Bob Young Could Be Tie Breaking Vote As $3.75Billion Worth Of WaMu Mortgages Assignments Hang In The Balance

Steve Dibert, MFI-Miami

“Control the coinage and the courts — let the rabble have the rest.” –Padishah Emperor Shaddam Corrino IV

As I wrote about in January, the Michigan Court of Appeals handed down a ruling about the chain of ownership of mortgages and notes.   This ruling takes Davenport v. HSBC (the benchmark of all chain of mortgage arguments in Michigan) to the next level and calls for a strict interpretation of a Michigan law that states that if a foreclosing party is not the originating note holder they must be able to show a record chain of the note.

MCL 600.3204(3) states:

If the party foreclosing a mortgage by advertisement is not the original mortgagee, a record chain of title shall exist prior to the date of sale under section 3216 evidencing the assignment of the mortgage to the party foreclosing the mortgage.

Unlike Davenport v. HSBC that was handed down in 2007, in Kim v. J.P. Morgan Chase, Chase claimed the requirements under MCL600.3204(3) don’t apply because JPMorgan Chase acquired the loan  “by operation of law”.  What this means is JPMorgan Chase is claiming they don’t need to show a recorded chain of ownership because they acquired the mortgage through their acquisition of Washington Mutual’s assets after Washington Mutual was placed into FDIC receivership in 2008.

The Court of Appeals disagreed and said that a claim of “by operation of law” could only be claimed by the FDIC and that a mortgage assignment from the FDIC to JPMorgan Chase still has to be properly recorded with the Register of Deeds.  JPMorgan Chase immediately requested an appeal hearing with the Michigan Supreme Court and was granted a hearing this past September.  As of this writing, a decision by the court is still pending.

This is how our Shakespearian tale of political and judicial corruption in the heartland of America begins.  But first, a lesson on Michigan judicial politics that is essentially a  constitutionally protected practice of tributes and partisan patronage.

Michigan’s System of Judicial Tangente

“Paying tribute will merely invite more demands” -Thomas Jefferson

Michigan Supreme Court Justices When Michigan rewrote it it’s constitution in 1962, it’s framers had the brilliant idea of requiring candidates for the Michigan Supreme Court to be nominated by either the Michigan Democratic Party or the Michigan Republican Party unlike lower court judges who remain non-partisan.  This means that the special interests that help fund the political party apparatus now have their hand in funding the highest court in Michigan.  As these special interests expect something in return from members of the Michigan Legislature, they also expect something from the court.   As billionaire  and  former Michigan GOP Chairwoman Betsy DeVos of Amway fame freely pointed out,

 “I know a little something about soft money, as my family is the single largest contributor of soft money to the Republican National Party. I have decided, however, to stop taking offense at the suggestion that we are buying influence. Now I simply concede the point. They are right. We do expect something in return.” -Betsy DeVos

A large number of Michigan attorneys I have spoken with privately have complained that the Michigan Bar Association not only encourages it’s members to give generously to judicial campaigns but they are expected to give as much as they can to judicial campaigns including the partisan Michigan Supreme Court.   This type of system gives the advantage to the bigger firms with deep pocketed clients like JPMorgan Chase or families like the Devoses.

Let’s be realistic a judicial or any political candidate will spend more time listening to and being influenced by someone who writes him or her a check for $35,000 than the person who cut them a check for $500.  In this era where you have lobbyist and special interest groups like Americans For Prosperity writing bills for members of the Michigan Legislature, only the idealistic, ignorant and naive would claim this doesn’t happen.   As one Michigan attorney once told me, “A good attorney knows the law, a great attorney knows the judge and way to get know him is with lots of money.”

As one can imagine this type of system is no better than the Italian custom of Tangente which is a bribe to a politician in return for business favors except in Michigan it’s constitutionally protected.

Chief Justice Young Solicited $42K In Campaign Cash From Lawyers and Lobbyists Arguing The Kim Case For JPMChase

 “Politics is supposed to be the second-oldest profession. I have come to realize that it bears a very close resemblance to the first.” -Ronald Reagan 

Chief Justice of Michigan Supreme Court Bob young was appointed by former Michigan Governor John Engler and gained a reputation of being one of the worst judges in Michigan due to his 92 percent “overruling rate.” That means Young has voted to overrule Michigan Supreme Court cases (which are also referred to as “precedent”) in 92 percent of the cases where the opportunity to overrule has presented itself.

Justice Bob Young's Campaign ManagerYoung has also been described as  an “activist” judge with a record of radical conservatism.  As one attorney described him, “It’s like having an African-American version of Ted Nugent sitting on the Michigan Supreme Court.  That’s how radical Bob Young is.”

It’s not unusual for a Republican politician to take money from other Republicans or even conservative causes but in regards to the Kim case, there is clear conflict of interest between Bob Young and three of the parties involved.

In 2010, his campaign brought in $3,400 from David Trott, whose firm, Trott & Trott initiated the foreclosure against the Kims on behalf of JPMorgan Chase and will benefit from the post-foreclosure title work JPMorgan Chase has hired his title company to perform and he will benefit as the post-eviction listing agent on the home when the house is put on the market and sold.  Trott’s newspaper publication, The Detroit Legal News and it’s sister publications have also ran glowing profiles of Justice Young including this one from June of last year.

Young also received a $3,500 contribution from the law firm of Dykema Gossett in Detroit who took over the case from Trott & Trott when the case was appealed to the Michigan Court of Appeals.  After losing at the Michigan Court of Appeals, Dykema then filed for a hearing before the Michigan Supreme Court. Dykema filed the case and then presented oral arguments before Young and the rest of the court.

But the check that Young received from Michigan Bankers Association, a trade and lobbying group of which JPMorgan Chase is an active membergave Young a whopping $35,000 and was allowed to file a Amicus Curiae or Amicus Brief on behalf of JPMorgan Chase in the Kim case that he presided over.  MBA also gave him $10,000 during his first election in 2002.  Both JPMorgan Chase and the Michigan Bankers Association gave substansantial amounts of money to both the Repblican governors Association and the Michigan Republican Party who return gave $61,000 of this earmarked money to Bob Young’s re-election campaign for the Michigan Supreme Court.

It’s one thing to be wildly conservative or even be wacko on both side of the political spectrum but Bob Young needs to come clean and publicly say if these contributions will affect his decision.  After all, he demanded Justice Diane Hathaway “come clean” about the short sale on her home that made headlines across Michigan last month.  If not, he needs to recuse himself from the case.

JPMorgan Chase and David Trott could pocket hundreds of millions of dollars in profits if the Michigan Supreme Court overturns the Michigan Court of Appeals decision and rules in favor of JPMorgan Chase.

You can see the filings below:

Kim v. JPMorgan Chase

This is the argument Dykema made with the Amicus Brief filed by the Michigan Bankers Association:

Kim Response

MBA Amicus Brief in Kim

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