petition for a writ 5
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PETITION FOR A WRIT OF CERTIORARI
___________________
The Court of Appeal for the Ninth Circuit as well as other federal
appellate courts have decided an important question of federal law that has
not been, but should be, settled by this Court, or has decided an important
federal question in a way that conflicts with relevant decisions of this Court.
Petitioner Reuben Nieves, a homeowner, like millions in danger of being
foreclosed non-judicially or who have been foreclosed non judicially, respectfully
prays that a writ of certiorari be issued to review the judgment of the Ninth Circuit
Court of Appeal. The issue is one of First Impression to this Court because this
court has never decided whether a federally chartered bank corporation created
under an act of Congress to provide an important governmental function could use
a non judicial procedure that allows the taking of a property interest without a
hearing thus violating the 5th Amendment. This Court has made numerous
decisions which would have been relevant in determining whether non judicial
procedures were applicable given the nature of these corporations. Specifically,
the issue involves a provision in a mortgage contract which allows the
bank( Wachovia Mortgage fsb), a corporation federally created and controlled by
the director of the Office of Thrift Supervision to use a non-judicial foreclosure
to redeem the property. It is an issue that goes to the core of the nature of federally
chartered corporations created under special law providing an important
governmental function. This case deals with the rights and obligations of these
corporations even to put such a provision in a contract. It is an issue which, in the
context of the current economic crisis and the massive foreclosures, sweeps thebreadth of this nation like a plague destroying families and communities as it
spreads, swelling the homeless population in its wake. This court is asked, as it
was asked in the case of Fidelity Federal S & L Assn v Reginald De La Cuesta,
458 U.S. 141 (1982) , to decide upon an issue of great importance on another
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provision in a mortgage contract involving a right or immunity guaranteed by the
Constitution that forms an essential element of plaintiffs claim. An issue that is
greater even than was decided in that case because it involves a constitutional right
affecting the lives of millions of families across this nation. Moreover, the
decision in the Ninth Circuit, as well as other appellate decisions regarding non
judicial foreclosures contravene several Supreme Court decisions regarding the
nature of corporations incorporated for a public purpose under an Act of Congress
which would affect whether these corporations could use a non judicial foreclosure
without violating the 5th Amendment due process clause.
OPINIONS BELOW
The Opinion of the Ninth Circuit Court of Appeal is attached as
APPENDIX_________
The Opinion of the District Court is attached as APPENDIX_______
JURISDICTION
The Ninth Circuit entered its judgment on _________. A petition for rehearingwas denied on ___________, 2009
The Supreme Court has jurisdiction under 12 U.S.C. 1254(1)
CONSTITUTIONAL PROVISIONS
AND STATUTES INVOLVED
I. THE 5TH AMENDMENT to the Bill of Rights states :
No person shall be. . .deprived of life, liberty, orproperty, without due
process of law.
II. 12 U.S.C 1461 Et seq.The HOME OWNERS LOAN ACT
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AN ACT To provide emergency relief with respect to home mortgage
indebtedness, to refinance home mortgages, to extend relief to the
owners of homes occupied by them and who are unable to amortize
the debt elsewhere, to amend the Federal Home Loan Bank Act, to
increase the market the obligations of the United States and for other
purposes:
III . Sec. 5[12 U.S.C. 1464] FEDERAL SAVINGS ASSOCIATION
(a) In GENERALIn order to provide thrift institutions for the
deposit of funds and for the extension of credit for homes and other
goods and services, the Director is authorized, under such regulations
as the Director may prescribe
(1) To issue charters therefore, giving primary consideration of the bestpractices of thrift institutions in the United States. The lending and
investment powers conferred by this section are intended to encourage such
institutions to provide credit for housing safely and soundly.
(2) To issue charters therefore, giving primary consideration of the best
practices of thrift institutions in the United States. The lending and
investment powers conferred by this section are intended to encourage such
institutions to provide credit for housing safely and soundly.
IV. 12 cfr 560. Applicability of law.
Occupation of field. Pursuant to sections 4(a) and 5(a) of the HOLA,
12 U.S.C. 1463(a), 1464(a), OTS is authorized to promulgate
regulations that preempt state laws affecting the operations of federal
savings associations when deemed appropriate to facilitate the safe
and sound operation of federal savings associations
V. 12 U.S.C. 38. The National Bank Act
The Act entitled An Act to provide a national currency secured by a
pledge of United States bonds, and to provide for the circulation and
redemption thereof, approved June 3, 1864, shall be known as The
National Bank Act.
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VI. 12 U.S.C. 24. Corporate powers of associations
Third. To make contracts.
Fourth. To sue and be sued, complain and defend, in any court of law
and equity, as fully as natural persons.
Fifth. To elect or appoint directors, and by its board of directors to
appoint a president, vice president, cashier, and other officers, define
their duties, require bonds of them and fix the penalty thereof, dismiss
such officers or any of them at pleasure, and appoint others to fill their
places.
Sixth. To prescribe, by its board of directors, bylaws not inconsistent
with law, regulating the manner in which its stock shall betransferred, its directors elected or appointed, its officers appointed, its
property transferred, its general business conducted, and the
privileges granted to it by law exercised and enjoyed.
Seventh. To exercise by its board of directors or duly authorized
officers or agents, subject to law, all such incidental powers as
shall be necessary to carry on the business of banking. . .
