1 Vermont Trotter

2 Appellant, Pro Se
3 512 S. 14th St
4 Coeur d’Alene, ID 83814
5 208-667-4164
6 vermontt@frontier.com
7
8 IN THE SUPREME COURT OF THE STATE OF IDAHO
9
10 )
11 VERMONT TROTTER )
12 )
13 APPELLANT ) SUPREME COURT NO.
14 ) 38022-2010
15 Vs. )
16 )
17 )
18 BANK OF NEW YORK )
19 MELLON F/K/A/BANK ) APPELLANT’S ORIGINAL
20 OF NEW YORK AS TRUSTEE ) BRIEF
21 FOR THE CERTIFICATE )
22 HOLDERS OF CWALT, INC. )
23 ALTERNATIVE LOAN TRUST )
24 2005-28CB MORTGAGE PASS )
25 THROUGH CERTIFICATES )
26 SERIES 2005-28CB; MORTGAGE )
27 ELECTRONIC REGISTRATION )
28 SYSTEMS, INC; AND )
29 RECONTRUST COMPANY NA )
30 )
31 )
32 RESPONDENT )
33
34
35 Appeal from the District Court of the First Judicial District for Kootenai County the Honorable
36 Lansing Haynes, District Judge presiding.
37
38 Vermont R. Trotter Lance Olsen
39 Appellant, Pro Se Routh Crabtree Olsen
40 512 S. 14th St Attorneys for Respondent
41 Coeur d’Alene, ID 83814 3535 Factoria Blvd, Suite 200
42 208-667-4164 Bellevue, WA 98006
43 Email: vermontt@frontier.com 425-586-1905
44 (fax) 283-5905

1
 1
2
3

4 Table of Contents

7 Case Citations 3

8 Statement of the Case 4

9 Issues Presented on Appeal 7

10 Argument 7

11 Assignment of Error #1 7

12 Assignment of Error #2 24

13 Assignment of Error #3 25

14 Conclusion 26

15 Relief Sought 26

16

17

18

19

20

21

22

23

24

2
 1 Case Citations:

