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Def Aff and Argument Against Plain MSJ

Def Aff and Argument Against Plain MSJ

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Case: CASE NO.: 08 CA 50630





Comes now the Defendant, Connie Denney, by and throufh undersigned counsel and pursuant to Fla.R.Civ.P. 1.510 files her affidavit and argument in opposition to Plaintiff's Motion for Summary Judgment filed on or about March 18,2009 and states:

1. It is axiomatic that the summary judgment standard requires that this Court resolve questions of genuine material fact and all inferences in favor of the non-moving party.

2. Plaintiff seeks to foreclose on a mortgage and collect on a promissory note both evidencing a principal loan in the amount of $347,750.00. The mortgage recorded in the Lee County Clerk's Official Records, instrument number 2007-000109478, reveals documentary stamps paid on the principal loan amount; this is a genuine issue of material fact preventing summary judgment in this case.

3. Plaintiff's Motion for Summary Judgment includes a supporting affidavit from Cheryl Samons, allegedly the "attorney-in-fact" on behalf of Indyrnac Federal Bank, f.S.B. FIK.fA Indymac Bank,

I Attached as Exhibit "1"


f.S.B. The Affidavit indicates that the amount owed to Plaintiff is $364,908.40; therefore there is $17,158.40 that Plaintiff must pay before this case can proceed any further. FLA. STAT. Ch. 201 et seq.; Department of Revenue v. Pinellas VP. LLC, 3 So.3d 361 (Fla. 2d DCA 2009); Somma v. Metra Elecs. Corp., 727 so.2d 302, 304 (Fla. 5th DCA 1999)(promissory notes for which documentary stamps have not been paid are as a matter of law unenforceable by any Florida court); but see, Suntrust Bank v. Hamway, 2010 WL 146858 (S.D.Fla. 1/11/10) Exhibit 2 .

4. Defendant executed agreements without knowledge of their true nature or content and/or the lender misrepresented the terms of the written agreements to trick her into executing the agreements. As such, it is Defendant's good faith belief that this entire alleged loan was void ab initio as it was the product of fraud in the factum. For example, Ms. Denney is not a signor on the alleged note in this case but merely a signatory to the mortgage. The signor of the pnote2 is a scoundrel who colluded with Plaintiff and/or its agents and assigns in order to rob the equity from Ms. Denney's homestead and leave Ms. Denney destitute; Ms. Denney believes the original lender, and/or its agents, assigns, affiliates, servicers, nominees, in this case misrepresented the terms of the p-note and/or mortgage in this case to induce her to enter into the agreement; this is also a genuine issue of material fact precluding summary judgment.

5. The Plaintiff appears to be a foreign resident (California) and not doing lawful business in Florida pursuant to Florida Statute §607.l502(l), the Plaintiff must be denied relief in the state courts of Florida due to its failure to allege that it possesses a certificate of authority allowing it to maintain a proceeding in any court of this state; this is also a genuine issue of material fact. Cadillac FalIview Corp. v. SWD, inc. 343 so.2d 933, 934 (Fla. 3d DCA 1977).

2 "p-note" is defined as "promissory note". 2

6. . Defendant's belief is based, inter alia, upon the attached July 9,

2009 deposition excerpts from Erica Johnson-Seck \n Indymac Federal Bank, FSB v. Machado, Case No. 50 2008 CA 03732XXXX MB AW, (Fla. 15th Cir. Palm Beach County, Fla.) attached as Exhibit "3" to the contemporaneously filed & served Request for Judicial notice.

7. Seck is the alleged signor on October 28, 2008, as a "vice president" ofMERS, of the assignment of the mortgage in this case that is recorded in the Lee County Clerk's Official Records as, instrument # 2008000335267 on December 24, 2008 at 10:25 a.m. for a $10.00 recording fee. See exhibit 2 to Request for Judicial notice.

8. Seck testified that she is a VIce president of banlauptcy and foreclosure with OneWest Bank that she used to work for Indymac Bank FSB until July 11, 2008 when it ceased to exist because the Federal Depository Insurance Company (FDIC) and Indymac Federal Bank, FSB "took over" . Depo.5:1-25.

9. Seck testifies that where an investor does not agree to cover future advances the bank servicer decides to foreclose on particular property or properties. 9:25- 10:11-134•

10. Seck testified that FDIC prohibited "the outsource vendor" so now document signing IS in-house and that she had "peers" in other departments who can assign as an "alternative to" her signature. depo 111: 19-12:24.

11. Seck testified that she signs approximately 750 documents a week, including lost note affidavits, affidavits of debt or "anything related to a bankruptcy or foreclosure" Seck said she used to spend

3 Hereinafter "Seck"

4 This testimony is appears to imply that the investor must be a party to this case.


about 2 seconds signing document now she spends 30 seconds because of a "QC process" She does not check the validity of the figures because the outsource vendor "LPS" "spot checks" 1 0% of the documents. Seck depo 13:13- 15:25.

12. Seck testified the procedure for her to sign the documents after the "QC" process is to quickly look to see if she can sign for the entity named in the document then it is notarized and LPS uploads the document so that the [law] firms know it's available and they send an original." Seck depo 173:3.

13. Seck essentially testified that there is a one week "document delay" between her acquiring a document to sign, getting it notarized and uploaded. The notaries do not see her sign the documents'. Most of the time her signature is not witnessed Seck depo 19:13-22: 10 (emphasis added).

14. LPS does not verify values in the documents it produces. It does a "screen scrape." Seck depo 24: 1-4

15. Seck testified that a 60 -120 day delinquent loan is "ripe for referral" to LPS who then sends to file to a stable of preferred attorneys (that she manages); 60 days would be for investors like Deutsche Bank pursuant to their Pooling & Servicing Agreement with the trustee bank; whereas government investment loans like Freddie and Fannie would be 120 days. Seck depo 25:2-26:22.

16. Seck stated that when the delinquent loan is in a "original note state like Florida ... Onewest begins its search for the original note. A Florida loan goes into a "queue" to an LPS "on-site" employee, Sylvia, located in Pasadena [CA]. 26:23-28:5.

5 This is a third degree felony in Florida see, Fla.Stat. § 837.02. Defendant believes that Seck is charging a large premium for her testimony in light of the criminal repercussions set forth in Florida Statutes.


17. Seck testified that Deutshce Bank is one of the biggest custodian of documents but that it was not necessarily the custodian of a particular p-note where it is the investor; Wells Fargo or another entity could be the custodian. Seck depo ·227: 16-29: 7 . (emphasis added).

18. "Sylvia" then e-mailed a "list" to Seck to approval for document release but that changed. As of Seck's deposition date 7/9/09, according to her, the process was changed so that Onewest's treasury department, apparently over seen by a "Sandy Schneider", approved release of original documents that are then sent via FedEx or UPS to Sylvia who then turns around and sends a bailee letter to the approved attorney via UPS. If the note is not sent to Onewest with 21 days "we send a request to the firms to prepare lost note affldavit.t" Seck depo 31:6-35:1.

6 A lost note affidavit must comply with Fla. Stat. § 673.3091,entitled "Enforcement of lost, destroyed, or stolen instrument."

{l) A person not in possession of an instrument is entitled to enforce the instrument if:

( a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred) or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

(b) The loss of possession was not the result of a transfer by the person or a lawful seizure; and

(c) The person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unlmown person or a person that cannot be found or is not amenable to service of process.


19. Seck testified that Onewest lost more p-notes during the FDIC receivership so there were more lost notes affidavits; but, since they are "Onewest Bank" she "can't remember doing a lost note affidavit. Seck depo. 37: 17- J8:24.

20. Seck testified that in June, 2009 Onewest referred 12,000 cases to foreclosure litigation. 39: 5-1 o.

21. Seck testified that that in Florida in the Fall of 2008, Sylvia would ask for a Lost Note Affidavit through the LPS system and through Onewest Bank's system. The only time the bank attorney would know the p-note was lost is through this process. Seck depo 5: 14- 51:17.

22. Seck identified Deutsche Bank as the investor and Onewest as the servicing agent. Seck agreed neither Onewest, Indymac Federal Bank, FSB nor JndyMac Bank, FSB owned the note and mortgage because the loan had been securitized into a trust; Deutsche Bank National Trust Company as trustee owned the loan and is called "the investor" on Onewest's computer system. 51: 18-54: 11.

23. Seck's testimony in the Machado case demonstrates that the loan was securitized into the IndyMac INDX Mortgage Trust series 2006-AR4 and that the pooling and servicing agreement (hereinafter PSA) dated, March 1, 2006 governs the relationship between Onewest and the trustee- even though the pleading in Machado do not indicate that a "trust" held the beneficial interest in Machado's property. Seck depo 54: 1- 55 :6.

(2) A person seeking enforcement of an instrument under subsection (1) must prove the terms of the instrument and the person's right to enforce the instrument.


24: Seck testified that there are 2 loss "mit" [mitigation] programs outside of the contractual restrictions in the PSA regarding loan modification: "Obama's RAMP" and FDIC's "loss mit program". HAMP is administered by Freddie Mac or Fannie Mae and requires a 31 % debt to income ratio (hereinafter DTI) and "catastrophic" reasons for default; it can include principal reduction. FDIC's program does not include principal reduction. 57:1-61:14.

25. Seck testified that the bank's "law finn" prepared the Affidavit of

Debt. That the firm would have obtained the amount owed from a computer' that calculates unpaid principal balance. The computer "projects" out the payoff/unpaid principal amount at an unlmown variable rate''. 63: 15-71 :8.

26. Seck testified that Onewest has a quality control process regarding the generation of pay-off figures. The document is uploaded by

7 GIGO is a well known acronym for "garbage in -garbage out" that means when a data entry is erroneous the product of that data entry shall also be erroneous. "Computer industry axiom signifying that no matter how sophisticated an information processing system is, the quality (accuracy, completeness, relevance, timeliness, etc) of the information corning out of it cannot be better than the quality of the information that went in. A program working on inaccurate data will only yield misleading results." ht1J):llwww.businessdictionary.comldefinitioni garbage-in-garbage-outGIGO.html. Defendant has a good faith, reasonable belief that Plaintiff's "QC" system is materially flawed because it is inherently illogical; i.e. the "fox guarding the henhouse". How can a quality control process "selfcheck" itself?

8 This testimony reveals the necessity for a business record custodian to testify, orally or through an affidavit, as to the authenticity of the records relied upon to determine the "amount owed" for purposes of preparing an Affidavit of Indebtedness to support Final Summary Judgment.


the law finn back through LPS system for the document to get signed, the document is printed in Minnesota and shipped to her in Austin Texas. If the document has a "little sticky", which represents that a "foreclosure specialist" has indicated that the payoff figure is correct, Ms. Seck does not "double check the numbers". In fact, Ms. Seck testified that she never verifies the payoff figure because "I just look for that sticky so that I know that the person I charged with checking it is doing what I expect them to do." And admitted that "errors are made" and when the error is not caught that "Onewest take[s] losses" Seck depo 69-72.

27. Seck agreed that IndyMac Bank ceased to exist in July, 2008 and

that it could not be the servicer of a loan on December 15, 2008; likewise IndyMac Bank could not be a servicer of the loan in this case on October 28, 2008, the date the "assignment of mortgage" in this case was signed by Ms. Seck as ''vice president" ofMERS. Seckdepo.74:10-76:17.

28. IndyMac Federal Bank, FSB was sold on March 19, 20099 via FDIC to Onewest Bank, a California federaIIy chartered, newly formed federal savings bank. See Exhibit 4.

29. Seck testified that "as of May 19, 2009, I could only do attorney-

in-fact for fudyMac, IndyMac Federal and FDIC as receiver and FDIC as conservator." 83:8-84:4.

30. Seck testifies that Jndymac Federal Bank was not the legal owner of the promissory note; rather it is owned by Deutsche bank. 93:4- 13; 100: 1-17.

31. Seck agrees that the banks lawyer's answers to Interrogatories are false because the loan was securitized and agreed that from day

9 Plaintiffs three (3) affidavits in support of its Motion for Final Summary Judgment are all conveniently dated March 18, 2009; one day before Onewest acquired IndyMac Federal Bank, FSB.


one the law firm, Florida Default Law Group, knew who the trustee was and they knew what Pooling and Servicing agreement governed the trust. 109-110.

32. - Seck admitted that foreclosure could not be brought by MERSwhich is why [they] have to assign it out of MERS for the legal action. Seck also admitted that Onewest could not sue in the name of the true owner Deutshce Bank. 121:3-123: 14

33. Seck provided a Limited Power of Attorney (LPOA) for Deutsche Bank; a LPOA for IndyMac Federal Bank dated 10-9-08 and a Deutsche Bank LPOA for Onewest Bank dated 4-6-09; she indicated that the trust in that litigation is in list of trusts on the LPOA. 162:15 - 163:17.

34. In fact in Machado, Seck agrees that fudyMac, the original lender transferred beneficial ownership to Lehman Brothers Holdings, Inc. on March 18, 2006 and a few weeks later beneficial interest is transferred to Deutsche Bank Trust Company as Trustee. 139:5- 141:10

35. Seck also agrees that MERS never had the p-note and therefore never transferred beneficial interest in that note because it never had a beneficial interest in the p-note.l43:11- 152:10.

36. Seck then agreed that Judge Schack of Kings County, New York had demanded that Deutsche Bank produce an affidavit from her that documented her employment for the last 3 years; an Order with which she has failed to comply by not producing said affidavit. 154: 1-156: 1 I.

