TEVEN E.

SMITH, SBN 140031 ttorney at Law

355 Topanga Canyon Blvd" Suite 301 oodland Hills, CA 91367

eL - (818)347-1940

ax - (818)347-1930 esmithesq@aol,com

ttorney for Plaintiff I Respondent Salvador Guillen

2

3

4

5

6

7

8

9

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION

10

11

12

DATE: May 16,2011 TIME: 9:30 a.m. DEPT: 650

SALVADOR GUILLEN,

Case No.: 2:U-cv-01561-GHK(VBKx)

I3

Plaintiff,

14

15

vs,

PLAINTIFF'S OPPOSITION TO MOTION TO DISMISS OF DEFENDANT MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.

16

GREEN POINT MORTGAGE FUNDING, INC,,; RESIDENTIAL FUNDING COMPANY, LLC; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC,; RECONTRUST COMPANY, N"A.;

and DOES 1 through 50 inclusive,

17

18

19

20

21

Defendants.

22

23

24

TO THE HONORABLE JUDGE OF THE UNITED STATES DISTRICT COURT, TO THE MOVANT, AND TO ALL OTHER INTERESTED PARTIES:

25

26 Plaintiff Salvador Guillen hereby opposes the Motion to Dismiss of Defendant

27 Mortgage Electronic Registration Systems ("Defendant") to the Complaint without leave

28

Guillen v. Greenpoint Mortgage Funding, Inc, Case No, 2:11-cv-01561-GHK(VBKx) Opposition to Motion to Dismiss

2

Guillen v Greenpoinf Mortgage Funding, Inc, Case No 2:11-cv-01561-GHK(VBKx) Opposition to Motion to Dismiss

to amend.

FACTS RELEVANT TO ALL CLAIMS

3

1

1.

Plaintiff Salvador Guillen ("Guillen') obtained a loan on his home

4

located at 2749 Hill Street, Huntington Park, CA 90255 (hereinafter referred to as the "Property") on or about December 5, 2006, obtaining refinancing from Defendant Greenpoint Mortgage Funding, Inc .. (hereinafter referred to as "Defendant Greenpoint"). Guillen entered into an Adjustable Rate Note on December 5, 2006 in the principal amount of $420,000, a true and correct copy of which is attached hereto as Exhibit "1," and executed a Deed of Trust on the Property, recorded on December 27, 2006, which named Defendant Mortgage Electronic Registration Systems, Inc .. (hereinafter referred to as "Defendant MERS") as Beneficiary.

2. There is no evidence that interest in the Note was ever assigned to a

party other than Defendant Greenpoint. There is no evidence that the note in question was ever assigned to a third party, or that notice of said assignment was ever given to the Plaintiff prior to the initiation of foreclosure proceedings ..

5

6

7

8

9

10

11

12

13

14

15

16

17

3 ..

On or about June 15,2009, Defendants claimed that Plaintiff became in

18

default of the note and recorded a Notice of Default (Complaint, Exhibit "B") Pursuant to the 2008 Peralta Mortgage Relief Act, Defendants were legally required to contact Plaintiff to discuss foreclosure-avoidance options at least thirty days before filing the Notice of Default.. The declaration attached to the Notice of Default pursuant to California Civil Code §2923.5, which concerns the statutory requirement of the "mortgagee, trustee, beneficiary or authorized agenf' to contact the borrower to "assess the borrower's financial situation and explore options for the borrower to avoid foreclosure," is signed by one Annette Kahlari of BAC Home Loans Servicing, LP, an entity which was neither the mortgagee, trustee, beneficiary or authorized agent

19

20

21

22

23

24

25

26

27

28

2

4

Guillen v GreenpointMortgageFunding, Inc .. Case No 2:11-cv-01561-GHK(VBKx) Opposition to Motion to Dismiss

5.

On or about August 10,2010, Defendant MERS purportedly assigned

4. On or about October 19, 2009, Defendants recorded a Notice of Trustee's

2 Sale. (Complaint, Exhibit "C").Again, the attached declaration is signed by a

3 representative of BAC Home Loans Servicing, LP.

5

interest in the Deed of Trust to Defendant Residential Funding Company, LLC (hereinafter referred to as "Defendant Residential") by way of a Corporation Assignment of Deed of Trust recorded in Los Angeles County on August 19, 2010. The signatory

on the Corporation Assignment of Deed of Trust was one "Paula Franklin," identified as "Assistant Secretary" of MERS.

