STATE OF RHODE ISLAND SUPERIOR COURT

PROVIDENCE, SC

CASIMIR J. KOLASKI III

V. CA NO. PC-11-2553

MERS, INC., HOMECOMINGS

FINANCIAL, LLC, GMAC

MORTGAGE, LLC, and JOHN

DOE SECURITIZED TRUST

MEMORANDUM IN SUPPORT OF OBJECTION TO MOTION TO DISMISS

The purpose of this memorandum of law is to rebut the position taken by the Defendants

in their Motion to Dismiss that the Plaintiff cannot seek relief from this Court based upon his

clearly stated and well supported claims of VOID, false, fraudulent and statutorily deficient

documents, and for reasons contrary to case law, because they are allegedly in default on their

mortgage payments and that there is no valid reason for delaying foreclosure. This is patently

untrue and contrary to the law.

The relief sought by the Plaintiff was set forth clearly in their verified complaint. The

arguments relative to MERS are all well supported and documented by case law, law review

articles and other scholarly articles that seem to be published on a daily basis.

The Defendants suggest that the Plaintiff’s ability to challenge wrongful assignments and

other entries in the actual land evidence records in Barrington Town Hall in Barrington, Rhode

Island is not supported by well settled Rhode Island and Federal Law, and also chafes against the

equitable principles that Rhode Island Courts and all Court have traditionally applied when

analyzing a litigant's request for equity and equitable relief.

The Plaintiff has averred and correctly pleaded several claims upon which relief may be

granted by this Court. They have been precise in asking the Court, inter alia, to rule that the

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Defendants MERS, Homecomings Financial, LLC ("Homecomings"), and GMAC Mortgage

LLC, ("GMAC") be removed from his record title and that they be declared the sole owner of the

subject real estate and be provided with other appropriate relief under the clear and concise

provisions of the Rhode Island Declaratory Judgment Act, Chapter 31 of Title 9, and of the

Quieting Title Act Contained in Chapter 16 of Title 34, and of the Marketable Title Act

contained in Chapter 13.1 of Title 34. The facts alleged as applied to each of the aforesaid acts

are sufficient to defeat the Defendants' Motion to Dismiss under Rule 12(b)(6) of the Federal

Rules of Civil Procedure.

The Defendants’ Motion asks this Court to ignore the right of the Plaintiff under the

Laws of the State of Rhode Island relative to their rights in their property to bring the aforesaid

actions. The Motion asks this Court to ignore the plain language set forth in the Rhode Island

General Laws §34-11-1, §34-11-22, §34-16-1 & §34-16-4 et seq., §34-13.1-1 et. seq., and §34-9-

1 et. seq. By design, the entire MERS system is complex beyond simple description, to the

general public, public officials, courts and judges alike. 1

It is wrought by misdirection,

1 MERS is a private electronic database, operated by MERS-CORP, Inc., that tracks the transfer

of the "beneficial interest" in home loans, as well as any changes in loan servicers. After a

borrower takes out a home loan, the original lender may sell all or a portion of its beneficial

interest in the loan and change loan servicers. The owner of the beneficial interest is entitled to

repayment of the loan. For simplicity, we will refer to the owner of the beneficial interest as the

"lender." The servicer of the loan collects payments from the borrower, sends payments to the

lender, and handles administrative aspects of the loan. Many of the companies that participate in

the mortgage industry—by originating loans, buying or investing in the beneficial interest in

loans, or servicing loans—are members of MERS and pay a fee to use the tracking system. See

Jackson v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487, 490 (Minn. 2009).

When a borrower takes out a home loan, the borrower executes two documents in favor

of the lender: (1) a promissory note to repay the loan, and (2) a deed of trust, or mortgage, that

transfers legal title in the property as collateral to secure the loan in the event of default. State

laws require the lender to record the deed in the county in which the property is located. Any

subsequent sale or assignment of the deed must be recorded in the county records, as well.

This recording process became cumbersome to the mortgage industry, particularly as the trading

of loans increased. See Robert E. Dordan, Mortgage Electronic Registration Systems (MERS), Its

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confusion and the random appointment of Presidents and Vice Presidents, who are not

employees or actual officers, who may allegedly act on its behalf. In its haste to allow the

securitization of loans and then foreclose, many times for an unnamed and unknown beneficiary

of a mortgage loan, MERS and its members, Homecomings, and GMAC have overlooked

important aspects of state laws throughout the country and particular to this case, ignoring and in

essence illegally disregarding the Laws of the State of Rhode Island.

Recent Legal Battles, and the Chance for a Peaceful Existence, 12 Loy. J. Pub. Int. L. 177, 178

(2010). It has become common for original lenders to bundle the beneficial interest in individual

loans and sell them to investors as mortgage-backed securities, which may themselves be traded.

See id. at 180; Jackson, 770 N.W.2d at 490. MERS was designed to avoid the need to record

multiple transfers of the deed by serving as the nominal record holder of the deed on behalf of

the original lender and any subsequent lender. Jackson, 770 N.W.2d at 490.

At the origination of the loan, MERS is designated in the deed of trust as a nominee for the

lender and the lender's "successors and assigns," and as the deed's "beneficiary" which holds

legal title to the security interest conveyed. If the lender sells or assigns the beneficial interest in

the loan to another MERS member, the change is recorded only in the MERS database, not in

county records, because MERS continues to hold the deed on the new lender's behalf. If the

beneficial interest in the loan is sold to a non-MERS member, the transfer of the deed from

MERS to the new lender is recorded in county records and the loan is no longer tracked in the

MERS system.

In the event of a default on the loan, the lender may initiate foreclosure in its own name,

or may appoint a trustee to initiate foreclosure on the lender's behalf. However, to have the legal

power to foreclose, the trustee must have authority to act as the holder, or agent of the holder, of

both the deed and the note together. See Landmark Nat'l Bank v. Kesler, 216 P.3d 158, 167 (Kan.

2009). The deed and note must be held together because the holder of the note is only entitled to

repayment, and does not have the right under the deed to use the property as a means of

satisfying repayment. Id. Conversely, the holder of the deed alone does not have a right to

repayment and, thus, does not have an interest in foreclosing on the property to satisfy

repayment. Id. One of the main premises of the plaintiffs' lawsuit here is that the MERS system

impermissibly "splits" the note and deed by facilitating the transfer of the beneficial interest in

the loan among lenders while maintaining MERS as the nominal holder of the deed.

The plaintiffs' lawsuit is also premised on the fact that MERS does not have a financial interest

in the loans, which, according to the plaintiffs, renders MERS's status as a beneficiary a sham.

MERS is not involved in originating the loan, does not have any right to payments on the loan,

and does not service the loan. MERS relies on its members to have someone on their own staff

become a MERS officer with the authority to sign documents on behalf of MERS. See Dordan,

12 Loy. J. Pub. Int. L. at 182; Jackson, 770 N.W.2d at 491. As a result, most of the actions taken

in MERS's own name are carried out by staff at the companies that sell and buy the beneficial

interest in the loans. Id.

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As a result of MERS' failure to comply with the General Laws of the State of Rhode

Island and with well settled case law in the State of Rhode Island and the adoption of the MERS'

system by these Defendants, the Plaintiffs request this Court deny the Motion to Dismiss, or in

the alternative, adopt the lead taken by Judge John McConnell of the Federal District Court for

the State of Rhode Island and enter an order staying all foreclosures actions pending in the

MERS Court and compel the parties to all of these actions to engage in allow for the full

development of the factual issues which drive all MERS cases in the State of Rhode Island and

abstain from ruling on the Motion to Dismiss at this stage of the case. For the purpose of this

objection the Plaintiff hereby incorporates the facts that are outlined within the Complaint,

verified by Plaintiff, all which must be taken as true.

STANDARD OF REVIEW

In regard to the Motion to Dismiss under Rule 12(b)(6) of the Rhode Island Rules of

Civil Procedure, the standard is that it must be "clear beyond a reasonable doubt that the plaintiff

in this case is not entitled to relief from the defendant under any set of facts that could be proven

in support of Plaintiff’s claim.‖ Hendrick v. Hendrick, 755 A.2d 791 (R.I. 2000) (quoting Bruno

v. Criterion Holdings, Inc., 736 A.2d 99, 99 (1999.) The Defendants are asking this court to

make findings of fact and law and to find, beyond a reasonable doubt, that the Plaintiff has not

plead facts sufficient to make out a cause of action. In a 12(b)(6) Motion, the Court’s review is

limited. ―It is well settled in Rhode Island that the role of a Rule 12(b)(6) Motion is to test the

sufficiency of the complaint.‖ Gammell-Roach v. Howland, PB 09-3501 (RISUP). See Toste

Farm Corp.v. Hadbury, Inc., 798 A.2d 901, 905 (R.I. 2002) (quoting R.I. Employment Sec.

Alliance, Local 401, S.E.I.U., AFL-CIO, v. State Dep’t of Employment and Training, 788 A.2d

465, 467 (R.I. 2002); See also Pellegrino v. R.I. Ethics Comm’n.,788 A.2d 1119, 1123 (R.I.

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2002) (stating that ―[t]he standard of granting a motion to dismiss is a difficult one for the

movant to meet‖). The complaint must give fair and adequate notice of the plaintiff’s claim, but

in most cases, it need not contain a high degree of factual specificity. See Hyatt v. Village

House Convalescent Home, Inc., 880 A.2d 821, 824 (R.I. 2005). In Gammell Judge Silverstein

wrote that ―The Court should grant such a motion only when it is clear beyond a reasonable

doubt that the [non-movant] would not be entitled to relief under any set of facts that could be

proven in support of the claim.‖ See PB 09-3501. Clearly, the facts set forth in the complaint and

then further explained in Plaintiff’s initial memorandum do support a claim for relief and this

Court should not find beyond a reasonable doubt that those facts, as alleged, do not set forth a

claim for the relief requested. This Court cannot interpose its personal or institutional beliefs on

this matter but must strictly adhere to the rules and actual case law of the State of Rhode Island.

DISCUSSION

The Plaintiff has alleged clearly and concisely that he disputes the legal authority of

MERS to have assigned the original mortgage to GMAC and further contested the standing of

Homecomings and/or GMAC to notice and/or conduct a foreclosure on his property because it

did not have the Promissory Note when it noticed the foreclosure on the Plaintiff's property.

Further, the note itself is evidence of the fact that the Mortgage, allegedly given to MERS as

some Mortgagee/Nominee aboration, was never intended to be conjoined with the instant

promissory note. In fact, MERS is never mentioned in the promissory note. At paragraph 10 of

the note, it clear states as follows:

"In addition to the protections given to the Note Holder under this Note, a

Mortgage, Deed of Trust, or Security Deed (the "Security Instrument") dated the

same date as this Note, protects the Note Holder from possible losses which might

result if I do not keep the promises I made in this Note. That security instrument

describes how and under what conditions I may be required to make immediate

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payment in full of all amounts I owe under this note. Some of those conditions

are described as follows:

If Lender [emphasis added] exercises this option, Lender [emphasis added] shall

give Borrower notice of acceleration. The note shall provide a period of not less

than thirty days from the date the notice is given in accordance with Section 15

within which Borrower must pay all sums secured by the Security Instrument. If

Borrower fails to pay these sums prior to the expiration of this period, Lender

[emphasis added] may invoke any remedies permitted by the Security Instrument

without further notice or demand on borrower."

In fact, MERS is not mentioned anywhere in the note. That is because MERS is not the Lender

and it has none of the powers of the Lender. MERS cannot foreclose because it does not own

the note. The Lender cannot foreclose because it does not have the mortgage. That is the

ultimate undoing of the MERS system. Even the MERS mortgage, which this Court has

massaged to the point of incomprehensibility, cannot make the note and the MERS mortgage

correspond with one another.

On April 21, 2011, The State of Michigan Court of Appeals, in a case entitled Residential

Funding Co., LLC v. Gerald Saurman, LC NO. 08-011138-AV (MI. App. 2011) and Bank of

New York Trust Company v. Corey Messner, LC No. 08-003406-AV (MI. App. 2011), issued a

decision which offers much guidance to this Court relative to MERS and the role it may play in

mortgage foreclosure. These two cases were consolidated and both involved foreclosures by

MERS which was the mortgagee in both cases. These cases both involve non-judicial

foreclosures so they are in line with Rhode Island Law relative to the type of foreclosure being

considered. The facts in these cases in relation to the facts in the Muscatelli case are remarked

similar; in the Michigan cases, similar to the case at bar, all parties agreed that MERS did not

own the indebtedness. The Court correctly found that MERS lacked the authority to foreclose by

advertisement unless it was the "owner ... of an interest in the indebtedness secured by the

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mortgage." Id. at 4. In the current case, it was not. In the Muscatelli case, MERS owns no part

of the indebtedness so it has not power to foreclose and no power to assign the mortgage. This

Court made it clear that the note and mortgage are two different things and that MERS is never

mentioned in the note. That is true in this case as well. MERS, as mortgagee, held an interest in

the property as security for the note, not an interest in the note itself. MERS’ interest in the

Mortgage does not give it an interest in the note, let alone an ownership interest in the note

which is required in order to invoke the statutory power of sale. The Michigan Court pointed

out that "it is uncontested that MERS is wholly without legal or rightful title to the debt and that

there are no circumstances under which it is entitled to receive any payments on the note." Id. at

6. Further the Court pointed out that if the legislature had intended to permit such actions

("MERS foreclosing") it could have easily included "agents and nominees of the note holder" as

parties that could foreclose by advertisement. The Michigan Statute does not and the Rhode

Island Statute does not. The Bucci decision stretched the concept of legal ownership past the

breaking point. MERS may be a mortgagee or a nominee or a mortgagee nominee, but it

certainly is never, by its own testimony, the owner of the indebtedness. See Bucci and Stephanie

Bucci v. Lehman Brothers Bank, FSB, a Federal Savings Bank, MERS & Aurora Loan Services,

LLC., (Providence Superior Court, C.A. PC-2009-3888), 2009 R.I. Super. Lexis 110 (August

25, 2009) (―Bucci‖)

The Michigan Court goes on to dismantle the efforts by MERS to wear multiple hats in

multiple jurisdictions in an attempt to dove tail with the laws of each state. The Court clearly

point outs "The separation of the note from the mortgage in order to speed the sale of mortgage

debt without having to deal with all the 'paperwork' of mortgage transfers appears to be the sole

reason for MERS existence." Id. at 11. Given this conclusion, it ruled that since MERS did not

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own the indebtedness, did not own an interest in the indebtedness secured by the mortgage, or

service the mortgage, it could not foreclosure pursuant to the power of sale. That is what the

Court should ultimately rule in this case. If MERS can't foreclose, it certainly cannot assign.

The United States Bankruptcy Court for the Southern District of California in In Re

Salazar wrote that "[the] MERS system is not an alternative to Statutory Foreclosure Law." No.

10-17456-MM13 (Bankr. Court, SD California 2011). The Plaintiffs’ have argued in their brief

that there are very clear and concise statutes which govern the foreclosure process in Rhode

Island. The Salazar Court ―notes that circumventing the public recordation system is, in fact, the

purpose for which the MERS system was created.‖ See Id. at fn. 14 (citing MERSCORP v.

Romaine, No. 179, 2006 NY Slip Op. 9500 slip op. 6 (Ct. of Appeal 2006). The Salazar Court

ruled that "The Creation of a private system, however, is not enforceable to the extent it departs

from California Law." Id. The same holds true in Rhode Island. The MERS private system

more than substantially deviates from the laws of the State of Rhode Island relative to the

foreclosure process and for that reason it should not have been accepted as lawful by the

Superior Court.

This Motion to Dismiss by the Defendants states that the Plaintiff has not posited a

colorable claim. This is simply not true and cannot be proven by the Defendants as is required

by the 12(b)(6) standard set forth above and adopted by the Rhode Island Supreme Court. For

this Court to rule otherwise it would have to ignore the law and adopt its own set of rules which

would be a clear abuse of judicial power.

The Defendants, in the section of their memorandum that allegedly refers to the facts of

the complaint, is deficient, misleading and should be treated as void, much like the illegal

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documents that the Defendants have caused to be recorded in the Town Hall regarding this

Plaintiff.

It is beyond dispute that the mortgage is not a contract between the Lender and the

Plaintiff. In fact, the mortgage is not a contract between the Lender and MERS. In fact, there is

no proof in any of the loan documents that there is a contract between the Lender and MERS.

This Court, in other rulings, has taken it on faith that such an agreement exists. To do so in this

case would be a clear abuse of judicial power.

What is true, and what is admitted by the Defendants, it that at best MERS holds only

legal title to the interests granted by the borrower in the mortgage. Based upon this fact, it

cannot later be argued that MERS holds the note; only the Lender holds the note. There is no

mechanism by which MERS can prove that the alleged assignment if valid without the transfer

of the note as contemplated by Statute. This Court incorrectly ruled in the Porter case and in the

Payette case that MERS is the nominee of the Lender2 and Lender's successors and assigns. See

Porter v. First NLC Fin. Servs., LLC, C.A. No. PC. 10-2526, 2011; Payette v. MERS, et. al., CA

No. 09-5875 (Superior RI, order pending). This alleged fact is denied by the Plaintiff and he

claims that MERS is not the nominee of the Lender's successors and assigns. There is no proof

that there is a contract between MERS and the Lender, let alone between MERS and some

unknown party or parties that may or may not even be in existence at the time the Mortgage is

executed. That is what is clearly and concisely alleged by the Plaintiff, and it must be taken as

true. It is also alleged that the mortgage, at paragraph 22 gives the statutory power of sale to the

Lender. Paragraph 22 does not mention MERS. The section of the Mortgage entitled

TRANSFER OF PROPERTY RIGHTS makes it clear that the Security Instrument secures to the

2 At least the documents identify the Lender, removing the guess work from who the actual

parties to the loan transaction are.

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Lender certain enumerated rights. This same section does not grant the Power of Sale to MERS

or to the mortgagee or to any alleged assignee of the mortgage. That would be an impossibility

under Rhode Island Law because MERS does not hold the beneficial interest in the mortgage.

MERS does not hold the note so it cannot foreclose. It follows then, that even if MERS is a

valid mortgagee, which the Plaintiff alleges MERS is not, it can only assign what it possesses. It

is absurd to take this argument to its illogical conclusion which would allow two distinct entities

to foreclose on a property. That is what the Defendants in this case are arguing. That the

mortgagee can foreclose without the note, and the lender can foreclose without the mortgage.

Further, MERS is not given the power to assign by the Plaintiff in the mortgage.

Nowhere in the Mortgage is it stated that the Borrower gives MERS the right to assign the

mortgage. As will be discussed in full, §34-11-24 of the Rhode Island General Laws clearly

provides that an assignment of the mortgage carries with it the note. In this case, and in all

MERS cases in Rhode Island, this is a legal impossibility. MERS cannot comply with §34-11-24

of the Rhode Island General Laws and cannot, therefore, legally assign the MERS mortgage

despite what the mortgage may or may not say. The aforesaid statute is what controls this issue,

not the content of the statutorily incorrect MERS mortgage. The Defendants suggest that MERS

is given the right to foreclose for the lender if necessary to comply with law or custom. Custom

is of no significance and nothing that MERS does is necessary to comply with the law. There is

no question that the law does not allow MERS to act as a mortgagee or to assign mortgages or to

foreclose on a mortgage. These are nothing but words of art that are not even part of a contract

between MERS and the Lender or the Lender the Plaintiff.

To be blunt, the suggestion of the Defendants that GMAC, or any mortgagee that is not

the holder of the note, may invoke the statutory power of sale under Rhode Island Law or by way

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of the MERS mortgage is specious. Paragraph 22 of the Mortgage clearly establishes that fact

as clearly set forth in the Plaintiff's complaint. That allegation alone, taken as true, is sufficient

to defeat this Motion to Dismiss.

The Plaintiff alleges that MERS, Homecomings, and GMAC, and/or any of their agents,

are without authority under the provisions of Rhode Island General Laws §34-11-1 to make any

recording on his record title in Barrington, Rhode Island and that the private MERS system exists

in derogation of the Rhode Island Recording Statute. Defendants improperly filed said

recordings against Plaintiff’s title by and through the unauthorized and allegedly void actions of

Defendants’ agents. The Plaintiff further alleges that GMAC did not have standing to foreclose

because it does not have legal or beneficial interest in the mortgage and note. The Plaintiff has

clearly alleged, in satisfaction of Rule 8 of the Rhode Island Superior Court Rules of Civil

Procedure, that the purported assignment to GMAC from MERS to GMAC is not an actual/legal

assignment by MERS.3 Kimberly Fritz is not an actual Vice President, employee or agent of

MERS. Her services are limited to signing documents to reverse engineer titles to allow

servicers and lenders to foreclose when they have no actual standing to do so. In fact, at the

time she signed the instant assignment was a Senior Business Analyst at GMAC ResCap.

