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STATEMENT OF THE CASE
Appellant Glenn Augenstein is a citizen of the Commonwealth of Kentucky
residing in Henry County. The Appellant is a self-employed craftsman with a custom
cabinet and furniture business operated from a workshop located on the subject property,
adjacent to his residence. Appellee Deutsche Bank National Trust Company (DBNT) is a
Los Angeles based subsidiary of a global banking concern. The real property which is
the subject of the case consists of two adjacent lots, numbers 3 and 4, totaling 14.88
acres. The residential dwelling is situated on Lot 3 (5.959 acres), which enjoys 595 feet
of road frontage. The Appellant personally built the structures situated on the property.
Appellee DBNT filed its unverified Complaint on December 13, 2007, alleging
that it was the ownerand holderof a promissory note, and holderof a mortgage securing
said note (R. pp. 1-4). Two unauthenticated documents were attached as exhibits to this
complaint. The first unauthenticated document purported to be a copy of an alleged
promissory note naming Option One Mortgage Corporation (Option One) as Lender
andpayee (R. pp. 5-7). The second unauthenticated document purported to be a copy of
an alleged mortgage naming Option One as Lender andgrantee (R. pp. 8-21).
Appellee Deutsche Bank is not named in either of these alleged instruments.
Appellant filed his timely answer to the Complaint on January 2, 2008, generally
denying Plaintiffs allegations (R. pp. 33-34). Appellant then filed a Motion to Dismiss
pursuant to CR 12.08 (2) on January 11, 2008 (R. pp. 35-36).
Appellee filed a response to Appellants January 11, 2008, Motion to Dismiss on
January 22, 2008 (R. pp. 40-41). Laura HESCOTTs affidavit of December 26. 2007,
executed in Dakota County, Minnesota, was attached as an exhibit to this response (R. pp.
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42-44). In this affidavit, Ms. HESCOTT falsely held herself out to be an officer of
Option One and falsely averred that she had personal knowledge of facts relating to the
alleged mortgage indebtedness. This affidavit did not certify or swear to the authenticity
of either of the unauthenticated exhibits to the Plaintiffs Complaint. In fact, it failed to
even identify the alleged promissory note or alleged mortgage at all and failed to aver
that the plaintiff was the owner or the holder of the alleged mortgage debt.
On March 17, 2008, Appellee filed a Combined Motion, Notice and Memorandum
for Summary and Default Judgment (R. pp. 61-66). No new evidence was attached.
On March 28, 2008, Appellant filed a Motion to Dismiss for Lack of Subject Matter
Jurisdiction (R. pp. 67-68). This motion to dismiss has not been opposed or answered by
Appellee or addressed or expressly ruled upon by the Court.
On May 28, 2008, the Appellant filed his First Amended Answer, inclusive of Pleas
to the Jurisdiction and Affirmative Defenses (R. pp. 103-106).
On May 30, 2008, the Appellant filed his Response to Plaintiffs Combined
Motion for Summary and Default Judgment disputing all alleged facts of the Plaintiffs
Complaint and pointing out defects and insufficiencies of the purported evidence (R. pp.
110-119). In support of this response, the Appellant submitted his Affidavit of May 30,
2008 (R. pp. 120-123). The Appellant expressly averred within his response that he
needed additional time to conduct discovery (R. p. 117).
On June 9, 2008, Appellee filed a Reply to Defendants Response to Plaintiffs
Combined Motion for Summary and Default Judgment(R. pp. 124-129). Attached to the
reply were three unauthenticated exhibits purporting to establish additional facts disputed
by the Appellant, including a forged mortgage assignment (R. pp. 130-131), a forged
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document purporting to be a notice of default (R. pp. 132-134), and a document
purporting to be a HUD-1 Settlement Statement (R. pp. 135-137). Once again, none of
these records were accompanied by a sworn business records affidavit or a sworn
certification that such documents were true and correct copies as required by CR 56.05
and KRE 902 (11). Moreover, this untimely submission of unauthenticated documents as
evidence was expressly violative of the provisions of CR 6.04(B), CR 56.05 (requiring
that evidence accompany the summary judgment motion) and KRE 902(11)(B) and
operated as a surprise to the Appellant, as these were tendered after the Appellants last
chance to impeach the evidence in his summary judgment response.
On June 12, 2008, the Court entered an order and summary judgment in favor of
the Plaintiff, referring the matter to a Master Commissioner (R. pp. 152-159).
On June 23, 2008, Appellant timely filed a Motion to Alter, Amend or Vacate,
pursuant to CR 59.05 (R. pp. 171-192). The Appellant attached the Affidavit of William
A. Roper, Jr., a mortgage industry veteran, as an exhibit to this motion (R. pp. 194-208).
On July 9, 2008 the Court entered an order for Appellee to respond to the CR 59.05
motion within twenty days, and for the Appellant to reply within ten days (R. p. 215).
On July 17, 2008, Appellee filed its 2 paragraph response to the Appellants 59.05
motion (R. pp. 227-228), along with a Motion for Rule 11 Sanctions against Appellant
(R. pp. 216-226). Most conspicuous is the Plaintiffs failure to deny (a) that Laura
HESCOTTs affidavit was perjured, (b) that the alleged mortgage assignment was forged,
and (c) that the alleged notice of acceleration was also a bald forgery.
