Amicus Brief Rhode Island Foreclosures

8/4/2019 Amicus Brief Rhode Island Foreclosures

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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

In re: Mortgage Foreclosure Cases Misc. No. 11-mc-88-M-LDA

AMICUS BRIEF IN OBJECTION TO THE ADOPTION OF THE REPORT AND

RECOMMENDATION ISSUED BY MAGISTRATE MARTIN

The United State District Court for the District of Rhode Island issued a solicitation for

amicus briefs or memoranda from interested parties so that it could hear multiple positions

regarding the adoption or rejection of the Report and Recommendation in the cases of Fryzel v.

MERS, et al, CA No. 10-352-M, and Cosajay v. MERS, et al., CA No. 10-442-M currently

before the Court. Of particular interest to the Court pursuant to its Order of August 16, 2011 is

whether or not, pursuant to Rhode Island Statutory Law and Case Law, a homeowner/mortgagee

has standing to challenge both the alleged assignments of mortgage and the alleged foreclosure

deeds that appear in the Records of Land Evidence in the towns/cities wherein the real property

which forms the subject matter of these lawsuits is situated.

The Plaintiffs have claimed that the Defendants do not have the right to foreclose because

the assignments and foreclosure deeds are either invalid or void as a matter of law. The

Plaintiffs further contend that mortgage assignments are, pursuant to Rhode Island Law, transfers

of an interest in real estate, and as such, the homeowner/mortgagor is a party to those

transactions thus giving them standing to challenge the validity of the assignments. The

Defendants have argued that, as a matter of law, that the homeowner/mortgagors are not parties

to the "contracts" and do not, therefore, have standing to challenge their validity. It is the

position of the amicus that the Plaintiffs do have standing to challenge the assignments and that



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their standing has its roots in §34-11, Form & Effect of Conveyances. In particular §34-11-11,

§34-11-12, §34-11-21 & §34-11-242 of the Rhode Island General Laws as well as §34-16-43 of

the Rhode Island General Laws support the position of the Plaintiffs and of the amicus.

1 Form & Effect of Conveyances: Conveyances required to be in writing and recorded. –

Every conveyance of lands, tenements or hereditament absolutely, by way of mortgage, or on

condition, use or trust, for any term longer than one year, and all declarations of trustsconcerning the conveyance, shall be void unless made in writing duly signed, acknowledged as

hereinafter provided, delivered, and recorded in the records of land evidence in the town or city

where the lands, tenements or hereditaments are situated; provided, however, that the

conveyance, if delivered, as between the parties and their heirs, and as against those taking bygift or devise, or those having notice thereof, shall be valid and binding though not

acknowledged or recorded. A lease for the term of one year or less shall be valid although madeby parol. Leases for terms of more than one year may be recorded with a memorandum of leasein writing rather than the original lease; provided, however, that the memorandum shall contain

the names of the parties to be charged, a description of the real estate, the duration of the lease,

including renewal options and purchase options.

History of Section. (G.L. 1896, ch. 202, § 2; G.L. 1909, ch. 253, § 2; G.L. 1923, ch. 297, § 2; G.L. 1938, ch. 435, §

1; G.L. 1956, § 34-11-1; P.L. 1979, ch. 231, § 1; P.L. 1981, ch. 380, § 1.)2 Effect of assignment of mortgage. – An assignment of mortgage substantially following the

form entitled "Assignment of Mortgage" shall, when duly executed, have the force and effect of

granting, bargaining, transferring and making over to the assignee, his or her heirs, executors,

administrators, and assigns, the mortgage deed with the note and debt thereby secured, and allthe right, title and interest of the mortgagee by virtue thereof in and to the estate described

therein, to have and to hold the mortgage deed with the privileges and appurtenances thereof to

the assignee, his or her heirs, executors, administrators and assigns in as ample manner as the

assignor then holds the same, thereby substituting and appointing the assignee and his or herheirs, executors, administrators and assigns as the attorney or attorneys irrevocable of the

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

History of Section. (P.L. 1927, ch. 1056, § 15; G.L. 1938, ch. 436, § 14; G.L. 1956, § 34-11-24.)3 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 realestate, 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 anyinterest 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 andquiet 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



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This Court is in position to hear over one hundred (100) cases involving allegedly invalid

mortgage assignment and foreclosure cases over the next several years. The pending cases,

similar to the ones currently before the court, involve matters that were never thought to exist

only a few short years ago. The advent of the Mortgage Electronic Registration System

("MERS") is at the forefront of many of these matters. That is not to say that there is not a

myriad of other title matters that are lurking, but it is MERS that is at the forefront of these cases.

