by Kenneth Eade
***
The complaint was filed in downtown Los Angeles the next morning, and a press release on it went out right after filing. Brent didn’t mention the word “murder” in the press release. RICO would be enough of an impact. By late afternoon, he had received a few email inquiries from journalists. The circus had begun.
Prudent Bank’s agent for process was served with the summons and complaint immediately by a process server. But Brent had a special service in mind for Bernstein. Jack Ruder waited in his late model white Ford Crown Victoria outside Bernstein’s house and waited for him to come home from work. At about 6:30 Bernstein pulled up in his new silver Mercedes Maclaren. Bernstein parked the Maclaren in his driveway, got out of it, and almost bumped into Jack, who handed him the summons and complaint.
“Steven Bernstein, I’m serving you with the summons and complaint in the case of Marsh v. Bernstein.”
Bernstein’s mouth gaped open. “Okay, you’ve served me, now get off my property,” he spat.
“You may want to talk to me now, Mr. Bernstein.”
“Fuck off. Talk to my lawyer.”
“Oh, we will. You may want to get one with criminal defense experience. Have a good day.”
Jack backed away from Bernstein, who stomped into his house, crumpling the complaint in his hand.
18
Litigation was war. A war that usually inflicted heavy casualties on both sides. It was an expensive and exhausting battle of wits. The rules of war for federal court were contained in the 86 rules of federal civil procedure, the rules of the local federal court, and the courtroom rules of the particular federal judge.
Everything had its time and place. The discovery rules were drafted to insure that there would be no surprises, and that each side had an opportunity to obtain the evidence that their opponent intended to present at trial. Brent prepared for a one year series of battles leading to the final one, which would be a trial by jury. He knew that the first series of battles would be a full assault on his complaint, to try to throw as much of it out of court as possible.
***
Brent prepared and filed a motion for preliminary injunction, to stay any foreclosure sale until the matter could come to a trial on the merits. To succeed on the motion, he had to show that the Marshes would be irreparably harmed if the foreclosure would be allowed to proceed without them having their day in court.
This would be fairly simple to prove. Mr. Marsh would stand to lose his only asset – his home. Each parcel of real estate was considered to be unique under the law. But Brent would also have to make a showing that he was likely to prevail when his case did come to trial. This was a tougher task.
He didn’t have to actually prove his case. That would come at trial. What he had to do was to raise “serious questions” that tipped the balance of hardships more toward the Marshes than Prudent Bank. Brent’s written motion took up every inch of the 25 page maximum he was allowed to file. Everything had to be put down on paper; oral argument on the motion in court was just for show; and to answer the judge’s questions, if she had any.
She was Judge Virginia Masters, an ex-federal prosecutor, intimately familiar with the workings of the RICO law. Brent’s opponents were the Goliath downtown Los Angeles firm of Stein, Stewart and Rothstein, and Prudent Bank was their best client. They would fight tooth and nail to throw out Brent’s case, with an unlimited litigation fund which allow for any expense. Brent was the “David” in this war; a one-man firm with a slingshot of an emotional case. If he could get it to the jury, he had a chance of winning.
The first assault launched by Stein, Stewart and Rothstein was by Joe Stein, one of the partners. It was the motion to dismiss that Brent had expected. He spent so many hours in legal research and fleshing out a brief in opposition to it that he lost all track of time. Minutes blended into hours, then into days and, before he knew it, he had been buried in his computer for an entire week. Brent knew he was nearing the end. And every time he thought he had come to the end, he knew it was good. It just had to be better.
“Boss, doesn’t your cat ever get hungry?” asked Melinda, as she was leaving the office one day.
“Huh…what?” Brent looked up momentarily from the computer screen.
“Your cat. You do have a cat, right?”
“Yeah, what about her?”
“It’s just that I always see you here, early in the morning, and you’re here every afternoon when I go home. It seems like you’re always in the office.”
“Well, I have to get this done.”
“I know boss, just saying. You want me to grab you something to eat?”
“Yeah, sure, that would be good,” Brent said, not missing a keystroke.
“What do you want?”
“Huh?”
“To eat. What do you want to eat?”
“Oh, anything, anything.”
19
The wood paneled courtroom on Spring Street held a full audience for the motion hearings on the Marsh case. Most of the audience consisted of journalists. Others were members of activists groups protesting mortgage fraud. April sat at the counsel table with Brent, anxiously waiting. Finally, Judge Virginia Masters entered the courtroom in her black robe, and climbed the stairs to her elevated perch. She strained her dark amber eyes through her 1960’s style cat eye glasses at the assembly before her. She seemed impatient and unimpressed.
“Case Number CV 13 – 61940, Marsh vs. Prudent Bank. Counsel, please state your appearances,” said Judge Virginia Masters, sternly, well aware of the media coverage, given her aspirations to loftier juristic heights. She had to appear to be strong to the entire public. “I’ll hear argument on the motion to dismiss first.”
Brent knew it was logical to decide the motion to dismiss first. If the case was dismissed, there would be no need to listen to argument on Brent’s motion for an injunction to stop the foreclosure sale. Still, he hated to give Joe Stein the opportunity to take the podium first. He had a reputation for hogging the entire show, kind of like a Senate filibuster.