2 Bagley v. Thomason, Docket No. 36041-2009 (Idaho, October 6, 2010) Pg 23

3 Barton v. Perryman, 577S.W.2d 596, 600 (Ark,. 1979); Pg 20

4 Bellistri v. Ocwen, 284 S.W. 3d 619 (Mo.App.E.D. 2009) Pg 10

5 Bellistri v. Ocwen Loan Servicing, LLC, 2009 WL 531057 (Mo. Ct. App. March 3, 2009) Pg 16

6 Bellistri v. Ocwen Loan Servicing, LLC, 284 S.W.3d 619, 623 (Mo.App. 2009). Pg 18

7 Black v. Adrian, 80 S.W.3d 909, 914-915 (Mo.App.S.D.2002). Pg 18

8 Carpenter V. Longan 83 US 271,274, (1872) Pg 19

9 Christian v. Mason, 219 P. 3d 473 (Idaho, 2009) Pg 23

10 Denniston v C.I.R., 37 B.T.A. 834, 1938 WL 373 (B.T.A. 1938); Pg 20

11 Federal Home Loan Mortgage Corporation v Appel, 143 Idaho 42, 127 P.3d 429 (2006) Pg 21

12 First Nat Bank v. Vagg, 65 Mont. 34,212 P.509,511 (Mont. 1922); Pg 20

13 Frontier Federal Sav. and Loan Assn. v. Douglass, 123 Idaho 808, 853 P.2d 553 (1993) cert.

14 denied 501 US 917 (1993) Pg 22

15 Hill v Favour 52AZ 561, 84 P.2d 575 (Ariz 1938); Pg 20

16 In re AMSCO, Inc., 26 B.R. 358, 361 (Bkrtcy.Conn., 1982); Pg 20

17 In re Bird, 2007 WL 2684265, at PP 2-4 (Bkrtcy.D.MD,2007); 20

18 In re BNT Terminals, Inc., 125 B.R. 963 Bankr.N.D. (Ill. 1990); Pg 20

19 In re Joshua and Stephanie Mitchell, Case No. BK-S-07-16226-LBR (Decision of August 19,

20 2008) Pg 15

21 In re Leisure Time Sports, Inc. 194 B.R. 859859,861 (9th Cir 1996); Pg 20

22 In Re Sheridan, Case No. 08-20381-TLM (Opinion issued March 12, 2009) pg 9

23 In Re Wilhelm, 407 B.R. 392 (Bankr.D.Idaho 2009 Pg 10

3
 1 In Re Wilhelm, Case No. 08-20577-TLM (opinion issued July 7, 2009) Pg 17

2 In Re: Walker, Case No. 10-21656-E-11 (CA – 2010). Pg 20

3 Jackson v. Blodget, 5 Cowan, 205 Pg 19

4 Jackson v. Willard, 4 Johnson, 43 Pg 19

5 Kelley v. Upshaw, 39 Cal2d 179, 192 246 P2d 23 (1952); Pg 20

6 Kirby Lumber Corp v. Williams, 230 f2d 330, 333 (5th Cir. 1956); Pg 20

7 Kluge v. Fugazy, 145 AD2d 537, 536 NYS2d 92 (2nd Dept., 1988); Pg 20

8 Landmark Nat. Bank v. Kessler, 216 P.3d `58, 164 (Kan. 2009)(emphasis supplied) Pg. 11

9 Landmark National Bank v. Kessler, 216 P.3d 158, 289 Kan. 528 (Kan. 2009) Pg 16

10 Loomis v. City of Haily, 119 Idaho 434, 436, 807 P. 2d 1272 (1991). Pg 8

11 Merritt v. Bartholick, 36 NY 44 (NY, 1867); Pg 20

12 Merscorp, inc. v. Romaine, 861 N.E.2d 81, 86 (N.Y. 2006) Pg 12

13 Miles v. Idaho Power Co., 116 Idaho 635, 641, 778 P.2d 757, 763 (1989) Pg 23

14 Mortgage Electronic Registration Systems, Inc. v. Nebraska Dept. of Banking & Finance, 704

15 N.W.2d 784, 785 (Neb. 2005) Pg 11

16 Mortgage Electronic Registration Systems, Inc. v. Johnston, Docket No. 420-6-09-Rdcv (2009)

17 Vermont Pg 12

18 Mortgage Electronic Registration Systems, Inc. v. Girdvainis, Civil Action No. 2005-CP-43-

19 0278 (Jan. 20, 2006) Pg 14

20 Mortgage Electronic Registration Systems, Inc. v. Southwest Homes of Arkansas, Inc., 2009 WL

21 723182 (Ark. 2009) Pg 17

22 Saxon Mortgage Services v. Hillery, 2008 WL 5170180 (N.D. Cal. Dec. 9, 2008) Pg 10

23 Saxon Mortgage Services v. Hillery, 2008 WL 5170180 (N.D.Cal. 2008) Pg 17

4
 1 Southerin v Mendum, 5 NH 420 1831 WL 1104, at PP 7 (NH 1831)); Pg 20

2 St. Luke's Reg. Med. Ctr. v. Bd. Of Comm'rs, 146 Idaho 753, 755, 203 P.3d 683, 685 (2009);Pg

3 23

4 Taylor v. Maile, 146 Idaho 705, 709, 201 P.3d 1282, 1286 (2009) Pg 23

5 Trane Co. v. Wortham, 428 S.W.2d 417,419 (TX Civ. App, 1968); Pg 20

6 Troutner v. Kempthorne, 142 Idaho 389, 391, 128 P.3d 926, 928 (2006).” Pg 23

7 West v First Baptist Church f Taft, 123 TX 388 71 S.W.2d 1090, 1098 (TX 1934); 20

8 Yoi –Lee Realty Corp. v 177th Street Realty Associates, 208 A.D.2d 185, 626 N.Y.S.2d 61,64

9 (N.Y.A.D. 1 Dept,1995); Pg 20

10

11 Statement of Facts

12 This suit seeks to find the full facts behind what can only be called a prototypical mortgage

13 securitization case so that said facts may be presented to a jury for their deliberation and

14 dispensation of justice. The procedural background of this case is as follows:

15

16 1. On or about Aug 24, 2009, RESPONDENT herein, BANK OF NEW YORK MELLON f/k/a

17 BANK OF NEW YORK FOR THE CERTIFICATE HOLDERS OF CWALT, INC.

18 ALTERNATIVE LOAN TRUST 2005-28CB MORTGAGE PASS THROUGH

19 CERTIFICATES SERIES 2005-28CB; MORTGAGE ELECTRONIC REGISTRATION

20 SYSTEMS, INC.; AND RECONTRUST COMPANY NA (hereinafter Respondent) initiated a

21 foreclosure action against Appellant seeking to foreclose upon a mortgage encumbering that

22 certain property located at 512 S. 14th St. Coeur d’Alene, ID 83814 further described as Lot 13

5
 1 in Block 11 of Lakeshore Addition to Coeur d’Alene according to the official plat thereof, filed

2 in Book B of Plats page 121 which property is Appellant’s primary residence.

3 2. In response, Appellant sought a Temporary Restraining order to postpone the foreclosure

4 proceedings until this matter could be considered by the court. A Temporary Restraining Order

5 was issued on the 6th day of January 2010 by the Honourable Judge Lansing Haynes of the

6 District Court of the First Judicial District of the State of Idaho in and for the County of

7 Kootenai.

8 3. The District Court extended the Ex Parte restraining order after a hearing on the 5th day of

9 February 2010.

10 4. A hearing on the merits relating to the defenses raised by Appellant was held on the 26th day

11 of May, 2010, after hearing testimony the matter was taken under advisement.

12 5. On the 2nd day of July, the Honorable District Court ruled against Appellant and concluded

13 that Respondents had standing to foreclose. That ruling was reduced to Judgment dated 19 July

14 2010

15 6. Appellant filed a Notice of Appeal from that Judgment on the 27th Day of August 2010.

16 7. On the 4th day of October 2010, Appellant filed with the District Court a notice of

17 substitution of Appellant Pro Se, wherein counsel for Appellant withdrew and notice was given

18 that Appellant would proceed Pro Se.

19 8. On the 5th day of October 2010, Appellant filed a Motion for Stay of Execution wherein he

20 moved the District Court for an order staying the foreclosure of the subject property pursuant to

21 IAR 13(b) (10) pending the outcome of the appeal.

22 9. On the 14th day of October 2010, the District Court denied the motion.

6
 1 10. On or about the 28th day of October, Appellant filed a Motion for a Stay of Execution with

2 the Supreme Court of Idaho pursuant to IAR 13(g). At this writing, that Motion remains

3 undecided.

4 11. Appellant adopts by reference and incorporates herewith as part of his submission all of the

5 pleadings memoranda and trial court record.

7 Issues Presented On Appeal

8 1) Whether the District Court erred in concluding Appellant failed to state a claim on which

9 relief could be granted.

10 2) Whether the District Court erred in refusing Appellant discovery?

11 3) Is Appellant entitled to attorney fees and costs?

12

13 Argument
14 Assignment of Error #1: Did the District Court err by dismissing the appeal on a 12(b)(6)

15 motion of Failure to State a Claim Upon Which Relief Can be Granted?

16

17 In a carefully considered decision the District Court focused on the wrong issues. Careful

18 review of the opinion shows that the Court presumed that the Idaho Deed of Trust act IC §45-

19 1502 et seq. (the Act) was applicable in this case, premised on the presumption that the

20 Appellees’ standing to prosecute was established. While there is a lengthy discussion of who

21 may be a beneficiary under the Act, the decision does not address the issue raised by Appellant

22 his pleadings: did any of the named Appellees have an interest in the note, not just the mortgage,

23 such that any of them had standing to prosecute.

