Ohio Supreme Court: Bombshell win for homeowners

BOMBSHELL WIN:  Schwartzwald vs. Federal Home Loan (Freddie Mac)
Lack of standing CANNOT be cured or remedied with a later assigned mortgage
Judgement REVERSED and CASE DISMISSED

             

Explosive Legal News: 
Supreme Court of OHIO:  
Cases: Nos. 2011-1201 and 2011-1362 - Submitted April 4, 2012

Decided: October 31, 2012
Written Opinion: Judge Terrance O'Donnell

O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, LANZINGER, CUPP,and M

CGEE BROWN, JJ CONCUR

This is a major victory and EXPLOSIVE NEWS in the FRAUDclosure battle

Federal Home Loan Mortgage Corp. v. Duane Schwartzwald et al. (HERE)

The Supreme Court of Ohio ruled that standing to initiate a mortgage foreclosure lawsuit is determined on the date the complaint is filed. A foreclosing party, which lacked standing at the time the suit was filed, CANNOT remedy that defect by obtaining an assignment of a mortgage and promissory note AFTER the filing of the foreclosure action but prior to an entry of a final judgment.

The court’s 7-0 unanimous decision dismissed a decree of foreclosure granted to Federal Home Loan Mortgage Corporation FHLMA  (AKA "Freddie Mac") against Duane and Julie Schwartzwald because FHLMA did not have standing at the time it filed the foreclosure action.

Congratulations to the court for making the right decision and for upholding the law. Many similar cases were cited from other states to support the decision. Congratulations to fine attorney ANDREW ENGEL for fighting this battle on behalf of the Schwartwald family (no longer in the home) and attorney BRUCE BROYLES for submitting an amicus brief on behalf of this blog
OHIO FRAUDCLOSUE (our amicus brief here) and OHIO homeowners

COURT FINDS:

{¶41}It is fundamental that a party commencing litigation must have standing to sue in order to invoke jurisdiction of the common pleas court. Civ.R. 17(A) does not change this principle, and a lack of standing at the outset of litigation cannot be cured by receipt of an {later post filing} assignment .... or by substitution of the real party in interest.

{¶42}Here it is undisputed that Federal Home Loan did not have standing at the time it commenced this foreclosure action, and therefore it failed... Accordingly, the judgment of the court of appeals is reversed, and the cause is dismissed.

OTHER STATE DECISIONS were relied upon:

{¶27}This principle accords with decisions from other states holding that standing is determined as of the filing the complaint.

See, e.g., Deutsche Bank Natl. Trust v. Brumbaugh, 2012 OK 3, 270 P.3d 151, ¶ 11 (“If Deutsche Bank became a person entitled to enforce the note as either a holder or nonholder in possession who has the rights of a holder after the foreclosure action was filed, then the case may be dismissed without prejudice * * *” [emphasis added]);

U.S.Bank Natl. Assn. v. Kimball, 190 Vt. 210, 2011 VT 81, 27 A.3d 1087, ¶ 14 (“U.S. Bank was required to show that at the time the complaint was filed it possessed the original note either made payable to bearer with a blank endorsement or made payable to order with an endorsement specifically to U.S. Bank” [emphasis added]);

Mtge. Electronic Registration Sys., Inc. v. Saunders, 2010 ME 79, 2 A.3d 287, ¶ 15 (“Without possession of or any interest in the note, MERS lacked standing to institute foreclosure proceedings and could not invoke the jurisdiction of our trial courts” [emphasis added]);

RMS Residential Properties, L.L.C. v.Miller, 303 Conn. 224, 229, 232, 32 A.3d 309 (2011), quoting Hiland v. Ives, 28 Conn.Supp. 243, 245, 257 A.2d 822 (1966) (explaining that “ ‘[s]tanding is the legal right to set judicial machinery in motion’ ” and holding that the plaintiff had standing because it proved ownership of the note and mortgage at the time it commenced foreclosure action);
McLean v. JP Morgan Chase Bank Natl. Assn., 79 So.3d 170, 17 (Fla.App.2012) (“the plaintiff must prove that it had standing to foreclose when the complaint was filed”); see also Burley v. Douglas, 26 So.3d 1013, 1019(Miss.2009), quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 571, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), fn. 5 (“ ‘standing is to be determined as of the commencement of suit’ ”);
In re 2007 Administration of Appropriations of Water of the Niobrara, 278 Neb. 137, 145, 768 N.W.2d 420 (2009) (“only a party that has standing may invoke the jurisdiction of a court or tribunal. And the junior appropriators did not lose standing if they possessed it under the facts existing when they commenced the litigation” [footnote omitted]).