Nowhere on her professional resume does she state that she is an officer of MERS. It is the well

founded allegation of the Plaintiff that she is not an officer of MERS and that by signing in such

capacity under oath, before a notary, she has committed a crime. Also, knowing that she was not

an officer of MERS and knowing also that the assignment would be recorded in Land Evidence

in Rhode Island, she has committed a crime in the State of Rhode Island.

3Kimberly Fritz is alleged not to be an officer of MERS and there is no corporate resolution or

power of attorney in the chain of title to this property that proves that she is and officer of

MERS. Even the memorandum of the moving party does not allege that she is an officer of

MERS.

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The Defendants would have this Court conclude that the Plaintiff is not entitled to relief

based upon the complaint. In support thereof, the Defendants claim that a default on a note

somehow renders a title clearing action a nullity; this is simply not true. The Plaintiff is not

claiming that the note should be forgiven and he is not admitting that it has not been satisfied.4

The Plaintiff has claimed that the assignment from MERS to GMAC is void and that the

foreclosure sale that was noticed was done so in violation of Rhode Island General Laws §34-11-

22 and that the assignment violates Rhode Island General Laws §34-11-1, and is therefore, void

under Rhode Island General Law §34-11-1 et seq. The fact that the Plaintiff accepted loan

proceeds from a lender willing to give him a loan is irrelevant as to whether or not the Plaintiff

has made out a cause of action. This is what the Defendants would have this Court believe.

The Plaintiff contends that MERS was without authority under the provisions of Rhode

Island General Laws §34-11-1, et. seq., to make any recording on his land record. Furthermore,

MERS did not properly file said recordings against his property due to the unauthorized actions

of its alleged agents. These contentions and allegations have been pled with great specificity

and most certainly are sufficient to warrant a denial of the Defendants’ Motion to Dismiss.

In the ARGUMENT section of its memorandum, the Defendants, move away from the

factual arguments set forth in the complaint and focus instead on the erroneous legal theory that

the Plaintiff does not have legal standing to bring this complaint. To be crystal clear, the

Plaintiff has alleged that the assignment and the foreclosure deed are void.5 Further, the Plaintiff

4 This Court has gone to great lengths to allow the payment/non-payment issue color its

judgment relative to the application of the facts to the law. 5 ―Void, adj. 1. Of no legal effect; null – The distinction between void and voidable is often of

great practical importance. When technical accuracy is required, void can be properly applied

only to those provisions that are of no effect whatsoever – those that are an absolute nullity.‖

―Voidable, adj. 1. valid until annulled.‖ Black’s Law Dictionary, 3rd

Pocket Edition, pg.763-64,

(2006).

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has correctly alleged that a Mortgage Assignment in Rhode Island is a conveyance of real estate.

He has not alleged that this is a simple common law contract matter. He has succinctly pled that

Homecomings is the Lender. He has pled that Kimberly Fritz is an employee of GMAC and not

an officer of MERS. He has pled that GMAC is in Montgomery, PA which is where GMAC is

located and which is where the alleged assignment was signed. MERS is located in Flint,

Michigan. MERS and GMAC created this fraudulent document for the sole purpose of reverse

engineering this title. Crimes have been committed in an effort to steal the Plaintiff's property.

The Rhode Island General Assembly did not enact §34-11-1 to allow for criminals to steal the

real property of Rhode Islanders.

It has been plead that GMAC, not MERS ordered, created, signed and recorded this

assignment. This is what MERS does in all its cases. It creates a shroud of deceit and illegality

that cannot be allowed to remain. It was plead that MERS does not own the note and that it

never gave GMAC a power of attorney to create, sign and record the assignment. The

assignment of the mortgage without the note is a legal nullity under Rhode Island Law and

evolving law across this great country.6

GMAC took nothing by way of the illegal assignment and had no standing to foreclose

on the subject property. The assignment is void as is the foreclosure. None of the defendants

acted in good faith and none of them had standing to record any documents in the Plaintiff's

chain of title in Barrington, Rhode Island. It has been alleged that the note has not been

properly endorsed to GMAC and that GMAC does not hold the note. It has been alleged that the

6 Carpenter v. Longan, 83 U.S. 271, 274 (1872), (the United States Court reasoned that "the note

and mortgage are inseparable; the former as essential, the latter as an incident. As assignment of

the note carries the mortgage with it, while an assignment of the latter alone is a nullity."); U.S.

Bank National Assoc. v. Ibanez, SJC 10694 (January 7, 2011) ("where a note has been assigned

but there is no written assignment of the mortgage underlying the note, the assignment of the

note does not carry with it the assignment of the mortgage.")

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note is unsecured because the mortgage and note were bifurcated and that the alleged assignment

is void and that MERS cannot hold the note and that it does not hold the note and that only

MERS holds the legal title to the mortgage. All of this must be taken as true and all of this is

supported by the documents attached to the pleadings and those provided by the Defendant.

Of critical importance is the fact that the Plaintiff claims that the assignment is void

pursuant to the General Laws of the State of Rhode Island and that the Foreclosure is void

pursuant to the General Laws of the State of Rhode Island. The Plaintiff does not allege that

they are voidable or defective. He alleges that do not even exist as a matter of law. That too

must be taken as true by this Court.

The new line of attack for banks and servicers and mortgage trustees and their counsel is

a battle cry that Plaintiffs in title clearing actions don't have standing to challenge assignments

despite the fact that they are parties to these alleged assignments. This runs contrary to Rhode

Island Statutory law as well as case law. In Rhode Island, the assignment of a mortgage is a

transfer of an interest in real estate and the owner of that real estate, who is also the mortgagor, is

always a party to such a transaction. Section §34-11-1 and §34-11-24 of the Rhode Island

General Laws both stand for the legal proposition that an assignment of mortgage is a

conveyance of land in the State of Rhode Island.

There is really no need to belabor this point as it is statutory black letter real estate law

put in place by the Rhode Island General Assembly. It is interesting to note that when a

Mortgage is assigned in Rhode Island, in each and every city and town, the name of the original

mortgagor is listed in the grantor index as the assignor. This is not by mistake, but is brought

about by the fact that it is the mortgagor's property interest that is actually being transferred by

the assignment. The assignment document itself reveals that the mortgagor/homeowner's

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property has been the subject of a conveyance under §34-11-1 of the Rhode Island General Laws

thus making the mortgagor/homeowner a party to each and every assignment that may take place

regarding their property. This being the case, this Plaintiff clearly has standing to challenge the

assignment as he has done in his complaint.

The Defendants in this case incorrectly state that the Plaintiff in this case is a non-party to

the assignment. The Defendants clearly establish that their argument regarding standing is based

upon contract principles and not on real estate principles. This genetic error is fatal to their

entire analysis.

The Magistrate was correct when he wrote at Section IX that one of the prudential

aspects of standing is "the general prohibition on a litigant's raising another person's legal rights

..." and further when he wrote that "[E]ven when a plaintiff has alleged injury sufficient to meet

the "case or controversy" requirement, the Supreme Court has held that the plaintiff generally

must assert his own legal rights and interests, and cannot rest his claim to relief on the legal

rights or interests of third parties." That is exactly what the Plaintiff is doing in this case. By

way of a void/illegal/criminal assignment, GMAC and FNMA7 are trying to take his real

property. He is the fee simple owner of that property he is a party to ever transaction/

conveyance regarding that property.

Because this Court has seen fit to change its position regarding the issue of homeowners/

mortgagor's standing to challenge Mortgage Assignments, it is necessary not only to respond to

the memorandum of the Defendants in this case but offer up an objection to the mere "Report

and Recommendation" of Magistrate Judge Martin in Fryzel and Cosajay.

7 After the void foreclosure took place, GMAC allegedly assigned its bid to FNMA.

16

To start, in the case of Brough v. Foley, 525 A.2d 919 (R.I. 1987), the Court was not

dealing with the conveyance of real estate. The Plaintiff in that case was not the owner of the

real estate that was subject to a sales agreement. If, however, the plaintiff in that case had been

the owner of the real property, he would have had standing under the appropriate Rhode Island

Statutes. Given the fact that this case was based upon pure contract and not on a conveyance as

defined by §34-11-1 of the Rhode Island General Laws, it has no application to the above

captioned cases and to other similar cases now pending before the Court.

These Defendants offer the case of Sousa v. Town of Coventry, 774 A.2d 812, 815 n.4

(R.I. 2004) which is just another case that misses the mark. It is a common law contract case and

is nothing like the case at bar. The Defendants are very careful not to claim that any of these so

called standing cases have anything to do with the conveyance of real estate. If they did, they

would be admitting that these cases are useless relative to the questions before this Court.

The same rationale holds true for the case of State v. Med. Malpractice Joint

Underwriting Ass'n, No. 03-0743, 2005 WL 1377493, at *2 (R.I. Super. Ct. June 7, 2005) ("Only

parties to a contract or intended third party beneficiaries may seek to have rights declared under a

contract.") (citing Forcier v. Cardello, 173 B.R. 973, 984-85 (D.R.I. 1994)); Baxendale v.

Martin, No. 94-23-2, 1997 WL 1051072, at *2, (R.I. Super. Ct. Aug. 14, 1997) ("one who is not

a party and has no right to enforce a contract lacks standing to seek a declaration of rights under

the contract"); see also Forcier, 173 B.R. at 984 ("The Rhode Island Supreme Court recognizes

the general rule that only intended, and not incidental, third party beneficiaries can maintain an

action for damages resulting from a breach of contract between two contracting parties.") ( citing

Davis v. New England Pest Control Co., 576 A.2d 1240, 1242 (R.I. 1990); Finch v. Rhode Island

Grocers Ass'n, 175 A.2d 177, 184 (R.I. 1961); cf. Meyer v. City of Newport, 844 A.2d 148, 151

17

(R.I. 2004), 774 A.2d 812, 815 n.4 (R.I. 2001) (per curiam)., this Court held that even accepting

plaintiff's argument that a town manager lacked the authority to execute a lease of town property,

people who were not a party to the agreement did not have standing to challenge its validity.")

Not one of the cases set forth above dealt with the conveyance of a property owner's real

estate. They are all distinguishable on that basis alone. In every case involving a transfer of an

interest in a homeowner's interest in real estate, it would violate the letter, spirit and intent of the

Rhode Island Conveyancing Statute.

In particular, it is clear that the Rhode Island Supreme Court has been consistent

regarding its conclusions on standing in a non-real estate context. It is equally as clear that none

of the cases cited by the Magistrate are concerned with the assignment of mortgages. This being

the case, it brings the Court back to the Statutes that govern the conveyance of real estate in the

State of Rhode Island and the clear language contained therein. The mortgage itself, which is

like the center of our universe, is the center of all of all of the transactions which took place in

these cases and other similar cases. To determine standing, the Magistrate should have

identified the fact that an assignment of mortgage is a conveyance of an interest in land.8 In

these cases, Fryzel and Cosajay were the owners of the property and it was an interest in their

real property that was being conveyed. The issue of standing before this Court does not have its

roots in breach of contract allegations between two other contracting parties. Standing in the

context of these cases and all other similar cases before this Court should be determined by

reference to the clear and concise statutory language referenced multiple times herein and not the

8 IN RE: SIMA SCHWARTZ, Chapter 7, Debtor SIMA SCHWARTZ v. HOMEQ SERVICING

AGENT FOR DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE AND

DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE Case No. 06-42476-

MSH, Adversary Proceeding No. 07-04098 (MA Bankr. August 22, 2011) which states that one

must be the owner of a mortgage in order to foreclose on that mortgage.

18

ancillary common law contract cases cited by the Magistrate. The Magistrate's analysis never

moved away from contract to conveyance and that is another reason why his ultimate conclusion

is flawed and should not be adopted by the Court.

Moving forward with the analysis of the Magistrate, he aptly wrote that "When

confronted with a request for declaratory relief, a trial justice must first determine whether a

party has standing to sue. Bowen v. Mollis, 945 A.2d at 317; Depetrillo v. Belo Holdings, Inc.,

No. PB 09-3367, 2009 WL 3794902 , at *1 (R.I. Super. Ct. Nov. 6 2009) (citing Bowen). The

Plaintiff does not disagree with the statement that "The most fundamental characteristic of

standing is that it focuses on the party seeking to have a claim entertained and not on the issues

he wishes to have adjudicated. McKenna v. Williams, 874 A.2d 217, 225 (R.I. 2005.) It is clear

to the Plaintiff that standing in these cases and in all other similar cases now pending before the

Court is properly directed at the party seeking relief and not the particular relief sought. In these

cases and in all other similar cases pending before this Court, the Plaintiffs are proper parties

because they are parties to each and every conveyance that takes place regarding their property

by way of mortgage, assignment or any other form of conveyance. This is firmly settled by

reference the aforementioned statutes regarding the Form and Effect of Conveyance.

At Section X of the Magistrates Report and Recommendation, the Magistrate engages in

a contract analysis of the facts and law to incorrectly find that the Plaintiffs do not have standing

to bring the instant action based upon their challenges to the lawfulness of the assignments on

record in land evidence. The Magistrate wrongfully concludes that the Plaintiffs are not parties

to the assignment agreements.9 §34-11-1 et. seq., of the Rhode Island General Laws clearly is

9 The Plaintiff reserves comment on the issue of the PSA since he does not make such allegations

in any of the complaints that he has before this Court or before the Superior Court of the State of

Rhode Island

19

controlling on the question of whether or not the mortgagor/homeowner is a party to an

assignment of mortgage. Pursuant to the foregoing, Fryzel and Cosajay, and all similarly

situated litigants in cases before this Court and the Federal District Court, where assignments

have been challenged as being void, have standing to bring their actions and to challenge any

assignment that may be executed and recorded relative to their real property.

The Magistrate turns once again to Brough, 525 A.2d at 921-922 to support his erroneous

conclusion. A reading of the Brough case reveals that there is not one reference made to §34-11-

1 et. seq., of the Rhode Island General Laws. That is because Brough is not a real estate case

and sounds strictly in contract. The assignment referred to therein is of a potential contract right

and not of an interest in real estate. In all of the cases before this Court, the allegation is that

certain real estate transactions involving real estate, actually owned in fee by the Plaintiffs, are

void due to non-compliance with §34-11-1 et. seq., of the Rhode Island General Laws.

Although elements of contract law run throughout all real estate transactions in Rhode Island,

§34-11-1 et. seq., of the Rhode Island General Laws codifies that which is before the Court and

should be the guiding influence on the Court when determining standing as well as the

underlying issues set forth in all of the pending title clearing actions.

The same rationale holds true when distinguishing State v. Med. Malpractice Joint

Underwriting Ass'n, . 03-0743, 2005 WL 1377493, at *2 (R.I. Super. Ct. June 7, 2005) from the

cases at bar. The aforementioned case had no basis whatsoever in real estate or conveyancing

and was determined based upon a straightforward common law contract analysis. The Plaintiffs

are not seeking to enforce a contract or have rights determined under a contract as was the case

in the aforesaid case. It is in no way dispositive on the cases at bar.

20

In regard to other string of cases cited by the Magistrate, none of them make any

reference of any type to the specific statutory construct of §34-11-1 et. seq., of the Rhode Island

General Laws to real estate transactions. All of the cases are based in common law contract

theory and none of them address the issue of whether or not a mortgagor/homeowner is actually

a party to a "real estate assignment." As stated earlier, a real estate assignment does is a contract

but it is a special contract governed specifically by statute. This being the case, it leads to the

inexorable conclusion that these case, although informative, are not truly probative relative to the

cases before this Court regarding real estate assignments.

The Plaintiff in this case agrees with the Magistrate that his focal point should have

shifted to the plaintiff after finding that there was a claim. The Plaintiff respectfully claims,

however, that the Magistrate was wrong when he concluded that it was undisputed that Plaintiffs

are not parties to the assignment agreements. The Plaintiff in this case finds its quite telling that

the Magistrate refers to the Assignments of Mortgage, as they are actually referred to in §34-11-

24 of the Rhode Island General Laws, as assignment agreements. It leads the Plaintiff in this

case to the conclusion that the Magistrate was more interested in the contractual element of the

Assignment of Mortgage than the fact that the Assignment of Mortgage is actually a real estate

conveyance. The assignment agreement, absent the real estate transaction, may very well be a

contract that fits the analytical paradigm used by the Magistrate to reach his conclusion, but

when considered in light of the fact that the conveyance statute dictates that it is a real estate

conveyance, the paradigm must yield a different result.

Despite the fact that Rhode Island, a title theory State, has a conveyancing statute that

should have been dispositive on the issue of standing, the Magistrate adopted a case from the

State of Michigan, a lien theory State, to buttress his conclusions regarding standing. See

21

Livonia Props. Holdings, L.L.C. v. 12840 Farmington Road Holdings, 717 F.Supp.2d 724, 747

(E.D. Mich. 2010). The Magistrate understood Livonia to stand for the proposition that a

borrower who is a non-party to assignments lacks standing to dispute their validity. The nuts

and bolts of the Michigan Foreclosure Statute are nothing like the Rhode Island Foreclosure

Statute 's underlying framework. It is somewhat confusing that the Magistrate would look to a

foreign jurisdiction with a contradictory statutory scheme to cite in support of his standing

arguments. Put succinctly, however, Livonia is non-dispositive on the matter before this Court

and should be rejected as legal authority by this Court.

On a more elemental level, the Magistrate quoted Livonia as follows:

"[R]egardless of what contracts exist between which entities, [p]laintiff was not

and is not a party to any of those contracts (including assignments), and lacks

standing to challenge their validity or the parties' compliance with those contracts

here." The Federal District Court for the Eastern District of Michigan reached his

conclusion based upon Michigan Law. The Magistrate in this case has already

stated with great clarity at footnote 26 of the Report and Recommendation that

"In determining state substantive law, a federal court: [l]ooks to the

pronouncements of the state's highest court in order to discern the contours of that

state's law" and "[i]f the highest court has not spoken directly on the question at

issue, [the federal court] predict[s] 'how that court likely would decide the issue,'

looking to the relevant statutory language, analogous decisions of the state

supreme court, decisions of lower state courts, and other reliable sources of

authority.'" Barton v. Clancy, 632 F.3d 9, 17 (1st Cir. 2011).

It must be assumed, therefore, that the Livonia decision was based upon Michigan Law.

It follows then that in Michigan, because of the fact that it is a lien theory state, that

mortgagors/homeowners within that state are not parties to Assignments of Mortgages. If the

Magistrate had followed the pronouncement of the First Circuit in Barton, he would have looked

to with §34-11-1 et. seq., of the Rhode Island General Laws and found that an Assignment of

Mortgage is a conveyance of an interest of land in the State of Rhode Island and as such, the

22

mortgagor/homeowner is most certainly a party to any and all Mortgage Assignments that may

take place in Rhode Island.

As written earlier herein, a Mortgage Assignment that does not conform to the Statutory

dictates of with §34-11-1 et. seq., of the Rhode Island General Laws is void. §34-11-1 and 34-

11-24 of the Rhode Island General Laws clearly contradicts the Report and Recommendation of

the Magistrate. There can be no question that a Mortgage Assignment is a Conveyance of Land.

This being true, to analyzing standing, a Justice must do more than rely on common law contract

cases. A Justice must contemplate the Mortgage Assignment in light of with §34-11-1 et. seq.,

of the Rhode Island General Laws. The Magistrate did not make one reference to the aforesaid

statutes in reaching his conclusion that the mortgagor/homeowner was not a party to a Mortgage

Assignment and did not, therefore, have standing to challenge the validity of the same.

Section 34-11-1 et. seq., of the Rhode Island General Laws unequivocally states that a

conveyance not executed at required therein is void. [emphasis added] To be a valid

conveyance [emphasis added] not a mere contract, a Mortgage Assignment ―must be in writing

duly signed, acknowledged as hereinafter provided, delivered, and recorded in the records of

land evidence..." Section 34-11-24 of the Rhode Island General Laws clearly establishes that a

Mortgage Assignment is a Conveyance of Land in the State of Rhode Island. It too requires that

it be duly executed. If not, pursuant to §34-11-1 of the Rhode Island General Laws, it is void.

