LEGAL MEMORANDUM

It has recently come to light to Paulson, by virtue of Judge Garr

King's 2010 ruling in Rineqard cited below, that FHLF, LLC has no

standing before any of the forums mentioned below. The issue of

whether or not a party has standing cannot be waived. 'Constitutional

Standing' is a "threshold jurisdictional requirement, and cannot be

waived". Pershing Park Villas Homeowners Assoc. v. Unified Pac.

lns. Co., 219 F3d 895, 899-900 19th Cir 2000).

PRELIMINARY

The Plaintiff, Lauren Paulson, was represented by Attorney

Matt Arbaugh during the bankruptcy proceedings from April, 2009

until May ,2010 and throughout, from Chapter 1 1, Chapter 7 until the

bankruptcy appeal. Notwithstanding that this is a simple, single asset

case; apparently no one in any of the antecedent proceedings

considered a glaring defect. FHLF, LLC has no standing before any

of these forums because they were not the 'Holder' of the Note. Thus,

FHLF, LLC had no standing to file a proof of claim, obtain relief from

stay, appear as a party of interest in any forum, file any motions

herein, much less a motion for summary judgment, nor conduct a

nonj ud icial foreclosure.

 FHLF, LLC as the assignee of the trust deeds from Fairway

Commercial Morlgage Corporation (Fairway), the lender, did not ever

come into possession of the underlying promissory Notes. The

lender, Fairway Commercial Mortgage Corporation, did not assign,

endorse nor transfer possession of the underlying promissory Notes

to FHLF, LLC. Therefore, FHLF, LLC had no standing before any of

the courls including this court because it never held the debt

instrument.

Such failure is fatal to FHLF, LLC's ability to appear as a party

in any litigation. lt is fatal to their ability to assert the debt in the

bankruptcy forum or foreclose under the law in Oregon and under the

law across the United States. They have no legal standing to file any

pleadings in any court.

PROCEDURAL POSTURE

This matter has been before foufieen (1a) judges in six (6) separate

judicial forums involving eight (8) iawyers not to mention a filing by

Paulson with the Oregon Attorney General's Office. It began in August,

2008. It presently pends in the Washington County Circuit Court, the

Oregon Court of Appeals, the U.S. Bankruptcy Appellate Panel for the Ninth
Circuit, the Oregon Federal District Coufl, Poftland Division and the U.S

Courl of Appeals, Ninth Circuit as follows:

1, Oregon Bankruptcy Case No, 09-32439rd77/7

2. Washington County Circuit Court Case No. C 10084

3. Washington County Circuit Court Case No. C 10085

4. Washington County Circuit Court Case No. C 10086

5. Oregon Court of Appeals Case No. 414569

6, Oregon Court of Appeals Case No, A74570

7. Oregon Court of Appeals Case No A14677

B. United States Bankruptcy Appellate Panel Case No. BAP OR-10-1173

9. Oregon District Court Case No. 3:10-cv-00048-MO

10. United States Court of Appeals Ninth Circuit Case No. 10-35745

11. Oregon District Court Case No. cv-08982-ST/PK

ISSI]E

Does FIILF, LLC have lega1 standing before any of the forums on

any of the pending matters?

ANSWER

No. State 1aw requires that when mortgages (here deeds of trust) are

assigned that the promissory Note be transferred to or endorsed to the

assignee, FHLF, LLC. That wasn't done. This means that the security

instrument was separated from the Note between two companies. Fairway

held the promissory Notes and FHLF,LLC held the deeds of trust. The
Rinegard case in Oregon and the law across the United States says that

when the security instruments (deeds of trust) are separated frorn the debt

obligation, (the promissory Notes) by such a defective assignment, the

security instruments become ineffective. The debt obligation is no longer

secured. (See cases below)

This means that FHLF, LLC, which was only assigned the security

instruments, not the Notes; had no standing in these forums nor had a right

to foreclose because they did not possess nor have an interest in the debt

instruments-i.e., the promissory Notes.

THE FACTS

At issue here are two 2005 trust deed transactions with two

promissory Notes between Paulson and Fairway Commercial Mortgage

Corporation (Fairway). Fairway Commercial Mortgage Corporation

subsequently morphed into a new organization yclept "Fairway America".

