1 Larry D. Lewellyn, Esq.

(SBN: 141687)
LAW OFFICES OF LARRY D. LEWELLYN
2 3255 Wilshire Boulevard, Suite 1024
Los Angeles, California 90010-1414
3 Telephone No.: (213) 389-5582
Facsimile No.: (213) 389-1143
4
SHARON Y. ADAMS, ESQ. (SBN: 264546)
5 Law Offices of Sharon Y. Adams
17625 South Central Avenue, Suite C
6 Carson, California 90746
Telephone No.: (310) 928-1098
7 Email: sadams.atty@gmail.com
8
Attorney for Plaintiffs,
9 TAMARA KEMP and TONYA BOYD
10
SUPERIOR COURT OF THE STATE OF CALIFORNIA
11
IN THE COUNTY OF RIVERSIDE
12

13 TAMARA KEMP and TONYA BOYD, ) CASE NO.

)
14 Plaintiffs ) PLAINTIFFS’ BRIEF IN SUPPORT OF
) ORDER TO SHOW CAUSE RE:
15 v. ) PRELIMINARY INJUNCTION
)
16 ) Date:
SELENE FINANCE, L.P., a Delaware ) Time:
17 limited corporation; SRMOF 2009-1 ) Dept:
Trust, a business entity of unknown form )
18 or jurisdiction; MORTGAGE )
ELECTRONIC REGISTRATION )
19 SYSTEMS, INC., a Delaware )
corporation, DEFAULT RESOLUTION )
20 NETWORK, a business entity of )
unknown form and jurisdiction; )
21 FIDELITY NATIONAL TITLE )
COMPANY, a business entity of )
22 unknown form; ORION FINANCIAL )
GROUP, INC., a corporation of )
23 unknown jurisdiction; and DOES 1 )
through 50, inclusive, )
24 )
Defendants. )
25 )

26

27

28

1
DECLARATION OF TAMARA KEMP
1
I.
2
INTRODUCTION
3
This brief is submitted on behalf of Plaintiffs Tamara Kemp and Tonya Boyd
4
(collectively referred to herein as “Plaintiffs”) and against defendant Selene Finance,
5
L.P. (hereinafter referred to as “Selene”) in support of Plaintiffs Brief re Order to Show
6
Cause for Preliminary Injunction.
7
A “shell” game requires three elements to be effective: a shuffler (one who
8
quickly shuffles the shells), a mark (the person targeted to be parted from his money or
9
personal property) and distractions (to ensure the mark doesn’t look too closely at how
10
he is being parted from his money and property). Selene is playing the game of shell
11
and has targeted Plaintiffs as its marks by using shells in the form of misleading and
12
deceptive recorded documents and distractions in the form of Plaintiffs’ missed
13
payments and unknown tax obligations to part Plaintiffs from their home.
14

15
II.
16
STATEMENT OF FACTS
17
On or about August 26, 2006, Plaintiffs purchased real property located at 17671
18
Morocco Court, Riverside, California 92504 (the “Property”). The Property’s purchase
19
was financed, in part, by a loan obtained from Ownit Mortgage Solutions, Inc. (“OMS”).
20
The loan was memorialized in writing under loan number 370018641 (the “Note”),
21
secured by a Deed of Trust recorded September 6, 2006 as document number 2006-
22
0657658 (the “DOT”). (Kemp Dec. __). The DOT identified OMS as the lender and
23
Defendant Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary
24
acting solely as nominee for the lender and lender’s assigns. (Request for Judicial
25
Notice, Ex. __).
26
From September 2006 to May 2008, Plaintiffs made all regularly scheduled
27
payments pursuant to the Note. (Kemp Dec. ___)
28

2
DECLARATION OF TAMARA KEMP
1 In or about June __, 2008, Plaintiffs’ note payment was rejected by the Note

2 servicer for reasons not satisfactorily explained to Plaintiffs. Thereafter, the Note

3 servicer refused to communicate or provide an explanation as to the status of the Note

4 and the payments due there under. (Kemp Dec. ___).

