Sunday, September 29, 2013

J.P. Morgan Chief Dimon Meets With Holder - WSJ.com

image


WASHINGTON—An unusual meeting Thursday between Attorney General Eric Holder and the chief executive of J.P. Morgan Chase & Co. could push the price tag of a potential settlement between the bank and the U.S. beyond $11 billion, according to people familiar with the discussions. James Dimon, accompanied by two of his top legal advisers, spent about 45 minutes with Mr. Holder discussing a potential deal to resolve outstanding probes of the bank's past work in mortgage-backed securities and settle potential criminal and civil charges against J.P. Morgan. Two people familiar with the discussions said Mr. Dimon had requested the meeting with Mr. Holder after the bank's attempt to strike a $3 billion settlement was rejected. On Monday night, the bank offered to pay that amount to settle civil and criminal probes of residential mortgage-backed securities that J.P. Morgan had issued before the financial crisis. Mr. Holder rejected the offer as insufficient, leading to the rapid increase in the size of a prospective settlement, as well as the number of outstanding inquiries being negotiated . . . . . . . .

J.P. Morgan Chief Dimon Meets With Holder - WSJ.com


\\

Wednesday, September 25, 2013

Foreclosing Party Must Own Note and Mortgage

IN THE COURT OF COMMON PLEAS
OF THE NINTH JUDICIAL CIRCUIT

STATE OF SOUTH CAROLINA
COUNTY OF CHARLESTON

Deutsche Bank National Trust Company, as
Trustee of the Indy Mac INDX Mortgage Trust
2007-FLX3, Mortgage Pass-Through
Certificates, Series 2007-FLX3 under the
Pooling and Servicing Agreement dated April 1,
2007

Plaintiff,

vs.

Scott J. Heinrich; Dinah K. Heinrich; One West
Bank, FSB; County of Charleston,
Defendants.


This case came before me on May 13, 2013 on Defendants’ pre-Answer Motion to Dismiss this case pursuant to Rules 12(b)(6) and 12(b)(7), SCRCP. Defendants, Scott J. Heinrich and Dinah K. Heinrich (“Defendants”), were represented by William H. Sloan of the Sloan Law  Firm, PA in Summerville, and Plaintiff was represented by John J. Hearn of Rogers Townsend & Thomas, PC in Columbia.

I. Rule 12(b)(6), SCRCP
Defendants claim that the Complaint should be dismissed pursuant to Rule 12(b)(6),
SCRCP, because Plaintiff “lacks the necessary standing to file this action prior to acquiring and
recording an Assignment of Mortgage” and fails to mention how they are the owner of the Note
and Mortgage in this case under our fact-based pleading scheme. Plaintiff admits that the
assignment of mortgage into Plaintiff was recorded February 23, 2011, about two weeks after
this action was filed. Plaintiff claims to have no obligation to record the assignment into itself
prior to filing this action.

Plaintiff has possession of the original-Note, which is indorsed in blank at the time of the
hearing before me on May 13. 2013. Plaintiff claims that the note is a negotiable instrument
under the South Carolina Uniform Commercial Code, S.C. Code §36-3 et seq. which would
entitle them certainly to sue on the note in this action. However, Plaintiff is seeking to foreclose
on the mortgage that is attached to the real property as opposed to simply suing on the
promissory note.

The idea that the Mortgage follows the Note is one which has been repeatedly confirmed
by our courts:
‘”South Carolina recognizes the ‘familiar and uncontroverted proposition’ that ‘the
assignment of a note secured by a mortgage carries with it an assignment of mortgage. However,
Carpenter v. Longan, 83 U.S. 271, 16 Wall. 271, 21 L.Ed. 313 (1872), quoted by Plaintiffs
counsel in this oral argument and brief, clearly supports the notion that the Plaintiff must clearly
own the Note and the Mortgage to foreclose on the property. Plaintiff failed to show that it
owned the Mortgage at the time the Complaint was filed. In its Complaint, Plaintiff merely
contends in §3 of its Complaint that is a holder and has the right to enforce. Further, the
mortgage of this case shows Mortgage Electronic Registration Systems, Inc. (MERS) to be the
mortgagee. This was confirmed by Plaintiffs counsel in oral argument. MERS is never
mentioned on the Note.

Qur state court of appeals made a recent decision in BAC Home Loan Servicing, L.P. v.
Kinder, 398 S.C. 619, 731 S.E.2d 547 (Ct. App. 2012.)
“[T]he assignment of a mortgage does
not need to be recorded, and failure to do so has no effect on the rights of the assignee.” /d. at

623. However, I distinguish the facts of Kinder from this case as the Assignment of Mortgage in
Kinder was after the foreclosure was already complete and the issue at dispute in that case was
the surplus funds going to the,Assignee. Filing is not the issue but ownership of the note. It is clear that to have standing in this foreclosure case, Plaintiff must not only be the holder & owner of the
original Note, but also the Mortgage as well. Plaintiff ’s Complaint in this case fails to meets this criteria. Plaintiff lacks the standing to initiate and prosecute the foreclosure, and dismissal pursuant to Rule 17(a) and Rule 12(b) (6) SCRCP is appropriate.


II. Failure to Join Necessary Parties under Rule 12(b)(7), SCRCP

Rule 12(b )(7) provides that one defense to an action is the failure to join a party under
Rule 19 of the South Carolina Rules of Civil Procedure. Rule 19 provides that:

A person who is subject to service of process and whose joinder will not deprive 
the court of jurisdiction over_ the subject matter of the action shall be joined as a
party in the action if(1) in his absence complete relief cannot be afforded among
those already parties, or (2) he claims an interest relating to the subject of the
action and is so situated that the disposition of the action in his absence may (i) as
a practical matter impair or impede his ability to protect that interest or (ii) leave
any of the persons already parties subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations by reason of his claimed interest. If
he has not been so joined, the court shall order that he be made a party.


Defendants claim that Mortgage Electronic Registration Systems, Inc. (“MERS”) and IndyMac
Bank, FSB (“IndyMac”) are necessary parties to this action, and that the court must join them as
parties to protect the Defendants from “double or triple liability” on the Note and Mortgage at
issue. Again, Defendants misapprehend the applicable law by advancing this argument. Under
South Carolina law, Defendants would not be subject_ to duplicative payment obligations because
Plaintiff ’s foreclosure judgment will discharge Defendants’ liability to other claimants. See S.C.
Code Ann §36-3~603(1) (2003) (explaining the circumstances under which cancellation or
satisfaction filed by the holder of a negotiable instrument will discharge liability for other claims
on same instrument.)

There is no reason that the absence of MERS or IndyMac would prevent this court from
issuing a foreclosure judgment establishing Plaintiffs sole authority to enforce the Note and
Mortgage at issue here. Further, even if it is determined that these were necessary parties. Rule
12(b )(7) does not call for dismissal of the action, and instead only requires that the parties be
joined. On a Rule 12(b )(7) motion, “the proper course for the trial· court is to determine the
necessity of adding a new party under Rule 19 to insure a full adjudication of the controversy.”
Bancohio National Bank v. Neville, 310 S.C. 323, 328, 426 S.E.2d 773, 776 (1993). As such,
Defendants’ motion to dismiss pursuant to Rule 12(b)(7) is denied. However, I find this issue
moot as I have dismissed this case pursuant to Defendants’ Heinrich’s Motion to Dismiss under
Rule 12(b)(6), SCRCP.


And it is so ordered that this case be dismissed without prejudice.

IT IS SO ORDERED!

J.C. Nicholas, Jr.
Presiding Judge
July 30,2013

Tuesday, September 24, 2013

JPMorgan Execs Indicted for Book-Cooking

courthousenews.com | September 19, 2013
 
MANHATTAN (CN) - Federal prosecutors say two JPMorgan Chase executives cooked the books to hide losses in the credit derivatives trading portfolio that ultimately lost more than $6 billion Though the Synthetic Credit Portfolio (SCP), which consists of indices and tranches of indices of credit default swaps, has generated $2 billion in gross revenues since its inception in 2007, the SCP began sustaining consistent and considerable losses in the first quarter of 2012, according to the indictment.
 
From at least March 2012, Javier Martin-Artajo and Julien Grout allegedly conspired to disguise those losses by artificially manipulating the SCP marks.
 
Martin-Artajo had been a managing director at JPMorgan and the head of credit and equity trading at the bank's chief investment office. Grout was a vice president for the bank's chief investment office and an SCP trader.
 
They allegedly hoped in part that this would to avoid losing control of the SCP to other traders at JPMorgan.
 
The SCP lost approximately $130 million in January 2012 and approximately $88 million in February 2012, the Justice Department claims.
 
Martin-Artajo and Grout allegedly instructed head SCP trader Bruno Iksil not to report losses in the SCP unless they were tied to some identifiable market event, such as a bankruptcy filing by a company whose bonds were in the CDS index.
 
Iksil has entered a nonprosecution agreement, Uncle Sam noted.
 
The government says JPMorgan's accounting policy required CIO traders to generally mark the securities in the SCP approximately to a mid-point, which they sometimes referred to as the "crude mid," between the price at which market-makers were willing to buy or sell a security.
 
Grout meanwhile maintained a spreadsheet that kept track of the difference between the price that he recorded in JPMorgan's books and records, on the one hand, and the "crude mids," on the other, according to the indictment.
 
The difference had allegedly grown to approximately $292 million by March 15.
 
"In a recorded on-line chat the same day, Grout explained that he was trying to keep the marks for most of the SCP's positions 'relatively realistic,' with the marks for one particular security 'put aside,'" prosecutors said in a statement. "That is, Grout mispriced that one particular security, of which the SCP held billions of dollars' worth, by the full $292 million. The following day, Iksil told Martin-Artajo that the difference had grown to $300 million, and 'I reckon we get to 400 [million] difference very soon.' In a separate conversation, Iksil remarked to Grout that 'I don't know where he [Martin-Artajo] wants to stop, but it's getting idiotic.'"
 
Ignoring Iksil's instructions on how to mark the positions, Grout instead followed Martin-Artajo's mandate to continue to hide the losses, prosecutors say.
 
"These incorrect figures in the SCP were not only integrated into JPMorgan's books and records, but also - as Martin-Artajo and Grout were well aware - into the bank's quarterly financial filing for the first quarter of 2012 with the SEC," according to the Justice Department's statement.
 
JPMorgan stripped Martin-Artajo and Grout of their SCP responsibilities and their scheme was discovered in August 2012.
 
When the bank restated its first quarter 2012 earnings, it recognized an additional loss of $660 million in net revenue attributable to the mismarking of the SCP, prosecutors said.
Martin-Artajo, 49, a Spanish citizen, and Grout, 35, a French citizen, face one count of conspiracy; one count of falsifying the books and records of JPMorgan; one count of wire fraud; and one count of causing false statements to be made in JPMorgan's filings with the SEC. Convictions on all counts carry a maximum sentence of 65 years each, plus at least $5 million in fines.

Monday, September 23, 2013

Estavillo Leads Three More Clients to Foreclosure Law Success - Law Office of Jason W. Estavillo

The Oakland, California Law Offices of Jason W. Estavillo led clients to foreclosure law success in three recent court rulings.

In one case Estavillo defended a client in summary judgment brought by Aurora Loan Services.  In two other cases we were successful in getting the courts to issue a TRO (temporary restraining order) and a preliminary injunction to stop an illegal foreclosure.

