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TABLE OF CONTENTS

I.          STATEMENT OF THE CASE…………………………………..….7

 

A.        PROCEDURAL HISTORY………………………………….7

 

B.        STATEMENT OF FACTS………………………………..…7

 

II.         STANDARD OF REVIEW………………………………..………10

 

III.       ARGUMENT……………………………………………………….11

 

A.        INTRODUCTION………………………………………….11

 

B.        RESPONDENT LACKED STANDING TO BRING THIS ACTION……………………………………………………………12

 

1.   IN FINDING FOR RESPONDENT THE COURT BELOW WRONGLY ASSUMED THAT EITHER A RELATIONSHIP EXISTED BETWEEN MERS AND MORTGAGEIT WHICH GAVE MERS THE AUTHORITY TO ASSIGN THE DEED OF TRUST AND THE POWER OF SALE CONTAINED THEREIN OR MERS WAS THE BENEFICIARY UNDER THE DEED OF TRUST……………………………………….………13

 

a.         MORTGAGEIT DID NOT CONFER THE AUTHORITY TO ASSIGN THE DEED OF TRUST TO MERS……………………………………………………….14

 

(1)       MERS Was Not A Beneficiary Underneath The Deed Of Belief………………………………………..…….15

 

(2)       MERS Is Not An Agent/Nominee Of Mortgageit With Respect To The Task Of The Deed Of Belief At Subject……………….……………..18

 

 

 

 

 

2.   THE POWER OF SALE IN THE DEED OF TRUST WAS NEVER ASSIGNED FROM MORTGAGEIT TO RESPONDENT AND, THEREFORE, RESPONDENT DID NOT HAVE THE POWER OF SALE AT THE TIME OF THE FORECLOSURE SALE OF THE SUBJECT PROPERTY……21

 

3.   EVEN IF MERS WAS PROPERLY ASSIGNED THE POWER OF SALE IN THE DEED OF TRUST, IT LACKED STANDING TO TRANSFER THE NOTE BECAUSE IT NEVER OWNED IT………………….…………………..……25

 

C.        THE NOTICE OF DEFAULT AND SUBSTITUTION OF TRUSTEE WERE VOID BECAUSE THE ENTITIES EXECUTING THE DOCUMENTS DID NOT HAVE THE LEGAL AUTHORITY TO DO SO……………………………………………………….29

 

D.        THE COURT’S APPLICATION OF THE PRESUMPTION SET FORTH IN SECTION 2934A(D) TO THIS MATTER WAS IMPROPER AND ERRONEOUS…………………………………31

 

E.         THERE WAS NO LEGAL REQUIREMENT FOR APPELLANTS TO ESTABLISH PREJUDICE TO DEFEAT RESPONDENT’S CLAIM PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 1161A……………………………….…34

 

IV.       CONCLUSION……………………………………………………36

 

 

 

 

                                              TABLE OF AUTHORITIES

 

CASES

 

In re Agard, 2011 WL 499959 (Bkrtcy E.D.N.Y)………..…14, 19, 23, 26, 27

Financial institution of America, N.A. v. La Jolla Group II (2005)

129 Cal.App.4th 706 ……………………………………………………..22, 23

California Viking Sprinkler Co. v. Pacific Indem. Co. (1963) 213 Cal. App. 2nd 844, 29 Cal. Rptr. 194…………………………………………………….19, 20

Carpenter v. Longan, 83 U.S. 271 (1872)……………………………26, 27, 28

Cheney v. Trauzettel (1937) 9 Cal. 2nd 158…………………………………..11

Cisco v. Van Lew (1943) 60 Cal.App.2nd 575……………………………….18

Widespread Trigger v. Board of Supervisors (1989), 49 Cal. 3d 432, 261 Cal. Rptr. 574, 777 P.2nd 610…………………………………………………………….12

Dimock v. Emerald Properties (2000) 81 Cal. App. 4th 868………….32, 33, 34

Domarad v. Fisher & Burke Inc. (1969) 270 Cal.App.2nd 543……………….28

Fisher v. Salmon (1851) 1 Cal. 413…………………………………………..19

Gantman v. United Pac. Ins. Co. (1991) 232 CA3d 1560, 284 CR 188……12

Ghirardo v. Antonioli (1994) 8 Cal.4th 791…………………………………10

Johnson v. Razey (1919) 181 Cal. 342………………………………………28

Kelly v. Upshaw (1952) 309 Cal. 2nd 179……………………………….27, 28

Kong v. Metropolis of Hawaiian Gardens Redevelopment Company (2002) 101 Cal.App.4th 1317…………………………………………………………….10

Little v. CFS Service Corp. (1987) 188 Cal. App. 3d 1354………….24, 33, 34

Malkoskie v. Choice One (2010) 188 Cal. App. 4th 968……………………..11

McGhan Medical Corp. v. Sup. Ct of San Diego County (1992) 11 Cal.App.4th 804……………………………………………………………………………10

MERS v. Nebraska Dep’t. of Banking and Finance, (2005)

704 N.W.2nd 784…………………………………………………………16, 17

Merscorp, Inc., v. Romaine, 8 N.Y.3d 90, 828 N.Y.S.2nd 266, 861 N.E.2nd 81 (N.Y.2006)………………………………………………………………13, 14

Miller v. Cote (1982) 127 Cal. App. 3d 888………………………………….30

In re Mitchell, US Bk Ct.Nev. Case No. BK-S-07-16226

(August 19, 2008)…………………………………………………………….15

Nagle v. Macy (1858) 9 Cal. 426……………………………………………25

Polhemus v. Coach (1866) 39 Cal. 685…………………………………….28

Santens v. Los Angeles Finance Co. (1949) 91 Cal. App.2nd 197…………..28

Strike v. Trans-West Low cost Corp. (1979) 92 Cal.App.3d 735…………..22

System Inv Corp. v. Union Financial institution (1971) 21 Cal. App. 3d 137………………29