On July 28, 2008, Appellant filed a Reply to Plaintiffs Response to Motion to
Alter, Amend or Vacate (R. pp. 231-245), inclusive of Exhibits A I (R. pp. 246-272).
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On August 12, 2008, the Court entered an order affording the Appellee another
opportunity to respond to Appellants Motion to Alter, Amend or Vacate within 20
(twenty) days, after which the Motion was to be considered as submitted (R. p. 275).
On August 29, 2008, Appellee filed its second response to Appellants Motion to
Alter, Amend or Vacate (R. pp. 276-284). Attached to Appellee's second response was
yet another unauthenticated exhibit, which purports to be a letter of referral from Fidelity
National Foreclosure and Bankruptcy Solutions, of Mendota Heights [Dakota County],
Minnesota, to the law firm of Lerner, Sampson and Rothfuss LLP (R. p. 284). Once
again, there was no sworn business records affidavit proving up this letter. And once
again, the evidence was submitted after the Appellants last opportunity to respond to the
matter which was scheduled for decision by submission.
On September 4, 2008, Appellant filed a Motion for Rule 11 Sanctions (R. p.
285-299), inclusive of Exhibits A I (R. pp. 300-338).
On September 25, 2008, the Court entered an order overruling Appellant's Motion
to Alter, Amend or Vacate (R. pp. 343-344).
On October 24, 2008, Appellant filed a Notice of Appeal (R. p. 375), which was
accepted by the Circuit Court on January 9, 2009, in accordance with his Motion to
Proceed in forma pauperis (R. p. 351).
This Appeal follows. 1
ARGUMENT
1. The Court erred as a matter of law in failing to dismiss for lack of subject matter
jurisdiction due to the Appellee's conspicuous lack of standing.
The Appellant raised the issue of standing and subject matter jurisdiction several
1The case chronology is also discussed within the Appellants Motion of June 23, 2008 (R. pp. 171-172),
and in his Motion of September 4, 2008 (R. pp. 286-288).
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times, most notably in his Motion to Dismiss for Lack of Subject Matter Jurisdiction of
March 28, 2008, (R. pp. 67-68) and in his First Amended Answer (R. p. 103, para. 1-2).
The issue was preserved in the Appellants summary judgment response (R. p. 110, para.
1-7, p.113, para. 16-25) and motion to vacate (R. pp. 173). However, no preservation of a
subject matter jurisdictional issue is even necessary. A jurisdictional defect can be raised
at any time [CR 12.08 (3)] and even for the first time on appeal. Privett v. Clendenin, 52
S.W.3d 530, 532 (Ky. [2001]).
Appellant is entitled to a reversalof the order and a dismissalof this case as a
matter of law due to the Appellees lack ofstanding.
Standing is a jurisdictional issue that can be raised at any stage of an action. The
concept of standing is implicit in the Kentucky Constitution, Bill of Rights 14 which
states, in relevant part:
All courts shall be open, and every person for an injury done him
in his lands, goods, person or reputation, shall have remedy by due
course of law, and right and justice administered without sale,denial or delay [emphasis added].
Implicit in the open courts provision ofKentuckys Constitution is a restraint upon
the courts to the adjudication of actual justiciable controversies. Our stateConstitution
reinforces this restraint within 112(5), which states, in relevant part:
The circuit court shall have original jurisdiction of all justiciable
causes not vested in some other court [emphasis added].
These provisions limit access to the courts to real parties in interest suffering an
injury. The open courts provision expresses that courts are to be open for justiciable
causes. A justiciable cause has been defined by the Supreme Court of Kentucky as a
controversy in which a present and fixed claim of right is asserted against one who has
an interest in contesting it. West v. Commonwealth, Ky., 887 S.W.2d 338, 341 (Ky.
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[1994]).
The Kentucky Constitution places substantial restrictions on the power of judicial
intervention by limiting its availability to those real parties in interest who have suffered
an injury and pled a justiciable controversy. The limitation placed upon the power of
judicial authority via Section 14 of the Kentucky Constitution is a limitation upon the
courts subject-matter jurisdiction, and as such, it cannot be waived. Cann v. Howard,
850 S.W.2d 57, 59 (Ky. App. [1993]).
Subject-matter jurisdiction depends on the state of things at the time of the action
brought [quoting Chief Justice John Marshall]Mollan v. Torrance, 9 Wheat. 537, 539
(1824);2 see, e.g., Smith v. Sperling, 354 U.S. 91, 93, n. 1 (1957); St. Paul Mercury
Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289-290 (1938). From Justice Scalias
concurring opinion in Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Foundation, Inc.,
484 U.S. 49; 108 S. Ct. 376; 98 L. Ed. 2d 306; 1987 U.S. LEXIS 5030 (U.S. 1987).
A plaintiff has the affirmative burden of pleading and proving the Court's
jurisdiction, and that it has the constitutionally required standing to invoke that
jurisdiction.
1(a). The Court erred as a matter of law in failing to dismiss for lack of subject matter
jurisdiction where the Plaintiffs only evidence indicates acquisition of the alleged
indebtedness after commencement of the suit.
Accepting arguendo that the forged, unauthenticated and untimely mortgage
assignment proffered by Appellee were admissible, at best this assignment would be
some evidence that the Plaintiff might have acquired an interest in the alleged subject
mortgage on January 11, 2008, a month after the Plaintiffs commencement of suit.
