8/20/2019 Feb 2014 Brief 2.

1/85

IN THE COURT OF APPEALS OF OHIO  SECOND APPELLATE DIVISION

 Wells Fargo Bank NA. as Trustee for Securitized C.A. CaseNo. 023136 Asset Backed ecei!a"les ##C 2006$%&1

'ortgage &ass$T(roug( Certi)cates*Series 2006 %&1

&lainti+*

 !. ,o(n A. eed* et al.

-efendant

DEFENDANTS MOTION TO VACATE

No co/es -efendant ,o(n A. eed -efendant* for t(is

/otion to !acate t(is Courts No!e/"er 13t( 200 4udg/ent

entr5 granting &lainti+ Wells Fargo Bank NA. as Trustee for

Securitized Asset Backed ecei!a"les ##C 2006$%&1 'ortgage

&ass$T(roug( Certi)cates* Series 2006 %&1 &lainti+7 /otion

of 4udg/ent on t(e "asis of t(e State of %(ios Su8re/e Courts

%cto"er 31* 2012 (olding in Federal 9o/e #oan 'ortgage

Cor8oration !. Sc(artzald* 2012$%(io$:01;.

  Respectfully submitted 

!!!!!!!!!!!!!!!!!!!!!!!! 

 "#$% A& Reed

8/20/2019 Feb 2014 Brief 2.

2/85

SERVICE

 A t'ue (%d e)(ct c#py #f t$e f#'e*#i%* $(s bee% se'+edt$is ,-t$ d(y #f Au*ust ./,/ +i( em(il (s f#ll#0s1

 Atty2s f#' Pl(i%ti3 

 A/elia A. Boer 0013

8/20/2019 Feb 2014 Brief 2.

3/85

I%t'#duct#'y St(teme%t

 As an initial /atter* -efendant freel5 acknoledges t(at

&lainti+ )led t(is lasuit in 200* and /uc( litigation (as since

ensued* including an a88eal and /otion for relief fro/ 4udg/ent

8ursuant to Ci!. . 60B. T(is does not* (oe!er* c(ange t(e

fact t(at t(e Court did not (a!e 4urisdiction to (ear t(is /atter*

nor as &lainti+ Wells Fargo Bank N.A. as Trustee t(e real 8art5

in interest entitled to enforce t(e note and /ortgage on

Fe"ruar5 2;t(* 200* t(e date &lainti+ )led t(e foreclosure

co/8laint* or can it "e at an5 8oint t(ereafter* it(out &lainti+

(a!ing 7'st "een assigned or ot(erise "een legall5 !ested as

t(e true 9older in -ue Course of t(e note /ortgage inHuestion. -efendant su"/its t(at &lainti+ is and as not.

&lainti+ Wells Fargo Bank N.A. as Trustee lacked standing to

"ring t(is action "ecause it as not t(e (older of t(e note or t(e

assignee of t(e /ortgage at t(e ti/e it )led suit. Df a 8art5 does

not (a!e standing at t(e ti/e t(e co/8laint is )led* it is a

 4urisdictional 8ro"le/ t(at cannot later "e cured.

T(e Huestion of standing is a t(res(old Huestion of (et(er

t(e 8art5 (as a personal stake in t(e outco/eIand if t(at

8ersonal stake does not eist (en t(e lasuit is )led* t(e suit

s(ould "e dis/issed. &lainti+ Wells Fargo Bank N.A. as Trustee

(ad no legal interest at t(e ti/e it )led t(e co/8laint* and

standing cannot eist it(out a legal rig(t or clai/.

Since t(e foreclosing "ank relied on an after$acHuired

interest in t(e note and /ortgage to esta"lis( its rig(t to

enforce t(e agree/ents* t(en D 'o!e t(e Court to !acate t(e

 4udg/ent. D need not 8roceed under Ci!.. 60B "ecause t(e

 4udg/ent is !oid. T(e Sc(artzald decision states t(at

3

8/20/2019 Feb 2014 Brief 2.

4/85

standing (as to eist at t(e ti/e t(e case is )led* and if it

doesnt eist* t(e 4urisdiction of t(e co//on 8leas court as not

in!oked. A court it(out 4urisdiction cannot enter an5 4udg/ent

ece8t one dis/issing t(e case for lack of 4urisdiction. A

/otion to !acate a !oid as o88osed to a !oida"le 4udg/ent isnot "ased on Ci!. . 60B* it in!okes t(e courts in(erent 8oer.

&atton !. -ie/er* 3: %(io St. 3d 6 1=.

WFB* according to t(e "inding case la in t(e State of

%(io and 'ontgo/er5 Count5* as not entitled to 4udg/ent as a

/atter of la "ecause t(e5 ere not and could ne!er "e t(e real

8art5 in interest. T(e 4udg/ent is !oid a" initio. es 4udicata

cannot "e a "ar to 4udg/ent t(at is !oid a" initio.

I& Rele+(%t F(ctu(l 8(c5*'#u%d

,&O% Feb'u('y .9t$ .//: ;E)& Pl(i%ti3 7led t$e

f#'ecl#su'e c#mpl(i%t i% t$is (cti#%&

2. As of 'arc( 6t(* 200 t(e note /ortgage at issue (ad

not "een assigned fro/ (oe!er t(e 8re!ious

(olderJoner as* to &lainti+ (erein.

3. %n August 26t(* 200 &lainti+ )led a Notice of

 Assign/ent of 'ortgage (ic( contains t(erein also an

 Assign/ent of Note ?( C7* (ic( contained a co85

of a recorded assign/ent of -efendants note

/ortgage to &lainti+. T(e Assign/ent*7 attac(ed

(ereto as ?(. B7.

8/20/2019 Feb 2014 Brief 2.

5/85

:. %n No!e/"er 13t(* 200 t(e Court granted &lainti+s

 4udg/ent and entered a decree of foreclosure against

-efendant.

-efendant (as continuousl5 (eld t(at &lainti+ in t(e caseat Bar lacked t(e ca8acit5 to e!oke t(e 4urisdiction of t(e court

in t(is actionK1 (ence &lainti+ lacked standing to initiate t(is

suit.2

II& L(0 (%d A'*ume%t

T(ere are /ore issues it( t(e 8ost dated assign/ent

t(an 4ust t(ose addressed in t(e Sc(artzald -ecision.

T$e POST DATED ASSI?NMENT issue @ ,&

 As is e!idenced in &lainti+s alleged Assign/ent7 fro/

%8tion %ne 'ortgage Cor8. to T(e Trust7 t(e date of t(e

transference or Assign/ent7 of "ot( t(e Note 'ortgage did

not occur until after t(e suit to foreclose (ad alread5 "een )led.

1 August 15, 2008, Memorandum in Opposition to Plaintiffs Motion for Summary Judgment

O!to"er 15, 2008, #eply to $omplaint %o&em"er 21,2008, Motion to 'a!ate a 'oid Judgment

• (e!em"er 1, 2008, Memorandum in Opposition to Plaintiffs Memorandum in Opposition to (efendant

Jo)n A* #eed+s Motion to 'a!ate January 1, 200-, Motion for #e!onsideration April 1,2010, Amended Motion to Appeal #uling of t)e .o/er $Ol1 April 30, 2010, Appli!ation for mergen!y #e!onsideration e"ruary 14,2011, Motion to 'a!ate Judgment ntry

2 $i&*#* 10( reuires atta!)ment to t)e pleading of a !opy of t)e /ritten a!!ount or any ot)er /ritten

instrument /)en a !laim or defense is founded on t)ose do!uments*

 Fed. Home Loan Mtge. Corp. v. Schwartzwald , 20126O)io65017* Standing is reuired to in&oe t)e 9urisdi!tion of t)e !ommon pleas !ourt, and it is determined as of t)e filing of t)e !omplaint*Wells Fargo v. Burrows, 20126O)io65--5 -t) (ist*A plaintiff must atta!) do!uments e&iden!ing t)e rig)tto enfor!e "ot) t)e note and t)e mortgage to t)e !omplaint to s)o/ standing, or "e su"9e!t to dismissal*

 HSBC Bank USA !.A. v. Sherman, 20136O)io64220 1st (ist*(etermination of standing s)ould "e made "ased on atta!)ments to a !omplaint, "ut standing in a fore!losure a!tion !an "e esta"lis)ed "y s)o/ing t)erig)t to enfor!e eit)er t)e note or mortgage* Also adopted in t)e Se!ond, ift), le&ent), and :/elft)(istri!ts*

 Lu"an v. #e$enders o$ W%ldl%$e, 504 *S* 555 1--2 :o sur&i&e a motion for summary 9udgment for la! ofstanding, a party must set fort) "y affida&it or ot)er e&iden!e spe!ifi! fa!ts to support its !laim*

5

http://www.supremecourt.ohio.gov/LegalResources/Rules/civil/CivilProcedure.pdfhttp://www.supremecourt.ohio.gov/LegalResources/Rules/civil/CivilProcedure.pdfhttp://www.supremecourt.ohio.gov/rod/docs/pdf/0/2012/2012-ohio-5017.pdfhttp://www.supremecourt.ohio.gov/rod/docs/pdf/0/2012/2012-ohio-5017.pdfhttp://www.supremecourt.ohio.gov/rod/docs/pdf/9/2012/2012-ohio-5995.pdfhttp://www.supremecourt.ohio.gov/rod/docs/pdf/9/2012/2012-ohio-5995.pdfhttp://www.supremecourt.ohio.gov/rod/docs/pdf/1/2013/2013-ohio-4220.pdfhttp://www.supremecourt.ohio.gov/rod/docs/pdf/1/2013/2013-ohio-4220.pdfhttp://scholar.google.com/scholar_case?case=10150124802357408838&q=504+U.S.+555&hl=en&as_sdt=6,36http://scholar.google.com/scholar_case?case=10150124802357408838&q=504+U.S.+555&hl=en&as_sdt=6,36http://www.supremecourt.ohio.gov/LegalResources/Rules/civil/CivilProcedure.pdfhttp://www.supremecourt.ohio.gov/rod/docs/pdf/0/2012/2012-ohio-5017.pdfhttp://www.supremecourt.ohio.gov/rod/docs/pdf/9/2012/2012-ohio-5995.pdfhttp://www.supremecourt.ohio.gov/rod/docs/pdf/1/2013/2013-ohio-4220.pdfhttp://scholar.google.com/scholar_case?case=10150124802357408838&q=504+U.S.+555&hl=en&as_sdt=6,36

8/20/2019 Feb 2014 Brief 2.

6/85

Dn Federal Home Loan Mortgage Corporation v.Schwarzwald, et al.* a case recentl5 decided "5 t(e%(io Su8re/e Court* 8lainti+ "ank "roug(t aforeclosure lasuit "efore it o"tained an assign/ent of/ortgage securing defendant (o/eoners loan.

-efendants /aintained t(at 8lainti+ lacked standing tosue /uc( as -efendant 8re!iousl5 contended in t(iscase "ecause t(e assign/ent of /ortgage (ad not"een recorded 8rior to t(e )ling of t(e lasuit. &lainti+ as assigned t(e /ortgage !ia for/al assign/ent* as(ere* onl5 (fte' t(e )ling of t(e lasuit. T(e trial courtentered a 4udg/ent in fa!or of 8lainti+* and t(e Second-istrict Court of A88eals a+ir/ed.

T(e Su8re/e Court re!ersed* (olding t(at standing

is a 4urisdictional reHuire/ent t(at /ust "e satis)ed toe!en initiate a foreclosure lasuitL

 e 'ec#*%iBed t$(t st(%di%* is (u'isdicti#%(l 'eui'eme%t2 i% State ex rel.

 Dallman v. Franklin Cty. Court of Common Pleas;,9G> G O$i# St& .d ,9- (%d 0e st(ted1 &

(Schwarzwald, (tt(c$ed $e'et# (s E)$&

8/20/2019 Feb 2014 Brief 2.

7/85

T$e l(c5 #f st(%di%* (t t$e c#mme%ceme%t #f (f#'ecl#su'e (cti#% 'eui'es dismiss(l #f t$ec#mpl(i%tJ&K d.  At 8ara.

8/20/2019 Feb 2014 Brief 2.

8/85

&lainti+ "roug(t t(is action to foreclose on an alleged

/ortgage* dated ,une =t(* 200:* (ic( secured an alleged loan

of M100*000 issued to t(e -efendant "5 9 Block 'ortgage

Cor8oration* a 'assac(usetts Cor8oration7* 9B7.

%n ,une =t(* 200:* 9B ?ntit5 A e(i"it assigned

all of t(eir rig(ts to t(e note and /ortgage to %8tion %ne

'ortgage Cor8oration ?ntit5 B* %8tion %ne7.

%8tion %ne t(en allegedl5 t(ere is no assign/ent

8ro+ered "5 &lainti+ for t(is action* t(roug( 2 unsigned and

unaut(enticated docu/ents*

1. titled &urc(ase &rice and Ter/s Agree/ent7

?.. and

2. Titled ?O?CETD%N C%&G F#%W A'?N-?- AN-

?STAT?- '%TA? #%AN &EC9AS? AN-

WAANTD?S A??'?NT*

e are lead to "elie!e it(out 8roof t(at %8tion %ne does

assignJsellsJtransfers3 all of t(eir rig(ts to t(e N%T?