U.S. Financial institution v. Ibanez, No. SJC-10694, 2011 WL 38071 (Mass. Supreme Jud. Courtroom, January 7, 2011)………………………………………………………24

In re Vargas 396 BR 511, 517 (Bankr. C.D. Cal. 2008)……………………..28

Videau v. Griffin (1863) 21 Cal. 389………………………………………..19

Watkins v. Bryant (1891) 91 Cal. 492……………………………………….25

STATUTES

 

California Civil Code part 1091…………………………………………..19

California Civil Code part 2309………………………………………….19

California Civil Code part 2923.5………………………………………..16

California Civil Code part 2924………………….7, 11, 24, 29, 31, 33, 34

California Civil Code part 2924(a)(1)………………………………..12, 29

California Civil Code part 2924(a)(1)(C)…………………………….11, 30

California Civil Code part 2932.5………………………22, 24, 25, 30, 32

California Civil Code part 2934a(d)……………..…..9, 25, 31, 32, 33, 36

California Civil Code part 2936………………………………………22, 27

California Code of Civil Process part 100…………………………….7

California Code of Civil Process part 367…………………………….12

California Code of Civil Process part 1161a……………………….11, 34

 

 

I.

                                            STATEMENT OF THE CASE

A.        PROCEDURAL HISTORY

This case arises out of an order in favor of Respondent in an Illegal Detainer continuing and, particularly, discovering that Respondent had complied with the provisions of California Civil Code part 2924 et seq. regardless of proof that Respondent had not obtained any energy of sale set forth within the Deed of Belief at or previous to the time of the associated Trustee’s Sale.  In arriving at such discovering the Courtroom under decided that Respondent was entitled to possession of the true property at subject.   The Courtroom thereafter issued a ruling in favor of Respondent and this Enchantment adopted.  The Courtroom’s closing judgment of the Courtroom, which is appealable to this Courtroom pursuant to CCP Part 100, was entered on June 25, 2010. The discover of enchantment was filed on August 19, 2010.

B.        STATEMENT OF FACTS

Appellants are a home-owner and a tenant who’ve asserted they had been foreclosed on and evicted unlawfully.  Particularly, Appellants alleged that they had been foreclosed on by Respondent which had no authorized standing to provoke or conclude a non-judicial foreclosures.  Consequently, Respondent was with none authorized authority to carry the underlying motion which is the topic of this Enchantment.  Appellants’ contentions had been that the foreclosures sale was void as Respondent was with none authorized proper to take action and that the Respondent was by no means a holder of the Energy of Sale contained within the Deed of Belief on or earlier than the date that the Trustee’s Sale befell.  The supporting proof offered at trial consisted of, inter alia, the Deed of Belief (“DOT”) figuring out the Lender as MortgageIt, Inc. (“MortgageIt”) and recorded on October 18, 2005 (Clerk’s Transcript (“CT”), at 57-86 and Exhibit “11” at Trial); a Discover of Default (“NOD”) which was both executed by High quality Mortgage Service Company (“High quality”) as a certified agent of MortgageIt or because the Trustee below the Deed of Belief (CT, at 87-90, and Exhibit “12”), which was recorded on January 5, 2009; a Substitution of Trustee (“SOT”) signed by Christina Allen, Duly Appointed Supply, of Choose Portfolio Servicing, Inc., Lawyer in Truth for U.S. Financial institution, Nationwide Affiliation, as trustee, on behalf of the hoders [sic] of the Terwin Mortgage Belief 2006-5 Asset-Backed Ceritificates, TMTS Sequence 2006-5, and recorded on February 18, 2009 (CT at 91-95 and Exhibit “13”); an Task of Deed of Belief (“Task of DOT”) signed by Invoice Koch as an Assistant Secretary of Mortgage Digital Registration Techniques, Inc. (“MERS”), as Nominee for MortgageIt, and recorded on February 27, 2009 (CT at 96-7 and Exhibit “14”),  and a Trustee’s Deed Upon Sale in favor of Respondent (CT at 175-176) and recorded on July 22, 2009, which signifies {that a} Trustee’s Sale was held on July 15, 2009 and that U.S. Financial institution, Nationwide Affiliation, as trustee, on behalf of the hoders [sic] of the Terwin Mortgage Belief 2006-5 Asset-Backed Ceritificates, TMTS Sequence 2006-5 was the “foreclosing beneficiary.”   CT at 12-14.  The Task of the Deed of Belief was executed and recorded AFTER the Substitution of Trustee and Discover of Default.  Thus, High quality acted previous to having the authorized authority to take action.  Furthermore, no proof of any written authorization conferring the rights of an Agent from MortgageIt to MERS was ever offered by Respondent.  Appellants famous at trial that the Task of Deed of Belief in favor of Respondent was recorded 9 calendar days after the Substitution of Trustee and fifty-three days after the Discover of Default.

Regardless of the anomalies famous by Appellants, the Courtroom discovered that Respondent complied with the statutory necessities and entered judgment in its favor on June 25, 2010.  The Courtroom’s judgment was primarily based on the next evaluation:

“COMMENTS; THE COURT FINDS IN FAVOR OF PLAINTIFF. DEFENDANT’S CHALLENGE TO THE VALIDITY OF THE SALE IS DENIED. THE COURT FINDS APPLICABLE THE PRESUMPTION STATE IN CODE OF CIVIL PROCEDURE SECTION 2934A(D) AND FINDS NO PREJUDICE TO THE DEFENDANTS DUE TO SIGNATORY AND RECORDATION REQUIREMENTS.” CT, at 110.

