9 10 11 APPEARANCES: 12 For Plaintiff: 13 14 15 16 For Defendants: 17 18 19 Court Recorder: 20 21 22 Transcription Service: 23 24 25 Proceedings recorded by electronic sound recording; transcript produced by transcription service. Petrilla Reporting & Transcription 5002 - 61st Street Sacramento, CA 95820 (916) 455-3887 (UNMONITORED) U.S. District Court 501 I Street, Suite 4-200 Sacramento, CA 95814 (916) 930-4072 BAHAREH MOSTAJELEAN Bryan Cave, LLP Two Embarcadero Center, #1410 San Francisco, CA 94111 (415) 675-3400 BERENICE THOREAU DE LA SALLE Pro Se P.O. Box 9399 1687 Forest Trail Mammoth Lakes, CA 95814 (760) 937-5645 TRANSCRIPT OF PROCEEDINGS BEFORE THE HONORABLE KIMBERLY J. MUELLER UNITED STATES MAGISTRATE JUDGE AMERICA'S WHOLESALE LENDER, et al., Sacramento, California Wednesday, February 10, 2010 10:04 A.M. Hearing re: defendant's motion to dismiss. ) ) ) ) ) ) ) ) ) ) ) Case No. 2:09-cv-02701-MCE-KJM


SACRAMENTO, CALIFORNIA, WED., FEBRUARY 10, 2010, 10:04 A.M. 1 2 (Call to order of the Court.) 3 THE CLERK: 4 Salle v. America's Wholesale Lender. 5 defendant's motion to dismiss, Your Honor. 6 THE COURT: 7 you could state your name for the record? 8 MS. DE LA SALLE: 9 plaintiff. 10 THE COURT: 11 MS. MOSTAJELEAN: 12 Mostajelean on behalf of defendants. 13 THE COURT: 14 parties' filing in this matter. 15 In this case I have no particular questions. 16 would allow is each side to argue briefly if they believe 17 something is not fully covered by the papers, or if in response 18 to the reply, Ms. De La Salle, you have something else you'd 19 like to say. 20 kind of making clear the ground rules. 21 MS. DE LA SALLE: 22 THE COURT: 23 what you say, I'll let you know. 24 So, Ms. Mostajelean? 25 And then if I have questions based on That's fine. But I'm going to start with the movant. I'm just What I Good morning. I have reviewed the Good morning, Your Honor. Bahareh Good morning. Yes. Berenice Thoreau De La Salle, Good morning. Appearances please. If This matter is on for Calling Civil Case 09-2701-MCE-KJM, De La


MS. MOSTAJELEAN: 1 preference on whether I come to the podium, or stay at the 2 table? 3 THE COURT: 4 MS. MOSTAJELEAN: 5 Your Honor, we don't really have much to add that 6 hasn't already been briefed, but I would just like to reiterate 7 that we request that this Court grant our motion to dismiss 8 simply because plaintiff's eleven causes of action, the 9 majority of them are premised on an untenable legal theory that 10 these defendants do not have the right to foreclose. 11 The loan documents that plaintiff signed establish 12 that, in fact, they all do. 13 in 2005 states that the lender is AWL, the trustee is 14 Recontrust and the beneficiary is MERS. 15 On page 3, it grants to the trustee, Recontrust, the 16 power of sale of the subject property, and on page 12 it 17 specifically states that the note or the interest can be sold 18 along with the security interest without prior notice to the 19 borrower. 20 So this -- these agreements, the plaintiff agreed to 21 are the basis for the defendant's right to non-judicially 22 foreclose, and defendant has not, as plaintiff has not been 23 current on her loan. 24 These are -- the defendant's are pursuing remedies 25 She is currently in default. The deed of trust which was signed Thank you, Your Honor. You can stay at the table.

