lauren j. paulson, magnum opus, faithless in foreclosure, how 14 fourteen judges took my home
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FAITHLESS IN
FORECLOSURE HOW 14 JUDGES
TOOK MY HOME
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TABLE OF CONTENTS
Page
Statement of the Case -- My Story........................ 3
A. 14 Judges............................................................................ 10
B. Unfair Foreclosures............................................................ 13
C. Legal ................................................................................. 15
D. Issue................................................................................... 18
E. The Facts............................................................................. 19
F. The Law............................................................................... 21
G. Cases Across U.S. .............................................................. 33
H. Constitutional Standing ................................................. 40
I. Personal Property.............................................................. 43
J. Appendix............................................................................ 44
No Hope for Homeowners..........................53
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MY STORY--Faithless in Foreclosure
Or How I Learned to Love Fairway Commercial
Mortgage Company.
I have been the proud owner of the M.E. Blanton House, on theNational Register of Historic Places, for over twenty (20) years.My parents are Swedish immigrants. Me? I am a veteranparatrooper with graduations hanging on the wall.
WHERE IT ALL BEGAN
My Troubles started ten years ago when I tried to save the M.E.Blanton House from the wrecking ball. You see, the Countywanted part of it for a street widening program. I fell onto hardtimes in the two year struggle against county-hall of which I wasonly partially successful.
Then I decided to become a whistleblower. That set me at oddswith another governmental agency, a local federal judge and putme deeper in debt. This venture eventually took away my rightto earn a living.
I am an educated consumer. That did not prevent me fromsuccumbing to a predatory loan in 2005. Happily, I am notunderwater. The siren song of retirement whispered to me thatthis loan was O.K. because I was going to sell the historic
property anyway in a year or two, then pay off this horrible12.5% loan. (The closing costs were over $25,000.) It didnthappen that way. I put the property up for sale in 2006, butasked too much. In 2007 I had a failed sale. I was still askingtoo much.
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I have since found out that this lender is not regulated by anystate or federal agency. So, then the predatory loan came due atthe inopportune time that I became unemployed.
THE DEFAULT
Being a good man, I went directly to my lender in February 2008when I knew I was going into default after two years of regularpayments. We worked on a forbearance agreement where Iwould be worse off than before and I would have to give up allmy legal rights and the loan payments. Back to the drawingboards. Further negotiations disclosed this stark fact: -- Thelender wanted to make a second profit on the new deal AND
make me pay the old predatory deal, in full, plus penalties. Thedevil is in all those extra charges. Dont kid yourself.
A FALSE RESCUE
Oh, Happy Days! A buyer of the property came along whichwould have paid off the predatory loan in full. All was solved.Not so fast Philo! My lender told me these unhappy facts:
My lender had failed to tell HIS lenders that I was in default.Therefore, he could not afford to have a closing on my propertybecause he would have to tell His secondary lender that heFAILED to advise them months ago that I had stopped paying onmy loan. The buyers were as disappointed as was I because theywanted to turn the historic property into a High-Tea restaurantwhich would suit the property perfectly.
If you are counting, these are TWO voluntary resolutions of the
dilemma that have now gone by the wayside. First, I wouldrestructure the loan, but that failed because they wanted asecond profit on that agreement, PLUS they wanted me to giveup all my known or unknown defenses on the predatory loan.(By that time the creditor had ALREADY made their fatal mistakeof splitting the security from the Note. More on that below.)Second, a sale would make the lender whole, but they had a case
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of internal fraud as to why they would not agree to a half milliondollar sale that would make everybody (?) happy.
LOOKING FOR HELP.
..in all the wrong places. The timing was ideal. Because ofthe September 2008 financial meltdown there were all sorts ofnew rescue vehicles for troubled homeowners like me:
Hope for Homeowners Hope Now Alliance National Fair Housing Alliance Making Home Affordable
Veterans Home Loan Program (State and Federal) National Trust for Historic Preservation U.S. Department of Housing and Urban Development
(HUD) U.S. Department of Treasury Homeowners Preservation
Office State Department of Housing and Community Services Consumer Federation of America Fannie Mae Home Affordable Refinance
Freddie Mac Relief Refinance Mortgage and HomeAffordable Modification
Obama Mortgage Modification Conversion DriveOffice of Homeownership Preservation
State Historic Preservation League Acorn Housing Corporation National Community Reinvestment Coalition African American Alliance for Homeownership Local Banks
Other Financial Institutions Neighborhood Assistance Corporation of America Home Affordable Modification Program (HAMP) Citizens for Responsible Lending
Beginning in January 2009, I went to them all either in person, bycomputer, by telephone or by gosh and by golly. It is possible to
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summarize the results of this effort with these metaphors. TheState Veterans Home Loan program advised me that since I hadbeen a veteran for more than thirty years, I was not eligible fortheir home loan programs. (Huh, I didnt know one could lose
their veteran status.) Acorns office was closed on Good Friday.All the banks said that their programs werent fully developed yet.The federal websites put you in a screen tree that is fireprooffrom ever getting to a human being. That is when I went straightto the local HUD office in person where they told me I was noteligible for ANY program. BUT, they asked, HAD I TRIEDCOUNSELING??
THE BANKRUPTCY
On to bankruptcy, the rescue club! At first blush, one would thinkthat this is where debtors like me achieve succor of some sort.Stay with me.
It is now a year after I missed my first payment. I had evenmade a payment on that forbearance agreement where theywanted me to give up all of my other rights--even if they
committed fraud! For a debtor in bankruptcy court there aresome startling realities:
Counseling -- Many of us may feel we are too good for this,but I have found, now having undergone three (3, countem) counseling sessions, that they are all worthwhile.Really. Unfortunately, there is no tie between all the goodcounseling information and a rescue loan.
Up Front Money -- I had to pay for the counseling, pay a
huge retainer to my bankruptcy attorney, pay for the U.S.Trustees fee, pay to get my taxes current (they were), andso on. Wait a minute, I thought it was the debtor whosought PROTECTION for the limited funds the debtor hadleft?!?
There is no succor in bankruptcy -- the deal was that I hadto sell to make the lender whole and sell we did. Once
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again, grace had shown my way a cash buyer on half theproperty with no conditions. Now, we are gettingsomewhere.
Those counseling sessions had disclosed a significant rescuevehicle for me because I am a SENIOR. However, no onebut me figured it out. I AM ELIGIBLE FOR A REVERSEMORTGAGE. I did my due diligence on reverse mortgages.I read everything in sight. AARP has good publications onthe subject. But more than anything, Jeremy at Open DoorCounseling gave almost four (4) hours of his sophisticatedknowledge to an attentive customer. THERE IS NO DOWNSIDE TO REVERSE MORTGAGES, even in dire circumstances
like mine. Really.
PROBLEM SOLVED?
All problems solved? Yep. The money from the cash buyer (ofpart of the property), combined with the funds from the reversemortgage would more than pay off the underlying predatory loanin question.
Again Not So Fast Philo (ANSFP) -- Unbeknowst to me, while weput together the cash/reverse mortgage deal in BankruptcyCourt, the lender had foreclosed my property out fromunderneath me, outside the Bankruptcy proceedings, withoutnotice to me. Suddenly, I didnt own these properties anymoreaccording to my lender and he promptly advised the buyers andmy reverse mortgage agent of this fact. The buyers went awayas did the reverse mortgage broker.
So, each day, I gazed out of my window (a wavy historic frostedwindow) and wondered if the foreclosure swat team is going toshow up in my driveway to put my stuff out into the street. Andit is getting cold outside.
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Eventually, they came, locked my doors and threw me out intothe street. And they took all my stuff. At age 66, after working58 years, if you count picking strawberries at age 8 andthereafter; I am homeless.
Is there no True Rescue Vehicle (TRV) out there? Who am I? Iam Everyman. Please contact me if you relate to what happenedhere or would like more information. Or just want to complain.
Lauren Paulson3980 SW 170th AveAloha, Or 97007
DEFINITIONS for further reading
The Law
COMMON LAW -- Law developed by judicial decisions. This is the Anglo-
American legal tradition which adheres to the principle of stare decisis (letthe decision stand). This doctrine holds that judges must look to past
judicial decisions or Man-made legislated laws to answer the case before them
presenting identical or similar questions. Kermit L. Hall, ed., The Oxford
Guide to the Supreme Court, Page 197 (2005)
NATURAL LAW -- This is the philosophical doctrine holding that there is a
certain order in nature that provides norms for human conduct. It proposes
that people can grasp certain principles through practical reason divined by
nature and God. If a judge makes decisions based on instincts and subjective
reasoning then the philosopher George Santayana would call that Mans
imitation of divinity. Will Durant, The Story of Philosophy, Page 493
(1926-1961)
Real Estate Concepts
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Later, I ask you to cry for those in this hellish foreclosure predicament.Now, however I am just sick to my stomach. Sick because I have stepped back
from my personal situation; and even further back from others as I
contemplate explaining necessary legal real estate concepts of the whole.
