Global Literary Marketplace Foreclosure Fraud Defense by Grace Adams

31. August 2012

JPMorgan Won’t Detail 500,000 Loans, Trustee Says‏

Hi Charles,
I highlighted “misrepresenting the quality of the underlying debt” below because that is what all of this mess is about. A little leaven leavens the whole lump 2 times
1 Corinthians 5-6 and Galatians 5-9.
  It’s all fraud on homeowners and investors by the banks. A little yeast works through the whole batch of dough.  A little corruption works through the whole batch of dough. A little fraud works through the whole banking system.


Subject: JPMorgan Won’t Detail 500,000 Loans, Trustee Says
Date: Fri, 31 Aug 2012 05:45:11 -0700

JPMorgan Won’t Detail 500,000 Loans, Trustee Says

By Steven Church – Jan 26, 2011 1:51 PM PT

A JPMorgan Chase & Co. unit refused to give mortgage trust investors more than 500,000 loan files that would show them how many of the loans are bad and must be repurchased, a trustee said in a court filing.

A unit of Deutsche Bank AG said it has a right to the files as trustee for the investors. The investors own 99 mortgage- backed-securities trusts that were built on loans made by Washington Mutual Bank before it was seized by regulators and sold to JPMorgan in 2008 for $1.9 billion.

“These access rights are unqualified and have been unequivocally breached by JPMC,” Deutsche Bank said in court papers filed in federal court in Washington on Jan. 14.

Mortgage-bond investors and bond insurers have accused loan sellers like WaMu and JPMorgan or bond underwriters of often misrepresenting the quality of the underlying debt. Those misrepresentations can trigger contractual or legal provisions requiring repurchases, investors claim. So-called mortgage putbacks may cost banks and lenders as much as $90 billion, JPMorgan bond analysts said in October.

Thomas A. Kelly, a JPMorgan spokesman, declined to comment.

Lost Value

Deutsche Bank National Trust Co.’s suit on behalf of investors against New York-based JPMorgan and the Federal Deposit Insurance Corp. claims the trusts have lost $6 billion to $10 billion in value. WaMu expected some of the loans it put in the trusts to go bad, according to a U.S. Senate investigation cited by Deutsche Bank.

JPMorgan and the FDIC have asked a judge to throw out the case. The Deutsche Bank filing is the trustee’s response to the motion to dismiss the lawsuit.

The outcome of the case could affect Washington Mutual Bank noteholders, who have filed claims in the receivership case being overseen by the FDIC, Kevin Starke, senior vice president with CRT Capital Group LLC said in an interview today.

Should Deutsche Bank win the case on behalf of the trusts, it would either have a claim against JPMorgan or the FDIC, depending on how the judge rules, Starke said. That claim would compete with other creditors of Washington Mutual Bank.

EMC Mortgage

JPMorgan’s EMC Mortgage said this week that it plans to turn over documents detailing the quality of loans in a mortgage trust managed by San Francisco-based Wells Fargo & Co. in an attempt to resolve a lawsuit.

Wells Fargo sued seeking access to files for more than 2,000 underlying mortgages in the Bear Stearns Mortgage Funding Trust 2007-AR2. The complaint, filed in Delaware Chancery Court, accused EMC of playing “rope a dope” and dragging its feet.

The case is Deutsche Bank National Trust Co. v. Federal Deposit Insurance Corp., 09-01656, U.S. District Court, District of Columbia (Washington).

Charles Wayne Cox
Email: or
Websites:; and 
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240direct
(541) 610-1931 eFax

29. August 2012

Automatic stay

Wed, 29 Aug 2012 05:20:30 -0700

Automatic stay

  • Pepper Hamilton, LLP
  • Vicki R. Harding
  • USA
  • August 23 2012

Hiraldo v. Banco Popular Depuerto Rico (In re Hiraldo), 471 B.R. 676 (D. P.R. 2012)

Hiraldo illustrates the key role that state law can play in determining the outcome of a bankruptcy case. Despite the fact that a mortgage presented for recording was still unrecorded six years later after the mortgagor filed bankruptcy, the debtor was not able to avoid the mortgage because it was eventually recorded post-petition, and under applicable state law recording related back to the time of presentment for purposes of determining priority.

As discussed in a prior blog on strong arm powers, a debtor can assert the rights of a hypothetical bona fide purchaser of real estate as of the commencement of the bankruptcy. That normally means that the debtor can avoid a mortgage that is unrecorded at the commencement of the case since the hypothetical bona fide purchaser would typically take title free and clear of unrecorded interests under state law. However, that was not the result in this case.

In Hiraldo the bank filed a mortgage at the Property Registry on September 15, 2003, as noted in the daily entry books. The registrar did not notify the bank of any defects. The debtor filed bankruptcy on July 21, 2008. On August 11, 2009, the debtor filed a complaint alleging that the mortgage was not perfected and should be reclassified as unsecured since the mortgage had not yet been recorded. Eventually the mortgage was recorded in 2011. The delay in registration was apparently due to a backlog.

A threshold issue was whether the post-petition act of recording was subject to the automatic stay imposed under the Bankruptcy Code. There is an exception from the stay for acts to perfect or to maintain or continue perfection of an interest to the extent that the rights and powers of a trustee or debtor are subject to perfection under Section 546(b) of the Bankruptcy Code. In essence, Section 546(b) provides an exception where laws of general applicability allow a creditor to perfect an interest that relates back to a time prior to the commencement of the case.

Under the Mortgage Law of Puerto Rico, a registrar is required to handle documents presented in the order of their presentation, and registration relates back to the date of filing. Consequently, the bank’s mortgage took priority based on the date of presentation and had priority over any other documents that might have been recorded prior to the filing of the bankruptcy but were presented after the mortgage (including a purchaser as of the commencement of the case). This meant that the post-petition act of recording was not subject to the automatic stay. It also meant that the hypothetical bona fide purchaser would take title subject to the mortgage, so that the mortgage could not be avoided on that basis.

The court also considered whether the grant of the mortgage lien constituted a preference. This turned on when a transfer is deemed to have been perfected. Under Section 547 of the Bankruptcy Code, a real estate transfer is deemed perfected when a bona fide purchase can no longer acquire a superior interest. In this case, a bona fide purchaser would have had to present a deed prior to the date that the bank presented its mortgage. So the transfer (i.e. grant of the mortgage lien) was deemed perfected in September 2003, which took it outside the preference period.

The issue of the “gap” between the date a document is submitted for recording and the date it is actually recorded can be a significant one. While the delay in this case of over 7 years is rather extreme, there are certainly jurisdictions with a backlog of weeks or months.

Under Section 547 if a real estate transfer (grant of mortgage lien) is perfected (typically recorded) within 30 days after the transfer, the transfer is deemed made at the time of the transfer. If it is perfected more than 30 days after the transfer, the transfer is deemed made at the time of perfection.

For a mortgage loan, this 30 days means the difference between a contemporaneous exchange that is not a preference and the grant of a lien on account of an antecedent debt that may constitute a preference. Unless the applicable state law recording system gives a document a priority date based on the date that it is presented (as is the case in Puerto Rico), a delay in recording of more than 30 days – whether due to a recording backlog or a delay in submitting a document for recording – results in potential preference exposure.

Pdf:   hiraldo-bankr-d-pr-adv-pro-09-001521.pdf

23. August 2012

RE: Max Gardner on Standing


I included an article by the same author you sent earlier that may shed some light on these rulings you sent below by the Court. 



By Tiffany Sanders on March 7, 2012

The report issued by the Permanent Editorial Board for the Uniform Commercial Code on November 14, 2011 was intended to explain the application of the UCC to negotiable and non-negotiable mortgage notes.  Although there are a number of other applicable issues, the PEB Report addresses only four issues:

1.    If the note is negotiable, who can enforce;

2.    If the note is negotiable or non-negotiable, how ownership is transferred;

3.    If the note is transferred, what is the effect on the mortgage; and

4.    How the transferee of the note can become an assignee of record in the mortgage system.

The Report states that Article 3 of the UCC only applies if the note is negotiable, and there is real controversy about whether or not a mortgage note is a negotiable instrument.  Max addresses some of the reasons he believes that mortgage notes are typically not negotiable instruments in this series of blog posts, and in greater depth at the UCC seminar coming up in Orlando March 24 and 25.  However, others including Boot Camper Tom Cox, offer a different analysis, highlighting the complexity of the issues and the degree to which judicial biases may impact how these issues are decided.

We’ll be discussing the Report in Orlando, as well, but here’s the short version of Max’s analysis:

1.  If the note is negotiable, the key issue is to identify the person entitled to enforce the instrument (PETE). §3-301 of the UCC provides three ways to become a PETE:

·         Be the holder of the note, as defined in Article 1 of the UCC;

·         Be a non-holder in possession of the note with the rights of a holder (for example, the executor of an estate or a transferee in possession of the note with the rights of a holder); or

·         Qualify as a PETE under the Lost Note Rules in UCC §3-309.

However, Article 3 applies only to negotiable notes, and §3-301 does not relate to state foreclosure law and who has the right to enforce the note under such law.

2.  If the note is non-negotiable, then Article 3 would not apply with respect to the determination of who is the PETE.  You have to look at the note to make this determination.  All courts have assumed residential mortgage notes are negotiable without reviewing the note.  Article 9 rules apply to the transfer of such a note.  If the note is non-negotiable, then it is called a promissory note and is really just a contract, governed by the law of assignment of contracts.

3.  Article 9 governs the transfer of both negotiable and non-negotiable notes.  Transfers of the note may be accomplished by outright sale or the grant of a security interest in the note.  §9-203 requires that:

·         You must have property rights in the note to transfer the note;

·         You must receive value for the sale of the note; and

·         You must authenticate a security agreement that describes the note or the transferee and must take possession pursuant to the security agreement of the transferor.