What is truly important to understand is that an Assignment of Mortgage is not a third party

beneficiary contract. That has never been argued in the cases at bar or in the other cases before

the Court. What it does is "make over to the assignee, the mortgage deed with the note and debt

thereby secured." Notwithstanding the fact that in Rhode Island, no MERS Assignment of

Mortgage can ever set over to the assignee the note, it is critical to recognize that the result of a

23

valid Assignment of Mortgage is a new Mortgagor/Mortgagee relationship between the original

mortgagor/homeowner and the new mortgagee. Clearly the mortgagor/homeowner is a party to

the Assignment if it is done in compliance with the statute.

What is missed in many instances, however, is the meaning of the language contained in

the last portion of §34-11-24 of the Rhode Island General Laws where it is stated as follows:

"[t]hereby substituting and appointing the assignee and his or her heir, executors,

administrators and assigns as the attorney or attorney's irrevocable of the

mortgagor under and with all the powers in the mortgage deed granted and

contained."

There is no new contract or new mortgage created when an assignment of mortgage is

executed in accordance with the Statute. The clear language of the Statute establishes "that the

assignee and any future assignee are substituted as the attorney irrevocable of the

mortgagor/homeowner under and with all the powers in the mortgage deed granted and

contained." [emphasis added] Nothing could be clearer than that by statute; the original

mortgagor is a party to any and all Assignments of Mortgage that may take place regarding their

fee simple title to their property. It follows then, that an Assignment of Mortgage is a

conveyance to which the original mortgagor is a party. That, together with the foregoing

argument, is why, under Rhode Island Law, a mortgagor/homeowner do have standing to

challenge the validity of assignments by alleging that they are void as a matter of law.

Further, the cases of Liu v. T & H Mach., Inc., 191 F.3d 790 (7th Cir. 1999); Turner v.

Lerner Sampson & Rothfuss, No. 1:11-CV-00056, 2011 WL 135745111, at *2 (N.D. Ohio Apr.

11, 2011) and Bridge v. Ames Capital Corp., No. 1:09 CV 2947, 2010 WL 3834059, at *3, all

dealt with issues that are not the same as the issues before this Court. The Liu case was a

straight contract assignment case and did not have any footing in the realm of real estate

transactions. The Turner Court, as well as the Bridge Court, both Ohio Federal Courts, cited

24

Livonia as support for their rulings that based upon contract law; non-parties to agreements have

no standing to challenge their validity. The rulings of these Courts fall far off point because they

fail to take into consideration that in the State of Rhode Island, pursuant to Statute, an

Assignment of Mortgage is a conveyance of an interest in real estate and that the fee simple

owner of that real estate is a party to that transaction.

What does resonate with this Plaintiff is the Magistrate's comments regarding Ifert v.

Miller, 138 B.R. 159 (E.D. Pa. 1992) where he clearly wrote that the law permits the obligor to

raise as a defense against the assignee the fact that the assignment contract between the assignor

and assignee was void. As with all of the other cited cases, Ifert deals with straight common law

contract issues and does not even touch on real estate conveyancing. Even so, because

Pennsylvania is a lien theory state like Michigan and Ohio, the applicability of these decisions is

suspect at best, particularly when the Rhode Island Statutes are so clear and concise. It seems

clear that the Magistrate acknowledged that if the Plaintiff's claim was that an assignment was

void, he would have standing. That being the case and the fact that §34-11-1 of the Rhode Island

General Laws renders void any noncompliant conveyance documents, the Magistrate should

have found that the Plaintiffs did have standing to bring their actions via §34-11-1 of the Rhode

Island General Laws.

The Magistrate, goes on to cite Jarbo v. BAC Home Loan Serv., No. 10-12632, 2010

WL 5173825, at *8-*9 (E.D. Mich. Dec. 15, 2010) which, relying on Livonia, ruled that a

borrower's claim that a defective assignment destroys record chain of title could not be sustained

based upon a lack of standing. In essence, Jarbo and Livonia are the same case and when

judged according to Rhode Island Law, are both flawed right down to their DNA.

25

In Michigan, according to Livonia and Jarbo, [e]ven if the transfer (assignment of

mortgage) were invalidated, the public record would remain as it is, and the record chain of title

would not be disturbed." In Michigan, which is a lien theory state and which has a foreclosure

by advertisement statute that is nothing like §34-11-22 of the Rhode Island General Laws; robo-

signed, robo-notarized, fraudulent, void, altered, un-notarized, fraudulently notarized,

unauthorized, documents obtained under duress, counterfeit, adulterated, crossed out, undated,

duplicated, whited-out, upside down, backwards, sideways, contaminated, tainted, bogus, forged

and fake documents can make up the record chain of title that satisfies the Michigan Foreclosure

by advertisement statute. The General Assembly of Rhode Island, when drafting and adopting

§34-11-1 of the Rhode Island General Laws went to great lengths to make sure that such a

travesty could never occur in the State of Rhode Island.

It would be appalling for this Court to conclude that any of the aforesaid could not be

challenged by a homeowner when his real property is at issue. Applying Michigan Statute and

case law to Rhode Island Real Estate Conveyances borders on the absurd.

Further, the Magistrate's position is flawed from the outset because he concluded that the

Plaintiffs, the owners of a fee simple interest in the property that they had mortgaged, were not a

party to latter assignments of an interest in their real property, were not parties to the

assignments. The Plaintiff suggests to this Court that the Magistrate did not apply Rhode Island

Law in reaching his ultimate conclusion that the Plaintiffs did not have standing in Fryzel and

Cosajay.

The Magistrate claims to have cited cases from other jurisdictions for the purpose of

showing that the principle adopted by the Rhode Island Supreme Court is well established in the

law. The Plaintiff does not disagree that Rhode Island Contract Law is consistent with that in

26

other states. The problem is that these cases are about real estate and are governed by particular

Rhode Island Statutes. Cases from Michigan and Ohio, for example, do nothing to assist the

Court with an interpretation of a clear and concise Rhode Island Statute. In fact, despite the

Court's attempt to distance itself from the Livonia line of thinking, the only conclusion that can

be reached is that the Magistrate has supplanted Rhode Island Law with Michigan Law to reach a

conclusion that runs contrary to all that §34-11-1 of the Rhode Island General Laws stands for.

Eisenberg v. Gallagher, 79 A. 941 (R.I. 1911) is still the law of the land in Rhode Island

relative to the rights of a mortgagor to challenge the validity of an assignment of that mortgage

because a mortgage is an estate in land and the mortgagee and the mortgagor are parties to that

transaction. It has never been overturned. Further, Eisenberg supports the position of the

Plaintiff that an assignment of mortgage, being a conveyance of an interest in land owned in fee

simple by the mortgagor/homeowner, does confer standing on the Plaintiffs in Fryzel and

Cosajay and all other similar cases before this Court because they are a party to the conveyance.

The analysis that leads to this inexorable conclusion must be based upon the law of real estate

and the applicable Rhode Island statutes and not upon common law contract theory and cases

related thereto.

Further, the Plaintiff and this Court, should find it disturbing that the Magistrate

summarily dispatched the venerable Eisenberg case as little more than a blip on the screen of

Rhode Island Supreme Court Jurisprudence. The fact that Eisenberg is found not to be

persuasive runs afoul of Barton v. Clancy, 632 F.3d 9, 17 (1st Cir. 2011). Eisenberg is an

undisturbed Rhode Island Supreme Court case and yes, it is but two pages long, but its authority

is not based upon the number of pages, but upon the logical application of law to facts. This

Plaintiff would call your attention to the Declaration of Independence. It is only four (4) pages

27

long but the Plaintiff submits that its influence, despite its brevity, is as powerful today as it was

on July 4, 1776.

At the bottom of Page 33 and through the end of the top paragraph of page 34, the

Magistrate does identify correctly the allegation that invalid assignments in Fryzel and Cosajay

leave the foreclosing party with no standing to foreclose. He does not, however, finish the

analysis of the allegations concerning the assignments in light of the holding of Eisenberg or the

controlling real estate statutes. Instead, he focuses in the PSA and the fact that the Plaintiffs were

not parties to the PSA. Even if this is true and even if his findings relative to the PSA are found

to be sound, it does not distinguish the facts of these cases from Eisenberg as it relates to the void

assignments. The Magistrate has failed to take the wind out of the sales of the Eisenberg Court

regarding a mortgagor/homeowner's right to challenge the validity of assignments because they

are actual parties to the assignments themselves. This holding has been ignored and is fatal to

the analysis of the Magistrate.

The Plaintiff also contends that the Magistrate's Report and Recommendation is

undermined by his misunderstanding or misstatement of §34-16-4 of the Rhode Island General

Laws. The Rhode Island General Assembly, in enacting §34-16-4 did provide that

mortgagor/homeowners had standing to challenge assignments of mortgages. The statute is set

forth fully in the Report and Recommendation.

On August 17, 2011, Associate Justice of the Superior Court, Brian Stern, published his

decision in the case of Smithfield Estates, LLC. v. The Heirs of John M. Hathaway, et als, CA.

No. PC-2003-4157. The decision is ponderous and one hundred (100) pages long. It is

important to the matters before this Court because it directly addresses the standing issue before

28

this Court. The facts of the case are significant to the extent that they deal with real estate. The

Court in Smithfield Estates wrote at page 73 as follows:

"The Rhode Island Supreme Court has adopted the view taken by the United

States Supreme Court that "[i]n an action which will affect an interest in life,

liberty, or property protected by the Due Process Clause of the Fourteenth

Amendment, a State must provide 'notice reasonably calculated, under all

circumstances, to apprise interested parties of the pendency of the action and

afford them an opportunity to present their objections."

Clearly, the Smithfield Court, in a fresh decision, has sent a message that property

owners and mortgagors possess a legally protected interest that may be significantly affected by

a tax sale, entitling such parties to notice reasonably calculated to apprise them of a pending tax

sale under the due process clause. L. Brayton Foundry Bldg., Inc., v. Santilli, 676 A.2d 1364,

1366 (R.I. 1996). See also Arnold Road Realty Assocs., LLC v. Tiogue Fire Dist. 873 119, 130

(R.I. 2005). If mortgagors possess a legally protected interest relative to tax sales, it would

follow that mortgagors have a legally protected interest in assignments that are recorded related

to their real property. The Smithfield Court, at page 74 through page 77, addresses the general

rule that has been cited by the Magistrate that one may not claim standing to vindicate the

constitutional rights of a third party. There is no question in Fryzel and Cosajay that the

Plaintiffs were the owners and mortgagors of their real property and, therefore, held legally

protected interests relative to conveyances concerning their property. Given the fact that an

Assignment of Mortgage in Rhode Island is a Conveyance pursuant to §34-11-1 and §34-11-24

of the Rhode Island General Laws, it follows that they too have the same legally protected right

as referred to in Smithfield.

§34-16-4 of the Rhode Island General Laws is also implicitly addressed by the Smithfield

Court. The Court wrote at page 75 as follows:

29

"While it is true that a plaintiff seeking to quiet title must possess sufficient legal

interest in the property so as to avoid dismissal for lack of standing, a claim of

rightful legal ownership satisfies these requirements." McCartin Leisure

Industries, Inc., v. Baker, 376 Mass. 62, 66, 378 N.E.2d 980, 983 (1978).

The Smithfield Court went on to write "Moreover, it is 'well settled' that a grantor,

grantee, or one who would take some interest in the real estate as a result of setting aside a deed

may attack the deed's validity." See Narragansett Indian Tribe v. RIBO, Inc. 686 F. Supp 48

(D.R.I. 1988) (citing Norris v. Harrison, 198 F.2d 953, 954 (D.C. Cir. 1952); City of Bluefield v.

Taylor, 365 S.E. 2d 51, 55 (W.Va. 1987). Most significantly, however, is the statement by the

Court regarding standing. It wrote that "Standing does not require that the party prove their

case before the commencement of a trial." [emphasis added] Pro Indiviso, Inc., v. Mid-Mile

Holding Trust, 131 Idaho, 741, 746, 963 P.2d 1178, 1183 (1998).

The facts of the cases before this Court, although not factually identical, do involve real

property and allegedly void assignments of mortgage and foreclosure deeds, all of which would

clearly fall within the ambit of the Smithfield case. In essence, the Magistrate has closed the

door on Fryzel and Cosajay to litigate their constitutionally protected property rights despite the

fact that they have made "claims" of rightful ownership of the real property which would satisfy

the standing requirement as determined by the Smithfield Court. The Smithfield Court, based

upon the very same reasoning as set forth by the Plaintiff found that Smithfield Estates had

standing to challenge the validity of certain real estate conveyances involving real property.

Based upon this clear, concise decision regarding "real estate conveyances" and not "mere

contract law", this Court should not adopt the Report and Recommendation of the Magistrate.

It is also very concerning to the Plaintiff that the Magistrate makes only a passing

reference to the Rhode Island Conveyance Statute, §34-11-1, et. seq., in a footnote at page thirty

five (35) of a thirty eight (38) page Report and Recommendation. In essence, he dispatches the

30

entire statute as having only marginal relevance to the real estate cases that he was determining.

The Plaintiff postulates that the Magistrate wrongly concluded that Rhode Island Statutes, which

are directly on point regarding real estate conveyances, were less important that common law

contract cases and foreclosure decisions from other jurisdictions. The relegation of the entire

Rhode Island conveyance statute to a footnote in a Real Estate Conveyance case, as an

afterthought, is preposterous.

In regard to the Magistrate's analysis of the §34-16-4 of the Rhode Island General Laws,

it must now be tempered and viewed in light of the conclusion of the Smithfield Court. Given

the fact that both Fryzel and Cosajay have made claims of legal ownership of real property while

seeking to quiet title as set forth in Smithfield, they have both satisfied the requirement of

requisite standing to challenge the assignments of mortgage.10

Finally, it is the position of this Plaintiff that only the party who owns the mortgage and

note may foreclose on a mortgage in the State of Rhode Island and that they must own both at

the time the foreclosure is commenced. This is a matter of law and whether or not a note is paid

in full or is not in default is not a prerequisite to the filing of an action to quiet title. Only the

party that owns the note should be able to collect on it and only the party that owns the note and

the mortgage should be able to foreclose.11

The Cosajay facts are very similar to those in Fryzel. In essence, Cosajay also claimed

that the assignments and foreclosure were void as a matter of law. That being the case, Cosajay

claimed that the Defendants did not have standing to foreclosure. The Magistrate Judge's

discussion regarding standing is on all fours with his ruling in Fryzel. The order of the

10

This is despite the fact that they "are" parties to the assignments of mortgage by way of

contract law and statute. 11

See Schwartz noted above.

31

Magistrate Judge's findings are a bit different, but that is mere form over substance is does not

distinguish Cosajay from Fryzel.

At section X of the Report and Recommendation, the Magistrate Judge again focuses his

attention on contract principles rather than real estate principles. In particular, he again eschews

the Rhode Island Conveyance Statute, §34-11-1, et. seq. Further, in Cosajay, the Magistrate

Judge moves the "Livonia line of thinking" to a more prominent position citing it alongside the

Rhode Island contract case, Brough v. Foley, 525 A.2d at 921-22. Despite the Magistrate

Judge's comment at his footnote 14 that Michigan Law does not control the issue before the

Court, he writes for over a two (2) pages about the holding and rationale of the Livonia Court.

To put it bluntly, deciding that a Rhode Island homeowner/mortgagor does not have standing to

file a declaratory action in Rhode Island, where the homeowner/mortgagor is a party, by Statute,

to each and every assignment of a mortgage, is an affront to that Rhode Island Citizen and to the

General Assembly of the State of Rhode Island.

The Magistrate Judge marches forward with a common law contract analysis and ignores

the fact that this is a case about real estate.12

The Magistrate Judge quotes Livonia at page

twenty six (26) of his Report and Recommendation. "There is ample authority to support the

proposition that a litigant who is not a party to an assignment lacks standing to challenge that

assignment." The "ample authority" referred to is likewise not dispositive on the right of a Rhode

Island Citizen, in a Rhode Island Court, which must apply Rhode Island Law, to seek a

declaratory judgment in a quiet title action.

The cases cited by the Magistrate Judge in support of his conclusion that Cosajay lacking

standing to bring the instant action do no comport with the clear and concise dictates of the

12

§34-4-11 of the Rhode Island General laws requires that future interests in Real Estate, which

is what a mortgagee holds, can only be transferred by a conveyance and not by a mere contract.

32

Rhode Island General Laws; to wit, Livonia Props. Holdings, L.L.C. v. 12840 Farmington Road

Holdings, 717 F.Supp.2d 724, 747 (E.D. Mich. 2010), Liu v. T & H Mach., Inc., 191 F.3d 790

(7th Cir. 1999); Turner v. Lerner Sampson & Rothfuss, No. 1:11-CV-00056, 2011 WL

135745111, at *2 (N.D. Ohio Apr. 11, 2011) and Bridge v. Ames Capital Corp., No. 1:09 CV

2947, 2010 WL 3834059, at *3. These cases all involve lien theory states and their foreclosure

statutes are not on par with the Rhode Island Conveyance Statute. If the instant cases involved

mere contracts, perhaps these cases would have the significance attached to them by the

Magistrate Judge, but because both Fryzel and Cosajay are real estate conveyance cases, they

have no applicability at all to either of them.

It is the position of the Plaintiff that the Bochese v. Town of Ponce Inlet, 405 F.3d 964,

981 (11th Cit. 2005) case is not appropriate to the analysis of this case. In Bochese, standing

was being considered relative to a non-party to a contract. In both Cosajay and Fryzel, the

Plaintiffs "are parties to the alleged, but clearly void, Assignments of Mortgage." Being parties

to the Mortgage Assignment, or as the Magistrate Judge seems to prefer, the assignment

agreement or contract, they do have standing. The Plaintiff urges this Court to conclude that the

Plaintiffs in Cosajay and Fryzel both have standing under the law of the State of Rhode Island.

The position taken by the Magistrate Judge has not been adopted by the Rhode Island Supreme

Court or other lower Courts. See Eisenberg v. Gallagher, 79 A. 941 (R.I. 1911); L. Brayton

Foundry Bldg., Inc., v. Santilli, 676 A.2d 1364, 1366 (R.I. 1996); Arnold Road Realty Assocs.,

LLC v. Tiogue Fire Dist. 873 119, 130 (R.I. 2005) and of Smithfield Estates, LLC. v. The Heirs

of John M. Hathaway, et als, CA. No. PC-2003-4157.13

13

Please refer to the discussion of the Smithfield case above.

33

Further, the Magistrate Judge's application of the facts of Cosajay to the holding in, In re

Wilson, Bankruptcy N. 05-17557-FJB, 2010 WL 4934936, at *4 (Bankr. D. Mass. Nov. 30,

2010) is made in error. The assignments at issue herein and in the other cases before the Court

relate to real estate transactions under Rhode Island Statutory Law. A more appropriate case

citation would be to In Re Schwartz, referenced earlier within this brief.

Also, the case of Porter v. First NLC Fin. Servs., LLC, C.A. No. PC. 10-2526, 2011 does

not support the conclusions the Magistrate Judge in Cosajay. The Porter decision is on Appeal

to the Rhode Island Supreme Court. In no way did its limited ruling set precedent that Mortgage

Assignments could not be challenged by homeowner/mortgagors in the State of Rhode Island. In

fact, the Porter Court alleges to have based its decision on the decision of another Justice of the

Superior Court in the matter of Bucci. See No. PC-2009-3888. Bucci is also on appeal to the

Rhode Island Supreme Court. The Plaintiff was trial counsel in the Bucci case and is also their

attorney related to the appeal. It is the good faith legal opinion of the Plaintiff that the Porter

Court's decision "is not in line with Bucci" and that the Porter decision is fundamentally flawed

due to the Court's misunderstanding of the facts of that case and of the methodology employed

by MERS and its members.

In Cosajay, Fryzel and all of the other similar cases before, this Court, all share one

common element. Each case stands for the proposition that the assignments of mortgage are

void as a matter of law. All of the cases brought by the Plaintiff contend that the mortgage

assignments are void as a matter of law and that the mortgage itself is defective and has not been

complied with. In those cases, the Plaintiffs clearly have standing to bring their actions.

As in Fryzel, the Magistrate Judge, at pages thirty one (31) and thirty two (32) of the

Cosajay Report and Recommendation, swiftly disposes of the Eisenberg case as well as the

34

entire Rhode Island Conveyance Statute which clearly establishes that Cosajay and Fryzel have

standing to bring and action under the mortgage and Mortgage Assignments because they are

parties to those agreements. To reiterate, these cases are about real estate conveyances and not

pure contract cases. For the Magistrate Judge to find that the Conveyancing Statute has no

bearing on a conveyancing case is clear error.

