A Guest Post By Californians for Justice
Saterbak v JPMorgan [Saterbak v JPMorgan, D066636 (Cal. Ct. App. March 16, 2016) Appellate Court attempts to over rule the California Supreme Court requires response from all. Presiding Judge Judith McConnell.
Below is an analytical response to the horrific ruling and opinion from the San Diego Appellate court that directly challenges the recent Yvanova vs. New Century Mortgage Corporation ruling from the Cal Supreme Court. We suggest that folks read this analysis and forward it with their comments to Kamala Harris (California State Attorney General) requesting her office to strongly object to this Saterbak ruling, and request that the Attorney General request that the Supreme Court de-publish the Appellate ruling.
“Saterbak cites Cockerell and Neptune, but those cases merely held that an assignee who files suit to enforce an assigned right bears the burden of proving a valid assignment.” (Cockerell v. Title Ins. & Trust Co. (1954) 42 Cal.2d 284, 292; Neptune Society Corp. v. Longanecker (1987) 194 Cal.App.3d 1233, 1242.)
B. Saterbak Lacks Standing to Challenge the Assignment.
This statement was clearly rejected in Yvanova where the Supreme Court stated: “Nor is it correct that the borrower has no cognizable interest in the identity of the party enforcing his or her debt. Though the borrower is not entitled to object to an assignment of the promissory note, he or she is obligated to pay the debt, or suffer loss of the security, only to a person or entity that has actually been assigned the debt. (See Cockerell v. Title Ins. & Trust Co., supra, 42 Cal.2d at p. 292 [party claiming under an assignment must prove fact of assignment].)”
[DC ed: Also found in Yvanova: “The logic of defendants‘ no-prejudice argument implies that anyone,even a stranger to the debt, could declare a default and order a trustee‘s sale—and the borrower would be left with no recourse because, after all, he or she owed the debt to someone, though not to the foreclosing entity. This would be an ―odd result indeed. (Reinagel, supra, 735 F.3d at p. 225.)”]
Here the California Supreme Court affirmed the findings in Cockerell which confirms the party claiming under assignment must prove fact of assignment, regardless of who filed the lawsuit.
The Appellate Court in Saterbak further stated:
“As a general principle, standing to invoke the judicial process requires an actual justiciable controversy as to which the complainant has a real interest in the ultimate adjudication because he or she has either suffered or is about to suffer an injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be adequately presented to the adjudicator. (Pacific Legal Foundation v. California Coastal Com. (1982) 33 Cal.3d 158, 169-172; Municipal Court v. Superior Court (1988) 202 Cal.App.3d 957, 960-964; California Water Telephone Co. v. Los Angeles (1967) 253 Cal.App.2d 16, 22; 3 Witkin, Cal. Procedure (4th ed. 1996) Actions, §§ 73-74, pp. 132-135.)”
Clearly, a homeowner will “suffer or is about to suffer an injury of sufficient magnitude” by a party that has not established that they are the beneficiary and has the right and authority to foreclose on their property forecloses and evicts the homeowner.
“Saterbak lacks standing to pursue these theories. The crux of Saterbak’s argument is that she may bring a preemptive action to determine whether the 2007-AR7 trust may initiate a nonjudicial foreclosure. She argues, “If the alleged ‘Lender’ is not the true ‘Lender,’ ” it “has no right to order a foreclosure sale.” However, California courts do not allow such preemptive suits because they “would result in the impermissible interjection of the courts into a nonjudicial scheme enacted by the California Legislature.” (Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 513 (Jenkins), disapproved on other grounds in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13; see Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1156 (Gomes) [“California’s nonjudicial foreclosure law does not provide for the filing of a lawsuit to determine whether MERS has been authorized by the holder of the Note to initiate a foreclosure”].
This is a troubling and erroneous finding by this Court as it is a slippery slope as to the courts interfering with the right of the homeowner to exercise their contracual rights under the deed of trust and their rights under the HBOR (Homeowners Bill Of Rights).