VII. 28 USC 453-OATHS OF JUSTICES AND JUDGES
Each justice or judge of the United States shall take the following
oath or affirmation before performing the duties of his office:
I,______, do solemnly swear (or affirm) that I will administer
justice without respect to persons, and do equal right to the poor
and to the rich, and that I will faithfully and impartially discharge
and perform all the duties incumbent upon me as___under the
Constitution and laws of the United States. So help me God
STATEMENT OF THE CASE
This is an action brought by plaintiff for declarative and injunctive relief
from a 5th Amendment violation as applied from an impending non-judicial
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foreclosure for the non-payment of installment payments required under the loan
agreement between REUBEN NIEVES, plaintiff and Wachovia Mortgage fsb,
formally World Savings Bank fsb, defendants based, in part, on defendants
election to use a non-judicial foreclosure procedure which would deny plaintiff
procedural due process under the 5 th amendment, and beyond the scope of a law of
Congress. Plaintiff alleges that the provision in the mortgage agreement requiring
plaintiff to transfer his interest to a trustee with a power of sale is therefore ultra
vires. Plaintiff alleges that Wachovia Mortgage fsb, is an instrumentality of the
Federal Government, and as a federally chartered bank serving a public purpose
in accordance with a federal mandate. Plaintiff , a 66 year old disabled real estate
professional, whose livelihood was damaged by the wrongful acts of all lenders
including defendant who befouled the real estate market by their participation in
the housing meltdown. Plaintiff alleges that Defendant, as federally chartered
bank, serves a public purpose pursuant to the Home Owner Loan Act(HOLA) .
This action is also based on the wrongful and reckless underwriting standards
which defendant, in concert with all lenders who used stated income products, with
adjustable rate mortgages and negative amortization and thereafter extended credit
to people who could default upon the loan adjusting. The wrongful conduct of
defendants had a chilling effect on the real estate market with the massive
amounts of foreclosures that the lenders thrust unto the real estate market hugely
discounting these homes and affecting the value of the surrounding homes to the
point where homeowners could not refinance or sell their homes without incurring
huge losses. Defendants actions undermined plaintiffs ability to repay his
mortgage debt to defendant. Plaintiff alleges that defendants wrongful conduct ledto plaintiff experiencing extreme emotional distress, and loss of confidence as well
as hypertension. Defendants wrongful conduct affected his credit worthiness, and
he has been subjected to humiliation in that plaintiff has always prided himself in
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Plaintiff brought this action under 28 USC 1331 alleging WACHOVIA
MORTGAGE fsb[formally World Savings fsb], a federally chartered bank,
incorporated a provision into his loan agreement which required plaintiff to
irrevocably transfer his interest to a trustee with a power of sale in favor of the
lender upon default of plaintiffs installment payments on the loan. Plaintiff alleges
that this is a non-judicial procedure which does not allow a hearing before
plaintiffs property interest is taken from him is a denial of procedural due process
in violation of the 5th Amendment. Plaintiff alleges that by virtue of the character
as a federally chartered corporation created under an act of Congress Home
Owner Loan Act(HOLA) to provide and important public function the
corporation is prohibited from applying this provision which would deny
procedural due process. Plaintiff alleges that the lending functions of Wachovia
Mortgage fsb are governmentaland not proprietary. Furthermore, the denial of a
preliminary injunction of the trustees sale by the Ninth Circuit was more than
abuse of discretion and a clear indication of disparate and unfair treatment of
which indicates an animus toward pro se informa pauperis litigants.
ARGUMENT
I. BANKS USE OF NON-JUDICIAL FORECLOSURES
IS NOT WITHIN THE SCOPE OF A LAW OF CONGRESS
A. BANKS CAN BE A GOVERNMENTAL
ACTOR IN VIOLATION OF THE 5TH AMENDMENT
Only by sifting facts and weighing circumstances can the nonobvious
involvement of the State in private conduct be attributed its true significance
Burton v. Wilmington Parking Authority, 365 U.S. 715 (1961)
With that advice, we must pierce the corporate veil to determine the involvement
of the federal government to this corporate entity.
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On June 24th, 2008 Judge Gregory G. Hollows issued his ORDER and
FINDINGS AND RCOMMENDATIONS APPENDIXpg. 26, lns 16-22 in
which he stated:
The court dismissed plaintiffs 1983 claim on the ground thatdefendants are not state actors and are not acting in conjunction with
state actors or implementing state policy, and that national banking
legislation does not confer a right protected by the Civil Rights Act.
The court dismissed plaintiffs last claim on the similar ground that
defendants are not federal instrumentalities having a symbiotic
relationship with the federal government but private entities whose
conduct is not actionable under the federal constitution. Since no
federal claims remained, the court also dismissed plaintiffs
remaining, pendant state law, claims.
On August 6th, 2008 Judge Morrison C. England adopted Magistrate
Hollows Recommendation and issued a final Order dismissing plaintiffs
complaint without leave to amend. See APPENDIX, p.59, ln 7 .
Plaintiff contends that the loan agreement signed by plaintiff on Sept. 29, 2006,
contains a provision Irrevocably granting and conveying the Property to the
Trustee, in trust for Lender, with a power of sale subject to the terms of the
Security Instrument for a default in the payments to the lender.(1st amendedcomplaint, APPENDIX, pg. 14,lns 23-28. As national banks and federal savings
banks, Defendants, and Does 1-10 have a symbiotic relationship with the federal
government(1st amended complaint, APPENDIX, pg 9, lns 11-15.
National banks and federal savings banks are agencies of the United States
created to promote its fiscal policies. APPENDIX, p. 15, lns 6-7. National banks
and federal savings banks benefit by not paying state taxes, avoiding state
predatory lending laws through the concept of Federal preemption, allowing them
to export high interest for the credit card thus avoiding the state usury laws.
