DEUTSCHE BANK vs. WILLIAMS | USDC Hawaii "There is no evidence on the record establishing what mortgages were included in the PSA."


DEUTSCHE BANK vs. WILLIAMS | USDC Hawaii “There is no evidence on the record establishing what mortgages were included in the PSA.”

DEUTSCHE BANK vs. WILLIAMS | USDC Hawaii “There is no evidence on the record establishing what mortgages were included in the PSA.”


SERIES 2007-NC1,



DATED APRIL 14, 1986; and JOHN
DOES 1-5,



Standing is a requirement grounded in Article III of the United States
Constitution, and a defect in standing cannot be waived by the parties. Chapman v.
Pier 1 Imports (US.) Inc., 631 F.3d 939,954 (9th Cir. 2011). A litigant must have
both constitutional standing and prudential standing for a federal court to exercise
jurisdiction over the case. Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11
(2004). Constitutional standing requires the plaintiff to “show that the conduct of
which he complains has caused him to suffer an ‘injury in fact’ that a favorable
judgment will redress.” Id. at 12. In comparison, “prudential standing
encompasses the general prohibition on a litigant’s raising another person’s legal
rights.” Id. (citation and quotation signals omitted); see also Oregon v. Legal
Servs. Corp., 552 F.3d 965, 971 (9th Cir. 2009).


The basis of Plaintiffs standing to foreclose on the subject property
(at least as alleged in the Complaint) is a January 13,2009 assignment of the
Mortgage and Note from Home 123 to Plaintiff. The assignment, attached to the
Complaint, provides:

This Assignment, made this 13th day of January,
2009, by and between Home 123 Corporation, a
California corporation, hereinafter called the “Assignor”,
and Deutsche Bank National Trust Company, as trustee
for Morgan Stanley ABS Capital I Inc., MSAC 2007NC1,
whose principal place of business and post office
address is c/o Saxon Mortgage Services, Inc., 4708
Mercantile Dr. N., Forth Worth TX 76137-3605,
hereinafter called the “Assignee.”
In consideration of the sum of ONE DOLLAR
($1.00) and other valuable consideration paid by the
Assignee, the receipt of which is hereby acknowledged,
the Assignor does hereby, without recourse, sell, assign,
transfer, set over and deliver unto the Assignee, its
successors and assigns, the mortgage and note hereinafter
described ….CompI. Ex. 4.

The Williamses argue that this assignment cannot be valid because
Home 123 was in bankruptcy liquidation as of January 13,2009. Specifically,
Home 123 filed for Chapter 11 bankruptcy in 2007, Home 123 filed a liquidation
plan in March 2008, and the bankruptcy court confirmed the liquidation plan in
July 2008. In re New Century TRS Holdings, Inc., 407 B.R. 576, 579-80 (Bankr.
D. Del. 2009). Effective August 1, 2008, the liquidation plan:

was created with Alan M. Jacobs as trustee. Also on that
date, the Creditors’ Committee was dissolved; the Plan
Advisory Committee (the “PAC”) was formed; debtors’
officers and directors ceased serving and were replaced
by Jacobs; debtors’ assets were distributed to the
liquidating trust; and NCFC’s outstanding common and
preferred stock, as well as all notes, securities, and
indentures, were cancelled.

Id. at 585-86 (citations omitted). Given this liquidation, it appears that Home 123
could not have validly assigned the Mortgage and Note to Plaintiff on January 13,
2009. And in Opposition, Plaintiff presents no evidence (or even argument)
explaining how this January 13,2009 assignment is valid despite Home 123 ‘s
bankruptcy and liquidation. In fact, Plaintiff argues — without factual support —
that NC Capital Corporation (“NC Capital”) first bought the Note from Home 123
and Plaintiff subsequently received it through a securitized trust. See PI. ‘s Opp’n
at 20. And at the hearing, Plaintiff’s counsel inexplicably stated that discovery is
required to deternrine the Note’s assignment, even though all facts concerning any
valid assignment should certainly be known to Plaintiff without having to conduct
discovery. In other words, even Plaintiff, who is master of its Complaint and by all
accounts should know the basis of its claims, apparently disclaims the allegations
in the Complaint and at this time cannot establish its legal right to enforce the
Mortgage and Note.