The Front Load: Here is what is really going on. The lawyers and thebankers have front loaded a simple residential loan and sale with so much
complicated paperwork that even a sophisticated consumer does not
understand what is happening. Nor does anybody read these documents.
The Back Load Dump: On the other hand, lawyers and bankers have
simplified their ability to get your home through nonjudicial foreclosure to the
point of denying consumers basic constitutional due process. Let me explain.
Here are the real estate concepts you MUST understand.
1. The Sheepskin -- The Sheepskin is what I call legal title. When asellerconveys a residential home to the buyerthe former usually transfersthe Sheepskin to the latter. The bank gets a lien usually called amortgage.
2. The Complication -- There are lien theory states and there are titletheory states. In lien theory states the buyer (consumer) holds theSheepskin. The bank simply has a lien. In title theory states the bank getsthe Sheepskin and the consumer simply has an equity interest in theirhome subject to what they owe. In lien theory states usually the consumergets due process, at least in theory, because a bank has to go through thecourts to foreclose. In title theory states nonjudicial foreclosure is thenorm. There are few due process protections in nonjudicial foreclosures.
3. Trust Deeds -- This is where they slipped the consumers a Mickey Finn. Imaintain a Trust Deed is NOT a deed at all. It is a mortgage. It is a securityinterest. It is NOT the Sheepskin. The theory behind a trust deed is that astraw person (not to confused with the nominee concept developed inMERS issues), called a trustee is an unknown fictitious person out there thatcan slip and slide to the courthouse steps and sell your home in a nonjudicial
foreclosure sale without you getting due process. In short, the banks havedevised a scheme where you, the consumer, have given the banks apower of sale to this unknown (trustee) person so they dont have to dothe right thing by you nor have a judge looking over their shoulder whilethey are placing you in the foreclosure shaft to homelessness.
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THE FIERCE STORMS OF LITIGATION Arrive Along With My
14 JUDGES
Aquinas conceives of what is known as the laws of nature. The Laws of
Nature are different from Man-made laws such as statutes and case law. Judges are
required to follow the latter not the former. Judges are required to follow Man-
made laws which are known as The Rules of Law. We are supposed to be a
country subject to The Rules of Law. Laws of Nature are different. When judges
follow the Laws of Nature they are being free agents. They are not applying nor
following the Laws of Man. Therefore, they are not following Common Law.
They are not following the Law of Precedents otherwise known asstare decisis.
STARE DECISIS Lat. "to stand by that which is decided." The principal is that
the precedent (previous) decisions are to be followed by the courts. It is only
through this predictability can lawyers knowledgeably advise their clients. Stare
Decisis is missing in action in our present legal system. We are not a country
subject to The Rule of Law when judges follow the laws of nature or do whatever
they want when they want.
Laws of Nature should be left to those who discovered them in the first
place: scientists.Laws of Nature should be left to those who discovered them in
the first place: philosophers. Laws of human conduct ie., Man-made laws or
statutory laws are made by legislatures. Laws of Nature are discovered by
scientists and philosophers. Man-made Laws are supposed to be discovered and
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applied by judges based on decisions in previous cases. Once so discovered and
applied, these laws are supposed to be followed by subsequent judicial rulings as
precedent. The public cannot possibly know how to conduct themselves in the
field of human affairs unless they can rely on judge-made law or Common Law
from previous judicial decisions. This is also known as Case Law. Case law is the
law enunciated by cases decided by judges in our highest courts.
Aquinas conceives the Laws of Nature which the scientist discovers as laws
implanted in the very nature of things at their creation by God. Mortimer Adler,
Great Ideas, The Lexicon of Western Thought, Macmillan Publishing Company,
Page 417(1952, 1992)
The problem is that the judiciary has decided that it is free to follow the
Laws of Nature; that is the laws divined by God, rather than the Common Law. In
a word, judges have decided they are Gods and may follow their own instincts and
do not have to follow Man-made law. This is a case in point. It is why 14 different
judges have fallen into a black hole of decision making.
All the while, the Common Law is clear under the facts found here. First, a
lender may not assign a security instrument (a mortgage or deed of trust) without
also assigning the debt instrument (the Promissory Note). Second, banks (and all
lenders) must maintain a clear chain of title. It is just like ownership of a car. If
banks assign the security instrument without also assigning the Promissory Note
they make a fatal mistake. This is what has been happening all around the United
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States. The media loves the concept of robo signatures, but that is not the new
tsunami already sweeping across the Country. Lenders failure to properly assign
the Promissory Note is a much more fundamental problem for the banks, yet this
concept is little understood by the media.
Once these two documents (the deed of trust and the Promissory Note) are
separated in subsequent transfers on the way to the securitization process, each
controlled as they are by two separate areas of the law; the lender cannot enforce
the security instrument. Humpty Dumpty, once fallen and broken cannot be put
back together again. Simple eh? None of the 14 judges, in three years of litigation
have taken notice of these simple principles of Man-made law in existence for
about two hundred (200) years in the United States. Why have they not had a
refresher course in this problem at Judge Camp? Judge camps are the lavish
conferences judges have all over town, all over the state, all over the world all the
time. The Ninth Circuit had theirs in Maui, Hawaii in 2010.
The New York State courts recognized this problem as early as 2004. Where
has everybody else been all this time?
None of the 14 judges here have taken notice of this aspect of Common Law
even though Paulson has repeatedly raised the issue formally in his motions and
pleadings. The judges here have just ignored this issue; this articulated legal
standard under the Common Law. Not a word have they said about this area of
the Common Law. Rather, they, all 14 of them, have divined themselves free to
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make any decision they want to make eschewing clear Man-made law; eschewing
thefederalCommon Law, eschewing Oregon statutes and state Common Law all
over the United States. The problem is the judges are not Gods, therefore they are
constrained not to follow their biases and their own personal view of Natural Law.
In other words, judges may not make any decision they want, motivated as to how
they feel that day. They may not make any decision they want whether they like
the merchant class party in front of them nor whether they like or dislike the lonely
unrepresented and unwashed single digit party in front of them; in a word, they
may not like Paulson. It is manifest that they must follow statutes and Case (or
Common) Law anyway. They must follow precedent. See, Appendix for specifics
how each judge has assiduously diverted from the Common Law to the Natural
Law in their considerations of this case.
UNFAIR FORECLOSURES IN THE REAL WORLD
(Or How I Learned to Love my 14 judges in a Simple, Single Asset
Bankruptcy)
Morton J. Horwitz, (sic) in his book, Transformation of American Law, 1870
to (Present), tells us that early law was chiefly for the benefit of the merchants. So,
it is now. It was chilling in my recent appearance in Bankruptcy Court to learn that
the overriding standard for the entire bankruptcy process is ...for the paramount
interests of the creditors. Because I did not know that, my Bankruptcy Judge,
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Randall Dunn, told me at my last hearing before him that, I had a pure heart, but
an empty head.
Thus admonished, I now see the process as it really is. You, as the debtor,
are nothing more than a fly on the wall. The only way that the public will have a
chance against the merchants is to unite.
My website search tells me that could happen, but is not happening now, but
there are some early signs it is beginning to happen (See, for example,
Stopforeclosurefraud.com). But, my research tells me more. It is essential that
debtors, know what banks have been doing wrong. This knowledge is the ultimate
effective power in the hands of debtors. It is the end of the world for the financial
institutions (banks and mortgage brokers) who have been doing it wrong. It has to
do with CONSTITUTIONAL STANDING. **WARNING** ---
Hundreds of thousands of foreclosures must be reexamined to
determine if nonjudicial or judicial foreclosures have occurred illegally
because the Promissory Note had been separated from the mortgage, but the
debtor was not aware of the issue. In Oregon alone this means thatALL of the
over 20,000 foreclosures that occurred in 2010 must be reexamined carefully,
whether the foreclosure is completed or not. Across the United States it means
over one million foreclosures need to be reviewed to see if all parties made the
same mistake as in Nataches case (see below) and here.
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More probably, this means that a class action will call for all
foreclosures in the last ten (10) years be reexamined to determine if the lender
made this fatal mistake that will cost them legal standing.