Appellants filed their discover of enchantment on August 19, 2010.  CT at 141-5.

II.

                                               STANDARD OF REVIEW

The usual of assessment involving points whereby the legislation is utilized to info that aren’t in dispute was acknowledged in McGhan Medical Corp. v. Sup. Ct of San Diego County (1992) 11 Cal.App.4th 804 at 810, as follows:

“If … the query requires us to contemplate authorized ideas within the mixture of reality and legislation and to train judgment concerning the values that animate authorized rules, then the issues of judicial administration will favor the appellate court docket, and the query ought to be categorized as one in every of legislation and reviewed de novo. … That is so as a result of normally the applying of legislation to reality would require the consideration of authorized ideas and contain the train of judgment concerning the values underlying authorized rules.(Emphasis added).  (Accord  Ghirardo v. Antonioli (1994) 8 Cal.4th 791 and Kong v. Metropolis of Hawaiian Gardens Redevelopment Company (2002) 101 Cal.App.4th 1317).”

Accordingly, the Customary of Assessment for figuring out whether or not Respondent was a “actual celebration in curiosity,” and all different points on this matter is de novo.

 

III.

ARGUMENT

A.        INTRODUCTION

In an motion for illegal detainer, California Code of Civil Process Part 1161a requires proof from the plaintiff that the property at subject was “duly offered in accordance with Part 2924 of the Civil Code.”  Thus, title, to the extent required by Part 1161a “not solely could, however have to be tried” in such actions.  Malkoskie v. Choice One (2010) 188 Cal. App. 4th 968, 974.  Consequently, the plaintiff should “show a sale in compliance with the statute and deed of belief, adopted by buy as such sale and the defendant could elevate objections” on that part of the problem of title.  Cheney v. Trauzettel (1937) 9 Cal. 2nd 158, 159-60.

With regard to the Discover of Default, Part 2924(a)(1)(C) supplies that it “shall” embody “an announcement setting forth the character of every breach truly recognized to the beneficiary and of his or her election to promote or trigger to be offered the property to fulfill that obligation and every other obligation secured by the deed of belief or mortgage that’s in default.” (emphasis added).  Thus, a stranger to the deed of belief can not elect to invoke the ability of sale within the deed of belief.  The facility is reserved solely for the “beneficiary.”  Cal. Code Civ. Proc. § 2924(a)(1)(C).

On the contrary, different ministerial duties required by the non-judicial foreclosures statutes might be delegated by the beneficiary to, e.g., “the trustee, mortgagee, or beneficiary, or any of their licensed brokers.”  Cal. Code Civ. Proc. § 2924(a)(1).

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B.        RESPONDENT LACKED STANDING TO BRING THIS ACTION

In California, each motion have to be prosecuted within the identify of the true celebration in curiosity, besides as in any other case offered by statute.  Cal. Code Civ. Proc. § 367.  Furthermore, contentions primarily based on lack of standing or {that a} celebration isn’t an actual celebration in curiosity contain jurisdictional challenges and could also be raised at any time within the continuing.  Widespread Trigger v. Board of Supervisors (1989), 49 Cal. 3d 432, 261 Cal. Rptr. 574, 777 P.2nd 610 (1989).

In an illegal detainer motion, the “actual celebration in curiosity” is the individual or entity who owns or holds title to the declare or property concerned.   See Gantman v. United Pac. Ins. Co. (1991) 232 CA3d 1560, 1566, 284 CR 188, 192.  Right here, Respondent claimed to be, and had the burden of show in establishing that it was, the “actual property in curiosity” because of the Task of the Deed of Belief from MERS and the non-judicial foreclosures sale of the Topic Property.  Nonetheless, the task from MERS to Respondent was invalid and didn’t switch any curiosity.  Due to this fact, Respondent didn’t purchase the ability of sale and was not the true celebration in curiosity as a result of it didn’t validly maintain the ability of sale on the time of the trustee’s sale.

Furthermore, Respondent didn’t have a useful curiosity within the Topic Property at any time earlier than or in the course of the underlying motion.  Consequently, because of Respondent’s lack of standing to carry the motion, the judgment in favor of Respondent have to be put aside and the motion dismissed with prejudice.

1.         IN FINDING FOR RESPONDENT THE COURT BELOW WRONGLY ASSUMED THAT EITHER A RELATIONSHIP EXISTED BETWEEN MERS AND MORTGAGEIT WHICH GAVE MERS THE AUTHORITY TO ASSIGN THE DEED OF TRUST AND THE POWER OF SALE CONTAINED THEREIN OR MERS WAS THE BENEFICIARY UNDER THE DEED OF TRUST

“In 1993, the MERS system was created by a number of giant individuals in the true property mortgage business to trace possession pursuits in residential mortgages. Mortgage lenders and different entities, referred to as MERS members, subscribe to the MERS system and pay annual charges for the digital processing and monitoring of possession and transfers of mortgages. Members contractually comply with appoint MERS to behave as their widespread agent on all mortgages they register within the MERS system.”  Merscorp, Inc., v. Romaine, 8 N.Y.3d 90, 828 N.Y.S.2nd 266, 861 N.E.2nd 81 (N.Y.2006) (footnotes omitted).

