Alston 3rd Amended Complaint Final
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Transcript of Alston 3rd Amended Complaint Final
IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
OBAMIKEL ALSTON and )FIKRIYYAH ALSTON, )
)Plaintiffs, )
)V. )
) Civil Action No. 5:10-CV-562-D )
THE BANK OF NEW YORK MELLON; )NOVASTAR MORTGAGE, INC.; SAXON )MORTGAGE SERVICES, INC.; MERSCORP, )INC.; SHAPIRO & INGLE, LLP; HUTCHENS, )SENTER & BRITTON, P.A.; PHILIP A. GLASS, )and JOHN DOES, )
)Defendants, )
__________________________________________)
THIRD AMENDED COMPLAINTWith the Written Consent of the Opposing Parties
AND NOW, come Plaintiffs, under F.R.C.P. §15(A)(2), by and through their attorneys
Lucas and Nowak, LLP, and with the consent of opposing parties and complains of the
Defendants and alleges the following:
PARTIES
1. Plaintiffs are adult residents of North Carolina whose address is 3509 Crofton Court,
Raleigh, North Carolina 27604.
2. Defendant The Bank of New York Mellon is a New York Corporation with its
principal place of business at One Wall Street, New York, New York 10286, doing
business in the State of North Carolina, and purporting to be a holder in due course of
the Note at issue in this case.
3. Defendant NovaStar Mortgage, Inc. is a subsidiary of NovaStar Financial, a Missouri
corporation with its principal place of business at 2114 Central Street, Suite 600,
Kansas City, MO 64108, and was the original lender for the Note and Deed of Trust
at issue in this action.
4. Defendant Saxon Mortgage Services, Inc. is a Texas corporation with a principal
place of business at PO Box 161489, Fort Worth, TX 76161, and purports to act as a
servicing agent for the loan account evidenced by the Note and Deed of Trust at issue
in this action.
5. Defendant MersCorp, Inc. is a Delaware corporation with a principal place of
business at 1818 Library Street, Suite 300, Reston, VA 20190, doing business in the
State of North Carolina as a mortgage industry registration service which operates
through its subsidiary Mortgage Electronic Registrations Systems, Inc. (hereinafter
collectively referred to as “MERS”), and served as “nominee” on the Note at issue in
this action.
6. Defendant Law Firm Shapiro & Ingle, LLP, is a law firm with its principal place of
business at 10130 Perimeter Parkway, Suite 400, Charlotte NC, 28216, from which it
does business within the State of North Carolina, and operated as a purported
substitute trustee in this action.
7. Defendant Law Firm Hutchens, Senter & Britton, P.A., d/b/a Substitute Trustee
Services, Inc., is a law firm with its principal place of business at 4317 Ramsey
Street, Fayetteville, NC 28311, from which it does business within the State of North
Carolina, and operated as a purported substitute trustee in this action.
8. Defendant Philip A. Glass is an Attorney with the Law Firm of Nodell, Glass, &
Haskell LLP, with a principal place of business at 5540 Centerview Drive, Suite 416,
Raleigh, North Carolina 27606, from which he performs legal services within the
State of North Carolina, and operates as a purported substitute trustee in this action.
9. Any allegations about acts of any corporate or other business Defendants means that
the corporation or other business did the alleged acts through its officers, directors,
employees, agents and/or representatives while they were acting within the actual or
ostensible scope of their authority.
10. At all relevant times, each Defendant committed acts, caused or directed others to
commit the acts, or permitted others to commit the acts alleged in this Complaint;
additionally, some of the Defendants acted as the agent for other Defendants, and all
of the Defendants acted within the scope of their agency as if acting as the agent of
another.
11. Knowing or realizing that other Defendants were engaging in or planning to engage
in unlawful conduct, each Defendant nevertheless facilitated the commission of those
unlawful acts.
12. Each Defendant intended to and did encourage, facilitate or assist in the commission
of the unlawful acts, and thereby aided and abetted the other Defendants in the
unlawful conduct.
13. All Defendants engaged in continuous and multiple unfair and deceptive trade
practices, fraud and misrepresentations that affected interstate commerce and
proximately caused the herein injuries to the Plaintiff.
II. JURISDICTION AND VENUE
14. The Court has original and subject matter jurisdiction under 28 U.S.C. 1332, 18
U.S.C. § 1961–1968, and over the statutory and common law violations of North
Carolina and common law.
15. Plaintiffs have consented to new Complaint and Venue is proper in this Judicial
District as the Plaintiffs’ property is located in Wake County North Carolina. All
Defendants have conducted business in this State by filing fabricated, illegal and
unenforceable transfers of Deeds of Trust, Promissory Notes, Assignments of
Promissory Notes, Appointments of Substitute Trustees, Affidavits as to loan
ownership of Plaintiffs’ Note and Deed of Trust and Status of Accounts, Mortgages
and Assignments of Mortgages and/or other court documents.