5 On or about ___________, Plaintiff was contacted by Meridian Financial

6 Services (“Meridian”) which identified itself as the new Note servicer. Plaintiff entered

7 into negotiations with Meridian in an effort to modify the Note. The negotiations were

8 unsuccessful and Plaintiffs retained the services of a real estate agent to sell the

9 Property. An offer to purchase the Property was made for less than the amount owing

10 under the Note. As a result, the sale would be a “short sale” and require Meridian’s

11 approval. (Kemp Dec. ___). The sale was never consummated.

12 While still in negotiations with Meridian, Plaintiffs was contacted by Selene which

13 identified itself as the new owners and/or servicers of the Note. However, Meridian

14 continued to contact Plaintiffs claiming to be the servicer of the Note. Confused by the

15 conflicting information from Selene and Meridian, Plaintiffs sought the advice of legal

16 counsel. (Kemp Dec. __)

17 Plaintiffs’ counsel investigated the matter, which included obtaining a title report

18 on the Property, and discovered the following:

19 1. On April 29, 2010, an Assignment of Deed of Trust, signed by M. E.

20 Wileman, as Vice President, for MERS, solely as nominee for OMS, was recorded with

21 the Riverside County Recorder’s Office as Document #2010-0196030 (the “MERS

22 Assignment”). The MERS Assignment provides that “For Valuable Consideration,”

23 MERS “solely as nominee for Ownit Mortgage Solutions, Inc.” assigns and sets over to,

24 without recourse, Selene Finance, L.P. “the described deed of trust, together with

25 certain note(s)…” The MERS Assignment was to be returned to M.E. Wileman at Orion

26 Financial Group, Inc. (Request for Judicial Notice, Ex. __, Wileman Dec. ___).

27 2. On July 22, 2010, a Notice of Default was recorded with the Riverside

28 County Recorder (the “NOD”). The NOD states that the amount in default is $199,240

3
DECLARATION OF TAMARA KEMP
1 as of July 21, 2010. In addition, the NOD states that the default is declared pursuant to

2 the DOT which “secures obligations in favor of OWNIT MORTGAGE SOLUTIONS, as

3 Beneficiary…” (Request for Judicial Notice, Ex. __)

4 3. On October 22, 2010, an Assignment of Mortgage/Security Deed/Deed of

5 Trust was signed by Daniel Smith, Vice President. was recorded with the Riverside

6 County Recorder’s office as Document No. 2010-0506223. The Assignment purports to

7 grant, assign, and transfer from Selene Finance, L.P. to MERS as nominee for SRMOF

8 2009-1 Trust the DOT “together with the note…” (the “Selene Assignment”). (Request

9 for Judicial Notice, Ex. __)

10 4. On October 22, 2010, Defendants MERS as nominee of Defendant

11 SRMOF 2009-1 Trust recorded a “Substitution of Trustee” substituting Fidelity National

12 Title Company, the original trustee, for Fidelity National Title Company, the new trustee.

13 The Substitution was recorded as Document No. 2010-0506224 and identifies OMS as

14 the original beneficiary, contrary to the DOT which identifies MERS as such. (Request

15 for Judicial Notice, Ex. __)

16 5. On October 22, 2010, Fidelity National Title Company recorded a Notice of

17 Trustee’s Sale (the “NOTS”) as Document No. 2010-0506225. The NOTS is dated

18 October 23, 2010, the day after it was recorded. The NOTS identifies OMS as

19 beneficiary, contrary to the DOT which identifies MERS as such. (Request for Judicial

20 Notice, Ex. __) The NOTS was scheduled to be held November 15, 2010.

21 Plaintiffs’ counsel also noticed that, prior to the MERS Assignment; the last item

22 recorded on the Property was the DOT on September 6, 2006, approximately 3 years

23 and 7 months earlier. There are no other recordings, including, but not limited to

24 assignments, transfers, or deeds, between the DOT and the MERS Assignment.

