i>the Court decided, the defective notice sent to Phillips and Pinti rendered the foreclosure sale void</i></b>.<b><span style="color: red; font-size: x-small;">(1)</span></b><br /><br /><b><i>Lest mortgagees become unduly concerned about pending or past foreclosures being invalidated on the grounds of a notice failure, the SJC stated that this decision is prospective only</i></b>.<b><span style="color: red; font-size: x-small;">(2)</span></b></li>
</ul>
<div>
For more, see <b><i><a href="http://www.jbllclaw.com/jb-blog/new-requirements-for-foreclosing-mortgagees-courtesy-of-the-supreme-judicial-court/7/21/2015" target="_blank">New Requirements For Foreclosing Mortgagees Courtesy Of The Supreme Judicial Court</a></i></b>.<br />
<br />
For the court ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=pinti+emigrant&hl=en&as_sdt=40006&case=9974742246494499215&scilh=0" target="_blank">Pinti v. Emigrant Mortgage Co.</a></i></b>, No. SJC-11742 (Mass. July 17, 2015).<br />
<br />
Thanks to Deontos for the heads-up on the court ruling.<br />
<div style="text-align: center;">
-----------------------</div>
<br />
<b><span style="color: red;">(1)</span></b> The court's discussion on <b><i>finding the foreclosure sale void, as opposed to merely voidable</i></b>, follows:<br />
<ul>
<li>Given our conclusion, the question presents itself whether Emigrant's failure to comply strictly with the default notice provisions of paragraph 22 <b><i>renders the title obtained by Wilion as a result of the subsequent foreclosure sale voidable rather than void</i></b>.[23] See <b><i><a href="https://scholar.google.com/scholar_case?about=1744130105086736846&q=pinti+emigrant&hl=en&as_sdt=40006&scilh=0" target="_blank">Chace v. Morse</a></i></b>, 189 Mass. 559, 561-562 (1905), and cases cited. As the court observed in Chace, this is not always an easy question to answer:<br /><br /><i><span style="font-family: Arial, Helvetica, sans-serif;">"The <b>distinction between the two classes of cases [void and voidable] has not been very clearly defined</b>, and the decisions in the different jurisdictions do not entirely agree. It has repeatedly been said that in order to make a valid sale under a power in a mortgage, the terms of the power must be strictly complied with. Roarty v. Mitchell, 7 Gray, 243 [(1856)]; Smith v. Provin, 4 Allen, 516 [(1862]). . . . Where the sale is to foreclose a mortgage for a breach of the condition, there is no authority to sell unless there is a breach, and an attempted sale would be without effect upon the right of redemption. So, where a certain notice is prescribed, a sale without any notice, or upon a notice, lacking the essential requirements of the written power, would be void as a proceeding for foreclosure. Moore v. Dick, 187 Mass. 207 [(1905)]. But if everything is done upon which jurisdiction and authority to make a sale depend, irregularities in the manner of doing it, or in the subsequent proceedings, which may affect injuriously the rights of the mortgagor, <b>do not necessarily render the sale a nullity</b>. The sale will be invalid so far as to enable the mortgagor, or perhaps the purchaser, to avoid it, and still be effectual if all the parties interested desire to have it stand."</span></i><br /><br />Id. See <b><i><a href="https://scholar.google.com/scholar_case?case=15564180476392861328&q=pinti+emigrant&hl=en&as_sdt=40006&scilh=0" target="_blank">Bevilacqua v. Rodriguez</a></i></b>, 460 Mass. 762, 778 (2011) ("Generally, <b><i>the key question in this regard is whether the transaction is void, in which case it is a nullity such that title never left possession of the original owner, or merely voidable, in which case a bona fide purchaser may take good title</i></b>").<br /><br />As the quoted passage from Chace, supra, suggests, a bona fide purchaser's "title is not to be affected by mere irregularities in executing a power of sale contained in a mortgage, of which irregularities he has no knowledge, actual or constructive." Rogers, 169 Mass. at 183-184. As applied to this case, therefore,<b><i> the question of void versus voidable may be reframed to ask whether the failure of Emigrant, as the mortgagee, to send the plaintiffs a notice of default providing the actual information required by the terms of the mortgage concerning the plaintiffs' right "to bring a court action" in order to raise any defense to the foreclosure sale is a "mere irregularity" that does not affect the validity of the property's title</i></b>.<br /><br />As previously discussed, in a nonjudicial foreclosure jurisdiction like Massachusetts, misstating this information in a way to suggest that a mortgagor with a defense does not need to initiate a lawsuit but may wait to respond to a foreclosure lawsuit filed by the mortgagee can have disastrous consequences for the mortgagor: if the mortgagor has a valid defense to the foreclosure sale going forward, but is not made aware that he or she must initiate an action in court against the mortgagee to raise that defense, the sale may well proceed and result in title passing to a bona fide purchaser without knowledge of the issue — at which point, and depending on the nature of the defense, the mortgagor's right to redeem his or her home may well be lost. See Bevilacqua, 460 Mass. at 777-778.[24] <b><i>Emigrant's failure to provide the required and correct information on this point in the notice of default cannot fairly be described as a "mere irregularit[y] in executing a power of sale contained in a mortgage</i></b>." Rogers, supra. Contrast Chace, 189 Mass. at 562. <b><i>The failure renders the subsequent foreclosure sale to Wilion void</i></b>.<br /><br />The position taken by the dissent is that strict compliance by Emigrant with the notice of default provisions in paragraph 22 was required, but that Emigrant's failure to do so did not render the foreclosure sale void. See post at ___. In the dissent's view, the result in this case is essentially controlled by our decision in Schumacher. See post at ___. The dissent reasons that § 35A, the subject of Schumacher, and the notice of default provisions in paragraph 22 are birds of a feather in terms of purpose and operation; that for the same reasons Schumacher concludes § 35A was not a statute relating to the foreclosure by sale, so paragraph 22 is not a term of the mortgage concerned with foreclosure by sale; and, consequently, as was the case in Schumacher, Emigrant's defective notice of default rendered the foreclosure sale only voidable, not void.<br /><br />We disagree. The dissent fails to take into account the distinction — reflected in our cases and in the language of § 21 — between the "terms of the mortgage" instrument relating to foreclosure by exercise of the power of sale, and "statutes" relating to foreclosure by the power of sale. But this distinction is a critical one. As discussed previously, that § 35A is not one of the statutes relating to foreclosure by the power of sale to which § 21 refers does not answer whether the provisions of paragraph 22 qualify as "terms of the mortgage" relating and integrally connected to the power of sale under § 21. And as to that question, this court's decisions about mortgage terms indicate that by structure and content, the notice of default required to be given under paragraph 22 is integrally connected, and operates as a prerequisite, to the proper exercise of the mortgage instrument's power of sale. <b><i>Emigrant's strict compliance with the notice of default required by paragraph 22 was necessary in order for the foreclosure sale to be valid; Emigrant's failure to strictly comply rendered the sale void</i></b>.</li>