In the case with Aurora Loan Services, the purported lender (Aurora Loan Services) brought a Motion for Summary Judgment against the Plaintiff on the wrongful foreclosure claim against Aurora.  Judge Derek Hunt found that there were triable issues of material fact on whether Aurora had the right to foreclose on our client’s home.  The trial is set for November 4th of this year.

In another matter, The Law Offices of Jason W. Estavillo were successful in Sacramento County to stop the Bank of New York from selling their clients home and staying the previous successful unlawful detainer action.  The court will determine next month if a preliminary injunction should be issued.

In Alameda County they were successful in convincing the court that JPMorgan Chase did not have the legal right to move forward with a foreclosure on a loan originally funded by Washington Mutual Bank.  This case is another example of JPMorgan claiming this right based upon it acquisition of some of Washington Mutual’s assets when it went into receivership by the FDIC in 2008.    However this loan was securitized and is allegedly in a trust created in 2005.  This is another case where the Glaski Decision will be very effective.  To read more about the Glaski decision please visit  Homeowner victorious in unprecedented foreclosure case against Bank of America.


For more information about how the Law Offices of Jason Estavillo can help you and your foreclosure case, please contact the firm for a free consultation.

Estavillo Leads Three More Clients to Foreclosure Law Success - Law Office of Jason W. Estavillo

Saturday, September 21, 2013

Homeowner victorious in unprecedented foreclosure case against Bank of America - Law Office of Jason W. Estavillo



Homeowner victorious in unprecedented foreclosure case against Bank of America

The Fifth Appellate District of the California Court of Appeals issued a 29-page opinion which reversed the trial court’s granting a demurer in favor of Bank of America and against the homeowner (Glaski) in an unprecedented foreclosure case.  Some of the claims alleged by the homeowner included claims for Wrongful Foreclosure, Quiet Title, Declaratory Relief, Cancellation of Instruments, and Unfair Business Practices under CA’s Business and Professions Code sec. 17200. The decision was issued on July 31, 2013 and initially it was not certified for publication, however on August 8, 2013 the court certified the decision for publication

The Complaint alleged that the mortgage loan had not been properly securitized. In other words the trust which was claiming to be holder/lender of the promissory note and the deed of trust did not acquire the homeowner’s loan before the trust closed in December of 2005. The alleged transfer (by assignment) was not until June 15, 2009. The homeowner alleged that the foreclosure was wrongful because it was initiated by a non-interested third party, because they had no interest in the Note or Deed of Trust.  Specifically the complaint alleged that there was a failure to comply with the trust documents as to when the loan had to be transferred to the trust, and thus the purported transfer by JPMorgan Chase to the WaMu securitized trust in 2009 was void, resulting in the foreclosure being void as well. Previously in California and in other jurisdictions Banks were able to get away with deficiencies in the securitization, however the Court rejected these other decisions.

The Wrongful Foreclosure by a Non-Holder of the Deed of Trust was based upon the theory that the foreclosure was wrongful because it was initiated by a nonholder of the deed of trust which the court said was “phrased as (1) the foreclosing party lacking standing to foreclose or (2) the chain of title relied upon by the foreclosing party containing breaks or defects.” Citing Scott .v JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 764; Herrera v. Deutsche Bank National Trust Co. supra, 196 Cal.App.4th 1366”

In this case along with a majority of foreclosure litigation cases the original lender is not trying to foreclose.  Instead the foreclosing party is relying upon one or more assignments of deeds of trust to validate their legal authority to move forward with the foreclosure.  In this case along with most, the borrower is asserting that the assignment was ineffective, at which point an issue arises on the borrower’s standing to challenge the assignment of the loan when the borrower is not a party.
The Court stated that a third party’s ability to challenge an assignment was found in a secondary source which stated, “Where an assignment is merely voidable at the election of the assignor, third parties, and particularly the obligor, cannot … successfully challenge the validity or effectiveness of the transfer.” (7 Cal.Jur.3d (2012) Assignments, § 43.)

The Court found that since the Trust was formed under New York law, New York law governs the operation of the Trust.  Specifically the Court cited New York Estates, Powers & Trusts Law section 7-2-4, which provides “If the trust is expressed in an instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee is contravention of the trust, except as authorized by this article and by any other provision of law, is void.


The Court concluded that the homeowner’s “factual allegations regarding post-closing date attempts to transfer his deed of trust into the WaMu Securitized Trust are sufficient to state a basis for concluding the attempted transfers were void. As a result, Glaski has stated a cognizable claim for wrongful foreclosure under the theory that the entity invoking the power of sale (i.e. Bank of America in its capacity as trustee for the WaMu Securitized Trust) was not the holder of the Glaski deed of trust.”
The Court also addressed the Gomes decision, which the most courts rely upon when ruling in favor of the banks, including this trial court relied upon in sustaining BOA’s demurrer.  Specifically the Court held, “[t]he instant case is distinguishable from Gomes on at least two grounds.  First, like in Naranjo v. SBMC Mortgage (S.D. Cal. Jul. 24, 2012, No. 11-CV-2229-L (WVG) 2012 l 3030370), Glaski has alleged that the entity claiming to be the noteholder was not the true owner of the note.  In contrast, the principal in Gomes concerns the authority of the noteholder’s nominee, MERS.  Second, Glaski has alleged specific grounds for his theory that the foreclosure was no conducted at the direction of the correct party. “

The Appellate Court directed the trial court to vacate its previous decision and enter a new order overruling the demurrer as Glaski’s third (quiet title), fourth (wrongful foreclosure), fifth (declaratory relief), eighth (cancellation of instruments) and ninth causes of action (unfair business practices).



Homeowner victorious in unprecedented foreclosure case against Bank of America - Law Office of Jason W. Estavillo

Malagon v. CitiMortgage - Fla 3rd DCA -- Reversed Confession of Error

Malagon v. CitiMortgage - Fla 3rd DCA(Reversed-confession of error)(11/11)
 
Appellants, Carlos Humberto Malagon a/k/a Carlos Malagon and Rosalba Malagon appeal the trial court’s order denying their motion to vacate final judgment of foreclosure and to cancel and/or rescind sale. 


Appellee, Citimortgage,Inc., concedes error on the trial court’s denial of appellants’ motion to vacate the final judgment of foreclosure.

Appellee consents to a reversal of the order and a remand for further proceedings. Upon concession of error, this Court, therefore, reverses the trial court’s denial of appellants’ motion to vacate the final judgment of foreclosure and remands for further proceedings.
 

Reversed and remanded.


Microsoft Word - 3D11-0395.doc - 3D11-0395.pdf

Bank Confesses Error on Appeal - Stopa Law Firm

Bank Confesses Error on Appeal - Stopa Law Firm

Bank Confesses Error on Appeal

Posted on July 24th, 2013 by Mark Stopa
Do you know the requirements for service of process?  And why a bank would admit to an appellate court that a lower court’s ruling was wrong?

Fla. Stat. § 48.031(1)(a) sets forth a plaintiff’s obligations with respect to service of process.  It provides:
Service of original process is made by delivering a copy of it to the person to be served with a copy of the complaint, petition, or other initial pleading or paper or by leaving the copies at his or her usual place of abode with any person residing therein who is 15 years of age or older and informing the person of their contents.
Under the plain language of the statute, the process server’s failure to “inform the person of the contents” of the Summons/Complaint being served requires that service of process be quashed.  See Bache, Halsey, Stuart, Shields, Inc. v. Mendoza, 400 So. 2d 558 (Fla. 3d DCA 1981).  That means, in layman’s terms, that it’s not enough for the process server to hand a defendant the Summons and Complaint - he/she must also explain to the defendant what the papers are.

Several months back, I represented a homeowner in a foreclosure lawsuit and believed the bank’s attempts at service were insufficient.  So I moved to quash service and vacate the default that was entered when the homeowner did not respond to the lawsuit.  The lower court denied my motion without explanation.  As I was confident the motion should have been granted, I filed an appeal.  In response to my Initial Brief, the bank filed this Confession of Error.  What does that mean?  Simple.  Instead of the bank arguing that the lower court’s ruling was correct, as typically happens in an appeal of this type, the bank conceded the ruling was erroneous and needed to be reversed by the appellate court.

Why would a bank just give up so easily?  No, it’s not a sudden onset of morality.  Rather, the banks often realize they’re better off admitting a lower court ruled incorrectly and losing that one case to prevent an appellate court from issuing a written decision that can impact thousands of other cases.  Think about it.  Since the bank conceded error, Florida’s First District Court of Appeal probably won’t issue a written opinion explaining how the motion to quash should have been granted because the process server did not inform my client of the contents of the Summons and Complaint.  The bank admitted the error, so the appellate court can issue a simple order reversing the lower court without a lengthy explanation.  By proceeding in this manner, the bank loses this appeal, but it prevents others from catching on to this argument.

That’s where I come in.  Banks may not want homeowners to know about this argument, but I do.  So read my Initial Brief.  And remember - a homeowner facing foreclosure can challenge service of process where the process server did not inform the homeowner of the contents of the Summons and Complaint.  See Fla. Stat. 48.031(1)(a).  Just bear in mind, like most defenses in foreclosure, this defense can be waived if not timely asserted, so don’t sit on your rights!
Mark Stopa

www.stayinmyhome.com

Friday, September 20, 2013

Linda Zimmerman v JPMorgan Chase Bank NA: Appelee JPMC's Confession of Error

 
Foreclosure fighters beware!  Chase is employing yet another legal tactic to steal homes not only in Florida but other states as well. Chase wants a second bite at the apple while keeping its dirty little secrets under the carpet. 

Nobody ever said that foreclosure was fair or just or equitable. The evil Chase Bank is stooping to a new low to steal homes and deceive the Court by utilizing the tactic of filing a Confession of Error.  But where is the priest and what is their confession? What is their error?  So when is a confession not a confession?  When employed by Chase and their murder of crows.

Confession of error is a party's admission, express or implied, made on appeal, that the court below committed an error in his favor, or prejudicial to the rights of an adverse party. The following is an example of a case law referring to confession of error: A confession of error by a litigant is an important factor to take into account in studying a record. It may disclose an intervening decision on a question of law that undermines the lower court's conclusion; it may disclose perjury by an important witness or newly discovered evidence; it may disclose other factors which weaken the conclusion of the lower court; or it may disclose a maneuver to save one case at the expense of another. [Casey v. United States, 343 U.S. 808, 811-812 (U.S. 1952)].
The saga of foreclosure fighter, Linda Patricia Zimmerman in the Fourth District of Florida Court of Appeal demonstrates just how far JPMorgan Chase Bank NA will go to steal Zimmerman's home through a wrongful foreclosure in which Chase most likely has no legal standing to foreclose. At a time when Zimmerman is fighting for her life. she must continue to battle the megalithic Chase Bank for the restoration of her home.  She has been intrepid in her fight.  She is once more mustering her energy and forces for her response to Chase's efforts to get a second bite at the apple through their so-called, half-assed "Confession of Errors."

Zimmerman is seeking reversal of the trial court’s final judgment of foreclosure and dismissal of the underlying foreclosure action. JPMorgan agrees with Zimmerman that reversal is required for another summary judgment hearing.  Chase believes that the Court should “reverse the judgment of the court below upon the ‘confession of Errors' without expressing any opinion as to the extent of the error.” 

