The GLASKI opinion has made the Wall Street banking industry crazy. There was an outcry for publication of this case as it allowed homeowners to challenge fabricated assignments. The Court agreed to publish the opinion.
The securitization case was briefed and argued as a New York law trust case when in fact it was actually a Delaware trust. While the outcome may have likely been the same, the Court’s opinion was based upon New York Trust Law. Thereafter, the banks (that it appears failed to raise these issues during or after the hearings) wanted the opinion to be de-certified for publication.
Apparently, no one realized that the WaMu Mortgage Pass-Through Certificates Series 2005-AR17 Trust was a Delaware trust. Frankly, it is hard to believe that anybody even bothered to read the PSA. As a seasoned researcher, right after you verify the Closing Date, the next stop is usually Article II – Conveyances of Mortgages and then you go to Governing Law. The first full paragraph of Section 2.01. Creation of the Trust reads:
LaSalle Bank National Association is hereby appointed as the trustee of the Trust, to have all the rights, duties and obligations of the Trustee with respect to the Trust expressly set forth hereunder, and LaSalle Bank National Association hereby accepts such appointment and the trust created hereby. Christiana Bank & Trust Company is hereby appointed as the Delaware trustee of the Trust, to have all the rights, duties and obligations of the Delaware Trustee with respect to the Trust hereunder, and Christiana Bank & Trust Company hereby accepts such appointment and the trust created hereby. It is the intention of the Company, the Servicer, the Trustee and the Delaware Trustee that the Trust constitute a statutory trust under the Statutory Trust Statute, that this Agreement constitute the governing instrument of the Trust, and that this Agreement amend and restate the Original Trust Agreement. The parties hereto acknowledge and agree that, prior to the execution and delivery hereof, the Delaware Trustee has filed the Certificate of Trust. [emphasis added]
C’mon guys – Delaware Trustee is mentioned 4 times in one paragraph. Nevertheless, the point that the Court was making was that challenge to the assignment by the homeowner should be permitted and even though New York Trust Law was used in the decision, had Delaware trust law been on the table the Court may have reached the same conclusion as Delaware trust law appears even more stringent.
What is amazing is that the banks attorneys tried to use correspondence to re-argue the case and made some disingenuous statements in order to ultimately request depublication of Glaski v. Bank of America, N.A. The depublication rules allow for any person to argue why an opinion should not be published.
While the banks hired their flashy high-priced attorneys to make their depublication requests, it has caused several excellent letters to be written in support of maintaining the publication that the public originally requested to be published.
Michael T. Pines’ letter can be found on Stopforeclosurefraud.com Letter to CA Supreme Court from Michael T. Pines in Response and Opposition to the Requests to Depublish Glaski v. Bank of America N.A. Opinion. “I am writing in opposition to the request by Deutsche Bank National Trust Company’s request to depublish in the above matter. I will only address one issue – the wrongful conduct of counsel seeking depublication,” writes Pines and continues, “A problem with the securitization of loans, is that the banks and their attorneys, that were, and are, involved in securitization serve no one but their own interests. They have violated countless laws. There are of course countless government and private cases pending regarding such. There are government actions, including criminal investigations against foreclosure law firms.”
Charles Cox, a California Contract Paralegal penned another brilliant letter to the Court [Click HERE for PDF version]:
October 11, 2013
Chief Justice Tani G. Cantil-Sakauye
and Associate Justices
Supreme Court of California
350 McAllister Street
San Francisco, CA 94102-4797
Re: Glaski v. Bank of America, National Association et al.
Supreme Court Case No. 5213814;
Appellate Case No. F064556, Disposition Date 07/31/2013;
Trial Court Case No. 09CECG03601
CORRECTED RESPONSE AND OPPOSITION TO REQUEST FOR DEPUBLICATION
Dear Justices of the Supreme Court:
Pursuant to California Rules of Court (“CRC”), Rule 8.1125(b) et seq., the undersigned
writes to respectfully and timely oppose and object to the requests to depublish the published opinion of the appellate court for the above referenced case by providing the following corrected response.
STATEMENT OF INTEREST AND INTRODUCTION
The undersigned’s interest in this response to the depublication request, relates to clients
served in the undersigned’s practice as a California Bus & Prof. Code qualified paralegal which consists of working on these types of cases with attorneys on a regular basis. We represent many clients who will be affected by this currently citable appellate court Opinion with some cases having already cited Glaski as applicable authority.
