Pamela Owen. Civil Rights. Declaration of Jody M. Mccormick Filed by Defendants. Document No. 41

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 1 of 63
The Honorable Benjamin H. Settle

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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON
AT TACOMA
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Plaintiff,
vs.
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Case No. 3:15-cv-05375-BHS
PAMELA S. OWEN,
FEDERAL HOUSING FINANCE AGENCY;

FEDERAL HOME LOAN MORTGAGE
CORPORATION; MTC FINANCIAL, INC.,
dba TRUSTEE CORPS; BISHOP,
MARSHALL & WEIBEL, P.S.; CHUCK E.
ATKINS, in his official capacity as Clark
County Sheriff,
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NOTE ON MOTION CALENDAR:

November 6, 2015
Defendants.
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DECLARATION OF JODY M.
MCCORMICK IN SUPPORT OF
FEDERAL HOUSING FINANCE
AGENCY'S AND FEDERAL HOME
LOAN MORTGAGE CORPORATION'S
JOINT MOTION TO DISMISS
PLAINTIFF'S COMPLAINT
I, Jody M. McCormick, make the following declaration:
1.
I am a partner with the law firm Witherspoon Kelley. I am counsel of record for
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Defendant Federal Housing Finance Agency ("FHF A") and Defendant Federal Home Loan
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Mortgage Corporation ("Freddie Mac") in the above-captioned case. I submit this Declaration
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in support of the accompanying Joint Motion to Dismiss Plaintiffs Complaint submitted by
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FHF A and Freddie Mac.
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DECLARATION OF JODY M. MCCORMICK IN SUPPORT
or FEDER.AL HOUSING FINANCE AGENCY'S AND
FEDERAL HOME LOAN MORTGAGE CORPORATION'S

JOINT MOTION TO DISMISS PLAINTIFF'S COMPLAINT - I
Case No. 3: 15-cv-05375-BHS
Sl2790lODQCX
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WITHERSPOONKELLE
Attorneys & Counselors
422 W. Riverside Avenue, Suite l 100

Spokane, Washington 99201-0300
Phone: 509.624.5265
Fax: 509.458.2728
2.
I contacted Plaintiff on two occasions to inform Plaintiff that she had not
properly effected service upon Freddie Mac and FHFA. On behalf of Freddie Mac and FHF A, I
represented that both parties would be willing to accept service on the condition that Plaintiff
agree to seek a stipulated order that would establish a briefing schedule for Freddie Mac and
FHF A to respond to her claims.

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3.
By letter dated August 4, 2015, and by email dated September 30, 2015, Plaintiff
rejected the offers described above.
4.
Attached are true and correct copies of the August 4, 2015 letter (Exhibit A) and
September 30, 2015 email (Exhibit B).
II
5.
Attached hereto as Exhibit C is a true and correct copy of the Motion and
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Declaration to Vacate Judgment and to Stay Enforcement and Writ of Restitution filed by
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Plaintiff in Clark County Superior Court Case No. 15-2-00924-2 (the "Unlawful Detainer
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Action").
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6.
Attached hereto as Exhibit D is a true and correct copy of Motion to Quash
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Service of Summons filed by Plaintiff in the Unlawful Detainer Action.

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7.
Attached hereto as Exhibit E is a true and correct copy of the Judgment for Writ
of Restitution Only entered in the Unlawful Detainer Action.
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OF FEDERAL HOUSING FINANCE AGENCY'S AND
JOINT MOTION TO DISMISS PLAINTIFF'S COMPLAINT- 2
Case No. 3: J5-cv-05375-BHS
$1279016 DOCX
lj~
WITHERSPOONKELLE
422 W. Riverside Avenue, Suite l 100

Phone: 509.624.5265
Fax: 509.458.2728
Respectfully submitted this 14'" day of October, 2015.

WITHERSPOON KELLEY
s/Jody M. McCormick
Jody M. McCormick WSBA # 26351
422 W. Riverside Ave., Suite 1100
Spokane, WA 99201-0300
Phone: 509-624-5265
Fax: 509-458-2728
jmm@witherspoonkelley.com
Attorneys for Defendants Federal Home Loan Mortgage
Corporation and Federal Housing Finance Agency
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2S
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JOINT MOTION TO DISMISS PLAINTIFF'S COMPLAINT - 3
Case No. 3: l 5-cv-05375-BHS

Sr/.790!6DOCX
WITHERSPOONKELLE
422 W. Riverside Avenue, Suite 1100

Phone: S09.624.S265
Fax: 509.458.2728
CERTIFICATE OF SERVICE
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J
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I hereby certify that on the 141" day of October, 2015,

1.
I caused to be electronically filed the foregoing DECLARATION OF JODY M.
MCCORMICK IN SUPPORT OF FEDERAL HOUSING FINANCE AGENCY'S AND
FEDERAL HOME LOAN MORTGAGE CORPORATION'S JOINT MOTION TO DISMISS
PLAINTIFF'S COMPLAINT with the Clerk of the Court using the CM/ECF System which will
send notification of such filing to the following:
Michael Steven DeLeo mdeleo@prklaw.com, rwhite@prklaw.com
Barbara L Bollero bbollero@bwrnlegal.com, tburt@bwrnlegal.com
William P. Richardson bill.richardson@clark.wa.gov,

nicole.davis@clark.wagov, thelma.kremer@clark.wa.gov
JO
Pamela S. Owen pamela.owen99@gmail.com, emanuel.mccray@hotmail.com,

parnela. 99.johnson@grnail.com
II
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David A Weibel dweibel@bwrnlegal.com
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2.
I hereby certify that I have mailed by United States Postal Service the foregoing
document to the following non-CM/ECF participants at the address listed below: None.
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3.
I hereby certify that I have mailed by United States Postal Service the foregoing
document to the following CM/ECF participants at the address listed below: None.
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4.
I hereby certify that I have hand-delivered the foregoing document to the
following participants at the addresses listed below: None.
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s!Jody M McCormick
Jody M. McCormick WSBA # 26351
WITHERSPOON KELLEY
422 W. Riverside Ave., Suite 1100
Spokane, WA 99201-0300
Phone:509-624-5265
Fax: 509-458-2728
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DECLARATION OF JODY M. MCCORMICK JN SUPPORT
JOINT MOTION TO DISMISS PLAINTIFF'S COMPLAINT 4
Case No. 3:15-cv-05375-BHS
Sl27QIJJ6DOCX
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WITHERSPOONKELLE
422 W_ Riverside Avenue, Suite 1100

Spokane, Washington 9920\-0300
Phone: 509.624.5'265'
Fax: 509.458.2728
EXHIBIT A
Pamela S. Owen
3912 NE 57th A venue
Vancouver, WA 98661
Tel: (360) 991-4758
pamcla.owen99t@g1nail.com
August 4, 2015
Jody M. McCormick
Witherspoon Kelley
422 W Riverside Avenue, Suite 1100
Spokane, WA 99201
Tel: (509) 624-5265; Fax: (509) 458-2728
Owen v. Atkins et al., 15-cv-053 75-BHS; United States District Court for the
Western District of Washington (Tacoma)
Cause:
Subj: Plaintiffs Rejection of Joint Offer to Stipulate to Order Setting Briefing Schedule
Dear Counsel:
l decline to accept your offer received on the above date for the following reasons, among
others not listed:
1.
The above-titled action was removed on June 4, 2015, and not June 5, 2015 as
stated in the Stipulation.
2.
The Stipulation erroneously claims that ''Plaintiff did not properly serve" your
clients. Plaintiff has never attempted to serve your clients with sun1mons and complaint is a more
accurate statement of the fact.
3.
On June 7, 2015, your clients were asked to waive service of summons. Your
clients have one choice at this late stage: Waive service or pay the costs of service. Rule 4(d)(2)
makes mandatory that:
lfa defendant located within the United States fails, without good cause, to sign
and return a waiver requested by a plaintiff located within the United States, the
court must impose on the defendant:

"(A) the expenses later incurred in making service; and
(8) the reasonable expenses, including attorney's fees, of any motion required to
collect those service expenses."
4.
You were provided with a copy of my motion to stay proceedings pending the
outcome of the unlawful detainer appeal. Your clients may use this opportunity to oppose this
motion and argue against delay. Should your clients prevail on appeal, the District Court would
be left with only one choice to dismiss the action.
5.
Defendant Sheriff Atkins informed the District Court that your clients agreed to
have this action ren1oved to Federal Court while being aware of the unlawful detainer appeal:
Pursuant to J8 lT.S.C'. 1446(b)t2)(AJ, consent to this re1110Yal has be obtained fro111 all
defendants that h1Ye filed a Notice of Appearance. or notified Defendant Atkins of their intent to
tile a Kotice of Appearance.
(Atkins Notice of Removal, Dkt. No. 1at2, filed 06/05/15.(

6.
Your clients may, without my stipulation, file a 1notion seeking an Order setting a
briefing schedule consistent with your current Stipulation. I will oppose your clients' motion for
the reason herein stated and for the reasons stated in my motion to stay pending outcome of the
unlawful detainer appeal.
7.
Your client, Freddie Mac, has a brief on appeal due on August 19, 2015. You are
required to remind your client of Rev. Code Wash. (ARCW) 40.16.030 (2015) (Offering false
instrument for filing or record); Exhibits 5 and 6 attached to the complaint; the Trustees Deed
Upon Sale; and the Declarations made under penalty of perjury to cause the Superior Court and
Sheriff Atkins to allegedly violate my State and Federal constitutional and statutory rights.
On a side note, you mentioned that should my settlement offer is "7 figures," you
would not take this amount to your clients. Washington State Court Rules of Professional
Conduct (RPC) 1.2 and 1.4 mandates that a lawyer n1ust communicate with her or his clients all
settlement offers. ''A lawyer shall abide by a client's decision whether to settle a matter." A
lawyer for a government agency, such as yourself, may have authority on behalf of the
government to decide upon settlement or whether to appeal from an adverse judgment. Such
authority must be consistent with the Government's it1-house lawyers. Thus, any failure to
comply with an obligation or prohibition imposed by a RPC would be a basis for invoking the
disciplinary process. While the RPC may not serve as a cause of action against you and your
other lawyers, the Rules do establish standards of conduct by lawyers and a lawyer's violation
of a Rule may be evidence of breach of the applicable standard of conduct."
Yours truly,
~
,/)'
, .,
/-f
,I_
1'
,.: '1
,.
~~._-_,ZccLflc.11~'~_,,~"':~c.::,,_~'~"~-"-''-'"-";'-'I-;:~.:_-~;,_,__)
Pamela S. Owen
Plain1ifr
Tel: (360) 991-4758
pan1ela. owcn 99(a~gm ai I.con1
EXHIBIT B
Jody M. McCormick
Pamela Owen <pamela.owen99@gmail.com>
Wednesday, September 30, 2015 5:36 AM
rwhite@prktaw.com; Alicia Asptint; Steven J. Dixson; tburt@bwmlegal.com;
dweibel@bwmlegal.com; Erin Hill; nicole.davis@clark.wa.gov;
thelma.kremer@clarkwa.gov; bill.richardson@clark.wa.gov; Emanuel McCray;
mdeleo@prklaw.com; thelma.kremer@prklaw.com; jmcintosh@rcolegal.com; Jody M.
McCormick
From:
Sent:
To:
Re: Owen v. Atkins
Subject:
Dear Counsel:
As a courtesy, the following is provided per your email dated 9/29/2015:
1.
Regarding service of summons and complaint on your clients, your attention is directed to Dkt.
#s 35 and 36.
2.
Pursuant to RCW 238.18.040 and .050. service was complete and '"had by serving the
secretary of state of the state of Washington" [23B.18.040]; and: ''No proceedings shall be had against the
nonadmitted organization nor shall it be required to appear, plead, or answer until the expiration of forty days
after the date of service upon the secretary of state."' [238.18.050], which was September 1. 2015.
3.
Under Local Civ.R. 55(a): ''A motion for entry of default need not be served on the defaulting
party. However, in the case of a defaulting party who has entered an appearance, the moving party must give the
defaulting party written notice of the requesting party's intention to move for the entry of default at least
fourteen days prior to filing its motion and must provide evidence that such notice has been given in the motion
for entry of default."
4.
Because your clients have been duly served under Chapter 23B.18 RCW, your request to
stipulate is moot.
I hope the above infonnation is useful to you. Please also confinn the interest of your clients in reaching
a settlement within the next week or two. This will save them the time and costs from sub1nitting an Answer
and Reply.
ls/Pamela Owen
Plaintiff
On Tue, Sep 29, 2015 at 11 :20 AM, Jody M. McCormick <JMM@witherspoonkelley.com> wrote:
Ms. Owen:
I am writing on behalf of the Federal Housing Finance Agency and Freddie Mac about Owen v. Atkins et al. (Case No.
3:15-cv-05375) in the Western District of Washington.
Freddie Mac and FHFA have still not been served with a summons and complaint in accordance with court
rules. However, both Freddie Mac and FHFA are willing to waive their objections to the sufficiency of service in order to
establish a plan to proceed with the case. We therefore wish to enter into a stipulation that would waive objections to
1

service and set dates for Freddie Mac and FHFA to respond to the complaint by a dispositive motion, for you to oppose
that motion, and for Freddie Mac and FHFA to reply to your opposition.
If you agree, I will send you proposed dates for a briefing schedule, and we can discuss further how we can document
the agreement in the form of a stipulation.
Jody
Jody M. McCormick
Principal I Witherspoon Kelley
jmm@witherspoonkelley.com I Attorney Profile I vCard
Cont1denr1al1/y Notice The J11forma/1on r::onlaJ11ed in ths email and any accompanymg attac/Jment(s) 1s intended only for the use of the intended rec1fJ1e111 and may be
conf1denlial and/or privileged If any reader of Ill is comm11mcat10111s 1101!he111te11ded rec1p1en/ unauthonied 11se disclosure or copying is stnctly prohibited and may be
un!ai;.1ul If you have received this com1mm1ca1mn in error, please 1mmed1a/e/y notify !h!' sender by return email and delete tl1e origma/ message and all copies from your
system Thank you
EXHIBIT C
Page:
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04/14/2015
"
FILED
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?Dl5APRl1 lt\1119
scan G WEB(R. CLEM

Cl ARI\ COUNTY
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No. /
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Plaintiff(s),
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'5),ocffl'-/-8.
Motion and Declaration to