JPMorgan does not agree that dismissal upon reversal is proper. Chase wants to take aim at Zimmerman again by fixing their so-called errors.

Chase has requested that the Court reverse the decision below with instructions to set aside the judgment and to proceed in a manner consistent “with the law and rules of practice governing such causes.”


See Chase's Confesssion of Error below.   
This blog will continue to publish updates as they occur.


IN THE DISTRICT COURT OF APPEAL OF FLORIDA
FOURTH DISTRICT
CASE NO: 4D12-2190
LT CASE NO: 502009CA004918XXXXMB

LINDA PATRICIA
ZIMMERMAN, et. al.,

Appellant,

v.
JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION,

Appellee,
/


APPELLEE'S CONFESSION OF ERROR

Appellee, JPMorgan Chase Bank, National Association (“JPMorgan”), by and
through its undersigned counsel and in lieu of filing an Answer Brief, hereby
confesses error on the authority of Rule 1.510(c) , Florida Rules of Civil Procedure,
Gonzalez v. Deutsche Bank Nat'l Trust Co., 95 So. 3d 251, 253–54 (Fla. 2d DCA
2012), and Venture Holdings & Acquisitions Group, LLC v. A.I.M. Funding Group,
LLC, 75 So. 3d 773, 776 (Fla. 4th DCA 2011).

JPMorgan does not agree with Appellant's argument that it did not have
standing to file and proceed with the subject foreclosure action, or that it did not
properly establish its status as holder of the subject note. See e.g. I.B. at pgs. 12-17.
JPMorgan filed the original note, endorsed in blank, prior to the entry of summary


CASE NO: 4D12-2190

judgment. See R. 172-180. JPMorgan also does not agree with Appellant’s
argument that the Notice of Acceleration sent to Appellant prior to commencement
of the subject foreclosure action did not meet the requirements of paragraph 22 of the
mortgage. See I.B. at pgs. 16-17. A review of the Notice of Acceleration and
paragraph 22 of the mortgage conclusively demonstrates JPMorgan’s compliance
and the lack of merit in Appellant’s assertion. See R. 151-53 and 194.

However, Appellant has also raised procedural issues relating to the entry of
summary judgment despite the lack of evidence in the record to establish that
JPMorgan had standing at the time it filed the foreclosure action. See e.g. I.B. at pg.
17-18, 22. As to those arguments, Appellant is correct. Rule 1.510(c) , Florida
Rules of Civil Procedure, Gonzalez v. Deutsche Bank Nat'l Trust Co., 95 So. 3d 251,
253–54 (Fla. 2d DCA 2012), and Venture Holdings & Acquisitions Group, LLC v.

A.I.M. Funding Group, LLC, 75 So. 3d 773, 776 (Fla. 4th DCA 2011).
JPMorgan is confident that it will ultimately prevail in this action by properly
establishing it had standing at the time the foreclosure action was filed.
Nevertheless, in this instance that does not render Appellant’s arguments moot.
Spradley v. Kemp, 596 So. 2d 506, 507 (Fla. 1st DCA 1992) (the fact that the
“appellant [will] not prevail” does not obviate the need for a reversal).

Appellant seeks reversal of the trial court’s final judgment of foreclosure and
dismissal of the underlying foreclosure action. See I.B. at pg. 23. JPMorgan agrees

2



CASE NO: 4D12-2190

that reversal is required for another summary judgment hearing, and the Court should

“reverse the judgment of the court below upon the ‘confession of Errors' without

expressing any opinion as to the extent of the error.” Gulf Power Co. v. Illinois-

Florida Land Co., 132 So. 109, 110 (Fla. 1931). JPMorgan does not agree that

dismissal upon reversal is proper.


Appellee, JPMorgan, requests that the Court reverse the decision below with

instructions to set aside the judgment and to proceed in a manner consistent “with the

law and rules of practice governing such causes.”
Gulf Power Co., 132 So. at 110.


/s/ Shayna A. Freyman
Thomas H. Loffredo, Esq.
Florida Bar No. 870323
Jeffrey T. Kuntz

Florida Bar No. 26345
Shayna A. Freyman, Esq.
Florida Bar No. 84993
Gray Robinson, P.A.
Counsel for Appellee
401 E. Las Olas Boulevard, 10th Flr.
Fort Lauderdale, FL 33301
Tel: (954) 761-8111; Fax: (954) 761-8112
tom.loffredo@gray-robinson.com
shayna.freyman@gray-robinson.com
jkuntz@gray-robinson.com
















Glaski v Bank of America: Glaski speaks to Lady Justice

Contributed by Deontoa
 
Glaski, speaks to Lady Justice, "I don't need your blindfold, but can I borrow your SWORD?"

Banksters and anyone else from their "Murder of Crows" should not open this if they have any tendency towards ULCERS.


The Crows should look WORRIED ...

An Appellate Judicial Panel VACATES a Submission Order to allow Plaintiff to file additional cites to previous Oral Argument. Plaintiff's Counsel then cites "Glaski". Not at all sure how this case relates to Glaski's fact pattern; but nonetheless the die has been cast in this proceeding. Indeed some unusual goings on ARE apparently afoot here...


______________________________________________

Inline image 1
 . . .
Inline image 2
__________________________________


REDACTED EXCERPT: "Statement of The Case"

Essentially this case is about Dual Tracking (Double Crossing the homeowner.). It is even more salacious as the Attorney General of the State of California was monitoring the file and they DOUBLE TRACKED the homeowner ANYWAY. The legal commentator states that at "oral argument" the Appellate Panel appeared to have issues with the Bankster's conduct. This is the third case in a month to emerge as PROMINENT regarding this egregious behavior.

The stirrings here imply a potential Odious Bad Moon Rising for the Bankster Ilk.  Time will certainly tell. The informed discussion is that this could be a very important case.
Due to the SENSITIVE stage of these proceedings I was requested to obscure the parties involved. I am respecting that request. I have high regard for the source of this insight and am sure they see good reasonfor this to fly somewhat under the radar for now anyway.
_____________________
Appellants OPENING BRIEF

Inline image 4
--




Thursday, September 19, 2013

Are regulators getting brass balls big enough to finally start doing their JOBS? OCC Takes Action Against JPMC to Protect Consumers


Office of the Comptroller of the Currency - U.S. Department of Treasury Office of the Comptroller of the Currency - Ensuring a Safe and Sound Federal Banking System for all Americans.
 


OCC Takes Action Against JPMC to Protect Consumers and to Ensure Servicemembers Receive Credit Protections for Their Non-Home Loans

WASHINGTON – The Office of the Comptroller of the Currency (OCC) today announced an enforcement action against JPMorgan Chase Bank, N.A., Columbus, Ohio, JPMorgan Bank and Trust Company, N.A., San Francisco, California, and Chase Bank USA, N.A., Wilmington, Delaware (collectively, the bank), for unsafe or unsound practices in connection with the bank’s non-home loan debt collection litigation practices and the bank’s non-home loan compliance with the Servicemembers Civil Relief Act (SCRA).

The enforcement action requires the bank to provide remediation to affected consumers and to correct deficiencies in the bank’s practices and procedures related to the preparation and notarization of affidavits and other sworn documents used in the bank’s debt collection litigation and its SCRA compliance program. The OCC’s action also directs the bank to improve its debt collection litigation policies, procedures and practices to ensure that affidavits and other sworn documents used in connection with non-home loan debt collection litigation are accurate, based on the personal knowledge of the bank employee signing the documents, or other applicable standard, and are notarized in accordance with all applicable legal requirements.

With respect to its SCRA compliance program, the OCC requires the bank to improve its policies and procedures for determining whether servicemembers are eligible for requested SCRA-related benefits, ensuring that the SCRA benefits are calculated correctly, and verifying the military status of servicemembers prior to seeking or obtaining default judgments on non-home loans.
The OCC’s action also directs the bank to conduct a review of all non-home lending debt collection litigation at the bank from January 1, 2009 until present, and all non-home lending SCRA accounts at the bank from January 2005 until present, to identify consumers eligible for remediation as a result of the deficiencies and unsafe or unsound practices cited by the OCC. The bank must submit a plan to the OCC detailing how remediation will be made to affected consumers. OCC national bank examiners will monitor compliance with this order and the remediation required to be provided by the bank.

Related Link

# # #
OCC shield The Office of the Comptroller of the Currency (OCC) charters and oversees a nationwide system of national banks and federal savings associations and assures that these banking institutions are safe and sound, competitive, and capable of serving the banking needs of their customers in the best possible manner. OCC press releases and other information are available at http://www.occ.gov. To receive OCC press releases and issuances by e-mail, subscribe at http://www.occ.gov/tools-forms/subscribe/occ-email-list-service.html.

Saturday, September 14, 2013

Merritt v Countrywide -- A Case of Fraud

Inline image 2

Merritt v. Mozilo CA6, (Cal. 2013)

Status: Non-Precedential
View original: From the court   |   Our backup
_______________________________________


Bank of America “would provide Countrywide with the loan contract agreements” that they “needed Countrywide to get borrowers to sign, and such contracts required Mozilo to 

design loans in a way which would strip borrowers savings, income and property equity before leading to default and foreclosure ....

RELATED
California Court of Appeal's Issues Writ of Mandamus Ordering Lower Court to Disqualify Former Countrywide Home Loan Lawyer Turn Judge From Largest Predatory Lending Case According to AUAF
California Court Appeal's issued order to stay all proceedings in Merritt v. Mozilo, et al, 109CV159993, and for Judge James Stoelker to be disqualified from the case after presiding Judge Richard J. Loftus refused to disqualify him after Stoelker's bias was shown by the plaintiffs in the case.                                San Jose, CA (PRWEB) December 07, 2012

Merritt v. Mozilo CA6, H037414 (Cal. 2013)

California Supreme Court

Date Filed: Friday, September 13th, 2013
Status: Non-Precedential
Fingerprint: 19513c2507426f67ed27b8e10c10a4f7272a46a0

Filed 9/13/13 Merritt v. Mozilo CA6
 
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.




               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      SIXTH APPELLATE DISTRICT


SALMA MERRITT et al.,                                                H037414
                                                                    (Santa Clara County
         Plaintiffs and Appellants,                                  Super. Ct. No. CV159993)

         v.

ANGELO MOZILO et al.,

         Defendants and Respondents.



         Plaintiffs Salma Merritt and David Merritt obtained two loans to purchase their
home. After the Merritts were unable to repay the loans, they filed an action against
multiple defendants for alleged predatory lending practices. The named defendants are
Angelo R. Mozilo, David Sambol, Michael Colyer, Countrywide Home Loans, Inc., and
Countrywide Financial Corporation (collectively Countrywide defendants), Kenneth
Lewis, and Bank of America Corporation (Bank of America), MERSCORP Holding, Inc.
(MERS), First American Title Company (First American), and Johnny Chen.1 The third
amended complaint alleged causes of action for conspiracy to commit the following:
fraud (first cause of action); breach of fiduciary duty (second cause of action); unfair
business practices (third, fourth, and fifth causes of action); breach of title insurance
contract (sixth cause of action); and intentional infliction of emotional distress (seventh


1
         Johnny Chen is not a party to this appeal.
cause of action). The trial court overruled Countrywide defendants’ demurrer to four
causes of action and sustained their demurrer without leave to amend to three causes of
action. The trial court also sustained the demurrers of First American, MERS, Lewis, and
Bank of America without leave to amend to all causes of action.
       On appeal, the Merritts contend that the trial court erred: (1) by failing to apply
the elements of conspiracy law; (2) by refusing the proffered amendment to the third
amended complaint and by failing to grant leave to amend; (3) by sustaining the
demurrers to the conspiracy to commit breach of fiduciary duty, conspiracy to commit
breach of title insurance contract, and conspiracy to inflict emotional distress causes of
action as to Lewis, Bank of America, MERS and First American; and (4) by sustaining
certain causes of action as to Countrywide defendants.
       We conclude that this court lacks jurisdiction to consider the appeal as to
Countrywide defendants and that the trial court did not err when it sustained the
demurrers of First American and MERS. We also conclude that the trial court erred in
sustaining the demurrers of Bank of America and Lewis. Accordingly, the judgments in
favor of First American and MERS are affirmed and the judgments in favor of Bank of
America and Lewis are reversed.