25 (Adams Dec. ___, Request for Judicial Notice, Ex. ___)

26 Plaintiffs’ counsel also discovered, through investigation, that OMS ceased

27 business operations and filed for bankruptcy protection in December 2006. (Adams

28 Dec. __). Based on the overwhelming amount of activity and documents referencing

4
DECLARATION OF TAMARA KEMP
1 OMS and discovering OMS’s corporate status as of December 2006, Plaintiffs’ counsel

2 advised Plaintiffs to seek further clarification from Selene.

3 On November 5, 2010, Plaintiffs’ counsel sent a letter to Selene concerning the

4 conflicting information with respect to the identity of the Note’s servicer and/or owner,

5 Plaintiffs’ dispute as to the default amount stated in the NOD, and the sudden “shuffling”

6 of interest in the DOT through a flurry of recordings. The November 5th letter requested

7 specific information with respect to the Note and Plaintiffs’ payments there under. The

8 letter was sent pursuant to federal 12 U.S.C. Section 2605(e) also known as the Real

9 Estate Settlement Procedures Act (“RESPA”) which governs borrowers requests to

10 services with respect to loans. (Adams Dec. __).

11 On or about November 8, 2010, Selene acknowledged the request in writing and

12 stated that, pursuant to RESPA, a response would be forthcoming. (Kemp Dec. __)

13 On or about November 10, 2010, Selene postponed the Trustee’s Sale to

14 December __, 2010. (Adams Dec. __)

15 On or about ___, Plaintiffs’ counsel contacted Selene by email to determine the

16 status of the written request. Selene informed Plaintiffs’ counsel that a response was

17 not complete and that the Trustee’s sale would be postponed to January 18, 2011.

18 (Adams Dec. __).

19 On or about December ___, 2010, Plaintiffs’ counsel received a letter from

20 Selene’s counsel enclosing a copy of the DOT, the MERS Assignment and the Selene

21 Assignment. Plaintiffs’ counsel promptly notified Selene’s counsel that the letter and

22 documents were not responsive to the November 5th request. (Adams Dec. __)

23 On or about January ___, 2011, Selene’s counsel notified Plaintiffs’ counsel that

24 it had no intent of providing further response to the RESPA request. (Adams Dec. __).

25 On January ___, 2011, Plaintiffs’ counsel initiated these proceedings.

26 On January ____, 2011, the parties appeared before this Court wherein the

27 parties presented arguments and, it was agreed: 1) the hearing would be continued, 2)

28 Selene would produce a payment history, an itemization of the alleged default amount

5
DECLARATION OF TAMARA KEMP
1 set forth in the NOD, and a copy of the endorsed Note, and 3) the parties would

2 participate in a meet and confer after production of the documents to discuss

3 outstanding issues or questions. (Request for Judicial Notice, Ex. ___, pg. ___).

4 On or about January 21, 2011, Selene’s counsel produced documents consisting

5 of an account history beginning in or about March 2009 and two copies of the Note.

6 On or about January 26, 2011, counsel held a telephonic meet and confer and it

7 was agreed that questions for which Selene’s counsel had no answer would be

8 submitted by email for a response. (Adams Dec. __).

9 On January 31, 2011, less than 24 hours before the continued hearing date on

10 the within Order to Show Cause re Preliminary Injunction, Selene’s counsel provided a

11 written response via email which essentially contained speculation as to the default

12 amount and provided no information regarding Selene’s alleged servicing predecessors.

13 However, Selene’s counsel also stated that Selene’s interest in the DOT did not come

14 from OMS, as implied by the MERS Assignment, the NOD and the NOTS, but was

15 acquired from Citimortgage.

16

17 III.

18 ARGUMENTS
A. COURT SHOULD GRANT PRELIMINARY INJUNCTION AGAINST SELENE
19 IN ORDER TO PREVENT IRREPARABLE HARM TO PLAINTIFFS
20 Code of Civil Procedure Section 526(a) provides:
21 “An injunction may be granted in the following cases:
(1) When it appears by the complaint that the plaintiff is
22 entitled to the relief demanded, and the relief, or any part thereof,
consists in restraining the commission or continuance of the act
23 complained of, either for a limited period or perpetually.
(2) When it appears by the complaint or affidavits that the
24 commission or continuance of some act during the litigation would
25 produce waste, or great or irreparable injury, to a party to the
action.
26 ***
(4) When pecuniary compensation would not afford adequate relief.”
27 (Emphasis added.)
28

