Ohio AG Sliced, Diced and Julienned By State Magistrate

In between holding press conferences concerning his brain storm to stem the tsunami of loan foreclosures in Ohio through the use of mediation and suing Freddie Mac for fraud for not publicly disclosing that it was conspiring to wreck the economy, Ohio Attorney General Marc Dann has jumped on a bandwagon started in November, when federal district court judges in Ohio started dismissing, without prejudice, foreclosure actions filed in federal court by foreclosing lenders who lacked documentary evidence to prove that they owned the loans they were foreclosing prior to the commencement of the foreclosure actions. Marc thought that inasmuch as federal judges were using that tactic to slow down the rush to federal court under diversity jurisdiction, maybe he could "borrow" that argument and make it work in state court. So, he started intervening in state foreclosures actions, trying to unwind the foreclosures on the same basis.

Now, what, you might rightly ask, is the Attorney General doing intervening in a private civil action on behalf of borrowers to, at best, delay the day of reckoning? You'd be right to ask the question, as you would to ask a similar question: What's this got to do with his job as Attorney General of the State of Ohio? The answer to the last question is "nothing" and the answer to the first is "to get himself some more press, so he can advance his political career."

Unfortunately for Dann, Deutsche Bank, the trustee handling the foreclosure, didn't back down, and fought Dann. Worse, Dann ran into a state court magistrate who not only kicked his fat tukus off the bandwagon, but also took his name.

Ohio Attorney General Marc Dann suffered his first setback Monday in a novel effort to slow foreclosure filings in the state - and in doing so had his ethics questioned by a Hamilton County magistrate.

Dann argues that lenders can't foreclose unless they can prove they own the mortgage they say is in default. Paperwork proving ownership often lags behind as lenders buy and sell mortgages. The result is that foreclosing lenders don't always have the paperwork to prove that they're the mortgage owners.

[...]

Monday, however, Common Pleas Court Magistrate Michael Bachman rejected Dann's argument.

He further said Dann was acting against the interests of his clients - the taxpayers of Ohio - by moving to dismiss foreclosure cases in which the state has liens against the properties.

Because it's the attorney general's duty to collect on those liens, the magistrate said Dann has an "obvious express conflict of interest."

Dann thought to steal the limelight by personally arguing the motion before the magistrate. Of course, not only losing badly, but being accused publicly by the magistrate of being unethical, might make Danny Boy think about sending an underling to argue the next time around. Perhaps a first year associate. Perhaps one who's read the Code of Professional Responsibility. Perhaps one who's also read the description of the office of Attorney General in the state constitution and has reasoned a way to justify the AG's involvement in this and other private foreclosure actions. I hope Marcy-Marc takes these helpful suggestions of Bank Lawyer's Blog in the spirit in which they are dished out.

You have to read the magistrate's actual decision to get the full flavor of the WWE-style verbal smackdown delivered to Dann. Just a taste:

When asked about this obvious express conflict of interest, the Attorney General informed the court that no conflict of interest exists because, as a matter of public policy, the Attorney General concluded that the State is more likely to collect the money owed to the State if the homeowners keep their homes. The court finds the Attorney General's argument utterly baseless and demonstrably meritless... [T]he court must conclude that the Attorney General was using this court to advance a political agenda rather than seek a legal remedy in a court of law."

Hearing a judicial official talk smack to morons like that makes me want to rear up on my hind legs and bay at the moon, just like that rodent that Sam Donaldson wears on his head and calls a "hairpiece." And maybe also yell "Toga Party" and fire up a classic recording of "Louie Louie" by The Kingsmen. If you're in the mood to see how those governmental "checks and balances" sometimes work where the rubber meets the road (or, in this case, where Alfred E. Neumann meets a flamethrower), read the whole opinion.

Naturally, Dann's appealing.

The attorney general's office said it would file an objection to the magistrate's ruling with Common Pleas Judge Robert P. Ruehlman.

"We strenuously reject that implication," said Dann's communications director, Leo Jennings III.

"The attorney general never said the state was not going to collect tax liens. To the contrary, we believe it will be easier to collect tax liens if we help homeowners stay in their homes rather than kick them out and sell the house for below market value," he said.

So, his press flak uses the same "utterly baseless and demonstrably meritless" argument that got Danny Boy smacked around in the first place. Smart move. Keep repeating it like Forrest Gump until somebody says, "Hey, that dumb idea is actually pure genius!" Or, maybe not.

Well, maybe he'll have better luck with the judge. My guess is the judge gives the magistrate a high five, but perhaps that's merely wishful thinking. It's always hard to figure out where public officials are coming down in an election year.

Note to Ohio taxpayers: Money well spent, eh?

The following is a short video of Danny Boy's staff commiserating with him over this temporary setback.