III. INTRODUCTION
16. On July 24, 2003, Plaintiff Alston executed a 30-year mortgage note (hereinafter
referred to as the “Note”) of $152,000 at 8.990% annual interest for monthly
installments of $1,221.93 on his home located at 3509 Crofton Court, Raleigh, with
Defendant NovaStar Mortgage, Inc. identified as “Lender,” signed by Plaintiff Alston
and signed “PAY TO THE ORDER OF” (no name or signature provided),
“WITHOUT RECOURSE” NovaStar Mortgage, Inc. (allegedly signed by David A.
Pazgan, Snr. Vice President, Joel D. Brenner, Vice President); a copy of the Note is
attached hereto and incorporated herein and marked Exhibit "A-1".
17. At some point in time subsequent to the aforementioned execution of the Note, an
almost indentical note was produced (hereinafter referred to as the “Second Note”),
differing from the original Note by purporting to be endorsed to “JPMorgan Chase
Bank, as Trustee” (stamped), and certifying itself as a “True and Correct Copy of the
Original” (stamped and signed by an unknown signature). This Note was not signed
by Plaintiffs. A copy of the Second Note is attached hereto and incorporated herein
and marked Exhibit "A-2".
18. As security for the aforementioned Note, on July 24, 2003, Plaintiffs executed a Deed
of Trust (hereinafter referred to as the “Deed of Trust”) identifying NovaStar
Mortgage, Inc. as lender, MERS as “nominee for Lender and Lender’s successor’s
and assigns .... [and as a] beneficiary under [the instrument],” and the Law Offices of
Benita Walker Gibbs as Trustee. A copy of the Deed of Trust is attached hereto and
incorporated herein and marked Exhibit "B".
19. Upon information and belief, MERS was established in or around 1993 by members
of the mortgage banking industry so as to create a centralized document custodial
system through which mortgages can be easily transferred between members without
having to record or pay county filing fees for such assignments.
20. Plaintiffs never executed a note naming MERS as a party, nor were Plaintiffs ever
notified or informed of a transfer of a note to MERS.
21. No evidence exists to support the claim that MERS is or ever was the holder in due
course of the Note at issue in this action.
22. MERS, listed on the Deed of Trust as the “nominee” or agent, and as the one-time
purported holder of the Note, by and through its membership rules, was not
empowered to act as an agent or nominee for its members, and therefore, without
specific written approval from a principal, lacked the mandate to effectuate mortgage-
related assignments, transfers or appointments of any kind.
23. There is no evidence to suggest that during the relevant time periods contemplated in
this Action, MERS was empowered by its principals to effectuate any mortgage-
related assignment, transfer or appointment.
24. On or about February 10, 2004, Defendant Shapiro & Ingle, LLP (“Shapiro &
Ingle”), drafted an appointment of substitute trustee on behalf of MERS, the
purported “Owner and Holder of the Note secured by said Deed of Trust,” removing
Benita Walker Gibbs as Trustee and naming Elizabeth B. Ells or David W. Neill as
Substitute Trustee under said Deed of Trust, signed February 10, 2004, NovaStar
Mortgage, Inc., as Servicer for Mortgage Electronic Registration Systems, Inc., Scott
Forst, V.P., before Nicole J. Taylor, Notary Public - Missouri; a copy of the
appointment of substitute trustee is attached hereto and incorporated herein and
marked Exhibit "C".
25. Upon information and belief, Elizabeth B. Ells and/or David W. Neill, were either
employees or licensed attorneys for Shapiro & Ingle at the time of said appointment.
26. On or about May 14, 2009 Defendant Law Firm of Hutchens, Senter & Britton, P.A.
(“Hutchens, Senter & Britton”) drafted an appointment of substitute trustee on behalf
of Defendant Bank of New York Mellon, “as Successor Trustee under NovaStar
Mortgage Funding Trust, Series 2003-3” and purported “holder of the Note,”
removing all prior trustees in favor of Substitute Trustee Services, Inc., signed May
14, 2009 by Bank of New York Mellon by its “Attorney-In-Fact, Saxon Mortgage
Services, Inc.,” Craig Hanlon, Asst. Vice President, before Christina Anne Sauerer,
Notary Public - Minnesota; a copy of the appointment of substitute trustee is attached
hereto and incorporated herein and marked Exhibit “D”.
27. Substitute Trustee Services, Inc. operates under the direction and control of
Defendant Hutchens, Senter & Britton, and therefore for purposes of this case, both
are treated as the same entity.
28. Plaintiffs were never informed or notified of any transfer of the Note to Defendant
Bank of New York Mellon.
29. No evidence exists to support the claim that the Bank of New York Mellon is the
holder in due course of the Note at issue in this action.
30. On June 1, 2009, Substitute Trustee Services, Inc. executed and filed a Notice of
Hearing Prior to Foreclosure of Deed of Trust before the Clerk in the General Court
of Justice on behalf of Bank of New York Mellon, purported owner and holder of the
mortgage Note; a copy of the Notice is attached hereto and incorporated herein and
marked Exhibit “E”.
31. On July 6, 2009, Substitute Trustee Services, Inc. executed a Notice of Foreclosure
Sale giving notice of the sale of Plaintiff’s property set to take place on July 27, 2009;
a copy of the Notice is attached hereto and incorporated herein and marked Exhibit
“F”.
