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Thomas H. Bray v. Bank of America

January 5, 2011


The opinion of the court was delivered by: Daniel L. Hovland, District Judge United States District Court


Before the Court are the Plaintiff's Motion for Summary Judgment, "Motion to Cease & Desist with Intent to Sue & Affidavit in Support of in Response to Counterclaim of MERS as a Nominee of America's Home Loans LLC, it's Successors & Assigns, Including Bank of America & Countrywide Home Loans," "Verified Motion for Summary Judgment Brief Included," "Motion to Find Judgment in Favor of Plaintiff Based on Fraudulent Contract," "Amended Verified Motion for Summary Judgment Brief Included," "Verified Motion to Find Summary Judgment in Favor of Plaintiff Based on Ultra Vires, TILA, RESPA, RICO, Usury Laws, & Federal Reserve Regulation Z Violations," "Amended: Motion to Find Judgment in Favor of Plaintiff Based on Fraudulent Contract," Amended Motion for Summary Judgment, "Request for Thirty (30) Day Extension for Purpose of Getting Expert Witness Affidavit/Testimony Third Party Plaintiff's Expert Witness Resume Attatched," and "Writ for Information Based on Freedom of Information Act." See Docket Nos. 34, 55, 60, 61, 71, 72, 77, 81, 140, and 175 (errors in originals). Also before the Court are the Defendants' and Counter Claimants' "Motion for Summary Judgment Dismissing Plaintiff's Claims" and "Motion for Summary Judgment on Counterclaim." See Docket Nos. 141 and 142. For the reasons set forth below, the Plaintiff's motions are denied and the Defendants and Counter Claimants' motions are granted.


On March 1, 2006, the plaintiff, Thomas H. Bray, obtained a loan from America's Home Loans, LLC, ("AHL") for $220,000. See Docket No. 44-1. The loan was evidenced by an adjustable rate note and secured by a mortgage. See Docket Nos. 44-1 and 44-2. According to the mortgage, "MERS" is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for the lender and the lender's successors and assigns. MERS is listed as the mortgagee on Bray's mortgage. See Docket No. 44-2. The proceeds of the loan were distributed to Security State Bank in the amount of $132,301.60, Richard Dietrich in the amount of $5,520.66, Bray in the amount of $66,827.82, and $15,349.92 was used to pay settlement charges owed by Bray. See Docket No. 1-6, p. 28. Bray testified in a deposition that he used the funds he received to pay his living expenses. See Docket No. 144-1, p. 10. Luis R. Ruano II, the Litigation Specialist for BAC Home Loan Servicing, LP ("BAC"), which is a subsidiary of Bank of America ("BOA") testified in an affidavit that the note was transferred as follows:

4. America's Home Loans LLC assigned the Note to Decision One Mortgage by an Allonge to Note . . . .

5. On May 2, 2006, Decision One Mortgage Company, LLC ("Decision One") transferred its servicing rights with respect to the Note and Mortgage to BAC. On May 2, 2006, Decision One also transferred its beneficial ownership in the Note to BAC.

6. On May 30, 2006, BAC transferred its beneficial ownership in the Note to The Bank of New York Mellon.

7. BAC currently is the servicer of the Note and the Mortgage. The original Note and Mortgage is in the possession of the Vogel Law Firm. At the time BAC began servicing the Note and the Mortgage there was no default under the Note or the Mortgage.

See Docket No. 147. Jennifer Guidicessi, Vice President of MERS, testified in an affidavit:

2. MERS is named as the mortgagee on Mr. Bray's mortgage. It holds legal title to the security instrument and does so as nominee for the original lender and its successors and assigns.

3. MERS is and at all time has been the record titleholder of a Mortgage executed by Mr. Bray in favor of MERS as nominee for America's Home Loans, LLC and its successors and assigns dated March 1, 2006 . . . . . . . .

5. The Note was endorsed in blank by Decision One Mortgage Company, LLC (the assignee of America's Home Loans). I have personal knowledge of the location of the Note, and although physically in the possession of counsel for this matter, the Note is under my control. MERS records show that the Bank of New York Mellon, N.A. is the current beneficial owner of the Note.