The amicus is fully aware that this knowledgeable Court knows by this point what MERS

is, what it does, what it is supposed to do and what it cannot do. The amicus will not belabor

those issues when it is clear that standing is the true issue at hand. The amicus will suggest to

the Court, however, that land evidence records in the Cities and Towns of Rhode Island are being

saturated with fraudulent and (as this amicus argues), void documents, all of which undermine

the very purpose of the Real Estate Recording Statute. The City and Town Clerks are not aware

of the legality or illegality of what is being recorded in their Town Halls. Until a very small, yet

determined group of lawyers and fraud examiners began to bring this to the forefront,

foreclosures took place with no one ever proving that the sales were based upon valid

documents. That is where we stand today. As stories of false and manufactured documents fill

the news, and the proof of their existence becomes the groundwork for hundreds of thousands of

lawsuits, it becomes vital that this Court take up the issue before it and rule that documents that

do not comport with the Statutes governing real estate conveyances in the State of Rhode Island

are void and cannot be used to foreclose on Rhode Island homeowners/mortgagors.

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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STATEMENT OF THE INTEREST OF THE AMICUS

I, George E. Babcock, Esquire, am an attorney licensed to practice law in the State of

Rhode Island. I am also a member of the Federal Bar for the District of Rhode Island and

Member of the Bar of the First Circuit Court of Appeals. I have been filing and litigating

lawsuits such as those under consideration in Rhode Island for over four (4) years. I currently

have over fifty-five (55) such cases pending in the Federal District Court for the District of

Rhode Island and over two hundred (200) such cases pending in the Superior Court of the State

of Rhode Island. I have dozens of such cases pending in the United States Bankruptcy Court for

the District of Rhode Island and over two hundred (200) evictions cases pending in the Rhode

Island District Court directly related to the issues currently before the Court.

DISCUSSION OF FRYZELL & COSAJAY

It is the professional opinion of the amicus that the Report and Recommendation should

not be adopted by Judge John McConnell and that neither case should be dismissed pursuant to

Fed. R. Civ. P. 12(b)(6).

The facts of the Fryzell, although a compelling set of MERS facts that set up a classic

MERS real estate transaction, are not the subject matter of either the Report and

Recommendation or this brief. It is clear that the Magistrate understood the facts and went to

great lengths to attempt to ascertain just what took place with the Fryzell Mortgage and the

conveyances that took place after the original mortgage was recorded.

It is interesting to note that the Magistrate found at page 5 of his Fryzell Report that the

first three assignments4 of mortgage assigned the promissory note. He also found that the fourth

4 It is the position of the Amicus that all three assignments are void as a matter of law as they

violate §34-11-1 of the Rhode Island General Laws.



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assignment explicitly included the promissory note.5

This is clear error on the part of the

Magistrate. In Rhode Island, MERS has admitted under oath at the trial of Bucci v. Lehman

Bros. Bank, No. PC-2009-3888, 2009 WL 3328373 (R.I. Super. August 25, 2009) that it never

holds a promissory note. In Bucci, it was admitted under oath that "MERS holds bare legal title

to the mortgage in a nominee capacity." Id. Given the admitted fact that MERS never owns the

Note in Rhode Island, the Magistrate's conclusion regarding the assignment of the Note is clear

error and supports the position of the amicus that his Report and Recommendation on Fryzell

should not be accepted.

The Plaintiff in Fryzell claimed that the assignments at issue were invalid for multiple

reasons. It is the position of the amicus that the assignments were void as a matter of law.

MERS never held the note. In fact, it never contends that it is the holder of then note. By the

very nature of a MERS transaction, the note and the mortgage are separated and are delivered to

two different parties at the close of the loan making it impossible for MERS to ever assign the

note. Since MERS is not the holder of the note, it does not have the rights of a mortgagee that

does hold the note. See Restatement (Third) of Property, Mortgages §5.4(c). This being true,

any assignment that MERS attempted to make in satisfaction of §34-11-1 and §34-11-24 of the

General Laws of the State of Rhode Island was void.