Your Honor, do you have a


that were specifically provided for in their agreements. 1 such, each of her claims that is premised on this argument 2 failed as a matter of law. 3 Her other claims, as we had discussed, I won't -4 there's no need to go into them, we've discussed it in our 5 motion to dismiss, and also in our reply, also fail for reasons 6 that we've stated. 7 If Your Honor has further questions, I'm happy to 8 answer them, but for the reasons that we've stated in our 9 motion to dismiss, we request that you grant it without leave 10 to further amend. 11 THE COURT: 12 MS. DE LA SALLE: 13 decided 138 years ago in the U.S. Supreme Court case of 14 Carpenter v. Longan, and the cite for that case is 16 Wall 271; 15 83 U.S. 271, 1872. 16 THE COURT: 17 MS. DE LA SALLE: 18 THE COURT: 19 so -20 MS. DE LA SALLE: 21 THE COURT: 22 the papers. 23 MS. DE LA SALLE: 24 But being that counsel for the defendant has reiterated her 25 I won't, and I will be very brief. -- you don't need to review everything in I understand. Yeah. Again, I have reviewed the papers, I do cite it in the papers. And you have cited that in your papers? Your Honor, the issue before us was All right. Ms. De La Salle?



position, I would like to reiterate -1 THE COURT: 2 MS. DE LA SALLE: 3 At page 274 of the U.S. Supreme Court decision, the 4 Court says, and I quote, 5 "The note and the mortgage are inseparable. 6 former as essential, the latter as an incident. 7 assignment of the note carries the mortgage with it. 8 assignment of the latter is a nullity." 9 MERS, Your Honor, has corrupted this basic black 10 letter law of mortgages that makes a split of the security 11 instrument from the note impermissible. 12 First, it names itself as the beneficiary of the deed 13 of trust, thus splitting the deed of trust from the note, and 14 then it attempts to rectify the split by stating that it is 15 acting in some form of restricted agency relationship solely as 16 the nominee for the lender. 17 In doing this, MERS attempts to do two things that 18 are inconsistent at the same time, and it is this ambiguous 19 contradictory language that fails the title. 20 First, because as the beneficiary of the deed of 21 trust, MERS has suffered no default. 22 of the note has suffered a default, and only the current holder 23 can enforce the note. 24 And secondly, even if it could be argued that MERS is 25 Only the current holder Why? An An The -- just a key point. Absolutely.


the agent for the original lender, America's Wholesale 1 Lender -- and Your Honor, it is important to note that within 2 the four corner of the document, within the four corners of the 3 deed of trust, there is nothing that establishes that agency 4 relationship. 5 But again, even if you argue that it exists, there's 6 nothing that establishes an agency relationship between MERS 7 and the alleged current owner of the note according to the bank 8 servicer, Bank of America; U.S. Bank as trustee for the 9 structured adjustable rate mortgage, 19 excess 2005. 10 apparently, allegedly, they are the current holder of the note. 11 Yet, MERS takes the position that through the deed of 12 trust all of these agency relationships are implied, and that 13 it can go forward based upon these implications and foreclose 14 even though the four corners of that document, of the deed of 15 trust, carries only one signature, mine, not the signatures of 16 MERS, nor its principals. 17 They seem to contend that with this implied agency 18 agreement that is in violation of the statute of fraud that the 19 U.S. Supreme Court ruling of Carpenter v. Longan prohibiting 20 the splitting of a mortgage from the note can somehow be 21 ignored. 22 Your Honor, it cannot. 23 the U.S. Supreme Court going back and reversing Carpenter v. 24 Longan. 25 It cannot be ignored without They are