LEGAL STANDING
Judges have a remarkably full tool kit to dispatch disfavored debtors to the
dust bin. In some states that is exactly what judges have been doing since at least
2004. However, now that this tsunami is about to engulf the financial industry,
there is nothing the judges can do to improperly favor the merchants. That is
because of the formidable legal concept ofConstitutional Standing. There is
nothing judges can do about it except rule in favor of the debtors. Creditors either
have Standing and they win, or they dont and they lose. There are few areas of the
law that are this black or white. This is one of them. You will have to read further
to see how powerful the concept of Standing is for debtors. You will have to read
my story. It is a sad tale of predatory practices, judicial incompetence and fraud.
Outright fraud. That is what those 50 state attorney generals better be
examining on behalf of innocent (homeless) consumers.
LEGAL MEMORANDUM
It became known to Paulson, by virtue of Federal Judge Garr Kings October
6, 2010 ruling in Natache Rinegard-Guirmas case, cited below, that FHLF, LLC
has no standingbefore any of the forums mentioned below. The issue of whether a
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party has standing cannot be waived. Constitutional Standing is a threshold
jurisdictional requirement, and cannot be waived. Pershing Park Villas
Homeowners Assoc. v. Unified Pac. Ins. Co., 219 F3d 895, 899-900 (9th Cir 2000).
PRELIMINARY
The Plaintiff, Lauren Paulson, was represented by Attorney Matt Arbaugh
during the bankruptcy proceedings from April 2009 until May 2010 and
throughout, from Chapter 11, Chapter 7 until the bankruptcy appeal.
Notwithstanding that this is a simple, single asset case; apparently no one in any of
the antecedent proceedings considered this glaring defect: FHLF, LLC has no
standing before any of these forums because they were not the Holder of the
Promissory Note. Thus, FHLF, LLC had no standing to file a proof of claim,
obtain relief from stay, appear as a party of interest in any forum, file any motions
herein, much less a motion for summary judgment, nor conduct a nonjudicial
foreclosure. This is because FHLF, LLC has no skin in the game. It is as simple
as that.
FHLF, LLC as the assignee of the trust deeds from Fairway Commercial
Mortgage Corporation (Fairway), the lender, did not ever come into possession of
the underlying Promissory Notes. The lender, Fairway Commercial Mortgage
Corporation, did not assign, endorse nor transfer possession of the underlying
Promissory Notes to FHLF, LLC. Therefore, FHLF, LLC had no standing before
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any of the courts including this court because it never held the debt instrument. It
doesnt have any pecuniary interest in these proceedings at all.
Such failure is fatal to FHLF, LLCs ability to appear as a party in any
litigation. It is fatal to their ability to assert the debt in the bankruptcy forum or
foreclose under the law in Oregon and under the law across the United States.
They have no legal standing to file any pleadings in any court
PROCEDURAL POSTURE
(Judicial Notice of all Cases Requested)
This matter has been before fourteen (14) judges in six (6) separate judicial
forums involving eight (8) lawyers not to mention a filing by Paulson with the
Oregon Attorney Generals Office (that has been completely ignored. All the
media hype about the state attorney generals activity is just that).
It began in August 2008. It presently pends in the Washington County
Circuit Court, the Oregon Court of Appeals, the U.S. Bankruptcy Appellate Panel
for the Ninth Circuit, the Oregon Federal District Court, Portland Division and the
U.S Court of Appeals, Ninth Circuit as follows:
1. Oregon Bankruptcy Case No. 09-32439rd11/7
2.Washington County Circuit Court Case No. C 100084
3.Washington County Circuit Court Case No. C 100085
4.Washington County Circuit Court Case No. C 100086
5.Oregon Court of Appeals Case No. A14569
6.Oregon Court of Appeals Case No. A14570
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7.Oregon Court of Appeals Case No A14671
8.United States Bankruptcy Appellate Panel Case No. BAP OR-10-1173
9.Oregon District Court Case No. 3:10-cv-00048-MO
10.United States Court of Appeals Ninth Circuit Case No. 10-35745
11.Oregon District Court Case No. cv-08982-ST/PK
ISSUE
Does FHLF, LLC have legalstandingbefore any of the forums on any of the
pending matters?
ANSWER
No. State law requires that when mortgages (here deeds of trust) are
assigned that the Promissory Note be transferred to or endorsed to the assignee,
FHLF, LLC. That wasnt done. This means that the security instruments were
separated from the Promissory Notes between two companies. Fairway held the
Promissory Notes and FHLF, LLC held the deeds of trust. The Rinegard
(Nataches) case in Oregon and the law across the United States says that when the
security instruments (deeds of trust or the mortgage) are separated from the debt
obligation, (the Promissory Notes) by such a defective assignment, the security
instruments become ineffective. The debt obligations (the Promissory Notes) are
no longer secured. (See cases below)
This means that FHLF, LLC, which was only assigned the security
instruments, not the Promissory Notes, had no standing in these forums nor had a
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right to foreclose because they did not possess nor have an interest in the debt
instrumentsi.e., the Promissory Notes.
THE FACTS
At issue here are two 2005 trust deed transactions with two Promissory
Notes between Paulson and Fairway Commercial Mortgage Corporation (Fairway).
Fairway Commercial Mortgage Corporation subsequently morphed into variously
described new organizations such as one yclept Fairway America, or one nka
(now known as) Skylands Investment Corporation, or one called Fairway America,
LLC or one called Fairway Commercial Corporation and so on. Matthew (Matt)
W. Burk is apparently involved in all the creditor entities (Fairway Commercial
Mortgage Corporation, Fairway Commercial Mortgage, Fairway America, Fairway
America, LLC, FHLF, LLC, and Skylands Investment Corporation, Manager of
FHLF, LLC) mentioned here. The 2005 loan transaction with Paulson only
involved Fairway Commercial Mortgage Corporation. The 2005 transaction
involved none of the other entities.
Huber-Wheeler Crossing, LLC (with Paulson as the sole member) is the
borrower on one Note and Lauren Paulson, Trustee of his testamentary (will) trust
is the borrower on the other Note. Paulson was represented by attorney Matt
Arbaugh for the bankruptcy proceedings. On Mr. Arbaughs instructions and
without objection by Fairway Commercial Mortgage Corporation, the four land
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parcels (lots) were quitclaimed to Lauren Paulson as an individual to facilitate the
bankruptcy reorganization. Paulson had gone out of business as a lawyer in 2006
and Huber-Wheeler Crossing, LLC had become inactive the same year.
The original lender, Fairway Commercial Mortgage Corporation, assigned
their deeds of trust to FHLF, LLC on February 6, 2006, but failed to assign,
endorse nor deliver the underlying Promissory Notes to FHLF, LLC. Fairway
Commercial Mortgage Corporation remained the lender and Holder on the
Promissory Notes following this ineffective assignment. It should be noted that
neither Fairway nor FHLF, LLC gave the debtor notice of the 2006 deed of
trust assignment.
FHLF, LLCs current attorney, Craig Russillo, also represents Fairway
America, Fairway American LLC, Fairway Commercial Mortgage and Fairway
Commercial Mortgage Corporation, Matt Burk and Wells Fargo Foothills. Mr.
Russillo was the attorney for FHLF, LLC in the FED eviction state court cases and
was the attorney for FHLF, LLC in the bankruptcy proceedings. In addition, Mr.
Russillo was formally designated as the agent for Joel Parker, the successor trustee
at the nonjudicial foreclosure sale. In this agency capacity, Mr. Russillo conducted
the nonjudicial foreclosure sale of September, 25, 2010 with Fairways corporate
attorney, Greg Blair, in tow.
FHLF, LLC, through Schwabe attorney Joel Parker, as successor trustee, and
Schwabe attorney Craig Russillo, as his agent; conducted that nonjudicial
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foreclosure on September 25, 2009 at the courthouse steps. This nonjudicial
foreclosure sale was done on that date without notice to Paulson. This foreclosure
was defective due to multiple other mistakes made by FHLF, LLC and their
counsel, but those defects are addressed elsewhere.
THE LAW
Absolute Assignment
FHLF, LLCs attorney, Mr. Russillo, has asserted the notion that the
Absolute Assignment in 2006 of the deeds of trust does the job for them. They
say this because there is general Note transfer language found in that document.
In other words, FHLF, LLC would say that the language in the deeds of trust
assignment is enough to include the Promissory Notes in that assignment. This
notion is refuted by the Rinegard (Nataches) case discussed below among all the
other judicial decisions that have ruled on this issue across the country. An attempt
to assert a general transfer of a Promissory Note in the mortgage (deeds of trust)
assignment was an issue in Bellistri v. Ocwen Loan Servicing, LLC 284 SW 3rd
619, 623 (Mo Ct App 2009). The court found as it did in Rinegard, that blanket
mortgage assignment language in an attempt to include the Promissory Note is of
no force because no actual transfer of possession of the Promissory Note occurs as
required by the law.
