Judicial Corruption Research Papers - Academia.edu (original) (raw)

III. INTRODUCTION
This appeal arises from a dispute over real property; it is the second time this case is on appeal. In 1999, Linda Nicholls borrowed $100,000 from Old Kent Mortgage Company (“Old Kent”) and executed a promissory note (the “Note”) secured by a deed of trust (the “DOT”) (collectively, the “Nicholls Loan”), which encumbered the property commonly known as 12002 4th Avenue SW in Seattle, Washington (the “Property”). Exh.1, 2.

In 2006, Nicholls borrowed $82,000 from Duncan Robertson, secured by a deed of trust against the same Property. Exh. 10. In 2008, Robertson became the record owner of the Property by virtue of his Trustee’s Deed when he foreclosed on his junior lien. CP 3511. Robertson began looking for the senior lienholder to pay them but could find no record of who held the promissory note and deed of trust. CP 1435-36, 1758-59. From 2008 to 2014, various entities initiated foreclosure. Robertson requested proof that the entity held the Note and DOT. CP 1758-59.

In 2014, Ocwen Loan Servicing, LLC (“Ocwen”) mailed Nicholls a notice it was transferring servicing to 21st Mortgage Corporation (“21st”). CP 1417. When Robertson requested proof that 21st held the Note, 21st filed a judicial foreclosure action against Robertson, claiming it owned the Note and DOT. CP 1759; Exh. 135. In support of its claim, 21st provided several assignments of the DOT and a Note endorsed to Bank One. CP 3415-3452. Ten months later, 21st produced three allonges, the last one endorsed in blank. CP 1856; Exh. 134.

Robertson hired two experts – expert Mortgage Fraud and Forensic Analyst and Certified Fraud Examiner Marie McDonnell and expert forensic document examiner Dr. James Kelley – to determine if 21st’s documents were originals. CP 2528-29, 5065.

According to McDonnell, Old Kent sold the Nicholls Loan to Residential Funding Corporation (“RFC”), who securitized it and placed it into a secured trust called Residential Asset Securities Corporation, Series 2000-KS2, a New York common law trust in 2000. Bank One, National Association, served as Trustee, and RFC was appointed Master Servicer. CP 1760 (citing 5068 (citing 4977)). When the trust dissolved in October 2006, the loans contained within the trust were paid in full, and there are no further records showing who held the Note. CP 1760, 5068, 4981-82. Subsequently, Residential Funding Company (“RFC,LLC”) became the master servicer. CP 1866-67, 5064-5070.

In 2012, RFC,LLC filed for bankruptcy and sold its assets to Berkshire Hathaway Incorporated (“Berkshire”) through the Bankruptcy Court by way of a sale order entered November 21, 2012 (“Sale Order”). Exh.12. Thereafter, RFC,LLC sold its subservicing rights to Ocwen for $49.6 Billion. CP 1256, 1291, 1408. According to 21st, when Berkshire purchased RFC,LLC’s assets, it created and placed the assets into Christianna Trust and appointed Knoxville Trust (“Knoxville”) as Trustee. Exh. 6. According to 21st, Knoxville contracted with 21st to service the loans Berkshire purportedly acquired. Exh. 7. Knoxville did not warrant that it produced the
original loan documents to 21st. Exh. 7 at 56.

Dr. James Kelley opined that the signatures on the allonges were placed there by a printer; thus, they were not originals but a copy. CP 2528-30 And according to McDonnell, the entities who purportedly indorsed the allonges did not exist or had no authority to do so at the time of the indorsement. CP 1760-61, 4986. Even more, on July 9, 2013, Ocwen, purportedly on behalf of RFC,LLC, assigned to 21st RFC,LLC’s beneficial interest in the DOT when both Ocwen and 21st knew RFC,LLC had no beneficial interest to assign. RP 418; CP 1256. Yet, both Ocwen and 21st relied on the July 9 assignment to complete the chain of title to the DOT. CP 1245, 4336; Exh. 135.

Based on this evidence, Robertson reasonably inferred RFC, LLC did not own the Nicholls Loan when it sold its assets to Berkshire. Thus, 21st never acquired any rights to service the loan. Likewise, Robertson’s evidence created a reasonable inference that Ocwen spent $49.6 Billion dollars to acquire the subservicing rights to loans for which it could not verify the beneficiary and that after the Bankruptcy court approved the Sale Order, both 21st and Ocwen realized they did not have the documents necessary to move forward with servicing or foreclosing on the Nicholls Loan, so they fabricated a chain of title by fabricating the indorsements on the allonges and the July 9 Assignment.

21st used this false assignment to obtain a decree of foreclosure against Robertson’s Property on summary judgment then to unlawfully obtain title. CP 3459, 3464-68, 3470-72, 3518, 4336, 4483, 4491. However, this Court reversed on the summary judgment order authorizing foreclosure and remanded it for trial. 21st Mortg. Corp. v. Robertson, No. 75262-6-I at 9, 2017 Wn. App. LEXIS 2471, (Ct. App. Oct. 30, 2017) (“21st Mortgage I”).

On remand, Ocwen and 21st relied on the false July 9 Assignment to persuade the trial court to dismiss Robertson’s claims \against them. CP 1245, 2153, 2155, 2156, 2162, 2163, 2164, 2169, 2260-66.

At trial, the trial court allowed 21st to use its own unclean hands to shield itself from any challenge to the chain of title by prohibiting Robertson’s mortgage fraud expert from testifying about the history of the DOT in its entirety and prohibiting her from testifying about the history of the Note prior to the Bankruptcy Sale Order. RP 525-27. Thus, the trial court permitted 21st to benefit from its own fraud upon the court without challenge. Even worse, when Robertson moved for fees and sanctions under RCW 4.84.185 and CR 11, the trial court denied his motion. Supp. CP 576 (Order Setting Costs 4/25/22)

Notwithstanding 21st’s and Ocwen’s deceptive acts, the jury found 21st did not hold the Note, thus, had no right to foreclose. CP \3425-28, 3499-3500. Yet, 21st remains the record owner of the Property. CP 3518-20. Thus, 21st received the very remedy the jury found it had no right to receive. Robertson moved to vacate the decree of foreclosure and sale, but the trial court denied it, allowing 21st to keep a property it obtained unlawfully and leaving this appeal as Robertson’s only recourse. CP 3645-50.

IV STATEMENT OF THE CASE

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