Finally, in regard to Cosajay, the Magistrate Judge found that the mortgage itself granted

the mortgagee the right to assign the mortgage and to foreclose on the mortgage. This is a

factual dispute that is common to all cases before this Court wherein MERS is a Defendant. In

fact, the Plaintiffs in all of the cases before this Court brought by the Plaintiff on behalf of his

clients alleged that the "MERS Mortgage" is not valid and that MERS does not have the right to

foreclose on or assign the mortgage. Under Rule 12(b)(6), this contention must be taken as true

by the Court, therefore, the conclusion rendered in Cosajay by the Magistrate Judge should not

be considered and should be disavowed by the Court when reaching its decision on the pending

Reports and Recommendations. See also In re Mark Lippold, Case No. 11-123000 (MG),

(Bankr. S.D.N.Y., (September 6, 2011)), regarding standing or the lack thereof, (citing N.Y. v.

Silverberg, 926 N.Y.S.2d 532, 536 (2d Dept. 2011) (citing cases). "[F]oreclosure of a mortgage

may not be brought by one who has no title to it and absent transfer of the debt, the assignment

of the mortgage is a nullity." See Kluge v. Fugazy, 145 A.D.2d 537, 538 (2d Dept. 1988) (citing

cases); see also HSBC Bank USA, Nat. Ass'n v. Miller, 26 Misc.3d 407, 411-12 (N.Y. Sup. Ct.,

Sullivan County 2009).

It is clear that the MERS system was never contemplated by our General Assembly so its

rules and regulations that are at odds with standing statutes must fall. As stated in Bank of NY

v. Silverberg, discussing the MERS system, the Court stated that "This matter involves the

35

enforcement of the rules that govern real property and whether such rules should be bent to

accommodate a system that has taken on a life of its own." 2011 NY Slip Op 5002 (N.Y. App.

Div., 2nd Dept. 2011). The issue on appeal in Silverberg, whether a party has standing to

commence a foreclosure action when that party's assignor, in this case, Mortgage Electronic

Registration Systems, Inc. (―MERS‖), was listed in the underlying mortgage instruments as a

nominee and mortgagee for the purpose of recording, but was never the actual holder or assignee

of the underlying notes; ―We answer this question in the negative." Id. This case is on all fours

with the case at bar as MERS was attempting to assign its rights, whatever they were, to another

party who then sought to foreclose. The Bankruptcy Appellate Panel, unmoved by any MERS

arguments, overruled the order of the Bankruptcy Court regarding standing. The Silverberg

Court actually provides this Court with a more precise and truthful analysis of why MERS was

really created and what its true purpose was.

The Silverberg Court delivered a thorough and thoughtful analysis of the MERS

mechanism, in this case particularly related to its ability to assign a mortgage. In Silverberg, the

Court ruled that "because MERS was never the lawful holder or assignee of the note described...

the corrected assignment of mortgage is a nullity, and MERS is without authority to assign the

power to foreclose to the plaintiff." Id. The same logic should be adopted in this case. MERS

never held the note and there is no question that the mortgage was held as security to the debt.

The Silverberg Court wrote that "a mortgage foreclosure cannot be pursued by one who has no

demonstrated right to the debt.‖ Id.

The Defendants in the case at bar allege that the holding in Bridge v. Ames Capital Corp.,

No. 009 CV 2947, 2010 WL 3834059 (N.D. Ohio, Sept. 29, 2010), a lien theory state, somehow

has cross application to the Statutory Law, 34-11-1, et seq. of the Rhode Island General Laws.

36

It does not. The Bridge case begs the question, why would two fraudulent actors, such as

GMAC and FNMA, ever challenge the validity of the assignment that they fraudulent engineered

to deprive the Plaintiff of his property in violation of the Constitution of the United States of

America, the Constitution of the State of Rhode Island, the General Laws of the State of Rhode

Island and long standing case law in the State of Rhode Island? The obvious answer is that they

would not. That is why the General Laws of the State of Rhode Island provide owners of real

property standing to challenge such documents.

It is ironic that on page 6 of their memorandum, that the Defendants would admit that this

is all about "simple contract law." [emphasis added] Nothing could be further from the truth in

the State of Rhode Island. The Conveyance Statute, 34-11-1 settles this beyond contest. This

case is not about simple contract law, it is about the conveyance of real estate to which the

Plaintiff is a party.

The Defendants go on to cite J.P. Morgan Mortg. Acquisition Corp. v. Lord, No. 10-

MISC-427846, slip op at 304(Mass Land. Ct. 29 2010 (Long, J.). This case is easily

distinguished from the case at bar because in Lord, the assignment was not disputed. In this

case, the Plaintiff disputes the very existence of the alleged assignments. In the case at bar, the

Plaintiff has not alleged that the assignments are invalid but that they are void. Knowledge of

the distinction between these two legal theories is charged to this Court. Further, the case of

Kiah v. Aurora Loan Services, LLC, No. 4:100cv-40161-FDS, 2011 WL 841282, at *6 (D. Mass.

Mar. 4, 2011) is also easily distinguished from this case. In the Kiah case, Kiah did not allege

that the note was not properly in the possession of the party seeking to foreclose. That fact alone

distinguishes Kiah from this case. However, it can be even further distinguished. The Kiah

Court wrote in Massachusetts, "[W]here a mortgage and the obligation secured thereby are

37

held by different persons, the mortgage is regarded as an incident to the obligation and,

therefore, held in trust for the benefit of the owner of the obligation." [emphasis added].

There is no statute in Rhode Island to this effect rendering the Kiah rationale non-applicable to

this case. The cases that the Defendants cite related to pooling and servicing agreements are not

relevant to this case because no allegations regarding the PSA have been made.14

In further response to the memorandum of the Defendants, the Rogan v. Bank One, 457

F.3d 561 (6th Cir. 2006) case is not on point because it did not turn on the application of facts to

the clear and concise language of 34-11-1 of the Rhode Island General Laws. It is really quite

simple. The Statutory Law of Rhode Island is clear and concise and holdings of non-Rhode

Island Court, based upon non-Rhode Island law, are no applicable to this uniquely Rhode Island

case. The Ifert case has already been commented upon and supports the claim of standing of

the Plaintiff because he does claim that the assignments are void. Two more Michigan cases,

Golliday v. Chase Home Fin. LLC, No. 1:10-CV-532, 2011 WL 31038 (W.D Mich. Jan 5, 201

and Drew v. Kemp Brooks, 10-14437, 2011 WL 2936103 at *5 (E.D. Mich. July 21, 2011) are

consistent in their rulings regarding the Michigan Foreclosure Statute. There application to the

Rhode Island Foreclosure Statute and to Rhode Island Conveyancing Law is nil.

In a plea to this Court to ignore the law of the State of Rhode Island, Defendants claim

that Plaintiffs such as Muscatelli should not be able to challenge assignments in any situation.

The Defendants seem to insinuate that the intensely fact specific complaint filed by the Plaintiff

did not state with any particularity why the assignment is invalid. To be clear, the allegations of

the Plaintiffs are that the assignments and foreclosure deed are void. It seems to be the position

14

In re Samuels and In re Almeida as cited by the Defendants relate to PSAs. The case before

this Court has nothing to do with claims against a PSA. These cases are of no use to this Court

in regard to applying the facts of this case to Rhode Island Law.

38

of the Defendants that void assignments are acceptable because if they are not, parties seeking to

foreclose will have to prove that they have the right to do so. In the Unites States of America,

Due Process requires just that. To be clear, the General Assembly created a non-judicial process

to foreclose legally. It did not give criminals a golden ticket to pollute land evidence with

fraudulently manufactured and counterfeit documents to benefit banks and loan servicers to the

detriment of the Citizens of the State Rhode Island. For this Court to rule otherwise would

make the Judiciary an accomplice to this criminal enterprise.

Despite the Defendants' efforts to overwhelm the senses by utilizing a plethora of

repetitive cases in order to support their contention that MERS has the ability to assign the

mortgage, the Plaintiff will try to save the court’s time by efficiently identifying the irrelevancy

of these cases to the current case; quite simply in US Bank, N.A. v. Flynn, 27 Misc. 3d 802, 806

(N.Y. Sup.Ct. 2010), Lane v. Vitek Real Estate Indus. Group, 2010 WL 1956707 (E.D. Cal.,

May 13, 2010), Peace v. MERS, 2010 WL 2384263 (E.D. Ark., 2010), Blau v. America’s

Servicing Company, 2009 WL 3174823 (D.Ariz., Sept. 28, 2009), among others, the foreclosing

party was either a beneficiary, had possession of the note or the assignee’s rights were dependent

upon ownership of the note); Crum v. LaSalle Bank, N.A., No. 2080110, 2009 WL 2986655, at

*3 (Ala. Civ. App., Sept. 18, 2009).

Further in J.P. Morgan Mortg. Acquisition Corp. v. Lord, No. 10-MISC-427846, slip op.

at 3-4 (Mass. Land. Ct. Nov. 29, 2010), the holding in that case was based upon the admitted fact

that the assignment was not disputed, where as in the case at bar, Plaintiff is not admitting there

is an assignment in existence as it is void. In Golliday v. Chase Home Fin., LLC, No. 1:10-cv-

532, 2011 WL 31038 (W.D. Mich. Jan. 5, 2011) and Drew v. Kemp-Brooks, 10-14437, 2011

WL 2936103 (E.D. Mich. July 21, 211), both cases are Michigan cases and rely upon Michigan

39

―Chain of Title‖ standards in the Michigan Statutes which are alien in nature compared to our

Rhode Island statutes. The case of Baisa v. Indymac, No. CIV. 09-1464, 2009 WL 3756682

(E.D. Cal. Nov. 6, 2009) is not on point and is misleading compared to the case at bar due to the

fact that Baisa discusses Deeds of Trust, not mortgages. In that case MERS could assign the

beneficial interest, whereas in the case at bar, MERS has admitted that it only holds bare legal

title and therefore MERS cannot assign a beneficial interest which it does not have.

The Defendants discuss Bain v. Metropolitan Mortgage, No. C09-0149-JCC, 2010 WL

891585 (W.D. Was. Mar. 11, 2010) however this case does not apply to the case at bar because

the case concerned ―Deeds of Trust‖ actions that fell under a specific ―Consumer Protection

Statute‖ that does not exist in the State of Rhode Island.

In addition, McKenna v. Wells Fargo Bank, No. 1010417, 2011 WL 1100160 (D. Mass.

Mar, 21, 2011), Lyons v. MERS, No. 09 MISC 416377, 2011 (Mass. Land Ct. Jan. 4, 2011), and

In re Lopez, 446 B.R. 12 (Bankr. D. Mass. 2011) all deal with issues that render them useless in

RI, such as Trustee Statutes which are non-existent in RI, or issues contemplated in Huggins,

which are no longer valid. Further, the holding in Adamson v. MERS, No. 11-0693, 2011 WL

1136462 (Mass. Super. Ct. Mar. 23, 2011), similar to the other cases Defendants discussed and

have been dismantled above, has been rendered toothless by recent cases. In the case of IN RE

SCHWARTZ, Case No. 06-42476-MSH, Adversary Proceeding No. 07-04098, (Bankr. Ct, D.

Mass., Central Division, August 22, 2011) the holding in Schwartz clearly renders the holding in

Adamson toothless as the litmus test for standing to foreclose in Massachusetts is set forth in

United States Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637 (2011) and to suggest otherwise is

counterintuitive. Clearly, in the Commonwealth of Massachusetts, one must hold legal title to a

40

mortgage when it invokes the statutory power of sale. The Schwartz Court wrote that "[u]ntil it

[MERS] assigned the mortgage to Deutsche, only MERS had authority to foreclose."

Further, in Schwartz at footnote 5, the Court wrote that

"Deutsche presented sufficient proof to prove that either it or Homeq, its

agent, had possession of both the Schwartz mortgage and promissory note

as of May 3, 2011. The note was endorsed in blank, which gave Deutsche

Bank the right to enforce the note. The fact that Deutsche had possession

of the mortgage, however, is irrelevant to its status as mortgagee. While a

promissory note endorsed in blank may be enforced by the party in

possession of the note, this is not the case with a mortgage. 'Like the sale

of land itself, the assignment of a mortgage is a conveyance of an interest

in land that requires a writing signed by the grantor.' Ibanez, 458 Mass at

649. Deutsche had not received a written assignment from MERS prior to

May 3, 2011. The fact that it had possession of the mortgage instrument

did not render Deutsche the mortgagee and thus lacked the power to sell

the property'."

In Schwartz, where there was proof that the mortgage was in a securitized pool, it was

still not sufficient to allow Deutsche to invoke the statutory power of sale. In this case, there is

no proof at all relative to the ownership of the Muscatelli mortgage.

Finally, the Defendants discuss LaCosta v. McCalla Raymer, 10-cv-1171-RWS, 2011

WL 166902 (N.D. Ga. Jan. 18, 2011) a Georgia case that does not support their position in the

way Defendants would suggest as in LaCosta the court denied the Defendants Motion to Dismiss

because it found the Plaintiff in that case stated a claim for violations of Georgia’s Foreclosure

Statutes.

The Defendants go on to argue that GMAC was assigned the mortgage by MERS. The

Plaintiffs have alleged that MERS did not assign the mortgage. GMAC is not a party to the

mortgage and the MERS mortgage is void so it has not standing to foreclose.

The Defendants go on to argue that MERS had the ability to assign the mortgage, and its

assignee had the right to exercise the power of sale. They go on to pigeon hole the MERS

41

mortgage which cannot pass muster under the laws of the State of Rhode Island. The Mortgage

in question gives the Lender the right to foreclose. That is because the MERS mortgage is so

poorly crafted that the cut and paste job that was done on it renders it void as a matter of law.

In fact, the MERS mortgage in this case does not substantially conform to the provisions

of Chapter 11 of Title 34 and to Chapter 10 of Title 18 of the Rhode Island General Laws.

a) The MERS MORTGAGE DEED FORM.

The contractual delegations of the R.I. mortgage powers to MERS are not authorized by R.I.

statutes. Each MERS mortgage deed contains the following two (2) paragraphs:

“This security Instrument secures to the Lender (1) the repayment of

the loan, and all renewals, extensions and modifications of the Note; and the performance of Borrowers covenants and agreements under this

Security Agreement and the Note. For this purpose, Borrower does

hereby mortgage, grant, and convey to MERS (solely as nominee for

the Lender and Lender’s successors and assigns) and to the successors

and assigns of MERS, with MORTGAGE COVENANTS UPON THE

STATUTORY CONDITION and with STATUTORY POWER OF

SALE, the following described property located in the Town of ***,

(See Legal Description Attached Hereto and Made a Part Hereof, at

Parcel ID *** which currently has the address of *** TOGETHER

WITH all the improvements now or hereafter erected on the property, and

all easements, appurtenances and fixtures now or hereafter a part of the

property. All replacements and additions shall also be covered by this

Security Instrument. All of the foregoing is referred to in this Security

Instrument as the ―Property‖. Borrower understands and agrees that MERS

holds only legal title to the interests granted by the Borrower in this

Security Instrument, ?but if necessary to comply with law or custom,

MERS (as nominee for Lender’s successors and assigns) has the right

to exercise any or all of those interests, including but not limited to,

releasing and cancelling this Security Interests.”(Emphasis Added) *** Lender at its option may require immediate payment in full of all

sums secured by this Security Instrument without further demand and may

invoke the STATUTORY POWER OF SALE ***.

a) MERS is not a statutory “mortgagee or his, her or its executors, administrators,

successors or assigns”.

42

A mortgagor is not authorize by the provisions of RIGL§ 34-11-22,15

§34-11-21 or of to

§34-11-20 to grant those statutory powers to an entity which is not a ―mortgagee or his, her or its

executors, administrators, successors or assigns‖. Only a mortgagee or an assigns of the

mortgagee or a power of attorney of the mortgagee or assigns may grant those powers to a third

party. A private contract cannot give or grant a government power to take property by

advertising to an entity or person to which the government has not named as a beneficiary.

MERS is not authorized to exercise a power of sale pursuant to R.I.G.L.§34-11-22

because it is not a statutory ―mortgagee or his, her or its executors, administrators, successors or

assigns.‖

15

R.I.G.L.§ 34-11-22. Statutory power of sale in mortgage. The following power shall be

known as the "statutory power of sale" and may be incorporated in any mortgage by reference:

(Power)

But if default shall be made in the performance or observance of any of the foregoing or other

conditions, or if breach shall be made of the covenant for insurance contained in this deed, then

it shall be lawful for the mortgagee or his, her or its executors, administrators, successors

or assigns to sell, together or in parcels, all and singular the premises hereby granted or intended

to be granted, or any part or parts thereof, and the benefit and equity of redemption of the

mortgagor and his, her or its heirs, executors, administrators, successors and assigns therein, at

public auction upon the premises, or at such other place, if any, as may be designated for that

purpose in this deed, or in the published notice of sale *** at least once each week in that

newspaper; and in his, her or its or their own name or names, or as the attorney or attorneys of

the mortgagor, for that purpose by these presents duly authorized and appointed with full power

of substitution and revocation to make, execute and deliver to the purchaser or purchasers at that

sale a good and sufficient deed or deeds of the mortgaged premises in fee simple, and to receive

the proceeds of such sale or sales, and from such proceeds to retain all sums hereby secured

whether then due or to fall due thereafter, or the part thereof then remaining unpaid, and also the

interest then due on the proceeds, together with all expenses incident to the sale or sales, or for

making deeds hereunder, and for fees of counsel and attorneys, and all costs or expenses incurred

in the exercise of such powers, and all taxes, assessments, and premiums for insurance, if any,

either theretofore paid by the mortgagee or his or her executors, administrators or assigns, or

then remaining unpaid, upon the mortgaged premises, rendering and paying the surplus of the

proceeds of sale, if any there be, over and above the amounts so to be retained as aforesaid,

together with a true and particular account of the sale or sales, expenses and charges, to the

mortgagor, or his, her or its heirs, executors, administrators, successors or assigns; which sale or

sales made as aforesaid shall forever be a perpetual bar against the mortgagor and his, her or its

heirs, executors, administrators, successors and assigns, and all persons claiming the premises, so

sold, by, through or under him or her, them or any of them. (Emphasis Added).

43

MERS is not eligible under the provisions of R.I.G.L.§34-11-2116

, to receive a statutory

condition because (1)it is not the‖ mortgagee or his or her heirs, executors, administrators, or

assigns‖; and (2) because MERS does not receive from the Mortgagor ―the principal and interest

of that certain promissory note bearing even date with this deed and secured by this deed.‖

The provisions of R.I.G.L.§34-11-2017

do not authorize the use of the words mortgage

covenants in a contract in which no promises are made to the third party receiving those statutory

16

R.I.G.L.§34-11-21. Statutory mortgage condition. The following condition shall be known

as the "statutory condition", and may be incorporated in any mortgage by reference: (Condition)

Provided, nevertheless, and this conveyance is made upon the express condition, that if the

mortgagor or his or her heirs, executors, administrators or assigns shall pay to the

mortgagee or his or her heirs, executors, administrators, or assigns the principal and

interest of that certain promissory note bearing even date with this deed and secured by

this deed, and shall perform every other obligation secured by this deed, at the time

provided in the promissory note or in this deed, and shall also pay all taxes and assessments

of every kind levied or assessed upon or in respect of the mortgaged premises, then this deed, as

also the promissory note, shall become and be absolutely void to all intents and purposes

whatsoever. 17

R.I.G.L.§34-11-20. Meaning of mortgage covenants. In any conveyance of real estate the

words "with mortgage covenants" shall have the full force, meaning, and effect of the following

words, and shall be applied and construed accordingly: "The mortgagor, for himself or herself

and for his or her heirs, executors, and administrators, covenants with the mortgagee and his

or her heirs and assigns, that he or she is lawfully seised in fee simple of the mortgaged

premises; that the same are free from all encumbrances; that he or she has good right, full power,

and lawful authority to sell and convey the same to the mortgagee and his or her heirs and

assigns; that the mortgagee and his or her heirs and assigns shall at all times hereafter

peaceably and quietly have and enjoy the mortgaged premises and that the mortgagor will, and

his or her heirs, executors, and administrators shall, warrant and defend the premises to the

mortgagee and his or her heirs and assigns forever against the lawful claims and demands of

all persons, and that the mortgagor and his or her heirs and assigns, in case a sale shall be made

under the power of sale, will, upon request, execute, acknowledge, and deliver to the

purchaser or purchasers such deed or deeds confirmatory of the sale as may be required;

and that insurance against loss by fire shall be kept and maintained on the buildings, if any, on

the mortgaged premises in such office or offices as the mortgagee or his or her heirs, executors,

administrators, or assigns shall approve, in a sum not less than the amount secured by the

mortgage deed, or as otherwise provided herein, and that the policy or policies of such insurance

shall be delivered to and held by the mortgagee and assigned and transferred, or made payable in

case of loss, to the mortgagee or his or her heirs, executors, administrators or assigns, as

collateral security hereto, and in default thereof, that the mortgagee or his or her heirs,

executors, administrators or assigns may affect such insurance in the name of the mortgagor

44

covenants. The mortgagor is not selling its property to MERS. The mortgagor has received no

money from MERS. The mortgagor is not promising MERS that it will defend the property sold

against prior title disputes. The mortgagor is not promising to deliver a deed to MERS if it sells

the property.

b) RI law does authorize either MERS, or nominees, or mortgage servicers to be a

mortgagee.