It also brings the question of the borrower’s 14th amendment rights.The Fourteenth Amendment to the United States Constitution provides in part: “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law;”
The question presented here, as in all actions challenged under the Fourteenth Amendment, is whether “there is a sufficiently close nexus between the State and the challenged action . . . so that the action . . . may be fairly treated as that of the State itself.” (Jackson v. Metropolitan Edison Co. (1974) 419 U.S. 345, 351 [42 L.Ed.2d 477, 484, 95 S.Ct. 449].) Thus, the threshold question which we must determine is whether the state is 277 significantly involved in the nonjudicial foreclosure procedure so as to bring that procedure within the reach of the due process clause.
Ignoring the proposition that the constitutional guarantees of due process and equal protection of laws apply only to state, as opposed to private, conduct and the troublesome problems that proposition would present in respect to Civil Code, section 2924 [citations], particularly in view of the fact that Civil Code, section 2924 is not an enabling or authorizing statute at all but, rather, a statute restricting and limiting the exercise of private powers of sale for the benefit of debtors (see Smith v. Allen, 68 Cal.2d 93, 96.
The Court in Saterbak stated that “California’s nonjudicial foreclosure law does not provide for the filing of a lawsuit to determine whether MERS has been authorized by the holder of the Note to initiate a foreclosure” and the statement “would result in the impermissible interjection of the courts into a nonjudicial scheme enacted by the California Legislature, (Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 513. [S]uch a requirement would be inconsistent with the policy behind nonjudicial foreclosure of providing a quick, inexpensive and efficient remedy.” (Gomes, supra, at p. 1154, fn. 5.).
[DC ed: One of the primary points that lacks decent argument is the MERS Blur issue, even though all the facts exist and are certifiable documents. By exposing the chronological order of MERS, it clarifies the fact that the MERS (III) in the mortgages is not the MERS with the membership and registry. To our knowledge there have been no documents ever provided to establish the commingling of assets between separate and distinct corporations. Isn’t it about time someone demanded to see the corporate tax returns for the last 10-15 years on these corporations? The USPTO filings are very telling. See DC’s THE HISTORY AND DEATH OF MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. ACCORDING TO THE USPTO (Sept. 27, 2013) and MERS – TOO MANY DEAD DUCKS (April 27, 2013). The key is to acknowledge the difference between the corporations and always provide the full names of each – rather than using the blurred acronyms. MORTGAGE ELECTRONIC REGISTRATIONS SYSTEMS, INC. is the 3rd corporation and is used as a straw man in the mortgages; MERSCORP HOLDINGS, INC. is the 2nd corporation (through many name changes) and it owns the “service mark” and membership. Don’t get them commingled and don’t allow the judge to be confused.]
Clearly, it was not the intent of the legislature when implementing the foreclosure statutes almost 100 years ago to allow parties with no beneficial interest or legal parties to the deed of trust to foreclose on a homeowner. This was made clear in Garfinkle when the Supreme Court stated; “In 1917, the Legislature impliedly recognized the validity of this contractual remedy standards for conducting nonjudicial foreclosures, by placing various restrictions on the creditors’ exercise of the power of sale “in order to protect the trustor/debtor against forfeiture.” (Garfinkle v. Superior Court (1978) 21 C3d 268).
[DC ed: Foreclosure statutes are based on “traditional” mortgage loans. In the past, banks held on to the mortgage and dealt directly with the homeowner. Back then, the banks’ mortgage department was not driven by a complex sophisticated mortgage software system designed specifically to procure collateral for the purpose of securitization (securities sale on Wall Street). There are no laws or no current legislation (in most states) that deals with “non-traditional” quasi securities mortgages. If there were, it would require full disclosure to the homeowner.]
“A court may not, “under the guise of construction, rewrite the law or give the words an effect different from the plain and direct import of the terms used.” (California Fed. Savings & Loan Assn. v. City of Los Angeles (1995) 11 Cal.4th 342, 349, 45 Cal.Rptr.2d 279, 902 P.2d 297.) Further, “‘[w]e must assume that the Legislature knew how to create an exception if it wished to do so․ [Citation]”.
Clearly the Court in Saterbak and numerous other Courts both Federal and State are attempting to “give the words an effect different from the plain and direct import of the terms used.”
