Hirace v LaSalle Bank Trust Lacked Standing[1]

7/31/2019 Hirace v LaSalle Bank Trust Lacked Standing[1]

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PHYLLISHORACEVS.LASALLEBANKNATIONALASSOCIATION,ETAL57-CV-2008-000362.00

considerationofhermotion,herevidentiarysubmissionsandherbriefthattheCourtwillenteraSummaryJudgmentinherfavorfindingthattheDefendanttrusthasnointerestinherpromissorynoteandnoabilitytoforecloseandfurtherfindingthattheTrustsinstitutionofforeclosureagainstherwaswrongfulandfurtherenjoiningtheTrustfromprosecutingaforeclosureagainstherinthiscase.ThePlaintifffeelsitimportanttonotethatherclaimsandhermotiondonotseektoobviatetheunderlyingpromissorynotehowever

thenatureofaclaimagainstastrangertohermortgageloanwhothreatenstoforecloseuponherpropertyunderdeciet,nondisclosurenfalseandfraudulentpretenses.PlaintiffhaseveryreasontobelievebasedonDefendantsadmissionthattheallegdedMortgageandnotehasbeensecuritized.MakingthiscaseclearthattheTrustisastrangertohermortgageloanandthatsuccessuponherclaimagainsttheTrustwillnotdefeattherightofaholderinduecoursetoenforcethepromissorynoteexecutedinconjunctionwithherhomemortgageloan.IneffectthePlaintiffassertsthatthereisaproperpayeeofhermortgagepromissorynoteh

oweveritisnottheDefendantChaseandwithnoTrustnamedassignedorendorsedoritcannotbeanyagentswhoareinvolvedinthethreatofforeclosureuponwhichshesuedinthepresentcase.

STATEMENTOFFACTS

1.OnMay24,2007AnnM.GallowayexecutedthealledgedamortgagetofacilitatetherefinaceforrennovationandconstructioncostsforherhomeinSantaFeCounty,NewMexico

2.Atthetimethefundswereborrowed,thenationwasinthemidstoftheexpandinghousingbubble.

3.PlaintiffthoughtshewasrecievingaloanfromMortgageStrategiesLLCamortgagelender,offeredMrs.Horacealoanthatiscommonlyreferredtoasa2/28ARM.ThisloaninvolvedaninitialtwoyearteaserrateperiodduringwhichMrs.Horacewasrequiredtomakeonlyinterest


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paymentsatalowteaserrate.Attheexpirationoftheteaserperiod,theloanrecasttoasubstantiallyhighermonthlypaymentbasedonthetermsofthenoteandmortgage.

4.Mrs.Horaceandherhusband(whoisnotasignatoryandthusnotboundtothemortgage)(togethertheHoraces)enjoyedincomefromregularemployment,whichwasusedtomaketheirmonthlymortgagepayments.5.Aftertheloanrecastattheendoftheteaserperiod,theHoracesincomewasnotsufficienttocoverthefullyindexedpayment,afactwhichwasknowntotheDefendantsatthetimeoforiginatingthisloan.6.DespitethepredatoryandunfairoriginationoftheHoraceloan,theloansoriginationisnotthesubjectofthesummaryjudgmentmotion.TheHoraceshavereservedthoseissuesfortrial.TheHoracesprovidethisinformationtotheCourtasbackgroundtoexplaintheoriginalclaimeddefaultwhichledtothislitigation.7.ThismotionandthecruxofthiscaseisaboutthevalidityofthetransfersofmortgagepromissorynotesintheWallStreetfinancingprocessknownassecuritizationandtheresultingissuesregardingtheabilityofthesecuritizationtrustinthiscasetoforeclose.Ultimately,muchoftheoutcomeofthiscasehingesupon

theCourtsrulingregardingthevalidityornotoftheTrustsassertionsthatitistheowneroftheHoracePromissorynote.8.Securitizationisthepracticeofpoolingandsellingcontractualdebtobligations(receivables)suchasresidentialmortgages,commercialmortgages,autoloansorcreditcarddebt,toaspecially-createdentity,typicallyatrust.Thetrustpaysforthereceivablesbyissuingdebtsecurities(variouslyreferredtoasbonds,pass-throughsecurities,orCollateralizedmortgageobligation(CMOs))toinvestors.Thetrustcollects


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paymentsofprincipalandinterestonthereceivables,whichitthenusestomakeregularpaymentstoinvestorsontheirdebtsecurities.1Securitizationthuslinksconsumerandcommercialborrowerswithfinancingfromsecuritiesmarkets.

9.Therearenumerousreasonswhyfinancialinstitutionsengageinsecuritization,includingthemanagementofcreditandinterestraterisk,relieffromregulatorycapitalrequirements,andliquidityenhancement.Securitizationbegantobeusedasafinancingtechniquewithmortgagesin1971.Fordecadesbeforethat,bankswereessentiallyportfoliolenders;theyheldloansuntiltheymaturedorwerepaidoff.Theseloanswerefundedprincipallybydeposits,andsometimesbydebt,whichwasadirectobligationofthebank(ratherthanaclaimonspecificassets).ButafterWorldWarII,depositoryinstitutionssimplycouldnotkeeppacewiththerisingdemandforhousingcredit.Banks,aswellasotherfinancialintermediariessensingamarketopportunity,

soughtwaysofincreasingthesourcesofmortgagefunding.Toattractinvestors,investmentbankerseventuallydevelopedaninvestmentvehiclethatisolateddefinedmortgagepools,segmentedthecreditrisk,andstructuredthecashflowsfromtheunderlyingloans.210.Banksuseavarietyofstructuresforsecuritizationtrustsdependingonthetypeofassetbeingsecuritized,butallsecuritizationstructuresarebasedontwooverridingconcerns.First,isensuringfavorabletaxtreatmentofthebank,the

securitizationtrust,andtheinvestors,ideallythroughthesecuritizationtrusthavingpass-thrutaxstatus,meaningthatthesecuritizationtrustisnottaxedonitsownincome1SYLVAINRAYNES&ANNRUTLEDGE,THEANALYSISOFSTRUCTUREDSECURITIES103(OxfordUniv.Press,2003).2AssetSecuritization:Comptroller'sHandbook,OfficeoftheComptrolleroftheCurrency,November1997,http://www.occ.treas.gov/handbook/assetsec.pdf.Lastviewed01/12/2011.


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whenitispaidonthereceivables.3Second,andperhapsmorecritical,isensuringthatthetrustsassetsarebankruptcyremote,meaningthattheyareinsulatedfromtheclaimsofthebankscreditors.Thisinvolvesensuringthatthetransferofthereceivablestothetrustisatruesaleandnotafinancingtransaction.

11.Bankruptcyremotenessiscriticalformakingtheeconomicsofsecuritizationwork.Byinsulatingthereceivablesplacedinthetrustfromtheclaimsofthebankscreditors,securitizationenablesinvestorstoinvestbasedsolelyonthequalityofthereceivablesandnothavetoworryaboutthebanksotherbusinessactivities.Toaccomplishthis,thebankconveysreceivablestoatrustforthebenefitofcertificateholders.12.Applyingtheseindustrystandardstothetransactionatissue,HoracepointsoutthattheDefendantisasecuritizationtrustidentifiedasLaSalleBankNationalAssociationasTrusteeforCertificateholdersofBearStearnsAssetBackedSecuritiesI,LLC,BearStearnsAssetBackedSecuritiesILLCAssetBackedCertificates,andS

eries2006-EC2(hereinaftertheTrust).413.TheTrustwasformedonFebruary1,2006bytheexecutionofthetrustagreement,whichisknownintheindustryasaPoolingandServicingAgreement(hereinafterPSA).5TheTrustsclosingdatewasFebruary28,2006.614.TheTrustisacommonlawtrustcreatedpursuanttothelawsoftheStateofNewYork,anditsexistenceandactionsaregovernedandcontrolledbyNewYorklaw.3Seeid.4SeePSAforDefendantTrustpage5of3975SeePSApage5of3976SeePSApage25of397


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15.NewYorktrustlawisancientandwell-settledwithrespecttothedeterminationofwhetheranassetistrustproperty.16.UnderNewYorklaw,theanalysisofwhetheranassetistrustpropertyisdeterminedunderthelawofgifts.7Inordertohaveavalidintervivosgift,theremustbeadeliveryofthegift(eitherbyaphysicaldeliveryofthesubjectofthegift)oraconstructiveorsymbolicdelivery(suchasbyaninstrumentofgift)sufficienttodivestthedonorofdominionandcontrolovertheproperty8andwhatissufficienttoconstitutedeliverymustbetailoredtosuitthecircumstancesofthecase.9Thedeliveryrulerequiresthat[the]deliverynecessarytoconsummateagiftmustbeasperfectasthenatureofthepropertyandthecircumstancesandsurroundingsofthepartieswillreasonablypermit.1017.NewYorklawisalsosettledthat(1)Untilthedeliverytothetrusteeisperformedbythesettlor,oruntilthesecuritiesaredefinitelyascertainedbythedeclarationofthesettlor,whenhehimselfisthetrustee,norightsofthebeneficiaryina

trustcreatedwithoutconsiderationarise.11(2)Thedeliverynecessarytoconsummateagiftmustbeasperfectasthenatureofthepropertyandthecircumstancesandsurroundingsofthepartieswillreasonablypermit;theremustbeachangeofdominion7See,e.g.,InreBecker,2004N.Y.SlipOp.51773U,4(N.Y.Sur.Ct.2004)(Inthecaseofatrustwherethereisatrusteeotherthanthegrantor,transferwillbegovernedbytheexistingrulesastointentanddelivery(theelementsofagift).).8(see,MatterofSzabo,10N.Y.2d94,98-99,supra;Speelmanv.Pascal,10N.Y.2d313,318-320,supra;BeavervBeaver,117NY421,428-429,supra;MatterofCohn,187App.Div.392,

395)ascitedinGruen

v.Gruen,68N.Y.2d48,56(N.Y.1986).9(MatterofSzabo,supra,atp.98).10(id.;Vincentv.Rix,248N.Y.76,83;MatterofVanAlstyne,supra,atp309;see,Beaverv.Beaver,supra,atp428)ascitedinGruenv.Gruen,68N.Y.2d48,56-57(N.Y.1986).11(cf.Riegelv.CentralHanoverBank&TrustCo.,266App.Div.586;MatterofGurlitz[Lynde],105Misc.30,affd190App.Div.907,supra;Marxv.Marx,5Misc.2d42)ascitedinSussmanv.Sussman,61A.D.2d838(N.Y.App.Div.2dDep't1978).


