Professional Documents
Culture Documents
MAC000000082-Memorandum of Law in Support of Motion
MAC000000082-Memorandum of Law in Support of Motion
MAC000000082-Memorandum of Law in Support of Motion
NOW COMES Defendant Ethel Young appearing pro se, herein submitting a
memorandum of law in support of the motion: (1) to vacate default, the order approving sale &
possession pursuant to 735 ILCS § 5/2-1401(a); (2) for declaratory relief 735 ILCS § 5/2-701
and 810 ILCS § 5/3-305 voiding the note & mortgage, the judicial sale deed to NR2-REO V-2
Corp. (“NR2”) recorded by the Cook County Recorder of Deeds on September 23, 2016 (See
Exhibit 9); and (3) for dismissal of foreclosure complaint with prejudice for lack of standing &
1
I. CONTROLLING LAW
1. When more than 30 days but less than 2 years have passed since the entry of a final order
or judgment, a party may move to vacate under Section 2-1401 of the Code of Civil Procedure.
735 ILCS § 5/2-1401(a). The moving party must set forth specific factual allegations to show:
(i) the existence of a meritorious defense or claim; (ii) due diligence in presenting this defense or
claim to the trial court in the original action; and (iii) due diligence in filing the Section 2-1401
petition for relief. Smith v. Airoom, Inc., 114 Ill. 2d 209, 220-21 (1986). The court’s decision is
discretionary. Id. at 221. “Section 2–1401(f) codifies a common law rule allowing litigants to
attack a void judgment any time.” Ford Motor Credit Co. v. Sperry, 214 Ill.2d 371, 379 (2005).
Petitions brought on voidness grounds need not be brought within the two-year time limitation,
and the allegation that the order is void substitutes for and negates the need to allege a
312 F 2d 337, 343(1962); If that judgment is void, the second judgment which was based upon it
is also void, and should be vacated. The second judgment ordering his realty sold was and is
void because it depended for validity upon a void prior judgment. 312 F.2d 337 114
U.S.App.D.C. 97 Clarence Austin, Appellant, v. Otis Smith et al., Appellees. No. 16451. United
States Court of Appeals District of Columbia Circuit. Argued Dec. 22, 1961. Decided Nov. 21,
1962. "Courts are constituted by authority and they cannot go beyond that power delegated to
them. If they act beyond that authority, and certainly in contravention of it, their judgments and
orders are regarded as nullities. They are not voidable, but simply void, and this even prior to
reversal." Old Wayne Mut. I. Assoc. v McDonough, 204 U.S. 8, 27 S.Ct. 236 (1907); Williamson
2
v Berry, 8 How. 495, 540, 12 L.Ed. 1170, 1189 (1850); Rose v Himely, 4 Cranch 241, 269, 2
L.Ed. 608, 617 (1808). Aoude v. Mobil Oil, 892 F.2d 1115, 1118 (1st Cir. 1989) described the
While broad, the trial court’s discretion is not unlimited. The [trial] judge must consider
the proper mix of factors and juxtapose them reasonably. “Abuse occurs when a material
factor deserving significant weight is ignored, when an improper factor is relied upon, or
when all proper and no improper factors are assessed, but the court makes a serious
mistake in weighing them.” Independent Oil and Chemical Workers of Quincy, Inc. v.
Procter & Gamble Mfg. Co., 864 F.2d 927, 929 (1st Cir. 1988); see also Anderson v.
Cryovac, Inc., 862 F.2d 910, 923 (1st Cir. 1988) (to warrant reversal for abuse of
discretion, it must “plainly appear[ ] that the court below committed a meaningful error in
judgment”).
3. “A void judgment is no judgment at all and is without legal effect.” (Jordon v. Gilligan,
500 F.2d 701, 710 (6th Cir. 1974). “A court must vacate any judgment entered in excess of its
jurisdiction.” (Lubben v. Selective Service System Local Bd. No. 27, 453 F.2d 645 (1st Cir.
1972). An order that exceeds the jurisdiction of the court, is void, or voidable, and can be
attacked in any proceeding in any court where the validity of the judgment comes into issue.
(See Rose v. Himely (1808) 4 Cranch 241, 2 L ed 608; Pennoyer v. Neff (1877) 95 US 714, 24 L
ed 565; Thompson v. Whitman (1873) 18 Wall 457, 21 l ED 897; Windsor v. McVeigh (1876) 93
US 274, 23 L ed 914; McDonald v. Mabee (1917) 243 US 90, 37 Sct 343, 61 L ed 608. U.S. v.
Holtzman, 762 F.2d 720 (9th Cir. 1985) ("Portion of judgment directing defendant not to import
vehicles without first obtaining approval ... was not appropriately limited in duration and, thus,
district court abused its discretion by not vacating it as being prospectively inequitable." Id at
722. Citing Government Employees Insurance Co. v. Hersey, 397 Ill.App.3d 551, 553 (2010):
“A void order or judgment is, generally, one entered by a court without jurisdiction of the subject
matter or the parties, or by a court that lacks the inherent power to make or enter the order
involved.” Id. at 379–80. “A void judgment is from its inception a complete nullity and without
3
legal effect.” Id. at 380.
4. Article III of the United States Constitution limits the power of the federal judiciary, alike
the state courts of New Jersey, to the adjudication of certain “Cases” and “Controversies.” U.S.
Const. art. III, § 2, cl. 1. From this textual limitation and “the separation – of – powers principles
underlying that limitation,” the federal courts have “deduced a set of requirements that together
make up the ‘irreducible constitutional minimum of standing.’” Lexmark Int’l, Inc. v. Static
Control Components, Inc., 134 S. Ct. 1377, 1386 – 88 (2014) (quoting Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560 (1992)). Three components comprise this “irreducible constitutional
minimum”: (1) the plaintiff must have suffered an “injury in fact,” (2) that injury must be “fairly
traceable” to the defendant’s challenged conduct, and (3) it must be likely that the plaintiff’s
injury would be redressed by the requested relief. Lujan, 504 U.S. at 560 – 61. At its essence,
Article III standing requires the plaintiff to have some personal and particularized stake in the
controversy from bringing suit, and “assures that issues are raised only by those parties with a
real interest in the outcome of the controversy.” Glisson v. City of Marion, 188 Ill. 2d 211, 221,
720 N.E.2d 1034 (1999); Nationwide Advantage Mortgage Co. v. Ortiz, 2012 IL App (1st)
112755, 975 N.E.2d 178. Our supreme court has held that, in civil cases, the lack of standing is
an affirmative defense, and as such, must be pleaded and proven by the defendant. Lebron v.
Gottlieb Memorial Hospital, 237 Ill. 2d 217, 252–53, 930 N.E.2d 895 (2010); Greer v. Illinois
Housing Development Authority, 122 Ill. 2d 462, 508, 524 N.E.2d 561 (1988). The plaintiff is
not required to plead facts to establish standing in a foreclosure case. Rosestone Investments,
4
LLC v. Garner, 2013 IL App (1st) 1234223, 2 N.E. 3d 532; Parkway Bank & Trust Co. v.
6. Regarding personal jurisdiction, it is well established that "the judgment of a [state] court
lacking [personal] jurisdiction is void" and "violate[s] the Due Process Clause of the Fourteenth
Amendment as well." Burnham v. Superior Court of California, County of Marin, 495 U.S. 604,
608-09 (1990). "The requirement that a court have personal jurisdiction flows not from Art. III,
but from the Due Process Clause.... It represents a restriction on judicial power not as matter of
sovereignty, but as a matter of individual liberty." Omni Capital Int'l Ltd. v. Rudolf Wolff & Co.,
Ltd., 484 U.S. 97, 104 (1987) (quoting Ins. Corp. of Ireland v. Campagnie des Bauzities de
Guinee, 456 U.S. 694, 702 (1982). "Defense of lack of jurisdiction over the subject matter may
be raised at any time, even on appeal." Hill Top Developers v. Holiday Pines Service Corp. 478
So. 2d. 368 (Fla 2nd DCA 1985) "Once challenged, jurisdiction cannot be assumed, it must be
proved to exist." Stuck v. Medical Examiners 94 Ca 2d 751. 211 P2d 389. "Jurisdiction, once
challenged, cannot be assumed and must be decided." Maine v. Thiboutot 100 S. Ct. 250.
7. When the jurisdiction of any tribunal is challenged, that tribunal bears the burden of
proving of jurisdictions over both person and subject matter. "Once jurisdiction is challenged it
must be proven." Hagins vs. Levine 415 U.S. 533 note 3 (1974). “There is no discretion to
ignore the lack of jurisdiction." Joyce v. US, 474 F2d 215. "Jurisdiction is fundamental and a
judgment rendered by a court that does not have jurisdiction to hear is void ab initio." In Re
Application of Wyatt, 300 P. 132; Re Cavitt, 118 P2d 846. When jurisdiction is properly
challenged, the party invoking federal jurisdiction has the burden of establishing it. Basso v.
Utah Power and Light Co., 495 F. 2d. 906 (10th Cir. 1974).