4.  §9-102 refers to the mortgage or deed of trust that creates a lien on the real property.  Case law going back to the Restatement of Mortgages and 19th century common law provides that the recorded mortgage is deemed to follow the note.   §9-203 and §9-308 provide as a matter of law that the creation of a security interest in the note automatically creates an interest in the mortgage or deed of trust. However, this does not address state law requirements.

5.  If state foreclosure law requires the mortgage or deed of trust to be recorded in the name of the foreclosing party, §9-607(b) provides a mechanism by which a party can fulfill that requirement if the original mortgagee is out of business or fails or refuses to execute an assignment.

6.  If the party seeking to enforce the note acquired it from the FDIC, then the agreement must comply with Article 9.  Courts use the word standing, but the same analysis described above for the PETE applies.

7.  Under §9-406 and §9-408, an anti-assignment clause does not negate either the granting of a security interest in or the sale of a note.  An anti-assignment clause would make the note non-negotiable.

8.  The true rules as to who owns the note, which do apply to state foreclosure law related to ownership, are found in §9-203.

9.  Holder in Due Course (HDC) is an Article 3 concept, and comes into play only if the maker has a defense to payment of the note and the holder wishes to establish that he has taken the note free of such defenses.  You do not have to be an HDC to be a PETE. However, there is no such thing as HDC of a non-negotiable note—you must have a negotiable note to become an HDC.

It’s important to keep in mind the scope and function of the PEB Report.   PEB reports are not legislative and have no judicial effect.  The function of the Report is similar to that of a high-level law review or treatise.  PEB reports address issues believed to be clear and unambiguous and seek to explain those Rules.  States and courts do not necessarily defer to PEB reports.  Further, neither Article 3 nor Article 9 determines who has the right to enforce the note under applicable state law.  State real estate law may include documentation requirements that differ from those set forth in the UCC.


Subject: Max Gardner on Standing
Date: Wed, 22 Aug 2012 10:47:13 -0700

Standing Updates

By Tiffany Sanders on August 22, 2012

See the online link to Max’s site on Standing:

The most recent updates includes several new cases on “holder of the note” standing:

In re Knigge, 2012 WL 1536343 (Bankr. W.D. Mo., April 30, 2012):  The creditor, as the party in possession of a promissory note endorsed in blank, was the “holder” of the note and was entitled to enforce the note; while the deed of trust referred to in the note required the debtors to perform a variety of undertakings beyond the payment of money, such as “occupy[ing] the property, refrain[ing] from wasting or destroying the property, maintain[ing] insurance on the property, and giv[ing] notice to Lender of any losses relating to the property,” these additional undertakings did not undermine the negotiability of the note under Missouri law.

In re Griffin, Case No. 11-1362 (9th Cir. B.A.P., April 6, 2012), appeal filed, Case No. 12-60046 (9th Cir., filed June 18, 2012):  The stay relief movant’s providing a copy of the Chapter 7 debtor’s promissory note, along with a declaration stating that the copy was a “true and correct copy of the indorsed Promissory Note,” was sufficient to demonstrate that the movant was in possession of the note. Under Fed. R. Evid. 1003, “[a] duplicate is admissible to the same extent as an original unless (1) a genuine question is raised as to the authenticity of the original or (2) in the circumstances it would be unfair to admit the duplicate in lieu of the original,” and the Chapter 7 trustee had not presented a genuine question as to the note’s authenticity such that the original would be required; since the note was properly endorsed in blank, the movant was a holder of the note entitled to enforce it.

In re Balderrama, — B.R. —-, 2012 WL 1893634 (Bankr. M.D. Fla., May 16, 2012):  In Florida, standing to enforce a note depends on the type of negotiable instrument the note becomes upon execution. If the note is endorsed in blank, it becomes a bearer instrument and can be enforced by the party in possession, regardless of how that party obtained the note. When a note is payable to an identifiable party, however, the instrument becomes a “special instrument,” and only the party or its assignee, specifically identified as the proper holder, i.e., the holder in due course, may enforce the note. Here, because the movant claimed that it held a special instrument specifically endorsed to the movant, it needed to prove that it was a holder in due course.

In re Fennell, 2012 WL 1556535 (Bankr. E.D. N.Y., May 2, 2012):  A party holding the debtor’s mortgage note endorsed in blank is entitled to enforce the note and has standing to move for relief from stay.

Charles Wayne Cox
Email: or
Websites:; and 
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct(541) 610-1931 eFax

21. August 2012

Full Day CLE Workshop Seminar: New Tools & Strategies for Distressed Homeowners

Subject: Workshop in Emeryville
Date: Mon, 20 Aug 2012 11:56:35 -0700

By Daniel Edstrom
DTC Systems, Inc.

8/25/2012 – Emeryville, CA – Full Day CLE Workshop Seminar: New Tools & Strategies for Distressed Homeowners

August 25th, 2012 – in San Francisco, California

Register here:

Venue is the Hyatt House in Emeryville, CA

This workshop has been approved for Minimum Continuing Legal Education (MCLE) by the State Bar of California. Total credit hours approved are 6.75 hours.

SECURE DOCUMENT RESEARCH<br>Auburn, CA 95603; ph: 530.888.9600

DTC Systems, Inc.

Presented by:
Secure Document Research and DTC Systems, Inc.

in Association with the Garfield Continuum and Neil F. Garfield, Esq.

Standard enrollment fee is $497.00.

Visit us at

If you have any problems paying for this event, you can also pay by sending PayPal payments directly to

Problems Registering? Call 530.888.9600

Presented by:
Secure Document Research and DTC Systems, Inc. in Association with the Garfield Continuum and Neil F. Garfield, Esq.

Workshop Information
This is a comprehensive 1-day workshop CLE seminar for lawyers and paralegals: Deny and Discover: New Tools & Strategies for Distressed Homeowners

This workshop has been approved for Minimum Continuing Legal Education (MCLE) by the State Bar of California. Total credit hours approved are 6.75 hours.


1. James Macklin

Owner of Secure Document Research providing Securitization Research and Analysis. While working briefly within the securities industry, Mr Macklin has been focused on the study of economics and macro-economics for over fifteen years, gathering professional insight into Generally Accepted Accounting Principles, Financial Accounting Standards, business ethics, securitization and the effects of “Control Fraud” (William Black, Professor; U.M.K.C.,) on market analysis. Mr. Macklin is now committed to the education, en mass, of the legal industry as a tool for the protection of rights of the under-sophisticated investing and borrowing public at large. James Macklin has over 10,000 hours of research into Securitization, Title and Publicly Recorded Instruments.

2. Daniel Edstrom

President of DTC Systems, Inc, having been in Information Technology for the last 18 years as a Systems Architect and Software Architect.The transformation of complex business requirements to complex Wall Street Engineering was an easy one. Securitization Expert, Daniel Edstrom analyzes complex financial engineering securitization transactions as well as providing a failure analysis, with well over 10,000 hours of research into Securitization and Title. Besides working for his own company, Daniel is a Senior Securitization Analyst for the Garfield Firm (

3. Neil Garfield

Neil F. Garfield, M.B.A., J.D., 61, is the winner of dozens of academic awards, a popular speaker, and author of technical treatises on law and economics. He has come out of retirement with a bang and financial institutions should take note. He knows them from the inside-out, who the deciders are, and how they arrived at a catastrophic scheme to defraud people, agencies, institutions and governments all over the world. For more information on Neil Garfield visit his website at

4. Daniel Hanecak

Daniel Hanecak, B.A. J.D., will be speaking on motion practice and recent court experience. Mr. Hanecak is licensed in California and specializes in complex real property litigation. Mr. Hanecak is currently representing homeowners against banks and mortgage servicers for fraud and wrongful foreclosure.

*Both James Macklin and Daniel Edstrom are not attorneys.

THIS WORKSHOP AND/OR ANY MATERIALS DISTRIBUTED AT THE WORKSHOP IS NO SUBSTITUTE FOR LEGAL ADVICE FROM LOCAL COUNSEL LICENSED TO PRACTICE IN THE COUNTY AND STATE WHERE THE SUBJECT PROPERTY IS LOCATED. The information presented is for general information for you to understand the current context of foreclosures and to enable you to ask relevant questions of an attorney of your choosing. Any opinions presented here, along with facts, cases, examples or arguments, may not apply to your case. You should consult with local licensed counsel before employing them.


Venue is the Hyatt House in Emeryville, CA

Pre-Registration is required and can be done on this website or over the phone at 530.888.9600, with payment by PayPal to Tickets will be emailed after payment is completed.

JAVAHERI v. JPMorgan Chase Bank, NA, Dist. Court, CD California 2012 …. Javaheri(“Wellworth Property”) goes down … JPMorgan’s Motion for Summary Judgment GRANTED and it gets WORSE from there …


I am incensed!!!  It is enough to make you sick. One judge says one thing, rules this way, and another that way….  There is no uniformity in the law, the states, or the united states.   1 Corinthians 5:6: A Little Leaven Leavens The Whole Lump.  Where the name “MERS = Ponzi Scheme” is even mentioned as a party to the transaction makes the transaction void. People should not have to be casualties daily losing their homes while the judges make up their mind to do right by calling fraud fraud.


Bank of America v Mitchell (2012)

The Editor’s Take: Watching our courts attempt to steer California’s antideficiency rules through the treacherous currents of multiple security contexts is always somewhat painful. Code of Civil Procedure §580d, enacted in 1939, prohibits recovery of a deficiency judgment after a nonjudicial sale, which seems straightforward enough at the start. But 24 years later, the California Supreme Court held that this prohibition did not apply to a creditor suing on its junior note after having been sold out in a senior foreclosure sale (the “sold-out junior exception”). Roseleaf Corp. v Chierighino (1963) 59 C2d 35, 41, 27 CR 873. But then, 30 years after that, a court of appeal held that this sold-out junior exception did not apply to a creditor who held both the senior and junior notes. Simon v Superior Court (1992) 4 CA4th 63, 71, 5 CR2d 428. So from then on, we had a “being your own junior” exception to the “sold-out junior” exception. 