37. The Order discussed in paragraph 34 was entered by Judge Arthur M. Schack on February 6, 2009 in the case: Indymac Bank, FSB v. Bethley and Rosado et al., 2009 NY Slip Op 50 186(U)[22 Mise 3d 1119(A)].


38. Seck then testifies about how the payoff/total indebtedness figure arrive; they come from a "green screen" aka "areas of the system that can be manipulated" and that defense counsel would just ''have to take her word for it" she has been working in the same system for 18 years"' o. 173-177:2.

39. The program that the data is stored in is caIIed "MSP Fidelity" which Seck believed changed its name back to LPS, but that is different from LPS Default Solutions, their "outsource vendor". The companies had previously all been under the same company, "MSP Fidelity" and the outsource vendor was Fidelity and the system was Fidelity but "they" would refer to the system as MSP to "differentiate" . Lender Processing Services is the "system of record" which was previously owned by Default Solutions which was a 3rd party vendor foreclosure services provider. 177: 1-178:9

40. Seck testifies that Onewest told its attorneys what entity to sue and what claims should be made. She testified that at the time the referral to foreclosure attorneys it made by Onewest they wouldn't mow if a lost note count would be necessary; 191:8 - 193: 2.

41. Seck also testified that "there are no contracts between Onewest Bank and Florida Default Law. It's all built on relationships and scorecards ... ". Essentially Onewest grades its lawyers "score" based on the number of uncontested mortgage foreclosures the lawyer handles. "kind of like grades ... " 195: 1-18

42. Seck explained that the reason that the investor is not named as plaintiff in a foreclosure action is because "investors usually don't

10 Defendant Canney demands to know exactly what data. was used to populate the "payoff screen" which lead to the "payoff amount" a.k.a. "amount of indebtedness" IndyMac is claiming she owes to any legal entity for the repayment of the loan alleged in Plaintiff's Complaint, Motion for Summary Judgment & its Three (3) supporting affidavits:


want you to do the action in their name." because their expectation is that the servicer ... service the loan, which includes the good and the bad and if there is ever a lawsuit the bank will handle it. .. " She explains that the investor doesn't pay "Onewest would eat the fees .... " 199:1-200:25.

43. The Machado case was filed on November 21,2008 in the name of Indymac Federal Bank, The MERS assignment was dated December 2, 2008. Seck attempted to explain why the bank did not wait until it had the MERS assignment to sue the homeowner. However, she analogized the explanation of why the bank didn't wait to figuring out the winning number in a 10 ttery.2 0 1 :9-203:16.

44. Seck agreed that if the bank did wait there would be a reduction in lost p-note counts because the p-note would be with the servicer. 204:3-8.

45. Seck testified that she never signed anything "in blank" 207: 13- 16. Seck testified that the only time the "LPS" folks put a different name than hers on a legal document it is because she is on vacation. 208-209.

46. Seck agreed that the Deutshce Bank's LPOA specifically withheld from Indymac the ability to commence or defend litigation on its behalf. 211: 14-212:23.

47. Plaintiff's counsel in this case, Law Office of David J. Stem, P.A. ("DJS"). DJS employs "Cheryl Lynn Samons" and has done so since approximately mid-199511 •

II Ms. Samons deposition was taken in the case Deutsche Bank National Trust Company, as Trustee for Morgan Stanley ABS Capital 1, Inc. Trust 2006-HE4 v. Belourdes Pierre et aI., Case No.: 50-2008-CA-028558 XXXX MB. By the Pierre's attorney, Thomas Ice, Esq .. Attorney Ice also took Seck's deposition in the Machado case as noted in the preceding paragraphs. Defendant has requested that this Court take notice of this case file.


48. Samons testified that she was not an officer nor an assistant secretary of ABN Amra Mortgage Group, Inc. but admitted that she signed an assignment of mortgage as the assistant secretary to Abn Amra Mortgage Group, Inc.28:19-30:1512• Samons testimony establishes that she is not an employee of MERS. 38:16-40:12. That the lender and investor are not necessarily the same. 58;19- 25. Not one person at DJS checked with MERS before preparing an assignment. 61 :25-62: 14. She did not think: that she had a duty to make sure MERS complies with its fiduciary duty 65:11. She also stipulate that 20 assignments of mortgage she signed as a MERS vice-president were executed by notaries whose stamp was not in existence at the time she signed the assignment 99:4-112:3

49. "Business records" are records that are "self-authenticating" to the extent provided in the UCC pursuant to Fla.Stat. § 90.902(8) so long as the record was not created primarily for use as "evidence of its own authenticity.

50. FLA. STAT. § 90.80313(15) provides that If the business record is alleged to be a "testament?" to its own identity as an authentic

12 This assignment of mortgage is recorded in the official records of Palm Beach County at Book 22851, page 1592 and is contained in the contemporaneously filed Request for Judicial Notice in this case ..

13 This section has been held unconstitutional by Federal and Florida State courts. Conner v. State, 748 So.2d 950, 951 (Fla. 1999); State v. Hasty, 944 So.2d 255,255+ (Fla. 2006); Boland v. Secretary, Dept. a/Corrections, 278 Fed.Appx. 876, 877+ (11th Cir.(Fla.) May 15, 2008); In re Commitment of Cartwright, 870 So.2d 152, 154+, 29 Fla. L. Weekly D259, D259+ (Fla. 2d DCA 2004); State v. Hasty, 835 So.2d 1202, 1203+, (Fla. 4th DCA 2003) State v. Abreu, 837 So.2d 400 (Fla. 2003); Grabau v. Department Of Health, Bd. of Psychology, 816 So.2d 701, 702+ (Fla. I st DCA 2002) Jenkins v. State, 803 So.2d 783, 784+, (pla.5th DCA 2001);prior version recognized as unconstitutional by, Price v. City of Boynton Beach, 847 So.2d 1051, 1052+(Fla. 4th DCA 2003).


document, without further authentication, the Plaintiff has not met its burden of proof. The business record exception to the hearsay rule, forces this Court to shift the evidentiary burdens traditionally shouldered by Plaintiff.

51. The Second District Court of Appeal recently excluded timely objected to "unauthenticated business records" in Armstrong v. State, 2010 WL 3155021 (Fla. 2d DCA Aug. 11, 2010)15. In this fraudulent use of a credit card case, the Armstrong Court was faced with the following facts:

at trial, the State offered as evidence printouts of her account transactions for the relevant time period. Lewis had downloaded and printed this evidence of the transactions in her account from her bank's website. The State sought to present these transactions to her for identification and to establish which were unauthorized. Armstrong's defense counsel objected on hearsay grounds because the State had not produced a records custodian to testify to the authenticity of these records as required by section 90.803(6)(a), Florida Statutes (2007), nor had the State provided an affidavit to self-authenticate them as permitted by section 90.902(11). The trial court overruled the hearsay objection and allowed the printouts into evidence. The State presented no other evidence of the unauthorized transactions for which amounts the bank had reimbursed Lewis. The jury convicted Armstrong as charged.

10 WL 3155021; p. 2.

The Armstrong Court reversed and remanded for a new trial because the Plaintiff failed to establish that the evidence was a business

14 Defendants suggest that if the business record was created with the expectation that it would be used as evidence in a civil case, it should be classified as "testimonial" pursuant to Crawford v. Washington, 124 S.Ct. 1354 (1985). See, Professor of Law, Fishman, Clifford, Crawford v. Washington: the New (Old?) Confrontation Clause, A Supplement to Replace Chapter 6 of A Student's Guide to Hearsay (2d ed., (2004).

15 This opinion is not final. It is attached as Exhibit 6.


records exception and "[T]he bank statement ... is ... hearsay as the downloaded and printed-out evidence used against Armstrong here.

Id. at p.3.

52. The uec imposes a duty of good faith, in performance and enforcement, upon the parties to a transaction that is governed by the UCC. In Florida the duty of good faith is found in FLA.STAT. § 671. I 02(2)(b) and FLA.sTAT. § 671.203. It is Defendants position that Seck and Samons above described testimony of the pre-suit & post filing "process" of identifying the p-note maker and "creating" the documents of title the Plaintiff must have in order to prevail on the claims in this case is not performed in good faith. This creates a material issue of fact.

53. The Plaintiff is required to prove with competent admissible evidence that the "signor" who appear on the altered promissory note had the authority to sign for the company allegedly represented. Plaintiff must provide admissible evidence of Cathy Powers's authority to sign on behalf of Jndymac Bank, FSB, Inc. on the date that she allegedly executed the document. Defendant's position is that the Plaintiff has completely failed to meet its evidentiary burden of proof that Powers is a authorized "signor".

54. FLA. STAT. § 671.202, entitled: " Prima facie evidence by thirdparty documents" read as follows: "[a] document in due form purporting to be a bill of lading, policy or certificate of insurance, official weigher's or inspector's certificate, consular invoice, or any other document authorized or required by the contract to be issued by a third party is prima facie evidence of its own authenticity and genuineness and of the facts stated in the document by the third party." The p-note is not a "third party document" in this case because it was generated by Onewest's predecessor, JndyMac Bank , FSB which is not a "third party" to the alleged subject transaction in this case.


55. Although FLA.STAT. § 673.3081 entitled "[pjl'roof of signatures and status as holder in due course", provides that (1) In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature. If an action to enforce the instrument is brought against a person as the undisclosed principal of a person who signed the instrument as a party to the instrument, the plaintiff has the burden of establishing that the defendant is liable on the instrument as a represented person under s. 673.4021(1).

Defendant, Denney, disputes the validity of the "signature" of Cathy Powers on the alleged p-note in this case so Plaintiff must establish the authenticity of the signature in this case. There is absolutely no evidence that Defendant is the undisclosed principal of the maker of the p-note. This creates another genuine issue of material fact.

56. Plaintiff alleges that it is the "servicer for the owner and acting on behalf of the owner with authority to do so [plaintiff] is the present designated holder of the note and mortgage with authority to pursue the present action." Plaintiff also brings a "lost note" count. The P-note that is filed on July 27,2009 contains markings that completely spoil its evidentiary value pursuant to the doctrine of spoliation of evidence; this creates a genuine issue of material fact.

57. Plaintiff failed to comply with National Housing Act, 12 U.S.C. § 1701x(c) (5) that requires Plaintiff to complete pre-foreclosure counseling for Defendant. As qualifying homeowner, Defendant should have been notified of her eligibility for this counseling when she first fell behind in mortgage payments. Instead Plaintiff



ignored Defendant's repeated attempts to inquire about said

counseling. Plaintiff has an affirmative duty to provide the preforeclosure counseling, its failure to so provide said counseling prevents a foreclosure action.

58. The alleged loan transaction upon which this foreclosure action is based, including any promissory note in connection with the mortgage foreclosure is subject to the provision of the Truth in Lending Act 15 U.S.C. § 1601-1641 and RegulationZ, 12 C.F.R. § 226 and as such is subject to the rescission provision in the act at 15 U.S.C. § 1635, and Regulation Z at 12 C.F.R. § 226.23. Defendant exercised her right to rescind pursuant to 12 C.F .R. § 226.33(b). Defendant timely sought rescission of this alleged debt on August 27,2009 as set forth in Composite Exhibit 7. Onewest in its specious response to Ms. Denney's demand for recession threatened her with unfair debt collection practices.

59. It appears to Defendant that the alleged mortgage and note were securitized 16investment products; as such, these products would need to be in compliance with Florida Blue Sky laws with all applicable state regulations met. Upon information and belief the alleged securitized investment products do not meet Florida Blue Sky law requirements and therefore enforcement should be denied and this foreclosure should be dismissed.

60. In addition, the costs and fees being charged in the alleged note and mortgage are usurious under Florida law section 687.03 and as such in equity the court may in its discretion deny foreclosure.

61. Upon information and belief Defendant alleges payment by a third party in particular insurers and/or the US government Troubled

16 Exhibit 8 is a January 14,2005 opinion letter from Daniel Stipano, Acting Chief Counsel, Comptroller of the Currency that evidences the united States' position regarding a real estate investment trust's standing to enforce claims such as those brought in this case.


Asset Relief Program (T ARP), which would terminate a mortgagee's right to foreclose.

62. The alleged mortgagee has behaved with unclean hands by refusing to accept rescission funds from defendant and by spoiling material evidence in this case specifically the alleged promissory note.

63. Plaintiff provides an affidavit that is ambiguous. Affiant swears in #3 of Affidavit in support of Plaintiff's motion for summary judgment, that, the affiant has been provided with the business records of the Plaintiff concerning the Note and Security Agreement, and that such information was made at or near the time by, or from information transmitted by, a person with knowledge but fails to state that the Affiant is the actual person. Otherwise, information passed on to the Affiant is hearsay and inadmissible to prove an essential element of this action.

64. Plaintiff, in its Motion for Summary Final Judgment, # 3, states that the Plaintiff holds or indicates by assumption that the note is in the possession of the Plaintiff. Dee Section 3-110(a) "[t]he person to whom an instrument is initially payable is determined by the intent of the person, whether or not authorized, signing as, or in the name or behalf of, the issuer of the instrument. Revised Article 9 and Article 3 of the uee (Negotiable Instruments) allow enforcement when the note has been lost, before or after the transfer to an assignee, or is simply unavailable. Section 3-l09(a) provides that a person not in possession of an instrument is nonetheless entitled to enforce it if the instrument was destroyed, lost or in the wrongful possession of an unlmown person. However, under § 3-309(b) the person seeking enforcement, if not the holder of the note, must prove the terms of the instrument and the person's right to enforcement, and also must provide "adequate protection" to the debtorlborrower to prevent the debtorlborrower from paying the same debt twice.