2Mollan v. Torrance, 22 U.S. 537; 6 L. Ed. 154; 1824 U.S. LEXIS 390; 9 Wheat. 537 (U.S. 1824).
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Mollan v. Torrance teaches us that standing is determined at commencement of suit.
The instant case involves a question of subject matter jurisdiction as inLilly. The
circuit court has jurisdiction over justiciable claims. An unripe claim is not justiciable.
Because the Appellants claims were filed before they were ripe, the circuit court has no
jurisdiction over the instant case. Doe v. Golden & Walters, PLLC, 173 S.W.3d 260 (Ky.
App. [2005]).
The issue is elementary. The only evidence the Plaintiff has presented (said
purported evidence being unsubstantiated, hearsay documents) say that the Plaintiff
acquired its interest in the mortgage on January 11, 2008. The suit was commenced by
the filing of the Complaint on December 13, 2007. The Plaintiff cannot possibly have
had standing at the time of commencement, and therefore the Court wholly lacked
jurisdiction to hear the Plaintiffs Complaint, or determine the Plaintiff's cause.
Courts in other jurisdictions have been presented with substantially identical facts in
other recently decided cases. Several of these cases involve precisely the same plaintiff,
Deutsche Bank, claiming an interest using a post commencement mortgage assignment
purportedly executed by Option One Mortgage Corporation.3 ...in a foreclosure action, a
bank that was not the mortgagee when suit was filed cannot cure its lack of standing by
subsequently obtaining an interest in the mortgage." Wells Fargo Bank N.A. v. Byrd, 2008
Ohio 4603, 897 N.E.2d 722, 2008 Ohio App. LEXIS 3874 (Oh. App. 3rd Dist., 2008).
In these cases, the Plaintiff was found to lack standing and the Court dismissed the
cases for lack of jurisdiction. Despite the wealth of case law showing that justiciability
and standing are essential to subject matter jurisdiction, the issue of a post-
3See Exhibits C through I in Defendant's Reply to Plaintiff's Response to Defendant's Motion to
Alter, Amend or Vacate (R. pp. 251-272).
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commencement assignment seems to be a matter of first impression in Kentucky.
1(b). The Court erred as a matter of law in failing to dismiss for lack of subject matter
jurisdiction where the record is devoid of any evidence Appellee is the owner and
holder of the promissory note.
This issue has been preserved by Appellant in his Amended Answer (R. p. 103,
para. 1, 8, 9), in his summary judgment response (R. p. 110, para. 1-7), and Appellants
Affidavit of May 30, 2008, (R. p. 120, para. 3, 5, 9), and is supported by the affidavit of
William A. Roper, Jr. (R. p. 194, para. 5-12).
In the present caseAppellee has not and cannot demonstrate anypecuniary interest
in the subject matter of the suit as of the December 13, 2007, date of commencement.
Appellee cannot demonstrate an injury and therefore absolutely lacksstanding.
Appellee presents as evidence an alleged promissory note that identifies Option
One Mortgage Corporation as thepayee. This alleged promissory note is unindorsed
and there is no evidence that the promissory note was everdeliveredto Appellee
Deutsche Bank. Although Appellee's pleadings contain the bare allegation that Appellee
is the holderand the owner, it is clear from the evidence before the Court that this cannot
be. Negotiation of a negotiable instrument is by indorsementand delivery. See KRS
355.3-201 & 3-203. Absent indorsementand delivery, Appellee Deutsche Bank National
Trust Company cannot be the owneror the holderof the promissory note.
Absent indorsement, no person or corporation other than the originalpayee of a
negotiable instrument can possibly be either the owneror the holder. No rule will admit
one other than a named payee to obtain the benefit of an obligation unless he establish the
fact that he, not the payee, is entitled thereto. Such a fact cannot be established or
presumed from mere possession of the instrument. If a litigant has a cause of action
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which is denied by pleading, he must prove his case in accordance with the rules adopted
in the long practice of law. Cumberland Bank & Trust Co. v. Buchanan (two cases), 291
Ky. 300; 164 S.W.2d 473 (Ky. [1942]).
One cannot become a holder of a negotiable instrument without the instruments
having been negotiated to him. If the instrument is payable to the order of a designated
party, as the plaintiffs notes were, it is negotiated by delivery with any necessary
indorsement and an indorsement is effective for negotiation only when it conveys the
entire instrument or any unpaid residue. Vitols v. The Citizens Banking Company, 10 F.
3d 1227; 1993 U.S. App. LEXIS 30953 (6
th
Cir., 1993).
There is no other evidence within the record that supports the Plaintiff's unverified
allegations appearing within its original Complaint asserting that it is the ownerand the
holderof the alleged promissory note. There exists no evidence of indorsement of the
promissory note. To the contrary, inspection of the copy of the promissory note pleaded
by the plaintiff reveals that there is no indorsement. This is incontestable and establishes
that the Appellee cannot possibly be the owner or the holder as a matter of law.
There is no evidence within the record ofdelivery of the promissory note to the
Plaintiff. There is no delivery receipt, custodial receipt or any documentary evidence that
supports any assertion that the promissory note was ever physically delivered to the
plaintiff. An indorsement without delivery is of no effect. Commerce Union Bank v.
Seese, 237 Ky. 384; 35 S.W.2d 544; (Ky. App. [1933]). An instrument payable to order
is negotiated by the endorsement of a holder and completed by delivery. Foster's Admr.
v. Metcalfe, 144 Ky. 385; 138 S.W. 314; (Ky. App. [1911]).