I'd like to make two other points, and that is 1 throughout the procedures, counsel for the defendant has used 2 the ad hominem arguments that question my motives by stating 3 that in filing this lawsuit I am merely attempting to delay the 4 inevitable foreclosure, that this is a delay tactic and that my 5 motives are, or should be questioned. 6 Although an ad hominem remark is not something that 7 the Court should consider, I feel that it is important to 8 address it. 9 On three occasions I have attempted to have this loan 10 modified in compliance with the intent and the spirit of the 11 legislature, and on three attempts I have not been given an 12 answer as to why it should be denied. 13 guidelines of a loan modification. 14 avoid a debt. 15 But Your Honor, if counsel for the defendants can 16 argue that there is no private right of action as a result of 17 HAMP and as a result of the spirit and the intent of the 18 legislature, then conversely I certainly can argue that I have 19 the right to avoid an illegal sale. 20 Moreover, being that the sale is illegal, being that 21 the deed of trust has no force and effect, the tender law, the 22 tender rule which counsel cites is not necessary. 23 inappropriate. 24 Court, Humboldt Savings v. McCloverty, which clearly state that 25 There are cases from the California Supreme It is I am not attempting to I fall within the


if a sale can be avoided legally, that the tender law, and the 1 need for redemption is not necessary. 2 That is all that I have to say, Your Honor, and I 3 respectfully request that this motion be denied. 4 THE COURT: 5 can you respond to the refusal to modify the loan? 6 MS. MOSTAJELEAN: 7 know as of right now, and that based on the statute, it does 8 not require that a modification be provided. 9 to provide a modification if a plaintiff cannot afford such 10 modification. 11 The plaintiff has attached exhibits to her complaint, 12 and one of those is the denial of this loan modification. 13 cannot state exactly the reasons why. 14 client to look into that and provide supplemental briefing if 15 you so desire. 16 However, based on the documents, her loan 17 modification was reviewed and it was denied, most likely on the 18 grounds that a modification could not solve her indebtedness 19 issues. 20 THE COURT: 21 briefing. 22 MS. MOSTAJELEAN: 23 THE COURT: 24 MS. DE LA SALLE: 25 Your Honor, may I respond to that? Right now, I don't think I do. Okay. I'll let you know if I need supplemental I'd be happy to ask the I There's no duty Your Honor, I can only state what I All right. Thank you. Ms. Mostajelean,


THE COURT: 1 MS. DE LA SALLE: 2 MS. MOSTAJELEAN: 3 opening motion to dismiss, and in our reply brief on page 7, 4 MERS does have an interest in this, and MERS does have standing 5 to pursue this foreclosure. 6 Moreover, loan services and trustees like BAC Home 7 Loan Services, and Recontrust, they have standing to enforce 8 these loan obligations despite the fact that they do not 9 currently -- that they are not the owners of the note, they do 10 have standing to pursue the remedies that are provided for 11 explicitly in the deed of trust, and that the deed of trust on 12 page 8, and that she has attached as Exhibit 2, I believe, 13 pages 2 and 3, and 12, they all create this right to pursue 14 non-judicial foreclosure in the event of a default, which is 15 what plaintiff is facing at this time. 16 Your Honor, for these reasons, and the reasons stated 17 in our papers, we do request that this -- our motion be granted 18 in its entirety. 19 THE COURT: 20 will still have the chance to respond, but if there's something 21 you wanted to clarify? 22 MS. DE LA SALLE: 23 that the loan modification has been denied because I can 24 allegedly not afford it. 25 Your Honor, that is not the case. My Yes, I'd like to clarify her remark You had another point? Ms. Mostajelean Your Honor, as we stated in our Okay.


Let her finish.


net income last year was $78,000. 1 modification. 2 the problem here is not whether or not I can afford it. 3 The problem here is that there is a conflict of 4 interest between the bank servicer, and the current owner of 5 the note, and I will put your attention to a treatise which I 6 cite in my opposition papers, which is entitled, "Why Servicers 7 Foreclose When They Should Modify and Other Puzzles of Servicer 8 Behavior." 9 And in that treatise, it explains that the bank 10 servicer collects the late fees and makes money in the event of 11 foreclosure. 12 event of a loan modification. 13 loan modification may be in the interest of the holder of the 14 note, bank servicers are not providing loan modifications. 15 They hold the power. 16 eight percent of all loan modifications today have been 17 approved and that's since the inception of HAMP. 18 reason, and the reason is money. 19 THE COURT: 20 the -- you've sought modification from Countrywide? 21 MS. DE LA SALLE: 22 times. 23 before Bank of America had bought it. 24 modification on two additional occasions, again from Bank of 25 I then sought The first time I sought modification from Countrywide I've sought modification three Just help me understand, the -- is There's a Your Honor, eight percent, only And therefore, even though the The bank servicer, however, loses money in the I've made that clear to the bank servicer, but