Subject: JAVAHERI v. JPMorgan Chase Bank, NA, Dist. Court, CD California 2012 …. Javaheri(“Wellworth Property”) goes down … JPMorgan’s Motion for Summary Judgment GRANTED and it gets WORSE from there …
Date: Tue, 21 Aug 2012 05:28:28 -0700

Prepare to be incensed!


The Court agrees with the majority of courts in the Ninth Circuit and finds that HOLA preempts section 2923.5. The Court therefore GRANTS JPMorgan’s Motion for Summary Judgment on Javaheri’s claim for violation of California Civil Code section 2923.5 as it relates to the Wellworth Property.

Here, no reasonable jury could conclude that Javaheri’s Note had been sold as part of a securitized trust. The pool number was only a partial entry of what was written in the margin of the Deed of Trust, and the only possible connection to some heretofore unnamed private investors is that the number entered into “Pool Talk” corresponds with a CUSIP number that had a Preliminary status in 2011—several months after the lawsuit was originated and at least two-and-a-half years since the Note was allegedly sold as a securitized trust. While the number written on the Deed of Trust bears a striking resemblance to a number associated with a securitized trust, Plaintiff simply fails to produce sufficient evidence to establish that this is anything more than a rare coincidence. The Court therefore finds that Javaheri has failed to establish that JPMorgan does not own his Note and Deed of Trust.

Javaheri contends finally that the Substitution of Trustee is invalid because it was robo-signed. ….. 

 Indeed, for the purposes of this Motion, the Court finds that the signature of Deborah Brignac on the Substitution of Trustee was signed by a different person than that purporting to be Deborah Brignac on the Notice of Trustee’s Sale.  ….. While the allegation of robo-signing may be true, the Court ultimately concludes that Javaheri lacks standing to seek relief under such an allegation. …..

In sum, Javaheri fails to establish that JPMorgan is not the owner, holder, or beneficiary of the Note or that it lacked the authority to foreclose, and he lacks standing to assert his robo-signing contentions. The Court therefore GRANTS JPMorgan’s Motion on Javaheri’s wrongful foreclosure claim as it pertains to the Wellworth Property.



JAVAHERI v. JPMorgan Chase Bank, NA, Dist. Court, CD California 2012



JPMORGAN CHASE BANK, N.A. and DOES 1-150, inclusive, Defendants.

Case No. 2:10-cv-08185-ODW (FFMx).

United States District Court, C.D. California.

August 13, 2012.


OTIS D. WRIGHT, II, District Judge.


Defendant JPMorgan Chase Bank, N.A. moves for partial summary judgment on Plaintiff Daryoush Javaheri’s Second Amended Complaint (“SAC”). (ECF No. 58.) The Court has carefully considered the arguments in support of and in opposition to the JPMorgan’s Motion. For the following reasons, JPMorgan’s Motion is GRANTED.


On November 14, 2007, Javaheri obtained a $2,660,000.00 mortgage loan from Washington Mutual Bank, FA to finance his property located at 10809 Wellworth Avenue, Los Angeles, California 90024 (the “Wellworth Property”). (Eric Waller Decl. Ex. 4.) In connection with the loan, Javaheri executed a promissory note (the “Note”) and a Deed of Trust encumbering the property. (Waller Decl. Exs. 4, 6.) The Deed of Trust identifies Washington Mutual as the lender and Chicago Title Company as the Trustee. (Waller Decl. Ex. 6.)

Javaheri asserts that in November 2007, Washington Mutual transferred the Note to Washington Mutual Mortgage and Securities Corporation. (SAC ¶ 14.) There is no evidence of this. Javaheri also alleges that the Note evidencing his indebtedness was then sold as an investment security to unknown private investors. (SAC ¶¶ 14, 28.) Javaheri identifies this security as Standard and Poor CUSIP number 31379XQC2, Pool Number 432551. (Douglas Gillies Decl. Ex. 5.) Javaheri took this Pool Number from the Deed of Trust and entered it into a “Pool Talk” form on the Fannie Mae website. (Michael B. Tannatt Decl. Ex. 1, Interrogatory No. 5.) But the number on the Deed of Trust was handwritten and read “XXXX-X-XX.” (Waller Decl. Ex. 6.) JPMorgan maintains that the number on the Deed of Trust corresponds to the Assessor’s Parcel Number. (Mot. 11.) The Assessor’s Parcel Number is “XXXX-XXX-XXX.” (Jessica Snedden Decl. Exs. 1, 4, 6.)

On September 25, 2008, the Office of Thrift Supervision closed Washington Mutual and appointed the Federal Deposit Insurance Corporation as receiver. (Waller Decl. Ex. 1.) JPMorgan acquired certain of Washington Mutual’s assets by entering into a Purchase and Assumption (“P&A”) Agreement with the FDIC. (Waller Decl. Ex. 2.) Paragraph 3.1 of the P&A Agreement states, “Notwithstanding Section 4.8, the assuming Bank specifically purchases all mortgage servicing rights and obligations of the Failed Bank.” (Waller Decl. Ex. 2.)

In March 2010, JPMorgan sent Javaheri a Notice of Collection Activity letter stating that he was in default of his mortgage because he had not made any payments since November 2009. (SAC Ex. 5.) Javaheri’s attorney at the time responded to the letter, requesting that all future communication related to the loan be conducted through his office. (SAC Ex. 6.)

On May 3, 2010, California Reconveyance Company (“CRC”) was substituted as the Trustee for the loan in place of Chicago Title Company. (Snedden Decl. Ex. 1.) Also on May 3, 2010, CRC recorded a Notice of Default and Election to Sell the Wellworth Property in the Los Angeles County Recorder’s Office. (Snedden Decl. Ex. 2.)

On May 14, 2010, CRC recorded a Notice of Rescission and a second Notice of Default. (Snedden Decl. Exs. 3, 4.) CRC then mailed a second Notice of Default to Javaheri on or about May 24, 2010, and again on June 8, 2010. (Snedden Decl. Ex. 5.) On August 16, 2010, a Notice of Trustee’s Sale was recorded and subsequently served on Javaheri, published in a local newspaper, and posted on the Wellworth Property. (Snedded Decl. Exs. 6-9.)

As a result of these events, on October 29, 2010, Javaheri filed a Complaint in this Court against JPMorgan and CRC. (ECF No. 1.) Both Javaheri’s original Complaint and his subsequent First Amended Complaint were dismissed for failure to state claims. (ECF Nos. 20, 28.) On April 12, 2011, Javaheri filed his SAC against JPMorgan. (ECF No. 29.) JPMorrgan filed a Motion to Dismiss (ECF No. 30), which the Court partially granted, leaving only claims for: (1) violation of California Civil Code section 2923.5; (2) wrongful foreclosure; (3) quasi-contract; (4) quiet title; and (5) declaratory and injunctive relief. (ECF No. 36.)

On December 5, 2011, Javaheri filed a Complaint in another action that was nearly identical to the SAC in this case, except that it concerned Javaheri’s condominium on Wilshire Boulevard instead of his house on Wellworth. Javaheri v. JPMorgan Chase Bank N.A., No. CV11-10072-ODW (FFMx) (C.D. Cal. Dec. 5, 2011). Due to the cases’ similarities, the Court consolidated the later-filed case regarding Plaintiff’s condo (CV11-10072) with this earlier-filed case concerning the Wellworth Property (CV10-8185). (ECF No. 50.)

On June 21, 2012, JPMorgan filed a Motion for partial Summary Judgment as to the remaining claims from Javaheri’s SAC. (ECF No. 58.) JPMorgan’s Motion pertains solely to the Wellworth Property originally associated with case number CV10-8185; it does not address Javaheri’s condo.


Summary judgment is appropriate when, after adequate discovery, the evidence demonstrates that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A disputed fact is “material” where the resolution of that fact might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is “genuine” if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party. Id. Where the moving party’s version of events differs from the nonmoving party’s version, “courts are required to view the facts and draw reasonable inferences in the light most favorable to the party opposing the summary judgment motion.” Scott v. Harris, 550 U.S. 372, 378 (2007) (internal quotation marks omitted).

The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). The moving party may satisfy that burden by demonstrating to the court that “there is an absence of evidence to support the nonmoving party’s case.” Id. at 325.

Once the moving party has met its burden, the nonmoving party must go beyond the pleadings and identify specific facts that show a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)Celotex, 477 U.S. at 323-34Liberty Lobby, 477 U.S. at 248. Only genuine disputes over facts that might affect the outcome of the suit will properly preclude the entry of summary judgment. Anderson, 477 U.S. at 248see also Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001) (finding that the non-moving party must present specific evidence from which a reasonable jury could return a verdict in its favor).

The evidence presented by the parties on summary judgment must be admissible. See Fed. R. Civ. P. 56(e). “[E]vidence that is merely colorable or not significantly probative does not present a genuine issue of material fact.” Addisu v. Fred Meyer, 198 F.3d 1130, 1134 (9th Cir. 2000). Likewise, conclusory or speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. Thornhill’s Publ’g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Conversely, a genuine dispute over a material fact exists if there is sufficient evidence supporting the claimed factual dispute, requiring a judge or jury to resolve the differing versions of the truth. Anderson, 477 U.S. at 253.