Vacate Judgment and to Stay
Enforcement of Judgm1nt and
Wiii of RHIHutlon
Defendant s .
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1. Relief reg,uested. The defendant( s} move(s) the court for an order vacating the
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judgment entered in this action and staying enforcement of the judgment and the writ of
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restitution until the motion can be heard.
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4. Authority and argument. This motion is made pursuant to CR 55 and CR 60 and
3. Evidence relied up.on. This motion is based on the attached declaration of
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(other)
Dated
.5q, 1'il,303
Qpv: /!3;CJ,CJ2
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Teleph<lne Number
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DECLARATION
1,
/:fr,171tda 5. Ot!!et
. declare as follows:
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L I am the defendant in this unlawful detainer action.
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2. I request that the judgment entered in this action be vacated and that enforcement of
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the judgment and the writ of restitution be stayed until the motion to vacale judgment can be
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heard for the following reasons:
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statement is true.
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Varieou ve
signed in
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, Washingtonon
(City)
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Motion ttnd l:Hdaration to Vacate Jud(/. and stay

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Case 3:15-cv-05375-BHS
Document
41 Filed
10/14/15
Page 16 of 63
Rew a11a.m unawu
delalner adlooDltib'essed
tune. p-evt1J.Slr.
RCWs > ~ > Chaoter 59.1 B >Section 59.18.363
Find Your Legislator

Visiting the Legtslature
Agendas, Schedules and
Calendars
t Biii information
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Washington
'TVW
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Aaess
awashington
"~'"'"''" "'"'"~'"'""''"
59.18.360 << 59. 18.363 >> 59,18.365
RCW 59.18.363
Unlawful detainer action - Distressed

home, previously.
In an unlawful detainer action Involving property that was a distressed home:
(1) The plaintiff shall disdose to the court whether the defendant previously
held title to the property that was a distressed home, and explain how the plaintiff
came to acquire litle;
(2) A defendant who previously held title to the property that was a distressed
home shall not be required to escrow any money pending tr1al when a material
question of fact exists as to whether the plaintiff acquired title from the defendant
directly or indirectly through a distressed home conveyance;
(3) There must be both an automatic stay of the action and a consolidation of
the action with a pending or subsequent quiet title action when a defendant
claims that the plaintiff acquired tltle to the property through a distressed home
conveyance.
12ooa c 21a 13.J
EXHIBIT D
COPY
ORIG\NA.l, fll,ED
APR 23 2615
I
Scott G. Weber. Cieri<. Clatk
IN THE SUPERIOR COURT OF THE STATE OF WASlllNGTON

IN AND FOR THE COUNTY OF CLARK
3
4
FEDERAL HOME LOAN MORTGAGE

CORPORATION
Plaintiff,
vs.
PAMELA S. OWEN, et al.
NO. 15-2-00924-2
MOTION TO QUASH
SERVICE OF SUMMONS
Defendants.
Hearing Date: May l, 2015
Time: 9:00a.m.
Judge: Honorable Judge Robert Lewis
Court: Department 9
8
9
10
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COMES NOW Defendant, Pamela S. Owen, fur her motion captioned above, and states:
12
TABLE OF CONTENTS
13
14
Table of Authorities ....................................................................... ...2
15
Questions Presented.........................................................................3
16
1.
Whether the trial court lacks subject matter unlawful detainer

Jurisdiction ................................................................. .3
0
17
18
19
2.
Whether the trial court erred in directing issuance of default

judgment against Defendant by order entered on April 3, 201 S . . 3
3.
Whether the trial court erred in directing issuance of writ

of restitution against Defendant by order entered on
April 3, 2015, at Sub. 12 ...................................................3
4.
Whether Defendant is entitled to have the writ of restitution

quashed, and the action dismissed with prejudice ...................... 3
20
21
22
23
24
25
26
27
28
co.
I.
Summary of Legal Argument ..................................................... 3
II.
Plaintiff's Reliefls Barred By Doctrine of "Unclean Hands" .................3
A.
Brief History and Overview of Securitization and Mortgage-Backed

Securities (MBS) and the Active Role of Plaintiff Federal Home Loan
Mortgage Corporation (FHLMC) or ("Freddie Mac") Leading To
DEFENDANT'S MOTION TO QUASH SERVICE OF SUMMONS
1
Recent Mortgage Crisis ................................................................ .4
B.
Federal Takeover of Plaintiff Freddie Mac .......................................... 7
c.
Plaintiff Freddie Mac's Role In the Creation of the Mortgage Electronic

Registration Systems (MERS) To Circumvent the State Land Registry ......... 9
III.
Plaintiff Does Not State In Its Complaint A Claim and Can Never State
A Claim Cogniz.able Under Chapter 59.12 RCW .................................. 15
Tue Court Lacks Subject Matter Jurisdiction Because of Plaintiff's

Unclean Hands and Plaintiff's Failure to Strictly Comply With
Chapter 59.12 RCW ..................................................................... 15
7
8
B.
Defendant Was Never In Demult As A Matter of State and Federal Law ...... 18
10
IV.
CONCLUSION ..........................................................................20
11
AVIHORJIIES
12
13
14
Fedm!Q!se!
Arbaugh v. Y & HCorp.. 546 U.S. 500, 510-516 (2006) ....................................23
15
State Cases
16
In re Agard, 444 B.R. 231, 247 (Bankr.E.D.N.Y.2011) ................................. 9, 17
17
Asuncion v. Superior Court ofSan Diego County, 108 Cal. App. 3d 141,
146-147, 166 Cal. Rptr. 306 (Cal. App. 4th Dist. 1980)................................23
18
19
Bain v. Metropolitan Mortgage Group, Inc.,

175 Wn.2d 83, 285 P.3d 34 (2012) .......................................................... 9, 14
20
21
22
23
Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co..

105 Wasb.2d 778, 780, 719P.2d 531 (1986) .................................................. 15
Housing Au!horll)i ofCil)I ofEverett v. Terry, 114 Wn.2d 558 (1990) ............23, 24, 25
Landmark Nat'/ Bankv. Kesler, 216 P.3d 158, 166-67 (Kan. 2010) ....................... 12
24
25
Little v. Catania, 48 Wn.2d 890, 297 P.2d255 (1956) .......................... 19, 23, 24, 24
26
Sowers v. Lewis, 49 Wn.2d 891, 894, 307P.2d 1064 (1957) ................... .19, 23, 24, 25
27
Wilson v. Daniels, 31Wn.2d633, 643, 198 P.2d 496 (1948) .......................20, 23, 25
28

2
Statutes
Washington Revised Code
7.28 ....................................................................................... 19
9A.52 ........... ....... .................. ........ ....21
59.12.030 ........................................................................... 19, 21
59.12.032 ............................................................................... 19
59.12.040 ...........................................................................20, 21
59.12.050 ............................................................................... 19
9
10
59.12.070 ......................................................................20, 21, 22
11
59.12.080 ..................................................................... .20, 21, 22
12
59.12.090 ...............................................................................24
13
59.12.120 ........ ................................................................22
14
59.12.121 ..... ................................ .................. 23
15
61.24 et seq ........................................................................... .13
16
61.24.040 ...................................................................... 14,18, 20

17
18
19
61.24.040, subd. (9) .................................................................. 20
61.24.060 .......................................................................... 19, 20
OUESJIONS PRESENTED
20
21
Defendant is alleging that Plaintiff bas entered this Temple of Justice with unclean bands
22
and bas completely failed to follow the procedures mandated by the Legislature under Chapter
23
59.12 RCW. The issues thus presented are:
24
25
1.
Wbether the trial court lacks subject matter unlawful detainer jurisdiction.
2.
Wbether the trial court erred in directing issuance of default judgment

against Defendant by order entered on April 3, 2015.
3.
Whether the trial court e~ in directing Issuance of Writ of Restitution

against Defendant by order entered on April 3, 2015, at Sub. 12.
26
27
28

3
4.
2
3
Whether Defendant is entided to have the writ of restitution quashed, and

the action dismissed with prejudice.
J.
SUMMARY OF LEGAL ARGUMENT
1.1
jurisdiction and the procedure the Court must follow when a Plaintiff intentionally fails to strictly
follow the statutory provisions governing the Plaintiff's rights and remedies and the Court's
jurisdiction lintited by the unlawful detainer statutes, Chapter 59.12 RCW.
1.2
The question at the heart of this motion is the Court's subject matter unlawful detainer
As more fully set forth and supported herein, Plaintiff failed to follow any of the procedure
prescn"bed by the unlawful detainer statute. Tho Superior Court cannot assert subject matter
jurisdiction due to the Plaintiff's failure to follow procedure.
10
1.3
II
Justice to circumvent the unlawful detainer laws of this State to summarily evict Defendant, who
12
is the lawful owner of her primary residence in violation of the Federal and State constitutions and
13
laws and due process of law.
14
1.4
Plaintiff; a Federal government corporation, is attempting to use this Honorable Temple of
The law in this State mandates that the proper action by the court in this proceeding is to
dismiss Plaintiff's action with prejudice.

15
16
17
D.
PLAINTIFF'S RELIEF IS BARRED BY DOCTRINE OF "UNCLEAN HANDS."
A.
Brief History and Overview of Securitizatlon and Mortaap-Baeked Seeuritieo (MBS)
and lbe Active Role of Plalntttf Federal Home Loan Mortgage Corporation (FHLMC) or
("Freddie Mnc") Leading To Reeent Mortgage Crisis.
18
2.1
19
Securitization is the creation and issuance of debt securities, or bonds, whose payments of
principal and interest derive from cash flows generated by separate pools of assets. It had grown
20
from a non-existent industry in 1970 to $6.6 trillion as of the second quarter of2003, before the
21
start of the recent financial crisis in 2008.
22
2.2
23
the value of a cash-producing asset These are typically financial assets such as loans, but can also
24
25
Financial institutions and businesses of all kinds use securitizatlon to immediately realize
be trade receivables or leases. lo most cases, the originator of the asset aotlcipates a regular stream
of payments. By pooling the assets together, the payment streams can be used to support interest
and principal payments on debt securities.
26
2.3
27
rather than spread out over time. Securitiz.ed mortgages are known as mortgage-backed securities
28

4
When assets are securitized, the originator receives the payment stream as a lump sum
(MBS), while securitized assets-non-mortgage loans or assets with expected payment streams--
are known as asset-backed securities (ABS).
2.4
To initiate a securiti7;ation, a company must first create what is called a special purpose
vehicle (SPV) in the parlance of securiti7;ation. The SPV is legally separate from the company, or
the bolder of the assets. Typically a company sells its assets to the SPV.
2.5
The payment streams generated by the assets can then be repackaged kl back an issue of
bonds, or the SPV can transfer the assets to a trust, which becomes the nominal issuer. In both
cases, the bonds are exchanged with an underwriter for cssh. The underwriter then sells the
securities to investors. Unlike other bonds, securities backed by mortgages usually pay both
interest and a portion of the investor's principal on a monthly basis, in addition to including
10
II
insurance for the financial product.

2.6
The first mortgage-backed securities arose from the secondary mortgage market in 1970.
Investors had traded whole loans, or unsecuritized mortgages, for some time before the
12
Government National Mortgage Asaociation (GNMA), also called Ginoie Mae, guaranteed the
13
first mortgage pass-through securities that pass the principal and interest payments on mortgages
14
through to investors.
15
2. 7
16
17
Ginnie Mae was soon followed by Plaintiff Freddie Mac as part of a federsl scheme to
promote homeownership by fostering a secondary marl<et in home mortgages.

2.8
"Pass-throughs" were a dramatic innovation in the secondary mortgage market, where the
whole-loan market, the buying and selling of mortgages, was relatively illiquid. This presented a
18
risk to mortgage lenders who could find themselves unable to find buyers if they wanted to sell
19
their Joan portfolios both quickly and at an acceptsble price.
20
2.9
21
lender's interest cost higher than its interest income. But trading whole loans meant a raft of
22
23
Holding the loans also meant exposure to the risk that rising interest rates could drive a
details and paperwodc: that made the business relatively costly.

2.10
Mortgage-backed securities changed all that by combining similar loans into pools, which
allowed the government agencies to pass the mortgage payments through to the certificate holders
24
or investors. This change made the secondary mortgage market more attractive to investors and
25
lenders alike. Investors now had a liquid instrument and lenders had the option to move any
26
interest rate risk associated with mortgages off of their bolance sheet.
27
28

5
2.11
sought a broader MBS investor base. In response, Fannie Mae issued the first collaterali7.ed
4
5
Growth in the pass-through market inevitably led to innovations especially as originators
mortgage obligations (CMO) in 1983. A more complicated twist on pass-tbroughs, CMOs redirect
the cash flows of trusts to create securities with several different payment features.
2.12
The central goal with CMOs was to address prepayment risk-the main obstacle to
expanding the demand for pass-throughs. "Prepayment risk" for MBS investors is the unexpected
return of principal stemming from consumers who refinance the mortgages that bsck the
securities.
2.13
inlerest rates are fillling. As this traoslates into prepayment ofMBS principal, investors were often
IO
11
It was calculated that homeowners would be more likely to refinance mortgages when
forced to reinvest the retnmed principal at a lower return.

2.14
Thus, CMOs were created to accommodate the preference of investors to lower
prepayment risk with classes of securities that offer principal repayment at varying speeds. The
12
different bond classes associated with CMOs are also called tranches (a French word meaning
13
slice).
14
2.15
15
tranches. In the event loans in the underlying securitization pool defaul4 investors in the
16
Some CMOs can include 50 or more tranches and can also be subordinate to other
subordinate tranche would have to absorb the loss first.