7
 1 The District Court, utilizing the standards for disposition of a motion for summary judgment,

2 concluded that the pleadings and exhibits showed no genuine issue of material fact, and that

3 Appellees were entitled to judgment as a matter of law, citing, inter alia, Loomis v. City of Haily,

4 119 Idaho 434, 436, 807 P. 2d 1272 (1991).

5 There is patent error in this conclusion. Appellant’s original complaint contains extensive

6 allegations concerning the overall securitization practices of MERS, which results in selling the

7 mortgage and separating it from the underlying note which it secures. Moreover, the complaint

8 specifically states that the actual owner of the original note Appellant signed is unknown, and

9 alleges that the ownership of the original note and Deed of Trust precludes Appellees, absent

10 proof of ownership of the original note, from foreclosing until they can demonstrate full legal

11 standing to do so. (Record pp 001-011)

12 Clearly, there are genuine issues of disputed facts, such as:

13 1) Who currently owns the original note?

14 2) Has ownership of the note been severed from ownership of the mortgage?

15 3) Does MERS or any defendant have any ownership interest in the note?

16 4) If neither MERS nor any defendant have no ownership interest in the original note, can

17 standing exist?

18 No competent evidence was produced by any Appellee which establishes answers to the

19 questions above. Appellant attempted to obtain this information via discovery, and Appellees

20 objected to each and every interrogatory, or request for production alleging inconvenience.

21 Appellants subsequent Motion to Compel was never considered by the Court. (Record PP057-

22 068)

8
 1 Without establishing these critical facts, it is simply impossible to conclude that Appellees are

2 entitled to judgment as a matter of law which the following discussion will establish.

3 The District Court specifically found at the February 5, 2010 hearing after full argument,

4 Idaho courts have spoken extensively on the alleged authority of MERS to do anything, and have

5 uniformly, along with other jurisdictions, rejected the authority of MERS to undertake any action

6 to institute or further a foreclosure including any purported assignment of either the Note or the

7 Deed of Trust from the original lender to any third party, which would include Appellee BONY

8 herein.

9 As set forth on the trial court record at the February 5, 2010 hearing, the United States

10 Bankruptcy Court for the District of Idaho, in two separate opinions, rejected the alleged

11 authority of MERS. The first was the matter of In Re Sheridan, Case No. 08-20381-TLM

12 (Opinion issued March 12, 2009). In analyzing the real party in interest requirements and the

13 alleged “beneficiary” status of MERS in the Deed of Trust, the Sheridan court expressly rejected

14 MERS’ self-appointed designation as “beneficiary” in view of its declared status of “solely as

15 nominee”, and found that the securitized mortgage loan trust and its “trustee” had no interest in

16 the Note or the Deed of Trust. The Court also found that there was no language in the Note

17 giving MERS any rights whatsoever. The Court found that there were disputed factual issues as

18 to who was the holder of the Note.

19 These same disputed issues of material fact are present in this case and thus a request for

20 summary judgment is disingenuous at best. The foreclosing party is a Wall Street bank which

21 claims to be an alleged “Trustee” of a securitized mortgage loan trust, which is not the original

22 lender. The Appointment of Successor Trustee and the Notice of Trustee Sale identify different

23 alleged “beneficiaries”, none of which is the original lender. The only purported authority of the

9
 1 “trustee” Wall Street Bank to do anything is the legally void and infirm MERS assignment,

2 which is defective as a matter of law as it does not and cannot assign the Note or the Deed of

3 Trust. It is without dispute that Defendant RC has no interest in either the Note or the Deed of

4 Trust.

5 The Idaho Bankruptcy Court went further in addressing the infirmities as to MERS in the

6 matter of In Re Wilhelm, Case No. 08-20577-TLM (opinion issued July 7, 2009), which was also

7 brought to the attention of the District Court and Appellees’ counsel at the February 5, 2010

8 hearing. In Wilhelm (as here), the Deeds of Trust named MERS as the alleged “beneficiary”, but

9 also stated that MERS was “solely as nominee” and that MERS held “only legal title”. The Court

10 found that the Deeds of Trust did not state that MERS was authorized to transfer the promissory

11 notes, but that nevertheless the movants in four of the five cases discussed in the opinion

12 submitted assignments in which MERS purported to assign the Deed of Trust “together with” the

13 note.

14 In again rejecting the alleged authority of MERS, the Wilhelm court noted that the

15 moving parties “seem to presume that the assignments, standing alone, entitle them to enforce

16 the underlying notes”. The Court found this assumption to be “unfounded”, as the “nominal

17 beneficiary” language in the Deeds of Trust did not, “either expressly or by implication”,

18 authorize MERS to transfer the promissory notes.

19 The Wilhelm Court cited to the cases of Saxon Mortgage Services v. Hillery, 2008 WL

20 5170180 (N.D. Cal. Dec. 9, 2008) and Bellistri v. Ocwen Loan Servicing, LLC, 2009 WL 531057

21 (Mo. Ct. App. March 3, 2009) in support of its position. These cases, as well as the Wilhelm

22 decision, are cited below in the discussion concerning the analysis of MERS by numerous courts

10
 1 throughout the United States which, like Sheridan and Wilhelm, have uniformly and consistently

2 rejected MERS’ purported authority to do anything.

