Case 3:18-cv-00157-YY Document 70 Filed 09/04/18 Page 1 of 8

Philip Van Der Weele, OSB #863650

Email: phil.vanderweele@klgates.com
K&L GATES LLP
1 SW Columbia Street, Suite 1900
Portland, OR 97258
Tel.: (503) 228-3200/Fax: (503) 248-9085

Attorneys for Defendant Morgan Stanley

ABS Capital I Inc.

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON (PORTLAND)

LEROI ESPIRIQUETZAL,
Case No. 3:18-cv-00157-YY
Plaintiff,
DEFENDANT MORGAN STANLEY
v. ABS CAPITAL INC.’S RESPONSE TO
PLAINTIFF’S OBJECTIONS TO
FINDINGS AND
QUALITY LOAN SERVICE RECOMMENDATIONS
CORPORATION OF WASHINGTON, et al.,

Defendants.

RESPONSE

Morgan Stanley ABS Capital I Inc. (“Morgan Stanley”) 1 respectfully submits this

Response to Plaintiff Leroi Espiriquetzal’s (“Plaintiff”) Objections to Findings and

Recommendations (“Plaintiff’s Objections”). Dkt. # 62. As with Plaintiff’s First Amended

1
The full name of the entity named in the Complaint, and the party filing this Response, is:
Morgan Stanley ABS Capital I Inc., in its capacity as Depositor for Morgan Stanley IXIS Real
Estate Capital Trust 2006-1 Mortgage Pass Through Certificates, Series 2006-1.

PAGE 1 – MORGAN STANLEY’S RESPONSE TO PLAINTIFF’S K&L GATES LLP

1 SW COLUMBIA STREET

OBJECTIONS TO FINDINGS AND RECOMMENDATIONS SUITE 1900

PORTLAND, OR 97258
TELEPHONE: (503) 228-3200
 Case 3:18-cv-00157-YY Document 70 Filed 09/04/18 Page 2 of 8

Complaint (“FAC”) and subsequent filings in this case, Plaintiff’s Objections largely repeat the

same incorrect legal arguments, advance conclusory and unsupported factual allegations, and

introduce some bizarre and irrelevant narratives. Because Plaintiff’s Objections have no merit,

the Court should reject Plaintiff’s Objections and adopt the Findings and Recommendations in

their entirety.

DISCUSSION
I. The Findings and Recommendations Properly Disregarded Plaintiff’s Inadmissible,
Irrelevant, and Incomprehensible Evidence
As a preliminary matter, Plaintiff appears to object to the Findings and Recommendations

on the ground that they disregard the conclusory, confusing, and voluminous filings in support of

his motions. See Dkt. # 62 at 2. But this rejection of materials beyond the pleadings and not

otherwise subject to judicial notice was entirely proper. See United States v. Corinthian Colleges,

655 F.3d 984, 998-99 (9th Cir. 2011) (quoting Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th

Cir. 2001)).

Furthermore, the Magistrate Judge properly exercised discretion by expressly declining

Plaintiff’s invitation to convert the motions into ones for summary judgment. See Dkt. # 60 at 18;

see also Yakima Valley Memorial Hosp. v. Wash. State Dep’t of Health, 654 F.3d 919, 925 n.6

(9th Cir. 2011) (citing Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1207 (9th

Cir. 2007)) (“The district court had discretion not to convert the motion for judgment on the

pleadings into a summary judgment motion”). After all, Plaintiff’s declarations appear to

contain only inadmissible and scandalous statements with little relevance to the instant case. See,

e.g., Dkt. # 40 at 2 (including hearsay statements from individuals named Pamela Owen and

Rebecca Manzano); Fed. R. Evid. 801 & 802.

II. Plaintiff Still Conflates the Morgan Stanley Entities and Fails to Allege Wrongdoing
on the Part of Morgan Stanley, Acting as Depositor
Even after providing another 26 pages conclusory and speculative factual allegations in

his Objections, Plaintiff still fails to allege any wrongful conduct on the part of Morgan Stanley,

acting as “Depositor.” As with his FAC and other pleadings, Plaintiff continues to conflate the

PAGE 2 – MORGAN STANLEY’S RESPONSE TO PLAINTIFF’S K&L GATES LLP

OBJECTIONS TO FINDINGS AND RECOMMENDATIONS 1 SW COLUMBIA STREET
SUITE 1900
PORTLAND, OR 97258
TELEPHONE: (503) 228-3200
 Case 3:18-cv-00157-YY Document 70 Filed 09/04/18 Page 3 of 8

different entities with the name “Morgan Stanley.” 2 See Dkt. # 62 at 11 (conflating Morgan

Stanley, acting as “Depositor” with “the Trust.”). Plaintiff’s inability or to distinguish between

defendants prejudices Morgan Stanley and does not comport with Fed. R. Civ. P. 8(a). 3 See

Gillette v. Malheur Cnty., No. 2:14-CV-01542-SU, 2015 WL 2365405, at *2-4 (D. Or. May 15,

2015) (dismissing complaint because of plaintiffs’ confusing complaint which “fails to

adequately notify defendants of the specific claims against each individual defendant”).