Joe Stein took the lectern, smiling for the press, as if he were trying to impress a jury that was not there. The grey haired devil looked smart and crisp in his three piece custom tailored suit, and he spoke with deliberate intonation – the mark of a great actor – as he fixed his steel grey eyes on the judge for his performance.
“Your Honor, the Plaintiff is attempting to capitalize on the wave of public sympathy surrounding foreclosures. Prudent Bank is not the Simon Legree of banking. Nobody wants to foreclose on the Marshes’ house or any other house for that matter. But this is business and foreclosure is the last resort. In fact, Prudent Bank is proud of its track record of actually putting people into new homes, and…”
“Let me stop you right there, Mr. Stein,” said Judge Masters. “We’re not taping a commercial for Prudent Bank. The only person in this room you have to impress is me. So let’s get on with it or I will exclude the press from the courtroom.”
Judge Masters was a tough broad, with an overdose of testosterone, probably gained fighting the male adversaries she faced while trying cases for the U.S. Attorney’s office. Brent had never appeared before her, and was already beginning to regret it.
“I’m sorry, Your Honor, I had only begun the introduction to my argument.”
“Mr. Stein, you may think, with this battery of law clerks at my disposal, that I have not read each and every word of your motion and the opposition, as well as your reply to the opposition, but I can assure you that I have. This Court’s time is precious, so please don’t go over everything in your brief. Just emphasize the points that you have not covered in in the briefs.”
“That goes for you, too, Mr. Marks,” said the Judge.
Brent had felt a bolt of confidence at her bullying of Stein, until she came to that comment.
“Mr. Stein, I want you to speak to the issue of predicate acts for the RICO count,” said Masters.
Not a good sign. That was
the weakest link in Brent’s case and she had zeroed in on it. Federal judges sometimes ask questions when they have already made up their mind about an issue, but want to seem to be fair to the opposition. Stein was beaming at the opportunity to go for the jugular vein in Brent’s case.
“Your Honor, that is the weakest part of the Plaintiff’s case,” he argued. “The predicate act of murder…”
“Mr. Stein,” said the Judge, interrupting him again, “let’s discuss first the mail fraud and wire fraud allegations.”
“Very well, Your Honor. In order to pass muster under Rule 9, allegations of fraud have to be specific. The four W’s – “who what, when and where” – are missing here. These allegations fail under Rule 9 because they are generic against Prudent Bank. They also allege that documents were forged to cover up an alleged fraudulent scheme, but in cases of fraud, you have to show reliance. Nowhere is it alleged here that Mr. Marsh relied on the alleged forgeries and suffered damages because of that reliance. And they cannot prove that, Your Honor. That is why we are requesting that you dismiss this count with prejudice.”
Brent felt like jumping up at this point, but protocol dictated that he keep his mouth shut until it was his turn to speak. Clients often interpreted following this protocol as a sign of weakness, but Brent had prepared April well.
“With regard to the bank fraud allegations, the Plaintiff has the same problem,” Stein continued, in detail. “But the weakest link of all is the absurd allegation of murder.”
Stein kept true to his reputation. His filibuster lasted for the entire ten minutes of his allotted argument time. It was clear, concise, and made sense. When Judge Masters signaled that the speech was over, Brent approached the podium, juiced with adrenalin.
“Your Honor, since, for the purposes of this motion, the allegations in the Plaintiff’s complaint are to be taken as true, all we have to do is sufficiently plead an enterprise, which is Prudent Bank; and the conduct of that enterprise through a pattern of racketeering, or investment of a part of the income of the racketeering activity into Prudent Bank. This has all been alleged. To allege racketeering activity, we only to have plead two predicate acts.
“In the days leading to the demise of Tentane Mutual, Prudent Bank knew that it was going to take over the assets of Tentane during the FDIC seizure. In fact the seizure and the asset takeover happened almost simultaneously. When Prudent found out that many of its mortgages had not been assigned to the mortgage backed securities trust pool, that Tentane had parceled off and sold securities that were not backed by the mortgages, and that it had no right to collect or service those mortgages, it began an elaborate cover up, by forging notary signatures and recording documents more than three years after the fact.
“This is obtaining property owned by or under the control of a financial institution by means of false or fraudulent pretenses; one of the predicate acts. Prudent also utilized the U.S. mail to record the forged documents. This is the predicate act of mail fraud. Therefore the Plaintiff has pleaded a sufficient case under RICO.”
“Mr. Marks,” said the Judge. “Even if you do get past the hurdle of pleading fraud with specificity, which I am not sure that you do with the mail fraud issue, you still have the problem of reliance. Mr. Marsh already had his loan at the time of the alleged mail fraud and financial institution fraud. How could he have possibly relied on the alleged fraudulent actions three years after the fact?”
“Your Honor, with regard to financial institution fraud, we have alleged that Prudent Bank collected interest and principal from Mr. Marsh on his loan, and applied it to the MBS holders’ accounts, even though the note and deed of trust were not properly transferred to the Trust. That collection is also based on the forgery and recordation of the assignment.