Rhode Island law allows no statutory powers to be exercised by MERS. MERS is neither

a statutory ―mortgagee, nor a statutory "nominee‖ nor a statutory ―mortgage servicer.‖ MERS

is not authorized by R.I.G.L.§ 18-10-1 to be a ―nominee‖. MERS is not a trust company or a

national banking association. It has an interest in real estate and not in personal property. A

statutory nominee is someone who can hold stock in a corporation for another, which is a form of

personal property not real estate.. MERS is a Delaware corporation, which maintains a registry

of mortgage deeds for its members. MERS is not authorized by R.I.G.L.§ 18-10-1 a ―nominee‖

because it is not a trust company or a national banking association.

Because this Court has been very clear that it will not stray from the decisions in both

Bucci and Porter, it is important to point out that this case does not fit the factual paradigm of

either of those cases. Notwithstanding this fact, the Plaintiff, for fear that the facts of this case

will be jammed into Cinderella's glass slipper despite being the wrong size, hereby presents a

thorough analysis of Bucci and Porter to preserve his record for appeal to the Supreme Court if

that need arises.

This Court has allegedly relied on the holding and rationale in Bucci to support its

decisions in both Porter and Payette. In reality, Bucci does not support Porter and neither Bucci

or his or her heirs or assigns, payable in case of loss to the mortgagee or his or her heirs,

executors, administrators or assigns, and that the premium or premiums paid therefore shall be

a further charge upon the mortgaged premises."(Emphasis Added).

45

nor Porter support Payette. Bucci was based upon the facts at bar in that case. Porter does not

property identify what Bucci stood for and instead, turned it on its head in Porter and in the

Payette decisions.18

A mortgagee cannot foreclose as a matter of law unless it also owns the note or an

obligation underlying the mortgage. Muscatelli has pled this as a fact in good faith and his

allegation must be taken as true. The self-serving statement of the Defendants regarding that

issue is merely gratuitous in nature.

The Defendants have asked this Court to rule, as a matter of law, that mortgagee can

foreclose without holding the note. It points to §34-11-22 of the Rhode Island General Laws to

support this allegation. The foreclosure statute is just a part of Title 34 of the Rhode Island

General Laws. It cannot be viewed in a vacuum. With MERS being involved, that is

impossibility. In Black's Law Dictionary, pg. 1104 (9th ed. 2009), the plain meaning and

common understanding of mortgagee is "[o]ne to whom property is mortgaged" meaning

"mortgage creditor, or lender." In other words, a mortgagee is a party entitled to enforce the debt

obligation that is secured by the mortgage. This is exactly what §34-11-21 provides when its

common words are given their common meaning. Apply this statute to the admitted role of

MERS, and MERS cannot enforce the debt obligation that is secured by the mortgage. MERS is

not, therefore, a mortgagee. MERS simply is not a mortgagee for purposes contemplated by the

General Laws of the State of Rhode Island. Most certainly, it cannot invoke the Statutory Power

of Sale because it is admittedly a nominee-mortgagee which is not provided for in either §34-11-

21 or §34-11-22 and because MERS cannot enforce the debt obligation that is secured by the

18

The Deconstruction of Payette incorporated in a later section of this memorandum.

46

mortgage. This all being true, it logically follows that MERS cannot assign that which it does

not possess.

"The parties appear to have defined the word [nominee] in much the same

way that the blind men of Indian legend described an elephant--their

description depended on which part they were touching at any given time."

[emphasis added] Landmark Nat'l Bank v. Kesler, 216 P.3d 158, 166-67

(Kan. 2010)

This quotation is right on point. MERS is an enigma, wrapped in an illusion. It has

fooled some, but not others. It is time for this Court to remove its blinders and see MERS for

what it truly is; nothing more than a tracking system that exists in derogation of Rhode Island

Statute.

In support of this principle, the recent decision of the US Bankruptcy Court for the

District of Massachusetts, In re Thomas, clearly stated MERS purpose; ―MERS, which is a

registry system that tracks the beneficial ownership and servicing of mortgages, was never the

holder of the note, and therefore lacked the right to assign it.‖ Case No.10-40549-MSH (Bankr.

D. Mass. February 9, 2011). MERS purpose is to track the exchanges of the beneficial owners

and servicing of mortgages; their power cannot exceed that of their specific role, meaning

tracking beneficial ownership does not confer upon them the powers of a beneficial owner, nor

does tracking servicing allow MERS to assume the title of ―mortgage servicer‖.

The issue of whether or not MERS has standing to assign has been addressed by Court in

Payette v. MERS.19

It can be deduced, however, from a careful reading of Bucci, that in order

for MERS to transfer property in the State of Rhode Island, it must be connected to the beneficial

owner of the Note. Id. In this case, it is clear that there is no such connection. The Defendants

go on to reference cases from other jurisdictions that have ruled that MERS has standing to

foreclose/assign but does not elaborate on the facts of those cases. If it did elaborate, this Court

19

See The Deconstruction of Payette attached hereto and incorporated herein by reference.

47

would learn that the facts of those cases were not in line with the facts in Bucci and not in

harmony with the facts in this case. In fact a majority of courts in the Country have ruled that

MERS does not have standing to bring a foreclosure action in its own name or to assign

mortgages. This is true in those cases and in this case because MERS does not own the note.

brought to light the true role of MERS and it is no longer defined as an innovative tool of real

In reality, the current trend in the country is that MERS does not have standing to

foreclose or to assign mortgages. See In Re Wilhem, Case No. 08-20577-TLM (Bankr. Idaho,

2009), In re Foreclosure Cases, 521 F. Supp. 2D 650 (S.D. Oh. 2007), In Re Hayes, 393 Bankr.

259 (Bankr. D. Mass. 2008) In Re Mitchell, Case No. BK-S-07-16226-LBR (Bankr. Nev.

3/31/09), In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal., 2008). In all of these cases, MERS’

mortgages and assignments have been found to be, one way or another, unenforceable. Further,

of particular interest are the following cases all decided by Judge Arnold Schack. In all of these

cases, he was particularly attentive to the actions of MERS and the Lenders. Based upon that

close attention, he rendered each of the following compelling decisions: JP Morgan Chase Bank,

N.A. v. George, 2010 NY Slip Op 50786, Kings 2010; US Bank v. Maynard, 2007 NY Slip Op.

33766, Kings 2007; HSBC Bank USA, NA v. Betts, 2008 NY Slip Op 31170, Kings 2008;

Countrywide Home Loans, Inc. v. Persaud, 2008 NY Slip Op 30076, Kings 2008; Deutsche

Bank National Trust Co. v. Maraj, 2008 NY Slip Op 50176, Kings 2008; US Bank v. Guichardo,

2009 NY Slip Op 50151, Kings 2009; IndyMac Bank, FSB v. Boyd, 2009 NY Slip Op 50094,

Kings 2009; Deutsche Bank National Trust Company v. Auguste, 2008 NY Slip Op 31991,

Kings 2008; Wells Fargo Bank National Association v. John Reyes, 2008 NY Slip Op 51211,

Kings 2008; Bank of NY v. Myers, 2009 NY Slip Op 50159, Kings 2009; Deutsche Bank

National Trust Co. v. Bailey, 2009 NY Slip Op 50191, Kings 2009; Wells Fargo Bank, N.A. v.

48

Hunte, 2010 NY Slip Op 50637, Kings 2010; LaSalle Bank NA v. Smith, 2010 NY Slip Op

50470, Kings 2010; HSBC Bank USA, NA v. Vasquez, 2009 NY Slip Op 51814, Kings 2009.

This is but a sampling of scores of cases where MERS' standing is being denied. See Norton

Bankruptcy Law Advisor, John R. Hooge, Issue No.8 (August 2010). Although New York's

foreclosure law is different from the Rhode Island Law, the concerns set forth by the Court in all

of these cases should be heard by Courts in Rhode Island. If the documents do not support

standing, then no foreclosure is appropriate. That is even truer in a State like Rhode Island

where there is no Court intervention or role until foreclosure is noticed or has taken place.

In addition, the Plaintiff draws the Court’s attention to the case Mortgage Electronic

Registration Systems, Inc., as Nominee for WMC Mortgage vs. Frank S. Johnston and Ellen L.

Johnston, et al., State of Vermont, Rutland Superior Court, Docket No. 420-6-09 Rdcv.

(September 1, 2009). In this very recent case, the Vermont Superior Court wrote a nineteen (19)

page decision regarding many of the issues related to this matter. The decision of the Johnston20

Court was detailed, persuasive and in direct contravention of Huggins, 357 B.R. 180 (Bankr. D.

Mass. 2006). Further, in August of this year, the Maine Supreme Court ruled that "MERS is not

in fact a 'mortgagee' within the meaning of our foreclosure statute, 14 M.R.S. §§ 6321-6325, and

therefore had no standing to institute foreclosure proceedings..." Mortgage Electronic

Registration Systems, Inc. v. Saunders, 2010 ME 79 - Me: Supreme Judicial Court 2010.21

While

the Defendants claim that the trend in courts is to find MERS has standing, which is certainly not

the case in our own backyard. The Plaintiff asks this Court to give great weight to these

thoughtful decision rendered by sister New England States in denying the relief sought by the

Defendants. This is a well plead case that should proceed through discovery and to trial.

20

See Johnston Attached. 21

See Saunders Attached

49

The Defendants imply in their memorandum that under Rhode Island Law and the terms

of the Mortgage, MERS had the ability to hold and assign the Mortgage; this is untrue. The

Defendants cite Bucci and Porter as precedent and support for this statement. It has already been

pointed out that Bucci is on appeal to the RI Supreme Court. Porter is also on appeal to the RI

Supreme Court. Further, the Plaintiff suggests that Porter does not follow the rationale of Bucci

but goes off course in its diagnosis of the MERS Mortgage and the MERS System. Porter

ignored the finding of Bucci that was that the note and mortgage had to be connected in order for

MERS to foreclosure. Clearly, Bucci provides that if there is any chance of a MERS assignment

being valid, the same rule would apply. MERS and the holder of the note had to be connected.

That is not true in this case and the recent cases establish that MERS, without an order from the

holder of the note, cannot foreclose or assign the mortgage.

Further, Judge Silverstein made it clear in his written opinion that his decision was

limited "to the case at bar." Id. By no means did he put his seal of approval on MERS ability to

foreclose in all cases and he did not address at all the issue in this case including whether or not

MERS can assign a Mortgage. Counsel for the Defendants relies in part on the holding in In re

Huggins, 357 B.R. 180 (Bankr. D. Mass. 2006). In reality, the Huggins’ Court clearly limited its

ruling to foreclosures. Id. The Huggins’ Court did address the issue of MERS being able to

assign and the Court's comments do not support MERS’ position in this case. The Huggins

Court discussed at length the case of LaSalle Bank National Association v. Lamy, Slip Copy, 12

Misc. 3d 1191(A) 2006 WL 2251721 (N.Y. 2006). In the Lamy case, the court denied a

foreclosure action by an "assignee of MERS" on the grounds that MERS had no ownership

interest in the underlying note and mortgage but rather acted as a nominee and thus did not have

the power or right to "assign." Id. Thus the Lamy holding has more applicability to this case

50

than does Huggins. In fact, the Huggins Court wrote that "there was no disconnection between

mortgage and note." See C.A. PC-2009-3888. Again, by simple deductive reasoning, it can be

concluded that if there had been a disconnection in Huggins, the decision would have been

different. It would follow therefore, that if there is a disconnection between the note and

mortgage, a conveyance cannot take place. Given that there is proof of disconnection between

the note and mortgage, the Plaintiff’s claim in this matter makes out a cause of action under the

laws of the State of Rhode Island.

Under Rhode Island Law and pursuant to the oft quoted and still relevant United States

Supreme Court case of Carpenter v. Longan, 83 U.S. 271 (1872), where the United States Court

reasoned that "the note and mortgage are inseparable; the former as essential, the latter as an

incident. As assignment of the note carries the mortgage with it, while an assignment of the

latter alone is a nullity." Id at 274. In this case, where there is a mere assignment of the

mortgage without the assignment of the note, the assignment is a nullity. The mortgage does not

go from MERS to GMAC because of the lack of the note. It seems clear that the Defendants do

not believe that Longan is still good law. They are wrong. Furthermore, a very recent landmark

case out of the Commonwealth of Massachusetts, our neighboring and similar non-judicial

foreclosure state, has confirmed that "where a note has been assigned but there is no written

assignment of the mortgage underlying the note, the assignment of the note does not care with it

the assignment of the mortgage." U.S. Bank National Assoc. v. Ibanez, SJC 10694 (January 7,

2011). The Ibanez case, which is being considered by courts around the country as a guide for

ruling on cases involving mortgage assignments, explained that "the party foreclosing must

prove that the assignment was made by a party itself that held the mortgage and the obligation

the mortgage secures‖ (i.e. the note). See Ibanez, citing In re Parrish, 326 B.R. 708, 720 (Bank.

51

N. D. Ohio 2005). ("If the claimant acquired the note and mortgage from the original lender or

from another party who acquired it from the original lender, the claimant can meet its burden of

proof through evidence that traces the loan from the original lender to the claimant.") It is clear

therefore, that with every transfer of the note, there needs to be an assignment of the mortgage

that corresponds to the transfer of the note in order for the party claiming to have standing to

properly foreclose. It is anticipated that the Defendants will spin Ibanez, but the holding and

dicta are pure and do not need to be kneaded like dough to have it rise to the level of a National

guide to real estate conveyancing and foreclosure. One thing is certain; GMAC cannot

foreclose on a mortgage without there being an underlying obligation.

The Defendants reach beyond Bucci and allege that the Plaintiff somehow agreed that

MERS would serve as nominee of some future unknown nominees, as long as they were

members of MERS. In fact, this Court reached beyond Bucci in its Payette decision. This

Court ruled that principles or note holders didn't have to be members of MERS when the

mortgage was allegedly made, but as long as they became MERS members at some time in the

future. There is no evidence of this in any case or in any documents that this Court has ever

seen. The complaint is clear that the Plaintiff did not agree to allow MERS to assign the

mortgage or to foreclose on them.

In Rhode Island, in the case of Nadjarian v. Rose, RI: Superior Court 2009, the Superior

Court wrote,

"A mortgage is defined as `security for the performance of an act by some

person.'" Pawtucket Inst. for Sav. v. Gagnon, 475 A.2d 1028, 1030 (R.I. 1984);

see also Blacks' Law Dictionary 1101 (9th ed. 2009) (defining a mortgage as

"[a] conveyance of title to property that is given as security for the payment of

a debt or the performance of a duty that will become void upon payment or

performance according to the stipulated terms"). A mortgage note is "[a] note

evidencing a loan for which real property has been offered as security," and a

promissory note is "[a]n unconditional written promise, signed by the maker, to

52

pay absolutely and in any event a certain sum of money either to, or to the order

of, the bearer or a designated third person." Black's Law Dictionary 1162 (9th

ed. 2009). Rhode Island "has previously recognized that a legal mortgage is an

executed conveyance requiring the same consideration as any other executed

transfer of property. However, there must be an underlying obligation which the

mortgage secures." Pawtucket Inst. for Sav., 475 A.2d at 1030 (citing Turner v.

Domestic Investment & Loan Corp., 119 R.I. 29, 34, 375 A.2d 956, 959

(1977)).

It appears, based upon this case that a MERS mortgage does not pass the test set forth in

Pawtucket Inst. for Sav. v. Gagnon, 475 A.2d 1028, 1030 (R.I. 1984). The Plaintiff in this case

owes nothing to MERS. Consideration is lacking. MERS admits that fact in each and every one

of its Rhode Island cases. It admits that fact in this case. Even adopting the Bucci rationale,

MERS cannot prove that it acts as an agent for GMAC or that the note was ever held or owned

by GMAC. There exists a genuine issue of material fact as to whether GMAC held or owned

the note. There is evidence provided to the Court that is contrary to the evidence allegedly

produced by MERS relative to the location and ownership of the note.

At the bottom of page 14 of their memorandum, the Defendants reach the conclusion that

the Bucci and Porter Courts both ruled that a Mortgagee could foreclose despite not being the

note holder. That is not what Bucci said. In Bucci, a nexus was found to be necessary for

MERS to foreclose. In Porter, this Court allegedly followed Bucci so it too must have found a

nexus between MERS and the note holder. Regardless of those holdings, which may or may not

be moot at this point, they have no application to this case which stands on its own facts as pled.

This is a 12(b)6 Motion. Bucci was decided after trial where findings of fact were made and

Porter was ruled on based upon an un-objected to Motion for Summary Judgment. Both

decision run afoul of the Supreme Court decision of Eisenberg.

The Defendants point to another Massachusetts Bankruptcy Court ruling in their

memorandum. The matter of In re Marron, No. 10-45395-MSH, slip op. (Bankr. D. Mass, June

53

29, 2011) is also cited as supplemental authority. Again, the Bucci matter which is on appeal in

the Rhode Island Supreme Court, addresses the issues addressed by the Marron Court, however,

the Bucci case will be decided based upon Rhode Island Statutes and Statutory Construction and

not upon a case from a foreign jurisdiction. It is alleged in this case and it was alleged in the

Bucci appeal that Massachusetts law relative to assignments and its position on MERS

assignments are not in line with Rhode Island Statutes Conveyance Statute. In any event, the

facts of Marron cannot be squared with the facts of this case and provide no authority upon

which this Court can rely in determining the Motion to Dismiss brought on these specific set of

facts.

In Valerio v. U.S. Bank, N.A. 716, F. Supp. 2d 124, 128 (D. Mass. 2010), the Court once

again applied the unique Massachusetts Statute that imputes a trust relationship between the

mortgagee and note holder when they are not one in the same. Rhode Island Law does not

contain any such provision and, therefore, this case is of no guidance to this Court on the case

before it.

In Hilmon v. MERS, 06-13055, 2007 WL 1218718 (E.D. Mich. April 23, 2007), the

promissory note involved was not a negotiable instrument distinguishing it from this case and the

question as to whether or not MERS could foreclose was based upon Michigan Law, in particular

Michigan Compiled Laws Section 600.3204, a copy of which is attached hereto. This statute

clearly states at Subsection (d)) that the "Party foreclosing the mortgage is either the owner of

the indebtedness or of an interest in the indebtedness secured by the mortgage or the servicing

agent of the mortgage." This case stands for the proposition that the mortgagee must have an

interest in the note.

54

Further, the Defendants allege that the case of U.S. Bank National Association v. Antonio

Ibanez, 2011 WL 38071, at *10 supports its claim that GMAC, in Rhode Island, can foreclose on

a mortgage without holding the note. Nothing could be further from the truth. As stated above,

Ibanez was determined based upon Massachusetts Law and its unique concept that the right to

foreclose remains with the mortgagee who "holds the mortgage in trust for the note holder and

who has an equitable right to obtain an assignment of the mortgage." There is nothing in Rhode

Island Statute or case law that operates to create an equitable trust between a mortgagee and a

note-holder." That would be a job for the General Assembly, not this Court.