</ul>
<br />
<b><span style="color: red;">(2)</span></b> <u>Prospective vs. Retroactive effect</u><br />
<br />
On this very significant point, the Massachusetts high court's desire here was to dodge, at all costs, the disaster with real estate titles that would have arisen throughout the state (the <b><i>"ticking time bombs" of void - as opposed to voidable - titles</i></b>) had the court applied this ruling retroactively. Some may remember that the court took this same dodge several years ago in <b><i><a href="https://scholar.google.com/scholar_case?case=14665863944989863163&q=pinti+emigrant&hl=en&as_sdt=40006&scilh=0" target="_blank">Eaton v. Federal Nat'l Mtge. Ass'n</a></i></b>, 462 Mass. 569 (2012).<br />
<br />
In this regard, <b><i>this case represents a significant win for the banksters</i></b> in that the court decided to give this ruling prospective (ie. "going forward") effect only (although it does apply the ruling to the parties to this litigation as well), thereby rendering the ruling inapplicable to any past foreclosures (and, thus, obliterating any "<b><i>ticking time bomb</i></b>" problem that would have occurred with the flood of past foreclosure sales that would have been voided had the court decided to give this ruling retroactive effect).<br />
<br />
The court addressed this point at the end of its majority opinion:<br />
<ul>
<li>We turn to the question whether our decision in this case <b><i>should be given prospective effect only</i></b>, because the failure of a mortgagee to provide the mortgagor with the notice of default required by the mortgage is not a matter of record and, therefore, <b><i>where there is a foreclosure sale in a title chain, ascertaining whether clear record title exists may not be possible</i></b>.<br /><br />We confronted the same issue in <b><i><a href="https://scholar.google.com/scholar_case?case=14665863944989863163&q=pinti+emigrant&hl=en&as_sdt=40006&scilh=0" target="_blank">Eaton</a></i></b>, 462 Mass. at 586-587. As Eaton also indicates, <b><i>in the property law context, we have been more willing to apply our decisions prospectively than in other contexts</i></b>. See id. at 588.<br /><br />We conclude that in this case, <b style="font-style: italic;">because of the possible</b> [me here - "disasterous"] <b style="font-style: italic;">impact that our decision may have on the validity of titles, it is appropriate to give our decision prospective effect only: it will apply to mortgage foreclosure sales of properties that are the subject of a mortgage containing paragraph 22 or its equivalent and for which the notice of default required by paragraph 22 is sent after the date of this opinion</b>.<br /><br />As in Eaton, however, and for the reasons stated there, <b><i>we will apply our ruling to the parties in the present case</i></b>. See id. at 589, and cases cited.[25]</li>
</ul>
<div>
The court also noted, in <b><i><a href="https://scholar.google.com/scholar_case?q=pinti+emigrant&hl=en&as_sdt=40006&case=9974742246494499215&scilh=0#[24]" target="_blank">footnote 25 of the majority opinion</a></i></b>, that it expressly declined to decide whether it will apply their ruling to cases currently pending on appeal:</div>
</div>
</div>
<div>
<ul>
<li>The parties have not argued, and we do not reach, the question whether our holding in this case should be applied to any other class of cases pending on appeal. See <b><i><a href="https://scholar.google.com/scholar_case?case=5696227726929982962&q=pinti+emigrant&hl=en&as_sdt=40006&scilh=0" target="_blank">Galiastro v. Mortgage Elec. Registration Sys., Inc.</a></i></b>, 467 Mass. 160, 167-170 (2014).</li>
</ul>
<div>
<strike>By giving this ruling prospective, as opposed to retroactive, effect only, the court appears to reaffirm the notion held by some that, no matter how badly the banksters screw up, they can usually count on the government (ie. the court system is part of the <b><i><a href="http://www.factmonster.com/ipka/A0774837.html" target="_blank">judicial branch of government</a></i></b>) to somehow pull their collective asses out of the fire.</strike></div>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-68071781329998431822015-07-31T00:01:00.000-04:002015-07-31T09:56:38.815-04:00Failure To Allege: Void (As Opposed To Merely Voidable) Transfer, Risk Of Double Payment Or Other Prejudice Is Fatal To Borrowers' Foreclosure Defense As Nebraska High Court Says Homeowners Lacked Standing To Challenge Allegedly Faulty Mortgage Assignment From One Bankster To AnotherAs has been been observed by at least one lender-favoring commentator:<b><span style="color: red; font-size: x-small;">(1)</span></b><br />
<ul>
<li><b><i>Attacking sufficiency, accuracy, or validity of assignments of mortgages and deeds of trust has been among the most common strategies employed by borrowers to challenge foreclosures</i></b>. Allegations regarding the status of MERS, the legal authority of the individual executing the assignment, and the timing of the assignment’s recording have all been raised and litigated in courts throughout the United States.<br /><br />Recently, however, the Nebraska Supreme Court joined a growing number of state courts that <b><i>have rejected such arguments, citing fundamental questions about borrowers’ standing to challenge contracts in which they have no legally cognizable interest</i></b>.</li>
</ul>
<div>
However, the point the commentator and others fail to emphasize, and what some courts throughout the country are either missing, or less-than-effective foreclosure defense attorneys are failing to raise, is the fact that, in order to have standing to challenge said assignments, an allegation that <b><i>the assignment is absolutely void</i></b>, and an allegation that <b><i>some injury or prejudice (or risk thereof)</i></b> due to the faulty assignment is present and <b><i>must be sufficiently plead, briefed, and ultimately proven by the homeowners</i></b>.</div>
<div>
<br /></div>
<div>
This appears to be the case in the recent ruling by the Nebraska Supreme Court referenced above.</div>
<div>
<br /></div>
<div>
Buried on the 16th page of the 18-page ruling, and on the basis of what it pointed out earlier in its ruling, the Nebraska high court made this observation:</div>
<div>
<ul>
<li><b><i>We need not decide in this case whether a borrower who is at risk of paying the same debt twice, or otherwise at risk of prejudice from an improper assignment, would have standing to challenge that assignment of its mortgage</i></b>.<br /><br /><b><i>Had the Marcuzzos established an injury that directly related back to the assignment of their mortgage, our holding may have been different</i></b>.<br /><br /><b><i>But no such injury caused by the assignment is alleged or found</i></b>. Strictly applying Nebraska law, the Marcuzzos were not a party to the assignment. Nor was the assignment made for their benefit. Thus, the Marcuzzos cannot challenge the assignment contract's validity.</li>
</ul>
<div>
Clearly, the court here is telegraphing to anyone who's bothering to pay attention (ie. hopefully, homeowners in foreclosure, foreclosure defense attorneys, etc.) that challenging said assignment requires an allegation (which must be plead and proven) that the assignment is absolutely void (ie. void ab initio, invalid, ineffective, etc.) and not merely voidable, and an allegation that the homeowners face some harm or risk of harm due to the faulty assignment. In this case, the homeowner, according to the court, <b><i>didn't bother to even allege a void assignment, harm, or risk of harm, much less prove it</i></b>.</div>
