jacobson exceptions

8/12/2019 Jacobson Exceptions

1/20

IN THE CIRCUIT COURT FOR TALBOT COUNTY

JOHN E. DRISCOLL, III, et al *

Plaintiffs, *

v. * Civil Action No. 20-C-2-00!"!#

ELI$A%E&H '. JACO%SON *

Defen(ant *

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

ELI$A%E&H '. JACO%SON *

Co)nte-Plaintiff *

v. *

JOHN DRISCOLL, III *RO%ER& E. +RA$IERLARA D. HARRIS *DANIEL J. PESACHOI&$ an(DEENA L. RENOLDS *S)/stit)te &)stees

*an(

*ELLS +ARO %AN1, N.A.

*Co)nte-Defen(ants

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

DEFENDANTS/COUNTER PLAINTIFFS EXCEPTIONS TO THEFORECLOSE SALE AND REQUEST FOR HEARING

Elia/et3 '. Jaco/son, Defen(ant4Co)nte-Plaintiff, /5 3e attone5, ea( P.

e3lin6e, Es7)ie, files t3is 'otion fo E8ce9tions to t3e +oeclos)e Sale an( Re7)est

fo Heain6 9)s)ant to R)le :-;0 an( in s)99ot 3eeof, states as follo?s@

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2/20

Noncomplianc !i"# R$l %&'(%)

&3e Plaintiffs sc3e()le( an( 3el( a sale of t3e s)/ect 9o9et5, B:!0 +ai?a5

Lane, Easton, '(., on Se9te/e B, 20;. At t3e sale t3e Len(ealle6e(l5 9)c3ase(

t3e s)/ect 9o9et5. 'a5lan( R)le :-20 6ovens t3e e7)ieents of t3e notice

9io to t3e sale.

'a5lan( R)le :-20 e7)ies t3at 9io to t3e foeclos)e sale, t3e in(ivi()al

a)t3oie( to aFe t3e sale )st sen( notice of t3e tie, 9lace an( tes of t3e sale /5

cetifie( ail an( /5 fist-class ail to t3e /oo?e. &3e ailin6s )st /e sent not

oe t3an ;0 (a5s an( not less t3an 0 (a5s /efoe t3e (ate of t3e sale. Ho?eve,

neit3e ells +a6o no t3e S)/stit)te &)stees co9lie( ?it3 t3ese e7)ieents to

notif5 's. Jaco/son of t3e sale ?it3in t3e e7)ie( tie 9eio(s o ?it3 t3e e7)ie(

infoation t3at )st /e containe( in t3e notice.

'. Ro/et Jaco/son is a nae( Defen(ant in t3e instant foeclos)e action as 3e

e8ec)te( t3e s)/ect Dee( of &)st. et, '. Jaco/son ?as neve notifie( of t3e sale of

t3e s)/ect 9o9et5 /5 eit3e t3e S)/stit)te &)stees o /5 ells +a6o as state( in t3e

attac3e( Affi(avit, E*#i+i" A.

'. Hillan an( 's. HletFo ?ee /ot3 in atten(ance at t3e Se9te/e 2, 20;,

3eain6 ?3eein Defen(ants co)nsel cleal5 state( t3at neit3e 's. Jaco/son no '.

Jaco/son ?ee 9o9el5 notifie( of t3e Se9te/e B, 20;, sale (ate. '. Hillan

es9on(e( t3at 3e ?as /ein6 a/)s3e( ?it3 t3is clai an( t3at 3e ?o)l( 3ave to

1It is )nclea as to ?3o t3e efeence( Len(e isG ells +a6o, t3e c)ent sevice an( (oc)ent

c)sto(ian, o +e((ie 'ac, t3e claie( o?ne of t3e s)/ect loan.

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3/20

evie? t3e notice=s> of sale at 3is office. '. Hillan t3en state( t3at if t3e 9aties ?ee

not 9o9el5 notifie( t3e5 co)l( )st file E8ce9tions.

It is )n(enia/le t3at it is t3e ()t5 of t3e S)/stit)te &)stees to co9l5 ?it3 '(.

R)le :-20 in t3e ailin6 of t3e notices, /5 cetifie( ail an( /5 fist-class ail, to t3e

/oo?e, t3e eco( o?ne of t3e 9o9et5 an( via fist-class ail to All Occ)9ants, to

anno)nce t3e tie, t3e 9lace, an( t3e tes of a sale. '. Hillan eco6nie( t3is in

statin6, in 3is A)6)st , /)t, )9on t3e S)/stit)te &)stees

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4/20

/ein6 ein(e( of t3at ()t5, t3e5 aFe no atte9t to le6itiie t3ei con()ct an( i(l5

anno)nce t3at t3e /)(en to notif5 t3e Co)t of t3e nonco9liance to R)le :-20 is on

t3e Defen(ant via 3e filin6 of E8ce9tions.