6.. Concurrently with the assignment of the Deed of Trust, a foreclosure sale

was held, in which Defendant Residential claimed that it had purchased the Property, as evidenced by a Trustee's Deed Upon Sale, also recorded on August 19, 2010. Again, one "Paula Franklin" signed the document, this time identifying herself as the "Assistant Secretary" of Defendant Recontrust Company, N.A. (hereinafter referred to as "Defendant Recontrust"), purportedly the trustee employed to handle the foreclosure sale .. Both documents were notarized in Ventura County, California, and Plaintiff is informed and believes that "Paula Franklin" is, in fact, employed by Defendant Recontrust in Simi Valley, California.

6

7

8

9

10

11

12

I3

14

15

16

17

18

19

20

21

L

DEFENDANT'S MOTION IS BASED ON A MISCHARACTERIZATION OF PLAINTIFF'S COMPLAINT

22

23

Defendant argues that the Complaint is "predicated on a fundamentally flawed legal theory: that the foreclosure proceedings were invalid because of the role played by Defendant Mortgage Electronic Registrations Systems (MERS) .. " [Motion, p .. 1] While the shaky legal and ethical role played by Defendant MERS in this and other foreclosures is questioned in the lawsuit, the fundamental premise of this lawsuit as it

24

25

26

27

28

3

pertains to Defendant MERS stems from the actions by itself and the other defendants 2 in the instant foreclosure, These actions include but are not limited to the use of "robo

3 signers" in initiating documents used to expedite the non-judicial foreclosure pursuant to 4 Ca lifo rn ia Civil Code §2924, et seq" affidavits signed under penalty of perjury that were 5 attached to the documents that were nevertheless false and misleading, and that

6 because the documents, such as the Notice of Default and Notice of Trustee Sale,

7 contained false, misleading and perjurious information, the Defendants did not comply 8 with the state laws which allowed them a "comprehensive" remedy to pursue non-

9 judicial foreclosure, These actions bring into question the legality of the foreclosure,

10 regardless of whether it is proper under California law for Defendant MERS to initiate a

11 foreclosure in the first place,

12

13

II,

CALIFORNIA'S TENDER RULE IS NOT AT ISSUE IN THE CIRCUMSTANCES BEFORE THIS COURT

14

15

Defendant MERS argues that the "long-established" tender rule in California requires Plaintiff to repay the full secured indebtedness as a prerequisite to challenge a fraudulent foreclosure, In fact, the tender rule, derived from Abdallah v. United Savings Bank (1996) 43 Cal,AppAth 1101,51 Cal Rptr.2d 286, arose in the context of a claim in that case that the foreclosure trustee had failed to obtain the best possible sales price at foreclosure, an issue that has not been raised in this case, Abdallah, 43 Cal.App.d" at 1109" Imposing the tender rule would be a gross manifestation of injustice in cases where the foreclosure process itself was tainted by irregularities and fraud,

Moreover, California Civil Code §2923,5, the statutory basis of Plaintiff's Ninth Cause of Action, guarantees a right to borrowers that necessarily alleviates any rigidly absolute adherence to the tender rule; to wit, it provides borrowers a right to have foreclosure alternatives proposed prior to the initiation and recording of the Notice of Default.. This was the basis of the recent holding in Mabry v. Superior Court (2010) 185

16

17

18

19

20

21

22

23

24

25

26

27

28

4

Guillen v Greenpoini Mortgage Funding, Inc, Case No 2: 11-cv-01561-GHK(VBKx) Opposition to Motion to Dismiss

2

Guillen v Greenpoint Mortgage Funding, Inc, Case No.2: 11-cv-01561-GHK(VBKx) Opposition to Motion to Dismiss

17

III,

PLAINTIFF CAN RECOVER UNDER ITS INDIVIDUAL CAUSES OF ACTION

3

Cal.App.c" 208, a case cited elsewhere by MERS (see Motion to Dismiss, p. 12) in which the Fourth Circuit Court of Appeal held that the state legislature intended to give borrowers a private cause of action under Civil Code §2923,5 to challenge foreclosure sales. The court held that

"the right conferred by section 2923 5 is a right to be contacted to 'assess' and 'explore' alternatives to foreclosure prior to a notice of default It is enforced by the postponement of the foreclosure sale" Therefore it would defeat the purpose of the statute to require the borrower to tender the full amount of the indebtedness prior to any enforcement of the right to-and that's the point-the right to be contacted prior to the notice of default." Mabry, 185 CaLApp4th at 225,