5
foreclosure is essential in order to guarantee a defendant’s due process rights are not violated. In
Illinois, the assistance of the state court, and the use of state officials who assist the court with
foreclosure proceedings including the county clerks, sheriffs, etc. is mandatory because the
foreclosing entity does not possess the right of self-help. In Shelley v. Kraemer, 334 U.S. 1
(1948), the Supreme Court held that the use of a court to enforce a restrictive covenant could be
state action because the court was essentially participating in the discrimination by enforcing the
facially discriminatory covenant. Similarly, in Connecticut v. Doehr, 501 U.S. 1 (1991), the U.S.
Supreme Court recognized that although prejudgment remedy statues ordinarily involve disputes
between private parties, there is significant governmental assistance by state officials and
through state procedures. Specifically, the U.S. Supreme Court acknowledged that prejudgment
remedy statues "are designed to enable one of the parties to 'make use of the state procedures
with the overt, significant assistance of state officials,' and they undoubtedly involve state action
'substantial enough to implicate the Due Process Clause.'" Doehr, 501 U.S. at 11 (quoting Pope,
485 U.S. at 486. See also Brinkerhoff-Faris Trust & Savings Co. v. Hill, 281 U.S. 673 (1930).
9. The U.S. Supreme Court has been a steadfast guardian of due process rights when what is
at stake is a person’s right “to maintain control over [her] home” because loss of one’s home is
“a far greater deprivation than the loss of furniture.” United States v. James Daniel Good Real
Property, 510 U.S. 43, 53-54 (1993). Courts have held that even “a small bank account” is
sufficient to trigger due process protections. See Nat’l Council of Resistance of Iran v. Dept. of
State, 251 F.3d 192, 202-205 (D.C. Cir. 2001) (citing Russian Volunteer Fleet v. United States,
282 U.S. 481, 489-92 (1931)). The U.S. Supreme Court has set out two elements that must be
met in order to establish state action under the Fourteenth Amendment: “First, the deprivation
must be caused by the exercise of some right or privilege created by the State… Second, the
6
party charged with the deprivation must be a person who may fairly be said to be a state actor.”
10. “Only judgments which are procured by fraud that gives the court colorable jurisdiction
are void. [Citation.] Fraud which occurs after the court acquires jurisdiction, such as false
testimony or concealment, renders the judgment voidable only, subject to collateral attack only
under the procedure set out in section 2-1401 of the Code ***.”. (Citing In re Marriage of
Noble, 192 Ill. App. 3d 501, 509, 548 N.E.2d 58, 523 (1989)). See also James v. Chicago Trans
it Authority, 42 Ill. App. 3d 1033, 1035, 356 N.E.2d 834, 836 (1976): “A judgment based upon
fraud, the nature of which gives the trial court only colorable jurisdiction, is void and may be
attacked at any time. On the other hand, fraud in the nature as alleged here, which occurs after
the trial court acquires jurisdiction in the action, renders the judgment voidable only.”. See also
Schwarz v. Schwarz, 27 Ill. 2d 140, 144 - 45, 188 N.E.2d 673, 676 (1963) (stating that the
supreme “court has long differentiated between fraud which gives the court only colorable
jurisdiction and fraud which occurred after the court acquired jurisdiction, such as obtaining
an order or decree by false testimony or concealment” and “[i]t is only fraud which gives a
11. “[U]pon principle, we hold that relief for fraud upon the court may be allowed under our
rule whether the fraud charged is denominated intrinsic or extrinsic… a decision produced by
fraud upon the court is not in essence a decision at all, and never becomes final……” Kenner v.
Comm’r of Internal Revenue, 387 F.2d 689, 691 (7th Cir. 1968). See 12 James W. Moore,
Moore’s Federal Practice § 60.81 (3d ed. 2007) (noting that fraud on the court deals with
integrity of the courts). “Fraud On The Court By An Officer Of The Court State or Federal"
7
Provides For An Independent Actions In Equity. State and federal attorneys fall into the same
general category and must meet the same requirements.” People v. Zajic, 88 Ill.App.3d 477, 410
12. The use of fraudulent evidence is a corruption of the “truth seeking” process of the trial
court constituting a violation of due process rights. See United States v. Agurs, 427 U.S. 97, 107
(1976) and Miller v. Pate, 386 U.S. 1 (1967) (finding that a deliberate misrepresentation of truth
to a jury is a violation of due process); Caldwell v. Mississippi, 472 U.S. 320 (1985) (fining that
Wainwright, 477 U.S. 168, 181-82 (1986) (improper argument and manipulation or misstatement
of evidence violates Due Process). Cf. Mesarosh v. United States, 352 U.S. 1, 14 (1956)
witness had committed perjury in other proceedings, stating that the Court had a duty "to see that
A. The Court must declare the “note” and “mortgage” in dispute null and void because
the entity known as “Washington Mutual Bank, FA” cease to exist as of April 2005,
and could not be a lender on April 16, 2008, rendering the “mortgage loan” in
dispute falsely uttered, unconscionable, and unconsummated as a matter of fact and
law.
(“WMBFA”) merged with and into Washington Mutual Bank (“WMB”), wherein the name
WMB was the surviving entity and WMBFA was used as a tradename and “doing business as”.
The defendant request Judicial Notice of page six from Washington Mutual Inc.’s (“WMI”)
“Annual Report Pursuant To Section 13 OR 15(d) of the Securities Exchange Act of 1934 for the
8
Fiscal Year Ended December 31, 2005” retrievable in its entirety at
https://www.sec.gov/Archives/edgar/data/933136/000110465906016786/a06-2446_110k.htm
and page six is herein submitted as Exhibit 1. See also Exhibit 2 for the January 25, 2005
correspondence from William L. Lynch of WMB addressed to the Office of Thrift Supervision
…On December 21, 2004, the Association's board of directors approved the bylaw
amendment to become effective upon the merger between the Association's acquisition
by merger, of its sister federal savings bank, which had the title of Washington Mutual
Bank. This merger was consummated on January 1, 2005....
…The corporate title of the savings bank is Washington Mutual Bank. The savings bank
also may do business under the name Washington Mutual Bank, FA. Both of these
amendments would become effective as of April 4, 2005.
14. Hence, for the foregoing reasons set forth above in ¶13, it is an indisputable fact that
effective April 4, 2005, WMBFA was nothing more than a trade name / “doing business as” used
by WMB as the surviving entity upon merging with WMBFA. See Exhibits 1-2.
15. The defendant avers that while the OCC has concluded that nothing in the National Bank
Act prohibits banks from using multiple trade names,1 the OCC has, however, determined that
the official title of the bank should be used on all critical documents (emphasis added),
including documents establishing trusts, powers of attorney, loans, and deposit account
16. Hence, it is an undisputable fact that the “mortgage loan” in dispute indicates that a
1
See OCC Bulletin 98-22 and OCC Interpretive Letter No. 698, reprinted in [1995-1996 Transfer Binder]
Fed. Banking L. Rep. (CCH) ¶ 81-013 (February 1, 1996).
9
trade name / “doing business as” (WMBFA) was the “Lender” that suffered a loss of
$176,000.00 on April 16, 2008, it fails to indicate that WMBFA was not an official entity
17. Thus, the defendant avers that the undisputable fact that as of April 4, 2005, WMBFA
cease to exist as an official entity upon merging with and into WFB, there could not and was not
a meeting of the minds between the defendant and a “tradename” / “doing business as”
(WMBFA) who WFB willfully misrepresented as the “lender” within the “mortgage loan” in
dispute dated April 16, 2008. Citing, in part, Ramsey v. Vista Mortgage Corp, 176 BR 183 (9th
Cir. BAP 1994): “. . . a loan contract was not consummated when the borrower signed the
promissory note and deed of trust because the actual lender was not known at that time. Under
these circumstances, the loan is not "consummated" until the actual lender is identified, because
until that point there is no legally enforceable contract…”. See Regulation Z § 226.2(13) which
defines consummation as “the time that a consumer becomes contractually obligated on a credit
transaction.” Citing Unico v. Owen, 50 N.J. 101 (1967) 232 A.2d 405: “…The transaction is
looked upon as a species of tripartite proceeding, and the tenor of the cases is that the financer
should not be permitted "to isolate itself behind the fictional fence" of the Negotiable
Instruments Law, and thereby achieve an unfair advantage over the buyer. State Nat. Bank of El
Paso, Tex. v. Cantrell, 47 N.M. 389, 143 P.2d 592, 152 A.L.R. 1216 (1943); Buffalo Industrial
Bank v. DeMarzio, 162 Misc. 742, 296 N.Y.S. 783 (Cty. Ct. 1937)[1]; and see, First &
Lumbermen's Nat. Bank v. Buchholz, 220 Minn. 97, 18 N.W.2d 771 (1945); Consumer Sales
Financing, 102 U. Pa. L. Rev. 782, 789-790 (1954)… This is not to say that all such contracts of
adhesion are unfair or constitute imposition. But many of them are, and the judicial branch of the
government within its sphere of operation in construing and applying such contracts must be
10
responsive to equitable considerations.”2 Citing Chauncey v. Arnold, 24 N.Y. 330, 338 (1862);
“No mortgagee or obligee was named in [the security agreement], and no right to maintain an
action thereon, or to enforce the same, was given therein to the plaintiff or any other person. It
was, per se, of no more legal force than a simple piece of blank paper.”