Mathew (Matt) W. Burk is the President of all the creditor entities (Fairway

Commercial Mortgage Corporation, Fairway America, FI{LF, LLC, and

Skylands Investment Corporation) involved here. The 2005 transaction only

involved Fairway Commercial Morlgage Corporation.

Huber-Wheeler Crossing, LLC (with Paulson as the sole member) is

the borrower on one Note and Lauren Paulson, Trustee of his testamentary
trust is the borrower on the other. On the instructions of Paulson's attomey,

Matt Arbaugh, both properlies were subsequently quitclaimed to Lauren

Paulson as an individual prior to and as part of the commencement of the

bankruptcy proceedings in April, 2009.

The original lender, Fairway Commercial Mortgage Corporation,

assigned their deeds of trust to FHLF, LLC on February 6,2006, but failed

to assign, endorse nor deiiver the underlying promissory Notes to FHLF,

LLC. Fairway Commercial Mortgage Corporation remained the lender and

'Holder' on the promissory Notes following this ineffective assignment. It

should be noted that neither Fairway nor FHLF, LLC gave the debtor

notice of the 2006 assignment.

FHLF, LLC's current attomey, CraigRussillo, also represents

Fairway America, Matt Burk and Wells Fargo Foothills. Mr. Russillo was

the attomey for FHLF, LLC in the FED state court cases as well as the

attorney for FHLF,LLC in the bankruptcy proceedings. In addition, Mr.

Russillo was formally designated as the agent for Joel Parker, the successor

trustee at the foreclosure sale.

FHLF, LLC, through Schwabe attorney Joel Parker as successor

trustee and Schwabe attorney CraigRussillo as his agent; conducted a

nonjudicial foreclosure on September 25,2009. This foreclosure was

defective due to multiple other mistakes made by FFILF, LLC and therr

counsel, but those defects are addressed elsewhere.

THE LAW

Absolute Assignment

FHLF, LLC's attorney, Mr. Russillo, has asserted the notion that the

'Absolute Assignment' in 2006 of the deeds of trust does the job for them.

They say this because there is general 'Note' transfer language found in that

document. In other words, FHLF, LLC would say that the language in the

deeds of trust assignment is enough to include the Note in the deeds of trust

assignment. This notion is refuted by the Rinegard case discussed below

among all the others. An attempt to assert a general transfer of a Note in the

mortgage (deeds of trust) assignment was an issue in Bellistri v. Ocwen

Loan Servicing. LLC 284 SW 3'd 679,623 (Mo Ct App2009). The court

found as it did in Rinegard, that 'blanket mortgage assignment language' in

an attempt to include the Note is of no force because no actual transfer of

possession of the Note occurs as required by the law.

But, even if such an assignment were enough (which it is not because

how the Note is transferred is governed by the UCC, as is discussed below;

NOT by the law of assignments) there are specific requirements under the

law of absolute assignments which must be followed:

o The entire debt must be assigned. That did not happen

here.

o The assignment must be in writing.

o The intention of the parties must be clear.

Written notice of the assignment must be given to the

debtor. That did not happen here. Failure to provide

Paulson with notice of the Note assignment renders it void

under the law of assignments. Condor Asset Management Ltd

v. Excelsior Eastern Ltd., NSWSC 1139, (2005)

o Then, under an 'absolute assignment' the assignor, Fairway,

must be joined in any foreclosure and that was not done here.

The Uniform Commercial Code

Before one can legally own a car, a person must physically come into

title. One may not legally transfer ownership of a car to another without

signing off on the title first. One cannot expect money from the transfer of

car ownership without having first been in title and then legally transferring

one's interest in that legal instrument. In other words, one cannot legally

enforce a car sale if that person didn't own the car in the first place. FIILF,
 LLC can't enforce the debt alleged to be owed to them by Paulson without

owning the Notes first. one cannot refer to 'other documents'; the

endorsements (signatures) must be on the title document itself or

permanently attached.

1. Negotiation and Transfer of Notes: -- The Uniform Commercial

Code (uCC), with state-specific variations, has been adopted as law by all

50 states and govems a major portion of the law with respect to deeds of
trust and accompanying promissory (mortgage) Notes. Article 3 applies to

the negotiation and transfer of promissory Notes as they are 'negotiable

instruments' as defined in that seclion of the UCC. Article 9 of the UCC

governs the sale of promissory notes. Oregon's UCC law is identical to all

UCC references here.

