Preview
John S. Sargetis SBN 80630
Stephen J. Foondos (SBN: 148982)
UNITED LAW CENTER
3013 Douglas Boulevard, Suite 200
Roseville, California 95661
Telephone: (916) 367-0630
Facsimile: (916) 265-9000
Attorneys for Plaintiff
JOSEPH NEW
ELECTRONICALLY
FILED
Superior Court of California,
County of San Francisco
01/21/2015
Clerk of the Court
BY:ANNIE PASCUAL
Deputy Clerk
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN FRANCISCO
JOSEPH S. NEW
Plaintiff,
VS.
U.S. BANK NATIONAL ASSOCIATION
AS TRUSTEE FOR THE BENEFIT OF
HARBORVIEW 2005-2 TRUST FUND;
RECONTRUST COMPANY, N.A.;
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.; BANK
OF AMERICA, N.A.; and DOES 1 — 100,
inclusive,
Defendants.
SS SS SSS
Case No. CGC -14- 538800
PLAINTIFF’S POINTS AND
AUTHORITIES IN OPPOSITION TO
DEMURRER OF U.S. BANK AND
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS TO
SECOND AMENDED COMPLAINT
DATE: February 3, 2015
TIME: 9:30 A.M.
DEPT: 501
Opposition to Demurrer to Second Amended ComplaintTABLE OF CONTENTS
TV. Entroduction vccccccesccsccsessessesessessesesessessnssessesussvesssessecucecsnesrecnesesseeneeeeeaesuseneeseenesseesseneensenes 1
IL. Factual Background
Il Standard of Review
IV. Opposition to Defendant’s Request for Judicial Notice .....c..secsessesecsecsseesnssssecsnseneeseeeseee 6
V. Plaintiff Sufficiently Pled Standing to Allege Wrongful Foreclosure........eeceeeeeeeetseseenee q
VI. Plaintiff Sufficiently Pled Prejudice by the Wrongful Foreclosure... eeeeeeeeeeeeeeene 12)
VIL = The Unlawful Detainer Judgment is not Res Judicata ........cccscesessssssesesseessesesseesseereseeneens 13)
VIIL = Tender of Loan Amount not Required ......0..c.ccccsssresesssseessesesseesssersseesestessenssesueenesneevess 14TABLE OF AUTHORITIES
Cases
Cheney v. Trauzettel (1937) 9 Cal.2d 158 ..
Culhane v. Aurora Loan Services of Nebraska, supra, 708 F.3d at p. 290... ceceseseseeceesreeeenee il
Evans v. Superior Court (1977) 67 Cal. App.3d 162.....sescecsssesessecssssccsesessesscenecnneneeanssneeecensaseneess 14
Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal. App.4th 256 ....ccecssecsessesseseercsseesesseseererse 13)
Glaski v. Bank of America, N.A. (2013) 218 Cal. App.4th 1079 oo cceeeeneeeeeees 7, 8,9, 10, 11, 12)
Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal. App.4th 1149 oe eeeeeseeseeaees 9, 12
Gonzales v. Gem Properties, Inc. (1974) 37 Cal.App.3d 1029 .
Holland v. Morse Diesel International, Inc. (2001) 86 Cal. App. 4th 1443 oo.
Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal. App.4th 497 oo. cssseseseesees 8,9, 10, 11
Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 117, 92.0.0... ccceeeeeeee sees 14
Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75 cscs 13
Unruh-Haxton y. Regents of Univ. of Cal. (2008) 162 Cal. App.4th 343... cescsssecessseseestenreenes 6
Vella v. Hudgins (1977) 20 Cal.3d 251, 255 ...scsscccssssscecsesssssesrearsnesesverssseneaceescneencasenensesseeerensenes 14
Wells Fargo Bank, N.A. v. Erobobo (Apr. 29, 2013) 39 Misc. 3d 1220(A)...
Statutes
Cal. Civ. Code §2924.ccecssssenssesenecsres
California Evidence Code section 452(d)
Evid. Code, §452...cccesscsesesseseeseseseess
Internal Revenue Code 26 U.S.C. §860G
Under 26 U.S.C. §860G.
diPlaintiff, Joseph S. New (hereinafter "Plaintiff") presents the following points. and
authorities in opposition to the demurrer of U.S. BANK AND MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS to the Second Amended Complaint (SAC) .
I. Introduction
Defendant’s demurrer should be overruled because, as demonstrated in the Second
Amended Complaint, Plaintiffs have alleged sufficient facts against Defendant to constitute a
Cause of Action for Wrongful Foreclosure. In the alternative and in the event that the Court
sustains Defendant’s demurrer in any respect, Plaintiffs respectfully request leave to amend the
Complaint so Plaintiffs may allege additional facts that would cure any deficiencies this Court
identifies.
I. Factual Background
The SAC in this action presents one cause of action for wrongful foreclosure by the
defendant of plaintiffs residence based on the latter not having standing or the legal right to
foreclose. The relevant allegations of the FAC all of which are deemed true for demurrer
purposes are as follows:
On July 7, 2011 an ASSIGNMENT OF DEED OF TRUST (ADOT) of the subject DOT
on which the foreclosure was based on was recorded with the San Francisco Recorder. This
Assignment identified MERS referring to itself as the “holder of the Deed of Trust” as the
assignor and US Bank as the assignee. Page 5 and 6, Para. 8.
The mere recording of the Assignment of DOT does not establish that US Bank was, in
fact, the holder of the beneficial interest in the plaintiffs DOT. Similarly, it did not establish
that US Bank in fact became the owner or holder of that beneficial interest in order to be able to
initiate or maintain foreclosure proceedings. Para. 10
Thereafter on October 14, 2011 there was recorded by Recontrust in the capacity of
“agent for the beneficiary” a “NOTICE OF DEFAULT AND ELECTION TO SELL UNDER
DEED OF TRUST” (NOD). Para. 11.
The NOD stated the amount of past due payments was $29,813.13 as of October 10,
2011. It also stated: “To find out the amount you must pay, or to arrange for payment to stopthe foreclosure,... contact: US Bank care of Bank of America. Para. 13
US Bank or its agent Bank of America directed Recontrust to issue the NOD.
Thereafter there was recorded on January 14, 2013 a “TRUSTEE’S DEED UPON SALE
executed by said Recontrust transferring the property to US Bank. US Bank or its agent Bank of
America directed Recontrust to issue the said Trustees Deed. Para. 14
Transfers that violate the terms of the Trust instrument created under the laws of New
York are void under New York trust law. Para. 15
Plaintiff has standing to challenge a void Assignment of his loan and DOT even though
he is not.a party to, or a third party beneficiary of the Pooling and Servicing Agreement (PSA)
that created the said Trust. Para 16.
More specifically, Plaintiff may and does challenge the validity of the said Assignment
to the said Trust by alleging the transfer to it occurred after the Trust’s closing date which
would render the assignment absolutely invalid or ineffective, or void and consequently any
foreclosure proceedings arising therefrom. Para. 17
Independently, Plaintiff may and does challenge the validity of the said Assignment to
the said Trust by alleging the transfer to it by the said Assignment document violated the PSA
which requires the Depositor to deliver to and deposit the original note, DOT and assignment to
the trustee which if not done would render the assignment absolutely invalid or ineffective, or
void. Para, 18.
Independently, Plaintiff may and does challenge the validity of any purported prior
unrecorded assignment to the said Trust by alleging the transfer to it violated the PSA which
requires the Depositor to deliver to and deposit the original note, DOT and assignment to the
trustee which if not done would render the assignment absolutely invalid or ineffective, or void.
Para. 19.
This action maintains defendants as the foreclosing entities were not the true owners of
the loan and DOT because its chain of ownership had been broken by illegal transfers of the
loan and DOT to the Trust. Para. 20.27
28
The subject Trust is a common law trust formed pursuant to New York law and named
HARBORVIEW 2005-2 TRUST FUND. Para. 22.
US Bank is the purported original trustee for the Trust. Para. 28
Under New York Trust Law, every sale, conveyance or other act of the trustee in
contravention of the Trust is void. EPTL § 7-2.4. Para 29
Per New York Estates, Powers & Trusts Law section 7-2.4: “If the trust is expressed in
an instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee
in contravention of the trust, except as authorized by this article and by any other provision of
law, is void.” The statutory purpose is “to protect trust beneficiaries from unauthorized actions
by the trustee.” (Turano, Practice Commentaries, McKinney’s Consolidated Laws of New York,
Book 17B, EPTL § 7-2.4.) Para. 30
The closing date to validly assign the subject Note and DOT to the said Trust was in
2005. Para. 31.
Therefore, the Assignment described above of the subject Note and DOT by the trustee
after the date the Trust closed is void. Under New York law, any transfer to the trust in
contravention of the trust documents is void. Para 32.