</div>
<div>
<br /></div>
<div>
In laying its groundwork for this observation (which it acknowledges is an exception to the general rule that one cannot challenge the validity of a contract to which it is neither a party nor a third-party beneficiary), the court made reference to a recent federal appeals court case in which the homeowner succeeded in challenging a mortgage assignment to which it was not a party:</div>
<div>
<ul>
<li>Some courts while accepting this general rule have <b><i>recognized an exception if the borrower can show actual prejudice by the improper assignment of the loan</i></b>.[22]<br /><br />For example, <b><i>if the borrower was at risk of paying the same debt twice, then the borrower could establish a concrete injury arising from the improper assignment of the mortgage</i></b>.[23]<br /><br />If the borrower can<b><i> show any injury that is directly traceable to the assignment of the mortgage</i></b>, then, under this exception, <b><i>the borrower would have standing to challenge that assignment</i></b>.<br /><br />Only one circuit court has held that the borrower does not need to demonstrate injury in order to have standing to challenge the validity of an assignment that the borrower was not a party to.[24] But, the court strictly circumscribed the type of challenge for which a borrower may have standing.[25]<br /><br />In <b><i><a href="https://scholar.google.com/scholar_case?case=666232793059695277&q=marcuzzo&hl=en&as_sdt=40006&scilh=0" target="_blank">Culhane v. Aurora Loan Services of Nebraska</a></i></b>,[26] the First Circuit Court of Appeals <b><i>held that a borrower can have standing to challenge the assignment of his or her mortgage where the borrower is arguing the mortgage is invalid, ineffective, or void</i></b>. Examples of void assignments include where the right attempted to be assigned is not assignable, or a prior revocation of the assignment.[27]<br /><br />However, the Culhane court <b><i>held that a borrower does not have standing to challenge shortcomings in an assignment that render it merely voidable at the election of one party, but otherwise effective to pass legal title</i></b>.[28]<br /><br />The plaintiff in Culhane argued that the assignor of the mortgage never had valid title to the mortgage, and therefore never had the right to assign the mortgage.[29] <b><i>If true, the mortgage assignment would be void ab initio</i></b>.<br /><br />The First Circuit Court of Appeals <b><i>found that the harm to the plaintiff in such circumstances would be the foreclosure, which could be traced directly to the creditor's "exercise of the authority purportedly delegated by the assignment."</i></b>[30] The court also found two key facts in favor of standing in light of the allegations presented: (1) that, in Massachusetts, debtors have a statutory right under state law to ensure that any attempted foreclosure on his or her home is conducted lawfully and (2) that the mortgage contained a power of sale without prior judicial authorization.[31] The court was careful to caution that its holding was narrow, specific to Massachusetts law, and applied <b><i>only when the borrower challenged the mortgage assignment as invalid, ineffective, or void</i></b>.[32]<br /><br />We find Culhane to be distinguishable from the case at bar. <b><i>The Marcuzzos did not allege a void assignment. They did not allege that MERS, or Bank of the West, had no legally cognizable right to assign under the mortgage documents</i></b>.<br /><br />Instead, the Marcuzzos' argument is that the assignment paperwork between the assignor and Bank of the West did not follow the proper procedural framework. Even if this were true, the assignment would not be defective.[33]</li>
</ul>
<div style="text-align: center;">
----------------------------</div>
<div>
<br /></div>
<div>
Based on the forgoing, it appears clear that to have any chance at successfully challenging a faulty mortgage assignment, the homeowner must sufficiently plead, brief and prove that:</div>
<div>
<ul>
<li>the defective aspects of the assignment render it void ab initio (ie. ineffective, invalid, a nullity) and not merely voidable, and</li>
<li>the homeowner faces some prejudice (ie. injury or risk of injury - risk of paying debt twice (ie. "double collection" on the part of note holder(s)), lack of assignor's right to assign, assignee's lack of title) which, as the court put it, "<i>could be traced directly to the creditor's exercise of the authority purportedly delegated by the assignment."</i></li>
</ul>
<div>
For the Nebraska Supreme Court ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=marcuzzo&hl=en&as_sdt=40006&case=17462928056445812680&scilh=0" target="_blank">Marcuzzo v. Bank of the West</a></i></b>, 290 Neb. 809 (Neb. May 1, 2015).<br />
<div style="text-align: center;">
-----------------------------------</div>
<br />
<b><span style="color: red;">(1)</span></b> See <b><i><a href="http://www.jdsupra.com/legalnews/borrowers-cannot-challenge-mortgage-assi-97227/" target="_blank">Borrowers Cannot Challenge Mortgage Assignments, Says Nebraska Joining Other States</a></i></b>.<br />
<br />
<b><span style="color: red;">(2)</span></b> For earlier posts providing examples of homeowners who have successfully challenged mortgage assignments, despite the fact that they were not parties to the assignment, see:<br />
<ul>
<li><b><i><a href="http://homeequitytheft.blogspot.com/2012/10/homeowners-have-standing-to-challenge.html" target="_blank">Homeowners Have Standing To Challenge Faulty Mortgage Assignments From One Bankster To Another, But Only Where Defects Render Conveyance Absolutely Void, Not Merely Voidable</a></i></b>,<br /><span style="color: white;">.</span><br /><b><i><a href="http://homeequitytheft.blogspot.com/2013/02/1st-circuit-borrower-has-standing-to.html" target="_blank">1st Circuit: Borrower Has Standing To Challenge Mortgage Assignments When Invalid, Ineffective, Or Void; Transfers That Are Merely Voidable Are Immune From Protest</a></i></b>,<br /><span style="color: white;">.</span><br /><a href="http://homeequitytheft.blogspot.com/2013/01/michigan-trial-court-oks-homeowner.html" style="font-style: italic; font-weight: bold;" target="_blank">Michigan Trial Court OKs Homeowner Challenge To Validity Of Mortgage Assignment Where Assignee's Lack Of Title Is Raised As A Defense</a> (reversed on other grounds, <b><i><a href="https://scholar.google.com/scholar_case?q=hsbc+young&hl=en&as_sdt=4,23&as_ylo=2013&case=14843567347243779372&scilh=0" target="_blank">HSBC Bank USA, NA v. Young</a></i></b>, No. 313212 (Mich. App. 2014) (unpublished) (appeal denied <b><i><a href="https://scholar.google.com/scholar_case?q=hsbc+young&hl=en&as_sdt=4,23&as_ylo=2013&case=10127861003829747970&scilh=0" target="_blank">HSBC v. Young, 2015</a></i></b>).</li>
</ul>
</div>
</div>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-73319093469344063932015-06-19T00:01:00.000-04:002019-02-17T14:20:47.827-05:00NJ Appeals Court OKs Forged Deed Used By Hubby To Swipe Estranged Wife's Interest In Marital Home Where Her Subsequent Conduct (Coupled With Title Transfer To Bona Fide Purchaser) Was Deemed To Constitute Ratification Of The 'Dirty Deed'The following facts have been adapted from a <b><i>2013 ruling from a New Jersey appeals court</i></b>:<br />
<ol>
<li>On August 29, 2001, husband ("Randy") and wife ("Maria") (who had been married since 1991) acquired property together.<br /><span style="color: white;">.</span></li>