2. Enforcement of Notes Requires Delivery: -- A negotiable

promissory Note is transferred when it is "delivered" for the purpose of
giving the transferee the right to enforce the note. [See UCC Section 3-

203(a), ORS 73.0203(I)] Fairway never 'delivered' the promissory Notes to

FHLF', LLC. Under the UCC if an entity never came into possession of the

Note then they are not entitled to enforce the Note. IUCC Section 3-301]

Because FHLF, LLC never came into possession of Paulson's promissory

Notes, they are not entitled to enforce the Notes. IORS 73.0301] Therefore,
FI{LF, LLC had no standing to appear in the bankruptcy proceedings, file a

proof of claim, obtain a relief from stay, file motions, nor to foreclose. (See

the Kemp case cited and discussed below)

3. DeliverJr Requires Endorsement: -- Moreover, 'delivery' requires

endorsement on the Note or on an 'a1longe'(a separate paper permanently

attached to the Note, used in case all the other endorsement spaces are taken

up) by the 'Holder', Fairway,to FIILF,LLC. Actual endorsement on the

document is required so FFILF, LLC can prove it didn't just come into

possession --by stealing the negotiabie instrument, to use an extreme

example. Here, there was no endorsement of Paulson's promissory Notes by

Fairway to FHLF, LLC which is a complete obstacle to FHLF,LLC

becoming a 'Holder' of the Notes.

4. Thus. FHLF. LLC is not the 'Holder' of the Notes: -- To enforce

a Note against the borrower, a person must prove that one is a "Holder" or it

is a transferee with the rights of a 'Holder'. IORS 73-0301] Fairway

Commercial Mortgage Corporation is the only 'Holder' of these Notes.

There is a purpose behind these stringent requirements in the UCC. A

debtor is only required to pay money to the 'Holder' of the Note, so he/she

does not have to worry about multiple and conflicting claims against the

debtor. Vis:
 Confl ictins Creditor Claims

All four of Matt Burk's corporations have variously and inconsistently

asserted a creditor's interest in this matter:

A. Fairway Commercial Mortgage Corporation: -- This is the

only company that Paulson dealt with in the 2005 loan

transactions and with whom Paulson 'contracted'. (Even this part

of the transaction has been bungled by Fairway. Apparently, there

does not exist a 'loan agreement',that has been signed by

Fairway. Mr. Seidenwurm for whom there is a signature space, is

no longer with the company and did not sign in the signature space

for Fairway.

It is only Fairway Commercial Mortgage Corporation that

issued the 1Il2512008 "Notice of Default and Election to Sell".

FI{LF, LLC is not mentioned in this recorded document. The

inconsistency is obvious. Why would Fairway Commercial

Mortgage Cor?oration be issuing a 2008 'Notice' in this matter if

they assigned their interest to FHLF.LLC in 2006? Why would

Fairway Commercial Mortgage Corporation be doing anything in

2008 when Fairway America is the replacement cotporation?

l0
B. FHLF. LLC: -- Following Paulson's filing of Chapter I I
bankruptcy in April,2009 the next pleading filed in the

bankruptcy matter is by FFILF, LLC through their attorney, Craig

Russillo on April 22,2009.

C. Fairway America: -- There is an undated memorandum on

Fairway America letterhead signed by Mathew W. Burk as

President of Skylands Investment Corporation assigning " the

rights and interest in the Assignment of Leases and Rents ...to

FHLF, an Oregon limited liability company " This undated memo

states: "Fairway America, LLC successor in interest to Fairway

Commercial Mortgage Corporation."(sic) If Fairway America

became a successor in interest to Fairway Commercial Mortgage

Corporation sometime in 2006 why is Fairway Commercial

Mortgage Corporation still filing documents in this case in 2008

and2009?

The initial 'demand to cure' letter to the Plaintiff came on

August 12,2008 from Attorney Joel Parker representing Fairway

America. On April 27,2010, Attomey CraigRussillo acting on

behalf of Fairway America filed FHLF, LLC's Memorandurn in

bankruptcy courl in supporl of the Trustee's intent to settle the

11
 Paulson's lawsuit. The ApriI27,2010 Memorandum is supporled

by a declaration signed by Fairway America's General Counsel

Greg Blair.