18. Further, the defendant avers that because WMBFA was merely a trade name effective as
April 4, 2005, the $176,000 allegedly loaned to the defendant from the trade name WMBFA on
19. For the foregoing reasons set forth within ¶¶13-18, and restated as though fully
incorporated herein, the defendant re-avers that the “mortgage loan” in dispute wherein WMB
deceptively designated a “trade name” (WMBFA) as the “Lender” that suffered a loss of
$176,000.00 on April 16, 2008, while fraudulently concealing and omitting the essential terms
2
See also Ubaldi v. SLM Corp., 852 F. Supp. 2d 1190, 1196 (N.D. Cal. 2012) (after conducting an
extensive review of the relevant case law, noting that, “where a plaintiff has alleged that a national bank is
the lender in name only, courts have generally looked to the real nature of the loan to determine whether a
non-bank entity is the de facto lender”); Eastern v. American West Financial, 381 F.3d 948, 957 (9th Cir.
2004) (applying the de facto lender doctrine under Washington state law, recognizing that “Washington
courts consistently look to the substance, not the form, of an allegedly usurious action”); CashCall, Inc. v.
Morrisey, 2014 WL 2404300, at *14 (W.Va. May 30, 2014) (unpublished) (looking at the substance, not
form, of the transaction to determine if the loan was usurious under West Virginia law); People ex rel.
Spitzer v. Cty. Bank of Rehoboth Beach, Del., 846 N.Y.S.2d 436, 439 (N.Y. App. Div. 2007) (“It strikes
us that we must look to the reality of the arrangement and not the written characterization that the parties
seek to give it, much like Frank Lloyd Wright’s aphorism that “form follows function.”).4 “In short, [the
Court] must determine whether an animal which looks like a duck, walks like a duck, and quacks like a
duck, is in fact a duck.” In re Safeguard Self-Storage Trust, 2 F.3d 967, 970 (9th Cir. 1993).
11
and conditions underlying the “transaction” in dispute, the “note” and “mortgage” instruments
created through the unconscionable transaction are void ab initio and unenforceable as a matter
of fact and law. Citing Whipp v. Iverson, 43 Wis. 2d 166 (1969); “It is not necessary for
rescission of a contract “that the party making the misrepresentation should have known that it
was false.” Recovery is allowed even though misrepresentation is innocently made because “it
would be unjust to allow one who has made false representations, even innocently, to retain the
fruits of a bargain induced by such representation.” 5 Williston, Contracts (Rev. ed., 1937), p.
4189, sec. 1500. This statement of law is adopted by the Restatement, 2 Contracts, p. 908, sec.
476, which states “Where a party is induced to enter into a transaction with another party that he
was under no duty to enter into by means of the latter's fraud or material misrepresentation, the
transaction is voidable as against the latter and all who stand in no better position, subject to”
Restatement, 2 Contracts, p. 890, sec. 470, Comment a, and if innocently made is voidable, sec.
476 (2). See also Restatement, Restitution, p. 123, sec. 28 (b).” See also 810 ILCS § 5/3-305
…the right to enforce the obligation of a party to pay an instrument is subject to the
following:
(1) a defense of the obligor based on (i) infancy of the obligor to the extent it is a
defense to a simple contract, (ii) duress, lack of legal capacity, or illegality of
the transaction which, under the law, nullifies the obligation of the obligor,
(iii) fraud that induced the obligor to sign the instrument with neither
knowledge nor reasonable opportunity to learn of its character or its
essential terms,…
20. Wherefore, this Court as a matter of fact and law, must instantly vacate the default
against the defendant, along with the order approving sale & possession pursuant to 735 ILCS §
5/2-1401(a), and grant declaratory relief pursuant to 735 ILCS § 5/2-701 and 810 ILCS § 5/3-
12
305 voiding the note & mortgage and judicial sale deed, and dismiss the foreclosure complaint
with prejudice for the “mortgage loan” in dispute wherein WMBFA which became a “doing
business as” effective April 16, 2005, was deceptively designated by WMB as the “Lender” of
$176,000.00 within the “mortgage loan” in dispute dated April 16, 2008, rendering the
instruments void ab initio, and the transaction unconscionable and unenforceable as a matter of
B. The Court must apply the doctrines of Judicial Estoppel and Res Judicata barring
the Plaintiff’s false claim that the September 25, 2008 Purchase and Assumption
Agreement between the FDIC included the “note” and “mortgage” in dispute.
21. The very basis of the foreclosure action at bar commenced by the Plaintiff through third-
party debt collectors Fisher and Shapiro, LLC (“Fisher & Shapiro”) on August 26, 2011, is the
false assertion that JPMorgan Chase Bank, National Association (“JPMC”) was the owner in
possession of the void ab initio “mortgage loan” in dispute by way of the September 25, 2008
Purchase and Assumption Agreement (“PAA”) between the Federal Deposit Insurance
22. On March 7, 2013, after JPMC through third-party debt collectors Fisher & Shapiro
commenced the action at bar on August 26, 2011, the Cook County Recorder of Deeds recorded
“assignor” and “assignee” of the “mortgage” in dispute as the purported attorney in fact for the
FDIC on March 2, 2013, absent any mention of a transfer of the original “note” payable to a
“doing business as” (WMBFA), and absent any proof of a power of attorney as provided in the
Illinois Power of Attorney Act (755 ILCS 45/). Citing Black’s Law Dictionary 1076 [8th ed
2004] [defining a nominee as “(a) person designated to act in place of another, (usually) in a very
13
limited way”]). See also N.J. Lawyers’ Fund for Client Prot. v. Stewart Title Guar. Co., 203 N.J.
208, 220 (2010); “An agency relationship is created “when one person (a principal) manifests
assent to another person (an agent) that the agent shall act on the principal’s behalf and subject to
the principal’s control, and the agent manifests assent or otherwise consents so to act.”
Restatement (Third) of Agency § 1.01 (2006) (internal quotation marks omitted). Generally, an
agent may only bind his principal for such acts that “are within his actual or apparent authority.”
Carlson v. Hannah, 6 N.J. 202, 212 (1951). Actual authority occurs “when, at the time of taking
action that has legal consequences for the principal, the agent reasonably believes, in accordance
with the principal’s manifestations to the agent, that the principal wishes the agent so to act.”
Restatement (Third) of Agency, supra, § 2.01. Apparent authority arises “when a third party
reasonably believes the actor has authority to act on behalf of the principal and that belief is
traceable to the principal’s manifestations.” Id. § 2.03. The doctrine of apparent authority
“focuses on the reasonable expectations of third parties with whom an agent deals.” Id. § 7.08
comment b. Therefore “a court must examine the totality of the circumstances to determine
whether an agency relationship existed even though the principal did not have direct control over
the agent.” [Sears Mortg. Corp. v. Rose, 134 N.J. 326, 338 (1993)].”. See also Bank of N.Y. v.
Alderazi, 28 Misc 3d 376, 379-380; “A party who claims to be the agent of another bears the
evidence (Lippincot v East Riv. Mill & Lbr. Co., 79 Misc 559 [1913]), and "[t]he declarations of
an alleged agent may not be shown for the purpose of proving the fact of agency."
23. The defendant, however, avers that the aforementioned claims set forth within ¶¶ 21-22
that serve as the basis of the Plaintiff’s foreclosure action are barred by the doctrines of Judicial
Estoppel and Res Judicata for the undisputable facts set forth immediately below.
14
24. First, the doctrine of judicial estoppel provides that a party who assumes a particular
legal proceeding. Gambino v. Boulevard Mortgage Corp., 398 Ill. App. 3d 21, 59 (2009). The
doctrine’s purpose is to promote the truth and protect the integrity of the court system by
prohibiting litigants from deliberately shifting positions to suit the exigencies of the moment.
Gambino, 398 Ill. App. 3d at 59-60. The doctrine’s five elements require that the party to be
estopped: (1) took two positions; (2) that were factually inconsistent; (3) in separate judicial
proceedings; (4) intending for the trier of fact to accept the truth of the facts alleged; and (5)
succeeded in the first proceeding and received some benefit from the factual position taken
therein. Runge, 234 Ill. 2d at 132. Judicial estoppel, like all estoppels, must be proved by clear
and convincing evidence. Smeilis, 2012 IL App (1st) 103385, ¶20; Boelkes v. Harlem
Consolidated School District No. 122, 363 Ill. App. 3d 551, 554 (2006) (citing Geddes v. Mill
Creek Country Club, Inc., 196 Ill. 2d 302, 314 (2001) (requiring clear and unequivocal
evidence of estoppel)).
25. The defendant avers that it is an undisputable fact that on November 22, 2010, prior to
the commencement of the foreclosure complaint at bar August 26, 2011, the Plaintiff in this
matter filed a motion for dismissal and partial summary judgment in Deutsche Bank v. FDIC, et
al., No. 09-cv- 01656 (RMC) before the United States District Court for the District of
Washington, D.C., wherein JPMC declared to the Court that the September 25, 2008 PAA
entered into with the FDIC transferred to JPMC the servicing rights for “mortgage loans”, and
not ownership of “mortgage loans” that were not assets on the books and records of WMB, by
“Here, to the extent that there is an actual controversy, it is ripe for immediate summary
judgment because this claim involves the interpretation of one unambiguous provision of
15
the P&A Agreement. Bastin v. Fed. Nat’l Mortgage Ass’n, 104 F.3d 1392, 1393-95(D.C.