6
DECLARATION OF TAMARA KEMP
1 The subject matter of the action concerns real property located at 17671

2 Morocco Court, Riverside, California 92504 (“the Property”) which is Plaintiffs’

3 customized primary residence built to specifications. The Property is unique and

4 monetary damages could not afford adequate relief should the Court permit the

5 foreclosure action to proceed and Plaintiff then prevails on the causes of action set forth

6 in their filed Complaint against Selene. If Selene is permitted to go forward with its

7 proposed foreclosure action, a multiplicity of court actions would commence in the form

8 of eviction proceedings for which Plaintiffs would be forced to defend. In addition,

9 permitting the foreclosure action to proceed would also cause irreparable harm in the

10 form of Plaintiffs being removed from their home based on fraudulent, deceptive and

11 misleading actions committed by Selene.

12 Therefore, the Court should grant Plaintiffs’ request for preliminary injunction and

13 enjoin Selene from proceeding with its proposed foreclosure action.

14
B. INJUNCTION IS APPROPRIATE TO PREVENT SELENE FROM
15 BENEFITTING FROM VIOLATION OF CALIFORNIA’S UNFAIR COMPETITION
16 LAW.

17
Business and Professions Code Section 17200, et seq. codifies California’s
18
Unfair Competition Law (“UCL”) which defines unfair competition as “any unlawful,
19
unfair or fraudulent business act or practice and unfair, deceptive, untrue and
20
misleading advertising…” Bus. & P. Code Section 17200.
21
California Bus. & P. Code Section 17203, provides, in pertinent part:
22
“Injunctive Relief--Court Orders
23 Any person who engages, has engaged, or proposes to engage in unfair
competition may be enjoined in any court of competent jurisdiction.”
24
Selene’s deceptive, unlawful and misleading business practices have and will
25
continue to result in great harm to Plaintiffs unless it is enjoined. “The test of whether a
26
business practice is unfair involves an examination of that practice’s impact on its
27
alleged victim, balanced against the reasons, justifications, and motives of the alleged
28
wrongdoer.” Smith v. State Farm Mutual Automobile, Inc. Co. (App. 2 Dist. 2001) 113
7
DECLARATION OF TAMARA KEMP
1 Cal. Rptr. 2d 399, 93 Cal. Appl. 4th 700. Selene’s use of deceptive assignments,

2 recordings used to “shuffle” title and interest, and documentation containing misleading

3 language and amounts have caused Plaintiffs significant damages in the form of time

4 and money expended to defend.

5 Selene’s violations under UCL are numerous. Selene engaged in unfair

6 competition when it unlawfully failed to provide an itemization of the alleged default

7 amount set forth in its NOD pursuant to 12 U.S.C. Section 2605(e) under the Real

8 Estate Settlement Practices Act (“RESPA”) and which is also a violation of Civil Code

9 Section 2923.5.

10 Selene also engaged in unfair competition when it deceptively used the MERS

11 Assignment, the NOD and the NOTS to mislead Plaintiffs into believing that OMS had

12 authorized the assignment of the DOT to Selene.

13 Selene further engaged in unfair competition when, in response to Plaintiffs’

14 request for evidence of Selene’s interest in the Property, it misleadingly and deceptively

15 produced two copies of the Note: (1) the first copy is a copy of a copy bearing the stamp

16 “Fidelity National Title Insurance Co.” confirming that the produced Note is a copy of the

17 original (“Note 1”); and (2) the second copy of the Note includes a single page bearing a

18 blank endorsement signed by an alleged employee of OMS (“Note 2”). Plaintiffs believe

19 that the production of Note 2 is deceptive and misleading and, therefore, contests the

20 validity of Note 2 for the reasons set forth below in Section ___.