Furthermore, in an odd twist, Plaintiff now appears to concede this point, as he objects to the

Findings and Recommendations on the ground that “[t]he collective characterization of ‘the

Trust’ in the Findings and recommendations is confusing and cannot be allowed to stand . . . .”

See Dkt. # 62 at 12. For this reason, the Court should reject Plaintiff’s Objections and adopt the

Findings and Recommendations in their entirety.

III. Plaintiff’s Objections Fail Because He Does Not Have Standing to Enforce the PSA
As explained in Morgan Stanley’s motion (Dkt. # 56 at 5-6 & n.4) and reply (Dkt. # 58 at

3), Plaintiff cannot base his claims on Morgan Stanley’s role as Depositor because Plaintiff does

not have standing to enforce the terms of the Pooling and Service Agreement (“PSA”). Plaintiff

continues to assert that various provisions of the PSA have been violated in some manner. See

Dkt. # 62 at 13-15. However, courts in this judicial district have repeatedly held that “[i]t is well

settled that a plaintiff lacks standing to enforce the terms of a PSA where she is neither a party

2
Plaintiff indiscriminately named multiple entities with “Morgan Stanley” in their names as
defendants in this matter. Defendants Certificateholders of Morgan Stanley IXIS Real Estate
Capital Trust 2006-1, Mortgage Pass-Through Certificates, Series 2006-1, Deutsche Bank
National Trust Company, as Trustee for Morgan Stanley IXIS Real Estate Capital Trust 2006-1,
and Morgan Stanley IXIS Real Estate Capital Trust 2006-1, in its capacity as Issuing Entity for
Morgan Stanley IXIS Real Estate Capital Trust 2006-1, Mortgage Pass-Through Certificates,
Series 2006-1 are referred to as the “Trust”. Dkt. #33; see also Dkt. #45.
3
Plaintiff appears to lump all defendants together as “coconspirators” in an alleged plot to
lawfully evict Plaintiff from the Property. See Dkt. # 62 at 7. Notwithstanding Plaintiff’s best
efforts to confuse the issue, although the Multnomah County Circuit Court had entered a
judgment that was without legal effect in April 2018, it later entered one on June 11, 2018 that
had legal effect as the Oregon Court of Appeals had expressly granted leave to do so. See Dkt. #
64, at 18, 87-89. Plaintiff appears to have been unsuccessful in seeking a stay of that judgment
as he has not provided any showing that he made a supersedeas undertaking.
PAGE 3 – MORGAN STANLEY’S RESPONSE TO PLAINTIFF’S K&L GATES LLP
OBJECTIONS TO FINDINGS AND RECOMMENDATIONS 1 SW COLUMBIA STREET
SUITE 1900
PORTLAND, OR 97258
TELEPHONE: (503) 228-3200
 Case 3:18-cv-00157-YY Document 70 Filed 09/04/18 Page 4 of 8

to, nor a third party beneficiary of, that agreement.” See, e.g., Staton v. BAC Home Loans

Servicing, LP, No. 6:10-cv-01306-PA, 2014 WL 1803376, at 3 (D. Or. May 6, 2014); Gibson v.

PNC Bank Nat’l Ass’n, No. :1:13-cv-01819-CL, 2014 WL 1333985, at *4 (D. Or. Apr. 2, 2014);

Oliver v. Delta Fin. Liquidating Trust, No: 6:12-cv-00869-AA, 2012 WL 3704954, at *4-5 (D.

Or. Aug. 27, 2012). Again, Plaintiff admits in his FAC that he was never a party to the PSA (see

FAC ¶ 46) and confirmed this fact in his Response (see Dkt. # 57 at 7 (“Plaintiff who was never

a party to any of these agreements and had no reason to possess knowledge of these

agreements”)). Plaintiff’s Objections do not address his lack of standing, demonstrating that his

claims based on the PSA have no merit. The Court should therefore reject Plaintiff’s Objections

and adopt the Findings and Recommendations in full.