Finally, it is not the task of the district court “to scour the record in search of a genuine issue of triable fact. [Courts] rely on the nonmoving party to identify with reasonable particularity the evidence that precludes summary judgment.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (quoting Richards v. Combined Ins. Co., 55 F.3d 247, 251 (7th Cir. 1995)); see alsoCarmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 2001) (“The district court need not examine the entire file for evidence establishing a genuine issue of fact, where the evidence is not set forth in the opposing papers with adequate references so that it could conveniently be found.”).


A. Violation of Civil Code § 2923.5

Javaheri’s claim for violation of California Civil Code section 2923.5 is preempted by the Home Owner’s Loan Act (“HOLA”), 12 U.S.C. §§ 1461-1468c. In California, section 2923.5 requires mortgagees, beneficiaries, or authorized agents to communicate with borrowers facing foreclosure. Cal. Civ. Code § 2923.5(a)(1). Section 2923.5 is a state law that attempts to regulate banks’ lending and servicing activities, and is “exactly the sort of statute that is proscribed by the HOLA.” McNeely v. Wells Fargo bank, N.A., No. SACV 11-01370 DOC (MLGx), 2011 WL 6330170, at *3 (C.D. Cal. Dec. 15, 2011).

HOLA is a comprehensive financial statute providing for the regulation of federal savings banks and associations by the Office of Thrift Supervision (“OTS”). See 12 U.S.C. § 1464; Ngoc Nguyen v. Wells Fargo Bank, N.A., 749 F. Supp. 2d 1022, 1031 (N.D. Cal. 2010). “Through HOLA, Congress gave the OTS broad authority to issue regulations governing federal savings associations.” Ngoc Nguyen, 749 F. Supp. 2d at 1031 (citing 12 U.S.C. § 1464; Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1005 (9th Cir. 2008)). In exercising its authority, the OTS “occupies the entire field of lending regulation for federal savings associations.” 12 C.F.R. § 560.2. Indeed, the Ninth Circuit has noted that HOLA is “so pervasive as to leave no room for state regulatory control.” Silvas, 514 F.3d at 1004-05 (quoting Conference of Fed. Sav. & Loan Ass’ns v. Stein, 604 F.2d 1256, 1257 (9th Cir. 1979), aff’d, 445 U.S. 921).

Here, the loan originator, Washington Mutual Bank, FA, was a federally chartered savings bank at the time the loan originated. (Waller Decl. Ex 1.); see Rodriguez v. JPMorgan Chase & Co.,809 F. Supp. 2d 1291, 1295 (S.D. Cal. 2011). Although JPMorgan is not a federal savings bank and is not regulated by the OTS, the same HOLA preemption analysis still applies because the loan originated with Washington Mutual. Rodriguez, 809 F. Supp. 2d at 1295see Deleon v. Wells Fargo Bank, N.A., 729 F. Supp. 2d 1119, 1126 (N.D. Cal. 2010).

While the California Court of Appeals, in Mabry v. Superior Court, 185 Cal. App. 4th 208, 213-19 (2010), has construed section 2923.5 to be outside the scope of preemption, the weight of federal authority supports a finding that HOLA preempts section 2923.5. See, e.g., Tanguinod v. World Sav. Bank, FSB, 755 F. Supp. 2d 1064, 1073-74 (C.D. Cal. 2010)Giannini v. Am. Home Mortg. Servicing, Inc., No. C11-04489 TEH, 2012 WL 298254, at *6-8 (N.D. Cal. Feb 1, 2012). “Because the issue is not one of interpreting state law but rather of federal preemption, `the [Court] is not bound by the decision in Mabry.‘” McNeely, 2011 WL 6330170, at *3 (quotingTanguinod, 755 F. Supp. 2d at 1074).

The Court agrees with the majority of courts in the Ninth Circuit and finds that HOLA preempts section 2923.5. The Court therefore GRANTS JPMorgan’s Motion for Summary Judgment on Javaheri’s claim for violation of California Civil Code section 2923.5 as it relates to the Wellworth Property.

B. Wrongful Foreclosure

Javaheri’s claim for wrongful foreclosure relies on three contentions: (1) that JPMorgan is not owner, holder, or beneficiary of the Note; (2) that JPMorgan does not have the authority to foreclose; and (3) that the signatures of Deborah Brignac were robo-signed. The Court addresses each of these arguments in turn.

1. Ownership of the Note

Javaheri alleges that JPMorgan did not own his Note and therefore did not have the right to foreclose. (SAC ¶ 30.) The Second Amended Complaint states that Washington Mutual transferred the Note to Washington Mutual Mortgage Securities Corporation in November 2007, and the Note was then sold to an investment trust. (SAC ¶ 14.)

To support this contention, Javaheri purports to provide evidence of the sale. The number “XXXX-X-XX” is handwritten in the margin of the Deed of Trust.[1] (Waller Decl. Ex. 6.) In April 2011, Counsel for Javaheri entered the number “432551” as a Pool Number in a form titled “Pool Talk” that was publicly available on Fannie Mae’s website.[2] (Gillies Decl. Ex. 5.) But the number that Counsel entered differs in both form and substance from the number written on the deed of trust: it includes neither the dashes nor the last digit. The only information available on the “Pool Talk” form is that the pool number “432551” corresponds to the CUSIP number “31379XQC2″ and that as of 2011, the status of this security was “Preliminary.” (Gillies Decl. Ex. 5.) Aside from this, Javaheri provides no information on who the private investors are, when the Note was sold, how much it was sold for, or any other evidence that would connect the Note to this loan pool.

JPMorgan’s explanation for the number “XXXX-X-XX” handwritten in the margin of the Deed of Trust is that it refers to the Assessor’s Parcel Number for the Wellworth Property. (Mot. 11.) The Assessor’s Parcel Number for the Wellworth Property is “XXXX-XXX-XXX”. (Snedden Decl. Exs. 1, 4, 6.) The parcel number and the handwritten number on the Deed of Trust are the same, and in the same format, except that the handwritten number omits the zeros contained in the Assessor’s Parcel Number.

Ordinarily, summary judgment cannot lie when there is a “genuine” issue of material fact.Anderson, 477 U.S. at 248. But if the evidence is merely colorable or not sufficiently probative, then the Court may grant summary judgment. Id. at 249-50. Only if genuine factual issues may reasonably be resolved in favor of either party should the case proceed to trial. Id. at 250. “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd., 475 U.S. at 587 (internal quotation marks omitted).

Here, no reasonable jury could conclude that Javaheri’s Note had been sold as part of a securitized trust. The pool number was only a partial entry of what was written in the margin of the Deed of Trust, and the only possible connection to some heretofore unnamed private investors is that the number entered into “Pool Talk” corresponds with a CUSIP number that had a Preliminary status in 2011—several months after the lawsuit was originated and at least two-and-a-half years since the Note was allegedly sold as a securitized trust. While the number written on the Deed of Trust bears a striking resemblance to a number associated with a securitized trust, Plaintiff simply fails to produce sufficient evidence to establish that this is anything more than a rare coincidence. The Court therefore finds that Javaheri has failed to establish that JPMorgan does not own his Note and Deed of Trust.

2. Authority to foreclose

Javaheri also argues that JPMorgan cannot produce the original Note and that there has been no recording of the beneficial interest in the Note to Chase.

The SAC states, “Neither WaMu, Chicago Title, CRC, nor Chase has recorded a transfer of the beneficial interest in the Note to Chase.” (SAC ¶ 29.) Javaheri is correct in this assertion, and JPMorgan offer no evidence to counter it. But this argument bears no weight on JPMorgan’s authority to foreclose. California courts have routinely held that a transfer of assignment of a debt does not need to be recorded. See, e.g., Herrera v. Fed. Nat’l Mortg. Assn., 205 Cal. App. 4th 1495, 1506 (2012)Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App. 4th 256, 271-72 (2011).

Javaheri also argues that JPMorgan cannot produce the original Note. (SAC ¶ 31.) This is also true. (Waller Decl. Ex. 5.) Nevertheless, numerous courts have concluded that production or possession of the original promissory note is not necessary for non-judicial foreclosure under California law. See, e.g., Saldate v. Wilshire Credit Corp., 686 F. Supp. 2d 1051, 1068 (E.D. Cal. 2010)Ngoc Nguyen v. Wells Fargo Bank, N.A., 749 F. Supp. 2d 1022, 1035 (N.D. Cal. 2010). The Court agrees.

Therefore, although JPMorgan cannot produce the original Note and has not recorded its interest in the Note, these actions are not required for non-judicial foreclosure in California and thus are inapposite to Javaheri’s claim for wrongful foreclosure.

3. Robo-signing

Javaheri contends finally that the Substitution of Trustee is invalid because it was robo-signed. (SAC ¶ 39.) According to Javaheri, surrogate signers allegedly signed several documents on behalf of and in the name of Deborah Brignac, without reading or understanding the documents’ contents. (Gillies Decl. Ex. 4.) Indeed, for the purposes of this Motion, the Court finds that the signature of Deborah Brignac on the Substitution of Trustee was signed by a different person than that purporting to be Deborah Brignac on the Notice of Trustee’s Sale. (Gillies Decl. Ex. 6.)

While the allegation of robo-signing may be true, the Court ultimately concludes that Javaheri lacks standing to seek relief under such an allegation. District Courts in numerous states agree. See, e.g., Repokis v. Deutsche Bank Nat’l Trust Co., No. 11-15145, 2012 WL 2373350, at *2 (E.D. Mich. June 25, 2012); In re Mortgage Electronic Registration Systems (MERS) Litigation, No. CV 10-1547-PHX-JAT, 2012 WL 932625, at *3 (D. Ariz. Mar. 20, 2012) see also See Bleavins v. Demarest, 196 Cal. App. 4th 1533, 1542 (2011) (“Someone who is not a party to a contract has no standing to challenge the performance of the contract. . . .” (internal quotation marks and alterations omitted)).