2.16 As part of the Tax Reform Act of 1986, Congress created the Real Estate Mortgage
17
Investment Conduit (REMIC) to facilitate the issuance of CMOs. Almost all CMOs are cumntly
18
issued in the form ofREMICs. In addition to varying maturities, REM!Cs can be issned with
19
different risk characteristics.
20
2.17
21
credit risk. Along with a simplif\ed tax treatmen4 these changes made the REMIC strueture an
22
23
REMIC investors, in exchange for a higher coupon paymen4 can choose to take on greater
indispensable feature of tho MBS market. Plaintiff Freddie Mac, and his sister, Fannie Mae are the
largest issuers of this typo of security.
B.
Federal Takeover of Plaintiff Freddie Mac.
24
2.18
On September 6, 2008, the director of the Federal Housing Finance Agency (FHFA)
25
placed two of the United States' Goveromont-Spousored Enterprises (OSEs), PlaintiffFederal
26
Home Loan Mortgage Corporation ("Freddie Mac"), and Federal National Mortgage Association
27
(''Fannie Mae"), into a conservatorship run by the FHFA as a result of their active participation in
28
the "subprime mortgage crisis" involving Bank of America, Countrywide Bank and other national
banks.
3
4
2.19
At a September 8, 2008 press conference, former United States Treasury Secretary Henry
Paulson stated ''that conservatorship was the only form in which I would commit taxpayer money
to the GSEs." He further said that "I attribute the need for today's aetion primarily to the inherent
conflict and !lawed business model embedded in the GSE structwe, and to the ongoing housing
correction."
2.20
stated: "I strongly endorse both the decision by FHFA Director Loclthort to place Fannie Mae and
Freddie Mac into conservatorshjp and the actions taken by Treasury Secretary Paulson to ensure
10
the financial soundness of those two companies."
2.21
11
At a subsequent news conference, Ben Bernanke, former Federal Reserve Bank Chainnan
The combined losses Plaintiff Freddie Mac and Fannie Mae ofUS$14.9 billion and market
concerns about their ability to raise capital and debt, threatened to disrupt the U.S. housing
12
financial market.
13
2.22
14
Department committed to invest as much as US$200 bi111on in preferred stock and extend credit
15
through 2009 to keep Plaintiff Freddie Mac and Fannie Mae solvent and operating.
16
2.23
In an effort to bsil out Plaintiff Freddie Mac and Fannie Mae, the U.S. Treasury
Reportedly, Plaintiff Freddie Mac and Fannie Mae have outstanding more than US$5
trillion in mortgage-backed securities (MBS) and debt-where the debt portion alone is US$1.6
17
18
trillion.
2.24
The conservatorsbip action has been described as "one of the most sweeping government
19
interventions in private financial markets in decades," and one that "could turn into the biggest
20
and costliest government bailout ever of private companies."
21
2.25
22
Recovery Act (HERA) of2008, Pub.L. 110-289, 122 Stat 2654, which enabled expanded
23
On July 30, 2008, President George W. Bush signed into law the Housing and Economic
regulatory authority over Plaintiff Freddie Mac and Fannie Mae by the newly established FHFA.
226
This new law also gave the U.S. Treasury the authority to advance funds for the purpose of
24
stabilizing Plaintiff Freddie Mac and Fannie Mae, limited only by the amount of debt that the
25
entire federal govemment is permitted by law to commit to.
26
2.27
27
Plaintiff Freddie Mac and Fannie Mae obtain the desired solvency, the law further raised the U.S.
28

7
The HERA was designed primarily to address the subprime mortgage crisis. To ensure
Treasury's debt ceiling by US$800 billion, to a total ofUS$10.7 trillion, in anticipation of the
potential need for the Treasury to have the flexibility to support Plaintiff Freddie Mac and Fannie
Mae, or the Federal Home Loan Banks.
228
Many commercial banks own preferred shares issued by Plaintiff Freddie Mac and Fannie
Mae. These shares have bad their dividends suspended, end are junior to the senior preferred stock
issued to the Treasury in the restructuring of Plaintiff Freddie Mac and Fannie Mae. The market
value of the preferred shares plunged after the restructuring announcement and suspension of
dividends. Banks were required to write down the value of Plaintiff Freddie Mac and Fannie Mae
prefened stock held in their portfolios, thus compounding capitalttation concerns for certain U.S.
banks. Gateway Bank, e.g., agreed to be bought out by Hampton Roads Banksbares, Inc. to make
10
11
up for a writedown ofUS$40 million on its stock in Plaintiff Freddie Mac and Fannie Mae, which
put it below regulatory requirements to be considered adequately capitalized.

2.29
Because of the change in management control of Plaintiff Freddie Mae and Fannie Mae,
12
the parties in the credit default swap (CDS) market contracts have defined the action of placing
13
Plaintiff Freddie Mac end Fannie Mae into conservatorship to be equivalent to bankruptcy.
14
2.30
15
contracts for the derivatives, which are used to hedge or speculate on the potential risk that a
16
17
In CDS parlance, this is termed a "credit evenf' that triggers the settling of outstanding
company will default on its bonds. This "credit event" also means that some owners ofCDSs that
were hedging against the risk of a bond default may be worse off, since the value of the bonds
may be higher than when they purchased the swap.
18
2.31
19
renting homes owned by Plaintiff Freddie Mac and Fannie Mae and the Federal Housing
20
Administration as an alternative to evicting the occupants, among other things. 1
21
C.
On August I0, 2011, the Federal Housing Finance Agency asked investors for ideas on
Plalnllff Freddie Mae'1 Role In the Creation of the Mortgage Eleetronle Registration
Syltem1 (MERS) To Cirenmvent the State Land Registry.
22
23
24
2.32
As mortgage-backed securities grew in record volume during the 1980s, it became self-
evident to the MBS market participants that a similar mechanism or SPV was needed for the
mortgages placed into these securities.
25
26
27
28
1 "U.S. Government May Renl FOTflC/osed Homu To Ease How Ing Slump," by. News Hub.
htto:tlwww.ponscreen.com!y/6 l 4mP/US-0Pvemment-May-Rent-Foreclosed-Homes-To-Ease:Housjng-Slumo-News.
HY.b_...PopScreen" is the world's first Video Prediction Engine (VPE), http://www.popscreen.com/abmrt. See aho:
"GtwemmenJ may rent out foreclosed properties, "The Sun News, published on August 8, 2011.

8
2.33
system that became known as "MERS" and a corporation that became known as Mortgage
3
4
In October 1993, Plaintiff Freddie Mac co-founded en electronic mortgage registration
Electrnnic Registration Systems, Inc., or MERS, Inc. in October 1995. Electronic Data System&
(EDS) was awarded a contract to develop and service the MERS technology systems, and MERS
was officially launched in April 1997. See Bain v. Metropolitan Mortgage Gr""P, Inc., 175
Wn.2d 83, 285 P.3d 34 (2012), citing In re Agard, 444 B.R. 231, 247 (Bankr.E.D.N.Y.2011); In
re MERSCORP, lnc. v. Romaine, 8 N.Y.3d 90, 96 n. 2, 861N.E.2d81, 828 N.Y.S.2d 266 (2006);
Phyllis K. Slesinger & Daniel McLaughlin, Mortgage Electronic Registration System, 31 Idaho
L.Rev. 805, 807 (1995); Christopher L. Peterson, Foreclosure, Subprime Mortgage Lending, and
the Mortgage Electronic Registration System, 78 U. Cin. L.Rev. 1359, 1361 (2010), and
10
Defendant's Exhibit 1 attached hereto.

2.34
II
The underlying problem Plaintiff Freddie Mac and its co-founders sought to curb or
circumveot was the fact that a mortgage loen transferred into en MBS had to become "bankruptcy
12
remote" from the originating lender in the event the originating lender collapsed, such as
13
happened to Countrywide Bank in 2007 and many others during the financial crisis of2008.
14
2.35
15
creditors could not "avoid" or ''rollback" the transfer of the loans into the MBS as fraudulent
16
17
Thus, MBS investors demanded some kind of protection to ensure that the lender's own
conveyances and suck them back into the lender's bankruptcy estate.
2.36
The easiest way to create such protection was to simply convey the loan for consideration
through three or four entities before it roached the MBS. However, each of these conveyances had
18
to be recorded with tho relevant recorder or land registry.
19
2.37
20
into each MBS, the result was that recorders were flooded with assignments, and investment
21
banks found themselves choking on paperwork and recorders' fees.
22
2.38
23
With each loan requiring three or four assignments, end hundreds of mortgage loans going
Plaintiff Freddie Mac and its co-founders used MERS in an endesvor to fix this problem
by requiring all members ofMERS to change their standard loan documents to name MERS as
the nominal beneficiary or mortgagee of record. This enabled loaders and investors to transfer
24
mortgages without recording assignments in local recorders' offices and in turn avoid having to
25
pay recording fees.
26
2.39
27
since all intermediate transfers between points are tracked only on the MERS system, and tho
28
Plaintiff Freddie Mac's MERS became immediately problematic for State land registries,

9
entity who holds the loan at the end merely records the reconveyance as an agent for MERSCORP
Holdings, Inc.
4
5
2.40
Plaintiff Freddie Mac's MERS presented an additional problem forthe States' Uniform
Commercial Code (UCC) because neither the owner of the original Note or the original Note was
tracked by MERS.
2.41
If a borrower defaults, and in an effort to citcumvent the UCC problem, Plaintiff Freddie
Mac and its co-founders authoriz.ed MERS, through the use of individuals known as "robo-
signers," to record an assignment of the Note on behalf of Mortgage Electronic Registration
Systems, Inc. to the real party in interest, i.e., an investment bank such as ReconTrust Company,
NA, in its capacity as Trustee for a bank or MBS, in order to initiate a nonjudicial foreclosure.
10
JI
242
The problems associated with Plaintiff Freddie Mac's nonjudicial foreclosure of
Defendant's mortgage is highlighted by the February 10, 2011 Decision of the U.S. Bllllkruptcy
Court in In re Agard, Case No. 8-10-77338-reg, (Eastem District of New York), reported in In re
12
Agard, 444 B.R. 231, 24 7 (Bankr.E.D.N. Y.2011 ); the Complsint filed by the Stste of Washington
13
against ReconTrust Company, N.A. in August 2011 and the Consent Decree and Injunction filed
14
against ReconTruston August 20, 2012. A complete and correctcopy of each document is
IS
attached hereto as Exhibits 1, 2 and 3, respectively.
16
2.43
On Februacy 10, 2011, the U.S. Bankruptcy Court for the Eastern District of New Yotk
considered a motion for relief from the bllllkruptcy stay brought by U.S. Bank as the trustee of a
17
securiti7.ation trust.
18
2.44
19
purported assignmaot of the mortgage from MERS. The court found itself constrained by the
20
Rooker-Feldman doctrine to give effect to a prior state-court judgment of foreclosure, but went on
21
to consider several arguments MERS advanced about its legal statos aud authority, noting that it
22
23
U.S. Bank claimed the right to foreclose on the debtor's mortgage in part because of
had held off on deciding dozens of additional cases until those matters were clarified.
2.45
The court found that MERS bad no power aa an agent to assign the mortgage under its
rules, its membership agreement, or the tellllS of the mortgage itself. The court also found that
24
MERS bad no power as the mortgagee of record to assign the mortgage: "MERS's position that it
25
can be both the mortgagee and an agent of the mortgagee is absurd, at best."
26
2.46
27
Freddie Mac, made the decision to create and operate under a business model that waa designed in
28
The court observed further that MERS audits partners/members, which include Plaintiff
10
large part to avoid the requirements of the traditional mortgage recording process, and the fact that
because MERS may be involved with 50% of all residential mortgagea in the country, was
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
insufficient reason for the Court to tum a blind eye to the fact that the MERS process does not
comply with S - law. The Court further stared that:
The Court finds that the record of this case is insufficient to prove that an agency
relationship exists under the laws of the state of New York between MERS and its
members. According to MERS, the principaUagent relatiowihip among itself and its
members is created by the MERS rules of membership and tenns and conditions,
as well as the Mortgage itself. However, none of the documents expressly creates
an agency relatiowihip or even mentions the word "agency." MERS would have
this Court cobble together the documents and draw inferences from the words
contained in those documents. For example, MERS argues that its agent status can
be found in the Mortgage which states that MERS is a "nominee" and a
"mortgagee of record." However, the fa.ct fuat MERS is named "nominee" in the
Mortgage is not dispositive of the existence of an agency relatiowihip and does not,
in and of itself, give MERS any "authority to act."
MERS also relies on its rules of membership as evidence of the agency

relationshlp. However, the rules lack any specific mention of an agency
relationship, and do not bestow upon MERS any authority to act Rather, the rules
are ambiguous as to MERS's authority to take offirmative actions with respect to
mortgages registered on its system.
In addition to casting itself as nominee/agent, MERS seems to argne that its role as
"mortgagee of record" gives it the rights of a mortgagee in its own right ... The
provisions of Section 1921 relate solely to the discharge of mortgages and the
Court will not apply that definition beyond the provisions of that section in order to
find that MERS is a "mortgagee" with full authority to perform the duties of
mortgagee in its own right Aside from the inappropriate reliance upon the
statutory definition of "mortgagee," MERS's position that it can be both the
mortgagee and an ageot of the mortgagee is absurd, at best
20
27
Adding to this absurdiry, it is notsble in this case that the Assignment of Mortgage
was by MERS, as nominee for First Franklin, the origioal lender. By the Movant's
and MERS's own admission. at the time the assignment was effectuated, First
Franklin no longer held any interest in the Note. Both the Movant and MERS have
represented to the Court that subsequent to the origioation of the loan, the Note was
assigned, through the MERS tracking system, from First Franklin to Aurora, and
then from Aurora to U.S. Bank. Accordingly, at the time that MERS, as nominee of
First Franklin, assigned the interest in the Mortgage to U.S. Baok, U.S. Bank
allegediy already held the Note and it was at U.S. Bank's direction, not First
Franklin's, that the Mortgage was assigned to U.S. Bank. Said anolher wsy, when
MERS assigned the Mortgage to U.S. Bank on First Franklin's behall; it took its
direction from U.S. Bank, not First Franklin, to provide documentation of an
28
21
22
23
24
25
26
11
assignment from an entity that no longer bad any rights to the Note or the
Mortgage. The documentation provided to the Court in this case (and the Court has
no reason to believe that any further documentation exists), is stunningly
inconsistent with what the parties define as the fucts of this case.
2
3
However, even ifMERS bad assigned the Mortgage acting on behalf of the entity
which held the Note at the time of the assignment, this Court finds that MERS did
not have authority, as "'nominee" or agent, to assign the Mortgage absent a showing
that it was given specific written directions by its principal.
5
6
This Court finds that MERS's theory that it can set as a "common agent" for
undisclosed principals is not support by the law. The relationship between MERS
and its lenders and its distortion of its alleged "nominee" status was appropriately
described by the Supreme Court of Kansas as follows: ''The parties appear to have
defined the word [nominee) in much the same wsy that the blind men of Indian
legend described an elephant-their description depended on which part they were
touching at any given time." Landmark Nat'/ Bankv. Kesler, 216 P.3d 158, 166-67
8
9
10
(Kan. 2010)."
11
12
2.48
13
Holdings shareholders: (I) American Land Title Association; (2) Bank of America, National
14
In addition to Plaintiff Freddie Mac, the following organizations are current MERSCORP
Association; (3) CCO Mortgage Corporation; (4) CitiMortgage, Inc.; (S) CoreLogic, Inc.; (6) CRE
Finance Counci~ (7) EverBank; (8) Fannie Mae; (9) First American Title Insurance Corporation;
15
(10) Guaranty Bank; (11) Housing Residential, Ltd.; (12) HSBC Finance Corporation; (13) MGIC
16
Investor Services Corporation; (14) Morserv, Inc.; (15) Mortgage Bankers Association; (16) PM!
17
Mortgage Insurance Company; (17) Residential Funding Company, LLC; (! 8) Stewsrt Title
18
Guaranty Company; (19) SunTrust Mortgage, Inc.; (20) Wells Fargo Bank, N.A.; and (21) WMC
19
Mortgage Corporation. https:l/www.mersinc.org/about-us/shareholders. [Last visited on April 19,
20
21
22
2015.)
2.49
In August 2011, the State of Washington suedReconTrustCompany, N.A. in State of
Washington King County Superior Court. The case is State of Washington v. Recon'.lrust Co.
N.A., case number 11-2-26867-5, filed on August S, 2011.
23
2.50
24
Co., a subsidiary of Bank of America N .A., and which also sets as a foreclosure trustee, of
25
conducting illegal nonjudicial foreclosures on thousands of homeowners and putting up
26
27
28
In the lawsuit, Washington State Attorney General Rob McKenna accused ReconTrust
roadblocks to saving residents' homes and violating its obligation to be a neutral third party acting
in the best interest oflenders and borrowers.