32. On July 13, 2009, Substitute Trustee Services, Inc. filed a Notice of Dismissal before
the Clerk in the General Court of Justice voluntarily dismissing the aforementioned
foreclosure action; a copy of the Notice is attached hereto and incorporated herein
and marked Exhibit “G”.
33. On December 4, 2009, John Cotrell, purported Assistant Vice President of Saxon
Mortgage Services, Inc., purported servicer of the loan account evidenced by a note
and deed of trust, executed and signed before Angelo Dupon Mayfield, Notary Public
– Texas, an affidavit naming Bank of New York Mellon as holder of the Note,
alleging Plaintiffs’ default with respect to the indebtedness evidenced by said note,
declaring acceleration and the balance of indebtedness immediately due, demanding
foreclosure of the Deed of Trust securing the indebtedness, and naming Substitute
Trustee Services, Inc. as substitute trustee; a copy of the Affidavit is attached hereto
and incorporated herein and marked Exhibit “H”.
34. On December 11, 2009, Substitute Trustee Services, Inc. filed a Notice of Hearing
Prior to Foreclosure of Deed of Trust before the Clerk in the General Court of Justice
on behalf of Bank of New York Mellon, purported owner and holder of the mortgage
Note; a copy of the Notice is attached hereto and incorporated herein and marked
Exhibit “I”.
35. On January 13, 2010, Substitute Trustee Services, Inc. executed a Notice of
Foreclosure Sale giving notice of the sale of Plaintiffs’ property set to take place on
February 8, 2010; a copy of the Notice is attached hereto and incorporated herein and
marked Exhibit “J”.
36. On Jauary 13, 2010, John Cotrell, purported Assistant Vice President of Saxon
Mortgage Services, Inc., purported servicer of the loan account evidenced by a note
and deed of trust, signed before Angelo Dupon Mayfield, Notary Public – Texas – an
affidavit naming Bank of New York Mellon as holder of the Note, alleging Plaintiffs’
default with respect to the indebtedness evidenced by said note, declaring acceleration
and the balance of indebtedness immediately due, demanding foreclosure of the Deed
of Trust securing the indebtedness, and naming Substitute Trustee Services, Inc. as
substitute trustee; a copy of the Affidavit is attached hereto and incorporated herein
and marked Exhibit “K”.
37. Between February 2010 and April 2010 a series of Motions and Orders to Continue,
initiated by Substitute Trustee Services, Inc. were filed, ultimately delaying the
foreclosure hearing to June 21, 2010; copies of the Motions and Orders are attached
hereto and incorporated herein and marked Exhibit “L”.
38. On May 24, 2010, Substitute Trustee Services, Inc. filed a Notice of Dismissal before
the Clerk in the General Court of Justice voluntarily dismissing the aforementioned
foreclosure action; a copy of the Notice is attached hereto and incorporated herein
and marked Exhibit “M”.
39. On October 12, 2010 Defendant Attorney Philip A. Glass, drafted an appointment of
substitute trustee on behalf of Defendant Saxon Mortgage Services, Inc., as servicing
agent for Bank of New York Mellon, “as Successor Trustee under NovaStar
Mortgage Funding Trust, Series 2003-3” and purported “holder of the Note,”
removing all prior trustees in favor of Philip A. Glass, Lenny Cicero, or Matthew
Hoptry, signed October 12, 2010 by Saxon Mortgage Services, Inc., Regina
Alexander, Assistant Vice President, before Angelo Dupon Mayfield, Notary Public -
Texas; a copy of the appointment of substitute trustee is attached hereto and
incorporated herein and marked Exhibit “N”.
40. On October 26, 2010, Defendant Attorney Philip A. Glass filed a Notice of
Foreclosure Hearing for November 29, 2010 on behalf of the Bank of New York
Mellon, purported owner and holder of the mortgage Note, signed October 21, 2010,
Philip A. Glass, Substitute Trustee; a copy of the Notice is attached hereto and
incorporated herein and marked Exhibit “O”.
41. On October 26, 2010, Attorney Philip A. Glass filed a Notice of Foreclosure Sale
giving notice of the sale of Plaintiff’s property set to take place on December 20,
2010, signed October 21, 2010, Philip A. Glass, Substitute Trustee; a copy of the
Notice is attached hereto and incorporated herein and marked Exhibit “P”.
42. On December 1, 2010, Attorney Philip A. Glass executed and signed a Re-Notice of
Foreclosure Sale giving notice of the sale of Plaintiff’s property for January 31, 2011,
which was subsequently edited to reflect a new sale date of February 14, 2011, posted
on January 10, 2011; a copy of the Notice is attached hereto and incorporated herein
and marked Exhibit “Q”.
43. Plaintiffs’ mortgage and the unlawful attempted foreclosures that followed were, and
are, based upon a Deed of Trust and a Note in the mortgage that are no longer held by
any identifiable entity or party.
44. Plaintiffs’ mortgage was flawed from the date of origination of the loan because
MERS was named as the beneficiary and nominee of the lender on the Deed of Trust,
which was done for purposes of deception, fraud, confusing – and therefore harming
– the Plaintiff, and theft of revenue from the local county government through the
illegal avoidance of mortgage recording fees.