'ortgage to Barcla5s Bank ?ntit5 CS8onsor (o t(en

"undles t(e Note 'ortgage along it( a88roi/atel5 :*000

ot(er like kind in!est/ents and uses t(e entire "undle to create

a ne )nancial instru/ent called a S8ecial &ur8ose >e(icle

S&>* (ic( is designed to "e de8osited into a ?'DC Trust.

3 As /it) almost all of Plaintiff;s do!ument su"missions, t)e do!uments Plaintiff su"mits t)at areto "e representati&e of t)e transfer of t)e %ote < Mortgage from Option One to =ar!lay;s =anare all unsigned and unaut)enti!ated so no >true? met)od of transfer is e&en represented* =:, t)e!ontrolling .a/ @#S < %* P:. "ot) reuire full sales and transfer of all rig)ts and o/ners)ip "efore a true se!uritiBation of t)e notes and mortgages into t)e trust !an eCist and t)e :rust;s!ontrolling do!ument, t)e PSA also mandates a !omplete e&identiary trail of all transfers andDorassignments of "ot) t)e note and mortgage "efore "eing allo/ed to "e deposited into t)e trust*

8

8/20/2019 Feb 2014 Brief 2.

9/85

Barcla5s Bank ?ntit5 C t(en* e are lead to "eli!e* sells

containing -efendants alleged Note 'ortgage to t(e

securitized trusts -e8ositor*:

 Securitized Asset Backedecei!a"les ##C7?ntit5 - SAB7 (o t(en de8osits and

transfers all of t(eir rig(ts t(e notes and /ortgages in t(e S&> 6 

to t(e Trust7 ?ntit5 ?. ;

%8tion %ne ?ntit5 B t(en alleges to (a!e assigned t(e

note and /ortgage to &lainti+ ?ntit5 ? "5 assign/ent

eecuted 'arc( ;t(* 200.

&lainti+ is t(e de"t collector trustee for a securitized trust

entitled Securitized Asset Backed ecei!a"les ##C 2006$%&1

'ortgage &ass$T(roug( Certi)cates* Series 2006 %&17* t(e

Trust7.

 AR?UMENT

T(e lack of 8ro8er transfers A P B* B P C* C P - and - P ?and in fact* i/8ro8er transfers as in t(e case at Bar (ere

&lainti+s Assign/ent e8resses transfer fro/ ?ntit5 B to ?* to

ot(ers creates a series of docu/ent defects and de)ciencies

t(at include* "ut are not li/ited to t(e folloingL

a Broken endorse/ent c(ains A P B* B P C* - P ?K" %riginal Notes it(out signatures on endorse/entsK

c Notes it( ski88ing endorse/entsK

4 Same as ootnote 3 a"o&eE no signed or aut)enti!ated !ontra!t*5 Same as ootnote 3 a"o&eE no signed or aut)enti!ated !ontra!t* Same as ootnote 3 a"o&eE no signed or aut)enti!ated !ontra!t*7 @t is important )ere to note t)at in ea!) transa!tion listed a"o&e, Plaintiff also produ!es nore!eipts, no deli&ery a!!eptan!e, not)ing /)atsoe&er to s)o/ proof of !on&eyan!e or transfer ornegotiation or sale of, in t)e end, an alleged F5 =illion /ort) of finan!ial instruments from any party to any ot)er party /)atsoe&er*

-

8/20/2019 Feb 2014 Brief 2.

10/85

d Notes it( endorse/ents on unattac(ed allongesK

e Allonges unattac(ed to t(eir original et$ink notesKf Allonges co8ies and taken fro/ ot(er notes and 8laced

onto a di+erent note Kg Allonges unattac(ed to original notes it( "lank

endorse/entsK

( Notes ne!er endorsedK

i Allonges ne!er datedK

 4 Allonges in "lank and 8re$eecuted and undated forlater )ll$ins "5 unknon 8artiesK

k -ou"le 8ledges of t(e sa/e note andJor loan todi+erent 8artiesK

l &ost$dated assign/ents of /ortgages and notesK

/ o"o$signed assign/ents of /ortgages and notesK

n &ost$dated assign/ents of /ortgages and notesK

o Assign/ents eecuted it( no laful aut(orit5K

8 Assignors assigning to t(e/sel!esK

H To di+erent 8arties clai/ing t(e oners(i8 of t(esa/e noteJloan.

Dn t(e case at Bar* it is t(e Trustee for t(e Trust7 t(at is

"ringing t(e foreclosure suit. &lainti+ Trustee o+ers no 8roof of

an5 transfer of an5 oners(i8* or rig(ts or aut(orit5 fro/ t(e

Trust to t(e Trustee ofJor 8ertaining to t(e Note andJor t(e

'ortgage.

Wit(in t(e &SA at section 3.1: e also )nd t(at "5

contractual agree/ent it is not t(e Trustees 8osition to engage

in an5 foreclosing acti!ities* it is instead t(e Ser!icers7

o"ligation. Setion 3.1: readsL

10

8/20/2019 Feb 2014 Brief 2.

11/85

Section 3.15 Realization upon Defaulted Mortgage Loans. >:)e Servicer s)all useits "est efforts, !onsistent /it) A!!epted Ser&i!ing Pra!ti!es, to fore!lose upon orot)er/ise !ompara"ly !on&ert /)i!) may in!lude an a!uisition of #O Property t)eo/ners)ip of properties se!uring su!) of t)e Mortgage .oans as !ome into and !ontinuein defaultE? emphas%s m%ne

 Again* lacking a 8ro8er Assign/ent of t(e Note andJor

/ortgage t(at is t(e su"4ect of t(is action* and lacking an5

aut(orit5 gi!en "5 t(e trusts go!erning docu/ent* t(e &SA*

&lainti+ Trustee lacked t(e ca8acit5 to in!oke t(e 4urisdiction

of t(is court t(erefore &lainti+ lacked standing to initiate suit.

Standing is a t(res(old issue. Wit(out standing to in!oke*

no furt(er /utterings or 8rotestations of t(e &lainti+ can "e

(eard for t(e5 are /oot.

THE TRUST

T(e Trust as for/ed as a !e(icle for 8urc(asing

/ortgage "acked securities. T(e Trust is su"4ect to t(e ter/s of

t(e trust indenture controlling docu/ent /e/orialized in a

docu/ent titled t(e &ooling and Ser!icing Agree/ent7* t(e

&SA7. T(e &SA as signed "5 t(e -e8ositor* Securitized Asset

Backed ecei!a"les ##C SAB7* "5 t(e Ser!icer* %8tion %ne*

and "5 t(e Trustee* W?##S FA% BAN* NA* and is dated

 ,anuar5 1* 2006.

T(e &SA sets fort( t(e /anner in (ic( /ortgages ould

"e 8urc(ased "5 t(e trust* as ell as t(e duties of t(e trustee

and t(e ser!icer. Dt is t(e trusts on controlling docu/ent.

Section 2.01* su"section 1 of t(e &SA reHuires t(at

transfer and assign/ent of /ortgages /ust "e e+ected "5 (and

deli!er5* for de8osit it( t(e Trustee it( t(e original note

endorsed in "lank.

11

8/20/2019 Feb 2014 Brief 2.

12/85

Section 2.0: of t(e &SA reHuires t(at t(e -e8ositor

transfer all rig(t* title* interest in t(e /ortgages to t(e Trustee*

on "e(alf of t(e trust* as of t(e Cl#si%* D(te. T(e Cl#si%*

D(te (s p'#+ided i% t$e PSA is "(%u('y .-t$ .//-.

T(e -ate of t(e Assign/ent of 'ortgage and Note

referenced infra* is o!er 2 5ears 8ast t(e date alloed for

de8osits into t(e trust. Df t(e trust does not 8erfect legal title "5

taking 8(5sical 8ossession of t(e notes and /ortgages* t(e

Dnternal e!enue Code* s8eci)call5 .- U&S&C& :-/?;d>;,>*

8ro!ides for a 100 8ercent ta 8enalt5 on t(ose non$co/8l5ing

cas( Qos.

 As listed in t(e &SA* t(e -e8ositor in t(e case at Bar as

Securitized Asset Backed ecei!a"les ##C7 RSABR. Wit(in

t(e sc(e/a of a securitized 'BS trust* t(e -e8ositor is t(e

necessar5 entit5 in t(e title c(ain t(at 8ro!ides t(e Bankru8tc5

re/oteness necessar5 to t(e Notes and t(e 'ortgages

de8osited into t(e trust* so t(at t(e trust can gain a AAA rating

it( t(e securities ratings agencies and to co/8l5 it( DS rule

60 8* T(e -e8ositor is also t(e designated sole de8ositor to t(e

trust.

Dn t(e case at Bar* &lainti+ s(os not 1 iota of 8roof t(at

said S8onsor* Barcla5s Bank ?ntit5 C* e!er recei!ed

-efendants Note andJor 'ortgage.

Dn t(e case at Bar* &lainti+ s(os not 1 iota of 8roof t(at

said -e8ositor ?ntit5 - e!er recei!ed -efendants Note andJor

'ortgage % t(e alleged and 8re!iousl5 allegedl5 created S&>

fro/ S8onsor Barcla5s Bank containing -efendants alleged

Note andJor 'ortgage.

12

http://www.law.cornell.edu/uscode/text/26/860Ghttp://www.law.cornell.edu/uscode/text/26/860G

8/20/2019 Feb 2014 Brief 2.

13/85

 Dn t(e case at Bar* &lainti+ s(os not 1 iota of 8roof t(at

said -e8ositor SAB e!er de8osited t(e alleged 'ortgage and

Note into t(e &lainti+ Trust.

Dn t(e case at Bar* &lainti+ s(os not 1 iota of 8roof t(at

said &lainti+ Trust e!er transferred t(e alleged 'ortgage and

Note to t(e &lainti+ Trusts Trustee* Wells Fargo Bank N.A. (o

is t(e &lainti+ in t(is case.

But it is essential for t(e courts to understand t(at "efore

t(e alleged note /ortgage could "e 8laced it(in an5 ?'DC

trust* eac( of t(ese ste8s as /andated "5 N.G. ?.&.T.#* D..C.

reHuire/ents AN- "5 t(e contractual ter/s found it(in t(e

&SA (ic( as signed and agreed u8on "5 t(e 8artici8ants of

t(e securitization. T(e rules for t(e de8osit of all of t(e Notes

'ortgages allegedl5 (eld it(in t(e 8ool of assets oned "5 t(e

trust are strict and are /andated to "e ad(ered to 8unctiliousl5.

 As stated in t(e NGSBA NG Business #a ,ournal

Su//er 2012 >ol. 16 No. 1 8g. ;;K

>:)e Mortgage Se!uritiBation :ransa!tion @n 1-8, $ongress !)anged t)e taC!ode* One of t)ese !)anges /as t)e !reation of t)e #eal state Mortgage@n&estment $onduit #M@$* A #M@$ or spe!ial purpose &e)i!le SP' is anentity t)at is !reated for t)e spe!ifi! purpose of "eing a taC6free pass6t)roug)for interest in!ome generated "y pooled mortgages* :)is allo/ed in&estors to pur!)ase s)ares or !ertifi!ates in a mortgage pool t)at /as only taCed on!e att)e in&estor le&el* :)e #M@$ rules allo/ed t)e mortgage pools to !olle!t

interest in!ome from t)e pool and dis"urse t)at in!ome to t)e !ertifi!ate )olderstaC6free at t)e pool le&el* Prior to t)e #M@$, interest in!ome from pooledmortgage in&estments /ere taCed t/i!e, on!e at t)e pool le&el and again at t)ein&estor le&el*

13

8/20/2019 Feb 2014 Brief 2.

14/85

#M@$ rules are &ery spe!ifi!,8 and to ualify as a #M@$ under federal andstate taC !odes, t)e SP' )ad to meet &ery stringent reuirements* Git) respe!tto #M=S t)e !ontrolling trust do!ument is no/n as t)e Pooling and Ser&i!ingAgreement PSA* One fun!tion of t)e PSA is to esta"lis) t)e rules go&erningt)e trust su!) t)at t)e trust;s a!ti&ities and management !onform to @#$ 80* @ft)e trust did not !onform, it !ould lose its #M@$ status and its taC6free pass6t)roug) status*?- 

 %S=A % =usiness .a/ Journal HSummer 2012 H'ol* 1 H%o* 1 pg* 77

T(e Trusts agree/ent knon as t(e &ooling and

Ser!icing Agree/ent &SA* t(e trusts indenture10* sets fort(

in its entiret5 (o t(e trust acHuires and is alloed to acHuire

its assets and t(e Trust agree/ent sets fort( "ot( 8oers and

t(e li/its of t(e 8oers of t(e Trust.