The California foreclosure statutes do not prohibit a borrower from bringing a lawsuit to defend his or her property nor is it correct “[S]uch a requirement would be inconsistent with the policy behind nonjudicial foreclosure of providing a quick, inexpensive and efficient remedy.” The statutes were created to protect the homeowner from these very actions and not as these courts are finding to allow parties that cannot prove they are entitled to invoke the power of sale to do so. “in order to protect the trustor/debtor against forfeiture.” (Garfinkle v. Superior Court (1978) 21 C3d 268). Here, the Courts are enabling the Banks to foreclose without proving they own the debt by these rulings in finding that a home owner is not entitled to bring a preemptive action to challenge the party attempting to enforce the debt.
These findings are in contradiction to numerous Supreme Court rulings, especially the most recent ruling in Yvanova. The Courts in Saterbak, Gomes and Jenkins and numerous other state and federal decisions have created the very “nexus” the Supreme Court spoke of in Garfinkle. These findings by these courts also contradict the covenants of the deed of trust. BORROWER COVENANTS that Borrower is lawfully seised of the estate hereby conveyed and has the right to grant and convey the Property and that the Property is unencumbered, except for encumbrances of record. Borrower warrants and will defend generally the title to the Property against all claims and demands subject to any encumbrance of record.
The provisions of the contract includes in clear language which states that “The notice shall further inform Borrower of the . . . right to bring a court action to assert the non- existence of a default or any other defense of Borrower to acceleration and sale.” Under the covenants’ of the deed of trust the borrower warrants he/she will defend title to “all claims and demands subject to any encumbrance of record. This would undoubtedly include persons or entities with no legal authority assigning interest in the property thereby clouding the borrowers’ title.
The “right to bring a court action to assert the non- existence of a default , as only the lender may invoke the power of sale it is also true that only the lender can claim default. Therefore, it would be only logical that a party or entity that cannot establish they are the lender beneficiary etc., cannot claim default on the borrower as they are not a party to the contract therefore cannot enforce the contract (see Cockerell). The right to “any other defense of Borrower to acceleration and sale,” would clearly include asserting an action against an entity that cannot prove legal or beneficial interest or “void” assignment.
Civil Code section 1638 provides that “[t]he language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity.” Applying that principle, the Supreme Court has held the “mutual intention of the parties is to be inferred, if possible, solely from the written provisions of the contract. Where contractual language is clear and explicit, it governs.” Powerine Oil Co. v. Superior Court, 37 Cal.4th 377, 396 (2005).
The provisions of the contract also states in clear language that “The notice shall further inform Borrower of the . . . right to bring a court action to assert the non- existence of a default or any other defense of Borrower to acceleration and sale.”
“A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done without violating the intention of the parties.” (Civ. Code, § 1643.) “The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the [221 Cal.App.4th 71] other.” (Id., § 1641.) “To the extent practicable, the meaning of a contract must be derived from reading the whole of the contract, with individual provisions interpreted together, in order to give effect to all provisions and to avoid rendering some meaningless.” (Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th 1010, 1027 [124 Cal.Rptr.3d 105].)
Legislature has not and cannot prohibit the rights granted to homeowners by contract nor can they prohibit their ability to enforce their rights under such contract. Due process is a right that is guaranteed under the Fourteenth Amendment of the U.S. Constitution. The Due Process Clause of the Amendment states that “no State [shall] deprive any person of life, liberty, or property, without due process of law…” With the Supreme Court case of Allgeyer v. Louisiana in 1897, the Court came to the conclusion that the Due Process Clause in the Fourteenth Amendment extended to private contracts as well, allowing such liberties as “freedom of contract” to be enforced without the implementation of various social and economic regulations passed by Federal and State governments. In addition, due process requires that a judge remove him or herself from a case if a conflict of interest exists within it.”1
1 On a side note, this brings to question the conflict of interest in the Judges Pension system which is managed by CalPERS and CalSTRS and which invested in many of the Mortgage Backed Securities (MBS) and the judge’s interest to protect their pensions by making these bias findings. This is further evidenced by the April 1, 2016 lawsuit filed by the Attorney General’s office on behalf of CalPERS and CalSTRS which manages the California Public Employees Retirement System, of which the judges are a part of, for losing BILLION$ of dollars in buying [RISKY] subprime debt from a variety of financial institutions and 406 million in MBS and SIV senior securities from Morgan Stanley in 2006.