But, even if such an assignment were enough (which it is not because how
the Promissory Note is transferred is governed by the Uniform Commercial Code
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(UCC), as is discussed below; NOT by the law of assignments) there are specific
requirements under the law of absolute assignments which must be followed:
The entire debt must be assigned. That did not happen here.
The assignment must be in writing.
The intention of the parties must be clear.
Written notice of the assignment must be given to the debtor .
That did not happen here. Failure to provide Paulson with notice of
the alleged Promissory Note assignment renders it void under the law
of assignments. Condor Asset Management Ltd v. Excelsior Eastern
Ltd., NSWSC 1139, (2005)
Then, under an absolute assignment the assignor, Fairway, must be
joined in any foreclosure and that was not done here.
The Uniform Commercial Code
Before one can legally own a car, a person must physically come into title.
One may not legally transfer ownership of a car to another without signing off on
the title first. One cannot expect money from the transfer of car ownership without
having first been in title and then legally transferring ones interest in that legal
instrument. In other words, one cannot legally enforce a car sale if that person
didnt legally own the car in the first place. FHLF, LLC cant enforce the debt
alleged to be owed to them by Paulson without legally owning the Promissory
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Notes first. One cannot refer to other documents; the endorsements (signatures)
must be on the title document itself or permanently attached. Fairway never signed
over the Promissory Notes nor delivered possession of the Promissory Notes to
FHLF, LLC as required by law. Thus, FHLF, LLC has no skin in the game because
not only do they not have a penny involved in the alleged assignment, Fairway
never transferred possession of the Promissory Notes to FHLF, LLC.
1. Negotiation and Transfer of Promissory Notes: -- The Uniform
Commercial Code (UCC), with state-specific variations, has been adopted as law
by all 50 states and governs a major portion of the law regarding deeds of trust and
accompanying Promissory Notes. Article 3 applies to the negotiation and transfer
of Promissory Notes as they are negotiable instruments as defined in that section
of the UCC. Article 9 of the UCC governs thesale of Promissory Notes. Oregons
UCC law is identical to all UCC references here.
2. Enforcement of Promissory Notes Requires Delivery: -- A negotiable
Promissory Note is transferred when it is delivered for the purpose of giving the
transferee (the receiving entity) the right to enforce the note. [See UCC Section
3-203(a), ORS 73.0203(1)] Fairway never delivered the Promissory Notes to
FHLF, LLC. Under the UCC if an entity never came into possession of the Note
then they are not entitled to enforce the Promissory Note. [UCC Section 3-301]
Because FHLF, LLC never came into possession of Paulsons Promissory Notes,
they are not entitled to enforce the Promissory Notes. [ORS 73.0301] Therefore,
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FHLF, LLC had no Constitutional Standing to appear in the bankruptcy
proceedings, nor to file a proof of claim, nor to obtain a relief from stay, nor to file
motions, nor to foreclose. (See the Kemp case cited and discussed below)
3. Delivery Requires Endorsement: -- Moreover, delivery requires
endorsement on the Promissory Note or on an allonge (a separate paper
permanently attached to the Promissory Note, used in case all the other
endorsement spaces are taken up) by the Holder, Fairway, to FHLF, LLC. Actual
endorsement on the Promissory Note document is required so FHLF, LLC can
prove it didnt just come into possession -- by stealing the negotiable instrument
(the Promissory Note), to use an extreme example. Here, there was no
endorsement of Paulsons Promissory Notes by Fairway to FHLF, LLC which is a
complete obstacle to FHLF, LLC becoming a Holder of the Promissory Notes.
4. Thus, FHLF, LLC is not the Holder of the Promissory Notes: -- To
enforce a Promissory Note against the borrower, a person must prove that one is a
Holder or it is a transferee with the rights of a Holder. [ORS 73-0301]
Fairway Commercial Mortgage Corporation is the only Holder of these
Promissory Notes. FHLF, LLC has never been the Holder of the Promissory
Notes, therefore, any claim asserted by FHLF, LLC in these matters is
unenforceable against Paulson and his property under Oregon law.
The underlying Promissory Notes are negotiable instruments under Oregons
version of the Uniform Commercial Code [ORS 73.0104] and according to the
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specific language of these loan documents. A party is entitled to enforce a
negotiable instrument if they are (A) the Holder of the Note or (B) under certain
circumstances when they are a nonholder in possession with the rights of a
Holder, or (C) a person not in possession, but who is entitled to enforce the note
when it is, for example, lost or stolen.
A. HolderThis is the person in possession of the note if payable to that
identified person. Since FHLF, LLC was never in physical possession of
the note, it cannot qualify as the Holder of the note.
B. Nonholder in possession -- FHLF, LLC could otherwise qualify under
the UCC under certain circumstances if it had ever come in possession of
the Note before foreclosure. Since FHLF, LLC never came into
possession of the Promissory Notes, it cannot qualify under this rule.
C. Nonholder not in possession -- This applies, among other things, to lost
or stolen Promissory Notes and is inapplicable here. [See ORS
73.0301]
Thus, clearly FHLF, LLC was never the Holder of Plaintiffs
Promissory Notes under the Uniform Commercial Code (UCC) applicable here.
Attorney Craig Russillo has written a recent E-mail that purports to anoint
Holder status for both Fairway Commercial Mortgage Corporation and
FHLF,LLCsimultaneously. That is impossible under the law of physics, under
statutory law (the UCC) and the Common Law. Mr. Russillo states:
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FHLF, LLC appointed Fairway Commercial Mortgage Corporationas its servicerand held the note and trust deeds on behalf of FHLF,LLC. (emphasis supplied)
Bottom line, FHLF held both the trust deeds and theindebtedness (emphasis supplied)
Here, there was no separation of those estates, as FHLF holds boththe note and trust deeds. (emphasis supplied)
Under Mr. Russillos representations he would have BOTH Fairway and
FHLF, LLC be a Holder at the same time. That is silly. There was no
negotiation. There was no transfer. There was no delivery. There was no
endorsement. FHLF, LLC has no Promissory Notes in their possession on this
matter. The proof is in the pudding.
A check of the recorded chain of title found in Washington County reflects
an assignment of the mortgage, but not an assignment of the Promissory Notes.
Attorney Russillo provides no proof of his assertions of who is the Holder and
Mr. Russillo has said specifically he will not allow inspection of his original
documents. Proof is essential to establish a chain of title. Proof is essential here to
establish Constitutional Standing.
All lender billings for payments due have been by Fairway. Only Fairway
has sent income tax information to Paulson. Only Fairway has to account for the
monthly payments sent to them by Paulson which clearly reflects that as of 2008
Fairway Commercial Mortgage Corporation calls itself the lender on the
transaction. Moreover, Fairway America (or more properly Fairway America,
LLC) as successor in interest to Fairway Commercial Mortgage Corporation is
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being actively represented as the servicer and lender in these forums by their
General Counsel, Greg Blair through and including April 2010. Therefore,
Fairway Commercial Mortgage Corporation cum Fairway America, LLC are the
lender and the servicer of Paulsons loan to this date, not FHLF, LLC who has no
role in the debt aspect of this matter at all.
5. The Deeds of Trust follow the Promissory Notes, Not the Other Way
Around:
-- The law across the United States and the common law for centuries is: The
mortgage (here deeds of trust) follows the Promissory Note. This means that if a
Promissory Note is assigned, that the security interest (deeds of trust) follows the
Promissory Note. The converse is NOT true. The Promissory Note DOES NOT
follow the mortgage (here deeds of trust). Thus, an assignment of the mortgage
without the concomitant assignment of the Promissory Notes is a nonevent. One
can enforce the bare Promissory Notes, but one cannot enforce the bare security
interests.
There is a purpose behind these stringent requirements in the UCC. A debtor
is only required to pay money to the Holder of the Note, so he/she does not have
to worry about multiple and conflicting claims against the debtor.
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Conflicting Creditor Claims
At least four or five of Matt Burks corporations have variously and
inconsistently asserted a creditors interest in this matter:
A. Fairway Commercial Mortgage Corporation: -- This is the only
company that Paulson dealt with in the 2005 loan transactions and with
whom Paulson contracted. (Even this part of the transaction has been
bungled by Fairway. Apparently, there does not exist a loan agreement,
that has been signed by Fairway. Mr. Seidenwurm for whom there is a
signature space, is no longer with the company and did not sign in the
signature space for Fairway on the loan agreement. Thus, there is no
loan agreement signed by both parties.)