3 Appellant still maintains the findings by the Court in Sheridan and Wilhelm represent the

4 current state of the law in Idaho as to the lack of authority on the part of MERS, as recognized by

5 the District Court in its entry of the injunction after a full hearing. Significantly, the conclusions

6 in Sheridan and Wilhelm are not isolated, but reflect the current state of the law nationally as to

7 MERS set forth below.

8 In order to understand what MERS is and what it is not, it is helpful to first examine the

9 structure of MERS as defined by the Supreme Courts of Kansas and Nebraska and the Court of

10 Appeals of New York (New York’s highest court):

11 “MERS is a private corporation that administers the MERS System, a national

12 electronic registry that tracks the transfer of ownership interests and servicing
13 rights in mortgage loans. Through the MERS system, MERS becomes the
14 Mortgagee of record for participating members through assignment of the
15 Member’s interests to MERS. MERS is listed as the grantee in the official
16 records maintained at country register of deeds offices. The lenders retain
17 the promissory notes, as well as the servicing rights to the mortgages. The
18 lenders can then sell these interests to investors without having to record
19 the transaction in the public record. MERS is compensated for its services
20 through fees charged to participating members.”
21

22 Landmark Nat. Bank v. Kessler, 216 P.3d `58, 164 (Kan. 2009)(emphasis supplied), citing

23 Mortgage Electronic Registration Systems, Inc. v. Nebraska Dept. of Banking & Finance, 704

24 N.W.2d 784, 785 (Neb. 2005) where MERS disclaimed a position in order to avoid registering as

25 a business entity and thus having to pay fees.

26 “In 1993, members of the real estate mortgage industry created MERS, an
27 electronic registration system for mortgages. Its purpose is to streamline the
28 mortgage process by eliminating the need to prepare and record paper
29 assignments of mortgage, as had been done for hundreds of years. To
30 accomplish this goal, MERS acts as nominee and as mortgagee of record
31 for its members nationwide and appoints itself nominee, as mortgagee,

11
 1 for its members’ successors and assigns, thereby remaining nominal
2 mortgagee of record no matter how many times loan servicing, or the
3 mortgage itself, may be transferred. MERS hopes to register every
4 residential and commercial home loan nationwide on its electronic system.”
5
6 Merscorp, inc. v. Romaine, 861 N.E.2d 81, 86 (N.Y. 2006).

7 In analyzing this defined role of MERS against the standard MERS language in a

8 mortgage document, the Superior Court of Rutland, Vermont in the matter of Mortgage

9 Electronic Registration Systems, Inc. v. Johnston, Docket No. 420-6-09-Rdcv (2009), conducted

10 a thorough examination of the current law as to MERS, first examining the definition of

11 “nominee” from Black’s Law Dictionary, 1076 (8th Edition, 2004) as being “a person designated

12 to act in place of another in a very limited way” and as “a party who holds bare legal title for the

13 benefit of others and distributes funds for the benefit of others”. Legal title is defined as “a title

14 that evidences apparent ownership but does not necessarily signify full and complete title or a

15 beneficial interest”, Black’s Law Dictionary at 1523. This is in contrast to “equitable title”,

16 which is “a title that indicates a beneficial interest in property and gives the holder the right to

17 acquire formal legal title”.

18 The Vermont court held that the mortgage deed consistently referred to MERS “solely as

19 a nominee” and that it holds “only legal title”, but it then purported to expand MERS’ authority

20 as a “nominee” to act as in essence an agent or power-of-attorney to carry out the rights of the

21 lender, including foreclosure and sale of the property. The court held that this purported

22 expansion of authority was restricted to that “necessary to comply with law or custom”, and that,

23 importantly, MERS and the lender purposely chose to use the specific legal term “nominee” and

24 not “agent” or “power of attorney”, and that MERS chose to define the term “nominee”. The

25 court further noted that the mortgage deed consistently referred to the Lender’s rights to the

12
 1 property, and not MERS’, which was consistent with MERS limited authority to act “solely as

2 nominee”.

3 Against this backdrop of established decisional law and admissions of MERS, the

4 Vermont court held that MERS could not enforce the underlying obligation, and may not enforce

5 the mortgage deed it holds in its name with only “bare legal title”. The fact that the Appellees

6 herein have acknowledged the presence of this same MERS language in the Deed of Trust the

7 subject of this action results in MERS being subject to the same caveats as set forth in the body

8 of decisional law set forth herein.

9 The Vermont court examined the Nebraska decision where affirmative representations

10 were made by MERS that:

11 (a) it does not acquire mortgage loans because it only holds bare legal title in a nominee

12 capacity;

13 (b) it is contractually prohibited from exercising any rights with respect to the

14 mortgages, i.e. foreclosure, without the authorization of its members;

15 (c) it does not own the promissory notes secured by the mortgages and has no rights to

16 payments on the notes; and

17 (d) it does not take applications, underwrite loans, make decisions on whether to extend

18 credit, collect mortgage payments, hold escrows for taxes and insurance, or provide any loan

19 servicing functions whatsoever. MERS merely tracks the ownership of the lien and is paid for its

20 services through membership fees charged to its members, concluding that MERS does not

21 acquire “any loan or extension of credit secured by a lien on real property”, and that MERS

22 “does not itself extend credit or acquire rights to receive payments on mortgage loans; that the

13
 1 lenders retain the promissory notes and servicing rights to the mortgage, while MERS acquires

2 legal title to the mortgage for recordation purposes.”

3 The Vermont court went on to note that counsel for MERS in the Kansas decision

4 “explicitly declined to demonstrate to the trial court a tangible interest in the mortgage”, citing

5 the case at 216 P.3d at 167, and that the Kansas court found that MERS had no stake in the

6 outcome of an independent action for foreclosure, as it did not lend money, nor was anyone

7 involved in the case required to pay MERS any money. The Kansas court concluded by holding

8 that “If MERS is only the mortgagee, without ownership of the mortgage instrument, it does not

9 have an enforceable right”, adding that while the note is essential, the mortgage itself is only “an

10 incident” to the note.