In this case, Plaintiff has alleged in its Ninth Cause of Action that the foreclosure sale did not comply with the requirements imposed by §2923,,5, as well as related statutes under California non-judicial foreclosure law (see para, 180 et seq", pp,35-41)" The determination of whether Defendants complied with §2923,,5 is an issue of fact, to be decided by the trial court, and not to be resolved according to whether the tender rule is complied with by the Plaintiff"

4

5

6

7

8

9

10

11

12

13

14

15

]6

18

19

Defendant MERS also lists a number of separate arguments, beginning on page 10 of its Motion, that Plaintiff cannot recover on the causes of action he has alleged Mostly, these arguments focus on the same legal argument as before, concerning the alleged non-compliance with the tender rule challenged in Mabry" For instance, MERS cites the decision in Gomes v Countrywide Home Loans, Inc, (2011) 192 Cal.App.d'" 1149, to justify the foreclosure of the property" In Gomes, the actual foreclosure of the property was performed by MERS, in its role as beneficiary, In this case, unlike the situation in Gomes, MERS had assigned the deed of trust to which it was the

20

21

22

23

24

25

26

27

28

5

2

Guillen v, Greenpoint Mortgage Funding, Inc, Case No.2: 11-cv-01561-GHK(VBKx) Opposition to Motion to Dismiss

26

Historically, a technical distinction existed between deeds of trust and mortgages. For deeds of trust, title vested in the trustee. For

3

"beneficiary" to a third party, Defendant RFC, by way of a deed that was recorded after the sale (Complaint, 1163, p .. 15) ..

As to the Ninth Cause of Action for Wrongful Foreclosure, citing Mabry, MERS argues that the declarations attached to the Notices of Default and Trustee Sale need not be sworn by the affiant under penalty of perjury, including the declaration showing compliance with Civil Code §2923.,5.. Although this is a correct citing of Mabry, as far as that goes, it is an irrelevant issue here, since each of the declarations here was signed under penalty of perjury (See Complaint, Exhibit "B," declaration of "Annette Kahlari," and Exhibit "C," declaration of Evan Johnston), That a party may not be legally required to sign an affidavit under penalty of perjury does not give that party license to tell falsehoods, nor does it excuse falsehoods when that party submits affidavits that were purported to be signed by the declarant under penalty of perjury, nor does it legally allow the use of "robo signers" who have no knowledge as to what they are signing in the first place ..

Lastly, in challenging Plaintiff's claim that the foreclosure sale was conducted in violation of California Civil Code §2932 .. 5, and that the defendants had no standing to proceed with a foreclosure, Movant argues that this statute is not applicable in the context of deeds of trust, as opposed to mortgages. However, recently, the Bankruptcy Court of the Southern District of California, in a case also involving a post-foreclosure challenge, ruled otherwise. In the case of Salazar v US" Bank (In re Salazar) (Bankr"SD .. CaI.2011) Case No .. 10-17456-MM13 RS #RVP-1, Dkt Entry No. 54, the court was presented with the same argument presented here: was there a relevant distinction between "mortgages" and "deeds of trust" that precluded the holders of the latter from receiving relief under §2932,,5? The Salazar court decided that there was not:

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

27

28

6

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

mortgages, title remained with the mortgagors" This distinction, however, has been determined to be obsolete" Bank of Italy Net. Trust & Sev. Assn, v Bentley, 217 Cal 644, 656 (1933) (legal title under a deed of trust, though held by the trustee to the extent necessary for execution of the trust, does not carry any "incidents of ownership of the property"); Yufaeva v. Greenpoint Mortg, Funding, Inc"No, S-09-1504, 2009 U,S .. Dist LEXIS 79094, at *4 (ED .. Cal.. Sept 3,2009) (citing 4 B"E. Witkin, Summary of California Law, ch VIII, § 5 (10th ed. 2005)); N, Brand Partners v Colony GFP Partners, LP. (In re 240 N. Brand Partners), 200 B,R 653,658 (B,A,P, 9th CiL 1996) ("The terminology creates a difference without distinction,n);see also 1 Roger Bernhardt, California Mortgages, Deeds of Trust, and Foreclosure Litigation, § 1,35 (4th ed 2009); 4 Harry D, Miller