                                   I. Statement of Facts2
                          A. The Merritts’ Initial Loan Transaction
       In February 2006, the Merritts entered into an agreement to purchase a townhouse
in Sunnyvale for $729,000. The Merritts spoke to one lender who offered to provide
2
       The Merritts are representing themselves. The statement of facts is based on the
allegations in the 100-page third amended complaint. This court has augmented the
record on appeal to include 279 pages of exhibits that were attached to the third amended
complaint. We “ ‘accept as true both facts alleged in the text of the complaint and facts
appearing in exhibits attached to it. If the facts appearing in the attached exhibit
contradict those expressly pleaded, those in the exhibit are given precedence.
[Citations.]’ ” (Sarale v. Pacific Gas & Electric Co. (2010) 189 Cal.App.4th 225, 245.)
                                             2
them with a loan with monthly payments of $4,600 per month while another offered a
loan with monthly payments of $4,800. The Merritts then contacted Colyer, who was
employed by Countrywide. Colyer told them that he could arrange a loan with payments
“maybe 40 percent lower” than what the other lenders had quoted. The Merritts provided
Colyer with their financial information, which stated that David Merritt’s gross income
for 2006 would be $60,000 and Salma Merritt would receive temporary disability
payments of $5,200.3 The disability payments would decrease to $1,400 in
September 2008.
       On March 15, 2006, two days before the deadline to remove the loan contingency
from the purchase agreement, Colyer gave the Merritts a good faith estimate based on a
30-year Federal Housing Administration (FHA) loan for $729,000 with an interest rate
between 1 and 3 percent. This written estimate indicated that monthly payments would
be between $1,800 and $2,200 for principal and interest if the Merritts made a down
payment of 5 percent of the purchase price. Relying on the estimate, the Merritts
removed the loan contingency on their purchase agreement.
       On March 20, 2006, Colyer informed the Merritts that his underwriters were
reluctant to approve their loan. About five days later, he informed the Merritts that he
was able to work out a loan with monthly payments of $5,200. When the Merritts told
him that they could not afford this loan, he told them that they would be subject to a
lawsuit if they did not close escrow. The Merritts then contacted the two lenders from
whom they had previously obtained estimates, and they were told that there was not
enough time to underwrite the loan prior to the close of escrow.
       On March 26, 2006, Colyer called the Merritts and told them that he was able to
secure “ ‘the best loan possible.’ ” This new loan was actually two loans or a “ ‘Combo
loan’ ” that consisted of a 30-year adjustable rate mortgage for $591,200 (first loan) and a

3
     There is no indication as to how frequently Salma Merritt would receive these
payments.
                                             3
home equity line of credit (HELOC) for $147,800. The interest-only payments on the
first loan were $3,202.33 per month and the interest rate was 6.5 percent for the first five
years. The interest rate on the HELOC was 7.5 percent the first month and adjusted
periodically thereafter. The Merritts would eventually be required to pay $6,693 per
month on the first loan and an additional $2,400 per month in interest on the HELOC.
       On March 26, 2006, Financial Title Company (FTC) provided Javani Wyatt, its
escrow agent, with two sets of documents that were partially filled out with financial
information. FTC also “instructed her to do whatever she could to convince [the
Merritts] to sign their set of documents, leave [them] with the second mostly blank
documents and return them to her supervisor.” When David Merritt began reading the
documents, Wyatt stated that she did not have time for him to read them and that she
would provide the Merritts with a copy of every document so they could read them later.
The Merritts signed the documents. When David Merritt began making copies of the
signed documents, Wyatt told him that they would be able to get signed copies from
Countrywide.
       On March 29, 2006, Colyer filled in the blank portions of the documents that the
Merritts had signed and returned them to First American. Does 91-95 of First American
recorded the deeds of trust and the notes, and transmitted the deeds of trust to Bear
Stearns and the notes to MERS. MERS transmitted the notes to Wells Fargo. The deeds
of trust for the first loan and the HELOC, which were recorded on March 30, 2006, stated
that the borrowers were the Merritts, the lender was Countrywide Home Loans, Inc., the
trustee was Recontrust Company, N.A., and MERS was the nominee for the lender.
       Between October 2006 and October 2008, the Merritts contacted Countrywide
defendants, Lewis, Chief Executive Officer (CEO) of Bank of America, and Wells Fargo,
and requested their signed loan documents. The documents were not provided. The
Merritts also asked that their loans be replaced with an FHA loan “or other traditional
loan that they could afford to repay.”
                                              4
       Between May 2006 and October 2008, Countrywide defendants, Lewis, and Bank
of America charged the Merritts four to seven interest rate points above the amount set
forth in the HELOC agreement. On January 20, 2009, Bank of America provided the
Merritts with copies of their loan documents, but “these documents were different,
specifically the HELOC Agreement and Note than what [the Merritts] recall[ed].”


                                      B. Loan Modification
       In February 2009, Does 71-80 of Bank of America “produced a modification of
original loans on orders of Wells Fargo” pursuant to its agreement with Bear Stearns “in
order to cover up . . . March 2006 fraudulent acts” and “the 2006 to 2008 overcharges.”
The loan modification “was a continuation of predatory lending practices of
Countrywide.” Though the new loan provided a temporary 4.5 percent interest rate, Does
71-80 “continued to mislead [the Merritts] b[]y representing that they only needed to pay
the interest and was in fact designed to not pay down the principle.” They also failed to
disclose that the payments did not include the HELOC payments, payment of property
taxes, homeowners insurance, and other fees.


                  C. Allegations of Defendants’ Roles in Alleged Conspiracy
                                           1. Background
       Beginning in January 1993, James Cayne, CEO of Bear Stearns, directed brokers
to encourage private investors to place their funds into mortgage-backed security pools,
which would be lent to individuals seeking residential loans. Cayne then began
implementing a plan in which Bear Stearns would identify real estate brokers “who
would agree to represent to borrowers that they were purchasing loans that were
traditional loans – i.e. fixed 30 year loan[s] – and conceal the fact that the loans were not
conventional loans at all[.]”


                                              5
                              2. First American and MERS
       In January 1995, Does 2-30 of Bear Stearns first met with Kennedy, CEO of First
American, and R.K. Arnold, CEO of MERS. Additional meetings were held in February
and March 1995, in which Does 2-30 of Bear Stearns explained how they wished to work
with Kennedy, Arnold, and Wells Fargo “to make enormous amounts of money from
residential mortgage borrowers.” Does 2-30 informed them that “they were going to
solicit billions in private dollars to fund mortgages for borrowers and needed to employ
brokers willing to craft loans designed to strip equity from Americans, increase
likelihood of loan defaults and to give Investors the opportunity to foreclose and resell
properties to make more profit. . . . Bear Stearns with Does 2-30 stated that in order to
conceal their identities from public record they would need Loan Brokers, Escrow and
Title agents, to not record Investors names with local County Clerk Recorders, but to
falsify local County Recorder Records by naming some entity in their place who would
be bound to not divulge their identities publicly.”
       On February 15, 1995, Arnold informed Bear Stearns that he would form MERS,
which would record its name with county recorders in place of Bear Stearns, and thus
conceal Bear Stearns’ identity from borrowers. Between January 2000 and December
2010, Arnold instructed MERS members not to disclose to borrowers, including the
Merritts, that MERS was acting as a front man for Bear Stearns.
       In February 1995, Kennedy presented the Bear Stearns proposal to the First
American Board of Directors. The board of directors then approved the agreement with
Bear Stearns that called for First American “to instruct and train its Escrow and Title
Insurance staff to falsify county records and not report title defects to borrowers or the
public.”
       In early 2000, MERS agreed to enroll Countrywide as a member if Mozilo would
agree to “lead Countrywide into falsifying loan documents and county records, as well as
keeping secret the fraudulent nature of [MERS], its activities and purposes.”
                                              6
       Between January 2000 and March 2006, First American entered into agreements
with various title companies to produce escrow and title search functions that First
American could underwrite. Between January 2006 and March 2006, First American
also required these companies to ignore title defects.
       On March 20, 2006, First American directed its agent FTC to conduct a title
search of the subject property. The subject property “was recorded as belonging to
MERS,” the “Note was separated from deed of trust,” and there were “multiple breaks in
the title, possibly more than a dozen holders in due course claiming rights to Property and
no way to validate a clean title.” First American directed its FTC agent to ignore the title
defects, to issue a preliminary title report, and to withhold certain documents from the
Merritts so that they would not learn of the title defects.
       On March 27, 2006, Does 91-95 of First American instructed Wyatt, pursuant to
its agreement with Bear Stearns, to take two sets of documents, which consisted of two
notes and two deeds of trust, to the Merritts’ home for their signatures. Does 91-95,
acting on instructions from Colyer, did not include material terms of the loan in the set of
documents that were to be given to the Merritts, such as the amount of payments and the
interest rates. These documents, however, stated that the amount of the first loan was
$591,200 and that of the HELOC was $147,800, and that MERS was a beneficiary.
                              3. Bank of America and Lewis
       Between January and May 2000, Does 2-30 of Bear Stearns held talks with Lewis,
CEO of Bank of America, and Mozilo, CEO of Countrywide, “about lending money to
mortgage borrowers which they wished to hire Countrywide to broker for Bear Stearns.”
During these discussions, Lewis informed Countrywide that Bank of America wanted to
lend subprime loans to achieve greater profits, but “they did not wish to lend predatory
loans directly . . . and wished to use Countrywide to broker their funds with certain types
of borrowers.”


                                               7
       On April 15, 2000, Does 2-30 of Bear Stearns and Lewis explained to Mozilo and
other Countrywide officers that Bear Stearns and Bank of America “would provide
Countrywide with the loan contract agreements” that they “needed Countrywide to get
borrowers to sign, and such contracts required Mozilo to design loans in a way which
would strip borrowers savings, income and property equity before leading to default and
foreclosure after statute of limitations had run out on breach of contract, fraud and other
civil limitations.” A month later, Does 2-30 of Bear Stearns and Lewis told Mozilo that
Countrywide would have to conceal that it was acting as a broker for Bear Stearns or
Bank of America. If Mozilo agreed to the terms discussed during the meetings, Bear
Stearns would lend funds to borrowers for whom Mozilo brokered loans. Bear Stearns
provided Mozilo with a “Master Repurchase Agreement” which committed Countrywide
to broker loans for Bear Stearns and Bear Stearns would fund such loans as long as the
terms of the loans met the specifications that Bank of America and Bear Stearns required.
The Countrywide Board of Directors then authorized Mozilo and others to enter into
agreements with Bear Stearns, Bank of America, Wells Fargo, MERS, and First
American.
       Between March 2000 and March 2006, Does 2-30 of Bear Stearns and Lewis, on
behalf of Bank of America, entered into agreements that committed them to providing
funds for Countrywide “to find borrowers who could be induced into buying subprime
and later HELCO/Pay Option ARM ‘Combo’ loans.”
       Between March and December 2000, Mozilo, Lewis, Does 2-30, and Wells Fargo
spoke with each other monthly regarding Mozilo’s “efforts to move Countrywide to
broker subprime loans for them.” In June 2000, Bear Stearns and Lewis asked Mozilo to
“disregard California laws regarding his real estate broker fiduciary duties, and to
manage Countrywide in a way which publicly presented Countrywide as the actual lender
of the funds being loaned out.” Mozilo agreed to do so.