Cir. 1997). Under the plain terms of that agreement, JPMC did not become WMB’s
successor in interest. Since its closure, the FDIC as receiver has controlled WMB.
While JPMC purchased all of the assets of WMB, it assumed only specified liabilities:
those that had been reduced to a dollar amount on WMB’s “general ledger and subsidiary
ledgers and supporting schedules which support the general ledger balances.”(Amended
Complaint Ex. 2 (P&A Agreement) at 2.) The unliquidated liabilities that Deutsche Bank
seeks to impose in this case are not alleged to be among those specified in the P&A
Agreement, and JPMC has clearly stated in its filings with the Securities and Exchange
Commission that this liability remains with the FDIC. (JPMorgan Chase &Co., Form 10-
Q, filed November 9, 2010 (McIntosh Declaration Ex. G), at 58.) Under the P&A
Agreement, the FDIC agreed to indemnify JPMC for any liabilities that it did not
expressly assume. Based on the plain language of the P&A Agreement, the Court should
award partial summary judgment declaring that any liabilities from this litigation that
were not on WMB’s general ledger, subsidiary ledgers, and supporting schedules as of
September 25, 2008 remained with the FDIC directly or as indemnitor for JPMC.”
(Footnote: To the extent that WMMSC has potential liability related to representations
and warranties it made, it has claims against the FDIC as receiver for WMB under
Mortgage Loan Purchase Agreements between WMB and WMMSC. See supra pages 5-
6.)…
Deutsche Bank asserts that if mortgage servicing rights and obligations were expressly
assumed by JPMC, then the mortgage origination liabilities at issue in this action were
expressly assumed by JPMC. (Amended Complaint ¶ 87.) This is wrong in at least two
fundamental respects. First, directly contrary to that assertion, the express assumption of
only “mortgage servicing rights and obligations” evidences the lack of any express
assumption of the mortgage repurchase obligations that are at issue here: As Deutsche
Bank acknowledges, repurchase obligations belong to the Seller or Depositor, not the
Servicer. (Id. ¶ 53.) Second, Deutsche Bank’s argument hinges on the incorrect
assumption that mortgage servicing rights are qualified financial contracts or are not
generally severable from the underlying securitizations. (See id . ¶¶ 32, 34.) Servicing
contracts are not securitizations or any other variety of qualified financial contract.
Moreover, courts have understood that a mortgage loan contract is divisible into one
agreement concerning the “servicing of mortgage loans” and another agreement
concerning the “sale and repurchase of mortgage loans.” In re Am. Home Mortgage,
Inc., 379 B.R. 503, 520-21 (Bankr. D. Del. 2008). “The terms, nature and purpose of are
purchase agreement are different from an agreement relating to servicing mortgage
loans,” and the “consideration for servicing mortgage loans is readily apportioned from
the other consideration flowing under the Contract.” Id. at 521. Therefore, the two
portions of the contract are severable. See id…
The defendant request the Court take Judicial Notice of JPMC’s motion for dismissal and partial
summary judgment filed on November 22, 2010 in Deutsche Bank v. FDIC, et al., No. 09-cv-
16
01656 (RMC), along with the order entered by the Court on June 17, 2015, the latter of which
…Specifically, the present litigation concerns interpretation of the P&A Agreement and
the question of whether FDIC transferred liabilities beyond their “Book Value” as
reflected on WaMu’s “Books and Records” (i.e., unbooked liabilities) to JPMC or
whether those liabilities remained with FDIC. The answer to this question will likely
affect other pending cases. Ultimately, the Court finds that JPMC did not assume
WaMu’s unbooked mortgage repurchase liabilities and will grant summary judgment in
part to JPMC, finding that JPMC assumed liability for the disputed mortgage
repurchase liabilities only to the extent that such liabilities were reflected at a stated
Book Value on WaMu’s financial accounting records as of September 25, 2008…
…Though JPMC and FDIC dispute the meaning of the phrase "reflected on the Books
and Records," the plain language of Section 2.1 is not reasonably subject to multiple
interpretations. Therefore, the Court finds that Section 2.1 is unambiguous in that it only
transfers to JPMC the liabilities of WaMu to the extent they were reflected at a stated
Book Value on WaMu's accounting records. Given the straight-forward language,
summary judgment will be granted in favor of JPMC.
The choice of language and construction of the phrase "reflected on the Books and
Records" make clear that the liabilities assumed by JPMC do not extend beyond the
amounts listed WaMu's financial accounting records. To start with the simplest point,
"reflected" is not a legal word mired in common law precedents. We can turn to a modern
dictionary, Merriam Webster, which defines "reflect" (as relevant here) as "to show
(something)," "to make (something) known," or "to make manifest or apparent: show."
See Merriam-Webster Online Dictionary, http://www.merriam-
webster.com/dictionary/reflect (last visited on May 28, 2015). Thus, in assuming
liabilities reflected on WaMu's "Books and Records," JPMC assumed an identifiable
quantity of liability: the amounts shown on WaMu's accounting records. FDIC argues
that because the Trusts' Governing Agreements were part of WaMu's business records
and imposed potential mortgage repurchase obligations on WaMu without regard to
ultimate cost, JPMC assumed all such liabilities without regard to ultimate cost under the
P&A Agreement. However, Section 2.1 does not state that JPMC assumed all liabilities
arising out of any records at WaMu. Rather, it specifies that liabilities passing to JPMC
were those reflected on WaMu's books and records at the time of WaMu's closing…
26. The defendant request the Court take Judicial Notice of the deposition given by Lawrence
Nardi on May 9, 2012 before the Florida 5th Judicial Circuit in JPMorgan Chase Bank, N.A. as
wherein the JPMC operations unit manager and mortgage officer who was a former employee of
17
WMB, confirmed that no schedule of mortgage loans exist displaying a transfer of residential
“mortgage loans” with the PAA between the FDIC and JPMC on September 25, 2008 by stating,
in part, that:
Q: (page 57, beginning at line 19): Okay. The — are you aware of any type of schedule
of loans that would have been created to represent the — either the loans that were asset
loans or the loans that were serviced by WAMU? Are you — was the — do you know if
there is a schedule or database of loans like that?
A: (page 58, beginning at line 1): I know that there was a schedule contemplated in
certain documents related to the purchase. That schedule has never materialized in any
form. We’ve looked for it in countless other cases. We’ve never been able to produce it in
any previous cases. It would certainly be a wonderful thing to have, but it’s — as far as I
know, it doesn’t exist, although it was — it was contemplated in the documents.
Q: (beginning at page 260, line 18): Have you ever in your duties of being a loan analyst
— a loan operations specialist, have you ever seen an FDIC bill of sale or a receiver’s
deed or an assignment of mortgage or an allonge?
A: (page 260, beginning at line 23): For loans, I’m assuming you’re talking about the
WaMu loan that was subject to the purchase here.
27. The defendant also request the Court take Judicial Notice of the “Motion for Leave
to file an Amended Counterclaim” filed by JPMC in Juan C. Chavez v. JPMorgan Chase Bank,
N.A. (Civil Action No. 12-cv-10691), wherein the Plaintiff in this matter declared before the
United States District Court for the District of Massachusetts in July 2014 that the PAA entered
into with the FDIC on September 25, 2008 only transferred to JPMC the “servicing rights”
retained by WMB for “mortgage loans”, and not ownership of the same by stating, in part, that:
18
Chase's Counterclaim alleges that "Chase acquired the plaintiff's Mortgage loan as part of
the asset sale from the FDIC."... Chase further alleges that "By virtue of a valid
assignment and other loan sale documents, Chase assigned the Mortgage and Note to
Bank of America, N.A."... In the course of further investigation of the Plaintiff's
Mortgage loan it was revealed that the above-quoted allegations are factually
inaccurate…
Chase did not acquire the Mortgage loan as part of the sale from the FDIC. Instead,
pursuant to a Mortgage Loan Purchase and Sale Agreement ("P&S") by and
between Washington Mutual Bank, FA ("WAMU") and Bank of America, N.A.
("BOA"), WAMU sold the Plaintiff's Mortgage loan to BOA on or about January 26,
2007. Pursuant to the P&S, WAMU retained servicing rights to the Plaintiff's
Mortgage loan. "On September 25, 2008, the Office of Thrift Supervision ("OTS")
declared WAMU to be insolvent and appointed the Federal Insurance Corporation
("FDIC") as Receiver for WAMU. The FDIC accepted the appointment as Receiver
of WAMU, it sold certain assets and certain liabilities of WAMU to Chase pursuant
to a written Purchase and Assumption Agreement."... Accordingly, Chase acquired
the servicing rights to the Plaintiff's Mortgage loan as part of the asset sale from the
FDIC...
28. Hence, this Court must prohibited the Plaintiff from succeeding in this matter
commenced on August 26, 2011 wherein JPMC is mispresenting that the PAA entered into with
the FDIC on September 25, 2008 transferred the “mortgage loan” in dispute to JPMC,
contradicting the Plaintiff’s statements made in earlier proceedings wherein JPMC declared that
the same PAA only included certain assets and liabilities that remained on the books and records
of WMB including “servicing rights” to “mortgage loans”, not ownership of the same.