12
Rather than act in good faith to borrowers, ReconTrust would only halt a home sale if a
2.51
beneficiary approved it, failed to identify the ownera ofloans and conducted foreclosure sales in
3
4
private locations instead of public spaces, the suit alleged.

2.52
McKenna also accused ReconTrust of providing confusing information about how
borrowers defaulted and how to rectify default, and using documents that were rife with errors or
improperly notariz.ed.
2.53
might have a shot at saving their homes to stop those foreclosures," McKenna said in a statemenL
"ReconTrost's claim that the company doesn't have to follow Washingtoo law and procedures
because it is a national bank is wrong,'' said McKenna.
10
2.54
"R.econTrust's illegal practices make it difficult, if not impossible, for borrowers who
The former Attorney General further accused ReconTrust, which haa issued nearly I 0,000
foreclosures notices since 2008, of stonewalling his office's investigation into its foreclosure
II
practices and ignoring warnings that it was in violation of Washington's Deed of Trust Act
12
(DTA), RCW 61.24 et seq.
13
2.55
14
noajudicial foreclosure proceedings, the OTA and a neutral Trustee are the only protectiona for
15
homeowners in foreclosures. "Homeowners facing foreclosure are captive to ReconTrust' s trustee
16
17
According to the State's complaint, because courts in Washington cannot get involved in
services," the complaint said.

2.56
The complaint further alleged that ReconTrust failed to comply with one essential
requirement of the deed of trust statute reqniring a trustee to keep a physical office in Washington
18
State so that residents at risk oflosing their homes can make a last-mim1te payment, seek
19
information or request that a foreclosure sale be postponed.
20
2.57
21
Western District of Washington. On August 20, 2012, the U.S. District Court entered an
22
Injunction and Conaent Decree against ReconTrost and ordering this benking entity to pay to the
23
24
On September 2, 2011, ReconTrust removed the Complaint to the U.S. District Court,
State $1,090,000 for costs and attorney fees and for possible enforcement of the Consent Decree.
2.58
Defendant's legal title to, ownership and continued unfettered possession of the real
property located at 3912 NE 57"' Avenue, Vancouver, Washington 98661, is inextricably
25
intertwined in the business model Plaintiff Freddie Mac and its coconspirators intentionally
26
created and operates as part of a scheme that was designed from the outset to intentionally avoid
27
28

13
the requirements of the traditional mortgage recording process, the UCC regarding negotiable
instruments, this State's Deed of Trust Act, and the unlawful detainer statutes, RCW 59.12 et seq.
3
4
2.59
In Bain v. Metropolitan Mortgage Group, Inc., 175 Wn.2d 83, 285 P.3d 34 (2012), the
Court unanimously held that under the Washington Deeds of Trust Act (WDTA), chapter 61.24
RCW, the beneficiary in a nonjudicial foreclosure action must be the actual "bolder" of the
promissory note.
2.60
beneficiary of a Note in a Deed of Trust if it never held the Note:

''The plaintiffs argue that our interpretation of the deed of trust act should be
guided by these UCC definitions, and thus a beneficiary must either actually
possess the promissory note or be the payee. E.g., Selkowitz Opening Br. at 14. We
agree. This aecords with the way the term "holder" is used across the deed of trust
act and the Washington UCC. By contrast, MERS's approach would require us to
give "bolder" a different meaning in differeot related statutes and construe the deed
of trust act to mean that a deed of trust may secure itself or that the note follows the
security inatnnnent. Washington's deed of trust act contemplates that the security
inatnnnent will follow the note, not the other way around MERS is not a "holder''
under the plain language of the statute."
8
9
10
II
12
13
14
With regards to MERS, the Court rejected the claim made by MERS that it could be a
2.61
The Supreme Court in Bain also rejected MERS's agency claims:
15
"But Moss also observed that "[w]e have repeatedly held that a prerequisite of an
16
agency is control of the agent by the principal." Id. at 402, 463 P.2d 159 (emphasis
added) (citing McCarty v. King County Med. Serv. Corp., 26 Wash.2d 660, 175
P.2d 653 (1946)). While we have no reason to doubt that the lenders and their
17
assigns control MERS, agency requires a specific principal that is accountable for
the acts of its agent.
18
19
But MERS offers no authority for the implicit proposition that the lender's
nomination of MERS as a noll1inee rises to an agency relationship with successor
notebolders. (Footnote omitted.) MERS fails to identify the entities that control and
are aecountable for its actions. It has not established that it is an agent for a lawful
prineipal.
20
21
22
We will not allow waiver of statutory protections lightly. MERS did not become a
beneficiary by conttact or under agency principals .
23
24
We answer the first certified question "No," based on the plain language of the
statute. MERS is an ineligible "'beneficiary' within the terms of the Washington
Deed of Trust Act," if it never held the promissory note or other debt inatnnnent
secured by the deed of trust."
25
26
27
28
2.62
The Supreme Court further held that a homeowner could state a cause of action under
14
Washington's Consumer Protection Act against Mortgage Electronic Registration Systems, Inc., if
MERS acts as an unlawful beneficiary under the terms of Washington's Deed of Trust Act:
3
4
5
"Bain contends that MERS violated the CPA when it acted as a beneficiary .... To
prevail on a CPA action, the plaintiff must show "(!) unfair or deceptive act or
practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury
to plaintiff in his or ber business or property; (5) causation." Hangmao Ridge
Training Stables. Inc. v. Safeco Title Ins. Co., 105 Wasb.2d 778, 780, 719 P.2d 531
(1986). MERS does not dispute all the elements.
12
The attorney general of this state maintains a consumer protection division and bas
considerable experience and expertise in consumer protection matters. As an!lcus,
the attorney general contends that MERS is claiming to be the beneficiary "when it
knows or should know that under Washington law it must bold the note to be the
beneficiary" and seems to suggest we bold that claim is per ee deceptive and/or
unfair. AG Br. at 14. This contention finds support inimloor Billboard/Wash., Inc.
v. Integra Telecom ofWash., Inc., 162 Wash.2d 59, 170 P.3d 10 (2007), where we
found a telephone company had committed a deceptive act as a matter oflaw by
listing a sun:harge "on a portion of the invoice that included state and federal tax
charges." Id at 76, J 70 P.3d 10.
13
Our attorney general also notes that the assignment of the deed of trust that MERS
8
9
10
11
14
15
16
17
18
19
20
21
uses purports to transfer its beneficial interest on behalf of its own successors and
assigns, not on behalf of any principal .... This undermines MERS's contention that
it acts only as an agent for a lender/principal and its successors and it "conceals the
identity of whichever loan holder MERS purports to be acting for when assigning
the deed of trust." AG Br. at 14. The attorney general identifies other places where
MERS purports to be acting as the agent for its own successors, not for some
principal. Id. at 15 (citing Doc. l, Ex. B). Many other courts have found it
deceptive to claim authority when no authority existed and to conceal the true party
in a transaction.
While we are 1Jllwilling to ssy it is per se deceptive, we agree that characterizing

MERS as the beneficiary has the cspacity to deceive and thus, for the purposes of
answering the certified question, presumptively the first element is met.
27
MERS contends that plaintiffs csnnot show a public interest impact becsuse, it
contends, each plaintiff is challenging "MERS's role aa the beneficiary under
Plaintifl's Deed of Trust in the context of the foreclosure proceedings on Plaintiff's
property." Resp. Br. ofMERS at 40 (Solkowitz) (emphasis omitted). But there is
considerable evidence that MERS is involved with an enormous number of
mortgages in the cowttry (and our state), perhaps as many as half nationwide. John
R. Hooge & Laurie Williams, Mortgage Electronic Registration Systems, Inc.: A
Survey of Cases Discussing MERS' Authority to Ac~ NORTON BANKR.L.
ADVISORY NO. 8, at 21(Aug.2010). lfin fact the language is unfair or
deceptive, it would have a broad impact. This element is also presumptively met.
28
22
23
24
25
26
15
As amicus notes, '1MERS' concealment of loan transfers also could also deprive
homeowners of other rights," such as the ability to take advantage of the
protections of the Truth in Lending Act and other actions that require the
2
3
homeowner to sue or negotiate with the actual holder of the promissory note. AG
Br. at 11 (citing 15 U.S.C. 1635(1); Miguel v. Country Funding Corp. 309 F.3d
1161, 1162-65 (9th Cir.2002)) ....
5
If the first word in the third question was "may" instead of "does," our answer
would be "yes." Instead, we answer the question with a qualified "yes," depending
on whether the homeowner can produce evidence on each element required to
prove a CPA claim. The fact that MERS claims to be a beneficiary, when under a
plain reading of the statute it was not, presumptively meets the deception element
of a CPA action... We answer the third question with a qualified "yes;" a CPA
action may be maintainable ...." A true and correct copy of the Attorney General
Ainicns Brief is attached hereto as Defendant's Exhibit S.
7
8
9
10
Il
12
2.63
The following is a screenshot of Clari< County Auditor's documents tracking the
transactions associated with Defendant's property:

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13
14
15
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2.64
24
its members, CoreLogic, Inc., see paragraph 2.48 supra. recorded an "Assignment of Deed of
25
26
On October 17, 2011, one yeerbefore the Supreme Court decided Bain. MERS and one of
Trust," Auditor Document No. 479971, wherein MERS, acting as beneficiary, purported assign
both the Mortgage and the Note to another member ofMERS, "Bank of America, National
Association," to wit:
27
28

16
ASSIGNMENT OF DEED OF TRUST

J'os Value RceAvcd,. 1M Wldcnipod boldor ofa Deod ofTnill (herein ..Assipor"') whoa: t.ddrea lsOO
S. W. 34TH AVENUE. SUIT& JOI OCALA, n. 34414 doef ~ pat.sell, a11ip. b'lll!.trer d cmYOj
GDIO BAro."X OF AMERICA, N.A., SUCCESSOR BY MERG8R TO BAC HOME LOANS
SERVJCINC, lJ' PXA COUNTRYWIDE HOME LO.U.'S SU.VICING, LP wlHM 9ddm& ii 400
lll'ATJONAL WAY, SIMJ VALLEY 1 CA 9)H5 all banoftcill lalml5l lmdaVLI\ ca-t111D Deed of'I'r8't
described btkiw 1oplblr whh the note{) Jmd obllpiiont thmin ~ 1nd die moaf)' du and to
become due '8\neou WM Interest utcl all ripl.I .ccrurcl or 10 ICr.nMI imder said Deed otTnJst.
2
3
4
2.65
Both the Supreme Court and the Attorney General found the language used in the aforementioned
A true and com:ct copy of this public record is attached hereto as Defendant's Exhibit 5.
Assignment to constitute a violation of the CPA. The Assignment also discloses the filct that
MERS is claiming to be the bolder of the Note, the mortgagee and the agent for the mortgagee.
Bain, citing In re Agard, 444 B.R. 231, 247 (Bankr.E.D.N.Y.2011 ), held that an interpre1Blion of
the term "beneficiary" "that has the deed of trust securing itself is untenable." "MERS 's position
10
that it can be both the mortgagee and an agent of the mortgagee is absurd, at best." In re Agard,
11
444 B.R. 231, 247 (E.D.N.Y.2011).
12
2.66
13
14
agency relationsbip with successor noteholders. MERS intentionally avoids the agency question in
the above Assignment by presenting a history of the ''Original Lender," to wit:
15
LANDMARK MORTGAGE COMPANY
PAMELA S.OWllN AMA.u1EDWOMANASllERIBPAR.\TB
UTA TE
17
19
OriPI Lender.
"'4NcBy: .
Origiul Trunco:
l"IDEUTY NATIONAL TITLE INSURANCE
Dat.e of Deed ofTrusc:
1V412DOS
Orii:!ui Lo.ri Amour.I:
S2Dl.UD.OD
~orded ir.i Clsrk Couf7.Wlt. on: Jlll!IHOJ. book NIA, P9JO NIA and binrwnl mnb 4Gl2)1t
16
18
Bain also rejected the notion that a "lender's nomination of MERS as a nominee rises to an
2.67
Plaintiff Freddie Mac, who is a co-founder of MERS and also a member of MERS, is
actively perpetrating a fraud upon this Honorable Court. To establish it is the new legal owner of
Defendant's property, Plaintiff does pot attach to its complaint a copy of the "Trustee's Deed
20
Upon Sale" issued on January 22, 2015, nor does Plaintiff Freddie Mac claim in its Complaint that
21
it was an innocent purchaser of Defendant's real property. As the co-founder and co-creator of
22
MERS and Its electronic registration system, Plaintiff's innocent purchaser claim would be
23
"untenable," simply because Plaintiff not only ratified the fraud of MERS and Bank of America,
24
25
26
as part ofMERS' membersbip agreement which Plaintiff helped create, Plaintiff demanded that
this fraud be undertaken by all ofMERS's members, including itself and its agents, Trustees,
successors and assignees. A true and correct copy of the Trustee's Deed on file with the County
Auditor is attached hereto as Defendant's Exhibit 6.
27
28