I can afford a loan


America. 1 bogus law firm which is now being sued by the Federal Trade 2 Commission. 3 I went the second time through a nonprofit 4 organization which has done nothing more than the bogus law 5 firm. 6 And I've gone a third time on my own. 7 THE COURT: 8 modification named as a defendant in this case? 9 MS. DE LA SALLE: 10 THE COURT: 11 MS. DE LA SALLE: 12 THE COURT: 13 reply? 14 MS. MOSTAJELEAN: 15 Based on the statute, and based on the fact that there is no 16 private right of action, and the fact that plaintiff is not 17 entitled -- that defendants do not have any duty to guarantee 18 plaintiff a loan modification, and the plaintiff's own exhibit 19 states that she was requesting a $150,000 haircut on her loan, 20 there is no guarantee that she should -- she's entitled to a 21 loan modification. 22 Regardless, the law as it is states that she has no 23 right of action to bring that claim, no private right of 24 action, and moreover, to claim that these defendants do not 25 Just very briefly, Your Honor. All right. Ms. Mostajelean, any further No. All right. No. And is the party from whom you've sought

I went through an attorney the first time.

It was a


have standing to initiate the non-judicial foreclosure 1 is -- it's false. 2 has an agreement. 3 She has failed to meet her obligations and as such, these 4 defendants are allowed to pursue their remedies, which is non5 judicial foreclosure. 6 Thank you very much. 7 we request that you grant out motion in its entirety. 8 Thank you. 9 THE COURT: 10 regarding the motion. 11 MS. DE LA SALLE: 12 Honor. 13 THE COURT: 14 MS. DE LA SALLE: 15 that I'm requesting a $150,000 haircut. 16 is in accordance with the loan modification process, and 17 with -- more importantly, with the current market values, 18 according to HAMP, if one's loan can be reduced to 95 percent 19 of the current market value of the property, that the loan 20 modification should go forward. 21 Now, I did not bring on this real estate crisis. 22 can be argued that the very institutions that are attempting to 23 stop the loan modification process in the interest of profit, 24 profit center for themselves, that those institutions created 25 It A haircut, Your Honor, Counsel for defendant points out All right. Yes, I have one more comment, Your One more thing? All right. I have no further questions For those reasons, Your Honor, She entered into this agreement in 2005. It's incorrect. The law is what it is. She


the mess that we're in, and yet counsel argues that given the 1 current market values, that I should not be able to benefit 2 from the loan modification, and the amount of the loan 3 modification which has been stipulated to by the legislature. 4 Clearly, I think that that is unfair. 5 THE COURT: 6 any of this counsel's clients are specifically denying 7 modification. 8 MS. DE LA SALLE: 9 believe that this counsel's clients are denying modification. 10 THE COURT: 11 MS. DE LA SALLE: 12 bought Countrywide, and it is the defendant and they have 13 denied -14 THE COURT: 15 asked you earlier if you had named as a defendant -16 MS. DE LA SALLE: 17 THE COURT: 18 MS. DE LA SALLE: 19 defendant. 20 THE COURT: 21 MS. DE LA SALLE: 22 meant have I named the bogus law firm that -23 THE COURT: 24 MS. DE LA SALLE: 25 No. Yes, I have named Bank of No. I misunderstood. I thought you All right. Yes, yes, I have named them as a So that's the BAC Home Loans. Oh, yes, of course. They have denied -- okay. So when I Bank of America Home Loan Servicing All right. Well, yes, Your Honor, I am. I But just so -- you're not arguing that