“The preliminary MERS mortgage is recorded within the County Clerk’s workplace with ‘Mortgage Digital Registration Techniques, Inc.’ named because the lender’s nominee or mortgagee of report on the instrument. Through the lifetime of the mortgage, the useful possession curiosity or servicing rights could also be transferred amongst MERS members (MERS assignments), however these assignments usually are not publicly recorded; as an alternative they’re tracked electronically in MERS’s personal system. Within the MERS system, the mortgagor is notified of transfers of servicing rights pursuant to the Fact in Lending Act, however not essentially of assignments of the useful curiosity within the mortgage.”  Id.

a.         MORTGAGEIT DID NOT CONFER THE AUTHORITY TO ASSIGN THE DEED OF TRUST TO MERS

To trace the chain of title on this motion from Appellant to Respondent, it’s first crucial to research the DOT, the connection between MortgageIt and its “nominee” (MERS), and MERS itself.  The DOT supplies that MERS is each the nominee of the Lender and the beneficiary below the DOT.  See In re Agard, 2011 WL 499959, *20 (Bkrtcy E.D.N.Y.) (“MERS’s place that it may be each the mortgagee and an agent of the mortgagee is absurd, at finest.”).  Nonetheless, a nominee of a beneficiary isn’t the identical as being the beneficiary.  In re Mitchell, US Bk Ct.Nev. Case No. BK-S-07-16226 (August 19, 2008), at p. 6.  The deed of belief in Mitchell contained an analogous assertion, particularly that MERS is the nominee and beneficiary of Fremont.  This assertion doesn’t imply that MERS is the beneficiary.

The Mitchell court docket held {that a} “beneficiary” is outlined as “one designated to learn from an appointment, deposition or task or to obtain one thing because of a authorized association or instrument.” Id. (citing Blacks Regulation Dictionary).   No California statute or resolution holds that anybody apart from the beneficiary or its assignee is entitled to “funds made on the notes” secured by Deeds of Belief.  Accordingly, it’s not factually or legally attainable for MERS to be something greater than an agent or lawyer the truth is.

Furthermore, as set forth under, when every of MERS’s twin positions are analyzed individually, it’s clear that the authorized necessities usually are not glad for both.

(1)       MERS Was Not A Beneficiary Underneath The Deed Of Belief

With regard to the declare within the DOT that MERS was the “beneficiary,” and never simply the nominee/agent, below the DOT or the lender or obligee below the Notice, the proof offered at trial was inconsistent with this assertion.  Particularly, Mr. Timothy Donlon of High quality testified that High quality executed the Discover of Default in January 2009 because the agent for MortgageIt, not MERS.  Reporter’s Transcript (“RT”), at 26:20-3.  Nonetheless, Mr. Donlon later testified that the Part 2923.5 Declaration was executed on behalf of Respondent as beneficiary on December 29, 2008, roughly two months previous to the recording of the Task of DOT.  RT, at 36:3-23; CT, at 106.  Thus, it’s undisputed that MERS was not the “beneficiary” when it alleged assigned the DOT to Respondent in February 2009.

Moreover, MERS is judicially estopped from asserting as such, the truth is or as a matter of legislation, because it has represented the opposite to a number of courts.  In MERS v. Nebraska Dep’t. of Banking and Finance (2005) 704 N.W.2nd 784, it represented to the Supreme Courtroom of the State of Nebraska that:

MERS shall don’t have any rights in any respect to any funds made on account of such mortgage loans, to any servicing rights associated to such mortgage loans, or to any mortgaged   properties securing such mortgage loans. MERS agrees to not assert any rights … with respect to such mortgage loans or mortgaged properties.”

Id.  at 787 (emphasis added).  “Additional, MERS argues that it doesn’t personal the promissory notes secured by the mortgages and has no proper to funds made on the notes. MERS explains that it merely “immobilizes the mortgage lien whereas transfers of the promissory notes and servicing rights proceed to happen.”  Id. (emphasis added).

Moreover, “counsel for MERS defined that MERS doesn’t take purposes, underwrite loans, make choices on whether or not to increase credit score, acquire mortgage funds, maintain escrows for taxes and insurance coverage, or present any loan servicing features in any respect. MERS merely tracks the possession of the lien and is paid for its providers via membership charges charged to its members. MERS doesn’t obtain compensation from customers. The Division doesn’t take subject with this characterization of MERS’ providers.”  Id. (emphasis added).

MERS is clearly not a “Beneficiary” as outlined below California legislation.  That’s, MERS is listed as a beneficiary in identify solely and never pursuant to any authorized definition.  MERS has made it clear that it doesn’t profit from being named because the beneficiary in deeds of belief.  It doesn’t obtain any funds thereunder or any consideration for the task or sale of the deed of belief. There are NO California statutes or choices which maintain that anybody apart from the Beneficiary or its assignee is entitled to “funds made on the notes” secured by Deeds of Belief.  Accordingly, it’s not factually or legally attainable for MERS to be something greater than an agent or lawyer the truth is.

(2)       MERS Is Not An Agent/Nominee Of Mortgageit With Respect To The Task Of The Deed Of Belief At Subject

With regard to MERS’s declare within the DOT that it was the nominee of MortgageIt, the phrase “nominee” connotes solely the delegation of authority to the nominee in a consultant or “nominal” capability, i.e., not a switch or task to the nominee of any property in, or possession of the rights of the individual nominating him, or her or it.  Cisco v. Van Lew (1943) 60 Cal.App.2nd 575.  In Cisco, supra, the court docket moreover held that:

“The phrase nominee ordinarily signifies one designated to behave for one more as his consultant in a quite restricted sense. Within the absence of an task from McGuire to the Ciscos or another efficient substitution of the Ciscos for McGuire because the purchasers, no rights change into vested within the Ciscos which they’re entitled to say on their very own behalf independently of McGuire. (emphasis added).