Federal Savings banks also have the same benefits and are no less
instrumentalities of the federal government than national banks whose purpose is
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to promote its fiscal policies. Alexander Hamilton argued that the Central Bank
was necessary to the nation in cases of emergency such as the financing of war, to
extend credit for Agriculture, trade, and to support the growth of manufacturing in
the United States. Hamilton believed that there was a symbiotic relationship
between agriculture, commerce, and manufacturing, and that progress in each of
these sectors was necessary for Americas economic development. (In the Report
of Credit II, Dec. 1790)
B. A PARTY MUST STATE FACTS
SUFFICIENT TO STATE A EITHER A
5th or 14th AMENDMENT DUE PROCESS CLAIM
Non-judicial foreclosures have been the subject of a flurry of cases including
the most currentApaov. San Diego Home Loans, Inc.,324 F3d 1091, Ninth
Circuit (2002) a California corporation. MargaretApao lost her home to a
foreclosure and sale under Hawaiis non-judicial foreclosure statute. The federal
district court dismissed the complaint for failure to state a claim and that the sale
was a purely private remedy. Apao appealed to the Ninth Circuit. The Ninth
Circuit affirmed the district courts decision on the grounds that previous decisions
of appellate courts upheld the constitutionality of similar non-judicial procedures.
The Ninth Circuit held inApao that the case ofCharmicorv. Deaner, 572 F2nd
694 was controlling although the plaintiff inApao attempted to distinguish it.
In Charmicor, the plaintiff claimed that the statute offended due process by failing
to provide a pre-sale hearing and that it offends civil rights statutes and the equal
protection clause by discriminating against appellants shareholders, who are
black. The court in Charmicor noted that the complaint failed to state a claim
for relief under the civil rights statutes, because the record was utterly barren of
any facts or allegationsthat could support a claim under the equal protection
clause, the Ninth Circuit affirmed. The court in these cases made no reference toSeveral Supreme Courts decisions which examined the nature of corporations
created under an act of Congress and were content with the notion that Congress
could adopt the local customs on debtor creditor relations without further analysis.
C. CONGRESSIONALLY CONFERRED POWERS
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MUST BE CONSISTENT WITH THE
STATUTES AND THE FEDERAL
CONSTITUTION
The power of Congress is vast, but not unlimited. Congress has the power
to confer authority to provide rules and regulations on any department or officer of
the government consistent with the statutes and the Constitution and within the
letter and spirit of the Constitution. Boske v Comingore, 177 U.S. 459(1900)
This includes the Office of Thrift Supervision and the Office of the Comptroller of
the Currency. It follows that the powers, enumerated and incidental, conferred on
National Banks as well as Federal Savings Associations/Banks must be consistent
with the statutes and the Constitution of the United States and with the letter and
spirit of the Constitution. The power to foreclose is an incidental power
because it is necessary to effectuate the enumerated powers of a bank in providing
residential mortgage lending. While the power to foreclose judicially is consistent
with the Constitution the power to foreclose non judicially is not because it
does not allow a hearing. Those powers not consistent with the Constitution are
therefore--unconstitutional. In First National Bank of Bay City v. Fellows, 244
U.S. 416 pgs 419,420 (1917) CHIEF JUSTICE WHITE quoting Justice
Marshall said :
with respect to the means by which the powers it confers [to nationalbanks] , let it be within the scope of the Constitution, and all
means which are appropriate, which are plainly adapted to that
end, which are not prohibited, but consistent with the letter and
spirit of the Constitution, are constitutional " [underline and bold
added]
D. NATIONAL BANKS ARE PUBLICNOT PRIVATE CORPORATIONS
InEaston v. Iowa,188 U.S.220 (1903) the Court said of national banks:
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. . .[W]e cannot concur in the suggestions that national banks, in respect
to the powers conferred upon them, are to be viewed as solely organized
and operated for private gain.
The Court inEaston went on to say at 188 U.S. 220 at p. 230 that theprinciples enunciated inMcCullough v Maryland, 17 U.S. 316(1819), and in
Osborn v Bank of United States, 22 U.S.738 (1824), though expressed in respect
to banks incorporated directly by acts of Congress, were still applicable to the
later and present system of national banks. The Court cited with approval the
holding of the latter as expressed by Chief Justice Marshall:
The bank is not considered as a private corporation whose principal
object is individual trade and individual profit, but as a publiccorporation created for public and national purposes. That the mere
business of banking is, in its own nature, a private business, and may be
carried on by individuals or companies having no political connection
with the government, is admitted, but the bank is not such an individual
or company. It was not created for its own sake or for private purposes.
It has never been supposed that Congress could create such a
corporation.[underline added]
The court inEaston goes on to say:
'National banks are instrumentalities of the Federal government,
created for a public purpose, and as such necessarily subject to the
paramount authority of the United States. It follows that an attempt
by a state to define their duties or control the conduct of their affairs is
absolutely void, wherever such attempted exercise of authority
expressly conflicts with the laws of the United States, and either
frustrates the purpose of the national legislation or impairs the
efficiency ofthese agencies of the Federal government to discharge
the duties for the performance of which they were enacted.
Our conclusions, upon principle and authority, are that Congress,
having power to create a system of national banks, is the judge as to
the extent of the powers which should be conferred upon such banks,
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and has the sole power to regulate and control the exercise of their
operations[bold added]
In view of the holding in Osborn which Justice Marshall held that banks
were public and not private bank corporations,which was approved and held
applicable to later national bank corporations not directly created by
Congress by the Supreme Court inEaston, why should we now consider
national banks private corporations? And why not consider them agencies of the
Federal government as referred to inEaston? And why should the same
reasoning not apply to federal savings banks such as WACHOVIA
MORTGAGE, fsb?
