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LAW OFFICES OF ADELA Z. ULLOA, APC ADELA Z. ULLOA, ESQ. (238540) 12304 Santa Monica Blvd #307 Los Angeles CA 90025 Telephone: 310-882-5034 Facsimile: 310-859-2285 Email: [email protected] Attorney for Plaintiff OZTAR DE JOURDAY SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES OZTAR DE JOURDAY, Plaintiff, v. LOAN MANAGEMENT SERVICES, INC.; MORTGAGE ELETRONIC REGISTRATION SYSTEMS, INC.; STEWART TITLE COMPANY; CITIBANK, N.A., AS TRUSTEE FOR THE HOLDERS OF STRUCTURED ASSET MORTGAGE INVESTMENTS II TRUST 2007-AR3, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2007-AR3; RECONTRUST COMPANY, N.A.; BAC HOME LOANS SERVICING, LP; BANK OF AMERICA, N.A.; and, DOES 1-35, inclusive, Defendants. 1. VIOLATION OF CALIFORNIA CIVIL CODE SECTION 2923.5; 2. VIOLATION OF CALIFORNIA CIVIL CODE SECTION 2934; 3. VIOLATION OF CALIFORNIA CIVIL CODE SECTION 2924; 4. BREACH OF CONTRACT; 5. BREACH OF GOOD FAITH AND FAIR DEALING; 6. FRAUDULENT MISREPRESENTATION; 7. CANCELLATION OF A VOIDABLE CONTRACT UNDER REV & TAX CODE 23304.1, 23305A AND VIOLATION OF CAL. CORP. CODE 191(C)(7); 8. TO VOID OR CANCEL ASSIGNMENT OF DEED OF TRUST; and 9. UNFAIR BUSINESS PRACTICES DEMAND FOR JURY TRIAL CASE NUMBER: COMPLAINT FOR:

COME NOW Plaintiffs, MARCIAL ALVAREZ and ABELINA RODRIGUEZ-ALVAREZ, 1 ___________________________________________________________________________ COMPLAINT

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

who allege as follows: I. PARTIES

At all times material, Plaintiffs MARCIAL ALVAREZ and ABELINA RODRIGUEZALVAREZ (PLAINTIFFS) were residents of the County of Los Angeles, California.

2.

Plaintiffs are informed and believe and thereon allege that Defendant LOAN MANAGEMENT SERVICES, INC., and DOES 1 through 5, inclusive and each of them, is a California corporation without an agent for service of process.

3.

Plaintiffs are informed and believe and thereon allege that Defendant MORTGAGE ELETRONIC REGISTRATION SYSTEMS, INC. (MERS), and DOES 6 through 10, inclusive and each of them, is a foreign corporation unauthorized to conduct business in the State of California.

4.

Plaintiffs are informed and believe and thereon allege that Defendant STEWART TITLE COMPANY (STEWART) and DOES 11 through 15, inclusive and each of them, is a corporation of unknown jurisdiction.

5.

Plaintiffs are informed and believe and thereon allege that Defendant CITIBANK, N.A., AS TRUSTEE FOR THE HOLDERS OF STRUCTURED ASSET MORTGAGE INVESTMENTS II TRUST 2007-AR3, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2007-AR3 (CITIBANK) and DOES 16 through 20, inclusive and each of them, is an entity of unknown form and unknown jurisdiction.

6.

Plaintiffs are informed and believe and thereon allege that Defendant RECONTRUST COMPANY, N.A. (RECONTRUST) and DOES 21 through 25, inclusive and each of them, is a national association.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

7.

Plaintiffs are informed and believe and thereon allege that Defendant BAC HOME LOANS SERVICING, LP (BAC) and DOES 26 through 30, inclusive and each of them, is an entity of unknown jurisdiction.

8.

Plaintiffs are informed and believe and thereon allege that Defendant BANK OF AMERICA, N.A. (BOFA) and DOES 31 through 35, inclusive and each of them, is a national association.

9.

Plaintiffs are informed and believe and thereon allege that each and every one of the named and unnamed Defendants herein were the agents, employees, representatives, and/or servants of each other, and were acting within the course and scope of that agency and capacity at all times material, and with the express or implied knowledge consent, and/or ratification of each other.

10.

The true names and capacities, whether individual, corporate, associate, or otherwise, of defendants DOES 1 through 35, inclusive, is unknown to Plaintiffs, who therefore sue said Defendants by such fictitious names. Plaintiffs are informed and believe and thereon allege that each of the Defendants designated herein as a DOE is responsible in some manner and to some extent for the events and occurrences referred to herein, and for the damages resulting to Plaintiffs. At such time as Plaintiffs learn the true name and capacity of any Defendant named as a DOE herein, Plaintiffs will amend their complaint to identify said defendant, and include accompanying charging allegations. II. JURISDICTION AND VENUE

11.

Plaintiffs are informed and believe and thereon allege that a substantial part of the acts, omissions, transactions and/or occurrences giving rise to the causes of action hereinafter alleged took place within the County of Los Angeles, California, and that the alleged damages exceed the minimum amount necessary to confer jurisdiction in this Court.

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12.

Plaintiffs further allege that the Subject Property as more specifically alleged hereinafter is located within the County of Los Angeles, California. III. GENERAL ALLEGATIONS

13.

