VIRGINIA: IN THE CIRCUIT COURT FOR PRINCE WILLIAM COUNTY Aurora Loan Services, LLC Plaintiff, Civil No. CL v.

Defendants.

DEFENDANTS' PLEA IN BAR AND MEMORANDUM IN SUPPORT Defendants ______________________________________________, collectively "Defendants," by their undersigned counsel, respectfully submit the instant plea in bar. Defendants pray that the instant case be dismissed because Plaintiff Aurora (1) does not have standing to prosecute this action and (2) is not the real party in interest. This plea in bar should be granted because, as a servicer and not purchaser of the loan, Aurora does not have any cognizable interest in the Property with respect to which it seeks to remove cloud on title. Likewise, as a servicer and not purchaser of the loan, Aurora is not the real party in interest to assert a claim against the Property, and cannot prosecute this action absent joinder of the necessary party, the purchaser of the loan. Lastly, the Trustee under the Deed of Trust is a necessary party and this action cannot proceed without said Trustee. In support of the plea in bar, Defendants rely on the supporting memorandum set forth below.

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MEMORANDUM I. Standard of Review

"A plea in bar is a defensive pleading that reduces the litigation to a single issue, . . . which, if proven, creates a bar to the plaintiff's right of recovery." Cooper Industries, Inc. v. Melendez, 260 Va. 578, 594 (2000) (internal citations omitted); see also Station #2, LLC v. Lynch, 280 Va. 166, 175, 695 S.E.2d 537, 542 (2010). The single issue raised in this plea is whether Aurora's status as a mere servicer of the subject loan (and not an assignee of the loan) precludes it from prosecuting a remove-cloud-on-title claim due to Aurora's lack of any interest in the subject Property. The clear answer is that, as a servicer, Aurora lacks any interest in the Property and thus cannot state a remove-cloud claim, whether or not it is the noteholder. II. Statement of Pertinent Facts

Plaintiff Aurora Loan Services, LLC ("Aurora") is a limited liability company organized and existing under the laws of Delaware and authorized to do business in Virginia. Compl. 1-2. Plaintiff Aurora is attempting to bring this action "to remove cloud on title" against a property of Defendants known as ____________________________________("Property"). Compl. 4-5. Aurora brings this action with respect to the Property as a servicer of the consumer mortgage loan issued on _______________, 2003 to Defendant ______________. Specifically, on or about _________________, 2003, Defendant ________________ entered into a consumer loan transaction with an entity known as Aegis Wholesale Corporation ("Aegis Wholesale"), whereby Defendant executed a document styled as fixed-rate promissory note ("Note") in favor of Aegis Wholesale in the principal amount of $__________, Comp. Ex. F (copy of the Note), and a document styled as a deed of trust ("Deed of Trust"), which was subsequently recorded in Prince William County, Virginia, Comp. Ex. A (copy of the Deed of Trust). -2-

The Deed of Trust defines "Lender" as "Aegis Wholesale Corporation" and provides that it "secures to Lender" the performance of the covenants stated therein, including the repayment of the loan. Id., p.2. Both uniform ( 1-21) and non-uniform ( 22-24) covenants specified in the Deed of Trust run from Borrower to Lender and its successors and assigns: "The covenants and agreements of this security instrument shall bind (except as provided in Section 20) and benefit the successors and assigns of Lender." Id. 13. Importantly, Section 20 provides that the Lender (or Lender's successor who purchased the loan) and the Servicer (entity collecting payments) may be different entities and that, in such a case, a loan purchaser is not obligated to service the loan unless such loan purchaser specifically assumes the servicing obligations. Id. 20. Section 20 of Deed of Trust provides that the beneficial ownership of the loan is different from the servicing obligations of the loan, and that such beneficial ownership and servicing obligations are transferred separately and independently of each other. Id. Aurora has produced no evidence (nor can it) that it is the purchaser of the subject loan or that the loan contract has otherwise been assigned or transferred to it. Instead, to the extent that Aurora claims to be the "holder" in possession of the Note evidencing the subject debt, it holds such Note, if at all, on behalf of the purchaser of the Note, which purchaser is another entity different from Aurora. See Exhs. A (listing Aurora as Servicer and Bank of America as the purchaser) and B (indicating that Aurora is a "servicer"). III. A. Argument Aurora Must Have Some Interest In the Property Itself To Bring Suit.