In Osborn at p. 22 U.S. 823 the court said of these national banks:
The charter of incorporation not only creates it, but gives it Every
faculty which it possesses. The power to acquire rights of any
description, to transact business of any description, to sue on those
contracts, is given and measured by its charter, and that charter is a law
of the United States. Take the case of a contract, which is put as the
strongest against the Bank. . . [H]as this being a right to make this
particular contract? .. . .[T]his question, too, depends entirely on a law
of the United States [underline added]
The court in Osborn at p. 823, made it clear that federally
chartered corporations could . . .acquire no right, make no
contract, bring no suit, which is not authorized by a law of the
United States. It is not only itself the mere creature of law, but all its
actions and all its rights are dependent on the same law.[underline
and bold added]
InRunyan v. Lessee of Coster, 39 U .S. 122 , p. 129 (1840) the court said
that a corporation possesses only those properties which the charter of its
creation confers upon it, eitherexpressly, or as incidental to its very existence.
That corporations created by statute must depend for their powers and the
mode of exercising them, upon the true construction of the statute.
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The corporation must show that the law of its creation gave it authority to
make such contracts. . [underline and bold added]
Did the law of its creation (HOMEOWNER BANK ACT [HOLA] ) give
Wachovia the right to make this contract with this particular provision? Or should
the question be: Can the law of its creation give Wachovia the right to make this
contract with this particular provision?
In an excerpt fromShoshone Mining Co. v. Rutter, 177 U.S. 505,509,510
,citing Osborn, the court said:
A corporation has no powers and can incur no obligations except
as authorized or provided for in its charter. Its power to do anyact which it assumes to do, and its liability to any obligation
which is sought to be cast upon it, depend upon its charter, and
when such charter is given by one of the laws of the United States
there is the primary question of the extent and meaning of that
law;[underline and bold added]
Can it then be said that the provision in a mortgage contract requiring a
mortgagor to transfer his rights to a trustee with a power of sale for the non-
payment of a mortgage is authorized by the federal charter? Is this not the right to
foreclose on an owner without resort to judicial process and a hearing? Is this not
the right to deprive a person of procedural due process? We must then ask the
question: Is the act of the national or federal savings bank in foreclosing non-
judicially within the scope of a law of Congress? Can the government by way
of a federal charterauthorize a right to a bank to do what it is forbidden to do
itself? It is fundamentally clear that the government can impart no greater power
through a charter than they possess themselves. The power to deny a person of
procedural due process is denied to the government under the 5th Amendment and
is equally denied to the banks. As John Locke said nearly 300 years ago:
Nobody can transfer to another more power than he has in himself [John Locke,
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TWO TREATISE OF GOVERNMENT, BOOK II] The courts in Osborn and
Shoshone show us that the conduct of banks in pursuit of non-judicial
foreclosures must be done under the authority of the federal charter which is a
law of the United Statesand therefore under color of federal law.
E. CONGRESS CANNOT AUTHORIZE OR
DELEGATE A RIGHT OR POWER THAT
IT CANNOT RIGHTFULLY EXERCISE ITSELF
If all the acts, rights and obligations of corporations with federal charters
must be done under the authority of the federal charter and a law of the United
States, including rights created in contract, how can Congress authorize a
provision that it could not exercise itself? The provision can only be validated bywhat it represents and the constitutional implications it may give rise to. In United
States v Grimaud, 220 U.S. 506 (1911) the Supreme Court decided that very issue
and the court citing Justice Marshall at 220 US pg. 517 said.
It will not be contended that Congress can delegate to the courts, or
to any other tribunals, powers which are strictly and exclusively
legislative. But Congress may certainly delegate to otherspowers
which the legislature may rightfully exercise itself. [underline bold &italics added]
A similar holding was made by the Ninth Circuit in Furman Crain et al.,
v. The First National Bank of Oregon, Portland et al, 324 F. 2d 532(1963) In
that case the Court said:
While Congress cannot delegate to private corporations or anyone
else the power to enact laws, it may employ them in an administrative
capacity to carry them into effect. Berman v Parker, 348 U.S. 26, 75S. Ct, 98, 99 L.Ed 27 (1954)
F. THE PROVISION IN A RESIDENTIAL MORTGAGE
CONTRACT IN FAVOR OF LENDER ALLOWING
A POWER OF SALE UPON DEFAULT IS AN
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ULTRA VIRESPROVISION AND NULL AND VOID
As the Supreme Court said in Concord First Natl Bank v Hawkins174
U.S. 364 p. 371:
The doctrine of ultra vires, by which a contract made by a
corporation beyond the scope of corporate powers is unlawful and
void and will not support an action, rests as the Court has often
recognized and affirmed, upon three distinct grounds.: the obligation
of anyone contracting with a corporation to take notice of the legal
limits of its powers, the interest of the stockholders not to be subject
risks which they have never undertaken, and above all, the interest
of the public that the corporation shall not transcend the powers
conferred upon it by law.[bold added]
The powers of a corporation are enumerated and incidental.Runyan at p.
129 supra. If Congress cannot confer the powers to Wachovia then the provision
is ultra vires and void.
II. THE LENDING FUNCTIONS OF
OF FEDERAL S&L/FEDERAL SAVINGS BANKS
ARE GOVERNMENTAL
In Federal Land Bank v. Bismarck Co. of St. Paul, 314 U. S. 95 (1941)the
court was faced with determining whether the lending functions were proprietary
orgovernmental. The court said:
The argument that the lending functions of the federal land banks are
proprietary, rather than governmental, misconceives the nature of the
federal government with respect to every function which it performs.
The federal government is one of delegated powers, and from that
it necessarily follows that any constitutional exercise of its
delegated powers is governmental. Graves v. New York ex rel.
