1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendant JOHN SMITH by and through his attorneys of record hereby proffers his further brief on the subject

of tender where, as here, he has both alleged and provided evidence, indeed Plaintiffs own evidence, that Plaintiff has never held an ownership interest in the loan pursuant to which a purported Trustees Sale has taken place. Plaintiff has clouded the facts of this case by suggesting that, even if Plaintiff does not and has never held an ownership interest in the loan at issue, defendant must first tender the amount of the loan in order to be in a position to challenge Plaintiffs right to possession. This argument most closely resembles that of a car thief who, as a
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Attorneys for Defendant, John Smith SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF RIVERSIDE E* TRADE BANK Plaintiff
v.

Case No. MVC 1234567 DEFENDANTS BRIEF ON TENDER (WHERE HE HAS ALLEGED PLAINTIFF HAS NEVER OWNED THE UNDERLYING OBLIGATION)

JOHN R. SMITH Defendant

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condition to returning a stolen car to its owner, demands he first be paid the value of the car. California law does not recognize the right of a thief to make such a demand or require its satisfaction before the rightful owner may recover his property. Indeed, Californias Fourth District Court of Appeals has made it clear that where, as here, a trustees sale is void then no duty to tender exists. Dimock v. Emerald Properties, LLC (2000) 81 Cal.App.4th 868. The Fourth District has also discussed the rights of a party to challenge the efficacy of a Trustees Deed issued pursuant to a void trustees sale, California Golf, L.L.C. vs. Cooper (2008) 163 Cal.App.4th 1053 at 1070 the mere existence of a comprehensive statutory scheme does not necessarily eliminate all further remedies without the consideration of the relevant policy concerns. Indeed, California courts have repeatedly allowed parties to pursue additional remedies for misconduct arising out of a nonjudicial foreclosure sale when not inconsistent with the policies behind the statutes. In this same vein the Court in Bank of America, N.A. v. La Jolla Group II (2005) 129 Cal.App.4th 706 at 712 explained: A power of sale in a deed of trust is a creature of contract, arising from the parties' agreement. "The power of sale only exists if it is expressly granted by the trustor in the security documents." (4 Miller & Starr, Cal. Real Estate (3d ed.2003) 10:123, p. 381.) The statutory scheme governing nonjudicial foreclosures does not expand the beneficiary's sale remedy beyond the parties' agreement, but instead provides additional protection to the trustor: "Statutory provisions regarding the exercise of the power of sale provide substantive rights to the trustor and limit the power of sale for the protection of the trustor." (Ibid.) As is typical, the deed of trust involved in this case allows the beneficiary to exercise its power of sale only if an "event of default" occurs. If, after a default, the trustor and beneficiary enter into an agreement to cure the default and reinstate the loan, no contractual basis remains for exercising the power of sale. (Emphasis added). Put otherwise, it is the Trustors interests the legislature intended to protect in non-judicial foreclosures, not those of a creditor. More recently, the Court in Lona v. Citibank, N.A. (2011) 202 Cal. App. 4th 89 at 112-113