&3e S)/stit)te &)stees clai fails t3at t3e sale )st ove fo?a( /eca)se it is

costin6 t3e len(e one5 eac3 tie a sale is sc3e()le( an( t3en cancele(.

S9ecificall5, t3e S)/stit)te &)stees clai t3at t3e Se9te/e B, 20;, sale ?as t3e

t3i( tie t3at a sale ?as sc3e()le(. &3is is false as t3e S)/stit)te &)stees sc3e()le(

one ot3e sale fo 'a5 ;, 20;, an( it ?as ells +a6o t3at on 'a5 !, 20;, cancele(

t3e sale of its o?n acco(. In a conte9oaneo)s stateent elease( 'a5 !, 20;, /5

ells +a6o to t3e Aeican %anFe 9)/lication ells +a6o confie( t3at it 3a(

te9oail5 9ost9one( cetain foeclos)e sales ?3ile ?e st)(5 t3e evise( 6)i(ance

fo t3e OCC. &3at aticles linF is accessi/le online, ?it3in ?3ic3 ae t3e OCCs

evise( 6)i(ance stateents@

3tt9@44???.aeican/anFe.co4iss)es4!#"B4?ells-citi-3alt-ost-foeclos)e-sales-as-occ-atc3ets-)9-sc)tin5-0


5/20

?it3 t3is sale )st /e /one /5 t3e S)/stit)te &)stees ()e to t3ei fail)e to co9l5

?it3 'a5lan( R)le :-20.

F,a$-

Recent foeclos)e case la? in 'a5lan( 3as left t3e (oo o9en to aisin6

7)estions of fa)( in 9ost-sale e8ce9tions. SeeBates v. Cohn:! '(. ;0", " A.;( #:B

=200>. &3e Defen(ant 3as alle6e( +a)(4 Deceit an( Cons9iac5 to Defa)( in 3e

Co)nte Clai, ?3ic3 t3is Co)t in its O(e (ate( 'a5 B, 20;, (enie( Plaintiffs

'otion to Disiss. Cleal5, Defen(ant 3as 9esente( eno)63 facts to s)99ot an

alle6ation of fa)( a6ainst Plaintiffs. Defen(ant inco9oates to t3is 'otion fo

E8ce9tions all alle6ations containe( in /ot3 3e co)nte clai an( aen(e( co)nte

clai, in 3e 'otion to Sta54Disiss t3e +oeclos)e Action, an( in all s)/se7)ent

'otions file( in t3is instant case.

It is citical t3at t3e Co)t 3as not 5et (eteine( a)t3enticit5 of t3e Note, a/o)t

?3ic3 it 3as assete( in its ecent 'eoan() O9inion an( O(e@ Ho?eve, if t3e

Note is not t3e oi6inal, t3en t3ee is a le6itiate concen as to ?3et3e ells +a6o an(

t3e &)stees 3a( an in(e9en(ent i63t to foeclose. Hence, t3e sale s3o)l( 3ave /een

sta5e( ?3en t3ee is a fact)al (is9)te as to t3e Notes a)t3enticit5. At t3e 3eain6 on

'a5 , 20;, co)nsel fo t3e S)/stit)te &)stees not onl5 to)te( 3ol(in6 in 3is 3an( 's.

Jaco/sons oi6inal Note (oc)ent, 3e invite( 's. Jaco/son to ins9ect t3e alle6e(

oi6inal Note o)tsi(e of t3e 3eain6. Ho?eve, (es9ite eceivin6 n)eo)s e7)ests in a

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6/20

9eio( e8cee(in6 :< (a5s, co)nsel fo t3e S)/stit)te &)stees 6ante( no s)c3

ins9ection of t3e Note )ntil t3e onin6 of t3e Se9te/e 2, 20; 3eain6.