65. In this case, Ms. Samon's affidavit indicates that the Plaintiff did not hold the original note in paragraph #4. There is no record evidence that Plaintiff has ever held the original note and was entitled to enforce it when it was lost.

66. Defendant believes that without production of the original note, or the identity of the true holder in due course, a potential invisible lender scenario is present. Defendant believes that there might be evidence of a claim by an investor/purchaser of the subject note with the Insurance carrier identified in the pooling and services agreement as required under an SEC filing.

67. Defendants further defend that the alleged "promissory note" fails to fulfill the criterion of uec § 3-104, as enacted in Florida Statutes § 673.1041 "that the undertaking be to pay a fixed amount of money." The promissory note in this case provides for the payment of a fluctuating sum because it is an "adjustable rate note" so that it is not a negotiable instrument pursuant to Florida Statutes § 673.104. Because the promissory note is not a negotiable instrument uec 3 is inapplicable.

68. However if uee 3 is found to apply to the subj eet promissory note; said note is not dishonored until the maker refuses to pay it when a presentment of the note is made. Florida statutes § 673.5021. Defendant, pursuant to Florida statutes § 673.5011, demands presentment. Presentment must be performed by a person entitled to enforce the subject promissory note pursuant to Florida statutes § 673.5011. Defendant affirmatively disputes the legitimacy of the "endorsement" on the alleged "original promissory note" and demands admissible evidence revealing the authority of Ms. Powers, the two people whose stamps were used for the alleged endorsements, to effect "transfers" of this promissory note. Until there is such a presentment of the original promissory note by a person entitled to enforce the instrument


defendants obligations, if any, under the subject promissory note are suspend pursuant to Florida statutes § 673.3IOl(2)(b). Defendant affirmatively states that the plaintiff is not a person entitled to enforce the instrument within the meaning of Florida statutes § 673.5011.

69. Defendant, Denney, contends that in the event an insurance claim was entered as a result of the failure of the note requirements, and such claim was awarded to the investor, than there exists no claim for damages as all parties through plausible deniability have no interest nor claim to subject note.

WHEREFORE Defendant requests that the Plaintiffs motion for

summary judgment be denied because there are multiple material issues of fact that would preclude an entry of Final Summary Judgment in this case and Defendant has not offered admissible evidence of its claims in this case.

Mack, Esquire

~ .. ~~'--n,_ LA W FIRM CHARTERED 2022 Placida Road

Englewood, Florida 34224-5204 (941) 475-7966

(941) 475-0729 facsimile

J acqulyn@MackLawFirm.org Florida Bar Number: 0134902 Attorney for Defendant Denney


I, hereby certify that a true and correct copy of the~going was

served via facsimile, email and U.S. Mail this / ;2- day of

I ,

August, 2010.



Danielle Parsons, Esq.

Law Offices of David J. Stern P .A. 900 South Pine Island Road, Suite 400 Plantation, FL 33324-3920 dparsons@dstern.com

(407) 992-7172 (fax)

Robert C Hill Jr P A PO Box 1086

Fort Myers, Florida 3390: (239) 332.2996-tele (239)332.7483- fax rhil1@attyhilI.com





Case: CASE NO.: 08 CA 50630




Defendant Connie Denney Affidavit in Opposition to Plaintiff's Motion for Summary Judgment


COUNTY OF b.. -ee..,

BEFORE :ME, the undersigned authority, personally appeared Connie L.

Denney, who, first being duly sworn, deposes and says the following facts are true based on hislher own personal knowledge:

1. My name is Connie L. Denney;

2. I am. over 18, and I know the meaning of an Oath;

3. I did not sign the promissory note that is alleged to be in default in this case.

4. I have reviewed my attorney, Jacqulyn Mack, response to the Motion for Summary Judgment of Foreclosure in this case and I swear and affirm that all factual statements in that response are true and correct based upon my personal knowledge of those facts.

Page lof2

The foregoing instrument was sworn to and subscribed before me this

I Y day of A:u_Q , 2010, by CDnn-' t.. 1le nn"t'~ • who [ ] is personally

known to roo:; or,l-l' hit pr~L 500 -II:; -50. ~ i~ntification,

Notary Public: U.J..e,g:;V j;)eJze.. Of ..... . CELESTE BlAKE

Printed Name' C £ lesk. (Q1~e,. ~~ MYCOMMISSIONIDD846864

, _:_ :_- - EXPIRfS:DEC1B,2012

Notary Commission No.: b D LJ {o5r(pLj .. ~ BonIIed1lroughlslStm~1UIIJg

My Commission Expires: PM.. 1~(}DJa-

Jacqul Mack, Esquire


Englewood, Florida 34224-5304 (941) 475-7966

(941) 475-0729 facsimile

Florida Bar Number: 0134902 Attorney for Defendant Denney


I, hereby certify that a true and correct copy of the foregoing was served via facsimile, email and U.S. Mail this l] r- day of August, 2010 to all

counsel indicated below, .t:::

Jacqulyn ck, Esquire

Danielle Parsons, Esq.

Law Offices of David J. Stern P.A. 900 South Pine Island Road, Suite 400 Plantation, FL 33324-3920 dparsons@dstem.com

(954)319.7121 -tele

(407) 992.7172 (fax)

Robert C Hill Jr P A POBox 1086

Fort Myers, Florida 33902- (239) 332.2996-tele

Page 2 of2

(239)332.7483- fax rhiIJ@attyhilI.com

Page 2 of2

_.., ... .., T' ~ l. ""TV\') -' \,)

Page 1 of 11

Not Reported in F.Supp.2d, 2010 WL 146858 (S.D.Fla.)

Motions, Pleadings and Filings View Markman Order version

Only the Westlaw citation is currently available ..

United States District Court, S.D. Florida.

SUNTRUST BANK, a Georgia corporatlcn. Plaintiff, v.

James HAMWAY, an individual; Carole Hamway, an individual; Albert Hamway, an

individual; Margaret D. Balzer, an individual; and Hamway Flooring, tnc., a Florida corporation, Defendants.

No. 09-61323 ... CIV.

Jan. 11, 2010.

West KeySummary IIKeyCite Citing References for this Headnote

~92B Consumer Credit

;:.=. ... 92BII Federal Regulation <.=92BII(A) In General

v.-92Bk31 k. Equal credit opportunity. Most Cited Cases

Signature of the wife of the sale officer and director of a company on a guaranty did not void the guaranty on a loan to the company under the Equal Credit Opportunity Act. The ECOA provides that a creditor may not require a spouse to guarantee a loan if the applicant independently qualifies for credit. There was no allegation that the wife was required by the lender to sign the guaranty, and there was no allegation concerning the director's qualifications as an applicant. Even if the wife was required to sign the guaranty and the director independently qualified, the guaranty would have been void only as to the wife and not as to the company or the director. 12 C.F.R. § 202.7(d)(1).

Philip Vincent Martino, Steven Douglas Knox, DLA Piper US LLP, Tampa, FL, for Plaintiff.

Leslie Gern Cloyd, Rene Devlin Harrod[ Berger Singerman, Fort Lauderdale, FL, for Defendants.


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CEOUA M. ALTONAGA, District Judge.

* 1 This cause is before the Court on Motion to Dismiss by Defendants, Carole Hamway ("Carole"), Albert Hamway (flAlbert")[ and Margaret Balzer ("Balzer") [D.E. 35J, filed on November 10, 2009. The Court has carefully considered the parties' written submissions and applicable law.


FN1. AU allegations of the Amended Complaint are taken as true.

This case involves the default of a loan and alleged fraudulent transfers. Between 2005 and 2007, Defendant, Hamway Flooring, Inc. ("Hamway Flooring"), and Plaintiff, SunTrust Bank ("SunTrust"), entered into a series of loans, promissory notes, advances, consolidations, and various revolving credit accounts. (See PIa intiff's First Amended Com plai nt ('~m. Compl. tt ) [D.E. 31] at ~~ 12-21). As part of the transactions, Defendant, James Hamway C'James"), the sale officer and director of Hamway Flooring, executed a personal guaranty of Hamway Flooring's debt to SunTrust. (See id. at ~1I18, 22), James's wife, Carole, also signed the guaranty. (See id.). On August 31, 2007, the operative loan matured, and Hamway Flooring failed to repay the loan in full. (See id. at ~ 23). Between August 31, 2007 and March 30, 2009, SunTrust, Hamway Flooring, and James and Carole Hamway entered into four written Forbearance Agreements whereby SunTrust agreed to forbear from exercising its rights under the Loan Documents and extended the maturity date of the loan to June 30, 2009. (See id.). Hamway Flooring defaulted on its obligations and did not repay the loan on June 30, 2009. (See id. at ~ 24). Pursuant to a Collateral Surrender Agreement, Hamway Flooring surrendered collateral to SunTrust, which then sold the collateral at public auction. (See id.).

Consistent with the Loan Agreement between SunTrust and Hamway Flooring, advances from SunTrust under the Note were governed by a Borrowing Base, which was defined as an amount equal to the sum of (a) 75 percent of Eligible Accounts Receivable, and (b) 50 percent of Eligible Inventory capped at $2,000,000.00 (See id. at ~ 26). Advances were not permitted if, after the advance, the outstanding balance of the Note would exceed the Borrowing Base. (See id. at ~ 27). If at any time the outstanding balance of the Note exceeded the Borrowing Base, Hamway Flooring was required to pay the excess amount within three days after demand from SunTrust. (See id.). Hamway Flooring was required to deliver a Borrowing Base Certificate after the end of each month to SunTrust. (See id. at ~ 28). The Certificate was to set forth the amount of Eligible Accounts and the

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Borrowing Base as of the last day of the prior month. (See id.).

The Loan Agreement included tfie following" provisions regarding Eligible Accounts:

"Eligible Accounts" shall mean, at any time, any domestic account receivable of Borrower which (a) is bona fide, valid and legally enforceable obligation of the account debtor in respect thereof, which is unconditionally owing by

such account debtor and is not subject to sale of consignment, sale of return, or any other similar arrangement;(b} is subject to a perfected first priority security interest in favor of The Bank and is free and clear of all liens, security interests and encumbrances; (c) is not subject to any

defense, dispute, offset, counterclaim or other claim by the account debtor; (d) is payable by an account debtor which is a solvent, going concern that is unaffiliated with Borrower; (e) is not more than ninety (90) days old from the original due date of the relevant invoice; (f) is not subject to any "bill and hold" or other similar arranqement; (g) Is not subject to the 25% crossage rule (l.e, "if 250/0 of the balance of a particular receivable is ninety (90) days past due from the date of the invoice, this account's entire balance will be eliminated from eligibility); and (h) is acceptable to The Bank in its sole discretion. (emphasis added).

*2 (Id. at ~ 29).

In April 2009, James Hamway, acting as President of Hamway Flooring, executed and submitted the Certificate for March 31, 2009. (See id. at ~ 30). At the time, the outstanding balance of the Note was $2,600,000.00. (See id. at 11 31). In the Certificate, James represented that Hamway Flooring had total accounts receivable of $2,566,911.84, of which $2,399,488.75 were Eligible Accounts. (See id.). This representation was false because James had included as Eligible Accounts some which were subject to liens, accounts that were more than 90 days old, and accounts that were 25 percent cross-aged. (See id. at ~ 32). Based on the sum of 75 percent of the Eligible Accounts ($1,799,616 .56) and 50 percent of the Eligible Inventory ($821,875.52), as of March 31, 2009, James calculated the Borrowing Base as $2,621,492.08, which exceeded the outstanding balance of the Note. (See td. at 1f 33).

Following the August 5, 2009 public auction of the Collateral, SunTrust engaged the services of Focus Management Group ("Focus") to facilitate the liquidation of the Collateral. (See id. at ~ 34). Upon reviewing the books of Hamway Flooring, Focus discovered that James had materially misrepresented the amounts of Eligible Accounts In the March 31, 2009 Certificate and in other Certificates. (See id. at" 35). The March 31, 2009 Certificate included $945,808.95 of accounts receivable that were subject to liens, $160,187.72 that were over 90 days old, and $283,819.05 that were 25 percent cross-aged, none of which were Eligible Accounts. (See id.).

The actual amount of Eligible Accounts on March 31, 2009 was

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$1,009,673.04. (See td. at ~ 36). Based on the sum of 750/0 of the actual

Eligibre Accounts ($757,254.78) and 50% of the Eligible Inventory .

($821,875.52), the Borrowing Base was only $1,579,130.29, well below the outstanding balance of the Note. (See id.). Had SunTrust known the actual amounts of Eligible Accounts as of March 31, 2009, it would not have permitted further advances under the Note and would have required Hamway Flooring fa repay the excess amount of $1,020,869.71. (See id. at ~ 37).

On March 27, 2009, James caused Hamway Flooring to transfer two vehicles it owned free and clear to insiders. (See ld. at ~ 39). Specifically, it transferred a 2005 Dodge Ram 1500 Quad (the "Dodqe Ram") to Albert for no constderatlon, and a 2001 BMW 740IL (the IIBMWII) to Balzer for no consideration. (See id.). As of the date of the transfers, the Kelley Blue Book retail value of a 2005 Dodge Ram 1500 Quad in good condition was $16,385.00, and the Kelley Blue Book retail value of a 2001 BMW 740IL in good condition was $16,760.00. (See id. at ~ 40). Balzer is James's motherin-law and Carole's mother. (See id. at ~ 41). Albert Hamway is James's father and former owner and employee of Hamway Flooring. (See id. at ~ 42). At the time of the transfers to Albert and Balzer, SunTrust was a Hamway Flooring creditor. (See id. at ~ 43).