Under New York law, assignment of the Note or DOT after the “closing date” is void ab
initio. Para. 33
Separate from the said Assignment being void because it was done after the closing date,
the said Assignment is void as it violated the PSA which requires the Depositor to deliver to and
deposit the original note, DOT and assignment to the trustee which was not done and therefore
the Assignment is absolutely invalid or ineffective, or void. Para. 34
Separate from the said Assignment being void on the grounds stated above any prior
assignment of the Note and DOT defendants can claim to have made to the trustee of said Trust
also violated the PSA which requires the Depositor to deliver to and deposit the original note,
DOT and assignment to the trustee which was not done and therefore any such claimed
assignment was absolutely invalid or ineffective, or void. Para. 35Finally, the Note and DOT were not duly endorsed, transferred and delivered to the
Trust in any other manner. Para. 36.
Therefore, the said Note and DOT were not effectively or legally transferred tothe Trust
that held the poo! of mortgage loans and thus the Trust never held the loan or DOT to be able to
initiate or legally maintain or direct foreclosure proceedings. Para. 37
Although there is no requirement under California law for the said Assignment to have
been recorded, since it was recorded, defendants are subject to the consequences of said
recorded document. The purported assignee of the said Assignment was defendant US Bank.
The issuance of the Notice of Default, Notice of Trustee’s Sale, the conducting of the trustee’s
sale and the recording of the Trustees Deed were all directed by US Bank or its agents
Recontrust or B of A acting on their behalf and arising solely out of the US Bank’s claimed
rights per the said Assignment and not out of any other authority or right to institute foreclosure
proceedings. Para. 38.
The fact that the trustee’s sale was conducted is not conclusive that it was performed
legally. Para. 39
Plaintiff is not required to establish prejudice in order to maintain this cause of action as
the foreclosure sale process was void under law, not merely voidable. However plaintiff was
prejudiced by the foreclosure sale as his lost title to his residence. Para. 40.
The Trust was created by a Pooling and Servicing Agreement (PSA) which established a
closing date after which the Trust may no longer accept loans and the procedure by which notes
and DOT’s are assigned to the Trust. These statutory provisions provides a legal basis for
concluding that the trustee’s attempt to accept a loan after the closing date or violation of the
procedure in which it must receive them would be void as an act in contravention of the Trust
document. Para. 41
Pursuant to Section 2.05 of the Pooling and Servicing Agreement, all mortgage files
transferred to the Trust must be delivered on or before the closing date and “shall deliver to and
deposit with, or cause to be delivered to and deposited with, the Trustee or the Initial Custodian
of the Mortgage Files, which shail at all times be identified in the records of the Trustee or the27
28
Initial Custodian, as applicable, as being held by or on behalf of the Trust. Concurrently with
the execution and delivery hereof, the Company shall cause to be filed with respect to each
Cooperative Loan the UCC assignment or amendment referred to in clause (Y)(vii) of the
definition of "Mortgage File." In connection with its servicing of Cooperative Loans, the
Servicer shall use its best efforts to file timely continuation statements, if necessary, with regard
to each financing statement relating to a Cooperative Loan". Para. 42.
Plaintiff's Note and DOT were not endorsed, transferred, and delivered into the trust
pursuant to the PSA before the closing date as set forth in Section 2.05 of the Pooling and
Servicing Agreement on file in this action, as it was not listed in any documents filed by the
Trust and available to the public at ww-w.edgar.gov. Accordingly, the subject Note and DOT
were never lawfully negotiated and physically delivered to the Trust. Therefore, the Trust did
not have standing to initiate or direct foreclose on the Subject Property. Para. 44
The said Assignment was ineffective as the Trust could not have accepted the Deed of
Trust after the Closing Date pursuant to the PSA and the requirements for a REMIC Trust. If the
Assignment was made after the closing date, the non-compliance with the REMIC statutes
would terminate the tax exempt status under the REMIC statutes. Para. 45.
Furthermore the PSA requires the Depositor to deliver and deposit with the trustee the
original note, the original mortgage and original assignment. The trustee is then required to
provide the Depositor an acknowledgment of receipt of the assets. The rationale behind this
requirement is to provide at least two intermediate levels of transfer to ensure the assets are
protected from the possible bankruptcy by the originator which permits the security to be
provided with the rating required for the securitization to be saleable. Para. 47
Any purported assignment that occurred with the subject Note and DOT whether by the
purported Assignment or any purported assignment failed to be assigned in this manner. Para.
48.
Therefore, the foreclosure of the Subject Property, as well as the Notice of Default,
Notice of Trustee's Sale, and Trustee's Deed Upon Sale, were wrongful and void ab initio. Para.
4912
13
14
27
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TENDER With regards to this cause of action plaintiff is not required to allege he
tendered payment of the loan balance because (1) absence of a tender does not bar a claim for
damages, (2) the tender rule is a principle of equity, (3) tender is not required where the
foreclosure sale is void, rather than voidable, such as alleged above the defendant lacked the
authority to foreclose on the property. Para. 57.
By utilizing a wrongful legal instrument to purportedly assign a Deed of Trust after the
closing date, the assignment becomes ineffective, thus precluding these Defendants, and each of
them, from conducting a Trustee's Sale, thus rendering the Trustee's Sale void ab initio and
requiring the Trustees Deed to be set aside. Para. 58
I. Standard of Review
A demurrer admits the truth of all facts properly pleaded. (Holland v. Morse Diesel
International, Inc. (2001) 86 Cal. App. 4th 1443, 1447) When considering the sufficiency of a
pleading, a court must liberally construe the allegations of the complaint with a view to
attaining substantial justice among the parties. (Youngman v. Nevada Irrigation District (1969)
70 Cal.2d 242, 244-245.) A complaint need only set forth the essential facts in a manner that
informs the defendant of the nature, source, and extent of the cause of action. (Id.) If there is
any reasonable possibility that the plaintiff can state a cause of action, she must be given leave
to amend. (Id. at 245.) Generally, California courts have exercised a policy of great liberality in
allowing amendment “at any stage of the proceeding so as to dispose of cases upon their
substantial merits where the authorization does not prejudice the substantial rights of others.”
(Douglas v. Superior Court (1989) 215 Cal.App.3d 155, 158.)-
IV. Opposition to Defendant’s Request for Judicial Notice
The Defendants’ request for Judicial Notice under California Evidence Code section
452(d) is inappropriate. This statute allows judicial notice of, “(d) Records of (1) any court of
this state or (2) any court of record of the United States or of any state of the United
States.”Evid. Code, §452.
Additionally, "a hearing on a demurrer cannot be turned into a contested evidentiary
hearing through the guise of having the court take judicial notice of documents whosetruthfulness or proper interpretation are disputable." (Unruh-Haxton v. Regents of Univ. of Cal.
(2008) 162 Cal.App.4th 343, 365.) In the instant case, Defendants’ demurrer improperly relies
entirely on extrinsic evidence, as the court does not take judicial notice of the truth of their
contents.
Vv. Plaintiff Sufficientiy Pled Standing to Alege Wrongful Foreclosure
In the First Cause of Action for Wrongful Foreclosure, Plaintiff alleges that Defendants
had no rights to the Subject Loan at all, and therefore, the subsequent foreclosure on the Subject
Property was wrongful. As the warrant for this claim, Plaintiffs allege that in order for
Defendant to have been able to own the Subject Loan and subsequently pool it with other
mortgages, it had to have acquired the Loan and the security within 90 days of the statutorily-
mandated closing date of the Real Estate Mortgage Investment Conduit (“REMIC”) Trust
(Trust), Under 26 U.S.C. §860G, a mortgage only qualifies to be placed into a REMIC Trust if
the REMIC possesses all necessary documents pertaining to the Subject Loan (Note and Deed
of Trust) within those 90 days, Failure to acquire those necessary documents means the Loan is
not a “qualified mortgage” as defined by the statute. As such, the Trust cannot own the Loan.