11 The Vermont court, expounding further on the holding of the Kansas decision which

12 itself noted what MERS argued to the Nebraska Supreme Court, found that MERS was not

13 authorized engage in practices that it would make it a party to either the enforcement of

14 mortgages or the transfer of mortgages. The Vermont court also noted that MERS and the lender

15 intentionally split the obligation and the mortgage deed, and held that MERS lacked standing to

16 bring a foreclosure action in its own name, or as “nominee” on behalf of the lender.

17 The Court of Common Pleas for the State of South Carolina in the matter of Mortgage

18 Electronic Registration Systems, Inc. v. Girdvainis, Civil Action No. 2005-CP-43-0278 (Jan. 20,

19 2006) also held MERS to its representations previously made to the Supreme Court of Nebraska

20 as to its non-ownership of the promissory notes; not extending any credit; not having any

21 independent right to collect on any debt because MERS did not extend any credit and that the

22 mortgage debtor does not owe MERS any money; etc. and held that since MERS prevailed in the

23 Nebraska litigation, MERS was “judicially estopped to disavow the positions it advanced during

14
 1 the litigation process in Nebraska or avoid the findings and conclusions articulated by the

2 Nebraska court.”

3 The South Carolina court, citing the caveat on MERS’ authority by MERS’ own contract,

4 held that the representation as to the assignment of the note and mortgage to MERS “for valuable

5 consideration” was “diametrically opposed to the way MERS operates”. The operative language

6 in the MERS contract to which the Girdvainis, supra court refers is that within MERS’ own

7 contract which it has with its lenders and servicers, which specifically limits MERS’ authority as

8 to mortgage loans and properties the subject thereof:

9 MERS shall have no rights whatsoever as to any payments made on account of such

10 mortgage loans, to any servicing rights related to such mortgage loans, or any mortgaged

11 properties securing such mortgage loans. MERS agrees not to assert any rights with respect to

12 such mortgage loans or mortgaged properties.

13 The United States Bankruptcy Court for the District of Nevada in the matter of In re

14 Joshua and Stephanie Mitchell, Case No. BK-S-07-16226-LBR (Decision of August 19, 2008),

15 in analyzing what MERS stated it was according to its own website; the testimony of the

16 Secretary of MERS; and the definition of “beneficiary” from Black’s Law Dictionary 165 (8 th

17 Edition 2004, the same as that used by the Vermont Court), held that “MERS is not a

18 beneficiary as it had no rights whatsoever to any payments, to any servicing rights, or to any of

19 the properties secured by the loans.” (emphasis supplied) The Court cited the same MERS

20 “Terms and Conditions” set forth in MERS v. Girdvainis , supra decision from 2006.

21 Thus and in view of the overwhelming weight of this now established decisional law,

22 Appellees’ assertion herein that MERS has some alleged authority to do anything, include

23 “assign” the Deed of Trust, is essentially specious. While the district court found the decisions

15
 1 cited by Appellant not binding, this is a case of first impression in the Idaho state court system,

2 and those cases should be, de minimus, overwhelmingly persuasive.1

3 Appellees’ argument violates the very caveats of MERS’ own contract; is vitiated by the

4 holdings in two separate Idaho Federal opinions; and Appellees’ assertion of what MERS is

5 purportedly permitted to do is “diametrically opposite” of what MERS purports to be, as

6 affirmatively represented to and found by the Courts of Nebraska (Supreme Court), Kansas

7 (Supreme Court), New York (Court of Appeals), Vermont, South Carolina, and Nevada

8 (Federal). However, the law as to what MERS is not and cannot do does not end there.

9 In addition to holding that MERS has no rights to the mortgage instrument, numerous

10 Courts of the United States have also held that MERS has no rights to the promissory notes and

11 no authority to transfer same. As a foreclosure requires unity of ownership, by the same party, of

12 both the note and the (incident) mortgage instrument, MERS’ legal inability to transfer the Note

13 further precludes it from instituting or furthering a foreclosure.

14 The court in the matter of Landmark National Bank v. Kessler, 216 P.3d 158, 289 Kan.

15 528 (Kan. 2009), held that “a nominee of the owner of a note and mortgage may not effectively

16 assign the note and mortgage to another for want of an ownership interest in said note and

17 mortgage by the nominee”, and that as MERS never held the promissory note, its assignment of

18 the deed of trust to a third party separate from the note had no force, citing Bellistri v. Ocwen

19 Loan Servicing, LLC, 284 S.W.3d 619, 623 (Mo. App. 2009).

1
Since this matter was instituted, the Attorney General of the State of Idaho has issued a press release indicating his intention to

join with other Attorneys General who are investigating fraudulent foreclosures by MERS

(http://www2.state.id.us/ag/consumer/consumerActions.htm#october13index.htm)

16
 1 Significantly, the Kansas Supreme Court also cited In Re Wilhelm, 407 B.R. 392

2 (Bankr.D.Idaho 2009) supra, for its holding that the “standard note language does not expressly

3 or implicitly authorize MERS to transfer the note”, and the decision in Saxon Mortgage Services

4 v. Hillery, 2008 WL 5170180 (N.D.Cal. 2008) as holding “for there to be a valid assignment,

5 there must be more than just assignment of the deed alone; the note must also be

6 assigned…MERS purportedly assigned both the deed of trust and the promissory

7 note…however, there is no evidence of record that establishes that MERS either held the

8 promissory note or was given the authority…to assign the note”.

9 The Supreme Court of Arkansas in the matter of Mortgage Electronic Registration

10 Systems, Inc. v. Southwest Homes of Arkansas, Inc., 2009 WL 723182 (Ark. 2009) found that the

11 deed of trust provided that all payments were to be made to the lender; that the lender made all

12 decisions on late payments; no payments on the underlying debt were made to MERS; and

13 MERS did not service the loan in any way as it did not oversee payments or administration of the

14 loan in any way. MERS asserted to be a corporation providing electronic tracking of ownership

15 interests in residential real property security instruments only.