*3 Between December 2006 and June 2007, James and Carole made a number of valuable improvements to their homestead property located in Lighthouse Point, Florida, including the installation of marble walls and floors in many rooms in the home, a custom mahogany stairwell, and a swimming pool. (See id. at ~'1l 44-45). To pay for the improvements, James withdrew $180,726.88 from Hamway Flooring's business account, in which SunTrust had a security interest. (See id. at '1l 46). James referred to the job as "WeI caseras" on Hamway Flooring's books. (See id.). James never repaid the $180,726.88 to Hamway Flooring. (See ld. at '1l 47). James created false invoices purporting to bill clients for the work done in order to remove the cost of the improvements from Hamway Flooring's books by writing off the cost of the improvements as a business expense of Hamway Flooring. (See id. at ~ 48).

James also entered into a barter arrangement with Robert Allard Pools whereby Robert Allard Pools agreed to install the pool in return for James's promise to provide Robert Allard Pools with Hamway Flooring's services and materials. (See td. at ~ 49). Between June 2007 and April 2009, James caused Hamway Flooring to provide services and materials at no cost to Robert Allard Pools. (See id. at ~ 50). Hamway Flooring records indicate Hamway Flooring spent a total of $56,797.99 on services and materials provided to Robert Allard Pools, all of which were either written off by Hamway Flooring or billed to Robert Allard Pools at $0.00. (See Id.). James never repaid the $56,797.99 to Hamway Flooring. (See id. at 1\ 51). At the

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time the construction .of the improvements and the pool commenced, Hamway Flooring was indebted to SunTrust for principal of up to $7,000,000.00. (See id . at ~ 52). The current assessed value of the homestead property is $2,108,030.00. (See ki. at ~ 53).

SunIrust's First Amended Complaint against Hamway Flooring, the Hamways, and Balzer, states nine counts: Count I is for breach of Note against Hamway Flooring; Count II is for breach of guaranty on Note against James and Carole; Count III is for fraud against James; Counts IV through VII are for fraudulent transfers against Balzer and Albert; Count VIII is for conspiracy to defraud against James, Balzer, and Albert; and Count IX seeks the imposition of an equitable lien against the homestead property of James and Carole. Carole, Albert and Balzer move to dismiss the Amended Complaint. While Defendants seek a dismissal of the Amended Complaint as a whole, their Motion does not present any argument as to Counts III and IX. The Motion only addresses Counts I and II (failure to state a claim), and Counts IV through VIII (lack of a jurisdictional basis).


"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' II Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S.Ct. 1937, 1949. 173 l.Ed.2d 868 (2009) (quoting Bell At/. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Although this pleading standard "does not require 'detailed factual allegations,' '" it demands more than an unadorned, thedefenda nt-un lawfully-ha rmed-me accusation." Id. (q uoting Twombly, 550 U.S. at 555)). Pleadings must contain "more than labels and conclusions, and a formulate recitation of the elements of a cause of action will not do." Twomb(v, 550 U.S. at 555. Indeed, uonly a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 129 S.O. at 1950 (citing Twombly, 550 U.S. at 556). To meet this "plausibility standard," a plaintiff must "plead] ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. II [d. at 1949 (citing TwomblYI 550 U.S. at 556). liThe mere possibility the defendant acted unlawfully is insufficient to survive a motion to dismiss." Sinaitrainal v. Coca-Cola Co., No. 06-1S8S1. 2009 WL 2431463, at *4 (11th Cir. Aug.1t. 2009) (citing Iqbal, 129 S.Ct. at 1949). *4 When reviewing a motion to dismiss, a court must construe the complaint in the light most favorable to the plaintiff and take the factual allegatIons therein as true. See Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364. 1369 (11th Cir.1997). But pleadings that "are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. II Iqbal, 129 S.O. at 1950; see also

Sina Itra ina I, 578 F.3d 1252. 2009 WL 2431463. at *3 (" '[U]nwarranted

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deductions of facti in a complaint are not admitted as true for purposes of testi rig the sufficiency of the a lIegatio ns. "). A cou rt's a na lysis of a Ru I e 12 (b) (6) motion "is limited primarily to the face of the complaint and the attachments thereto. II Brooks, 116 F.3d at 1368.

III. ANALYSIS A. Florida Statute § 201.08

Defendants first argue that Counts I and II must be dismissed on the ground that the Note is unenforceable because SunTrust did not pay documentary stamp taxes pursuant to Section 201.08, Florida Statutes. Section 201.08 provides, in part:

Failure to pay the tax shall not affect the lien for any such future advance given by s. 697.04, but any person who fails or refuses to pay such tax due by him or her is guilty of a misdemeanor of the first degree. The rnortqaqe, trust deed, or other instrument shall not be enforceable in any court of this state as to any such advance unless and until the tax due thereon upon each advance that may have been made thereunder has been paid.

Fla. Stat. § 201.08(1)(b). Interpreting the statute, one Florida appellate court has reasoned,

Section 201.08(1), Florida Statute (1997), clearly states that in an action to enforce a promissory note the plaintiff must establish, as a condition precedent to pursuing the action, that the taxes due on the note have been paid. The prohibition against actions to enforce promissory notes until the required documentary taxes have been paid applies to "any court" including ours. The obvious purpose of this statute is to ensure payment of statutorily mandated taxes. "This statutory provision is concerned primarily with enforcement of the taxing statutes and collecting monies due the state for documentary stamps on designated instruments." Silber, 526 So.2d at 977. To this end, section 201.08(1) constitutes an injunction prohibiting courts from enforcing rights created by instruments upon which required taxes have not been paid. Accordingly, since no evidence was submitted at trial to prove that Mr. Somma had paid the taxes due on the note, this lawsuit should have been dismissed.

Somma v. Metra Elecs. Corp., 727 SO.2d 302, 304 (Fla. 5th DCA 1999). The court further explained,

[P]romissory notes for which documentary taxes have not been paid are, as a matter of law, unenforceable by any Florida court. In an action to enforce such a note, once the court discovers that the documenta ry taxes have not been paid, the court must dismiss the action without prejudice, or upon proper motion abate the action for a time sufficlent to enable the plaintiff to purchase documentary stamps and affix them to the note.

*5 [d. at 305.

Defendants here assert "[tjhere is no allegation that the requlstte documentary stamp tax due the State of Florida has been paid, and the

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promissory notes attached to. the Complaint do not reflect the payments of _ the required documentary stamp tax.' (Defendants' Motion to Dismiss ("Defendants' Mot." ) [D.E. 35] at 3). But SunTrust "specifically alleges that 'all conditions precedent to the institution and maintenance of this action have been performed, waived or excused .' II (Plaintiffs Response ("Plaintiff's Resp. I') [D.E. 39] at 10). Furthermore, the Note attached to the Amended Complaint reflects that "it is a renewal and increase of the October 14, 2004 promissory note in the principal amount of $3,5000,000.00, upon which documentary stamp taxes were previously paid and '" no documentary stamp tax is due because the statutory maximum was paid on the October 14, 2004 note.' (Id. at 11).

Still unwilling to concede the sufficiency of the pleading, Defendants argue the failure to pay tax stamps is jurisdictional in nature rather than a condition precedent, and therefore cannot be averred generally. (See Defendants' Reply Memorandum ("Defendants' Reply" ) [D.E. 40] at 2). Assuming Defendants are correct, SunTrust has done more than aver generally that the tax stamps were paid. The Note attached to the Amended Complaint specifically reflects payment of the tax stamps, and therefore dismissal on this basis is not warranted. See Fed .R.Civ.P. lOCc) ("A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes. ").

In the case relied most heavily upon by Defendants, the court stated, "[tlhe dispositive issue raised in this action to enforce a promissory note is whether the trial court was required to dismiss the action once it was established at trial that the plaintiff had failed to pay the taxes due on the note. II Somma, 727 SO.2d at 302. The procedural posture of this case is entirely different from Somma. In Somma, the case had proceeded to trial, and the factual record had been thoroughly established. Here, the issue is the sufficiency of the pleading, and discovery is not complete. It has not been "established," as it was in Somma, that the tax stamps were not paid. Instead, SunTrust has made a specific allegation that the tax stamps were paid, and this is accepted as true. The requested dismissal of Counts I and II is denied. [FN2J

FN2. The parties also dispute whether section 201.08(1)(b) is even applicable to documentary tax stamps on promissory notes, and argue as to the correct interpretation of Glenn Wright Homes (Delray) LLC v. Lowy,

18 So.3d 693, 606 (Fla. 4th DCA 2009), which is critical of Somma for misreading the statute. Because the allegation of payment is sufficient to ward off dismissal, the parties' dispute concerning Glenn Wright Homes is not addressed.

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B. Equal Credit Opportunity Act

Defendants next argue Count II fails to state a claim for breach of the guaranty because the guaranty is void under the Equal Credit Opportunity Act ("ECOA" or the "Act"). Defendants claim the fact that both James and Carole signed the guaranty renders it void under the Act. The ECOA provides that a creditor may not require a spouse to guarantee a loan if the applicant independently qualifies for credit. Regulation B, interpreting the ECOA, states:

*6 Rule for qualified applicant. Except as provided in this paragraph, a creditor shall not require the signature of an applicant's spouse or other person, other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor's standards of creditworthiness for the amount and terms of the credit requested. A creditor shall not deem the submission of a jolnt financial statement or other evidence of jointly held assets as an application for joint credit.

12 C.F.R. § 202.7(d)(1).

Defendants cite several cases in support of their contention that the presence of both spouses' signatures voids the guaranty. In Silverman v. Eastrich Multiple Investor Fund, LoP., 51 F.3d 28. 33 (3d Cir.1995), the appellate court reversed the dismissal of plaintiffs claim that a creditor violated the ECOA by requiring her signature on a loan guaranty for her spouse. Id. at 29. -Plaintiffs husband was a partner in a general partnership that acquired a loan from a bank. Id. at 29-30. The bank required all partners within the partnership to sign the guaranty agreement, and required plaintiff, a partner's wife, to sign as well. Id. at 30. The partnership became insolvent, and the holder of the guaranty attempted to collect. Id. Plaintiff filed suit, alleging, among other things, a violation of the ECOA on the ground that she should not have been required to sign the guaranty when she was not a partner in the partnership. [d. Noting that an ECOA violation may be used as a defense to an obligation under a guaranty, the court explained:

If Atlantic did in fact Violate the ECOA, then plaintiff may have a valid defense and obtain relief from her obligations under the Guaranty. We note however that if plaintiff's guaranty is voided, this would not void the underlying debt obligation nor any other guaranties .•.. The district court ruled in favor of defendant as a matter of law and did not make a factual determination that Atlantic required her signature solely based upon her marital relationship with a borrower. Although the district court noted plaintiff was not a. partner in Hunt's Pier, AtlantiC may have justifiably required her to guaranty the loan if it determined her husband was not Independently creditworthy.

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Id. at 33 (internal. cltatlon and parenthetical omitted).

Silverman does not, as Defendants suggest, stand for the proposition that simply because a spouse signed a guaranty, the guaranty is void. Rather, Silverman stands for the proposition that if the creditor required the

spouse's signature solely because he or she was married to the applicant, the guaranty may be unenforceable as to the signing spouse. That holding does not warrant dismissal of sun'rrust's claims against Defendants. First, while Carole did sign the guaranty, there is no allegation that SunTrust required her to sign. Moreover, there is no allegation concerning James's qualifications as an applicant. There is simply no allegation from which it can be ascertained that SunTrust did or did not violate the ECOA as to Carole. *7 Defendants also cite Integra Bank/Pittsburgh v. Freeman, 839 F.Supp. 326 (E.D.Pa.1993), to support their argument that the guaranty is void because it violates the ECOA. In Integra, a bank required the principals of a corporation to sign a personal guaranty to secure a loan, and required the wives of the principals to sign as well. Id. at 328. The bank sued to enforce the guaranty, and the defendant/debtors argued against summary judgment in favor of the bank on the basis of an ECOA violation. [d. Explaining that the ECOA's purpose is to eradicate credit discrimination against women, the court quoted a pertinent portion of the regulation: " 'a creditor shall not require the signature of an applicant's spouse or any other person, other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor's standards of creditworthiness for the amount and terms of the credit requested.' " Id. (quoting 12 C.F.R. § 202 .7(d)(1)). In determining that an ECOA violation could serve as a defense against enforcement of a guaranty, the court, like the court in Silverman, held that "while an ECOA violation should not void the underlying credit transaction

an offending creditor should not be permitted to look for payment to parties who, but for the ECOA violation, would not have incurred personal liability on the underlying debt in the first instance." Id. at 329. Ultimately, the

court determined that if the wife could prove the creditor impermissibly required her to sign the guaranty, she would have no liability under the guaranty. Id. at 331. Her husband, however, would remain liable. Id. Integra, like Silverman, does not absolve the applicant debtor from liability under a guaranty due to an ECOA violation; only the spouse is released from liability. Moreover Integra, like Silverman, requires a finding that the creditor has impermissibly required the signature of the spouse, acknowledging that circumstances exist under which a spouse's signature may be required. In this case, as noted, the pleading is silent as to whether James was a qualified applicant such that Carole's signature should not have been required. Consequently, dismissal of the breach of guaranty count Is not appropriate.