T(e &SA 11 reHuires t(at eac( 8art5 to t(e sale of t(e

/ortgage loans endorse eac( 8ro/issor5 note to t(e net 8art5

in t(e c(ain of title until t(e 8ro/issor5 note is endorsed to t(e

Trustee for t(e "ene)t of t(e Trust. T(is reHuire/ent is

included in t(e &SA and is found at Section 2.10.

 According to t(e reHuire/ents set fort( in t(e Trust

 Agree/ent &SA t(ere /ust "e a series of endorse/ents of t(e

8ro/issor5 note reQecti!e of eac( 8art5 (o (ad an oners(i8

8 @#$ 80 reuires t)at, among ot)er t)ings, t)e #M@$ trust "e a >!losed entity? and >"anrupt!y remote*?

 %e/ or;s state Po/ers < :rust la/s /ere !)osen "y #M=S sponsors in t)e PSAs as t)e >!ontrolling?statutes to go&ern #M@$ trusts, as t)e P:.;s rules and !on!omitant !ommon la/ esta"lis) >!ommon la/trusts? t)at !onform t)e #M@$ taC free pass6t)roug) reuirements* %S=A % =usiness .a/ Journal HSummer 2012 H'ol* 1 H%o* 1 end note 7-

 @f a taC6free pass6t)roug) trust lost its #M@$ status, t)e taC penalties to an in&estor t)at pur!)ased!ertifi!ates /ould "e de&astating* @t /ould also trigger an e&ent !alled a >put "a!*? :)ere /as !onsidera"le

argument o&er /)et)er t)ese trusts /ere >"usiness? trusts or !ommon la/ trusts, "ut t)e trend appears to "e a 9udi!ial re!ognition t)at t)ey are in fa!t !ommon la/ trusts* %S=A % =usiness .a/ Journal HSummer2012 H'ol* 1 H%o* 1 end note 8

10 =la!;s -t)* trust %ndenture. 1* A do!ument !ontaining t)e terms and !onditions go&erning atrustee+s !ondu!t and t)e trust "enefi!iaries+ rig)ts* 6 Also termed %ndenture o$ trust. I$ases :rusts$KL 1-62-* 2* See deed o$ trust under ((*11 :)e :rust;s Pooling and Ser&i!ing Agreement is a Pu"li! (o!ument a&aila"le )ereE)ttpDD///*se!info*!omDd#Sm*&8)*d*)tm

14

http://www.secinfo.com/dRSm6.v8h.d.htmhttp://www.secinfo.com/dRSm6.v8h.d.htm

8/20/2019 Feb 2014 Brief 2.

15/85

interest in t(e 8ro/issor5 note cul/inating it( a "lank

endorse/ent fro/ t(e de8ositor at t(e !er5 /ini/u/.

T(is c(ain of endorse/ents* or rat(er t(e lack t(ereof* in

order to co/8l5 it( t(is Trusts &SA* ould (a!e (ad to "eco/8lete on or "efore t(e closing date7 of t(e trust s8eci)ed

it(in t(e &SA of t(is securitization "ut in no e!ent /ore t(an

=0 da5s fro/ t(e closing date of t(e trust 8ursuant to section

2.02a of t(e &SA. T(e a"sence of t(ese endorse/ents on t(is

8ro/issor5 note is not onl5 !er5 co/8elling 8roof of lack of note

(older status* "ut also 8roof of &lainti+s fraud in t(e 8roduction

of t(e Assign/ent of 'ortgage ?(i"it ?7 (ic( "5 t(e ter/s

of t(e trusts on go!erning docu/ent &SA cannot and does

not legall5 eist.

Ender eit(er t(e ter/s of t(e trust* t(e contracts "eteen

t(e 8arties* or ECC = in t(e case at Bar* t(ere are un/et

reHuire/ents for t(e c(ain of title "5 t(e foreclosing entit5 to "e

Huali)ed as a &?T?7 8erson entitled to enforce. Dn ot(er

ords* single endorse/ents in "lank* and clai/ing t(at an5

8art5 in 8ossession of a note* can enforce a note* e!en a t(ief*

does not ork.

T(e e!idence in t(e collateral )le s(os an utter and

co/8lete failure of t(e 8arties to t(is alleged securitization to

actuall5 con!e5 t(is alleged 8ro/issor5 note to t(is Trust as as

articulated "5 t(e -efendant in eac( and e!er5 8re!ious

8leading. T(e 8lainti+ Trust (as o+ered no 8roof of oners(i8

and t(e collateral )le 8ro+ered "5 t(e &lainti+ t(roug(

-isco!er5 clearl5 de/onstrates t(at t(is loan as not

securitized nor as it e!er transferred to t(is Trust.

15

8/20/2019 Feb 2014 Brief 2.

16/85

T(e Court s(ould also "e aare t(at Sections 2.0; d.* e.*

(.* 3.01 c.* 3.1; (* :.02* c* .11 of t(e &SA are all s8eci)c to

t(e case at "ar (ic( set fort( furt(er e8licit restrictions on

t(e 8oers of t(e Trustee* -e8ositor and t(e Ser!icer of t(etrust7 and (ic( 8ro(i"its t(e Trustee* -e8ositor and t(e

Ser!icer fro/ taking an5 action (ic( ould 4eo8ardize t(e

?'DC status of t(e Trust. T(e 8roduction of t(e 8ost dated*

forged and fa"ricated Assign/ent of 'ortgage is itself a

8ro(i"ited action. T(ese t58es of li/itations are co//on and

are 8resent in t(is or a si/ilar for/ in e!er5 8ooling and

ser!icing agree/ent (ic( seeks to create a securitized trust

t(at can clai/ t(e ta "ene)ts of ?'DC status under t(e ES

Ta Code.

 An5 atte/8t to acce8t a transfer of t(is alleged

&ro/issor5 note after t(e ,anuar5 26* 2006* =0 da5 closing date

of t(e trust ould (a!e !iolated "ot( S?C code

8/20/2019 Feb 2014 Brief 2.

17/85

 c. T(ird* t(e alleged 8ro/issor5 note as ne!er

endorsed to t(e trust "5 t(e de8ositor and as suc( is

de!oid of t(e reHuired c(ain of endorse/ents reHuired

it(in t(e &SA and (ic( an5 reasona"le /arket

8artici8ant ould e8ect to "e 8resent for t(e8ur8oses of esta"lis(ing t(e series of true sales set

fort( in t(e &SA to esta"lis( a (ole and co/8lete

c(ain of title of t(e 8ro/issor5 note for t(e 8ur8oses of

"ankru8tc5 re/oteness.

d. Fourt(* T(e clai/ t(at t(e alleged note (as "een

transferred to t(e Trust (en it is endorsed in "lank

si/8l5 Qies in t(e face of t(e /andator5 ter/s of t(e

&SA and is an etre/e de!iation fro/ t(e industr5

standards* custo/s and 8ractices (ic( 8re!ailed at all

ti/es /aterial to t(is transaction and (ic( 8re!ail

toda5.

e. Fift(* an5 transfer alloed to "e acce8ted into t(e

trust 8ast t(e trusts on cut$o+ date of de8osits

in!okes t(e rat(er draconian DS /andate of taing t(e

?'DC trusts assets not at t(e fa!ora"le rate of 0U

t(at t(e5 no en4o5* "ut at t(e rate of 100U of t(e

 !alue of t(eir assetsV causing* /assi!e )nancial losses

to t(e Certi)cate 9older Dn!estors.

?Huall5* "5 alloing a -e8osit into t(e trust after t(e

trusts closing date7 as &lainti+s Assign/ent of 'ortgage7

alleges* &lainti+ Wells Fargo Bank as Trustee again !iolates t(e

8lain language found it(in t(e &SA at section .11 titled Ta

'atters section 4 8ara. 6 (ic( reads in 8artK

17

8/20/2019 Feb 2014 Brief 2.

18/85

 %eit)er t)e Ser&i!er nor :rustee s)all i permit t)e !reation of any interestsin any :rust #M@$ ot)er t)an t)e regular and residual interests set fort) int)e Preliminary Statement,EEE or iii ot)er/ise no/ingly orintentionally tae any a!tion, !ause t)e :rust und to tae any a!tion or fail totae or fail to !ause to "e taenany a!tion reasona"ly /it)in its !ontrol andt)e s!ope of duties more spe!ifi!ally set fort) )erein, t)at, under t)e #M@$Pro&isions, if taen or not taen, as t)e !ase may "e, !ould A endanger t)e

status of any :rust #M@$ as a #M@$ or = result in t)e imposition of ataC upon any :rust #M@$ or t)e :rust und in!luding "ut not limited to t)etaC on &proh%'%ted transact%ons&  as defined in Se!tion 80a2 of t)e $odeand t)e taC on !ontri"utions to a :rust #M@$ set fort) in Se!tion 80d of t)e $ode, or t)e taC on &net %ncome $rom $oreclosure propert(&  unless t)e:rustee re!ei&es an Opinion of $ounsel at t)e eCpense of t)e party seeing totae su!) a!tion or, if su!) party fails to pay su!) eCpense, and t)e :rusteedetermines t)at taing su!) a!tion is in t)e "est interest of t)e :rust und andt)e $ertifi!ate)olders, at t)e eCpense of t)e :rust und, "ut in no e&ent at t)eeCpense of t)e :rustee to t)e effe!t t)at t)e !ontemplated a!tion /ill not,/it) respe!t to t)e :rust und or any :rust #M@$ !reated )ereunder,endanger su!) status or, unless t)e :rustee determines in its sole dis!retion to

indemnify t)e :rust und against su!) taC, result in t)e imposition of su!) ataC*

To Su//arize* T(e closing date of t(is trust as ,anuar5

26* 2006. T(e creation date of &lainti+s Assign/ent of

'ortgage is 'arc( ;* 200 or 2: 'ont(s 8ast t(e trusts

closing date and as suc( is in !iolation of t(e trusts on

controlling docu/ent* t(e &ooling and Ser!icing Agree/ent&SA* D..C. regulations and t(e trusts controlling la* N.G.

?.&.T.#. &lainti+s and &lainti+s counsel clearl5 s(o scienter

"5 (a!ing acted in contra!ention to t(e trust "5K

1. creating or /anufacturing* forger5 it( intent to

defraud

2. atte/8ting t(e use of distri"ution and intent to

fraud

3. actuall5 su"/itting selling false* forged and

fraudulent docu/ents it(in t(is !er5 Court of #a

and ?Huit5* e!idenced not onl5 "5 t(eir late creation

date as it concerns legal standing to in!oke t(e

18

8/20/2019 Feb 2014 Brief 2.

19/85

 4urisdiction of t(e Court* "ut also in contra!ention of

DS ?'DC #a as e8lained a"o!e and again it(in

t(e &SA at Section .11 Ta 'atters g (ic( readsK

g not knoingl5 or intentionall5 take an5 action oro/it to take an5 action t(at ould cause t(e

ter/ination of t(e ?'DC status of an5 Trust

?'DC created (ereunderK

&

Dn so doing t(e a"o!e* in !iolation of t(e la* codes* rules

regulations articulated a"o!e* &lainti+ also acted in !iolation

of t(e Fair -e"t Collection &ractices Act. T(e allegations a"o!e

are re$alleged and incor8orated (erein "5 reference.

-efendant ,o(n A. eed incor8orates "5 reference all of

t(e 8roceeding and foregoing allegations in t(e entiret5 of

-efendants ansers 8leadings as in regard to t(e Co/8laint

in its entiret5 and fro/ its ince8tion.

1-

8/20/2019 Feb 2014 Brief 2.

20/85

T$e POST DATED ASSI?NMENT .

 As is referred to a"o!e* &lainti+s Assign/ent of

'ortgage7 and Note as created on 'arc( ; t(* 200. T(e

&lainti+ Trust* "5 !irtue of its ?'DC status (as (at is calleda Cut$%+ date7. T(e Trusts cut$%+ date7 is t(e date in (ic(

t(e Trust is /andated "5 la to sto8 acce8ting de8osits into it.

 Aside fro/ t(e creation 8ost foreclosure issue related a"o!e* "5

t(e ter/s of t(e Trusts on &SA* N.G. ?.&.T.#. D..C.

regulations all /andate t(at t(is Assign/ent as !oid at its

ince8tion.

&lainti+ de"t collector in t(is case is a Trustee for a

'ortgage Backed Securitized Trust and as suc( &lainti+ Trustee

and t(e Trust are controlled in t(eir entiret5 "5 t(e Trust

Dndenture or controlling docu/ent* a docu/ent titled t(e

&ooling Ser!icing Agree/ent7 &SA.

T(e Trust is also a eal ?state 'ortgage Dn!est/ent

Conduit ?'DC trust and as suc( is (eld in strict regulations

it( "ot( D..S. ?'DC trust rules of #a and t(e #as and

ules created s8eci)call5 in accordance it( t(e Trust las of

eit(er t(e State of t(e Trusts creation or "5 t(e contractual

c(oice of t(e 8artici8ants of t(e Trust* as is t(e case at "ar. T(e

agreed contractual c(oice of #a to "e ad(ered to "5 t(e

Trusts 8artici8ants in t(e case at Bar is Ne Gork Trust #a

?.&.T.#..