Defen(ant (i( ins9ect t3e alle6e( oi6inal Note 9ovi(e( /5 Plaintiffs on

Se9te/e 2, 20; as t3ee ?as ins)fficient notice fo Defen(ants e89et to atten(

Co)t to ins9ect t3e Note. &3e ins9ection of t3e Note /5 t3e Defen(ant eveale( t3at

t3ee ?ee no i9essions o in(entations on t3e evese si(e of t3e 9a6e /eain6

Defen(ants si6nat)e, lea(in6 Defen(ant to concl)(e t3at t3e alle6e( Note (i( not

contain 3e oi6inal si6nat)e. +)t3e, t3e soot3ness of t3e alle6e( oi6inal Note

in(icate( t3at t3e Note ?as 9inte( fo a colo 9inte as o99ose( to /ein6 t3e Note

/eain6 t3e oi6inal ?et-inFe( si6nat)e of t3e Defen(ant. &3is instant case is (iffeent

fo Thomas v. Nadel, :2! '(. ::, :# A ;( 2!B ='(., 202> ?3ee t3e Co)t fo)n(

t3at t3e &)stees 3el( t3e oi6inal (oc)ents an( t3ee ?as fo)n( to /e no eal (is9)te

as to t3e a)t3enticit5 of t3e Note. In t3e instant case, t3e Co)t 3as fo)n( a fact)al

(is9)te as to t3e Notes a)t3enticit5 t3ee/5 evealin6 fa)( if t3e Plaintiffs (o not

9ossess t3e oi6inal ?et-inFe( Note an( 5et ove( fo?a( ?it3 t3e sale of t3e s)/ect

9o9et5.

A6ain, t3is instant case (iffes fo Thomas v. Nadel, :2! '(. ::, : t3)s violatin6 HA'P, +e((ie 'ac 6)i(elines an( t3e s)/ect

Dee( of &)st an( settin6 's. Jaco/son (o?n t3e 9at3 of foeclos)e t3at 3as no?

es)lte( in t3e sale of 3e 3oe /5 failin6 to 3ono its contact)al o/li6ation )n(e

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7/20

HA'P. Cleal5, ells +a6o, in et)nin6 t3e 9a5ents to 's. Jaco/son instea( of

a99l5in6 t3e 9a5ents to 3e loan as e7)ie(, flo)te( HA'P 6)i(elines an( violate( its

o/li6ations )n(e HA'P. +)t3e, it ?as ells +a6o t3at (i( not eve 9ovi(e to 's.

Jaco/son a lette e7)estin6 s9ecific (oc)entsG it ?as ells +a6o t3at lie( to 's.

Jaco/son in statin6 t3at ells +a6o ?o)l( ?oF to e-o9en 3e loan o(ificationG it

?as ells +a6o t3at ef)se( to acce9t 's. Jaco/sons ot6a6e 9a5entsG it ?as ells

+a6o t3at FicFe( 's. Jaco/son o)t of 3e HA'P o(ificationG an( it is ells +a6o

t3at as Sevice acts to /eac3 its o/li6ations to /ot3 +e((ie 'ac an( to 's. Jaco/son.

.ll Fa,0o Ha No S"an-in0 "o En1o,c "# S$+2c" No"

Plaintiff4S)/stit)te &)stees o?n (oc)ents ?3ic3 it 9esents to Defen(ant an(

to t3is Co)t in its O(e to DocFet filin6 eflect conflictin6 infoation as to t3e sec)e(

9at5 of Defen(ants Note. &3e Notice of Intent to +oeclose an( t3e S)/stit)tion of

&)stee (oc)ents eac3 clai t3at ells +a6o is t3e sec)e( 9at5, ?3ile t3e Affi(avit

Cetif5in6 O?nes3i9 of De/t Inst)ent (oc)ent, an( t3e Acc)ac5 of Note

S)/itte( Hee?it3 (oc)ent, state t3at +e((ie 'ac is t3e o?ne of t3e Note.

Donal( %iseni)s, E8ec)tive Mice Pesi(ent of +e((ie 'acs Sin6le +ail5 Ce(it

)aantee %)siness ?3en a99eain6 on Dece/e , 200, to t3e .S. Senate

Coittee on %anFin6, Ho)sin6 an( /an Affais claifie( t3e ole of sevices =ells

+a6o> an( +e((ie 'acs elations3i9 ?it3 t3ose sevices is as follo?s@ LiFe ost

ot3e ot6a6e investos, +e((ie 'ac is not a sevice. Instea(, ?e contact ?it3 eit3e

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8/20

t3e ot6a6e oi6inato o anot3e financial instit)tion to sevice t3e ot6a6es ?e

9)c3ase. In 6eneal, sevices collect loan 9a5ents fo t3e /oo?es an( eit t3e

to +e((ie 'ac eac3 ont3. &3ese ?o(s s)/stantiate Defen(ants clai t3at ells

+a6o (i( not eceive 9a5ents, /)t at3e, collecte( t3e fo fo?a(in6 to 9a5ent

eceive +e((ie 'ac. Defen(ant ecites t3e lan6)a6e containe( in 3e e8ec)te(

ot6a6e Note, 3i63li63t incl)(e(@ &3e Len(e o an5one ?3o taFes t3is Note /5

tansfe AND ?3o is entitle( to eceive 9a5ents )n(e t3is Note is calle( t3e Note

Hol(e.