C. Jurisdiction Over Counts IV Through IX

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Fin~lly, Defendants argue the Court does not-have jurisdlctlon over Counts IV through IX because they do not independently meet the dollar amounts for diversity jurisdiction under 28 U.S.C. § 1332, and because they do not arise from a common nucleus of operative facts as the claims that do satisfy the dollar amount. Counts IV through IX involve alleged fraudulent transfers from .Hamway Flooring to certain individuals. SunTrust alleges the transfers were made in an attempt to keep it from collecting on the debt owed by Hamway Flooring. Assuming the fraudulent transfer claims do not independently meet the dollar requirement of section 1332, the claims are nevertheless sufficiently related to claims that do to satisfy supplemental jurisdiction under 28 U.S.C. § 1367.

*8 Pursuant to 28 U.S.C. § 1367,

Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.

28 U.S.C. § 1367(a). The Eleventh Circuit has held that sufficient relatedness under section 1367 will be found where claims "Involve the same witnesses, presentation of the same evidence, and determination of the same, or vervslmllar, facts." Palmer v. Hospital Auth. of Randolph County, 22 F.3d 1559. 1563-1564 (11th Cir.1994). The court explained, "[w]hile all the elements of the federal and state claims are certainly not identical, and in some cases are quite different, each claim involves the same facts, occurrences, witnesses, and evidence." [d. at 1566.

In Count III of the Amended Complaint, SunTrust aUeges James fraudulently misrepresented the amount of Hamway Flooring's assets in the form of accounts receivable in order to induce SunTrust to loan Hamway Flooring more than the loan documents permitted. SunTrust alleges it Incurred damages in the amount of $2,593,657.95 [FN3]--the amount due under the Note--because of James's alleged fraudulent misrepresentation I Count III clearly satisfies the jurisdictional dollar amount.

EN3. SunTrust also claims it is owed accrued interest on the Note, attorney's fees and costs.

In Counts IV through VII, SunTrust alleges James transferred two vehicles belonging to Hamway Flooring to Albert and Balzer. According to SunTrust, the transfers were made in order to avoid the attachment of those vehicles by SunTrust to aid in paying the debt owed to SunTrust. In Count VIII,

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SunTrust alleges that James, Albert, and Balzer all conspired to defraud. _ SunTrust by means of fraudulently transferring the assets of Hamway Flooring to various individuals to prevent SunTrust from collecting on the debt owed by Hamway Flooring and the Hamways. Count VIII clearly encompasses Counts IV through VII.

SunTrust's theory in this case isthat James deliberately misrepresented the assets of Hamway Flooring in order to induce SunTrust to provide Hamway Flooring with a substantial loan. SunTrust alleges that after Hamway Flooring defaulted on the loan, James conspired with others to avoid repayment of the loan by fraudulently transferring assets of Hamway Flooring to certain individuals. While the fraudulent transfer claims include Defendants other than James--i.e., Albert and Balzer--those claims nonetheless concern James and his intention to avoid his obligations to SunTrust under the loan. Accordingly, Counts IV through VII are part of the same case or controversy as Counts III and VIII, and supplemental jurisdiction is satisfied under section 1367(a).

IV. CONCLUSION In light of the foregoing f it is hereby

*9 ORDERED AND ADJUDGED that the Motion to Dismiss [D.E. 35] is DENIED. Defendants are to file an Answer to SunTrust's Amended Complaint within 10 days of the date of this Order.


S.D. Fla. ,2010.

Suntrust Bank v. Hamway

Not Reported in F.Supp.2d, 2010 WL 146858 (S.D.Fla.)

Motions, Pleadings and Filings (Back to top)

• O:09cv61323 (Docket) (Aug. 26, 2009) END OF DOCUMENT

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Home I Depositlnsurance I Consumer Protection I Industry Analysis I Regulations & EKaminations

Home> Industry Analysis> Failed Banks> Failed Bank Information

Failed Bank Information

Information for IndyMac Bank, F.S.B., and IndyMac Federal Bank, F.S.B., Pasadena, CA

l. Introduction II. Press Release

IU. Acquiring Financial Institution IV. Question and Answer Sheet

• En Espaliol

• Chinese Language Version (350 kb PDF File PDF Help) V. Banking Services

VI. Loan Customers

VII. Unclaimed Deposits

VIII. Possible Claim! AW!l.nst The Fallod Institution • FAa [8 IndvMac ~No Value" Determination IX. Priority of Claims

X. Dlvldond Information

XI. Brokered Deposits (Institutional Brokers) XII. Agreements

• Purchase and Assumption Agreement (1.1 mb PDF File - PDF Help)

• Master Purchase Agreement by and among FDIC as Conservator for lodyMac Federal Bank. FSB and 1MB HaldCo LLC. and DneWes! Bank Group llC {5.3 mb PDF FJla -

PDFH~~ .

• Loan Sale Agreement Between the FDIC as ReCeiver for IndyMac Federal Bank. ESB and OneWes, Bank. FSB (3.5 mb PDF File - PDF Help}

• Shared boss Agreement Between the FDIC as ReceiVer for IndyMac Federal Bank.

FSB and OneWest Bank, FSB (1.7 mb PDF File - PDF Help) XIII. Bid Summary

XIV. IndyMac Bank. E.S.B.! Contact Infonnatlon XV. Balance Sheet Summary

XVI. The Dodd-Frank Wdll Street Reform and Consumer Protection Act guesUon and Answer Guide

I. Introduction

On Mar:c:h 19, 2009, the Federal Deposit Insurance Corporation (FDIC) completed the sale of IndyMac Federal Bank, FSB, Pasadena, California. to OneWest Bank, F.S.B., Pasadena, California. OneWest Bank, ESB Is a newly formed federal savings bank organized by 1MB HoldCo LLC. All deposits af IndyMac Federal Bank. FSB have been transferred 10 OneWest Bank, FSB.

On July 11,2008, IndyMac Bank, F.S.B., Pasadena, CA was closed by the Office of Thrift Supervision (DTS) and the FDIC was named Conservator. All non-brokered insured deposit accounts and substantially all of the assets of IndyMac Bank, F .S.B. have been transferred to IndyMac Federal Bank,

http://www.fdic.govlbanklindividual/fajled/IndyMac.htm I


rage L or :>

F.S.B. (IndyMac Federal Bank), Pasadena, CA "assuming institution") a newly chartered full-service FDIC-Insured institution. No advance notice is given to the public when a financial instltutlon is closed.

The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a car loan, a business checking account, a commercial loan. a Social Security direct deposit. and other relationships with the Institution. The FDIC has compiled the following information which should answer many of your questrons.

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II. Press Release

The FDIC has issued the following press releases (PR-55-200S. PR-42-2009) about the institution's closure. If you represent a media outlet and would like information about the closure, in California. please contact David Barr with the Office of Public Affairs at 202-89S-6992, in Washington D.C. please contact Andrew Gray at 202-89S-7192.

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III. Acquiring Financial Institution

On March 19.2009, all deposits of IndyMac Federal Bank, FSB were transferred to OneWest Bank, FSB, (OneWest Bank) Pasadena, California.

On July 11, 2008, all non-broke red Insured deposit accounts were transferred to IndyMac Federal Bank, F.S.B. (IndyMac Federal Bank), Pasadena, CA rassuming institution") a newly chartered full-service FDIC-insured institution. The OTS appointed the FDIC conservator of IndyMac Federal Bank. All Insured deposit accounts will be available as usual during regular business hours starting July 14,2008.

Principal and Interest on insured accounts. through July 11. 2008, are fully insured by the FDIC, up to the insurance limit of $100,000. You will receive full payment for your Insured account. Certain entitlements and different types of accounts can be Insured for more than the $100,000 limit. IRA funds are insured separately from other types of accounts, up to a $250,000 limit.

All accounts that exceed the $100,000 insurance limit, andlor all accounts that appear to be related and exceed this limit, are reviewed by the FDIC to determine their ownership and Insurance coverage. If you think you might have uninsured deposits you should call the FDIC Call Center to arrange for a telephone Interview with a Claims Agent at 866-806-5919. The Claim Agent may direct you to download and submit a partIcular form that will assist in expediting the processing of your claim.

list of Affidavits. Declarations. and Forms available for download

Please return the forms to the FDIC by FAX (facsimile) or mail at the number or address listed for the failed institution.

If It Is detennlned that you have uninsured funds. the FDIC will generate and mail to you a Receiver Certificate. This certificate entitles you to share proportionately in any funds recovered through the disposal of the assets of IndyMac Bank. F.S.B. This means that you will eventually recover some of your uninsured funds. The FDIC declared a 50% advance dividend for uninsured deposits.

To find out more about FDIC Oeposillnsurance:

• Visit EDIE the FDIC's Electronic Deposillnsurance Estimator

• View the FDIC Deposit Insurance Coverage Video

Checks that were drawn on IndyMac Bank, F .S.B. will be honored up to your available balance or the insured amount. You may withdraw funds from any transferred account without an early withdrawal penalty until you enter into a new deposit agreement with IndyMac Federal Bank. A hold may be in place on deposits accounts due to delinquent loans where the depositor is the borrower or guarantor. Additionally, any account pledged as collateral for a loan will be held.

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http://www.fdic.govlbanklindividual/failediIndyMac.htm I


r'age 3 of 5

V. Bankin~g Services

On March 19, 2009 there was no break in services.

As of July 14,2008 you may continue to use the services to which you previously had access, such as, online service, safe deposit boxes, night deposit boxes, wire services, etc.

Your checks will be processed as usual. All outstanding checks will be paid against your available insured balance(s) as if no change had occurred. IndyMac Federal Bank will contact you soon regarding any changes in Ihe terms of your account. if you have a problem with a merchant refusinq to accept your check, please contact IndyMac Federal Bank, Customer Service Department, at 800-998· 2900. An account representative will clear up any confusion about the validity of your checks.

AU interest accrued through Friday, will be paid at your same rate. IndyMac Federal Bank will be reviewing rates and will provide further information soon. You will be notified of any changes.

Your automatic direct deposit(s) and/or automatic withdrawal(s) will be transferred automatically to IndyMac Federal Bank. if you have any questions or special requests, you may contact a representative of your assuming institution at 800-998-2900.

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VI. Loan Customers

If you had a loan with IndyMac Bank, F.S.B., you should continue to make your payments as usual. The terms of your loan will not change under the terms of the loan contract because they are contractually agreed to your promissory note with the failed Institution. Checks should be made payable as usual and sent to the same address until further notice.

For aU questions regarding new Ioans and the lending policies of IndyMac Federal Bank, please contact 600·998-2900 or visit the IndyMac Federal Bank website at www.lndyMac.com.

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VII. Unclaimed Deposits

Please note that any deposits that have not been claimed within 18 months of the failure of Indymac Bank was sent to the FDIC by One West Bank. If the FDIC is unable to locate the deposit customer, the unclaimed funds will eventually be escheated to the state or according to Federal Law (12 U.S.C., 1822 (e».

FDIC Unclaimed Deposits 1-877-875-4621 Option #2

Hours of Operation - Pacific Standard Time

Monday through Friday, 8;00 a.rn, - 5:00 p.rn,

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VIII. Possible Claims Against the Failed Institution

. Defermlnatlon· ofinsufflclent"Asset~.To Satisfy C,lallJ1s Agalnst Flnanclal_lnstltutlon rri ' Receivership

SUMMARY: The FDIC, by its Board of Directors, has determined that insufficient assets exist in the receivership of IndyMac Bank, F .S.B., Pasadena, California and the receivership of IndyMac Federal Bank. FSB. Pasadena, california to make any distribution to general unsecured dalms,· and ·therefore such claims will recover nothing and have no value.

DATES; The Board made Its determination on November 12,2009.

http://www . fdic.gov /bank/individual/fai led/lndyMac.html


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FOR FURTHER INFORMATION CONTACT: If you have questions regarding Ihis notice, contact Thomas P. Bolt, Counsel, legal Division, (703) 562-2046 or tboll@fdic.gov; Shane Kiernan, Senior Attorney, Legal Division, (703) 562-2632 or skiernan@fdic.gov,

Federal Deposit Insurance Corporation

3501 N, Fairfax Drive Arlington, VA 22226

SUPPLEMENTARY INFORMATION: On July 11, 2008, IndyMac Bank, F.S.B., Pasadena, California ("lndyMac Bank") (FIN # 10007) was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation ("FDIC") was appointed as Its receiver. In complying with its statutory duty to resolve the institution in the method that is least cosUy to the deposit insurance fund (see 12 U.S.C. 1823(c)(4}), the FDIC effected a pass-through receivership. Accordingly, the FDIC organized IndyMac Federal Bank, FSB, Pasadena, Califomia ("lndyMac Federal"), a new federal savings bank for which the FDIC was appolnted as conservator. IndyMac Bank's assets were transferred to IndyMac Federal under an agreement whereby the amount (if any) realized from the final resolution of IndyMac Federal after payment [n full of IndyMac Federal's obligations was to be pard to the IndyMac Bank receivership. On March 19, 2009, IndyMac Federal was placed In receivership and substantially all of Its assets were sold. The amount realized from the resolution of IndyMac Federal Is Insufficient to pay all of Its liablliUes, and therefore there will be no amount to pay to the fndyMac Bank receivership.

Section 11 (d)(11 )(A) of the FOI Act, 12 U.S.C. 1821 (d)(11 }(A), sets forth the order of priority for distribution of amounts realized from the liquidation or other resolution of an insured depository institution to pay claims. Under the statutory order of priority, administrative expenses and deposit liabilities must be paid In full before any distribution may be made to general unsecured creditors or any lower priority claims. The FDIC has determined that the assets of IndyMac Bank are insufficient to make any distribution on general unsecured claims and therefore, such claims, asserted or unasserted, will recover nothing and have no value. The FDIC has also determined that the assets of IndyMac Federal are Insufficient to make any distrIbution on general unsecured claims and therefore, such claims, asserted or unasserted, will recover nothing and have no value.