As Plaintiff alleges that the governing law of the Trust is New York Law, as New York Trust
Law (NY EPTL §7-2.4) specifies that any action taken by the Trustee in contravention of the
Trust is a void act, and as Plaintiff alleges that US Bank continuing to assert an ownership
interest in the Subject Loan threatened the REMIC status of the Trust, opening it to sever tax
consequences, the late assignment of the Deed of Trust to the Trust constituted a void act. (See
Glaski v. Bank of America, N.A. (2013) 218 Cal.App.4th 1079, 1097.)
Defendants first argument is that just because the recording of the Assignment didn’t
take place until the recording date it might have been actually been assigned earlier and the
recording may be to only reflect what may have been done earlier. The problem with that
argument is for demurrer purposes is what is alleged in the complaint is deemed true, Para. 36
alleges:
36. Finally, the Note and DOT were not duly endorsed, transferred
and delivered to the Trust in any other manner.Therefore the complaint alleges there was no other transfer in any other manner. This being
deemed true defendants argument that it may have been transferred earlier is a factual issue that
is irrelevant for demurrer purposes. Furthermore, by the very Assignment which is Ex B. to the
RJN no reference is made that the document is a mere memorialization of a prior act. The
language therein to the extent the court may take judicial notice purports to make the
assignment as of the date of the instrument. Yes, its possible the note may have been assigned
before, but the SAC alleges it wasn’t and the document itself, to the extent the Court can
analyze documents at the demurrer stage doesn’t even hint at that.
Defendant then argues the Trust can violate its own rules and ratify a transfer afier its own
self imposed closing date. First, for demurrer purposes that is also a question of fact and not
arguable on demurrer. Did this Trust accept the subject loan after the closing date. This is a
factual question. The SAC alleges it was against the law for the Trust to accept any loans after
the closing date and again this is a factual question.
Defendants cite Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497.The
first problem with this argument is that Plaintiff is not seeking recourse to the Pooling and
Servicing Agreement (the “PSA”) in order to enforce its terms. Plaintiff merely looks to the
PSA to establish (1) the closing date of Trust, which is not a unique aspect of this particular
PSA, but rather is a statutorily mandated requirement, as stated above, and (2) the governing
law of the Trust. The second problem with the argument is that it implies that as long as
Plaintiff carries a debt to someone, then ANYONE can seek to enforce its terms, even if
Plaintiff can allege facts that indicate that those parties actually had no standing to enforce the
terms of the loan at all. Finally, this argument ignores the specific allegation in the SAC that
the instant Deed of Trust is governed under both Federal and State Law. The Complaint
specifically states that since California Law is silent as to the methods by which a REMIC Trust
may purchase a mortgage for the purposes of securitization, Federal law applies. Plaintiff
specifically posits that although the Deed of Trust grants the lender the right to sell the Note and
Deed of Trust, Plaintiff has standing under his own Deed of Trust to assert that these particular27
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parties are not parties to the loan because under Federal law, they did not properly acquire the
Subject Loan.
More importantly, the authorities upon which Defendants rely are inapposite. In Jenkins,
the plaintiffs were trying to stop foreclosures of their homes. Here, Defendants have already
foreclosed on the Subject Property. The rationale upon which both cases are based is that there
is no procedure in Cal. Civ. Code §2924 to question the right of the foreclosing party to
foreclose. Whether that rationale is sound or not, is has nothing to do with the instant case
because Plaintiff is not attempting to insert a requirement into the statute to force Defendants to
prove ownership or agency before they can proceed with a foreclosure
Moreover, Jenkins is unavailing to Defendants because Jenkins specifically relies on
Gomes, supra, which in turn recognizes the possibility of maintaining a claim such as the instant
one, (See id. at 1155.) Gomes merely found that the Plaintiff failed to assert any factual basis
for challenging the ownership of his loan. (See Gomes, supra, at 1156: “Gomes has not asserted
any factual basis to suspect that MERS lacks authority to proceed with the foreclosure. He
simply seeks the right to bring a lawsuit to find out whether MERS has such authority. No case
law or statute authorizes such a speculative suit.”) Likewise, in Jenkins, the Court looked to
Gomes specifically and held that:
Consequently, the Gomes court concluded that allowing a trustor-debtor to
pursue such an action, absent a “specific factual basis for alleging that the
foreclosure was not initiated by the correct party” would unnecessarily
“interject the courts into [the] comprehensive non-judicial scheme”
created by the Legislature, and “would be inconsistent with the policy
behind non-judicial foreclosure of providing a quick, inexpensive and
efficient remedy. [Citation.]”
(Jenkins, supra, 216 Cal.App.4th at 512, quoting Gomes, supra, 192 Cal.App.4th at
1154-1156.)
The arguments made and facts presented in the Glaski complaint are completely
different (and even more nuanced) than those in the Jenkins and Gomes complaints. Glaski did
not argue third party standing to enforce failures under the PSA. Glaski argued that since the
violations of the PSA also violated the Internal Revenue Code 26 U.S.C. §860G, et seq. which
in turn violated New York Trust Law, the failure to properly assign his Deed of Trust into thew
~
securitized pool was a VOID act. As such, Glaski was not seeking to enforce the PSA. He was
using the PSA simply as evidence of the failure to follow the REMIC statutes.
The implication in Jenkins — that the plaintiff was merely a third party to the PSA and
that any violations of the PSA were of sole concern to the parties to the PSA — is that the act
was VOIDABLE. That Jenkins implies the improper transfer is voidable is evident from the
third party analysis in which that Court engaged (i.e., since only the parties to the Agreement
are affected by failures to perform under the Agreement, such failures are up to the parties
themselves and no one else to dispute.). However, Glaski changed the argument in a way that
makes Jenkins largely irrelevant: where the transaction is void-ab intitio, as determined by the
Internal Revenue Code and New York Trust Law, third party standing no longer becomes an
issue, because even the parties to the Agreement do not have the ability to “look the other way.”
The impact of Glaski's void vs. voidable analysis is crucial. The Internal Revenue Code
creates a very specific system for the creation of Real Estate Mortgage Investment Conduit
(REMIC”) trusts. In order for the Trust to enjoy tax-free status, it must follow very specific
rules in its creation. One of the most important rules is that within 90 days of the closing date
of the Trust (as. established by the PSA), the Trust must “own” the loan and security interest to
which it will later claim to be the beneficiary. (26 U.S.C. §860G(a)(3)Gi) and §860G(a)(9).)
Not doing so exposes the entire trust to catastrophic tax consequences the Trust was specifically
designed to avoid. Moreover, a failure to abide by the specific REMIC rules exposes investors
to the Trust to the same consequences when attempting to realize return on their investment.
(Glaski, supra, 218 Cal.App.4th at 1097: “we believe applying the statute to void the attempted
transfer is justified because it protects the beneficiaries of the WAMU Securitized Trust from
the potential adverse tax consequence of the trust losing its status as a REMIC trust under the
Internal Revenue Code.”)
Most importantly, Glaski interpretation of New York EPTL §7-24 comes from a literal
interpretation from a New York State decision. Glaski quoted Wells Fargo Bank, N.A. v.
Erobobo (Apr. 29, 2013) 39 Misc. 3d 1220(A) slip opn. p. 8 (2013 WL 1831799), for the
proposition that “[uJ]nder New York Trust Law, every sale, conveyance or other act of the
10trastee in contravention of the trust is void. EPTL § 7-2.4. Therefore, the acceptance of the note
and mortgage by the trustee after the date the trust closed, would be void.” (Glaski, supra, 218
Cal. App. 4th at 1097).
No case cited by the Defendants in this matter offers a substantive response to the specific
issues the Glaski court raises to distinguish itself from Jenkins-like analysis. Although Glaski
does not mention Jenkins (presumably because it came out just a few months after the Jenkins
opinion and was not privy to it by the time oral argument was presented), it certainly rejects the
underlying thesis that is attribute to Jenkins:
We reject the view that a borrower's challenge to an assignment must fail
once it is determined that the borrower was not a party to, or third party
beneficiary of, the assignment agreement. Cases adopting that position
“paint with too broad a brush.” (Culhane v. Aurora Loan Services of
Nebraska, supra, 708 F.3d at p. 290.) Instead, courts should proceed to the
question whether the assignment was void.
(Glaski, supra, 218 Cal. App. 4th at 1095.)