16 MERS argued in the Arkansas case that it held a property interest through holding legal

17 title with respect to the rights conveyed to the borrower by the lender. The Court’s response:

18 “We disagree”. The Court found that title was conveyed to the trustee; that the deed of trust did

19 not convey title to MERS; and that as such, MERS was not the “beneficiary” even though it is so

20 designated in the deed of trust. The Court held that the lender on the deed of trust was the

21 beneficiary as it received payments on the debt secured by the property.

17
 1 Similarly here, MERS is not the trustee; MERS did not receive any payments; and thus

2 MERS is not the “beneficiary” despite what Appellees claim. The law cited above is clear and

3 consistent that the “person for whose benefit a trust deed is given” is the lender, not MERS.

4 As set forth above, the Kansas decision in Landmark, supra cited (as did the Wilhelm

5 decision from Idaho) the case of Bellistri v. Ocwen, 284 S.W. 3d 619 (Mo. App. E.D. 2009).

6 That case held that the record reflected no evidence “that MERS held the promissory note or that

7 the original lender gave MERS the authority to transfer the promissory note. MERS could not

8 transfer the promissory note; therefore the language in the assignment of the deed of trust

9 purporting to transfer the promissory note was ineffective”, citing Black v. Adrian, 80 S.W.3d

10 909, 914-915 (Mo.App.S.D.2002).

11 The Idaho Federal Bankruptcy Court in In Re Wilhelm, supra, similarly held, finding that

12 although the deeds of trust named MERS as the “nominal beneficiary”, this language did not,

13 either expressly or by implication, authorize MERS to transfer the promissory notes. Without

14 any transfer of the Notes, there was no interest in the Note by the party seeking to pursue a

15 foreclosure through a MERS assignment.

16 Appellees completely ignore this wealth of recent decisional law, including that from the

17 state of Idaho, with its consistent findings and holdings nullifying any alleged authority of

18 MERS to do anything other than electronically track mortgage loans, which law completely

19 vitiates the entirety of Appellees’ positions as to MERS and completely destroys the very

20 foundation of Appellees’ assertions. In view of this wealth of authority, Appellees’ arguments

21 should be rejected and its Motion should have been denied in its entirety, whether couched as a

22 Motion to Dismiss or as a request for summary judgment.

18
 1 Appellees’ entire premise rests on the unfounded (and legally incorrect) assumption that

2 MERS assigned the Deed of Trust and that simply because “MERS role was fully disclosed” that

3 the alleged Assignment was legally proper. As the District Court recognized at the prior hearing

4 and has been established by the consistent case law nationally including the law from Idaho,

5 Appellees’ assertions are not only unfounded, but have been expressly rejected on the law not

6 only in Idaho but by a multitude of jurisdictions, both state and Federal, across the United States,

7 with several of these jurisdictions relying in part for their decisions on the findings of the Idaho

8 Federal Bankruptcy Court in the Wilhelm, supra.

9 As such, whether Appellees’ allegedly “complied with” the Idaho foreclosure procedure

10 is irrelevant to the inquiry and issues raised by the Complaint. The real issue, which Appellees

11 ignored at the last hearing and continue to ignore, is whether they had any alleged authority to

12 even undertake actions toward foreclosure, which the decisional law of Idaho and numerous

13 jurisdictions throughout the United States have uniformly held that they cannot as a matter of

14 law.

15 Indeed, Appellees’ position flies in the face of firmly established law which requires that

16 the note and the deed of trust be held by the same owner in order to be enforceable.

17 In an 1872 appeal from the Colorado Territories, the United States Supreme Court stated “The

18 note and mortgage are inseparable; the former as essential, the latter as an incident. An

19 assignment of the note carries the mortgage with it, while an assignment of the latter alone is a

20 nullity,” Carpenter v. Longan 83 US 271,274, (1872) citing: Jackson v. Blodget, 5 Cowan, 205;

21 Jackson v. Willard, 4 Johnson, 43.

22 The United States Supreme Court has not addressed the issue since but there is a long, solid

23 history of jurisprudence from around the country both before and after the 1872 ruling which

19
 1 holds that a mortgage and a debt cannot be separated. The mortgage without the note is

2 unenforceable. See, Southerin v Mendum, 5 NH 420 1831 WL 1104, at PP 7 (NH 1831));

3 Merritt v. Bartholick, 36 NY 44 (NY, 1867); First Nat Bank v. Vagg, 65 Mont. 34,212

4 P.509,511 (Mont. 1922); West v First Baptist Church f Taft, 123 TX 388 71 S.W.2d 1090, 1098

5 (TX 1934); Denniston v C.I.R., 37 B.T.A. 834, 1938 WL 373 (B.T.A. 1938); Hill v Favour

6 52AZ 561, 84 P.2d 575 (Ariz 1938); Kelley v. Upshaw, 39 Cal2d 179, 192 246 P2d 23 (1952);

7 Kirby Lumber Corp v. Williams, 230 f2d 330, 333 (5th Cir. 1956); Trane Co. v. Wortham, 428

8 S.W.2d 417,419 (TX Civ. App, 1968); Barton v. Perryman, 577S.W.2d 596, 600 (Ark,. 1979);

9 In re AMSCO, Inc., 26 B.R. 358, 361 (Bkrtcy.Conn., 1982); Kluge v. Fugazy, 145 AD2d 537,

10 536 NYS2d 92 (2nd Dept., 1988); Yoi –Lee Realty Corp. v 177th Street Realty Associates, 208

11 A.D.2d 185, 626 N.Y.S.2d 61,64 (N.Y.A.D. 1 Dept,1995); In re BNT Terminals, Inc., 125 B.R.

12 963 Bankr.N.D. (Ill. 1990); In re Leisure Time Sports, Inc. 194 B.R. 859859,861 (9th Cir

13 1996); In re Bird, 2007 WL 2684265, at PP 2-4 (Bkrtcy.D.MD,2007); In Re: Walker, Case No.