Only someone who suffered a concrete and particularized injury that is fairly traceable to the substitution can bring an action to declare the assignment of CRC as void. In re Mortgage Electronic Registration Systems (MERS) Litigation, 2012 WL 932625, at *3. The Substitution of Trustee in this case replaces Chicago Title Company with CRC as trustee of the Deed of Trust. (Snedden Decl. Ex. 1.) Javaheri was not party to this assignment, and did not suffer any injury as a result of the assignment. Instead, the only injury Javaheri alleges is the pending foreclosure on his home, which is the result of his default on his mortgage. The foreclosure would occur regardless of what entity was named as trustee, and so Javaheri suffered no injury as a result of this substitution. See Bridge v. Aames Capital Corp., No. 1:09 CV 2947, 2010 WL 3834059, at *4 (N.D. Ohio Sept. 29, 2010) (“Plaintiff is still in default on [his] mortgage and subject to foreclosure. As a consequence, Plaintiff has not suffered any injury as a result of the assignment.”)

In sum, Javaheri fails to establish that JPMorgan is not the owner, holder, or beneficiary of the Note or that it lacked the authority to foreclose, and he lacks standing to assert his robo-signing contentions. The Court therefore GRANTS JPMorgan’s Motion on Javaheri’s wrongful foreclosure claim as it pertains to the Wellworth Property.

C. Quasi-Contract

Javaheri’s claim for quasi-contract alleges that JPMorgan was unjustly enriched when Javaheri paid it monthly mortgage payments because JPMorgan was not the owner, lender, or beneficiary of the note. (SAC ¶ 42.)

In its previous Order, the Court denied JPMorgan’s Motion to Dismiss the quasi-contract claim on the basis that “if indeed JPMorgan did not own the Note yet received payments therefrom, those payments may have been received unjustly.” (Order 8.) The Court premised its decision on Javaheri’s well-pleaded allegations that JPMorgan was not the rightful owner of the Note, and so was unjustly enriched by collecting mortgage payments from Javaheri. (SAC ¶ 42.)

These allegations were sufficient to withstand a Rule 12(b)(6) motion to dismiss, but to withstand summary judgment, Javaheri must provide admissible evidence demonstrating that the Note is owned by another entity. Javaheri has not done this, and so, as the Court has already concluded, Javaheri fails to establish that JPMorgan is not the rightful owner of the Note.

Javaheri does not argue that the Note and the Deed of Trust are not valid documents as to the Subject Loan and Wellworth Property; he argues only that JPMorgan is not the valid owner. (SAC ¶ 42.) These documents are thus controlling in establishing the respective rights and obligations between Javaheri and JPMorgan.

Under California law, a claim for quasi-contract alleging unjust enrichment cannot lie “when an enforceable, binding agreement exists defining the rights of the parties.” Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96 F.3d 1151, 1167 (9th Cir. 1996). Here, the Note and the Deed of Trust are express contracts covering the same subject material as Javaheri’s quasi-contract claim. The Court must therefore look to the physical, written contracts (the Note and the Deed of Trust) to determine whether Javaheri’s claim fails as a matter of law. See Klein v. Chevron U.S.A., Inc., 202 Cal. App. 4th 1342, 1388 (2012)Lance Camper Mfg. Corp. v. Republic Indem. Co. of Am., 44 Cal. App. 4th 194, 203 (1996).

The Note instructs the Borrower to make monthly payments to the Note Holder. (Waller Decl. Ex. 4.) The Note Holder is either the original lender, Washington Mutual, or “anyone who takes the Note by transfer and who is entitled to receive payments under this Note.” (Waller Decl. Ex. 4.) The Note was properly transferred from Washington Mutual to the FDIC as receiver of the bank, and from the FDIC to JPMorgan through the P&A Agreement. So, JPMorgan is now the Note Holder. Thus, the Note is a valid contract between Javaheri and JPMorgan, and any attempt to plead a quasi-contract claim in substitution of the Note and Deed of Trust must necessarily fail.

Finally, even if the Court could find that there was no enforceable contract governing the parties’ rights and obligations in this case, there is still no evidence that JPMorgan has unjustly benefitted from Javaheri’s mortgage payments at Javaheri’s expense. Unjust enrichment requires the receipt of a benefit and the unjust retention of that benefit at the expense of another. Tilley v. Ampro Mortg., No. S-11-1134 KJM CKD, 2011 WL 5921415, at *9 (E.D. Cal. Nov. 28, 2011) (quoting Peterson v. Cellco Partnership, 164 Cal.App.4th 1583, 1593 (2008));Cross v. Wells Fargo Bank, N.A., No. CV11-00447 AHM (Opx), 2011 WL 6136734, at *3 (C.D. Cal. Dec. 9, 2011) (same). Conspicuously absent from both Javeheri’s Complaint and the evidentiary record in this case is any contention or any evidence that JPMorgan—to the extent that it does not own Javaheri’s Note and is not entitled to keep Javaheri’s mortgage payments—has failed to credit Javaheri’s account or forward Javaheri’s payments to the appropriate entity. Nor does any other creditor appear to claim an interest in any of the payments Javaheri made prior to default. Javaheri therefore has not established the very essence of a quasi-contract claim.

The Court therefore GRANTS JPMorgan’s Motion for Summary Judgment on Javaheri’s quasi-contract claim as it relates to the Wellworth property.

D. Quiet Title

Javaheri’s claim for quiet title is based on allegations (1) that JPMorgan does not own and cannot produce the original promissory note and (2) that all necessary sums have been paid.

California courts have held that a party seeking to quiet title to a property on which he owes a debt must first offer payment in full on that debtRosenfeld v. JPMorgan Chase Bank, N.A.,732 F. Supp. 2d 952, 975 (N.D. Cal. 2010)Miller v. Provost, 26 Cal. App. 4th 1703, 1707 (1994). In his SAC, Javaheri alleges, “[T]he obligations owed to WaMu under the DOT were fulfilled and the loan was fully paid when WaMu received funds in excess of the balance on the Note as proceeds of sale through securitization(s) of the loan and insurance proceeds from Credit Default Swaps.” (SAC ¶ 63.) In other words, Javaheri suggests that he need not pay off his debt simply because Washington Mutual transferred the Note to a third party. Even assuming that Washington Mutual did sell the Note to a securitized trust, which Javaheri has failed to establish, public policy demands that Javaheri pay off his debt. It would be patently unfair to allow Javaheri to own his home free and clear without fully paying the money he owes on the home. Moreover, district courts have consistently held that “the sale or pooling of investment interests in an underlying note [cannot] relieve borrowers of their mortgage obligations.” Upperman v. Deutsche Bank Nat’l Trust Co., No. 01:10-cv-149, 2010 WL 1610414, at *2 (E.D. Va. Apr. 16, 2010)see Matracia v. JP Morgan Chase Bank, NA, No. CIV. 2:11-190 WBS JFM, 2011 WL 3319721, at *3 (E.D. Cal. Aug. 1, 2011).

JPMorgan has satisfied its burden by providing evidence that Javaheri has not tendered the full amount due under the loan. (Tannatt Decl. Ex. 4, at 22.) Javaheri does not refute this. (SeePlaintiff’s Statement of Genuine Issues in Opposition to Motion for Summary Judgment.) Javaheri’s SAC does allege that his obligation to pay Washington Mutual was fulfilled when Washington Mutual received proceeds from the sale of the Deed of Trust to private investors in a securitized trust. (SAC ¶¶ 43, 63.) But while this was enough to survive a Rule 12(b)(6) motion to dismiss, it is not enough to survive summary judgment. Javaheri provides no evidence that there were any proceeds from the sale of the Deed of Trust to private investors. Therefore, even if this sale did occur, there is still no evidence of tender. And because Javaheri provides no evidence that he tendered the full amount owed under the Deed of Trust, there can be no claim to quiet title. Accordingly, JPMorgan’s Motion is GRANTED with respect to Javaheri’s claim for quiet title as it relates to the Wellworth Property.

E. Declaratory and Injunctive Relief

Claims for declaratory and injunctive relief are ultimately prayers for relief, not causes of action.Lane v. Vitek Real Estate Indus. Grp., 713 F. Supp. 2d 1092, 1104 (E.D. Cal. 2010). Javaheri is not entitled to such relief absent a viable underlying claim. Shaterian v. Wells Fargo Bank, N.A., 829 F. Supp. 2d 873, 888 (N.D. Cal. 2011).

The Court stated in its June 2, 2011 Order, “Plaintiff has properly pleaded his underlying claims and Defendant may therefore be found liable at a later stage of the litigation.” (Order 9.) Javaheri’s allegations were enough to withstand dismissal under 12(b)(6), but for summary judgment, Javaheri cannot rest upon mere allegations or denials in his pleadings; rather, he must assert evidentiary materials showing that there is a genuine issue for trial. Anderson, 477 U.S. at 256. Because there is no evidence to support Javaheri’s underlying claims, injunctive relief is improper.

To state a claim for declaratory relief, there must be an actual controversy. Am. States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1994). The Court has dismissed Javaheri’s claims, so there is no longer a controversy regarding the Wellworth Property. Therefore, the Court has no jurisdiction to award declaratory relief on the Wellworth Property.

Accordingly, the Court GRANTS JPMorgan’s Motion for Summary Judgment on Javaheri’s claim for declaratory and injunctive relief as it relates to the Wellworth Property.


The Court GRANTS Defendant’s Motion for Partial Summary Judgment in its Entirety. The parties shall proceed in this litigation solely on Plaintiff’s Wilshire Boulevard condo, which is the only property remaining subject to this action.


[1] The number as written on the Deed of Trust is “XXXX-X-XX.” But, in his response to Interrogatory No. 5, Javaheri claims that the number was written as “432551.” (Tannatt Decl. Ex. 1.) In the Opposition to the JPMorgan’s Motion, Counsel for Javaheri states that the number is “4325514.” (Opp’n 3.)