The clarity the appellate court provided in its well-reasoned Opinion was qualified for
publication, certified for publication and accordingly, was rightfully published. The undersigned respectfully requests that the Glaski appellate court Opinion not be upset for the following additional reasons.
THE DEPUBLICATION REQUEST PROCESS IS NOT A FORUM TO RE-TRY THE CASE A DEPUBLICATION REQUEST SHOULD ONLY BE UTILIZED TO CONFIRM THAT THE APPELLATE COURT’S OPINION MET THE STANDARD FOR PUBLICATION1
The depublication process should not be used as a forum to re-try the case. Supreme
Court review was an available option to the defendants but no petition was filed.
Justice Joseph R. Grodin wrote in 1984 confirming earlier explanations by the late Chief
Justice Donald R. Wright 2 and then Chief Justice Rose Elizabeth Bird,3 that depublication is only ordered because the majority of the justices consider the opinion to be wrong in some significant way, such that it would mislead the bench and bar if it remained citable as precedent.4 Such is not the case here.
The appellate court had no choice but to assume the purported “Trust” was formed under
New York Trust Laws because Plaintiff claimed it was and the defendants failed to refute or object to this stated fact in the instant case. The law under which the trust was purportedly formed does not change the general concept the appellate court established, that assets are prohibited from entering a trust after the trust closing-date. This is in order to mitigate tax liability and the potential of losing the trust’s tax exempt status by utilizing the restrictive requirements required to maintain limited liability for the trust as a pass through entity.
Regardless of whether or not organized under New York Trust Laws, it was still a Real
Estate Mortgage Investment Conduit (“REMIC”) trust where I.R.S. Code § 860 et seq., and
Delaware Code, Title 12, Chapters 35 and 38 et seq., each provides similar if not more comprehensive requirements related to the actual purpose of the trust; for instance:
“Every direct or indirect assignment, or act having the effect of an assignment,whether voluntary or involuntary, by a beneficiary of a trust of the beneficiary’s interest in the trust or the trust property or the income or other distribution therefrom that is unassignable by the terms of the instrument that creates or defines the trust is void.”5
Statements in the requests for depublication that Delaware Statutes provide no
comparable provision that would render a belated assignment to a trust void is simply untrue.
The appellate justices’ Opinion was sound, applicable and well-reasoned. Defendants’ Petition for Rehearing was rightfully denied and the numerous requests for publication were properly considered and the case was certified for publication.
THE APPELLATE COURT’S OPINION MET THE STANDARDS
FOR CERTIFICATION AND PUBLICATION
The appellate court’s Opinion met the standard for certification and publication as
authorized by Cal. Rules of Court, Rule 8.1105(c) which provides that an opinion of a court of appeal or a superior court appellate division – whether it affirms or reverses a trial court order or judgment – should be certified for publication in the Official Reports if the opinion:
(1) Establishes a new rule of law;
(2) Applies an existing rule of law to a set of facts significantly different from those stated
in published opinions;
(3) Modifies, explains, or criticizes with reasons given, an existing rule of law;
(4) Advances a new interpretation, clarification, criticism, or construction of a provision of
a constitution, statute, ordinance, or court rule;
(5) Addresses or creates an apparent conflict in the law;
(6) Involves a legal issue of continuing public interest;
(7) Makes a significant contribution to legal literature by reviewing either the
development of a common law rule or the legislative or judicial history of a provision
of a constitution, statute, or other written law;
(8) Invokes a previously overlooked rule of law, or reaffirms a principle of law not applied
in a recently reported decision; or
(9) Is accompanied by a separate opinion concurring or dissenting on a legal issue, and
publication of the majority and separate opinions would make a significant
contribution to the development of the law.
The undersigned contends the appellate court’s well-reasoned Opinion was published on
the grounds of sub-sections 2, 3, 5, 6, and 8 referenced above and more specifically related to Sections III. sub-sections A-H and Section IV. sub-section B of the appellate court’s Opinion. 6
Section III.A. The appellate court’s Opinion clarifies securitization issues related to the
lack of transfer of the deed of trust into securitized trusts after the closing date, which was
deemed not acceptable due to the controlling “pooling and servicing agreement” and statutory requirements applicable to REMIC trusts, which is further clarified in FN 12 of the opinion? This meets the standard for publication per CRC, Rules 8.1105(c)(3), (5), (6) and (8).