45. MERS is unregistered and unlicensed to conduct mortgage lending or any other type
of business in the State of North Carolina and has been and continues to knowingly,
intentionally, illegally and fraudulently record mortgages and conduct business in
North Carolina on a large scale and systematic fashion.
46. Neither MERS nor Bank of New York Mellon are the original lenders for the
Plaintiffs’ subject Deed of Trust or Note herein.
47. Neither MERS nor Bank of New York Mellon are legally documented assignees of
either the Plaintiffs’ Deed of Trust or Note and do not hold the original Deed of Trust
nor have they ever held the Plaintiffs’ Note.
48. No Note or other evidence exists which could ever make the Plaintiffs indebted to
MERS or Bank of New York Mellon in any way.
49. Neither MERS nor Bank of New York Mellon ever had nor will they ever have the
authority to assign the Mortgage to any entity.
50. Neither MERS nor Bank of New York Mellon ever had any right to collect on the
Note or enforce the Deed of Trust or Mortgage, nor have they ever had a right to
hold, enforce or collect upon Plaintiff's Note.
51. At the time Plaintiff signed the Note and Deed of Trust, he was unknowingly
converting his property into an asset of a MBS and was deliberately induced into
signing a Negotiable Instrument which was never intended as such, but was intended
by NovaStar Mortgage, Inc. as collateral for a MBS.
52. The alleged Note in question started its life as a negotiable instrument, similar to a
check. The negotiation and enforceability of the Note is governed by Article Three
(3) of the Uniform Commercial Code.
53. The Defendants are not in possession of the original negotiable instrument with any
legally binding original endorsement.
54. There is no assignment of the Note to any of the foreclosing Parties/Defendants. The
endorsement stamped on the copy of the Note (Exhibit A-1) bears no signature and is
blank and invalid; the subsequent alteration of the original Note (Exhibit A-2),
confusingly endorsed to JPMorgan Chase and certified by an unknown signature as a
“true and correct copy of the original,” serves only to further cloud the already broken
chain of title, evidencing fraud, misrepresentation, and other offenses.
55. Defendants Shapiro & Ingle, Hutchens, Senter & Britton, and Attorney Philip A.
Glass (collectively referred to herein as “Defendant Law Firms”) have conspired to
file false and fraudulent Foreclosure Actions against Plaintiff; it is asserted that such
actions are part of Defendant Law Firms' regular practices and procedures of systemic
fraud across the State of North Carolina in conspiracy with its clients, who Defendant
Law Firms knew, or should reasonably have known, were not entitled under the law
to foreclose on Plaintiffs’ property.
56. The note that had been executed with the deed of trust became part of a pool of
mortgages losing its individual identity as a note between a lender and a borrower; it
merged with other unknown notes as a total obligation due to the investor or
investors; it is no longer a negotiable instrument, rather, collateral for a federally
regulated Security under the confines of the SEC.
57. In actuality, MERS was not the “nominee” for the lenders; the true lenders were
investors who had provided the funds for the loans through mortgage backed security
pools which were held as trusts.
58. This fact was known to MERS and the Servicers and the subsequent assignees of any
and all rights purported to have been assigned by MERS at the time the note and deed
of trust was signed by Plaintiff and at the time of each and every later purported
assignment by MERS, or others, of any interest in the note and deed of trust.
59. The proper parties to this action would be the investors of the mortgage-backed
securities to which Plaintiffs’ loan was securitized; but these parties have no recorded
interest in the mortgage or deed of trust, which were never delivered to the Trustee
for the mortgage backed security pool; therefore the note itself is, at best, unsecured
rights to payment.
60. All Defendants knew that Plaintiffs’ loan was securitized and intended to be
securitized prior to the preparation of the note and mortgage reflecting the loan.
61. The Servicers profited by foreclosing because of the standard Prospectus and Pooling
and Service Agreements, allowing Servicers to keep proceeds of the foreclosures
when the MBS has been closed or the investors paid off.
62. All of the purported Assignments, transfers and filing of foreclosure notices were
done by the Defendants without the required corporate resolution giving authorityfor
that person to
COUNT I. FRAUD AND CONSPIRACY TO COMMIT FRAUD AND MISREPRESENTATION and ABUSE OF PROCESS
ALL DEFENDANTS
63. Plaintiffs re-allege and affirm each preceding paragraph of this Complaint and
incorporate such as if alleged anew.
64. Defendant Shapiro & Ingle conspired to create and did create and file with the Wake
County Court a false, phony and fictitious Appointment of Substitute Trustee on
behalf of MERS, which said Defendant knowingly and falsey purported to be holder
and owner of the Note at issue, naming employees, attorneys, and/or agents of said
Defendant’s law firm as substitute trustees.
65. Defendants Hutchens, Senter & Britton and Attorney Philip A. Glass, respectively,
conspired to create and did create and file with the Wake County Court false, phony
and fictitious Appointments of Substitute Trustee on behalf of Bank of New York
Mellon, which said Defendants knowingly and falsey purported to be holder and
owner of the Note at issue, naming employees, attorneys, and/or agents of said
Defendants’ law firms as substitute trustees.