<li>In January 2003, Randy and Maria seperated, and she left the marital residence with their two children.<br /><span style="color: white;">.</span></li>
<li>On April 1, 2004, a deed (later alleged by Maria to be forged) reflecting that Maria granted Randy sole ownership of the property for $1.00 was executed.<br /><span style="color: white;">.</span></li>
<li>On April 14, 2004 (ten days later), Randy sold the home to an innocent purchaser, one Mangiliman. Mangiliman obtained mortgages to purchase the property for $429,000.<br /><span style="color: white;">.</span></li>
<li>In the summer of 2005, Maria discovered that, unbeknownst to her, Randy sold the home. At that time, she obtained copies of the April 1 and 14, 2004 deeds, and subsequently claimed that the signatures purporting to be hers on the April 1, 2004 deed and related paperwork were forged. She acknowledged at the time, however, <b><i>that the mortgage on the marital residence may have been in default</i></b> in March 2004.<br /><span style="color: white;">.</span></li>
<li>Upon learning about the deeds and the sale, plaintiff called Cantu. According to plaintiff, Cantu told her that he had done what he had to do and that if she did anything about it he would kill her.<br /><span style="color: white;">.</span></li>
<li>Plaintiff called her divorce lawyer, who told her that litigation to regain her interest would be costly. Because of the expense, she decided not to pursue the issue.<br /><span style="color: white;">.</span></li>
<li>For approximately the next three years, she continued to acquiesce.<br /><span style="color: white;">.</span></li>
<li>In August 2008, three years after learning about the deeds and sale of the marital residence and discussing the matter with her lawyer, plaintiff filed a complaint for divorce.<br /><span style="color: white;">.</span></li>
<li>In her divorce complaint, she states that their items of real and personal property acquired by the parties during the marriage have been distributed to each party's satisfaction.<br /><span style="color: white;">.</span></li>
<li>On February 2, 2009, a judgment of divorce was entered. It incorporates a property settlement agreement (PSA) bearing signatures of Maria and Randy that were notarized three days earlier. Among other things, and just as Maria's divorce complaint had, the PSA represented that the parties "<b><i>have heretofore divided all marital assets to their satisfaction</i></b>."<br /><span style="color: white;">.</span></li>
<li>In September, 2010 (over five years after discovering that Randy ripped off her one-half interest in the marital home, and then sold the home to an unwitting buyer), Maria filed a complaint to quiet title to the former marital residence against her now-ex husband, Randy, and the innocent purchaser, Mangiliman.<br /><span style="color: white;">.</span></li>
<li>During her deposition in this action, Maria gave several reasons for signing the PSA despite her awareness of the forged deed and the fact that the PSA did not provide her with any proceeds from the sale of the marital residence. She testified, "My understanding in the property settlement agreement was this was something I was signing in order to finalize my divorce." And she further explained that she did not seek a share of the proceeds because of the litigation expense. When asked why she commenced this action after the long delay, plaintiff's only response was, "I think it's fair."</li>
</ol>
<div style="text-align: center;">
----------------------------------</div>
<div>
<br /></div>
<div>
In assuming that the April 1, 2004 deed from Maria to Randy was forged (there was never an actual finding of forgery - the lower court disposed of the matter on summary judgment), both the lower court and the New Jersey appeals court <b><i>validated the forged deed under the specific facts of this case</i></b>. The relevant portion of the appeals court's ruling in reaching this determination follows (wife Maria is the plaintiff; husband Randy is referred to by his last name, Cantu; "PSA" refers to the property settlement agreement in their divorce proceeding):</div>
<div>
<ul>
<li><b><i>Generally, a deed that is forged is deemed void and a nullity</i></b>. <b><i><a href="https://scholar.google.com/scholar_case?case=6600742374586463908&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Sonderman v. Remington Const. Co.</a></i></b>, 127 N.J. 96, 115 (1992) (Stein, J., dissenting) (noting that a recorded deed that is a "`forgery'" or "`procured by fraud in the execution'" is void and "`the fact that it is recorded in no sense enhances its validity'" (quoting Roger A. Cunningham et al., The Law of Property § 11.9 at 782 (1984))).<br /><span style="color: white;">.</span><br />Despite the general rule, a person such as plaintiff wronged by a forgery may engage in a course of conduct that bars her from obtaining redress.<br /><span style="color: white;">.</span><br /><b><i>One who knows a deed transferring his or her ownership in property has been transferred and does nothing to repudiate it may be deemed to have ratified the forged deed and lose the right to challenge the forgery later, when an anticipated benefit does not materialize</i></b>. See <b><i><a href="https://scholar.google.com/scholar_case?case=3882369572965888926&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Thermo Contracting Corp. v. Bank of N.J.</a></i></b>, 69 N.J. 352, 363-64 (1976) (approving and relying upon <b><i><a href="https://scholar.google.com/scholar_case?case=274972066835020125&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Rakestraw v. Rodrigues</a></i></b>, 500 P.2d 1401 (Cal. 1972) (a case involving a husband's forgery of a deed to property owned by his wife, who acquiesced in and did not object to the forgery until her marriage deteriorated)); <b><i><a href="https://scholar.google.com/scholar_case?case=7196863899036277326&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Todd v. Mutual Aid Sav. & Loan Ass'n</a></i></b>, 19 N.J. Super. 532, 537 (Law Div. 1952) (finding ratification by successors to an incompetent who knew about and would have been prejudiced by the loss).<br /><span style="color: white;">.</span><br />"Ratification requires intent to ratify plus full knowledge of all the material facts." <b><i><a href="https://scholar.google.com/scholar_case?case=3882369572965888926&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Thermo Contracting Corp.</a></i></b>, supra, 69 N.J. at 361. While equities asserted by an innocent purchaser are irrelevant when a deed is a nullity, our cases suggest that such equities are relevant when a fraudulent deed has been ratified. See <b><i><a href="https://scholar.google.com/scholar_case?about=16568203603199137491&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Knopf v. Alma Park, Inc.</a></i></b>, 105 N.J. Eq. 299, 301 (Ch. 1929), <b><i><a href="https://scholar.google.com/scholar_case?about=9968465414915411629&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">aff'd, 107 N.J. Eq. 140</a></i></b> (E. & A. 1930).<br /><span style="color: white;">.</span><br />Here, <b><i>plaintiff engaged in conduct amounting to a ratification</i></b>. By Summer 2005, plaintiff was not only aware of the forged deed and resulting sale of her marital residence, but also had copies of the deeds, which she discussed with her attorney. <b><i>Nevertheless, she did not repudiate the forged deed or act to invalidate the sale of the marital residence — a sale that relieved her of obligations under a mortgage that was in default</i></b>. Her intent to ratify the deed she knew had been forged is demonstrated by her decision to forego litigation and her representation in the divorce action that she and her husband had divided all marital property to their mutual satisfaction.