O'Keefe,306 U. S. 466, 306 U. S. 477. It also follows that, when
Congress constitutionally creates a corporation through which the
federal government lawfully acts, the activities of such
corporation are governmental. (cites)
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As part of their general lending functions, the land banks are
authorized to foreclose their mortgages and to purchase the real
estate at the resulting sale. They are "instrumentalities of the federal
government, engaged in the performance of an important
governmental function."(cites)
In Federal Land Bank v. Board of Kiowa County., 368 U.S. 146 the
court said :
"the Federal Government performs no 'proprietary' functions. If
the enabling Act is constitutional and if the instrumentality's activity
is within the authority granted by the Act, a governmental function is
being performed."
InConference of Federal Savings and Loan Associations et al v. Alan L.
Stein et al. 604 F.2d 1256 (9th Circuit) (1979) the court related the history of
HOLA and the reason for its creation:
The Home Owners' Loan Act of 1933, 12 U.S.C. 1461 Et seq.
(HOLA), was the result of congressional dissatisfaction with state law
and practice in the financing of home construction.
The result was HOLA, a radical and comprehensive response to the
inadequacies of the existing state systems. A Federal savings andloan system was created. The Federal Home Loan Bank Board (the
Bank Board) was created with extremely broad powers to promulgate
rules and regulations. 12 U.S.C. 1464(a) provides in part:
[T]he Board is authorized, under such rules and regulations as it
may prescribe, to provide for the organization, incorporation,
examination, operation, and regulation of associations to be known as
'Federal Savings and Loan Associations' * * * and to issue charters
therefore, giving primary consideration to the best practices of local
mutual thrift and home-financing institutions in the United States."
It is well settled that the enabling Act, Home Owner Loan Act
(HOLA) is constitutional .Pittman v. Home Owners' Loan Corp.,
308 U. S. 21. Like federal land banks, the lending functions of federal
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savings assns/federal savings banks, such as Wachovia Mortgage fsb,
a federal instrumentality , should be treated as governmental, even
when the activity is in pursuit of foreclosure because foreclosure is an
essential part of the general lending functions which the court in
Bismarckheld was governmental. Federal Land Bank v.
Bismarck Co. of St. Paul, 314 U. S. 95, p. 102 (1941)
A. GOVERNMENT CANNOT EVADE ITS MOST
SOLEMN CONSTITUTIONAL OBLIGATIONS BY SIMPLY
RESORTING TO THE CORPORATE FORM
Can Congress divest itself of its identity with a corporation created and
participated in for a public purpose sufficiently to allow the corporation to use aprocedure that does not allow a hearing? That question was asked and answered
in Lebron v National Railroad Passenger Corporation. 513 U.S. pgs 374, 375
when the court said:
c) There is a long history of corporations created and participated in
by the United States for the achievement of governmental objectives.
Like some other Government corporations, Amtrak's authorizing
statute provides that it "will not be an agency or establishment ofthe United States Government," [cite]
(d) Although 541 is assuredly dispositive of Amtrak's
governmental status for purposes of matters within Congress's
control--e.g., whether it is subject to statutes like the
Administrative Procedure Act-and can even suffice to deprive it
of all those inherent governmental powers and immunities that
Congress has the power to eliminate-e.g., sovereign immunity
from suit-it is not for Congress to make the final determination of
Amtrak's status as a Government entity for purposes ofdetermining the constitutional rights of citizens affected by its
actions. The Constitution constrains governmental action by whatever
instruments or in whatever modes that action may be taken
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(e) Amtrak is an agency or instrumentality of the United States
for the purpose of individual rights guaranteed against the
Government by the Constitution. This conclusion accords with the
public, judicial, and congressional understanding over the years that
Government-created and -controlled corporations are part of the
Government itself.(cites) ; A contrary holding would allow
government to evade its most solemn constitutional obligations by
simply resorting to the corporate form, Bank of United States v.
Planters' Bank of Georgia, 9 Wheat. 904, 907, 908 (other cites).
Like Amtrak, defendant is federal instrumentality and member in a
banking system created for a public purpose and controlled by the director of
The Office of Thrift Supervision. Like Amtrak it is not for Congress to make the
final determination of defendants status as a government entity for purposes of
determining the constitutional rights of citizens affected by its actions. Plaintiff
Reuben Nieves is a citizen whose constitutional rights are affected by its actions
when a non judicial foreclosure is exercised by a federally chartered corporation
like defendant Wachovia Mortgage, fsb. To paraphrase an old saying, that with
great power comes great obligations. This is no less true when the federal
government, by way of Congress , confers enumerated and incidental powers
on a corporation it creates for an important governmental function. It must follow
that with the immunities from taxation and state laws that frustrate the activities
of corporations for which an act of Congress was enacted, the constitutional
obligations of the government must also attach. For as Justice Scalia said in
Lebronat p. 399:
But it does not contradict those statements to hold that a corporation
is an agency of the Government, for purposes of the constitutionalobligations of Government rather than the "privileges of the
government," when the State has specifically created that
corporation for the furtherance of governmental objectives, and
not merely holds some shares but controls the operation of the
corporation through its appointees.
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In this case control of the operations is exercisedby the director of the
Office of Thrift Supervision an independent federal regulatory agency vested with
plenary authority to administer the Home Owners' Loan Act of 1933 (HOLA),
The Director of the OTS is appointedby the President, by and with the advice and
consent of the senate. (12 USC 1462c) InFidelity Fed. S. & L. v. De la Cuesta,
458 U.S. 141 (1982) at p. 161 the court said:
The broad language of 5(a) expresses no limits on the Board's
authority to regulate the lending practices of federal savings and
loans. As one court put it, "[I]t would have been difficult for Congress
to give the Bank Board a broader mandate." [cites] And Congress'
explicit delegation of jurisdiction over the "operation" of these
institutions must empower the Board to issue regulationsgoverning mortgage loan instruments.