&lainti+s 8roduction of t(e Assign/ent7 is contrar5 to

Ne Gork #a and DS 60. Dn s(ort* t(e &lainti+ Trust

eercised a 8ro(i"ited act on 'arc( ;t(* 200.

20

8/20/2019 Feb 2014 Brief 2.

21/85

T(e afore/entioned Assign/ent7 is contrar5 to t(e

Trusts Dnstru/ents and t(erefore >oid 8ursuant to DS 60A$

and Ne Gork ?states* &oers Trusts ?.&.T.# $ &art 2 $ ; 

2.< and t(e Trusts Dndenture reHuire/ents.

Any a!tion /)i!) de&iates from t)e :rust do!uments is &oid* N 762*4 A!t oftrustee in !ontra&ention of trust @f t)e trust is eCpressed in t)e instrument !reatingt)e estate of t)e trustee, e&ery sale, !on&eyan!e or ot)er a!t of t)e trustee in!ontra&ention of t)e trust, eC!ept as aut)oriBed "y t)is arti!le and "y any ot)er pro&ision of la/, is &oid*

No 8ossession of t(e Asset eists until t(ere (as "een a

deli!er5 and an acce8tance of t(e Asset and t(e gi!er of t(e

 Asset (as relinHuis(ed all do/inion and control o!er t(e Asset

signif5ing a true sale of t(e Asset to t(e &lainti+ Trust t(ere"5

/aking t(e Asset* inter alia* "ankru8tc5 re/ote and securel5

it(in t(e Trust >ault.

&lainti+s 8ro+ered Assign/ent7 in t(e case at Bar

8ro!es onl5 t(at it as a forged and fa"ricated docu/ent

created solel5 for t(e 8ur8ose of facilitating t(e eas5 t(eft of

-efendants (o/e it(in a Court of #a.

The Trust is a REMI Trust

T(e Trust as for/ed as a ?'DC trust&,. Ender t(e

?'DC 8ro!isions of t(e Dnternal e!enue Code DC7 t(e

closing date of t(e Trust is also t(e startu8 da5 for t(e Trust.

12 :)e @nternal #e&enue $ode pro&ides t)at t)e terms Qreal estate mortgage in&estment!onduit; and Q#M@$; mean any entityR1 to /)i!) an ele!tion to "e treated as a #M@$ appliesfor t)e taCa"le year and all prior taCa"le years, 2 all of t)e interests in /)i!) are regular interestsor residual interests, 3 /)i!) )as 1 and only 1 !lass of residual interests and all distri"utions, if any, /it) respe!t to su!) interests are pro rata, 4 as of t)e !lose of t)e 3rd mont) "eginning after t)e startup day and at all times t)ereafter, su"stantially all of t)e assets of /)i!) !onsist ofualified mortgages and permitted in&estments*

21

8/20/2019 Feb 2014 Brief 2.

22/85

T(e closing dateJstartu8 da5 is signi)cant "ecause all assets of

t(e Trust are /andated to "e transferred to t(e Trust on or

"efore t(e closing date to ensure t(at t(e Trust recei!ed its

?'DC status. T(e DC 8ro!ides in 8ertinent 8art t(atL

>C!ept as pro&ided in se!tion 80d2, Qif any amount is !ontri"uted toa #M@$ after t)e startup day, t)ere is )ere"y imposed a taC for t)e taCa"le yearof t)e #M@$ in /)i!) t)e !ontri"ution is re!ei&ed eual to 100 per!ent of t)eamount of su!) !ontri"ution*?2 *S*$* N 80d1*

T(e assign/ent of t(e note and t(e /ortgage (ic(

alleges t(e transfer of t(e Note 'ortgage in t(is case as

dated 'arc( ;t(* 200* (oe!er* 8ursuant to t(e ter/s of t(e

&SA t(e trust closed on ,anuar5 1st* 2006. Acce8tance of t(e

alleged Note 'ortgage into &lainti+ Trust at t(e date s(on

on &lainti+s Assign/ent is in !iolation of DC 60d2 and as

suc( is /andated to "e declared >%D- "5 t(e ter/s found it(in

t(e &SA and "5 N.G. ?.&.T.#. D..C. regulations.

THE POST DATED ASI?NMENT .

Dn t(e case at "ar* Wells Fargo Bank* N.A* as Trustee of t(e

Trust7* clai/s to "e t(e sole and eclusi!e oner of t(e

securitized note /ortgage. Df Wells* as Trustee for t(e

Trust7 is in fact t(e true and legal oner* it /ust (a!e acHuired

legal title to t(e loan it(in =0 da5s of ,anuar5 1* 2006 t(e

trusts closing date7.

For clari)cation of t(e a"o!eK Ne Gork la states t(at

transfers to a ?'DC trust after t(e closing date of t(e trust are

 !oid. N.G. ?states* &oers and Trusts #a 96,&,:* 96.&.

?l(s5i +& 8(%5 #f Ame'ic( N&A .* 21 Cal.8tr.

8/20/2019 Feb 2014 Brief 2.

23/85

2013. See also* S(ldi+(' +& "PM#'*(% C$(se* 2013 W#

2

8/20/2019 Feb 2014 Brief 2.

24/85

-efendant asserts t(at t(e alleged transfer of t(e note

/ortgage to &lainti+ Trust (erein is !oid "ecause t(e note is

re8resented to (a!e "een acHuired after t(e trusts closing date

and as suc( is a !iolation of t(e contractual ter/s of t(e Trusts

controlling docu/ent* t(e &SA.

W(ereas in %(io #a it /a5 "e 8er/issi"le for a 9older7

to eecute suit on a note andJor /ortgage* in t(e case at Bar t(e

alleged contraction "eteen 8arties is not "eing done "5 an

%(ioan against an %(ioanY Dnstead it is "eing co//itted "5 a

de"t collector (o is an alleged re8resentati!e of a NG Trust

(ic( is "ound "5 NG #as and as suc( it is u8 to &lainti+ to

8ro!e (e is indeed t(e true &?T? &erson ?ntitled To ?nforce of 

t(e alleged Note 'ortgage.

Dn t(e case at Bar &lainti+ o+ers onl5 3 signed docu/ents*

 4ust 3 8ieces of 8a8er attesting to t(eir legiti/ac5 to foreclose*

t(eir rig(t to "e &?T?. T(ose docu/ents areL

1. t(e 8ost dated* 8ost created and )led it( t(e

court /ont(s after foreclosure initiation*

 Assign/ent of 'ortgageV (ic( is o"o$Signed

"5 a 's. To8aka #o!e.

2. T(e 8ost dated* 8ost created and )led it( t(e

court /ont(s after foreclosure initiation* A+ida!it

of Status of Account and 'ilitar5 StatusV again

signed "5 t(e sa/e o"o$Signer 's. To8aka #o!e

3. T(e Allonge fro/ %8tion %ne 'ort. Cor8. to

"lank.

-efendant su"/its ne e!idence in t(is case in t(e for/

of an A+ida!it attesting to t(e o"o$signing e8lained infra of

24

8/20/2019 Feb 2014 Brief 2.

25/85

"ot( &lainti+s Assign/ent of 'ortgage7 and &lainti+s

A+ida!it of Status of Account and 'ilitar5 Status7.

THE ALLON?E

%n or a"out ,une =* 200:* as t(e e!idence of record s(os'r. eedXs alleged original lender* 9 Block 'ortgage Cor8.*

clai/s t(at t(roug( t(e use of an alleged eecuted endorse/ent

(ic( as unattac(ed* inco/8lete* non$aut(enticated "5

a+ida!it* uneecuted &a5 to t(e %rder7as in eisting distinctl5

se8arate under la fro/ "earer 8a8er7* allonge dated ,une =*

200: fro/ %8tion %ne to "lank.13

13 o!!ents "f #$e Lavalle To %lorida Supre!e ourt &age 52 %ye .a&alle, Pe/ Mortgage @nstitute, 407D-86-0-7 mortgagefraudsaol*!om >243* @n fa!t, a !ommon industry pra!ti!e /as to !reate an >unatta!)ed? and an undated >endorsed in "lan?

 pie!e of paper t)e industry /rongly inferred /as an >allongeT? 244* :)e unatta!)ed pie!e of paper /it) aneCe!uted endorsement upon its fa!e /ould t)en "e pla!ed in a file /it) or /it)out a note, s!anned andimaged into an imaging system and t)en dis!arded, destroyed, !on!ealed, or e&en later atta!)ed if ne!essary,upon default "y a "orro/er /)en a ser&i!er needed to !reate e&iden!e of note o/ners)ip or )older status*245* nder $$ Arti!le 3, >indorsement? means a signature >on an instrument, not on a 'lank p%ece o$

 paper *? 24* @n order for t)e endorsement on an allonge to "e &alid, t)e proper do!ument !ustody pro!ess t)ats)ould )a&e "een follo/ed /as to a determine if room eCisted on t)e last page of t)e note or its "a!side tosee if any room eCisted for t)e endorsementU " only if no room eCisted, a "lan pie!e of paper s)ould "efirmly affiCed to t)e >last page? of t)e original /et6in note, so as to pre&ent its remo&al and repla!ementU !t)e first page on t)e fa!e of t)e note s)ould t)en "e stamped >Allonge property address, loan num"er et!*s)ould "e pla!ed upon t)e "lan pie!e of paperU and t)en e t)e endorsement stamp and signature s)ould "e

 pla!ed on t)e affiCed pie!e of paper to t)e note i*e* an allonge* 247* An unatta!)ed to an original note "lan

 pie!e of paper is not an allonge* An unatta!)ed to an original note "lan pie!e of paper /it) an endorsementon its fa!e is not an allonge eit)er* @f t)e endorsement is pla!ed upon t)e "lan pie!e of paper and t)en t)eendorsement and signature are pla!ed on t)e "lan pie!e of paper /)ile unatta!)ed, all someone )as endorsed/as t)e "lan pie!e of paper, not t)e original note itself* 248* (arrell G* Pier!e is a Mi!)igan la/yer for t)enational la/ firm of (yema ossett* Mr* Pier!e ser&ed as mem"er of t)e Arti!le - Study $ommittee for t)ePermanent ditorial =oard for t)e niform $ommer!ial $ode, as $)air of t)e Arti!le - iling Pro9e!t and ast)e primary drafter of t)e @nternational Asso!iation of $ommer!ial Administrators; Model Administrati&e#ules for Arti!le - filing offi!es* Ve is a freuent le!turer and /riter regarding $$ matters*? >24-* Mr*Pier!e aut)ored an arti!le for t)e Asso!iation of $orporate $ounsel titled >Allonges Separate @ndorsements

 %ot ffe!ti&e nless AffiCed*? @n t)is arti!le, Mr* Pier!e eCposes t)e lender;s >dirty se!ret? of t)e moti&esand use of allonges "y t)e mortgage industry /)en )e /rites

>Se!ured lenders routinely tae pledges of instruments in!luding negotia"le instruments under $$Arti!le 3 and ot)er promissory notes as !ollateral* @nstruments are su"9e!t to spe!ial priority rules*Se!urity interests perfe!ted merely "y filing a $$1 finan!ing statement are 9unior to se!urity interests

 perfe!ted "y possession, /it)out regard to time of filing or possession*Se!urity interests perfe!ted "y >!ontrol? possession plus indorsement are senior to t)ose perfe!tedmerely "y filing or possession* A!!ordingly, se!ured parties /)o are relying on instruments as !ollateral/ill /ant to )a&e !ontrol o&er t)e instruments*Instru!ents !a$ 'e indorsed to secured parties( 'ut it is a cumbersome process that has to be

unwound when the loan is repaid as expected . It is( therefore( convenient and common practice

to have the requisite indorsements supplied on a separate piece of paper . This keeps the instrument 

“clean” so that it can be returned clean when the secured obligations are paid . The separate piece of 

 paper is kept with the instrument but is not typically attached to it ( though the lender or its custodian

has authorit$ to do so( at least upon default.

:)is pra!ti!e /ors /ell in most !ases* Even though the lender is not $et a )holder* under +rticle 3(

25

mailto:mortgagefrauds@aol.commailto:mortgagefrauds@aol.commailto:mortgagefrauds@aol.com

8/20/2019 Feb 2014 Brief 2.

26/85

Dt is -efendants 8osition t(at t(e 8ro+ered Allonge7 fro/

%8tion %ne 'ort. Co. to "lank7 is a fraud and a s(a/e created

solel5 to re8resent to t(is Court &lainti+s interest in t(e Note

'ortgage (ic( in trut( (as no legal !alue (atsoe!erV ece8t

to 8ro!e &lainti+s and &lainti+s Counsels illingness to createand "ring into t(is court fraudulent docu/ents created solel5 to

inQuence t(e Courts "ias. 

T$e ells F('*# M(%u(l

-efendant su"/its ne and 8re!iousl5 uno"taina"le

e!idence in t(is case of &lainti+ Wells Fargo Banks recentl5

8u"lis(ed in (ouse /anual titledV  ells F('*# H#me

'ecause the indorse!ent is not attached( the lender has possession and the related loan docu!ents

should cause the lender to 'e a )nonholder in possession of the instru!ent ,ho has the rights of a

holder(* that is one ,ho can enforce the instru!ent as such under - 3/301 ( and co!pel

indorse!ent under - 3/03.