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andownership;intentionormerewordscannotsupplytheplaceofanactualsurrenderofcontrolandauthorityoverthethingintendedtobegiven.12

18.Lastly,underNewYorklawtherearefouressentialelementsofavalidtrustofpersonalproperty:(1)Adesignatedbeneficiary;(2)adesignatedtrustee,whomustnotbethebeneficiary;(3)afundorotherpropertysufficientlydesignatedoridentifiedtoenabletitletheretotopasstothetrustee;and(4)theactualdeliveryofthefundorotherproperty,orofalegalassignmentthereoftothetrustee,withtheintentionofpassinglegaltitletheretotohimastrustee.13Thereisnotrustunderthecommonlawuntilthereisavaliddeliveryoftheassetinquestiontothetrust.14Furthermore,whenthetrustfailstoacquiretheproperty,thenthereisnotrustoverthatpropertythatmaybeenforced.1519.WhenNewYorktrustlawisappliedtotheTrustandthefactsofthiscase,itisapparentthattherewasneveravaliddeliveryofMrs.Horacesmortgagenotetothe

Trust,sotheTrustmaynotenforcethemortgagenote.20.AccordingtothetermsofthePSA,allpromissorynotestransferredtotheTrustarerequiredtohaveacompletechainofendorsementsfromtheoriginalpayeethereoftoeitherBlankortotheTrusteeforthespecificTrust.Thismeansthateachpromissorynotemusthavethefollowingcompletechainofendorsementsinorderto12Vincentv.Putnam,248N.Y.76,82-84(N.Y.1928).13Brownv.Spohr,180N.Y.201,209-210(N.Y.1904).14Untilthedeliverytothetrusteeisperformedbythesettlor,oruntilthesecuritiesaredefinitelyascertainedbythedeclarationofthesettlor,whenhehimselfisthetrustee,n

orightsofthebeneficiaryinatrustcreatedwithoutconsiderationarise(cf.Riegelv.CentralHanoverBank&TrustCo.,266App.Div.586;MatterofGurlitz[Lynde],105Misc30,affd190AppDiv907,supra;MarxvMarx,5Misc2d42)ascitedinSussmanv.Sussman,61A.D.2d838(N.Y.App.Div.2dDep't1978).15Inanactionagainsttheindividualdefendantastrustee,basedonthetheoryofbreachoffiduciaryobligation,thecomplaintwasproperlydismissedonthegroundthathehadacquirednotitleorseparatecontrolofthegoodsand,hence,therewasnoactualtrustoverthepropertytobreach.Kermaniv.LibertyMut.Ins.Co.,4A.D.2d603(N.Y.App.Div.3dDept1957).


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complywiththeTrustsdocumentsandthusfitwithintheauthorizationoftheTrustsactivities:FromEncoreCreditCorporationto

.

EMCMortgageCorporation;whoendorsedto

.

BearStearnsAssetBackedSecuritiesI,LLC,astheDepositor;whoendorsedeitherinblankorspecificallyto

.

LaSalleBankNationalassociationastrusteeforCertificateholdersofBearStearnsAssetBackedSecuritiesI,LLC,BearStearnsAssetBackedSecuritiesILLCAssetBackedCertificates,andSeries2006-EC2

21.ThePSArequiresthiscompletechainofendorsementstobeinplacebytheTrustsclosingdateorundernocircumstanceslaterthan90daysaftertheTrustsclosingdate.ThereforethelastpossibledaytotransfertotheTrustwithinthetermsoftheTrustagreementwasMay29,2006.22.Duringthelitigationofthiscase,theDefendantsproducedacollateralfilethatincludedtheoriginal,wet-ink,signednoteinthiscase.ThisnotecontainedasingleendorsementinblankbytheEncoreCreditCorporationandnoother.Accordingly,the

endorsementchainpresentedbytheDefendantTrustdoesnotcomplywiththatrequiredbythePSA.ThismeansthatunderNewYorktrustlaw,thereisnoeffectivetransferoftheHoracemortgagenotetotheDefendantTrust,sotheTrustcannotenforcethenote.23.ThereisnoevidencethatMrs.Horacesmortgagepromissorynotehasbeensecuritized,andthereisnoeffectiveconveyanceofMrs.Horacesmortgage


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promissorynotetotheDefendantTrust,whichhasclaimedownershipandsoughttoforeclose.16

24.InthecasebeforetheCourtthereisnogoodfaithbasisforthedefendantTrusttoassertorotherwiseclaimthattheHoracepromissorynoteisTrustproperty.25.Mrs.HoracerequeststhattheCourtenterasummaryjudgmentinherfavorthattheTrustisnottheownerofherpromissorynoteandthattheTrusthasnorighttoforecloseuponherrealproperty.26.Mrs.HoracealsorequeststhattheCourtenteranyappropriateOrderstoeffectuatethisJudgment.27.Mrs.HoracealsorequeststhattheCourtdirectliabilityinherfavoronherclaimsagainsttheTrustandthepartiesactingontheTrustsbehalfwithrespecttoherclaimsregardingtheforeclosureactioninstitutedbythesepartiesandthattheCourtseatajuryforthesolepurposeofdeterminingwhatdamagesshouldbeawardedagainstthesepartiesfortheirwrongfulconduct.PLAINTIFFSEVIDENTIARYSUBMISSIONSINSUPPORTOFHERMOTION

FORSUMMARYJUDGMENT

ThePlaintiffsubmitsthefollowinglistofexhibitsinsupportofhermotionforsummaryjudgmentinthiscase:

28.Attachedasexhibit1tothismotionisthePSAconsistingofallexhibitsincludingtheformcustodyagreementandthemortgageloanpurchaseagreementpulledfromtheSECswebsiteandconsistingof397pages.Thisexhibitdoesnotincludethemortgageloanschedulesubmittedbythedefendantsinthiscase.16AfactnotedintheopinionsandtestimonyofHoracessecuritizationexpert,T

homasJ.AdamswhoopinesthatthepromissorynoteisnotanassetoftheDefendanttrustinhisdepositionat140:4-8.


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29.Attachedasexhibit2tothismotionistheaffidavitofThomasJ.AdamspreviouslyprovidedtotheDefendantsinthiscase.30.Attachedasexhibit3tothismotionisthedepositionofThomasJ.Adamstakenbycounselforthedefendants,ShaunRamey.31.Attachedasexhibit4tothismotionisthecompletecollateralfileproducedbythedefendantsinthiscasewhichconsistsof62pagesasproducedbytheDefendants.32.Attachedasexhibit5tothismotionisanexhibitwhichshowsthetransfersrequiredbytheTrustinstrumentasarecapitulationofthevoluminousdocument.33.Attachedasexhibit6tothismotionisanexhibitwhichdemonstratesthetransfersofthemortgagepromissorynoterevealedbythecontentsofthemortgagecollateralfile.34.Attachedasexhibit7isHorace391whichisasingledocumentfromthePSAwhichsetsforththerequireddocumentsforthecollateralfilesofloansproperlytransferredtotheDefendanttrust.35.Additionally,otherdocumentsareattachedtothismotionwhicharereferencedinthismotionorinbriefbytheirBatesStampnumberwhichinclude,atleast,

BatesStampeddocumentsnumbered2&29.CONCLUSION

TheplaintiffrequeststhattheCourtconsiderhermotion,herevidentiarysubmissionsandherbriefinsupportofhermotionforsummaryjudgmentanduponconsiderationofthesame,entersummaryjudgmentasprayedforhereinagainstthe


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DefendantTrustanditsagentsdeclaringthattheTrusthasnointerestinherpromissory

noteandmaynotpursueforeclosureagainstherandpreservingfortrialtheissueof

damagesagainsttheDefendanttrustanditsagents.

RESPECTFULLYSUBMITTED,

/s/NicholasH.WootenNicholasH.WootenAla.BarNo.Woo084(AttorneyforPlaintiff)

P.O.Box3889Auburn,AL36831-3389Tel.(334)887-3000Fax(334)821-7720OFCOUNSEL:

Mr.NickWooten

WOOTENLAWFIRM,P.C.

P.O.Box3389Auburn,Al.36831(334)887-3000JINKS,CROW,&DICKSON,P.C.

POBox350219PrairieStreetNorthUnionSprings,AL36089

CERTIFICATEOFSERVICE

IherebycertifythatIhaveservedacopyoftheforegoingupontheDefendants

byprovidinganelectroniccopyonthisthe13thdayofJanuary2011.