B. THE POWER TO FORECLOSE IS AN
INCIDENTAL POWER OF THE NATIONAL BANKS
AS WELL AS FEDERAL SAVINGS BANKS
The history of national banking legislation has been "one of
interpreting grants of both enumerated and incidental `powers' to national banks
as well as federal savings associations[which includes savings banks]. Bank ofAmerica et al v City of San Francisco et al309 F.3d 551 (Ninth Circuit) (2002)
Consider this hypothetical. The California legislature would makes a law that as a
matter of public policy foreclosures of any kind will not be permitted on a
homeowners primary residence. The OTS is charged with the supervision of the
Home Owner Loan Act like the Office of the Controller of Currency is charged
with supervision of the National Bank ActNationsBank of N.C.N.A. v Variable
Annuity Life Ins. Co. 513 U.S. 252, 256(1995) The OTS and the OCC would
promulgate rules allowing the banks to foreclose on the homes that have defaulted
and in concert with the banks claim that the power to foreclose was an incidental
power of national banks and also federal savings banks and therefore would
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preempt state law. The State would challenge that decision in court. Both Acts are
silent on the necessity of banks foreclosures to secure the residential property in
the event of default. The Acts, however, do bestow upon banks the authority to
exercise by its board of directors, or duly authorized officers or agents, subject to
law, all such incidental powers as necessary to carry on the business of
banking. . .12 .S.C.24(Seventh). The OTS authority to preempt state laws
affecting its lending practices lies in 12 cfr 560.2. Because these sections are not
explicit on the limits of incidental powers, an inquiry as to whether the NBA or
HOLA would support the use of either one or both methods of
foreclosures(Judicial foreclosures and/or non-judicial foreclosure) would be
necessary. The holding in United States v. Grimaud, 220 U.S. 506(1911) would
apply. The NBA or HOLA could authorize the former but not the latter because the
government could not exercise the power to foreclose non-judicially. Otherwise,
as Justice Scalia said inLebronat p. 375, ...It would allow the government to
evade its most solemn obligations by simply resorting to the corporate form.
C. WACHOVIA MORTGAGE FSB CAN BE
CONSIDERED AN AGENCY OF THE GOVERNMENT
In Acron Investments, Inc.et al v Federal Savings and Loan Insurance
Corporation , 363 F.2nd 236 (9th Circuit, 1966) the court was given the task to
determine if the Federal Savings & Loan Insurance Corporation (FSLIC) was
an agency. After reviewing all the relevant code sections the court concluded
that the corporation was an agency under 28 USC 451 because the control of
the government over the corporation was more than custodialorincidental. In
Acron at paragraphs 27 & 28 the court said:
[T]he Reviser's Note under 18 U.S.C. 6 states that "The phrase
`corporation in which the United States has a proprietary interest' is
intended to include those governmental corporations in which stock
is not actually issued, as well as those in which stock is owned by theUnited States. It excludes those corporations in which the interest of
the Government is custodial orincidental." (Emphasis added.) 28
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Since the control which Congress and the United States exercise
over the Corporation is clearly more than "custodial orincidental,"
it would appear that the Corporation fits within the definition of
"agency" of 28 U.S.C. 451 and thus within the terms of 28 U.S.C.
1345. [bold added]
Under that test Wachovia Mortgage fsb is an agency and, if there is any
doubt , the Supreme Court in Fidelity Fed. S. & L. v. De la Cuesta, 458 U.S. 141
(1982) at p. 161 settled the issue of the government control over the operations
of saving and loan associations as being more than custodialorincidentalwhen
the court said:
The broad language of 5(a) expresses no limits on the Board's
authority to regulate the lending practices of federal savings and
loans. As one court put it, "[I]t would have been difficult for
Congress to give the Bank Board a broader mandate."
Glendale Federal Sav. & Loan Assn. v. Fox, 459
F.Supp. 903, 910 (CD Cal.1978), final summary judgment
granted, 481 F.Supp. 616 (1979), order reversing and
remanding,663 F.2d 1078 (CA9 1981), cert. pending, No.
81-1192. And Congress' explicit delegation of jurisdiction over the"operation" of these institutions must empower the Board to issue
regulations governing mortgage loan instruments.[bold &
underline added]
D. WACHOVIA MORTGAGE FSB
CANNOT PUT A PROVISION IN ACONTRACT TO PUT ITSELF BEYOND THE
REACH OF THE 5TH AMENDMENT
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Wachovia Mortgage cannot put itself beyond the reach of the constitution
and the 5th Amendment by putting a provision in a contract. Oliver Wendell
Homes stated inHUDSON COUNTY WATER CO. v. Mc CARTER, 209 U. S.
349 (1908).One whose rights, such as they are, are subject to state restriction
cannot remove them from the power of the state by making a contract about them.
But the contract, the execution of which is sought to be prevented here was illegal
when it was made. The contract will carry with it the infirmity of the subject
matter [cites] The constraints of the government pass on to Wachovia Mortgage,
fsb, and cannot be avoided by putting a provision in a contract to put themselves
beyond the restrictions of the 5 th Amendment.
Wachovia Mortgage fsb is restricted by its nature as a federally created
corporation, created under an act of Congress from using a non judicial
foreclosure.
III. THE NINTH CIRCUIT DENIAL OF
A PRELIMINARY INJUNCTION WAS
AN ABUSE OF DISCRETION
An abuse of discretion occurs when the decision of the court is based on
erroneous interpretations of the law, or is clearly unreasonable, arbitrary or
fanciful. Cybor Corp. v. FAS Technologies, Inc., 128 F.3d 1448,1460(Fed. Cir.