Standing is a "preliminary jurisdictional issue having no relation to the substantive merits of an action." Andrews v. American Health & Life Ins. Co., -3-

236 Va. 221, 226, 372 S.E.2d 399, 402 (1988). In order to have standing to bring an action involving real property, a plaintiff must have "an interest" in the property. Keepe v. Shell Oil Co., 220 Va. 587, 260 S.E.2d 722 (1979). Similarly, in breach of contract actions the plaintiff must be a party to the agreement. A non-party may not simply sue in order to obtain relief with respect to the contract. Virginia Beach Beautification Comm'n v. Bd. of Zoning Appeals, 231 Va. 415, 420, 344 S.E.2d 899, 903 (1986). The Supreme Court of Virginia has said that the "point of standing is to ensure that a person who asserts a position has a substantial legal right to do so." Grisso v. Nolen, 262 Va. 688, 554 S.E.2d 91 (2001). Thus, "in asking whether a person has standing, the question, in essence, is whether that person has a sufficient interest in the subject matter of the case so that the parties will be actual adversaries and the issues will be fully and faithfully developed." Id. (emphasis added). Notably, an individual or entity does not acquire standing to sue in a representative capacity by asserting the rights of another, unless authorized by statute to do so. W.S. Carnes, Inc. v. Bd. of Supervisors., 252 Va. 377, 478 S.E.2d 295 (1996). Thus a plaintiff must demonstrate "an immediate, pecuniary and substantial interest in the litigation, and not an indirect interest." Nicholas v. Lawrence, 161 Va. 589, 593, 171 S.E. 673, 674 (1933); Virginia Beach Beautification Comm'n, 231 Va. 415, 419, 344 S.E.2d 899, 902 (1986). The instant litigation concerns the title to the real property identified in the Complaint (the Property). Comp. at 1-10. It is not an action collect on a note, but an action to remove cloud on title to real property. Id. Thus, Aurora must show an interest in said Property. Keepe, 220 Va. at 260. When it appears that a party without standing has commenced an action, the proper remedy in Virginia is the dismissal of the initial action, followed by the commencement of a new -4-

action by a person with standing. Chesapeake House on the Bay, Inc. v. Virginia Nat'l Bank, 231 Va. 440, 442, 344 S.E.2d 913, 915 (1986) (citing cases). B. Aurora's interest, if any, in the Property is derived solely from the Deed of Trust.

In Virginia, deeds of trust, like mortgages, are regarded in equity as mere securities for the debt, and whenever the debt is assigned, the deed of trust or mortgage is assigned or transferred with it. Williams v. Gifford, 139 Va. 779, 784 (1924); Stimpson v. Bishop, 82 Va. 190, 197 (1886). In the instant case, the security provided by the Deed of Trust flows with the debt to the current beneficial owner of the debt and not to Aurora. The Virginia Supreme Court has observed with respect to promissory notes and deeds of trust securing them that: Being separate or at least separable, the note may and does confer one right and the security another. The former is governed by the law merchant, and the latter by the law of real property and equitable rules and principles. General Elec. Credit Corp. v. Lunsford, 167 S.E.2d 414, 418 (Va. 1969). In Lunsford, the Supreme Court concluded that the holder of the notes involved can have no greater right respecting the land than the deed reserving the lien confers by its terms properly interpreted, whatever its right may be, respecting the maker and endorsers thereof. The lien on the land is created and defined by the deed, not the notes. Id. (emphasis added). The Court then held that the noteholder "General Electric is bound by the provisions of the instrument on which it relies and can have no greater interest in the land than that conferred by the instrument creating the security. The fact that General Electric might also be a holder in due course of a negotiable note for which the deed of trust is security does not extend General Electric's interest in the property beyond that granted by the deed of trust.

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Id. (emphasis added). See also Stimpson v. Bishop, 82 Va. 190, 200 (1886) (a promissory note is a personal contract, which cannot, at law or in equity, be governed by the principles applicable to a mortgage of any description); accord. Benkahla v. Samuel I. White, CL 2010-4955 (Vir. Cir., Fairfax Co., January 18, 2011) (opinion letter, Thacher, J.). Therefore, given the Supreme Court's holding in Lunsford, Aurora here cannot have an interest in the Property "beyond that granted by the deed of trust." Just like General Electric in Lunsford, Aurora here relies on its alleged status as a "holder" of the (negotiable) Note1 for which the Deed of Trust serves as security. Thus, under Lunsford, Aurora's interest, if any, in the Property stems from the Deed of Trust. IV. As a Servicer and Not the Purchaser of the Loan, Aurora Has No Interest in the Property.