AllcounselofRecord

_/s/NickWootenOFCOUNSEL


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AlaFileE-Notice

57-CV-2008-000362.00

Judge:ALBERTLJOHNSON

To:[email protected]

NOTICEOFELECTRONICFILING

INTHECIRCUITCOURTOFRUSSELLCOUNTY,ALABAMA

PHYLLISHORACEVS.LASALLEBANKNATIONALASSOCIATION,ETAL57-CV-2008-000362.00

ThefollowingmatterwasFILEDon1/13/20115:43:39PM

C001HORACEPHYLLIS

MEMORANDUMINSUPPORTOFSUMMARYJUDGMENT

[Attorney:DICKSONNATHANANDREWII]

NoticeDate:1/13/20115:43:39PM

KATHYS.COULTERCIRCUITCOURTCLERK

RUSSELLCOUNTY,ALABAMARUSSELLCOUNTYJUDICIALCENTERPHENIXCITY,AL36867

334-298-0516

[email protected]


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STATEOFALABAMAUnifiedJudicialSystem57-RUSSELLDistrictCourtCircuitCourtRevised3/5/08UnifiedJudicialSystem57-RUSSELLDistrictCourtCircuitCourtRevised3/5/08CaseNo.CV2008000362001/13/20115:43PMCV-2008-000362.00CIRCUITCOURTOFRUSSELLCOUNTY,ALABKATHYS.COULTER,CLERKAMAPHYLLISHORACEVS.LASALLEBANKNATIONALASSOCIATION,ETALCIVILMOTIONCOVERSHEETNameofFilingParty:C001-HORACEPHYLLISName,Address,andTelephoneNo.ofAttorneyorParty.IfNotRepresented.AttorneyBarNo.:NATHANA.DICKSONPOSTOFFICEBOX350UNIONSPRINGS,AL36089DIC031

OralArgumentsRequestedTYPEOFMOTIONMotionsRequiringFeeMotionsNotRequiringFeeDefaultJudgment($50.00)JoinderinOtherParty'sDispositiveMotion(i.e.SummaryJudgment,JudgmentonthePleadings,orotherDispositiveMotionnotpursuanttoRule12(b))($50.00)SummaryJudgmentpursuanttoRule56($50.00)RenewedDispositiveMotion(SummaryJudgment,JudgmentonthePleadings,orotherDispositiveMotionnotpursuanttoRule12(b))($50.00)JudgmentonthePleadings($50.00)

MotiontoDismiss,orintheAlternativeSummaryJudgment($50.00)OtherpursuanttoRule($50.00)*Motionfeesareenumeratedin12-19-71(a).FeespursuanttoLocalActarenotincluded.PleasecontacttheClerkoftheCourtregardingapplicablelocalfees.LocalCourtCosts$MotiontoIntervene($297.00)AddPartyAmendChangeofVenue/TransferCompel

ConsolidationContinueDepositionDesignateaMediatorJudgmentasaMatterofLaw(duringTrial)DisburseFundsExtensionofTimeInLimineJoinderMoreDefiniteStatement


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MotiontoDismisspursuanttoRule12(b)NewTrialObjectionofExemptionsClaimedPlaintiff'sMotiontoDismissPreliminaryInjunctionProtectiveOrderQuashReleasefromStayofExecutionSanctionsSeverSpecialPracticeinAlabamaStayStrikeSupplementtoPendingMotionVacateorModifyWithdrawOtherMemoranduminsupportofsummarypursuanttoRulejudgmentnone(SubjecttoFilingFee)PendenteLiteCheckhereifyouhavefiledorarefilingcontemoraneouslywiththismotionanAffidavitofSubstantialHardshiporifyouarefilingonbehalfofanagencyordepartmentoftheState,county,ormunicipalgovernment.(Pursuantto6-5-1CodeofAlabama

(1975),governmentalentitiesareexemptfromprepaymentoffilingfees)Date:1/13/20115:43:16PM/sNATHANA.DICKSONSignatureofAttorneyorParty:

ELECTRONICALLYFILED

*ThisCoverSheetmustbecompletedandsubmittedtotheClerkofCourtuponthefilingofanymotion.EachmotionshouldcontainaseparateCoverSheet.**Motionstitled'MotiontoDismiss'thatarenotpursuanttoRule12(b)andareinfactMotionsforSummaryJudgmentsaresubjecttofilingfee.


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ELECTRONICALLYFILED1/13/20115:43PMCV-2008-000362.00CIRCUITCOURTOFRUSSELLCOUNTY,ALABAMAKATHYS.COULTER,CLERKELECTRONICALLYFILED1/13/20115:43PMCV-2008-000362.00CIRCUITCOURTOFRUSSELLCOUNTY,ALABAMAKATHYS.COULTER,CLERKINTHECIRCUITCOURTOFRUSSELLCOUNTY,ALABAMA

PHYLLISHORACE,CASENUMBER:PLAINTIFF,CV-2008-362VS.

LASALLEBANKNATIONALASSOCIATIONasTrusteeforCertificateHoldersofBEARSTEARNSASSETBACKEDSECURITIESI,LLC

assetbackedcertificates,series2006-EC2;MORTGAGEELECTRONICREGISTRATIONSYSTEMS,INC.,ENCORECREDITCORP.,EMCMORTGAGECO.,andBANKOFAMERICA,Assuccessor-in-interesttoLasalleBankNationalAssn.,

DEFENDANTS.

MEMORANDUMOFLAWINSUPPORTOFPLAINTIFFSMOTIONFORSUMMARYJUDGMENTANDINRESPONSETODEFENDANTSMOTIONFORSUMMARYJUDGMENT

PlaintiffPhyllisHorace,throughcounsel,submitsthismemorandumoflawinsupportofhermotionforsummaryjudgmentontheissueofstandingastoDefendantLaSalleBankNationalAssociation(LaSalle).PlaintiffsComplaintclaimsthatLaSalledidnothavepossessionofthemortgagenotewhenitnotifiedherthatforeclosurewasforthcoming.Namely,LaSallehadnoandcannothaveanyauthoritytoinstituteforeclosureproceedingsbecauseLaSalleisnotentitledtothemoneysecuredbythepromissorynote.

INTRODUCTION

OnNovember11,2005,Plaintiffborrowed$283,500.00forthepurchaseofpropertyat3745KnowlesRoadinPhenixCity,Alabama.Theloanwassecuredbyamortgagetothelender


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MortgagetoPlaintiff.Plaintiffthenfiledtheinstantcause.ThecourtenjoinedtheforeclosurebyorderenteredonNovember20,2008.Plaintiffcurrentlylivesinthesubjectproperty.PlaintiffcomesbeforethecourttodayrequestingajudgmentthattheforeclosureproceedingbepermanentlyenjoinedastothedefendantTrusteeLaSalleactingforitsbeneficiarytrust(andBankofAmericaasthesuccessor-in-interest),theonlyentitytogivenoticeofforeclosureandforsummaryjudgmentonherclaimsrelatedtothewrongfulforeclosureofthisrealproperty.II.STANDARDOFREVIEWSummaryjudgmentisappropriateonlywhenthereisnogenuineissueastoanymaterialfactand...themovingpartyisentitledtoajudgmentasamatteroflaw.ALA.R.CIV.PROC.56(c)(3),Youngv.LaQuintaInns,Inc.,682So.2d402(Ala.1996).Acourtconsideringamotionforsummaryjudgmentwillviewtherecordinthelightmostfavorabletothenonmovingparty,Hurstv.AlabamaPowerCo.,675So.2d397(Ala.1996),Fuquav.Ingersoll-RandCo.,591

So.2d486(Ala.1991);willaccordthenonmovingpartyallreasonablefavorableinferencesfromMortgagetoPlaintiff.Plaintiffthenfiledtheinstantcause.ThecourtenjoinedtheforeclosurebyorderenteredonNovember20,2008.Plaintiffcurrentlylivesinthesubjectproperty.PlaintiffcomesbeforethecourttodayrequestingajudgmentthattheforeclosureproceedingbepermanentlyenjoinedastothedefendantTrusteeLaSalleactingforitsbeneficiarytrust(andBankofAmericaasthesuccessor-in-interest),theonlyentitytogivenoticeofforeclosureandforsummaryjudgmentonherclaimsrelatedtothewrongfulforeclosureofthisr

ealproperty.II.STANDARDOFREVIEWSummaryjudgmentisappropriateonlywhenthereisnogenuineissueastoanymaterialfactand...themovingpartyisentitledtoajudgmentasamatteroflaw.ALA.R.CIV.PROC.56(c)(3),Youngv.LaQuintaInns,Inc.,682So.2d402(Ala.1996).Acourtconsideringamotionforsummaryjudgmentwillviewtherecordinthelightmostfavorabletothenonmovingparty,Hurstv.AlabamaPowerCo.,675So.2d397(Ala.1996),Fuquav.Ingersoll-RandCo.,591So.2d486(Ala.1991);willaccordthenonmovingpartyallreasonablefavorable

inferencesfromEncoreCreditCorp(Encore).ThemortgagewasrecordedintheofficeoftheprobatejudgeonAugust11,2006.Atsomeunknowntimeafterthesigningofthemortgagedocuments,Encoreexecutedablankendorsement.1NootherassignmentsorendorsementsarepresentintherecordprovidedtothePlaintiff.2

OnOctober16,2008,LaSallesentaNoticeofAccelerationofPromissoryNoteand


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theevidence,Fuqua,supra,Aldridgev.ValleySteelConstr.,Inc.,603So.2d981(Ala.1992);andwillresolveallreasonabledoubtsagainstthemovingparty.ExparteBrislin,719So.2d185(Ala.1998).

1Bates#:Horacev.LaSalle29.2Bates#:Horacev.LaSalle2.

-2


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III.ARGUMENTSA.THEDEFENDANTTRUSTHASNOSTANDINGTOFORECLOSEBECAUSETHEREHASBEENNOVALIDENFORCEABLEASSIGNMENTTOTHETRUSTEEOFTHETRUSTA-1.TheDefendantTrustIsANewYorkCommonLawTrustGovernedByNewYorkLawBasedOnItsTrustAgreementTheOctober16,2008NoticesenttoPlaintiffwasonbehalfofthelegalentity,LaSalleBankNationalAssociation,asTrusteeforCertificateholdersofBearStearnsAssetBackedSecuritiesILLC,Asset-BackedCertificates,Series2006-EC2(hereaftertheTrust).LaSalleisnottheoriginatorofthemortgage,theservicer,orevenabank.Instead,thisentityisaNewYorkcommonlawtrustcreatedbyanagreementknownasPoolingandServiceAgreement.Allegedly,thePlaintiffsloan,alongwithotherloans,werepooledintoatrustandconvertedintomortgage-backedsecurities(MBS)thatcanbeboughtandsoldbyinvestorsaprocessknownassecuritization.TheunderlyingpromissorynotesofeachandeverymortgageheldbytheTrustserveasgenerateapotentialincomestreamforinvestors.