At all times material to this Complaint, Plaintiffs were the lawful owners of a certain parcel of residential real property located at 8755-8757 McKinley Place, Los Angeles, CA 90002 (hereinafter referred to as the Subject Property). Plaintiffs had purchased this Subject Property in 1997.

14. In or about 2007, Plaintiffs were advised by their mortgage broker that they could refinance their loan at a lower interest rate thereby saving money.
15.

On or about February 6, 2007, Plaintiffs refinanced the Subject Property they had purchased in 1997 by executing a promissory note and a deed of trust with lender in the total sum of Three Hundred and Sixty-Seven Thousand Dollars ($367,000.00) (Deed of Trust or Subject Loan). The Deed of Trust named Defendant LOAN MANAGEMENT SERVICES, INC. as the Lender; MORTGAGE ELETRONIC REGISTRATION SYSTEMS, INC. as the Beneficiary; and, STEWART TITLE COMPANY as the Trustee. A true and correct copy of this Deed of Trust is attached hereto as Exhibit A and incorporated herein by this reference. Subsequently, Plaintiffs made regular monthly installment payments pursuant to the aforementioned financing agreement.

16.

Lack of Fluency in English Language: Plaintiffs first language is not English and they do not have a strong command of the English language. Especially in regard to reviewing loan documents. Plaintiffs should have been provided with loan documents in Spanish; however, they were never provided with any such translated documents.

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1 2 3 4 5 6 7 8 9 10

17.

Stated Income and Use of Fraudulent MTA Index Rate: Unbeknownst to Plaintiffs, they qualified for their new loan via a stated income application, in which their income was fraudulently misrepresented by the mortgage broker in order for them to qualify for this new loan. Further, Plaintiffs were put into the stated income program with a false start rate of 2.25% and initial payment of One Thousand Four Hundred and Two Dollars and Eighty-Four Cents ($1,402.84) when, in fact, Plaintiffs should have been qualified using a calculated payment of the Monthly Treasury Average (MTA) index of 5.014% (MTA index in 2/2007) which would have rendered a much greater initial monthly payment!

18. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19.

Plaintiffs Were Unaware of Adjustable Rate Mortgage: Additionally, Plaintiffs were placed into an Adjustable Rate Mortgage (ARM), of which they were unaware. Plaintiffs were never advised and never knew that their mortgage payment was going to continually increase. Plaintiffs owned the Subject Property for ten (10) years prior to the re-finance and assumed that the Subject Loan would be like their previous fixed loan, and were never advised to the contrary. Plaintiffs were simply advised to initial and sign the new loan documents and that they would be saving money, however they were never advised that their mortgage would fluctuate or that they were qualified for the loan via the stated income program and with a fraudulent initial treasury index. Facially Deficient and Invalid NOD Never Provided to Plaintiffs: The Notice of Default recorded as to the Subject Property is incomprehensible and contains the following defects:
a.

Defendants never contacted Plaintiffs to assess their financial situation and advise them as to their right to a meeting, however they fraudulently claimed to do so via some boilerplate generic declaration (NOD). As mentioned Plaintiffs are not fluent in the English language and accordingly, the signatory of the Declaration, Michael D. Link

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20. b.

must be a Spanish speaker. A true and correct copy of this NOD is attached hereto as Exhibit B and incorporated herein by this reference. The NOD refers to four (4) separate entities and is so unbelievably confusing that Plaintiffs did not know which entity to contact, which entity is the beneficiary, servicer or lender. The NOD states the following:
i.

contact: CITIBANK, N.A., AS TRUSTEE FOR THE HOLDERS OF STRUCTURED ASSET MORTGAGE INVESTMENTS II TRUST 2007-AR3, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2007-AR3 C/O BAC Home Loans Servicing, LP 400 COUNTRYWIDE WAY;

ii.

The NOD is then executed by Defendant RECONTRUST, as agent for the Beneficiary; and,

iii.

Finally, the Declaration states that I, Michael D. Link, Sr. Collector of BAC Home Loans Servicing, LP, declarethat the following is true and correct: Bank of America has contacted the borrower (Please see Exhibit ) (Emphasis added).

Invalid Substitution of Trustee and Assignment of Deed of Trust: Plaintiffs never received a Substitution of Trustee form indicating that the trustee had been changed from STEWART TITLE to Defendant RECONTRUST. Yet after a title search, it appears as though a Substitution of Trustee and Assignment of Deed of Trust was executed on March 29, 2010 (coincidentally the same date the NOD was executed). Further supporting Plaintiffs assertion of fraudulent misrepresentation and overall confusion as to which entity owns Plaintiffs loan is the fact that there are two (2) separate Assignments to Defendant CITIBANK by MERS approximately a year apart! Yet despite these recorded Assignments, notice was ever given to

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22. 21.

Plaintiffs that the beneficiary of the loan had changed from MERS to CITIBANK. Further, pursuant to the Deed of Trust, MERS as beneficiary did not have the right to execute any such Assignments.
a.

Assignments:
i.

On March 29, 2010 MERS executed an Assignment to CITIBANK. A true and correct copy of this Substitution and Assignment is attached hereto as Exhibit C and incorporated herein by this reference.

ii.