<br /><span style="color: white;">.</span><br /><b><i>We recognize that there is evidence that plaintiff's husband threatened to take her life if she took action to void the transaction</i></b>. Giving plaintiff the benefit of an inference that she refrained from challenging the deed out of fear of her former husband does not change our view of her intent. In her deposition, plaintiff explained that she decided against litigation because of the expense. She is the person who filed the divorce complaint and <b><i>opted to affirmatively assert her satisfaction with the division of marital property in that proceeding and urge the court to incorporate a PSA confirming her satisfaction in the judgment of divorce</i></b>. That conduct compels a finding of intent to ratify the forgery and does not give rise to an inference of action taken under duress.<br /><span style="color: white;">.</span><br />Respecting the balance of equities relevant to ratification, the evidence establishes, as the judge found, that Mangiliman had no way of knowing that the deed in her chain of title was forged, had been paying the mortgages and the property taxes for years and that, even though it may have declined in value, the property was Mangiliman's home. The judge determined, and we agree, that <b><i>the equities favored Mangiliman, not plaintiff who had asserted in her divorce action that all marital property had been divided to her satisfaction</i></b>.[3]<br /><span style="color: white;">.</span><br />For the foregoing reasons, we conclude that plaintiff, <b><i>acting with knowledge of the material facts — that her ownership interest in the marital residence had been obliterated with the issuance of a forged deed — and the intent to forego its repudiation, ratified the deed and is, thereby, barred from seeking redress against an innocent purchaser for value</i></b>.</li>
</ul>
<div style="text-align: center;">
-----------------------------------------</div>
</div>
<div>
<br /></div>
<div>
After reaching this conclusion, the appeals court added a second, independent basis to support its decision not to invalidate the deed: the application of the doctrine of <b><i><a href="https://en.wikipedia.org/wiki/Judicial_estoppel" target="_blank">judicial estoppel</a></i></b>.</div>
<div>
<ul>
<li>There is an additional reason for barring plaintiff's attempt to seek redress for her husband's forgery of the April 1 deed from Mangiliman. <b><i>Our courts "protect the integrity of the judicial process by not permitting a litigant" to take conflicting positions or make conflicting representations in the same or related judicial proceedings</i></b>. <b><i><a href="https://scholar.google.com/scholar_case?case=18299037466541677866&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">McCurrie ex rel. Town of Kearny v. Town of Kearny</a></i></b>, 174 N.J. 523, 534 (2002); accord <b><i><a href="https://scholar.google.com/scholar_case?case=7299949477452607119&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">State v. Galicia</a></i></b>, 210 N.J. 364, 398 (2012); see <b><i><a href="https://scholar.google.com/scholar_case?case=10277877858488982359&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Newell v. Hudson</a></i></b>, 376 N.J. Super. 29, 30, 38 (App. Div. 2005) (noting that judicial estoppel applies to related litigation and applying the doctrine to bar a malpractice action arising from a settled divorce case).<br /><span style="color: white;">.</span><br />Although protecting judicial integrity is the purpose of this form of estoppel, <b><i>courts invoke it only "when a party's inconsistent behavior will otherwise result in a miscarriage of justice</i></b>." <b><i><a href="https://scholar.google.com/scholar_case?case=265536197364270171&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Ryan Operations G.P. v. Santiam-Midwest Lumber Co.</a></i></b>, 81 F.3d 355, 365 (3d Cir. 1996); accord <b><i><a href="https://scholar.google.com/scholar_case?case=2841275102762181003&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">State v. Jenkins</a></i></b>, 178 N.J. 347, 359 (2004) (quoting <b><i><a href="https://scholar.google.com/scholar_case?case=16661535867552291110&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Kimball Int'l, Inc. v. Northfield Metal Prods.</a></i></b>, 334 N.J. Super. 596, 608 (App. Div. 2000), <b><i><a href="https://scholar.google.com/scholar_case?about=10602643072183718265&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">certif. denied, 167 N.J. 88 (2001)</a></i></b>).
<br /><span style="color: white;">.</span><br /><b><i>
Plaintiff's conduct in the divorce warrants application of judicial estoppel</i></b>. In that action, she attested to the truth of the allegation in her complaint, <b><i>one of which was that to her knowledge all marital property had been divided to her and her husband's satisfaction</i></b>. In addition, plaintiff urged the judge to incorporate the parties' PSA in the final judgment. That PSA not only memorialized her agreement that marital property had been divided to her satisfaction but also agreements favorable to her, such as the award of primary residential custody of the children and $800 monthly child support.
<br /><span style="color: white;">.</span><br />
Plaintiff's presentation of the parties' agreement facilitated her goals — on this evidence, her goals were more likely than not foregoing a challenge to equitable distribution to obtain some terms favorable to her and finalizing her divorce. <b><i>With the PSA, plaintiff was able to obtain a judgment of divorce expeditiously</i></b> and without the need to demonstrate "extraordinary circumstances" and "good cause" that would have been required to obtain a judgment of divorce before equitable distribution of marital property, custody and child support had been resolved. R. 5:7-8.
<br /><span style="color: white;">.</span><br />
To the extent that application of judicial estoppel depends upon a court's acceptance of the inconsistent position in a prior proceeding, <b><i><a href="https://scholar.google.com/scholar_case?case=16661535867552291110&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Kimball</a></i></b>, supra, 334 N.J. Super. at 607-08, that element is satisfied in this case. In the divorce action, <b><i>the judge accepted and incorporated the PSA in its judgment</i></b>.
<br /><span style="color: white;">.</span><br />
Neither the fact that plaintiff and her former husband settled questions of custody, child support and equitable distribution nor the fact that Mangiliman was not a party to that action precludes judicial estoppel. This court and others have applied the doctrine to bar a legal malpractice action against a third party that arose from a property settlement agreement in a divorce action. See <b><i><a href="https://scholar.google.com/scholar_case?case=10277877858488982359&q=Estevez+v.+Mangiliman&hl=en&as_sdt=40006&scilh=0" target="_blank">Newell</a></i></b>, supra, 376 N.J. Super. at 30, 38-40 (applying judicial estoppel in that circumstance and discussing cases involving grants of summary judgment "in legal malpractice actions based on the doctrine of judicial estoppel where a litigant repudiates a prior, sworn inconsistent statement made in order to secure an advantage in or judicial approval of the underlying settlement"). Given that precedent, there is no principled basis for concluding that the doctrine cannot be applied here.