As the Supreme Court opined in Garfinkle; “Power of sale exercised by the trustee in nonjudicial foreclosure is created by contract, not by statute.”(Garfinkle v. Superior Court (1978) 21 C3d 268). “The decision whether to exercise the power of sale is a determination to be made by the creditor. The statutes merely restrict and regulate the exercise of the power of sale once a choice has been made by the creditor to foreclose the deed of trust in that manner.” (Strutt v. Ontario Sav. Loan Assn., supra, 28 Cal.App.3d 866, 877; see also, Davidow v. Corporation of America, supra, 16 Cal.App.3d 6, 13; Barrera v. Security Building Investment Corporation, supra, 519 F.2d 1166, 1170; Federal National Mortgage Ass’n. v. Howlett, supra, 521 S.W.2d 428, 432.)
A creditor is defined as: “An individual to whom an obligation is owed because he or she has given something of value in exchange. One who may legally demand and receive money, either through the fulfillment of a contract or due to injury sustained as a result of another’s Negligence or intentionally wrongful act.”
The deed of trust governs the right to invoke the power of sale not statutes.Under the deed of trust only the lender may invoke the power of sale, the Supreme Court in Garfinkle and many other Courts contend that “The statutes merely restrict and regulate the exercise of the power of sale once a choice has been made by the creditor” which is consistent with the deed of trust.
The Court in Saterbak and many other Courts are in contradiction to Supreme Court rulings and with the contract entered into by the borrower and lender. “Finally, Saterbak contends the deed of trust is an adhesion contract, and, therefore, restrictive language that “deprives a borrower of the right to argue her loan has been invalidly assigned” must be “conspicuous and clear.” She claims,
“If the assignment clause was intended by the drafter to cutoff the borrower’s right to challenge the assignment, it should have used clear language to that effect. It did not.”
As a rule, “contracts of adhesion are generally enforceable according to their terms, [but] a provision contained in such a contract cannot be enforced if it does not fall within the reasonable expectations of the weaker or ‘adhering’ party.” (Fischer v. First Internat. Bank (2003) 109 Cal.App.4th 1433, 1446 (Fischer).) However, “[b]ecause a promissory note is a negotiable instrument, a borrower must anticipate it can and might be transferred to another creditor” (Fontenot, supra, 198 Cal.App.4th at p. 272),
[DC ed: A researcher named Ken Dost discovered that the mortgage and note documents were actually Fannie Mae and Freddie Mac copyrighted instruments licensed to 3rd parties for the purpose of sale to originators. Homeowners were never informed that the instruments were not drafted by the originator or that the contract was intended to be a contract of adhesion. Homeowners were told what the interest rate would be and were sold on the terms of the loan by slick talking loan officers who promised that the short term ARMs could be refinanced before the term ended for a better rate and 30-year fixed mortgage – at that point they could object to the interest rate and terms (although the copyright contracts were pre-existing) and the loan officer would restructure the loan or pressure sale a different or the same agreement in order to save the sale – or turn up at the closing with the deal objected to originally by the homeowner. Homeowners would have had no way of knowing that these documents were new “non-traditional” financial products related to Wall Street securities or pre-existing copyrighted “contracts of adhesion” and thus, the homeowner had no further power to negotiate. Again, more evidence of homeowner non-disclosure.
Excerpt’s from CONTRACTUAL CHOICE OF LAW IN CONTRACTS OF ADHESION AND PARTY AUTONOMY: “More than a half century ago, Professor Albert Ehrenzweig examined a number of cases that involved contracts of adhesion and found that the party autonomy rule was inapplicable because these contracts did not result from equal bargaining. Thus, he concluded that in order to restore “freedom of contract,” rather than “freedom to adhere,” it was important to realize that “whatever the status of the principle of party autonomy in the conflicts law of contracts in general, this principle has no place in the conflicts law of adhesion contracts.” Is Ehrenzweig’s observation still valid today?