@n addition, secured parties in 2!ere possession have priorit$ over other secured parties e4ceptthose ,ho have control 2possession plus indorse!ent, so t)e failure to a!)ie&e full !ontrol does notnormally impair priority no one else /ill )a&e possession eC!ept in rare !ases* $$ N-6330d*

 So, even if a separate indorsement is not initially “affixed” to an instrument, a secured party

inAtta!)edU? d identifying information on t)e note su!) as origination date, "orro/er name, possession normally maintains first priority and has the power to negotiate the instrument upon

default.

:)ere are o!!asions, )o/e&er, /)en )a&ing an indorsement is !riti!ally important* One /ould "e

t)e relati&ely rare !ase /)ere one !ompeting se!ured party )as possession for itself as /ell as for t)eot)er !ompeting se!ured party, so "ot) /ould "e in possession and priority !ould depend on t)eeffe!ti&eness of an indorsement* Anot)er /ould "e /)ere t)e maer of a negotia"le instrument )asdefenses against t)e named payee "ut t)e se!ured party, /it) t)e indorsement, /ould "e a )older in due!ourse* et anot)er /ould "e an assignment of a note or a !asual pledge /)ere t)e related do!uments donot !learly pro&ide t)e lender /it) t)e rig)ts of a )older*nder $$ Arti!le 3, /)i!) applies to >negotia"le instruments? as defined in Arti!le 3 and /)i!)is !ommonly applied "y !ourts to non6negotia"le instruments, > indorse!ent* !eans a signature )onan instru!ent %or the purpose of deter!ining ,hether a signature is !ade on an instru!ent( a

paper affi4ed to the instru!ent is a part of the instru!ent.* - 3/062a 2e!phasis supplied.

-nder this rule( a separate assign!ent docu!ent is not sufficient to create the re7uisite

indorse!ent( unless it is )affi4ed* to the instru!ent.

Some Mi!)igan assignees found out t)e )ard /ay )o/ important it is to )a&e one;s separateindorsement >affiCed*? @n one !ase, a separate indorsement /as not atta!)ed to t)e note in uestion andt)e assignee /as un/illing to produ!e t)e underlying assignment of loans agreement* :)e !ourt )eld t)e

separate indorsement /as not effe!ti&e and, "e!ause it referen!ed t)e unprodu!ed underlying agreement,it did not pro&e an a"solute assignment /as intended*  Brown Bark )) L* v. Ba( Are Floor Cover%ng +

 #es%gn )nc. $ase %o* 2-0, Mi!)* $t* App* May 31, 2011* @n t)e ot)er !ase, t)e assignee ultimately)ad t/o pro"lems after it too a note and pla!ed it in an en&elope /it) a separate indorsement* %ot only/as t)e separate indorsement ineffe!ti&e "e!ause it /as not affiCed to t)e note, it turned out t)e >note?/as in fa!t a !olor !opy of t)e original note, so t)e assignee did not e&en )a&e possession of t)e note*Git)out e&er )a&ing )ad possession, t)e assignee did )a&e standing to enfor!e t)e note as a lost noteunder $$ N3630-* Sha(a v. ,aram $ase %o* 308-05 Mi!)* $t* App* May , 2014* Pledgees andot)er assignees of notes need to ensure t)at original notes are deli&ered to t)em, and if indorsements areseparately pro&ided, t)at transa!tion do!uments properly aut)oriBe t)em to atta!) t)e separateindorsements /)en appropriate*?

2

8/20/2019 Feb 2014 Brief 2.

27/85

M#'t*(*e F#'ecl#su'e Att#'%ey P'#cedu'e M(%u(l

 Ve'si#% ,= 8ro!ing scienter t(roug( a 8attern and 8ractice of

&lainti+s and &lainti+s Counsel in t(e creation of fraudulent

docu/ents created solel5 to allo &lainti+ and &lainti+s

Counsel to fraudulentl5 take (o/es fro/ (o/eoners (ent(e5 lacked t(e rig(t "ecause t(e5 lacked t(e 8roof to

acco/8lis( it legall5.

 A distinguis(ed colleague* Ne Gork "ankru8tc5 attorne5

#inda Tirelli (as "een orking in e8osing t(ese re/ediation7

8ractices. T(eir ta$da7 &err5 'ason$like /o/ents of e!idence

all of a sudden a88earing in foreclosure and "ankru8tc5

litigation are not a/using. %n 'arc( 12* 201

8/20/2019 Feb 2014 Brief 2.

28/85

¬ %$ WF0 does have signing authority, enter log code

F3)4% 5))647 &7T F68 %T78) &%4T987:

¬ %$ WF0 does not have signing authority, enter log code

F3)47 5))647 &7T 69T F68 7;739T%6: and maildocument $or

8/20/2019 Feb 2014 Brief 2.

29/85

9onora"le Court to understand (en t(e cor8orate itness for

Wells Fargo testi)ed t(atL

%$&m not here as a human "ein'. $&m here as areresentative of )ells Far'o.* 

Dn (is o8inion attac(ed as ?(i"it 9* ,udge ?lliott

c(astised Wells Fargo for t(eir outrageous and re8re(ensi"le7

decisions and dece8ti!e and intentional conduct7 t(at

dis8la5ed a co/8lete and total disregard for t(e rig(ts of t(e

"orroers. 9e ent on to stateL

 -efendant Wells Fargo o8erated fro/ a 8osition ofsu8eriorit5 8ro!ided "5 its enor/ous ealt(.7 WellsFargos decision took ad!antage of an o"!iousl5 )nanciall5 !ulnera"le fa/il5*7

t(e 4udge continued* noting t(at Wells Fargo s(oed no

e!idence of re/orse for t(e (ar/ caused.

 $n fact, the Court recalls the lack of remorse andhumanity illustrated "y a )ells Far'o cororatereresentative who testi+ed, $&m not here as ahuman "ein'. $&m here as a reresentative of )ells

 Far'o, 7

 t(e 4udge rote.

T$e RO8O6SI?NED DOCs&

W(en &lainti+* se!eral /ont(s after initiating foreclosure*

introduced into t(e court record a forged and fa"ricated* "ack

dated and o"o$Signed

1<

 docu/ent titled Assign/ent of14  /e no/ )a&e a legal definition of #o"o6signer from t)e *S*$*O*A* for t)e 5t) $ir!uit :W in

t)e !ase of #@%A. &* (:S$V =A%X %A:@O%A. :#S: $OMPA%, %o* 126505-5t) $ir* O!t* 2-, 2013* :)e !ourt defined #o"o6signing as follo/sU

>#o"osigning? is t)e !ollouial term t)e media, politi!ians, and !onsumer ad&o!ates )a&e used todes!ri"e an array of uestiona"le pra!ti!es "ans deployed to perfe!t t)eir rig)t to fore!lose in t)e/ae of t)e su"prime mortgage !risis, pra!ti!es t)at in!luded )a&ing "an employees or t)ird6party!ontra!tors 1 eCe!ute and a!no/ledge transfer do!uments in large uantities /it)in a s)ort

 period of time, often /it)out t)e purported assignor;s aut)oriBation and outside of t)e presen!e of

2-

8/20/2019 Feb 2014 Brief 2.

30/85

'ortgage7* &lainti+s Counsel certi)ed t(e legiti/ac5 of a

docu/ent t(at could* "5 t(e !er5 ter/s it(in t(e controlling

docu/ent of t(e Trust &SA itself* ne!er 8ossi"l5 eist.

T(is docu/ent is titled Assign/ent of 'ortgage7. E8on

ins8ection t(oug(* t(is docu/ent is in realit5 not onl5 t(e

alleged assign/ent of t(e alleged /ortgage "ut also t(e alleged

assign/ent of t(e alleged note.

 Also u8on ins8ection it can "e found t(at t(is docu/ent

as attested to and signed "5 one 's. To8aka #o!e. 's. #o!e is

an e/8lo5ee of #ender &rocessing Ser!ices in -akota Count5*

'innesota and as suc( t(e A%' as also fraudulentl5 signed "5a 8erson (o (ad no aut(orit5 to sign. Dt is 8atentl5 fraudulent

and is an o"!ious forger5 and as e8lained infra it as eecuted

to 5ears after t(e &lainti+ trusts /andated Cut$%+ date7 for

de8osits.

'ortgages /a5 "e enforced onl5 "5* or on "e(alf of* t(e

entit5 t(at is entitled to enforce t(e o"ligation t(e /ortgage

secures. T(e underl5ing o"ligation in all cases is a 8ro/issor5

note. T(e /ortgage is t(e securit5 instru/ent t(at secures t(e

inde"tedness created "5 t(e note to t(e real 8ro8ert5.

T(e 8ractice of &lainti+ Wells Fargo Banks use of

unaut(orized docu/ent forgers in A+ida!it Assign/ent of

'ortgage creation is no co//on knoledge it as e!en on

60 'inutesY. Dt is a /atter t(at (as e!en "een una+ectionatel5

t)e notary !ertifying t)e a!no/ledgment, and 2 s/ear out affida&its !onfirming t)e eCisten!e ofmissing pie!es of loan do!umentation, /it)out personal no/ledge and often outside of t)e

 presen!e of t)e notary*

30

8/20/2019 Feb 2014 Brief 2.

31/85

ter/ed o"o$Signing71:  16 AN- no t(roug( co//on

knoledge of &lainti+ Wells Fargo Banks &u"lic ad/issions

and 8a5/ent of M Billions in )nes concerning sa/e of

8artici8ation in t(e t(at !er5 sa/e illegal action on a dail5*

/ont(l5 and 5earl5 "asis* -efendant su"/its and 'euests t$eC#u'ts "udici(l N#tice of t(e recentl5 and 8re!iousl5

una!aila"le A+ida!it and acco/8an5ing letter attac(ed (ereto

as ?(i"it F7 stating in 8artK

  > )n an attempt to prov%de (ou w%th more ass%stance ) have enclosed an a$$%dav%t 

 s%gned '( me as -eg%ster o$ the Southern sse/ #%str%ct -eg%str( o$ #eeds

attest%ng to the presence o$ a ro'o0s%gned s%gnature on (our document as l%sted

on Mc#onnell *ropert( Ana1(t%cs Approved -o'o0s%gners L%st. )$ (ou are

currentl( 'e%ng $oreclosed upon th%s a$$%dav%t ma( 'e presented to (our attorne(

the lender or the court to show that (our cha%n o$ t%tle has 'een corrupted *?

T(e a"o!e referenced A+ida!it attests to t(e unlaful and

knon o"o$Signer7 signature status of &lainti+s Assign/ent

of 'ortgage ? ?7 as ell as signature status of &lainti+s

sole 8ro+ered and alleged legal conclusor5 A+ida!it titled

STATES %F ACC%ENT AN- 'D#DTAG STATES AFFD-A>DT7

?. F7 (ic( are "ot( signed "5 one 's. To8aka #o!e* as as

8re!iousl5 articulated to t(is Court "5 -efendant in all of

-efendants 8re!ious 8leadings. T(e a"o!e /entioned forged*

fraudulent and conclusor5 A+ida!it7 and Assign/ent of

'ortgage ('e t$e s#lely si*%ed d#cume%ts &lainti+

15 :)e term ro"osigning does not a!!urately des!ri"e t)e pattern and pra!ti!e* :)e pattern and pra!ti!e are

more a!!urately des!ri"ed as !ontra!t per9ury, !ontra!t forgery, e&iden!e fa"ri!ation, fraud upon t)e $ourt,and t)eft in /)i!) families are rendered )omeless as a result of !riminal "e)a&ior*

1 :)e pra!ti!e from in&estopedia, @n t)e t)ird and fourt) uarters of 2010, a ro"o6signing s!andal emerged

in t)e nited States in&ol&ing MA$ Mortgage and a num"er of ma9or *S "ans* =ans )ad to )altt)ousands of fore!losures in numerous states /)en it "e!ame no/n t)at t)e paper/or /as illegitimate

 "e!ause t)e signers )ad not a!tually re&ie/ed it* G)ile some ro"o6signers /ere middle managers, ot)ers/ere temporary /orers /it) &irtually no understanding of t)e /or t)ey /ere doing*

31

8/20/2019 Feb 2014 Brief 2.

32/85

8resented to t(e court in t(eir case to esta"lis( t(eir oners(i8

of t(e alleged Note 'ortgage and t(eir su"seHuent rig(t to

initiate t(is foreclosure suit against -efendant.

T(e a"o!e #o!e conclusor5 a+ida!it re8resents t(at it is

"ased on #o!es fa/iliarit5 it( -efendants account stating

 !"iant has access o# and has personal knowledge o# the

acco$nts o# said compan%, and speci&call% with the acco$nt o#

 'ohn L. (eed, de#endant herein.7 #o!e also a!ers t(at said

acco$nt is in de#a$lt and that plainti" has elected to call the

entire )alance o# said acco$nt d$e and pa%a)le..7. W(ile t(e

#o!e A+ida!it states t(at #o!es 8ersonal knoledge is li/ited

to (er re!ie of %8tion %ne 'ortgage Co. as Ser!icing Agentfor &lainti+* #o!e fails to identif5* descri"e or anne t(e

8articular "usiness records u8on (ic( (er li/ited knoledge is

"ased.