The Deed of Trust provides that it "secures to Lender" the performance of the covenants contained in the Deed of Trust, including the repayment of the debt referenced in the Note. Compl. Exh. A, p. 1. "Lender," in turn, is defined in the Deed of Trust as "Aegis Wholesale Corporation" and its "successors and assigns." Id. at 2, 8. Aurora is not a successor or assign of Aegis under the Deed of Trust. Instead, Aurora is a collection agent (servicer) for such a successor/assign. Exh. A hereto (MERS database printout). Further, Aurora has previously admitted, through counsel, that it is the servicer of the loan. See Record of Proceeding, Jan. 21, 2011.

Even Aurora's "holder" status is questionable in light of the Note's provision that the "Note Holder" is the "Lender [Aegis] or anyone who takes this Note by transfer and is entitled to receive payment under this Note." Compl. Exh. F. As explained elsewhere herein, Aurora is not an entity that took the Note by transfer and that is entitled to receive payments under the Note. Rather, Aurora is, at best, a collection agent for such an entity. -6-

The Deed of Trust specifically contemplates the distinction between the Lender (and its successors and assigns, such as a purchaser of the loan) and the Servicer. The Deed of Trust provides: A sale [of the loan] might result in a change in the entity (known as the "Loan Servicer") that collects Periodic Payments due . . . . There also might be one or more changes of the Loan Servicer unrelated to a sale fo the Note. . . . If the Note is sold and thereafter the Loan is serviced by a Loan Servicer other that the purchaser of the Note, the mortgage loan servicing obligations to Borrower will remain with the Loan Servicer or be transferred to a successor Loan Servicer and are not assumed by the Note purchaser unless otherwise provided by the Note purchaser. Comp. Exh. A, p. 9 ( 20). Thus, under the Deed of Trust, a servicer is not a successor or assign of the Lender and a transfer of the loan to an assignee does not affect the servicing rights. Id. Aurora is the Servicer under the Deed of Trust and not the Note purchaser, i.e., not a successor assignee of the Lender (Aegis). See, e.g., Exh. A (listing Aurora as Servicer and Bank of America as Note purchaser). According to MERS' database, which purports to track transfers of mortgage loans where MERS is used as nominee, the current assignee of the loan contract is "Bank of America as Trustee." Id. Additionally, the "Bank of America as Trustee" language indicates that the subject loan has been securitized (i.e., pooled with other loans, with receivables of the pool sold to investors via mortgage-backed bonds) or attempted to be securitized. A cursory search of SEC filings at www.sec.gov reveals that the current claimed purchaser (assignee) of the loan is Structured Asset Investment Loan Trust (SAIL) 2004-3 (hereafter "SAIL Trust"), Exh. B, for which LaSalle Bank,

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N.A.2 serves as Securitization Trustee, id. at 3. By contrast, Aurora is the Servicer of the loan and not its purchaser. Id. at 2. Given that Aurora's status as a servicer and not as a loan purchaser (assignee of Lender) cannot reasonably be contested, there can be no doubt that the security provided under the Deed of Trust flows, if at all, to the SAIL Trust (or similar entity) as the purported assignee of the loan contract and definitively not to Aurora. Aurora therefore cannot and does not have any interest in the Property by virtue of the Deed of Trust, and cannot state a claim for removal of cloud on title to the Property. FOR THE FOREGOING REASONS, the plea in bar should be granted and Aurora's Complaint should be dismissed with prejudice.

Respectfully submitted,

__________________________ Gregory Bryl, Esq. VSB# 45225 1629 K Street NW, Suite 300 Washington, DC 20006 202-360-4950 703-997-5925 fax help@bryllaw.com Attorney for Defendants

Bank of America is successor-in-interest to the failed LaSalle Bank. See, e.g., Bank Of America, N.A., As Successor By Merger to LaSalle Bank, N.A. v. Johnson, No. 3:09-cv-50027 (N.D. Ill. 2009). -8-

CERTIFICATE OF SERVICE ***

_______________________________ Gregory Bryl, Esq.