The California Supreme Court has granted Review in another Court of Appeal opinion
that also repudiated Glaski, namely YVANOVA v. NEW CENTURY MORTGAGE
CORPORATION whose previous citation was 226 Cal.App.4th 495 but which is no longer
citable since the Califomia Supreme Court granted review in case No. $218973 on August 27,
2014. The California Supreme Court stated:
The petition for review is granted. Briefing and argument is limited to the
following issue (see Cal. Rules of Court, rule 8.516(a)(1)): In an action for
wrongful foreclosure on a deed of trust securing a home loan, does the
borrower have standing to challenge an assignment of the note and deed of
trust on the basis of defects allegedly rendering the assignment void?
As alleged in para 7 of the FAC:
7. The Court of Appeals opinions in Yvanova, Keshtgar and Mendoza
all having been taken up for review by the California Supreme Court now cannot
be cited as authority to maintain as a defense to this action.
Three anti Glaski cases are up for review with the high court. Understandably
considering there are two new justices with no history of the decisions on this subject there is no
1127
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predicting the outcome. However, the best we have at the present time is the Glaski case as the
sole direct authority and therefore the demurrer should be overruled.
The point of Glaski is there a specific factual basis for challenging ownership sufficient to
withstand demurrer. Under this theory, Plaintiff asserts that the REMIC statutes require a loan
to pass through various Special Purpose Vehicles (“SPVs”) before getting to the Trust as doing
so ensures that the Trust is bankruptcy remote. Where a REMIC trust is perfected, it will enjoy
preferred tax status. However, Plaintiff does not seek refuge in the terms of the PSA itself, they
rely specifically on the REMIC statutes. More significantly, the terms of the PSA are not
unique to the PSA: they are creatures of statute. As such, under Glaski, failure to properly
transfer the Subject Loan into the REMIC Trust threatens the entire REMIC status of the Trust,
and therefore any transaction that threatens the Trust is considered void as a matter.of New
York Trust Law. Under Glaski, a plaintiff has the right to allege that an assignment of deed of
trust recorded more than 90 days after the closing date of the securitized trust is evidence of a
failure to follow the REMIC statutes, and therefore a plaintiff can allege the transaction is void
as a matter of New York Trust Law
Under either or both theories, sufficient facts are presented to claim that Defendants
neither own nor are the authorized agents of the true owner of the beneficial interest in the
Subject Loan. This is not an action to find out “whether [Defendants] [have] such authority.”
(Gomes, supra, 192 Cal.App.4th at 1156, emphasis added.) The present action affirmatively
presents factual allegations that, if taken as true, as they must on demurrer, would tend to prove
a lack of ownership in the beneficial interest in the Subject Loan, despite Defendants’ currently
unfounded claim of such ownership and authority.
Again, Plaintiffs have proffered a specific factual basis for arguing that when they sold
Plaintiffs home, Defendants did so wrongfully and without any rights to the Subject Loan.
VI. Plaintiff Sufficiently Pled Prejudice by the Wrongful Foreclosure
Defendants other basis for the demurrer is that Plaintiff is not prejudiced by improper
securitization. However, Plaintiffs are not arguing that a glitch in the securitization process
constitutes a glitch in the non-judicial foreclosure process. Prejudice is a consideration in the
12analysis only where what is being alleged is “an alleged imperfection in the foreclosure
process.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272.) In essence,
to allege prejudice, a plaintiff must be able to show that an un-dotted “i” or an uncrossed “t”
was the cause of the foreclosure, and that but for those “imperfections” the foreclosure would
not have occurred. However, that is not what is alleged in the Complaint and is not the basis for
Plaintiffs’ claims. Plaintiff argues that whether Defendants followed every requirement in the
non-judicial foreclosure framework or followed none of them is irrelevant: Defendants had no
tights to initiate the process from the start. Siliga v. Mortgage Electronic Registration Systems,
Inc. (2013) 219 Cal.App.4th 75 is inapposite because there was no foreclosure preceding the
Court’s opinion in that case, and so it suffers from the same defect recognized in Keshtgar,
supra. However, Plaintiff does, in fact, allege prejudice. However plaintiff was prejudiced by
the foreclosure sale as his lost title to his residence. Para. 40.
VU. The Unlawful Detainer Judgment is not Res Judicata
Neither New’s Answer to the Unlawful Detainer action, Ex. J nor the Judgment against
him attached as Ex. K to defendants RJN in case no. CUD 13 644400, US Bank v. New, make
any reference anywhere therein that an issue raised therein was that the foreclosure was
wrongful based of a void assignment of the Deed of Trust. More specifically the defenses to an
unlawful detainer action are limited and any allegation to the effect that the foreclosure was
wrongful based of a void assignment of the Deed of Trust as set forth in the instant FAC is not a
legal defense to an unlawful detainer action and therefore cannot be res judicata to the instant
action. As a general rule, in unlawful detainer proceedings, only claims bearing directly upon
the right to possession are involved. Vella v. Hudgins (1977) 20 Cal.3d 251, 255, 142 Cal.Rptr.
414, 572 P.2d 28. However, where title is acquired through proceedings described in Code of
Civil Procedure section 1161a, courts must make a limited inquiry into the basis of the
plaintiffs title. (Gonzales v. Gem Properties, Inc. (1974) 37 Cal.App.3d 1029, 1035, 112
Cal.Rptr. 884.) The Supreme Court has explained that where the plaintiff in the unlawful
detainer action is the purchaser at a trustee's sale, he or she “need only prove a sale in
compliance with the statute and deed of trust, followed by purchase at such sale, and the
13defendant may raise objections only on that phase of the issue of title. Matters affecting the
validity of the trust deed or primary obligation itself, or other basic defects in the plaintiff's title,
are neither properly raised in this summary proceeding for possession, nor are they concluded
by the judgment.” (Cheney v. Trauzettel (1937) 9 Cal.2d 158, 160, 69 P.2d 832, emphasis
added; see also Vella v. Hudgins, supra, 20 Cal.3d at p. 255, 142 Cal.Rptr. 414, 572 P.2d 28.)
Further, the pendency of another action concerning title is immaterial to the resolution of an
unlawful detainer proceeding. (Evans v. Superior Court (1977) 67 Cal.App.3d 162, 171,
VIII. Tender of Loan Amount not Required in a Damage Action
An unambiguous viable tender of payment of the indebtedness is only required in an
action to set aside a voidable sale under a deed of trust. (Karlsen v. American Sav. & Loan
Assn. (1971) 15 Cal-App.3d 112, 117, 92 Cal.Rptr. 851.) To the extent the instant SAC is for
damages tender is not an element. Nevertheless the SACalleged as follows on the issue of
“tender”:
57. | With regards to this cause of action plaintiff is not required to
allege he tendered payment of the loan balance because (1) absence of a
tender does not bar a claim for damages, (2) the tender rule is a principle
of equity, (3) tender is not required where the foreclosure sale is void,
rather than voidable, such as alleged above the defendant lacked the
authority to foreclose on the property.
This is an action for damages, not just one seeking to set aside a trustee’s sale. However,
tender is only required when seeking a Court’s equitable powers to set aside a sale, not for
damages.
Also, the tender rule presents no obstacle if the sale is void. (See, e.g., Lona, supra, 202
Cal.App.4th at pp. 113—114.
DATED: January 20, 2015 UNITED LAW CENTER
A Professional Law Corporation
SS
John S-Sargetis
Attorneys for Plaintiff
14New v. U.S. Bank, et al.
San Francisco County Superior Case No. CGC-14-538800
PROOF OF SERVICE
I, KATHY K. PILLADO, declare that I am a citizen of the United States, over 18 years off
age, employed in Placer County, and not a party to the within action. My business address is 3013)
Douglas Boulevard, Suite 200, Roseville, California 95661.
I served a copy of the following document:
PLAINTIFF’S POINTS AND AUTHORITIES IN OPPOSITION TO DEMURRER OF
U.S. BANK AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS TO
SECOND AMENDED COMPLAINT
on the parties in this action by placing a copy thereof enclosed in sealed envelopes
addressed as follows:
() (BY MAIL) _ I caused such envelopes with postage thereon fully prepaid to be
placed in the United States mail at Roseville, CA.
(X) (BY FAX and/or E-MAIL) I caused such document to be sent, via Facsimile
(FAX) and/or E-mail Telecommunication transmission, to the offices of the
addressee.
(X) (BY FEDERAL EXPRESS) 1 caused such envelope with overnight fees paid to bq
deposited in a box regularly maintained by Federal Express service carrier at Roseville, CA.