Though the Court could readily find for the Appellant based upon Appellee's self-
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contradictory evidence alone, Appellant submitted with his motion to vacate an additional
Affidavit of William A. Roper, Jr., attached as Exhibit A, which affirmatively sets
forth within Paragraphs 5 through 12 reasons why Appellee cannot be the owneror the
holderof the alleged promissory note (R pp. 194-197). Within Paragraphs 13 through 27
of this affidavit, affiant William A. Roper, Jr., a mortgage industry veteran, discusses the
reasons that the Plaintiff must not be the holderof the mortgage and further avers that the
purported assignment pleaded by the Plaintiff is aforgery (R. pp. 197-201).
A more complete discussion of indorsement and delivery is in a Memorandum of
Law contained in Appellant's reply to Appllee's response to his motion to vacate under
CR 59.05 (R. pp. 238-239) and within the Affidavit of Mr. Roper (R. pp. 194-208).
Since the Plaintiff/Appellee cannot have been either the owner or the holder as a
matter of law, the Court must set aside the judgment and order that the Complaint be
dismissed for lack of subject matter jurisdiction.
2. The Court erred in failing to dismiss the Complaint pursuant to Rule 17.01 based
upon the Appellees failure to show that it was the real party in interest.
This issue has been preserved by Appellant in his Amended Answer (R. p. 103,
para. 2), in his summary judgment response (R. p. 110, para. 1-7).
The Appellant incorporates by reference each of the factual and evidentiary matters
discussed above with respect to lack of jurisdiction, as well as the authorities therein cited
distinguishing Kentucky law as to ownership and holdership of a negotiable instrument.
Separate from the Constitutional standing defects above, the Plaintiff also clearly
fails to prove, and instead shows conclusively, that it is not the real party in interest.
CR 17.01 requires that suits be brought within the name of the real party in interest
which is clearly not Appellee, as neither the promissory note, nor the mortgage, name
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Appellee as payee or grantee.
"The real party in interest is one who is entitled to the benefits of the action upon
the successful termination thereof. Stuart v. Richardson, 407 S.W.2d 716, 717 (Ky.
1966); Brandon v. Combs, 666 S.W.2d 755, 759 (Ky. App. 1983). A real party in interest
then, is a person, or entity, which wins, or loses, dependent upon the resolution of the
questions." Harris v. Jackson, 192 S.W.3d 297 (Ky. [2006]).
3. The Court erred in granting the Plaintiffs Motion for Summary Judgment.
The Appellants evidentiary objections are preserved in Appellant's summary
judgment response (R. pp. 110-119), his Affidavit (R. pp. 120-122) and his CR 59.05
motion (R. pp. 181-190).
The standard for grant and review of Summary Judgments in Kentucky is well
established. Only when it appears impossible for the non-moving party to produce
evidence at trial warranting a judgment in his favor should the Motion for Summary
Judgment be granted. Steelvest v Scansteel, 807 S.W.2d 476, 482 (Ky. [1991]).
Appellate Courts will not defer to the trial courts decision on summary judgment, and
the issue will be reviewed de novobecause only legal questions are involved. Hallahan
v. The Courier Journal, 138 S.W.3d 699, 705 (Ky. App. [2004]). The court must view
the record in the light most favorable to the nonmovant and resolve all doubts in his
favor. Hallahan, 138 S.W.3d at 705. Catron v Citizens Union Bank, 229 S.W.3d 54
(Ky. App. [2006]).
The circuit judge must examine the evidentiary matter, not to decide an issue of
fact, but to discover if a real or genuine issue exists. All doubts are to be resolved in
favor of the party opposing the motion. The movant should not succeed unless a right to
judgment is shown with such clarity that there is no room left for controversy and it is
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established that the adverse party cannot prevail under any circumstances. Pile v City of
Brandenberg, 215 S.W.3d 36 (Ky. [2006]).
3(a). The court erred as a matter of law in granting summary judgment to Appellee
when essential facts were unsupported by any summary judgment evidence.
In order to be entitled to a judgment in a mortgage foreclosure action, the plaintiff
must prove that it is the owner and holder of a valid promissory note of which the
defendant is the maker, that there has been a default under such promissory note, that the
plaintiff has satisfied all conditions precedent, including service of a notice of
acceleration, and that any affirmative defenses interposed by the defendant are
unsupported by any evidence. In order to prevail by summary judgment, the plaintiff
must prove that there are no issues of material fact as to each of these elements.
Where any element of the plaintiffs case is not supported by any valid summary
judgment proof, or where it is conclusively proven that the Plaintiff cannot be the owner
or the holderof the alleged indebtedness, summary judgment cannot be granted.
There is no evidence within the record that the plaintiff is either the owneror the
holderof the alleged promissory note and mortgage made out in favor of another payee
Option One Mortgage Corporation.
There is no express evidentiary identification of the alleged promissory note or
alleged mortgage at all by affidavit or otherwise. That is, other than the unverified
allegations within the Complaint and summary judgment motion itself, there is no
identification within the only affidavit submitted by the plaintiff as to the alleged original
principal amount, the alleged date of the instruments, the identification of the alleged
subject property, identification of a loan account number or any other particular
identifying characteristics of the alleged loan. NOTHING.