It is onlyFairway Commercial Mortgage Corporation that
issued the 11/25/2008 Notice of Default and Election to Sell.
FHLF, LLC is not mentioned in this recorded document. The
inconsistency is obvious. Why would Fairway Commercial Mortgage
Corporation be issuing a 2008 Notice in this matter if they assigned
their financial interest to FHLF,LLC in 2006? Why would Fairway
Commercial Mortgage Corporation be doing anything in 2008 when
Fairway America, LLC or Skylands Investment Corporation is the
replacement corporation as variously asserted by Matt Burks entities and
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as variously asserted by Craig Russillo, their variously asserted attorney
and agent?
B. FHLF, LLC: -- Following Paulsons filing of Chapter 11 bankruptcy in
April 2009 the next pleading filed in the bankruptcy matter is by FHLF,
LLC through their attorney, Craig Russillo on April 22, 2009.
C. Fairway America: -- There is an undated memorandum on Fairway
America letterhead signed by Matthew W. Burk as President of
Skylands Investment Corporation assigning the rights and interest in
the Assignment of Leases and Rents to FHLF, an Oregon limited
liability company This undated memo states: Fairway America, LLC
successor in interest to Fairway Commercial Mortgage
Corporation.(sic) If Fairway America or Fairway America, LLC
became a successor in interest to Fairway Commercial Mortgage
Corporation sometime in 2006 why is Fairway Commercial Mortgage
Corporation still filing documents in this case in 2008, 2009 and 2010?
The initial demand to cure letter to the Plaintiff came on
August 12, 2008, from Attorney Joel Parker representing Fairway
America. On April 27, 2010, Attorney Craig Russillo acting on behalf
of Fairway America filed FHLF, LLCs Memorandum in bankruptcy
court in support of the Trustees alleged intent to settle the Paulsons
federal court predatory lending lawsuit against the various Fairway
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entities. The April 27, 2010 Memorandum is supported by a declaration
signed by Fairway Americas General Counsel Greg Blair.
Yet in a pleading filed by Attorney Craig Russillo in the United
States Court of Appeals for the Ninth Circuit on January 5, 2011, Mr.
Russillo states:
(Paulson) incorrectly names Fairway America
Corporation as a defendant-respondent in this appeal. No
such entity exists to the best of defendants-respondents
knowledge. The entity that Plaintiff presumably intended
to name is Fairway Commercial Mortgage Corporation,nka Skylands Investment Corporation.
However, in the same pleading he provides another Declaration
by Greg Blair as general counsel forFairway America, successor in
interest to the business of Fairway Commercial Mortgage Corporation
(Fairway).
D. Skylands, Who?: -- Throughout the debtors 2005 loan transactions
with Fairway, there was no mention of Skylands Investment
Corporation. Skylands is first mentioned in 2008 when a curious
document is found in the chain of title recorded in Washington
Countys Taxation and Assessment Department. In this 2008 document,
Fairway Commercial Mortgage Corporation is listed as Grantor (the
debtor entity granting a security interest to another) of the deed of trust
assignment. They probably meant to put Huber-Wheeler Crossing, LLC
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as the actual Grantor of the deeds of trust. This document appoints a
successor trustee, Joel Parker, who is an attorney for Schwabe law firm.
This document is signed by Matthew W. Burk, President of Skylands
Investment Corporation, an Oregon corporation, Manager. To this day,
the Paulson has no idea who Skylands Investment Corporation is nor
what role they have in any of the transactions encompassed here. Yet,
Skylands signs as Manager of FHLF, LLC, another entity that Paulson
has never dealt with in any of the loan proceedings???
E. Fairway America, LLC -- This is the entity that registered with
Oregons Corporation Division on December 6, 2007. It is the entity that
should have been identified as the successor corporation to Fairway
Commercial Mortgage Corporation instead of the entity that does not
exist --- Fairway America----, referred to often as the successor. It is
not known nor explained anywhere how Fairway America, LLC fits in
with Fairway Commercial Mortgage Corporation and Skylands
Investment Corporation. Nor is it explained anywhere where these three
entities fit in with FHLF, LLC other than the deed of trust assignment by
Fairway Commercial Mortgage Corporation to them. That assignment
does not explain the relationship between these entities as they bear on
the original loan.
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However, Paulson previously provided the Court with a
signature page by Mr. Russillo dated March 20th, 2009 where he signs
himself as the attorney for Fairway America Corporation. There is no
such company. However, Matthew W. Burk does own Fairway
Commercial Mortgage. Then as recently as April 10, 2010, Mr. Russillo
signs himself as the attorney for Fairway America, the entity that also
does not exist as pointed out above. Confused? In summary, along with
the contracting Fairway entity: -- Fairway Commercial Mortgage
Corporation, the actual lender has variously used the names Fairway
America LLC, Fairway America Corporation, Fairway Commercial
Mortgage and just plain Fairway America. The Oregon Business
Registry identifies the probable proper successor entity as Fairway
America, LLC.
Causing further confusion is the fact that in the same current
pleading Craig Russillo states that, Fairway Commercial Mortgage
Corporation is now known as Skylands Investment Corporation. On
the other hand, Greg Blair states in his declaration that Fairway
America, LLC is the successor in interest to the business of Fairway
Commercial Mortgage Corporation to this current day.
Finally, Fairway America (not Fairway America, LLC
which is the actual entity registered with the State of Oregon. Fairway
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America is NOT registered with the State of Oregon) is the only entity
designation on all of Fairways letterhead communications.
On the Motion for Summary Judgment filed in the instant case,
Mr. Russillo signed as the attorney for Fairway America Corporation.
There was testimony in a court proceeding by Attorney Joel Parker that
there are individual investors on Paulsons loan. These investors lent
funds to Fairway to finance Paulsons loan and to whom Fairway may
owe about $200,000. These individuals may have an additional interest
in these matters.
Thus, there are at least four to five creditors who are asserting
claims against the Plaintiff since 2005; Fairway Commercial Mortgage
Corporation, Fairway Commercial Mortgage, Fairway America, FHLF,
LLC and Skylands Investment Corporation. Even the bankruptcy judge,
Judge Dunn, was confused. He thought the dispute in the bankruptcy
proceedings was between Paulson and Fairway when in truth and in
fact, the only matters before Judge Dunn in the bankruptcy proceeding
were the claims of FHLF, LLC.
Cases Across The United States
The current economic meltdown has disclosed that financial institutions across
the country have made the same mistake Fairway and FHLF, LLC made here:
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Kemp v. Countrywide, USDC of New Jersey, Case No 08-18700- JHW
(11/16/10) {The debtor successfully expunged the proof of claim in
bankruptcy adversary proceeding because the Note was neither endorsed to
transferee nor put in transferees possession}
Schwend v. US Bank, N.A, et al., USDC of Missouri, Case No 4:10 CV
1590 CDP (12/3/10) { A debtor successfully resisted a Motion to Dismiss
her claim for wrongful foreclosure citing Missouri law that a foreclosure is
invalid if the person causing the foreclosure does not actually hold title to
the Note}
Cogswell v. CitiFinancial Mortgage Company, Incorporated, US Court of
Appeals, 7th Circuit, No 08-2153 (10/5/10) {Debtor successfully avoided
foreclosure when CitiFinancial assigned its interest in a mortgage but never
delivered the Note to the assignees. Citing Illinois law, the Court stated that
only the Holder of the Note may foreclose}
Servido v. US Bank N.A. et al., District Court of Appeal for State of Florida,
Fourth District, Case No 4DE10-1898 (10/27/10) {Holding that the party
seeking foreclosure must present evidence that it owns and holds the note
and mortgage in question}
BAC Home Loans Servicing, LP fka Countrywide v. White, Court of Civil
Appeals of Oklahoma, Case No 108,736, (12/3/10) {Court holds that a
mortgage is merely an incident and accessory to the Note. Under Oklahoma
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law an assignment of the mortgage to one other than the holder of the note is
of no effect}
Fawn Ridge Partners, LP v. BAC Home Loans Servicing, LP, U.S.
Bankruptcy Appellate Panel of the Ninth Circuit, Bk. No 09-15088-TD,
BAP No. CC-09-1396-HPDu , before Dunn and Perris, Bankruptcy Judges,
(3/29/10) { Countrywide, the lender, has a practice of retaining the original
Promissory Notes. Because Countrywide did not endorse and transfer the
Note to BAC, the latter had no standing to request a relief from stay. 11
USC Section 362(d) Court holds that Constitutional standing is a threshold
jurisdictional requirement, and cannot be waived (citing cases) Under
California law, to qualify as a Holder, one must be in possession of the
instrument, and the instrument must be properly endorsed.}
LNV CORP v, Madison Real Estate, Supreme Court of New York, Index No.