[…] The main theme of the article is to suggest that the choice of law clause in contracts of adhesion shall not take effect (although the clause may not necessarily be invalid), unless and until the other party (adherent) meaningfully agrees or a court scrutinizes the contract for the true assent of the adherent.”
Because the promissory note can be transferred does not resolve the issue as to the transfer being made by a party or entity with no authority or legal interest in attempting to transfer the debt.
In the case of Saterbek, American Brokers Conduit, which was the original lender, ceases to exist on 08/02/2007, 5 years before the purported transfer to the trust by MERS. The issue is not whether the borrower can object to the assignees’ standing, but whether the original lender, who is not before the Court, actually transferred its rights to CitiBank.
Furthermore, MERS cannot transfer or assign anything for their own interest as they apparently did in the Saterbak case due to the demise of New Century prior to any transfer.(“MERS may exercise the rights and obligations of a beneficiary …but it will exercise those rights and obligations only as an agent for the lender, not for its own interests.” Fontenot v. Wells Fargo Bank NA (2011) 198 Cal.App.4th 256, 272.
For MERS to be an agent there must be a controlling principal.Saterbak “irrevocably grant[ed] and convey[ed]” the Mount Helix property to the Lender; recognized that MERS (as nominee) had the right “to exercise any or all” of the interests of the Lender; and agreed that the Note, together with the DOT, could be sold one or more times without notice to her. There is no reasonable 12 *12 expectation from this language that the parties intended to allow Saterbak to challenge future assignments made to unrelated third parties. (Cf. Fischer, supra, at pp. 1448-1449 [holding there was a triable issue of fact “as to whether the parties mutually intended to permit cross-collateralization” on two separate loans, given ambiguity between the broadly worded dragnet clause and a ” ‘Related Document’ ” incorporated by reference into the loan agreement as to whether the parties mutually intended it].)7 D. The Homeowner Bill of Rights Does Not Confer Standing.”
Clearly, the deed of trust does not “irrevocably grant[ed] and convey[ed]” the Mount Helix property to the Lender” as the Appellate Court in Saterbek contends, such a grant/ conveyance to the lender would be a mortgage with the power of sale and not a deed of trust. A deed of trust irrevocably grants property to the trustee and not the lender.
As aforementioned, the deed of trusts plain contract language, allows the borrower to challenge an assignment made that would impede title to property and any other defense to default and sale of the property.
“Saterbak cites Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, but the New York case upon which Glaski relied has been overturned. (Wells Fargo Bank, N.A. v. Erobobo (N.Y. App. Div. 2015) 127 A.D.3d1176, 1178; see Rajamin, supra, 757 F.3d at p. 90 [rejecting Glaski’s interpretation of New York law].) We decline to follow Glaski and conclude the alleged defects here merely render the assignment voidable.”
Erobobo, was not overturned because the assignment was not void under EPTL 7-2.4 it was overturned because the court found that Erobobo lack standing to enforce the PSA.
“In any event, Erobobo, as a mortgagor whose loan is owned by a trust, does not have standing to challenge the plaintiff’s possession or status as assignee of the note and mortgage based on purported noncompliance with certain provisions of the PSA” (see Bank of N.Y. Mellon v Gales, 116 AD3d 723, 725; Rajamin v Deutsche Bank Natl. Trust Co., 757 F3d 79, 86-87 [2d Cir]).
This finding by the NY Court was clearly rejected by the Supreme Court of California in Yvanova. Clearly the Appellate Court in Saterbak is attempting to circumvent the Supreme Courts’ findings in Yvanova. The Saterbak court rejects Glaski, but does not give an explanation besides the erroneous analyzation of Erobobo.
Furthermore, the findings of “Rajamin” were by a Federal Court which does not bind the state court. The Glaski Court fully describes their reasoning for finding the transfer to the trust after the closing date void, unlike the Court in Saterbak. The findings of the Saterbak Court are irrational and irresponsible and clearly bias.
AND THAT’S WHY THIS WAS FILED:
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