Magistrate Martin concluded that the Plaintiff in Fryzell was claiming that the

assignments were defective based upon the status of those executing the documents. In

actuality, reference to the Statutes set forth above was all that was needed to find that the

assignments were void as a matter of law under Rhode Island Law. The amicus has argued this

very issue before the Court in the cases of Robert Moll v. MERS, et. al., CA No. 11-0004-S-

5

It is the position of the Amicus that the fourth assignment is void as a matter of law as itviolates violate §34-11-1 of the Rhode Island General Laws.



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LDA (D.R.I. pending) and Emilio Aceto v. American Brokers Conduit, et. al., CA No. 10-0481-

ML-DML (D.R.I. pending).6 The fact of the matter is that the alleged assignments are of no

legal significance, despite being recorded in land evidence, because they are void as a matter of

law. This subtle distinction becomes very important considering that the Magistrate's primary

focus was ultimately regarding the issue of standing.

The amicus concurs with Fryzell regarding the fact that the signatures and the business

practices of MERS and the other parties to this action were illicit. The amicus recognizes that

the Magistrate was ruling based upon the complaint before the Court. However, the reality is

that this Court can look beyond what was claimed in Fryzell and Cosajay and look to this brief

and to other cases that have been argued before the Court on identical issues to conclude that the

intent of Fryzell and Cosajay was to claim that the assignments were void as a matter of law

despite the fact that the complaint may not have been so artfully crafted to lead Magistrate

Martin to that conclusion.7

In Section VIII of the Fryzell Report and Recommendation, the Magistrate limits the

actual claims of the Plaintiff when he writes that the challenge to the foreclosure was based upon

the terms of the Pooling and Servicing Agreement referenced in footnote 25 of the Magistrate's

Report. The Magistrate goes on to incorrectly conclude that the Plaintiffs were neither party to,

nor intended beneficiaries of , the PSA or the assignments. The amicus will not comment on

the issues related to the PSA.

In Rhode Island, however, 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

6In both Moll and Aceto, the amicus argued that the assignments were VOID under Rhode

Island Statutory Law. The relevant portions of the amicus’ memorandum in objection to therespective Motions to Dismiss regarding this point are attached as Exhibit 1.7 Id., see also Cafua v. MERS, et al., CA No. 09-7407 (R.I. Superior, pending) (Attached)



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transaction. Section §34-11-1 and §34-11-24 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 property has been the

subject of a conveyance under §34-11-1 thus making the mortgagor/homeowner a party to each

and every assignment that may take place regarding their property.

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

..."8

The Magistrate was also correct 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." See Id.

The amicus concurs wholeheartedly that Rhode Island Law must control the Plaintiffs'

claims in both Fryzell and Cosajay. The Court was correct when it wrote that "[A] Federal

Court sitting in diversity....must apply state substantive law." Id. The Magistrate then fatally

stayed from the Conveyancing Statute; to wit, §34-11-1 et. seq., which governs real estate

conveyances in the State of Rhode Island. The Magistrate, instead of looking to the statutes set

8 See Report and Recommendation



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forth above9

relating to conveyancing and standing to bring an action in title, looked to contract

case law, all of which is distinguishable from the cases under consideration by the Court.

In the case of Brough v. Foley, 525 A.2d 919, 921 (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.

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); Meyer v. City of Newport, 844 A.2d 148, 151

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

9 §34-11-1, §34-11-12, §34-11-24 & §34-16-4



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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 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.10 In these cases,

Fryzell 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 ancillary

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

10 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. (Attached)



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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 appropriately wrote that "When

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

party has standing to sue.” See 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 amicus 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 amicus 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 to 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.11 Rhode Island General Laws §34-11-1 et. seq., clearly is

11The amicus 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



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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 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 to support his erroneous conclusion. See 525

A.2d at 921-922. 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 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 to the cases at bar.



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In regard to another 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 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 cases, although informative, are not truly probative relative to

the cases before this Court regarding real estate assignments.

