August 29, 2012

A Clay County, Florida Circuit Judge today denied US Bank’s Motion for Judgment on the Pleadings in a case where the homeowner, representing himself, asserted various defenses including securitization-related defenses. US Bank is the claimed “trustee” of a securitized mortgage loan trust, and attempted to argue the non-viability of certain of the homeowner’s defenses “as a matter of law”, requesting a “partial” judgment on the pleadings.

The Court denied the Motion and permitted the homeowner leave to amend his affirmative defenses. The homeowner is now represented by Jeff Barnes, Esq., who argued the Motion today in the Clay County Circuit Court.

US Bank attempted to argue the recent Third District Court of Appeal decision in Castillo v. Deutsche Bank for the proposition that any “securitization/PSA” related defenses fail “as a matter of law”. The Court declined to address this issue in view of its ruling granting leave to amend the Answer and Affirmative Defenses.

Castillo is a 6-line opinion which relies on 2 Bankruptcy cases (one from Pennsylvania and one from Massachusetts) which are distinguishable, and the Riggs opinion of the Florida 4th District Court of Appeal, which decision does not address the real issue. The line of cases which hold that a borrower is not a “third party beneficiary” to a PSA have been distinguished by numerous decisions (including one from the Hawaii Federal court which rendered the “third party beneficiary” decision initially), holding that such a “defense” is only applicable in a situation where the homeowner sues the foreclosing bank to stop a foreclosure, and that when the bank sues the homeowner, noncompliance with the PSA goes to the issue of standing. This case law, from the Federal Courts in Hawaii and California, clarify the issue.

As those of you who follow this website also know, Mr. Barnes also prevailed on the issue of noncompliance with the PSA in the Hendricks decision in Michigan, where the Court granted summary judgment to the homeowner after finding that US Bank as Trustee did not comply with the PSA. The Horace decision from Alabama further holds that a borrower is in fact a third party beneficiary to a PSA.

Jeff Barnes, Esq.,