103576/2010, (12/09/2010) {Under New York law a party foreclosing must
show that they are the owner of the Note as well as the mortgage at the time
the action is commenced. Absent an effective transfer of the debt as well as
the note, the assignment of the mortgage is void and the party may not
foreclose. That party has no standing.}
HSBC v. Thompson, et al., Court of Appeals of Ohio, Trial Court Case No.
07-CV-9439, 2010-4158 (9/3/2010) {Trial Court decision affirmed granting
debtor summary judgment and dismissing foreclosure action because HSBC
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failed to establish that it was the Holder of the Promissory Note. Without
that showing HSBC has no standing to bring the foreclosure. Standing is a
threshold issue for the courts to decide for it to proceed to adjudicate the
action. In a foreclosure action the real party in interest is the current holder
of the note and mortgage. Financial institutions, noted for insisting on their
customers compliance with numerous ritualistic formalities, are not
sympathetic petitioners in urging relaxation of an elementary business
practice. For nearly a century, Ohio courts have held that whenever a
Promissory note is secured by a mortgage, the note constitutes the evidence
of the debt and the mortgage is mere incident to the obligation. Edgar v.
Haines, 109 Ohio St. 159, 164, 141 NE 837 (1923) Moreover, a financial
institution cannot cure its lack of standing by subsequently obtaining an
interest in the mortgage or Note. Accord Bank of New York v. Gindele,
Hamilton App. No. C-C090251, 2010-Ohio-542.}
Country Place Community Association, Inc. J.P. Morgan Mortgage
Acquisition Corp, District Court of Appeal of Florida, Case No. 2D10-569,
(12/29/10) Country Place sued J.P. Morgan for attorney fee after the circuit
court dismissed J.P. Morgans mortgage foreclosure action. J.P. Morgan
never produced any evidence that it owned the note and mortgage that were
subject to the previous proceeding. Thus, Country Place successfully
dismissed the case on summary judgment and now seeks their attorney fees.
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The court agreed that without proof that it owned the note, J.P. Morgan had
no standing. The court holds that if a ruling of a trial court is not worthy of
support then J.P. Morgan should confess error.
The common law rule that the mortgage follows the note is codified in
Article 9 of the UCC, Section 9-203(g) which states: The attachment of a security
interest in a right to payment or performance secured by a security interest or other
lien onreal property is also attachment of a security interest in the security
interest, mortgage, or other lien. [ORS 79.0203(7)]
As the following cases demonstrate, the mortgage note does not follow the
mortgage if there is an attempted assignment of the mortgage alone or if there is an
assignment separate from the mortgage note as happened here. Bellistri v. Ocwen
Loan Servicing, LLC 284 SW 3rd 619, 623 (Mo Ct App 2009) An assignment of
the deed of trust separate from the note has no force. Saxon Mortgage Serf. Inc
v. Hillery, No C-08-4357 EMC, 2008 WL5170180, at 4-5(ND Cal Dec 9 2008).
For there to be a valid assignment, there must be more than just an assignment of
the deed of trust alone; the Promissory Note must also be assigned. In re Wilhelm,
407 BR 392, 400-05 (Bankr D Idaho 2009). Oregon cases support the concept that
the security, here the Deed of Trust, is merely an incident to the debt. West v.
White, 307 Or 296, 300, 766 P2d 383 (1988)
Where, as here, the Promissory Note and the trust deed are split, the
transfer of the trust deed is ineffective. Bellistri v. Ocwen Loan Servicing, LLC,
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284 SW 3rd 619, 623-24 (Mo Ct App 2009) A putative transfer of the Promissory
Note in the trust deed assignment is ineffective because the UCC governs the
transfer of a Promissory Note. Because Fairway Commercial Mortgage
Corporation never physically transferred the Promissory Notes to FHLF, LLC, Joel
Parker as successor trustee on the security interests did not have a legally
cognizable interest in the property. Therefore, Parker had no standing to foreclose
on FHLF, LLCs behalf. Saxon Mortg. Serv., Inc v. Hillery, No C-08-4357 EMC,
2008 WL 5170180. That Fairway Commercial Mortgage Corporation remained
the lender on the transaction is evidenced by the fact that only Fairway
Commercial Mortgage Corporation, as lender, continued to collect on and enforce
the debt following the putative execution of the Promissory Notes in 2005.
Further, only Fairway Commercial Mortgage Corporation, as beneficiary, issued
the 2008 Notice of Default and Election to Sell. This is a clear break in the chain
of title. Fairway had supposedly assigned their interests to FHLF, LLC in 2006
according to the official records. Yet in 2008 Fairway is representing itself as the
real party at interest in the trust deeds while two years earlier Fairway had assigned
their trust deed interests to FHLF, LLC. This Notice contains no mention of
FHLF,LLC. Then, as discussed above, Fairway then morphed into Fairway
America and participated variously in these proceedings as described.
It is clear that FHLF, LLC did not have Constitutional Standing in this
Court, nor standing to either seek relief from the bankruptcy stay, seek an FED, nor
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move forward with foreclosure because FHLF, LLC was never in possession
of the Promissory Notes. The other Fairway entities were just hopelessly
confused.
As stated above, Judge Garr King in Natasches Case -- Rinegard-Guirma
v. Bank of America, et al U.S. District Court, District of Oregon, Portland
Division Civil Case No 10-1065-PK decision dated October 6, 2010, Held:
that when the lender splits the trust deed from the Promissory Notes, any
foreclosure is ineffective. That is exactly what happened here. In short:
In Rinegard the lender, Mortgage Lenders Network (MLN) assigned the deed of trust to LaSalle who appointed thesuccessor trustee
In Paulson, the lender, Fairway Commercial Mortgage Corporation (FCMC) assigned the deed of trust to FHLFwho appointed the successor trustee
In Rinegard the lender, MLN, physically retained the Promissory Notes as well as the servicing rights to themortgages.
In Paulson, the lender FCMC physically retained the Promissory Notes as well as the servicing rights to themortgages.
In Rinegard payments were to be made to the lender, Mortgage Lenders Network, USA
In Paulson, payments were to be made to the lender, Fairway Commercial Mortgage Corporation.
Fairway Commercial Mortgage Corporation split the trust deeds from the
Promissory Notes when they made the 2006 assignments of the trust deeds to
FHLF, LLC, but did not assign nor transfer possession of the Promissory Notes to
FHLF, LLC. Therefore, all proceedings with them as a party or participant in any
forum including the foreclosure leading to the FED action was defective and void
because FHLF, LLC had no standing in any judicial forum.
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Constitutional Standing
The issue of standing involves both constitutional limitations on federal
court jurisdiction and prudential limitations on its exercise. Warth v. Seldin, 422
US 490, 498 (1975). To have constitutional standing FHLF, LLC must show that it
suffered an actual concrete and particularized injury in fact, caused by the debtor
which would result in likely redress. Lujan v. Defenders of Wildlife, 504 US 555,
559-560 (1992). Here, FHLF, LLC can show no interest in the underlying debt
instrument nor that it paid anything for this transaction. FHLF, LLC cannot show
that it was either the transferee or assignee of the Note. Therefore, FHLF, LLC
cannot demonstrate that it has been injured by the debtors putative default on the
loan. As such, FHLF, LLC did not have constitutional standing to file anything,
foreclose, much less for a relief from Stay or to participate in these proceedings at
all.
Prudential standing requires that FHLF, LLC assert its own claims rather
than the claims of another. Dunmore v. United States, 358 F3d 1107, 1112 (9th Cir.
2004). Clearly FHLF, LLC is nothing more than a shell company attempting to
assert the claims of Fairway. As such it has no financial interest and no standing
under any doctrine.
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Attorney Fees
Defendant Franki Keefe has petitioned for attorney fees in this case. FHLF,
LLC, even though they do not have standing, had advised the Court that
bankruptcy trustee Amy Mitchell took control of Paulsons estate regarding this
litigation ...out of (his) hands as debtor-in-possession and put it into those of Ms.
Mitchell, as the trustee. This Court so held in its summary judgment ruling. The
fact that Paulson pointed out just from the billing that Defendant Keefe is claiming
attorney fees to which she is not entitled (billing for attorney services in another
forum) demonstrates the need for discovery which Paulson has requested and been
refused.