On June 23, 2011 MERS executed another Assignment to CITIBANK! A true and correct copy of this Assignment is attached hereto as Exhibit D and incorporated herein by this reference.

MERS Not Authorized to Conduct Business in California: Further supporting the fact that the Assignments are in invalid is the fact that MERS was at all times herein operating in the State of California without registering as a foreign corporation to avoid paying taxes to the state. Lack of Standing to Foreclose: Plaintiffs do not know which entity owns is the lender, servicer, trustee or beneficiary. None of the Defendants attempting to singularly or collectively foreclose on the Subject Property is the real party in interest in the foreclosure proceeding nor can they be the real party in interest in defending this action because the note has not been properly transferred from one entity to the next as required by the Uniform Commercial Code and the California Uniform Commercial Code. Only the real party in interest can prosecute or defend a lawsuit and moreover, only the real party in interest can proceed with a non-judicial foreclosure. Plaintiffs are informed and believe and thereon allege that none of the Defendants is the true holder of the note on the Subject Property. Therefore, none of the Defendants has the right to

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25. 24. 23.

proceed with a foreclosure on the Subject Property and the Defendants should be enjoined from proceeding with a foreclosure without producing the original note. On information and belief, Plaintiffs allege that Defendants are NOT the real parties in interest because they have sold or otherwise transferred the original note that represents the contract between the homeowner and the original note holder. Plaintiffs are informed and believe and thereon allege that the original note has been sold into what is known as the secondary market of the real estate industry and has been securitized through pooling trusts and pooling service bonds and/or securities whereby several investors have purchased the note securing the Subject Property such that it is difficult or impossible to determine who is the true note holder, beneficiary, mortgagee or owner. This is evidenced by the name of the alleged beneficiary CITIBANK, N.A., AS TRUSTEE FOR THE HOLDERS OF STRUCTURED ASSET MORTGAGE INVESTMENTS II TRUST 2007-AR3, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2007-AR3. One of the fundamental tenets of foreclosure law is that the mortgage holder seeking foreclosure has to prove that it owns the mortgage it is seeking to foreclose, and accordingly Defendants should be required to produce the original note in securing the Subject Property as collateral for any debt Defendants contend the homeowner owes in order to determine to whom Plaintiff should offer reinstatement, if to anybody. Further Defendants should be required to prove which entity is the valid lender, beneficiary, servicer and trustee of the Subject Loan. Plaintiffs have not been provided with valid notices and disclosure pursuant to the California Civil Code and are completely unaware as to basic information concerning the Subject Loan. All Defendants Named in Each Cause of Action: As a result of the foregoing, Plaintiffs are naming all Defendants in each cause of action, as they are unaware as to which entities are the 8 ___________________________________________________________________________ COMPLAINT

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 27. 26.

actual parties in interest and which entities were and/or are responsible for compliance with the California Civil Code in regard to the non-judicial foreclosure process, as well as compliance with the terms of the Deed of Trust. Plaintiffs are informed and believe and thereon allege that each and every one of the named and unnamed Defendants herein were the agents, employees, representatives, and/or servants of each other, and were acting within the course and scope of that agency and capacity at all times material, and with the express or implied knowledge consent, and/or ratification of each other. IV. CLAIMS FOR RELIEF FIRST CAUSE OF ACTION FOR VIOLATION OF CALIFORNIA CIVIL CODE 2923.5 (Against all Defendants) Plaintiff re-alleges and incorporates by reference the general allegations set forth above in paragraphs 1 through 25 as if fully set forth herein. California Civil Code 2923.5 requires that a Notice of Default include a declaration stating that the mortgagee, beneficiary or authorized representative contacted the borrower in person or by telephone in order to assess the borrowers financial situation and explore options for the borrower to avoid foreclosure. 28. All Defendants and each of them, failed to comply with the requirements of California Civil Code Section 2923.5 by: a. Not contacting the borrower in person or by telephone in order to assess the borrowers financial situation;

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 32. 31. 30.

c.

By fraudulently claiming to have contacted the borrower to assess the borrowers financial situation and advise him as to his right to a meeting, via a generic boilerplate paragraph as included on the second page of the NOD.

29. Clearly Defendants failed to comply with the stringent requirements of the California Civil Code. Due to Defendants non-compliance with Civil Code Section 2923.5 resulting in an invalid Notice of Default, as well as the fact that Plaintiffs do not even know which entity is the beneficiary, lender or servicer, Plaintiffs are likely to succeed in their claims for relief. Injunctive relief is proper to prevent the trustee sale of the Subject Property from proceeding. The hardship incurred by Plaintiffs if the Subject Property and equity is lost as a result of the foreclosure and sale is permanent and severe; whereas the hardship incurred by Defendants if the foreclosure process is reinitiated following the conclusion of the subject litigation is transitory and minimal. Plaintiffs are entitled to such relief as set forth in this Cause of Action including any statutory relief, and such further relief as is set forth below in the section captioned Prayer for Relief which is by this reference incorporated. SECOND CAUSE OF ACTION FOR VIOLATION OF CALIFORNIA CIVIL CODE 2934 (Against ALL Defendants) Plaintiffs re-allege and incorporate by reference the general allegations set forth above in paragraphs 1 through 29, as if fully set forth herein. California Civil Code Section 2934 codifies the procedure for substituting a trustee and has certain requirements that need to be met in order for the substitution to be valid. Specifically, 10 ___________________________________________________________________________ COMPLAINT