In fact, they had no true right to collect, and Mr. Marsh relied upon their representations that he was paying his mortgage payments to the correct loan servicer, when Adelay Gioriano, the employee of Prudent Bank, indicated to Mr. and Mrs. Marsh that the bank had taken over the loan and directed payment to be made to them.”
“That still leaves you with the problem of the lack of specificity of the mail fraud allegation, Mr. Marks,”
“If Your Honor is not satisfied that we have alleged the mail fraud with certainty…”
“And I am not…”
“…Then I would point out to the Court the fact that the murder and attempted murder allegations also serves as predicate acts.”
“You realize then, do you not, Mr. Marks, that your entire RICO case would depend upon proving a case of murder?”
“Or attempted murder, Your Honor. Yes, I do. There is no federal rule that says I have to plead murder with specificity.”
“Your Honor, may I be heard please?” asked Stein.
“Are you finished, Mr. Marks?” asked the Judge.
“No, Your Honor, I am not. The Defendants have profited from the biggest bank default in history. The fraudulent and deliberately criminal acts committed by Prudent Bank and its predecessor nearly destroyed the entire world economy, and the government gave them billions of dollars in bailout money which they used, not to help people refinance, which they promised my client and countless others, but to foreclose on millions of homes and make obscene profits. The Plaintiff has sufficiently pleaded a case of racketeering and the motion to dismiss must be denied.”
“Now we have the issue of standing,” said the judge. “Your entire case, Mr. Marks, is predicated on the allegation that the Note and Deed of Trust are void because they were not transferred to the Trust Pool by the closing of the Pooling Service Agreement.”
“That’s right, Your Honor. Under Glaski v. Bank of America, the lack of assignment in conformance with the terms of the PSA renders the Note and Deed of Trust void.”
“According to Mr. Stein’s motion, your clients have no standing to enforce the terms of the PSA, and all the cases in this district agree with him. They are not parties to the PSA, nor are they third-party beneficiaries.”
“That’s true Your Honor, but the Serrato case recognizes that there are other ways to claim standing.”
“I object, your Honor, Serrato is an unpublished case and Mr. Marks is citing non-binding dictum in the case.”
“You’ll get your chance on rebuttal, Mr. Stein, now please take your seat and let Mr. Marks finish.”
“If the Note and Deed of Trust were left outstanding,” said Brent, “it would subject Plaintiff to collection and foreclosure activities from multiple parties, thus causing injury to the Plaintiff, which gives rise to his standing to raise the issue, as a party injured by the contract, pursuant to Civil Code section 3412.”
“That’s a very clever argument, Mr. Marks. Mr. Stein, now it’s your turn.”
Brent left the podium feeling good. All through Stein’s rebuttal, nothing had been said that could topple the strength of Brent’s argument. That was the good news. The bad news was that, if he won the motion to dismiss, he would have to prove that an agent or employee of the bank murdered April’s mother and tried to murder her father.
And, Brent could not assume he was out of the woods yet. The Judge took both the motion to dismiss and the motion for preliminary injunction under submission. She would render a written opinion on it in the week to come.
Brent could see from April’s expression that she was very pleased. Stein did not appear so happy. He and his junior counsel walked out of the courtroom without saying good-bye and waded through the bevy of reporters outside the courthouse, treating them with a rapid-fire of “no comments.”
Brent, on the other hand, could not wait to “bathe” in the sea of reporters. Before they exited, he said to April, “Now remember what I told you. Just let your expressions reveal your emotions, but let me do all the talking.”
“Okay,” she said, teary-eyed.
“Crying is okay, but let me talk about the case. We don’t want Stein to claim we tainted the jury pool.”
The jury pool was
to be drawn from downtown Los Angeles and Brent could not be happier about that. He would try to pack the jury with people whose lives had been touched by foreclosure. All they had to do now was wait for the judge’s decision and then the game was on.
20
Judge Masters rendered her decision on Friday, and it was a grand slam. She denied the motion to dismiss the complaint and granted an injunction to stay the foreclosure until trial. She also set a scheduling conference, which would mark the beginning of the parties’ discovery. Brent had already prepared written requests for documents with the help of his new investigator, and a set of written questions, but the most sought after discovery tool was the deposition of Steven Bernstein. In the deposition, Brent could grill him under oath and find out what it would be like to have him on the witness stand at trial.
Brent met with Jack Ruder to plan a strategy for discovery of what essentially would be a murder case. April, at about the same time as Jack, was happy to have heard the good news that her case had not been thrown out. Brent introduced her to Jack as his new investigator.
“April, I have to tell you that what we’ve been through so far is nothing compared to what we will have to go through to complete this case,” said Brent.
“I understand.”
“Now, essentially what we have to do is to prove a murder case. And we have nothing to go on, so we’re starting from square one. Jack, this is your case. Where do we begin?”
“Ms. Marsh, does your father ever communicate with you?”
“Never.”
“Is he conscious, does he appear to be alert?”
“You know, he appears to be alert, but I just talk and talk, and he doesn’t even seem to react to my presence.”