TheTrustallegedlyholdingthePlaintiffsnotewascreatedonoraboutFebruary1,2006,andisidentifiedasLaSalleBankNationalAssociation,asTrusteeforCertificateholdersofBearStearnsAssetBackedSecuritiesILLC,Asset-BackedCertificates,Series2006-EC2.TheTrust,byitsterms,setaclosingdateofFebruary28,2006.ThetermsoftheTrustarecontainedinthePoolingandServicingAgreement(PSAortheTrustagreement),whicisanapproximately400-pagedocumentthatcreatestheTrustanddefinestherights,dutiesand

-3


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obligationsofthepartiestotheTrustAgreement.3ThePSAisfiledunderoathwiththeSecuritiesandExchangeCommissionandisattachedtoLaSallesmotionforsummaryjudgmentasExhibit1.ThePSAalsoincorporatesbyreferenceaseparatedocumentcalledtheMortgageLoanPurchaseAgreement(MLPA).Thesevariousdocuments,andhencetheacquisitionof

26U.S.C.S.860D(emphasisadded).

3Itissettledthatthedutiesandpowersofatrusteearedefinedbythetermsofthetrustagreementandaretemperedonlybythefiduciaryobligationofloyaltytothebeneficiaries(see,UnitedStatesTrustCo.vFirstNatlCityBank,57A.D.2d285,295-296,affd45NY2d869;Restatement[Second]ofTrusts186,commentsa,d).SeeInreIBJSchroderBank&TrustCo.,271A.D.2d322(N.Y.App.Div.1stDept2000)

TheTrust,beingsuedthroughitstrustee,isaNewYorkCorporateTrustformedtoactas

aREMICtrust(definedbelow)pursuanttotheU.S.InternalRevenueCode(IRC).PuruanttothetermsoftheTrustandtheapplicableInternalRevenueService(IRS)regulationsadoptedandincorporatedintothetermsoftheTrust,theclosingdateoftheTrust(February28,2006)isalsotheStartupDayfortheTrustundertheREMICprovisionsoftheIRC.TheStartupDayissignificantbecausetheIRCtiesthelimitationsuponwhichaREMICtrustmaybereceiveitsassetstothisdate.TherelevantportionoftheIRCaddressingthedefinitionofaREMICis:themortgageassetsfortheTrust,aregovernedunderthelawoftheStateofNe

wYorkpursuanttosection11.03ofthePSA(foundatpage133of397ofthePSA).(a)Generalrule.Forpurposesofthistitle,thetermsrealestatemortgageinvestmentconduitandREMICmeananyentity(1)towhichanelectiontobetreatedasaREMICappliesforthetaxableyearandallpriortaxableyears,(2)alloftheinterestsinwhichareregularinterestsorresidualinterests,(3)whichhas1(andonly1)classofresidualinterests(andalldistributions,ifany,withrespecttosuchinterestsareprorata),(4)asofthecloseofthe3rdmonthbeginningafterthestartupdayandatalltimesthereafter,substantiallyalloftheassetsofwhichconsistofqualifiedmortgagesandpermittedinvestments.

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REMICafterthestartupday,thereisherebyimposedataxforthetaxableyearoftheREMICinwhichthecontributionisreceivedequalto100percentoftheamountofsuchcontribution.26U.S.C.860G(d)(2)states:(2)Exceptions.Paragraph(1)shallnotapplytoanycontributionwhichismadeincashandisdescribedinanyofthefollowingsubparagraphs:(A)Anycontributiontofacilitateaclean-upcall(asdefinedinregulations)oraqualifiedliquidation.(B)Anypaymentinthenatureofaguarantee.(C)Anycontributionduringthe3-monthperiodbeginningonthestartupday.(D)AnycontributiontoaqualifiedreservefundbyanyholderofaresidualinterestintheREMIC.(E)Anyothercontributionpermittedinregulations.ThePSA(primarilyinsection9.12)addressesthesesectionsoftheIRCbyobligingthepartiestotheTrusttoavoidanyactionwhichmightjeopardizethetaxstatusofanyREMICand/orimposeanytaxupontheTrustforprohibitedcontributionsorprohibitedtransactions.ThesePSAprovisionsareimportanttothecourtsanalysisofthefactsinthisca

sebecauseoftheinterplaybetweentheNewYorktrustlaw,theIRCsREMICprovisions,andthePSAsincorporationoftheIRCREMICprovisions.A-2.TheTrustInstrument/PSASetsForthASpecificTime,MethodAndMannerOfREMICafterthestartupday,thereisherebyimposedataxforthetaxableyearoftheREMICinwhichthecontributionisreceivedequalto100percentoftheamountofsuchcontribution.26U.S.C.860G(d)(2)states:(2)Exceptions.Paragraph(1)shallnotapplytoanycontributionwhichismadeincashandisdescribedinanyofthefollowingsubparagraphs:(A)Anycontributiontofacilitateaclean-upcall(asdefinedinregulations)o

raqualifiedliquidation.(B)Anypaymentinthenatureofaguarantee.(C)Anycontributionduringthe3-monthperiodbeginningonthestartupday.(D)AnycontributiontoaqualifiedreservefundbyanyholderofaresidualinterestintheREMIC.(E)Anyothercontributionpermittedinregulations.ThePSA(primarilyinsection9.12)addressesthesesectionsoftheIRCbyobligingthepartiestotheTrusttoavoidanyactionwhichmightjeopardizethetaxstatusofanyREMICand/orimposeanytaxupontheTrustforprohibitedcontributionsorprohibitedtransactions.

ThesePSAprovisionsareimportanttothecourtsanalysisofthefactsinthiscasebecauseoftheinterplaybetweentheNewYorktrustlaw,theIRCsREMICprovisions,andthePSAsincorporationoftheIRCREMICprovisions.A-2.TheTrustInstrument/PSASetsForthASpecificTime,MethodAndMannerOfTheIRCalsoprovidesdefinitionsofprohibitedtransactionsandprohibitedcontributionswhicharerelevanttothiscaseaswell.Inthecontextofthiscase,therelevantstatuteisthedefinitionofprohibitedcontributionswhichisasfollows:


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26U.S.C.860G(d)(1)states:

Exceptasprovidedinsection860G(d)(2),ifanyamountiscontributedtoa

FundingTheTrust

TheTrustseekingtoforecloseonthePlaintiffhasincludedinthetermsofitsTrustagreement(thePSA)aspecifictime,methodandmanneroffundingtheTrustwithitsassets.

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ThemostcriticaltimeistheTrustsclosingdate,February28,2006.4AccordingtothetermsofthePSA,alloftheassetsoftheTrustweretobetransferredtotheTrustonorbeforetheclosingdate.5ThisrequirementistoensurethattheTrustwillreceiveREMICstatusandthusbeexemptfromfederalincometaxation.Section2.02(a)ofthePSAprovidesforawindowof90daysaftertheTrustclosingdateinwhichtheTrustmaycompleteanymissingpaperworkor

finalizeanydocumentsnecessarytocompletethetransfersofassetsfromthedepositortotheTrust.6B.THETRUSTAGREEMENTPROVIDESTHEONLYMANNERINWHICHASSETSMAYBEPROPERLYTRANSFERREDTOTHETRUSTANDANYACTINCONTRAVENTIONOFTHETRUSTAGREEMENTISVOIDThus,foranassettobecomeanassetoftheTrustitmusthavebeentransferredtotheTrustwithinthetimesetforthinthePSA.Theadditional90daysinthetimelinerequirementisincorporatedfromtheREMICprovisionsoftheIRCtoprovideaclean-upperiodforaREMIC

tocompletethedocumentsassociatedwiththetransfersofassetstoaREMICafterthestartupday(whichisalsotheTrustclosingdate).Therefore,accordingtotheplaintermsoftheTrustagreementinthiscase,theclosingdate/startupdatewasFebruary28,2006andthelastdayfortransferofassetsintotheTrustwasMay29,2006.B-1.TransferofAssetstotheTrustPursuanttotheTrustInstrument/PSAAsagenericmatter,thereareseveralmethodsbywhichtheunderlyingassetsoftheTrust,specificallytheindividualpromissorynotes,mightbetransferredorconveyed.Atrustsabilitytotransactisrestrictedtotheactionsauthorizedbyitstrustdocumen

ts.Inthiscase,theTrustdocumentspermitonlyonespecificmethodoftransfertotheTrust.ThatmethodissetforthinSection2.01ofthePSA:

4http://sec.gov/Archives/edgar/data/1352655/000088237706000801/d431341.htm(lastviewed1/7/10)ThisdateisdefinedintheTrustinstrumentatpage25of397inexhibit1.

5ThisrequirementisfoundatSection2.01onpage56of397.6Thisrequirementisfoundatpage58of397.

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PursuanttotheMortgageLoanPurchaseAgreement,eachSellersold,transferred,assigned,setoverandotherwiseconveyedtotheDepositor,withoutrecourse,alltheright,titleandinterestofsuchSellerinandtotheassetssoldbyitintheTrustFund.

