Dyer v. Wells Fargo Bank, N.A. ( 2020 )

United States Court of Appeals
For the First Circuit
No. 15-2421
EDYTHE DYER,
Plaintiff, Appellant,
v.
WELLS FARGO BANK, N.A., d/b/a America's Servicing Company;
U.S. BANK, N.A., as Trustee for CSFB Mortgage-Backed
Pass-Through Certificates, Series 2005-2,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. M. Page Kelley, U.S. Magistrate Judge]
Before
Howard, Chief Judge,
Lipez and Thompson, Circuit Judges.
Glenn F. Russell, Jr., with whom Glenn F. Russell Jr., &
Associates, P.C. was on brief, for appellant.
David E. Fialkow, with whom Jeffrey S. Patterson, Michael R.
Stanley, and K&L Gates LLP were on brief, for appellees.
April 17, 2020
Per Curiam.1 The plaintiff, Edythe Dyer, brought this
suit against U.S. Bank, N.A. ("U.S. Bank") and Wells Fargo Bank,
N.A. ("Wells Fargo"), arising out of a foreclosure sale on her
property. The suit was dismissed, and we now affirm.
I.
In 2004, Dyer executed a promissory note to Dreamhouse
Mortgage Corporation ("Dreamhouse") and granted a mortgage on her
property at 41 Commonwealth Avenue, Unit #9, in Boston,
Massachusetts (the "Property"). She granted the mortgage to
Mortgage Electronic Registration Systems, Inc. ("MERS") as the
"nominee" for Dreamhouse and its successors and assigns. In 2008,
MERS executed a document entitled "Assignment of Mortgage," which
transferred the mortgage to U.S. Bank, as trustee. The document
was recorded with the Registry of Deeds for Suffolk County,
Massachusetts. MERS also executed an assignment of the mortgage
to U.S. Bank in 2011. In 2012, MERS published a "Confirmatory
Assignment" confirming the 2008 assignment. That document
explained that the 2011 assignment was a nullity because, in 2011,
1 An opinion first issued in this appeal in November 2016.
In June 2018, that opinion was withdrawn, the judgment was vacated,
and the case was reassigned to the current, entirely different
panel. See Dyer v. Wells Fargo Bank, N.A., 841 F.3d 550 (1st Cir.
2016), withdrawn, 2018 WL 3018544 (1st Cir. June 14, 2018). Having
reviewed the record and relevant precedent, we now conclude that
the withdrawn opinion properly resolved the issues on appeal.
Accordingly, we reiterate here, in substantial part, the analysis
contained in the earlier opinion.
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MERS did not have standing to assign the mortgage, given that it
had already transferred the mortgage to U.S. Bank in 2008. In
2013, Wells Fargo, U.S. Bank's servicer of the loan, recorded an
affidavit in the registry of deeds attesting that, as of that time,
U.S. Bank held the note secured by Dyer's mortgage.
In April 2015, U.S. Bank notified Dyer that it intended
to foreclose on the Property by utilizing the statutory power of
sale granted in Massachusetts General Laws Chapter 183, § 21. That
provision permits a proper party to execute a foreclosure sale
without prior judicial authorization. See Eaton v. Fed. Nat'l
Mortg. Ass'n, 969 N.E.2d 1118, 1127 (Mass. 2012). The requirements
for exercising that statutory power of sale are laid out in
Massachusetts General Laws Chapter 244, § 14. See Fed. Nat'l
Mortg. Ass'n v. Rego, 50 N.E.3d 419, 422-23 (Mass. 2016).
Dyer filed suit against U.S. Bank and Wells Fargo in
Massachusetts state court in May 2015. She sought a declaratory
judgment that U.S. Bank is not a proper party to utilize the
statutory power of sale, and she also sought damages against U.S.
Bank for slander of title based on that same allegation. In her
claim against Wells Fargo, the servicer of the loan, Dyer sought
damages under Massachusetts's catch-all consumer protection
statute, Massachusetts General Laws Chapter 93A.
The defendants removed the case to federal court based
on diversity jurisdiction, and the parties consented to proceeding
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before a magistrate judge. See 28 U.S.C. § 636(c). Dyer then
filed a separate motion for a preliminary injunction to stop the
foreclosure sale, which the magistrate judge denied. The
defendants thereafter filed a motion for judgment on the pleadings.
See Fed. R. Civ. P. 12(c). The magistrate judge granted that
motion and dismissed all of Dyer's claims. Dyer now appeals.
II.