D. Skylands, Who?: -- Throughout the debtor's 2005 loan

transactions with Fairway, there was no mention of Skyland's

Investment Corporation. Skylands is first mentioned in 2008

when a curious document is found in the "chain of title" recorded

in Washington County's Taxation and Assessment Department. In

this 2008 document "Fairway Commercial Mortgage

Corporation", is listed as "Grantor"of the deed of trust assignment

(they probably meant to put Huber-Wheeler Crossing, LLC as the

actual Grantor of the deeds of trust) and this document appoints a

successor trustee, Joel Parker, who is an attorney for Schwabe law

firm. This document is signed by "Mathew W. Burk, President"

of "Skylands Investment Corporation, an Oregon corporation,

Manager". To this day, the Plaintiff has no idea who Skylands

Investment Corporation is nor what role they have in an), of the

transactions encompassed here. Skylands signs as Manager of

FHLF, LLC.???

12
 There was testimony in a court proceeding by Attorney Joel

Parker that there are individual investors on Paulson's loan. These

investors loaned funds to Fairway to finance Paulson's loan and to

whom Fairway may owe about $200,000. These individuals may

have an additional interest in these matters.

Thus, there are al least four creditors who are asserting claims

against the Plaintiff since 2005; Fairway Commercial Mortgage

Corporation, F'airway America, FHLF,LLC and Skylands Investment

Corporation. Even the bankruptcy judge, Judge Dunn, was confused.

He thought the dispute was between Paulson and "Fairway" when in

truth and in fact, the only matters before Judge Durut in the

bankruptcy proceeding were the claims of FHLF, LLC.

FFILF. LLC Is Not A 'Holder'

As discussed above, zfly claim asserted by FHLF ,LLC in these

matters is unenforceable against Paulson and his property under Oregon law.

The underlying promissory Notes are negotiable instruments under Oregon's

version of the Uniform Commercial Code . IORS 73.0104]. and according

to the specific language of these loan documents. A party is entitled to

enforce a negotiable instrument if they are (A) the 'Holder' of the Note or

(B) under certain circumstances when they are a 'nonholder' in possession

13
with the rights of a 'Holder', or (C) u person not in possession, but who is

entitled to enforce the note when it is, for example, lost or stolen.

A. Holder-This is the person in possession of the note if payable to

that identified person. Since FFILF, LLC was never in physical

possession of the note, it cannot qualifu as the 'Holder' of the note.

B. Nonholder in possession -- FHLF, LLC could otherwise qualifu

under the UCC under certain circumstances if it had ever come in

possession of the Note before foreclosure. Since FHLF, LLC

never came into possession of the Notes, it cannot qualiff under

this rule.

C, Nonholder not in possession -- This applies, among other things,

to lost or stolen notes and is inapplicable here. [See ORS

73.03011

Thus, it is clear that FHLF,LLC was never the 'Holder' of Plaintiff s

promissory Notes under the Uniform Commercial Code (UCC) applicable

here.

Attorney CraigRussillo has written a recent E-mail that purports to

anoint 'Holder' status for both Fairway Commercial Mortgage Corporation

and FHLF,LLC simultaneouslv. That is impossible under the law of

I4
physics, under statutory law (the UCC) and the Common Law. Mr. Russilio

states:

"FHLF. LLC appointed Fairway Commercial Mortqage

Corporation as tts servicer and held the note andtrust deeds on
behalf of FHLF. LLC". (emphasis supplied)
"Boltomline.Flil-F held both the trust deeds and the
indebtednes s ... " (.emphasis supplied)
"Here. there was no separation of those estates. as FHLF ftolds
both the note and trust deeds. " (,emphasis supplied\

Under Mr. Russillo's representations he would have BOTH Fairway

and FHLF, LLC be a 'Holder' at the same time. That is silly. There was

no negotiation. There was no transfer. There was no delivery. There was

no endorsement. FHLF, LLC has no Notes in their possession on this

matter. The proof is in the pudding.

A check of the recorded chain of title found in Washington County

reflects an assignment of the mortgage,butnot an assignment of the lVote.

Russillo provides no proof of his assertions of who is the 'Holder' and will

not allow inspection of his original documents. Proof is essential in order to

establish a chain of title. Proof is essential here to establish standing.

All lender billings for payments to Paulson have been by Fairway.