Federal Register I Vol. 74, No. 221 I Wednesday, November 18,20091 ti0tices 59541 FAa ra IndyMac ~NQ Value" Determination

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IX. Priority of Claims

In accordance with Federal law, allowed claims will be paid, after administrative expenses, in the following order of prIorIty:

. .

1. Depositors

2. General Unsecured Creditors 3 .. Sub.Qrdl(la~ed.Debt

4.. StockholdE!r.s '. . ..

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X. Dividend Information

mn-hmymc was pl~d Fn~ ConseNafors~1n1ulyor2006:1heF~c ~1ai;[tha\lh~ui~~

resotutlon··of rndYMac Would result lna rricOvery of a pproxlm a tElly' 50% of ihe uninsured deposits of IndyMac. Based upon that estimate, an advance dividend in that amount was paid to the uninsured depositors at that time. The announced sale of IndyMac to 1MB Management Holdings Is consistent with the original estimate 01110 ::0 additional dividend will be paid as a consequence of this sale.

_ •• _ ... I.

http://www. fd i c. gOY /bank/individual/fai ledllndy Mac. html


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~b\~.jI~JWJ§~I'h?f~cP~W~'b'FMr~~e ~an1fcipated at this time. the FDIC will continue to periodically re-assess tile financial condition of the receivership to determine if there is additional cash for dividend distributions.

Dividend History on IndyMac Bank. F.S.B.

Dividend Information on Failed Financial Institutions

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XI. Brokered Deposits

The FDIC offers a reference guide to deposit brokers acting as agents for their investor clientele. This site outlines the FDIC's poflcles and procedures that must be followed by deposit brokers when filing for pass-through insurance coverage on custodial accounts deposited In a failed FDIC Insured Institution.

Deposit Broker Processing Guide

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General Disclaimer

Last Updated 0712112010


Home I Conleel Us , Search r Help I SlleM~p I Forms

Freedoll\ o{ lnlO1ffialloll Ac\ \FOIA) Service Celller I Web"iu~ Po\i1:\(lS I USA·9()'~ I FDIC QII\c1! oImspetlcr Gel'lera\ FDIC Open GOllernmenl Webpage I No FEAR Act Dala

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A supplement to replace Chapter 6 of A Student's Guide to Hearsay (2d ed.)


Clifford S. Fishman' Professor of Law

The Catholic University of America Law School

A prosecutor offers an out-of-court statement in evidence; defendant D objects on hearsay and Sixth Amendment Confrontation Clause grounds. The Confrontation Clause reads:

In all criminal prosecutions, the accused shall enjoy

the right .. to be confronted with the witnesses against him."

To be "confronted with" a witness must come to court, testify in the presence of the defendant, and be available for cross-examination by defense counsel. The Clause applies only when a prosecutor offers hearsay against a defendant in a criminal case.

~,.;~:._~:~'·il:f-td" determine whether the ~tatement i~ b~ing offered for a hearsay

. "pUrpose. If It ,IS offered for-a non-hearsay 'purpose, both objections must be overruled.' !

2. If the statement is being offered for a hearsay purpose, i.e, if its relevance depends on the truth of the statement, we next address the hearsay issue: can the prosecutor cite an applicable hearsay objection? If she cannot, then the evidence is excluded without further analysis.

3.·.ffthe statement does fall within a hearsay exception, we must.analyze the applicability of the Confrontation Clause to the statement. Prior to Crawford v. Washington,l the first step in that process was to determine whether the hearsay exception was "firmly rooted."! Now, however, resolution of the Confrontation Clause issue does not necessarily depend

I Copyright 2004 by Clifford S. Fishman. All rights reserved.

2 Crawford v, Washington, 124 S Ct 1354, 1369 note 9, citing Tennessee v, Street, 471 U.S. 409, 414, 105 S.Ct. 2078, 85 L.Ed.2d 425 (1985).

3 124 S.Ct. 1354 (2004).

4 This term, and its origin. will be provided infra. Those ofa certain age with a literary bent might think of this as the "Alex Haley" factor. If you don't get the reference, Google him - you will discover several fascinating aspects of American history. You will also learn that LaVar Burton's first big TV role was not that of Geordi on Star Trek:

The Next Generation.

on the hearsay exception involved. Rather, we must ask: was the statement .

"testimonial"? (I will define that term in ~ 5.)

a. Calls the declarant as a witness (Crawford, note 9). Thus, any statement falling within FRE 80 I (d)(l )(A), (B) or (C) will automatically satisfy the Confrontation Clause; likewise any statement falling within 803(5). (Why? Because each of these exceptions already requires that the declarant be on the witness stand.) (Or:)

.. ~ h. Establishes declarant unavailability and shows that D had an adequate opportunity to cross-examine the declarant's "testimonial" statement (Crawford, Part III B; Part IV). (Or:)

,,"c. Demonstrates that the defendant has wrongfully procured the declarant's e unavailability, and thereby "forfeited" his Confrontation Clause objection:

Crawford, Part V A. This basic principle is codified in FRE 804(b)(6). (Or.)

d. Demonstrates that the statement is the defendant's. ~~"'de]enaa'Wsl'fid ~~~~t~~~m~prtTf"a"§··a· party-admission, FRE 80 1 ~d)(2)(~w.sm~ I

~wa:s··'~esfinfon1al." (In other words, a defendant's prror testimony will

always be admissible against him over hearsay and Confrontation Clause objections.) (Or:)


civil trial in which D was not a party, X testified about an event in which X and D participated. D attended the trial and heard X's the testimony, and afterward told W, "It happened exactly as X described it in court today." At D's subsequent criminal trial, the prosecutor can call W to testify as to what D said; and then the transcript of X's testimony should also be admissible against D, as an adopted admission.

a. EQ{au~:

(I) any testimony given at a formal proceeding in a criminal case - preliminary hearing, grand jury, motion to suppress, prior trial; bail hearing, sentencing hearing, etc.

(2) Statements made during police interrogation of a suspect or arrestee, however the Court ultimately defines "interrogation."

(3) guilty plea allocutions (e.g, of coconspirators. to prove that a conspiracy existed). Crawford, Part VB.

(4) affida vi ts su bmitted in cri m i na I Ii tiga ti on.

( I ) F oren s ic I a b re po rts - whether revea ling drugs, fi ngerpri nts, ti rearms evidence, blood. DNA. etc. The Court did not address such documents; indeed, the Court observed that "business records" are not "testimonial"; but this particular type of business record is "testimonial" in its very nature. (Still, we can expect some state and lower federal courts to hold that they are not "testimonial.")

(2) (Choose one): some(?) most(?) all(?) statements made to police officers by persons not in custody, particularly if made in response to police questioning.

Most such statements would not survive a hearsay objection anyway; but even those that could survive a hearsay objection (excited utterances, for example) might be considered "testimonial."

.~t_i21cz.~ l~YR~;'~.~ ~Jpwa~'prp,*~i!lg in civil.I.~~Uon.s{ :,,~~t,,~m~;;~~R~~4}~. c.iyV 1i9J~.ath;m';,:·,"<i

c. Perhaps:

(1) Statements made by people in response to questions by public officials who are not law enforcement officers. (Example: when a Child Services worker interviews a mother during an investigation to determine whether the mother is capable of having custody. Ditto when the worker interviews the mother's neighbors.)

(2) Dying declarations made to police officers. But perhaps dying declarations are "sui generis" and thus are exempt from the Confrontation Clause altogether even though they are "testimonial." See Crawford, note 6.

(3) Dying declarations made to non-police officers (which might be classified as non- "testimon ia I" even if dying declarations to po I ice officers are categorized as "testimonial").

_5 A hyper-technical reading of Crawford might allow someone to argue that justice

. "SCimfielerred only to "testimony' in criminal cases, but [ strongly believe that the Court

would apply the rule to testimony in civilcases as well. ..

(4) Excited utterances made to police officers, although that's not altogether clear - see Scalia's reference to While v. Illinois in footnote S. But excited utterances made to someone other than a police officer or other public official presumably would not be considered "testimonial."

(5) Any document fall ing within: S03(9), S03(11) - S03( 15), 803(22)-803(23). 803(9) involves a public record. The other exceptions listed here are private docu men ts (church records, fam i Iy record s Ii sti ng birth s, deaths, marriages, documents effecting an interest in property, etc.), and are rarely made with criminal litigation in mind. On the other hand, such records are made and kept with the purpose of providing "evidence" (albeit in a non-courtroom sense) of the events or relationships recorded therein.

6. What statements are clearly not "testimonial"?

a. A statement by a conspirator made during and in furtherance of the conspiracy. Crawford, Part IIlB (text immediately preceding note 6).

b. Any statement made "casually" (Crawford, Part lIT A) rather than for purposes of "going on record" with a government agent or agency. This should include most statements that fit within the following exceptions (at least, if not made to a police officer or other public official): 801 (d)(2)(B)-(O); 803 (l) - 803 (4); 804(b )(3).

c. "Business records," i.e. statements falling within FRE 803(6) - 803(8); 803(10), so long as the record was not created primarily for use as "evidence." See Crawford, Part VB (text immediately preceding note 6, referring to "business records"); dissenting, Chief Justice Rehnquist cites Scalia for the proposition that the Court's analysis excludes "business records and official records." But if the record was created with the expectation that it would be used as evidence, it should be classified as "testimonial." (Thus, forensic reports should be considered "testimon ia!. ")

7. If the statement is not "testimonial," what then? Does the Confrontation Clause apply at aU? If so, how, and what standard is used to measure whether it complies with the Clause?

a. It is unclear whether the Confrontation Clause now applies at all to nontestimonial hearsay.

(I) Justice Scalia's own view, that the Confrontation Clause should apply "only to testimonial statements, leaving the remainder to regulation by hearsay law," is quite clear. Justices Thomas and Breyer have expressed a similar preference.

(2) At present, however, this is dictum, not holding. (See the discussion In Crawford of White v, Illinois)

, .

(3) Thus, until the Court tells us definitively otherwise, we must assume that the Confrontation Clause still applies to non-testimonial hearsay.

b. Assuming it applies, how does it apply?

(I) Until the Court revisits the issue, the most plausible approach is to assume that at least some aspects of the Roberts/Inadi approach will survive. Ohio v. Roberts, 448 U.S, 56 (1980), which is based on the pre-Cl'alljord concept that if a statement is sufficiently reliable it will satisfy the Confrontation Clause, held that if a hearsay statement came within a "firmly rooted" ("FR") hearsay exception, that sufficed to establish reliability; if the hearsay exception is not firmly rooted, however, the offering party must make a particularized showing of trustworthiness. US. v, lnadi, 475 U.S, 387, 395, 106 S.Ct. 1121,89 L.Ed,2d 390 (1986), held that the prosecutor need neither produce the declarant, nor demonstrate her unavailability, if the hearsay fell within an exception which describes statements that have independent evidentiary significance (<tIES"). A hearsay exception that satisfies both of these requirements is a "FRIES" exception.

(2) Combining Roberts/Inadi and Crawford, until the Court tells us otherwise, the operating assumption should be that a non-testimonial statement that falls within a FRIES exception automatically satisfies the Confrontation Clause.

(3) Where the hearsay statement is (a) not testimonial and (b) does not come within a "firmly rooted" exception, but (c) does fall within a hearsay exception that is not "firmly rooted.l" the offering party must demonstrate the trustworthiness of the hearsay pretty much the way the law was before Crawford. See § 6.04 of the Second Edition.

Bottom line: Crawford might wind up changing the Confrontation Clause only a littlesee §§ 4, Sa. Or it might wind up changing just about everything we thought we knew about the Confrontation Clause. Nobody knows. (At Justice Scalia's appearance at Catholic U. Law School a month after Crawford was decided, one of my students asked him, and that's what he told her: "Nobody knows." If ever the statement "nobody knows" can be considered authoritative on a subject, this is the one!)

6 Examples: statements made to a doctor who will not treat, but will only testify about the cause, nature or extent ofplaintifrs injuries, per FRE 803(4); declarations against penal interest, 804(b)(3); residual exception hearsay, FRE 807.


2010 WL 3155021i

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i _

--- So.3d ----I 2010 WL 3155021 (Fla.App. 2 Dist.)

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Briefs and Other Related Documents '. Judges and Attorneys

Only the Westlaw citation is currently available.


District Court of Appeal of Florida!

Second District.

Cederic Lovell ARMSTR9NG, Appellant, v.

STATE of Florida, Appellee.

No. 2D09-1033. Aug. 11, 2010.

Appeal from the Circuit Court for Pinellas County: Richard A. Lucer Judge. James Marion Moorman, Public Defender! and Cynthia J. Dodge, Assistant Public Defender! Bartow, for Appellant. .~.

Bill McCollum, Attorney General! Tallahassee, and Donna S. Koehl Assistant Attorney General, Tampa! for Appellee.

CASANUEVA, Chief Judge.

*1 Cederic Lovell Armstrong appeals his conviction and sentence for

fraudulent use of a credit card.FN1 Because the trial court erred in failing to exclude unauthenticated business records upon timely and proper defense objection! we reverse for a new trlal..

FN1. § 817.61, Fla. stat. (2007).

