Quote: syl said:
This was enlightening to me. PSA is governed by New York Trust Law which states must be in Trust name and not Trustee. Also PSA is the set of rules stipulated and agreed to by all parties to govern all UCC issues therein covered. Hence, PSA trumps UCC.
You need to re-examine your arguments very carefully! Bill is on the right track with his previous post.
There is a choice of law provision in both the note and the mortgage signed by the borrower. The choice of law provision in the note -- the negotiable instrument -- is going to be controlling as to the interpretation of the negotiable instrument.
This CANNOT possibly be ALTERED by the unilateral actions of subsequent holders.
The PSA and/or trust indenture has a separate choice of law provision which governs the PSA and the securitization.
But even such a provision probably does NOT trump the commercial law in respect of negotiation.
Negotiation is by indorsement and delivery and completed by delivery. Negotiation is going to be controlled by the law of the place of delivery. I have discussed this in prior threads.
The choice of law provision in an instrument is something that can be looked to by the courts and is often enforced as written. But such a provision is NOT absolute as to resolution of conflict of law principles.
For example, suppose that Alina and I decide to draw up a contract. Alina is in Florida and I am in Pennsylvania. Further suppose that I fly to Atlanta and meet Alina there. We both sign the contract in Atlanta. Further suppose that Alina has a widget factory in South Carolina that she owns outright in her own name. And the contract is for the purchase of widgets which she will deliver for my business use at my widget finishing and polishing plant in Delaware.
If we specified a choice of law provision in our contract executed in Georgia, we could probably arguably state that Georgia law might apply. We could arguably agree that the law of my place of residence (PA) or that Alina's place of residence (FL) might apply. Or we might specify the law of the place of the manufacture of the widgets (SC) or their place of delivery (DE). If there was another specification in the contract that I was to pay for the widgets at Alina's Maryland bank or that the widgets would be inspected during transit in North Carolina, any of these might give rise to some arguable claim that a choice of law provision specifying that place might be binding.
But suppose that I suggest to Alina that we specify the laws of Utah within the choice of law provision. And further suppose that nothing about the contract or parties touches Utaah in any way, would this choice of law provision be binding on the Florida Courts if I sued Alina there for breach of contract in respect of manufacture and delivery of defective widgets?
The idea that any subsequent non-UCC contract (the PSA) might somehow alter the choice of law provisions actually written into the notes is absolutely absurd and will NOT prevail ANYWHERE.
Writing a choice of law provision into the PSA also might NOT alter the law of negotiation IF the instruments were actually negotiated in ANOTHER PLACE (for example delivered to NJ rather than NY).
I think that ABSENT any evidence as to the place of negotiation, that there is at least a very plausible argument that the choice of law provision appearing within the PSA MIGHT apply. And the good news is that if a really first rate lawyer makes the defensive argument against a second string incompetent from a foreclosure mill who FAILS to either get evidence as to the place of delivery into the record OR to argue that the law of the place of negotiation should apply, then this could be pretty potent stuff.
But IF you can bring the negotiation under NEW YORK LAW, the allonge space test arguement is actually MUCH MORE ROBUST than the ultra vires argument as to the PSA.
But the ultra vires argument does NOT depend upon the place of negotiation. I have NO PROBLEM with someone making this argument, too, but NOT by putting the PSA into evidence which is almost always DISASTEROUS. This same argument can be made in other ways, including by obtaining admissions and stipulations as to the NY choice of law provision in the governing documents.
And the argument can be made in the alternative, while making and preserving the far stronger and better arguments.