                                             8
       Between July and September 2000, Sambol, president of marketing for
Countrywide, instructed Does 31-50 of Countrywide to prepare training programs for
brokers, such as Colyer, on how to conceal from borrowers Countrywide’s predatory
lending practices. Between January 2001 and March 2006, Sambol also worked with
others to design loans “with payments that increased over time to take 75, 90 and more
than 100% of borrowers income so they could ensure that borrower would default and be
subjected to foreclosure.” These loans were designed pursuant to agreements Mozilo
made with Bear Stearns and Bank of America.
       Between 2003 and 2007, “approximately 50% of the loans produced by
Countrywide were loans brokered for” Bear Stearns and Bank of America. Lewis spoke
with Mozilo between January 2006 and December 2007. Mozilo told Lewis that he
would sell Countrywide “at a very cheap price” to Bank of America if Lewis “would do
whatever he could to cover up Mozilo et al deeds in the event their fraud became known
and they were prosecuted.” Lewis presented this proposal to the Bank of America Board
of Directors in December 2007. The board of directors authorized Lewis “to enter into
this and other details of agreement with Mozilo and his team.”
       Between December 2007 and July 2008, Lewis and Mozilo negotiated the terms of
the sale of Countrywide to Bank of America. Lewis assured Mozilo that he “would cover
up the predatory loan practices and other frauds committed by Mozilo, Sambol and
others.” After an audit of Countrywide was conducted, Lewis learned that “most of the
Countrywide loans which they had sold, including [the Merritts’ loan] were predatory
loans . . . and that Countrywide was intentionally falsifying monthly charges to
borrowers,” including the Merritts. After Lewis lobbied the board of directors to view
this as “a good opportunity” for Bank of America, the board of directors accepted Lewis’
assessment and his agreement with Mozilo to cover up Countrywide’s fraud. The board
of directors also “agreed that since they were generating hundreds of millions of dollars
in additional profits by falsely overcharging borrowers, that they would not stop
                                             9
overcharging borrowers, including [the Merritts], unless borrowers complained.”
Between July 2008 and March 2009, Bank of America sent the Merritts monthly billing
statements which overcharged them.


                                   II. Statement of the Case
       In December 2009, the Merritts filed a complaint against Countrywide defendants,
Lewis, Bank of America, Wells Fargo, Chen, and John Stumpf for restitution, injunctive
relief, rescission, and civil penalties. The complaint alleged causes of action for
conspiracy to commit fraud, misleading statements, unfair business practices, violation of
Civil Code section 1920, race discrimination in housing, and conspiracy. After Bank of
America filed a demurrer to the complaint, the trial court sustained the demurrers with
leave to amend to five causes of action and overruled the demurrers to the conspiracy
cause of action.
       In August 2010, prior to the deadline for First American to file its response to the
initial complaint, the Merritts filed a first amended complaint pursuant to Code of Civil
Procedure section 472 against Countrywide defendants, Lewis, Bank of America, Chen,
John Benson, MERS, and First American. The causes of action alleged in the first
amended complaint included fraud, conspiracy, breach of fiduciary duty, unfair business
practices, breach of contract, breach of title insurance contract, and intentional infliction
of emotional distress. Following demurrers to the first amended complaint, the trial court
sustained the demurrers of Countrywide defendants, Lewis, Bank of America, and MERS
with leave to amend. However, the trial court sustained Wells Fargo’s demurrer without
leave to amend. The Merritts filed an appeal from the order sustaining the demurrer of
Wells Fargo without leave to amend.
       Before the hearing on First American’s demurrer to the first amended complaint in
December 2010, the Merritts filed a second amended complaint against the same
defendants with the exception of Wells Fargo. The second amended complaint alleged
                                              10
causes of action for fraud and misrepresentation, conspiracy, breach of fiduciary duty,
unfair business practices, breach of contract, breach of title insurance contract, and
intentional infliction of emotional distress. The trial court then sustained demurrers to the
second amended complaint with leave to amend.
       In April 2011, the Merritts filed their third amended complaint. The third
amended complaint alleged causes of action for conspiracy to commit the following:
fraud, breach of fiduciary duty, unfair business practices, breach of title insurance
contract, intentional infliction of emotional distress. In July 2011, the Merritts filed an
amendment to their third amended complaint. Following a hearing in August 2011 on the
demurrers to the third amended complaint, the trial court issued an order striking the
amendment to the third amended complaint. The trial court also sustained the demurrers
of First American, MERS, Lewis, and Bank of America without leave to amend to all
causes of action. However, the trial court overruled Countrywide defendants’ demurrer
to four causes of action and sustained their demurrer without leave to amend to three
causes of action.
       In October 2011, the Merritts filed a notice of appeal.
       In December 2011, this court reversed the judgment in Merritt v. Wells Fargo
Bank, N.A. (Dec. 19, 2011, H036259) [nonpub. opn.] and directed the trial court to enter
a new order sustaining Wells Fargo’s demurrer to the first and second causes of action
with leave to amend to state a single cause of action for conspiracy to defraud.4 This
court also rejected the Merritts’ procedural claims and concluded that they had waived
their claims of error regarding their causes of action for unfair business practices, breach
of fiduciary duty, breach of contract, breach of the title insurance contract, and intentional
infliction of emotional distress.


4
       This court has taken judicial notice of the opinion in case No. H036259, Merritt v.
Wells Fargo Bank, N.A.
                                             11
                                         III.   Discussion
                                          A. Jurisdiction
         Countrywide defendants contend that this court lacks jurisdiction to consider the
appeal as to them. They point out that the trial court overruled their demurrer to the first,
third, fourth, and fifth causes of action.
         “In general, the right to an appeal is entirely statutory; unless specified by statute
no judgment or order is appealable.” (Garau v. Torrance Unified School Dist. (2006)
137 Cal.App.4th 192, 198.) Code of Civil Procedure section 904.1, subdivision (a)
provides that only final judgments are appealable. “Judgments that leave nothing to be
decided between one or more parties and their adversaries . . . have the finality required
by section 904.1, subdivision (a).” (Morehart v. County of Santa Barbara (1994) 7
Cal.4th 725, 741.) Here, as the Merritts concede, a final judgment has not been entered
against Countrywide defendants. Thus, this court lacks jurisdiction to consider the appeal
as to them.
         The Merritts’ reliance on Kuperman v. Great Republic Life Ins. Co. (1987) 195
Cal.App.3d 943 (Kuperman) is misplaced. In that case, the trial court struck the
plaintiffs’ third amended complaint in its entirety, thereby leaving no issues to be
determined between the plaintiffs and one of the defendants. (Id. at pp. 946-947.) The
Court of Appeal held the order was appealable as a final judgment. In contrast to
Kuperman, here, issues remain to be determined between the Merritts and Countrywide
defendants.
         The Merritts also argue that policy reasons support treating the trial court’s order
as an appealable order. However, appellate review is available only where authorized by
statute, and Code of Civil Procedure section 904.1 does not grant us jurisdiction on this
basis.
         The Merritts alternatively request that we treat their appeal as a petition for a writ
of mandate. “ ‘A petition to treat a nonappealable order as a writ should only be granted
                                                12
under [the most] extraordinary circumstances, “ ‘compelling enough to indicate the
propriety of a petition for writ . . . in the first instance . . . .’ [Citation.]” ’ ” (Wells
Properties v. Popkin (1992) 9 Cal.App.4th 1053, 1055.) Since the circumstances before
us are neither extraordinary nor compelling, we decline to treat the present appeal as to
Countrywide defendants as a petition for a writ of mandate.
       We next consider the issue of our jurisdiction as to the other defendants. Though
the record contains a judgment of dismissal in favor of First American and thus is
appealable under Code of Civil Procedure section 904.1, there is no judgment of
dismissal in favor of Lewis, Bank of America or MERS. “The general rule of
appealability is this: ‘An order sustaining a demurrer without leave to amend is not
appealable, and an appeal is proper only after entry of a dismissal on such an order.’
[Citation.] But ‘when the trial court has sustained a demurrer to all of the complaint’s
causes of action, appellate courts may deem the order to incorporate a judgment of
dismissal, since all that is left to make the order appealable is the formality of the entry of
a dismissal order or judgment.’ ” (Melton v. Boustred (2010) 183 Cal.App.4th 521, 528,
fn. 1.) Thus, we will treat the order sustaining the demurrers of Lewis, Bank of America,
and MERS as appealable.


                       B. Sufficiency of the Third Amended Complaint
                                              1. Waiver
       We first consider whether the Merritts have failed to substantively address their
conspiracy to commit fraud cause of action (first) and conspiracy to commit unfair
business practices causes of action (third, fourth, and fifth), and thus have waived any
argument of error by the trial court in sustaining the demurrer without leave to amend to
these causes of action.
       We presume that the judgment is correct and the appellant has the burden of
overcoming this presumption by affirmatively showing error. (Ketchum v. Moses (2001)
                                                 13
24 Cal.4th 1122, 1140-1141.) “When an appellant fails to raise a point, or asserts it but
fails to support it with reasoned argument and citations to authority, we treat the point as
waived. [Citations.]” (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.)
       In challenging the trial court’s ruling on the conspiracy to commit fraud and the
conspiracy to commit unfair business practices causes of action, the Merritts rely on the
legal principles on conspiracy and fraud as set forth in Merritt v. Wells Fargo Bank, N.A.
Thus, they have met their burden as to the conspiracy to commit fraud cause of action.
However, there was no discussion in that case regarding the conspiracy to commit unfair
business practices. In the present appeal, the Merritts have failed to present any reasoned
argument with citations to authority as to the underlying tort of unfair business practices.
They do not set forth the elements of unfair business practices and how their third, fourth,
and fifth causes of action survive the demurrers. Merely summarizing the allegations in
the third amended complaint and claiming that the trial court did not understand the
elements of conspiracy law is insufficient.5 Though we conclude that they have not
waived the issue of whether the trial court erred in sustaining the demurrer to the first
cause of action for conspiracy to commit fraud, the Merritts have waived any further
claim of error on appeal with regard to the third, fourth, and fifth causes of action.
                                    2. Standard of Review
       “In determining whether plaintiffs properly stated a claim for relief, our standard
of review is clear: ‘ “We treat the demurrer as admitting all material facts properly
pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We
also consider matters which may be judicially noticed.” [Citation.] Further, we give the
complaint a reasonable interpretation, reading it as a whole and its parts in their context.