The Defendants go on to claim that the language of the mortgage clearly grants the

statutory power of sale to MERS and clearly not to the Lender. The Defendants must be reading

a different mortgage than the one related to this matter because Paragraph 22 of the Mortgage

completely dispels as false all that the Defendants claim to be true. The Defendants claim that

the mortgage did not restrict MERS from selling the property if the Mortgage and Note were not

held by the same entity. It most certainly did. Once again, MERS is clearly not the Lender and

only the Lender is given the statutory power of sale. It takes great imagination and a will to find

a way where none exists to reach the conclusion that Paragraph 22 is does not control who may

invoke the power of sale. Further, contracts set forth right and obligations between parties and

they do not, nor can they, set forth every negative covenant that may exist, but by implication,

based upon the clear words written in the Mortgage, MERS may not invoke the statutory power

and by the clear reading of 34-11-24, it cannot assign the mortgage because it cannot satisfy the

content thereof; to wit, it cannot assign the note because it never owns the note. This is really

very simple if the words in the mortgage, note and statute are read as they are written.

55

MERS was never given the Statutory Power of Sale. MERS was never given the Note.

MERS was never the Lender. MERS never held the mortgage in trust for the note holder,

whoever that may have been. MERS simply held a spot in the registry of deeds as an alleged

Mortgagee for a named Lender, not for every potential holder of the note that may appear

throughout time. That would truly be ridiculous and contrary to the letter, intent and spirit of the

Laws of the State of Rhode Island.

It is anticipated that the Defendant’s brief, in support of the Magistrates Report and

Recommendation in Fryzel and Cosajay, may reference the case of Payette v. MERS, et. al., CA

No. 09-5875 (Superior RI, order pending). The author of this brief is counsel for the Payettes and

plans on filing an appeal of the Superior Court's decision once it is entered as an Order of the

Court. The Plaintiff hereby addresses the Payette decision in the event that it is cited by counsel

with opposing views.

THE DECONSTRUCTION OF PAYETTE V. MERS

On August 22, 2011, Judge Alan Rubine of the Rhode Island Superior Court issued a

written Decision in the case of Christopher A. Payette & Dale J. Payette v. MERS; IndyMac

Bank, FSB, & One West Bank. Counsel for Payette is also the author of this memorandum and

states unequivocally that the Payette Decision will be appealed to the Rhode Island Supreme

Court once an Order is entered.

The Payette Decision has been subject to jubilation in the MERS community as a great

victory in the State of Rhode Island. Because of this stance, it is necessary to dissect the Payette

Decision for the Federal District Court for the District of Rhode Island to understand what an

abomination it is.

56

The Court's attention is drawn to the very first paragraph of the FACTS & TRAVEL

section of the Payette Decision. The court writes that the Plaintiffs "executed a mortgage on the

property to secure payment of the Note, naming IndyMac as the lender and MERS as the

mortgagee and nominee of Indy Mac and Indy Mac's successors and assigns." The Judge claims

that this allegation was contained in the Plaintiffs' Complaint. It was not. He claims that this

language appears in the mortgage. It does not.

The court goes on to write that Indy Mac endorsed the Note in blank to Deutsche Bank.

As this Court knows, it is a legal impossibility to endorse a promissory note in blank to any

particular party. If a note is endorsed to a particular party, that would be a specific endorsement.

Further, the Plaintiffs specifically alleged that the note was not properly endorsed and the

Defendants argued that it was. In a Rule 56 Motion for Summary Judgment, the Judge's role is

to identify facts, not decide them. In this matter, The court broke from the rules and make the

incorrect factual determination that the note was "endorsed to" Deutsche Bank. This too is clear

error on the part of the court. This fact in issue should have been enough to defeat the Motion

for Summary Judgment.

At this point in his decision, the court has Deutsche Bank holding a specifically

endorsed promissory note.

It is critical to the deconstruction of this opinion that this Court take Judicial Notice of the

above factual recitation and that which follows. In paragraph 2 of the FACTS & TRAVEL of

his decision, he writes that "Then, FDIC, still acting as receiver for Indy Mac Federal, transferred

the rights associated with the Note to One West." This is not true. Based upon his earlier

finding of fact, the note could not be transferred to One West because it was already held by

Deutsche Bank pursuant to a specific endorsement.

57

At this point in this decision, the court has the note being held by both Deutsche Bank

and One West. This is impossible and that alone undermines the entire decision of the court.

Not being able to follow the path of the note from one party to the next and admitting the same in

writing destroys the legal significance of this decision. Further, it is clear that there was a

genuine issue of material fact that even the court could not determine as to the ownership of the

note.

As a further indictment of this decision, the court found as a matter of fact that

"Contemporaneously [with transfer of the note] MERS assigned its mortgagee interest to

OneWest." Relative to the timing of these events, the findings of fact are not true. They are also

genuine issues of material fact that only a fact finder could determine. In their memorandum of

law and in their flow chart, the Defendants were not able to identify the exact date that the note

was transferred, and instead state it was "soon thereafter". The court has instead, identified the

date for them, to the detriment of the Plaintiffs and in violation of Rule 56.

The second line of the third paragraph again identifies One West as the note holder and as

assignee of MERS' status as mortgagee and nominee to the original lender. As to for the note, it

is being held by both Deutsche Bank by way of specific endorsement and One West by way of

an unsubstantiated transfer from the FDIC to it. Clearly, this is impossible.

Further, One West never claims to be the assignee of MERS' status as a mortgagee and

nominee to the original lender. Counsel for the Plaintiffs is not quite sure what it means to

"assign one's status as mortgagee and nominee." MERS could not assign its status as anything,

and even if it could, it wouldn't matter under the law of the State of Rhode Island. This case is

about whether or not mortgage assignments, tangible legal documents, were created and were

executed according to Rhode Island Statute. At this point, MERS has supposedly assigned its

58

interest to One West but there is no finding that it has assigned the mortgage. In any event, that

fact was disputed throughout the Plaintiffs argument and remains in dispute.

The court converted what was a 12(b)(1) Motion to a Rule 56 Motion for Summary

Judgment. In doing so, he raised the bar for the Plaintiffs and never gave the Plaintiffs an

opportunity to respond to the motion as one for Summary Judgment as provided for by Rule

12(b)(7). This was highly prejudicial to the Plaintiffs. Notwithstanding the conversion, which

will be appealed to the RI Supreme Court, the court continued to misstate facts and evidence in

support of his ultimate conclusion that the Defendants were entitled to Summary Judgment.

In particular, at paragraph four of the decision entitled ―Conversion‖, the court writes that

the uncertified documents provided by the Defendants showed "the Mortgage traveled from

IndyMac (the loan originator) to MERS, FDIC, IndyMac Federal, and ultimately One West. (the

foreclosing bank)." This written statement reveals that the court simply did not understand how

this mortgage travelled. He reaches a conclusion that is grounded in sand and that has no

foundation. He indicates that the mortgage was originally owned by Indy Mac. This is not true.

This is not what was pleaded by either party and it is not what the documents prove. Indy Mac

was never the mortgagee.

The Court’s entire analysis is flawed from the inception and the internal inconsistencies

and legal impossibilities contained therein leads to no other conclusion than that he does not

possess even a rudimentary understanding of the MERS System, so called, and its impact on

conveyancing property pursuant to the General Laws of the State of Rhode Island. In reality, the

mortgage was never owned by Indy Mac. This is clearly set forth in the mortgage itself and in

the pleadings of both the Plaintiffs and Defendants. MERS was the alleged original mortgagee.

It is beyond comprehension that this fact, which is the premise upon which this entire case is

59

based, is misstated and misunderstood. There is no assignment from MERS to the FDIC, and

there is no evidence that ever puts ownership of the mortgage in the FDIC. In fact, if the

mortgage was owned by MERS from the inception, it never would have passed through the

FDIC or Indy Mac Federal. The Court's findings of fact regarding the travel of the ownership of

the mortgage are simply wrong. None of this was ever claimed to be the case by either the

Plaintiffs or the Defendants. The Court simply ignored the facts as pleaded by both parties and

proffered facts that were not pleaded and which cannot be true based upon the documents in the

file.

Whether or not the conversion of the Motion to Dismiss should have been made is a

matter that will be appealed to the Rhode Island Supreme Court and it is not before this Court at

this time.

The Plaintiff admits that it supplemented its memorandum with other exhibits. Page 7 of

the Decision contains the written statement that there was a Power of Attorney authorizing FDIC

to transfer the assets previously owned by Indy Mac to One West. This exhibit was submitted to

prove that there was a mechanism in place that the FDIC would adhere to in transferring Indy

Mac Federal Assets to One West. It was not a certified document. The Court claimed that this

document was pertinent to the resolution of Plaintiffs' argument that a disconnection between the

Note and Mortgage occurred, and that the wrong party foreclosed, because this document details

the final disposition of the Note, which is to an entity that through assignment also owns the

mortgage. This is wrong on multiple levels.

The Court wrote earlier in its decision that Deutsche Bank held then Note by way of a

specific endorsement from Indy Mac. The note reveals that this is not the case and that the

Court, by ruling this way, committed reversible error. Not only is it an error, it is evidence of the

60

Court's misunderstanding of what actually took place in this case with the Note and the

Mortgage. Clearly, the Court made a finding of fact in section one of its decision that is not in

accord with remainder of its decision.

It is an erroneous finding of fact that the FDIC Power of Attorney, which was not in the

record chain of title, proved anything regarding the final disposition of the Note and Mortgage.

At the top of Page 8, the Court wrongly concluded that "this document [uncertified Power of

Attorney not in the chain of title] details the final disposition of the Note, which is to an entity

that through assignment also owns and controls the mortgage." This is patently false. The Court

concluded that the Note was held by Deutsche Bank, by way of specific endorsement from Indy

Mac, and now it finds that the Note is held by One West by way of a transfer of the same by the

FDIC. The Court has the Promissory Note traveling two divergent paths to two different ends

and this simply cannot be. The findings of facts set forth in the decision of the Court clearly

establish that the wrong party did foreclose. There can be no other conclusion. The Court did

not follow the path of the note correctly.

The Plaintiff in this case does not dispute the Summary Judgment Standard as set forth by

the Court in Payette.

The Court wrote that the Payette case presented many of the same facts critical to the

analyses in the Porter and Bucci case. One thing that these cases have in common is that there

was a MERS mortgage. The Court in Payette missed this very critical fact in its analyses.

Further, it is the opinion of this author that Bucci continues to stand on its own while on appeal

to the Supreme Court. It is the opinion of this author that Porter misconstrued and misapplied

the holding in Bucci so they are distinguishable from each other and from Payette.

61

The Court's finding that the "undisputed exhibits demonstrate a chain of title to the

mortgage that is consistent with the right of One West ultimately to conduct the mortgage sale.‖

This conclusion is clearly wrong. Further, in support of this incorrect conclusion, the Court

relies on an unreported decision from the Commonwealth of Massachusetts while not giving

consideration to one of over forty-five plus reported cases from across the country finding that

MERS mortgages and assignments are ineffective, void or otherwise legally flawed.

The devolution of the Payette decision continues at Section A of the decision entitled

―Defendants' Authority to Transfer the Note and Mortgage‖. The Court writes that the Payettes

argued that IndyMac lacked the contractual authority to assign the Mortgage and its attendant

rights to MERS. No such argument was ever made by the Payettes because Indy Mac was never

the mortgagee so it had no rights to assign. The Payette Court clearly did not understand who

the mortgagee was in the loan transaction. It was MERS, not Indy Mac. In the middle of the

first paragraph of page 11 of the Decision, the Court erroneously wrote that "Thus, following the

holdings and rationale of Porter and Bucci, this Court finds that no factual dispute exists as to the

contractual soundness of the lender's assignment of the Mortgage to MERS as the lender's

nominee and mortgagee." This conclusion utterly makes no sense. There was never an

assignment of the mortgage from IndyMac to MERS because IndyMac was not the original

mortgagee and never appeared in the record chain of title. Further, the Court in Payette cited the

Plaintiffs' Complaint at Paragraphs 13-14, 20, 22-27. These portions of the complaint are set

forth below and clearly establish that the Court did not read them correctly and as a result,

reached a faulty conclusion.

To fully comprehend the Payette Court's total lack of understanding of the Plaintiffs'

complaint, they ask the Court to consider the following salient portions of their complaint:

62

¶2. MERS is a Delaware Corporation and upon information and belief is not

authorized to do business in the State of Rhode Island. MERS is not a

Lender. MERS is the alleged Mortgagee of a Mortgage executed by Payette

to secure payment of a Note.... [emphasis added]

It is beyond contest that the Payettes alleged as a fact that MERS was the mortgagee.

The Payette Court found that the Lender assigned the Mortgage to MERS. This is simply not

true and is a critical and catastrophic level error by the Court. Reference is made to the

following portion of the instant complaint.

¶3. Indymac Bank, FSB ("Indymac"), upon information and belief is a mortgage

lender indentified in a mortgage to Payette and was the lender of $250,000.00 to

Payette....

It is beyond contest that the Payettes alleged in the Complaint that Indy Mac was the

lender. It was never alleged that Indy Mac was the mortgagee or that it lacked contractual

authority to assign the mortgage to MERS. There was never an assignment to MERS and

Payette never suggested that there was a lack of contractual authority to assign because Indy Mac

was not the mortgagee. This author is quite sure that there is not genuine issue of fact relative to

matter. Both the Plaintiff and Defendant agreed that Indy Mac was the Lender and MERS was

the mortgagee. These are facts that the Payette Court misunderstood. This is another example

of yet another fatal flaw in the Payette Decision.

The Payette Decision cited Paragraphs 13-14 of the Plaintiffs' Complaint. The Court

misread, misunderstood or did not understand the plain language in those paragraphs which are

set forth below:

¶13. The Mortgage, on Page 1, Paragraph (C) goes on to state, in contravention of the

immediately preceding sentence, that "MERS is the mortgagee under this

Security Agreement."

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The Payette Court seems to understand that IndyMac was the lender, but reaches the

totally inconceivable conclusion that it was the mortgagee. Paragraph 13 of the Complaint

clearly proves that the factual finding of the Payette Court is flawed. The Payettes never alleged

the impossible; to wit, Indy Mac, a non-mortgagee assigning the mortgage to MERS.

¶14. The two (2) sentences in Paragraph C of the Mortgage cannot be read together in

a consistent manner. MERS cannot be solely a Nominee and then be something

else. (Mortgagee).

Paragraph 14 once again identified MERS as the Mortgagee. It was never alleged that

Indy Mac was the mortgagee or that its assignment was "unsound". The complaint fully settles

this particular issue. What is disturbing is the fact that the Payette Court found an assignment

that never took place legally sound and based its decision on a purely fictional occurrence.

¶20. The assignment from MERS to OneWest states that MERS was acting as nominee

for IndyMac. However, on the date the assignment was executed and notarized,

IndyMac was a defunct entity that had been seized by the FDIC and closed. At

that point, Indy Mac lost any ability to enter any contracts or agreements with any

third party. All of those powers were absorbed by the FDIC. Further, when

Indymac became controlled by the FDIC and no longer existed as it previously

had, it could no longer be a member of MERS. MERS by its own admission

states that when a member falls out of system and all action the former takes

must be recorded because MERS no longer is the nominee. Likewise, when the

principal dies the agency dies as well.

There is nothing in paragraph 20 that even remotely suggests that Indy Mac did have the

contractual authority to assign the Mortgage to MERS. It would not because the Payette’s knew

from a simple reading of the mortgage document that MERS was named as what they called a

Nominee/Mortgagee. The Payette Court misread the complaint and the mortgage to reach the

morbidly incorrect finding of fact that Indy Mac assigned the mortgage to MERS. Further,

paragraph 20, taken as true, clearly establishes that IndyMac fell out of the MERS system when

the FDIC took it over. There was nothing submitted by the Defendants to rebut that fact. It

must be remembered that the Payette Court adopted the Bucci holding. In Bucci, the MERS

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Rules of Membership were part of the official record. That record clearly proved what was

included in Paragraph 20 of the Payette Complaint was true. The Payette Court claims to have

followed Bucci but it did not. In fact, for the same reason, Porter did not follow Bucci. That

claim made by the Porter and Payette Courts is not true and is dangerously misleading in Payette

and in all cases still pending before the Payette Court on the MERS Calendar.

¶22. At page 13, paragraph 22 of the Mortgage, it clearly states that the Lender (ie.

INDYMAC), upon default by the borrower, may invoke the statutory power of

sale.

This is true, however, it appears that the Payette Court misunderstood this statement as

well in support of its incorrect conclusion that Payette had claimed that IndyMac could not

assign the mortgage. The Payettes wrote exactly what the mortgage said. This paragraph in no

way reflects a claim by Payette that Indy Mac, the lender, could not assign the mortgage.

Nothing could be further from the truth. Payette and MERS all know that Indy Mac could not

assign the mortgage because it never owned the mortgage. Indy Mac had nothing to transfer.

That is a fact that the Payette Court missed.

¶23. The mortgage does not state anywhere that the mortgagee or its assigns may

invoke the statutory power of sale.

This statement is also true and cannot/was not refuted. No matter how many times the

mortgage is read, those words do not appear within it. The words in the mortgage have to be

bent and stretched to reach the conclusion that the Payette Court reached. Notwithstanding the

aforesaid, Paragraph 23 of the Complaint does not in any way set forth a claim that Indy Mac did

not have contractual authority to assign the mortgage because it was never the mortgagee.

Many words, sentences and paragraphs are wasted in the Payette decision because the Court

simply did not understand what the mortgage actually said and what was pleaded by the

Plaintiffs.

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¶24. At paragraph 13, paragraph 22, it goes on to state that "If Lender invokes the

statutory power of sale" Lender shall mail a copy of a notice of sale to Borrower.\

Nothing in this paragraph can possibly be construed to serve as support for the incorrect

finding of fact and conclusion of law reached by the Payette Court.

¶25. The Lender (ie. Indy Mac) never invoked the Statutory Power of Sale in this

matter.

This statement is true in all regards and in no way supports the impossible findings of fact

made by the Payette Court. Paragraph 22 which directly references the invocation of the power

of sale, could never be complied with by MERS or any of its assignees

¶26. At page 13, paragraph 22, it states that "Lender shall publish the notice of sale."

This statement is true in all regards and in no way supports the impossible findings of fact

made by the Payette Court. Paragraph 22 which directly references the invocation of the power

of sale, could never be complied with by MERS or any of its assignees.

¶27. The Lender (ie. INDYMAC) never published the notice of sale.

This statement is true in all regards and in no way supports the impossible findings of fact

made by the Payette Court.

In regard to all of the Paragraphs discussed hereinabove, all of which were cited by the

Payette Court in its decision, it is clear that the Court totally misconstrued, misunderstood or

simply ignored what had actually be claimed by the Payettes. This elemental failure to properly

read the complaint and the mortgage are fatal to the Payette Court's decision and render it useless

in determining any of the issues that it portends to determine. All of this is to the detriment of

the Payettes and to other Courts reading the Payette Decision without the benefit of the

documents which underpin it.

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Finally, regarding this one particular issue, the Payette Court claims to have followed the

rationale of Bucci when in fact it has done no such thing. The Payette Court has totally

misunderstood Bucci and although claiming to follow its rationale, it has strayed far afield from

the same and has neglected to recognize that in Bucci, MERS made certain admissions under

oath and MERS submitted its own Rules and Regulations as exhibits. The Payette Court claims

to understand Bucci and the Rules and Regulations of MERS but clearly it does not because its

conclusion that MERS and its successors and assigns could remain the nominee of Indy Mac, an

entity that fell out of the MERS System, violates the Rule and Regulations that are part of the

Trial Record of Bucci. This is yet another reason why the Payette Decision is absurd.

In yet another fantastic conclusion, the Payette Court finishes its "Contractual Analysis"

with the finding that "this Court finds that no factual dispute exists as to the contractual

soundness of the lender's assignment of the Mortgage to MERS as the Lender's nominee and

Mortgagee." All of the pleadings and all of the documents establish beyond any doubt, that the

Lender (INDY MAC) never assigned the mortgage to MERS as the Lender’s nominee and

mortgagee! This being true, the decision of the Payette Court is legally without any merit or

precedential value and must be ignored or it will lead to subsequent absurd rulings. This case

has been broadcast across the internet as being landmark when instead it is a landmine.

The Payette Court continues throughout its Decision to make statements of fact that are

wrong and then relies upon those incorrect facts to support incorrect legal conclusions. The

Payette Court writes that the "Plaintiffs' second argument is based upon statutory construction."

The Court wrote that the Plaintiffs maintain that R.I.G.L 34-11-21 prohibited IndyMac's

Assignment of the mortgage to MERS and MERS subsequent actions taken as IndyMac's

nominee. This is simply untrue. The Plaintiffs' complaint never maintains that IndyMac could

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not assign the mortgage to MERS because the Plaintiffs knew, as should the Court, that IndyMac

was never the mortgagee. Both the Plaintiffs and Defendants pleadings, as well as the mortgage

itself, clearly establish this to be the actual facts of this case. The Payette Court then further

reveals its total lack of understanding of the actual facts of this case. It cannot in any way

bootstrap this case into the framework of Bucci or Porter.