29. Last, and certainly not least, “Res judicata is an equitable doctrine that is designed to
prevent a multiplicity of lawsuits between the same parties where the facts and issues are
the same.” Severino v. Freedom Woods, Inc., 407 Ill. App. 3d 238, 244 (2010). For res judicata
to apply, three requirements must be met: (1) a final judgment on the merits rendered by a court
of competent jurisdiction; (2) identity of cause of action; and (3) identity of parties or
their privies. Wilson v. Edward Hospital, 2012 IL 112898, ¶9. When these three factors are
met, the final judgment rendered on the first cause of action bars any subsequent action between
19
the same party or their privies involving the same claim, demand, or cause of action. Id. “A
cause of action is defined by the facts that give rise to a right to relief.” Id. ¶10. Even if several
theories of recovery arise out of the same facts and same evidence, there is a single cause of
action. Id.
30. Hence, the defendant request the Court take Judicial Notice of the ruling entered on July
5, 2013 by the trial court in JP Morgan Chase Bank, Natl. Assn. v. Butler 2013 NY Slip Op
51050(U) [40 Misc 3d 1205(A)] from the Supreme Court of New York declaring that the PAA
entered into by JPMC and the FDIC on September 25, 2008 transferred to JPMC the “servicing
rights” of WMB, and not ownership of “residential mortgage loans” that were originated by
…Despite CHASE'S claims, before December 2011, to the Special Referee and the Court
that it owned the subject mortgage and note, plaintiff CHASE only purchased the
servicing rights to the subject mortgage and note from the FEDERAL DEPOSIT
INSURANCE CORPORATION [FDIC] in September 2008, when WAMU was
seized by the FDIC…
…This case is troubling because various counsel for CHASE falsely claimed for almost
two years, from January 20, 2010 until December 2011, that CHASE was the owner of
the mortgage and note. Ultimately, in late 2011, after the subject mortgage had been
satisfied, plaintiff CHASE's counsel admitted, in opposition to defendant BUTLER's
October 26, 2011 order to show cause, that plaintiff CHASE did not own the BUTLER
mortgage and note, but only the servicing rights to it…
The defendant also request the Court take Judicial Notice of the decision rendered by the District
Court of Appeal of Florida, Fourth District on March 23, 2016 in Ottoniel Cruz, et al. v.
JPMorgan Chase Bank, N.A., et al. (No. 4D14-3799) by stating, in part, that: “The PAA has
caveats where JPMorgan could refuse to acquire assets and there is no record evidence that the
FDIC transferred the note to JPMorgan before the complaint was filed. Id.”.
31. Hence, this Court must not only apply the doctrine of judicial estoppel to bar the Plaintiff
20
from taking a position that contradicts earlier statements made proceedings prior to this action
commenced on August 26, 2011, this Court must bar the Plaintiff from re-litigating the same
claim that that the PAA entered into with the FDIC on September 25, 2008 transferred the
“mortgage loan” in dispute to JPMC wherein courts of competent jurisdiction have declared such
claim to be unfounded as a matter of fact for the PAA only included certain assets and liabilities
that remained on the books and records of WMB including “servicing rights” to “mortgage
32. Wherefore, for the foregoing reasons wherein the Plaintiff’s claim that the PAA entered
into with the FDIC on September 25, 2008 transferred the “mortgage loan” in dispute, must be
barred by the doctrines of judicial estoppel and res judicata for JPMC already declared in other
judicial proceedings that the PAA entered into with the FDIC on September 25, 2008 did not
include the transfer and purchase of residential “mortgage loans” originated by WMB, and other
courts of competent jurisdiction correctly concluded that the PAA did not automatically include
C. The Plaintiff and opposing counsel have deliberately misrepresented to the Court
that the “note” in dispute is a Negotiable Instrument pursuant to Article 3 of the
Uniform Commercial Code knowing that Article 9 prevails which requires that
value be given.
33. The Plaintiff and opposing counsel have averred to the Court that the falsely uttered
“note” in dispute is a negotiable instrument made pursuant to 810 ILCS 5/Art. 3 wherein
34. The defendants, however, aver that the Plaintiff and opposing counsel knew, or should
have known, that the “note” in dispute is not a negotiable instrument made pursuant to 810 ILCS
21
35. In the year of 2001, the Illinois Legislature adopted the Uniform Commission on Laws
Recommendations to Amend Article 9 of the Uniform Commercial Code to include the sale of
promissory notes in the law governing secured transactions and to codify the common law rule
36. These 2001 amendments codified that, upon proof of purchase of the debt evidenced by
the signed agreements from the closing of a securitized trust documenting a complete chain of
title for each loan, the mortgages would follow the note for all the loans in the securitized
shareholders meeting, the international law firm of Baker Hostetler issued a report to Fannie Mae
to address the allegations (“the BH Report”). On February 4, 2012, the New York Times
38. The 2006 BH Report to Fannie Mae concluded at page thirty-five (35) “that foreclosure
attorneys in Florida are routinely filing false pleadings and affidavits regarding the Plaintiff’s –
MERS or servicers – interest in the proceedings and regarding lost, missing or destroyed
promissory notes. The practice could be occurring elsewhere. It is axiomatic that the practice is
39. The BH Report to Fannie Mae also included a section at page thirty-seven (37) entitled
“Effects of a Note Endorsed in Blank” which contained the banking industry’s official legal
position from 2006, that Article 9 of the UCC, entitled secured transactions, controls the sale of
40. Hence, Fannie Mae is an industry leader who sets the national standard for issuing and
3
The Defendant herein request the Court take Judicial Notice of
http://www.nytimes.com/interactive/2012/02/05/business/05fanniedoc.html?action=click&contentCollecti
on=Business%20Day&module=RelatedCoverage&pgtype=article®ion=EndOfArticle&_r=0 (last
checked April 24, 2017).
22
foreclosing on mortgage loans, usually documented using Fannie Mae uniform instruments such
41. The BH Report agrees with the interpretation that Article 9 of the UCC codified the
common law rule that the “mortgage follows the note” upon proof of purchase of the debt.
42. Before the BH Report was issued, the State of New Jersey, and almost all other states
within the United States of America revised their statutory codifications of the UCC in 2001 to
43. The newly revised 810 ILCS 5/9-1094 codified the common law rule that the mortgage
follows the note. The statutes further provided that, unless the party seeking to enforce the
mortgage and mortgage note was the loan originator, any party seeking to enforce a mortgage
and note must present evidence that the foreclosing party owned the note (i.e. paid value to a
party who had the right to enforce and transfer the mortgage note), and that party is in possession
44. Furthermore, 810 ILCS 5/9-109 lists the requirements for having a valid and
enforceable security interest against a debtor in personal property subject to Article 9 of the
UCC.5 A security interest is enforceable against the debtor and attaches only if:
(3) the debtor has authenticated security agreement that provides a description of the
collateral (although possession or control may also suffice).
45. This analysis is a question of first impression whether the 2001 Amendments to
4
Citing N810 ILCS 5/9-109: “a sale of accounts, chattel paper, payment intangibles, or promissory
notes;”.
5
See 810 ILCS 5 / 9-203(g): “The attachment of a security interest in a right to payment or performance
secured by a security interest or other lien on personal or real property is also attachment of a security
interest in the security interest, mortgage, or other lien.”
23
Article 9 of the UCC created a “Statute of Frauds” for mortgage assignments requiring proof of
46. The security interest only followed the sale of the promissory note if there was evidence
of a complete chain of title and chain of custody for all transfers from the originator to the party
47. Hence, the defendant avers that despite the clear changes to Article 9 of the UCC as
confirmed by the BH report, the Plaintiff and opposing counsel continue to misrepresent to this
court that Article 3 of the UCC controls and that the effect of a “note” endorsed in blank such as
the instrument presented to this Court by the Plaintiff and opposing counsel provides them with
48. The defendant further avers that the Plaintiff and opposing counsel have misrepresented
to this Court and others that every mortgage note on a residential home, which are far from
uniform, are negotiable instruments despite the fact that the promissory notes provide that
additional amounts due under the note are provided for in the mortgage and additional
protections the mortgage associated with the mortgage note, thereby destroying the negotiability
49. The defendant further avers that the “note” in dispute is non-negotiable as the parties
“promissory note” in dispute which states, in part,: “… Lender or anyone who takes by transfer
and who is entitled to receive payments under this Note is called the “Note Holder.” Therefore,
a party in possession of the original “promissory note” in dispute with a blank endorsement
would still need to prove it took by lawful transfer and had entitlement to receive payments.
Article 3 of the UCC says even a thief can enforce a blank endorsed note. The “promissory
24
50. The defendant further avers that the “note” in dispute is a non-negotiable instrument
pursuant to ¶5 of the “note” which provides any loan charge later found to be illegal may, at
lender’s option, result in a reduction in principal. Accordingly, the reader must refer to the
outside source in order to determine the value of the “promissory note” in dispute.