14 10-21656-E-11 (CA – 2010).

15 None of the Appellees have established by competent evidence that they are the current

16 owners of the actual note and mortgage, which is an indispensible legal requirement before I.C. §

17 45:1502 et seq. can come into play.

18 After extensive discussion and analysis of MERS position as a nominee and successor for

19 purposes of the I.C. § Rev 45-15 et.seq., the district court never addressed the issue of attempting

20 to foreclose on a mortgage without proof of an actionable interest in the underlying note or its

21 proper status as an agent for the holder of the note. In Re: Wilhelm et al., supra.

20
 1 While the district court premised its decision on the exhibits attached to Appellees’

2 memorandum the single most critical documents were not produced: The original note and proof

3 of current ownership of that note.

4 How could a mortgage which is not backed up by a note be enforceable by anyone? How

5 could MERS by any designation, nominee or otherwise, seek to enforce a hollow shell?

6 It is this issue which is so critically tied to the erroneous result reached by the District

7 Court. The question is not whether the procedural requirement of the Idaho foreclosure statutes

8 have been met, the question is whether the statute even comes into play absent traditional proof

9 that the mortgage and the note must always be tied together, and that neither MERS or any of

10 the Appellees has an actual enforceable interest in both.

11 Similarly, MERS has failed to establish it has any right title or interest in the note itself.

12 MERS has never contended that Appellant owes any payment to it. Indeed, MERS has not ever

13 served as a servicing institution for the holder of this note. MERS insists that its titular

14 designation as nominee or mortgagee entitles it to foreclose without it having met the underlying

15 legal necessities. These issues were not considered by the district court before addressing I.C. §

16 45:1502, et seq.

17 The District Court in this matter stated that the decisions of the Bankruptcy court in Idaho

18 were not binding, however, what more persuasive rationale could there be for a case of first

19 impression, such as this one, than from Idaho federal judges construing Idaho law? Absent a

20 definitive ruling from a higher Idaho court, one must start somewhere.

21 Instead, Appellees rely on a smokescreen citing Federal Home Loan Mortgage

22 Corporation v Appel, 143 Idaho 42, 127 P.3d 429 (2006). Appel, supra, involved the proper

23 procedures required of MERS after the foreclosure and sale. It is completely distinguishable

21
 1 from this case because no challenge to MERS standing was raised before the sale. Appel, supra,

2 related solely to the procedure which followed post-foreclosure. Appel, supra, did not address

3 the threshold issue of standing.

4 Appellees further cite Frontier Federal Sav. and Loan Assn. v. Douglass, 123 Idaho 808, 853

5 P.2d 553 (1993) cert. denied 501 US 917 (1993) purportedly for the proposition that MERS has

6 authority as a note holder. At the outset it must be noted that MERS was not even in existence at

7 the time this case was presented to the Douglass district court. MERS Corporation did not even

8 create its non-statutory recordation system until after 1997. The real challenge in this case is not

9 what happens with other trustees, or beneficiaries, but rather how MERS has created a legally

10 flawed system for pursuing foreclosures which is not supported by Idaho law.2

11 In Douglass, supra the predominant issue was the propriety of issuance of a deficiency

12 judgment. The case contained some challenges to the trustee's authority which are not relevant

13 here. The issue of standing to foreclose was not raised there. In fact, the language of the opinion

14 supports Appellant's position. The court ruled that for the trustee to foreclose, he must be

15 presented with both the note and deed of trust. Specifically, the court noted:

16 “The fifth assignment of error, regarding deposit of the deed of trust and note with the
17 trustee as required by the deed of trust, also fails. The record shows that First American
18 received the notice of default, which provided that "a breach of the obligation for which
19 such transfer has occurred ... and that the beneficiary elects to sell or cause the trust
20 property to be sold to satisfy said obligation." Furthermore, the deed of trust does not
21 state when the deed of trust and note (emphasis added) must be deposited with the
22 trustee. Based on these facts, we conclude that the district court correctly ruled that
23 Douglass and Hassing were not prejudiced by any delay in providing the instruments to
24 First American.”
25 Id at 113.

2 As this case has progressed, three Qui Tam actions have been initiated to investigate this issue:
Tennessee (Chancery Court Montgomery County Civil Action No.: MCCHCURE 10-10 filed Apr 18, 2010),
California (CA Superior Court County of Lassen Case No.: 49097 Department 1 filed May 12, 2010 1 st
Amended Complaint) and Nevada (3rd Judicial District of Nevada, Churchill County Case#35179 filed 3
June 2101 3rd Amended Complaint) In each case, the plaintiff seeks damages for the fraud perpetuated on
the court system by willfully depriving the counties of hundreds of thousands, if not millions, of dollars in
filing fees lost by MERS surreptitious filing system.

22
 1 Douglass, supra, makes it clear that in Idaho the note and mortgage must be transferred to

2 the trustee, his agent, or assignor. Transfer of only one of the documents renders the enforcement

3 invalid. The Douglass court makes this abundantly clear in addressing the transfer of both items,

4 and in using the plural in regards to the transfer.

5 Standing is a threshold issue. Lack of standing may not be waived and may be considered

6 by the court sua sponte. Christian v. Mason, 219 P. 3d 473 (Idaho, 2009)

7 In Christian, supra, the court noted: “Jurisdictional issues, such as standing, and the

8 interpretation of statutory language that confers standing are questions of law over which this

9 Court exercises free review. See St. Luke's Reg. Med. Ctr. v. Bd. Of Comm'rs, 146 Idaho 753,

10 755, 203 P.3d 683, 685 (2009); Taylor v. Maile, 146 Idaho 705, 709, 201 P.3d 1282, 1286

11 (2009).”