The Payette Court ruled that an assignment that never happened was sound as a matter

of law and then cites Porter and Bucci in support of that impossible conclusion calling into

question whether or not the Payette Court truly understands what Bucci and Porter actually said.

Continuing down the wrong path, the Court "pauses to address a factual distinction

presented in this that Plaintiffs argue compels the Court to deviate from the rulings of Porter and

Bucci." The Payette Court does make one correct factual statement in that Porter and Bucci

both were about MERS foreclosing because there was no assignment. This one correct

statement is then undercut by the disassociated finding that "Here, the original lender, IndyMac,

assigned the mortgage to MERS: MERS then assigned its nominee status and mortgagee interest

to One West, the foreclosing party." The Court then writes that all of these assignments were

duly recorded pursuant to R.I.G.L. §34-13-1. This entire thread is wrong and fatal to the entire

Payette Decision. The Court implicitly admits that it does not understand what actually took

place in this case regarding the mortgage and alleged assignments.

To be clear, IndyMac was the Lender. IndyMac was never the mortgagee. IndyMac

never assigned anything to MERS because it had nothing to assign. There was never any

recording of any assignment from IndyMac to MERS. In fact, the Payette Court writes that the

alleged assignment from MERS to One West was not of the tangible mortgage but of an

intangible status. An intangible status is not something that can be conveyed pursuant to R.I.G.L

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34-11-1. This is a tacit finding of fact by the Payette Court that MERS did not assign the

mortgage itself but only rights associated with the mortgage. What was assigned was nothing

more than a concept and not a document of conveyance as set forth in R.I.G.L 34-11-1.

Incredibly, the Court then writes that all of these misstatements of fact and the

conclusions drawn there from do not make a difference to its analysis in this case. This is not

true and is an error of law. To be clear, the Payette Court makes another improper finding of fact

when it wrote that the Payettes granted anything to the nominees of MERS. MERS was never

granted the power of sale in the mortgage by the Payettes. As set forth in the Complaint and

Memorandum of Law, and as clearly set forth in the Mortgage itself, MERS is never expressly

granted the Power of Sale by the Payettes. This is a conclusion reached by the Payette Court

because it is the decision that it clearly wanted to reach to buttress its ultimate conclusion that it

doesn't matter who forecloses on a mortgage if money is owed. Although the Payette Court

does sit in equity, it must rule based upon facts that truly exist in the record. In this case, the

Payette Court has failed to rule on actual facts and, therefore, it Decision itself should be

eschewed as nothing more than one massive mistake and its misleading conclusions must be cast

aside as if void.

The flood of errors continues from paragraph to paragraph of the decision. The Payette

Court wrote that "Plaintiffs unequivocally permitted the lender to assign the mortgage to

MERS." This statement simply hammers home the fact that the Payette Court did not

understand at any level the actual conveyances that did and did not take place in the Payette case.

There is no language in any document in the file of this case where the Plaintiffs allowed the

lender to assign a mortgage that it never held. IndyMac was the lender only and was never the

owner of the mortgage and was never in the chain of title to the Payette property.

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Further, there is nothing in the mortgage that gave MERS the right to assign the

mortgage. Those words simply do not appear in the mortgage. Further, the Payette Court wrote

that Payette relied upon R.I.G.L 34-11-1 and R.I.G.L 34-11-22 to support that argument. Payette

submitted a forty-four (44) page Objection in addition to a twenty-five (25) page supplemental

objection, citing over fifty (50) cases. The argument posited by the Payettes was that MERS

would have to execute and deliver an assignment that comported with the Rhode Island General

Laws, §34-11-1 and §34-11-24. It is as if the Plaintiffs' memorandum was not even looked at in

any detail before this Decision was written. Further, this was never claimed to be the fact in

Bucci at any point in the timeline of that case which is now pending before the Rhode Island

Supreme Court.

Another disturbing portion of the Decision relates to the Payette Court's agency analysis.

In its analysis, the Payette Court, which clearly did not read the MERS Rules and Regulations

which were part of the Bucci trial and which were relied upon by the Bucci Court in reaching its

decision on the "facts of the case at bar", wrongly concluded that IndyMac, once it went into

receivership, was still in a contractual relationship with MERS. This is false and was clearly

pleaded by the Payettes. The MERS Rules and Regulations, Membership Rules at Section 4

clearly provide that a:

"The transfer of a non-Member of servicing rights with respect to a

mortgage loan registered on the MERS System shall require the

deactivation of such mortgage loan from the MERS System in

accordance with these rules and regulations. " [emphasis added]

This language is directly from the MERS Rules which is a part of the official record from

the Bucci case. If the Court relied upon Bucci in reaching its decision, this is a fact that it

should have considered in reaching its ultimate conclusion that the fact that the very Rules of

MERS establish that the Payette Loan was deactivated from the MERS System when the FDIC

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took over IndyMac. The FDIC is not a member of MERS and, therefore, the Indy Mac Loan

was deactivated then it was taken over by the FDIC. The conclusions reached by the Payette

Court, and more specifically the following, are simply wrong on every level.

"Here, the reorganization of IndyMac, like the alleged bankruptcy of

the Porter Lender, did not affect MERS' contractual and statutory

authority as nominee of the lender. As a matter of contract, the

Mortgage signed by Plaintiffs recognized MERS' rights to act as

nominee for IndyMac and IndyMac's "successors and assigns". Thus,

whatever financial entity currently holds the beneficial interest of the

note, MERS is designated as the nominee of [that entity] based upon

the broad language contained in the Mortgage Agreement."

It is important to note that IndyMac was not reorganized, IndyMac was closed by the

FDIC. The reorganization took place after IndyMac was closed. Indy Mac ceased to exist

when the FDIC took it over. This is beyond contestation. The MERS mortgage, so called, may

be evidence of an agreement between MERS and its members, but it is not a contract between

MERS and its members. The contract between MERS and its members stems from the Rules of

Membership of MERSCORP, INC., which are part of the official record of Bucci. Nothing that

Payette did created a contract between IndyMac and MERS. This is another incorrect legal

conclusion based upon a total misunderstanding of the facts and law. MERS was never the

nominee of the FDIC or of IndyMac Federal since neither party was a member of MERS, thus

the MERS mortgage was, by Rule of MERS, deactivated from the MERS System. That is one

of the reasons the MERS assignment in this case must fail. Once IndyMac failed, the Mortgage

was deactivated by the Rules and the mortgage fell out of the system and MERS was not the

nominee of anyone. That is the only logical conclusion that can be reached when the facts are

viewed in light of the MERSCORP Rules. It is clear that the Payette Court never looked at the

MERSCORP Rules and that it is not familiar with them. If it were, it never could have reached

this impossible conclusion that MERS is the nominee of any party that ever holds the beneficial

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interest in the note. The Payette Court has ruled contrary to the Rules that govern MERS.

Taking the Payette Court's ruling, as well as the Porter ruling to their logical conclusion, MERS

could end up being the nominee of a non-MERS member. Even MERS admits that this is not

possible and its own Rules and Regulations prove this to be true.

The final paragraph of Section A of the Payette Decision discusses the statutory law on

receivership and reorganization and how it relates to this matter. The Payette Court seems to

say that the FDIC transferred the note and mortgage to IndyMac Federal. This is not true and is

supported by none of the facts that the Payette Court previously stated as being undisputed. As

stated earlier herein, the Payette Court found that the original note was specifically endorsed to

Deutsche Bank by One West. It then found that the FDIC delivered the note to One West. The

actual fact of the matter is that there is no proof of either party ever holding the note. Further,

there is no question that the FDIC never owned the mortgage so it conclusion that the MERS

mortgage was transferred to One West by way of the receiver is another error. The Payette Court

determined that 12 U.S.C. § 1821(d)(2)(A) establishes that the FDIC succeeded to the rights and

assets of IndyMac. It is clear from the facts found by the Payette Court earlier in the Decision,

that the Note was already out of IndyMac at the time that the FDIC took over Indy Mac. Further,

since the mortgage was never in IndyMac, the FDIC could not pass ownership to One West. The

findings of fact and conclusions of law cannot be read together to lead to a legally meaningful

and cogent ruling. Further, despite the plethora of reported cases provided to the Payette Court,

it relied instead on a Trial Court Decision out of the Commonwealth of Massachusetts to support

its impossible conclusions. Even if the case relied upon were found to be persuasive, it may be

distinguished from the Payette case because that holding was that the foreclosure run by the

party that purchased the note and mortgage from the receiver was valid. In Payette, the party

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running the foreclosure on their property took nothing at all from the FDIC. The facts of Payette

were clear to both the Plaintiff and Defendant. It is the Court that could not put the pieces

together and that is why the Decision falls flat on its face.

The Payette Court went on to write about the claim of the Payettes that the note and

mortgage became disconnected at the very inception of the loan. There is no question that there

was an immediate disconnection. That is the result of any mortgage wherein MERS is the

Mortgagee such as in this case. The Payette Court comes right out of the corner of the ring

wrongly writing that "Plaintiffs further contend that IndyMac's initial assignment of the

Mortgage to MERS disconnected the Note and Mortgage, leaving both obligations invalid as

their inception‖. This was never claimed by the Payettes and there is no question that the Payette

Court is wrong in its statement. Again, IndyMac was never the mortgagee and never assigned

anything to MERS. The Payette Court's failure to understand this primary fact is inexcusable

and has led to the publication of a totally erroneous decision. The Payette Court claims that the

Payette's complaint and memorandum claim this to be the case. This is yet another fatal error by

the Payette Court. Please consider the following portions of the Complaint as cited by the

Payette Court.

¶38. Since MERS was never assigned the Note and, but its own definition, never

accepts payments, an entity such as MERS that separates the mortgagee and the

note holder from the deed's inception cannot exist under the Rhode Island

General Laws.

¶39. Rhode Island General Laws 34-11-22 provides that a Mortgagee may invoke the

statutory power of sale, however, the statute clearly contemplates the mortgagee

and lender being the same party. In this instance, it is clearly stated in the Note

and Mortgage that the Lender, any by necessary implication, not the Mortgagee or

a "Nominee Mortgagee", can invoke the Statutory Power of Sale."

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There is nothing in either of these paragraphs that can be remotely construed to be a

claim that there was an assignment of the Mortgage from IndyMac to MERS. Paragraph 38

discussed the transfer of the note to MERS. Paragraph 39 discussed provisions of §34-11-22.

The Plaintiffs' Memorandum at Page 20 never contends that IndyMac made an assignment of the

Mortgage to MERS. As stated many times herein, the Payette’s knew that the mortgage was to

MERS and not to IndyMac. Only the Payette Court got this fact wrong and stated it wrongly

over and over again in its Decision. In fact, the Payette Court goes on to state again that:

"The analyses in both Porter and Bucci presuppose that an

assignment of the mortgage to MERS does not fatally disconnect the

Note and Mortgage."

Nothing could be further from the truth and it is certainly not what was held by the Bucci

Court. In Bucci, there was no assignment to MERS by the Lender. The Payette Court seems to

be laboring under the misguided belief that MERS gets its status as mortgagee by way of an

assignment from the Lender. This is never the case when MERS is the original mortgagee as it

was in Bucci, Porter and Payette. In Bucci, MERS was the Mortgagee. In Porter, MERS was

the Mortgagee. In Payette, MERS was the Mortgagee. There was no assignment into MERS in

any of these three cases. The Payette Court reveals that it does not understand the simple fact in

all three of these cases that the original lender never made an assignment to MERS. This being

the case, the Payette decision cannot be looked upon as determinative on the issue of whether or

not MERS has standing to assign a mortgage pursuant to the General Laws of the State of Rhode

Island.

At this point and for the purposes of this document, it is not necessary to address the issue

of whether or not a disconnect occurs. The factual errors that permeate the Payette Decision

wash out its foundation and render that which is built upon it more than suspect. The Payette

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Decision is based upon a total and complete misreading and understanding of the facts and a

misunderstanding and misapplication of Bucci. The Porter Decision, which was also written by

the Payette Court must also be called into question based upon its clear misunderstanding of

Bucci and the actual pleadings filed in that case.

As an aside, however, the Payette Court suggests that the holding in In Re Huggins, 357

B.R. 180 (Bankr. D. Mass. 2006) is dispositive on the disconnection of the note and mortgage.

It is not. It is based upon Massachusetts law and a set of facts quite different than those in this

case. In fact, within the Huggins case, the Court refers to the case of LaSalle Bank National

Association v. Lamy, Slip Copy, 12 Misc. 3d 1191(A) 2006 WL 2251721 (N.Y. 2006). In the

Lamy case, the court denied a foreclosure action by an "assignee of MERS" on the grounds that

MERS had no ownership interest in the underlying note and mortgage but rather acted as a

nominee and thus did not have the power or right to "assign." Id. Thus the Lamy holding has

more applicability to this case than does Huggins. In fact, the Huggins Court wrote that "there

was no disconnection between mortgage and note." See C.A. PC-2009-3888. Again, by simple

deductive reasoning, it can be concluded that if there had been a disconnection in Huggins, the

decision would have been different. It would follow therefore, that if there is a disconnection

between the note and mortgage, a conveyance cannot take place. Given that there is proof of

disconnection between the note and mortgage, the Plaintiff’s claim in this matter makes out a

cause of action under the laws of the State of Rhode Island.

Finally, at the end of the first paragraph of the Disconnection portion of the Payette

Decision, the Court writes that One West exercised all of the rights as the assignee of the

Mortgage and as holder of the Note. The Court found that One West could invoke the Statutory

Power because it was the mortgagee and note holder. It is clear beyond any stretch of the

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imagination that One West was never the mortgagee. It claims to be the assignee of the mortgage

from MERS and whether that is true remains a genuine issue of fact and question of law. Also,

the Payette Court again wrongly states the One West was the note holder. As stated time and

time again herein, the Court wrote at page 1 of the Payette Decision that " IndyMac thereafter

endorsed the Note in blank to Deutsche Bank. IndyMac continued to service the Note on behalf

of Deutsche Bank." When these two statements are right next to each other, it leads to no other

conclusion that that the Payette Court never really knew who held the note. This being the case,

this Decision must be totally disregarded due to the scores of factual errors contained therein.

One final, but damaging comment regarding the Payette Court's section on Disconnection

is necessary to once again drive home the fact that Decision is of no guidance to this Court or to

any other Court considering a similar fact pattern. In the Disconnection section, the Payette

Court stated that there was no fatal disconnection between the note and mortgage. Clearly, it did

not rule that there was not a disconnection as alleged by the Payettes. In the final paragraph of

this section, the Payette Court states that "the Mortgage and Note were clearly reunited when

both documents were transferred to One West, the foreclosing party." For the note and

mortgage to be reunited, by implication, they had to have been disconnected in the first place. It

appears that the Payette Court never really decided whether or not a disconnection took place at

the inception of this loan transaction. That may be because the Payette Court never really

understood the facts and reality of the transaction. Of even more concern relative to the

reliability and usefulness of the Payette Decision is the Court's final statement that MERS

assigned the Mortgage to OneWest, which could not take place because MERS was no longer the

nominee of any party to this matter, and that the FDIC Power of Attorney, submitted by the

Plaintiff to prove that the FDIC did in fact record assignments in Rhode Island, that had nothing

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at all to do with the Payette property. Further, the Court then incorrectly states that the note was

transferred to One West by way of an FDIC Transfer. Again, the Court had already found that

the Note had been specifically endorsed to Deutsche. The multiple and scattered conclusions

reached by the Court are all impossible to accept as true and they totally undermine the Payette

Decision.

The Payette Court then goes on to comment upon the Payette's attack on the MERS

System. It is true that the Payettes, just like the Buccis, have challenged the MERS System. In

Payette, they argued that the all of the documents in their chain of title are void pursuant to the

General Laws of the State of Rhode Island. The Court frames the issue as follows: "The

Defendants argue that Plaintiffs lack standing to assert these claims, as Plaintiffs are strangers to

any action MERS took regarding the Mortgage." To be clear, the Payettes were most certainly

parties to the mortgage which is the subject matter of their litigation.

It has been well settled since 1911 in the Eisenberg case that in Rhode Island, a mortgage

deed is transfer of an interest in Real Estate. Clearly, as a party to the mortgage every transfer

of that mortgage by way of assignment involves the Payette's rights in that property. They are a

party to the mortgage, mortgage assignments and the promissory note.

The Payette Court, which only nine (9) months ago had ruled that they did have standing,

has done a180’ turn based upon a Report and Recommendation issued out of the Federal District

Court for the District of Rhode Island.

The Payette Court states that "The rationale of excluding homeowners/debtors from

interfering with legitimate [emphasis added] commercial transactions between financial

institutions is entirely consistent with this Court's determination that the commercial transfers of

the Note and mortgage, to which the Plaintiffs agreed, were entirely lawful. Reading this

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statement in its converse, the Payette Court clearly states that homeowners and debtors may

interfere with illegitimate commercial transactions. It is also a tacit admission by the Payette

Court that there are times when, what it called commercial transfers, are not legitimate. Whether

or not one of these commercial transfers is legitimate or not is a question of fact. In this

converted summary judgment, the Payette Court hereby admits that it made findings of fact.

The Payettes alleged that the mortgage and its assignment and the foreclosure were not

legitimate. They alleged that the note was not property endorsed. Is this not enough for the

Payette Court? Clearly, it did not even consider these facts from any point of view except its

point of view and that is clearly in violation of Rule 56.

Further, the Payettes never agreed to their mortgage or note being transferred. They

acknowledged that it may happen and assumed that it would happen in a lawful manner. They

never agreed to or assented to illegal and unlawful transfers of the note and of the mortgage, to

which they were unmistakably a party. To assume otherwise is simply obtuse. Further, the

Payette Court once again misses the point that the assignments challenged as void are transfers

of an interest in real property and are governed by Title 34 of the General Laws of the State of

Rhode Island. In particular, 34-11-1 clearly states that if a conveyance, which an assignment of

mortgage is, does not meet its requirements, it is void. The Payette Court simply ignores the

Statutory grounds upon which the Payettes objected to the assignment. Further, the Payette

Court, which never quite figured out who actually held the note, simply disregarded the fact that

the note was not property endorsed and that the authenticity of the alleged allonge was never

established.

By Statute, mortgagors and homeowners have standing to challenge title. They have

statutory standing to claim that assignments are void pursuant to §34-11-1. They have statutory

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standing to claim that foreclosures are void due to void assignments and lack of proof as to the

ownership of the mortgage and the note. They have statutory standing to claim all that they did,

including that standing to challenge title derives from the plaintiffs having an interest in title

according to the statute, which gives plaintiff the right to challenge any adverse interest on title.

It has always been the claim of the Payettes that the assignments were void. It has always been

the position of the Payettes that they are parties to any real estate transaction that involves the

title to their property. To rule otherwise is to render toothless Title 34. Cases such as these are

not about how foreclosure proceeds should be divided by potentially bad actors, but about who

has the right to foreclose.

In regard to the failure of MERS System portion of the Decision, the Payette Court once

again proves that it does not appreciate what is actually available to it to render a proper

decision, based upon the facts and the law. The Payette Court states the Plaintiffs did not cite

any authority for the proposition that the failure to follow internal guidelines affects a bank,

mortgagee or servicer's ability to foreclose. Once again the Payette Court reveals that it was

operating from a fundamentally unsound foundation of knowledge when rendering its opinion.

The Bucci decision, and the Porter decision that allegedly was based upon the rationale in

Bucci, was, in part, based upon the record in Bucci. The Bucci record contained the

MERSCORP Rules. Given the fact that Payette Court cited to Bucci, clearly, it should have been

fully aware of when went into the Bucci decision. MERS did not follow its internal rules as

written earlier and the Payette Court disregarded their existence. The Payette Court claimed that

the Payettes did not cite any authority for this position when in fact the Bucci case was cited by

the Payettes, the Defendants and by the Court. It is a failing of the Court to use Bucci as a tool

to grant summary judgment in the Payette case when not even knowing what was in the Bucci

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trial transcript and appendix. Further, the Payette Court also writes about a servicer's right to

foreclose. In Rhode Island, a servicer does not have any statutory authority to foreclose.

The United States Department of Treasury Consent Order was evidence of wrongdoing

by MERS. The Payette Court apparently culled through the order but chose only to speak of

what the Order did not say, not what it did say. The Payette Court dispatched this Consent

Order and made a wrongful finding of fact that MERS had not violated any laws or regulations.