Signi)cantl5* t(e #o!e 'o!ing A+ida!it /akes t(e

conclusor5 re8resentation t(at 8lainti+ (as "een in continuous

8ossession of t(e note and /ortgage since 8rior to t(e

co//ence/ent of t(is action it(out 8ro!iding an5 factualdetails* or t(e source of #o!es knoledge. Dn addition to a lack

of foundation* t(e #o!e 'o!ing A+ida!it fails to 8ro!ide

e!idence t(at t(e originating lender* 9 Block Dnc.* indorsed

and 8(5sicall5 deli!ered t(e alleged eed Note to t(e Asset

Backed ecei!a"les Trust.

-efendant (as re8eatedl5 denied 8lainti+s actions on t(e

ground t(at &lainti+ Wells Fargo Bank as Trustee for trust lacks

standing to foreclose.

S8eci)call5* -efendant contends and (as ala5s

contended in eac( and e!er5 of (is 8leadings t(at 's. #o!e also

32

8/20/2019 Feb 2014 Brief 2.

33/85

lacked t(e actual aut(orit5 to eecute t(e %8tion %ne

 Assign/ent.

T(e a"o!e referenced a+ida!it of ,o(n %"rien* co/"ined

it( t(e se!eral ot(er factual inconsistencies t(e -efendant (as8re!iousl5 articulated to t(is Court,9 ,: ,  20* 8ro!e "e5ond an5

dou"t t(at &lainti+s 8osition* a 8osition (ic( is co/8letel5

 !oid of legal standing to (a!e initiated t(is foreclosure action

against -efendant* could not (a!e "een acco/8lis(ed it(out

t(e use of* as as 8re!iousl5 articulated "5 -efendant*21 forged

and fraudulentl5 created docu/ents* created s8eci)call5 "5 and

deli!ered into t(is Court (ile "eing Certi)ed as "eing true* 4ust

and accurate "5 &lainti+ and &lainti+s Counsel for t(e sole

8ur8ose of "linding t(is Court to t(e legal realities of t(eir

8osition and t(e situation (ic( t(en lead to t(e ulti/ate t(eft

of -efendants (o/e* loss of -efendants 8ersonal and "usiness

in!entor5 and 8ossessions* forced (o/elessness u8on -efendant

and "eca/e t(e cause of -efendants /ental in4ur5 (ile

alloing &lainti+s on un4ust enric(/ent.

 As a result* t(e Courts No!e/"er 13t(* 200 entr5

granting &lainti+s /otion for 4udg/ent and issuing a decree of

foreclosure s(ould "e !oid a" initio as o88osed to !oida"le.

17 Ans/er of (efendant Jo)n #eed 5D2D2008 N 8, 11, 12, 13, 14, 15, 17, 18, 1-, 20, 21, 22, 23, and

t)roug)out t)e rest of t)e pleadings*18

 Ans/er of (efendant Jo)n A* #eed Memorandum in Opposition to Plaintiff;s Motion or Summary

Judgment and #euest or :rial =y Jury filed Aug, 15t)

, 2008 N :)e opening statement > irstly, ouVonor, t)e plaintiff )asn;t e&en pro&en t)at it o/ned or )eld t)e promissory note /)i!) is t)e su"9e!t of t)e!omplaintE? N 1, 2,1-

 a!) and e&ery ot)er pleading su"mitted "y (efendant and already a part of t)is legal a!tion;s re!ord*20 MO:@O% :O APPA. :V ($@S@O%, O#(# A%( %:# O'##.@% (%(A%:SM#%$ AM%(( MO:@O% :O 'A$A: A 'O@( J(M%: in it;s entirety21

 MO:@O% :O APPA. :V ($@S@O%, O#(# A%( %:# O'##.@% (%(A%:SM#%$ AM%(( MO:@O% :O 'A$A: A 'O@( J(M%: at 4 t)ru 1, 35, 45, 4, 47,48,50, 52, 58, 0, 7, 23-, 240, 241, 242, *

33

8/20/2019 Feb 2014 Brief 2.

34/85

 Accordingl5* "ased u8on t(e foregoing* -efendant

res8ectfull5 reHuests t(at t(e No!e/"er 13t( 200 entr5 "e

 !acated and t(is /atter re/anded "ack to t(e Ci!il Court it(

instruction to dis/iss* instruction to Huiet title and eac( of-efendants Counterclai/s to "e lafull5 ad4udged.

Respectfull$ su'!itted(

 

 888888888888888888888888 

  9ohn +. Reed

+ aple ve.3enterville, 6hio

>>**

8/20/2019 Feb 2014 Brief 2.

35/85

Intil t)is opinion appears in t)e O)io Offi!ial #eports ad&an!e s)eets, it may "e!ited as Fed Home Loan Mtge. Corp. v. Schwartzwald Slip Opinion %o* 20126

0)io65017*

#"TIE

:)is slip opinion is su"9e!t to formal re&ision "efore it is pu"lis)ed in an ad&an!e

s)eet of t)e O)io Offi!ial #eports* #eaders are reuested to promptly notify t)e

#eporter of (e!isions, Supreme $ourt of O)io, 5 Sout) ront Street, $olum"us,

O)io 43215, of any typograp)i!al or ot)er formal errors in t)e opinion, in order

t)at !orre!tions may "e made "efore t)e opinion is pu"lis)ed*

SLI& "&I#I"# #o. 01/0:I"/501;%EDER+L :"ME L"+# M"RT

8/20/2019 Feb 2014 Brief 2.

36/85

S-&REME "-RT "% ":I"

ig)t) (istri!ts on t)e follo/ing issue @n a mortgage fore!losure a!tion, t)e

la! of standing or a real party in interest defe!t !an "e !ured "y t)e assignment of 

t)e mortgage prior to 9udgment*

YZ2[ ederal Vome .oan !ommen!ed t)is fore!losure a!tion "efore it

o"tained an assignment of t)e promissory note and mortgage se!uring t)e

S!)/artB/alds; loan* :)e S!)/artB/alds maintained t)at ederal Vome .oanla!ed standing to sue* :)e trial !ourt granted summary 9udgment in fa&or of 

ederal Vome .oan and entered a de!ree of fore!losure* :)e appellate !ourt

affirmed, )olding t)at ederal Vome .oan )ad remedied its la! of standing /)en

it o"tained an assignment from t)e real party in interest*

YZ3[ Vo/e&er, standing is reuired to in&oe t)e 9urisdi!tion of t)e

!ommon pleas !ourt, and t)erefore it is determined as of t)e filing of t)e

!omplaint* :)us, re!ei&ing an assignment of a promissory note and mortgage

from t)e real party in interest su"seuent to t)e filing of an a!tion "ut prior to t)e

entry of 9udgment does not !ure a la! of standing to file a fore!losure a!tion*

Z4[ A!!ordingly, t)e 9udgment of t)e !ourt of appeals is re&ersed, and

t)e !ause is dismissed*

%acts and &rocedural :istor$

Z5[ @n %o&em"er 200, (uane and Julie S!)/artB/ald pur!)ased a

)ome in Wenia, O)io, and re!ei&ed a mortgage loan from .ega!y Mortgage in t)e

amount of F251,250* :)ey eCe!uted a promissory note and a mortgage granting

.ega!y Mortgage a se!urity interest in t)e property* .ega!y Mortgage t)en

endorsed t)e promissory note as paya"le to Gells argo =an, %*A*, and assigned

it t)e mortgage*

YZ [ @n Septem"er 2008, (uane S!)/artB/ald lost )is 9o" at =ar!o,

3

8/20/2019 Feb 2014 Brief 2.

37/85

@n!*, and t)e S!)/artB/alds mo&ed to @ndiana so )e !ould a!!ept a ne/ position*

:)ey !ontinued maing mortgage payments as t)ey tried to sell t)e )ouse in

Wenia, "ut t)ey /ent into default on January 1, 200-* @n Mar!) 200-, Gells

2

January :erm, 2012

argo agreed to list t)e property for a s)ort sale, and on April 8, 200-, t)e

S!)/artB/alds entered into a !ontra!t to sell it for F25-,-00, /it) !losing set for 

June 8, 200-*

YZ7[ Vo/e&er, on April 15, 200-, ederal Vome .oan Mortgage

$orporation !ommen!ed t)is fore!losure a!tion, alleging t)at t)e S!)/artB/alds

)ad defaulted on t)eir loan and o/ed F245,085*18 plus interest, !osts, and

ad&an!es* @t atta!)ed a !opy of t)e mortgage identifying t)e S!)/artB/alds as

 "orro/ers and .ega!y Mortgage as lender, "ut did not atta!) a !opy of t)e note,

!laiming t)at a !opy of It)e note is !urrently una&aila"le*

YZ8[ Julie S!)/artB/ald t)en !onta!ted Gells argo a"out t)e

fore!losure !omplaint* S)e testified, @ /as told t)at it /as +standard pro!edure+

and +don+t /orry a"out it+ "e!ause /e /ere doing a s)ort sale* :)e

S!)/artB/alds did not ans/er t)e !omplaint*

YZ-[ On April 24, 200-, ederal Vome .oan filed /it) t)e !ourt a !opy

of t)e note signed "y t)e S!)/artB/alds in fa&or of .ega!y Mortgage* :)e final

 page !arries a "lan endorsement "y Gells argo pla!ed a"o&e t)e endorsement

 "y .ega!y Mortgage paya"le to Gells argo*

YZ10[ On May 15, 200-, Gells argo assigned t)e note and mortgage to

ederal Vome .oan, and ederal Vome .oan filed /it) t)e !ourt a !opy of t)e

37

8/20/2019 Feb 2014 Brief 2.

38/85

assignment on June 17, 200-* @t t)en mo&ed for a default 9udgment and a

summary 9udgment, "ut t)e trial !ourt dis!o&ered t)at ederal Vome .oan )ad

failed to esta"lis) a !)ain of title "e!ause no assignment of t)e mortgage from

.ega!y Mortgage to Gells argo appeared in t)e re!ord*

BC11 (uring t)is time, e&en t)oug) it )ad assigned its interest in t)enote and mortgage to ederal Vome .oan, Gells argo !ontinued dis!ussing a

s)ort sale of t)e property /it) t)e S!)/artB/alds, "ut delays in* t)is pro!ess

e&entually !aused t)e S!)/artB/alds+ "uyer to res!ind t)e offer* On (e!em"er 

14, 200-, t)e trial !ourt granted t)e S!)/artB/alds lea&e to file an ans/er* :)at

3

SP#M $O#: O OV@O

same day, ederal Vome .oan filed /it) t)e !ourt a !opy of t)e assignment of t)e

mortgage from .ega!y Mortgage to Gells argo dated %o&em"er 27,200*

YZ12[ ederal Vome .oan again mo&ed for summary 9udgment,

supporting t)e motion /it) t)e affida&it of Verman Jo)n Xennerty, &i!e president

of loan do!umentation for Gells argo as ser&i!ing agent for ederal Vome .oan,

/)o a&erred t)at t)e S!)/artB/alds /ere in default and /)o aut)enti!ated t)e *

note and mortgage as /ell as t)e assignment of t)e note and mortgage from Gells

argo* Su"seuently, ederal Vome .oan filed !opies of t)e notariBed

assignments from .ega!y Mortgage to Gells argo and from Gells argo to

38

8/20/2019 Feb 2014 Brief 2.

39/85

ederal Vome .oan*

YZ13[ :)e S!)/artB/alds also mo&ed for summary 9udgment, asserting

t)at ederal Vome .oan la!ed standing to fore!lose on t)eir property*

YZ14[ :)e trial !ourt entered summary 9udgment for ederal Vome .oan,

finding t)at t)e S!)/artB/alds )ad defaulted on t)e note, and it ordered t)eeuity of redemption fore!losed and t)e property sold* ederal Vome .oan

 pur!)ased t)e property at a s)eriff+s sale*

YZ15[ On appeal, t)e Se!ond (istri!t $ourt of Appeals affirmed and )eld

t)at ederal Vome .oan )ad esta"lis)ed its rig)t to enfor!e t)e promissory note

as a non)older in possession, "e!ause assignment of t)e mortgage effe!ted a

transfer of t)e note it se!ured* :)e !ourt furt)er eCplained t)at standing is not a

 9urisdi!tional prereuisite and t)at a la! of standing may "e !ured "y su"stituting

t)e real party in interest for an original party pursuant to $i&*#* 17A* :)us, t)e

!ourt !on!luded t)at alt)oug) ederal Vome .oan la!ed standing at t)e time it

!ommen!ed t)e fore!losure a!tion, it !ured t)at defe!t "y t)e assignment of t)e

mortgage and transfer of t)e note prior to entry of 9udgment*

YZ1[ :)e !ourt of appeals !ertified t)at its de!ision !onfli!ted /it)

Wells Fargo Bank !.A. &* B(rd 178 O)io App*3d 285, 200860)io6403, 8-7

 %**2d 722 1st (ist*, Z 1561U Bank o$ !ew 6ork &* 7%ndele 1st (ist* %o* $6

4

January :erm, 2012

3-

8/20/2019 Feb 2014 Brief 2.