66. Purporting to act on behalf of the Bank of New York Mellon, as successor trustees
under NovaStar Mortgage Funding Trust, Series 2003-3, and without a lawful
assignment of the Note or Deed of Trust, Defendant Hutchens, Senter & Britton filed
multiple foreclosure actions, voluntary dismissals and motions to continue against
Plaintiffs between June 2009 and May 2010 in Wake County North Carolina.
67. Purporting to act on behalf of the Bank of New York Mellon, as successor trustees
under NovaStar Mortgage Funding Trust, Series 2003-3, and without a lawful
assignment of the Note or Deed of Trust, Defendant Philip A. Glass filed a
foreclosure action against Plaintiffs beginning in or about October 2010, in Wake
County North Carolina.
68. At the time of the foregoing false Appointments, foreclosures, and other actions, none
of the Defendant Law Firms possessed a lawful and valid assignment of Deed and
Trust from NovaStar Mortgage, Inc., the orignal lender and holder of the Note and
Deed of Trust, and therefore knowingly lacked standing and the capacity to foreclose.
69. Defendant Saxon Mortgage Services, Inc., by and through its purported Assistant
Vice President John Cottrell, twice executed, signed and notorized affidavits falsely
naming The Bank of New York Mellon as holder of the Note and indebtedness,
alleging Plaintiffs’ default on the loan, and declaring acceleration, balance due and
foreclosure, despite having no first-hand knowledge of the loan, no valid assignment
of any loan document, and therefore no authority to file affidavits as to the validity of
the loan documents or of the existence of the loan.
COUNT II. DECEPTIVE AND UNFAIR TRADE PRACTICES
70. Plaintiff re-alleges and affirms each and every preceding paragraph of this Complaint
and incorporate such as if alleged anew.
71. In 2010, Defendants Bank of New York-Mellon, Novastar Mortgage and Saxon
Mortgage Service intentionally instituted other foreclosures against Plaintiffs based
upon fraudulent documents in the Wake County Court.
72. The scheme employed by Defendants Hutchens, Senter & Britton whereby they filed
multiple foreclosure actions, intentionally had the capacity and tendency to deceive
Plaintiffs, and did deceive Plaintiffs, and others similarly situated.
73. The acts of the Defendants violated standards of fair trade practices.
74. As a result of the conduct of the Defendants The Bank of New York Mellon,
NovaStar Mortgage, Inc., Saxon Mortgage Services, Inc. MersCorp, Inc. Shapiro &
Ingle, LLP Hutchens, Senter & Britton, P.A. Philip A. Glass (or, alternatively,
Nodell, Glass & Haskell, LLP) Plaintiff was proximately injured in his business and
his person.
COUNT III. NEGLIGENT SUPERVISIONThe Bank of New York Mellon, NovaStar Mortgage, Inc., Saxon Mortgage Services, Inc.
MersCorp, Inc. Shapiro & Ingle, LLPHutchens, Senter & Britton, P.A. Philip A. Glass
75. Plaintiff re-alleges and affirms each and every preceding paragraph of this Complaint
and incorporate such as if alleged anew.
76. Defendants had a duty of care to supervise the actions of their employees and agents
77. Defendants employees' and/or agents' actions, as alleged previously, were unlawful
and violated Plaintiff's property rights.
78. Defendants knew or should have known that their employees and/or agents were
acting unlawfully.
79. As a result of the Defendants' negligent supervision, Plaintiff was proximately injured
by the unlawful acts of their employees and/or agents.
80. An agency relationship exists between the individual defendants and the corporate
defendants.
81. The actions of the individual defendants were done on behalf of and at the direction
of the corporate defendants and within the scope of their agency relationship.
82. As a result of the actions of the individual defendants, the Plaintiff was injured.
COUNT IV. Common Law Fraud and Injurious Falsehood
83. Plaintiff incorporates by this reference each and every paragraph of this Complaint as
if set forth fully herein.
84. The lack of notice and lack of required evidence of the alleged mortgage assignments
enabled the Defendants to perpetrate the fraudulent foreclosures. The Defendants
conspired together and “knew” the material representations were false. The material
representations to the Court and to the Plaintiff were made so that the Court and the
Plaintiff would believe that the Defendants had legitimate claims in the property. The
Plaintiff and County Clerk relied on such and the Plaintiff was injured as a result with
the entering of a judgment and the facing of foreclosure litigation.
COUNT V.
Fraud by MisrepresentationUNFAIR AND DECEPTIVE TRADE PRACTICES
85. Plaintiff incorporates by this reference each and every paragraph of this Complaint as
if set forth fully herein.
86. The deceptive acts of the original Lender, MERS, Bank of New York, Saxon
Mortgage and Novastar Mortgage and the Servicers resulted in a multitude of
misrepresentations, including but not limited to the true identity of the Lender, and
the fraudulent misrepresentation as to the Mortgagee.
87. The aforementioned Defendants induced the Plaintiff to enter into the transaction
when there existed in the inducement and execution material representations which
were false and were known to be false or were made recklessly, which inducement
was reasonably acted upon by Plaintiff and acted upon in reliance thereon and
Plaintiff has suffered injury proximately due to such.
