Thank you Richard Zaretsky, Esq., for putting this out for us to review!

This is rare but one can never be too certain…

Today I received a call from one of my blog readers asking me for help with a pleading he received months ago, that is now being scheduled for a hearing in August.  This is a prime example of why Strategic Defaults or just walking away from a property can be so dangerous.  The pleading is a Motion for Deficiency Judgment from a foreclosure judgment and sale that occurred but was (like most other foreclosure sales) acquired by the lender for a nominal bid.  I and many others have been writing about this forgotten liability of borrowers.

Now here is an example of just what we said would happen, happening:

How the deficiency judgment hearing proof is presented to the court is discussed in my previous article on Foreclosure Deficiency Judgments and my original Back to Basics article.  The essence is that a deficiency judgment to be issued must go through a hearing where the lender submits proof (evidence) of the value of the property. The borrower has the right to refute the values. Getting to the number works like this:

To figure get the balance of the monies the bank must go back to court to ask the court to award it a “Deficiency Judgment”.  The amount is what is in question and the amount is measured using various rules.  Let’s assume the bank bid $100.  The court is not going to say that the house was worth $100 and $324,900 is still owed.  For our assumption we will say that the property is worth $200,000 and the foreclosure judgment is for $325,000.  That means the court will ask for an appraisal of the property as of the day of the foreclosure sale and the judge will likely give it that value.  So it will be the appraisal value less the judgment amount which will equal the Deficiency Judgment.  If the appraisal is $250,000, the Deficiency Judgment would be $75,000.   Now if there was real bidding at the foreclosure sale the judge could consider that bidding and instead adopt the selling price under the competitive bidding process that occurred at the foreclosure sale.  Then the Deficiency Judgment would be the difference from the foreclosure judgment and the winning bid amount. If the competitive bid was $240,000, then the Deficiency Judgment would be $85,000.

Back to the real life person with his August hearing – we suggested that before he retain us to negotiate with the lender on the deficiency amount and terms as a possible settlement without going to court, he try it himself.  We also suggested he speak with a bankruptcy attorney as there may be some planning opportunities available for him before the judgment is entered – if the negotiations don’t work.

Remember, a money judgment – that is what a Deficiency Judgment is – gives the judgment holder broad powers to collect the money, including garnishment and attachment of assets (like bank accounts).  Fraudulent Transfer Acts in the various states will block or take back transfers made to “hide” money from creditors.  See the article at CNN Money.

Copyright 2010 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@Florida-Counsel.com – FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW – We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide!  Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com.

Via: Chink in the Amor

We’ve talked in the past about Dueling Databases and the havoc it can play in daily economic considerations.  We’ve seen the havoc which occurs when unrecorded assignments are allowed to have parity with assignments recorded at the courthouse.  We’ve also seen how important it is for interested third parties to be able to ascertain specific ownership.  We’ve seen how MERS is keeping a very private database and only allowing peeks into it when they deem it appropriate.  We’ve seen how you can’t rely on them for accurate information.

There is a persistent rumour circulating amongst the people who are in the trenches of this fight for the sanctity of law over corporotism.  It just won’t go away and it keeps popping its head up to the point now where I feel compelled to mention it.  So far,  there is no solid proof of it but we are looking.  It’s important information.  The rumour is that when the title company filed your paperwork from the purchase of your home,  they filed a duplicate set of paperwork for the MERS system which re-created you inside the MERS network.  In other words,  there are now two of you.  At least. Continue Reading

RON DIXON, As Conservator for Beatrice Jiggetts, Plaintiff,
v.
MIDLAND MORTGAGE CO., Defendant.

Civil Action No. 09-1789 (RWR).

United States District Court, District of Columbia.

June 29, 2010.

MEMORANDUM OPINION AND ORDER

RICHARD W. ROBERTS, District Judge.

Plaintiff Beatrice Jiggetts brings this action against the defendant, Midland Mortgage Company (“Midland”), alleging claims of trespass, conversion, and breach of contract arising out of Midland changing the locks and foreclosing on her home. Midland moves to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that its home entry was authorized because Jiggetts defaulted on her mortgage and abandoned her home, that the law of conversion applies to personal property and not real property, and that the complaint fails to allege the elements of a contract. Because conversion applies only to chattel, Midland’s motion to dismiss Jiggetts’s conversion claim will be granted. However, because the complaint amply states a cause of action for both trespass and breach of contract and Midland does not show it was authorized to enter Jiggetts’s home, Midland’s motion to dismiss Jiggetts’s trespass and breach of contract claims will be denied.

BACKGROUND

Jiggetts co-owned with Charles L. Chesley a single-family home located in Washington, D.C. (Compl. ¶ 4.) For the past several years, however, Jiggetts has lived in a nursing home because she suffers from dementia. While Jiggetts was in the nursing home, Chesley was to make the monthly mortgage payments on the property, but failed to do so. (Id. ¶ 5.) Thus, Midland chose to foreclose. (Id. ¶ 6.)