21
C. VIOLATED CCP 2923.5 WHEN IT FAILED TO PROVIDE PLAINTIFFS WITH
22 AN ITEMIZATION OF THE ALLEGED AMOUNT IN DEFAULT CONTAINED IN
23 THE NOTICE OF DEFAULT
California Civil Code Section 2923, et seq. sets forth exhaustive requirements
24
governing non-judicial foreclosures that are intended to protect borrowers, the
25
mortgagees, trustees, beneficiaries, or other authorized agents such as servicers.
26
Specifically, Civil Code Section 2923.5 governs the language, the issuance and the
27
communication to be included in the notice of default.
28

8
DECLARATION OF TAMARA KEMP
1 In Selene’s NOD, the required statutory language, including the alleged default

2 amount in the amount of $199,240, is provided. Also included in the NOD is the

3 following statement: “Upon your written request, the beneficiary or mortgagee will give

4 you a written itemization of the entire amount you must pay. …you must pay all

5 amounts in default ….” Pursuant to said statement, on November 5, 2010, Plaintiffs’

6 counsel sent a letter to Selene requesting a payment history of the account, which

7 should have included an itemization of the alleged default amount. On ______,

8 Selene’s counsel provided a payment history that only accounted for $77,____, ___ of

9 which was accumulated after the NOD recording date. The only other accounting or

10 payment history offered by Selene is a paragraph contained in an email from its

11 attorney speculating as to the nature of the balance of the default amount.

12 Therefore, Selene violated C. Civ. Section 2923.5 when it failed to produce the

13 requisite information which is also a violation of UCL. The failure to provide the

14 information is perceived by Plaintiffs as being an attempt to use the NOD and the

15 default amount alleged therein to scare and intimidate Plaintiffs into believing that the

16 Note was in such default as to have no recourse but to walk away from the Property for

17 the $20,000 offered by Selene. (Kemp Dec. __).

18 D. VIOLATED THE FEDERAL REAL ESTATE SETTLEMENT PROCEDURES

19 ACT WHEN IT REFUSED TO PROVIDE INFORMATION PURSUANT TO
PLAINTIFFS’ QUALIFIED WRITTEN REQUEST
20
Under 12 U.S.C. Section 2605(e), under the Real Estate Settlement Procedures
21
Act (“RESPA”), a borrower may submit a QWR to a servicer seeking information
22
regarding its loan. Upon receipt of said QWR, RESPA sets forth servicers
23
responsibilities, specifically:
24 “Duty of loan servicer to respond to borrower inquiries

25 ***
(2) Action with respect to inquiry
26 Not later than 60 days …after the receipt from any borrower of any qualified
written request under paragraph (1) and, if applicable, before taking any action
27 with respect to the inquiry of the borrower, the servicer shall—
28 ***

9
DECLARATION OF TAMARA KEMP
 (B) after conducting an investigation, provide the borrower with a written
1 explanation or clarification that includes—
2 (i) to the extent applicable, a statement of the reasons for which the servicer
believes the account of the borrower is correct as determined by the servicer;
3 and
(ii) the name and telephone number of an individual employed by, or the office
4 or department of, the servicer who can provide assistance to the borrower; or
(C) after conducting an investigation, provide the borrower with a written
5 explanation or clarification that includes—
6 (i) information requested by the borrower or an explanation of why the
information requested is unavailable or cannot be obtained by the servicer; and
7 (ii) the name and telephone number of an individual employed by, or the office
or department of, the servicer who can provide assistance to the borrower.”
8 (Emphasizes added.)
9 On November 5, 2010, Plaintiffs’ counsel sent correspondence in the form of a
10 QWR requesting information including the contact number of Selene’s predecessor, the
11 name and contact information for the person who authorized the MERS Assignment, an
12 explanation of the MERS Assignment in light of OMS’s, the alleged nominor, corporate
13 dissolution and bankruptcy filings that preceded the assignment, and an account
14 payment history.
15 On January 10, 2011, more than 60 days later, Selene’s counsel, Marvin
16 Adviento, sent correspondence setting forth Selene’s right, as the Note owner, to
17 foreclose. Plaintiffs’ counsel immediately notified Mr. Adviento that his letter was non-
18 responsive to the November 5th’s enumerated requests and again requested
19 information. On January ___, 2011, Selene’s counsel stated in writing that Selene
20 would not produce the information requested.
21 Therefore, as a result of its failure and refusal to provide the information to which
22 Plaintiffs’ are entitled, Selene further violated the UCL when it unlawfully failed and
23 refused to adhere to the requirements set forth under RESPA and provide responsive
24 information to the November 5th letter.
25
E. VIOLATED CALIFORNIA’S ROSENTHAL FAIR DEBT COLLECTION ACT
26 WHEN IT USED TO DECEPTIVE AND MISLEADING DOCUMENTS TO
COLLECT THE ALLEGED DEBT OWED UNDER THE NOTE
27

