Personal contract and tort liability of trustee.

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“5810.10 Personal contract and tort liability of trustee.
(A) Except as otherwise provided in the contract, for contracts entered into on or after March 22, 1984, a trustee is not personally liable on a contract properly entered into in the trustee’s fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity. The words “trustee,” “as trustee,” “fiduciary,” or “as fiduciary,” or other words that indicate one’s trustee capacity, following the name or signature of a trustee are sufficient disclosure for purposes of this division.
(B) A trustee is personally liable for torts committed in the course of administering a trust or for obligations arising from ownership or control of trust property, including liability for violation of environmental law, only if the trustee is personally at fault.
(C) A claim based on a contract entered into by a trustee in the trustee’s fiduciary capacity, on an obligation arising from ownership or control of trust property, or on a tort committed in the course of administering a trust may be asserted in a judicial proceeding against the trustee in the trustee’s fiduciary capacity, whether or not the trustee is personally liable for the claim.” [Emphasis added]
1) THERE WAS NO TRUST CREATED, THEREFORE PARAGRAPH (A) DOES NOT PROVIDE IMMUNITY
It follows as a matter of logic that for there to be a trustee eligible for the special statutory privilege of immunity described below, and cited by the purported Attorney for defendant in the Motion to Dismiss, there must have been formed in fact a legal trust, ab initio. The following authorities refute that claim on the facts of this case as set out in the attached affidavit.
The Ohio codification draws upon the UNIFORM TRUST CODE (Last Revised or Amended in 2010), drafted by the NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS,
“Report on HB 416: The Ohio Trust Code
As Enacted
Prepared for the Joint Committee on the Ohio Trust Code of the Legal, Legislative, and Regulatory Committee of the Ohio Bankers League and the Estate Planning, Trust, and Probate Law Section of the Ohio State Bar Association
Alan Newman, Reporter for the Joint Committee
The University of Akron School of Law
http://www.ohiobankersleague.com/pdf/hb416asenacted.pdf

“…Policy considerations.
Much of the OTC is a codification of the existing common law of trusts, the adoption of which will not change Ohio law. Pre-OTC Ohio trust law, however, is relatively sparse and is found in scattered statutes and sometimes difficult to locate case law. Further, on some issues of trust law there is not well defined and accepted common law.“

The prefatory statements to the Uniform Trust provisions note:

“The Code is supplemented by the common law of trusts, including principles of equity. To determine the common law and principles of equity in a particular state, a court should look first to prior case law in the state and then to more general sources, such as the Restatement of Trusts, … The common law of trusts is not static but includes the contemporary and evolving rules of decision developed by the courts in exercise of their power to adapt the law to new situations and changing conditions. It also includes the traditional and broad equitable jurisdiction of the court, which the Code in no way restricts.”

Later under the model trust law is:

“SECTION 107. GOVERNING LAW.
The meaning and effect of the terms of a trust are determined by:
(1) the law of the jurisdiction designated in the terms unless the designation of that jurisdiction’s law is contrary to a strong public policy of the jurisdiction having the most significant relationship to the matter at issue; or
(2) in the absence of a controlling designation in the terms of the trust, the law of the jurisdiction having the most significant relationship to the matter at issue.” [Emphasis added.]

Per the comments to the Uniform Act; “the location of the trust property” is relevant in establishing the requisite “significant relationship”. Consequently, a review of Ohio law as already cited by the defendant’s purported counsel is pertinent. Ohio law as noted above draws upon the uniform trust law.

“SECTION 401. METHODS OF CREATING TRUST.
A trust may be created by:
(1) transfer of property to another person as trustee during the settlor’s lifetime or by will or other disposition taking effect upon the settlor’s death;
(2) declaration by the owner of property that the owner holds identifiable property as trustee; or
(3) exercise of a power of appointment in favor of a trustee.

Comment: [in the model act]
This section is based on Restatement (Third) of Trusts Section 10 (Tentative Draft No. 1, approved 1996), and Restatement (Second) of Trusts Section 17 (1959). Under the methods specified for creating a trust in this section, a trust is not created until it receives property. For what constitutes an adequate property interest, see Restatement (Third) of Trusts Sections 40-41 (Tentative Draft No. 2, approved 1999); Restatement (Second) of Trusts Sections 74-86 (1959)…”

A general power of appointment is one which allows the holder of the power to appoint to himself, his estate, his creditors, or the creditors of his or her estate the right to have the beneficial use and enjoyment of certain property covered by the power of appointment. In this case the trust failed under any of the three conditions by want of any reasonable description of the property to have been the trust property.

If the settlor had followed the prescription set out in the Indenture and Servicing Agreements as filed with SEC, the issue would not arise, the trust would survive as an enfranchised entity under state law and that trust would have met the requirements for tax-exempt treatment as a REMIC. However, the settlor-depositor failed to follow its own representations and warrantees as set out in the securitization documentation.

The Model law Comment adds, ironically;
“A declaration of trust can be funded merely by attaching a schedule listing the assets that are to be subject to the trust without executing separate instruments of transfer. But such practice can make it difficult to later confirm title with third party transferees and for this reason is not recommended.”
[Emphasis added.]
http://www.law.upenn.edu/bll/archives/ulc/uta/2004final_rev.htm#TOC1_7

The foregoing described mechanism, a loan “schedule,” was exactly that contemplated by the securitization documents.

As stated in the affidavit of______, the purported trustee was not entrusted with the homeowner promissory notes by the purported settlor-“depositor” pursuant to the Indenture and Pooling and Servicing Agreement. There was no appointment of power over specified assets nor transfer of those assets. There was no appointment by a filing of a loan schedule with SEC as represented in the SEC filing. There was a mere blank page where the list was to have been appended. There was no transfer of intangible property by way of a specifically described detailed listing of loans, with the Delaware Secretary of State –UCC division. There was again a mere blank page. The assets were not even described in the most general sense. These blank filings were represented by the SEC filer, bankrupt American Home Mortgage, as the triggering events for the establishment of the trust. Hence no trust was actually created.

Thus the role of the purported trustee must be re-construed in terms consistent with the actual facts. The failed trust defaults to existence as a mere joint venture. The purported trustee is in fact the Operator of the joint venture at best. A mere operator of a failed or defunct estate of assets, however accumulated, is not entitled to the privilege of immunity granted a true trustee with property or appointed to exercise power over specified property.

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