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explained the relationship between a void sale or underlying obligation and the duty to tender: There are, however, exceptions to the tender requirement. Our review of the case law discloses four exceptions. First, if the borrower's action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt . (Stockton, supra, 148 Cal.App.2d at p. 564) [trustor sought rescission of the contract to purchase the property and the promissory note on grounds of fraud]; Onofrio, supra, 55 Cal.App.4th at p. 424.) Second, a tender will not be required when the person who seeks to set aside the trustee's sale has a counterclaim or setoff against the beneficiary. In such cases, it is deemed that the tender and the counterclaim offset one another, and if the offset is equal to or greater than the amount due, a tender is not required. (Hauger, supra, 42 Cal.2d at p. 755.) Third, a tender may not be required where it would be inequitable to impose such a condition on the party challenging the sale. (Humboldt Sav. Bank v. McCleverty (1911) 161 Cal. 285, 291 [119 P. 82] (Humboldt).) In Humboldt, the defendant's deceased husband borrowed $55,300 from the plaintiff bank secured by two pieces of property. The defendant had a $5,000 homestead on one of the properties. (Id. at p. 287.) When the defendant's husband defaulted on the debt, the bank foreclosed on both properties. In response to the bank's argument that the defendant had to tender the entire debt as a condition precedent to having the sale set aside, the court held that it would be inequitable to require the defendant to pay, or offer to pay, a debt of $57,000, for which she is in no way liable to attack the sale of her $5,000 homestead.10 (161 Cal. at p. 291.) Fourth, no tender will be required when the trustor is not required to rely on equity to attack the deed because the trustee's deed is void on its face. (Dimock, supra, 81 Cal.App.4th at p. 878 [beneficiary substituted trustees; trustee's sale void where original trustee completed trustee's sale after being replaced by new trustee because original trustee no longer had power to convey property].) (Emphasis added). In the instant matter defendant has alleged that Plaintiff does not and has never owned the obligation for which a Deed of Trust was executed by him in favor of another entity, Gateway Funding Diversified Mortgage Services L.P.. A single recorded document, an Assignment of Note and Deed of Trust, purports to convey the interest in the obligation from Mortgage Electronic Registration Systems, Inc. (via a putative Attorney in Fact) to Plaintiff. Defendant has already explained in his Opposition that California Civil Code section 2936 specifies that such an Assignment of a Note,
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presumed valid, also assigns any mortgage or Deed of Trust securing the Note. However an Assignment of Note that is void on its face and as a matter of law conveys nothing. Thus defendant squarely falls within both exceptions one and four as identified by the Lona court. While defendant has not asserted he does not owe the underlying debt to anyone he has clearly asserted he does not and has never owed it to Plaintiff. Further, because the Assignment of Note was void ab initio the trustees sale and trustees deed upon sale, which necessarily rely on the Assignment, are likewise void. Questions about the validity of such assignments have recently been raised by an increasing number of courts concerned with the ramshackle approach taken by many putative lenders and mortgage loan servicers to use the non-judicial foreclosure process and then effectively look to the courts as unwitting assistants in the perpetration of fraud on homeowners. Two recent cases in the District courts for the State of California have examined precisely this issue. In the Central District case of Tang v. Bank of America (a complete copy of the Courts order denying Bank of Americas Motion to Dismiss is attached as required by California Rules of Court) which was filed on March 19, 2012, the Court, in discussing the tender rule at pages 7 - 8, stated: The Court does not believe it is useless to require lenders and trustees to comply with statutory requirements before foreclosing on all debtors, regardless of their financial situation. Improperly recorded notices, unsigned affidavits, and specious trustee substitutions cast a cloud of doubt over what otherwise may be a perfectly legitimate transaction. That uncertainty causes borrowers to question the legal authority of those attempting to foreclose, prompting lawsuits such as this, which consume vast amounts of judicial resources. Further, unsophisticated and financially distressed borrowers confused by sale irregularities may bring these lawsuits pro se or under the guidance of less-thanscrupulous attorneys, unaware of statutory provisions that may make them liable for the lenders attorneys fees. Numerous other courts have recognized the confusion created by statutory non-compliance in assignment and recording procedures. See, e.g., In re Foreclosure Cases, 521 F. Supp. 2d 650, 654 (S.D. Ohio 2007) (giving foreclosing parties in 27 separate actions thirty days to present proper documentation before proceeding with judicial foreclosures); In re Foreclosure Cases, No. 1:07CV2282, et al., 2007 WL 3232430, at *3 n.3 (N.D. Ohio Oct. 31, 2007) (There is no doubt every decision made by a financial