Paulson realizes that Judge Papak will not rule in Paulsons favor on
anything, not even such a fundamental right as discovery nor due process (ie.
hearing Paulsons multiple formal Motions for a hearing on preliminary injunction
issues. For that reason, Paulson has asked that he be disqualified. Judge Aiken has
ruled on erroneous grounds and did not follow the U.S. Supreme Court standard
enunciated in Litkey v. United States , 510 US 540 (1994). The standard is
whether the judge displayed deep seated and unequivocal antagonism that would
render fair judgment impossible. By refusing to schedule a hearing at all on
Paulsons Motions for Preliminary Injunction demonstrates deep seated and
unequivocal antagonism against Paulson that renders fair judgment impossible. By
these Courts refusing Paulson access to his own property pertaining to this
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litigation renders due process for him nugatory. The Oregon Supreme Court has
done the very same thing -- oddly. Why would courts allow one party to
confiscate the legal materials of the other party and not even give the latter an
opportunity to be heard?
DISCOVERY
A supreme irony in this case is that three judges have denied ALL of
Paulsons Motion to Compel Discovery. The irony is that in order for a creditor to
foreclose they must prove that they have standing as discussed above. To do this
the creditor must prove chain of title also discussed above. Paulson has formally
requested discovery in each forum and followed with a Motion to Compel. Judge
Erwin denied Paulsons Motion to Compel in the State Court proceedings. Judge
Papak denied Paulson discovery twice. Judge Haggerty denied Paulsons Motion
to Compel. Both Judge Papak and Judge Haggerty represent that they have read all
the stuff in their file. Yet neither mention the Judge Garr Kings ruling in the
Rinegard case which is noted in Paulsons last Motion to Compel. Curious. In
short, the Defendants have not been required to provide a single piece of paper in
this case. Curious when the whole issue is whether they can prove that they have
standing before this court or any court.
Conversely, these Defendants have ALL of Paulsons stuff: viz. --
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PERSONAL PROPERTY
Paulson previously asked the Courts for an emergency Stay to protect
the property. In August 2010 when the Defendants were threatening to remove and
destroy all of Paulsons personal property, Paulson again moved for an emergency
stay. None of the Courts were willing to have a hearing on these emergency
motions. A clear denial of Due Process. Now, that removal and destruction of
Paulsons property and personal property has occurred. Paulson has no idea where
that property has been taken nor whether that property has been destroyed.
Considering the current issue of constitutional standing, Paulson is again asking
the courts to issue a preliminary injunction and stay requiring the Defendants to
return Paulson to the premises and requiring the Defendants to return Paulsons
personal property.
This is probably the only case in history where the Court has
allowed one party to litigation to confiscate all the other partys litigation materials,
including the computer hard drive of the adversary, while the litigation was
pending. The Defendants not only have all of Paulsons personal property, they
also have his family irreplaceable heirlooms dating back over 100 years. Thats
not all. The Defendants also have over 2,000 client files and the client list of
Paulsons for over 300 clients. In theory, one would suppose one business would
not be allowed the customer lists of another business, but that is allowed here. It
shouldnt have been allowed.
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The Defendants also have confiscated three of Paulsons vehicles
including a classic motor home.
And then there is the other computer hard drive belonging to Paulson in the
custody of Attorney Paul Bergs paralegal who is defending Craig Russillo by the
Professional Liability Fund, Oregons lawyer malpractice insurance carrier. This
hard drive contains confidential client information and confidential financial
information belonging to Paulson.
All the courts have been asked to stay these proceedings and have been
asked to schedule an evidentiary hearing to determine chain of title and to
determine if the putative creditor, FHLF, LLC has constitutional standing. It
doesnt. No judge out of the 14 and no court out of the 6 have addressed this issue.
APPENDIX -- NATURAL LAW v. THE COMMON LAW
My 14 Judges Used Natural Law
So far, this case is much like the recently maligned mortgage market: This
case has been sliced and diced, vertically and horizontally. There are mezzanine
tranches, there are state court tranches, there are federal court tranches, there are
trial courts, there are appellate courts, there are bankruptcy courts, there are non-
judicial tranches, and the list goes on.
In 1788, Alexander Hamilton suspected that some judges might not do their
duty. Thus, he stated in THE FEDERALIST PAPERS:
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It has been frequently remarked, with great propriety, that a
voluminous code of laws is one of the inconveniences necessarily
connected with the advantages of a free government. To avoid an
arbitrary discretion in the courts, it is indispensable that they should
be bound down by strict rules and precedents, which serve to define
and point out their duty in every particular case that comes before them;
and it will readily be conceived from the variety of controversies which
grow out of the folly and wickedness of mankind, that the records of
those precedents must unavoidably swell to a very considerable bulk,
and must demand long and laborious study to acquire a competent
knowledge of them. Hence it is, that there can be but few men in the
society who will have sufficient skill in the laws to qualify them for the
stations of judges. (Emphasis supplied) Alexander Hamilton, The
FederalistNo. 78, (1788)
MYSIXOTHER COURTS
(JUDICIAL NOTICE)
1. U.S. Federal District Court: -- Paulson first filed his predatory loan case
against Fairway, et al., in Oregon Federal District Court on August 21,
2008 under Case No. CV 08982 ST. The case was assigned to Honorable
Magistrate Judge Janice Stewart.
Common Law -- Judge Stewart followed The Common Law and the Rules of
the Court. Then she removed herself from the case for unknown reasons and the
case was assigned to Magistrate Judge Paul Papak.
Natural Law -- Judge Papak neither followed the Common Law nor the Rules of
the Court when he refused to schedule nor hear Paulsons emergency motions.
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Paulson appealed Judge Papaks rulings and the case was assigned to federal court
Judge Ancer Haggerty. Judge Haggerty followed Natural Law. Judge Haggerty
generally followed the Rules of the Court, but not the Common Law as he saw
made short work of Paulsons case. Judge Haggerty also refused to hear Paulsons
multiple filed Motions that are required to be heard by simple due process and by
his own court rules. Judge Haggerty refused Paulson Discovery that is allowed
under court rules. Finally, he failed to read Paulsons Motion to Compel Discovery
which pointed out the issue of constitutional standing recently discussed by his
brother Honorable Judge Garr King in the same building.
Paulson appealed Judge Haggertys decision to United States Court of
Appeals Ninth Circuit Case No. 10-35745 where it remains.
2. U.S. Federal Bankruptcy Court: -- Paulson filed his Chapter 11
Bankruptcy case on April 8, 2009 under Case No. 09-32439 rdl 11 after he
was formally threatened with non judicial foreclosure by the creditor
Fairway. The case was assigned to Honorable Judge Randall Dunn. Judge
Dunn neither followed the Rules of the Court nor the Common Law. This is
where the wheels fell off.
Common Law -- Bankruptcy law is Man-made law. Chapter 7 is liquidation.
Chapter 11 is reorganization so the debtor can reemerge as a healthy organization
after satisfying the debt obligations. Paulson filed for Chapter 11 reorganization.
The debt is restructured so the debtor may continue to pursue a living. This case
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was perfect for that since the single asset was worth $655,000 and the creditors
were only owed, if at all, $400,000 or thereabouts. Thus, the case was not
underwater.
Natural Law -- No reorganization plan was made as called for by the Chapter 11
statutory scheme. The judge allowed an unnecessary lawsuit for eviction in State
Court times three. (Three unnecessary State Court lawsuits were filed by a
substitute creditor, FHLF, LLC who did not have constitutional standing.) The
judge allowed a nonjudicial foreclosure without the required statutory notices to
the debtor. Then for good measure, the judge allowed the false creditor to settle
the debtors lawsuit against the creditors for predatory loan practices against
established law. The bankruptcy trustee sided with the creditors and even sat with
them during the hearing. She was supposed to be neutral. The good judge ignored
the fact that the parties had a settlement that worked out for everybody.
3. Washington County Circuit Court, State of Oregon: -- Fairway filed three
state FED (eviction) cases on January 25, 2011 in Washington County
Circuit Court under Case Nos. C10084,85,86 EV.
Common Law -- The Oregon Constitution requires that Paulson be allowed a
Jury. Judge Erwin in eviction court suddenly decided he would render a verdict on
the case himself and took the case away from the jurys decision. Court rules
require that Judge Erwin hold a hearing upon Paulsons Motion for a New Trial,
but Judge Erwin decided that was not necessary. Further, under Oregon statutes,
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Paulson is entitled to a stay of Judge Erwins decision upon a Motion for a New
Trial, but Judge Erwin decided that Paulson didnt need that either nor the required
hearing on the matter. Paulson requested the judge to make written finding of
facts and conclusions of law as allowed by the Man-made law. Judge Erwin
decided he didnt have to do that either. The purpose of this rule is so consumers
can know why a judge ruled as they did. No luck here either.