The amicus agrees with the Magistrate that his focal point should have shifted to the

plaintiff after finding that there was a claim. The amicus 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 amicus 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 amicus 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



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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 MichiganLaw. 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 thestate'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 statesupreme 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 §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

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



14

take place in Rhode Island. Not doing so was error on the part of the Magistrate and for that

reason, his Report and Recommendation should not be adopted by this Court.

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, and these sections

clearly contradict 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 analyze standing, a

Justice must do more than rely on common law contract cases. A Justice must contemplate the

Mortgage Assignment in light of §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 as 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



15

the result of a 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'sirrevocable 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 does 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



16

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 the amicus 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. See Id. 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.



17

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 statute12 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. 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, as they were not parties to the

assignments. The amicus 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.

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 amicus does not disagree that Rhode Island Contract Law is consistent with that in

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

12See Michigan Common Laws Section 600.3204 Foreclosure by advertisement; circumstances;

installments as separate and independent mortgage; redemption; chain of title; commencement of

proceedings prohibited; conditions; applicability of subsection (4). (Exhibit 2)



18

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

amicus 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 amicus finds 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. See

632 F.3d at 17. 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. The amicus printed the Declaration of Independence and attached it

hereto as Exhibit 3. It is only four (4) pages long but the amicus submits that its influence,

despite its brevity, is as powerful today as it was on July 4, 1776.



19

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 were true and even if his findings relative to the PSA

were 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 amicus 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

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



20

interest in life, liberty, or property protected by the Due Process Clause of

the Fourteenth Amendment, a State must provide 'notice reasonablycalculated, 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. See 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.

Section 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:

"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).



21

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 Id.; 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 Bluef ield 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 amicus 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 bothersome to the amicus 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

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



22

The amicus 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.13

Finally, it is the position of the amicus 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.14

One of the allegations plead in the Fryzel complaint was that the signatures on the

assignments were invalid and not authorized, rendering them void. The Defendants, American

Home Mortgage Servicing, Inc. Mortgage Electronic Registrations Systems, Inc., and the

Defendant Trust, in their reply memorandum, dated November 24, 2010 on page 7 disputed this

allegation, stating: "Furthermore, in this case, neither the assignors nor the assignees of the

13This is despite the fact that they "are" parties to the assignments of mortgage by way of

contract law and statute.14 See IN RE: SIMA SCHWARTZ, Case No. 06-42476-MSH (MA Bankr. August 22, 2011)



23

mortgage assignments dispute their validity." This statement is inconsistent with the reality of

the situation involving these assignments which were prepared by Lender Processing Services,

Inc. and its subsidiary DOCX, LLC.

On August 24, 2011, in the District Court of Dallas County Texas, American Home

Mortgage Servicing, Inc. (“AHMSI”) commenced a lawsuit against Lender Processing Services,

Inc. (“LPS”) and DOCX, LLC (“DOCX”) as indicated in Exhibit 4-A, attached to this

memorandum.15 AHMSI sought redress for millions of dollars in losses it had suffered as a result

of LPS’ and DOCX’s unauthorized execution and notarization of assignments affecting more

than 30,000 residential mortgages. The complaint indicates that AHMSI, a loan servicer, which

never held the Plaintiff’s mortgage, or any interest in it, purportedly authorized certain

employees of these two companies to be Special Officers of AHMSI. However LPS and DOCX

engaged in a practice described as “surrogate signing” in which persons, not authorized by

AHMSI’s Board, executed assignments of mortgage by signing the names of the Special Officers

who were explicitly authorized. AHMSI learned of the practices in late 2009.

The lawsuit alleges that DOCX began document processing services for AHMSI in April

2008, when a contract between Option One Mortgage Corporation and DOCX were assigned to

AHMSI. This contract had expired on January 9, 2007, but the same work continued after the

expiration date. On August 1, 2008 the agreement, which had expired, was amended to allow the

LPS and DOCX employees to sign assignments of mortgages, which were never held owned by

AHMSI. Page 9 of the complaint indicates the improper signature and notarization of thousands

of these assignments. In fact the total number of these fraudulently assignments exceeded

15 Exhibit 4 includes a copy of the AHMSI v. LPS complaint, in addition to the Exhibits AHMSI

attached to their complaint.