The fraudulently used credit card belonged to. Dana Lewis. She testified that on the day after Labor Day 2007! she received a telephone call from her bank alerting .her to unusual activity in her home equity credit line account. The acc6unt could be accessed by use of her credit card and its

PIN/N2 which she kept together in a shoebox located in a closet in her home. Armstrong! had visited with Lewis a{ her home during the Labor Day


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2010 WL 315502

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weekend and hbd had access to the room where she kept the shoebox.

Later, she confro~ted Armstrong about the charges that she had not incurred! and he respond~d by savinq, "I ,have a disease."

FN2. A \'PIN'" is the "personal identification number" which must be used in conjunction with the credit card to obtain money from an ATM machine, similar to a signature if the card is used in person for a purchase. Armstrong also contends in this appeal that he could not be convicted of fraudulent use of a credit card because use of Lewis! PIN is not tantamount to representing himself as the cardholder, an element that section 817.61 requires under a plain reading of the statute. W.e find no merit to this argument.

During Lewis' testimony at trial, the State offered as evidence printouts of her account transactions for the relevant time period. Lewis had downloaded and printed this evidence of the transactions in her account from her bank's website. The State sought to present these transactions to her for identification and to establish which were unauthorized. Armstrong's defense counsel objected on hearsay grounds because the State had not produced a records custodian to testify to the authenticity of these records as required by section 90.803(6)(a), Florida Statutes (2007), nor had the State provided an affidavit to self-authenticate them as permitted by section 90.902(11). The trial court overruled the hearsay objection and allowed the printouts into evidence. The State presented no other evidence of the unauthorized transactions fqr which amounts the bank had reimbursed Lewis. The jury convicted Armstrong as charged. The trial court sentenced him to ten years' incarceration as a habitual offender and ordered restitution to the bank for the amount of the unauthorized withdrawals.

Armstrong now contends that his conviction must be reversed because this erroneously admitted hearsay evidence was the sale basis for the State1s case against him. To support this contention he cites Medlock v. State, 537 SO.2d 1030 (Fla. 2d DCA 1988). In Medlock, the defendant was convicted of grand theft for taking money from an ATM by using her roommate's bank money card. This court reversed for a new trial, saying, "Since the state relied upon [the victim's] bank statement as the primary, if not the sole, evidence of the theft, we. find the admission of the statement to be reversible error." Id. at 1031. We agree with Armstrong's argument because Medlock is factually and legally indistinguishable and thus is controlling precedent. The bank statement used there is the same kind of hearsay as the downloaded and printed-out evidence used against

.. •• I I .. '"


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2010 WL 315502~

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Armstrong he~e. And Lewis' testimony relied solely on the hearsay in this unauthenticated printout. In Medlock, the State failed to establish that the evidence wasta business records exception to the hearsay rule, yet the trial court admitted the evidence without such p-roper authentication. In doing so it erred. '537 So.2d at 1031; see.elso N.S. v. State, 988 So.2d 1153 (Fla. 3d DcA 2008) (finding simllarerror but holding it harmless because other evidence supported the conviction, thus distinguishing Medlock ). For the same reason, the trial court here also erred.

*2 Reversed and remanded for a new trial. See Quick v. State, 450 SO.2d 880, 881 (Fla. 4th DCA 1984).

SILBERMAN and LaROSE, JJ., Concur.

Fla.App. 2 Dist.,2010. Armstrong v. State

--- So.3d ----, 2010 WL 3155021 (Fla.App. 2 Dist.)

Briefs and Other Related Documents (Back to 'top)

• 2D09-1033 (Docket) (Mar. 5, 2009)

Judges and Attorneys (Back to top) Judges I Attorneys


• Casanueva, Hon. Darryl C.

State of Florida District Court of Appeal, 2nd District Florida

Litigation History Report I Judicial Reversa·1 Report I Judicial Expert Challenge Report I Profiler

• LaRose, Hen. Edward C.

State of Florida District Court of Appeal, 2nd District Florida

Litigation History Report I Judicial Reversal Report I Profiler

• Luce, Hen. Richard A.

State of Florida Circuit Court, 6th Judicial Circuit

Florida ,

Litigation History 'Report I Judicial Reversal Report I Profiler



1. ,. . _ I' _ 1_..... ._. .1 _1_ _ _ _ _ • __ I .. 1 L I .l ••• __ •• LL L __ • __ • <) __ L- T""\ r'\f"'I 0 __ .c 0 11 C. 1'"'1 f\ 1 "

2010 WL 3155021

Page 4 of4

• Silberman, Hon, Morris ,

State of Florida District Court of Appeal, 2nd District,

Florida I ' ,

Litigation History Report [:Judicial Reversal Report [ Judicial Expert

Challenge Report II Profller ,



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Attorneys for Appellant

• Dodge, Cynthia J.

Bartow, Florida

Litigation History Report I



• Moorman, Jan1es Marion

Bartow, Florida :

Litigation History Report I PrafHer

Attorneys for Appellee • Koch, Donna S. Tampa, Florida

Litigation History Repart I Profiler

• McCollum, Bill Orlando, Florida

Litigation History Report I Prafiler


(c) 2010 Thomson Reuters. No Claim to Orlg. US Gov. Works.





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OneWest Bank

8BB E. Walnul Streel Pasadena, CA 91101 Tel 626-535-5869 Fax 626-535-4 130 Toll Free: ~69-2300 ext, 5869 Email: ellc:e.p0er5chlc:e@awb.com

September 17,2009

Connie L. Denney 1751 Cobia Way

N. Ft. Myers, FL 33917

RE: 1MB Loan No. 1009618305

Dear Ms. Denney:

We are in receipt of your letter dated August 27,2009 regarding the above referenced loan. This matter has been provided to me to address.

You claim that you only received one copy of the Notice of Right to Cancel and never received 2 HUD Booklets: therefore, you wish to rescind your loan.

I would like to call your attention to the copy of the Notice of Right to Cancel included in Attachment "A". Under the heading of "Acknowledgement of Receipt", the document states:

"I hereby acknowledge that the transaction identified on the face of this Notice was consummated and that I have received one (1) copy of the Federal Truth in Lending Disclosure and two (2) copies of this Notice. "

You Signed the Notice of Right to Cancel and by doing so acknowledged receipt of two copies. Please note that the Truth in Lending Act does not require the Notice of Right to Cancel to be signed so this is further proof that we require the Signature as an acknowledgment of receipt outside of what the law requires.

In terms of your claim that you did not receive the required HUD booklet, the Consumer Handbook on Adjustable Rate Mortgage was included in the initial disclosure package sent to you by IndyMac Bank. Furthermore, you acknowledged receipt of this booklet upon Signing the final Truth in Lending Statement, as the paragraph above your Signature states:

Page 2 of 2

"The undersigned hereby acknowledge receipt of a completed copy of this disclosure, and if this loan has a variable rate feature, a copy of the Adjustable/Varjable Rate Loan Program Disclosure along with a copy of The Consumer Handbook on Adjustable Rate Mortgages (CHARM Booklet}."

A copy of this document is included in Attachment "S".

For the reasons stated above, we respectfully deny your request to rescind this transaction.

If you are interested in a loan modification we ask that you visit our website at wvvvv.onewestbank.com. You may update your financial information and complete a financial package by clicking on the "We can help" link. You should follow the instructions for submitting the required verification of income, providing current income and monthly expense information and hardship information.

If you do not have access to the internet, you may call a loan counselor at 1-877-90S- 4357 for information. Once we have received all required documentation, IndyMac Mortgage Services. a division of OneWest Sank will review your loan status, financial information, income verification and all other submitted documentation to determine if you qualify for a loan modification under the rules of our-current loan modification plans. You should receive a written response from IndyMac in about 30 days informing you of an approval or denial.

Our response to your Qualified Written Request will be forwarded under separate cover.

We lrust that the above information will provide clarification to your concerns. If you have any further questions or concerns, please do not hesitate to contact me.


Vice President. Corporate Compliance

LElIDBR: DID'iW1C B~. F.S.B •• A FEDmALLY CSlI.~ S7.v1J~ 8A..~~

PRDPERlY; 1751 can:~ HAY. NCRIH FCIlT~, FL 33917

~NO./HIN:~Sa66639 /100055401258666991

NOTICE OF RIGHT TO CANCEL (Refinancing with Orlglnal Creditor)

You Righi 10 CIIncei. You zre enlCrins imo n pew trarIS:leIiOiliO i_ncrcase me amounl ofcredit previously provided 10 you. Your bomc is the: aEcwll)' for Ihis new cransaaion. You have a legal righl under federal law 10 eanocllhis !Ie\" lrBnSIIcl:ion. witboul ~ within three (3) business days from whichever orllle following events occurs last-

(J ) the dale of the trail Slicti Dn, .... hkll is; I ""reb 22 2007 l.or

(2) !he datc )'(l1I reee ivC.:I )'DIll" new TMh in LemH.IIg dj $I: 1osus1s: or

{3} W: dale you reocivc:1lhli nolice ofyouc rlthl to eanect

If you cancel this new IJllllSllelion "will nol IIfI"ca ,11: amaunJ 1II:u you prtsently owc. Voor holllll II the securily for thai. amounL Wilbln twenly (20) calendar da)'i aft!:!" we receiyt )'OlII" nolia: of cancellation of tho new tnmsaetion WE JJI1lSl mk!: Ih sups ncet:SSlU)' 10 rt:ne-clibe fat'lWI )'OUr ham~ d oes nOI secure the inerease or ~il. Wcm1lSl also rerum any money you llaYC given to us or anyone else.in connectlon willllllisJlCW IraIlSaCtion.

"You may keep any money _ have &i~en you in this new lr.IJI5<Idion UDlil we have d()lle the Illin~ men'ioned above bu1. you 1'C1.ISI1Iien ofTl:!" to return the monty allbe ~ below. I rwc do nOllBke possession orlM monC)' within twcruy (20) calendar ~ of your offer YOll may k~ it without rw1herobligalion.

Hf)", Tf) CaDt.d. Ir)'O"JllW:iOt If) e~ this ~on, YOU'rrJaY do SI) by nalirying us in wrhln);. \t". ~ BANK. F.S.B .• A FEIImALLY CH1\R'I'ERED SA."VIlCS BrINK BUG C, 901 E 104m sr 4'IH FI.CX:Il: ATlN: HIS Intemal 0::ntr016 lCINSAS CI'IY, M:l 64131 - Fax: ~26-229-11l3

You may usc a.oy .maen swemcnl tIw Is signed and daied by yOu and slBles }'OUT inlenlion 10 o;:;uICel, or you may use this noli Ct! by datin;; 8.IId signing below. Kcql DJIC (I) cop), of III is 1lO1ic:c beeaese it COIIlDins importanl

infonnalion about your ri~ts. _

If)'Oll cancel by mail er ielegram, you must send me~ no ~r than midnight of, I Kn:cll 26, 2007 [;

(or mldaight orlbc Ibird bu.~ d.y followinil the la,CSI or !he ~ e~ts listed above). If you send or del~r }'I)W" wnlU:n ~ In ~td some other ..,."."/. it I1I\.ISl be ddi"IIcrtd 10.the abtrYc 1!.1I.dRss no \;llcr 1han \hal time:

I WISh To Canw.

U:Uf! _

Rcc!lpl of Noliee. 1 lH::rmy acknowledge !hat th!: 1r.lIIsac:liort ldentifJOCl 011 the filee of this NotiCe was consummated IUKllhall llilYC received one (I) wpy of d~ Fedcral TnKh i:I Lending DisclollR and IWO (2) eepies

nflll is Noli ct. .

Noli« 01 Rl;:bllo Cloftl (RdI.'IKIDJI"'illo 00--iJ:f.,.1 Cl<dih".) (H9) IMMI,LltllOj

-·llit CoIoirUAA"ccSotmcr. I","~ ,.~, on

~: mm:J'~C M.~, f".S.B., A mlE!OO.LY 0i1IR'IERED .s.~VJ:l')8S aw/_

PROP.ER'lY: 1751 CDED\. WTl.Y, N::RlH FmT~. fl. 33917

LOKNND./MIN:~25B66699 /100055401258666991

NOTICE OF RIGHT TO CANCEL (Refinancing with OrigiD~1 Creditor)

YOIJr RighEto C:tn<:tL You <Ire mloing inlO ~ nl:\O' rnwaeliOl'l 10 iDtttasc.!he atnounl of acdil prcvXJl.tSly provided 10 )'OIL Your nom~ is Ik lCQlfity for \his T1!:W ~ion. 'Iou nave]l It&al rigbI under frdtTallaw 10 aneel lhis Ilew trul!al:lion, wllholll ton, wilhin tlne lJ) business days from whicl)ey~ o{the fo!lowing CYeIlI$ ocaus las.:

{I} !he l!alt <lftne. hn5acllon, whithis; t ~ 2'2,; 20,Q7 ~.Of

(2) Ilt¢ date: you r«eiYcd your n~Y Truth in lefII}ing dl 51:105 pres; or·

(3) the da Il: you reed \!aJ th is norier. of)'OU1 rij;h I I" ~,

If you =J lhis new Ir.uuaction il will 1101 afTed. the arnDJllt th~1 ~u ~nlly owe, ¥01lT ~ is ihe security ror Ih:d ameum, Wilhio 'WCnIY {2n} calendar d~ys dtu \\'1: r«:r:ive )'tlllT nolice of C3IIecllalilll1 of ibis nel" mnW:\KJn we: (111m ~k \he ~ep!. \'ICC~ 10 ~ me fad m!.! )'nil!" bomc 1l«s 1\0\ =ure \be intt~ or 'Otl:di~. We mLlSlltl!Q retern any mone), YOII have Gi1lCllio us or an)'tlfle else In connec:lioJl with Ibis IICW Ir.u'Isaction.