I declare under penalty of perjury that the foregoing is true and correct. Executed afl
Roseville, California on January 21, 2015.
THY K.TELADO
Proof of ServiceSERVICE LIST
Thomas N. Abbott
Joel C. Spann
SEVERSON & WERSON
One Embarcadero Center, Suite 2600
San Francisco, California 94111
Tel: (415) 677-5583 — Joel Direct
Fax: (415) 956-0439
ta@severson.com
Jes@severson.com
Attomeys for Defendants, MORTGAGE
ELECTRONIC REGISTRATION:
SYSTEMS, INC., and U.S. BANK
NATIONAL ASSOCIATION AS
TRUSTEE FOR THE BENEFIT OF
HARBORVIEW 2005-2 TRUST FUND
Proof of Service
Preview
John S. Sargetis SBN 80630 Stephen J. Foondos (SBN: 148982) UNITED LAW CENTER 3013 Douglas Boulevard, Suite 200 Roseville, California 95661 Telephone: (916) 367-0630 Facsimile: (916) 265-9000 Attorneys for Plaintiff JOSEPH NEW ELECTRONICALLY FILED Superior Court of California, County of San Francisco 01/21/2015 Clerk of the Court BY:ANNIE PASCUAL Deputy Clerk IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO JOSEPH S. NEW Plaintiff, VS. U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE FOR THE BENEFIT OF HARBORVIEW 2005-2 TRUST FUND; RECONTRUST COMPANY, N.A.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; BANK OF AMERICA, N.A.; and DOES 1 — 100, inclusive, Defendants. SS SS SSS Case No. CGC -14- 538800 PLAINTIFF’S POINTS AND AUTHORITIES IN OPPOSITION TO DEMURRER OF U.S. BANK AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS TO SECOND AMENDED COMPLAINT DATE: February 3, 2015 TIME: 9:30 A.M. DEPT: 501 Opposition to Demurrer to Second Amended ComplaintTABLE OF CONTENTS TV. Entroduction vccccccesccsccsessessesessessesesessessnssessesussvesssessecucecsnesrecnesesseeneeeeeaesuseneeseenesseesseneensenes 1 IL. Factual Background Il Standard of Review IV. Opposition to Defendant’s Request for Judicial Notice .....c..secsessesecsecsseesnssssecsnseneeseeeseee 6 V. Plaintiff Sufficiently Pled Standing to Allege Wrongful Foreclosure........eeceeeeeeeetseseenee q VI. Plaintiff Sufficiently Pled Prejudice by the Wrongful Foreclosure... eeeeeeeeeeeeeeene 12) VIL = The Unlawful Detainer Judgment is not Res Judicata ........cccscesessssssesesseessesesseesseereseeneens 13) VIIL = Tender of Loan Amount not Required ......0..c.ccccsssresesssseessesesseesssersseesestessenssesueenesneevess 14TABLE OF AUTHORITIES Cases Cheney v. Trauzettel (1937) 9 Cal.2d 158 .. Culhane v. Aurora Loan Services of Nebraska, supra, 708 F.3d at p. 290... ceceseseseeceesreeeenee il Evans v. Superior Court (1977) 67 Cal. App.3d 162.....sescecsssesessecssssccsesessesscenecnneneeanssneeecensaseneess 14 Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal. App.4th 256 ....ccecssecsessesseseercsseesesseseererse 13) Glaski v. Bank of America, N.A. (2013) 218 Cal. App.4th 1079 oo cceeeeneeeeeees 7, 8,9, 10, 11, 12) Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal. App.4th 1149 oe eeeeeseeseeaees 9, 12 Gonzales v. Gem Properties, Inc. (1974) 37 Cal.App.3d 1029 . Holland v. Morse Diesel International, Inc. (2001) 86 Cal. App. 4th 1443 oo. Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal. App.4th 497 oo. cssseseseesees 8,9, 10, 11 Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 117, 92.0.0... ccceeeeeeee sees 14 Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75 cscs 13 Unruh-Haxton y. Regents of Univ. of Cal. (2008) 162 Cal. App.4th 343... cescsssecessseseestenreenes 6 Vella v. Hudgins (1977) 20 Cal.3d 251, 255 ...scsscccssssscecsesssssesrearsnesesverssseneaceescneencasenensesseeerensenes 14 Wells Fargo Bank, N.A. v. Erobobo (Apr. 29, 2013) 39 Misc. 3d 1220(A)... Statutes Cal. Civ. Code §2924.ccecssssenssesenecsres California Evidence Code section 452(d) Evid. Code, §452...cccesscsesesseseeseseseess Internal Revenue Code 26 U.S.C. §860G Under 26 U.S.C. §860G. diPlaintiff, Joseph S. New (hereinafter "Plaintiff") presents the following points. and authorities in opposition to the demurrer of U.S. BANK AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS to the Second Amended Complaint (SAC) . I. Introduction Defendant’s demurrer should be overruled because, as demonstrated in the Second Amended Complaint, Plaintiffs have alleged sufficient facts against Defendant to constitute a Cause of Action for Wrongful Foreclosure. In the alternative and in the event that the Court sustains Defendant’s demurrer in any respect, Plaintiffs respectfully request leave to amend the Complaint so Plaintiffs may allege additional facts that would cure any deficiencies this Court identifies. I. Factual Background The SAC in this action presents one cause of action for wrongful foreclosure by the defendant of plaintiffs residence based on the latter not having standing or the legal right to foreclose. The relevant allegations of the FAC all of which are deemed true for demurrer purposes are as follows: On July 7, 2011 an ASSIGNMENT OF DEED OF TRUST (ADOT) of the subject DOT on which the foreclosure was based on was recorded with the San Francisco Recorder. This Assignment identified MERS referring to itself as the “holder of the Deed of Trust” as the assignor and US Bank as the assignee. Page 5 and 6, Para. 8. The mere recording of the Assignment of DOT does not establish that US Bank was, in fact, the holder of the beneficial interest in the plaintiffs DOT. Similarly, it did not establish that US Bank in fact became the owner or holder of that beneficial interest in order to be able to initiate or maintain foreclosure proceedings. Para. 10 Thereafter on October 14, 2011 there was recorded by Recontrust in the capacity of “agent for the beneficiary” a “NOTICE OF DEFAULT AND ELECTION TO SELL UNDER DEED OF TRUST” (NOD). Para. 11. The NOD stated the amount of past due payments was $29,813.13 as of October 10, 2011. It also stated: “To find out the amount you must pay, or to arrange for payment to stopthe foreclosure,... contact: US Bank care of Bank of America. Para. 13 US Bank or its agent Bank of America directed Recontrust to issue the NOD. Thereafter there was recorded on January 14, 2013 a “TRUSTEE’S DEED UPON SALE executed by said Recontrust transferring the property to US Bank. US Bank or its agent Bank of America directed Recontrust to issue the said Trustees Deed. Para. 14 Transfers that violate the terms of the Trust instrument created under the laws of New York are void under New York trust law. Para. 15 Plaintiff has standing to challenge a void Assignment of his loan and DOT even though he is not.a party to, or a third party beneficiary of the Pooling and Servicing Agreement (PSA) that created the said Trust. Para 16. More specifically, Plaintiff may and does challenge the validity of the said Assignment to the said Trust by alleging the transfer to it occurred after the Trust’s closing date which would render the assignment absolutely invalid or ineffective, or void and consequently any foreclosure proceedings arising therefrom. Para. 17 Independently, Plaintiff may and does challenge the validity of the said Assignment to the said Trust by alleging the transfer to it by the said Assignment document violated the PSA which requires the Depositor to deliver to and deposit the original note, DOT and assignment to the trustee which if not done would render the assignment absolutely invalid or ineffective, or void. Para, 18. Independently, Plaintiff may and does challenge the validity of any purported prior unrecorded assignment to the said Trust by alleging the transfer to it violated the PSA which requires the Depositor to deliver to and deposit the original note, DOT and assignment to the trustee which if not done would render the assignment absolutely invalid or ineffective, or void. Para. 19. This action maintains defendants as the foreclosing entities were not the true owners of the loan and DOT because its chain of ownership had been broken by illegal transfers of the loan and DOT to the Trust. Para. 20.27 28 The subject Trust is a common law trust formed pursuant to New York law and named HARBORVIEW 2005-2 TRUST FUND. Para. 22. US Bank is the purported original trustee for the Trust. Para. 28 Under New York Trust Law, every sale, conveyance or other act of the trustee in contravention of the Trust is void. EPTL § 7-2.4. Para 29 Per New York Estates, Powers & Trusts Law section 7-2.4: “If the trust is expressed in an instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void.” The statutory purpose is “to protect trust beneficiaries from unauthorized actions by the trustee.” (Turano, Practice Commentaries, McKinney’s Consolidated Laws of New York, Book 17B, EPTL § 7-2.4.) Para. 30 The closing date to validly assign the subject Note and DOT to the said Trust was in 2005. Para. 31. Therefore, the Assignment described above of the subject Note and DOT by the trustee after the date the Trust closed is void. Under New York law, any transfer to the trust in contravention of the trust documents is void. Para 32. Under New York law, assignment of the Note or DOT after the “closing date” is void ab initio. Para. 33 Separate from the said Assignment being void because it was done after the closing date, the said Assignment is void as it violated the PSA which requires the Depositor to deliver to and deposit the original note, DOT and assignment to the trustee which was not done and