[2] Javaheri is inconsistent in enumerating the number that he entered into the “Pool Talk” form. As stated in the Opposition and as appearing in Exhibit 5, the number entered is “432551.” (Opp’n 3; Gillies Decl. Ex. 5.) But, Gillies’ Declaration states that he entered the number “4325514” in the “Pool Talk” form. (Gillies Decl. at 3.)


Follow up to Javaheri‏

Subject: Follow up to Javaheri
Date: Tue, 21 Aug 2012 10:16:26 -0700

And you wonder why? Check out the “investments”…

Charles Wayne Cox
Email: or
Websites:; and 
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Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; CA Licensed Real Estate Broker; Forensic Loan Analyst.  Litigation Support and Expert Witness Services.

FAQ on Niday Ruling & MERS/Oregon…MERS YOU LOSE

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FAQ on Niday Ruling & MERS/Non-Judicial Foreclosures in Oregon

Heading For Source-Phil Querin)

Compliments of several dedicated consumer attorneys, includingKelly Harpster, consumer attorney par excellence, and Sybil Hebb,lead attorney for the Oregon Law Center, a non-profit law firm for low income Oregonians, I am posting a Frequently Asked Questions publication discussing the recent Niday court ruling [which I have discussed here and here] as well as general issues regarding the infamous MERS company and important Oregon foreclosure information.  Although it is not “legal advice,” this post contains information “You can take to the bank.”  And after you take it to the bank, you can tell them what to do with it…. PCQ

1)  What is MERS?

MERS stands for Mortgage Electronic Registry Systems, Inc. It is a private company that operates an electronic registry designed to track servicing rights and ownership of mortgageHYPERLINK “”loans in the United States. MERS is owned by holding company MERSCORP, Inc. When MERS is named as a beneficiary in a trust deed, a related entity named MERSCORP records transfers of the loan in a private database.

2)  What is the Oregon Trust Deed Act?

The Oregon Trust Deed Act (OTDA) is the statute that authorizes non-judicial foreclosures in certain circumstances. Prior to passage of the OTDA, the only way to foreclose on property was in court, under the oversight of a judge who could examine the evidence submitted by both parties and ensure fairness. In 1959, in response to industry requests for an expedited process, the Oregon Trust Deed Act was passed. The OTDA allowed an expedited foreclosure and sale without a judge’s oversight, but only if certain procedural requirements were met.  If a lender chooses not to use the non-judicial process, it has the option of using the judicial process.

3)  The Oregon Court of Appeals just issued a ruling on a MERS/non-judicial (OTDA) foreclosure case. What was the case about and what does the ruling say?

In this case, Rebecca Niday bought her home by getting a loan from GreenPoint Mortgage Funding, Inc., a MERS member. The trust deed was recorded in Clackamas County listing MERS as a beneficiary of the loan, and indicating that MERS was acting solely as a nominee (or agent) for GreenPoint. At some point, GreenPoint assigned its interest in the loan. Three years later, the company that claimed to own the loan commenced a non-judicial foreclosure of the trust deed.

Ms. Niday challenged the foreclosure on the grounds that only the true beneficiary of a loan can foreclose.  Niday argued that MERS was not the true beneficiary of the loan and the assignment of the trust deed by GreenPoint had not been recorded in the public records. The lower court rejected Niday’s argument, but the Court of Appeals reversed the trial court’s decision. The Court of Appeals ruling has two parts:

a)  MERS is not the “beneficiary” of a MERS trust deed because MERS is not the person for whose benefit the trust deed is given (i.e., MERS is not the person to whom the debt is owed); and

b)  A trust deed may be foreclosed non-judicially under the OTDA only if all assignments of the trust deed, including assignments that occur by operation of law when the promissory note is sold or assigned, are recorded in the local county public land records.

4)  Was the homeowner in default? If so, why did she win this case? What was the Court’s reasoning?

The Niday decision  was a procedural decision. Whether or not the homeowner was in default was not at issue in the case. The questions for the Court were related to whether the requirements for Oregon’s non-judicial foreclosure were met. It found that the requirements were not met. The Court reasoned that when the Oregon legislature established the statutory process for non-judicial foreclosure (the Oregon Trust Deed Act), it imposed strict safeguards to ensure the accuracy of property records. The requirement that assignments be recorded is designed to protect the interests of homeowners, prospective purchasers, and actual purchasers of real property. The foreclosing beneficiary cannot ignore this requirement if the beneficiary wants to use the expedited non-judicial foreclosure process. The beneficiary can always elect to foreclose judicially, if it is unable to satisfy the procedural requirements necessary to foreclose non-judicially.

5)  What does this ruling mean along with the other MERS related rulings? Will the Oregon Supreme Court rule on this issue?

The Niday decision is currently the highest state ruling on these matters. Unless and until the Oregon Supreme Court holds differently, Oregon Circuit Courts must follow the rules announced in Niday. Federal courts are not required to follow Niday, but are likely to do so.

A day after the Niday decision, the Oregon Supreme Court announced that it had officially accepted a federal judge’s request in a different case that it answer questions related to MERS and non-judicial foreclosures. Also, MERS has indicated it will ask the state Supreme Court to review the Niday decision. It is unknown whether the Supreme Court will accept review of theNiday case, or when an answer will be given to the federal judge’s questions.

6)  What does the Niday ruling mean for homeowners who have a pending non-judicial foreclosure sale?

If the recording requirements of the OTDA have not been met, homeowners with pending non-judicial foreclosures may have legal grounds to ask a court to stop the non-judicial foreclosure. The foreclosure could be filed judicially instead. If the beneficiary has satisfied the recording and all other requirements of the OTDA, the non-judicial foreclosure can continue.

7)  What does the Niday ruling mean for homeowners who have already had their homes foreclosed?

It is not yet clear what impact, if any, the Niday decision will have on a foreclosure that is already completed. If you have questions about this, you should seek legal advice immediately.

8)  What does the Niday ruling mean for homeowners who are not in foreclosure but have a trust deed with MERS listed as the beneficiary?

The decision does not affect homeowners who are not in foreclosure.  This ruling does not invalidate trust deeds with MERS listed as the beneficiary.

9)  We have heard that lenders will start filing more judicial foreclosures in Oregon because of MERS cases and/or new mediation laws. Is there any evidence of this trend and is there any reason to be concerned about a shift to judicial foreclosures?

While some counties have seen increases in judicial foreclosure filings over the last year, it istoo soon to tell whether lenders will begin filing judicial foreclosures to avoid the recording requirements of the Oregon Trust Deed Act or the new requirement to mediate.

A shift to judicial foreclosure will not have a negative impact on homeowners. When a foreclosure is filed judicially, the usual procedural guarantees of fairness apply and the process is overseen by a judge. Courts also may choose to require mediation and settlement conferences in judicial foreclosures similar to the new foreclosure mediation process for non-judicial foreclosures.

10) What are the major differences between the non-judicial and judicial foreclosure process?

1.      Recording requirements and the right to foreclose: A lender filing a judicial foreclosure is not required to record all trust deed assignments prior to beginning the judicial foreclosure process.  Instead, the lender must submit sufficient evidence to prove that it has the right to foreclose. The non-judicial foreclosure process allows foreclosure without judicial oversight if all trust deed assignments are recorded prior to foreclosure.

2.      Right to mediation: As of July 11, 2012, SB 1552 requires certain lenders to offer borrowers the option of face to face mediation in front of a neutral third party prior to a non-judicial foreclosure. In a judicial foreclosure proceeding, a borrower may request mediation, and a court may encourage mediation, but it is not required.

3.      Deficiency judgments:  As of July 11, 2012, a borrower is protected from a deficiency judgment after a foreclosure if, at the time of the default on which the foreclosure is based, the borrower was living in the home being foreclosed. This applies to judicial and non-judicial foreclosures. If the borrower was not living in the home at the time of the default, the lender can seek a deficiency judgment in a judicial foreclosure.

4.      Right of redemption:  After a judicial foreclosure, a homeowner has 180 days after the property is sold in a foreclosure sale to redeem the property from the purchaser at the sale.  To redeem the property, the homeowner must pay the purchaser the amount paid by the purchaser at the sale plus interest, and, in some cases, other amounts. There is no right of redemption after a non-judicial foreclosure.

11) How will a homeowner know if the lender has begun the judicial foreclosure process?

The judicial foreclosure process begins when the lender sues the homeowner by filing a foreclosure complaint in court.  A homeowner must be served with a copy of the complaint and a summons.  The homeowner must file a written response to the complaint in court within 30 days of the date it is served on her.

12) If a homeowner is served with a judicial foreclosure complaint, what should she do?

The homeowner should immediately contact an attorney licensed in Oregon. A housing counselor can help refer a homeowner to an attorney, but housing counselors are not licensed to advise or represent homeowners concerning judicial foreclosure.

13) Where can a homeowner go for more information?

If you are in foreclosure or at risk of foreclosure, you should seek qualified assistance immediately. Foreclosure is a complicated area of the law and there are many issues to consider. You should consult an attorney or a housing counselor as soon as possible for assistance.

Legal Assistance: – Free legal assistance for low-income homeowners - Lawyer Referral Service and Modest Means Program

Other Foreclosure Assistance: -Statewide list of free foreclosure counselors non-judicial foreclosure mediation information homeowner assistance programs created by multistate foreclosure litigation settlement -foreclosure prevention resources

* The information in these FAQs may not apply in every situation and is not a substitute for legal advice.  To obtain legal advice, a homeowner should contact an attorney licensed in Oregon.