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No business accounting records were submitted which would reflect or support the
bare allegations of contract perjurer Laura HESCOTT as to the alleged amounts owed or
the fact of the alleged default. She merely alleges default of an unspecified account.
The facts she alleges are themselvesself-contradictory. She tells us in an affidavit
which purports to be dated December 26, 2007, that she is acting as an officer of Option
One in its alleged capacity as attorney in factfor the plaintiff (without furnishing any
evidence of such authority), but then herself executes theforgedmortgage assignment on
January 11, 2008, which purports to transfer the alleged mortgage indebtedness to
Appellee Deutsche Bank. How was she acting as Deutsche Banks agent on December
26, 2007, if the bank didnt acquire its interest in the alleged promissory note until
January 11, 2008?
One of the most remarkable uncontested facts is the Appellants averment that
Laura HESCOTTs affidavit is perjured and that the alleged mortgage assignment and the
alleged notice of acceleration were forged. This is undenied by the Appelle in any
pleading, motion, response or reply. The Appellees law firm hopes for the Court to
simply ignore the facts of this egregious misconduct, while carefully avoiding further
compounding of the known perjury and known forgery! Will the Appellee certify to the
Court in its Appellees Brief that the affidavit is not perjured or that the alleged mortgage
assignment is not forged?
3(b). The court erred in granting summary judgment to Appellee when all essential
elements necessary to a summary judgment in foreclosure were at least in dispute.
Appellant disputed every allegation of Appellees Complaint and the motion for
summary judgment in his Amended Answer (R. pp. 103-106), his Affidavit (R. pp.
120-123), and his summary judgment Response to Plaintiffs Motion for Summary and
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Default Judgment (R. pp. 110-119).
Within Paragraph 11 of his First Amended Answer (R. p. 104), Appellant
expressly denied that Appellee was the holderof the alleged mortgage. Within
Paragraphs 3 through 7 of his Affidavit (R. pp. 120-121), Appellant expressly disputed
the Appellee's ownership and holdership of the alleged promissory note and mortgage.
Appellant calls the Courts particular attention to this averment within Paragraph 5: The
Plaintiff has not shown that the alleged promissory note is indorsed in favor of the
Plaintiff or that the mortgage is assigned in favor of the Plaintiff.
Appellant denied Appellees ownership and holdership of the alleged promissory
note in Paragraphs 1 through 7 of his summary judgment response (R. pp. 110-111).
Appellant further denied the Appellee's holdership of the mortgage in Paragraphs 16
through 25 of this response (R. pp. 113-115).
A more thorough discussion of disputed facts can be found in Appellant's Amended
Answer (R. pp. 104-105, par. 8-19), in his response to summary motion (R. pp. 110-117),
and in his Affidavit (R. pp. 120-122). In his motion to vacate under CR 59.05 Appellant
presented a list of Facts Not In Dispute to the Circuit Court (R. pp. 177-178), and a list
of Facts In Dispute (R. pp. 183-187).
4. The Court erred in finding that the Plaintiff was the owner and the holder of the
mortgage when the Plaintiff's own submissions prove the contrary
The Appellant incorporates by reference each of the factual and evidentiary matters
discussed above in Issue 1, as well as the authorities therein cited distinguishing
Kentucky law as to ownership and holdership of a negotiable instrument.
A determination ofownership and holdership of the alleged promissory note and
alleged mortgage is a matter of law for the Court and is subject to de novo review.
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The Appellant expressly asks the Court of Appeals to reassess the trial courts
determination as to the ultimate question of the Appellees ownership orholdership of the
alleged promissory note de novo and to reach a determination that based upon the
absence of indorsement of the alleged promissory note and absence of any evidence of
delivery that the Appellee lacked ownership and holdership as a matter of law.
A trial court may also grant summary judgment in favor of a non-moving party
"where overruling the [movant's] motion for summary judgment necessarily would
require a determination that the [non-moving party was] entitled to the relief asked, [and]
a motion for summary judgment by the [non-moving party] would have been a useless
formality." Collins v. Duff, 283 S.W.2d 179, 183 (Ky. 1955). Osborne v Commonwealth
of Kentucky, 185 S.W.3d 645, 650-1; 2006 Ky. LEXIS 50 (Ky. [2006]).
The Appellant expressly asks the Court to enter a defensive summary judgment on
the merits and dismiss the case with prejudice.
5. The court erred in finding that Appellee had satisfied conditions precedent.
This issue is preserved in Appellant's Amended Answer (R. p 103, para. 4 and p.
104, para. 10) and in his CR 59.05 motion (R. pp. 189-190).
The purported notice of acceleration of October 4, 2007, submitted with Appellee's
June 9, 2008, Reply to Response to Combined Motion for Summary and Default
Judgment (R. pp. 135-137) was absolutely inadmissible as evidence supporting the
Plaintiffs motion for summary judgment for several reasons.
First, it did not conform to the express provisions of CR 56.01 that affidavits in
support of a motion for summary judgment are to be submitted with the motion for
summary judgment. Second, it did not conform to the express provisions of KRE
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902(11) in terms of either authentication or timeliness of submission. Third, there is no
evidence the purported letter was ever actually mailed. Appellant expressly denied in his
Affidavit (R. p. 121, para. 8) that he was ever served any notice of acceleration, or notice
of default, by any entity.