It seems odd that such an order would issue from United States of America Department of the

Treasury, Comptroller of the Currency, the Board of Governors of the Federal Reserve System,

the FDIC, the Office of Thrift Supervision and the Federal Housing Finance Agency if there

were not questions about the practices of MERS. The Payettes admit that the document was not

certified, but it did not need to be for the purposes of a 12(b)(1) Motion. The Payette Court

changed the rules in midstream by converting the matter to a Summary Judgment Motion

without giving the Payettes an opportunity to respond with certified documents as provided for

by Rule 56.l.

The Payette Court, after making error after error regarding the facts and the chain of title

and the ownership of the mortgage and note, finally gets to the point that it wanted to reach all

along. The politics of lending have nothing to do with this case. It had nothing to do with Bucci

or Porter or any case where wrongful foreclosures are taking place based upon void and illegal

documents. The Court's manifesto regarding what is right and what is wrong is seriously

misplaced in its decision. The Payette Court writes about unfairness to the lenders but writes

nothing about the unfairness of allowing rogue businesses from stealing people's property, while

violating venerable Rhode Island Conveyencing Statutes and well settled case law. The

Payettes do not argue, as the Court has so glibly asserted, that they should be allowed to escape

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their repayment obligations. What they do argue is that in order for someone to invoke the

statutory power of sale in a mortgage, it must be a party with standing to do so. Void

assignments pursuant to Rhode Law cannot be accepted as the norm. Fraudulent and

unauthorized signatures cannot be the accepted mechanism by which real estate conveyances

take place in the State of Rhode Island. The simple fact is that a mortgage assignment in Rhode

Island, is governed by R.I.G.L §34-11-1 and if that statute is not complied with, any document

governed thereby is void. The MERS mortgage is not in accord with R.I.G.L §34-11-1. It is

void. The MERS assignment in this case does not comply with R.I.G.L §34-11-1. It is void.

The foreclosure, which was totally reliant upon the existence of the mortgage and assignment,

does not comply with R.I.G.L §34-11-1 and is void. The Payettes were a party to the mortgage

so they have standing to challenge that document. They Payettes were parties to the alleged

assignment pursuant to R.I.G.L §34-11-24 so they have standing to challenge that document.

The Payettes, as property owners in Rhode Island so they have statutory standing pursuant to

R.I.G.L §34-16-4 which gave them standing to challenge title. R.I.G.L §34-16-422

clearly gave

the Payettes, who are the fee simple owners of the property, the unquestionable right to challenge

22

§ 34-16-4 Action brought by person claiming through conveyance, devise, or inheritance.

– Any person or persons claiming title to real estate, or any interest or estate, legal or equitable,

in real estate, including any warrantor in any deed or other instrument in the chain of title to the

real estate, which title, interest, or estate is based upon, or has come through, a deed, grant,

conveyance, devise, or inheritance, purporting to vest in the person or persons or his, her, or their

predecessors in title the whole title to such real estate, or any fractional part thereof or any

interest or estate therein, may bring a civil action against all persons claiming, or who may claim,

and against all persons appearing to have of record any adverse interest therein, to determine the

validity of his, her, or their title or estate therein, to remove any cloud thereon, and to affirm and

quiet his, her, or their title to the real estate. The action may be brought under the provisions of

this section whether the plaintiff may be in or out of possession and whether or not the action

might be brought under the provisions of § 34-16-1 or under the provisions of any other statute.

History of Section. (G.L. 1938, ch. 528, § 26; P.L. 1940, ch. 938, § 1; P.L. 1941, ch. 1005, § 1; G.L. 1956, § 34-16-

4.)

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any adverse interest on title. This statute is clear and concise and directly rebuts the holding of

the Payette Court and its reliance on the Livonia based cases, as discussed above.

The Commercial Transactions between financial institutions in Rhode Island are not

subject to the dictates of R.I.G.L §34-11-1 but all real estate transactions in Rhode Island are

governed by R.I.G.L §34-11-1. The Payette Court clearly lost sight of this fact even before it

started writing its Decision.

In the ―Failures of the MERS System‖ Portion of the Payette Decision, the Court is

correct when it writes that the Payettes argued that MERS failed to follow its internal rules for

the disposition or transfer of interests. The Court incorrectly states that the Payettes did not cite

any authority for the proposition that the failure to follow internal guidelines affects a bank,

mortgagee or servicer's right to foreclose. Nothing could be further from the truth. As stated

earlier herein, MERS did not and could not follow its rules because IndyMac's demise took it out

of the MERS System and caused the Mortgage to be deactivated. This is settled by the MERS

Rules that are part of the record of evidence in Bucci. The Payette Court, with its constant

reliance on Bucci in both this case and the Porter case, should have known just what the MERS

Rules said before ruling that they did not apply to this matter. Further, the Payettes cited case

upon cases that supported this proposition. Not one of those cases are distinguished or even

mentioned in the Payette Decision.

It is incomprehensible how the Payette Court, after wrongfully converting a Motion to

Dismiss to a Motion For Summary Judgment, would give weight to each and every document or

exhibit provided by the Defendants despite their not being certified, but would cast aside as

driftwood, the relevant and probative documents provided it by the Payettes.

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The Payette Court's statement that they [the Payettes] have failed to raise any issue of fact

regarding whether defendants breached any law or regulation, and to demonstrate if such a

breach, if shown, could comprise a private cause of action to rescind the foreclosure sale and

extinguish the homeowner's repayment obligation. The author is not quite sure what this

statement means, but it is clear that the Payettes did raise multiple issue of fact regarding the

Defendant's breach of laws and regulation. In fact, the Payettes argued that all of the "real estate

transactions" associated with this case were void. They provided documentary evidence of this

allegation. The provided case law in support of their claims. They provided evidence that the

multiple United States Government Agencies had identified and reported that MERS, along with

many of its members, were under strict scrutiny. The Payette Court simply ignored the Report

of these Government Agencies and made the flawed statement that all it said was that "MERS

will review its business operations and take quality assurance measures." The Consent Decree

was twenty-two pages long and spoke of deficiencies, unsafe or unsound practices by MERS. It

also ordered that controls be put in place due to the Agencies’ findings that MERS and

MERSCORP:

(a) have failed to exercise appropriate oversight, management supervision and

corporate governance, and have failed to devote adequate financial, staffing,

training, and legal resources to ensure proper administration and delivery of

services to Examined Members; and

(b) have failed to establish and maintain adequate internal controls, policies, and

procedures, compliance risk management, and internal audit and reporting

requirements with respect to the administration and delivery of services to

Examined Members. (See Consent Order, pg. 5)

The purpose of the Consent Order was specifically due to MERS’ overall failure to

comport with the law and the Agencies’ determination that the risk associated with the

deficiencies in MERS internal controls required intervention. The Payette Court wrote that there

83

is no issue of fact as to whether or not the Payettes were harmed because MERS violated any law

or regulation. The Payettes lost their house. What more harm has to be shown? At the end of

a broken chain of title lies the damage to the Payettes. Their house in the name of Deutsche

Bank by way of a Foreclosure Deed that has its genesis in a void mortgage, void assignment and

an unendorsed note. That is damage in their world and the world of millions of others being

foreclosed upon based upon bad title, bad acts, corporate greed and judicial indifference.

Also, the Payettes provided evidence to the Court that the foreclosing party did not own

the note when it noticed the foreclosure. This fact is clearly an issue because the Payette Court

never quite figured out who owned the note. If there is no one who owns the note and who can

prove that it has not been paid, this Court cannot conclude as a matter of law that the Payettes

owe money to anyone. This Court cannot, based upon the facts of this case and the facts that it

has presented in its Decision, find that the Payette note is due and payable to anyone.

Despite what appears to be the Payette Court's affinity for the MERS System and its

unwillingness to accept that MERS has been the Subject of a Consent Order by the United States

of America, Department of the Treasury, Comptroller of the Currency, the Board of Governors

of the Federal Reserve System, the FDIC, the Office of Thrift Supervision and the Federal

Housing Finance Agency on April 13, 2011, it is clear that the MERS System and its admitted

shortfalls were relevant to the Payettes and the claim that they presented to the court.

The Court refers to the Consent Order by the United States of America, Department of

the Treasury, Comptroller of the Currency, the Board of Governors of the Federal Reserve

System, the FDIC, the Office of Thrift Supervision and the Federal Housing Finance Agency and

MERS as nothing more than a vague agreement to design and implement quality control

measures. In essence, the Payette Court has determined, as a matter of fact and law that the

84

Consent Order drafted by the various Federal Banking Agencies is not written in a way that can

be understood by the Judiciary in Rhode Island and is, therefore, of no value in the State of

Rhode Island. The Payette Court thereby indicts the Consent Decree and refuses to give it full

faith and credit. The Payette Court's commentary regarding the "vague" document is an affront

to those Agencies and proves that the Payette Court's agenda and moral compass are more

important on these issues than that of the Federal Agencies that oversee the banks, and

mortgagees and servicers that the Payette Court seeks to protect from the evil consumer.

The Payettes did not assert one specific instance of misconduct on the part of MERS in

this case. The Payettes claimed that MERS cannot be a mortgagee under Rhode Island Law and

that it cannot assign the mortgage under Rhode Island Law and that any foreclosure that stems

from these documents is void. The Court cites wide authority to the contrary but cites no cases

in support of that conclusion. The Payette’s cited more than forty-five (45) cases to support their

position.23

Again, it must not be forgotten that the Payette Court is writing about RoboSigning

under the mistaken facts already discussed over and over again hereinabove.

23

Anthony Bucci and Stephanie Bucci v. Lehman Brothers Bank, FSB, a Federal Savings Bank, MERS

& Aurora Loan Services, LLC., (Providence Superior Court, C.A. PC-2009-3888), 2009 R.I. Super.

Lexis 110 (August 25, 2009); In re Thomas, Case No.10-40549-MSH (Bankr. D. Mass. February 9,

2011); In Re Wilhem, Case No. 08-20577-TLM (Bankr. Idaho, 2009); In re Foreclosure Cases, 521 F.

Supp. 2D 650 (S.D. Oh. 2007); In Re Hayes, 393 Bankr. 259 (Bankr. D. Mass. 2008); In Re Mitchell,

Case No. BK-S-07-16226-LBR (Bankr. Nev. 3/31/09); In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal.,

2008), JP Morgan Chase Bank, N.A. v. George, 2010 NY Slip Op 50786, Kings 2010; US Bank v.

Maynard, 2007 NY Slip Op. 33766, Kings 2007; HSBC Bank USA, NA v. Betts, 2008 NY Slip Op

31170, Kings 2008; Countrywide Home Loans, Inc. v. Persaud, 2008 NY Slip Op 30076, Kings 2008;

Deutsche Bank National Trust Co. v. Maraj, 2008 NY Slip Op 50176, Kings 2008; US Bank v.

Guichardo, 2009 NY Slip Op 50151, Kings 2009; IndyMac Bank, FSB v. Boyd, 2009 NY Slip Op 50094,

Kings 2009; Deutsche Bank National Trust Company v. Auguste, 2008 NY Slip Op 31991, Kings 2008;

Wells Fargo Bank National Association v. John Reyes, 2008 NY Slip Op 51211, Kings 2008; Bank of

NY v. Myers, 2009 NY Slip Op 50159, Kings 2009; Deutsche Bank National Trust Co. v. Bailey, 2009

NY Slip Op 50191, Kings 2009; Wells Fargo Bank, N.A. v. Hunte, 2010 NY Slip Op 50637, Kings 2010;

LaSalle Bank NA v. Smith, 2010 NY Slip Op 50470, Kings 2010; HSBC Bank USA, NA v. Vasquez,

2009 NY Slip Op 51814, Kings 2009; Mortgage Electronic Registration Systems, Inc., as Nominee for

WMC Mortgage vs. Frank S. Johnston and Ellen L. Johnston, et al., State of Vermont, Rutland Superior

85

The Plaintiffs' did claim that the signatory on the alleged assignment, JC San Pedro, was

not an officer of MERS. On page 10 of the Payette's original memorandum, it was claimed that

"There is no evidence in land evidence or other evidence from any other source that Mr. San

Pedro had any authority from IndyMac or from MERS to sign the document." The court's

reference to the exhibits regarding Erica Johnson Seck suggests that the exhibits were not closely

examined prior to rendering the decision. The Plaintiffs made it abundantly clear in their first

memorandum that San Pedro had signed the Payette assignment and the purpose of the Erica

Johnson-Seck exhibits attached to the second memorandum served the purpose of presenting to

the court the extent to which the robo-signing plague had infected and corroded the Chain of

Title within the State of Rhode Island and throughout the Nation.

The Plaintiffs’ inclusion of the Johnson-Seck exhibits highlighted to the court the obvious

attempt of the Defendant’s to reverse engineer documents for the purpose of applying a band-aid

over the crater in the title, hoping the court wouldn’t catch on. There are two vitally important

Court, Docket No. 420-6-09 Rdcv. (September 1, 2009); Mortgage Electronic Registration Systems, Inc.

v. Saunders, 2010 ME 79 - Me: Supreme Judicial Court 2010; LaSalle Bank National Association v.

Lamy, Slip Copy, 12 Misc. 3d 1191(A) 2006 WL 2251721 (N.Y. 2006); Carpenter v. Longan, 83 U.S.

271 (1872); In re Parrish, 326 B.R. 708, 720 (Bank. N. D. Ohio 2005); Barry Alton Parker v. U.S. Bank

National Association, as Trustee on behalf of the Holder of the Adjustable Rate Mortgage Trust 2007-1,

et al. Defendants. Case No. 09-10186, Adversary Proceeding No. 09-1022. (Bankr. D. Vt. September 29,

2010.); Roman Pino v. The Bank of New York Mellon, District Court of Appeal of the State of Florida,

No. 4D10-378 at *5 (4th Dist. January 2011); In re Agard, Feb. 2011, Case No. 810-77338-reg (Bankr.

E.D.N.Y. February 11, 2011); Bank of New York v. Alderazi, 900 N.Y.S. 2d 821, 824 (N.Y. SUp. Ct.

2010); LaSalle Bank , N.A. v. Boulete, No. 41583/07, 2010 WL 3359552 at * 2 (N.Y. Sup. Aug. 26,

2010) ; Landmark Nat'l Bank v. Kesler, 216 P.3d 158 (Kan. 2010); In re Sheridan, No. 08-20381-TLM,

2009 WL 631355 (Bankr. D. Idaho March 12, 2009); In re Vargas, 396 B.R. 511, 517 (Bankr. C.D. Cal.

2008); In Re McCoy Case No. 10-63814-fra13 (Bankr. D. Or. February 7, 2011); In re Jorge Canellas,

(Bankr. M. FL. 2010) Case No. 6:09-bk-12240-ABB; In re Jacobson, 402 B.R. 559, 366 (Bankr. W.D.

Wash. 2009); In re Kerman J. Minbatiw Alla, 424 B.R. 104 (Bankr. S.D. NY, 2010); U.S. Bank Nat'l

Assoc. v. Ibanez, No. 08-Misc-384283, 2009 WL 3297551 (Mass. Land Ct. Oct 14, 2009); Premier Bank

v. J.D. Homes of Olathe, Inc., 30 Kan. App. 2d 898, 50 P.3d 517 (2002); Ankerman v. Mancuso, 271

Conn. 772, 860 A.2d 244 (2004); Johnson v. McNeil, 2002 ME 99, 800 A.2d 702 (Me. 2002); Pines v.

Farrell, 577 Pa. 564, 848 A.2d 94 (2004); Mers v. Saunders, 2A.3d 289, 2010 ME 79 - Me: Supreme

Judicial Court, 2010; McDuff Estate v. Kost, 158 A. 373 (1932); Winnerman v. Angell, 58 A. 882 (1904)

86

issues that the Johnson-Seck exhibits bring to light that further raise multiple questions of fact.

First, the Payette case was presented with three other cases, Ingram, Noury, and Breggia, all

similar in certain respects. Verified answers from the four cases all contained affidavits signed

by Johnson-Seck, however she signed as the VP for multiple entities. Specifically, the Plaintiffs’

original objection memos in all for cases included the following explanation of the incestuous

relationship of the signors:

In addition to all of the above, the Court's attention is drawn to the Verified

Answers, which are in effect affidavits in Support of a Rule 56 Summary

Judgment Motion. In this case, Charles Boyles signed under oath that he was

the Assistant Vice President of OneWest. Erica Johnson Seck signed under

oath that she was the Vice President of MERS. In the Ingram case which is also

before this Court for even date, Erica Johnson Seck signed under oath that she

was the Attorney-in-Fact of Deutsche Bank and Mr. Boyle swore that he was a

Vice President of MERS. In the Noury case which is before this Court on even

date, Mr. Boyle then becomes the Attorney-in-Fact of Deutsche and Ms.

Johnson Seck become the Vice President of MERS. Finally, in the Breggia

case, which is full of surprises, Ms. Johnson Seck swears that she is the Vice

President of One West and the Vice President of MERS. This would all make

great fodder for a Greek tragedy or a Shakespearian Play, but such obvious legal

incest has no place in this Court and the hundreds of other Courts where these

two play the dual and sometimes triple roles of Vice Presidents to allow for the

fraudulent reverse engineering of title and fraud upon the Court.

It is clear that this explanation brings into question Johnson-Seck’s employment status,

role, and her authority to sign on behalf of any of the entities for which she asserts she serves

interchangeably as Vice-President and/or Attorney-in-Fact.

Second, the assignment attached to the supplemental memorandum (which is also signed

by Johnson-Seck) was an example of the form assignment utilized by the FDIC to transfer the

mortgages. As the Plaintiffs’ explained in their memorandum:

―…FDIC’s role regarding Assignments from IndyMac Bank; the FDIC set out

specific guidelines for which the Assignment of Mortgage would follow, as

evidenced by the attached Assignments pulled from an unrelated property.

IndyMac was closed in July of 2008, therefore the FDIC, as receiver for

IndyMac Federal, was responsible for signing the Assignments. The

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Assignment for Mortgage on June 22, 2009, signed by Dennis Kirkpatrick did

not follow the FDIC guidelines and therefore a Corrective Assignment of

Mortgage was recorded on May 13, 2010 was executed naming the FDIC as

receiver for IndyMac Federal as the assignor. If the FDIC guidelines were

insignificant, then why would the FDIC find it necessary to record a

supplementary Corrective assignment? These Assignments support not only

Plaintiffs’ position that the FDIC had specific guidelines for the Assignments of

Mortgages from IndyMac, but also that these guidelines were important enough

to preserve the chain of title that the FDIC corrected the previously defective

Assignment form June 22, 2009.‖

There was no such assignment in the Payette chain of title which would suggest that no

such transfer of the mortgage was authorized by the FDIC. The question of whether the FDIC

assigned the mortgage is again another question of fact that was either misunderstood or outright

ignored by the court.

The Payette Court oversimplifies the agreement that the Payettes made with Indy Mac

and MERS. They did agree to repay the note and they did agree that foreclosure could be the

result of their nonpayment. They never agreed to be parties to illicit assignments. They never

agreed that a foreclosure could be run by a party that did not own the original note. They did not

agree that a foreclosure could be run by one who did not own the mortgage. They did not agree

that their mortgage could be assigned by a person that had no authority to sign the document.

They did not agree that the original note could be transferred among parties in violation of the

UCC. They never agreed to allow MERS and its cohorts to take their property from them in

violation of Title 34 of the Rhode Island General Laws. The Payette Court's conclusion that the

chain of title to the note is consistent with the right of One West to foreclose is wrong and the

body of the Payette Decision proves that the Payette Court never got it right relative to the

alleged assignment and ownership of the mortgage and the ownership and transfer of the note.

For all of those reasons, and the implications thereof, the Payette Decision is hereby

deconstructed and rendered nothing and less than the sum of its parts.

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CONCLUSION

For all of the above stated reasons, the Plaintiff hereby requests this Honorable Court to

deny the Defendants’ Motion to Dismiss.

Respectfully the Plaintiff,

By his attorney,

___________________________

George E. Babcock, Esquire

574 Central Ave

Pawtucket, RI 02861

Bar Id# 3747

401-724-1904

September 19, 2011

CERTIFICATION

I hereby certify that I mailed and emailed a copy of the within to Brian Grossman, Esq. at

Prince Lobel Tye LLP, 100 Cambridge Street, Suite 2200, Boston, MA 02114 on September 19,

2011.

____________________________

George E. Babcock, Esquire