PREVIOUS Ohio circuit court decisions:

{¶34} Thus the Third and the Ninth Circuits have rejected the notion that Fed. R. Civ. P. 17(a), on which Civ.R. 17(A) is based, allows a party with no personal stake in a controversy to file a claim on behalf of a third party, obtain the cause of action by assignment, and then have the assignment relate back to commencement of the action {and} “Rule 17(a) does not apply to a situation where a party with no cause of action files a lawsuit to toll the statute of limitations and later obtains a cause of action through assignment. Rule 17(a) is the codification of the salutary principle that an action should not be forfeited because an honest mistake; it is not a provision to be distorted by parties to circumvent the limitations period.

{¶37} Other courts have also determined that plaintiff cannot rely on procedural rules similar to Civ.R. 17(A) to cure a lack of standing at the commencement of litigation. Davis v. Yageo Corp., 481 F.3d 661, 678 (9th Cir.2007)

{¶38}We agree with the {above} reasoning and analysis presented in these cases. Standing is required to invoke the jurisdiction of the common pleas court. Pursuant to Civ.R. 82, the Rules of Civil Procedure do not extend the jurisdiction of the courts of this state, and a common pleas court cannot substitute a real party in interest for another party if no party with standing has invoked its jurisdiction in the first instance

JUDGEMENT REVERSED AND CASE DISMISSED

Andrew M. Engel, for appellants.

Bruce M. Broyles, urging reversal for amici curiae Homeowners of the

State of Ohio and Ohiofraudclosure.blogspot.com.

Advocates for Basic Legal Equality, Inc., and Andrew D. Neuhauser;

Legal Aid Society of Cleveland and Julie K. Robie; Legal Aid Society of

Southwest Ohio, L.L.C., and Noel M. Morgan; Community Legal Aid Services,

Inc., Christina M. Janice, and Paul E. Zindle; and Ohio Poverty Law Center and

Linda Cook, urging reversal for amici curiae Advocates for Basic Legal Equality,

Inc., Legal Aid Society of Cleveland, Legal Aid Society of Southwest Ohio,

L.L.C., Community Legal Aid Services, Inc., Ohio Poverty Law Center, Legal

Aid Society of Columbus, Southeastern Ohio Legal Services, Legal Aid of

Western Ohio, and Pro Seniors, Inc.

.

US Court of Appeals smackdown of Ohio Mill Firm - LSR

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT ANNOUNCES

Major Smackdown of Predator Drone Law Firm (LSR) in  

BETTY WALLACE
v.

WASHINGTON MUTUAL BANK F.A.

WELLS FARGO BANK N.A.,

Defendants

LERNER, SAMPSON & ROTHFUSS,

Defendant-Appellee
Appeal from the U. S. District Court for the Southern District of Ohio at Cincinnati.

(Download Opinion - HERE)

A major victory at the federal level reverses a bad decision originally decided in the southern district of Ohio - Cincinnati - which is coincidentaly the home & headquarters of Predator Drone & Foreclosure Mill law firm -Lerner Sampson Rothfuss (LSR)

The court held:

The single issue before us is whether the filing of foreclosure action by the law firm claiming ownership of the mortgage by its client Washington Mutual constitutes a "false, deceptive or misleading representation" under the Fair Debt Collection Practices Act {FDCPA} when the bank has not received a transfer of the ownership documents. We hold that the complaint states a valid claim and reverse the dismissal of the case.

Plaintiff alleges that the statement in the foreclosure complaint that Lerner, Sampson filed against her on behalf of Washington Mutual contained the false statement that Washington Mutual was the holder of her mortgage. District courts have decided, and we agree, that a clearly false representation of the creditor’s name may constitute a "false representation to collect or attempt to collect any debt" under Section 1692e.

Hepsen v. J.C. Christensen and Assocs., Inc., No. 8:07-CV-1935-T-EAJ, 2009 WL 3064865, at *5 (M.D. Fla. Sept. 22, 2009) (imposing liability based on a statement incorrectly identifying the name of a creditor comports with the purposes of the Act); Blarek v. Encore Receivable Mgmt., Inc., No. 06-C-0420, 2007 WL 984096, at *15 (E.D. Wis. Mar. 27, 2007) (same).