Section III.B. Clarifies previous issues and opinions related to wrongful foreclosure by a
nonholder of the deed of trust; or when a party alleged not to be the true beneficiary, instructs the trustee to file a Notice of Default and initiate nonjudicial foreclosure which conflicts with other holdings; adopts more applicable holdings and further clarifies that a plaintiff must allege facts that show the defendant who invoked the power of sale was not the true beneficiary. This meets the standard for publication per CRC, Rules 8.1105(c) (3), (5), (6) and (8).
Section III. C. This is an important opinion not previously held by other courts clarifying
the question of whether the purported assignment was void, not dependent on whether the
borrower was a party to, or third party beneficiary of the assignment agreement. This meets the standard for publication per CRC, Rules 8.1105(c)(2), (3), (5), (6) and (8).
Section lII.E. This section distinguishes the Gomes 8 case which seems to be universally
utilized by other courts and defendant attorneys in California whether the application applies to the actual facts of the case at bar or not. Of particular note is the appellate court’s interpretation allowing borrowers to pursue questions regarding the chain of ownership and consolidation with the Herrera 9 case as opposed to Gomes which applies to not only Glaski but many other cases. The Opinion of the appellate court clarifies important characteristics authorized by the standards for publication per CRC, Rules 8.1105(c)(3), (5), (6) and (8).
Section III.F. Banks raise failure to tender as a defense in virtually every case whether applicable or not. The Glaski opinion correctly holds that tender is not required where the
foreclosure sale is void, rather than voidable which meets the standard for publication per CRC, Rules 8.1105(c)(3), (5), (6) and (8).
GLASKI WAS CORRECTLY DECIDED
Whether Glaski was a party or third-party beneficiary to the purported securitized trust agreement or Pooling and Servicing Agreement (“PSA”) is irrelevant. The PSA itself did NOT allow transfer into the purported trust AFTER the closing-date whether the borrower invokes standing to challenge assignment into the trust or not. The same holds true whether or not the borrower was a party or third-party beneficiary of the PSA. The appellate court ruled that such a transfer after the closing-date was not allowed as it would violate the purpose of the securitized trust as a REMIC as further addressed herein.
Professor Adam Levitin 10 of Georgetown Law School states the following, regarding the view (as expressed in the requests for depublication) that a homeowner has no standing to challenge assignments into a trust because of not being a party to the PSA:
“I think that view is plain wrong. It fails to understand what PSA-based foreclosure defenses are about and to recognize a pair of real and cognizable Article III interests of homeowners: the right to be protected against duplicative claims and the right to litigate against the real party in interest because of settlement incentives and abilities.
The homeowner is obviously not party to the securitization contracts like the PSA (query, though whether securitization gives rise to a tortious interference with the mortgage contract claim because of PSA modification limitations•••). This means that the homeowner can’t enforce the terms of the PSA. The homeowner can’t prosecute putbacks and the like. But there’s a major difference between claiming that sort of right under a PSA and pointing to noncompliance with the PSA as evidence that the foreclosing party doesn’t have standing (and after Ibanez, it’s just incomprehensible to me how this sort of decision could be coming out of the 1st Circuit BAP with a MA mortgage).
Let me put it another way. Homeowners are not complaining about breaches of the PSA for the purposes of enforcing the PSA contract. They are pointing to breaches of the PSA as evidence that the loan was not transferred to the securitization trust. The PSA is being invoked because it is the document that purports to transfer the mortgage to the trust. Adherence to the PSA determines whether there was a transfer effected or not because under NY trust law (which governs most PSAs), a transfer not in compliance with a trust’s documents is void. And if there isn’t a valid transfer, there’s no standing. This is simply a factual question-does the trust own the loan or not? (Or in UCC terms, is the trust a “party entitled to enforce the note”-query whether enforcement rights in the note also mean enforcement rights in the mortgage•••) If not, then it lacks standing to foreclosure.