IV. The Court Should Reject Plaintiff’s Argument That His Debt Has Been Satisfied By
Insurance Payments
Plaintiff appears to double down on his theory that his debt has been satisfied due to the

payments the Trust may or may not have received from an insurance payment, again without

citing to any legal authority. See Dkt. # 62 at 14. Courts routinely reject this theory. See e.g.,

Smith v. U.S. Bank, N.A., Civ. No. 10-3077-CL, 2011 WL 7628515, at *8 (D. Or. Oct. 26, 2011)

(holding that plaintiffs’ “persistent belief that their obligation to repay their mortgage claims has

been extinguished as the result of its sale and securitization is unsupported by any identifiable

legal theory” and dismissing claims based on that theory). As Plaintiff’s argument is without
merit, the Court should reject it and adopt the Findings and Recommendations in full.
V. Plaintiff Arguments on the Applicable Statute of Limitations Are Largely
Incomprehensible, Fail to Address Collateral Estoppel, and Should Be Rejected by
the Court
Even now, Plaintiff appears to still claim that a six-year statute of limitations applies to

enforcement of the Deed of Trust, rather than the correct ten-year statute of limitations under

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PAGE 4 – MORGAN STANLEY’S RESPONSE TO PLAINTIFF’S K&L GATES LLP

OBJECTIONS TO FINDINGS AND RECOMMENDATIONS 1 SW COLUMBIA STREET
SUITE 1900
PORTLAND, OR 97258
TELEPHONE: (503) 228-3200
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4
Or.Rev. Stat. § 88.110. See Dkt. # 62 at 15-16. As noted in the Findings and

Recommendations and as raised by several defendants, Plaintiff is collaterally estopped from

challenging the applicable statute of limitations. See Dkt. # 60 at 9-11. Plaintiff does not rebut

the Magistrate Judge’s thorough collateral estoppel analysis in any way.

Instead, Plaintiff appears to challenge the underlying state court judgment. 5 See Dkt. #

62 at 16 (contending that a “split the note” theory is somehow “fatal to the validity of the State

court judgment”). The Court should reject that argument as the Rooker-Feldman doctrine

precludes federal court review of a state judgment. See Noel v. Hall, 341 F.3d 1148, 1154 (9th

Cir. 2003). “The clearest case for dismissal based on the Rooker-Feldman doctrine occurs when

a ‘federal plaintiff asserts as a legal wrong an allegedly erroneous decision by a state court, and

seeks relief from a state court judgment based on that decision.’” Henrichs v. Valley View Dev.,

474 F.3d 609, 613 (9th Cir. 2007) (quoting Noel, 341 F.3d at 1164). Plaintiff cannot use this

Court to re-litigate a valid state court judgment.

VI. Plaintiff’s Claims Based on Purported Defects in the Notices of Trustee Sale Are
Barred by Oregon Law
Plaintiff continues to assert various perceived defects in the Trustee’s Notice of Sale,

assignments, or other recorded documents. See Dkt. # 62 at 20-23. As the Findings and

Recommendations explain—and as Morgan Stanley has previously argued—the defects Plaintiff

4
As best as Morgan Stanley can tell, Plaintiff confusingly contends that by accelerating payment
under a loan due to Plaintiff’s default, the Note became a “liability” governed by the six-year
statute of limitations in Or. Rev. Stat § 12.080(1) rather than a non-judicial foreclosure action
governed by the statute of limitations in Or. Rev. Stat. § 88.110. See Dkt. # 62 at 15-18.
Plaintiff paradoxically also contends that the Note and the Deed of Trust cannot be “split.” Id.
In any event, Plaintiff’s argument is squarely foreclosed by McClure v. U.S. Bank, Civ. no. 6:16-
cv-01516-MC, 2017 WL 981388, at *2-3 (D. Or. Mar. 13, 2017), which held that the ten-year
statute of limitations in Or. Rev. Stat. § 88.110 applies as it was specifically enacted as a
mortgage foreclosure statute.
5
Plaintiff bizarrely and illogically argues that the defendants improperly removed this case to
federal court so that they could use collateral estoppel to seek dismissal. See Plaintiff’s
Objection at 23. But Plaintiff’s claims would have been barred by collateral estoppel regardless
of whether he was in Oregon or federal court—after all, defendants argued for collateral estoppel
under Oregon law, which the Magistrate Judge applied. See Dkt. # 60 at 9-11.
PAGE 5 – MORGAN STANLEY’S RESPONSE TO PLAINTIFF’S K&L GATES LLP
OBJECTIONS TO FINDINGS AND RECOMMENDATIONS 1 SW COLUMBIA STREET
SUITE 1900
PORTLAND, OR 97258
TELEPHONE: (503) 228-3200
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alleges are not based on fundamental flaws in the foreclosure proceedings. See Dkt. # 60 at 11-