The Complaint’s assertion that Plaintiff obtained the Mortgage and
Note through the January 13,2009 assignment is further called into doubt by the
fact that Plaintiff brings this action as “Trustee Morgan Stanley ABS Capital I Inc.
Trust 2007-NCI Mortgage Pass-Through Certificates, Series 2007-NC-I”–
suggesting (as Plaintiffnow argues) that Plaintiffmay have received the Mortgage
and/or Note through a Pooling and Servicing Agreement (“PSA”) in 2007. From
the evidence presented by the Williamses (Plaintiff presented no evidence on
standing in Opposition), Home 123 generally sold mortgages to its affiliate NC
Capital, who then resold the mortgages for inclusion into securitized trusts. See
Williamses’ Ex. Gat 4,-r,-r 9, 11. And NC Capital and Morgan Stanley ABS
Capital I Inc., with Plaintiff as trustee, entered into a PSA dated January 1, 2007.
See Williamses’ Ex. U. The PSA requires NC Capital to deliver to Plaintiff
assignments of mortgage for each mortgage loan, and for Plaintiff to certify
“receipt of a Mortgage Note and Assignment of Mortgage for each applicable
Mortgage Loan.” Id. at 41-42.

This evidence presents two problems for Plaintiff. First, if Plaintiff
did indeed obtain the Mortgage and Note through a 2007 PSA, then the 2007 PSA
is yet another reason why the January 13,2009 assignment is a nullity and the
Complaint’s assertion that Plaintiff obtained the Mortgage and Note from Home
123 is untrue. Second, the evidence presented does not actually establish that
Plaintiff received the Mortgage and Note through the PSA — there is no evidence
on the record establishing what mortgages were included in the PSA. Thus,
although Plaintiff might have obtained the Mortgage and Note through this PSA,
there is no evidence showing or even suggesting that this is indeed the case. As a
result, there is no evidence — at least on the record presented before the court —
creating a genuine issue of material fact that Plaintiffwas assigned the Mortgage
and Note on which it now seeks to foreclose.

In opposition, Plaintiff argues that the Williamses are not parties or
beneficiaries to the assignment such that they cannot challenge it. In making this
argument, Plaintiff relies on caselaw from this court rejecting that a
plaintiff/mortgagee can assert claims raising assignment irregularities and/or
noncompliance with a PSA. See Fed. Nat’! Mortg. Ass’n v. Kamakau, 2012 WL
622169, at *3-4 (D. Haw. Feb. 23, 2012) (relying on Velasco v. Sec. Nat’l Mortg.
Co., — F. Supp. 2d —-, 2011 WL 4899935, at *4 (D. Haw. Oct. 14,2011), to
reject “slander of title” claim challenging assignment of the note and mortgage
because where the borrower is not a party or intended beneficiary of the
assignment, he cannot dispute the validity of the assignment); Abubo v. Bank of
New York Mellon, 2011 WL 6011787, at *8 (D. Haw. Nov. 30,2011) (rejecting
claim asserting violation of a PSA because a third party lacks standing to raise a
violation of a PSA and noncompliance with terms of a PSA is irrelevant to the
validity of the assignment).

Plaintiffs argument confuses a borrower’s, as opposed to a
lender’s, standing to raise affirmative claims. In Williams v. Rickard, 2011 WL
2116995, at *5 (D. Haw. May 25,2011), — which involved the same parties in this
action and in which Lei Williams asserted affirmative claims against Deutsche
Bank — Chief Judge Susan Oki Mollway explained the difference between the two:

[Lei Williams is] confused about the doctrine of legal
standing. [Lei Williams] believers] that, because
Deutsche Bank and Real Time have not proven that they
have standing to enforce the loan documents, they lack
standing to seek summary judgment on the affirmative
claims asserted against them. Had Deutsche Bank or
Real Time filed affirmative claims to enforce the notes
and mortgages, they would have had to establish their
legal right to enforce those documents. However,
Williams has sued Deutsche Bank and Real Time, and
the banks are merely seeking a determination that they
are not liable to Williams for the claims Williams asserts
against them. The banks need not establish that they are
the legal owners of Williams’s loans before they defend
against Williams’s claims. “Standing” is a plaintiff’s
requirement, and Williams misconstrues the concept in
arguing that Defendants must establish “standing” to
defend themselves.

(emphasis added). In this action, the proverbial shoe is on the other foot —
Deutsche Bank asserts affirmative claims against the Williamses seeking to enforce
the Mortgage and Note, and therefore must establish its legal right (i.e., standing)
to do so. See, e.g., IndyMac Bank v. Miguel, 117 Haw. 506, 513, 184 P.3d 821,
828 (Haw. App. 2008) (explaining that for standing, a mortgagee must have “a
sufficient interest in the Mortgage to have suffered an injury from [the
mortgagor’s] default”). As explained above, Deutsche Bank has failed to do so.

The court therefore GRANTS the Williamses’ Motion to Dismiss.

[ipaper docId=87466582 access_key=key-1szk77peen8kvkve052f height=600 width=600 /]


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