Jiggetts alleges that, on approximately July 16, 2009, her conservator, Ron Dixon, came to an agreement with Midland to postpone the foreclosure sale until August 19, 2009 in order to give Dixon an opportunity to secure a buyer for the house and avoid foreclosure. (Id. ¶ 10.) Midland then scheduled a foreclosure sale for August 19, 2009. (Id. ¶ 7.) During the last week of July, Dixon found a potential buyer and asked Chesley to prepare the property for the potential buyer’s visit. (Id. ¶ 11.) When Chesley arrived, he discovered that the locks on the property had been changed. (Id.) Chesley and Dixon contacted Midland, and Midland’s attorney told them that the deed of trust authorized Midland’s entry into the property. (Id.) Midland ultimately gave Dixon the combination to unlock the house. (Id. ¶ 12.)

Jiggetts brought suit in the Superior Court of the District of Columbia alleging that Midland’s entry into the property and alteration of the locks constituted trespass and conversion (id. ¶¶ 14-19) and a breach of contract. (Id. ¶¶ 21-24.) Midland removed this action to federal court on the basis of diversity jurisdiction and now moves to dismiss, arguing that it cannot be held liable for trespass because it had a superior possessory interest in the property, that the law of conversion applies to personal property only, and that Jiggetts has failed to state a claim for breach of contract.^{[ 1 ]}

DISCUSSION

“`To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient factual matter, acceptable as true, to “state a claim to relief that is plausible on its face.”‘” Anderson v. Holder, 691 F. Supp. 2d 57, 61 (D.D.C. 2010) (brackets omitted) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007))). A court considering a 12(b)(6) motion takes all factual assertions within the complaint as true and gives a plaintiff “`the benefit of all inferences that can be derived from the facts alleged.’” Id. (quoting Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156, 165 (D.C. Cir. 2003)). Those inferences, however, must be supported by the facts alleged, and merely asserting legal conclusions as facts will not suffice. Id. “[A] court `may consider only the facts alleged in the complaint, any documents either attached to or incorporated in the complaint and matters of which [a court] must take judicial notice.’” U.S. ex rel. Westrick v. Second Chance Body Armor, Inc., 685 F. Supp. 2d 129, 133 (D.D.C. 2010) (alteration in original) (quoting Trudeau v. FTC, 456 F.3d 178, 183 (D.C. Cir. 2006)). A document outside the complaint may be considered on a motion to dismiss under Rule 12(b)(6) if it is “referred to in the complaint and [is] integral to” the plaintiff’s claim. Kaempe v. Myers, 367 F.3d 958, 965 (D.C. Cir. 2004).

I. TRESPASS CLAIM

Under District of Columbia law, “`[a] trespass is an unauthorized entry onto property that results in interference with the property owner’s possessory interest therein.’” Sarete, Inc. v. 1344 U St. Ltd. P’ship, 871 A.2d 480, 490 (D.C. 2005) (quoting Richard R. Powell, Powell on Real Property § 64A.02[1] at 64A-16 (Michael A. Wolf ed., 2000)). Jiggetts contends that Midland trespassed on her property when it entered her property and changed the locks. Midland does not dispute that it entered the property and changed the locks. Its sole argument against Jiggetts’s trespass claim is that its entry was lawful because Jiggetts abandoned the property. (Def.’s Mem. at 3-4.)

Midland’s argument is misguided, however. In the District of Columbia, abandonment is defined as an anticipatory breach wherein a tenant “`leaves the premises vacant with the avowed intention not to be bound by [the] lease.’” Jones v. Cain, 804 A.2d 322, 331 (D.C. 2001) (quoting Simpson v. Lee, 499 A.2d 889, 894 (D.C. 1985)). The complaint does not allege or concede facts reflecting that Jiggetts intended to abandon her property. Instead, the complaint reflects that Jiggetts had every intention of maintaining the monthly mortgage payments. (See, e.g., Compl. ¶ 5 (“While [Jiggetts was] in the nursing home, Chesley was supposed to be making the monthly mortgage payments on the subject property.”).) Moreover, while Midland claimed that the deed of trust authorized Midland to enter the property upon default (see id. ¶ 11), Midland has not presented any copy of the deed of trust mentioned in the complaint or any other agreement granting it the right to enter the property upon Jiggetts’s failure to make the mortgage payments. Because Jiggetts has pled that Midland entered her property without consent and changed the locks, preventing entry by the owners, and Midland has failed to show it was otherwise authorized to take that action, Midland’s motion to dismiss Jiggetts’s trespass claim will be denied.