Inconnectionwithsuchsale,theDepositorhasdeliveredto,anddepositedwith,theTrusteeortheCustodian,asitsagent,thefollowingdocumentsorinstrumentswithrespecttoeachMortgageLoansoassigned:(i)the

originalMortgageNote,includinganyridersthereto,endorsedwithoutrecourse(A)inblankortotheorderofLaSalleBankNationalAssociation,asTrusteeforCertificateholdersofBearStearnsAssetBackedSecuritiesILLC,Asset-BackedCertificates,Series2006-EC2,or(B)inthecaseofaloanregisteredontheMERSsystem,inblank,andineachcaseshowinganunbrokenchainofendorsementsfromtheoriginalpayeethereoftothePersonendorsingittotheTrustee,Theanalysisofthistransferlanguagerequiresthecourttoconsidereachpart.InthesecondparagraphofthelanguageintheTrustAgreement,thefirststatementisoneoftransfer,stating

theDepositorhasdeliveredtoanddepositedwiththeTrusteeortheCustodianthefollowingdocuments.Thekeydocumentistheoriginalmortgagenote,whichrequiresmandatoryendorsementsfoundinthislanguage:theoriginalmortgagenote.endorsedwithoutrecoursefollowedbytwoalternativeswhicharephrasedintheeither/orformat.ThefirstlabeledAstatesinblankortotheorderofLaSalleBankNationalAssociation,asrusteeforCertificateholdersofBearStearnsAssetBackedSecuritiesILLC,Asset-BackedCertificates,Series2006-EC2.ThesecondpossibilitystatedinBprovidesastheopropositionfortransferthefollowingstatementinthecaseofaloanregistered

ontheMERSsystem,inblankIneachcase,theaffirmativelanguageoftheTrustagreementplacesaburdenonthedepositortomakeavalidlegaltransferinthetermsrequiredbytheTrustinstrument.Thekeylanguageintheentireparagraphisthefinalstatementtrailingtheeither/orlanguageofA&Bwhichreads:andineachcaseshowinganunbrokenchainofendorsementsfromtheoriginalpayeethereoftothePersonendorsingittotheTrustee.

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StackeduponthetopofthisrequirementofanunbrokenchainofendorsementsistherequirementofcertificationofthefinalcontentsofthecollateralfileforthebenefitoftheTrust.ThisrequirementisfoundatExhibit1totheMLPA(MortgageLoanPurchaseAgreement),whichisanattachmenttoandincorporatedasapartofthePSAinSection2.01.ThisDocumentisfoundatHorace391andstatesasfollows:

WithrespecttoeachMortgageLoan,theMortgageFileshallincludeeachofthefollowingitems,whichshallbeavailableforinspectionbythePurchaseroritsdesignee,andwhichshallbedeliveredtothePurchaseroritsdesigneepursuanttothetermsofthisAgreement.(a)TheoriginalMortgageNote,includinganyridersthereto,endorsedwithoutrecoursetotheorderofLaSalleBankNationalAssociation,asTrusteeforcertificateholdersofBearStearnsAssetBackedSecuritiesILLC,Asset-BackedCertificates,Series2006-EC2,andshowingtotheextentavailabletotherelatedMortgageLoanSelleranunbrokenchainofendorsementsfromtheoriginalpayeethereoftothePersonendorsingittotheTrustee;Theforegoingrequirementdemonstratesclearlythatwhilethepartiestothesec

uritizationmadeprovisionswherebypromissorynotesforthisTrustmightbedeliveredinblanktotheTrustee,thereweretworequirementsthatweremandatory.First,allnotessoldtotheTrustwererequiredtohaveanunbrokenchainofendorsementsfromtheoriginalpayeetothepersonendorsingittotheTrustee.Thisrequirementstemsfromaparticularbusinessconcerninsecuritization,namelytoevidencethattherewasinfactatruesaleofthesecuritizedassetsandthattheyareinnowaystillpropertyoftheoriginator,sponsor,ordepositor,andthusnotsubjecttotheclaimsof

creditorsoftheoriginator,sponsor,ordepositor.AfacttestifiedtobythePlaintiffssecuritizationexpert,ThomasJ.Adams,whoexplainedunderexaminationbyCounselforthe

Trustasfollows:

Page8317QSowhatthenIguesswithrespectto18notesis--what'sthepurposethenofhavinga19chainofendorsements,ifwhatI'mconcerned

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5conveyedtoit,that--thatthe--thatthey6willhavetherighttoestablishtheirownership7asinvestorsinthatcollateral.Second,therewasarequirementthatultimately,within90daysoftheTrustclosingdate,theactualpromissorynotemustbeendorsedovertothetrusteeforthespecifictrusttoeffectivelytransfertheassetintothetrustandthereforemaketheHoracepromissorynoteTrustproperty.Thisrequirementfindssupportinlogicandlawandis,infact,theancientandsettledlawofNewYorkonthisissue.B-2.NewYorkLawGovernsTheMandatoryRequirementsToEffectivelyTransferAnAssetToATrustItisnotcontestedthatsecuritizationtrusts,suchasthedefendant,aresubjecttothecommonlawofNewYork.7NewYorkstrustlawisancientandsettled.ThereareafewprinciplesofNewYorkTrustlawthatareparticularlyimportanttotheanalysisofwhetheranyparticularassetisanassetofagiventrust.UnderNewYorklaw,the5conveyedtoit,that--thatthe--thatthey6willhavetherighttoestablishtheirownership7asinvestorsinthatcollateral.

Second,therewasarequirementthatultimately,within90daysoftheTrustclosingdate,theactualpromissorynotemustbeendorsedovertothetrusteeforthespecifictrusttoeffectivelytransfertheassetintothetrustandthereforemaketheHoracepromissorynoteTrustproperty.Thisrequirementfindssupportinlogicandlawandis,infact,theancientandsettledlawofNewYorkonthisissue.B-2.NewYorkLawGovernsTheMandatoryRequirementsToEffectivelyTransferAnAssetToATrustItisnotcontestedthatsecuritizationtrusts,suchasthedefendant,aresubjectto

thecommonlawofNewYork.7NewYorkstrustlawisancientandsettled.ThereareafewprinciplesofNewYorkTrustlawthatareparticularlyimportanttotheanalysisofwhetheranyparticularassetisanassetofagiventrust.UnderNewYorklaw,the20aboutiswhocurrentlyownsit?21AMyunderstandingisthatithelps22establishhowyoucametopossessit.23QOkay.Andwhydoesthatmatter?Page841AFromaninvestorperspectiveina2mortgagebackedsecuritiesgovernedbyapooling3andservicingagreement,youwantconfidence4thatthecollateralforthefileisproperly

ordertohaveavalidintervivosgift,theremustbeadeliveryofthegift(eitherbya

analysisofwhetheranassetistrustpropertyisdeterminedunderthelawofgifts.8In

7Asearlyas1935,inBurgoynev.James,282N.Y.S.18,21(1935),theNewYorkSupremeCourtrecognizedthatbusinesstrusts,alsoknownasMassachusettstrusts,aredeemedtobecommonlawtruts.SeealsoInreEstate


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ofPlotkin,290N.Y.S.2d46,49(N.Y.Sur.1968)(characterizingcommonstocktrustfundsascommonlawtrust[s]).Otherjurisdictionsareinaccord.See,e.g.,Mayfieldv.FirstNatlBanofChattanooga,137F.2d1013(6thCir.1943)(applyingcommonlawtrustprinciplestoapoolofmortgageparticipationcertificateholders).8Inthecaseofatrustwherethereisatrusteeotherthanthegrantor,transferwillbegovernedbytheexistingrulesastointentanddelivery(theelementsofagift)InreBecker,2004N.Y.SlipOp.51773U,4(N.Y.Sur.Ct.2004).

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physicaldeliveryofthesubjectofthegift)oraconstructiveorsymbolicdelivery(suchasbyaninstrumentofgift)sufficienttodivestthedonorofdominionandcontrolovertheproperty9andwhatissufficienttoconstitutedeliverymustbetailoredtosuitthecircumstancesofthecase.10Thedeliveryrulerequiresthat[the]deliverynecessay

toconsummateagiftmustbeasperfectasthenatureofthepropertyandthecircumstancesandsurroundingsofthepartieswillreasonablypermit.11UnderNewYorklawtherearefouressentialelementsofavalidtrustofpersonalproperty:(1)Adesignatedbeneficiary;(2)adesignatedtrustee,whomustnotbethebeneficiary;(3)afundorotherpropertysufficientlydesignatedoridentifiedtoenabletitletheretotopasstothetrustee;and(4)theactualdeliveryofthefundorotherproperty,orofalegalassignmentthereoftothetrustee,withtheintentionofpassinglegaltitletheretotohimastrustee.12ThereisnotrustunderthecommonlawuntilthereisavaliddeliveryoftheassetinquestiontotheTrust.13

9(see,MatterofSzabo,10N.Y.2d94,98-99,supra;SpeelmanvPascal,10N.Y.2d313,318-320,supra;Beaverv.Beaver,117N.Y.421,428-429,supra;MatterofCohn,187App.Div.392,395)ascitedinGruenv.Gruen,68IfthetrustfailstoacquiretheN.Y.2d48,56(N.Y.1986).10(MatterofSzabo,supra,atp.98).11(id.;VincentvRix,248N.Y.76,83;MatterofVanAlstyne,supra,atp309;see,Beaverv.Beaver,supra,atp428)ascitedinGruenv.Gruen,68N.Y.2d48,56-57(N.Y.1986).

12Brownv.Spohr,180N.Y.201,209-210(N.Y.1904).

13Untilthedeliverytothetrusteeisperformedbythesettlor,oruntilthesecuritiesaredefinitelyascertainedbythedeclarationofthesettlor,whenhehimselfisthetrustee,norightsofthebeneficiaryinatrustcreatedwithoutconsiderationarise(cf.Riegelv.CentralHanoverBank&TrustCo.,266App.Div.586;MatterofGurlitz[Lynde],105Misc30,affd190App.Div.907,supra;Marxv.Marx,5Misc2d42)ascitedinSussmanv.Sussman,61A.D.2d838(N.Y.App.Div.2dDept1978).