1 2 3 4 5 6 7 8 9 10 34. 11 12 13 14 15 36. 16 17 18 19 20 21 22 23 24 25 26 27 28 35. 33.

the Substitution of Trustee form needs to be signed by the beneficiary and acknowledged; and, must be accompanied by an affidavit signed by the beneficiary stating that certain requirements have been met. The affidavit must state that the Substitution was mailed to everyone entitled to a copy of the NOD pursuant to California Civil Code Section 2924. Plaintiffs are the record owners of the Subject Property and entitled to receive notice pursuant to California Civil Code Section 2924. However, Plaintiffs were never provided with a Substitution of Trustee form indicating that the valid beneficiary had substituted the trustee from STEWART TITLE to Defendant RECONTRUST. It appears that a Substitution of Trustee was executed and recorded but it does not contain the required affidavit indicating that a copy of the Substitution of Trustee was mailed to Plaintiffs. To date, Plaintiffs are unaware as to which entity is the actual trustee of the Subject Loan, or whether Defendant RECONTRUST has the authority to act as agent for the actual lender. Due to Defendants non-compliance with Civil Code Section 2934 resulting in failure to provide Plaintiffs with notice as to the actual trustee, as well as the fact that Plaintiffs do not even know which entity is the beneficiary, lender or servicer, Plaintiffs are likely to succeed in their claims for relief. Injunctive relief is proper to prevent the trustee sale of the Subject Property from proceeding. The hardship incurred by Plaintiffs if the Subject Property and equity is lost as a result of the foreclosure and sale is permanent and severe; whereas the hardship incurred by Defendants if the foreclosure process is reinitiated following the conclusion of the subject litigation is transitory and minimal. Plaintiffs are entitled to such relief as set forth in this Cause of Action including any statutory relief, and such further relief as is set forth below in the section captioned Prayer for Relief which is by this reference incorporated.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 41. 40. 39. 38. 37.

THIRD CAUSE OF ACTION FOR VIOLATION OF CALIFORNIA CIVIL CODE 2924 (Against ALL Defendants) Plaintiffs incorporate and re-allege the allegations of Paragraphs 1 through 29, and 32 through 36 herein as though set forth completely in this cause of action. California Civil Code Section 2924(b) provides in pertinent part that at least twenty (20) days before the date of a trustee sale, the trustee needs to provide those with a recorded interest with a Notice of Trustee Sale. It further provides that a Substitution of Trustee form must be mailed to record owners. NOTS Never Provided to Plaintiffs: Plaintiffs believe and allege that Defendants did not mail a copy of the NOTS registered or certified to them, as they never received a copy. Substitution of Trustee Never Provided to Plaintiffs: Pursuant to California Civil Code Section 2934, discussed in further detail hereinabove and incorporated herein by this reference, Plaintiffs were never provided with a valid Substitution of Trustee indicating that a valid beneficiary had substituted the trustee of the Subject Loan from STEWART TITLE to Defendant RECONTRUST. Additionally, pursuant to Civil Code Section 2924, Plaintiffs had a right to reinstate the loan by paying the sums due. However, Plaintiffs were not contacted prior to proceeding with the foreclosure process; Plaintiffs were not provided with a valid Notice of Default; Plaintiffs were not provided with a valid Substitution of Trustee form, or any Substitution of Trustee form for that matter; and, Plaintiffs were never provided with an opportunity to reinstate the loan pursuant to Civil Code Section 2924. 12 ___________________________________________________________________________ COMPLAINT

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42.

Due to Defendants non-compliance with Civil Code Section 2924 resulting in lack of notice to Plaintiff, failure to provide Plaintiff with a valid Substitution of Trustee, and failure to provide Plaintiff with an opportunity to reinstate the Subject Loan; as well as the fact that Plaintiffs do not even know which entity is the beneficiary, lender or servicer, Plaintiffs are likely to succeed in their claims for relief. Injunctive relief is proper to prevent the trustee sale of the Subject Property from proceeding. The hardship incurred by Plaintiffs if the Subject Property and equity is lost as a result of the foreclosure and sale is permanent and severe; whereas the hardship incurred by Defendants if the foreclosure process is reinitiated following the conclusion of the subject litigation is transitory and minimal. Plaintiffs are entitled to such relief as set forth in this Cause of Action including any statutory relief, and such further relief as is set forth below in the section captioned Prayer for Relief which is by this reference incorporated. FOURTH CAUSE OF ACTION FOR BREACH OF CONTRACT (Against all Defendants)

43.

Plaintiffs re-allege and incorporate by reference the general allegations set forth above in paragraphs 1 through 29, and 32 through 38 herein as though set forth completely in this cause of action.

44.

On or about February 6, 2007, Plaintiffs entered into a written agreement with Defendants when they refinanced the Subject Property they had purchased in 1997 by executing a promissory note and a deed of trust with lender in the total sum of Three Hundred and Sixty-Seven Thousand Dollars ($367,000.00) (Deed of Trust or Subject Loan). The Deed of Trust named Defendant LOAN MANAGEMENT SERVICES, INC. as the Lender; MORTGAGE ELETRONIC REGISTRATION SYSTEMS, INC. as the Beneficiary; and, STEWART TITLE

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 47. 46. 45.