See Docket No. 151. The Allonge to Note states:

FOR VALUABLE CONSIDERATION, the undersigned hereby endorses without recourse to: Decision One Mortgage Company LLC All of his/her rights, title and interest in and to the attached Note dated MARCH 1, 2006 in the amount of $220,000.00. The Borrower(s) in said Note are: THOMAS H. BRAY. Said Note is secured by a Mortgage/Deed of Trust of the same date on real property located at: 105 MULBERRY LANE, BISMARCK, NORTH DAKOTA 58501.

See Docket No. 144-2, p. 5 (emphasis in original). The Allonge to Note is signed by Ruth Hart, Closing Funding Coordinator, on behalf of AHL. The Note is stamped with the following endorsement:

Without Recourse

For valuable consideration Decision One Mortgage Company, LLC Assigns all rights, title and interest to See Docket No. 44-1. The endorsement is signed by Pat Stowe, Assistant Secretary, on behalf of Decision One.

Bray filed a "Verified Complaint for Quiet Title and an Order of Cease and Desist" in Burleigh County District Court on October 26, 2009. See Docket No. 1-5. Bray sought "to quiet title to land and buildings situated at 105 Mulberry Lane, Bismarck, North Dakota." See Docket No. 1-5, p. 3. The Defendants removed the case to federal district court on November 17, 2009. See Docket No. 1.

In his complaint, Bray states:

[W]hen a bank loan transaction is entered into bank deposits are placed in a transaction account in the name of the borrower in exchange for the promissory note. This proves that the loan is a mutual loan between the lender and the borrower and that the borrower funds his own loan with the promissory note. The Defendants, in this matter have not incurred a financial cost or damages by my failure to pay the alleged balance due on the note in this matter. When the Defendants created the alleged money . . . it did not cost them anything.

See Docket No. 1-5, pp. 15-16 (ellipses in original). Bray contends further that United States currency has no value:

All bank loans in the continental United States are fraudulent in their very nature because the Federal Reserve Notes are only based upon book keeping entries by the bankers and represent no value, no valuable consideration and no pledging of the banks assets. The original mortgage is therefore chattel paper with no valuable consideration and therefore the whole mortgage contract is based upon fraud and a lack of valuable consideration since Federal Reserve Notes have no intrinsic value whatsoever, and are just bookkeeping entries under the 1933 bankruptcy [of the United States government].

See Docket No. 1-5, pp. 17-18 (errors in original).

Bray asserts he has "allodial" title to the real property in question and the Defendants have no legal interest in the property. See Docket No. 1-5, p. 33. Bray also claims the Defendants have violated the Fair Debt Collection Practices Act ("FDCPA"), the Truth in Lending Act ("TILA"), and the Real Estate Settlement Procedures Act ("RESPA"). As relief, Bray requests that the Court order the Defendants to cease and desist any foreclosure proceedings or collection of the mortgage debt, to remove the property from any list of assets, and for a declaratory judgment that no claim to the property exists superior to Bray's. Bray also requests damages in the amount of three times the original mortgage plus interest and expenses.

On January 26, 2010, MERS and BAC sent Bray a "Notice Before Foreclosure," informing him that, unless the mortgage was brought current, they would commence foreclosure proceedings in thirty days. See Docket No. 44-3. On April 12, 2010, the Defendants filed a counterclaim. See Docket No. 44. The Defendants request a monetary judgment against Bray in the amount of $229,289.74 with additional interest of $49.2557 per day; a declaration that the mortgage and note are valid liens on the property; a decree of foreclosure; a decree of sale of the property; a declaration that all persons claiming an interest in the property "shall forever be barred and foreclosed of all right, claim, lien and equity of redemption in subject property, and all proceeds of the property and every part thereof, except the right of redemption given by law;" and costs and fees. See Docket No. 44.