12 The standard applicable to the issue of standing was recently set forth by the Idaho

13 Supreme Court in Bagley v. Thomason, Docket No. 36041-2009 (Idaho, October 6, 2010) which

14 stated:

15 “ Thomasons contend that Bagleys lacked standing to bring a quiet title action regarding
16 the real property and that the district court therefore lacked jurisdiction. "The doctrine of
17 standing focuses on the party seeking relief and not on the issues the party wishes to have
18 adjudicated." Miles v. Idaho Power Co., 116 Idaho 635, 641, 778 P.2d 757, 763 (1989).
19 To satisfy the requirement of standing litigants must allege an injury in fact, a fairly
20 traceable causal connection between the claimed injury and the challenged conduct, and a
21 substantial likelihood that the judicial relief requested will prevent or redress the claimed
22 injury. Troutner v. Kempthorne, 142 Idaho 389, 391, 128 P.3d 926, 928 (2006).”
23
24 Given this standard, the Appellees do not fit the legal requirements. No Appellee can

25 establish that they are the owners of both the note, and the deed of trust. Clearly, based on the

26 discussion above, only the current holder of both the note and deed of trust has the legal

27 authority to bring a foreclosure action. Appellees have not met that burden of proof. There is no

23
 1 traceable connection between the alleged injury, default on the note, and Appellees. No sums

2 were due to them, thus only the current owner of the note is the only proper party.

3 In truth and in fact, the district court ruled that appellant had not produced any evidence

4 to support his position. Absent discovery it is impossible. Appellant filed extensive

5 interrogatories and requests for production in this matter. All Appellees did was object to every

6 single request on the grounds of inconvenience.

7 The documents necessary for Appellant to prove his case are in the possession of the

8 Appellees, if anywhere. Consequently, in denying Appellant the opportunity to procure the

9 necessary proof, it was not possible for him to set forth the factual underpinnings which would

10 have entitled him to relief even on the motion to dismiss and ultimately on the merits.

11 Conversely, it was the Appellees who failed to produce the requisite evidence to proceed

12 with foreclosure. They did not produce anything other than a copy of the original note without

13 any proof of their interest in that note. Nor did the photocopied document reflect assignments or

14 transfers of title either on the document itself or any allonges. The only “evidence” produced

15 was a photocopy of the original note, front side only.

16 Having failed to fully establish any legal interest in both the note, and the deed of trust,

17 Appellees simply lack the legal authority to prosecute a foreclosure action.

18

19 Assignment of Error #2: Did the District Court err in refusing Appellant discovery?

20 Assuming that this Honorable Court does not rule in favor of Appellant on the issue of

21 standing as a matter of law, and concludes that genuine issues of fact exist, Appellant asks in the

22 alternative that this matter be remanded to the District Court for full discovery. Appellant has

23 always maintained, from his first pleadings onward, that MERS can not prove it has any

24
 1 actionable interest in the original note. To support his position, he filed extensive requests for

2 information in discovery. Appellees objected to every request sent to them and instead filed a

3 Motion to Dismiss.

4 In reply, Appellant filed a Motion to Compel (Record pp 027-029) which was set for

5 hearing on the same date as consideration of the motion to dismiss (ROA Report 5/26/2010 Code

6 DCHH). Appellant submits it was error for the District Court to fail to consider the motion to

7 compel, and then held that Appellant did not produce the documents needed to establish the

8 validity of his claims.

9 While if the district court’s decision on standing is upheld by this Honorable Court,

10 Appellant recognizes the issue of his motion being moot continues. If, on the other hand, this

11 Court rules in his favor, then he respectfully requests this Court order the District Court to

12 consider and grant his motion to compel accordingly, together with any and all sanctions

13 authorized by I.R.C.P. Rule 37, if appropriate.

14

15 Assignment of Error #3: Is Appellant entitled to attorney fees and costs?

16 Appellant hereby moves the Court for an award of attorney fees as provided by Idaho

17 Appellate Rules 41 and will submit the appropriate memorandum of costs as provided by Idaho

18 Appellate Rule 40 upon decision. While Appellant did not incur fees from an attorney, he

19 incurred costs and paralegal fees in preparation for this appeal, and respectfully requests that

20 they be granted to him.

21

22

23

25
 1 CONCLUSION

2 MERS, by its very own self description, and by its very own documents, cannot be a beneficiary

3 of any mortgage in its system and therefore fails to meet the definition of who can bring

4 foreclosure in the State of Idaho (Idaho Code 45-1502 (1). To assert the authority of a

5 “beneficiary” one must do more than invoke the phrase. This is a threshold issue and MERS fails

6 to meet it. Further, the MERS business model of bifurcation of Deed of Trust and the debt it

7 secures is not allowed in the Idaho. Long standing principles relating to the ownership and

8 transfer of property are at issue, and there is no valid legal precedent on which MERS can justify

9 its actions. Properly evaluated, MERS claims must be dismissed. This Honorable Court has the

10 authority under Christian, supra, to render an order in Appellant’s favor directly, and it is

11 respectfully submitted that is the proper outcome of this appeal.

12

13 RELIEF SOUGHT

14 1) Appellant prays the court overrule the District Court and grant him a declaratory

15 judgment on the issue of lack of standing.

16 2) In the alternative, Appellant prays that this court overrule the District Court’s decision

17 and remand with order the matter proceed to trial.

18 3) Further in the alternative, appellant prays this Court for an order remanding this case

19 back to District Court with an order requiring Appellees comply with all discovery

20 requests so the case may move forward to trial and proper resolution.

21 4) Further in the alternative, Appellant prays for a remand with an order granting him costs

22 and attorney fees for prosecution of the motion to compel discovery, and sanctions for

23 defendant’s willful refusal to comply.

26
1 5) For all other general and equitable relief to which Appellant may be entitled.

2
3
4
5 _______________________
6 Vermont Trotter
7 512 S. 14th St.
8 Coeur d’Alene, ID 83814

27