<br /><span style="color: white;">.</span><br /><b><i>
It is also evident that application of judicial estoppel is necessary to avoid a miscarriage of justice in this case</i></b>.[4] If we were to hold otherwise, Mangiliman, the innocent purchaser of the marital residence, would be left, as the trial judge found, without a home, with the debt secured by her mortgage, and without realistic means of recovering her loss from the apparent wrongdoer, Cantu, who has at this point apparently disappeared. <b><i>Noting that plaintiff knowingly misrepresented her satisfaction with the division of property, the judge found that equity could not abide upsetting title that had passed effectively to Mangiliman. We could not agree more</i></b>.
<br /><span style="color: white;">.</span><br />
The judgment <b><i>declaring Mangiliman to have good and valid title, free and clear of any title, interest, right, agreement, encumbrance or lien of plaintiff, is affirmed</i></b>.</li>
</ul>
<div>
For the ruling, see <b><i><a href="https://scholar.google.com/scholar_case?case=13745981964566103679&q=+Estevez+v.+Mangiliman,+No.+A-2097-11T3&hl=en&as_sdt=40006" target="_blank">Estevez v. Mangiliman</a></i></b>, No. A-2097-11T3 (App. Div. 2013) (unpublished).<br />
<br />
See <b><i><a href="http://homeequitytheft-cases-articles.blogspot.com/2011/08/voidable-or-void-ab-initio-or-void.html" target="_blank">Voidable Or Void Ab Initio (Or "Void Unless & Until Later Ratified")?</a></i></b> on a Mississippi case discussing the issue of subsequent ratification when a court decides whether or not to invalidate a forged deed.</div>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-45248766030806412042015-06-18T00:01:00.000-04:002015-06-18T00:01:00.107-04:00Another Tax Deed Declared Void; County's Failure To Take Further Action When Mailed Notice Of Tax Sale To Homeowner Is Returned Unclaimed Fatal To Sale Process; Oklahoma Supremes: Gov't Can't Simply Shrug Shoulders & Say 'We Tried'From a <b><i>Justia US Law Opinion Summary</i></b>:<br />
<ul>
<li>The question presented on appeal to the Oklahoma Supreme Court in this case was whether an owner of real property received constitutionally sufficient notice of the sale of his property for delinquent taxes <b><i>when notice was provided only by publication and certified mail that was returned undelivered</i></b>.<br /><br />Appellant-landowner neglected to pay taxes on certain real property in McIntosh County. The property was sold at a tax sale and a tax deed was issued to the buyer. The landowner <b><i>filed suit seeking to invalidate the tax deed and quiet title in himself</i></b>, asserting that the sale and resultant deed were void because he was not given constitutionally sufficient notice of the sale and was denied his right to redeem the property. Both the landowner and the county defendants moved for summary judgment.<br /><br />The trial court granted the county defendants' motion and denied the landowners. The landowner appealed, and the Court of Civil Appeals affirmed.<br /><br />After review, the Supreme Court held: (1) that the landowner did not receive constitutionally sufficient notice; and (2) the sale and resultant tax deed were therefore void.<b><span style="color: red; font-size: x-small;">(1)</span></b></li>
</ul>
<div>
Source: <b><i><a href="http://law.justia.com/cases/oklahoma/supreme-court/2015/112728.html" target="_blank">Opinion Summary - Crownover v. Keel</a></i></b>.<br />
<br />
For the court ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=Crownover+v.+Keel&hl=en&as_sdt=2006&case=9235396424786676550&scilh=0" target="_blank">Crownover v. Keel</a></i></b>, 2015 OK 35 (Okla. May 26, 2015) (Editor's Note: At this time, this opinion has not yet been released for publication. Until released, it is subject to revision or withdrawl).<br />
<br />
<div style="text-align: center;">
---------------------------------------</div>
<br />
<b><span style="color: red;">(1)</span></b> Some of the Oklahoma Supreme Court's reasoning backing its conclusion follows:<br />
<ul>
<li>¶ 1 The question presented on appeal is whether an owner of real property received constitutionally sufficient notice of the sale of his property for delinquent taxes <b><i>when notice was provided only by publication and certified mail that was returned undelivered. We hold that he did not</i></b>.<br /><br /><div style="text-align: center;">
***</div>
<br />¶ 19 <b><i>The notice requirement of due process is not satisfied where, as here, notice sent via certified mail is returned undelivered and no further action is taken</i></b>. The decision of the United States Supreme Court in <b><i><a href="https://scholar.google.com/scholar_case?case=12425368191422129521&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank">Jones v. Flowers</a></i></b>, 547 U.S. 220, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006), is directly on point concerning notice required to satisfy the requirements of due process prior to sale of real property for delinquent taxation.<br /><br />In Jones, under similar facts to this cause, the Supreme Court of the United States determined that "<b><i>when mailed notice of a tax sale is returned unclaimed, the State must take additional reasonable steps to attempt to provide notice to the property owner before selling his property, if it is practicable to do so</i></b>." <b><i><a href="https://scholar.google.com/scholar_case?case=12425368191422129521&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank">Jones</a></i></b>, 547 U.S. at 225. The tax sale in Jones occurred after the State published notice in a newspaper and attempted to notify the property owner—who no longer lived on the property—by certified mail twice, with the notice returned unclaimed both times. <b><i><a href="https://scholar.google.com/scholar_case?case=12425368191422129521&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank">Jones</a></i></b>, 547 U.S. at 223-224.<br /><br />¶ 20 The Jones Court reaffirmed that the due process clause of the United States Constitution <b><i>does not require that a property owner receive actual notice</i></b> before the government may take his property. 547 U.S. at 226; <b><i><a href="https://scholar.google.com/scholar_case?case=6026890540367791777&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank">Dusenberry v. United States</a></i></b>, 534 U.S. 161, 170, 122 S.Ct. 694, 151 L.Ed.2d 597 (2002). However, <b><i>the Court also noted that</i></b>:<br /><br /><span style="color: white;">.... </span><i>due process requires the government to provide "notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections</i>."<br /><br /><div style="text-align: center;">
. . . .</div>