51. The defendant further avers that the “note” in dispute is non-negotiable pursuant to ¶10 of
the “note” which provides there are additional protections for the “note” “Holder” by way of the
“mortgage” if the borrower fails to keep its promises. Accordingly, the “promissory note” in
dispute is governed by and subject to the various provisions of the “mortgage” that affect the
52. Specifically, the “mortgage” in dispute defines the term “loan” at § (F) as all amounts
due under the note and mortgage. The mortgage further provides in ¶2, the application of
payments goes first to interest, then principal, then amounts due under ¶3 of the mortgage, then
late charges, then any other charges under the mortgage, then to reduce the principal. This
renders the “promissory note” in dispute subject to the “mortgage” and affects the amount due
53. Wherefore, the defendant avers that the repeated assertions made in this court by the
Plaintiff and opposing counsel that the “note” in dispute is a negotiable instrument pursuant to
Article 3 of the U.C.C., constitutes a deliberate and willful misrepresentation for the sole purpose
of avoiding the heightened proof requirements under Article 9 of the U.C.C. requiring proof of a
true sale, evidence which the Plaintiff is unable to document without further fabricating
evidence.
25
D. The Plaintiff and opposing counsel commenced their foreclosure action on August
26, 2011, prior to recording a void ab initio instrument titled “assignment of
mortgage” which makes no mention of a transfer of the “note”, and the alleged true
copy of the latter submitted to the Court by the Plaintiff and opposing counsel
contradicts a version mailed to the defendant from the Plaintiff, and neither
versions of the “note” demonstrate when and how the Plaintiff took possession.
54. Under the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1101 et seq. (West 2006)),
the mortgagee, or the lender, is defined as the holder of an indebtedness secured by a mortgage
or one claiming through a mortgagee as a successor (735 ILCS 5/15-1208 (West 2006)).
55. The defendant avers that should this court persist that the “note” in dispute is governed
by 810 ILCS 5 / Art. 3 rather than 810 ILCS 5 / Art. 9, the Plaintiff has failed to demonstrate
when and how possession of the “note” came about as provided in 810 ILCS 5/3-301.
56. First, the foreclosure complaint at bar was filed by the Plaintiff through opposing counsel
on August 26, 2011 at which time, the records maintained by the Cook County Recorder of
Deeds still indicated that WMBFA was the “mortgagee” of record for there were no instruments
titled “assignment of mortgage” indexed against the subject title indicating a transfer of the
57. On March 7, 2013, after the Plaintiff though its counsel commenced the foreclosure
action at bar on August 26, 2011, the Cook County Recorder of Deeds indexed a void ab initio
instrument titled “assignment of mortgage” wherein the Plaintiff is designated as the “assignor”
and “assignee” of the “mortgage” in disputed as a purported attorney in fact for the FDIC on
March 2, 2013, absent any proof of authority by power of attorney,6 and absent any mention of a
transfer of the "note". Citing the Ninth Circuit Bankruptcy Appellate Panel in In re Veal, 450
B.R.: “Illinois courts treat a mortgage as incident or accessory to the debt, and, an assignment of
a mortgage without the note as a nullity. In order for the Illinois courts to enforce a mortgage
6
See Illinois Power of Attorney Act (755 ILCS 45/).
26
assignment, the assignor must assign the underlying debt secured by the mortgage debt. It is
axiomatic that any attempt to assign the mortgage without transfer of the debt will not pass the
mortgagee's interest to the assignee.” See also Carpenter v. Longan, 83 U.S. 16 Wall. 271 271
(1872): “The note and mortgage are inseparable; the former as essential, the latter as an incident.
An assignment of the note carries the mortgage with it, while an assignment of the latter alone is
a nullity.”
58. Next, at a date yet to be determined by the defendant, the Plaintiff through its counsel
submitted to this Court as “Exhibit B” a purported “true copy” of the original falsely made
“note” in dispute which displays on page three of three a stamp purported to be an indorsement
in blank by a “doing business as” (WMBFA) that is undated (See Exhibit 4), and there is no
certainty if the purported transfer by indorsement occurred before the instant foreclosure action
was filed on August 26, 2011. Citing Wells Fargo Bank v. Ford, 418. N.J. Super. 592, 597 (App.
Div. 2011) (“Consequently,… the date of that indorsement would be a critical factual issue in
determining whether Wells Fargo is a holder in due course.”). See also Kelly v. Bank of New
York as Trustee for CWALT, Inc. ALT 2007-25, Case No. 1D13-2778 (opinion issued July 14,
2015) where the Florida 1st District Court of Appeal held that where the plaintiff files the
original note after filing suit, an undated blank endorsement on the note is insufficient to prove
standing at the time the initial complaint was filed, citing to Tilus v. AS Michai LLC, 161 So.3d
1284 at 1286 (Fla. 4th DCA 2015). The Court further held that when a plaintiff asserts standing
based on an undated endorsement, it must show that the endorsement occurred before the filing
of the complaint through additional evidence, citing to Lloyd v. Bank of NY Mellon, 160 So.3d
513 at 515 (Fla. 4th DCA 2015). More recently, in Peoples v. SAMI II Trust, et al., Case No.
4D14-2757 (Oct. 14, 2015), the Florida Fourth District Court of Appeal reiterated that “blank
endorsements” in foreclosure proceedings give no proof of when the stamp was placed on the
27
note, resulting in reversal of any final judgment in favor of the foreclosing party (and thus no
59. Further, the undated stamp in blank by a “doing business as” (WMBFA) affixed to page
three of the purported “true copy” of the “note” in dispute submitted to the Court by the Plaintiff
i. the assertion made by the Plaintiff and opposing counsel that JPMC became the
owner in possession of the “mortgage loan” in dispute by the PAA entered into with
the FDIC on September 25, 2008; and
ii. the void ab initio instrument titled “assignment of mortgage” wherein the Plaintiff is
designated as the “assignor” and “assignee” as the purported attorney in fact for the
FDIC on March 2, 2013 (See Exhibit 3).
60. Last, and certainly not least, JPMC used the U.S. Mail to forward the defendant a
communication dated May 6, 2014, and included an instrument purported to be a “true copy” of
the original “note” in dispute wherein the alleged indorsement in blank affixed upon the alleged
“true copy” submitted to the Court by the Plaintiff and opposing counsel as “Exhibit B” (See
61. Nevertheless, the defendant avers that the Plaintiff and opposing counsel have failed to
demonstrate when and how JPMC came into possession of the “note” in dispute prior to
commencing the foreclosure action at bar on August 26, 2011. Citing Bayview Loan Servicing,
L.L.C. v. Nelson, 382 Ill. App. 2d 1184, 1186 (2008): “There is no evidence that Bayview ever
62. Wherefore, as a matter of fact and law, this Court must instantly vacate the default
against the defendant, along with the order approving sale & possession pursuant to 735 ILCS §
5/2-1401(a), grant declaratory relief 735 ILCS § 5/2-701 voiding the judicial sale deed, and
dismiss the foreclosure complaint with prejudice for the "[p]laintiff's attempt to foreclose upon a
28
mortgage in which he had no legal or equitable interest was without foundation in law or fact.".
Citing Katz v East-Ville Realty Co., (249 AD2d 243 [1d Dept 1998]).
E. The Plaintiff and opposing counsel are fraudulently concealing from this Court the
Plaintiff’s communications declaring Fannie Mae is the owner of the “mortgage
loan” in dispute.
63. The doctrine of standing is designed to ensure that only those parties with a real interest
in the outcome of the controversy bring suit. Glisson v. City of Marion, 188 Ill. 2d 211, 221
(1999). Accordingly, a plaintiff in a mortgage foreclosure action must have a beneficial interest
in the mortgage. Winkelman v. Kiser, 27 Ill. 20, 21 (1861). In this regard, section 15—1208 of
the Illinois Mortgage Foreclosure Law (Foreclosure Law) (735 ILCS 5/1 5—1208 (West 2008))
secured by a mortgage or any person designated or authorized to act on behalf of such holder and
(ii) any person claiming through a mortgagee as successor.” The Foreclosure Law further
requires that “[i]n all cases the evidence of the indebtedness and the mortgage foreclosed shall be
exhibited to the court and appropriately marked, and copies thereof shall be filed with the court.”
64. It is an undisputable fact that according to a communication dated January 16, 2012 sent
from the Plaintiff to the defendant using the Mail, Fannie Mae (not JPMC) is declared the owner
65. The defendant further avers that it is an undisputable fact that according to a
communication dated May 6, 2014 sent from the Plaintiff to the defendant using the Mail, in
which the defendant was directed to contact opposing counsel, Fannie Mae (not JPMC) is again
(emphasis added) declared the owner of the “mortgage loan” in dispute. See Exhibit 7.
29
66. Hence, it is an undisputable fact that the foreclosure action at bar was commenced by
JPMC on August 26, 2011 as the Plaintiff, with the assistance of opposing counsel, wherein the
co-conspirators falsely declared JPMC as the owner in possession of the “mortgage loan” in
dispute, while omitting the Plaintiff’s contradictory statements set forth within the
aforementioned correspondences dated January 16, 2012 and May 6, 2014 wherein Fannie Mae
(not JPMC) is declared owner of the “mortgage loan” in dispute, and JPMC instructed the
defendant to contact third-party debt collectors Fisher & Shapiro. See Exhibits 6-7.