88. The deceptive acts of the Lender, MERS, and the other Defendants constitute
fraudulent misrepresentation and the parties in question are jointly and severally
liable for their acts of fraud by their misrepresentation and all damages stemming
from such, including punitive damages and attorney’s fees.
COUNT VI. CONSPIRACY TO COMMIT FRAUD BY OMISSION AND INDUCEMENT
89. Plaintiff incorporates by this reference each and every paragraph of this Complaint as
if set forth fully herein
90. The Lender conspired to fraudulently conceal the “True Lender” at closing, and the
Note was unlawfully securitized and converted into an investment vehicle. MERS
had a duty to disclose material facts, failed to disclose those facts; and that failure
induced the Plaintiff to act, and he has suffered actual damages due to the fraudulent
omissions.
91. The Defendants had a duty to disclose the true nature of their relationship and the fact
that the Lender was merely a “Pretender Lender” and thus, the agent for the
Concealed and Unknown Lender.
92. The Defendants and MERS are jointly and severally liable for their acts of Fraud by
Omission and all damages stemming from such.
COUNT VII. Conspiracy to Commit Fraud by the Creation, Operation and Use of MERS System
93. Plaintiff incorporates by this reference and re-alleges the allegations contained in all
the paragraphs above as if set forth fully herein.
94. Upon information and belief, Defendants and each of them, did knowingly and
willfully conspire and agree among themselves to engage in a conspiracy to promote,
encourage, facilitate and actively engage in fraudulent and predatory lending
practices perpetrated on Plaintiff as alleged herein and the actions of the Defendant
conspirators were taken as part of the business policies and practices of each
Defendant conspirator in participating in the MERS system.
95. Upon information and belief, the Defendant conspirators Saxon, Novastar, and the
foreclosure Defendants are members of and participants in the MERS system, and,
through their employees and agents, served as members of MERSCORP, Inc. and/or
MERS, Inc., and participated in the design and coordination of the MERS system
described in this complaint.
96. Defendants’ participation as shareholders, directors, operators, or members of
MERSCORP, Inc. and/or MERS, Inc. are as follows:
97. Whenever this Complaint refers to any corporation's act, deed, or transaction, it
means that such corporation engaged in the act, deed, or transaction by or through its
members, officers, directors, agents, employees, or other representatives while they
actively were engaged in the management, direction, control, organization or
transaction of its business and affairs.
98. MERS, Inc. and/or MERSCORP, Inc. arranged for bilateral and multilateral
meetings, bilateral and multilateral teleconferences, and bilateral internet
communications with potential Shareholders, actual Shareholders, candidates for
Membership, and Members.
99. Upon information and belief, the Defendants conspired among themselves and with
other unknown parties to: a) Develop a system of earning profits from the origination
and securitization of residential loans without regard for the rights of Plaintiffs; and
b) In furtherance of the system referred to immediately above, the Defendant
conspirators intentionally utilized, created, managed, operated and controlled the
Defendants MERSCORP, Inc. and MERS, Inc. for the specific purpose of MERS,
Inc. being designated as a sham “beneficiary” in the original deeds of trust securing
those loans, including the loans made to Plaintiff and other similarly situated
individuals by the “lenders”; and c) Defendant conspirators intentionally organized,
created, managed, operated and controlled the MERS system with the unlawful intent
and for the unlawful purpose of making it difficult or impossible for Plaintiffs and
other victims of such industry-wide predatory policies and practices to identify and
hold responsible the persons and entities responsible for the unlawful actions of
Defendants and their co-conspirators.
100.MERSCORP, Inc. informed its co-conspirators that using the MERS system would
remove transaction records from the public record.
101.MERSCORP, Inc. and MERS, Inc. have publicly stated the following:
102.“MERS eliminates the need to prepare and record assignments when trading
residential and commercial mortgage loans.” 1) “With the recording of the security
instrument(s), MERS becomes the mortgagee in the county land records and no
assignments are required during a subsequent sale and transfer of the loan between
MERS members.” and 2) “There is no dependency on the corporate name you use on
closing documents and the corresponding corporate name on the MERS System
because the MERS System is not the legal system of record of ownership of mortgage
loans.”
103.MERSCORP, Inc.’s marketing materials also promises Members with assistance with
foreclosures. MERSCORP, Inc. and/or MERS, Inc. have publicly stated “MERS has
assembled a Foreclosure Manual to provide a state-by-state guideline for our
Members to follow when foreclosing a mortgage loan in the name of MERS.”
104.MERSCORP, Inc. and/or MERS, Inc. offered Members increased profits.
105.MERSCORP, Inc. has publicly stated: 1) “The MERS web site enables you to target
directly your MERS® Ready products and services to MERS members.” 2)
“Commercial originators and issuers save hundreds to thousands of dollars (in the
case of cross-collateralized loans) in preparing and recording assignments. Where the
originator has not recorded a MERS as Original Mortgagee (MOM) security
instrument, the issuer saves the costs of assigning to the Trust by having the
originator assign to MERS.” and 3) “It will reduce risk and generate more profits for
lenders because the Notes registered on it will be in electronic format. It shortens the
timeframe between the closing and the securitization of the loan, enabling the Note to
move instantly, creating faster funding.”