40/85

0-0251, 201060)io6542, Z 364U and Wells Fargo Bank !.A. &* 2ordan 8t) (ist*

 %o* -175, 200-60)io6@0-2, Z 21, !ases t)at )eld t)at a la! of standing !annot

 "e !ured "y su"stituting t)e real party in interest for an original party pursuant to

$i&*#* 17A* Ge a!!epted t)e !onfli!t and t)e S!)/artB/alds+ dis!retionaryappeal on t)e same issue*

+rgu!ents on +ppeal

YZ17[ :)e S!)/artB/alds eCplain t)at t)e essential aspe!t of standing is

in9ury to a legally prote!ted rig)t and !laim t)at ederal Vome .oan )ad not "een

in9ured "y t)eir default at t)e time it !ommen!ed t)is fore!losure a!tion, "e!ause

it )ad not o"tained t)e note and mortgage until after it filed t)e !omplaint*

#elying on federal !asela/, t)ey maintain t)at standing is determined as of t)e

time t)e a!tion is "roug)t, so t)at su"seuent e&ents do not !ure a la! of 

standing* :)ey furt)er urge t)at alt)oug) t)e reuirement of a real party in

interest !an "e /ai&ed, t)at reuirement !annot "e euated /it) t)e reuirement

of standing*

YZ18[ ederal Vome .oan asserts t)at pursuant to #*$* 1303*31, it is a

person entitled to enfor!e t)e note "e!ause it is Ia non)older in possession of 

t)e instrument /)o )as t)e rig)ts of a )older "y &irtue of t)e negotiation of t)e

note from .ega!y to Gells argo and t)e assignment from Gells argo* urt)er,

it maintains t)at #*$* 1303*31 defines only /)i!) party is entitled to enfor!e a

note and t)at t)e failure to "e a real party in interest at t)e !ommen!ement of suit

!an "e !ured pursuant to $i&*#* 17A "y t)e assignment of t)e mortgage, and

note* @t also !ontends t)at t)e 9urisdi!tional reuirement of 9usti!ia"ility is

satisfied if t)e allegations of t)e !omplaint esta"lis) t)at t)e plaintiff )as standing

to present a 9usti!ia"le !ontro&ersy and t)at e&en if it is determined t)at t)ose

allegations /ere in fa!t false, t)e matter remains 9usti!ia"le so long as t)e plaintiff 

su"seuently o"tains t)e rig)t to fore!lose prior to 9udgment* On t)is "asis, it

argues t)at "e!ause t)e O)io $onstitution "esto/s general and not limited

40

8/20/2019 Feb 2014 Brief 2.

41/85

8/20/2019 Feb 2014 Brief 2.

42/85

controvers$ is ,hat has traditionall$ 'een referred to as the

7uestion of standing to sue. =here the part$ does not rel$ on an$

specific statute authorizing invocation of the Gudicial process( the

7uestion of standing depends on ,hether the part$ has alleged

...... a personal staFe in the outco!e of the controvers$. H

January :erm, 2012

 )d uoting M%ddletown &* Ferguson 25 O)io St*3d 71, 75, 4-5 %**2d 380

1-8, uoting S%erra Clu' &* Morton 405 *S* 727, 7316732, -2 S*$t* 131, 31

.*d*2d 3 1-72, uoting Baker &* Carr 3- *S* 18, 204, 82 S*$t* -1, 7

.*d*2d 3 1-72* Similarly, t)e nited States Supreme $ourt o"ser&ed in

Steel Co. &* C%t%zens $or a Better nv%ronment 523 *S* 83, 102, 118 S*$t* 1003,

140 .*d*2d 210 1--8, t)at Istanding to sue is part of t)e !ommon

understanding of /)at it taes to mae a 9usti!ia"le !ase*\

YZ22[ Ge re!ogniBed t)at standing is a 9urisdi!tional reuirement in

State e/ rel. #allman &* Frankl%n Ct(. Court o$ Common *leas 35 O)io St*2d

17, 17-, 2-8 %**2d 515 1-73, and /e stated @t is an elementary !on!ept of 

la/ t)at a party la!s standing to %nvoke the "ur%sd%ct%on of t)e !ourt unless )e )as,

in an indi&idual or representati&e !apa!ity, some real interest in t)e su"9e!t matter 

of t)e a!tion* mp)asis added* See also !ew Boston Coke Corp. &* 8(ler 9:

O)io St*3d 21, 218, 513 %**2d 302 1-87 ++t)e issue of standing, inasmu!) as

it is 9urisdi!tional in nature, may "e raised at any time during t)e penden!y of t)e

42

8/20/2019 Feb 2014 Brief 2.

43/85

 pro!eedingsU Steinglass < S!arselli, 8he ;h%o State Const%tut%on< A -e$erence

7u%de 180 2004 noting t)at t)e 9urisdi!tion of t)e !ommon pleas !ourt is

limited to 9usti!ia"le matters*

YZ23[ And re!ently, in ,%nca%d &* r%e )ns. Co. 128 O)io St*3d 322,

201060)io603, -44 %**2d 207, /e affirmed t)e dismissal of a !omplaint for  la! of standing /)en it )ad "een filed "efore t)e !laimant )ad suffered any

in9ury* :)ere, Xin!aid asserted !laims t)at )is insurer )ad "rea!)ed t)e insuran!e

!ontra!t "y failing to pay eCpenses !o&ered "y t)e poli!yU )o/e&er, )e )ad ne&er 

 presented a !laim for reim"ursement to t)e insurer* Ge !on!luded t)at Xin!aid

la!ed standing to assert t)e !ause of a!tion, eCplaining, ntil rie refuses to pay

a !laim for a loss, Xin!aid )as suffered no a!tual damages for "rea!) of !ontra!t,

t)e parties do not )a&e ad&erse legal interests, and t)ere is no 9usti!ia"le

!ontro&ersy* )d. at Z 13*

7

SP#M $O#: O OV@O

YZ24[ =e!ause standing to sue is reuired to in&oe t)e 9urisdi!tion of t)e

!ommon pleas !ourt, standing is to "e determined as of t)e !ommen!ement of 

suit* Lu"an v. #e$enders o$ W%ldl%$e 504 *S* 555, 5706571, 112 S*$t* 2130, 11-

.*d*2d 351 1--2, fn* 5U see also Fr%ends o$ the arth )nc. v. La%dlaw

 nv%ronmental Servs. 48;C5 528 *S* 17, 180, 120 S*$t*-3, 145 .*d*2d 10

43

8/20/2019 Feb 2014 Brief 2.

44/85

2000= !ova Health S(s. &* 7and( 41 *3d 114-, 115461155 10t) $ir*2005U

 Focus on the Fam%l( &* *%nellas Suncoast 8rans%t Auth. 344 *3d 123, 1275

11t) $ir*2003U *err( &* Arl%ngton Hts. 18 *3d 82, 830 7t) $ir*1---U Carr 

&* Alta >erde )ndustr%es lnc. -31 *2d 1055, 101 5t) $ir*1--1*

YZ25[ urt)er, in&oing t)e 9urisdi!tion of t)e !ourt depends on t)e stateof t)ings at t)e time of t)e a!tion "roug)t, Mullan &* 8orrance 22 *S* 537, 53-,

.*d* 154 1824, and t)e Supreme $ourt )as o"ser&ed t)at It)e state of 

t)ings and t)e originally alleged state of t)ings are not synonymousU

demonstration t)at t)e original allegations /ere false /ill defeat 9urisdi!tion*

 -ockwell )nternatl. Corp. &* Un%ted States 54- *S* 457, 473, 127 S*$t* 13-7,

17 .*d*2d 1-0 2007*

YZ2[ :)us, Ipost6filing e&ents t)at supply standing t)at did not eCist

on filing may "e disregarded, denying standing despite a s)o/ing of suffi!ient

 present in9ury !aused "y t)e !)allenged a!ts and !apa"le of 9udi!ial redress* 13A

Grig)t, Miller < $ooper, Federal *ract%ce and *rocedure -, Se!tion 3531

4:??@5= see 7rupo #ata$lu/ &* Atlas 7lo'al 7roup L.*. 541 *S* 57, 575, 124

S*$t* 1-20, 158 .*d*2d 8 2004, uoting Caterp%llar )nc. &* Lew%s 51- *S*

1, 75, 117 S*$t* 47, 13 .*d*2d 437 re9e!ting argument t)at +finality,

effi!ien!y, and 9udi!ial e!onomy+ !an 9ustify suspension of t)e time6of6filing

ruleU Utah Assn. o$ Count%es &* Bush 455 *3d 10-4, 1101, and fn* 10t)

$ir*200 a plaintiff !annot rely on in9uries o!!urring after t)e filing of t)e

!omplaint to esta"lis) standing*

8

January :erm, 2012

44

8/20/2019 Feb 2014 Brief 2.

45/85

YZ27[ :)is prin!iple a!!ords /it) de!isions from ot)er states )olding t)at

standing is determined as of t)e filing t)e !omplaint* See e.g. #eutsche Bank 

 !atl. 8rust &* Brum'augh 2012 OX 3, 270 P*3d 151, Z 11 @f (euts!)e =an  "e!ame a person entitled to enfor!e t)e note as eit)er a )older or non)older in

 possession /)o )as t)e rig)ts of a )older a$ter the $oreclosure act%on was $%led

t)en t)e !ase may "e dismissed /it)out pre9udi!e ] ] ] Iemp)asis addedU U.S.

 Bank !atl. Assn. &*  ,%m'all 1-0 't* 210, 2011 ': 81, 27 A*3d 1087, Z14 *S*

=an /as reuired to s)o/ t)at at the t%me the compla%nt was $%led it possessed

t)e original note eit)er made paya"le to "earer /it) a "lan endorsement or made

 paya"le to order /it) an endorsement spe!ifi!ally to *S* =an Iemp)asis

addedU Mtge. lectron%c -eg%strat%on S(s. )nc.&* Saunders 2010 M 7-, 2 A*3d

287, Z 15 Git)out possession of or any interest in t)e note, M#S lacked 

 stand%ng to %nst%tute fore!losure pro!eedings and !ould not in&oe t)e 9urisdi!tion

of our trial !ourts Iemp)asis addedU -MS -es%dent%al *ropert%es L.L.C. &,

 M%ller 303 $onn* 224, 22-, 232, 32 A*3d 30- 2011, uoting H%land v. )ves 28

$onn*Supp* 243, 245, 257 A*2d 822 1- eCplaining t)at +Istanding is t)e

legal rig)t to set 9udi!ial ma!)inery in motion+ and )olding t)at t)e plaintiff )ad

standing "e!ause it pro&ed o/ners)ip of t)e note and mortgage at t)e time it

!ommen!ed fore!losure a!tionU Mclean &* 2* Morgan Chase Bank !atl. Assn.

7- So*3d 170, 173 la*App*2012 t)e plaintiff must pro&e t)at it )ad standing

to fore!lose /)en t)e !omplaint /as filedU see also Burle( v* #ouglas 2 So*3d

1013, 101- Miss*200-, uoting Lu"an &* #e$enders o$ W%ldl%$e 504 *S* 555,

571, 112 S*$t* 2130, 11- .*d*2d 351 1--2, fn* 5 +standing is to "e

determined as of t)e !ommen!ement of suit+ U )n re :??3 Adm%n%strat%on o$ 

 Appropr%at%ons o$ Water o$ the !%o'rara 278 %e"* 137, 145, 78 %*G*2d 420

200- only a party t)at )as standing may in&oe t)e 9urisdi!tion of a !ourt or 

tri"unal* And t)e 9unior appropriators did not lose standing if t)ey possessed it

under t)e fa!ts eCisting /)en t)ey !ommen!ed t)e litigation Ifootnote omitted*

45

8/20/2019 Feb 2014 Brief 2.