1998)
On or about August 20th 2009, plaintiff was served with a notice of trustee
sale scheduled for September 10th, 2009. Plaintiff timely filed for an emergency
preliminary injunction or stay pending appeal but was denied on September 9 th,
2009, one day before the scheduled trustee sale. Justice Harry Pregerson dissented
and stated he would have granted the preliminary injunction. The result was that
defendant was enabled to deny plaintiff due process by going through with the
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trustee sale. The denial of the preliminary injunction therefore was an abuse of
discretion. Since the whole point of plaintiffs appeal from the district courts
dismissal was a determination of the constitutionality of a trustees sale, and all
the briefs were submitted, it was unreasonable, arbitrary, or fanciful for the court to
deny plaintiff relief before the court determined the constitutionality of the very
procedure on appeal. The result would lead to plaintiff losing his home to a
trustees sale and the court would have facilitated the denial of due process before
the determination of the court of the constitutionality of the trustee sale. In
Fuentes v. Shevin, 407 U.S. 67, 92 at pgs. 80-82 (1972) the court held that due
process requires notice and an opportunity to be heard prior to the deprivation of a
property interest. In Soc.sec.rep.ser. 80, et al., Plaintiffs-appellees, v. Margaret
M. Heckler, Secretary of Health and Human Services,et al. ,Ninth Circuit. -
725 F.2d 1489 the court said:
It is hornbook law that "[t]he general purpose of a preliminary
injunction is to preserve the status quo pending final determination of
the action after a full hearing." 7 J. Moore & J. Lucas, Moore's
Federal Practice p 65.04 at 65-36 (2d ed. 1983). It is similarly well
accepted that "[t]he status quo is the last uncontested status whichpreceded the pending controversy." Westinghouse Electric Corp. v.
Free Sewing Machine Co., 256 F.2d 806, 808 (7th Cir.1958The
purpose of a preliminary injunction is to preserve the status quo .
But the status quo was not preserved, and the constitutional promise that no
one would be deprived of property without due process was kicked to the curb.
The defendant Wachovia Mortgage fsb and its attorney had constructive notice of
the potential constitutional injury through plaintiffs brief s and motion for
preliminary injunction, but chose to proceed anyway.
CONCLUSION
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In closing, there is no law within the scope of Congress that can authorize a
federally chartered bank to foreclose on a homeowner and terminate his property
rights without allowing a judicial hearing. That is the undeniable conclusion
drawn from the Supreme Courts decisions inEaston, Osborn, andShoshone.
Wachovia Mortgage fsb, incorporated under the Home Owner Loan Act (HOLA)
to provide an important governmental functionresidential mortgage lending, the
operations of which are controlled by the Office of Thrift Supervision whose
director is an appointee of the President of the United States. It follows that
Wachovia Mortgage activities aregovernmentaland the Constitutional
obligations still attaches. It also follows that all the acts of Wachovia Mortgage
fsb must be consistent with the act of its incorporation as well as the
Constitution of the United States; that the powers enumerated and incidental must
be consistent with the Home Owner Loan Act and the Constitution. And, since
the power to foreclose is an incidental power it to must be consistent as well.
The power to foreclose judicially is consistent but not the power to foreclose non
judicially.
Additionally, the denial of a preliminary injunction was an abuse of
discretion by the Ninth Circuit court of appeal and plaintiff asks this court to
declare it so.
The massive foreclosures that have occurred and will continue to occur is
the by-product of the reckless conduct of the lending industry whose
underwriting standards were compromised by their own greed. If left to continue,
it will crush the economy as it is crushing the spirit of this nation.
This court should declare that federally chartered corporations , like
Wachovia Mortgage fsb, be prohibited from using non judicial foreclosures which
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violates the 5th Amendment . Constitutionally conferred powers to a bank should
not be used to produce an unconstitutional result.
In closing, there is no law within the scope of Congress that can authorize a
federally chartered bank to foreclose on a homeowner and terminate his property
rights without allowing a judicial hearing. That is the conclusion drawn from the
Supreme Courts decisions cited by plaintiff.. Wachovia Mortgage fsb,
incorporated under the Home Owner Loan Act (HOLA) to provide an important
governmental functionresidential mortgage lending, the operations of which
are controlled by the Office of Thrift Supervision whose director is an appointee
of the President of the United States. This court should declare that federally
chartered banks like Wachovia Mortgage fsb, are prohibited from using non
judicial foreclosures. The powers conferred, enumerated and incidental to
Wachovia Mortgage fsb are conferred by Congress under the authority of the
Constitution. Constitutionally conferred powers to a bank should not be used to
produce an unconstitutional result. This court should declare that the denial of
plaintiffs emergency motion for preliminary injunction was an abuse of discretion.