& Marvin B" Starr, Miller and Starr California Real Estate, § 10: 1 n 9 (3d 2010) (citing Domarad v Fisher & Burke, Inc, 270 Cal.. App 2d 543, 553 (1st Dis! 1969)) (mortgages and deeds of trust have the same effect and economic function and are "subject to the same procedures and

limitations on judicial and nonjudicial foreclosure"). [footnote omitted]

The outdated distinction between mortgages and deeds of trust is especially moribund in the context of borrower's rights in the nonjudicial foreclosure context, such as the borrower rights protected by Civil Code section ~~'~?T§, Bank of Italy, 217 Cal at 658 ("[I]mportant rights and duties of the perties should not be made to depend on the more or less accidental form of the security."); Dimock, 81 Cal. App 4th at 877 ("[The title distinction] has been ignored in order to afford borrowers with the protection provided to mortgagors,") .. Civil Code section ~g~?:§ protects borrowers from confusion as to the ownership of their loans" Stockwell, 7 Cal. App at 416-17; Bank of America, 129 Cal. App 4th at 712 (citing 4 Harry D" Miller & Marvin B .. Starr, Miller and Starr California Real Estate, § 10:123 (3d ed. 2003)) ("Statutory provisions regarding the exercise of the power of sale provide substantive rights to the trustor and limit the power of sale for the protection of the trustor H); see also Civ Code §§ 2935-

7

Guillen v Greenpoint Mortgage Funding, Inc Case No 2:11-cv-01561-GHK(VBKx) Opposition to Motion to Dismiss

2

2937 (Deering 2010) providing requirements for the transfer of interests of indebtedness on residential real property that put borrower on notice). Civil Code section 29~:2.§ must therefore be applied to deeds of trust to ensure trustors are provided the same protection as mortgagors under California law.

Thus, Salazar stands for the proposition that since borrowers have a right to know who holds their loans, the foreclosing entity may proceed only if it has a recorded assignment giving public notice in the chain of title, and that this requirement, mandated under Civil Code §2932.5, exists regardless of whether the instrument was a mortgage or deed of trust More importantly, the historical distinctions between "deed of trust" and "mortgage" that buttressed the earlier opinions holding otherwise were no longer relevant

IV

PLAINTIFF IS AMENABLE TO FURTHER AMEND THE REMAINING CAUSES OF ACTION

17 Defendant MERS asserts that the remaining causes of action are insufficiently

18 pled. If it be so, Plaintiff is amenable to amending said claims to comply fully with

19 federal requirements, and seeks leave to amend.

3

4

5

6

7

8

9

10

II

12

13

14

15

16

20

21 Dated: May 4, 2011

22

23

24

25

26

27

28

STEVEN E .. SMITH

A ~y at Law

VEN E SMITH Attorney for Plaintiff

8

Guillen v Greenpoinl Mortgage Funding, Inc, Case No 2:11-cv-01561-GHK(VBKx) Opposition to Motion to Dismiss

20

21

22

24

25

27

28

2

PROOF OF SERVICE

STATE OF CALIFORNIA

) ) )

55.

3

COUNTY OF LOS ANGELES

4

I, SONIA GOMEZ, declare:

5

I am employed in the County of Los Angeles, State of California.. I am over the age 0 eighteen (18) years and not a party to the within action My business address is 6355 Topanga Canyon Blvd", Suite 301, Woodland Hills, CA 91367,

6

7

8

On May 4,2011, I served the foregoing documents described as PLAINTIFF'S OPPOSITION TO MOTION TO DISMISS; REQUEST FOR JUDICIAL NOTICE

9

on interested parties in said action by placing a true copy thereof enclosed in a sealed envelope addressed as follows:

10

11

Attn: STEVEN A. ELLIS, ESQ. ALISON M. NORRIS, ESQ. SHANNA M. RAMS OWER, ESQ. GOODWIN, PROCTER, LLP

601 South Figueroa Street, 41st Floor Los Angeles, CA 90017

12

13

14

15

lliJ BY REGULAR MAIL - enclosed in a sealed envelope with postage thereof fully prepaid, in the United States Mail at Inglewood, California,

[] BY PERSONAL SERVICE

lEI BY ELECTRONIC FILING SERVICE

16

17

18

19 I declare under penalty of perjury under the laws of the State of California that the above is true and correct..

Executed May 4,2011, in Woodland Hills, Calttornla. '""\

23

26