Motion to Dismiss for Lack of Standing

The Scheduling Order set April 15, 2015 as the deadline to file a Motion for Summary Judgment. I waited till close to the deadline so as not to give Wells Fargo a lot of extra time, and warning.

I am hopeful, but by no means sure that my home and garden are safe under the provisions of the UCC, Uniform Commercial Code, which is a part of my state’s statutes, as it is a part of your state’s.

4/27/2015 ~ Following the PreTrial Conference I refiled my motion under the name the Judge used for it: “Defendant Kline’s Motion to Dismiss for Lack of Standing”, prior to refiling it had been “Defendant’s Motion for Summary Judgment”. The only changes I made were to the name and the line asking for relief.

The motion is based on Bank of New York v. Romero. Read case.

Your state most likely has a similar case on file. Your motion to Dismiss for Lack of Standing will be stronger if you quote the Supreme Court of your state.

6/8/2015 ~ I lost the hearing. For one thing I misunderstood what it means to have standing from the time of filing of the case. It doesn’t mean that the bank has to show the documents with its Complaint, it means that the bank has to have had the original note before it filed the foreclosure. Bank of New York v. Romero doesn’t make that clear.

The judge asked me how I responded to Wells Fargo saying they had the note, but lost it. I did an abysmal job of answering, in part because I have experienced so many lies from Wells Fargo.

.

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After I lost I kept interrupting the judge while he was ruling, which didn’t gain me any points.

Since the hearing my health has been in major decline. Now taking a step causing sharp, gasp-making pain.

The next step in the foreclosure is a trial, anywhere from two to three days of trial. Wells Fargo most likely is counting on how its lawyers will annihilate me with my brain injury at trial.

6/11/2015 ~ Examining the witness for the bank is key. I had failed to understand that there was no way my motion to dismiss could be granted. As long as the bank claims they had the original note, that makes a trail necessary. Read more.


 

FIRST JUDICIAL DISTRICT COURT
COUNTY OF SANTA FE
STATE OF NEW MEXICO

Wells Fargo Bank NA,
Plaintiff,

No. D-101-CV-200800942

Karen Marie Kline, Pueblos de Rodeo Road Owners
Association, Inc.; Manhattan Condominium Association,
Defendants.

DEFENDANT KLINE’S MOTION TO DISMISS FOR LACK OF STANDING

FORMERLY KNOWN AS

DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

     

COMES NOW Defendant Karen Marie Kline and resubmits her motion so that its name and request for relief conform to the language from the PreTrial Conference (everything else remains the same) and moves this honorable Court to dismiss for lack of standing as a matter of law for these reasons:

  1. UCC, NMSA 55-3-301 provides that the party seeking to enforce the note has the burden of establishing timely ownership of the note and the mortgage to support its entitlement to pursue a foreclosure action.
  2. Wells Fargo’s copy of the note attached to Wells Fargo’s Complaint for Foreclosure, date stamped April 7, 2008, is not indorsed to Wells Fargo. Exhibit 1, page 2.
  3. Wells Fargo has provided no evidence that it had possession and ownership of the note at the time it filed this foreclosure.
  4. I mailed a Request for Production of the original note to Wells Fargo on May 26, 2009, and filed the Request the same day, but Wells Fargo has not produced the original note as required to have standing to foreclose. “If [the entity] was a successor in interest to a party on the [contract], it was incumbent upon it to prove this to the court.” Bank of New York v. Romero, 2014-NMSC-007.
  5. The Court’s Scheduling Order gives Wells Fargo till April 30, 2015 to produce the original note. However, even if the Original Note is produced by the Scheduling Order deadline, Wells Fargo failed to demonstrate that it had standing under New Mexico’s Uniform Commercial Code to bring the foreclosure action at the time it filed suit.