24

30,000. On December 2, 2009, LPS announced that it would no longer execute documents on

behalf of its clients.

On February 22, 2010 AHMSI sent a Demand Letter to LPS referencing improper

execution and notarization of assignments of mortgage. This was attached to the complaint as

Exhibit J. LPS responded on May 19, 2010 and acknowledged this letter as referenced in Exhibit

K of the complaint. On October 22, 2010 AHMSI sent a demand for information ( also in

Exhibit K) to LPS, to resolve, the issues created by the “surrogate signer” program. Rhode

Island was indicated as one of the states in which the problem has occurred. AHMSI alleged that

1800 loans required foreclosure recommendation and/or rescission. AHMSI had knowledge of

the defective assignments when it allowed its attorney in this case to asserted that there were no

problems with the assignments.

A review of the Texas pleadings and Exhibits, which are attached to the amicus brief,

proves that all of the allegations of the Plaintiff regarding fraud, were, in fact true. AHMSI knew

that the allegations of the Fryzel complaint were true. However, it made a false assertion to the

Magistrate Judge as indicated above. A copy of the AHMSI complaint and exhibits are attached

to this memorandum, which upon review demonstrate the gross misconduct of AHMSI. That

entity knew that the assertions of the Plaintiffs’ complaint were true as it had 30,000 similar

situations in which it sought redress from LPS and DOCX, yet it neglected to provide its attorney

with that information. This conduct constitutes fraud on the Court by the Defendants.

This Court is urged to view the misconduct of the Defendants as an example of their

standard business practice, which supports the allegations in this case and many similar cases

before the Court. This misconduct warrants an investigation of AHMSI and gives credence to

the allegations in Fryzel and Cosajay. It remains to be seen how a party can argue that the



25

mortgagor, who gave a power of sale to the mortgagee and its valid assignees, lacks standing to

contend that the assignments were fraudulently executed, when the loan servicer knew that the

assignments were fraudulently executed. This Court is urged, on these grounds alone, not to

accept the Report and Recommendation of the Magistrate Judge, who was also misled by

AHMSI.

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

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.



26

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

the fact that this is a case about real estate. 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

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 amicus 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



27

agreement or contract, they do have standing. The amicus 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-2003-4157.16

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 amicus 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 amicus that the Porter

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

16 Please refer to the discussion of this case within this brief.



28

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 amicus 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

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 amicus 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),



29

(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 anticipated that there may be amicus briefs submitted in support of the Magistrate's

Report and Recommendation. If that is the case, it is likely that such briefs will include

references to the case of Payette v. MERS, et. al., CA No. 09-5875 (Superior RI, order pending).

The amicus 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 amicus 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. (See written decision appended hereto). Counsel for Payette is

also the amicus 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.

https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=p%2fiR1dOz7sAt0Dx29ViMK7Vkfw661x1ykn8i8cBxKTc7aDGRT6qVsIe62O%2bAG1738PJ%2b8PLLoflDq0gnezw7Z1Goy%2bLZ0L5wATkAj1UR7GQyibnCPjzUmUBMh2PwJolG&ECF=N.Y.+v.+Silverberg%2c+926+N.Y.S.2d+532%2c+536+(2d+Dept.+2011)


https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=p%2fiR1dOz7sAt0Dx29ViMK7Vkfw661x1ykn8i8cBxKTc7aDGRT6qVsIe62O%2bAG1738PJ%2b8PLLoflDq0gnezw7Z1Goy%2bLZ0L5wATkAj1UR7GQyibnCPjzUmUBMh2PwJolG&ECF=Kluge+v.+Fugazy%2c+145+A.D.2d+537%2c+538+(2d+Dept.+1988)

https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=p%2fiR1dOz7sAt0Dx29ViMK7Vkfw661x1ykn8i8cBxKTc7aDGRT6qVsIe62O%2bAG1738PJ%2b8PLLoflDq0gnezw7Z1Goy%2bLZ0L5wATkAj1UR7GQyibnCPjzUmUBMh2PwJolG&ECF=HSBC+Bank+USA%2c+Nat.+Ass%27n+v.+Miller%2c+26+Misc.3d+407%2c+411-12



https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=p%2fiR1dOz7sAt0Dx29ViMK7Vkfw661x1ykn8i8cBxKTc7aDGRT6qVsIe62O%2bAG1738PJ%2b8PLLoflDq0gnezw7Z1Goy%2bLZ0L5wATkAj1UR7GQyibnCPjzUmUBMh2PwJolG&ECF=Kluge+v.+Fugazy%2c+145+A.D.2d+537%2c+538+(2d+Dept.+1988)





30

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.