28

10
DECLARATION OF TAMARA KEMP
1 California Civil Code Section 1788, known as California’s Rosenthal Fair Debt

2 Collection Act, prohibits deceptive, dishonest, unfair and unreasonable debt collection

3 practices by debt collectors for consumer debts.

4 Here, the MERS assignment is contested in this case because it purports to be

5 signed on behalf of OMS for the purpose of assigning its interest in the DOT to Selene.

6 However, OMS has not claimed an interest in the Property since September 2006,

7 which pre-dates the MERS Assignment by over three (3) years. (Adams Dec. __).

8 “The burden of proving an assignment falls upon the party asserting rights there under.”

9 Cockerell v. Title Insurance & Trust Co. (1954) 42 Cal. 2d 284, 292. Despite numerous

10 questions regarding the source of the authorization for the MERS Assignment, Selene

11 has steadfastly refused to respond. In fact, Selene has proffered no evidence which

12 supports that the MERS Assignment was a valid assignment of interest in the DOT.

13 In fact, it was not until January 31, 2011 at 4:38 p.m., less than 24-hours before

14 the continued hearing in the case at bar, that Selene’s counsel states in an email that

15 the source of Selene’s interest is Citimortgage (a fact that was too late to confirm prior

16 to the hearing).

17 The problem for Selene is that Citimortgage is not in the chain of title or interest

18 on the Property. Under the Statute of Fraud, a transfer of interest in real property

19 requires writing. An assignment of a deed of trust is a transfer of interest in real

20 property. Therefore, any claim of interest in the Property requires writing. For Selene to

21 receive an interest in the Property through an assignment from Citimortgage, there

22 would have to be evidence of writing transferring interest in the Property to

23 Citimortgage. However, no such writing exists in the recordings on the Property.

24 There is no assignment from OMS, the original lender, to Citimortgage, nor is

25 there an assignment from Citimortgage to Selene. Selene assertions that it obtained its

26 interest from Citimortgage when Citimortgage has no recordable or verifiable interest is

27 questionable at best and, likely, illegal at law.

28

11
DECLARATION OF TAMARA KEMP
1 In addition, according to counsel for OMS’ bankruptcy estate, OMS relinquished

2 its interest in the Property in September 2006. Thus, any transfer by OMS of its interest

3 in the Property after September 2006 would result in a Selene receiving nothing more

4 than a piece a paper, but certainly no interest in that OMS had no interest to transfer.

5 Thus, how Selene purports to obtain interest from Citimortgage for which Selene

6 has adduced no writing evidencing the transfer is a puzzle to Plaintiffs and certainly

7 should not be allowed to go unchallenged. Selene is utilizing the questionable MERS

8 Assignment in order to mislead and deceive Plaintiffs and convince them to believe that

9 Selene has a legal interest in the Property.

10 Even if, arguendo, the DOT is validly assigned, in California, only the holder of

11 the note can initiate foreclosure proceedings, regardless of who the mortgage is owed.

12 Adler v. Sargent (1895) 109 Cal. 42, 49. A mortgagee’s “purported assignment of the

13 mortgage without an assignment of the debt is a legal nullity.” Kelly v. Upshaw (1952)

14 39 Cal.2d 179, 192. Selene claims to receive its interest from Citimortgage and offers

15 copies of the underlying Note, neither of which references Citimortgage.