5
       We remind the Merritts that self-represented litigants are “held to the same
standards as attorneys. [Citation.]” (Kobayashi v. Superior Court (2009) 175
Cal.App.4th 536, 543.) “[S]elf-representation is not a ground for exceptionally lenient
treatment.” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 984.)
                                             14
[Citation.] When a demurrer is sustained, we determine whether the complaint states
facts sufficient to constitute a cause of action. [Citation.] And when it is sustained
without leave to amend, we decide whether there is a reasonable possibility that the
defect can be cured by amendment: if it can be, the trial court has abused its discretion
and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.]
The burden of proving such reasonable possibility is squarely on the plaintiff.’
[Citations.]” (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.)
                                         3. Conspiracy
       Since each cause of action alleges a conspiracy to commit a specified tort, we
summarize the general principles regarding conspiracy. “Conspiracy is not a cause of
action, but a legal doctrine that imposes liability on persons who, although not actually
committing a tort themselves, share with the immediate tortfeasors a common plan or
design in its perpetration. [Citation.] By participation in a civil conspiracy, a
coconspirator effectively adopts as his or her own the torts of other coconspirators within
the ambit of the conspiracy. [Citation.] In this way, a coconspirator incurs tort liability
co-equal with the immediate tortfeasors.” (Applied Equipment Corp. v. Litton Saudi
Arabia Ltd. (1994) 7 Cal.4th 503, 510-511 (Applied Equipment).) However, “[b]y its
nature, tort liability arising from conspiracy presupposes that the coconspirator is legally
capable of committing the tort, i.e., that he or she owes a duty to plaintiff recognized by
law and is potentially subject to liability for breach of that duty.” (Id. at p. 511.)
       “The elements of a civil conspiracy are ‘(1) the formation and operation of the
conspiracy; (2) the wrongful act or acts done pursuant thereto; and (3) the damage
resulting. [Citations.]’ ” (Mosier v. Southern Cal. Physicians Ins. Exchange (1998) 63
Cal.App.4th 1022, 1048.) Because civil conspiracy is easy to allege, “plaintiffs have a
weighty burden to prove it. [Citation.] They must show that each member of the
conspiracy acted in concert and came to a mutual understanding to accomplish a common
and unlawful plan, and that one or more of them committed an overt act to further it.
                                              15
[Citation.] It is not enough that the conspiring officers knew of an intended wrongful act,
they had to agree—expressly or tacitly—to achieve it. Unless there is such a meeting of
the minds, ‘ “the independent acts of two or more wrongdoers do not amount to a
conspiracy.” ’ ” (Choate v. County of Orange (2000) 86 Cal.App.4th 312, 333.)
       “[A] plaintiff is entitled to damages from those defendants who concurred in the
tortious scheme with knowledge of its unlawful purpose. [Citation.] Furthermore, the
requisite concurrence and knowledge ‘ “ ‘may be inferred from the nature of the acts done,
the relation of the parties, the interests of the alleged conspirators, and other
circumstances.’ ” ’ [Citation.] Tacit consent as well as express approval will suffice to
hold a person liable as a coconspirator.” (Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d
773, 784-785.)6
                  a. First Cause of Action – Conspiracy to Commit Fraud
       The Merritts contend that “the CEO’s with Boards of Directors of Bear Stearns,
Wells Fargo, MERS[], [First American, Bank of America] and Countrywide . . . entered
into agreements as early as 2000 and onward, to help Bear Ste[a]rns defraud borrowers.”
       “The elements of fraud are: (1) a misrepresentation (false representation,
concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to
defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage.”
(Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 990.) “ ‘Promissory
fraud’ is a subspecies of the action for fraud and deceit. A promise to do something
necessarily implies the intention to perform; hence, where a promise is made without
such intention, there is an implied misrepresentation of fact that may be actionable fraud.
[Citations.] [¶] An action for promissory fraud may lie where a defendant fraudulently

6
       The Merritts allege in the first, second, sixth and seventh causes of action that
defendants “knowingly and willfully conspired and agreed among themselves to” commit
the underlying torts. Conclusory allegations regarding the formation and operation of a
conspiracy are insufficient and are disregarded. (Choate v. County of Orange, supra, 86
Cal.App.4th at p. 333.)
                                              16
induces the plaintiff to enter into a contract. [Citations.]” (Lazar v. Superior Court
(1996) 12 Cal.4th 631, 638 (Lazar).)
       “In California, fraud must be pled specifically; general and conclusory allegations
do not suffice. [Citations.] ‘. . . [¶] This particularity requirement necessitates pleading
facts which “show how, when, where, to whom, and by what means the representations
were tendered.” ’ [Citation.] A plaintiff’s burden in asserting a fraud claim against a
corporate employer is even greater. In such a case, the plaintiff must ‘allege the names of
the persons who made the allegedly fraudulent representations, their authority to speak, to
whom they spoke, what they said or wrote, and when it was said or written.’ [Citation.]”
(Lazar, supra, 12 Cal.4th at p. 645.)
       In the present case, the third amended complaint alleges that, executives of Bear
Stearns, Bank of America, and Countrywide held talks to discuss lending money to
mortgage borrowers beginning in 2000. Lewis informed Countrywide that Bank of
America wanted to lend subprime loans to achieve greater profits, it did not want to be
publicly identified with predatory lending, and it wanted Countrywide to target certain
borrowers. Bank of America would also provide Countrywide with contracts for
borrowers to sign that would be designed “so borrowers would not be able to pay off
loans,” thereby leading to default and foreclosure. Between March and December 2000,
executives of Countrywide, Bank of America, and Wells Fargo spoke monthly regarding
Mozilo’s “efforts to move Countrywide to broker subprime loans for them.” Lewis also
asked Mozilo to “disregard California laws regarding his Real Estate Broker fiduciary
duties” which Mozilo agreed to do. Pursuant to this plan, Countrywide began a training
program for its brokers on predatory lending practices as well as a deceptive marketing
campaign. Between 2003 and 2007, approximately 50 percent of the loans produced by
Countrywide were funded by Bear Stearns and Bank of America. Beginning in January
2006, Lewis and Mozilo discussed Bank of America’s purchase of Countrywide “at a
very cheap price” if Bank of America agreed to cover up Countrywide’s fraudulent
                                             17
conduct. In December 2007, the Bank of America Board of Directors authorized Lewis
to enter into the agreement with Countrywide, and Bank of America purchased
Countrywide in July 2008. Bank of America then learned that “most of Countrywide’s
loans which they had sold, including [the Merritts], were predatory loans” and that
“Countrywide was intentionally falsifying monthly charges to borrowers” including the
Merritts. Between July 2008 and March 2009, Bank of America continued
Countrywide’s practice of overcharging the Merritts. In 2009, the Merritts signed a loan
modification agreement with Bank of America, which “was a continuation of predatory
lending practices of Countrywide,” and Bank of America misled them as to the terms of
the agreement.
       Here, there are no allegations that Bank of America had any interest in the
Merritts’ first loan or the HELOC or that they funded these loans, thus distinguishing it
from Wells Fargo’s participation in the conspiracy to defraud the Merritts. However,
Lewis, on behalf of Bank of America, agreed before the Merritts obtained their loans
from Countrywide to supply Countrywide with funds if Countrywide would sell
subprime loans for Bank of America. Bank of America also specified the terms of the
loans that Countrywide would offer to borrowers. Thus, Lewis and Bank of America
participated in the formation of the conspiracy with Countrywide and came to a mutual
understanding of how to accomplish their unlawful goal. After Countrywide
implemented the plan, Lewis and Bank of America agreed to cover up Countrywide’s
fraudulent conduct, continued Countrywide’s practice of overcharging the Merritts, and
misled them as to the terms of the loan modification agreement. Thus, these allegations
were sufficient to state a cause of action against Bank of America and Lewis for
conspiracy to commit fraud.
       As to First American and MERS, the first cause of action alleges that Kennedy
and Arnold met with Bear Stearns and agreed to conceal Bear Stearns’ identity from
borrowers. First American and Arnold would ignore “title defects.” These title defects
                                            18
consisted of: (1) deeds of trust showing MERS as the beneficiary, and (2) the
“separation” of deeds of trusts and the underlying notes resulting from loan
securitization.
       “As case law explains, ‘MERS is a private corporation that administers the MERS
System, a national electronic registry that tracks the transfer of ownership interests and
servicing rights in mortgage loans. Through the MERS System, MERS becomes the
mortgagee of record for participating members through assignment of the members’
interests to MERS. MERS is listed as the grantee in the official records maintained at
county register of deeds offices. The lenders retain the promissory notes, as well as the
servicing rights to the mortgages. The lenders can then sell these interests to investors
without having to record the transaction in the public record. MERS is compensated for
its services through fees charged to participating MERS members.’ [Citation.]” (Gomes
v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1151 (Gomes).) Under
California law, MERS has authority to act as the beneficiary under a deed of trust.
(Gomes, at pp. 1155-1156 [MERS authorized to initiate foreclosure as deed of trust
beneficiary]; Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 270-271
[MERS has the authority to act as nominee for the lender] (Fontenot).) Here, the deeds
of trust state that MERS was “the beneficiary.” However, the deeds of trust also
specifically restrict MERS’ interest to that of a “ ‘nominee’ ” for the lender. “A ‘nominee’
is a person or entity designated to act for another in a limited role—in effect, an agent.”
(Fontenot, at p. 270.) The Merritts have not alleged that they were unable to make their
payments or negotiate a modification of their loans because they did not know who the
lender was. Thus, the Merritt’s contention that MERS is not a proper beneficiary under
the deed of trust cannot support their claim that First American and MERS engaged in
any fraudulent conduct by recording MERS as a beneficiary.
       Similarly, the Merritts’ allegations that securitization of the loans constituted a
title defect do not state a claim of conspiracy to commit fraud against First American and
                                             19
MERS. Securitization does not affect the validity of a loan. A secured promissory note
that is traded on the secondary market remains secured because the mortgage or deed of
trust follows the note. (Civ. Code, § 2936 [“The assignment of a debt secured by
mortgage carries with it the security.”].) Thus, a lender or trustee does not lose its
interest in the loan when it “was packaged and resold in the secondary market, where it
was put into a trust pool and securitized.” (Lane v. Vitek Real Estate Industries Group
(E.D.Cal. 2010) 713 F.Supp.2d 1092, 1099; Hafiz v. Greenpoint Mortgage Funding, Inc.
(N.D.Cal. 2009) 652 F.Supp.2d 1039, 1043 [rejecting the plaintiff’s theory that
“defendants lost their power of sale pursuant to the deed of trust when the original
promissory note was assigned to a trust pool”].)
       The Merritts also alleged that First American was liable for misrepresentation and
concealment of material facts because it was an agent of the other defendants. However,
conclusory agency or secondary liability allegations are insufficient to state a cause of
action. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 133-134, fn.
12 (Moore).) The Merritts further alleged that Wyatt, who was an agent of First
American, gave the Merritts documents which “were partially filled out with financial
information.” These allegations are also insufficient to state a claim that First American
participated in a conspiracy to defraud the Merritts. First American was the escrow agent
in the transaction, and its only duty was to comply with the written instructions of the
parties to the escrow. (Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co.
(2002) 27 Cal.4th 705, 711 (Summit).) First American had nothing to do with arranging,
brokering, processing, underwriting, or making the loans to the Merritts.
       In sum, the Merritts stated a cause of action for conspiracy to commit fraud
against Bank of America and Lewis. However, the trial court properly found that it failed
to state a cause of action against First American and MERS.