67. Wherefore, as a matter of fact and law, this Court must instantly vacate the default
against the defendant, along with the order approving sale & possession pursuant to 735 ILCS §
5/2-1401(a), grant declaratory relief 735 ILCS § 5/2-701 voiding the judicial sale deed, and
dismiss the foreclosure complaint with prejudice upon evidence herein submitted by the
defendant, that was omitted from this Court by the Plaintiff and opposing counsel, wherein
JPMC declared that Fannie Mae was the owner of the “mortgage loan” in dispute, and the real
party in interest.
F. The conduct by JPMC and opposing counsel in this matter displays continuous
violations of consent orders entered into with State and Federal Authorities, fraud
upon this Court and unclean hands arising to criminal acts for which the Court and
the Defendant are obligated to report to the Authorities.
68. Before the illegal foreclosure debt collection at bar was commenced by JPMC through
third-party debt collectors Fisher & Shapiro on August 26, 2011, it is an undisputable fact for
which the defendant was not fully aware and recently discovered, that the Comptroller of the
Currency of the United States of America ("OCC") issued a cease and desist order on April 13,
30
2011 against the Plaintiff in this instant matter for which Judicial Notice is herein requested,7
wherein a Federal Authority documented and prohibited the Plaintiff’s unfair, deceptive, and
unlawful practices in its capacity as a “mortgage servicer” (emphasis added) for 6,300,000
“mortgage loans” throughout the United States of America, by stating in part, that:
“The OCC has identified certain deficiencies and unsafe or unsound practices in
residential mortgage servicing and in the Bank’s initiation and handling of foreclosure
proceedings. The OCC has informed the Bank of the findings resulting from the
examination…
(a) filed or caused to be filed in state and federal courts affidavits executed by
its employees or employees of third-party service providers making various
assertions, such as ownership of the mortgage note and mortgage, the amount of the
principal and interest due, and the fees and expenses chargeable to the borrower, in
which the affiant represented that the assertions in the affidavit were made based on
personal knowledge or based on a review by the affiant of the relevant books and
records, when, in many cases, they were not based on such personal knowledge or
review of the relevant books and records;
(b) filed or caused to be filed in state and federal courts, or in local land
records offices, numerous affidavits or other mortgage-related documents that
were not properly notarized, including those not signed or affirmed in the
presence of a notary;
(3) By reason of the conduct set forth above, the Bank engaged in unsafe or unsound
banking practices…”.
69. Hence, it is an undisputable fact that the Plaintiff through third-party debt collector
7
See In the Matter of: JPMorgan Chase Bank, N.A. (AA-EC-11-15) retrievable in its entirety at
https://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47e.pdf (last checked April 24,
2017).
31
Fisher & Shapiro, disregarded the aforementioned consent order entered by the OCC on April
13, 2011, upon JPMC illegally commencing the instant matter at bar on August 26, 2011 by
willfully misrepresenting itself (JPMC) as the owner in possession of the falsely made “mortgage
loan” in dispute, by means of intrinsic and extrinsic fraud as set forth within ¶¶13-67 and herein
70. It is an undisputable fact for which the defendant that was not fully aware and recently
discovered that on March 14, 2012, the United States of America and 49 State Attorney Generals
(including the Illinois Attorney General) commenced a civil action in the United States District
Court for the District of Columbia, for which Judicial Notice is requested, 8 wherein the Federal
and State Authorities documented the unfair, deceptive, and illegal practices by the Plaintiff in
this matter and its affiliate company(s) in their capacities as “mortgage servicers” (emphasis
47. Each of the Banks services home mortgage loans secured by residential
properties owned by individual citizens of the Plaintiff States, and of the United States.
48. Each Bank is engaged in trade or commerce in each of the Plaintiff States and
is subject to the consumer protection laws of the States in the conduct of their debt
collection, loss mitigation and foreclosure activities. The consumer protection laws of
the Plaintiff States include laws prohibiting unfair or deceptive practices.
49. Under the States’ consumer protection laws, the Banks are prohibited from
engaging in unfair or deceptive practices with respect to consumers.
50. In the course of their conduct, management and oversight of loan servicing in
the Plaintiff States, the Banks have engaged in a pattern of unfair and deceptive practices.
51. The Banks’ unfair and deceptive practices in the discharge of their loan
servicing activities, include, but are not limited to, the following:
8
See United States of America, et.al. v. Bank of America, N.A., et al. (Docket No. 1:12-cv-00361 RMC).
32
a. failing to timely and accurately apply payments made by borrowers and failing
to maintain accurate account statements;
d. imposing force -placed insurance without properly notifying the borrowers and
when borrowers already had adequate coverage;
2. The Banks’ Unfair, Deceptive, and Unlawful Loan Modification and Loss
Mitigation Processes
52. Under the States’ consumer protection laws, the Banks are prohibited from
engaging in unfair or deceptive practices with respect to consumers…
…54. Under the Treasury’s various rescue and stimulus programs, the Banks
received monetary incentives from the Federal government in exchange for the
commitment to make efforts to modify defaulting borrowers’ single family residential
mortgages. See, e.g., Making Home Affordable Handbook v.1.0, ch. 13 (“Incentive
Compensation”) (Aug. 19, 2010). Under the programs, the Banks agreed to fulfill
requirements set forth in program guidelines and servicer participation agreements.
56. In the course of their servicing and oversight of mortgage loans, the Banks
violated federal laws, program requirements and contractual requirements governing loss
mitigation.
33
65. The Banks’ failure to follow appropriate foreclosure procedures, and related
unfair and deceptive practices include, but are not limited to, the following:
71. It is an undisputable fact for which the defendant was not fully aware and recently
discovered that on April 4, 2012, the Plaintiff in this matter and its affiliate company(s) entered
into the “National Mortgage Settlement” with the United States of American and 49 State
Attorney Generals (including the Illinois Attorney General), for which Judicial Notice is
requested,9 wherein JPMC agreed to reframe from further engagement in the unfair, deceptive,
and illegal practices cited in United States of America, et.al. v. Bank of America, N.A., et al.
9
See the National Mortgage Settlement (April 4, 2012) retrievable in its entirety at
https://d9klfgibkcquc.cloudfront.net/Consent_Judgment_Chase-4-11-12.pdf (last checked on April 24,
2017)
34
Unless otherwise specified, these provisions shall apply to bankruptcy and
foreclosures in all jurisdictions regardless of whether the jurisdiction has a judicial,
non-judicial or quasi-judicial process for foreclosures and regardless of whether a
statement is submitted during the foreclosure or bankruptcy process in the form of an
affidavit, sworn statement or declarations under penalty of perjury (to the extent
stated to be based on personal knowledge) (“Declaration”).
2. Servicer shall ensure that affidavits, sworn statements, and Declarations are
based on personal knowledge, which may be based on the affiant’s review
of Servicer’s books and records, in accordance with the evidentiary
requirements of applicable state or federal law.
35
6. Affidavits, sworn statements and Declarations shall accurately identify the
name of the affiant, the entity of which the affiant is an employee, and the
affiant’s title.
14. Servicer shall maintain records that identify all notarizations of Servicer
documents executed by each notary employed by Servicer….
18. In all states, Servicer shall send borrowers a statement setting forth facts
supporting Servicer’s or holder’s right to foreclose and containing the
information required in paragraphs I.B.6 (items available upon borrower
request), I. B.10 (account statement), I.C.2 and I.C.3 (ownership statement),
and IV.B.13 (loss mitigation statement) herein. Servicer shall send this
statement to the borrower in one or more communications no later than 14
days prior to referral to foreclosure attorney or foreclosure trustee. Servicer
36
shall provide the Monitoring Committee with copies of proposed form
statements for review before implementation….
3. Servicer shall set forth the information establishing the party’s right to
foreclose as set forth in I.C.2 in a communication to be sent to the borrower
as indicated in I.A.18.
5. Servicer shall not intentionally destroy or dispose of original notes that are
still in force.
72. Hence, it is an undisputable fact that the Plaintiff through third-party debt collector
37
Fisher & Shapiro disregarded the consent order entered by the OCC on April 13, 2011, along
with the National Mortgage Settlement entered on April 4, 2012 by illegally commencing the
instant matter at bar on August 26, 2011, and prosecuting the unlawful action resulting in a
judicial sale to NR2-REO V-2 Corp. on May 26, 2016 by willfully misrepresenting itself (JPMC)
as the owner in possession of the falsely made “mortgage loan” in dispute, by means of intrinsic
and extrinsic fraud as set forth within ¶¶13-67 and herein re-stated as though fully incorporated.
73. Hence, the defendant re-avers and re-states ¶¶13-67 as though fully incorporated herein,
the Plaintiff and opposing counsel willfully misrepresented and or omitted from the trial court
i. WMBFA ceased to exist as a legal entity as of April 2005 (See Exhibits 1-2);
ii. as of April 16, 2008, WMBFA was a “doing business as” and, therefore, was not
and could not be the lender as designated within the “mortgage loan” in dispute;
iii. the PAA between the FDIC and the Plaintiff dated September 25, 2008 did not
include the transfer of residential “mortgage loans”;
iv. JPMC was neither the owner nor holder of the “note” in dispute upon filing the
foreclosure action at bar on August 26, 2011;
vi. Audia Gardenhi, whose name and alleged signature is affixed upon the
aforementioned instrument titled “assignment of mortgage” as a “Vice President”
for the FDIC through its purported attorney in fact JPMC, is an imposter in
violation of 18 U.S.C. § 134210 for the individual lacked the authority claimed,
10
Citing 18 U.S.C. § 1342: “Whoever, for the purpose of conducting, promoting, or carrying on by means
of the Postal Service, any scheme or device mentioned in section 1341 of this title or any other unlawful
business, uses or assumes, or requests to be addressed by, any fictitious, false, or assumed title, name, or
address or name other than his own proper name, or takes or receives from any post office or authorized
depository of mail matter, any letter, postal card, package, or other mail matter addressed to any such
fictitious, false, or assumed title, name, or address, or name other than his own proper name, shall be
fined under this title or imprisoned not more than five years, or both.”