COMPANY as the Trustee. A true and correct copy of this Deed of Trust is attached hereto as Exhibit A and incorporated herein by this reference. Plaintiffs are informed and believe and thereon allege that subsequent to entering into the Deed of Trust (written agreement) Defendants may or may not have acquired the rights and assumed the liabilities associated with the aforementioned promissory note and Deed of Trust, thereby becoming the lender. Accordingly Plaintiffs have a written agreement with at least one of the above-referenced Defendants, and each of them, as they were and are the agents, employees, representatives, and/or servants of each other, and were acting within the course and scope of that agency and capacity at all times material, and with the express or implied knowledge consent, and/or ratification of each other; however, Plaintiffs do not know who the actual lender, beneficiary, trustee and servicer of the Subject Loan are at this time. According to Section 22 of the Deed of Trust, Defendants were required to provide Plaintiffs with written notice prior to acceleration of payment due; however, Defendants failed to properly do so. Further, according to this same section only the Lender or the Trustee can execute a Notice of Default and the Lender or Trustee must mail a copy of this notice to Plaintiffs. According to the NOD, Defendant RECONTRUST executed the NOD as agent for the beneficiary. Plaintiffs were never properly provided with an opportunity to reinstate the loan, which they are ready, willing and capable of doing. Further, the NOD was not even executed by the Trustee or Lender as required and accordingly, Plaintiffs were further confused as to which entity to contact and were further delayed in attempting to find a resolution, all to the benefit of Defendants. Plaintiffs attempted to cure their temporary breach of the terms of the Deed of Trust by contacting the alleged lenders and attempting to find a resolution, however Plaintiff 14 ___________________________________________________________________________ COMPLAINT

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 50. 49. 48.

was simply forced to direct himself through a labyrinth of phone operators to no avail. Defendants material breach of the Deed of Trust is not excused as Plaintiffs communicated their willingness to continue to perform pursuant to the terms of the written agreement. Further, pursuant to Section 24 of the Deed of Trust, only the Lender can validly substitute the trustee. However, the recorded Substitution of Trustee indicates that Defendant MERS in its capacity as Beneficiary substituted the trustee from STEWART TITLE to Defendant RECONTRUST. Defendants failure to provide Plaintiff with written notice prior to acceleration in conformance with the Deed of Trust, the failure of the actual lender to validly substitute the trustee from the specific trustee named in the Deed of Trust to Defendant RECONTRUST and/or to name Defendant RECONTRUST its authorized agent, and the failure of the actual lender or trustee to execute the NOD constituted willful and material breaches of contract, and as a direct result, Plaintiffs have sustained compensatory, consequential and incidental damages in an amount to be determined at the time of trial. As a proximate result of Defendants material breaches of the valid written agreement between Plaintiffs and Defendants, Plaintiffs have been prejudiced, have suffered, and will continue to suffer, general and special damages including loss of equity in their house, costs and expenses related to protecting themselves, reduced credit scores, unavailability of credit, increased costs of credit, reduced availability of goods and services tied to credit ratings, increased costs of those services, as well as fees and costs including, without limitation, attorneys fees and costs, all in an amount according to proof at the time of trial. FIFTH CAUSE OF ACTION FOR BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING 15 ___________________________________________________________________________ COMPLAINT

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 53. 52. 51.

(Against all Defendants) Plaintiffs re-allege and incorporate by reference the general allegations set forth above in paragraphs 1 through 29, 32 through 36, and 40 through 46 herein as though set forth completely in this cause of action. On or about February 6, 2007, Plaintiffs entered into a written agreement with Defendants when they refinanced the Subject Property they had purchased in 1997 by executing a promissory note and a deed of trust with lender in the total sum of Three Hundred and Sixty-Seven Thousand Dollars ($367,000.00) (Deed of Trust or Subject Loan). The Deed of Trust named Defendant LOAN MANAGEMENT SERVICES, INC. as the Lender; MORTGAGE ELETRONIC REGISTRATION SYSTEMS, INC. as the Beneficiary; and, STEWART TITLE COMPANY as the Trustee. A true and correct copy of this Deed of Trust is attached hereto as Exhibit A and incorporated herein by this reference. Plaintiffs are informed and believe and thereon allege that subsequent to entering into the Deed of Trust (written agreement) Defendants may or may not have acquired the rights and assumed the liabilities associated with the aforementioned promissory note and Deed of Trust, thereby becoming the lender. Accordingly Plaintiffs have a written agreement with at least one of the above-referenced Defendants, and each of them, as they were and are the agents, employees, representatives, and/or servants of each other, and were acting within the course and scope of that agency and capacity at all times material, and with the express or implied knowledge consent, and/or ratification of each other; however, Plaintiffs do not know who the actual lender, beneficiary, trustee and servicer of the Subject Loan are at this time.

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54.

Under the statutory scheme for non-judicial foreclosure, the covenant of good faith is coextensive with Defendants duty to conduct the foreclosure proceedings fairly, openly and in good faith.