MERS’s company officers have asserted that it was and is a synonym for “Agent.”  It’s MERS’s tacit or specific assertions that it’s the “widespread agent” of a number of hundred or thousand numerous lenders that creates vital authorized points involving Company legislation.  See Agard, supra, at *15.  Right here, MERS and MortgageIt didn’t fulfill the authorized necessities for an company relationship to switch pursuits in actual property.  See Agard, supra, at *19 (holding that there was inadequate proof to ascertain an company relationship between MERS and its member).

Particularly, California Civil Code part 1091 states, in its entirety:

An property in actual property, apart from an property at will or for a time period not exceeding one yr, might be transferred solely by operation of legislation, or by an instrument in writing, subscribed by the celebration disposing of the identical, or by his agent thereunto licensed by writing.” (emphasis added).

Thus, the one approach for an curiosity in actual property to be transferred is thru a written instrument.  Moreover, for an agent to switch an curiosity in actual property, there have to be a written authorization from the principal which permits the agent to take action.  Accordingly, in California, businesses involving the switch or pledge of pursuits in actual property have to be evidenced by a writing.  Cal. Civ. Code §§ 1091 and 2309; Videau v. Griffin (1863) 21 Cal. 389 at 391; Fisher v. Salmon (1851) 1 Cal. 413).   The burden of proving company, in addition to scope of the agent’s authority, rests upon the celebration asserting the existence thereof.  California Viking Sprinkler Co. v. Pacific Indem. Co. (1963) 213 Cal.App.2nd 844, 29 Cal.Rptr. 194

Consequently, for MortgageIt to validly authorize MERS to switch or promote its curiosity within the DOT that it acquired upon origination of the loan, there have to be a written authorization executed by MortgageIt for MERS to take action.  It’s nonsensical to argue {that a} third celebration (MERS) which didn’t lend any cash to anybody would mechanically, or as a matter of legislation, get hold of a safety curiosity in actual property primarily based solely upon a borrower’s execution of a deed of belief.  The borrower doesn’t outline the connection between the Lender and MERS.

Furthermore, the borrower’s execution of the deed of belief can not, as a matter of legislation, create a written company relationship between two different entities or concurrently give two separate entities the best to train the ability of sale.  If true, debtors could be compelled to take care of the Lender and MERS as each could be able to exercising the ability of sale.  The California non-judicial foreclosures statutes weren’t enacted to permit for such confusion and double restoration.

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Thus, MERS can solely be an agent retained by the lender, i.e., MortgageIt, to deal with the assignments or switch of the deed of belief.  Consequently, a written authorization was required and none was launched at trial by Respondent.  Due to this fact, as Respondent didn’t fulfill its burden of proof in establishing that it acquired a legitimate curiosity within the Topic Property from MERS, the judgment have to be overturned.

Furthermore, the proof at trial was inconsistent with the idea that MERS was appearing because the agent for MortgageIt.  Particularly, Mr. Donlon testified that Respondent had been appearing because the beneficiary roughly two months earlier than Respondent was assigned the DOT.  RT, at 36:3-23; CT, at 106.  Thus, MortgageIt now not had an curiosity within the DOT to assign by the point the Task of the DOT was recorded on February 27, 2009.

Because the company relationship between the 2 entities doesn’t enable for one to switch an curiosity in actual property for the opposite, the eventual Task of the DOT from MERS to Respondent was void as MERS had nothing to assign.  As no proof of a writing conferring such authority on MERS was admitted at trial, U.S. Financial institution didn’t fulfill its burden of creating a correct chain of title from MortgageIt to it. That’s, as a result of MERS couldn’t have been the agent or lawyer the truth is of MortgageIt, the task of the DOT from MERS to U.S. Financial institution is a authorized nullity

2.         THE POWER OF SALE IN THE DEED OF TRUST WAS NEVER ASSIGNED FROM MORTGAGEIT TO RESPONDENT AND, THEREFORE, RESPONDENT DID NOT HAVE THE POWER OF SALE AT THE TIME OF THE FORECLOSURE SALE OF THE SUBJECT PROPERTY

The facility of sale in a deed of belief isn’t the identical as a safety curiosity.  The task of the previous is the topic of Part 2932.5, whereas the latter is ruled by Part 2936.  With regard to the ability of sale, Civil Code part 2932.5 makes it clear that:

“The place an influence to promote actual property is given to a mortgagee, or different encumbrancer, in an instrument supposed to safe the fee of cash, the ability is a part of the safety and vests in any one that by task turns into entitled to fee of the cash secured by the instrument. The facility of sale could also be exercised by the assignee if the task is duly acknowledged and recorded.” (Emphasis added).

The statute is obvious in that it expressly identifies each an “encumbrancer” and “an instrument supposed to safe the fee of cash.”  Certainly, the Fourth District Courtroom of Appeals has expressly utilized the language of the statute to Deeds of Belief stating:

A recorded task of be aware and deed of belief vests within the assignee all the rights, pursuits of the beneficiary together with authority to train any energy of sale given the beneficiary.”  Strike v. Trans-West Low cost Corp. (1979) 92 Cal.App.3d 735 at 744 (emphasis added).