17
2.68
the Deed of Trust Act, Chapter 61.24 RCW. The Bain Court reiterated the law of this State
A legally, cogniz.able Trustee's Deed requires that the Trustee must have complied with
requiring Trustees to be obligated to "all of the parties":
"Critically under our statutory system, a trustee is not merely an agent for the
leoder or the lender's successors. Trustees have obligations to all of the parties to
the deed, including the homeowner. RCW 61.24.010(4) .... Amoog other things,
"the trustee shall have proof that the beneficiary is the owner of aoy promissory
note or other obligation secured by the deed of trust..." before foreclosing on an
owner-occupied home. RCW 61.24.030(7)(a), (8)0).
s
6
11
Finally, throughout this process, courts must be mindful of the fact that
"Washington's deed of trust act should be consttued to further three basic
objectives .... ''First, the nonjudicial foreclosure process should remain efficient
aod inexpensive. Second, the process should provide ao adequate opportunity for
interested parties to prevent wrongful foreclosure. Third, the process should
promote the stability of land titles."'
Bain v. Metropolitan Mortgage Group, Inc., 175 Wn.2d 83, 285 P.3d 34, 39 (2012).
12
2.68
13
transactions. See paragraph 2. This Deed also does not explain bow MTC Financial, Inc. obtained
14
powers to become Trustee for Bank of America, N.A., aoother member of MERS, when MERS
IS
was never a beneficiary aod never held power to make any assignment to Bank of America.
9
10
16
2.69
The Trustee's Deed denies that MERS was ever the beneficiary in any of Defendant's
On March 26, 2014, Document Processing Solution caused to be recorded the County
Auditor"Appointment of Successor Trustee," Document No. 5059964, on behalf of Bank of

17
America, N.A., wherein it was claimed that MERS, Inc. was the "original beneficiary ...." A true
18
and correct copy of this public record is attached as Defendant's Exhibit 9.
19
2.70
20
Sale); 4799971 (Assignment of Deed of Trust and Note(s) and 5059964 Appointment of
21
Successor Trustee) would appear to be the fruits of fraud aimed at destabilizing land titles in Ibis
22
23
Thus, Auditor Document Nos. 5139307 (Trustee's Deed); 5080743 (Notice ofTrustee
State as stated by the Court in Bain v. Metropolitan Mortgage Group, Inc., 115 Wn.2d 83, 285
P.3d 34, 39 (2012), and which Ibis Court bas no jurisdiction to aid or abet.
2.71
During Defendant's bankruptcy proceeding, Bank of America, N.A., in support of its
24
Motion for Relief From Stay, attached a copy of the original "Note," which was materially
25
different from the copy of the original Note given to Defendant nine yesrs previously.
26
Defendant's copy contains both a MERS Number and a "loao number." The copy presented by
27
Bank of America to prove it was the owner or holder of the original Note lacked a MERS number
28

18
and a loan number. True and correct copies of these conflicting Notes are attached hereto as
Defendant's Exhibits 7 and 8, respectively.
2.72
Additionally, Bank of America produced an allonge containing indorsements which
attempt to convert the fraudulent copy of the original Note into a besrer Note or a Note indorsed
in blank. See Page 2 of Exhibit 8. This allonge also does not identify the Joan nwnber.
2.73
The Court's exercise of subject matter unlawful detainer jurisdiction would violate both
the "three basic objectives" of the DTA and the unlawful detainer ststutes.
2.74
General with a copy of her initial pleading alleging a violation of the CPA by PlaintiffFreddie
Mac and its co-conspirators:
Washington's CPA, RCW 19.86.095, also directs that Defeudant serve the Attorney
"In any proceeding in which there is a request for injuoctive relief under RCW
19.86.090, the attorney geoeral shall be served with a copy of the initial pleading
alieging a violation ofthis chapter. In any appellate proceeding in which an issue is
presented concerning a provision of this chapter, the attorney general shall, within
the time provided for filing the brief with the appellate court, be served with a copy
of the brief of the party preseoting such issue."
JO
11
12
13
14
15
PLAINTIFF DOES NOT STATE IN ITS COMPLAINT A CLAIM AND CAN

NEVER STATE A CLAIM COGNIZABLE UNDER CHAPTER 59.12 RCW.
ill.
16
A.
The Court Lacks Subject Matter Jurisdiction Because of Plaintiff's Unclean Hands
...d Plaintiff's Failure to Slrictly Comply With Chapter 59.12 RCW.
17
3.1
18
cogni7Bble under Chapter 59.12 RCW, which narrowly limits a Superior Court's exercise of
19
subject matter jurisdiction.
20
21
3.2
In addition to haviog unclean hands, Plaintiff does not state and cannot state a claim
Section 59 .12.050, RCW, is a grant of limited jurisdiction, rather than a geoeral grant of
jurisdiction.
3.3
The Clarl< County Superior Court lacks jurisdiction to hear this case because the
22
"jurisdictional condition precedent" has not beeo satisfied and cannot be satisfied by Plaintiff
23
Federal Home Loan Mortgage Corporation ("Freddie Mac'').
24
3.4
25
estate: an action in ejectment under RCW 7.28; or an action for unlawful detainer under RCW
26
Washington law provides two methods of removing an occupant in possession of real
59.12.
27
28

19
3.5
jurisdictional. i.e., the "jurisdictional condition precedeol" Sowers v. Lewis, 49 Wn.2d 891, 894,
3
4
Where a special statute provides a method of process, compliance with that method is
307 P.2d 1064 (1957); Little v. Catania, 48 Wn.2d 890, 297 P.2d 255 (1956).
3.6
In this case, Plaintiff Freddie Mac elected to bring an action for nnlawful detainer under
Chapter 59.12 RCW, but failed to comply with this special law.
3. 7
The Legislature provided in RCW 59.12.032 that an nnlawful detainer action,
commenced as a result of a trustee's sale under chapter 61.24 RCW, !l!Yl1. first comply with the
requirements ofRCW 61.24.040 (Foreclosure Notice of Sale) and 61.24.060 (Rights and
remedies of trustee's sale purchaser and written notice to occnpants or tenants), in order for the
purchaser to exercise its statutory right to the summary proceedings to obtain possession of real
10
II
property provided in chapter 59.12 RCW, the unlawful detainer statute.

3.8
Indeed, Plaintiff Freddie Mac evidences the fact that its unlawful detainer Complaint is
subject to Chapter 59.12 RCW in paragraph l, where it is claimed this Court's subject matter
12
jurisdiction is provided pursuant to RCW "59.12.050."
13
3.9
14
foreclosure shall entitle the purchaser to utilize the summary proceedings under chapter 59.12
15
RCW to "evict occupants who are not tenants."
16
3.10
Moreover, RCW 61.24.040, subd. (9) directed that a trustee's election of a nonjudicial
RCW 61.24.040, subd. (9) further provides that for tenant-occupied property, "the
purchaser shall provide a tenant with written notice in accordance with RCW 61.24.060 ...."
17
3.11
Because the unlawful detainer statute is in derogation of the common law, and must be
18
strictly construed in favor of the tenant, Wilson v. Daniels, 31Wn.2d633, 643, 198 P.2d 4%
19
(1948), in order to take advantage of its favorable provisions, a landlord must strictly comply with
20
the requirements of Chapter 59.12 RCW. Sowers v. Lewis, 49 Wn.2d 891, 894, 307 P.2d 1064
21
(1957).
22
3.12
Further, compliance with the requirements for the complaint, summons and notice
mandated by the Legislature in RCW 59.12.030, 59.12.070 and 59.12.080, constitutes the
23
24
~urisdictional condition precedenf' to
bringing a cause of action in unlawful detainer, which have
not beeo met and carmot be met by Plaintiff Freddie Mac.
25
3.13
26
of real property for a term less than life is guilty of unlawful detainer either:"
The Legislature defined the term "unlawful detainer" in RCW 59.12.030 as "(a] tenant
27
28

20
2
3
4
5
6
7
8
9
10
II
12
(1) When he or she holds over or continues in possession, in penon or by

subtenant, of the property or any part thereof after the expiration of the term for
which it is let to him or her. When real property is lessed for a specified term or
period by express or implied contract, whether written or oral, the tenancy shall be
terminated without notice at the expiration of the specified term or period;
(2) When he or she, having leased property for an indefinite time with monthly or
other periodic rent reserved, continues in possession thereof; in person or by
subtenant, after the end of any such month or period, when the landlord, more then
twenty days prior to the end of such month or period, has served notice (in manner
in RCW 59.12.040 provided) requiring him or her to quit the premises at the
expiration of such month or period;
(3) When he or she continues in possession in person or by subtenant after a default
in the payment of rent, and after notice in writing requiring in the alternative the
payment of the rent or the surrender of the detained premises, served (in manner in
RCW 59.12.040provided) in behalf of the person entitled to the rent upon the
person owing it, bas remained uncomplicd with for the period of three days after
service thereof. The notice may be served at any time after the rent becomes due;
19
(4) Wben he or she continues in poasession in person or by subtenant after a

neglect or failure to keep or perform any other condition or covenant of the lesse or
agreement under which the property is held, including any covenant not to assign
or sublet, then one for the payment of rent, and after notice in writing requiring in
the alternative the performance of such condition or covenant or the surrender of
the property, served (in manner in RCW 59.12.040 provided) upon him or her, and
if there is a subtenant in actual possession of the premises, also upon such
subtenant, shall remain uncomplied with for ten days after service thereof. Within
ten days after the service of such notice the tenact, or any subtenant in actual
occupation of the premises, or any mortgagee of the term, or other person
interested in its continuance, may perform such condition or covenant and thereby
save the lease from such forfeiture;
20
(S) When he or she commits or permits waste upon the demised premises, or when
13
14
IS
16
17
18
21
22
23
24
25
26
he or she sets up or carries on thereon any unlawful business, or when he or she

erects, suffers, permits, or maintains on or about the premises any nuisance, and
remains in possession after the service (in manner in RCW 59.12.040 provided)
upon him or her of three days' notice to quit;
(6) A person who, without the permission of the owner and without having color of
title thereto, enters upon land of another and who fails or refuses to remove
therefrom after three days' notice, in writing and served upon him or her in the
manner provided in RCW 59.12.040. Such person may also be subject to the
criminal provisions of chapter 9A.52 RCW; or
27
28