17. August 2012

Bain Decision is out in Washington – MERS YOU LOSE!!!‏


See pdf bain-ruling1.pdf

Under the deed of trust act, the beneficiary must hold the promissory note Bain (Kristin), et al. v. Mortg. Elec. Registration Sys., et al., No. 86206-1 40 and we answer the first certified question “no.” We decline to resolve the second question. We answer the third question with a qualified “yes;” a CPA action may be maintainable, but the mere fact MERS is listed on the deed of trust as a beneficiary is not itself an actionable injury. bain-ruling1.pdf

13. August 2012

NY Dist Court – Suit for breach of contract and gross negligence managing a CDO, judgment reversed‏BAYERISCHE LANDESBANK NEW YORK BRANCH v. ALADDIN CAPITAL MANAGEMENT LLC

 BAYERISCHE LANDESBANK, NEW YORK BRANCH and Bayerische Landesbank, Plaintiffs–Appellants, v. ALADDIN CAPITAL MANAGEMENT LLC, Defendant–Appellee.Docket No. 11–4306–cv.Argued: March 12, 2012. — August 06, 2012

Before LIVINGSTON and LOHIER, Circuit Judges, and RAKOFF, District Judge.* David Spears (Jason Mogel, Laurie Faxon Richardson, on the brief), Spears & Imes LLP, New York, N.Y., for Plaintiffs–Appellants.Jason M. Halper (Lambrina Mathews, on the brief), Cadwalader, Wickersham & Taft LLP, New York, N.Y., for Defendant–Appellee.

In this case, we are called on to determine whether an investor in a special investment vehicle—a synthetic collateralized debt obligation (“CDO”) that sold interests in a credit default swap—can bring an action against the manager of the investment portfolio for the loss of its investment where the investor was not a party to the contract that defined the manager’s role and duties.

Plaintiffs–Appellants Bayerische Landesbank (“Bayerische”) and Bayerische Landesbank New York Branch filed this action against Defendant–Appellee Aladdin Capital Management LLC (“Aladdin”) for breach of contract and gross negligence based on Aladdin’s alleged disregard of its obligation to manage the portfolio in favor of the investors. Aladdin’s purportedly gross mis-management allegedly caused plaintiffs to lose their entire $60 million investment in the CDO. On January 31, 2011, plaintiff Bayerische Landesbank, New York Branch filed its original Complaint in the United States District Court for the Southern District of New York seeking to recover damages for the loss of its investment, and later filed an Amended Complaint joining its parent, Bayerische Landesbank, as co-plaintiff. Aladdin moved to dismiss the Amended Complaint, and, by Order dated July 8, 2011, the district court granted the motion. The district court held that, because of a provision of the contract limiting intended third-party beneficiaries to those “specifically provided herein,” plaintiffs could not bring a third-party beneficiary breach of contract claim, and held also that plaintiffs could not “recast” their failed contract claim in tort. For the reasons described below, however, we conclude that plaintiffs have properly alleged both a breach of contract claim and a tort claim.


The pertinent allegations in plaintiffs’ Amended Complaint, together with those “documents incorporated in it by reference” and “matters of which judicial notice may be taken,” Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002) (internal quotation marks omitted), are as follows:

Plaintiff Bayerische Landesbank is a publically regulated bank incorporated in Germany with its principal place of business in Munich, Germany. Co-plaintiff Bayerische Landesbank, New York Branch is the New York branch of Bayerische Landesbank and is a federally chartered bank licensed by the United States Office of the Comptroller of the Currency. Defendant Aladdin is a Delaware limited liability company with its principal place of business in Stamford, Connecticut. Aladdin is a registered investment adviser under the Investment Advisers Act of 1940, and is a subsidiary of Aladdin Capital Holdings LLC (“ACH”), an investment bank.

In December 2006, plaintiffs invested $60 million in a collateralized debt obligation structured and marketed by defendant Aladdin and by non-parties Goldman Sachs & Co. and Goldman Sachs International (collectively, “Goldman Sachs”). A CDO is a financial instrument that sells interests (here in the form of “Notes”) to investors and pays the investors based on the performance of the underlying asset held by the CDO. The CDO at issue in this case, called the Aladdin Synthetic CDO II (“Aladdin CDO”) was a “synthetic” CDO, meaning that the asset it held for its investors was not a traditional asset like a stock or bond, but was instead a derivative instrument, i.e., an instrument whose value was determined in reference to still other assets. The derivative instrument the Aladdin CDO held was a “credit default swap” entered into between the Aladdin CDO and Goldman Sachs Capital Markets, L.P. (“GSCM”) based on the debt of approximately one hundred corporate entities and sovereign states that were referred to as the “Reference Entities” and comprised the “Reference Portfolio.”

A credit default swap (“CDS”) is a financial derivative that allows counterparties to buy and sell financial protection for the creditworthiness of specific corporations or sovereign entities, here the Reference Entities. A counterparty taking the position that the Reference Entities would not experience a “Credit Event”—such as bankruptcy, default, restructuring, or failure to pay a defined obligation—is said to be the “protection seller,” similar to an insurance underwriter. A counterparty taking the position that the Reference Entities would experience a Credit Event is the “protection buyer,” similar to an individual purchasing insurance. A credit default swap differs from traditional insurance in that the protection buyer need not actually own the underlying asset or security in order to purchase protection on it. More to the point, the protection seller is, in effect, taking a long position and betting that there will be no Credit Event, while the protection buyer is taking a short position and betting that there will be a Credit Event.

Here, Aladdin and Goldman Sachs created a shell entity, the “Issuer” of the Aladdin CDO, to serve as the protection seller, while GSCM served as the protection buyer. Thus, GSCM was to pay premiums to the Issuer in order to purchase protection against the occurrence of a Credit Event. The Issuer was also authorized to establish a separate “short” Reference Portfolio, which would reverse the counterparties’ positions—i.e. the Issuer would be the protection buyer and GSCM would be the protection seller.

Since the Issuer was just a shell entity, Aladdin and Goldman Sachs, in order to fund the CDO and have money available to pay GSCM in the event of a Credit Event, marketed interests in the CDO to investors in the form of Notes. The Notes were formally issued by the Issuer, Aladdin Synthetic CDO II SPC, and the Co–Issuer, Aladdin Synthetic CDO II (Delaware) LLC, which are limited liability companies incorporated under the laws of the Cayman Islands and Delaware, respectively. Aladdin, as “Portfolio Manager,” used the money received from investors who purchased the Notes to purchase interest-yielding securities that, together with the payment of premiums by GSCM, were intended to pay quarterly interest payments to Noteholders until the CDO matured in December 2013, when the principal would be returned to the Noteholders. The principal that investors paid to purchase the Notes was available to cover payments to GSCM as the protection buyer if there were a Credit Event.The Issuer split the Notes into separate Series, each with different levels of risk and return. Each Series of Notes had a specific level of risk, or “subordination,” that protected each Series of Notes against possible losses to the invested principal. continue See pdf below.


10. August 2012

Cal. Cases…Separation of Note and Deed of Trust‏

Just a FYI…found this case researching something else on Google Scholar…I left the links in in case you want to follow up or on…

Domarad v. Fisher & Burke, Inc., 270 Cal.App.2d 543 (1969)

[3-5] Consonant with the foregoing, we note the following established principles: that a deed of trust is a mere incident of the debt it secures and that an assignment of the debt “carries with it the security.” (Civ. Code, § 2936; Cockerell v. Title Ins. & Trust Co., 42 Cal.2d 284, 291 [267 P.2d 16]; Lewis v. Booth, 3 Cal.2d 345, 349 [44 P.2d 560]; Union Supply Co. v. Morris, 220 Cal. 331, 338-339 [30 P.2d 394]; Savings & Loan Soc. v. McKoon, 120 Cal 177, 179 [52 P. 305]; Hyde v. Mangan, 88 Cal. 319, 327 [26 P. 180]); that a deed of trust is inseparable from the debt and always abides with the debt, and it has no market or ascertainable value, apart from the obligation it secures (Buck v. Superior Court, 232 Cal. App.2d 153, 158 [42 Cal. Rptr. 527, 11 A.L.R.3d 1064]; Nagle v. Macy, 9 Cal. 426, 428; Hyde v. Mangan, supra; Polhemus v. Trainer, 30 Cal. 685, 688); and that a deed of trust has no assignable quality independent of the debt, it may not be 554*554 assigned or transferred apart from the debt, and an attempt to assign the deed of trust without a transfer of the debt is without effect. (Adler v. Sargent, 109 Cal. 42, 48 [41 P. 799]; Polhemus v. Trainer, supra; Hyde v. Mangan, supra; Johnson v. Razy, 181 Cal. 342, 344 [184 P. 657]; Kelley v. Upshaw, 39 Cal.2d 179, 191-192 [246 P.2d 23].)[5]

Charles Wayne Cox
Websites:;; and
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240
(541) 610-1931\eFax

4.1:101 Model Rule Comparison

Filed under: California,case law,false statements,lawyers — admin @ 16:31

Research Notes


4.1:101      Model Rule Comparison

MR 4.1 provides that a lawyer shall not knowingly (1) make a false statement of material fact or law to a third person; or (2) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by MR 1.6 (regarding the confidentiality of information). The CRPC do not contain a similar rule regarding truthfulness in statements to others. B&PC � 6068(d) prohibits

California lawyers from making false statements of fact or law to any judge or judicial officer. In addition, B&PC � 6106 provides that the commission of any act of moral turpitude or dishonesty constitutes a cause for disbarment or suspension. By prohibiting dishonesty by lawyers, B&PC � 6106 is sufficiently broad to prohibit false statements by lawyers to third parties.