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andTrustsLaw(EPTL)section7-2.1(c)authorizesinvestmenttruststoacquirerealorpersonalpropertyinthenameofthetrustassuchnameisdesignatedintheinstrumentcreatingsaidtrust.Further,theactualcontractsoftheparties,whichincludethecustodialagreements,themortgageloanpurchaseagreements,andthetrustinstrumentknownasthepoolingandservicingagreement,prescribeaveryspecificmethodoftransferofthenotesandmortgagestotheTrust.BecausethemethodoftransferissetforthintheTrustinstrument,itisnotsubjecttoanyvarianceorexception.1614Inanactionagainsttheindividualdefendantastrustee,basedonthetheoryofbreachoffiduciaryobligation,theTheTrustdocumentsrequirethatthepromissorynotesandmortgagesbetransferredtotheTrustee,whichunderNewYorktrustlawrequiresvaliddelivery.ThequestionthenarisesWhatconstitutesvaliddeliverytotheTrustee?andTrustsLaw(EPTL)section7-2.1(c)authorizesinvestmenttruststoacquirerealorpersonalpropertyinthenameofthetrustassuchnameisdesignatedintheinst

rumentcreatingsaidtrust.Further,theactualcontractsoftheparties,whichincludethecustodialagreements,themortgageloanpurchaseagreements,andthetrustinstrumentknownasthepoolingandservicingagreement,prescribeaveryspecificmethodoftransferofthenotesandmortgagestotheTrust.BecausethemethodoftransferissetforthintheTrustinstrument,itisnotsubjecttoanyvarianceorexception.1614Inanactionagainsttheindividualdefendantastrustee,basedonthetheoryofbreachoffiduciaryobligation,theTheTrust

documentsrequirethatthepromissorynotesandmortgagesbetransferredtotheTrustee,whichunderNewYorktrustlawrequiresvaliddelivery.ThequestionthenarisesWhatconstitutesvaliddeliverytotheTrustee?property,thenthereisnotrustoverthatpropertywhichmaybeenforced.14Anattempttoconveytoatrustwillfailifthereisnodesignatedbeneficiaryintheconveyance.15

Inthecontextofmortgage-backedsecuritization,itisclearthatregistrationofthenotesandmortgagesinthenameofthetrusteeforthetrustisnecessaryforeffective

transfertothetrust.WithintheStatutesofNewYorkgoverningTrusts,EstatesPowers

complaintwasproperlydismissedonthegroundthathehadacquirednotitleorseparatecontrolofthegoodsand,hence,therewasnoactualtrustoverthepropertytobreach.Kermaniv.LibertyMut.Ins.Co.,4A.D.2d603(N.Y.App.Div.3dDept1957).15WellsFargoBankv.Farmer,2008N.Y.MiscLexis3248.16Courtsmayneitherignoretheactualprovisionsoftransactiondocumentsnorc


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reatecontractualremediesthatwereomittedfromthegoverningcontractsbythecontractingparties.SeeSchmidtv.MagneticHeadCorp.,468N.Y.S.2d649,654(N.Y.App.Div.1983)(Itisfundamentalthatcourtsenforcecontractsanddonotrewritethem...Anobligationundertakenbyoneofthepartiesthatisintendedasapromise...shouldbeexpressedassuch,andnotlefttoimplication.(citationsomitted));MorleeSalesCorp.v.ManufacturersTrustCo.,172N.E.2d280,282(N.Y.1961)([T]hecourtsmaynotbyconstructionaddorexciseterms...andtherebymakeanewcontractforthepartiesundertheguiseofinterpret[ation].(quotingHellerv.Pope,250N.E.881,882(N.Y.1928))

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Whentherequirementsoftransfertothetrusteeareviewedinthecontextofthecorporateorbusinesstrustindenture,moreinformationaboutcompliancewiththeserequirementsbecomesapparent.Onemustfirstunderstandthat

[t]hecorporatetrusteehasverylittleincommonwiththeordinarytrustee....Thetrusteeunderacorporateindenture...hashis[orher]rightsanddutiesdefined,notbythefiduciaryrelationship,butexclusivelybythetermsoftheagreement.His[orher]statusismorethatofatrustee.17

Indeed,[a]nindenturetrusteeisunliketheordinarytrustee.Incontrastwiththelatter,somecaseshaveconfinedthedutiesoftheindenturetrusteetothosesetforthintheindenture.18obligationsaredefinedbythetermsoftheindentureagreement.19settledthatthedutiesandpowersofatrusteearedefinedbythetermsofthetrustagreementandarebeneficiaries.20

takedeliveryinstrictcompliancewiththetermsofthePSA/Trustdocument.Further,giventhatNewYorkEstatesPowersandTrustsLawsection7-2.1(c)authorizesatrusteetoacquirepropertyinthenameofthetrustassuchnameisdesignatedinthe

astakeholderthanoneofTheindenturetrustee,ithasbeensaid,resemblesastakeholderwhoseMoreover,[i]tistemperedonlybythefiduciaryobligationofloyaltytotheTheclearimportofthesecasesandstatutesisthatthedeliveryofanassettoa

trusteeunderthetermsofacorporateindenturerequiresstrictcompliancewiththemandatorytransfertermsofthetrustindenture.ThustheTrusteeinthiscasecanonly17AGCapitalFundingPartners,L.P.v.StateSt.Bank&TrustCo.,2008N.Y.SlipOp.5766,7(N.Y.2008)18Greenv.TitleGuarantee&TrustCo.,223A.D.12,227N.Y.S.252(1stDept.),affd,248N.Y.627(1928);Hazzardv.ChaseNationalBank,159Misc.57,287N.Y.S.541(Sup.Ct.1936),affd,257A.D.950,14N.Y.S.2d147(1stDept.),affd,282N.Y.652,cert.denied,311U.S.708(1940).19SeeMeckelv.ContinentalResources,758F.2d811,816(2dCir.1985)ascitedinAmbacIndem.Corp.v.

BankersTrustCo.,151Misc.2d334,336(N.Y.Sup.Ct.1991).20see,UnitedStatesTrustCo.vFirstNatlCityBank,57A.D.2d285,295-296,affd45NY2d869;Restatement[Second]ofTrusts186,commentsa,d)ascitedinInreIBJSchroderBank&TrustCo.,271A.D.2d322(N.Y.App.Div.1stDept2000).

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instrumentcreatingsaidtrustproperty,thereshouldbelittledoubtthatfortransfertoantrusteetobeeffective,thepropertymustberegisteredinthenameofthetrusteefortheparticulartrust.Trustpropertycannotbe,astheDefendantargues,heldwithincompleteendorsementsandassignmentsthatdonotindicatethatthepropertyisheldintrustbyatrusteeforaspecificbeneficiarytrust.Infact,itisclearinthelawofNew

YorkthatanattempttotransfertoatrustwhichfailstospecifybothatrusteeandabeneficiaryisineffectiveasaconveyancetotheTrust.ThefailuretonameabeneficiaryfortheTrusteerenderstheassignmentwithoutmerit.21ThispositionisfurthersupportedlogicallyinthecommonlawofNewYorkbythefollowingpropositions:(1)Untilthedeliverytothetrusteeisperformedbythesettlor,oruntilthesecuritiesaredefinitelyascertainedbythedeclarationofthesettlor,whenhehimselfisthetrustee,norightsofthebeneficiaryinatrustcreatedwithoutconsiderationarise.22(2)Thedeliverynecessarytoconsummateagiftmustbeasperfectasthenature

ofthepropertyandthecircumstancesandsurroundingsofthepartieswillreasonablypermit;theremustbeachangeofdominionandownership;intentionormerewordscannotsupplytheplaceofanactualsurrenderofcontrolandauthorityoverthethingintendedtobegiven.23Itistheconsummationofthedonorsintenttogivethatcompletesthetransaction.Intentionalone,nomatterhowfullyestablished,isofnoavail

21WellsFargoBank,N.A.v.Farmer,2008NYSlipOp51133U,6(N.Y.Sup.Ct.20

08)22(cf.Riegelv.CentralHanoverBank&TrustCo.,266App.Div.586;MatterofGurlitz[Lynde],105Misc.30,affd190App.Div.907,supra;Marxv.Marx,5Misc2d42)ascitedinSussmanv.Sussman,61A.D.2d838(N.Y.App.Div.2dDept1978).23Vincentv.Putnam,248N.Y.76,82-84(N.Y.1928).

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withouttheconsummatedactofdelivery.24Howcouldonelogicallyarguethatdeliveringapromissorynoteendorsedinblank(makingitbearerpaper)intoatrusteesvaultisdeliverybeyondtheauthorityandcontrolofthedonorwhenthevaultismanagedbytheagentofthedonor?Ifthedonorweretoclaimthatthepromissorynote

Ifthedonordeliversthepropertytothethirdpersonsimplyforthepurposeofhisdeliveringittothedoneeastheagentofthedonor,thegiftisnotcompleteuntilthepropertyhasactuallybeendeliveredtothedonee.Suchadeliveryisnotabsolute,fortheordinaryprincipleofagencyapplies,bywhichthedonorcanrevoketheauthorityoftheagent,andresumepossessionoftheproperty,atanytimebeforetheauthorityisexecuted.wereitsproperty,notthetrustees,therewouldbenoevidentiarybasisforthetrusteetoclaimownership.Accordingly,NewYorklawexpresslyrequiresthatforpropertytobevalidlydeliveredtoatrust,thepropertymustpasscompletelyoutofthecontrolofthedonor(anditsagents):

25AnothercaseaddressingthisissueholdsthatInorderthatdeliverytoathirdpersonshallbeeffective,hemustbetheagentofthedonee.Deliverytoanagentofthedonorisineffective,astheagencycouldbeterminatedbeforedeliverytotheintendeddonee.26Trusteesforsecuritizationsoftenoccupymanyrolessimultaneouslyandconflictinglybothasdocumentcustodiansandtrusteesformyriadthousandsofsecuritizationsaswellasforvariouspartieswhoareactiveinthesecuritizationprocessincludingoriginators,servicers,sponsorsanddepositors.Accordingly,itisinconceivablethatanythingotherthanregistrationintothenameofthetrustas

such

24Phillippsenv.EmigrantIndus.Sav.Bank,86N.Y.S.2d133,137-138(N.Y.Sup.Ct.1948).(Beaverv.Beaver,supra,117N.Y.421,428,22N.E.940,941,6L.R.A.403,15Am.St.Rep.531).25(See,also,GrantTrust&SavingsCo.v.Tucker,49Ind.App.345;Furenesv.Eide,109Ia.511;Dickeschiedv.ExchangeBank,28W.Va.340;Lovev.Francis,63Mich.181;[**428]Merchantv.BuildingCo.[***15],17OhioCircuitCt.190.)26InreNatlCommer.Bank&TrustCo.,257A.D.868,869-870(N.Y.App.Div.3dDept1939)citingVincentv.Rix,suprav.Rix,supra;Bumpv.Pratt,84Hun,201.