<br /><span style="color: white;">.... </span><i>In <b><a href="https://scholar.google.com/scholar_case?case=7655817448479468134&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank">Mullane</a></b> we stated that "when notice is a person's due ... [t]he means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it" . . </i>.<br /><br /><b><i><a href="https://scholar.google.com/scholar_case?case=12425368191422129521&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank">Jones</a></i></b>, 547 U.S. at 226, 229 (quoting <b><u><a href="https://scholar.google.com/scholar_case?case=7655817448479468134&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank"><i>Mullane v. Central Bank & Trust Co.</i></a></u></b>, 339 U.S. 306, 314-315, 70 S.Ct. 652, 94 L.Ed. 865 (1950)).<br /><br />In Jones, much as in this cause, the State argued that it satisfied the notice requirement of due process through the act of sending notice via certified mail. The Court disagreed, holding:<br /><br /><span style="color: white;">.... </span><i>We do not think that a person who actually desired to inform a real property owner of an impending tax sale of a house he owns would do nothing when a certified letter sent to the owner is returned unclaimed</i>.<br /><br /><span style="color: white;">.... </span><i>If the Commissioner prepared a stack of letters to mail to delinquent taxpayers, handed them to the postman, and then watched as the departing postman accidentally dropped the letters down a storm drain, one would certainly expect the Commissioner's office to prepare a new stack of letters and send them again. <b>No one "desirous of actually informing" the owners would simply shrug his shoulders as the letters disappeared and say "I tried."</b> Failure to follow up would be unreasonable, despite the fact that the letters were reasonably calculated to reach their intended recipients when delivered to the postman</i>.<br /><br /><b><i><a href="https://scholar.google.com/scholar_case?case=12425368191422129521&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank">Jones</a></i></b>, 547 U.S. at 229 (emphasis added).<br /><br />The Jones court also stated succinctly that <b><i>the property owner's failure to keep his address updated, which was required by statute, did not result in the owner somehow forfeiting his right to constitutionally sufficient notice</i></b>.<br /><br />547 U.S. at 229. Further, "the common knowledge that property may become subject to government taking when taxes are not paid <b><i>does not excuse the government from complying with its constitutional obligation of notice before taking private property</i></b>." 547 U.S. at 232.<br /><br />¶ 21 While the Jones Court determined that the State should have taken other reasonable measures to reach the property owner, it stopped short of requiring the state to search elsewhere for an address for the property owner, noting that an open-ended search for a new address would unduly burden the State.<br /><br />547 U.S. at 236. Rather, the Court suggested reasonable measures such as posting notice on the property door, or even sending notice by regular mail, which could at least have resulted in its delivery and presence on the property. <b><i><a href="https://scholar.google.com/scholar_case?case=12425368191422129521&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank">Jones</a></i></b>, 547 U.S. at 235. The Court noted that it was not its responsibility to redraft the State's notice statute, but it was sufficient that the Court was confident additional reasonable steps were available for Arkansas to employ before taking the property. <b><i><a href="https://scholar.google.com/scholar_case?case=12425368191422129521&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank">Jones</a></i></b>, 547 U.S. at 238. The Court concluded:<br /><br /><span style="color: white;">.... </span><i>There is no reason to suppose that the State will ever be less than fully zealous in its efforts to secure the tax revenue it needs. The same cannot be said for the State's efforts to ensure that its citizens receive proper notice before the State takes action against them. In this case, <b>the State is exerting extraordinary power against a property owner-taking and selling a house he owns. It is not too much to insist that the State do a bit more to attempt to let him know about it when the notice letter addressed to him is returned unclaimed</b></i>.<br /><br /><b><i><a href="https://scholar.google.com/scholar_case?case=12425368191422129521&q=Crownover+v.+Keel&hl=en&as_sdt=2006&scilh=0" target="_blank">Jones</a></i></b>, 547 U.S. at 239.</li>
</ul>
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-2605225690776371952.post-72705310480089542662015-06-10T00:01:00.000-04:002015-06-10T00:15:07.749-04:00Florida Appeals Court To Cash-Snatching Judgment Creditor: Hands Off Debtor's $458K In Home Sale Proceeds! State Exemption Against Certain Collection Activity Protects 'Homeless' Homeowner In Between AbodesThe following facts have been adapted from a recent ruling from a <b><i>Florida appeals court</i></b>:<br />
<ol>
<li>In 2010, a judgment creditor obtained its judgment for over $740,000 against homeowner.<br /><span style="color: white;">.</span></li>
<li>Under Florida law (<b><i><a href="http://www.leg.state.fl.us/Statutes/Index.cfm?Mode=Constitution&Submenu=3&Tab=statutes#A10S04" target="_blank">Florida Constitution, Article X, Section 4</a></i></b>), the homeowner's home (with certain limitations not relevant here) is generally exempt from collection actions from creditors holding non-consensual liens (ie. non-mortgage judgment creditors). Consequently, the creditor's judgment did not create a lien on the home.<br /><span style="color: white;">.</span></li>
<li>On October 28, 2013, in connection with a divorce from his co-owner/wife, the marital home was sold. Until he could buy himself a new home, the 'now-homeless' homeowner took his $458,000+ share of the sale proceeds and dumped it into an account with a financial institution (ie. Wells Fargo), <b><i>which he entitled "FL Homestead Account"</i></b> and was split into three sub-accounts.<br /><span style="color: white;">.</span></li>
<li>As of February 28, 2014, a cash sub-account held $139,000+, and two securities/brokerage sub-accounts containing mutual funds and unit investment trusts held a total of $322,000+. Apparently, the value held in these accounts (now totaling $461,000+) had appreciated by a couple of thousand dollars.<br /><span style="color: white;">.</span></li>
<li>Early in 2014, the judgment creditor (obviously in the mood to get paid, now that the homeowner sold his home and his share of the now-liquidated home equity therein is being held in the form of cash and marketable securities with Wells Fargo) makes a grab for the loot sitting in the brokerage accounts by serving <b><i><a href="http://www.alperlaw.com/asset-protection/creditors-collection-tool/writ-of-garnishment/" target="_blank">garnishment writs</a></i></b> on Wells Fargo directed at those accounts (it left the $139,000+ in the cash account alone).<br /><span style="color: white;">.</span></li>
<li>The judgment creditor claimed that, because this "now-homeless" homeowner used a portion of his home sale proceeds to buy securities instead of reinvesting it in a new homestead, that portion of the money forfeited its homestead protection and should be made available to satisfy the $740,000+ money judgment.</li>
</ol>
<div>