Perhaps most importantly, this forgery fails to even meet the requisites of a notice
of acceleration, as no actual acceleration is shown, and it merely expresses an intention to
accelerate at some unspecified future date.
The Appellant expressly incorporates by reference all other argument and authority
regarding the notice of acceleration and Appellees failure to satisfy conditions
precedent appearing within his CR 59.05 motion (R. p. 189-190).
6. The court erred in finding that the subject property was indivisible.
Appellant expressly denied the subject property is indivisible in his Amended
Answer (R. p. 104, para. 17), in his summary judgmentresponse (R. p. 116, para. 32), his
Affidavit (R. p. 121, par. 10) and his CR 59.05 motion (R. p. 186).
The Plaintiffs Complaint alleges within paragraph 4: Plaintiff further says that the
real estate has improvements thereon and is indivisible for purposes of sale without
materially impairing its value and the security of plaintiffs lien. The only support for
this allegation is the affidavit of Laura HESCOTT.
HESCOTTs affidavit of December 26, 2007, avers Affiant further states that the
property which is security for the note obligation herein consists of a residential lot with
improvements thereon and cannot be divided for the purposes of sale without materially
impairing its value and the security of plaintiffs lien. The first part of this sworn
averment is clearlyfalse, as the property is shown within the plaintiffs own filings to
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consist of two lots (Lots 3 and 4) not one. The second part of the averment is clearly
conclusory and the HESCOTT affidavit fails to furnish any persuasive basis as to why the
Court should believe such an averment of a person who is: (a) out of state and unfamiliar
with Henry County real estate, (b) altogether unacquainted with the subject property and
has never set foot on the property, (c) unqualifiedto express an expert opinion as to the
value of the property when sold (i) as a single two lot tract, (ii) sold separately as two
single lots, and/or (iii) further subdivided into smaller building parcels. Ms. HESCOTT
does not set forth that she is a qualified and licensed Kentucky real estate appraiser
pursuant to KRS Chapter 324A. Neither does she set forth that she is a registered
Professional Engineer or Land Surveyor pursuant to KRS Chapter 322. She falsely avers
that she has personal knowledge when it is abundantly clear that she has none.
The legal description of the subject property provided by Appellee in the original
complaint (R. p. 21) describes the property as Lots #3 and #4 of Wooded Hills Farms
Subdivision, thereby directly contradicting the sworn averment of Laura HESCOTT.
Public records available in the Henry County Recorders Office show lot #3 as being
5.959 acres with 595.95' of road frontage, and lot #4 as being 8.918 acres with 1675.81'
of road frontage. The Appellant would submit that, as the person who constructed the
improvements on the subject property and as a resident of the property and of Henry
County, his lay understanding of the property metes and bounds, the survey, the plat and
the situation of the improvements thereon, supplemented by the record plat, is superior to
the unschooled conclusory opinions of a Minnesota contract perjurer.
The Appellant asks the Court to examine the property description of the subject
property and to takejudicial notice of the recorded plat for the Wooded Hill Farms
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subdivision, which is recorded with the Henry County Clerk at Book 123 at Page 402.
The Appellant asks the Court to find that the subject property is divisible as a
matter of law and that he is entitled to defensive summary judgment as to this point.
7. The court erred by admitting into evidence unauthenticated copies of documents
that did not comply with Kentucky Rules of Evidence and under circumstances
impermissible by the Rules of Civil Procedure.
This issue is preserved in Appellant's summary judgment response (R. p. 111, par.
4, and R. p. 114, par. 19) and in Appellant's CR 59.05 motion (R. pp. 187-190).
Moreover, no preservation of error is required when inadmissible evidence is untimely
submitted by surprise in a manner that inherently denies a party the opportunity to object.
The Appellee attached no evidence to its motion for summary judgment. Instead,
the motion only refers to the unauthenticated copy of the alleged promissory note and
alleged mortgage attached to its Complaint, and only refers to the affidavit of Laura
HESCOTT, attached as an exhibit to its response to the Appellants motion to dismiss.
Laura HESCOTTs affidavit does not authenticate, certify or otherwise prove up the
hearsay exhibits attached to the Complaint.
The Kentucky Rules give express guidance as to what evidence is to accompany
motions generally, including motions for summary judgment. CR 6.04 says, in part:
When a motion is supported by affidavit, the affidavit shall be
served with the motion; and, except as otherwise provided in Rule
56.03, opposing affidavits may be served not later than one day
before the hearing, unless the court permits them to be served atsome other time [emphasis added].
The evidence is to accompany the motion. This puts the opposing party on notice
not only as to the provisions of the motion, but also of the proof offered in support.
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While the plaintiffs only affidavit was served before the motion for summary
judgment rather than with the such motion, the Appellant finds no fault with this breach
of CR 6.04. Early filing of an affidavit or of proof is consistent with the intent that the
party opposing the motion be given notice of the proffered proof and the due process
notice and opportunity to be heard in opposition requirement.
Butpost motion tender of proof by the movant is neither contemplated nor
permitted by the Rule. The Rule says that opposing affidavits may be served not later
than one day before the hearing, unless the court permits them to be served at some other
time. It does not make provision for reply or rebuttal affidavits by the movant. The
Rule requires that all affidavits by a movant shall be served with the motion and that only
opposingaffidavits may be offered after that.