106.When the Plaintiffs' Note was split from the deed of trust, the note became unsecured.
107.Utilizing the MERS system, Servicers were able to hide profits and fees that were not
disclosed to the Plaintiffs or to the investor in the note.
108.The Servicer-conspirators agreed to unlawfully foreclose on loans despite the
separation of the loan from the unsecured deed of trust.
109.All of the conspirators agreed to the participation of the other conspirators in their
individual roles in the conspiracy.
110.The Servicers agreed to foreclose despite full knowledge of the loan file of the
Plaintiffs.
111.Defendants have acted as players in the conspiracy, and as Securitizers or the agents
of securitizers in the conspiracy.
112.The Defendants-Securitizers knowingly, and by agreement, serviced the unlawfully
obtained mortgage;
113.Defendants named herein as co-conspirators profited from their respective roles in
originating loans, selling them, and pooling their MERS registered home loans
together in large bundles which were sold and turned into financial derivative
instruments;
114.The mortgage securitization process became known in financial industry parlance as
“slicing and dicing.” The slicing and dicing resulted in a pool of mortgages, including
Plaintiffs’, which had lost its individual characteristic but had a high value to those
who created them;
115.The Defendant-Servicers have attempted to unlawfully foreclose on the Plaintiffs’
property. The Servicers continue to misrepresent the legal right to foreclose when
they have no such right.
116.All Defendants named as MERS members agreed to promote and to utilize MERS in
an unlawful manner in order to deprive Plaintiffs, and those similarly situated, of
property.
117. As a result of Defendant conspirators’ conspiracy described herein, Plaintiffs
suffered injuries which include mental anguish, emotional distress, embarrassment,
humiliation, loss of reputation and a decreased credit rating which has, or will, impair
Plaintiffs’ ability to obtain credit at a more favorable rate than before the decrease in
credit rating, the anticipated loss of their Residence and other financial losses
according to proof, and Plaintiffs have incurred attorneys’ fees and costs in this
matter.
118.Defendant conspirators’ actions were wanton, willful and reckless, and justify an
award of punitive damages against each of them.
COUNT VIII. Fraudulent Conveyance
119.Plaintiffs incorporate by this reference each and every paragraph of this Complaint as
if set forth fully herein.
120.The Defendants knowingly engaged in fraudulent conveyances.
121.The Plaintiffs were aggrieved by the transfers and assignments of their mortgage of
their real property and this action serves as a Petition in Equity against the
Defendants.
122.All parties taking part in or who conspired with those who participated in the acts or
practices in question are jointly and severally liable to the Plaintiffs.
COUNT IX - VIOLATIONS OF THE FAIR DEBT COLLECTIONS PRACTICES ACT ("FDCPA") 15 USC § 1692
123.Plaintiffs re-allege and affirm each and every preceding paragraph of this Complaint
and incorporate such as if alleged anew.
124.Defendants Saxon, Novastar and the law firms are debt collectors as defined by 15
USC 1692(a)(6).
125.Defendants filed false, deceptive, misleading, and perjured affidavits in connection
with the collections of debts in violation of 15 USC 1692(e).
126.Plaintiffs suffered actual damages from these violations.
127.Pursuant to 15 USC 1692(k), Plaintiffs are entitled to actual damages, statutory
damages as set forth herein, and reasonable attorney fees and costs.
128.Because the conduct of the Defendants was frequent and persistent, because the
nature of the violations of the FDCPA were so egregious, because the FDCPA
violations were a part of a deliberate scheme, Plaintiffs are entitled to the maximum
possible relief permitted under 15 USC 1692k(a).
129.Defendants failed to inform Plaintiffs of any Assignments and transfers of the
mortgage in violation RESPA.
COUNT X: Reformation
130.Plaintiffs incorporate by this reference each paragraph of this Complaint as if set forth
fully herein.
131.Based on this Petition in Equity, the Plaintiffs are entitled to have clear title restored
and the Court should Order the Clerk of the County to release the mortgage and strike
all mortgage assignments filed in the name of the Defendants as to the Plaintiffs.
COUNT XI: Slander of Title
132.Plaintiffs incorporate by this reference each and every paragraph of this Complaint as
if set forth fully herein.
133.The Defendants have knowingly and maliciously communicated, in writing, a false
statement which has the effect of disparaging the plaintiff’s title to property. The
Plaintiffs have incurred special damage as a result.
134.MERS has no legally enforceable claim, interest or standing to sue as to the Note or
Mortgage in question and the claim is a cloud on the Defendants’ title and should be
quieted as against MERS under North Carolina law.
135.Plaintiffs are the rightful owner of the subject property.
136.Plaintiffs are the legal title holders of this property.
137.MERS has knowingly and unlawfully caused a cloud to be recorded against the title
of the Plaintiffs’ property and cause to be sent notices of default, foreclosures and
served and filed mortgage documents that claim an interest in the property of the
Plaintiffs.