13. Therefore, Plaintiff’s post-sale claims under the Oregon Trust Deed Act are barred. See

Streater v. Fed. Nat’l Mortg. Ass’n, 224 F. Supp. 3d 1113, 1115-16 (D. Or. 2016) (citing

DiGregorio v. Bayview Loan Serv., LLC, 281 Or. App. 484, 490, 381 P.3d 961 (2016)); see also

Woods v. U.S. Bank N.A., 831 F.3d 1159, 1166 (9th Cir. 2016). Plaintiff admits in his FAC that

he received notice of the sale and was in default at the time. See FAC ¶ 48. He cannot (and does

not) allege differently in his Objections. As a result, the Court should reject Plaintiff’s

Objections on these grounds and adopt the Findings and Recommendations in full.
VII. Plaintiff’s Miscellaneous Arguments Are Without Legal Support and Should Be
Rejected by This Court
Beyond the arguments addressed above, Plaintiff also sprinkles a myriad of vague,

speculative, and legally unsupported arguments throughout his Objections. See, e.g., Dkt. # 62 at

7-10 (discussing a “‘deep state’ conspiracy”) (emphasis in original), 11 & 23 (alluding to the

routinely rejected “show me the note” theory of relief). 6 As Plaintiff does not provide any legal

basis for his arguments (and particularly given their bizarre nature), the Court should deem those

arguments abandoned for lack of support. See In re Apple 3G Prods. Liability Litig., 859 F.

Supp. 2d 1084, 1089 (N.D. Cal. 2012) (citing Ghahremani v. Gonzalez, 498 F.3d 993, 997 (9th

Cir. 2007)) (“Plaintiffs fail to develop this argument in any way, and fail to cite any legal

authority in support of it. Thus, the Court deems this argument to have been abandoned by
Plaintiffs.”).

CONCLUSION
For the reasons set forth above, Morgan Stanley respectfully requests that the Court reject

Plaintiff’s Objections and adopt the Magistrate Judge’s Findings and Recommendations in their

entirety.

6
Courts in this judicial district regularly reject “show me the note” theories of relief. See
Chruszch v. Bayview Loan Servicing, LLC, No. 3:15-cv-01131-MO, 2015 WL 6756130, at *2
(D. Or. Nov. 4, 2015).
PAGE 6 – MORGAN STANLEY’S RESPONSE TO PLAINTIFF’S K&L GATES LLP
OBJECTIONS TO FINDINGS AND RECOMMENDATIONS 1 SW COLUMBIA STREET
SUITE 1900
PORTLAND, OR 97258
TELEPHONE: (503) 228-3200
 Case 3:18-cv-00157-YY Document 70 Filed 09/04/18 Page 7 of 8

DATED this 4th day of September, 2018.

K&L GATES LLP

By: s/Philip Van Der Weele

Philip Van Der Weele, OSB #863650
Email: phil.vanderweele@klgates.com
Attorneys for Defendant Morgan Stanley ABS
Capital I Inc.

PAGE 7 – MORGAN STANLEY’S RESPONSE TO PLAINTIFF’S K&L GATES LLP

OBJECTIONS TO FINDINGS AND RECOMMENDATIONS 1 SW COLUMBIA STREET
SUITE 1900
PORTLAND, OR 97258
TELEPHONE: (503) 228-3200
 Case 3:18-cv-00157-YY Document 70 Filed 09/04/18 Page 8 of 8

CERTIFICATE OF SERVICE

I hereby certify that on this day I caused to be served a true and correct copy of the

foregoing DEFENDANT MORGAN STANLEY ‘S RESPONSE TO PLAINTIFF’S

OBJECTIONS TO FINDINGS AND RECOMMENDATIONS upon all counsel of record for

this case via the Court’s CM/ECF System.

Dated this 4th day of September, 2018.

s/Philip Van Der Weele

Philip Van Der Weele, OSB #863650

PAGE 8 – MORGAN STANLEY’S RESPONSE TO PLAINTIFF’S K&L GATES LLP

OBJECTIONS TO FINDINGS AND RECOMMENDATIONS 1 SW COLUMBIA STREET
SUITE 1900
PORTLAND, OR 97258
TELEPHONE: (503) 228-3200