55.

Defendants, and each of them, were and are the agents, employees, representatives, and/or servants of each other, and were acting within the course and scope of that agency and capacity at all times material, and with the express or implied knowledge consent, and/or ratification of each other. Accordingly, this Cause of Action lies against all Defendants and each of them.

56.

Defendants interfered with Plaintiffs right to receive the benefits of the above-referenced valid written agreement and breached the covenant of good faith and fair dealing implied in the Deed of Trust, by doing the following:
a.

Fraudulently inducing Plaintiffs to enter into the agreement by placing Plaintiffs into the stated income program with a false start rate of 2.25% and initial payment of One Thousand Four Hundred and Two Dollars and Eighty-Four Cents ($1,402.84) when, in fact, Plaintiffs should have been qualified using a calculated payment of the Monthly Treasury Average (MTA) index of 5.014% (MTA index in 2/2007) resulting in a much greater payment which Plaintiffs could not afford;

b. Failing to advise Plaintiffs that their mortgage payments were adjustable and would increase to their detriment; c. Failing to provide Plaintiffs with loan documents in Spanish, their first language, so that they would understand the terms of the loan;
d.

Failing to comply with the statutory requirements for conducting a non-judicial foreclosure by failing to provide Plaintiff with a statutorily valid Notice of Default (the

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 57. j. i. e.

NOD asserts the fraudulent misrepresentation that Defendant(s) contacted Plaintiffs to discuss their financial situation and advise them as to their right to a meeting); Failing to comply with the statutory requirements for conducting a non-judicial foreclosure by failing to provide Plaintiffs with a statutorily valid Substitution of Trustee; f. Failing to provide Plaintiffs with notice as to a new lender or beneficiary or servicer;
g.

Failing to provide Plaintiffs with written notice of acceleration as required by the Deed of Trust;

h. Failing to comply with the terms of the Deed of Trust by having Defendant MERS, the Beneficiary, attempt to substitute the Trustee instead of the Lender or Trustee; Failing to comply with the terms of the Deed of Trust by having the NOD executed by an agent of the beneficiary as opposed to the Lender or Trustee as required; and, Failing to contact Plaintiffs and discuss his financial situation prior to proceeding with foreclosure, in direct violation of statutory law. As a proximate result of Defendants breaches of the covenant of good faith and fair dealing, Plaintiff has suffered, and will continue to suffer, general and special damages including loss of equity in his house, costs an expenses related to protecting himself, reduced credit scores, unavailability of credit, increased costs of credit, reduced availability of goods and services tied to credit ratings, increased costs of those services, as well as fees and costs including, without limitation, attorneys fees.

SIXTH CAUSE OF ACTION FOR FRAUD (Against ALL Defendants) 18 ___________________________________________________________________________ COMPLAINT

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 b. a. 60. 59. 58.

Plaintiffs re-allege and incorporate by reference the general allegations set forth above in paragraphs 1 through 29, 32 through 38, 40 through 46, and 49 through 53 herein as though set forth completely in this cause of action. Foreclosure of the Subject Property is proceeding based upon invalid documents legally required for foreclosure of the Subject Property. Defendants, and each of them, were and are the agents, employees, representatives, and/or servants of each other, and were acting within the course and scope of that agency and capacity at all times material, and with the express or implied knowledge consent, and/or ratification of each other. Accordingly, this Cause of Action lies against all Defendants and each of them. Defendants engaged in the following fraudulent actions or omissions in order to induce Plaintiffs reliance on such fraudulent information all to Defendants benefit: In February 2007, Defendants fraudulently induced Plaintiffs to enter into the Deed of Trust by placing Plaintiffs into the stated income program with a fraudulent start rate of 2.25% and initial payment of One Thousand Four Hundred and Two Dollars and Eighty-Four Cents ($1,402.84) when, in fact, Plaintiffs should have been qualified using a calculated payment of the Monthly Treasury Average (MTA) index of 5.014% (MTA index in 2/2007) resulting in a much greater payment which Plaintiffs could not afford; In February 2007, Defendants fraudulently misrepresented to Plaintiffs that the monthly mortgage payment would be One Thousand Four Hundred and Two Dollars and EightyFour Cents ($1,402.84), when Defendants knew that this payment would shortly escalate into a sum that Plaintiffs could not afford and that this sum was derived by using a fraudulent start rate;

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c. In February 2007, Defendants fraudulently concealed the fact that Plaintiffs mortgage rate would fluctuate and increase according to the Monthly Treasury Index from Plaintiffs; d. In February 2007, Defendants fraudulently concealed the fact that Defendants used a fraudulent start rate to qualify Plaintiffs for the Subject Loan; e. On or about April 1, 2010 Garbriella Ibarra of Defendant RECONTRUST fraudulently misrepresented to Plaintiffs that Defendant RECONTRUST had the authority to execute and record the NOD, when in fact it did not have any such authorization since pursuant to the Deed of Trust only the Lender or Beneficiary were authorized to execute the NOD;
f.

On or about March 1, 2010 Michael D. Link of Defendant BAC fraudulently misrepresented on the attached Declaration to the NOD that Defendant BofA has contacted the borrower to assess the borrowers financial situation and explore options for the borrower to avoid foreclosure, when Defendants had, in fact, NEVER, contacted Plaintiff;

g.