'. %iseni)s f)t3e state( on /e3alf of +e((ie 'ac in 3is Dece/e , 200,

a99eaance t3at +e((ie 'ac sets fot3 a co9e3ensive set of e7)ieents fo

sevices in o) Selle4Sevice )i(e =t3e )i(e>. &3e )i(e 9ovi(es (etaile(

inst)ctions an( 6)i(elines fo sevicin6 /ot3 9efoin6 an( non-9efoin6

ot6a6es, incl)(in6 t3e co9ensation an( incentives 9ai( to sevices. Nota/l5, t3e

)i(e also e7)ies sevices to f)ll5 co9l5 ?it3 all a99lica/le la?s elatin6 to t3e

ot6a6es t3e5 sevice. Cleal5, ells +a6o as t3e sevice of Defen(ants loan cannot

clai Note Hol(e stat)s, no clai it is t3e sec)e( 9at5--no 3as it t3e a)t3oit5 to

s)/stit)te t3e t)stees ?3o, nota/l5, ae also t3e S)/stit)te &)stees ?3o 3ave faile( to

co9l5 ?it3 t3e notice e7)ieent 9)s)ant to R)le :-20.

In 3is stateent to t3e Senate %anFin6 Coittee, Donal( %iseni)s (esci/es t3e

(oc)ent c)sto(ian as follo?s@

Concens 3ave /een aise( a/o)t t3e c)sto(5 of ot6a6e notes an(ot3e (oc)ents. 3en a ot6a6e is sol( to +e((ie 'ac, t3e selle)st (elive t3e oi6inal note fo ot6a6e loan, to6et3e ?it3 an59o?e of attone5 o o(if5in6 inst)ent =s)c3 as a o(ificationa6eeent, convesion a6eeent, ass)9tion of lia/ilit5 o elease oflia/ilit5 a6eeent>, to a (oc)ent c)sto(ian, ?3ic3 3ol(s t3e

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9/20

(oc)ents in t)st fo +e((ie 'ac. C)entl5, +e((ie 'ac )sesa99o8iatel5 2< (oc)ent c)sto(ians, ?it3 )c3 of t3e vol)econcentate( in a elativel5 sall n)/e of la6e co9anies.

O) )i(e sets fot3 eli6i/ilit5 stan(a(s an( vaio)s ot3ee7)ieents fo (oc)ent c)sto(ians. Eac3 (oc)ent c)sto(ianentes into a ti-9at5 c)sto(ial a6eeent ?it3 +e((ie 'ac an( t3esevice t3at is sevicin6 a ot6a6e fo ?3ic3 t3e c)sto(ian 3ol(s notefiles.

&3e +e((ie 'ac Doc)ent C)sto(5 Poce()es Han(/ooF =t3e Han(/ooF>,

(ate( 'ac3 202, (etails t3e e7)ieents of t3e C)sto(ian2. &3e Han(/ooFs

Ovevie? states t3at a Selle4Sevice =(efine( as an entit5 9iail5 o e8cl)sivel5

sellin6 'ot6a6es to, o sevicin6 'ot6a6es fo, +e((ie> sellin6 ot6a6es to +e((ie

'ac )st ens)e t3at t3e Notes ae (elivee( to t3e Doc)ent C)sto(ian. +e((ie 'ac

allo?s fo a Self-C)sto(ianG 3o?eve, t3e Self-C)sto(ian )st ens)e t3at (oc)ent

c)sto(5 f)nctions ae se9aate fo 'ot6a6e oi6ination, sellin6 o sevicin6, 9)s)ant

to C3a9te 2, 9a6e < of t3e Han(/ooF. &3e Doc)ent C)sto(ian )st cetif5 t3at t3e

Notes ae (elivee( /5 t3e Selle4Sevice an( 3el( in t)st fo +e((ie 'ac. =C3a9te 2,

9a6e 2 of Han(/ooF>.

&3e C)sto(ial A6eeent is t3e ti-9at5 a6eeent aon6 +e((ie 'ac, t3e

sevice an( t3e c)sto(ian as (esci/e( /5 '. %iseni)s in 3is Dece/e , 200,

stateent to t3e Senate %anFin6 Coittee. In e8ec)tin6 t3is C)sto(ial A6eeent;,

t3e C)sto(ian e9esents an( ?aants t3at it 3as no, an( covenants t3at it s3all 3ol(

no, a(vese inteest, /5 ?a5 of sec)it5 o ot3e?ise, in an5 Note an( 3ee/5 ?aives an(

2&3e co9lete Han(/ooF can /e fo)n( at t3is linF@ 3tt9@44???.fe((ieac.co4ci43an(/ooF.3tl

3 Defen(ant 3as e7)este( via Discove5 t3at ells +a6o an( t3e S)/stit)te &)stees 9o()ce t3e

C)sto(ial A6eeent 6ovenin6 t3e s)/ect loan, 3o?eve, to (ate, neit3e 9at5 3as es9on(e( to

Discove5.