                                             20
                        b. Second Cause of Action – Conspiracy to
                               Commit Breach of Fiduciary Duty
       “In order to plead a cause of action for breach of fiduciary duty, there must be
shown the existence of a fiduciary relationship, its breach, and damage proximately
caused by that breach.” (Pierce v. Lyman (1991) 1 Cal.App.4th 1093, 1101, superseded
by statute on another ground as stated in Pavicich v. Santucci (2000) 85 Cal.App.4th 382,
396.) To state a cause of action for conspiracy to breach a fiduciary duty, a plaintiff must
establish that each of the coconspirators owed a fiduciary duty to him or her and are
potentially subject to liability for breach of that duty. (Applied Equipment, supra, 7
Cal.4th at p. 511.)
       It is not clear what the Merritts’ arguments are as to this cause of action. They
begin by summarizing the allegations in the third amended complaint and assert that
these facts “support fiduciary claim.” They then rely on Smith v. Home Loan Funding,
Inc. (2011) 192 Cal.App.4th 1331 (Smith) for the proposition that “it is not a Company’s
name or how a Company is registered, or even mostly conducts business with most
borrowers, but how they actually behave on a case-by-case basis. That is what
determines whether a registered mortgage broker forms a fiduciary relationship or not.” 7
       Smith recognized that “[a] mortgage broker has a fiduciary duty to a borrower. A
mortgage lender does not.” (Smith, supra, 192 Cal.App.4th at p. 1332.) In Smith, the
defendant funded most of its loans to borrowers and brokered other loans to third party
lenders. (Ibid.) One of the defendant’s loan officers told the plaintiff that he was a
mortgage broker and that he could “ ‘shop the loan’ ” for her. (Id. at. p. 1333.) Though
the loan officer repeatedly told the plaintiff that the loan would not have a prepayment
penalty, a prepayment penalty was included in a rider to the promissory note. (Id. at

7
       The Merritts also alleged that each of the defendants was an agent for the other
defendants. As previously stated, conclusory agency or secondary liability allegations
are insufficient to state a cause of action. (Moore, supra, 51 Cal.3d 120, 133-134, fn. 12.)
                                             21
p. 1334.) Smith held that there was substantial evidence that the defendant and its loan
officer acted as mortgage brokers and breached their fiduciary duties to the plaintiff. (Id.
at pp. 1335-1336.)
       Here, the Merritts have not alleged any facts that Bank of America and Lewis
acted as mortgage brokers. Since they acted as lenders, they owed no fiduciary duty to
the Merritts.8
       We next consider the nature of the duty owed by First American and MERS to the
Merritts. First American owed a fiduciary duty to the parties to the escrow. (Summit,
supra, 27 Cal.4th at p. 711.) However, as previously stated, First American’s duty was to
comply with the written escrow instructions. (Ibid.) “Absent clear evidence of fraud, an
escrow holder’s obligations are limited to compliance with the parties’ instructions.”
[Citations.]” (Ibid.) Here, the Merritts did not allege that First American breached any
escrow instructions. They appear to be arguing that First American breached its fiduciary
duty by recording MERS as the beneficiary under the deed of trust, thereby falsifying
records and failing to inform the Merritts of title defects. As previously discussed,
neither First American nor MERS engaged in any fraudulent conduct. Moreover, the
Merritts cite no authority for the proposition that MERS owed a fiduciary duty to them.
                          c. Sixth Cause of Action - Conspiracy to
                               Breach of Title Insurance Contract
       The Merritts also contend that though they titled the cause of action as conspiracy
to breach title insurance contract, “the allegations show[] . . . [First American] and its

8
        For the same reason, Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773 does not
assist the Merritts’ position. In Wyatt, the defendants were engaged in the loan brokerage
business. Prior to signing the loan documents, the plaintiffs asked the broker about “the
rate of interest, late payments, and the size of the balloon payment due at the end of the
loan period.” (Id. at p. 782.) Since the broker provided “materially misleading and
incomplete information,” Wyatt held that there was substantial evidence to support the
finding that the defendants had breached their fiduciary duties to the plaintiffs. (Id. at
pp. 782-783.)
                                              22
agent FTC, was hired by the Merritts with its promise to perform fraud-free Title Search,
fraud-free Title Report and fraud-free Close of Escrow.”
       In this cause of action, the Merritts alleged that First American issued a policy of
title insurance to them, breached the policy by recording MERS as the beneficiary and
refused to indemnify them for their losses pursuant to the terms of the policy. The
Merritts also alleged that Countrywide defendants, Bear Stearns, Wells Fargo, MERS,
and First American “conspired and agreed among themselves to breach the Title
Insurance purchased” by the Merritts.
       However, the Merritts cannot state a claim for conspiracy to breach a title
insurance contract, because no such cause of action exists. “Conspiracy is not a cause of
action, but a legal doctrine that imposes liability on persons who, although not actually
committing a tort themselves, share with the immediate tortfeasors a common plan or
design in its perpetration. [Citation.]” (Applied Equipment, supra, 7 Cal.4th at pp. 510-
511.) Given that there can be no cause of action for conspiracy to breach a title insurance
contract, the trial court properly sustained the demurrer to the sixth cause of action as to
Bank of America, Lewis, MERS, and First American.
       Moreover, to the extent that the Merritts are now contending that First American
breached its contract with them, their contention fails. First, as previously discussed,
recordation of the deeds of trust which designated MERS as the beneficiary is not
actionable under California law. Second, schedule B of the policy, which was attached to
the third amended complaint, states that “this Policy does not insure against loss, costs,
attorneys’ fees, and expenses resulting from . . . [¶] . . . [¶] [the] Deed of Trust . . . .”
Third, the Merritts’ claim that First American breached the title policy by refusing to
deliver copies of the loan documents, failing to close escrow at the title company,
discouraging them from reading the loan documents, not preparing the appropriate
number of copies of the loan documents, failing to deliver a notice of their right to
rescind the loans with filled in dates, not delivering Truth in Lending disclosures filled in,
                                                23
and refusing to allow David Merritt to make copies of their signed loan documents has no
merit. “Title insurance is a contract by which the title insurer agrees to indemnify its
insured against losses caused by defects in or encumbrances on the title not excepted
from coverage. [Citation.]” (Vournas v. Fidelity Nat. Title Ins. Co. (1999) 73
Cal.App.4th 668, 675.) The Merritts’ allegations are not covered under the policy and
thus cannot constitute a breach of the title policy.
                   d. Seventh Cause of Action – Conspiracy to Commit
                       Intentional Infliction of Emotional Distress
       The Merritts next contend that Countrywide defendants, First American, MERS,
Lewis, Bank of America, and Bear Stearns conspired to intentionally inflict emotional
distress on them. They argue that they were promised “one 30-year fixed loan with
payments between $1,800 and $2,200; but were given at the very last moment two loans
totaling $5,000 and set to balloon into $10,000 monthly installments” and were
overcharged on their loans.
       The elements of an intentional infliction of emotional distress claim are (1) the
defendant’s conduct was extreme and outrageous; (2) the defendant intended to cause
emotional distress or recklessly disregarded the probability of causing emotional distress;
(3) the plaintiff suffered severe emotional distress; and (4) the defendant’s outrageous
conduct was the cause of the severe emotional distress. (Davidson v. City of Westminster
(1982) 32 Cal.3d 197, 209 (Davidson).)
       Sanchez-Corea v. Bank of America (1985) 38 Cal.3d 892 (Sanchez-Corea)
provides an example of outrageous conduct by a lender. In Sanchez-Corea, McGowen, a
vice-president with the defendant bank, handled the account for the plaintiffs’ company
and used bank funds to cover overdrafts on this account without the bank’s knowledge.
(Id. at pp. 896-897.) The bank also provided a loan of $70,000 to the plaintiffs. (Id. at
p. 897.) After the bank discovered that McGowen had embezzled funds, including
$240,000 that was allegedly credited to the plaintiffs’ account, the bank demanded
                                              24
$240,000 from the plaintiffs and refused to extend additional credit. (Ibid.) The
plaintiffs disagreed with the bank as to the amount of money that they owed and
eventually brought suit against the bank. (Ibid.) The California Supreme Court
concluded that there was sufficient evidence to support the award of damages to the
plaintiffs for intentional infliction of emotional distress, and summarized the evidence as
follows: “There is evidence from which the jury could have determined that the Bank
acted outrageously in reaction to the plight in which the Sanchez-Coreas found
themselves as a result of vice president McGowen’s conduct. Testimony indicated that
Bank officers Jones and Timerman failed to advise plaintiffs that the Bank had
determined not to give [the plaintiffs’ company] any further loans. According to
Sanchez-Corea, the Bank’s office misrepresented to him that further financial assistance
would be forthcoming but only if plaintiffs assigned all their past, present and future
accounts receivable to the Bank. A day after the plaintiffs made such an assignment, the
Bank refused the further loan. There was evidence that the Bank forced the Sanchez-
Coreas to execute excessive guarantees and security agreements. In addition to [the
plaintiffs’ company’s] pledge of over $262,000 of accounts receivable for a $70,000 note,
Mrs. Sanchez-Corea executed a $50,000 guaranty for a $30,000 note, and Mr. Sanchez-
Corea was directed to purchase a life insurance policy in the amount of $40,000 naming
the Bank as beneficiary. Furthermore, there was extensive testimony about an incident at
the San Franciscan Hotel in San Francisco. According to the testimony, Bank officials
publicly ridiculed Mr. and Mrs. Sanchez-Corea, using profanities in their statements. A
friend who was with the Sanchez-Coreas testified that Bank employees were pointing at
the Sanchez-Coreas and the employees were laughing about the financial plight of [the
plaintiffs’ company].” (Id. at pp. 908-909.)
       In contrast to Sanchez-Corea, here, as a matter of law, none of the conduct alleged
by the Merritts was “ ‘so extreme as to exceed all bounds of that usually tolerated in a
civilized community. [Citations.]’ ” (Davidson, supra, 32 Cal.3d at p. 209.)
                                               25
Accordingly, the trial court did not err by sustaining the demurrer to the seventh cause of
action for intentional infliction of emotional distress as to Bank of America, Lewis,
MERS, and First American.9
       Relying on Bird v. Saenz (2002) 28 Cal.4th 910 (Bird), the Merritts contend that
“when a plaintiff witnesses a third-party victim being inflicted with harm, a cause of
action exist[s] for the party who witnessed infliction.” Thus, they claim that they have
stated a cause of action for negligent infliction of emotional distress under the bystander
theory since they “witnessed each other going through certain damage as a result of the
continuous fraud over an initial 3 year period; after they tried fruitlessly to rescind their
loans; loss thousands, faced financial ruin and homelessness.” There is no merit to this
contention.
       Bird stated the elements of a cause of action for negligent infliction of emotional
distress under a bystander theory: “ ‘a plaintiff may recover damages for emotional
distress caused by observing the negligently inflicted injury of a third person if, but only
if, said plaintiff: (1) is closely related to the injury victim; (2) is present at the scene of
the injury-producing event at the time it occurs and is then aware that it is causing injury
to the victim; and (3) as a result suffers serious emotional distress—a reaction beyond
that which would be anticipated in a disinterested witness and which is not an abnormal
response to the circumstances.’ [Citation.]” (Bird, supra, 28 Cal.4th at p. 915.) Bird
held that the plaintiffs could not state a negligent infliction of emotional distress cause of
action because they were not present in the operating room when their relative’s artery
was transected and they did not know that the care she was receiving was inadequate.
(Id. at pp. 921-922) Here, the alleged injury occurred when the loan documents were


9
        Kendall Yacht Corp. v. United California Bank (1975) 50 Cal.App.3d 949 does
not assist the Merritts. In Kendall, the defendant bank did not challenge the sufficiency
of the evidence to support the award of damages for infliction of emotional distress. (Id.
at p. 955.)
                                               26
signed by the Merritts and they were unaware that it was causing injury. Accordingly,
they cannot state a cause of action under this theory.