Where the motion is set for determination by a court ordered schedule, tardy
submission of evidence denies the opposing party the opportunity to deliberately assess,
evaluate, contest and/or impeach the tardy documents, denying the opposing partys
procedural due process rights under the U.S. Constitution, his due course of law rights
under the Kentucky Constitution and his express rights under the Rules.
This language of 6.04 is mirrored in CR 56.03 which says, in pertinent part:
The motion shall be served at least 10 days before the time fixed
for the hearing. The adverse party prior to the day of hearing mayserve opposing affidavits. [emphasis added]
Again the Rule contemplates that the non-moving, adverse party is entitled to serve
opposing affidavits. There is no entitlement for the moving party to serve supplemental
affidavits or evidence afterthe filing of its motion. This is a common sense result, for in
a summary judgment determination ifany of the facts are contested, the moving party is
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not entitled to summary judgment at least as to the contested points. Provision of rebuttal
affidavits by the moving party inherently suggests either that (a) the movant failed to
make its evidentiary case with its motion, or (b) the facts are contested and the movant is
seeking to overcome the defendants facts by further evidence, which is incompatible
with the summary judgment standard. If the opposing party contests the facts by valid,
admissible evidence, no summary judgment is possible.
CR 56.05 gives us further instruction regarding the filing of other documentary
evidence which might accompany a summary judgment motion:
Sworn or certified copies of all papers or parts thereof referred
to in an affidavit shall be attached thereto or served therewith. The
court may permit affidavits to be supplemented or opposed bydepositions or by further affidavits.
This provision teaches us that other documentary proof is to be attached to the
affidavits. The Kentucky Rules of Evidence does not contemplate the pleading of
business records orcopies of instruments without an authenticating affidavit.
The provisions of the Kentucky Rules of Civil Procedure must be read in
conjunction with the Kentucky Rules of Evidence.
Provisions of KRE 902 relating to Self-Authentication provide:
Extrinsic evidence of authenticity as a condition precedent to admissibilityis not required with respect to the following:
(11)Business records.
(A) Unless the sources of information or other circumstances indicate lack
of trustworthiness, the original or a duplicate of a record of regularlyconducted activity within the scope of KRE 803 (6) or KRE 803 (7),which the custodian thereof certifies:[emphasis added]
(i) Was made, at or near the time of the occurrence of the matters
set forth, by (or from information transmitted by) a person with
knowledge of those matters;
(ii) Is kept in the course of the regularly conducted activity; and
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(iii) Was made by the regularly conducted activity as a regular
practice.
(B) A record so certified is not self-authenticating under this paragraph
unless the proponent makes an intention to offer it known to the adverse
party and makes it available for inspection sufficiently in advance of its
offer in evidence to provide the adverse party with a fair opportunity tochallenge it [emphasis added].
(C) As used in this paragraph "certifies" means, with respect to a
domestic record, a written declaration under oath subject to the penalty ofperjury,
In the case ofMatthews v. Commonwealth,163 S.W.3d 11, 27 (Ky.
[2005]), the court held as follows:
The Kentucky Supreme Court overrules Young v. Commonwealth, 968S.W.2d 670 (Ky. 1998), to the extent that it appears to allow business records
to be authenticated without extrinsic evidence under Ky. R. Evid. 902 (8) by
simply attaching a separate notarized document to them instead of followingthe procedure outlined in Ky. R. Evid. 902 (11). Business records, including
medical records from out-of-state hospitals, must be authenticated by a live
foundation witness or meet one of the foundation exceptions listed in Ky. R.Evid. 803 (6), namely Ky. Rev. Stat. Ann. 422.300, another statutory
exception, or Ky. R. Evid. 902 (11).
None of the following documents submitted as evidence by Appellee and accepted
by the court have any form of custodial certification whatsoever and do not comply with
the above KRE 902(11):
The unauthenticated copy of the alleged promissory note (R. pp. 5-7).
The unauthenticated copy of the alleged mortgage (R. pp. 8-21).
The unauthenticated copy of the alleged mortgage assignment (R. p. 130).
The unauthenticated copy of the alleged notice of acceleration (R. p. 132).
The unauthenticated copy of the alleged HUD-1 Settlement Statement (R. p.100).
The unauthenticated copy of the alleged referral letter (R. p. 284).
In addition to completely lacking certification in the form of a sworn affidavit by an
actual custodian of records with personal knowledge of the correctness and validity of the
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records, in the cases of the alleged mortgage assignment, the alleged notice of
acceleration, the alleged HUD-1 Settlement Statement, and the alleged referral letter,
each of these documents was submitted at such late hour as to be an impermissible
surprise, in conflict with KRE 902(11)(B), rendering them inadmissible for consideration
as summary judgment evidence. The Plaintiff's surprise submission of these records by
its June 9, 2008, filing (after the Defendants only permitted summary judgment response
was made), being merely one day before the submission deadline, and three days before
the Courts decision by submission (without hearing) denied the Appellant his rights
under the Rules and his due process right to confront and impeach the purported
evidence.
In almost every setting where important decisions turn on questions of fact, due
process requires an opportunity to confront and cross-examine adverse witnesses. E.g.,
ICC v. Louisville & N. R. Co., 227 U.S. 88, 93-94 (1913); Willner v. Committee on
Character & Fitness, 373 U.S. 96, 103-104 (1963). Goldberg v. Kelly, No. 62, 397 U.S.
254; 90 S. Ct. 1011; 25 L. Ed. 2d 287; 1970 U.S. LEXIS 80 (U.S. 1970).