therefore the Assignment is absolutely invalid or ineffective, or void. Para. 34 Separate from the said Assignment being void on the grounds stated above any prior assignment of the Note and DOT defendants can claim to have made to the trustee of said Trust also violated the PSA which requires the Depositor to deliver to and deposit the original note, DOT and assignment to the trustee which was not done and therefore any such claimed assignment was absolutely invalid or ineffective, or void. Para. 35Finally, the Note and DOT were not duly endorsed, transferred and delivered to the Trust in any other manner. Para. 36. Therefore, the said Note and DOT were not effectively or legally transferred tothe Trust that held the poo! of mortgage loans and thus the Trust never held the loan or DOT to be able to initiate or legally maintain or direct foreclosure proceedings. Para. 37 Although there is no requirement under California law for the said Assignment to have been recorded, since it was recorded, defendants are subject to the consequences of said recorded document. The purported assignee of the said Assignment was defendant US Bank. The issuance of the Notice of Default, Notice of Trustee’s Sale, the conducting of the trustee’s sale and the recording of the Trustees Deed were all directed by US Bank or its agents Recontrust or B of A acting on their behalf and arising solely out of the US Bank’s claimed rights per the said Assignment and not out of any other authority or right to institute foreclosure proceedings. Para. 38. The fact that the trustee’s sale was conducted is not conclusive that it was performed legally. Para. 39 Plaintiff is not required to establish prejudice in order to maintain this cause of action as the foreclosure sale process was void under law, not merely voidable. However plaintiff was prejudiced by the foreclosure sale as his lost title to his residence. Para. 40. The Trust was created by a Pooling and Servicing Agreement (PSA) which established a closing date after which the Trust may no longer accept loans and the procedure by which notes and DOT’s are assigned to the Trust. These statutory provisions provides a legal basis for concluding that the trustee’s attempt to accept a loan after the closing date or violation of the procedure in which it must receive them would be void as an act in contravention of the Trust document. Para. 41 Pursuant to Section 2.05 of the Pooling and Servicing Agreement, all mortgage files transferred to the Trust must be delivered on or before the closing date and “shall deliver to and deposit with, or cause to be delivered to and deposited with, the Trustee or the Initial Custodian of the Mortgage Files, which shail at all times be identified in the records of the Trustee or the27 28 Initial Custodian, as applicable, as being held by or on behalf of the Trust. Concurrently with the execution and delivery hereof, the Company shall cause to be filed with respect to each Cooperative Loan the UCC assignment or amendment referred to in clause (Y)(vii) of the definition of "Mortgage File." In connection with its servicing of Cooperative Loans, the Servicer shall use its best efforts to file timely continuation statements, if necessary, with regard to each financing statement relating to a Cooperative Loan". Para. 42. Plaintiff's Note and DOT were not endorsed, transferred, and delivered into the trust pursuant to the PSA before the closing date as set forth in Section 2.05 of the Pooling and Servicing Agreement on file in this action, as it was not listed in any documents filed by the Trust and available to the public at ww-w.edgar.gov. Accordingly, the subject Note and DOT were never lawfully negotiated and physically delivered to the Trust. Therefore, the Trust did not have standing to initiate or direct foreclose on the Subject Property. Para. 44 The said Assignment was ineffective as the Trust could not have accepted the Deed of Trust after the Closing Date pursuant to the PSA and the requirements for a REMIC Trust. If the Assignment was made after the closing date, the non-compliance with the REMIC statutes would terminate the tax exempt status under the REMIC statutes. Para. 45. Furthermore the PSA requires the Depositor to deliver and deposit with the trustee the original note, the original mortgage and original assignment. The trustee is then required to provide the Depositor an acknowledgment of receipt of the assets. The rationale behind this requirement is to provide at least two intermediate levels of transfer to ensure the assets are protected from the possible bankruptcy by the originator which permits the security to be provided with the rating required for the securitization to be saleable. Para. 47 Any purported assignment that occurred with the subject Note and DOT whether by the purported Assignment or any purported assignment failed to be assigned in this manner. Para. 48. Therefore, the foreclosure of the Subject Property, as well as the Notice of Default, Notice of Trustee's Sale, and Trustee's Deed Upon Sale, were wrongful and void ab initio. Para. 4912 13 14 27 28 TENDER With regards to this cause of action plaintiff is not required to allege he tendered payment of the loan balance because (1) absence of a tender does not bar a claim for damages, (2) the tender rule is a principle of equity, (3) tender is not required where the foreclosure sale is void, rather than voidable, such as alleged above the defendant lacked the authority to foreclose on the property. Para. 57. By utilizing a wrongful legal instrument to purportedly assign a Deed of Trust after the closing date, the assignment becomes ineffective, thus precluding these Defendants, and each of them, from conducting a Trustee's Sale, thus rendering the Trustee's Sale void ab initio and requiring the Trustees Deed to be set aside. Para. 58 I. Standard of Review A demurrer admits the truth of all facts properly pleaded. (Holland v. Morse Diesel International, Inc. (2001) 86 Cal. App. 4th 1443, 1447) When considering the sufficiency of a pleading, a court must liberally construe the allegations of the complaint with a view to attaining substantial justice among the parties. (Youngman v. Nevada Irrigation District (1969) 70 Cal.2d 242, 244-245.) A complaint need only set forth the essential facts in a manner that informs the defendant of the nature, source, and extent of the cause of action. (Id.) If there is any reasonable possibility that the plaintiff can state a cause of action, she must be given leave to amend. (Id. at 245.) Generally, California courts have exercised a policy of great liberality in allowing amendment “at any stage of the proceeding so as to dispose of cases upon their substantial merits where the authorization does not prejudice the substantial rights of others.” (Douglas v. Superior Court (1989) 215 Cal.App.3d 155, 158.)- IV. Opposition to Defendant’s Request for Judicial Notice The Defendants’ request for Judicial Notice under California Evidence Code section 452(d) is inappropriate. This statute allows judicial notice of, “(d) Records of (1) any court of this state or (2) any court of record of the United States or of any state of the United States.”Evid. Code, §452. Additionally, "a hearing on a demurrer cannot be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of documents whosetruthfulness or proper interpretation are disputable." (Unruh-Haxton v. Regents of Univ. of Cal. (2008) 162 Cal.App.4th 343, 365.) In the instant case, Defendants’ demurrer improperly relies entirely on extrinsic evidence, as the court does not take judicial notice of the truth of their contents. Vv. Plaintiff Sufficientiy Pled Standing to Alege Wrongful Foreclosure In the First Cause of Action for Wrongful Foreclosure, Plaintiff alleges that Defendants had no rights to the Subject Loan at all, and therefore, the subsequent foreclosure on the Subject Property was wrongful. As the warrant for this claim, Plaintiffs allege that in order for Defendant to have been able to own the Subject Loan and subsequently pool it with other mortgages, it had to have acquired the Loan and the security within 90 days of the statutorily- mandated closing date of the Real Estate Mortgage Investment Conduit (“REMIC”) Trust (Trust), Under 26 U.S.C. §860G, a mortgage only qualifies to be placed into a REMIC Trust if the REMIC possesses all necessary documents pertaining to the Subject Loan (Note and Deed of Trust) within those 90 days, Failure to acquire those necessary documents means the Loan is not a “qualified mortgage” as defined by the statute. As such, the Trust cannot own the Loan. As Plaintiff alleges that the governing law of the Trust is New York Law, as New York Trust Law (NY EPTL §7-2.4) specifies that any action taken by the Trustee in contravention of the Trust is a void act, and as Plaintiff alleges that US Bank continuing to assert an ownership interest in the Subject Loan threatened the REMIC status of the Trust, opening it to sever tax consequences, the late assignment of the Deed of Trust to the Trust constituted a void act. (See Glaski v. Bank of America, N.A. (2013) 218 Cal.App.4th 1079, 1097.) Defendants first argument is that just because the recording of the Assignment didn’t take place until