21
(7) When he or she commits or permits any gang-related activity at the premises as
prohibited by RCW 59.18.130.
3
4
5
6
3.14
unlawful detainer. The Complaint further does not allege "facts" regarding the notice Plaintiff was
required to provide to Defendant before commencing its action for unlawful detainer.
3.15
"The plaintiff in his or her complain' which shall be in writing, must set forth the
facts on which he or she seeks to recover, and describe the premises with
reasonable certainty, and may set forth therein any circumstances of fraud, force or
violence, which may have accompanied the forcible entty or forcible or unlawful
detainer, end claim damages therefor, or compensation for the occupation of the
premises, or both; in case the unlawful detainer charged be after default in the
payment of ren' the complaint must state the amount of such rent. A summons
must be issued as in other cases, returnable at a day designated therein, which shall
not be loss than seven nor more than thirty days from the date of service, except in
cases where the publication of summons is necessary, in which case the comt or
judge thereof may order that tho summons be made returnable at such time as may
be deemed proper, and the summons shall specify the return day so fixed."
10
11
12
13
14
3.16
The Legislature provided in RCW 59.12.080 that tho unlawful detainer summons must,
at a minimum, ''notify the defendant to appear and answer," among other things, to wit:
16
"The summons must state the names of the parties to tho proceeding, the court in
which the seme is brough' the nature of the action, in concise terms, and the relief
s o and also the return day; and must notify the defendant to appear end answer
within the time designated or that the relief sought will be taken against him or her.
The summons must be directed to the defenden' end in case of summons by
publication, be served at least five days before the return day designated therein.
The summons must be served and returned in the same manner as summons in
other actions is served and returned."
17
18
19
20
21
The minimum mandatory contents of a complaint for unlawful detainer and the issuance of
its associated summons are governed by RCW 59.12.070, which provides:
15
Plaintiff Freddie Mac points to nothing in RCW 59.12.030 to support its complaint for
3.17
Nowhere under RCW Chapters 59.12 or 61.24 does the Legislature provide Plaintiff a
22
right or remedy to create its own summons providing for Defendant's default before tho action is
23
filed with end the summons is issued by the Superior Court
24
3.18
25
other cases .... " Likewise, RCW 59.12.080 directs, among other things, that: "The summons
26
Moreover, RCW 59.12.070 expressly mandates that "[a) summons must be issued as in
must state ...the court in which the same is brought...."
27
28
22
3.19
was ..brought" or "issued." Rather, the summons stated the name of a court in which the summons
3
4
would be brought and issued from at some unspecified time in the future.
3.20
Under RCW 59.12.180, the Legislature made the "rules of practice" for civil actions in
this State applicable to unlawful detainer actions:
"Except as otherwise provided in this cbapter, the provisions of the laws of this
state with refereoce to practice in civil actions are applicable to, and constitute the
rules of practice in the proceedings mentioned in this chapter; and the provisions of
such laws relative to new trials and appeals, exoept so fur as they are inconsistent
with the provisions of this chapter, shall be held to apply to the proceedings
mentioned in this chapter."
7
8
9
The summons used by Plaintiff did not state the name of the Court in which the summons
B.
Defendant Was Never In Default Al A Matter of State and Federal Low.
10
3.21
The Court's jurisdiction to render a judgment by default is specified in RCW 59.12.120
JI
and is further predicated upon a valid snmmons having been issued by the court pW'SU31lt to RCW
12
59.12.070 and 59.12.080:
"If on the date appointed in the summons the defendant does not appear or answer,
the court shall render judgment in favor of the plaintiff as prayed for in the
complaint." RCW 59.12.120.
13
14
15
3.22
16
unconstitutional, the condition giving rise to the pleading by Defendant specified in RCW
17
59.12.121 never became due:
"On or before the day fixed for bis or her appearance the defendant may appear and
answer or demur." RCW 59.12.121.
18
19
Additionally, because the summons created and utilized by Plaintiff was null, void and
3.23
An unlawful detainer action is a special proceeding which relates only to real estate. There
20
must be a substantial compliance with the requisites of such a statute. Because the summons was
21
not issued by the court and was not filed with the court before it was served, Plaintiff did not
22
comply with Chapter 59.12. The Courts in Wilson v. Daniels, 31Wn.2d633, 643, 198 P.2d4%
23
(1948); Little v. Catania, 48 Wn.2d 890, 297 P.2d 255 (1956); Sowers v. Lewis, 49 Wn.2d 891,
24
25
26
27
28
894, 307 P.2d 1064 (1957); and Housing Authority of Cily of Everett v. Terry, 114 Wn.2d 558,
789 P.2d 745 (1990) directs that the trial eourt must dismiss Plaintiff's Complaint.
3.24
The State's law dismissing a complaint for lack of subject-matter jurisdiction is consistent
with Federal law. Justice Ginsburg, writing for the Court in Arbaugh v. Y & HCorp., 546 U.S.
500, 506, 5I0-516 (2006), explained that "subject-matter jurisdiction... involves a court's power
23
the parties "to the enforcement of such rights as they may have in some more appropriate
. ......
proceedings
4
5
:
8
9
Respectfully submitted,
Dated: April 19, 2015
.() J
~?J.~uv~
elaS. Owen
3912 NE 57' Avenue
Vancouver, WA 98661
(360) 991-4758
10
11
12
13
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Case 8-10-77338-reg
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UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT Of NEW YORK
------------------------------------------------------x
ln re:
Case N-0. 810-77338-reg
FERREL L. AGARD,
Chapter 7
Debtor.
---------------------------------------------------x
MEMORANDUM DECISION
Before the Court is a motion (the "Motion'') seeking relief from the auto1natic stay
pursuant to 11 U.S.C. 362(d)(1) and (2), to foreclose on a secured interest in the Debtor's real
property located in Westbury, New York (the "Property"). The movant is Select Portfolio
Servicing, Inc. ("Select Portfolio" or "Movant"), as servicer for U.S. Bank National Association,
as Tn1stee for First Franklin Mortgage Loan Trust 2006-FF 12, Mortgage Pass-Through
Certificates, Series 2006-FF 12 (.. U.S. Bank"). The Debtor filed limited opposition to the Motion
contesting the Movant's standing to seek relief from stay. The Debtor argues that the only
interest U.S. Bank holds in the underlying mortgage 'vas received by way of an assignment from
the Mortgage Electronic Registration System a/k/a MERS, as a "nominee" for the original
lender. The Debtor's argument raises a fundamental question as to whether MERS had the legal
authority to assign a valid and enforceable interest in the subject mortgage. Because U.S. Bank's
rights can be no greater than the rights as transferred by its assignor- MERS - the Debtor argues
that the Movant, acting on behalf of U.S. Bank, has failed to establish that it holds an
enforceable
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right against the Property. 1 The Movant's initial response to the Debtor's opposition \Vas that
MERS's authority to assign the mortgage to U.S. Bank is derived from the mortgage itself which
allegedly grants to MERS its status as both ''nominee" oftlie mortgagee and "mortgagee of
record." The Movant later supplemented its papers taking the position that U.S. Bank is a
creditor with standing to seek relief from stay by virtue of a judgment of foreclosure and sale
entered in its favor by the state court prior to the filing of the bankruptcy. The Movant argues
that the judgment of foreclosure is a final adjudication as to U.S. Bank's status as a secured
creditor and therefore the Rooker-Feldman doctrine prohibits this Court from looking behind the
judgment and questioning whether U.S. Bank has proper standing before this Court by virtue ofa
valid assignment of the 1nortgagc from MERS.
The Court received extensive briefing and oral argument .fron1 MERS, as an intervenor in
these proceedings which go beyond the arguments presented by the Movant. In addition to the
rights created by the mortgage documents themselves, MERS argues that the terms of its
membership agreement with the original lender and its successors in interest, as well as New
York state agency laws, give MERS the authority to assign the mortgage. MERS argues that it
holds legal title to mortgages for its member/lenders as both ''nominee" and "1nortgagee of
The Debtor also questions whether Select Portfolio has the authority and the standing to
seek relief from the automatic stay. The Movant argues that Select Portfolio has standing
to bring the Motion based upon its status as "servicer'' of the Mortgage, and attaches an
affidavit of a vice president of Select Portfolio attesting to that servicing relationship.
Caselaw has established that a mortgage servicer has standing to seek relief from the
automatic stay as a party in interest. See, e.g., Greer v. O'Dell, 305 F.3d 1297
(11th Cir. 2002); In re Woodber1y, 383 B.R. 373 (Bankr. D.S.C. 2008). This presumes,
however, that the lender for \Vhom the servicer acts validly holds the subject note and
mortgage. Thus, this Decision will focus on whether U.S. Bank validly holds the subject
note and 1nortgage.
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record." As such, it argues that any me1nber/lender 'vhich holds a note secured by real property,
that assigns that note to another member by way of entry into the MERS database, need not also
assign the mortgage because legal title to the mortgage remains in the name ofMERS, as agent
for any member/lender which holds the corresponding note. MERS's position is that if a MERS
member directs it to provide a written assignment of the mortgage, MERS has the legal
authority, as an agent for each of its members, to assign mortgages to the member/lender
currently holding the note as reflected in the MERS database.
For the reasons that follow, the Debtor's objection to the Motion is overruled and the
Motion is granted. The Debtor's objection is overruled by application of either the RookerFeld1nan doctrine, or resjudicata. Under those doctrines, this Court 1nust accept the state court
judgment of foreclosure as evidence of U.S. Bank's status as a creditor secured by the Property.
Such status is sufficient to establish the Movant's standing to seek relieffro1n the automatic stay.
The Motion is granted on the merits because the Movant has shown, and the Debtor has not
disputed, sufficient basis to lift the stay under Section 362{d).
Although the Court is constrained in this case to give full force and effect to the state
courtjud~ment
of foreclosure, there are numerous other cases before this Court which present
identical issues with respect to MERS and in which there have been no prior dispositive state
court decisions. This Court has deferred rulings on dozens of other motions for relief from stay
pending the resolution of the issue of whether an entity which acquires its interests in a mortgage
by way ofassign1nent from MERS, as nominee, is a valid secured creditor with standing to seek
relief from the auto1natic stay. It is for this reason that the Court's decision in this matter will
address the issue of whether the Movant has established standing in this case notwithstanding the
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existence of the foreclosure judgment. The Court believes this analysis is necessary for the
precedential effect it will have on other cases pending before this Court.
The Court recognizes that an adverse ruling regarding MERS's authority to assign
mortgages or act on behalf of its 1nember/lenders could have a significant impact on MERS and
upon the lenders which do business with MERS throughout the United States. However, the
Court must resolve the instant matter by applying the laws as they exist today. It is up to the
legislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisite
authority to assign mortgages under its current business practices. MERS and its partners n1ade
the decision to create and operate under a business inodel that was designed in large part to avoid
the requirements of the traditional mortgage recording process. rhis Court does not accept the
argument that because MERS 1nay be involved with 50o/o of all residential mortgages in the
country, that is reason enough for this Court to turn a blind eye to the fact that this process does
not comply with the law.
Facts
Procedural Background
On September 20, 2010, the Debtor filed for relief under Chapter 7 of the Bankruptcy
Code. In Schedule A to the petition, the Debtor lists a joint ownership interest in the Property
described as follows:
A "[s]ingle family home owned with son, deed in son's name since 2007; used as
primary residence .... Debtor \Vas on original deed and is liable on the mortgage,
therefore has equitable title, Debtor is in default of the mortgage with a princi1)a]
balance of over $450,000.00. The house is worth approximately $350,000. A
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foreclosure sale was scheduled 9121/\0."
According to Schedule D, the Property is valued at $350,000 and is encumbered by a mortgage

in the amount of$536,920.67 held by "SPS Select Portfolio Servicing."
On October 14, 2010, the Movant filed the Motion seeking relief from the automatic stay
pursuant to 11 U.S.C. 362(d) to foreclose on the Property. The Motion does not state that a
foreclosure proceeding had been commenced or that a judgment of foreclosure was granted prior
to the filing of the bankruptcy petition. Nor does it 1nention that the Debtor holds only equitable
title and does not hold legal title to the Property. Instead, Movant alleges that U.S. Bank is the
"holder" of the Mortgage; that the last mortgage payment it received from the Debtor was
applied to the July, 2008 payment; and that the Debtor has failed to 1nake any postpetition
payments to the Movant. Movant also asserts that as of September 24, 2010, the total
indebtedness on the Note and Mortgage was $542,902.33 and the Debtor lists the value of the
Property at $350,000 in its schedules. On that basis, Movant seeks entry of an order vacating the
stay pursuant to l t U.S.C. 362(d)(t) and (d)(2).
Annexed to the Motion are copies of the following documents:
Adjustable Rate Note, dated June 9, 2006, executed by the Debtor as borrower and listing
First Franklin a Division of Na. City Bank of In. ("First Franklin") as the lender
(''Note");
Balloon Note Addendum to the Note, dated June 9, 2006;
Mortgage, dated June 9, 2006 executed by the Debtor and listing First Franklin as lender,
and MERS as nominee for First Franklin and First Franklin's successors and assigns
("Mortgage");
Adjustable Rate and Balloon Rider, dated June 9, 2006;
Addendum to Promissory Note and Security Agreement executed by the Debtor; and
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Assignment of Mortgage, dated February I, 2008, listing MERS as nominee for First
Franklin as assignor, and the Movant, U.S. Bank National Association, as Trustee for
First Franklin Mortgage Loan Trust 2006~ FF 12, Mortgage Pass-through Certificates,
Series 2006-Ff 12, as assignee(" Assignment of Mortgage").
The Arguments of the Parties

On October 27, 2010, the Debtor filed "limited opposition" to the Motion, alleging that
the Movant lacks standing to seek the relief requested because MERS, the purported assignor to
the Movant, did not have authority to assign the Mortgage and therefore the Movant cannot
establish that it is a bona fide holder of a valid secured interest in the Property.
The Movant responded to the Debtor's li111ited opposition regarding MERS's authority to
assign by referring to the provisions of the Mortgage '"'hich purport to create a "nominee"
relationship between MERS and First Franklin. In conclusory fashion, the Movant states that it
therefore follows that MERS's standing to assign is based upon its no1ninee status.
On November 15, 2010, a hearing was held and the Court gave both the Debtor and
Movant the opportunity to file supplemental briefs on the issues raised by the Debtor's lin1ited
opposition.
On December 8, 2010, the Movant filed a n1e1norandum of law in support of the Motion
arguing that this Court Jacks jurisdiction to adjudicate the issue of \Vhether MERS had authority
to assign the Mortgage, and even assuming the Court did have jurisdiction to decide this issue,
under New York law the MERS assignment was valid. Jn support of its jurisdictional argument,
the Movant advises the Court (for the first time) that a Judge1nent of Foreclosure and Sale
("Judgment of Foreclosure") was entered by the state court in favor of the Movant on Nove1nber
24, 2008, and any judicial review of the Judgment of Foreclosure is barred by the doctrines of
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resjudicata, RookerFeldn1an, and judicial estoppeL2 The Movant argl1es that the Debtor had a
full and fair opportunity to litigate these issues in state court, but chose to default, and cannot
now challenge the state court's adjudication as to the Movant's status as a secured creditor or
holder of the Note and Mortgage, or its standing to seek relief from the automatic stay in this
Court. The Movant also notes that the Debtor admits in her petition and schedules that she is
liable on the Mortgage, that it was in default and the subject of a foreclosure sale, and thus
judicial estoppel bars her arguments to the contrary.

In addition to its preclusion argu1nents, on the underlying merits of its position the
Movant cites to case law holding that MERS assignments similar to the assignment in this case,
are valid and enforceable. See U.S. Bank, N.A. v. Flynn, 897 N.Y .S. 2d 855, 858 (N.Y, Sup. Ct.
2010); Kiah v, Aurora Loan Sen>ices, LLC, 2010 U.S. Dist. LEXIS 121252, at* I (D. Mass. Nov.
!6, 201 O); Perry v. Nat'l Default Servicing Corp., 2010 U.S. Dist. LEXIS 92907, at* I (Dist.
N.D. Cal. Aug. 20, 2010). It is the Movant's position that the provisions of the Mortgage grant
to MERS the right to assign the Mortgage as "nominee," or agent, on behalf of the lender, First
Franklin. Specifically, Movant relies on the recitations of the Mortgage pursuant to which the
"Borrower" acknowledges that MERS holds bare legal title to the Mortgage. but has the right
"(A) to exercise any or all those rights, including, but not limited to, the right to foreclose and
'
The Judgment of Foreclosure names the Debtor and an individual, Shelly English, as
defendants. Shelly English is the Debtor's daughter-in-la\v. At a hearing held on
December 13, 20 I0, the Debtor's counsel stated that he "believed" the Debtor transferred
title to the Property to her son, Leroy English, in 2007. This is consistent \Vith
infonnation provided by the Debtor in her petition and schedules. Leroy English,
however, was not named in the foreclosure action. No one in this case has addressed the
issue of whether the proper parties were named iri the foreclosure action. However,
absent an argument to the contrary, this Court can only presume that the Judgment of
Foreclosure is a binding final judgment by a court of competent jurisdiction.
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sell the Property; and (B) to take any action required of Lender including, but not lilnited to,
releasing and canceling [the Mortgage]." In addition, the Movant argues that MERS's status as a
"mortgagee and thus its authority to assign the Mortgage is supported by the New York Real
Property Actions and Proceedings Law ("RPAPL") and New York Real Property Law (.. RPL").
Movant cites to RPAPL 1921-a which allows a "mortgagee" to.execute and deliver partial
releases of lien, and argues that MERS falls within the definition of "mortgagee" which includes
the "current holder of the mortgage of record ... or.,. their.,. agents, successors or assigns."
N.Y. Real Prop. Acts. Law 1921(9)() (McKinney 2011). Although the definition of
"mortgagee" cited to by the Movant only applies to RPAPL 1921, Movant argues that it is a
"mortgagee" vested with the authority to execute and deliver a loan payoff statement; execute
and deliver a discharge of mortgage and assign a mortgage pursuant to RPL 274 and 275.
In addition to its status as "mortgagee," Movant also argues that the assignment is valid
because MERS is an "agent" of each of its member banks under the general laws of agency in
New York. see N.Y. Gen. Oblig. Law 5-1501 (I) (McKinney 2011 ),3 and public policy requires
the liberal interpretation and judicial recognition of the principal-agent relationship. See Arens v.
Shainsw1lt, 37 A.D.2d 274 (N.Y. App. Div. 1971 ), affd 29 N.Y.2d 663 (1971 ). In the instant
case, Movant argues, the Mortgage appoints MERS as "nominee," read "agent," for the original
'
Movant cites to New York General Obligations Law for the proposition that "an agency
agreement may take any form 'desired by the parties concerned.'" The direct quote
"desired by the parties concerned" seems to be attributed to the General Obligations Law
citation, however, the Court could find no such language in the current version of 5150 l (1 ). That provision, rather, defines an agent as "a person granted authority to act as
attorney-in-fact for the principal under a power ofattorney, and includes the original
agent and any co-agent or successor agent. Unless the context indicates otherwise, an
'agent' designated in a power of attorney shall mean 'attorney-in-fact' for the purposes of
this title. An agent acting under a power of attorney has a fiduciary relationship with the
principal." N.Y. Gen. Oblig. Law 5-1501(1) (McKinney 2011) (emphasis added).
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lender and the original lender's successors and assigns. As nominee/agent for the lender, and as
mortgagee of record, Movant argues MERS had the authority to assign the Mortgage to the
Movant, U.S. Bank, "in accordance with the principal's instruction to its nominee MERS, to
assign the mortgage lien to U.S. Bank ... ,"
Finally, Movant argues that even absent a legally enforceable assignment of the
Mortgage, it is entitled to enforce the lien because U.S. Bank holds the Note. The Movant
argues that if it can establish that U.S. Bank is the legal holder the Note, the Mo11gage by
operation of law passes to the Movant because the Note and the Mortgage are deemed to be
inseparable. See In re Conde-Dedonato, 391 B.R. 247 (Bankr. E.D.N.Y. 2008). The Movant
represents, but has not proven, that U.S. Bank is the rightful holder of the Note, and further
argues that the assignment of the Note has to this point not been contested in this proceeding.
MERS nioved to intervene in this matter pursuant to Fed. R. Bankr. P. 7024 because:
12.
The Court's detennination of the MERS Issue directly affects the
business model ofMERS. Additionally, approximately 50o/o of all consumer