CASE LAW IN SUPPORT

Wells Fargo, like Bank of New York in Bank of New York v. Romero, filed suit to foreclose. In Wells Fargo’s case as in Bank of New York’s case the party filing to foreclose is required to demonstrate under New Mexico’s Uniform Commercial Code (UCC) that it had standing to bring the foreclosure action at the time it filed suit:

“{17} The Bank of New York does not dispute that it was required to demonstrate under New Mexico’s Uniform Commercial Code (UCC) that it had standing to bring a foreclosure action at the time it filed suit. See NMSA 1978, § 55–3–301 (1992) (defining who is entitled to enforce a negotiable interest such as a note); see also NMSA 1978, § 55–3–104(a), (b), (e) (1992) (identifying a promissory note as a negotiable instrument); ACLU of N.M. v. City of Albuquerque, 2008–NMSC–045, ¶ 9 n. 1, 144 N.M. 471, 188 P.3d 1222 (recognizing standing as a jurisdictional prerequisite for a statutory cause of action); Lujan v. Defenders of Wildlife, 504 U.S. 555, 570–71 n. 5 (1992) ( “[S]tanding is to be determined as of the commencement of suit.”); accord 55 Am.Jur.2d Mortgages § 584 (2009) (“A plaintiff has no foundation in law or fact to foreclose upon a mortgage in which the plaintiff has no legal or equitable interest.”). One reason for such a requirement is simple: “One who is not a party to a contract cannot maintain a suit upon it. If [the entity] was a successor in interest to a party on the [contract], it was incumbent upon it to prove this to the court.” L.R. Prop. Mgmt., Inc. v. Grebe, 1981–NMSC–035, ¶ 7, 96 N.M. 22, 627 P.2d 864 (citation omitted). The Bank of New York had the burden of establishing timely ownership of the note and the mortgage to support its entitlement to pursue a foreclosure action. See Gonzales v. Tama, 1988–NMSC016, ¶ 7, 106 N.M. 737, 749 P.2d 1116 (“One who holds a note secured by a mortgage has two separate and independent remedies, which he may pursue successively or concurrently; one is on the note against the person and property of the debtor, and the other is by foreclosure to enforce the mortgage lien upon his real estate.” (internal quotation marks and citation omitted)).” Bank of New York v. Romero, 2014-NMSC-007

Wells Fargo has not “put forth” evidence to prove that it is legally entitled to enforce the note. Wells Fargo has not demonstrated that it had standing to bring this foreclosure. In Bank of New York v. Romero, New Mexico Supreme Court says evidence of the right to foreclose must be “put forth”:

“{19} The Bank of New York argues that in order to demonstrate standing, it was required to prove that before it filed suit, it either (1) had physical possession of the Romeros’ note indorsed to it or indorsed in blank or (2) received the note with the right to enforcement, as required by the UCC. See § 55–3–301 (defining “[p]erson entitled to enforce” a negotiable instrument). While we agree with the Bank that our state’s UCC governs how a party becomes legally entitled to enforce a negotiable instrument such as the note for a home loan, we disagree that the Bank put forth such evidence.’ Ibid.

New Mexico Supreme Court cites UCC’s definition of the first type of “person entitled to enforce” a note:

{21} The UCC defines the first type of “person entitled to enforce” a note—the “holder” of the instrument—as “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” NMSA 1978, § 55–1–201(b)(21)(A) (2005); see also Frederick M. Hart & William F. Willier, Negotiable Instruments Under the Uniform Commercial Code, § 12.02(1) at 12–13 to 12–15 (2012) (“The first requirement of being a holder is possession of the instrument. Ibid.

In Wells Fargo’s foreclosure action against my home, Wells Fargo is not “entitled to enforce”. Wells Fargo is not now, nor was Wells Fargo at the time of filing this foreclosure, in possession of the note, that is, the negotiable instrument, and, Wells Fargo’s copy of the note, used by Wells Fargo as an exhibit to its Complaint for Foreclosure, shows that the note was not made payable to Wells Fargo. Exhibit 1, page 2.