the recording date it might have been actually been assigned earlier and the recording may be to only reflect what may have been done earlier. The problem with that argument is for demurrer purposes is what is alleged in the complaint is deemed true, Para. 36 alleges: 36. Finally, the Note and DOT were not duly endorsed, transferred and delivered to the Trust in any other manner.Therefore the complaint alleges there was no other transfer in any other manner. This being deemed true defendants argument that it may have been transferred earlier is a factual issue that is irrelevant for demurrer purposes. Furthermore, by the very Assignment which is Ex B. to the RJN no reference is made that the document is a mere memorialization of a prior act. The language therein to the extent the court may take judicial notice purports to make the assignment as of the date of the instrument. Yes, its possible the note may have been assigned before, but the SAC alleges it wasn’t and the document itself, to the extent the Court can analyze documents at the demurrer stage doesn’t even hint at that. Defendant then argues the Trust can violate its own rules and ratify a transfer afier its own self imposed closing date. First, for demurrer purposes that is also a question of fact and not arguable on demurrer. Did this Trust accept the subject loan after the closing date. This is a factual question. The SAC alleges it was against the law for the Trust to accept any loans after the closing date and again this is a factual question. Defendants cite Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497.The first problem with this argument is that Plaintiff is not seeking recourse to the Pooling and Servicing Agreement (the “PSA”) in order to enforce its terms. Plaintiff merely looks to the PSA to establish (1) the closing date of Trust, which is not a unique aspect of this particular PSA, but rather is a statutorily mandated requirement, as stated above, and (2) the governing law of the Trust. The second problem with the argument is that it implies that as long as Plaintiff carries a debt to someone, then ANYONE can seek to enforce its terms, even if Plaintiff can allege facts that indicate that those parties actually had no standing to enforce the terms of the loan at all. Finally, this argument ignores the specific allegation in the SAC that the instant Deed of Trust is governed under both Federal and State Law. The Complaint specifically states that since California Law is silent as to the methods by which a REMIC Trust may purchase a mortgage for the purposes of securitization, Federal law applies. Plaintiff specifically posits that although the Deed of Trust grants the lender the right to sell the Note and Deed of Trust, Plaintiff has standing under his own Deed of Trust to assert that these particular27 28 parties are not parties to the loan because under Federal law, they did not properly acquire the Subject Loan. More importantly, the authorities upon which Defendants rely are inapposite. In Jenkins, the plaintiffs were trying to stop foreclosures of their homes. Here, Defendants have already foreclosed on the Subject Property. The rationale upon which both cases are based is that there is no procedure in Cal. Civ. Code §2924 to question the right of the foreclosing party to foreclose. Whether that rationale is sound or not, is has nothing to do with the instant case because Plaintiff is not attempting to insert a requirement into the statute to force Defendants to prove ownership or agency before they can proceed with a foreclosure Moreover, Jenkins is unavailing to Defendants because Jenkins specifically relies on Gomes, supra, which in turn recognizes the possibility of maintaining a claim such as the instant one, (See id. at 1155.) Gomes merely found that the Plaintiff failed to assert any factual basis for challenging the ownership of his loan. (See Gomes, supra, at 1156: “Gomes has not asserted any factual basis to suspect that MERS lacks authority to proceed with the foreclosure. He simply seeks the right to bring a lawsuit to find out whether MERS has such authority. No case law or statute authorizes such a speculative suit.”) Likewise, in Jenkins, the Court looked to Gomes specifically and held that: Consequently, the Gomes court concluded that allowing a trustor-debtor to pursue such an action, absent a “specific factual basis for alleging that the foreclosure was not initiated by the correct party” would unnecessarily “interject the courts into [the] comprehensive non-judicial scheme” created by the Legislature, and “would be inconsistent with the policy behind non-judicial foreclosure of providing a quick, inexpensive and efficient remedy. [Citation.]” (Jenkins, supra, 216 Cal.App.4th at 512, quoting Gomes, supra, 192 Cal.App.4th at 1154-1156.) The arguments made and facts presented in the Glaski complaint are completely different (and even more nuanced) than those in the Jenkins and Gomes complaints. Glaski did not argue third party standing to enforce failures under the PSA. Glaski argued that since the violations of the PSA also violated the Internal Revenue Code 26 U.S.C. §860G, et seq. which in turn violated New York Trust Law, the failure to properly assign his Deed of Trust into thew ~ securitized pool was a VOID act. As such, Glaski was not seeking to enforce the PSA. He was using the PSA simply as evidence of the failure to follow the REMIC statutes. The implication in Jenkins — that the plaintiff was merely a third party to the PSA and that any violations of the PSA were of sole concern to the parties to the PSA — is that the act was VOIDABLE. That Jenkins implies the improper transfer is voidable is evident from the third party analysis in which that Court engaged (i.e., since only the parties to the Agreement are affected by failures to perform under the Agreement, such failures are up to the parties themselves and no one else to dispute.). However, Glaski changed the argument in a way that makes Jenkins largely irrelevant: where the transaction is void-ab intitio, as determined by the Internal Revenue Code and New York Trust Law, third party standing no longer becomes an issue, because even the parties to the Agreement do not have the ability to “look the other way.” The impact of Glaski's void vs. voidable analysis is crucial. The Internal Revenue Code creates a very specific system for the creation of Real Estate Mortgage Investment Conduit (REMIC”) trusts. In order for the Trust to enjoy tax-free status, it must follow very specific rules in its creation. One of the most important rules is that within 90 days of the closing date of the Trust (as. established by the PSA), the Trust must “own” the loan and security interest to which it will later claim to be the beneficiary. (26 U.S.C. §860G(a)(3)Gi) and §860G(a)(9).) Not doing so exposes the entire trust to catastrophic tax consequences the Trust was specifically designed to avoid. Moreover, a failure to abide by the specific REMIC rules exposes investors to the Trust to the same consequences when attempting to realize return on their investment. (Glaski, supra, 218 Cal.App.4th at 1097: “we believe applying the statute to void the attempted transfer is justified because it protects the beneficiaries of the WAMU Securitized Trust from the potential adverse tax consequence of the trust losing its status as a REMIC trust under the Internal Revenue Code.”) Most importantly, Glaski interpretation of New York EPTL §7-24 comes from a literal interpretation from a New York State decision. Glaski quoted Wells Fargo Bank, N.A. v. Erobobo (Apr. 29, 2013) 39 Misc. 3d 1220(A) slip opn. p. 8 (2013 WL 1831799), for the proposition that “[uJ]nder New York Trust Law, every sale, conveyance or other act of the 10trastee in contravention of the trust is void. EPTL § 7-2.4. Therefore, the acceptance of the note and mortgage by the trustee after the date the trust closed, would be void.” (Glaski, supra, 218 Cal. App. 4th at 1097). No case cited by the Defendants in this matter offers a substantive response to the specific issues the Glaski court raises to distinguish itself from Jenkins-like analysis. Although Glaski does not mention Jenkins (presumably because it came out just a few months after the Jenkins opinion and was not privy to it by the time oral argument was presented), it certainly rejects the underlying thesis that is attribute to Jenkins: We reject the view that a borrower's challenge to an assignment must fail once it is determined that the borrower was not a party to, or third party beneficiary of, the assignment agreement. Cases adopting that position “paint with too broad a brush.” (Culhane v. Aurora Loan Services of Nebraska, supra, 708 F.3d at p. 290.) Instead, courts should proceed to the question whether the assignment was void. (Glaski, supra, 218 Cal. App. 4th at 1095.) The California Supreme Court has granted Review in another Court of Appeal opinion that also repudiated Glaski, namely YVANOVA v. NEW CENTURY MORTGAGE CORPORATION whose previous citation was 226 Cal.App.4th 495 but which is no longer citable since the Califomia Supreme Court granted review in case No. $218973 on August 27, 2014. The California Supreme Court stated: The petition for review is