38
and lacked knowledge as to the whereabouts and ownership of the “mortgage
loan” in dispute;
vii. Y.K. Wilson, whose name and notary seal is affixed upon the aforementioned
instrument titled “assignment of mortgage” was at all times an employee of the
Plaintiff, and knows that Audia Gardenhi never appeared before the Louisiana
notary public to present identification as a “Vice President” for the FDIC through
its purported attorney in fact JPMC, and never presented the “mortgage loan” in
dispute, constituting notary fraud;
viii. presenting an alleged “true copy” of the falsely made “note” as “Exhibit B”
displaying a defective stamp presented as an indorsement in blank by a “doing
business as” (WMBFA) without any date to determine when the purported
transferred occurred (See Exhibit 4);
ix. concealing from the Court an alleged “true copy” of the falsely made “note” in
dispute forwarded from the Plaintiff as part of the May 6, 2014 communication,
wherein the undated stamp affixed to the purported “true copy” submitted by the
Plaintiff and opposing counsel as “Exhibit B” (See Exhibit 4) does not appear
(See Exhibit 5); and
x. concealing from the Court the Plaintiff’s communications dated January 16, 2012
and May 6, 2014 forwarded to the defendant by mail declaring Fannie Mae as the
owner of the “mortgage loan”, not JPMC (See Exhibits 6-7).
74. It is an undisputable fact that the aforementioned void ab initio instrument titled
“assignment of mortgage” recorded by the Cook County Recorder of Deeds on March 7, 2013
(See Exhibit 3) displaying misrepresentations, imposters, and a false notarization indicates that
Nationwide Title Clearing, Inc. (“NTC”) requested the document be returned to NTC after
recording which means that NTC may have been involved with the creation of the falsely made
instrument in violation of the final consent decree issued by this Court on October 30, 2013 in
The People of the State of Illinois v. Nationwide Title Clearing, Inc. (Case No. 12 CH 03602)
75. The defendant further avers that the Plaintiff and opposing counsel know and they are
39
omitting from the Court and defendant that the original “note” in dispute was deliberately
destroyed by WMB and is no longer enforceable pursuant to 810 ILCS 5/3-604, upon WMB
illegally creating a transferable record a/k/a “eNote” (“electronic note”)11 that is dated April 16,
2008, that is worth at least $176,000.00, and was made part of the “mortgage loan” in dispute
absent the defendants knowledge, explicit consent, and electronic signature as required by the
Uniform Electronic Transactions Act (“UETA”)12 and the Electronic Signatures in Global and
76. In support of the defendant’s assertion set forth within ¶74, Judicial Notice is requested
of the Florida Bankers Association’s “Summary of Comments” dated September 28, 2009,
submitted to the Supreme Court of Florida in Case No.: 09-1460 (In Re: Amendments to Rules of
Civil Procedure and Forms for use with Rules of Civil Procedure) stating, in part, that:
… It is a reality of commerce that virtually all paper documents related to a note and
mortgage are converted to electronic files almost immediately after the loan is closed.
Individual loans, as electronic data, are compiled into portfolios which are transferred
to the secondary market, frequently as mortgage-backed securities…
…The reason many firms file lost note counts as a standard alternative pleading in the
complaint is because the physical document was deliberately eliminated to avoid
confusion immediately upon its conversion to an electronic file. See State Street Bank
and Trust Company v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003). Electronic storage is
almost universally acknowledged as safer, more efficient and less expensive than
maintaining the originals in hard copy, which bears the concomitant costs of physical
indexing, archiving and maintaining security. It is a standard in the industry and
becoming the benchmark of modern efficiency across the spectrum of commerce—
including the court system….
See 810 ILCS 5/3-604 Discharge by cancellation or renunciation, stating in part: “(a) A person
entitled to enforce an instrument, with or without consideration, may discharge the obligation of
11
See 810 ILCS 5/9-105.
12
See 15 U.S.C. § 7021. UETA §16.
13
See 15 U.S.C. § 7001 et seq..
40
a party to pay the instrument (i) by an intentional voluntary act, such as surrender of the
cancellation…”.
77. The doctrine of unclean hands bars equitable relief when the party seeking that relief is
guilty of misconduct in connection with the subject matter of the litigation. Thomson Learning,
Inc. v. Olympia Properties, LLC, 365 Ill. App. 3d 621, 634 (2006). The doctrine is intended to
prevent a party from taking advantage of its wrong. Id . To allege the defense of unclean hands,
the defendant must plead: (1) misconduct by the plaintiff that amounts to fraud or bad faith, (2)
made toward the defendant, and (3) related to the subject matter of the litigation. See id.; State
Bank of Geneva v. Sorenson, 167 Ill. App. 3d 674, 680 (1988); Illinois Power Co. v. Latham, 15
Ill. App. 3d 156, 167-68 (1973). Furthermore, many cases have been decided as to the effect that
the practice of a fraud upon the court by false affidavits is ground for disbarment. People ex rel.
Witherow v. Leary, 84 Ill. 190; *337 People ex rel. Healy v. Barrios, 237 Ill. 527, People ex rel.
Chicago Bar Association v. Johnson, 344 Ill. 132. The most common formulation of the
"unclean hands" doctrine in recent Illinois cases is that "one seeking equitable relief cannot take
advantage of his own wrong." Polk Bros., Inc., v. Forest City Enter., Inc., 776 F.2d 185 (7th
Cir.1985) (citing Fair Automotive Repair, Inc. v. Car-X Service Sys., Inc., [128 Ill.App.3d 763,
84 Ill.Dec. 25] 471 N.E.2d 554, 558 (Ill.1984)). If the plaintiff creates or contributes to the
situation on which it relies, the court denies equitable relief in order to deter the wrongful
conduct. Id. "One who has defrauded his adversary to his injury will not be heard to assert a
right in equity." Fruhling v. County of Champaign, [95 Ill.App.3d 409, 51 Ill.Dec. 508] 420
78. “[U]pon principle, we hold that relief for fraud upon the court may be allowed under our
41
rule whether the fraud charged is denominated intrinsic or extrinsic… a decision produced by
fraud upon the court is not in essence a decision at all, and never becomes final……” Kenner v.
Comm’r of Internal Revenue, 387 F.2d 689, 691 (7th Cir. 1968). See 12 James W. Moore,
Moore’s Federal Practice § 60.81 (3d ed. 2007) (noting that fraud on the court deals with
integrity of the courts). “Fraud On The Court By An Officer Of The Court State or Federal"
Provides For An Independent Actions In Equity. State and federal attorneys fall into the same
general category and must meet the same requirements.” People v. Zajic, 88 Ill.App.3d 477, 410
N.E.2d 626 (1980). The use of fraudulent evidence is a corruption of the “truth seeking” process
of the trial court constituting a violation of due process rights. See United States v. Agurs, 427
U.S. 97, 107 (1976) and Miller v. Pate, 386 U.S. 1 (1967) (finding that a deliberate
U.S. 320 (1985) (fining that an uncorrected, misleading statement of law to a jury violated due
process); Darden v. Wainwright, 477 U.S. 168, 181-82 (1986) (improper argument and
manipulation or misstatement of evidence violates Due Process). Cf. Mesarosh v. United States,
352 U.S. 1, 14 (1956) (reversing convictions based on Solicitor General's disclosure that an
important government witness had committed perjury in other proceedings, stating that the Court
had a duty "to see that the waters of justice are not polluted").
79. Wherefore, as a matter of fact and law, this Court must instantly vacate the default
against the defendant, along with the order approving sale & possession pursuant to 735 ILCS §
5/2-1401(a), and dismiss the foreclosure complaint with prejudice for the intrinsic and extrinsic
42
III. CONCLUSION
The defendant respectfully moves this Court: (1) to vacate default, the order approving
sale & possession pursuant to 735 ILCS § 5/2-1401(a); (2) for declaratory relief 735 ILCS § 5/2-
701 and 810 ILCS § 5/3-305 voiding the note & mortgage, judicial sale deed recorded by the
Cook County Recorder of Deeds on September 23, 2016; and (3) for dismissal of foreclosure
complaint with prejudice for lack of standing & fraud upon the court.
Respectfully Submitted,
Ethel Young
43
IV. VERIFICATION
I Ethel Young affirm that the facts in the Petition are true and correct according to my
________________________________Affiant-1308
STATE OF ILLINOIS
COUNTY OF COOK
BEFORE ME personally appeared Ethel Young who, Petitioner being by me first duly
sworn, executed the foregoing in my presence and stated to me that the facts therein are true and
My commission expires:
SEAL:
44