mortgages in the United States are held in the name ofMERS, as the mortgagee
of record.
13.
The Court's determination of the MERS Issue will have a
significant impact on MERS as well as the mortgage industry in New York and
the United States.
14.
MERS has a direct financial stake in the outcome of this contested
matter, and any detennination of the MERS Issue h.as a direct hnpact on MERS.
(Motion to Intervene, ,~12-14).
Pennission to intervene was granted at a hearing held on December 13, 2010.

In addition to adopting the arguments asserted by the Movant, MERS strenuously
defends its authority to act as mortgagee pursuant to the procedures for processing this and other
mortgage.!'. under the MERS "system." First, MERS points out that the Mortgage itself
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designates MERS as the "nominee" for the original lender, First Franklin, and its successors and
assigns. In addition, the lender designates, and the Debtor agrees to recognize, MERS "as the
inortgagee of record and as no1ninee for 'Lender and Lender's successors and assigns"' and as
such the Debtor ''expressly agreed without qualification that MERS had the right to foreclose
upon the premises as well as exercise any and all rights as nominee for the Lender." (MERS
Memorandum of Law at 7). These designations as "nominee," and "mortgagee of record," and
the Debtor's recognition thereof, it argues, leads to the conclusion that MERS was authorized as
a matter of law to assign the Mortgage to U.S. Bank.
Although MERS believes that the mortgage documents alone provide it with authority to
effectuate the assign1nent at issue, they also urge the Court to broaden its analysis and read the
documents in the context of the overall "MERS System." According to MERS, each
participating bank/lender agrees to be bound by the terms ofa membership agreement pursuant
to which the 1nember appoints MERS to act as its authorized agent with authority to, among
other things, hold legal title to mortgages and as a result, MERS is empowered to execute
assignments of mortgage on behalf of all its member banks. In this particular case, MERS
maintains that as a member of MERS and pursuant to the MERS 1nembership agreement, the
Joan originator in this case, First Franklin, appointed MERS ''to act as its agent to hold the
Mortgage as no1ninee on First Franklin's behalf, and on behalf of First Franklin's successors and
assigns." MERS explains that subsequent to the mortgage's inception, First Franklin assigned
the Note to Aurora Bank FSB f/k/a Lehman Brothers Bank ("Aurora"), another MERS member.
According to MERS, note assignments among MERS me1nbers are tracked via self-effectuated
and self-monitored computer entries into the MERS database. As a MERS member, by
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operation of the MERS membership rules, Aurora is deemed to have appointed MERS to act as
its agent to hold the Mortgage as nominee. Aurora subsequently assigned the Note to U.S. Bank,
also a MERS member. By operation of the MERS membership agreement, U.S. Bank is deemed
to have appointed MERS to act as its agent to hold the Mortgage as nominee. Then, according to
MERS, "U.S. Bank, as the holder of the note, under the MERS Me1nbership Rules, chose to
instruct MERS to assign the Mortgage to U.S. Bank prior to commencing the foreclosure
proceedings by U.S. Bank." (Affirmation of William C. Hultman, ,12).
MERS argues that the express tenns of the 1nortgage coupled with the provisions of the
MERS membership agreement:. is "more than sufficient to create an agency relationship between
MERS and lender and the lender's successors in interest" under New York law and as a result
establish tv1ERS's authority to assign the Mortgage. (MERS Me1norandu1n of Law at 7).
On December 20, 2010, the Debtor filed supplemental opposition to the Motion. The
Debtor argues that lhe Rooker-Feldn1an doctrine should not preclude judicial review in this case
because the Debtor's objection to the Motion raises issues that could not have been raised in the
state court foreclosure action, namely the validity of the assignment and standing to lift the stay.
The Debtor also argues that the Rooke1-Feld111an doctrine does not apply because the Judgment
of Foreclosure was entered by default. Finally, she also argues that the bankruptcy court can
review matters "which are void or fraudulent on its face." See In re Ward, 423 B.R. 22 (Bankr.
E.D.N.Y. 2010). The Debtor says that she is "alleging questionable, even possibly fraudulenl
conduct by MERS in regards to transferring notes and lifting the stay." (Debtor's Supplemental
Oppositio:n at 3).
The Movant filed supplemental papers on December 23, 20 I0 arguing that the Motion is
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moot because the Property is no longer an asset of the estate as a result of the Chapter 7
Trustee's "report of no distribution," and as such, the Section 362(a) automatic stay was
dissolved upon the entry ofa discharge on December 14, 2010. See Brooks v. Bank ofNe11 York
1
Mellon, No. DKC 09-1408, 2009 WL 3379928, at '2 (D. Md. Oct. 16, 2009); Riggs Nat 'I Bank
o/Woshington, D.C. v. Peny, 129 F.2d 982, 986 (4th Cir. 1984).
The Movant also maintains that RookerFeld111an does apply to default judgments
because that doctrine does not require that the prior judgment be a judgment "on the merits."
Charchenko v. City o/Stilhvater, 47 F.3d 981, 983 n.l (8th Cir. 1995); see al.so Kafele v. Lerner,
Sampson & Rothfass, L.P.A., No. 04-3659, 2005 WL 3528921, at '2-3 (6th Cir. Doc. 22, 2005);
In re Dahlgren, No. 09-18982, 2010 WL 5287400, at' I (D.N.J. Dec. 17, 2010). The Movant
points out that the Debtor seems to be confusing the Rooker-Feldman doctrine with issue and
claim preclusion and that the Debtor has misapplied Chief Judge Craig's ruling in In 1e J{'ard.
Discussion
As a threshold matter, this Court will address the Movant's argument that this Motion has
been mooted by the entry of the discharge order.
Effect of tire Chapter 7 discharge 011 Ille automatic stay
Section 362(c) provides that:

Except as provided in subsections (d), (c), (f), and (h) of this section-(1) the slay of an act against property ofthe estate under subsection (a) of this
section continues until such property is no longer property of the estate;
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(2) the stay of any other act under subsection (a) of this section continues until the
earliest of(A) the time the case is closed;
(B) the time the case is dismissed; or

(C) if the case is a case under chapter 7 of this title concerning an individual or a case
under chapter 9, 11, 12, or 13 of this title, the ti111e a discharge is granted or denied;
11 U.S.C. J62(c) (emphasis added).

Pursuant to Section 362(c)(1), the auto1natic stay \Vhich protects "property of the estate,"
as opposed to property of the debtor, continues until the property is no longer property of the
estate regnrdless of the entry of the discharge. The provision of the statute relied upon by the
Movant for the proposition that the auto1natic stay tenninates upon the entry of a discharge,
relates only to the stay of"any other act under subsection(a),", i.e., an act against property that is
not property of the estate, i.e., is property "of the debtor." The relationship between property of
the estate and property of the debtor is succinctly stated as follows:
Property of the estate consists of all property of the debtor as of the date of the
filing of the petition. 11 U.S.C. 541. It remains property of the estate until it has
been exempted by the debtor under 522, abandoned by the trustee under
554(a), or sold by the trustee under 363. lfproperty of the estate is not claimed
exempt, sold, or abandoned by the trustee, it is abandoned to the debtor at the
time the case is closed if the property was scheduled under 521(1). If the
property is not scheduled by the debtor and is not otherwise administered, it
remains property of the estate even after the case has been closed.
If the property in question is property of the estate, it ren1ains subject to the
automatic stay until it becomes property of the debtor and until the earlier of the
time the case was closed, the case is dismissed, or a discharge is granted or denied
in a chapter 7 case.
Jn re Pulln1an, 319 B.R. 443, 445 (Bankr. E.D. Va. 2004).
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Movant's position seems to be that the Chapter 7 Trustee's filing of a "report of no
distribution," otherwise known as a "no asset report," effectuated an abandonment of the real
property at issue in this case, and therefore the Property has reverted back to the Debtor.
However, Movant fails to cite the relevant statute. Section 554(c) provides that "[u)nless the
court orders othetwise, any property scheduled under section 521 (I) of this title not otherwise
administered at the time ofthe closing of a case is abandoned to the debtor and administered for
purposes of section 350 of this title." 11 U.S.C. 554(c) (emphasis added); Fed. R. Bankr. P.
6007. Cases interpreting Section 554(c) hold that the filing of a report of no distribution does
not effectuate an abandonment of estate property. See, e.g., In re Israel, 112 B.R. 481, 482 n.3
(Bankr. D. Conn. 1990) ("The filing of a no-asset report does not close a case and therefore does
not constitute an abandonment of property of the estate.") (citing e.g., Zlogar v. Internal Revenue
Serv. (Jn re Zlogar), 101 B.R. 1, 3 n.3 (Bankr. N.D. Ill. 1989); Scln1,aber v. Reed (In re Reed), 89
B.R. JOO, 104 (Bankr. C.D. CaL 1988); 11U.S.C.554(c)).
Btcause the real property at issue in this case has not been abandoned it remains property
of the estate subject to Section 362(a) unless and until relief is granted under Section 362(d).
Rooker-Feldman and resjudicata"
The Movant argues that U.S. Bank's status as a secured creditor, which is the basis for its
standing in this case, already has been detennined by the state court and that determination
cannot be revisited here. The Movant relies on both the Rooker-Feldn1an doctrine and res
Because the Debtor's objection is ovenuled under Rooker-Feld111an and resjudicata, the
Court will not address the merits ofthe Movant'sjudicial estoppe! arguments.
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judicata principles to support this position.
The Rooker-Feldman doctrine is derived from two Supreme Court cases, Rooker v.
Fidelity Trust Co., 263 U.S. 413 (1923), and D.C. Court ofAppeals v. Feldnian, 460 U.S. 462
(1983), which together stand for the proposition that lower federal courts lack subject 1natter
jurisdiction to sit in direct appellate review of state courtjudg1nents. The Rooker-Feldn1an
doctrine is a narrow jurisdictional doctrine which is distinct from federal preclusion doctrines.
See McKithen v. Brown, 481 F.3d 89, 96-97 (2d Cir. 2007) (citing Exxon Mobil Corp. v. Saudi
Basic Indus. Corp., 544 U.S. 280, 284 (2005), and Hob/ock v. Albany County Board of Elections,
422 F.3d 77, 85 (2d Cir. 2005)). In essence, the doctrine bars "cases brought by state-court
losers complaining of injuries caused by state-court judgments rendered before the district court
proceedings commenced and inviting district court review and rejection of those judgments.
Rooker-Fe/dn1an does not otherwise override or supplant preclusion doctrine or augment the
circumscribed doctrines that allow federal courts to stay or dismiss proceedings in deference to
state-court actions." Exxon Mobil, 544 U.S. at 283.
The Second Circuit has delineated four elements that must be satisfied in order for
Rooker-Feldman to apply:
First, the federal-court plaintiff must have lost in state court. Second, the plaintiff
must "complain []of injuries caused by [a] state-court judgment[.]" Third, the
plaintiff must "invit[e] district court review and rejection of [that] judginent [ ]."
Fourth, the state-court judg1nent 1nust have been "rendered before the district
court proceedings commenced"-i.e., Rooker-Feldman has no application to
federal-court suits proceeding in parallel with ongoing state-court litigation. The
first and fourth of these requirements may be loosely ter111ed procedural; the
second and third may be termed substantive.
McKithen, 481 F.3d at 97 (internal citation omitted and alteration in original) (quoting Hoblock,
Pagel5of 37
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422 F.3d at 85).
In a case with facts similar to the instant case, Chief Judge Craig applied the RookerFeldman doctrine to overrule a debtor's objection to a motion for relief from the automatic stay.
See In re Ward, 423 B.R. 22 (Bankr. E.D.N.Y. 2010). In In re Ward, a foreclosure sale was
conducted prior to the filing of the bankruptcy petition. When the successful purchaser sought
relief from stay in the bankruptcy case to proceed to evict the debtor, the debtor opposed the
motion. The debtor argued that the foreclosure judgment was flawed because "no original note
was produced", "the mortgage was rescinded", "the plaintiff in the action doesn't exist" or "was
not a proper party to the foreclosure action'', and that ~'everything was done irregularly and
underneath [the] table." In re Ward, 423 B.R. at 27. Chief Judge Craig overruled the debtor's
opposition and found that each of the elements of the Rooker-Feld111an doctrine were satisfied:
The Rooker-Feldn1an doctrine applies in this case because the Debtor lost in the
st&te court foreclosure action, the Foreclosure Judgn1ent was rendered before the
Debtor commenced this case, and the Debtor seeks this Court's review of the
J-'oreclosure Judgment in the context of her opposition to the Purchaser's motion
for relief from the automatic stay. The injury complained of, i.e., the foreclosure
sale to the Purchaser, was "caused by" the Foreclosure Judgment because "the
foreclosure [sale] would not have occurred but-for'' the Foreclosure Judgment.
Accordingly, the Rooker-J:<e/dman doctrine does not pennit this Court to
disregard the Foreclosure Judgment.
Jn re Ward, 423 B.R. at 28 (citations omitted and alteration in original).
In the instant case, the Debtor argues that the Rooker-Feldtnan doctrine does not apply
because the Judgment of Foreclosure was entered on default, not on the merits. She also argues
that Rooker-FeJdn1an should not apply because she is alleging that the Judgment of foreclosure
was procured by fraud in that the MERS syste1n of mortgage assignments was fraudulent in
nature or void. However, this Court is not aware of any exception to the Rooker-Feldman
Page 16 of 37
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doctrine for default judg1nents, or judg1nents procured by fraud and the Court will not read those
exceptions into the rule. See Salen1 v. Paroli, 260 B.R. 246, 254 (S.D.N.Y. 2001) (applying
Rooker-Feldn1an to preclude review of state court default judgment); see also Lo111bard v.
Lombard, No. OO-CIV-6703 (SAS), 2001 WL 548725, at '3-4 (S.D.N.Y. May 23, 2001)
(applying Rooker-FeldJnan to preclude review of stipulation of settlement executed in