Lerner, Sampson does not dispute that the foreclosure complaint identifies Washington Mutual as the actual holder of plaintiff’s mortgage, but claims that Ohio law permits Washington Mutual to anticipate that it would become the title holder after the foreclosure action was initiated but before it becomes final. We disagree that the issue of standing in Ohio, even if resolved in Lerner, Sampson’s favor, has any bearing on whether misidentifying a creditor is materially misleading under the Fair DebtCollection Practices Act.

HUGE footnote (below) referencing outcome of pending OHIO SUPREME COURT: Federal Home Loan Mortg. Corp. v. Schwartzwald

1The Ohio Supreme Court allowed an appeal and stayed briefing in plaintiff’s state case against WASHINGTON MUTUAL, Wallace v. Washington Mutual Bank N.A. ..2011-Ohio-6556..(Dec 21, 2011)....pending resolution of Fed. Home Loan Mort. Corp. v. Schwartzwald, 194 Ohio App. 3d 644, 2011-Ohio-2681, 957 N.E.2d 790 (Ohio Ct. App.), motion to certify and appeal allowed by 129 Ohio St. 3d 1488, 2011-Ohio-5129, 954 N.E.2d 661(Ohio Oct 5,2011)(Consolidating cases and certifying a conflict in the Ohio appellate courts on the issue of whether in order to have standing as a plaintiff in a mortgage foreclosure action, a party must show that it owned the note and the mortgage when the complaint was filed.). Should the Ohio courts decide that a potential mortgagee may anticipate transfer of the note and mortgage and bring valid foreclosure proceedings in advance, the district court will have to decide the impact of such a holding on Wallace’s claim for damages under the Fair Debt Collection Practices Act. We do not agree, however, with the district courts of this Circuit that have treated the debate in Ohio over standing to bring a foreclosure action as dispositive of whether a statement was materially misleading under the Act. See, e.g., Whittiker v. Deutsche Bank Nat’l Trust Co., 605 F. Supp.Kline v. Mortg. Elec. Sec. Sys., No. 3:08cv408, 2010 WL 1133452, at *7 (S.D. Ohio Mar. 22, 2010). Certainly, should the Ohio courts decide that Washington Mutual did not have standing to bring the foreclosure action in the first place, the materiality of the false statement of ownership would be patent. However, even if Ohio holds the opposite, the Act protects the unsophisticated consumer from false statements tending to mislead or confuse—whether Washington Mutual may ultimately succeed in an Ohio court in its foreclosure action has no bearing on whether the initial false statements misled Wallace. The issue arises in the shadow of the recent subprime mortgage crises in which financial institutions are charged with encouraging reckless lending standards and rapid transfer and sale of subprime mortgages so as to profit from the mass securitization and sale of the mortgages

Slipping computer generated, shoddy and manufactured paperwork past lower court judges (old, out-of-touch, too busy) on a “fast track” to foreclosure…used to be easy! The judicial machinery spun out of control when directed by large Predator Drone Foreclosure Mills and their "Bench Warmers"(local counsel used to foreclose) seeking the revered “Green Light” rating (used by LPS Desktop Solutions). Unfortunately thousands of Ohioans lost their homes while these FRAUDclosure factories and drone filing attorneys operated openly in front of Ohio judges ...which unfortunately were asleep-at-the-wheel. (Link to report).

However, recent attention from the OCCUPY movement, highly regarded foreclosure defense attorneys and bloggers (here, here, here) have turned the spotlight on the fraudulent and criminal behavior (of the Foreclosure Mills & Servicers) The robo-signing clearly showed that documents, legally needed to initiate foreclosures, were created and falsely executed. The attention has finally started to drown out the traditional lap dog media trained in "Bank-Speak."

Predator Drone Foreclosure Mills:

The mindless and legally void factory approach used to methodically ram-rod thousands of FRAUDclosures through the judicial machinery of Ohio’s 88 county Civil Court system appears to have finally hit a BUMP. Proof: recent published decisions coming out of some of Ohio's twelve Appellate Courts show that some judges are actually waking-up from a deep legal sleep. The Appellate courts have been routinely overturning and dismissing cases which had improperly awarded Summary Judgment to pretend lenders, bogus trust & trustees, and improper plaintiff parties.

Read full deposition - with admissions - of LSR employee Shellie Hill