Provisions of CR 56.05 and KRE 902 (11)(B) are not merely evidentiary
suggestions subject to whimsical neglect by plaintiffs and courts, but rather reflect
Constitutional procedural due process imperatives. Kentucky Courts cannot lightly allow
a foreclosure plaintiff to simply belatedly submit purported evidence into the record after
the defendants last opportunity to respond. If tardy and surprise pleading of evidence is
ever allowed or permitted, why would any plaintiff ever expose its evidence to scrutiny
and impeachment by adherence to the requirements of CR 56.05 that summary judgment
evidence accompany the motion rather than sneaking evidence into a case after the
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defendants opportunity to respond has passed?
The Courts reliance on the untimely surprise pleading of the mortgage assignment
and the purported notice of acceleration deprived the Appellant of his due process
rights under the Fourteenth Amendment and his due course of law rights under the
Kentucky Constitution. This evidence must therefore be excluded in determining the
sufficiency of the evidence and the Appellees entitlement to summary judgment.
If each document improperly submitted as evidence without the required
authentication or certification is excluded, the Appellees sole affirmative evidence is the
perjured affidavit of Laura HESCOTT, which fails to identify the alleged promissory note
or alleged mortgage or even aver that the Plaintiff is the ownerand the holderof the
mortgage. Such exclusion of evidence must necessarily result in the conclusion either
that the plaintiff lacked standing to bring the suit or, alternatively, that the Appellant has
conclusively proven that he was entitled to defensive summary judgment and dismissal
with prejudice.
8. The court erred in denying the Appellants Motion to Alter, Amend or Vacate,
pursuant to CR 59.05.
The Appellant incorporates by reference all of the arguments appearing within
Issues 1 through 7, as well as the arguments appearing within his Motion to Alter, Amend
or Vacate, pursuant to CR 59.05. The Appellant contends that the Courts failure to set
aside its judgment of June 12, 2008, was a gross abuse of discretion.
The Appellant also expressly calls the Courts attention to the utter failure of the
Appellee to deny that the Affidavit of Laura HESCOTT wasperjured, that the alleged
mortgage assignment wasforgedor that the alleged notice of acceleration was a bald
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fabrication created solely for use as false, fraudulent and sham evidence in the underlying
proceeding. The Appellant supported his allegations ofperjury andforgery by affidavit.
Due to the seriousness of the Appellees criminal conspiracy and fraud on the Court,
the Appellant expressly requests that the Court of Appeals takejudicial notice of the
following additional readily verifiable facts.
Laura HESCOTT is shown by her own affidavit to be an employee ofFidelity
National Foreclosure Solutions, a firm purportedly furnishing foreclosure support
services to the mortgage industry, but actually specializing in contractforgery and
perjury. One of many such affidavits can be found within the case materials in the Ohio
case ofWells Fargo National Bank Minnesota NA v Sherry J. Lesher, Case No. CV
2007-07-4936, a case in the Court of Common Pleas, Summit County, Ohio. That
Courts records are available online at no charge at:
http://www.cpclerk.co.summit.oh.us/Disclaimer.asp?toPage=SelectDivision.asp
The Movant respectfully requests the Court to takejudicial notice of the affidavit
Laura HESCOTT filed in that case (Shown within the Docket as LAURA HESCOTT'S
AFFIDAVIT OF STATUS OF ACCOUNT AND NON-MILITARY AFFIDAVIT, 28
Dec 2007). The Court will note this affidavit is dated two days after the perjured affidavit
in this case. The Appellant also asks the Court to takejudicial notice that the notary who
authenticated Ms. HESCOTTs affidavit in this case, Matthew BANASZEWSKI, is the
same notary who authenticated the HESCOTTs affidavit in theLeshercase.
The Appellant also expressly asks the Court to take judicial notice of the documents
filed and the decisions to date in the caseIn Re Wilson, U.S. Bankruptcy Court, Eastern
District of Louisiana, Case No. 07-11862. The records are available through PACER.
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Within these records, the Court will find that Laura HESCOTTs employer is now a party
to that action and has been made subject to discovery by the United States Trustee, be-
cause that firm is being investigated for a pattern of fraud in preparingfalse affidavits
used in Court proceedings. Ms. HESCOTTs co-worker Dory GOEBEL was found to
have filed afalse affidavitin that case and has already been sanctioned. This was not the
first time that Ms. GOEBEL was found to have filed a false affidavit.
CONCLUSION
The Appellant is absolutely entitled to a dismissal of the instant action for lack of
subject matter jurisdiction and lack of standing. Appellee's case is devoid of any
evidentiary support. The Court must bear in mind the summary judgment standard in
determining whether the plaintiff was entitled to judgment as a matter of law. Clearly,
every major allegation was disputed by Appellant and judgment and order of
foreclosure/sale must be reversed if the Court finds that there were disputes of facts
essential to the Appellee's establishment of aprima facia case.
The trial court erred in granting Appellee's motion for summary judgment. This
decision should be reversed. The court erred in not dismissing the case for lack of subject
matter jurisdiction. This case should be dismissed.
For the above reasons Appellant prays the court reverse the summary judgment
order and remand this case to the Henry Circuit Court with directions to dismiss the case.
Respectfully Submitted
___________________
Glenn Augenstein932 Wooded Hills Road
Pendleton, KY 40055
502-743-0504