connection with state court proceeding even though applicant argued that the stipulation should
be declared null and void because he was under duress at the time it was executed).
The Debtor also argues that Rooker-Feldn1m1 does not apply in this case because she is
not asking this Court to set aside the Judgment of Foreclosure, but rather is asking this Court to
make a determination as to the Movant's standing to seek relief from stay. The Debtor argues
that notwithstanding the Rooker-Feldman doctrine, the bankruptcy court musl have the ability to
determine the standing of the parties before it.
Although the Debtor says she is not seeking affirmative relief from this Court, the net
effect of upholding the Debtor's jurisdictional objection in this case would be to deny U.S. Bank
rights that were !awfully granted to U.S. Bank by the state court. This would be tantamount to a
reversal which is prohibited by Rooker-Feldn1an.
Even if Rooker-Feldn1an were found not to apply to this detennination, the Court still
would find that the Debtor is precluded from questioning U.S. Bank's standing as a secured
creditor under the doctrine of resjudicata. The state court already has determined that U.S.
Bank is a secured creditor with standing to foreclose and this Court cannot alter that
detennination in order to deny U.S. Bank standing to seek relief from the automatic stay.
The doctrine of resjudicata is grounded in the Full Faith and Credit Clause of the United
Page 17 of 37
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States Constitution. U.S. Const. art. IV. I. It prevents a party from re-litigating any issue or
defense that was decided by a court of co1npetent jurisdiction and which could have been raised
or decided in the prior action. See Burgos v. Hopkins, 14 F.3d 787, 789 (2d Cir. 1994) (applying
New York preclusion rules); Swiatkowski v. Citibank, No. 10-CV-1 !4, 2010 WL 3951212, at
*14 (E.O.N.Y. Oct. 7, 2010)(citing Waldman v. Vill. of Kiryas Joel, 39 F.Supp.2d 370, 377
(S.D.N.Y. 1999)). Res judicala applies to judgments that were obtained by default, see Kelleran
v. Andrijevic, 825 F.2d 692, 694-95 (2d Cir. 1987), but it 1nay not apply if the judgment was
obtained by extrinsic fraud or collusion. "Extrinsic fraud involves the patties' 'opportunity to
have a full and fair hearing,' while intrinsic fraud, on the other hand, involves the 'underlying
issue in the original lawsuit."' In re Ward, 423 B.R. at 29. The Debtor's assertions that the
MERS sy.;tem of assignments may have been fraudulent is more appropriately deen1ed an
intrinsic fraud argu1nent. The Debtor has not alleged any extrinsic fraud in the procurement of
the Judgment of Foreclosure which prevented a full and fair hearing before the state court.
As a result. the Court finds that the Judgment of Foreclosure alone is sufficient evidence
of the Movant's status as a secured creditor and therefore its standing to seek relieffroni the
automatic stay. On that basis, and because the Movant has established grounds for relief from
stay under Section 362(d), the Motion will be granted.
MERS
Because of the broad applicability of the issues raised in this case the Court believes that
it is appropriate to set forth its analysis on the issue of whether the Movant, absent the Judgment
of Foreclosure, would have standing to bring the instant 1notion. Specifically MERS's role in
Page 18 of 37
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the ownership and transfer of real property notes and 1nortgages is at issue in dozens of cases
before this Court. As a result, the Court has deferred ruling on 1notions for relief from stay
where the movants' standing may be affected by MERS's participation in the transfer of the real
property notes and mortgages. ln the instant case, the issues were resolved under the RookerFekhnan doctrine and the application ofresjudicata. Most, if not all, of the remainder of the
"MERS cases" before the Court cannot be resolved on the same basis. For that reason, and
because MERS has intervened in this proceeding arguing that the validity ofMERS assignments
directly affects its business model and will have a significant impact on the national nlortgage
industry, this Court will give a reasoned opinion as to the Movant's standing to seek relief from
the stay and how that standing is affected by the fact that U.S. Bank acquired its rights in the
Mortgage by way of assignment from MERS.
Standing to seek relieffroni tile auton1atic stay

The Debtor has challenged the Movant's standing to seek relief from the automatic stay.
Standing is a threshold issue for a court to resolve. Section 362(d) states that relieffro1n stay
may be granted "(o]n request of a party in interest and after notice and a hearing." 11 U.S.C.
362(d). The term "party in interest" is not defined in the Bankruptcy Code, however the Court
of Appeals for the Second Circuit has stated that "(g)enerally the 'real party in interest' is the
one who, under the applicable substantive law, has the legal right which is sought to be enforced
or is the party entitled to bring suit." See Roslyn Savings Bank v. Con1coach (Jn re Co111coach),
698 F.2d 571, 573 (2d Cir. 1983). l'he legislative history of Section 362 "'suggests that,
notwithstanding the use of the term 'party in interest'. it is only creditors who 1nay obtain relief
Page 19 of 37
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from the automatic stay." id. at 573-74. (citing H.R. Rep. No. 95-595, 95th Cong., I st Sess. 175.
reprinted in 1978 U.S.Code Cong. & Ad. News 5787, 6 J 36); see also Greg Restaurant E'quip.
And Supplies v. Toar Train P'ship (In re Toar Train P'ship), 15 B.R. 401, 402 (Bankr. D.
Vt.1981) (finding that a judgment creditor of the debtor was not a "party in interest'' because the
judgment creditor was not itself a direct creditor of the bankrupt).

Using the standard established by the Second Circuit, this Court must determine whether
the Movant is the "one who, under applicable substantive law, has the legal right'' to enforce the
subject Note and Mortgage, and is therefore a "creditor" of this Debtor. See In re Toar, 15 B.R.
at 402; see also in re Mims, 438 B.R. 52, 55 (Bankr. S.D.N.Y. 2010). The Bankruptcy Code
defines a ''creditor" as an "entity that has a claim against the debtor that arose at the tiine <lf or
before the order for relief .... " 11 U.S.C. I 01(10). "Claim" is defined as the "right to
payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, tnatured, unmatured, disputed, undisputed, legal. equitable, secured or unsecured ...
," 11 U.S.C. 101(5)(A). In the context of a lift stay motion where the movant is seeking to
commence or continue with an action to foreclose a n1ortgage against real property, the n1ovant
must show that it is a ''party in interest" by showing that it is a creditor with a security interest in
the subject real property. See Miins, 438 B.R. at 57 (finding that as movant "failed to prove it
owns the Note, it has failed to establish that it has standing to pursue its state law remedies with
regard to the Mortgage and Property"). Cf Bro1vn Bctrk I L.P. v. Ebersole (Jn re Ebersole), 440
B.R. 690, 694 (Bankr. W.D. Va. 2010) (finding that movant seeking relief fron1 stay must prove
that it is the holder of the subject note in order to establish a 'colorable claim' which would
establish standing to seek relief from stay).
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Note/1older status
In the Motion, the Movant asserts U.S. Bank's status as the "holder" of the Mortgage.
However, in order to have standing to seek relieffron1 stay, Movant., which acts as the
representative of U.S. Bank, must show that U.S. Bank holds both the Mortgage and the Note.
Mims, 438 B.R. at 56. Although the Motion does not explicitly state that U.S. Bank is the holder
of the Note, it is implicit in the Motion and the arguments presented by the Movant at the
bearing. However, the record de1nonstrates that the Movant has produced no evidence,
documentary or otherwise, that U.S. Bank is the rightful holder of the Note. Movant's reliance
on the fact that U.S. Bank's noteholder status has not been challenged thus far does not alter or
diminish the Movant's burden to show that it is the holder of the-Note as well as the Mortgage.
Under New York law, Movant can prove that U.S. Bank is the holder of the Note by
providing the Court with proof of a written assign1nent of the Note, or by deinonstrating that
U.S. Bank has physical possession of the Note endorsed over to it. See, eg., LaSalle Bank N.A. v.
Lamy, 824 N.Y.S.2d 769, 2006 WL2251721, at'\ (N.Y. Sup. Ct. Aug. 7, 2006). The only
written assign1nent presented to the Court is not an assignment of the Note but rather an
"Assignment of Mortgage" which contains a vague reference to the Note. Tagged to the end of
the provisions which purport to assign the Mortgage, there is language in the Assignment stating
"To Have and to Hold the said Mortgage and Note, and also the said property until the said
Assignee forever, subject to the tenns contained in said Mortgage and Note." (Assignment of
Mortgage (emphasis added)). Not only is the language vague and insufficient to prove an intent
to assign the Note, but MERS is not a party to the Note and the record is barren of any
representation that MERS, the purported assignee, had any authority to take any action with
Page21of37
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respect to the Note. Therefore, the Court finds that the Assignment of Mortgage is not sufficient
to establish an effective assignment of the Note.

By MERS's own account, it took no part in the assignment of the Note in this case, but
merely provided a database which allowed its 1ne1nbers to electronically self-report transfers of
the Note. MERS does not confinn that the Note was properly transferred or in fact whether
anyone including agents ofMERS had or have physical possession of the Note. What remains
undisputed is that MERS did not have any rights with respect to the Note and other than as
described above, MERS played no role in the transfer of the Note.

Absent a showing of a valid assignment of the Note, Movant can demonstrate that U.S.
Bank is the holder of the Note if it can show that U.S. Bank has physical possession of the Note
endorsed to its name. See In re Mirn.s, 423 B.R. at 56-57. According to the evidence presented
in this matter the manner in which the MERS system is structured provides that, "[w]hen the
beneficial interest in a loan is sold, the pro1nissory note is[] transferred by an endorsement and
delivery from the buyer to the seller [sic], but MERS Members are obligated to update the
MERS System to reflect the change in ownership of the promissory note .... " (MERS
Supplemental Memorandum of Law at 6). However, there is nothing in the record to prove that
the Note in this case was transferred according to the processes described above other than
MERS's representation that its computer database reflects that the Note was transferred to U.S.
Bank. The Court has no evidentiary basis to find that the Note was endorsed to U.S. Bank or
that U.S. Bank has physical possession of the Note. Therefore, the Court finds that Movant has
not satisfied its burden of showing that U.S. Bank, the party on whose behalf Movant seeks relief
from stay. is the holder of the Note.
Page 22 of 37
EXHIBIT __
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Pamela Owen. Civil Rights. Declaration of Jody M. Mccormick Filed by Defendants. Document No. 41

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Pamela Owen. Civil Rights. Declaration of Jody M. Mccormick Filed by Defendants. Document No. 41

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Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 1 of 63

The Honorable Benjamin H. Settle

UNITED STATES DISTRICT COURT

Case No. 3:15-cv-05375-BHS

FEDERAL HOUSING FINANCE AGENCY;

NOTE ON MOTION CALENDAR:

I, Jody M. McCormick, make the following declaration:

in support of the accompanying Joint Motion to Dismiss Plaintiffs Complaint submitted by

FHF A and Freddie Mac.

or FEDER.AL HOUSING FINANCE AGENCY'S AND

FEDERAL HOME LOAN MORTGAGE CORPORATION'S

422 W. Riverside Avenue, Suite l 100

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 2 of 63

FHF A to respond to her claims.

rejected the offers described above.

September 30, 2015 email (Exhibit B).

Attached hereto as Exhibit D is a true and correct copy of Motion to Quash

Service of Summons filed by Plaintiff in the Unlawful Detainer Action.

of Restitution Only entered in the Unlawful Detainer Action.

422 W. Riverside Avenue, Suite l 100

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 3 of 63

Respectfully submitted this 14'" day of October, 2015.

DECLARATION OF JODY M. MCCORMICK IN SUPPORT

Case No. 3: l 5-cv-05375-BHS

422 W. Riverside Avenue, Suite 1100

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 4 of 63

I hereby certify that on the 141" day of October, 2015,

Michael Steven DeLeo mdeleo@prklaw.com, rwhite@prklaw.com

Barbara L Bollero bbollero@bwrnlegal.com, tburt@bwrnlegal.com

William P. Richardson bill.richardson@clark.wa.gov,

Pamela S. Owen pamela.owen99@gmail.com, emanuel.mccray@hotmail.com,

David A Weibel dweibel@bwrnlegal.com

422 W_ Riverside Avenue, Suite 1100

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 5 of 63

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 6 of 63

court must impose on the defendant:

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 7 of 63

tile a Kotice of Appearance.

(Atkins Notice of Removal, Dkt. No. 1at2, filed 06/05/15.(

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 8 of 63

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 9 of 63

Re: Owen v. Atkins

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 10 of 63

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 11 of 63

scan G WEB(R. CLEM

Motion and Declaration to

restitution until the motion can be heard.

Motion and Declaration to Vacate Judg. and Stay

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 13 of 63

?UJ\.tt<_. c;; .6u.X.r .

3. Evidence relied up.on. This motion is based on the attached declaration of

L I am the defendant in this unlawful detainer action.

heard for the following reasons:

2111--"-'<:.=--=,,.=-p+.--'"-':,.=-_;~:.dJ..l-='-,/P-''-"''='W-'-"-'-'-::>'--~.-fo__,~~{,=u:;'-Motion and O.ClaretJon to Vacate Judg. and Stay

Motion ttnd l:Hdaration to Vacate Jud(/. and stay

Case 3:15-cv-05375-BHS Document 41 Filed 10/14/15 Page 15 of 63

-------- ----------- - --------

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RCWs > ~ > Chaoter 59.1 B >Section 59.18.363

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