granted. Briefing and argument is limited to the following issue (see Cal. Rules of Court, rule 8.516(a)(1)): In an action for wrongful foreclosure on a deed of trust securing a home loan, does the borrower have standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void? As alleged in para 7 of the FAC: 7. The Court of Appeals opinions in Yvanova, Keshtgar and Mendoza all having been taken up for review by the California Supreme Court now cannot be cited as authority to maintain as a defense to this action. Three anti Glaski cases are up for review with the high court. Understandably considering there are two new justices with no history of the decisions on this subject there is no 1127 28 predicting the outcome. However, the best we have at the present time is the Glaski case as the sole direct authority and therefore the demurrer should be overruled. The point of Glaski is there a specific factual basis for challenging ownership sufficient to withstand demurrer. Under this theory, Plaintiff asserts that the REMIC statutes require a loan to pass through various Special Purpose Vehicles (“SPVs”) before getting to the Trust as doing so ensures that the Trust is bankruptcy remote. Where a REMIC trust is perfected, it will enjoy preferred tax status. However, Plaintiff does not seek refuge in the terms of the PSA itself, they rely specifically on the REMIC statutes. More significantly, the terms of the PSA are not unique to the PSA: they are creatures of statute. As such, under Glaski, failure to properly transfer the Subject Loan into the REMIC Trust threatens the entire REMIC status of the Trust, and therefore any transaction that threatens the Trust is considered void as a matter.of New York Trust Law. Under Glaski, a plaintiff has the right to allege that an assignment of deed of trust recorded more than 90 days after the closing date of the securitized trust is evidence of a failure to follow the REMIC statutes, and therefore a plaintiff can allege the transaction is void as a matter of New York Trust Law Under either or both theories, sufficient facts are presented to claim that Defendants neither own nor are the authorized agents of the true owner of the beneficial interest in the Subject Loan. This is not an action to find out “whether [Defendants] [have] such authority.” (Gomes, supra, 192 Cal.App.4th at 1156, emphasis added.) The present action affirmatively presents factual allegations that, if taken as true, as they must on demurrer, would tend to prove a lack of ownership in the beneficial interest in the Subject Loan, despite Defendants’ currently unfounded claim of such ownership and authority. Again, Plaintiffs have proffered a specific factual basis for arguing that when they sold Plaintiffs home, Defendants did so wrongfully and without any rights to the Subject Loan. VI. Plaintiff Sufficiently Pled Prejudice by the Wrongful Foreclosure Defendants other basis for the demurrer is that Plaintiff is not prejudiced by improper securitization. However, Plaintiffs are not arguing that a glitch in the securitization process constitutes a glitch in the non-judicial foreclosure process. Prejudice is a consideration in the 12analysis only where what is being alleged is “an alleged imperfection in the foreclosure process.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272.) In essence, to allege prejudice, a plaintiff must be able to show that an un-dotted “i” or an uncrossed “t” was the cause of the foreclosure, and that but for those “imperfections” the foreclosure would not have occurred. However, that is not what is alleged in the Complaint and is not the basis for Plaintiffs’ claims. Plaintiff argues that whether Defendants followed every requirement in the non-judicial foreclosure framework or followed none of them is irrelevant: Defendants had no tights to initiate the process from the start. Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75 is inapposite because there was no foreclosure preceding the Court’s opinion in that case, and so it suffers from the same defect recognized in Keshtgar, supra. However, Plaintiff does, in fact, allege prejudice. However plaintiff was prejudiced by the foreclosure sale as his lost title to his residence. Para. 40. VU. The Unlawful Detainer Judgment is not Res Judicata Neither New’s Answer to the Unlawful Detainer action, Ex. J nor the Judgment against him attached as Ex. K to defendants RJN in case no. CUD 13 644400, US Bank v. New, make any reference anywhere therein that an issue raised therein was that the foreclosure was wrongful based of a void assignment of the Deed of Trust. More specifically the defenses to an unlawful detainer action are limited and any allegation to the effect that the foreclosure was wrongful based of a void assignment of the Deed of Trust as set forth in the instant FAC is not a legal defense to an unlawful detainer action and therefore cannot be res judicata to the instant action. As a general rule, in unlawful detainer proceedings, only claims bearing directly upon the right to possession are involved. Vella v. Hudgins (1977) 20 Cal.3d 251, 255, 142 Cal.Rptr. 414, 572 P.2d 28. However, where title is acquired through proceedings described in Code of Civil Procedure section 1161a, courts must make a limited inquiry into the basis of the plaintiffs title. (Gonzales v. Gem Properties, Inc. (1974) 37 Cal.App.3d 1029, 1035, 112 Cal.Rptr. 884.) The Supreme Court has explained that where the plaintiff in the unlawful detainer action is the purchaser at a trustee's sale, he or she “need only prove a sale in compliance with the statute and deed of trust, followed by purchase at such sale, and the 13defendant may raise objections only on that phase of the issue of title. Matters affecting the validity of the trust deed or primary obligation itself, or other basic defects in the plaintiff's title, are neither properly raised in this summary proceeding for possession, nor are they concluded by the judgment.” (Cheney v. Trauzettel (1937) 9 Cal.2d 158, 160, 69 P.2d 832, emphasis added; see also Vella v. Hudgins, supra, 20 Cal.3d at p. 255, 142 Cal.Rptr. 414, 572 P.2d 28.) Further, the pendency of another action concerning title is immaterial to the resolution of an unlawful detainer proceeding. (Evans v. Superior Court (1977) 67 Cal.App.3d 162, 171, VIII. Tender of Loan Amount not Required in a Damage Action An unambiguous viable tender of payment of the indebtedness is only required in an action to set aside a voidable sale under a deed of trust. (Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal-App.3d 112, 117, 92 Cal.Rptr. 851.) To the extent the instant SAC is for damages tender is not an element. Nevertheless the SACalleged as follows on the issue of “tender”: 57. | With regards to this cause of action plaintiff is not required to allege he tendered payment of the loan balance because (1) absence of a tender does not bar a claim for damages, (2) the tender rule is a principle of equity, (3) tender is not required where the foreclosure sale is void, rather than voidable, such as alleged above the defendant lacked the authority to foreclose on the property. This is an action for damages, not just one seeking to set aside a trustee’s sale. However, tender is only required when seeking a Court’s equitable powers to set aside a sale, not for damages. Also, the tender rule presents no obstacle if the sale is void. (See, e.g., Lona, supra, 202 Cal.App.4th at pp. 113—114. DATED: January 20, 2015 UNITED LAW CENTER A Professional Law Corporation SS John S-Sargetis Attorneys for Plaintiff 14New v. U.S. Bank, et al. San Francisco County Superior Case No. CGC-14-538800 PROOF OF SERVICE I, KATHY K. PILLADO, declare that I am a citizen of the United States, over 18 years off age, employed in Placer County, and not a party to the within action. My business address is 3013) Douglas Boulevard, Suite 200, Roseville, California 95661. I served a copy of the following document: PLAINTIFF’S POINTS AND AUTHORITIES IN OPPOSITION TO DEMURRER OF U.S. BANK AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS TO SECOND AMENDED COMPLAINT on the parties in this action by placing a copy thereof enclosed in sealed envelopes addressed as follows: () (BY MAIL) _ I caused such envelopes with postage thereon fully prepaid to be placed in the United States mail at Roseville, CA. (X) (BY FAX and/or E-MAIL) I caused such document to be sent, via Facsimile (FAX) and/or E-mail Telecommunication transmission, to the offices of the addressee. (X) (BY FEDERAL EXPRESS) 1 caused such envelope with overnight fees paid to bq deposited in a box regularly maintained by Federal Express service carrier at Roseville, CA. I declare under penalty of perjury that the foregoing is true and correct. Executed afl Roseville, California on January 21, 2015. THY K.TELADO Proof of ServiceSERVICE LIST Thomas N. Abbott Joel C. Spann SEVERSON & WERSON One Embarcadero Center, Suite 2600 San Francisco, California 94111 Tel: (415) 677-5583 — Joel Direct Fax: (415) 956-0439 ta@severson.com Jes@severson.com Attomeys for Defendants, MORTGAGE ELECTRONIC REGISTRATION: SYSTEMS, INC., and U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE FOR THE BENEFIT OF HARBORVIEW 2005-2 TRUST FUND Proof of Service