                       C. Amendment to Third Amended Complaint
       The Merritts argue that the trial court erred by striking the amendment to their
third amended complaint. We disagree.
       The trial court found that the Merritts “filed . . . a document purported to be an
Amendment to the Third Amended Complaint. This document was filed without leave of
court and was objected to by the moving Defendants. As such, the Court finds that it was
filed improperly and strikes this filing.”
       Code of Civil Procedure section 472 provides in relevant part: “Any pleading may
be amended once by the party of course, and without costs, at any time before the answer
or demurrer is filed, or after demurrer and before the trial of the issue of law thereon, by
filing the same as amended and serving a copy on the adverse party . . . .” “ ‘[A] litigant
does not have a positive right to amend his pleading after a demurrer thereto has been
sustained. “His leave to amend afterward is always of grace, not of right. [Citation.]”
[Citation.]’ . . . After expiration of the time in which a pleading can be amended as a
matter of course, the pleading can only be amended by obtaining the permission of the
court. [Citations.]” (Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th
603, 612-613.)
       Here, demurrers had been filed, and thus the Merritts no longer had a right to
amend as a matter of course. Instead, they were required to obtain the trial court’s
permission to file the amendment to the third amended complaint. Since the Merritts
failed to follow the proper procedure, the trial court did not err by striking the amendment
to the third amended complaint.
       We next consider whether the Merritts have failed to carry their burden that they
could amend their complaint to cure any defects. “To satisfy that burden on appeal, a
                                             27
plaintiff ‘must show in what manner he can amend his complaint and how that
amendment will change the legal effect of his pleading.’ [Citation.] The assertion of an
abstract right to amend does not satisfy this burden. [Citation.] The plaintiff must clearly
and specifically set forth the ‘applicable substantive law’ [citation] and the legal basis for
amendment, i.e., the elements of the cause of action and authority for it. Further, the
plaintiff must set forth factual allegations that sufficiently state all required elements of
that cause of action. [Citations.] Allegations must be factual and specific, not vague or
conclusionary. [Citation.]” (Rakestraw v. California Physicians’ Service (2000) 81
Cal.App.4th 39, 43-44.)
       Here, the Merrits request that this court review the amendment to the third
amended complaint. This amendment adds allegations primarily against the Countrywide
defendants and causes of action for negligent torts. However, the Merritts have failed to
state how this amendment will cure the defects in their third amended complaint. They
have not set forth the applicable law and specific factual allegations that satisfy the
elements of a cause of action. Accordingly, we conclude that the Merritts have failed to
carry their burden on appeal.


                                       IV.     Disposition
       The judgments in favor of First American and MERS are affirmed and the
judgments in favor of Bank of America and Lewis are reversed. Costs are awarded to
First American and MERS. Bank of America, Lewis, and the Merritts are to bear their
own costs.




                                              28
                                  _______________________________
                                  Mihara, J.



WE CONCUR:




______________________________
Elia, Acting P. J.




______________________________
Márquez, J.




Merritt et al. v. Mozilo et al.
H037414


__________________________________________________________________

_Inline image 1

. . . 

We conclude that this court lacks jurisdiction to consider the appeal as to Countrywide defendants and that the trial court did not err when it sustained the demurrers of First American and MERS. We also conclude that the trial court erred in sustaining the demurrers of Bank of America and Lewis. Accordingly, the judgments in favor of First American and MERS are affirmed and the judgments in favor of Bank of America and Lewis are reversed.

 THE STORY BEHIND THE LITIGATION:

Merritt v. Countrywide

Merritt v. Countrywide is a collection of lawsuits resulting from a predatory loan pushed upon David and Salma Merritt.  In 2006, the Merritts, newlyweds, were looking to purchase a home in Sunnyvale, CA.  Countrywide was aggressively advertising 30-year mortgages at between 1 and 3 percent interest. Representatives of Countrywide gave the Merritts a “good faith estimate” of monthly payments between $1,800 and $2,200 matching the ads. Countrywide reps then manipulated deadlines to ultimately threaten the Merritts with the loss of their down payment and the home they were wanting to buy, and with being sued for $729,000 if they failed to sign a contract without reading it and without even receiving a copy.  They were soon surprised with bills for $4,500 per month.  When Countrywide refused to produce a copy of the contract they had on file, the Merritts were told to stop making payments, which they did.  When Countrywide still did not supply the contract, the Merritts sued.  Only then did they learn that the contract that Countrywide claimed to have on file was fraudulent.  

The procedures used by Countrywide to obtain many loan contracts with people like the Merrits "appeared systemic", according to Eileen Foster, Senior VP for Fraud Risk Management at Countrywide in 2008.  She was interviewed on 60 Minutes, Dec. 4, 2011. Most of Countrywide's victims have meekly accepted the loss of their life savings and the confiscation of their homes through foreclosure procedures of questionable legality. David Merritt is different. He's not an attorney. However, he has worked enough with attorneys that he has been able to represent himself ("pro se" or "pro per") without being completely outclassed by attorneys for Bank of America, the parent company of Countrywide, and other major banks named as defendants in various filings by the Merritts. 

Merritt v. Countrywide in Federal Court

The Merritts first filed suit in US District Court in San José, CA in March 2009 (Case No. C09-CV-01179-JW). Judge James Ware ruled that the statute of limitations had expired and the evidence was insufficient.  The Merritts appealed to the US Ninth Circuit Appellate Court (appeal No. No. 09-17678). The firm of Kasowitz, Benson, Torres & Friedman LLP was appointed to represent the Merritts. Oral arguments were heard November 9, 2012. Attorneys Jacob N. Foster, representing the Merritts, and James Goldberg, representing Countrywide et al. were peppered with questions by a 3-judge panel. Goldberg noted that the law gives loan applicants 3 days to demand rescission, and the Merritts did not request rescission in 2006 but waited until 8 days after they received on January 20, 2009 a copy of the contract that Countrywide claimed they had signed. Goldberg confirmed under questioning that there were outstanding class action suits against Countrywide in similar cases. A ruling from the appellate court is now pending.  

Merritt v. Wells Fargo

This case attracted national attention when the California Court of Appeals, Sixth District, reinstated Wells Fargo as a defendant after a lower court had removed them from Merritt v. Mozillo.  An undisclosed settlement was reached between the Merritts and Wells Fargo that have removed the latter as a defendant in future actions.  


Merritt v. Mozilo 

The primary case in this process is Salma Merritt and David Merritt, Plaintiffs, v. Angelo R. Mozilo, Bank of America, First American Title, et al., Case Number 1-09-CV-159993 in the Santa Clara County Superior Court.  It was filed 22 December 2009.  As of November 2012, it is still in process.  Similar suits were either dismissed or settled in at most 9 months.  The complaint alleges that senior executives of Countrywide, Bank of America, Wells Fargo, Chase and others conspired to write unintelligible legal contracts, market them aggressively and deceptively especially to first time home buyers.  

Judge Stoelker and Defense Attorney Goldberg 

Between March 2010 and November 2012 judge James L. Stoelker was ruling on discovery in Merritt v. Mozilo et al.  Unbeknownst to the Merritts, Stoelker had represented defendants in this case in numerous cases in the decade prior to being appointed to the bench in Dec. 2010.  In this case, he has ruled consistently in favor of his previous clients.  This does not constitute evidence of bias under California law, even if the rulings are contrary to law.  The key question is whether "A person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial." [CCP 170.1(a)(6)(A)(iii)]  For this, we consider his rulings regarding the unprofessional and possibly criminal behavior of defense attorney James Goldberg, in yelling obscenities and physically assaulting the elderly father of David Merritt, who attempted to observe a previous deposition. Moreover, Goldberg was clearly inappropriately aggressive and abusive when deposing plaintiff Salma Merritt, who is disabled and in frail health.  Judge Stoelker ruled that the depositions continue without other observers apart from David Merritt's Father and without the Merritts being allowed to make their own recording.  Stoelker did so without citing "good cause shown", as required by law [CCP 2025.420(b)].  Stoelker's illegal failure to cite "good cause shown" may not be evidence of bias.  However,  his insistence on the continuation of a secret, abusive deposition of a woman in frail health could potentially cause "A person aware of the facts [to] entertain a doubt" about the impartiality of the judge.  Stoelker made this ruling is spite of the fact that defense attorney Goldberg clearly has a motive for fabricating a fraudulent deposition record, and his previous unprofessional behaviors suggests that he may have the will to do so.  Judge Stoelker's ruling to exclude independent observers and recording gives Goldberg the opportunity to do so.  However, Stoelker has not recused himself, and a supervising judge has also denied the Merritts' motion for recusal. Merritt has appealed.  On Nov. 26, 2012, the appellate court ruled that the Santa Clara County Superior Court should either replace Stoelker or show cause why they shouldn't.  

Merritt v. Benson

Merritt v. Mozilo includes allegations that appraiser John Benson conspired with representatives of Countrywide to inflate the value of the property by 10 percent so Countrywide could obtain higher commissions, etc.  Benson failed to respond to a summons in August 2011.  January 9, 2012, Judge Manouchian heard 2 hours of presentation of evidence against Benson.  February 16, 2012, Manouchian awarded the Merritts a $1.8 million default judgment.  Benson then got an attorney, who got that decision reversed, so as of 20 July 2012, the Merritts owe Benson $4,000 in attorney's fees.1 

On April 15, 2000, Does 2-30 of Bear Stearns and Lewis explained to Mozilo and other Countrywide officers that Bear Stearns and Bank of America “would provide Countrywide with the loan contract agreements” that they “needed Countrywide to get borrowers to sign, and such contracts required Mozilo to design loans in a way which would strip borrowers savings, income and property equity before leading to default and foreclosure after statute of limitations had run out on breach of contract, fraud and other civil limitations.” A month later, Does 2-30 of Bear Stearns and Lewis told Mozilo that Countrywide would have to conceal that it was acting as a broker for Bear Stearns or Bank of America. If Mozilo agreed to the terms discussed during the meetings, Bear Stearns would lend funds to borrowers for whom Mozilo brokered loans. Bear Stearns provided Mozilo with a “Master Repurchase Agreement” which committed Countrywide to broker loans for Bear Stearns and Bear Stearns would fund such loans as long as the terms of the loans met the specifications that Bank of America and Bear Stearns required. The Countrywide Board of Directors then authorized Mozilo and others to enter into agreements with Bear Stearns, Bank of America, Wells Fargo, MERS, and First American


In sum, the Merritts stated a cause of action for conspiracy to commit fraud against Bank of America and Lewis. However, the trial court properly found that it failed to state a cause of action against First American and MERS

IV. Disposition

The judgments in favor of First American and MERS are affirmed and the judgments in favor of Bank of America and Lewis are reversed. Costs are awarded to First American and MERS. Bank of America, Lewis, and the Merritts are to bear their own costs.