Only Fairway has sent income tax information to Paulson. Only Fairway

has to account for the monthly payments sent to them by Paulson which

clearly reflects that as of 2008 Fairway Commercial Mortgage Corporation

l5
calls itself the 'lender' on the transaction. Moreover, Fairway America as

successor in interest to Fairway Commercial Mortgage Corporation is being

actively represented as the servicer and lender in these forums by their

General Counsel, Greg Biair through and including April, 2010. Therefore,

it is clear that Fairway Comrnercial Morlgage Corporation cum Fairway

America are the lender and the servicer of Paulson's loan to this date.

5. The Deeds of Trust follow the Notes. Not the Other Wa)' Around:

-- The law across the United States and the common law for centuries is:
"The mortgage (here deeds of trust) follows the Note." This means thatif a

promissory note is assigne d, that the security interest (deeds of trust) follows

the note. The converse is Nor true. The promissory note DoES NoT
follow the morlgage. Thus, an assignment of the mortgage without the

concomitant assignment of the Note is a nonevent. One can enforce the bare

Note, but one cannot enforce the bare security interest.

The current economic meltdown has disclosed that financial institutions

across the country have made the same mistake Fairway and FHLF,LLC
made here:

o Kemp v. Countrywide, USDC of New Jersey, Case No 08-18700-

JHw (rll16110) {The debtor successfully expunged the proof of

16
claim in bankruptcy adversary proceeding because the Note was

neither endorsed to transferee nor put in transferee's possession)

Schwend v. US Bank. N.A. et al., USDC of Missouri, Case No 4:10

CV 1590 CDP (l2l3ll0) { A debtor successfully resisted a Motion to

Dismiss her claim for wrongful foreclosure citing Missouri law that a

foreclosure is invalid if the person causing the foreclosure does not

actually hold title to the Note)

Cogswell v. CitiFinancial Mortgage Company. Incorporated, US

Court of Appeals, 7'h Circuit, No 08-2153 (1 015110) {Debtor

successfully avoided foreclosure when CitiFinancial assigned its

interest in a mortgage but never delivered the Note to the assignees.

Citing Illinois law, the Court stated that only the 'Holder' of the Note

may foreclose)

Servido v. US Bank N.A. et a1., District Court of Appeal for State of

Florida, Fourth District, Case No 4DE10-1898 (I0l27lI0) {Holding

that the pafty seeking foreclosure must present evidence that it owns

and holds the note and mortgage in question)

BAC Home Loans Servicing, LP fka Countrvwide v. White, Court of

Civii Appeals of Oklahorna, Case No 108,736, (I2l3lI0) {Court holds

that a mortgage is merely an incident and accessory to the Note.

17
Under Oklahomalaw an assignment of the morlgage to one other than

the holder of the note is of no effect)

Fawn Ridge Partners. LP v. BAC Home Loans Servicing. Lp, u.s.

Bankruptcy Appellate Panel of the Ninth circuit, Bk. No 09-15098-

TD, BAP No. CC-09-1396-LIPDu , before Hollowell, Dunn and

Perris, Bankruptcy Judges, (3129110) { Countrywide, the lender, has a

practice of retaining the original Notes. Because Countrywide did not

endorse and transfer the Note to BAC, the latter had no standing to

request a relief from stay. 1 1 USC Section 362(d) Court holds that

Constitutional standing is a'threshold jurisdictional requirement, and

cannot be waived (citing cases)"' under california law, to qualiS' as

a 'Holder', one must be in possession of the instrument, and the

instrument must be properly endorsed.)

LNV CORP v. Madison Real Estate, Supreme Court of New York,

Index No. 10357612010, (1210912010) {Under New York law aparty

foreciosing must show that they are the owner of the Note as well as

the mortgage at the time the action is commenced. Absent an

effective transfer of the debt as well as the note, the assignment of the

mortgage is void and the party may not foreclose. That party has no

standing.)

l8
 HSBC v. Thompson. et al.. courl of Appeals of ohio, Trial court

case No. 07-cY-9439,2010-4158 (91312010) {Trial courr decision

affirmed granting debtor summary judgment and dismissing

foreclosure action because HSBC failed to establish that it was the

'Holder' of the promissory Note. without that showing HSBC has no

standing to bring the foreclosure. Standing is a threshold issue for the

courls to decide for it to proceed to adjudicate the action. In a

foreclosure action the real party in interest is the current holder of the

note and mortgage. Financial institutions, noted for insisting on their

customers' compliance with numerous ritualistic formalities, are not

sympathetic petitioners in urging relaxation of an elementary business

practice. "For nearly a century, Ohio courts have held that whenever

a promissory note is secured by a mort gage, the note constitutes the

evidence of the debt and the mortgage is mere incident to the

obligation. Edgar v. Haines. 109 Ohio St. 159, 164,141 NE 937

(1923) Moreover, a financial institution cannot cure its lack of

standing by subsequently obtaining an interest in the mortgage or

Note. Accord Bank of New York v. Gindele, Hamilton App. No. c-

C09 025 1, 20i 0-Ohio-5 42.)

t9
 o Country Place Communitlz Association. Inc. J.P. Morgan Mortgage

Acquisition Corp. District Court of Appeal of Florida, Case No.

