The Neil Garfield Show: Dangers of Judicial Presumptions

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California Attorney Charles Marshall and Investigator Bill Paatalo will discuss the dangers of judicial presumptions.

To prevail in a wrongful foreclosure case, the financial institution  must convince the trial court that:

(1) it was, in fact, the beneficiary under the deed of trust,

(2) a properly appointed substitute trustee conducted the foreclosure proceedings, and

(3) the plaintiff lacked standing to claim the foreclosure was wrongful.

In Guilex v. PennyMac the financial institution argued its chain of title to the deed of trust was established by facts stated in recorded assignments of deed of trust and a recorded substitution of trustee. The trial court took judicial notice of the recorded documents.

However, on appeal, the plaintiff contended that he had standing to challenge the foreclosure and, furthermore, the judicially noticed documents did not establish the financial institution actually was the beneficiary under the deed of trust. California’s Fifth District Court agreed and reversed the lower court decision.

Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919 (Yvanova) clearly establishes plaintiff has standing to challenge a nonjudicial foreclosure on the grounds that the foreclosing party lacked the authority to initiate the foreclosure because it held no beneficial interest under the deed of trust.

As to establishing facts by judicial notice, it is well recognized that courts may take notice of the existence and wording of recorded documents, but not the disputed or disputable facts stated therein. (Yvanova, supra, 62 Cal.4th at p. 924, fn. 1; Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375 (Herrera).)

The court concluded that the facts stated in the recorded assignments of deed of trust and the substitution of trustee were not subject to judicial notice.

Therefore, the financial institution did not present evidence sufficient to establish its purported chain of title to the deed of trust. Consequently, the financial institution failed to show it was the owner of the deed of trust and had the authority to foreclose on plaintiff’s residence.

Hundreds of thousands of foreclosures were “completed” under the false assumption that there were magical presumptions preventing the homeowner from defending and guaranteeing a win for so-called beneficiary under a deed of trust.

The first magical presumption erroneously applied in foreclosure litigation has been on the doctrine of “judicial notice.” Judges have been erroneously ruling that once a judicially “noticed” document is admitted into evidence, everything in it represents a proffer of evidence which is accepted by the court into evidence.Once the words of the contested document are in evidence, the burden shifts to the homeowner to discredit them, but no objection can be

Once the words of the contested document are in evidence, the burden shifts to the homeowner to discredit them, but no objection can be raised as to hearsay, best evidence or anything else. Banks have been working this angle not only by asking for judicial notice of documents in the county recording office; they have also slyly uploaded all sorts of documents to the SEC site and then asking for judicial notice even though the document was not a government document, upon which the court can place great weight. By accepting the words in the document as evidence under the judicial notice doctrine, the burden shifts to the homeowner to disprove a false statement without any facts or testimony.

That is why it is so important to require the foreclosing party to prove its prima facie case. It is also one of the fundamental defects in the way that nonjudicial procedures are applied. The homeowner is set with the task of disproving allegations that have not been made except by implication in a substitution of trustee, notice of default and notice of sale.

Judicial notice has been liberally applied but the law has always been that contested facts within the document to be “noticed” by the court were not subject to judicial notice. If they are not subject to judicial notice then that means those words that are contested are not admitted into evidence. If they are not admitted into evidence there is an absence of proof. Unless the bank comes up with a different way of getting those words into evidence — with proper foundation — they lose.

The second magical presumption erroneously applied in foreclosure litigation has been some sort of doctrine of concoction on standing to defend.  This is a nonsensical and unsupportable doctrine in which the homeowner may not defend the case using a defense that the party ostensibly foreclosing has no right, justification or excuse for doing so.

In Yvanova, supra, the California Supreme Court inexplicably held that the homeowner can sue for damages for a wrongful foreclosure based upon false instruments and lack of authroity but that the homeowner could not stop the foreclosure itself. Far from being the last word on this subject, the doctrine is leaking badly all over the country. If a homeowner has a right to damages because the foreclosure should never have been conducted, then exactly how could the homeowner be prevented from stopping it in the first place?

Practice Hint: Oppose Motions for Judicial Notice, File Motions in Limine, File Motions for Summary Judgment, Enforce discovery and preserve the issues on appeal.  And of course only TIMELY and well-founded objections are preserved for appeal. If you think the Judge is applying one or more of the magical presumptions then  make sure it is clear on the record that this is what the Judge was doing. Question the Judge if necessary. Narrow it down. If there is another possible explanation for the ruling the appeals court will affirm based upon the other possible explanation.

 

Bill Paatalo
Oregon Private Investigator – PSID#49411
BP Investigative Agency, LLC
P.O. Box 838
Absarokee, MT 59001
Office: (406) 328-4075
Charles Marshall, Esq.
Law Office of Charles T. Marshall
415 Laurel St., #405
San Diego, CA 92101

3 Responses

  1. There are several recent of your postings concerning which I have some substantive knowledge ( not comment) EG NTC Does your office have a methodology to receive information.

    sb scheinman stanbsch@aol.com 203-644-6832

  2. I hope we will hear more from Mr. Paatalo on two topics.

    One was about half way through the segment, in his response when Mr. Marshall asked if he had anything to add to what Mr. Marshall had just said, when it seemed like a whole show would be needed to lay out the fundamentals of the problem Mr. Paatalo described.

    The other was the issue he raised at the very end but didn’t have time to finish.

    I’m left wondering whether the plaintiffs owe anyone any money. Presumably, at the time of purchase, the sellers and/or their lender (or “lender”) each received, in some kind of bank account, a sum of money.

    Assuming they’d had some equity in their former property, the sellers could then have gone to their bank and withdrawn what they’d received in cash.

    What entity made that deposit into the seller’s bank account? Did the same entity satisfy the seller’s lender with a deposit of cash into a bank account? Isn’t that entity the creditor (or, if two entities were involved, “are those the creditors”) to whom the plaintiffs owe the balance on their loan?

    If not, why did that/those entity/entities give the sellers and their lender/”lender” any amount(s) of money?

    (If the deposits came from an escrow account of some kind, whose escrow account and who funded it? Is that depositor the plaintiff’s creditor?)

  3. Our mortgage was foreclosed when the suit to enjoin foreclosure was not dismissed. Is this foreclosure void? Please advise.

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