46/85

-

SP#M $O#: O OV@O

YZ28[ Vere, ederal Vome .oan !on!edes t)at t)ere is no e&iden!e t)at it

)ad suffered any in9ury at t)e time it !ommen!ed t)is fore!losure a!tion* :)us,

 "e!ause it failed to esta"lis) an interest in t)e note or mortgage at t)e time it filed

suit, it )ad no standing to in&oe t)e 9urisdi!tion of t)e !ommon pleas !ourt*

8he -eal0*art(0%n0)nterest -ule

YZ 2-[ :)e !ourt of appeals and ederal Vome .oan relied on t)e

 plurality opinion in State e/ rel. 2ones &* Suster 84 O)io St*d 70, 77, 701 %**2d

1002 1--8, /)i!) suggested t)at It)e la! of standing may "e !ured "y

su"stituting t)e proper party so t)at a !ourt ot)er/ise )a&ing su"9e!t matter 

 9urisdi!tion may pro!eed to ad9udi!ate t)e matter* $i&*#* 17* Vo/e&er, four 

 9usti!es de!lined to 9oin t)at portion of t)e opinion, and t)erefore it is not a

)olding of t)is !ourt* See O)io $onstitution, Arti!le %, Se!tion 2A A

ma9ority of t)e supreme !ourt s)all "e ne!essary to !onstitute a uorum or to

render a 9udgment*

YZ30[ At !ommon la/, all a!tions )ad to "e "roug)t in t)e name of t)e

 person )olding legal title to t)e rig)t asserted, and indi&iduals possessing only

euita"le or "enefi!ial interests !ould not sue in t)eir o/n rig)t* See generall(

$lar < Vut!)ins, 8he -eal *art( %n )nterest 34 ale .*J* 25- 1-25U A

Grig)t, Miller < Xane, Federal *ract%ce and *rocedure Se!tion 1541 2010*

Vo/e&er, t)e pra!ti!e in euity relaCed t)is reuirement, and states later 

4

8/20/2019 Feb 2014 Brief 2.

47/85

a"rogated t)e !ommon6la/ rules and adopted rules t)at permitted any +real party

in interest+ to "ring suit* Spr%nt Commun%cat%ons Co. L.*. &*AP$$ Servs. )nc.

554 *S* 2-, 27-, 128 S*$t* 2531, 171 .*d 2d 424 2008*

YZ31[ @n O)io, $i&*#* 17A go&erns t)e pro!edural reuirement t)at a

!omplaint "e "roug)t in t)e name of t)e real party in interest and pro&ides

&ery a!tion s)all "e prose!uted in t)e name of t)e real party in

interest* An eCe!utor, administrator, guardian, "ailee,

10

January :erm, 2012

trustee of an eCpress trust, a party /it) /)om or in /)ose name a !ontra!t

)as "een made for t)e "enefit of anot)er, or a party aut)oriBed "y statute

may sue in )is name as su!) representati&e /it)out 9oining /it) )im t)e

 party for /)ose "enefit t)e a!tion is "roug)t* G)en a statute of t)is*state

so pro&ides, an a!tion for t)e use or "enefit of anot)er s)all "e "roug)t in

t)e name of t)is state* %o a!tion s)all "e dismissed on t)e ground t)at it is

not prose!uted in t)e name of t)e real party in interest until a reasona"le

time )as "een allo/ed after o"9e!tion for ratifi!ation of !ommen!ement of 

t)e a!tion "y, or 9oinder or su"stitution of, t)e real party in interest* Su!)

ratifi!ation, 9oinder, or su"stitution s)all )a&e t)e same effe!t as if t)e

a!tion )ad "een !ommen!ed in t)e name of t)e real party *in interest*

YZ32[ $onsidering $i&*#* 17A in Sheal( &* Camp'ell 20 O)io St*3d 23,

24\25,485 %**2d 701 1-85, /e o"ser&ed

47

8/20/2019 Feb 2014 Brief 2.

48/85

:)e purpose "e)ind t)e real party in interest rule is > +] ] ] to

ena"le t)e defendant to a&ail )imself of e&iden!e and defenses t)at t)e

defendant )as against t)e real party in interest, and to assure )im finality

of t)e 9udgment, and t)at )e /ill "e prote!ted against anot)er suit "roug)t

 "y t)e real party at interest on t)e same matter*+ Celanese Corp. o$ Amer%ca &* 2ohn Clark )ndustr%es 5 $ir*l-54, 214 *2d 551, 55* )n re

 H%ghland Hol%da( Su'd%v%s%on 1-71, 27 O)io App*2d 237 240 I273

 %**2d -03*

YZ33[ As t)e Supreme $ourt eCplained in L%ncoln *ropert( Co. &* -oche

54 *S* 81,-0, 12 S*$t* 0, 13 .*d*2d 415 2005, t)e real6party6in6interest

rule !on!erns only proper party 9oinder* $i&*#* 17A does not address standingU

rat)er, t)e point of t)e rule is t)at suits "y representati&e plaintiffs on "e)alf of 

t)e real parties in interest are t)e eC!eption rat)er t)an t)e rule and s)ould only "e

 allo/ed /)en t)e real parties in interest are identifia"le and t)e res 9udi!ata s!ope

of t)e 9udgment !an "e effe!ti&ely determined** Consumer Fedn. o$ Am. &*

Up"ohn Co. 34 A*2d 725, 72- (*$*1-75 !onstruing analogous (istri!t of 

$olum"ia rule*

YZ34[ :)us, t)e :)ird and t)e %int) $ir!uits )a&e re9e!ted t)e notion t)at

ed*#*$i&*P* 17a, on /)i!) $i&*#* 17A is "ased, allo/s a party /it) no

 personal stae in a !ontro&ersy to file a !laim on "e)alf of a t)ird party, o"tain t)e

!ause of a!tion "y assignment, and t)en )a&e t)e assignment relate "a! to

!ommen!ement of t)e a!tion, stating

#ule 17a does not apply to a situation /)ere a party /it) no

!ause of a!tion files a la/suit to toll t)e statute of limitations and later

o"tains a !ause of a!tion t)roug) assignment* #ule 17a is t)e

!odifi!ation of t)e salutary prin!iple t)at an a!tion s)ould not "e forfeited

 "e!ause of an )onest mistaeU it is not a pro&ision to "e distorted "y

 parties to !ir!um&ent t)e limitations period*

7ardner &* State Farm F%re < Cas. Co. 544*3d 553, 53 3d $ir*2008, uoting

48

8/20/2019 Feb 2014 Brief 2.

49/85

Un%ted States e/ rel. Wul$$ v. CMA )nc. 8-0 *2d 1070, 1075 -t) $ir*l-8-*

YZ 35[ :)e SiCt) $ir!uit $ourt of Appeals+ de!ision in ur%ch )ns. Co. v.

 Log%trans )nc. 2-7 *3d 528 t) $ir*2002, illustrates t)is point* @n t)at !ase, a

fire at a /are)ouse destroyed property insured "y Ameri!an uarantee, /)i!) paid out a !laim for damages* Vo/e&er, anot)er insuran!e !ompany, ^uri!)

S/itBerland, filed a !omplaint !laiming to "e t)e insured+s su"rogee,

not/it)standing t)e fa!t t)at ^uri!) S/itBerland )ad neit)er issued an insuran!e

12

January :erm,2012

 poli!y nor paid out any money to t)e insured* :)e defendants mo&ed to dismiss

for la! of standing, and* ^uri!) S/itBerland soug)t to su"stitute Ameri!an

uarantee as t)e real party in interest pursuant to ed*#*$i&*P* 17a* :)e distri!t

!ourt dismissed t)e a!tion*

YZ3[ :)e SiCt) $ir!uit $ourt of Appeals a!no/ledged t)at t)e statute of 

limitations /ould "ar Ameri!an uarantee+s !laim unless ed*#*$i&*P* 17a

allo/ed it to "e su"stituted for ^uri!) S/itBerland* Vo/e&er, t)e !ourt

distinguis)ed "et/een t)e reuirement of standing and t)e o"9e!tion t)at t)e

 plaintiff is not t)e real party in interest, and it )eld t)at "e!ause ^uri!) Ameri!an

admittedly )as not suffered in9ury in fa!t "y t)e defendants, it )ad no standing to

 "ring t)is a!tion and no standing to mae a motion to su"stitute t)e real party in

interest* ld.

YZ37[ Ot)er !ourts )a&e also determined t)at a plaintiff !annot rely on

 pro!edural rules similar to $i&*#* 17A to !ure a la! of standing at t)e

!ommen!ement of litigation** #av%s v. 6ageo Corp. 481 *3d 1, 78 -t)

$ir*2007 /)et)er or not (uC /as t)e real6party6in6interest, it does not )a&e

standing, and it !annot !ure its standing pro"lem t)roug) an in&o!ation of 

ed*#*$i&*P* 17aU Clark &* 8ra%l%ner Corp. 242 *3d 388 10t) $ir*2000

ta"le, opinion reported at 2000 G. 1-42-- noting t)at t)e plaintiff !annot

4-

8/20/2019 Feb 2014 Brief 2.

50/85

&retroact%vel( 'ecome t)e real6party6in6interest in order to !ure a la! of 

standing at t)e filing of t)e !omplaint Iemp)asis si!U accord State &* *ropert( at 

:?1@ -a%n'ow #r%ve 740 So*2d 1025, 102761028 Ala*1--- re9e!ting t)e

argument t)at a la! of standing !an "e !ured after filing of t)e !omplaintU

Consumer Fedn. o$ Am. v. Up"ohn Co. 34 A*2d 725, 72- (*$*App*1-75eCplaining t)at dismissal for la! of standing is !onsistent /it) (*$*

Super*$t*$i&*#* 17aU see also McLean &* 2*Morgan Chase Bank !atl. Assn.

7- So*3d 170, 173 la*App*2012 a party is not permitted to esta"lis) t)e rig)t

13

SP#M $O#: O OV@O

to maintain an a!tion retroa!ti&ely "y a!uiring standing to file a la/suit after t)e

fa!t*

YZ38[ Ge agree /it) t)e reasoning and analysis presented in t)ese !ases*

Standing is reuired to in&oe t)e 9urisdi!tion of t)e !ommon pleas !ourt*

Pursuant to $i&*#* 82, t)e #ules of $i&il Pro!edure do not eCtend t)e 9urisdi!tion

of t)e !ourts of t)is state, and a !ommon pleas !ourt !annot su"stitute a real party

in interest for anot)er party if no party /it) standing )as in&oed its 9urisdi!tion

in t)e first instan!e*

YZ3-[ A!!ordingly, a litigant !annot pursuant to $i&*#* 17A !ure t)e

la! of standing after !ommen!ement of t)e a!tion "y o"taining an interest in t)e

su"9e!t of t)e litigation and su"stituting itself as t)e real party in interest*

 &ffect of "ack of Standing on oreclosure 'ctions

YZ40[ :)e la! of standing at t)e !ommen!ement of a fore!losure a!tion

reuires dismissal of t)e !omplaintU )o/e&er, t)at dismissal is not an ad9udi!ation

on t)e merits and is t)erefore /it)out pre9udi!e* See State e/ rel Coles &*

7ranv%lle 11 O)io St*3d 231, 200760)io6057, 877%**2d -8, Z 51* =e!ause

t)ere )as "een no ad9udi!ation on t)e underlying inde"tedness, our dismissal )as

50

8/20/2019 Feb 2014 Brief 2.

51/85

no effe!t on t)e underlying duties, rig)ts, or o"ligations of t)e parties*

onclusion

YZ61 @t is fundamental t)at a party !ommen!ing litigation must )a&e

standing to sue in order to present a 9usti!ia"le !ontro&ersy and in&oe t)e

 9urisdi!tion of t)e !ommon pleas !ourt* $i&*#* 17A does not !)ange t)is prin!iple, and a la! of standing at t)e outset of litigation !annot "e !ured "y

re!eipt of an assignment of t)e !laim or "y su"stitution of t)e real party in

interest*+

YZ 42[ Vere, it is undisputed t)at ederal Vome .oan did not )a&e

standing at t)e time it !ommen!ed t)is fore!losure a!tion, and t)erefore it failed

14

January :erm, 2012

to in&oe t)e 9urisdi!tion of t)e !ourt of !ommon pleas* A!!ordingly, t)e

 9udgment of t)e !ourt of appeals is re&ersed, and t)e !ause is dismissed*

Judgment re&ersed

and !ause dismissed*

O+$O%%O#, $*J*, and P@#, .%(=# S:#Al:O%,

A%^l%#, $PP, and M$ =#OG%,JJ*, !on!ur*

 _____________________________ 

:)ompson Vine, .*.*P*, S!ott A* Xing, and :erry G* Posey Jr*, for 

appellee*

Andre/ M* ngle, for appellants*

=ru!e M* =royles, urging re&ersal for ami!i !uriae Vomeo/ners of t)e

State of O)io and O)iofraud!losure*"logspot*!om,

Ad&o!ates for =asi! .egal uality, @n!*, and Andre/ (* %eu)auserU

.egal Aid So!iety of $le&eland and Julie X* #o"ieU .egal Aid So!iety of 

51

8/20/2019 Feb 2014 Brief 2.

52/85

Sout)/est O)io, .*.*$*, and %oel M* MorganU $ommunity .egal Aid Ser&i!es,

@n!*, $)ristina M* Jani!e, and Paul * ^indleU and O)io Po&erty .a/ $enter and

.inda $oo, urging re&ersal for ami!i !uriae Ad&o!ates for =asi! .egal uality,

@n!*, .egal Aid So!iety of $le&eland, .egal Aid So!iety of Sout)/est O)io,

.*.*$*, $ommunity .egal Aid Ser&i!es, @n!*, O)io Po&erty .a/ $enter, .egalAid So!iety of $olum"us, Sout)eastern O)io .egal Ser&i!es, .egal Aid of 

Gestern O)io, and Pro Seniors, @n!*

 ___________________________