America, absolutely. 1 THE COURT: 2 De La Salle is proceeding on her own, I'm just making sure we 3 have a complete record 4 MS. MOSTAJELEAN: 5 understandable, Your Honor. 6 Just -- the final word is the claim for a loan 7 modification as I mentioned previously, there is no private 8 right of action, there is no duty to provide a loan 9 modification, and unfortunately, that's what the law says, and 10 the law holds in favor of our -- of the defendants in this 11 matter. 12 Regardless, aside from the loan modification issue, 13 her other claims fail as a result, in fact, that these parties 14 are entitled to foreclose, and to initiate the non-judicial 15 foreclosure. 16 And again, as we stated earlier, we request that this 17 Court dismiss plaintiff's complaint without further leave to 18 amend. 19 THE COURT: 20 to resolve the motion based on the law. 21 given some of what I've heard this morning, and some of what 22 was alluded to in the papers, that -- is there any possibility 23 that the parties are willing to take advantage of one of the 24 court sponsored mediation or settlement programs? 25 Is that a Here's my question, All right. So my job on this motion is Thank you, Your Honor. Sure. No, that's totally All right. Final word. Given that Ms.


possibility here? 1 resolution where a veteran attorney is available, or a judge, 2 either this magistrate judge, or another judge drawn by random 3 assignment could sit as a settlement judge. 4 That would only happen if both of you wanted to go 5 there. 6 that a possibility? 7 and it made me feel comfortable asking that. 8 MS. MOSTAJELEAN: 9 I'm going to resolve the motion. 10 the law if I need to, and I'm happy to do that. 11 MS. MOSTAJELEAN: 12 I'm going to have to discuss with my clients to determine how 13 they would like to proceed. 14 they would be willing to enter into that, but it's something 15 that I will discuss with them, and I can let you know in the 16 future. 17 THE COURT: 18 any initial reaction? 19 the week to let me know, and they could contact Mr. Caspar and 20 let him know if they want to take advantage of our court 21 sponsored settlement. 22 MS. DE LA SALLE: 23 in the negative, and that is because of the NAF debacle, the 24 National Association of Arbitration which was proven to be 25 Your Honor, my initial reaction is I can give the parties till the end of All right. Ms. De La Salle? Do you have As of right now, I cannot say that Your Honor, that's something that I'm going to do that based on Sure. And I'm not signaling how You just used the word "unfortunately," Your clients, Ms. Mostajelean and Ms. De La Salle. Is

There's something called voluntary dispute


corrupt, and it ended up being sued by these -1 THE COURT: 2 organization, it's with a judge of this Court, or an attorney 3 whose been selected to be a member of a panel that the court 4 itself has convened. 5 organization that I would be referring the matter to. 6 MS. DE LA SALLE: 7 possibility also 8 THE COURT: 9 until Friday, close of business, so that would be at this point 10 4:00 o'clock to let Mr. Caspar know if they want to be referred 11 to some kind of settlement. 12 know regardless. 13 is submitted, and I'll resolve the motion on the loan. 14 MS. MOSTAJELEAN: 15 THE COURT: 16 MS. MOSTAJELEAN: 17 our client likes to have the pleadings closed first and have 18 you decide, but I will -- we will let Mr. Caspar know by the 19 end of the week regardless. 20 THE COURT: 21 submitted as of Friday at 4:00. 22 MS. MOSTAJELEAN: 23 MS. DE LA SALLE: 24 (Whereupon the hearing in the above-entitled matter was 25 Thank you, Your Honor. Thank you, Your Honor. All right. Thank you. The matter is Generally I know that -- I believe All right. Your Honor, again, if I may? If one or both of you say no, then the matter And if you could let Mr. Caspar All right. So I'll give the parties I would like to reflect upon that So there's no outside separate Well, this is not with any outside


adjourned at 10:28 a.m.) 1 --o0o-2 CERTIFICATE 3 I certify that the foregoing is a correct transcript from 4 the electronic sound recording of the proceedings in the above5 entitled matter. 6 7 March 3, 2010 8 Patricia A. Petrilla, Transcriber 9 AAERT CERT*D-113 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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