On September 3, 2010, the Defendants filed motions for summary judgment on Bray's claims and their counterclaim and a single response to all of Bray's motions that had been filed at that time. See Docket Nos. 141, 142, and 144. In their response, the Defendants summarize Bray's claims as follows:

(1) the Mortgage is invalid on account of the beneficial owner of the Note not being the record owner of the Mortgage; (2) MERS and/or the other Defendants failed to produce the "wet ink" originals of the Note and the Mortgage and that the Note and the Mortgage are therefore unenforceable; (3) Defendants violated the Fair Debt Collection Practices Act by failing to verify the debt; (4) the Note and the Mortgage fail for lack of consideration; (5) Mr. Bray exercised his right of rescission under the Truth in Lending Act; (6) Defendants violated applicable usury laws; (7) Defendants committed ultra vires acts; (8) Defendants violated the Racketeer Influenced and Corrupt Organizations Act; (9) fraud; (10) the law of acquiescence; and (11) violations of the Real Estate Settlement Procedures Act.

See Docket No. 144, pp. 8-9. The Court has reviewed the entire record and believes the Defendants' characterization of Bray's claims to be accurate. In addition, Bray claims that he owns "allodial" title to the property. The Defendants contend that summary judgment in their favor is appropriate because there are no genuine issues of material fact, that Bray's claims are without merit, and the Defendants are entitled to judgment as a matter of law.


Initially, the Court notes that Bray is appearing pro se. Pro se litigants are held to lesser pleading standards than other parties and pro se complaints are to be liberally construed. Whitson v. Stone Cnty. Jail, 602 F.3d 920, 922 n.1 (8th Cir. 2010). Summary judgment is appropriate when the evidence, viewed in a light most favorable to the non-moving party, indicates that no genuine issues of material fact exist and that the moving party is entitled to judgment as a matter of law. Davison v. City of Minneapolis, Minn., 490 F.3d 648, 654 (8th Cir. 2007); Fed. R. Civ. P. 56(c). Summary judgment is not appropriate if there are factual disputes that may affect the outcome of the case under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is genuine if the evidence would allow a reasonable factfinder to return a verdict for the non-moving party. Id.

The Court must inquire whether the evidence presents a sufficient disagreement to require the submission of the case to a factfinder or whether the evidence is so one-sided that one party must prevail as a matter of law. Diesel Mach., Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 832 (8th Cir. 2005). The moving party bears the burden of demonstrating an absence of a genuine issue of material fact. Simpson v. Des Moines Water Works, 425 F.3d 538, 541 (8th Cir. 2005). The non-moving party "may not rely merely on allegations or denials in its own pleading; rather, its response must . . . set out specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e)(2). The court must consider the substantive standard of proof when ruling on a motion for summary judgment. Anderson, 477 U.S. at 252.



Bray contends that MERS cannot foreclose on the property because MERS does not own the note. The Defendants contend MERS can foreclose on the property because it is the mortgagee of record and is acting as the nominee for the original lender's successors and assignees. The note states underneath the heading "Borrower's Promise to Pay," "I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the 'Note Holder.'" See Docket No. 44-1. Bray admitted during a deposition that he signed the note. See Docket No. 144-1, p. 8. America's Home Loans transferred the note to Decision One. Decision One endorsed the note in blank. MERS asserts that it controls the note and mortgage. The Court must determine whether MERS, by virtue of its possession of both the note and the mortgage, has standing to foreclose.

North Dakota's version of the Uniform Commercial Code is codified in title 41 of the North Dakota Century Code. N.D.C.C. § 41-03-23(1) (U.C.C. § 3-204) defines "endorsement":

"Endorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of negotiating the instrument, restricting payment of the instrument, or incurring endorser's liability on the instrument regardless of the intent of the signer, a signature and its accompanying words is an endorsement unless the accompanying words, the terms of the instrument, the place of the signature, or other circumstances unambiguously indicate that the signature was made for a purpose other than endorsement. . . .

N.D.C.C. § 41-03-24 (U.C.C. § 3-205) defines special and blank endorsements:

1. If an endorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the endorsement identifies a person to whom it makes the instrument payable, it is a "special endorsement". When specially endorsed, an instrument becomes payable to the identified person and may be negotiated only by the endorsement of that person. . . .

2. If an endorsement is made by the holder of an instrument and it is not a special endorsement, it is a "blank endorsement". When endorsed in blank, an instrument becomes payable to bearer and may be negotiated by ...

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