II. CONVERSION CLAIM

Under District of Columbia law, conversion is defined as the “`intentional exercise of dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel.’” Edmonds v. United States, 563 F. Supp. 2d 196, 202 (D.D.C. 2008) (quoting Fed. Fire Protection Corp. v. J.A. Jones/Tompkins Builders, Inc., 267 F. Supp. 2d 87, 92 n.3 (D.D.C. 2003)). A chattel is defined as “`[m]ovable or transferable property; personal property; . . . [or] a physical object . . . not the subject matter of real property.’” Doe ex rel. Doe v. Fed. Express Corp., 571 F. Supp. 2d 330, 333 (D. Conn. 2008) (quoting Black’s Law Dictionary (8th ed. 2004)) (first alteration in original). Jiggetts argues that the defendant “converted [her] leasehold interest, in the subject property, to [its] own interest” by entering the property and changing the locks. (Pl.’s Opp’n at 3.) However, the leasehold interest in her home is the subject matter of real property and is not chattel, see District Of Columbia v. Place, 892 A.2d 1108, 1112 (D.C. 2006), and the law of conversion does not apply to real property. Midland’s motion to dismiss Jiggetts’s conversion claim will be granted.

III. BREACH OF CONTRACT CLAIM

A contract is formed when there is an offer, an acceptance, and valuable consideration, see Paul v. Howard Univ., 754 A.2d 297, 311 (D.C. 2000), and a contract can be made orally or in writing. See Ames v. HSBC Bank USA, N.A., Civil Action No. 06-2039 (RMC), 2007 WL 1404443, at *2 (D.D.C. May 11, 2007). The complaint alleges that Midland “agreed to postpone the foreclosure until August 19, 2009, in order to allow [Dixon] to attempt to sell the property to avoid the foreclosure” and that the defendant breached an agreement when it entered the property and changed the locks. (Compl. ¶¶ 10, 22.) Midland contends that the breach of contract claim must be dismissed because “plaintiff attaches no proof of such an agreement to the Complaint.” (Def.’s Mem. at 6.)

On a motion to dismiss, a plaintiff is not required to prove each element of her claim. Instead, she is merely required to plead facts that, if proven, would establish the elements of her claim. Moreover, while Jiggetts fails to plead facts reflecting that Midland breached an agreement to postpone the foreclosure sale because she does not allege that a foreclosure sale took place before August 19, 2009, Jiggetts’s complaint can be read to state a claim that Midland breached the parties’ mortgage agreement. The complaint refers generally to a contract and states that Midland breached an agreement by breaking into and changing the locks on the doors. (Compl. ¶ 22.) Further, Jiggetts’s opposition states that “[w]hen the Defendant changed the locks . . . without an order of the court to do so, it was a breach of their mortgage contract[.]” (Pl.’s Opp’n at 4.) Because a court is to grant the plaintiff the benefit of all inferences derived from the facts alleged, and the complaint — read in the light most favorable to Jiggetts — contains sufficient factual matter to state a claim for breach of the parties’ mortgage agreement, Midland’s motion to dismiss Jiggetts’s breach of contract claim will be denied.^{[ 2 ]}

CONCLUSION AND ORDER

Because conversion applies only to chattel, Midland’s motion to dismiss Jiggetts’s conversion claim will be granted. However, the complaint alleges a trespass and, read in the light most favorable to Jiggetts, a breach of contract claim. Thus, Midland’s motion to dismiss Jiggetts’s trespass and breach of contract claims will be denied. Accordingly, it is hereby

ORDERED that Midland’s motion [5] to dismiss be, and hereby is, GRANTED in part and DENIED in part. Jiggetts’s conversion claim is dismissed, but Midland’s motion is denied in all other respects.

This copy provided by Leagle, Inc.

By DinSFLA 6/30/2010

When Fannie Mae announced that she was going to start to penalize people who walk away from underwater mortgages it created a fire storm of angry individuals.

She said it would step up efforts to pursue deficiency judgment—seeking to recoup the difference between the loan balance and the net proceeds of the foreclosure sale—against so-called “strategic” defaulters in states where such suits are allowed. Fannie also will lengthen to seven years, from five, the amount of time borrowers who go through a foreclosure must wait before getting a new loan.

So here is my solution, grab a pen and write this down:

• Homes have lost not a little but an enormous amount of it’s value up to 70% in some areas.
• In my opinion it is going to take more than 7 years to see any hope in Real Estate stabilization.
• Who wants to buy today when we read about possibly 8 million shadow foreclosures that will ultimately bring down the market further to dust?
• We the tax payers are the owners so who the hell asked us if this is appropriate? Were any of us invited to this meeting and discuss this? Did we have a say in this like we never do? DISCLOSURES?
• What about the possible millions that were denied a modification from no fault of their own? Oh but the Obama Administration admitted this too…too…too…late Who will be responsible for those who were improperly foreclosed on?
• With the taxes and insurance sky rocketing, it only makes sense to rent for a while.
• Deficiency Judgment? Do you realize what this little pot you stir will cause?? Hmmm think about it.
• Credit who wants credit? We don’t even know where our own money is being used.
• Who do we have to contact to foreclose on Your “arse” Fannie??? After all you are owned by us… Do not bite the hand that feeds you!

You see the threat really has no impact.

Trust is earned my friends and we have absolutely none at the moment.

The evil thing here is that instead of going after the true Run A Ways “the banks” who stole the cash you go after the ones who feed you and behind our back you feed them???

Image source: The Simpsons “Angry Mob”