It’s important to understand that this is not an attempt to invoke investors’ rights under a PSA. One can see this by considering the other PSA violations that homeowners are not invoking because they have no bearing whatsoever on the validity of the transfer, and thus on standing. For example, if a servicer has been violating servicing standards under the PSA, that’s not a foreclosure defense, although it’s a breach of contract with the trust (and thus the MBS investors). If the trust doesn’t own the loan because the transfer was never properly done, however, that’s a very different thing than trying to invoke rights under the
I would have thought it rather obvious that a homeowner could argue that the foreclosing party isn’t the mortgagee and that the lack of a proper transfer of the mortgage to the foreclosing party would be evidence of that point. But some courts aren’t understanding this critical distinction. Even if courts don’t buy this distinction, there are at least two good theories under which a homeowner should have the ability to challenge the foreclosing party’s standing. Both of these theories point to a cognizable interest of the homeowner that is being harmed, and thus Article III standing. First, there is the possibility of duplicative claims. This is unlikely, although with the presence of warehouse fraud (Taylor Bean and Colonial Bank, eg), it can hardly be discounted as an impossibility. The same mortgage loan might have been sold multiple times by the same lender as part of a warehouse fraud. That could conceivably result in multiple claimants. The homeowner should only have to pay once. Similarly, if the loan wasn’t properly securitized, then the depositor or seller could claim the loan as its property. Again, potentially multiple claimants, but the homeowner should only have to pay one satisfaction.
Consider a case in which Bank A securitized a bunch of loans, but did not do the transfers properly. Bank A ends up in FDIC receivership. FDIC could claim those loans as property of Bank A, leaving the securitization trust with an unsecured claim for a refund of the money it paid Bank A. Indeed, I’d urge Harvey Miller to be looking at this as a way to claw back a lot of money into the Lehman estate.
Second. the homeowner had a real interest in dealing with the right plaintiff because different plaintiffs have different incentives and ability to settle. We’d rather see negotiated outcomes than foreclosures, but servicers and trustees have very different incentives and ability to settle than banks that hold loans in portfolio. PSA terms, liquidity, capital requirements, credit risk exposure, and compensation differ between services/trustees and portfolio lenders. If the loans weren’t properly transferred via the securitization, then they are still held in portfolio by someone. This means homeowners have a strong interest in litigating against the real party in interest.11
The arguments proffered supporting depublication are nothing more than meritless
attempts to re-argue the Glaski case. The appellate court’s Opinion was well-reasoned and correctly decided. The appellate court’s opinion promotes the requirement that in order to foreclose on an owner’s property, the foreclosing entity must have obtained standing to foreclose properly, not based on a void assignment in contravention of the foreclosing entity’s controlling documents. In this case an assignment into a securitized trust after the closing-date of the trust has been properly deemed invalid and void by the appellate court.
For the foregoing reasons and on behalf of clients and persons this case affects, the
undersigned respectfully request this Honorable Court NOT depublish the above referenced appellate court Opinion due to the importance that the continued ability to cite this well reasoned Opinion has provided and will continue to provide in the future.
- 1 See Joseph R. Grodin, The Depublication Practice o/the California Supreme Court, 72 Cal. L. Rev. 514, 514 n.1 (1984).
- See Julie H. Biggs, Note 8. at 1185 n.20, Decertification of Appellate Opinions: The Need for Articulated Judicial Reasoning and Certain Precedent in California Law, 50 S. Cal. L. Rev. 1181, 1200 (1977) quoting Chief Justice Wright.
- In Justice Bird’s address at the State Bar Convention in San Francisco, CA Sept. 10, 1978, in Report, LA. Daily J., Oct. 6, 1978, at 4, 8, speaking of depublished opinions as ones “with which the court does not agree” and as “erroneous ruling[s]”.
- Grodin, supra, note 7, at 514-15.
- Delaware Decedents’ Estates and Fiduciary Relations, Chapter 35, Trusts, Subchapter III. General Provisions § 3536.
- The “Section” stated herein and below, relate to the applicable Sections of the appellate court’s Opinion.
- “This allegation comports with the following view of pooling and servicing agreements and the federal tax code provisions applicable to REMIC trusts. “Once the bundled mortgages are given to a depositor, the [pooling and servicing agreement] and IRS tax code provisions require that the mortgages be transferred to the trust within a certain time frame, usually ninety dates from the date the trust is created. After such time, the trust closes and any subsequent transfers are invalid. The reason for this is purely economic for the trust. If the mortgages are properly transferred within the ninety-day open period, and then the trust properly closes, the trust is allowed to maintain REMIC tax status.” (Deconstrueting Securitized Trusts, supra, 41 Stetson L.Rev. at pp. 757-758.)” Glaski, supra fn 12.
- Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149.
- Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366.
- See: http://www.law.georgetown.edu/faculty/levitin-adam-j.cfm.
Thank you Charles for allowing DC to post your letter and to Anita, Shelley, Deontos and Steve for their research and heads-up!