16 As stated above, Selene produced two copies of the underlying Note for which

17 the DOT is the security instrument. Plaintiffs do not contest that Note 1, bearing the

18 stamp of “Fidelity National Insurance Company” is a true and correct copy of the original

19 Note.

20 However, Plaintiffs do contest that Note 2, as described above, reflects a

21 properly endorsed original. Note 2 consists of seven (7) pages in total, the last page

22 being a single blank page bearing an endorsement stamp that reads “PAY TO THE

23 ORDER OF ____________________ WITHOUT RECOURSE OWNIT MORTGAGE

24 SOLUTIONS, INC., A CALIFORNIA CORPORATION” signed by Gina [sic] Castrell,

25 Funder. The endorsement is blank and, if valid, is considered payable to the bearer.

26 The seventh page is unremarkable in that it contains no references to the preceding six

27 (6) pages. In addition to the “blank endorsement,” the copy marks of the last page are

28 not consistent with the copy marks on the preceding six (6) pages. It is impossible to

12
DECLARATION OF TAMARA KEMP
1 determine whether the seventh page was properly affixed to the preceding pages or

2 was affixed for the sole purpose of defrauding Plaintiffs out of Property and/or money.

3 Plaintiffs acknowledge readily that blank endorsements are commonly used in

4 commercial transactions. Plaintiffs further acknowledge that the seventh page would

5 also be referred to as an “allonge” in a commercial transaction and is identified as a

6 page affixed to a negotiable instrument for the purpose of endorsements.

7 Plaintiffs doubt the validity of the endorsement because allonges are typically

8 used when there is insufficient space on the negotiable instrument for an endorsement.

9 In Pribus v. Bush, 118 Cal. App. 3d 1003, the Court determined that California

10 has adopted the majority view and held that allonges are only permitted “when there is

11 no longer room on the negotiable instrument itself to write an indorsement.”

12 Here, page 6, which precedes the seventh page of Note 2, contains language

13 that covers only one-half of the page. The endorsement on the seventh page measures

14 less than 2 inches wide and 1-1/2 inches long and is the only endorsement on the page.

15 Therefore, page 6 provides more than enough room to place an endorsement which

16 would remove any doubt as to whether the endorsed seventh page was intended by the

17 endorser to be affixed.

18 The Pribus court further held that:

19 “[T]he law merchant rule on allonges was developed as a refinement of

20 the basic rule that an indorsement must be on the instrument itself. This
basic rule must have become impractical when strictly applied in certain
21 multiple indorsement situations.... The allonge, then was apparently
created to remedy the inconvenience of the basic rule, not as an
22 alternative method of indosement.” Id. at 1009.
23 Based on the Pribus court ruling, the use of an allonge is proper with respect to a

24 negotiable instrument, such as a mortgage backed promissory note, that will likely

25 experience multiple transfers. However, where sufficient space on the instrument itself

26 is available for endorsement, an allonge is “ineffective as an indorsement.” Pribus, at

27 1011.

28

13
DECLARATION OF TAMARA KEMP
1 As stated above, sufficient space exists on page 6 of Note 2 for the single

2 endorsement. The use of an allonge in this matter is an ineffective endorsement and

3 should not be permitted as evidence of Selene being the Note holder. Although a blank

4 endorsement implies that the bearer is the payee on demand, Selene has adduced no

5 evidence of an effective endorsement, blank or otherwise, which would entitle it to being

6 determined the holder of a legal Note affecting the Property.

7 Therefore, Selene cannot initiate foreclosure proceedings against the Property

8 because it is not the holder of the note nor it is the bearer of an effectively endorsed

9 note and a preliminary injunction should issue enjoin Selene from attempting to collect

10 on a debt pursuant to Note 2.

11 IV.

12 CONCLUSION

13 Based on Selene’s multiple violations of UCL, Plaintiffs request that this Court

14 issued a preliminary injunction against Selene enjoining its foreclosure sale of the

15 Property until such time as this matter can be litigated on its merits pursuant to

16 Plaintiffs’’ Complaint already on file herein.

17 Dated: February ___, 2011 ___________________________

18 LARRY D. LEWELLYN
Attorney for Plaintiffs,
19 TAMARA KEMP and TONYA BOYD

20

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14
DECLARATION OF TAMARA KEMP