Under Florida case law, a homeowner has a "reasonable period of time"<b><span style="color: red; font-size: x-small;">(1)</span></b> (although no court has specifically defined exactly how much time is reasonable) to reinvest the proceeds of a home sale into a new homestead without subjecting the money to creditor claims. In this case, the courts decided that taking some of the sale proceeds and temporarily investing it in mutual funds and unit investment trusts until a new home could be purchased was not inconsistent with the purposes of homestead and. accordingly, held that the funds did not lose their protected status<b><span style="color: red; font-size: x-small;">(2)</span></b> (although in its ruling, the appeals court did say that the exemption should not be applied in a way that encourages excessive speculation with the proceeds of a sale. Here, the court pointed out that there was no evidence that the securities in the brokerage account were particularly risky and the funds were kept "separate and apart" from the homeowner's other funds<b><span style="color: red; font-size: x-small;">(3)</span></b>).<br />
<br />
Consequently, the trial court dissolved the garnishment writs, and told the judgment creditor to come back in over a month to check on the status of the money held in the accounts and that it could feel free to reassert its claim on the money at that time or thereafter.<br />
<br />
The Florida appeals court affirmed the lower court ruling (although it did specifically point out that <b><i>it was not necessarily ruling that the appreciation in value of the securities held in the accounts was also protected</i></b>, since that point was not argued by the parties; maybe this was the appeals court's way of telegraphing an invitation to the judgment creditor to argue in the future that, even if the sale proceeds maintain their protected status, the accrued appreciation on those funds does not).<b><span style="color: red; font-size: x-small;">(4)</span></b><br />
<br />
For the appeals court ruling, see <b><i><a href="https://scholar.google.com/scholar_case?q=jbk+associates+v+sill+bros&hl=en&as_sdt=4,10&case=1690756527761186225&scilh=0" target="_blank">JBK Associates, Inc. v. Sill Bros., Inc.</a></i></b>, No. 4D14-3049 (Fla. App. 4th DCA, March 11, 2015).<br />
<br />
See also:<br />
<ul>
<li><b><i><a href="https://www.linkedin.com/pulse/garnishing-non-cash-proceeds-from-sale-homestead-karl-gruss" target="_blank">Garnishing Non-Cash Proceeds from Sale of a Homestead</a></i></b>,</li>
<li><b><i><a href="http://www.assetprotectionfl.com/2015/06/homestead-proceeds-invested-marketable-securities-may-exempt-homestead-account.html" target="_blank">Homestead Proceeds Invested In Marketable Securities May Be An Exempt “Homestead Account</a></i></b>."</li>
</ul>
<div style="text-align: center;">
------------------------------</div>
</div>
<div>
<br /></div>
<div>
<b><span style="color: red;">(1)</span></b> The appeals court recited the case law applying the Florida homestead exemption protection from certain creditors' claims to the proceeds of a voluntary sale of the homestead:<br />
<ul>
<li><b><i><a href="https://scholar.google.com/scholar_case?case=4333962252572507608&q=jbk+associates+v+sill+bros&hl=en&as_sdt=4,10&scilh=0" target="_blank">Orange Brevard Plumbing & Heating Co. v. La Croix</a></i></b>, 137 So. 2d 201 (Fla. 1962), is the seminal case on the application of the homestead exemption to the proceeds of the voluntary sale of a homestead. The Supreme Court held that<br /><br /><i>the proceeds of a voluntary sale of a homestead [are] exempt from the claims of creditors just as the homestead itself is exempt if, and only if, the vendor shows, by a preponderance of the evidence <b>an abiding good faith intention prior to and at the time of the sale of the homestead to reinvest the proceeds thereof in another homestead within a reasonable time</b>. Moreover, only so much of the proceeds of the sale as are intended to be reinvested in another homestead may be exempt under this holding. Any surplus over and above that amount should be treated as general assets of the debtor. We further hold that in order to satisfy the requirements of the exemption the funds <b>must not be commingled with other monies of the vendor but must be kept separate and apart and held for the sole purpose of acquiring another home</b>. The proceeds of the sale are not exempt if they are not reinvested in another homestead in a reasonable time or if they are held for the general purposes of the vendor.</i></li>
</ul>
<b><span style="color: red;">(2)</span></b> The appeals court describes how Florida case law has dealt with non-cash proceeds from a homestead sale, and sale proceeds that may ultimately go uninvested:<br />
<ul>
<li><b><i>Non-cash proceeds of a sale of a homestead "can be eligible for exemption</i></b>, so long as they serve the same function that cash proceeds do, i.e., a temporary form of the homestead, to be reinvested, to be converted back into real-property homestead within the <b><i><a href="https://scholar.google.com/scholar_case?case=4333962252572507608&q=jbk+associates+v+sill+bros&hl=en&as_sdt=4,10&scilh=0" target="_blank">Orange Brevard</a></i></b> reasonable time period." <b><i><a href="https://scholar.google.com/scholar_case?case=16960696779763634810&q=jbk+associates+v+sill+bros&hl=en&as_sdt=4,10&scilh=0" target="_blank">Sun First Nat'l Bank of Orlando v. Gieger</a></i></b>, 402 So. 2d 428, 432 (Fla. 5th DCA 1981) (involving a note and mortgage received as part of the sale price of a homestead). <b><i>Proceeds of a sale not invested in a new homestead are not entitled to homestead protection</i></b>. See <b><i><a href="https://scholar.google.com/scholar_case?case=16067246427283053220&q=jbk+associates+v+sill+bros&hl=en&as_sdt=4,10&scilh=0" target="_blank">Shawzin v. Donald J. Sasser, P.A.</a></i></b>, 658 So. 2d 1148, 1151 (Fla. 4th DCA 1995); <b><i><a href="https://scholar.google.com/scholar_case?case=10428074994730348407&q=jbk+associates+v+sill+bros&hl=en&as_sdt=4,10&scilh=0" target="_blank">Rossano v. Britesmile, Inc.</a></i></b>, 919 So. 2d 551, 552 (Fla. 3d DCA 2005).</li>
</ul>
<b><span style="color: red;">(3)</span></b> In an ostensible attempt to discourage the use of homestead funds for speculative investment activities when a homeowner is in between abodes, the appeals court observed:<br />
<ul>
<li>This case <b><i>does not involve the speculative put and call option trading</i></b> of up to 302 transactions per month that led a bankruptcy panel to conclude that such use of the proceeds was inconsistent with the purposes of Arizona's homestead exemption. <b><a href="https://scholar.google.com/scholar_case?case=4244734771922606305&q=jbk+associates+v+sill+bros&hl=en&as_sdt=4,10&scilh=0" target="_blank"><i>In re White</i></a></b>, 389 B.R. 693, 697, 704 (B.A.P. 9th Cir 2008).</li>
</ul>
<div>
<b><span style="color: red;">(4)</span></b> The court stated:<br />
<ul>
<li>Because it was not argued, <b><i>we do not reach the issue of whether any profits realized from the securities, over and above the proceeds from the sale</i></b>, are "held for the general purposes" of the debtor so that they are "general assets" not entitled to homestead protection. <b><i><a href="https://scholar.google.com/scholar_case?case=4333962252572507608&q=jbk+associates+v+sill+bros&hl=en&as_sdt=4,10&scilh=0" target="_blank">Orange Brevard</a></i></b>, 137 So. 2d at 206.</li>
</ul>
</div>
</div>
Unknownnoreply@blogger.com0