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institution in the foreclosure process is driven by money. And the legal work which flows from winning the financial institution's favor is highly lucrative. . . .[U]nchallenged by underfinanced opponents, the institutions worry less about [proper procedure] and more about maximizing returns.); In re Obasi, No. 10-10494 (SHL), 2011 WL 6336153, at *8 (Bankr. S.D.N.Y. Dec. 19, 2011) (The country is in the midst of a foreclosure crisis, and the news is replete with examples of misleading, inaccurate or incomplete mortgage related pleadings that have been filed . . It is easy to find examples . . . of the problems caused by the filing of inadequate documentation related to mortgage obligations.). (Emphasis added). The Court in Tang went on to discuss virtually the same issue as defendant has raised herein the validity of one or more recorded documents and, in particular, the fact of an agency relationship where one was necessarily required. The court, on pages 13 14 stated: Plaintiffs allege that the Substitution of Trustee was invalid because the person executing it on behalf of BOA, T. Sevillano, was a robo-signer who lacked the requisite agency relationship. Section 2934a requires that, in order for a trustee to be substituted, the beneficiary or the beneficiarys agent must record the substitution. Cal. Civ. Code 2934a(a). As noted above, Section 2924 requires that a notice of default be recorded by the mortgagee, trustee, beneficiary, or authorized agent thereof. Cal. Civ. Code 2924(a)(1); see also Cal. Civ. Code 2932.5. If Sevillano lacked an agency relationship with BOA when he executed the Substitution of Trustee, the Substitution of Trustee was invalid, such that Recontrust was not one of the four parties authorized by Section 2924 to record a Notice of Default. Thus, if Sevillano had no agency relationship with BOA, all subsequent actions taken by Recontrust as the trustee are invalid . In support of their allegations of robo-signing, Plaintiffs have submitted documents that show Sevillano acting as an agent of MERS only a few months before acting as an agent for BOA. In order for the Substitution of Trustee to have been validly executed by Sevillano as an agent of BOA, (1) Sevillano must have changed employment between March and August 2010, (2) Sevillano must be an agent for both BOA and MERS, or (3) MERS itself must be an agent of BOA. The Court presently has no information to suggest that one of these possibilities is true; the relationship between MERS, BOA, and Sevillano in August 2010 remains unclear. The Court thus finds Plaintiffs allegations of robo-signing plausible to proceed. Aside from the very documents whose legitimacy is reasonably questioned by Plaintiffs, Defendants submit no judicially noticeable documents showing that Sevillano was indeed an agent for BOA and not MERS. Notably, Defendants choose to address Plaintiffs robo-signing allegations in a footnote, claiming simply that the allegations of robo-signing are inapplicable because Sevillano did not need personal knowledge to sign the Substitution of Trustee.. This argument fails because Plaintiffs do not rely on Sevillanos personal knowledge in making their robo-signing claim; they have directly attacked the agency relationship itself
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by averring that Sevillano has no authority to sign the Substitution of Trustee . . Simply stating, as Defendants do, that [a]s an agent to Bank of America and as the named Trustee, T. Serillano [sic] was and is authorized to assign the deed of trust does nothing to defeat Plaintiffs claims when that very agency relationship is the basis of Plaintiffs challenge. The Court believes that it would benefit from the minimal discovery necessary to prove the agency relationship between BOA, MERS, and Sevillano during the relevant portions of 2010, perhaps with a deposition of Sevillano. Thus, because Plaintiffs have made a facially plausible claim that Sevillano was not an agent of BOA and did not have authority to substitute Reconstrust as the trustee, the Court DENIES Defendants Motion to Dismiss Plaintiffs wrongful foreclosure claim stemming from allegations of robo-signing. (Emphasis added). Here, Defendant has attacked the Assignment of Note and Deed of Trust on far more settled grounds it is executed by an Agent in the Agents own name thereby violating Californias Statute of Frauds as first articulated by the California Supreme Court in the cases of Fisher v. Salmon (1851) 1 Cal. 413 and Videau v. Griffin (1863) 21 Cal. 389. Indeed, the Assignment in question goes one step further in its failure to comply with the California statute of frauds it is ostensibly signed by a certifying officer of an attorney in fact of an agent acting in the agents own name. Since the Court in Fisher held that an instrument purporting to convey an interest in real property signed by an agent in its own name is void ab initio; it is axiomatic that such an instrument signed by the attorney in fact of an agent with no mention of the actual principal is also void. A second District Court case, out of the Southern District for the State of California, likewise discusses BOTH the tender rule and a challenge to the ownership of the loan at issue in the case. In Johnson v. HSBC Bank USA, N.A. as Trustee (also filed on March 19, 2012, a complete copy of which is attached hereto) the Court, at page 4, in concluding the tender rule did not apply stated: Plaintiff is not challenging Defendants' compliance with the foreclosure law, but is claiming that defendants did not properly receive the assignment of their loan . The "tender requirement does not apply to this case because" Plaintiff challenges "the beneficial interest held by [Defendants] in the deed of trust, not the procedural sufficiency of the foreclosure itself." (Emphasis added).
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Accordingly, the Johnson court, just as the California authorities already cited, found no tender is required where the rights and claims of a putative obligee are at issue. Here, defendant has

unequivocally stated plaintiff has never owned the underlying loan and thus is precluded from making any claims which require ownership. Again, no California case stands for the proposition that a thief is entitled to payment before returning that which it has stolen. While plaintiff will no doubt assert it holds some hyper-attenuated or equitable claim to the underlying obligation the rights afforded an obligee under Californias non-judicial foreclosure statutes arise out of contract, not equity and Plaintiff has repeatedly failed to provide proof, which it offered to provide, of a legally cognizable ownership interest in the loan that underlies this action. Plaintiffs Motion for Summary Judgment and request for tender of amounts to which it has not and cannot prove it is entitled should be denied with prejudice.

Dated April 2, 2012

_________________________ Bob Jones Attorney for Defendant, John Smith

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