138.Any purported transfer of any interest in the Plaintiffs’ real estate was wrongful and
invalid because the mortgages, foreclosures or purported foreclosures were invalid
and were not conducted in accordance with the laws of North Carolina. MERS knew
or should have known that such transfers were wrongful and invalid. Any publication
of an ownership interest in any of the Plaintiffs’ properties is, therefore false.
139.The recording of the mortgages published the information to third parties.
140.As a result of said wrongful publication of an ownership interest in the Plaintiffs’
property, Plaintiffs have incurred damages and will continue to incur attorneys’ fees
and costs related to this litigation, in an amount to be proven at trial.
141.Defendants have filed mortgages, threatened foreclosure and have foreclosed against
Plaintiffs for which Defendants were not owed any payments, had no lawful right to
foreclose and have unlawfully deprived and attempted to deprive Plaintiffs of their
home and failed to notify the Plaintiffs of the discharge of their obligations on the
notes associated with their mortgage.
142.Plaintiffs seeks a declaratory judgment against Defendants stating that Defendants
have violated Plaintiffs’ rights and that the Defendants had and have no right to hold
mortgages in the name of MERS and/or foreclose on the Plaintiffs’ property and that
the Defendants are entitled to no further payments from the Plaintiffs or recognition
in Plaintiffs’ Title to his property.
143.Plaintiffs have been intentionally misled about the terms and conditions of the
agreements entered into with the Defendants, MERS and all others who have
attempted to foreclose on the Plaintiffs.
144.The Plaintiffs are entitled to a reformation of these notes as unsecured notes or as
partially or wholly discharged notes and a right to reformation of the contracts with
the persons or entities who are owed obligations because of funding of the loans of
the Plaintiffs.
COUNT XII: Quiet Title
145.Plaintiffs incorporate by this reference each and every paragraph of this Complaint as
if set forth fully herein.
146.The Plaintiffs are entitled to have their property as referred to herein quieted in
Defendants' names until and unless some party comes forward in this litigation who
has a right to enforce the loans upon his house free and clear of all encumbrances.
147.The originator of the loan was a broker of loans and intended to place the loans and
never be the “lenders” that they purported to be.
148.The originator of the loan employed a means by which MERS and the Defendants
could insulate themselves from liability for the breach of contract, the violation of
lending and recording laws and for all the reasons stated in the allegations of this
Complaint.
149.The Defendants have not loaned any money to the Plaintiffs.
150.The Defendants have no contractual relationship with the Plaintiffs.
151.The Defendants are not the holders in due course of the notes on the Plaintiffs’
property.
152.No one who has an legal interest in the Plaintiffs’ properties has made any claim of
that interest.
153.Plaintiffs have been required to retain counsel in this matter to protect their rights and
seek these remedies and has incurred attorneys’ fees and costs in this matter.
CONCLUSION
154.Upon information and belief, the Defendants, did not and cannot legally obtain
foreclosures and/or file an Assignment of the Notes or Mortgages of the Plaintiffs.
155.The Plaintiffs are entitled to equitable relief.
156.MERS should be enjoined from this day forward from drafting, executing and filing
Mortgages and Mortgage Assignments and should be further enjoined from filing
Complaints in Foreclosure based in fraud and further be enjoined from prosecuting all
pending cases.
WHEREFORE, Plaintiffs demand judgment against Defendants as follows:
1. Judgment against Defendants as Jointly and Severally Liable for all issues.
2. Actual and statutory damages for violations of FDCPA pursuant to 15 USC § 1692(k)
and relevant North Carolina law;
3. Pre-Judgment and post judgment interest at the maximum rate allowable by law;
4. Compensatory damages;
5. Punitive damages as allowed by law;
6. Such other and further relief available under all applicable under state and federal
laws and any relief the court deems just and appropriate;
DEMAND FOR JURY TRIAL pursuant to rule 38(a) of the F.R.C.P.
Plaintiffs demands a jury trial as to all issues triable by a jury.
Respectfully submitted this the 14th day of March, 2011.
/s/ Jeffrey Nowak /s/ H.E. Luke Lucas
Jeffrey Nowak, Esquire H.E. Luke Lucas, EsquireNC Bar # 40625 PA Bar # 61124Lucas & Nowak, LLP2631 E. Geer St.Durham, NC [email protected]
Attorneys for Plaintiffs OBAMIKEL ALSTON andFIKRIYYAH ALSTON
CERTIFICATE OF ELECTRONIC FILING AND SERVICE
I, the undersigned counsel for the Plaintiffs, hereby certify that on, March 14, 2011, a copy of
Plaintiffs’ 3rd Amended Complaint was filed electronically. I understand that notice of this
filing will be sent to all parties below by operation of the Court's electronic filing system. Parties
may access this filing through the Court's CM/ECF system.
Avery A. SimmonsBOA Corporate Ctr100 N. Tryon StSte 2690Charlotte, NC [email protected]
Phillip A. Harris [email protected] Nelson Mullins Riley & Scarborough LLPGlenLake One, Suite 2004140 Parklake Avenue, Raleigh, North Carolina 27612
/s/ Harold E. LucasLucas & Nowak, LLP2631 E. Geer St.Durham, NC 27704