A third party, like Wells Fargo, must prove both physical possession and the right to enforcement. In Bank of New York the New Mexico Supreme Court points to Romeros’ note being “clearly made payable to the order of Equity One” which is similar to my note being made payable to the order of G.E. Capital Mortgage Services, Inc., Exhibit 1, page 2. The determination must be made as to whether sufficient evidence was provided of how Bank of New York or Wells Fargo became a “holder” by either an indorsement or transfer:

Possession is not necessarily sufficient to make one a holder․ The payee is always a holder if the payee has possession. Whether other persons qualify as a holder depends upon whether the instrument initially is payable to order or payable to bearer, and whether the instrument has been indorsed.” (footnotes omitted)). Accordingly, a third party must prove both physical possession and the right to enforcement through either a proper indorsement or a transfer by negotiation. See NMSA 1978, § 55–3–201(a) (1992) (“‘Negotiation’ means a transfer of possession of an instrument by a person other than the issuer to a person who thereby becomes its holder.”). Because in this case the Romeros’ note was clearly made payable to the order of Equity One, we must determine whether the Bank provided sufficient evidence of how it became a “holder” by either an indorsement or transfer. Ibid.

In Wells Fargo’s foreclosure action against my home, the note was clearly made payable to the order of G.E. Capital Mortgage Services, Inc., Exhibit 1, page 2. Wells Fargo’s Lost Note affidavit sought to cure the problem, however: “Plaintiff’s Affidavit of Lost Original Note shows a copy of the note. It was not endorsed to Wells Fargo. The affidavit does not give the date the original note was shipped, the means by which it was shipped, the tracking information related to the shipping, nor any explanation of how the tracking information failed to locate the original note. With these deficiencies Wells Fargo’s Affidavit of Lost Original Note fails to show that the loss of possession was not the result of transfer or lawful seizure, either of which would preclude Wells Fargo from foreclosing on the negotiable instrument pursuant to the UCC, 55-3-309(2) NMSA 1978. The Affidavit of Yolanda T. Williams may not be relied upon when it lacks evidence to support its statements.” See Karen Marie Kline’s Brief on Lost Original Note, incorporated here by reference.

Wells Fargo must prove that the instrument was not lost in a transfer or seizure in order for Wells Fargo to prove its right to enforce the instrument pursuant to 55-3-309(a)(ii) NMSA.

The uncontroverted facts are (1.) in 1993 I signed a Note and Mortgage to Bank of Texas on my home at 3255 Calle de Molina, Santa Fe, New Mexico, (2.) Bank of Texas indorsed the note to G.E. Capital Mortgage Services, Inc. and (3) there is no indorsement to Wells Fargo.

No evidence has been presented by Wells Fargo to show that the loss of the Note was not a result of transfer or seizure. But, beyond that, there is this:

“{23} Possession of an unindorsed note made payable to a third party does not establish the right of enforcement, just as finding a lost check made payable to a particular party does not allow the finder to cash it. See NMSA 1978, § 55–3–109 cmt. 1 (1992) (“An instrument that is payable to an identified person cannot be negotiated without the indorsement of the identified person.”). The Bank’s possession of the Romeros’ unindorsed note made payable to Equity One does not establish the Bank’s entitlement to enforcement.” Ibid.

Thus, even if Wells Fargo possessed the unendorsed note made payable to a G.E. Capital Mortgage Services, Inc. it would not establish Wells Fargo’s entitlement to enforcement.

“[S]pecial indorsement to JPMorgan Chase establishes JPMorgan Chase as the proper holder of the Romeros’ note absent some evidence by JPMorgan Chase to the contrary. See Cadle Co. v. Wallach Concrete, Inc., 1995–NMSC–039, ¶ 14, 120 N.M. 56, 897 P.2d 1104 (“[A] special indorser has the right to direct the payment and to require the indorsement of his indorsee as evidence of the satisfaction of own obligation. Without such an indorsement, a transferee cannot qualify as a holder in due course.” (omission in original) (internal quotation marks and citation omitted)). Because JPMorgan Chase did not subsequently indorse the note, either in blank or to the Bank of New York, the Bank of New York cannot establish itself as the holder of the Romeros’ note simply by possession.” Ibid.