Furthermore, Part 2932.5 was enacted for the safety of the trustor, not the beneficiary.  Particularly, in Financial institution of America, N.A. v. La Jolla Group II (2005) 129 Cal.App.4th 706, 712, the court docket acknowledged that

“The facility of sale solely exists whether it is expressly granted by the trustor within the safety paperwork.  The statutory scheme governing nonjudicial foreclosures doesn’t broaden the beneficiary’s sale treatment past the events’ settlement, however as an alternative supplies extra safety to the trustor:  Statutory provisions relating to the train of the ability of sale present substantive rights to the trustor and restrict the ability of sale for the safety of the trustor.”  (emphasis added).

Thus, Part 2932.5 was enacted to guard the trustor and alleviate confusion as to which entity had the ability of sale at any specific time.  However, MERS was created solely to save cash.  Agard, supra, at *13 (“MERS was created to alleviate issues created by, what was decided by the monetary neighborhood to be, gradual and burdensome recording processes adopted by nearly each state and locality. In impact the MERS system was designed to avoid these procedures. MERS, as envisioned by its originators, operates as a alternative for our conventional system of public recordation of mortgages.”).

Right here, Respondent is a securitized belief.  More and more it’s being proven that severe questions come up as to the possession of a given mortgage loan and the rights related to such possession.  Most just lately, the Massachusetts Supreme Judicial Courtroom within the matter of U.S. Financial institution v. Ibanez, No. SJC-10694, 2011 WL 38071 (Mass. Supreme Jud. Courtroom, January 7, 2011), held that the place a foreclosing celebration conducts a non-judicial foreclosures sale it MUST maintain the requisite Energy of Sale at or earlier than the time of sale.  Within the Ibanez case, the foreclosing entities, two Trustees of securitized trusts, one in every of which was Respondent, didn’t maintain the Energy of Sale on the time of sale and, accordingly, the gross sales had been deemed void.

The identical applies in California.  Particularly, neither the “mortgagee” nor “encumbrancer,” i.e., MortgageIt, assigned the ability of sale to Respondent.  As a substitute, it was allegedly assigned to it by MERS but it surely was by no means assigned to MERS.  Thus, MERS had nothing to assign.  Furthermore, the task has no authorized existence previous to recordation.  In any other case, the plain language of CC 2932.5 could be rendered meaningless.  Accordingly, it was not attainable for both Respondent or High quality to ascertain it complied with Civil Code part 2924 et seq as neither of them held the rights, title or curiosity of a beneficiary on the time of the sale.

The place the defect in a foreclosures sale is the failure to adjust to a statutory provision which is necessary, the sale is void.  Little v. CFS Service Corp. (1987) 188 Cal. App. 3d 1354, 1358.  Thus, the non-compliance with Part 2932.5 voids the sale. In contrast to Part 2934a(d) with regard to substitution of trustees, there isn’t any provision which validates upon recordation, foreclosures actions by the assignee after execution of the task however previous to recordation.  Due to this fact, it’s only upon recordation of the Task of DOT that Respondent was permitted by legislation to provoke the foreclosures.  Its actions previous to its authorization to behave together with the recording of the SOT are invalid.  In mild of the foregoing, there might be little doubt that any actions taken by an assignee previous to the recording of the task are a authorized nullity.

3.         EVEN IF MERS WAS PROPERLY ASSIGNED THE POWER OF SALE IN THE DEED OF TRUST, IT LACKED STANDING TO TRANSFER THE NOTE BECAUSE IT NEVER OWNED IT

Standing to foreclose in California requires possession of the be aware. The beneficiary have to be an obligee of the secured obligation (normally the payee of a be aware) as a result of in any other case, the deed of belief in its favor has no function.  Watkins v. Bryant (1891) 91 Cal. 492; Nagle v. Macy (1858) 9 Cal. 426.  Neither MERS’s standing as a nominee for the useful proprietor, nor its standing as a beneficiary below the DOT is ample to create standing to foreclose.

Due to this fact, as set forth above, MERS isn’t an precise beneficiary of something.  It is just a nominal beneficiary or nominee/agent below the DOT.  Each the Notice and DOT establish the lender as MortgageIt.  In reality, MERS isn’t talked about in any California promissory notes.  Furthermore, there isn’t any assertion within the DOT that the be aware has been transferred to MERS or to every other entity.  Accordingly, MERS lacked the authorized authority to assign the DOT as a result of the Notice and the DOT had been owned by separate entities on the time.

Consequently, even when MERS held the ability of sale from the DOT on the time of the task to Respondent, it had no useful curiosity within the Notice.  See Agard, supra, at * 12 (“By MERS’s personal account, it took no half within the task of the Notice on this case, however merely offered a database which allowed its members to electronically self-report transfers of the Notice. MERS doesn’t verify that the Notice was correctly transferred or the truth is whether or not anybody together with brokers of MERS had or have bodily possession of the Notice. What stays undisputed is that MERS didn’t have any rights with respect to the Notice and apart from as described above, MERS performed no position within the switch of the Notice.”).

Moreover, the splitting of possession of the be aware and the deed of belief is much more problematic.  As acknowledged by the court docket in Agard,

“In easy phrases the Movant depends on the argument {that a} be aware and mortgage are inseparable. See Carpenter v. Longan, 16 Wall. 271, 83 U.S. 271, 274, 21 L.Ed. 313 (1872). Whereas it’s typically true {that a} mortgage travels a parallel path with its corresponding debt obligation, the events on this case have adopted a course of which by its very phrases alters this follow the place mortgages are held by MERS as “mortgagee of report.” By MERS’s personal account, the Notice on this case was transferred amongst its members, whereas the Mortgage remained in MERS’s identify. MERS admits that the very basis of its enterprise mannequin as described herein requires that the Notice and Mortgage journey on divergent paths. As a result of the Notice and Mortgage didn’t journey collectively, Movant should show not solely that it’s appearing on behalf of a legitimate assignee of the Notice, but additionally that it’s appearing on behalf of the legitimate assignee of the Mortgage.”  Agard, supra, at *13.