31

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 there after". 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



32

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



33

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



34

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 amicus that Bucci continues to stand on its own while on appeal

to the Supreme Court. It is the opinion of this amicus that Porter misconstrued and misapplied

the holding in Bucci so they are distinguishable from each other and from Payette.



35

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:



36

¶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 aLender. 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 amicus 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."



37

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 ina 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. Atthat 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 previouslyhad, 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



38

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.17

¶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

17 See Administrative Order No: 2010-14 (Attached, Exhibit 5)



39

simply did not understand what the mortgage actually said and what was pleaded by the

Plaintiffs.

¶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 thismatter.

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."


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.


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



40

the Payettes and to other Courts reading the Payette Decision without the benefit of the

documents which underpin it.

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



41

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

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



42

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

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



43

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.

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 a rgument. 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



44

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

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 uponthe 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



45

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

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



46

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

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 mortgageeand lender being the same party. In this instance, it is clearly stated in the Note



47

and Mortgage that the Lender, any by necessary implication, not the Mortgagee or

a "Nominee Mortgagee", can invoke the Statutory Power of Sale."

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.



48

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

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.



49

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

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



50

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

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.



51

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

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



52

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

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



53

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

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



54

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

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 §34-16-418

clearly gave

18 § 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



55

the Payettes, who are the fee simple owners of the property, the unquestionable right to challenge

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.

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.)



56

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.

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 amicus 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, andprocedures, compliance risk management, and internal audit and reporting



57

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

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



58

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

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.19

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.

19 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;



59

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

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

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)

http://scholar.google.com/scholar_case?case=14224889172679208203&q=mers+v.+saunders&hl=en&as_sdt=2,40

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60

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

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 VerifiedAnswers, which are in effect affidavits in Support of a Rule 56 Summary

Judgment Motion.20

In this case, Charles Boyles signed under oath that he was

the Assistant Vice President of OneWest. Erica Johnson Seck signed underoath 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 evendate, 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 VicePresident 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 thesetwo play the dual and sometimes triple roles of Vice Presidents to allow for the

fraudulent reverse engineering of title and fraud upon the Court.

20 See Signatory Chart for Ingram, Breggia, Payette, Noury, in addition to copies of Signed

Verifications (Attached Exhibit 6)



61

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, asevidenced 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. TheAssignment 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 wereinsignificant, 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



62

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.

CONCLUSION

In conclusion, the amicus would respectfully request that this honorable court deny the

adoption of the Report and Recommendation of Magistrate Martin due to the various reasons

stated above, but most importantly because mortgage assignments are, pursuant to Rhode Island

Statutory Law, transfers of an interest in real estate, and as such, the homeowner/mortgagor is a

party to those transactions thus giving them standing to challenge the validity of the assignments.

It is the position of the amicus that the Plaintiffs do have standing to challenge the assignments

rooted in §34-11, Form & Effect of Conveyances.

Finally, the amicus would like to thank the court for the opportunity to submit this amicus

brief and for the court’s consideration of his position in this matter.

Respectfully Submitted,

/s/ George E. Babcock

______________________________

George E. Babcock, Esq. # 3747

574 Central AvenuePawtucket, RI 02861

September 9, 2011 401-724-1904



CERTIFICATE OF SERVICE

I hereby certify that on September 9, 2011, a copy of the foregoing document, filed

through the CM/ECF System, will be sent electronically to the registered participants as

identified on the Notice of Electronic Filing (NEF) and paper copies shall be served by first class

mail postage prepaid on the parties listed on the NEF as not receiving electronic notice.

/s/ George E. Babcock, Esq.

____________________________

George E. Babcock, Esquire

Documents

Amicus Brief Rhode Island Foreclosures