You may keql any mOMy we llave given you in this new ttanstlo:!.ion !lIUn we have done Ihe Ihin&! mentioned abcwc bul)'OU mUS! then orrer to ICtUlllihe mOIl!:)' ~llha add.'t:SS below. Ifwe do n",1ake posstssion of lite mo~ey within Iwcnly (20) C31emar days oryour offer you may keep II wiIhoul further oblJs;!liDll-

HoI\' To cancel If you decide locanccllhis transaction, you iIIiI}' d9 10 by nDrifying us in writing, at: :INOYWIC BlINK, F.S_B .• A FEERALLY ~ SAVlloX;S BlINK .mro C, 901 E ~04T'rl st 4lH F1..O:JR Al'lN: HIS·Int:eJ::na1 o::ntrols ~ CITi. K) 64131 - Fax: ~26·249·J.713

You DliI)' lUe any wrinen si;demcn' OLRI is signed anil ~ by you and staleS yollr irltCIIlioJllo otnecl, or you may lI$C thit !lOtic.t by datillg. mu:l u&rnnll. below. Keep QtIe (I) eopyl of lilts notice b::cause it conW!a. ill\p'J.fU!.nt

inlimti al;OII abou t your ri(;hts. _

If you cancel by lTIIIiI or tdfglVl\. you lTIIISI SCIld lite nQfice no Jale!" ~ fIlidnighl ar, I March 26, 2007 I: (or midnight of ~ third business d3Y following Ibc latest of !he tIt1Ce eve~IS lisred above). If you send or de Ii ver yourwrinen JJI)IiCl: 10 I;BQIZI some otherWl.y.;1 must be delive(cd 10 ~ above ~ no lalcr!h.a~ lhaltimc.

I WISh To Canru .

~; ----------------------

'R~pt of 1'10\ 1I:c.. . I hereby etknttHled&c thM the b"Bns;\tUon: idulified on Ulc raee. or ",is NotU W26 conrulll1llatc:d. and !hat I hsve received one (I) copy onlle FedmJ Troth [0 lending Dnclo~ and rwo (2:) copies of ibis Malice.

Do nol Jig}! UI1J= Ibe WIles in Ih e bolC!l a~ cODlplcted..


Connie L Denney 1751 Cobia Way N.Ft.Myers. FL 33917

August 27.2009


IndyMac Federal Bank

Attn legal Department and Account Manager 6900 Beatrice Drive

Kalamazoo MI 49009

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\.D RE: AllegedAccoun/ #: 1009618305 Property Address: 1751 Cobia Way

Property Address: North ForI Myers FL 33917 Foreclosure case No OB-CA-050630


Dear Sirs/Madam:

With this letter. I. hereby exercise my rights under the Federal Truth in Lending Act. 15 U.S.C. § 1635, Regulation Z §;226.23. to rescind the above referenced mortgage loan for the following reason:

The borrower received one form right of rescission instead of two. Burrower was not provided two forms sign~d by the borrower for proof of acknowledgement of receiving notification and understanding of the rescission poUcy. Borrower never got 2 HUD booklets.

As a result of the lender/trustee/agent violation of the Truth-In-Lending Act. L Connie L Denney hereby exercise my extended right of rescission and therefore demand rescission according to 15 USC §1635{f); Reg Z §§226.15{aJ(3), 226.23(aH3). Liability for violating TILA runs to the lender.

Once the loan is sold. the liability, as related to rescission, extends to the assignee oswell. 15 USC §1641(c).

The regulations set up a three-step process to rescind a loan.

1.1. Rrst. the borrower must notify the lender. in writing. of the cancellation of the loan. While the notice must be in writing. it can be transmitted by mail. telegram. or other means. Reg Z §§226.15{all21. 226.23{al (2).

I .2. Once the loan is rescinded. the security interest or lien becomes automatically void by operation of law. 15 USC § 1635Ib); Reg Z §§226.1 51d)l J.I.. 226.23{d)(1 ). The note also is voided. The lender's interest in the property is "automatically negated. regardless of its status and whether or not it was ~eccrded cr perlec~ed." Off\Cial, Steff Commenkwy §§226.\ 5~dH' \- t , 226.23(d)(1 )-1.

1.3. Within 20 days of receipt of the notice of cancellation, the lender must re'liurn to the borrower any money or property that has been given to anyone in connection with the loan. 1 5 USC § 1635 (b); Reg Z § § 226. 1 Sf d) (2), 226.23( d) (2)_ The lender must also take steps to reflect that the security interest has terminated.

Failure to respond to the rescission notice as spelled out above results in another violation and an addition award of statutory damages. White v. WMC Mortgage. 2001 U.S. Dist. LEXIS 15907, at'" 5 fE.D. Po. July 31.2001); Mayfield v. Vanguard Savings & Loan, 710 F. Supp. 143, 145 (E.D. Po. 1989).

Liability for TlLA claims for monetary damages runs against assignees where the violation is apparent on the face of the loan documents. 15 U.S.C. § 1641 (a).

statute of L1mHatlons

• 1 year for affirmative claims. 15 U.S.C. § 1640(e):

• 3 years for rescission. Beac h v, Ocwen. 523 U.S. 41 0 (1998);

• UnllmHed as a defense to foreclosure In the nature of a recoupment or setoff. 735 ILCS 5/13-207. Bank of New York v. Heath, 2001 WL 1771825, at !1 (III. elr. Oct. 26, 2001).


Additionally, please consider this letter a "Qualified Written Request" per RESPA and as such I am demanding an accounting of my loan including the following: loan disbursements. charges. all payments paid to date. and the principal balance.






DATE: 09/0112009

RECEIPT #7002 2410 0006 5969 7518



DArn: 09/0112009

RECEIPT #70022410000659697501


I ,


Comptroller of the Currency Administrator of National Banks

Washington, DC 20219


January 14, 2005

Anthony J. Sylvester

Riker, Danzig. Scherer, Hyland & Perretti. LLP Headquarters Plaza

One Speedwell Avenue

Morristown, NJ 07962-1981

Madeline L. Houston Houston & Totaro

S6 Broad Street. Suite 1 Bloomfield, N.l. 07003


Wells Fargo Bank, Minnesota, N.A. v. Alberta Harris, et al, Docket No. ESX-L-4676-02


Bank One National Association v. Feinstein Docket No. F-11450-00

Dear Mr. Sylvester and Ms. Houston:

This letter is in response to your letter dated December 13,2004, seeking the views of the Office afthe Comptroller afthe Currency ("OCe") concerning preemption of certain state laws in connection with claims and defenses asserted by the parties in the above-named cases. You requested the OCC's views at the direction afthe Honorable Kenneth S. Levy, l.S.C., presiding judge in this litigation. For the reasons stated below, based on the facts presented in the materials provided to us, we believe that neither 12 C.F.R. § 34.4 nor the National Bank Act preempts application of the state laws at issue here to loans simply because they were purchased and held by national banks acting as trustees in connection with issuance of the mortgage-backed securities involved in this case.


According to the materials provided with the December 13tt. letter addressed to me. Delta F\mding made a mortgage loan to Alberta Harris in December 1999 (Wells Fargo Complaint,

· First Count '1), and subsequently assigned the mortgage to Wells Fargo "as Trustee for Delta Funding Home Equity Loan Trust 2000~ 1" eN ells Fargo Complaint, First Count 14). Delta Funding made a mortgage loan to Dequilla Robinson in November 1999 (Bank One Statement of Material Facts Not in Dispute 13), and subsequently assigned the mortgage to Bank One National Association lias Trustee in Trust for the Registered Holders of Delta Funding Home Equity Loan Asset-Backed Certificates Series 1999 .. 3" (Certification of Harold L. Kofman, Esq. '111,3). There i~ no indication that either Wells Fargo or Bank One made the original mortgage loans to Alberta Harris or Dequilla Robinson, nor does any party assert that Wells Fargo or Bank One has any other interest in these transactions except as trustees for investors in the mortgagebacked securities.

As trustee acting on behalf of the investors in Home Equity Loan Trost 2000~1, Wells Fargo

filed suit against Ms. Harris alleging that she had defaulted on the loan made by Delta and sought to foreclose on the real estate she had pledged as collateral for that loan (Wells Fargo Complaint. First Count ,,1 ~ 14). As trustee acting on behalf of the investors in Delta Asset-Backed Certificates Series 1999~3, Bank One filed suit against Jack Feinstein, as Administrator Ad Prosequendum for the estate of Ms. Robinson, seeking to foreclose on the real estate she had pledged as collateral for the loan made by Delta (Memorandum of Law in Support ofPlaintitf Bank One National Association's Motion for Summary Judgment at 3-4). Ms. Harris and Mr. Feinstein ("Defendants"), through counsel, opposed the foreclosure actions. They alleged in counterclaims against the Banks (and third~party claims against Delta and others) defenses based upon alleged violations of the New Jersey Consumer Fraud Act (''CPA''), N.l.S.A 56.8-2, whic~ BIJlong other things, proscribes unc;onscionable practices in real estate transactions. N.1.S.A. 56.8-2. See Defendant's Brief in Opposition to Plaintiff Wells Fargo's Motion for Partial Summary Judgment at 3; Defendant's Brief in Opposition to Plaintiff Bank One's Motion for Summary Judgment at 4. Asserting that federa1law authorizing national banks to make and purchase real estate loans preempted the Defendants' state law defenses under the CF A, Wells Pargo and Bank One, as trustees acting on behalf of the investors, sought partial summary judgment on the cross-claims.


Pursuant to 12 U.S.C. § 371, national banks may'ntake, arrange, purchase or sell loans or extensions of credit secured by liens on interests in real estate, subject to • • • such restrictions end requirements as the Comptroller of the Currency may prescribe by regulation or order." The oce's real estate lending regulations provide that, fI[ e]xcept where made applicable by Federal law, state laws that obstruct, impair, or condition a national bank's ability to fully exercise its Federally authorized real estate lending powers do not apply to national banks." 12 C.F.R.

o 34.4(a). .

The Banks assert that application of the CFA is preempted because it would interfere with their power as national banks to purchase loans as authorized under 12 U.S.C. § 371, and that holding them liable for violations of the CF A as loan purchasers would be contrary to 12 C.F.R.

§ 34A(a), which preempts state laws that interfere with national bank real estate lending authority.


Section 34.4(a)(10) states that national banks "may make real estate loans under 12 V.S.c. § 371 without regard to state law limitations concerning • * • [p]rocessing, origination, servicing, sale or purchase of, or investment or participation in, mortgages," 12 C.F.R.§ 34.4(a)(10) (emphasis added). However, in no sense, under the facts presented, can the Banks be viewed as making a real estate loan under 12 U.S.C. § 371 and 12 C.F.R. § 34.4. The Banks did not originate the loans. They did not fund the loans at inception. Nor did they "purchase" the loans as part of any real estate lending program comprehended by the regulation. Here, the Banks act as trustees for the benefit of investors in the trusts. The substance of the transaction is that the investors, not the Banks, are purchasing the loans that have been made by Delta. The investors own the beneficial interest in the loans held by the Banks as trustees. And the effect of any liability for violation of the CFA ultimately falls on the investors. Nowhere do the Banks allege that they themselves, as opposed to the trusts they represent, are exposed to liability for any violation of the CFA. For all these reasons, 12 U.S.C. § 371 and 12 C.F.R. § 34.4(a) simply do not apply to the transactions by which the Banks acquired legal title to the loans in the circumstances at issue here.

With respect to the activities of Wells Fargo and Bank One as trustees, the banks derive their power to act as trustees from 12 U.S.C. § 92a. When state law conflicts with national banks exercising powers granted to them by federal law, the Supremacy Clause of the United States Constitution requires that the state law yield to the paramount authority of federal law , with the result that application of the state law to national banks is preempted. The Supreme Court has explained this principle stating that it interprets "grants of both enumerated and incidental 'powers' to national banks as grants of authority not nonnally limited by, but rather ordinarily pre-empting, contrary state law." Barnett Bank of Marian Countyv. Nelson, 517 U.S. 25,32 (1996).

As the Supreme CoUrt demonstrated in its review ofpreemption cases in the Barnett case, Supremacy Clause principles animating conflict preemption have been expressed in a wide variety of phrases that do not yield materially different meanings, including "stand as an obstacle to:' "impair the efficiency 04" Cisignificantly interfere," "interfere," "infringe," and "hamper." See Barnett, 517 U.S. at 33. Thus, ifapplication of the CFA to the loans held by the Banks as trustee were to obstruct, impair, condition, or otherwise interfere with the Banks' exercise of fiduciary powers granted to them under federa1law, the state statute would be preempted.

Based on the facts presented, we do not believe that to be the case. The Banks have not claimed that application of the CF A would impair their ability to act as trustee in these circumstances or that the state law otherwise interferes with the performance of their legal obligations as trustee. Not could they claim that having to respond to state law defenses to recovery on assets held in trust obstructs or impairs their power to act as trustee absent some indication that the state law infringes their authority, conditions their actions, or imposes a burden in a way prohibited by federal law. In short, the BBIJks' authority to act as trustees under federal law does not insulate the assets the Banks hold in trust for the benefit of investors from state law requirements otherwise applicable to those assets.



We trust that the foregoing is respcnsive to your request. .


{sl Daniel P. Stlpano

Daniel P. Stipano Acting Chief Counsel

Cc: HOD. Kenneth S. Levy, J.S.C. 212 Washington Street

The Wilentz Justice Complex General Equityt 8th Floor New~ New Jersey 07102

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