2Dl0-569, (12129/10) Country Place sued J.P. Morgan for attorney

fees after the circuit court dismissed J.P. Morgan's mortgage

foreclosure action. J.P. Morgan never produced any evidence that it

owned the note and mortgage that were subject to the previous

proceeding. Thus, Country Place successfully dismissed the case on

summary judgment and now seeks their attorney fees. The court

agreed that without proof that it owned the note, J.P. Morgan had no

standing. The court holds that if a ruling of a trial court is not worthy

of support then J.P. Morgan should confess error.

The common law rule that 'the mortgage follows the note' is codified

in Article 9 of the UCC, Section 9-203(9) which states: "The attachment of

a security interest in a right to payment or performance secured by a security

interest or other lien on...real property is also attachment of a security

interest in the security interest, mortgage, or other lien." IORS 79.0203(7)]

As the following cases demonstrate, the mortgage note does not

follow the mortgage if there is an attempted assignment of the morlgage

alone or if there is an assignment separate from the mortgage note as

happened here. Bellistri v. Ocwen Loan Servicing. LLC 284 SW 3'd 619,

20
623 (Mo Ct App 2009) An assignment of the deed of trust separate from the

note has no 'force'. Saxon Mortgage Serf. Inc v. Hiilery, No C-08 -435i

EMC, 2008 WL5170180, at 4-5(ND Cal Dec 9 2008). For there to be a

valid assignment, there must be more than just an assignment of the deed of

trust alone; the note must also be assigned. In re Wilheim,407 BR 392,

400-05 (Bankr D Idaho 2009). Oregon cases support the concept that the

security, here the Deed of Trust, is 'merely an incident to the debt.' West v.

white, 307 or 296, 300, 7 66 P2d3g3 (1 ggg)

Where, as here, the note and the trust deed are split, the transfer of

the trust deed is ineffective. Bellistri v. Ocwen Loan Servicing, LLC, 284

SW 3'd 619,623-24 (Mo Ct App 2009) A putative transfer of the note in the

trust deed assignment is ineffective because the UCC governs the transfer of

a promissory Note. Because Fairway Commercial Mortgage Corporation

never physically transferred the Notes to FHLF, LLC, Joel Parker as

successor trustee on the security interests did not have a legally cognizable

interest in the property. Therefore, Parker had no standing to foreciose on

FHLF, LLC's behalf. Saxon Mortg. Serv.. Inc v. Hillery, No C-08-4357

EMC, 2008 WL 5170180. That Fairway Commercial Mortgage Corporation

remained the lender on the transaction is evidenced by the fact that only

Fairway Commercial Mortgage Corporation, as lender, continued to collect

2t
on and enforce the debt following the putative execution of the Notes in

2005. Further, only Fairway Commercial Mortgage Corporation, as

beneficiary, issued the 2008 Notice of Default and Election to Sell. This is a

clear break in the 'chain of title'. Fairway had supposedly assigned their

interests to FHLF, LLC in2006 according to the official records. Yet in

2008 Fairway is representing itself as the real party at interest in the trust

deeds while two years earlier Fairway had assigned their trust deed interests

to FHLF, LLC. This 'Notice' contains no mention of FHLF,LLC. Then, as

discussed above, Fairway then morphed into Fairway America and

participated variously in these proceedings as described.

It is clear that FHLF,LLC did not have standing in this Court, nor

standing to either seek relief from the bankruptcy stay, seek an FED, nor

move forward with foreclosure because FHLF, LLC was never in possession

of the promissory Notes. The other Fairway entities were just hopelessly

confused.