Wells Fargo is not in possession of the instrument, nevertheless for the sake of rounding out this motion, I cite New Mexico Supreme Court’s explanation of how there’s a second way under the UCC for a plaintiff in possession to demonstrate that it has the rights of a holder:

“{29} The second type of “person entitled to enforce” a note under the UCC is a third party in possession who demonstrates that it was given the rights of a holder. See § 55–3–301 (“ ‘Person entitled to enforce’ an instrument means a nonholder in possession of the instrument who has the rights of a holder.”). This provision requires a nonholder to prove both possession and the transfer of such rights. See NMSA 1978, § 55–3–203(a)–(b) (1992) (defining what constitutes a transfer and vesting in a transferee only those rights held by the transferor). A claimed transferee must establish its right to enforce the note. See § 55–3–203 cmt. 2 (“[An] instrument [unindorsed upon transfer], by its terms, is not payable to the transferee and the transferee must account for possession of the unindorsed instrument by proving the transaction through which the transferee acquired it.”). Ibid.

“{30} Under this second category, the Bank of New York relies on the testimony of Kevin Flannigan, an employee of Litton Loan Servicing who maintained that his review of loan servicing records indicated that the Bank of New York was the transferee of the note. The Romeros objected to Flannigan’s testimony at trial, an objection that the district court overruled under the business records exception. We agree with the Romeros that Flannigan’s testimony was inadmissible and does not establish a proper transfer.” Ibid.

In Wells Fargo’s foreclosure action against my home, Wells Fargo failed to comply with the Court’s Scheduling Order deadline for filing its list of witnesses. I have filed a motion asking for the Court to exclude Wells Fargo’s witnesses for failing to comply with the Scheduling Order. See Motion to Exclude Wells Fargo Bank’s Witnesses for Failure to Comply with Scheduling Order.

In addition, Wells Fargo did not list the name of a person to give testimony at trial to establish proper transfer. Without such a witness proper transfer cannot be established.

In Bank of New York, the bank’s witness named “a pooling and servicing agreement” to support his testimony that transfer of the note to Bank of New York took place. New Mexico Supreme Court, however, noted that no such business record was itself offered or admitted into evidence:

“{32} When pressed about Flannigan’s basis of knowledge on cross-examination, Flannigan merely stated that “our records do indicate” the Bank of New York as the holder of the note based on “a pooling and servicing agreement.” No such business record itself was offered or admitted as a business records hearsay exception. See Rule 11–803(F) NMRA (2007) (naming this category of hearsay exceptions as “records of regularly conducted activity”).” Ibid.

Wells Fargo’s Exhibit List does not include business records that evidence the transfer of my note to Wells Fargo, Exhibit 3, pages 1-2 of 3. Wells Fargo has not provided a Pooling and Servicing Agreement that governs or includes my loan, nor has it provided a purchase and sale agreement for the subject loan. Wells Fargo has not provided a record of the disbursement of funds for the acquisition of my note. In like circumstances when no documents evidencing a transfer were entered into evidence, Bank of New York was found by New Mexico Supreme Court to be unable to establish a transfer:

“Neither Flannigan’s testimony nor Kelley’s affidavit can substantiate the existence of documents evidencing a transfer if those documents are not entered into evidence. Accordingly, Flannigan’s trial testimony cannot establish that the Romeros’ note was transferred to the Bank of New York.” Ibid.

Thus, even if Wells Fargo’s witnesses were not excluded, Wells Fargo has not provided documentary evidence of the transfer and therefore is cannot show that it qualifies as the second type of “person entitled to enforce” a note under the UCC.