On or about March 29, 2010 Flor Valerio of Defendant MERS fraudulently misrepresented to Plaintiffs that it had the authority to execute a Substitution of Trustee, when it in fact had no such authority since only the Lender could validly substitute the trustee;

h. On or about March 29, 2010 Flor Valerio of Defendant MERS fraudulently misrepresented to Plaintiffs that it had the authority to execute an Assignment of Deed of Trust, when it in fact had no such authority;

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 63. 62. 61.

i.

On or about July 6, 2010 Kristina Madrigal of Defendant RECONTRUST fraudulently misrepresented to Plaintiffs that Defendant RECONTRUST had the authority to execute the Notice of Trustee Sale when it in fact did not since it was not the authorized trustee; and,

j. On or about June 23, 2011 Yomari Quintanilla of Defendant MERS fraudulently misrepresented to Plaintiffs that it had the authority to execute an Assignment of Deed of Trust, when it in fact had no such authority. At the time Defendants made the representations they knew they were false and were made for the sole purpose of inducing Plaintiffs into entering into the Deed of Trust, although they were aware that Plaintiffs could not afford the mortgage and such misrepresentations were made solely to induce reliance by Plaintiffs. This is further evidenced by the fact that Defendants failed to provide Plaintiffs with a copy of the loan documents in Spanish so that Plaintiffs could understand the actual terms of the loan. At the time Defendants made the remaining misrepresentations they knew they were false and were made for the sole purpose of inducing reliance and confusing Plaintiffs in order to further delay Plaintiffs from securing a resolution, and thereby forcing Plaintiffs to accumulate additional charges and interest, as well as potentially suffer foreclosure to the benefit of Defendants. At the time Defendants concealed the above-referenced material facts from Plaintiffs they knew that Plaintiffs did not know these material facts and concealed such facts in order to deceive Plaintiffs and induce Plaintiffs to enter into the Deed of Trust to the benefit of Defendants.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

64.

Plaintiffs did rely on such misrepresentations and concealments to their detriment and Plaintiffs reliance on the above-referenced intentional misrepresentations and concealments made by Defendants, and each of them, was reasonable because the Defendants are financial institutions and an average lay individual in Plaintiffs position would have reasonably believed and relied on said misrepresentations, promises and concealments made by Defendants.

65.

Plaintiffs reasonable reliance on Defendants above-referenced intentional misrepresentations and concealments was to Plaintiffs detriment as Plaintiffs delayed in seeking a resolution, as well as legal intervention, and as a result incurred additional late charges and interest, attorneys fees, reduced credit scores, loss of equity and potential foreclosure.

66.

As a proximate result of Defendants fraudulent and intentional misrepresentations and concealments, Plaintiffs have been damaged in a sum to be determined according to proof at Trial. Without limiting the damages as described elsewhere in this Complaint, Plaintiffs damages arising from this Cause of Action also include loss of equity in his house, costs and expenses related to protecting himself, reduced credit score, unavailability of credit, increased costs of credit, reduced availability of goods and services tied to his credit rating, increased costs of those services, as well as fees and costs, including without limitation, attorneys fees and costs. The aforementioned misrepresentations and concealments were made with the intent to deceive and imbue Plaintiffs with a false sense of security, such that Plaintiffs would enter into a loan agreement they could not afford and thereafter not take any precautionary measures to protect themselves from default and ongoing default on the loan, from the potential foreclosure sale of the Subject Property, and from losing their rights of reinstatement and equity of redemption.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

67. Defendants actions in their totality are so egregious as to justify an award of exemplary and punitive damages in order to deter any such continued unlawful conduct. SEVENTH CAUSE OF ACTION CANCELLATION OF A VOIDABLE CONTRACT UNDER REV & TAX CODE 23304.1, 23305A AND VIOLATION OF CAL. CORP. CODE 191(C)(7) (AGAINST ALL DEFENDANTS) 68. Plaintiffs re-allege and incorporate by reference the general allegations set forth above in paragraphs 1 through 29, 32 through 38, 40 through 46, 49 through 53, and 56 through 62 herein as though set forth completely in this cause of action. 69. MERS operates as a record-keeping database company in which MERS contracts with lenders to track security instruments in return for an annual fee.
70.

Based upon information and belief, MERS was at all times herein operating in the State of California without registering as a foreign corporation to avoid paying taxes to the state. Further it is a suspended corporation and does not have the right to conduct business in the State of California. Please see a copy of this record from the Secretary of State, a true and correct copy of which is attached hereto as Exhibit and incorporated herein by this reference.

71.

As a result of MERSs failure to comply with the California franchise tax laws, the Deed of Trust alleged herein is voidable by Plaintiffs pursuant to Rev & Tax Code 23304.1, 23304.1(b), and 23305a.

72. Moreover, MERS is not in the business of creating evidences, and it is not a foreign lending institution. It does not originate loans, never had any true interest in the subject loan or Deed of Trust, and thereby does not meet any legal exceptions to the registration requirement for foreign corporations.
73.

MERS conducted business in California when it was not registered with the Secretary of State. Specifically, it prepared and/or executed a Substitution of Trustee and Assignment of Deed of

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 77. 76.