As stated above, Judge Garr King in Rinegard-Guirma v. Bank of

America, et al LI.S. District Court, District of Oregon, Portland Division

Civil Case No 10-1065-PK decision dated October 6,2010, Held: that

when the lender splits the trust deed from the promissory notes, any

foreclosure is ineffective. That is exactly what happened here. In short:

22
In Rinegard the lender, Mortgage Lenders Network (MLN) assigned the deed of trust to LaSalle who
appointed the snccessor trustee

In Paulson, the lender, Fairway Commelcial Mortgage Corpolation (FCMC) assigned the deed of trust to
FHLF who appointed the successor trustee

In Rinegard the lender, MLN, physically retained the promissory notes as well as the servicing rights to
the mortgages.

In Paulson, the lender FCMC physically retained the promissory notes as well as the servicing rights to the
mortgages.

In Rinegard payments were to be made to the lender, Mofigage Lenders Network, USA

In Paulson, payments were to be rnade to the lender, Fairway Commercial Mortgage Corporation.

Fairway Commercial Mortgage Corporation split the trust deeds from

the promissory Notes when they made the 2006 assignments of the trust

deeds to FFILF, LLC, but did not assign nor transfer possession of the

promissory Notes to FHLF, LLC. Therefore, all proceedings with them as a

party or participant in any forum including the foreclosure leading to the

FED action was defective and void because FHLF, LLC had no standing in

any judicial forum.

Constitutional Standing

The issue of standing involves both "constitutional limitations on

federai couft jurisdiction and prudential limitations on its exercise". Warth

v. Seldin. 422IJS 490,498 (1975). In order to have constitutional standing

FHLF, LLC must show that it suffered an actual concrete and parlicularized

injury in fact, caused by the debtor which would result in likely redress.

Luian v. Defenders of Wildlife. 504 lls 555,559-560 (1992). Here, FI{LF,

23
LLC can show no interest in the underlying debt instrument nor that it paid

anything for this transaction. FHLF, LLC cannot show that it was either the

transferee or assignee of the Note. Therefore, FIILF, LLC cannot

demonstrate that it has been injured by the debtor's putative default on the

loan. As such, FIILF, LLC did not have constitutional standing to file

anything, foreclose, much less for a relief from Stay or to participate in these

proceedings at all.

Prudential standing requires that FHLF, LLC assert its own claims

rather than the claims of another. Dunmore v. United States, 358 F3d 1107,

1112 (9th Cir.2004). It is clear that FHLF,LLC is nothing more than ashell

company attempting to assert the claims of Fairway. As such it has no

financial interest and no standing under any doctrine.

PERSONAL PROPERTY

Paulson previously asked the Courts for an emergency Stay to protect

the property. In August, 2010 when the Defendants were threatening to

remove and destroy all of Paulson's personal properly Paulson agarnmoved

for an emergency stay. None of the Courts were wiliing to have a hearing

on these emergency motions. Now, that removal and destruction of

Paulson's property and personal property has occurred. Paulson has no idea

where that property has been taken nor whether that property has been

24
destroyed. In light of the current issue of constitutional standing, Paulson is

again asking the courts to issue a preliminary injunction and stay requiring

the Defendants to return Paulson to the premises and requiring the

Defendants to retum Pauison's personal properly.

This is probably the only case in history where the Court has

allowed one party to litigation to confiscate all of the other party's litigation

materials, including the computer hard drive of the adversary, while the

iitigation was pending. The Defendants not only have all of Paulson's

personal property, they also have his family irreplaceable heirlooms dating

back over 100 years. That's not all. The Defendant's also have over 2,000

client files and the client list of Paulson's for over 300 ciients. In theory,

one would suppose one business would not be allowed the customer lists of

another business, but that is allowed here. It shouldn't have been allowed.

The Defendants also have confiscated three of Paulson's vehicles

including a classic motor home.

And then there is the other computer hard drive belonging to Paulson

in the custody of Attorney Paul Berg's paralegal who is defending Craig

Russillo by the Professional Liability Fund, Oregon's lawyer malpractice

insurance carrier. This hard drive contains conhdential client information

and confidential financial information belonging to Paulson.

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 Paulson has asked for a stay of the Appellate Panel proceedings so the

Portland Bankruptcy Courl may consider the issue of standing at the

bankruptcy trial court level. The Portland Bankruptcy Court has been asked

to schedule an evidentiary hearing to determine chain of title and to

determine if the putative creditor, FHLF, LLC has constitutional standing. It

doesn't.

Dated this 4th day of January, 20tl

Lauren Paulson

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