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10/20

eleases an5 s)c3 inteest ?3ic3 it a5 3ave o ac7)ie in an5 s)c3 Note. &3e 9aties

eac3 3ee/5 acFno?le(6e t3at neit3e title, o?nes3i9 no i63t of alienation ?it3

es9ect to t3e Notes, no an5 /ooFs an( eco(s elatin6 to t3e Notes, is 3ee/5

tansfee( to, o confee( )9on, C)sto(ian. =99 :-< of t3e C)sto(ial A6eeent>.

In li63t of t3e foe6oin6 tes of t3e Han(/ooF an( C)sto(ial A6eeent, S)/stit)te

&)stees Co)nsel, in statin6 at t3e +e/)a5 , 20;, 3eain6 t3at ells +a6o 3as 3el(

t3e Note since it ?as oi6inate(, 3as confie( t3at ells +a6o is t3e Doc)ent

C)sto(ian fo t3e s)/ect loan.

&3e 9aties ae no? cleal5 (efine(@ +e((ie 'ac is t3e o?ne of t3e Note4loan, an(

ells +a6o is /ot3 t3e Sevice an( t3e C)sto(ian of Doc)ents on /e3alf of +e((ie

'ac. Also, it is cleal5 esta/lis3e( t3at ells +a6o is not o?ne4investo of t3e s)/ect

loan, an( t3at 9)s)ant to t3e C)sto(ial A6eeent ells +a6o onl5 3ol(s t3e Note in

trustfo +e((ie 'ac /eca)se ells +a6o 3as ?aive( an( elease( an5 inteest it 3a( in

t3at Note. &3e inesca9a/le concl)sion is t3atells +a6o lacFs stan(in6 to enfoce t3e

Note via a foeclos)e action /eca)se ells +a6o is eel5 t3e sevice an(4o t3e

(oc)ent c)sto(ian of t3e s)/ect loan.

Fa+,ica"ion o1 Doc$mn" an- D1ama"ion

In t3ei atte9t to ali6n an( (efae:'s. Jaco/sons c3aacte to t3is Co)t, t3e

S)/stit)te &)stees an( ells +a6o 3ave 6one so fa to fa/icate (oc)ents an(

4&o 9esent aprima faciecoon la? case fo (efaation, a 9laintiff )st 9lea( an( 9ove fo) t3in6s@

t3at t3e (efen(ant a(e a (efaato5 stateent to a t3i( 9esonG t3at t3e stateent ?as falseG t3at t3e

(efen(ant ?as le6all5 at fa)lt in aFin6 t3e stateentG an( t3at t3e 9laintiff t3ee/5 s)ffee( 3a.

Gohari v. Darvish, ;B; '(. :2, , 7)otin6 foRosenberg v. Helinsi, ;2#

'(. BB:, B!

10
https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Gohari+v.+Darvish%2C++363+Md.+42%2C+54https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Gohari+v.+Darvish%2C++363+Md.+42%2C+54https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Gohari+v.+Darvish%2C++363+Md.+42%2C+54https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Gohari+v.+Darvish%2C++363+Md.+42%2C+54https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=767+A.2d+321%2C+327+(2001)https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Rosenberg+v.+Helinski%2C++328+Md.+664%2C+675https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Rosenberg+v.+Helinski%2C++328+Md.+664%2C+675https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Rosenberg+v.+Helinski%2C++328+Md.+664%2C+675https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Rosenberg+v.+Helinski%2C++328+Md.+664%2C+675https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Rosenberg+v.+Helinski%2C++328+Md.+664%2C+675https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Rosenberg+v.+Helinski%2C++328+Md.+664%2C+675https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=616+A.2d+866%2C+871+(1992)https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Gohari+v.+Darvish%2C++363+Md.+42%2C+54https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Gohari+v.+Darvish%2C++363+Md.+42%2C+54https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=767+A.2d+321%2C+327+(2001)https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Rosenberg+v.+Helinski%2C++328+Md.+664%2C+675https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=Rosenberg+v.+Helinski%2C++328+Md.+664%2C+675https://apps.fastcase.com/Research/Pages/Document.aspx?LTID=DkdUZ3lnfIRywXI6JYB0U6O8cv35a0r8OZ5voatqo9K2QEzBUx397yctbeDsvCalj3hKupuefn5XMapsCnYsEnCsA8LhbdhNlyrB1WMACXmDb%2F9SZaNPJyEPBRjZVbQc74wDyuTi35W5rPpJSriDpQ%3D%3D&ECF=616+A.2d+866%2C+871+(1992)


