STAFNE LAW CRUSHES MERS, FIDELITY AND DEUTSCHE BANK IN KNECT V. FIDELITY

KingCast and Mortgage Movies Celebrate as Stafne Law Crushes MERS, Fidelity and Deutsche Bank in Knecht v. Fidelity Summary Judgment; MERS Assignment a Legal Nullity.

Above: Attorneys Scott Stafne and Josh Trumbull at the command center 

as we discussed the ramifications of yesterday's Federal Court victory.

Several months ago KingCast/Mortgage Movies cameras interviewed Attorney Scott Stafne relative to the Unconstitutional Nature of the Deed of Trust Act vis a vis his pending case ofKnecht v. Fidelity, 2014 U.S. Dist. Lexis 113131 (Washington WD 2014).  We were both clearly worried but it turned out for the good because they got a Judge who actually gives a damn. You see, in my vast experience as former escrow attorney and in shooting dozens of courtroom videos I see that some Courts and Judges get it: See Bradburn v. ReconTrust in which I shot the entire argument on some of the same issues manifest herein.  See also this summer's case of Pardo v. OCWEN, MERSCORP, NWTS. In this case the Judge denied the Stafne Constitutional arguments but at least got most of the the evidentiary matters correct.

However, some steadfastly refuse to acknowledge what I consider to be basic tenets of Jurisprudence. To wit, Judge Marsha Pechman, who is -- unfortunately in my opinion -- the Chief Justice in the Western District. I'll tell it straight to her face if given the opportunity, it's a Free Country the last time I checked. Heck, Attorney Stafne said as much when he moved to recuse her last year as noted in the above links, supra.

Here is the yesterday's ORDER from Hon. Richard C. Jones. I have taken the liberty of quoting some of the salient passages but there is much more.

"In Washington, lenders hoping to take advantage of the MERS system designated MERS as the beneficiary of deeds of trust, just as ABC did in Mr. Knecht’s deed of trust. But it is now clear that Washington law does not permit MERS to act as a beneficiary unless it is also the “holder” of the note secured by the deed of trust.Bain, 285 P.2d at 47. 

There is no suggestion that MERS ever held Mr. Knecht’s note, and yet it purported in April 2010 to assign to DB “the Promissory Note secured by [the Knecht] deed of trust and also all rights accrued or to accrue under said Deed of Trust.” The assignment, which is recorded in King County, was executed by “MERS as nominee for [ABC],” but there is no evidence that ABC actually authorized MERS to effect the transfer. See Bavand v. OneWest Bank, FSB, 309 P.3d 636, 649 (Wash. Ct. App. 2013)(noting MERS’s failure to establish its agency relationship with a noteholder). There is no dispute in this case that MERS lacked the power to transfer anything to DB. Knecht, 4-5. 

Mr. Knecht has offered two pieces of evidence: his original note and deed of trust, in which DB held no interest; and the MERS assignment, which was a legal nullity. A trier of fact could determine that this evidence makes it more likely than not that DB has no valid interest in Mr. Knecht’s note or deed of trust. Knecht, at 7. 
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 Fn3 --  The court observes that it is the beneficiary, not the borrower, who can be expected to possess evidence that it is the holder or owner of a promissory note. The court finds it unlikely that a Washington court would burden the borrower alone with providing that evidence. As the Bain court observed, in cases where “the original lender ha[s] sold the loan, th[e] purchaser would need to establish ownership of that loan, either by demonstrating that it actually held the promissory note or by documenting the chain of transactions.” 285 P.3d at 47-48.
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Mr. Knecht has evidence of damages caused by MERS’s and DB’s conduct. Mr. Knecht did what many homeowners faced with the prospect of foreclosure would do: he investigated. His evidence establishes that he spent substantial time on that investigation, and that suffices to establish a CPA injury. Walker, 308 P.3d at 727 (“Investigative expenses, taking time off from work, travel expenses, and attorney fees are sufficient to establish injury under the CPA.”). DB and MERS insist that the cause of Mr. Knecht’s injury was his default, not their wrongdoing, but they are mistaken. If a jury concludes that DB had no authority to foreclose, then a trier of fact could infer that the cause of his need to investigate was DB’s wrongfully-initiated foreclosure proceedings."

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