Significantly New Mexico Supreme Court cites 55 Am.Jur.2d Mortgages, “A mortgage securing the repayment of a promissory note follows the note, and thus, only the rightful owner of the note has the right to enforce the mortgage.”

[W]e have long recognized the separate functions that note and mortgage contracts perform in foreclosure actions. See First Nat’l Bank of Belen v. Luce, 1974–NMSC–098, ¶ 8, 87 N.M. 94, 529 P.2d 760 (holding that because the assignment of a mortgage to a bank did not convey an interest in the loan contract, the bank was not entitled to foreclose on the mortgage); Simson v. Bilderbeck, Inc., 1966–NMSC–170, ¶¶ 13–14, 76 N.M. 667, 417 P.2d 803 (explaining that “[t]he right of the assignee to enforce the mortgage is dependent upon his right to enforce the note” and noting that “[b]oth the note and mortgage were assigned to plaintiff. Having a right under the statute to enforce the note, he could foreclose the mortgage.”); accord 55 Am.Jur.2d Mortgages § 584 (“A mortgage securing the repayment of a promissory note follows the note, and thus, only the rightful owner of the note has the right to enforce the mortgage.”); Dunaway, supra, § 24:18 (“The mortgage only secures the payment of the debt, has no life independent of the debt, and cannot be separately transferred. If the intent of the lender is to transfer only the security interest (the mortgage), this cannot legally be done and the transfer of the mortgage without the debt would be a nullity.”). These separate contractual functions—where the note is the loan and the mortgage is a pledged security for that loan—cannot be ignored simply by the advent of modern technology and the MERS electronic mortgage registry system.

In Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), which New Mexico Supreme Court cites in Bank of New York, the U.S. Supreme Court said,

“[T]he core component of standing is an essential and unchanging part of the case-or-controversy requirement of Article III. See, e. g., Allen v. Wright, 468 U.S. 737, 751 (1984).”

The Court noted its,

“longstanding rule that jurisdiction is to be assessed under the facts existing when the complaint is filed.” Lujan v. Defenders of Wildlife.

In Wells Fargo’s foreclosure action against my home Wells Fargo has failed to demonstrate that the Original Note was in its possession when it filed its Complaint for Foreclosure. Over the several years since Wells Fargo filed its foreclosure against my home, Wells Fargo has not produced the Original Note.

The U.S. Supreme Court has made clear that the burden of establishing standing rests on the plaintiff. Of particular importance is the fact that, per the opinions of the U.S. Supreme Court, standing must exist on the date the complaint is filed and throughout the litigation.   Defendant is entitled to a judgment as a matter of law. See Rule 1-056 A NMRA.

Wherefore, Defendant moves the Court to:

  1. Dismiss
  2. Grant such other and further relief as to the Court seems proper.

Respectfully submitted,

 

Karen Marie Kline, Defendant, pro se

xxxxxxx

Santa Fe, New Mexico 87507

xxxxx

CERTIFICATE OF SERVICE: I caused a second true copy of the above DEFENDANT KLINE’S MOTION TO DISMISS FOR LACK OF STANDING FORMERLY KNOWN AS DEFENDANT’S MOTION FOR SUMMARY JUDGMENT to be mailed today, April 23, 2015, to:

Larry J. Montaño
110 N. Guadalupe, Suite 1
Post Office Box 2208
Santa Fe, New Mexico 87505
TEL:   (505) 988-4421
FAX:   (505) 983-6043

I’m not showing the Exhibits in order to save myself time.

Defendant’s Exhibit 1, page 1 of 2 of Wells Fargo’s copy of note

Defendant’s Exhibit 1, page 2 of 2 of Wells Fargo’s copy of note, showing indorsements

Exhibit 2, page 1 of 3

Exhibit 2, page 2 of 3

Exhibit 2, page 3 of 3

Exhibit 3, page 1 of 3

 

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