11/20

isstate t3e facts. &o (ate, neit3e t3e S)/stit)te &)stees no ells +a6o 3as a(e

an5 atte9t to etact t3ei false acc)sations o ?it3(a? t3e fa/icate( (oc)ent =t3e

+ist &ie Hoe/)5e 9ovision> t3e5 s)/itte( as E83i/it % to Plaintiff4S)/stit)te

&)stees S)99leent O99osition to Defen(ants 'otion to Disiss an(4o Sta5 an(4o

+oeclos)e Sale. &3e S)/stit)te &)stees assete( on 9a6e 2 of t3at otion, e6a(in6

t3e afoeentione( 9ovision fo t3e Defen(ants Contact of Sale, t3at t3e veacit5

of t3e Defen(ant )st /e 7)estione( also to t3e fact t3at t3at ?3en s3e 9)c3ase( t3e

Easton Po9et5 an( o/taine( fist tie 3oe /)5e ce(it as to avoi( eco(ation

ta8es . . . &o coect t3is false assetion, Defen(ant in 3e 'otion fo Reconsi(eation

9ovi(e( to t3is Co)t t3e 'a5lan( IntaFe fo cleal5 eflectin6 t3at 's. Jaco/son (i(

not in fact eceive a ce(it fo /ein6 a 'a5lan( fist tie 3oe/)5e. As a((itional

9oof t3at 's. Jaco/son (i( not eceive t3e 'a5lan( fist-tie 3oe/)5e ce(it,

Defen(ant s)/itte( to t3e Co)t a co95 of t3e final HD fo t3e settleent of t3e

s)/ect 9o9et5. &3e HD line 20; cleal5 eflects t3at /)5e an( selle s9lit e7)all5

t3e state tansfe ta8, s)/stantiatin6 t3at t3ee ?as no fist tie 3oe/)5e ce(it of .

2


12/20

Plaintiffs4S)/stit)te &)stees, 3a( in t3ei 9ossession t3e HD ?3ile Fno?in6l5

s)/ittin6 a false, (efective e83i/it to t3is Co)t.

Unclan Han-

%ase( on t3e foe6oin6, ells +a6o an( t3e S)/stit)te &)stees 9esent a

convincin6 3isto5 of )nclean 3an(s. &3e Co)t in "ells #argo v. Neal, "22 A.2n(>. As ?e 3ave state( 9evio)sl5, t3e NHA an( its i9leentin6 e6)lations

co9el +HA ot6a6ees to 9)s)e loss iti6ation state6ies /efoe initiatin6

foeclos)e. In t3e 9esent case, if NealQs contentions e6a(in6 ells +a6oQs

fail)e to co9l5 ?it3 t3e loss iti6ation (iectives ae 9oven to t3e satisfaction of

t3e tial co)t, s)c3 a fail)e a5 constit)te i9o9e an(4o ine7)ita/le con()ct,

(e9en(in6 on t3e 9oven cic)stances. &3)s, )n(e t3e (octine of clean 3an(s,

12


13/20

?3ile Neal tec3nicall5 a5 /e sai( to /e in (efa)lt, t3e le6al fiction t3at no (efa)lt

e8ists a5 /e aintaina/le )ntil s)c3 tie as ells +a6o co9lies ?it3 t3e

stat)to5 an( e6)lato5 i9eative to 9)s)e loss iti6ation 9io to foeclos)e.

ells +a6o an( t3e S)/stit)te &)stees 3ave (itie( t3ei collective 3an(s in

ac7)iin6 t3e i63t t3e5K no? asset /5@

Ref)sin6 to convet 's. Jaco/sons loan o(ification to a 9eanent loan

o(ification afte t3e ;(&PP ?as a(e an( f)t3e (it5in6K its 3an(s

/5 sin6lin6 o)t 's. Jaco/son in etaliation to 3e ?3istle-/lo?in6 /5

violatin6 /ot3 HA'P an( +e((ie 'ac e7)ieents /5 et)nin6 all !

&PPs.

