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Burden of Proof in Non-Judicial Foreclosure States

Burden of Proof in Non-Judicial Foreclosure States

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Published by bryllaw
opposition to a motion to dismiss discussing the burden of proof in a non-judicial foreclosure state and discussing a securitization trust's claim as a holder of the note
opposition to a motion to dismiss discussing the burden of proof in a non-judicial foreclosure state and discussing a securitization trust's claim as a holder of the note

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Published by: bryllaw on Nov 11, 2010
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07/07/2013

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Likewise, the state court judgment, even if it had some preclusive effect in this
3
Adversary (which it does not) could be re-considered based on fraud pursuant to Va. Code §8.01-428(D) (allowing final judgments to be set aside for fraud).In the instant Adversary Proceeding, regardless of, and quite apart from, res judicata,Debtor has the right to have the dischargeability of Defendants' purported secured claimdetermined by this Court in a bankruptcy proceeding. Additionally, Defendants' claim may bedischargable or avoidable in bankruptcy under Section 522 on the basis of, inter alia, fraud.
3
Adv.C. ¶¶ 76-83. Since the issues of dischargeability and avoidance of Defendants' purportedsecured lien hinge on the determination and resolution of the claims contained in the AdversaryComplaint, those claims withstand the res-judicata-based motion to dismiss.Lastly, to the extent that the Adversary Complaint is not viewed or construed to includesuch a claim of dischargeability/avoidance,
Debtor hereby respectfully moves for leave toamend to include such a claim
.
III.Debtors Adversary Claims Are Meritorious.A.Counts I (Violaiton of Foreclosure Statutes), II (Declaratory Judgment), andIV (Fraud) Each State A Claim For Relief Supported by Ultimate Facts.
As a preliminary matter, Defendants' argument that Debtor's claim against them for violating Virginia's nonjudicial foreclosure statutes somehow turns Virginia into a judicialforeclosure state, MTD at 14-16, is a red herring. Apart from not being true, it is utterlyirrelevant whether Debtor's valid claims against Defendants for foreclosure statutes violationswould have any systemic effect on Virginia's nonjudicial foreclosure. It is axiomatic that every person has a right to bring a valid claim for violation of law supported by ultimate facts andwithin the jurisdiction of the court. As long as such a claim is stated, it can proceed.
 
While it is true that a party that complies with Virginia's nonjudicial foreclosure procedure may foreclose out-of-court, such nonjudicial foreclosure
would not be available wherethe very compliance with the nonjudicial foreclosure procedure is challenged 
., as long as suchchallenge is valid under applicable evidentiary principles, as discussed below.At best, Defendants can be heard to say that a borrower cannot make merely a conclusoryallegation that the foreclosing party cannot foreclose (for whatever reason), thereby necessitatinga judicial determination of every foreclosure, even one presumptively valid. While this may betrue, that is entirely
not 
what Debtor has done in this case. The debtor has adduced concreteevidence (similar to competing affidavits in a summary judgement proceeding) that castssufficient doubt on Defendants' prima facie claim of compliance with applicable foreclosure procedures.
See
,
e.g.
, Adv.C. ¶¶ 3-27, ¶ 21 & n.1; Exhibits C (SEC filings showing securitizationof the loan and the loan's transfer process, as well as the parties involved, to be
different 
from andirreconcilable with those claimed by Defendants in the course of their nonjudical foreclosure proceeding), and E (Defendants' own written statement tending to establish they are not in possession of the note) thereto, as well as
Exh. B
(media coverage of Mr. Allotey – deed of appointment signer – as a fraudulent signer &
C
(affidavit of Lynne Semonyak establishingfraudulent nature of the deed of appoinment) hereto. Debtor therefore defeated the Deed of Appointment's prima facie validity, if any.
See
,
e.g.
,
Graham v. County of Gloucester, Va.
, 668F. Supp. 2d 734, 736 (E.D. Va. 2009) (in summary judgment context, opposing party can"present specific facts demonstrating that there is a genuine issue for trial [which facts] must be presented in the form of exhibits and sworn affidavits," rather than bare allegations);
 Lim v. Choi
,256 Va. 167 (Va. 1998) (
 prima facie
validity of a deed may be overcome by other documents or evidence);
 Moffitt v. Com.
, 434 S.E.2d 684, 16 Va.App. 983 (Va. App., 1993) (in a civil
 
 proceeding, "[
 prima facie
evidence produces
 for the time being 
a certain result, but that the result
may be repelled 
") (emphasis added).Once the Debtor has come forward with
evidence
(rather than bare allegations) that castsdoubt on Defendants' claimed compliance with the nonjudicial foreclosure requirements, a validclaim for relief has been stated, and such a claim no longer be defeated by mere reliance on thenonjudicial nature of the foreclosure process. The details of Defendants' noncompliance withVirginia's foreclosure laws are addressed below.
B.The Deed of Appointment Was Not Executed By The Claimed Secured PartyOr Its Agent.
The Deed of Appointment is signed by one Liquenda Allotey as Vice President for American Home Mortgage Servicing, Inc. ("AHMSI"), as "Servicing Agent for [DeutscheTrust]." Ms. Allotey's signature was apparently notarized by in the State of Minnesota, Countyof Dakota, by Carmela D. Lagarile, a notary public.The Deed of Appointment does not contain even a scintilla of evidence of the purportedagency relationship, such as a Power of Attorney or a Servicing Agreement. AHMSI's authorityto act on behalf of Deutsche Bank (the claimed secured party) is dependent upon the existence of a specified relationship of AHMSI and Deutsche Bank. Absent evidence of agency relationship,the Deed of Appointment is deficient and violates both Virginia Statutes and the terms of theDeed of Trust.
C.The Deed of Appointment Was Fraudulently Executed By An IndividualFalsely Claiming To Be An Employee of AHMSI.
The Deed of Appointment is executed by one Liquenda Allotey as Vice President for American Home Mortgage Servicing, Inc. ("AHMSI"), as Servicing Agent.
 
Adv.C. Exh. D (Deedof Apppointment). In connection with this litigation, Plaintiff had the Deed of Appointment and

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