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nameisdesignatedintheinstrumentcreatingsaidtrustproperty27couldeverqualifyasdeliverytoanyparticularsecuritizationtrust.Absentsuchregistration,therewouldbenothingthatwouldindicatewhichofthousandsoftrustsinthecareofatrusteeaparticularpromissorynotemightbelongtoorifitwerethepersonalpropertyofthe

ThispointwasrecentlyslammedhometothepublicconsciousnessinawatersheddecisionoutoftheStateofMassachusetts.OnJanuary7,2011,theSupremeJudicialCourtofMassachusettsthehighestcourtinthatstaterenderedaunanimousverdictinacasecaptionedU.S.Natl.BankAssn.,Trustee,v.Ibanez,ForABFC20050PT1Trust,ABFCAssetBackedCertificates,Series2005-0PT1,No.SJC-10694,(Mass.Jan.7,2011).Whilethatrulingisofcoursenotbindinguponthiscourt,itisverymuchcontrarytothemortgagesecuritizationindustryspositionincasesinvolvingtheforeclosureofmortgageloanswhichhaveallegedlybeensecuritized.Thefactsof

thecaseinMassachusettsandthefactsofthisinstantcasearesimilar.BoththeMassachusettsandtheHoracecasesconcernanentityseekingtoforecloseonthetrusteeitself.Absentsuchregistration,apromissorynotewouldsimplybebearerpaper,andthusthepropertyofanyonewhoobtainedpossessionofit.Further,ifanythinglessconstituteddelivery,whyareourcourtsoverwhelmedwithrobo-signedmortgageassignmentsandaffidavitsexpressinglegally-impossibletransfersintothespecifictrustslongafterthetrustshaveclosedforfunding?mortgagorwhentheforeclosingentitiesdidnotpossesstheunderlyingpromissor

ynoteatthetimeoftheforeclosure(orattemptedforeclosureintheHoracesituation).Thecasewasarulingontwoconsolidatedcasesbothcaseswerefiledbybanks(astrusteesfor

27EPTL7-2.1(c)

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twoseparatetrusts)toquiettitleonpropertiestheyhadforeclosedandpurchasedattheforeclosuresaletosatisfythemortgagorsdebt.TheMassachusettsSupremeJudicialCourtheldthatneitherbankprovedthatitstrustownedthemortgageswhentheyforeclosedonthehomes;therefore,neitherhadtitletotheforeclosedpropertiesandthattheirforeclosureswerevoid.Effectively,thisputtheborrowersbackintotheplacethey

werebeforetheforeclosure.TheMassachusettsSupremeJudicialCourtdidnottellthehomeownerstheyareallowedtoshirktheirobligationtopaytheirmortgages,whicharestilloutstanding,validobligations.TheMassachusettsSupremeJudicialCourtdid,however,sharplyinstructthebanksthattheymusthavetheproperdocumentationwhichdemonstratesavalidrighttoforeclosebeforeaforeclosurecanbecarriedout.ItiswellworthnotingtheconclusionoftheMassachusettsIbanezopinion.TheMassachusetts

SupremeJudicialCourtnotedthatThelegalprinciplesandrequirementswesetfortharewellestablishedinourcaselawandourstatutes.Allthathaschangedisthe[banks]apparentfailuretoabidebythoseprinciplesandrequirementsintherushtosellmortgage-backedsecurities.JustastheprinciplesandrequirementsofMassachusettslawarewell-founded,sotooarethoseofNewYorklaw,andtheyshouldbeupheldevenifadherencetothelawisinconvenientforbanksrushingtosellmortgage-backedsecurities.

B-3THEINTENTTOTRANSFERANASSETTOTHETRUSTISNOTATRANSFERTOTHETRUST

Thecontentsofthesestatutes,casesandcontractsleadtooneinescapableconclusion:theintentofthepartiesandtherequirementsofthecontractswerethattheassetsbeconveyedtotheTrustsbytheTrustclosingdates.Foratransfertoany

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foreclosureindustryhaschosentoarguethatitisclearthatitwasthepartiesintenttotransfertheseassetsandthereforenocourtwouldeverdeclarethattheseassetswerenottransferredtothesetrusts.Thecontrollinglawisoverwhelminglyagainsttheindustryinthisposition.Thefailuretodeliverthenotesandmortgagestothesetrustsasrequiredbythetrustinstrumentsisadefaultunderthetermsofeveryagreementthatthesepartiesexecuted,includingtheiragreementsforpaymentguaranteeswiththemonolinebondinsurers.ThesecuritizationindustrychosetocreateitssecuritizationtrustsunderNewYorklawpreciselybecausethelawwasancientandsettled.Nowthattheactionsoftheforeclosureindustrycontradictsthatlaw,partiessuchasthedefendanttrustarelefttoarguehopeagainstprecedent.Thewell-settledNewYorktrustlawprovidesthatAmereintentiontomakeagiftwhichhasnotbeencarriedintoeffect,confersnorightupontheintendedbeneficiary.Theremustbealsodeliverybeyo

ndthepoweroffurthercontrolanddominion.28Equitywillnothelpoutanincompletedelivery.Iftheagentofthedonorhasfailedtomakethedeliveryexpectedequitywillforeclosureindustryhaschosentoarguethatitisclearthatitwasthepartiesintenttotransfertheseassetsandthereforenocourtwouldeverdeclarethattheseassetswerenottransferredtothesetrusts.Thecontrollinglawisoverwhelminglyagainsttheindustryinthisposition.Thefailuretodeliverthenotesandmortgagestothesetrustsas

requiredbythetrustinstrumentsisadefaultunderthetermsofeveryagreementthatthesepartiesexecuted,includingtheiragreementsforpaymentguaranteeswiththemonolinebondinsurers.ThesecuritizationindustrychosetocreateitssecuritizationtrustsunderNewYorklawpreciselybecausethelawwasancientandsettled.Nowthattheactionsoftheforeclosureindustrycontradictsthatlaw,partiessuchasthedefendanttrustarelefttoarguehopeagainstprecedent.Thewell-settledNewYorktrustlawprovidesthatAmereintentiontomakeagiftwhichhasnotbeencarriedintoeff

ect,confersnorightupontheintendedbeneficiary.Theremustbealsodeliverybeyondthepoweroffurthercontrolanddominion.28Equitywillnothelpoutanincompletedelivery.Iftheagentofthedonorhasfailedtomakethedeliveryexpectedequitywillparticulartrusttobeeffective,thereshouldhavebeenaregistrationoftheassetsintothenameofthetrustassuchnameisdesignatedintheinstrumentcreatingsaid


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trustpropertythisistheonlymethodbywhichtheseassetscouldhavebeendivestedfromthepossessionandtitleofthedonors.

Inresponsetothelucidityofthecontrollinglawonthisissue,themortgage

28(Vincentv.Rix,248N.Y.76,85v.Rix,248N.Y.76,85;MatterofGreen,247App.Div.540;McCarthyv.Pieret,281N.Y.407,409.)ascitedbyInreFIRSTTRUST&DEPOSITCO.,264A.D.940,941(N.Y.App.Div.4thDept1942)

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notdeclarehimatrusteeforthedonee.29Thus,ThorntononGiftsandAdvancements

(140)notes:

Indeterminingwhethertherehasbeenavaliddelivery,thesituationofthesubjectofthegiftmustbeconsidered.Thusifitisactuallypresent,andcapableofdeliverywithoutseriouseffort,itisnottoomuchtosaythattheremustbeanactualdelivery,althoughthedonorneednotinpersonorbyagenthandthe

articletothedonee,ifthelatterassumesthepossession.Therewasabsolutelynothinginthephysicalnatureofthepaperstobedeliveredinthiscase,orinthephysicalconditionorthesurroundingsofthedonor,thatmadeasymbolicaldeliverynecessary.30ofthethinggivenhasbeenverylargelyrelaxed,butasymbolicaldeliveryissufficient

deliveryasnearlyperfectandcompleteasthecircumstanceswillallow.31

somecaseshaveconfinedthedutiesoftheindenturetrusteetothosesetforthintheindenture.33FromthiscontextspringstheseminalruleoflawthateffectivelycausesthepartiestotheTrustagreementandtheTrusttobegoredbytheirownbull.New

ItistruethattheoldrulerequiringanactualdeliveryonlywhentheconditionsaresoadversetoactualdeliveryastomakeasymbolicalFurther,thefailuretoconveytoatrustperthecontrollingtrustdocumentisnotamatterthatmaybecuredbythebreachingparty.NewYorklawisunflinchinglyclear

thatatrusteehasonlytheauthoritygrantedbytheinstrumentunderwhichheholds,eitherdeedorwill.Thisfundamentalrulehasexistedfromthebeginningandisstilllaw.32Anindenturetrusteeisunliketheordinarytrustee.Incontrastwiththelatter,29Vincentv.Putnam,248N.Y.76,82-84(N.Y.1928)30InreVanAlstyne,207N.Y.298,309-310(N.Y.1913).31InreVanAlstyne,207N.Y.298,309-310(N.Y.1913).32Allison&VerValenCo.v.McNee,170Misc.144,146(N.Y.Sup.Ct.1939).33AmbacIndem.Corp.v.BankersTrustCo.,151Misc.2d334,336(N.Y.Sup.Ct.1991).