Claiin6 to t3is Co)t t3at ells +a6o 3as stan(in6 as t3e sec)e( 9at5

to enfoce t3e Note an( t3en 9ovi(in6 no (oc)entation to s)/stantiate

t3e clai t3at +e((ie 'ac 3as a)t3oie( ells +a6o %anF, N.A. to t3e /e

t3e 3ol(e of t3e Note fo t3e 9)9oses of con()ctin6 t3is foeclos)e

action


14/20

%eac3in6 t3ei fi()cia5 ()t5 to t3e Defen(ant as S)/stit)te &)stees to

9ost9one t3e Se9te/e B, 20;, sale afte it ?as 9ointe( o)t in o9en Co)t

/5 Defen(ants Co)nsel t3at neit3e 's. Jaco/son no '. Jaco/son ?ee

9o9el5 notifie( of t3e )9coin6 sale.

Dis9la5in6 a cavalie let t3e eat caFe attit)(e of t3e S)/stit)te &)stees

t3at even if R)le :-20 3a( /een violate(, it ?as )9 to t3e Defen(ant to file

E8ce9tions as t3e S)/stit)te &)stees a99eae( to /e ?as3in6 t3ei 3an(s of

t3e ?3ole atte.

ells +a6o an( t3e S)/stit)te &)stees ovin6 fo?a( ?it3 a sale ?3en

t3e a)t3enticit5 of t3e s)/ect Note ?as still in 7)estion. &3is Co)t state(

t3at if t3e Note is not t3e oi6inal, t3en t3ee is a le6itiate concen as to

?3et3e ells +a6o an( t3e &)stees 3a( an in(e9en(ent i63t to

foecloseG 5et t3e sale ove( fo?a( as sc3e()le(.

Defen(ant inco9oates all of 3e 9evio)sl5 file( 'otions an(

Co)nteClais as evi(ence of t3e (it5 3an(s of ells +a6o an( t3e

S)/stit)te &)stees.

Co)ts acoss t3is co)nt5 ae callin6 o)t ells +a6o on its too /i6 to fail an(

too /i6 to /e acco)nta/le fo its /e3avio to?a(s 3oeo?nes actions. A ecent N

&ies aticleB, 7)otin6 t3e )(6e in ecent case ?3ee ells +a6o ?as a 9at5, state('

(The disconnect bet&een "ells #argo)s publicl! advertised face and its actual litigation

6http://www.nytimes.com/2013/09/29/business/why-judes-!"e-scow#in-!t-b!n$s.htm#%p!ew!nted&!##'("&1'

14
http://www.nytimes.com/2013/09/29/business/why-judges-are-scowling-at-banks.html?pagewanted=all&_r=1&http://www.nytimes.com/2013/09/29/business/why-judges-are-scowling-at-banks.html?pagewanted=all&_r=1&http://www.nytimes.com/2013/09/29/business/why-judges-are-scowling-at-banks.html?pagewanted=all&_r=1&http://www.nytimes.com/2013/09/29/business/why-judges-are-scowling-at-banks.html?pagewanted=all&_r=1&


15/20

conduct here could not be more etreme,+ the udge &rote. ($ -uic visit to "ells

#argo)s "eb site confirms that it vigorousl! promotes itself as consumerfriendl!,+ he

continued, (a far cr! from the hardnosed &inatan!cost stance it has adopted here.+

Ne? 'e8ico Distict Co)t J)(6e %icF3o)se ecentl5 iss)e( 3e (ecision in

Christopher Dollens, et al v. "ells #argo Ban, N.$. et al, Case No. CM 20-0statin6 in 3e A)6)st 2!, 20;, (ecision t3at ells +a6o faile( to follo? t3e +e((ie

'ac sevice 6)i(elines )st as Defen(ant alle6es in t3is instant case. &3e Co)t also

fo)n( t3at, &3e con()ct /5 ells +a6o ?as a /eac3 of t3e covenant of 6oo( fait3 an(

fai (ealin6 an( es)lte( in a ?on6f)l foeclos)e. &3e Co)t fo)n( t3at ()e to t3e

e6e6io)s nat)e of t3e con()ct of ells +a6o, t3e co)t ?ill consi(e t3e attone5K

fees in its calc)lation of 9)nitive (aa6es ?3ic3 es)lte( in a total (aa6es a?a( of

;,#2,!":.02 a6ainst ells +a6o. In coin6 to t3is concl)sion t3e )(6e state(@

The Court is a&are that it cannot punish "ells #argo for acts in other cases, or for

conduct outside this case. /ie&ise, "ells #argo cannot be punished for acts for &hichit has alread! been punished. Ho&ever, the Court can consider the reprehensibilit! of

"ells #argo0s s!stemic misconduct, "ells #argo0s net &orth, and the need for

deterrence. The evidence of &rongful conduct in this case merits significant punitive

damages.