Underneath California legislation, the identical authorized precept applies.  Thus, the mortgage or deed of belief follows the be aware.  That’s, if the creditor transfers the be aware however not the deed of belief, the transferee receives a secured be aware, i.e., the safety follows the be aware.  Cal. Civ. Code § 2936.  Nonetheless, if the transferee is given the deed of belief with out the be aware accompanying it, the switch has no significant rights besides the opportunity of a authorized motion to compel fee below the be aware, if such was the settlement.  Kelly v. Upshaw (1952) 309 Cal. 2nd 179; Polhemus v. Coach (1866) 39 Cal. 685.  Likewise, an task of the deed of belief with out switch of the duty (the promissory be aware) is totally ineffective. Kelly, supra, at 192; Johnson v. Razey (1919) 181 Cal. 342; Domarad v. Fisher & Burke Inc. (1969) 270 Cal.App.2nd 543, 553-554; Santens v. Los Angeles Finance Co. (1949) 91 Cal. App.2nd 197, 202.

Due to this fact, MERS was not a beneficiary below the DOT because the Notice was held by one other, albeit unknown, entity, as is at all times the case with MERS.  That’s, even when MERS is the beneficiary below the Deed of Belief (which it’s not), with out possession of the Notice, it didn’t have an enforceable proper. See, e.g., In re Vargas 396 BR 511, 517 (Bankr. C.D. Cal. 2008) (“[w]hile the be aware is crucial, the mortgage is barely ‘an incident’ to the be aware.”); see additionally Carpenter v. Longan (1872) 83 U.S. 271, 275.

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In abstract, though standing to implement the be aware via foreclosures in California could not require bodily possession of the unique be aware, it requires possession of the be aware.  Thus, the beneficiary of the deed of belief have to be an obligee of the secured obligation (payee of the be aware) as a result of in any other case the deed of belief in its favor has no function. Due to this fact, MERS had no standing as a beneficiary below the DOT when the be aware is owned and held by one other entity and, thus, MERS didn’t have standing to assign the be aware to Respondent for the aim of instituting foreclosures proceedings in opposition to the Topic Property.  As solely MortgageIt seems to have had an possession curiosity within the be aware, it’s the solely entity who might have assigned it to Respondent.  Once more, for MERS to assign it to Respondent on behalf of MortgageIt, there have to be a written authorization from MortgageIt permitting MERS to take action.  As none was launched at trial, the task of the DOT to Respondent was invalid and void as Respondent by no means acquired the authorized authority to implement the be aware.

C.        THE NOTICE OF DEFAULT AND SUBSTITUTION OF TRUSTEE WERE VOID BECAUSE THE ENTITIES EXECUTING THE DOCUMENTS DID NOT HAVE THE LEGAL AUTHORITY TO DO SO

The non-judicial foreclosures statutes set forth in California Civil Code Part 2924 et seq., require strict compliance.  System Inv Corp. v. Union Financial institution (1971) 21 Cal. App. 3d 137, 152-3 (“The statutory necessities have to be strictly complied with, and a trustee’s sale primarily based on a statutorily poor Discover of Default is invalid.”).  As set forth above, there was no compliance in any respect because the NOD and SOT had been recorded BEFORE the Task of the DOT.

With regard to the NOD, the plain language of Civil Code part 2924(a)(1) makes it clear that solely the unique “trustee, mortgagee, or beneficiary” could “file for report, within the workplace of the recorder of every county whereby the mortgaged or belief property or some half or parcel thereof is located, a discover of default.”  Certainly, if the legislature had not supposed for the beneficiary of a deed of belief to be the de facto holder of the Energy of Sale, it will not have required that the beneficiary set forth the character and extent of the default within the Discover of Default as required by part 2924(a)(1)(C) which states, in pertinent half, that “A press release setting forth the character of every breach truly recognized to the beneficiary and of his or her election to promote or trigger to be offered the property to fulfill that obligation and every other obligation secured by the deed of belief or mortgage that’s in default.” (emphasis added).

Right here, the NOD was executed and recorded by High quality previous to it being substituted in as trustee via the SOT.  Thus, the NOD is invalid as a result of it was both (1) recorded by a “trustee” who was not a trustee on the time of recordation; or (2) recorded by an agent of a “beneficiary,” MortgageIt or MERS, neither of which had a useful curiosity within the DOT on the time of recordation.  See Miller v. Cote (1982) 127 Cal. App. 3d 888, 894.  The “electing beneficiary” should have authorized energy deriving from the unique Notice or Deed of Belief.  Right here, MERS didn’t have both.  Thus, the NOD was recorded by a stranger to the DOT.

Accordingly, there appears to be no dispute that an Task of the Energy of Sale, as laid out in Civil Code part 2932.5 have to be acknowledged and recorded to be efficient.  As Respondent didn’t set up at trial that it was correctly assigned the ability of sale, there was no legally cognizable foundation for a trustee’s sale.  Thus, as Respondent didn’t present compliance with California Civil Code part 2924, it was not entitled to a judgment within the underlying motion.