4.1:102      Model Code Comparison

DR 7-102(A)(5) provides that “[i]n his representation of a client, a lawyer shall not . . . [k]nowingly make a false statement of law or fact.” DR 7-102(A)(3) also provides that a lawyer shall not “[c]onceal or knowingly fail to disclose that which is required by law to reveal.” As noted above, the CRPC do not contain a similar provision. B&PC � 6068(d), however, states that “[i]t is the duty of an attorney . . . [t]o employ, for the purposes of maintaining the causes confided to him or her such means only as are consistent with the truth, and never to seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law.” 

4.1:200   Truthfulness in Out-of-Court Statements

 Primary California References: B&PC � 6068(d)
 Background References: ABA Model Rule 4.1,Other Jurisdictions
 Commentary: ABA/BNA � 71:201, ALI-LGL � 157, Wolfram � 13.5

B&PC � 6068(d) provides in part that it is the duty of every

California lawyer “[t]o employ, for the purpose of maintaining the causes confided to him or her such means only as are consistent with the truth. “In addition to this general admonishment, B&PC � 6128 provides that “every attorney is guilty of a misdemeanor who . . . is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party.” Taken together, B&PC � 6068(d) and B&PC � 6128 require

lawyers to be truthful in all statements, whether to the court, opposing parties, clients, or third parties.This broad interpretation is supported by the case law in

. For example, in People v. Petas (1st Dist. 1989) 214 Cal.App.3d 70, 262 Cal.Rptr. 467, the court held that a lawyer could be charged with a misdemeanor where the lawyer presented a false or fraudulent claim for payment of insurance by falsely representing in insurance demand letters that the client’s injuries resulted from a single accident when the lawyer knew that they did not.It is also clear that a

lawyer may not make false or misleading statements in affidavits or other court papers. See, e.g., Lee v. State Bar (1970) 2 Cal.3d 927, 88 Cal.Rptr. 361, 472 P.2d 449 (disciplinary action against lawyer who made false statements in sworn testimony); Sturr v. State Bar (1959) 52 Cal.2d 125, 338 P.2d 897 (involving affidavit containing false statements); Vickers v. State Bar (1948) 32 Cal.2d 247, 196 P.2d 10 (disciplinary action against lawyer who made false statement in proceeding for letters of special administration that he was the surviving husband of decedent).Besides prohibiting false statements, the provisions of the B&PC prohibit all forms of deceit, including selective presentation of incomplete facts. For example, a

lawyer may not author a legal opinion on a transaction that discloses only facts favorable to his client where the lawyer is aware of other adverse material facts that may affect another’s decision in the transaction. Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (2nd Dist. 1976) 57 Cal.App.3d 104, 128 Cal.Rptr. 901. But see Price v. Superior Court (2nd Dist. 1983) 139 Cal.App.3d 518, 188 Cal.Rptr. 832(criminal defense counsel must disclose to prosecutor that another prosecutor had previously refused a plea bargain that defense counsel was now proposing to the prosecutor). Moreover, a

lawyer has an affirmative duty to correct prior misleading statements by disclosing true facts or new information to persons who may act in reliance on the original statement. Failure to disclose correct facts or new information constitutes tortious abuse in

. See, e.g., Dyke v. Zaiser (4th Dist. 1947) 80 Cal.App.2d 639, 182 P.2d 344. Failure to disclose material facts may also provide a basis for reformulation of a contract or agreement to reflect the true facts. Stare v. Tate (2nd Dist. 1971) 21 Cal.App.3d 432, 98 Cal.Rptr. 264 (contract reformed where lawyer prepared counter offer that concealed a mistaken figure provided by the other side). 


1.6:380      Physical Evidence of Client Crime [see 3.4:210]

The ethical obligations of a criminal defense attorney whose client hands over physical evidence of the crime are governed by Pen. Code � 135, which states that it is a violation of the law for one knowingly to conceal or destroy any �instrument in writing, or other matter or thing [that] is about to be produced in evidence upon any trial, inquiry, or investigation whatever, authorized by law.� Similarly, former CRPC 7-107(A) (1975) provides that �[a] member of the State Bar shall not suppress any evidence that he or his client has a legal obligation to reveal or produce.Prior to taking over the evidence of a client�s crime, the attorney should give careful consideration as to the consequences of his or her action. SeeC.O.P.R.A.C. Op. 1984-76. The attorney should also inform the client of the attorney�s obligation to turn over physical evidence once possession occurs. SeeC.O.P.R.A.C. Op. 1984-76. After holding the evidence for a reasonable period of time, the attorney has an obligation to turn over the physical evidence to the prosecution. See C.O.P.R.A.C. Op. 1984-76.

1.6:390      Confidentiality and Conflict of Interest [see also, 1.7:200, supra]

CRPC 3-310(E) states that an attorney must not accept employment adverse to a client or former client, without the informed and written consent of the client or former client, relating to a matter in reference to which he or she has obtained confidential information by reason of or in the course of employment by the client or former client. See also In re Marriage of Zimmerman (1st Dist. 1993) 16 Cal.App.4th 556, 562, 20 Cal.Rptr.2d 132 (it is well settled that an attorney may not do anything which will injure the former client in any manner in which he formerly represented the client nor may he use any knowledge or information that he gained through the relationship against the former client). The purpose of this rule is to protect the confidential information, as well as the attorney-client relationship. See In re Marriage of Zimmerman (1st Dist. 1993) 16 Cal.App.4th 556, 562, 20 Cal.Rptr.2d 132. The possibility of a breach of this duty can trigger disqualification. See Woods v. Superior Court (5th Dist. 1983) 149 Cal.App.3d 931, 936, 197 Cal.Rptr. 185 (there was a potential for the disclosure of confidential information since husband�s attorney, who was being used in a dissolution action, previously had acted as the family�s business attorney, had drafted the wife�s will and had acted as counsel for the family corporation). The client or former client may, however, consent to the attorney�s acceptance of employment of an adverse client, which may thereby compromise the confidential relationship. See 

Arden v. State Bar (1987) 43 Cal.3d 713, 239 Cal.Rptr. 68, 739 P.2d 1236.CRPC 3-310(E) does not contain the �substantial relationship test� as found inMR 1.9(b), which provides that �[a] lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client … (2) about whom the lawyer had acquired information� protected by MR 1.6. Nevertheless, this test is referred to in

case law. See Zador Corporation, N.V. v. C.K. Kwan (6th Dist. 1995) 31 Cal.App.4th 1285, 1293-1294, 37 Cal.Rptr.2d 754(attorney may not represent an adversary of a former client in a matter �substantially related� to the former client�s representation); Trone v. Smith (9th Cir. 1980) 621 F.2d 994, 998 (the test for disqualification is �whether the former representation is `substantially related� to the current representation�);Global Van Lines, Inc. v. Superior Court (4th Dist. 1983) 144 Cal.App.3d 483, 489, 192 Cal.Rptr. 609 (same). The purpose of the substantial relationship test is to protect and enhance the attorney-client relationship in all its dimensions. See Trone v. Smith (9th Cir. 1980) 621 F.2d 994, 998.To satisfy the substantial relationship test, the former client must show that the pending suit, wherein the attorney appears on behalf of the client�s adversary, is substantially related to the prior representation. See Zador Corp. N.V. v. C.K. Kwan (6th Dist. 1995) 31 Cal.App.4th 1285, 1293-1294, 37 Cal.Rptr.2d 754; see also, In the Matter of Charles Willie L. (2nd Dist. 1976) 63 Cal.App.3d 760, 763-74, 132 Cal.Rptr. 840 (an attorney is not barred from representing a client who is adverse to a former client if the matter for which the attorney is retained has no relation to any confidential information acquired in the course of the former representation). The test is satisfied if by the nature of the former representation or the relationship of the attorney to his former client, confidential information material to the present dispute would normally have been acquired by the attorney. See H.F. Ahmanson & Co. v. Salomon Brothers, Inc. (2nd Dist. 1991) 229 Cal.App.3d 1445, 1454, 280 Cal.Rptr. 614. The focus is on the nature and extent of the former attorney�s involvement with the representation, as well as the factual and legal similarities of the cases. See H.F. Ahmanson & Co. v. Salomon Brothers, Inc. (2nd Dist. 1991) 229 Cal.App.3d 1445, 1454, 280 Cal.Rptr. 614. The court must look at the time spent by the attorney on the prior case, the type of work performed, and the attorney�s potential exposure to the formulation of policy or strategy. See H.F. Ahmanson & Co. v. Salomon Brothers, Inc. (2nd Dist. 1991) 229 Cal.App.3d 1445, 1454, 280 Cal.Rptr. 614.The substantial relationship test is not satisfied if the complaining client did not have a reasonable expectation that the attorney would hold the information in confidence. See Christensen v.

District Court for Cent. District of Cal. (9th Cir. 1988) 844 F.2d 694, 698 (former corporate counsel allowed to represent former corporate board of director in suit by corporation since corporation knew that any information given to corporate counsel would be conveyed to board of director); Cornish v. Superior Court (4th Dist. 1989) 209 Cal.App.3d 467, 476, 257 Cal.Rptr. 383 (contractor knew that its attorney was also representing surety�s interests and, thus, contractor did not reasonably expect attorney would withhold communications from surety). But cf.,Western Continental Operating

Co. v. Natural Gas Corp. (1st Dist. 1989) 212 Cal.App.3d 752, 762-763, 261 Cal.Rptr. 100 (client had reasonable expectation that attorney would withhold certain information from co-client).When the prior representation involves joint clients, the substantial relationship test is not used since there is an inherent substantial relationship between the pending and prior representation. See Zador Corp. N.V. v. C.K. Kwan (6th Dist. 1995) 31 Cal.App.4th 1285 at 1293, 37 Cal.Rptr.2d 754. Additionally, in the joint client context, it is necessary to disclose confidential information. See Zador Corp. N.V. v. C.K. Kwan (6th Dist. 1995) 31 Cal.App.4th 1285 at 1285, 37 Cal.Rptr.2d 754.

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