An(@

%indful of the ratios to be considered &ith regards to punitive damages, the Court

believes that "ells #argo0s conduct ustifies a higher ratio. 1n light of the repeated,s!stematic nature of "ells #argo0s misconduct, the Court calculated the punitive

damages at si times the compensator! damages of 2343,563.65. $&arding a ratio of

5 results in a punitive damages a&ard of 27,876,9:;.95. Total damages, &ithout treble

7&3e case can /e fo)n( 3ee@ http://www.msfraud.org/LAW/Lounge/Dollens-v-Wells-Fargo_$3-million-in-damages_-!3.pdf

15
http://www.msfraud.org/LAW/Lounge/Dollens-v-Wells-Fargo_$3-million-in-damages_8-13.pdfhttp://www.msfraud.org/LAW/Lounge/Dollens-v-Wells-Fargo_$3-million-in-damages_8-13.pdfhttp://www.msfraud.org/LAW/Lounge/Dollens-v-Wells-Fargo_$3-million-in-damages_8-13.pdfhttp://www.msfraud.org/LAW/Lounge/Dollens-v-Wells-Fargo_$3-million-in-damages_8-13.pdf


16/20

damages under the >.37, attorne!s0 fees

and costs of 23>;,:49.33, and punitive damages of27,876,9:;.95, for a total damages

a&ard of2>,967,8;3.:7.

A ecent o9inion file( A)6)st # 20;, fo t3e "t3Cic)it of A99eals confis t3at

ells +a6o is contact)all5 e7)ie( to offe a 3oeo?ne a 9eanent ot6a6e

o(ification afte t3e 3oeo?ne 3as co9lie( ?it3 t3e e7)ieents of t3e &PPs. See

=hillip R. Covello v. "ells #argo Ban, N.$., No. -B2;:, nite( States Co)t of

A99eals fo t3e Nint3 Cic)it. In a conc)in6 o9inion J)(6e Noonan state( t3e

follo?in6 efein6 to t3e Hoe Affo(a/le 'o(ification &ial Peio( Plan =HA'P>

(oc)ent@

"ells #argo drafted this document, and "ells #argo must be held responsible

for it. The document promises a substantial benefit to Corvello if he meets its terms.

The document then maes these benefits illusor! because the! depend entirel! on the

&ill of "ells #argo. To sa!, (1 give 29:: for !our &atch but 1 &ill decide &hether 1

pa! !ou 29::+ is not a mae a contract but to engage in flimflam or, in plain &ors,

to &or a fraud. ?ou promise so that the other &ill perform. ?ou reserve !our

promise so that the promise is empt! &hile !ou have gotten &hat !ou &anted from the

promisee.

No purpose &as served b! the document "ells #argo prepared ecept the

fraudulent purpose of inducing Corvello to mae the pa!ments &hile the ban retained

the option of modif!ing the loan or stiffing him. (Heads 1 &in, tails !ou lose+ is a

fraudulent coin toss. "ells #argo did no better.=9a6e B>

In its A9il :, 202, t3e nite( States %anF)9tc5 Co)t, Easten Distict of

Lo)isiana, 3el( t3at 9)nitive (aa6es ae ?aante( ?3en t3e con()ct in 7)estion is

?illf)l an( e6e6io)s an( t3ee is no 7)estion t3at ells +a6os con()ct ?as ?illf)l.

16


17/20

See%ichael /. @ones v. "ells #argo Home %ortgage, 1nc., Case No. 0;-B


18/20

/)siness con()ct t3eselves ?it3 3onestl5 an( fai (ealin6. &3)s, t3ee is a ston6

societal inteest in (etein6 s)c3 f)t)e con()ct t3o)63 t3e i9osition of 9)nitive

elief. &3e Co)t fo)n( ells +a6os actions ?ee not onl5 3i63l5 e9e3ensi/le, /)t

t3at its s)/se7)ent eaction on t3ei e89os)e 3a( /een less t3an satisfacto5 an(

)ltiatel5 a?a(e( a6ainst ells +a6o a 9)nitive (aa6e a?a( of ;,!,


19/20

+o t3e foe6oin6 easons, t3e Defen(ant4Co)nte Plaintiff es9ectf)ll5 e7)ests t3at

t3is Co)t vacate t3e Se9te/e B, 20;, sale of t3e Defen(ants 3oe an( assess an5

fees an( costs associate( ?it3 t3at sale to t3e S)/stit)te &)stees.

Res9ectf)ll5 S)/itte(,

ea( P. e3lin6e2# est Alle63en5 Aven)eS)ite 20&o?son, 'a5lan( 220:P3one@ :0-#2-002

jacobson exceptions

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