Respectfully submitted,
________________ Date:___________,2009
Reuben Nieves
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Statutes
12 U.S.C 1461 Et seq.The HOME OWNERS LOAN ACT...........................3
12 U.S.C. 24...........................................................................................................4
12 U.S.C. 38. The National Bank Act..................................................................3
Sec. 5[12 U.S.C. 1464] FEDERAL SAVINGS ASSOCIATION..........................3
Other Authorities
Furman Crain et al., v. The First National Bank of Oregon, Portland et al, 324
F. 2d 532(1963).....................................................................................................14
John Locke, TWO TREATISE OF GOVERNMENT, BOOK II......................14
John Locke, TWO TREATISE OF GOVERNMENT, BOOK II].....................14
Rules
12 U.S.C. 1254..........................................................................................................2
Regulations
12 cfr 560...............................................................................................................3
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Constitutional Provisions
5th Amendment...........................................................................................................5
7th Amendment...........................................................................................................7
Table of Contents
PAGE
PETITION FOR A WRIT OF CERTIORARI .........................................................1
OPINIONS BELOW ..............................................................................................2
STATEMENT OF THE CASE ................................................................................3
STATEMENT OF THE FACTS ..............................................................................4
SUMMARY OF ARGUMENT.................................................................................5ARGUMENT ...........................................................................................................6
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I. BANKS USE OF NON-JUDICIAL FORECLOSURE AGAINST A
HOMEOWNER IS NOT WITHIN THE SCOPE OF A LAW OF CONGRESS . . 1
A. BANKS CAN BE A GOVERNMENTAL ACTOR IN VIOLATION OF
THE 5
TH
AMENDMENT ........................................................................................ 2B. A PARTY MUST STATE FACTS SUFFICIENT TO STATE A EITHER A
5th or 14th AMENDMENT DUE PROCESS CLAIM ....................................... 3
C. NATIONAL BANKS ARE PUBLIC NOT PRIVATE CORPORATIONS. 4
D. THE REASONING OF OSBORN AND EASTON AND SHOSHONE IS
APPLICABLE TO FEDERAL SAVINGS BANKS ........................................... 5
TABLE OF CONTENT
(CONTINUED)
E. THE RIGHTS AND POWERS OF CORPORATIONS ARE
CIRCUMSCRIBED BY THE LAW OF ITS CREATION ............................ 6
F. CONGRESS CANNOT AUTHORIZE OR DELEGATE A RIGHT OR
POWER THAT IT CANNOT RIGHTFULLY EXERCISE ITSELF .................... 1
G. THE PROVISION IN A RESIDENTIAL MORTGAGE CONTRACT IN
FAVOR OF LENDER ALLOWING A POWER OF SALE UPON DEFAULT
IS AN ULTRA VIRESPROVISION AND NULL AND VOID .......................... 2
II. THE LENDING FUNCTIONS OF FEDERAL S&L/FEDERAL
SAVINGS BANKS ARE GOVERNMENTAL ............................................... 3
A. LENDING FUNCTIONS OF CORPORATIONS CREATED BY THE
GOVERNMENT FOR A PUBLIC PURPOSE ARE GOVERNMENTAL........... 4
B. GOVERNMENT CANNOT EVADE THE MOST SOLEMN
OBLIGATIONS IMPOSED IN THE CONSTITUTION BY SIMPLY
RESORTING TO THE CORPORATE FORM .................................................. 5
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C. THE POWER TO FORECLOSE IS AN INCIDENTAL POWER OF THE
NATIONAL BANKS AS WELL AS FEDERAL SAVINGS BANKS............ 6
CONCLUSION ....................................................................................................... 1
TABLE OF AUTHORITIES
Cases
Acron Investments, Inc.et al v Federal Savings and Loan Insurance
Corporation , 363 F.2nd 236 (9th Circuit, 1966)....................................................20
Apao v. San Diego Home Loans, Inc.,324 F3d 1091 (2002)..................................9
Burton v Wilmington Parking Authority 365 U.S. 715(1961)................................7
Bank of America et al v City of San Francisco et al309 F.3d 551 (2002)...........19
Boske v Comingore, 177 U.S. 459(1900)...............................................................10
Charmicorv. Deaner, 572 F2nd 694.......................................................................9
Concord First Natl Bank v Hawkins 174 U.S. 364 p. 371:..................................15
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Conference of Federal Savings and Loan Associations et al v. Alan L. Stein et al.
604 F.2d 1256 (9th Circuit) (1979)........................................................................16
Cybor Corp. v. FAS Technologies, Inc., 128 F.3d 1448,1460(Fed. Cir. 1998).....22
Easton v.Iowa,188 U.S.220 (1903).......................................................................11
Federal Land Bank v. Bismarck Co. of St. Paul, 314...........................................15
Fidelity Federal S & L Assn v Reginald De La Cuesta, 458 U.S. 141 (1982).1,21
First National Bank of Bay City v. Fellows, 244 U.S. 416 pgs 419,420 (1917)...10
Fuentes v. Shevin, 407 U.S. 67, 92 at pgs. 80-82 (1972)......................................22
Furman Crain et al., v. The First National Bank of Oregon, Portland et al, 324F. 2d 532(1963).....................................................................................................14
Lebron v National Railroad Passenger Corporation. 513 U.S. pgs 374,............17
McCullough v Maryland, 17 U.S. 316(1819),.......................................................11
NationsBank of N.C.N.A. v Variable Annuity Life Ins. Co. 513 U.S. 252,
256(1995)..............................................................................................................20
Osborn v Bank of United States, 22 U.S.738(1824),.......................................11, 12
Pittman v. Home Owners' Loan Corp., 308 U. S. 21............................................17
Runyan v. Lessee of Coster, 39 U.S. 14 Pet. 122 (1840)......................................12
Shoshone Mining Co. v. Rutter, 177 U.S. 505,509,510.........................................13
Soc.sec.rep.ser. 80, et al., Plaintiffs-appellees, v. Margaret M. Heckler,
Secretary of Health and Human Services,et al. , Ninth Circuit. - 725 F.2d 1489
...............................................................................................................................22
United States v. Grimaud, 220 U.S. 506(1911.......................................................20
Statutes
12 U.S.C 1461 Et seq.The HOME OWNERS LOAN ACT...........................3
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12 U.S.C. 24...........................................................................................................4
12 U.S.C. 38. The National Bank Act..................................................................3
12 U.S.C. 1254..........................................................................................................2
12 U.S.C. 1254(1)............................................................................................2, 5, 27
Sec. 5[12 U.S.C. 1464] FEDERAL SAVINGS ASSOCIATION..........................3
Other Authorities
John Locke, TWO TREATISE OF GOVERNMENT, BOOK II].....................14
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