D.        THE COURT’S APPLICATION OF THE PRESUMPTION SET FORTH IN SECTION 2934A(D) TO THIS MATTER WAS IMPROPER AND ERRONEOUS

In its ruling, the Courtroom utilized the presumption set forth in Part 2934a(d) which units forth that

“A trustee named in a recorded substitution of trustee shall be deemed to be licensed to behave because the trustee below the mortgage or deed of belief for all functions from the date the substitution is executed by the mortgagee, beneficiaries, or by their licensed brokers.  . . .  As soon as recorded, the substitution shall represent conclusive proof of the authority of the substituted trustee . . . to behave pursuant to this part.”  Accordingly, pursuant to Part 2934a(d), the essential reality of such presumption is the recording of a substitution of trustee.  If the essential reality isn’t proven, the presumption has no impact.”

Nonetheless, implied within the presumption is the requirement of a legitimate substitution of trustee.  If the substitution isn’t legitimate, the presumption would conclusively enable a trustee named in a solid substitution, or substitution filed by a stranger with no connection to the property, to have any motion undertaken in both state of affairs conclusively presumed to be authoritatively taken.

Right here, the SOT recorded on February 18, 2009, is a substitution by a stranger.  As a consequence of non-compliance on the time of the recordation with the required prior recorded task to Respondent pursuant to Part 2932.5, Respondent had no energy to make stated substitution.  Whereas Part 2934a(d) statutorily makes acts taken by a trustee after execution of a substitution, however earlier than recordation, retroactively legitimate upon recordation of the substitution, there isn’t any corresponding provision pursuant to Part 2932.5 for the Task of DOT to Respondent.  That’s, Respondent’s acts previous to recordation usually are not statutorily retroactive.

Consequently, the conclusive presumption of authority set forth in Part 2934a(d) primarily based on the recordation of the SOT on February 18, 2009, earlier than Respondent was empowered to behave in any capability within the foreclosures of the Topic Property, is invalid, a nullity, and void.  Due to this fact, the presumption is ineffective to conclusively set up something.

The case at bar is considerably much like Dimock v. Emerald Properties (2000) 81 Cal. App. 4th 868.  In Dimock, the substitution of trustee voided the foreclosures motion initiated by the trustee of report previous to the recordation of the substitution.  Thus, the court docket discovered that as a result of the preliminary trustee was disadvantaged of its energy to convey the property by the substitution of trustee, the trustee’s deed upon sale executed by the preliminary trustee was void.

Equally, Respondent had no energy to substitute a trustee previous to February 27, 2009, when by recordation it was allegedly assigned the DOT from the unique beneficiary, all actions taken by any trustee (apart from Traders Title – the trustee listed within the DOT) had been void, together with the recording of the NOD upon which the trustee’s sale was primarily based.  Thus, the void deed in Dimock primarily based on substituting a trustee out by recordation is equal to the void SOT signed and recorded by Respondent earlier than it was empowered to take action by recordation.  Little, supra, 188 Cal. App. 3d at 1354 (“A void contract can’t be given any impact in any respect [citation omitted].  It binds nobody and is a mere nullity.  [citation omitted].”).

Respondent’s SOT, previous to its empowerment to provoke foreclosures on February 27, 2009, offered no authority to provoke foreclosures on behalf of Respondent.  Thus, Respondent didn’t show compliance with Part 2924 and was not entitled to the presumption set forth in Part 2934a(d).  Alternatively, there was ample proof at trial, as set forth above, to beat any presumption primarily based on the shortage of authorized authority to assign something to anybody.

E.        THERE WAS NO LEGAL REQUIREMENT FOR APPELLANTS TO ESTABLISH PREJUDICE TO DEFEAT RESPONDENT’S CLAIM PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 1161A

Opposite to the Courtroom’s ruling, in an illegal detainer motion introduced pursuant to CCP Part 1161a, there isn’t any requirement that the defendant set up prejudice to defeat the plaintiff’s declare.  As a substitute, the plaintiff in a Part 1161a illegal detainer motion has the burden of creating compliance with the non-judicial foreclosures statutes set forth in Part 2924, et seq.  When attacking a void sale as a defendant in an illegal detainer motion, the defendant isn’t required to satisfy any of the burdens that could be imposed when, as a matter of fairness, a celebration is affirmatively in search of to put aside a voidable trustee’s sale.  Dimock, supra (citing Little, supra, 188 Cal. App. 3d at 1354).

Moreover, the non-judicial foreclosures statues have to be strictly construed.  If the legislature had supposed for prejudice to be a component in a protection, it will have included the component in Part 1161a and/or Part 2924 et seq.  Furthermore, the legislation by no means locations any burdens of proof on a defendant with regard to the claims in opposition to the defendant.  It’s the plaintiff that should fulfill its burden of creating every component of its case.  Illegal detainer actions are not any completely different.  Alternatively, the judgment ought to be put aside and remanded in order that Appellants can introduce proof of prejudice as there was no approach for them to know that it was a required component till after the trial concluded and the judgment was rendered.

 

IV.

CONCLUSION

            Within the instantaneous matter there was by no means any proof offered, nor do Appellants imagine such proof existed, authorizing MERS to behave because the agent or lawyer the truth is of MortgageIt.  In mild of clear statutory necessities there might be little query that absent such authority any motion taken by a purported agent is void.  Right here the execution of an Task of Deed of Belief from MERS to Respondent was a authorized nullity.

Even when such task was legally legitimate, there isn’t any logical or authorized foundation for holding that the NOD and SOT, which had been executed and recorded previous to the Task of the DOT, had been legitimate as such a holding could be inconsistent with present decisional and statutory legislation.  Accordingly, the trustee’s sale was void and a authorized nullity.

Lastly, the Courtroom’s software of the presumption set forth in Part 2934a(d) and requirement that Appellants present prejudice had been improper.  In mild of the foregoing, the choice of the Courtroom under ought to be reversed in its entirety and its orders vacated.

 

 

 

 
 

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