Trust in March 2010 and June 2011. The substitution allowed the alleged new Trustee, Defendant RECONTRUST, to record a Notice of Default and Notice of Trustee Sale on the Subject Property. 74. At all relevant times herein, MERS was not registered in California and could not prepare or execute the Assignment of Deed of Trust. MERS had no legal authority to take such action. Deeds of Trust are contractual in nature. A contract made by a corporation doing business in California while that corporation has failed to perform its franchise tax obligations is voidable at the option of any party to the contract, other than the [delinquent] taxpayer. Thus, MERS did not have the legal capacity to enter into a contract with Plaintiffs or anyone else, and Plaintiffs have the option of voiding the contract. Therefore, any action that MERS took with regard to assigning the within deed of trust and substituting the trustee would be ultra vires and void. 75. Plaintiffs hereby expressly request an adjudication to the effect that the assignment of the deed of trust and substitution of trustee by MERS are void. EIGHTH CAUSE OF ACTION TO VOID OR CANCEL ASSIGNMENT OF DEED OF TRUST (AGAINST ALL DEFENDANTS) Plaintiffs re-allege and incorporate by reference the general allegations set forth above in paragraphs 1 through 29, 32 through 38, 40 through 46, 49 through 53, 56 through 62, 65 through 70 herein as though set forth completely in this cause of action. The Assignment of the Deed of Trust are invalid, and of no force and effect, for the reasons set forth above including, inter alia, the fact the MERS did not have standing or the legal authority to assign the deed of trust which purportedly secured the Note, and which served as the basis for a claim to have the right to conduct a non-judicial foreclosure. Thus, the assignment of the deed of trust was at all times void. 24 ___________________________________________________________________________ COMPLAINT

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 81. 80. 78.

NINTH CAUSE OF ACTION VIOLATION OF CALIFORNIA BUSINESS AND PROFESSIONS CODE SECTIONS17200 ET SEQ. (AGAINST ALL DEFENDANTS) Plaintiffs incorporate herein by reference the allegations made in paragraphs 1 through 97, inclusive, as though fully set forth herein. 79. California Business & Professions Code Section 17200, et seq., prohibits acts of unfair competition, which means and includes any fraudulent business act or practice . . . and conduct which is likely to deceive and is fraudulent within the meaning of Section 17200. As more fully described above, the Foreclosing Defendants acts and practices are likely to deceive, constituting a fraudulent business act or practice. This conduct is ongoing and continues to this date. Specifically, the Foreclosing Defendants engage in deceptive business practices with respect to entering into the Deed of Trust with Plaintiffs, mortgage loan servicing, assignments of notes and Deeds of Trust, foreclosure of residential properties and related matters by
(a)

Using fraudulent index rates to qualify borrowers for a loan;

(b) Concealing material facts from borrowers by failing to advise them that their mortgages are adjustable; (c) Failing to provide foreign language speakers with loan documents in their native language such that they may understand the actual terms of the Deed of Trust; (d) Executing and recording false and misleading documents; and (e) Acting as beneficiaries and trustees without the legal authority to do so.

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1 2 3 4 5 6 7 8 9 10

82.

The Defendants fail to act in good faith as they take fees for services but do not render them competently and in compliance with applicable law.

83.

Moreover, the Defendants engage in a uniform pattern and practice of unfair and overlyaggressive servicing that result in the assessment of unwarranted and unfair fees against California consumers, and premature default often resulting in unfair and illegal foreclosure proceedings. The scheme implemented by the foreclosing Defendants is designed to defraud California consumers and enrich the Foreclosing Defendants.

84. The foregoing acts and practices have caused substantial harm to California consumers.
85.

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 86.

As a direct and proximate cause of the unlawful, unfair and fraudulent acts and practices of the foreclosing Defendants, Plaintiffs and California consumers have suffered and will continue to suffer damages in the form of unfair and unwarranted late fees and other improper fees and charges. By reason of the foregoing, the foreclosing Defendants have been unjustly enriched and should be required to disgorge their illicit profits and/or make restitution to Plaintiffs and other California consumers who have been harmed, and/or be enjoined from continuing in such practices pursuant to California Business & Professions Code Sections 17203 and 17204. Additionally, Plaintiffs are therefore entitled to injunctive relief and attorneys fees as available under California Business and Professions Code Sec. 17200 and related sections. PRAYER FOR RELIEF Wherefore, Plaintiffs pray for legal and equitable relief against defendants, and each of them, as

follows: (1) For a temporary and permanent injunction preventing Defendants from proceeding with a trustee sale of the Subject Property; 26 ___________________________________________________________________________ COMPLAINT

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

(2) (3) proof; (4) (5) (6) (7)

For general damages in a sum according to proof; For special damages, including consequential and incidental damages, in a sum according to

For attorneys fees and costs; For punitive damages; For interest as allowed by law; and For such other legal and equitable relief as this Court deems just and proper.

DATED: MARCH 21, 2012

LAW OFFICES OF ADELA Z. ULLOA, APC

BY:___________________________________ ADELA Z. ULLOA, ESQ. Attorney for Plaintiffs MARCIAL ALVAREZ and ABELINA RODRIGUEZ-ALVAREZ

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