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Therefore,thetrusteesforthesetrustsmayonlyacquireassetsinthemannersetforthinthetrustinstrumentandmaynotacquireassetsinviolationofthetrustinstrument.Totheextentthatanyassetswerenotconveyedtothesetrustsasrequiredandwhenrequiredbythetrustinstrument,theyarenotassetsofthetrustsandthetrusteecannotcorrectthisdeficiencynowsincethefundingperiodprovidedintheTrustinstrumentspassedmanyyearsago.TheattempttoacquireassetsbythesetrustswhichviolatethetermsoftheTrustinstrumentarevoid.Therefore,lateassignments,improperchainsoftitle,lateendorsements,improperchainsoftitleintheendorsementsandtheattempttotransfertothetrustsbyforeclosuredeedarejustanumberofthemanyexamplesofactionswhicharevoidiftakenbyapartytotheindenturewhoisattemptingtotransferpropertytotheTrusteefortheTrustinviolationofthetrustinstrument.C.THETRUSTNEVERPROPERLYACQUIREDTHEMORTGAGENOTEANDTHETRUSTCANNOTCUREITSFATALSTANDINGDEFECTTherefore,thetrusteesforthesetrustsmayonlyacquireassetsinthemanners

etforthinthetrustinstrumentandmaynotacquireassetsinviolationofthetrustinstrument.Totheextentthatanyassetswerenotconveyedtothesetrustsasrequiredandwhenrequiredbythetrustinstrument,theyarenotassetsofthetrustsandthetrusteecannotcorrectthisdeficiencynowsincethefundingperiodprovidedintheTrustinstrumentspassedmanyyearsago.TheattempttoacquireassetsbythesetrustswhichviolatethetermsoftheTrustinstrumentarevoid.Therefore,lateassignments,improperchainsoftitle,lateendorsements,improperchainsoftitleinthe

endorsementsandtheattempttotransfertothetrustsbyforeclosuredeedarejustanumberofthemanyexamplesofactionswhicharevoidiftakenbyapartytotheindenturewhoisattemptingtotransferpropertytotheTrusteefortheTrustinviolationofthetrustinstrument.C.THETRUSTNEVERPROPERLYACQUIREDTHEMORTGAGENOTEANDTHETRUSTCANNOTCUREITSFATALSTANDINGDEFECTYorkslawissowell-settledregardingthelimitationsofatrusteespowertoactthatNewYorksEstatesPowersandTrustLawSection7-2.4states:

7-2.4Actoftrusteeincontraventionoftrust

Ifthetrustisexpressedintheinstrumentcreatingtheestateofthetrustee,everysale,conveyanceorotheractofthetrusteeincontraventionofthetrust,exceptasauthorizedbythisarticleandbyanyotherprovisionoflaw,isvoid.

UnderNewYorklawthereisnotrustoverpropertythathasnotbeenproperlytransferredtoatrust.TheDefendantTruststatedtotheU.S.SecuritiesandExchangeCommi


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ssioninfilings

underoaththatithasassetsinexcessof$400million.34Toacquireassets,theTrustmustbe

34http://sec.gov/Archives/edgar/data/1352655/000088237706000801/d431341.htm(lastviewed1/7/10)

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fundedinaccordancewiththerequirementsofthePSA/Trustdocuments.Thepertinenttermsoftheagreementarefoundat2.01(ConveyanceofTrustFund)ofthePSA.35ThissectiondetailshowthemortgagenotesintheinstantcaseweretransferredfromEncoreCreditCorp.(asOriginator)toEMCMortgageCorp.(astheSponsorandMasterServicer)toBearStearnsAssetBackedSecuritiesILLC(theDepositor)toLaSalleBankNationalAssociation(theTrustee).

BearStearnsastheDepositorwasrequiredtodelivertoLaSalletheoriginalmortgagenoteshowinganunbrokenchainofendorsementsfromtheoriginalpayeetothepersonendorsingittotheTrustee.ThepersonendorsingtotheTrusteewastheBearStearnsentity.36InthediscoveryprovidedtothePlaintiff,theonlyendorsementtotheHoracemortgagenoteisablankendorsementpaytotheorderof______withoutrecourseEncoreCreditCorp,ACaliforniaCorporation,signedbyanunreadablenamewithanunreadabletitle.37NolaterthanMay29,2006thereshouldhavebeenataminimumendorsementsfromEncoreCreditCorp.toEMCMortgageCorp.,thenEMCMortgageCorp.toBear

Stearns,thenBearStearnstoLaSalle.ThelastassignmentofthemortgagewasablankendorsementwithastampbyEncorenothinghasbeensubmittedbytheTrusttotheCourtindicatingthatEncoreeverassignedthemortgagetoanyotherentity.Thus,basedonthedocumentsinthiscase,Encore,notLaSalle,isthemortgageholder.LaSalledoesnothavetheauthoritytoforeclosethemortgage.38Andyet,thereisnoshowingofanunbrokenchainofendorsementsinthedocumentsprovidedtothePlaintiff.TheaffidavitofThomasJ.Adams,

expertforthePlaintiff,testifiedtothis:

35Bates#:Lasalle/Horace0067.36SeeBates#:LaSalle/Horace0067-0068:(A)inblankortotheorderofLaSalleBakNationalAssociation,asTrusteeforCertificateholdersofBearStearnsAssetBackedSecuritiesILLC,Asset-BackedCertificates,Series2006-EC2,or(B)inthecaseofaloanregisteredontheMERSsystem,inblank,andineachcaseshowinganunbrokenchainofendorsementsfromtheoriginalpayeethereoftothePersonendorsingittotheTrustee,...37Bates#:Horacev.LaSalle29.

38Plaintiffstatesataminimumbecausetheremayhavebeenmoretransfers.

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AccordingtotherequirementssetforthintheTrustAgreementIwouldexpecttoseeaseriesofendorsementsofthepromissorynotereflectiveofeachpartywhohadaninterestinthepromissorynotereflectiveofeachpartywhohadanownershipinterestinthepromissorynoteculminatingwithablankendorsementfromthedepositorattheveryminimum.39

TheTrustneverpossessedthemortgagenoteperthetermsofthePSA(Poolingand

ServiceAgreement).Further,inthePSAsexhibits,ExhibitOnesetsforththecontentsofthecollateralfileforeachmortgageloanthatistrustpropertyandfurtherincludesafinalspecificendorsementtotheTrusteeforthespecifictrustinthiscasetoeffectafinaltransfertotheTrustandtomaketheHoracepromissorynotetrustproperty.AnyattemptbyLaSalle,orBankofAmerica,totransferthepromissorynotetotheTrustatthislatedatewouldfailfornumerousreasons,nottheleastofwhichisthattheclosingdateofFebruary28,2006passednearly5yearsago.BythetermsoftheTrustandtheapplicable

provisionoftheInternalRevenueCodeincorporatedintoandapartoftheTrustagreement,thepromissorynotecannotbetransferredtotheTrust.40D.THETRUSTISNOTENTITLEDTOTHEMONEYSECUREDBYTHEHORACEBecausetheuncontradictedevidenceinthecaseisthattheHoraceloanhasneverbeenconveyedtotheTrustandaconveyancetotheTrustatthistimewouldbevoidasviolatingthetermsofthePSAtheCourtisleftwithoneclearandinescapableproposition:TheTrusthasneverownedtheHoracepromissorynoteandtheTrustcanneverowntheHoracepromissorynote.MORTGAGEANDCANNOTFORECLOSE

PerAla.Code35-10-12,thepowertoselllandsisheldbythepersonwho...byassignmentorotherwise,becomesentitledtothemoneythussecured.Asoutlinedabove,the39AffidavitandTestimonyofThomasJ.Adams,12.40AffidavitandTestimonyofThomasJ.Adams,17.

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TrusthasnotprovideddocumentationtoshowthatitwasorisentitledtothemoneysecuredbythemortgageofHoracesproperty.ThedefendantTrust[LaSalle]hasofferednoproofofownershipandthecollateralfileofferedbythedefendantTrustclearlydemonstratesthatthisloanwasnotsecuritizednorwasittransferredtothisTrust.41

CONCLUSION

Basedonthelaw,thetermsofthePoolingandServiceAgreement,thefailuretoshowtheproperchainofendorsements,andtheargumentscontainedherein,PlaintiffmovesthisCourttopermanentlyenjoinLaSalleBankNationalAssociation(andBankofAmericaasitssuccessor-in-interest)fromforeclosingonthepropertyat3745KnowlesRoad,PhenixCitybecausetheyhavefailedtomaketherequiredshowingthattheyareoreverwereorevercouldbetheholderofthemortgagepromissorynote.RESPECTFULLYSUBMITTED,/s/NicholasH.Wooten

NicholasH.WootenAla.BarNo.Woo084(AttorneyforPlaintiff)P.O.Box3889Auburn,AL36831-3389Tel.(334)887-3000Fax(334)821-7720OFCOUNSEL:Mr.NickWooten

WOOTENLAWFIRM,P.C.

P.O.Box3389Auburn,Al.36831

(334)887-300041AffidavitandTestimonyofThomasJ.Adams,14anddepositiontestimonypage140,lines4-8.

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JINKS,CROW,&DICKSON,P.C.

POBox350219PrairieStreetNorthUnionSprings,AL36089

CERTIFICATEOFSERVICEIherebycertifythatIhaveservedacopyoftheforegoingupontheDefendantsbyprovidinganelectroniccopyonthisthe13thdayofJanuary2011.AllcounselofRecord_/s/NickWootenOFCOUNSEL-23


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Hirace v LaSalle Bank Trust Lacked Standing[1]

Documents

Transcript of Hirace v LaSalle Bank Trust Lacked Standing[1]