Natural Law -- (Paulson filed to Remandthe FED cases in Oregon District
Federal Court under No. cv 08982 ST, but was assigned a new Case No. 3:10-
cv-00048-MO and a new judge, Honorable Mosberg. Judge Mosberg followed
Natural Law. He followed neither the Rules of the Court nor the Common Law.
He made his Ruling at a Status Conference instead of a formal hearing.) Neither
lawyers nor the parties are prepared to argue the facts and the law nor expect a
substantive ruling by the court at a status conference. So, while under the
Common Law, any litigation involving real estate is supposed to remain in the
jurisdiction that first acquired jurisdiction (here Oregon Federal District Court)
Judge Mosberg allowed the jurisdiction to shift to State Court.
This case was then assigned to Honorable Steve Price in State Court for the
Eviction proceedings as discussed above. There are certain time lines allowed
under the Court Rules for a response. Judge Price decided Paulson did not need
that time nor did Judge Price allow Paulsons response to the creditors filings.
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The trial was assigned to Honorable Andrew Erwin. Both judges followed Natural
Law. Neither followed the Rules of the Court nor the Common Law.
4. Oregon State Court of Appeals: -- Paulson timely appealed the eviction
decisions to the Oregon Court of Appeals. Oregon Court of Appeals Case
No. A14569, Oregon Court of Appeals Case No. A14570, Oregon Court of
Appeals Case No A14671 Paulson timely filed to be allowed to stay in his
home during the pendency of these proceedings and the appeal.
Common Law -- As allowed by Oregon Statutes and Rules of Civil Procedure,
Paulson filed a sixteen page (16) Motion to Return Paulson to his home based on a
Constitutional issue of Standing. In support of that motion Paulson asked that new
Judge Andrew Erwin be disqualified based on a U.S. Supreme Court (Litkey v.
United States) case among other legal authorities.
Natural Law -- Referring to none of Paulsons arguments, authorities nor even the
U.S. Supreme Court case, Judge Erwin denied the motion. The problem is that
Paulson wrote an article on judicial elections in his blog that Judge Erwin could
have taken as negative to him. Subsequently, Judge Erwin denied Paulson his
statutory right to stay in his home without a hearing even though a hearing is
required by written statutory law. No matter to Judge Erwin.
The Oregon Court of Appeals followed neither their Court Rules nor the
Common Law in denying Paulson the right to stay in his own home while these
proceedings were pending. Further, they assigned the case to Commissioner Nass
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who has never been a judge, never elected, appointed, nor anything judicial, yet
decided Paulson could not stay in his house pending the appeal even though that is
allowed by Oregon law. He not only followed Natural Law, but made up laws that
nowhere exist, then lied.
5. U.S. Bankruptcy Appellate Panel of the Ninth Circuit : -- Paulson timely
filed his Notice of Appeal of Judge Randall Dunns Order in the Oregon
Bankruptcy Court on May 17, 2010 to the UnitedStates Bankruptcy
Appellate Court Panel which assigned Case No. BAP No. OR-10-1173.
Common Law -- On December 19, 2010 Paulson filed his twenty-two (22) page
Motion to Expunge FHLF, LLCs Proof of Claim in bankruptcy court. Paulsons
Motion cited five (5) distinct legal basis for his motion. The motion cited over
twenty (20) cases and seven (7) statutory rules in support of his position. The
motion contained twenty-seven (27) pages of supporting documents as exhibits.
Natural Law -- On January 18, 2011 Bankruptcy Appellate Panel Judges Pappas
and Markell denied Paulsons motion in a six (6) line, quarter page ORDER. The
Courts Order cites no cases, no statutes, refers to none of Paulsons five legal
arguments nor refers to any of his legal briefs nor any of his 27 pages of supporting
materials.
6. U. S. Court of Appeals for the Ninth Circuit: -- Because Magistrate Judge
Papak wouldnt afford Paulson a hearing on any of the matters (six of
them) that he filed, he asked Chief Judge Ann Aiken to look into the matter
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because that refusal seemed so unusual. She wouldnt look into the matter
either, so Paulson asked the Ninth Circuit to forbid Fairways threatened
confiscation of Paulsons personal property and to disqualify Judge Papak.
Common Law -- The law allows for a time-out if one party may suffer
irreparable harm and that party has a colorable case on the merits. It is now August
of 2010. Paulson had been asking the courts to save his irreplaceable family
heirlooms since May 2010 without a hearing. Paulson also briefed the Ninth
Circuit on the law of disqualification and pointed out how case law across the land
and in Oregon is the opposite of Chief Judge Ann Aikens ruling on the issue of
Judge Papaks bias. Paulsons brief is fifteen (15) pages long and cites eight cases
and court rules. In addition, Paulson supplies twenty-eight (28) additional pages of
supporting materials.
Natural Law -- Without referring to any of the law nor the facts recited by
Paulson, the Court denies Paulsons motion in a one page Order. The court does
not even mention the issue of Judge Papaks disqualification. Either Judge Aiken
is right on the law of disqualification or Paulson is right. Paulson has analyzed the
issue under the U.S. Supreme Court case of Litkey v. Supreme Court case, and no
judge has analyzed this case in terms of why or how Paulson is wrong. (Clifton,
Bybee and Ikuta) Yes, thatBybee!
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The Playing Field Changes
The Playing Field Changed in Oregon on October 6, 2010 when Ms.
Natache Rinegard-Guirma bravely, and by herself, took on the Bank of America.
The issue is described above in detail.
Common Law -- With Nataches case folded firmly under his arm, Paulson
supplied the new precedent to the Ninth Circuit. They were not interested.
Natural Law -- This time Paulson provided the Ninth Circuit with a brand new
brief of twenty-six (26) pages citing thirty-four (34) case or statutory rules as
precedent. Paulson also provided fifteen (15) additional new exhibits. Without
referring to a single issue nor page of Paulsons documents nor arguments, the
Ninth Circuit said Paulsons appeal ...is frivolous. This Order is one and half a
page. It cites no case law. It cites no statutory law. It just doesnt like Paulson.
(Leavy, Bybee)
The United States Supreme Court has recently reversed the Ninth Circuit for
the tenth (10) time since November 2010. The United States Supreme Court called
Ninth Circuit decisions: inexplicable. Long the problem child of the U.S.
Supreme Court, the Ninth Circuit Court of Appeals has Paulson in their cross-hairs
of decision-making.
CASES PENDING
In summary, this case is now pending in Washington County Circuit Court,
The Oregon Court of Appeals, The Oregon Supreme Court. This case is also
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pending before the Oregon Bankruptcy Court, the Federal Bankruptcy Court of
Appeals, the United States Court of Appeals for the Ninth Circuit.
In short, State Court Judges Knapp, Price and Erwin have only followed
Natural Law, not Man-made law. At the Oregon Court of Appeals, Commissioner
Nass and Chief Judge David Brewer have only followed Natural Law, not Court
Rules nor Common Law. And Commissioner Nass lied.
At the Federal Court level, Judge Janice Stewart is the only judge to follow
Common Law. Judges Dunn, Papak, Haggerty, Aiken, and Mosberg have only
followed Natural Law. None of these judges have followed their own Court Rules,
the Federal Rules of Civil Procedure nor have they followed The Rule of Law.
Indeed, none, except Judge Haggerty have even cited case law.
At the Ninth Circuit Court of Appeals it is no better as summarized above.
The Roiling Seas of Litigation Roil On.
THERE IS NO HOPE FOR HOMEOWNERS
There is no hope for homeowners and here is why. But, first let me define theproblem.
THE PROBLEM
A homeowner who is in present financial distress is caught in a hopeless tautology.Here are the essential elements:
Citizens in a financial pickle are demoralized and ashamed. Therefore, theconsumer is reluctant to reach out or deal with new or redundant paperwork.
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Government has encumbered their rescue vehicles with so muchbureaucracy that they sink of their own weight. There is no one agency ornonprofit in charge. No one is in charge.
Reality -- All the lame programs purportedly providing hope for homeownersignore two realities about creditors and servicing agencies. The first reality is that
servicing agencies hold debtors in contempt. There will be few friendly workoutsbecause of how creditors view debtors. The second reality is that lenders look tosituations like these as an opportunity to make a second profit from theunsuspecting public. Just look at the new mortgage advertisements!
The Tautology -- The tautology works like this. All programs require the debtorto start with counseling somewhere. Fine. The problem is that none of thecounselors have any clout with lenders. I have been through three sophisticated
counseling sessions, all of which were worthwhile and none got me any closer toresolution of my loan default. In other words, there is no hand-off or linchpin
between the counse