We start with the issues concerning U.S. Bank. The
declaratory judgment and slander of title counts in Dyer's
complaint both rest on the same contention: that U.S. Bank was not
authorized to exercise the statutory power of sale. Hence, if
U.S. Bank had such authority, both causes of action fail.2
In contending that U.S. Bank was not authorized to
exercise the statutory power of sale, Dyer chiefly argues that
U.S. Bank was not the holder of the mortgage when it purported to
exercise the statutory power and that, under Eaton, U.S. Bank was
not entitled to exercise that power. See 969 N.E.2d at 1129, 1131
(holding that, to foreclose under Section 14, an entity must both
hold the mortgage and either hold the note or act as an agent of
the noteholder). In so contending, Dyer acknowledges that there
2 Because Dyer seeks damages for slander of title, the appeal
is not moot even though the foreclosure sale went forward after
the magistrate judge denied Dyer's motion for a preliminary
injunction. See McKenna v. Wells Fargo Bank, N.A., 693 F.3d 207,
210 n.2 (1st Cir. 2012).
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was a purported 2008 assignment of the mortgage from MERS to U.S.
Bank. Dyer acknowledges as well that U.S. Bank referenced this
assignment in the statutorily required notice. See Mass. Gen.
Laws ch. 244, § 14. But, Dyer contends, that 2008 assignment was
void for a number of reasons. We do not agree.
Dyer first argues that the assignment was void because
MERS, when it made the 2008 assignment, was neither the noteholder
nor the agent of the noteholder. Instead, MERS held the mortgage
only as a "nominee" for the lender, Dreamhouse, and its successors
and assigns. But we held in Culhane v. Aurora Loan Services of
Nebraska, 708 F.3d 282 (1st Cir. 2013), that a mortgage contract
that names "MERS . . . as nominee for [Lender] and [Lender]'s
successors and assigns" does suffice to make MERS the mortgage
holder and thus authorizes MERS to assign the mortgage on behalf
of the lender to the lender's successors and assigns. Id. at 293.
And here, Dyer's 2004 mortgage contract contains the same language
regarding MERS, and its status as nominee (in this case for
Dreamhouse), as the one that we addressed in Culhane.
Dyer responds that Culhane is not controlling. She
contends that Culhane relied on a construction of Section 14 that
pre-dated the SJC's decision in Eaton and that Eaton renders that
construction impermissible. While Eaton did expressly reserve the
question of whether a "nominee" is an "agent" of the noteholder,
it did so only in connection with its discussion of whether MERS's
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status as a "nominee" of the lender empowered it to execute the
statutory power of sale. See Eaton, 969 N.E.2d at 1134 n.29.
Eaton in no way suggested that MERS's status as a nominee was
insufficient to permit it to hold or assign a mortgage to a
successor or assign of the lender. And, in Culhane, in which we
expressly applied Eaton, Culhane, 708 F.3d at 288 n.4, we concluded
that MERS's status as a nominee was sufficient to permit it to
hold a mortgage and to make such an assignment. Id. at 293. Thus,
Dyer's first ground for contending that the 2008 assignment is
void is without merit given the language of the 2004 contract
naming MERS as Dreamhouse's nominee.3
Dyer also contends that the 2008 assignment from MERS to
U.S. Bank is void for an independent reason. She argues that MERS
assigned the mortgage to U.S. Bank in violation of a trust
3 Eaton holds that, even if the mortgage and the note had
previously been separated, a party may only exercise Section 14's
power of sale if at the time of the sale it holds both the mortgage
and the note. Eaton, 969 N.E.2d at 1129. In addition to contesting
U.S. Bank's status as the mortgage holder, Dyer separately
challenges the magistrate judge's finding that U.S. Bank also held
the note. The magistrate judge based that finding on both a copy
of the note endorsed in blank that U.S. Bank produced and a copy
of the 2013 affidavit by Wells Fargo, U.S. Bank's agent and
servicer of the loan, stating that U.S. Bank held the note. Dyer
provides no basis for rejecting that finding beyond her conclusory
contrary assertion and a reference to an allonge, which she does
not develop into an argument that would warrant reversal of the
magistrate judge's finding. We thus treat as waived any argument
that U.S. Bank was not a proper party to execute the sale because
it did not hold the note in addition to the mortgage. See United
States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).
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agreement between U.S. Bank and the investors in the loan and that
the breach of the trust agreement rendered the assignment void.
But in Butler v. Deutsche Bank Trust Co. Americas, 748 F.3d 28, 37
(1st Cir. 2014), we held that an assignment made in contravention
of such a trust agreement is at most voidable at the option of the
parties to the trust agreement, not void as a matter of law.
Hence, the alleged violation of the trust agreement does not void
the 2008 assignment and thereby strip U.S. Bank of its status as
a holder of the mortgage. Accordingly, this argument, too, fails.
Dyer next asserts that the 2008 assignment is void for
yet another reason: the 2012 Confirmatory Assignment states that
MERS lacked "standing" to assign the mortgage. That document,
however, makes clear that MERS lacked "standing" to assign the
mortgage in 2011, because MERS had validly assigned the mortgage
to U.S. Bank in 2008. The Confirmatory Assignment thus hardly
casts doubt on the validity of the 2008 assignment to U.S. Bank;
in fact, it appears to confirm it. We therefore reject this
argument as well.
Finally, we reject Dyer's separate argument that U.S.
Bank was not a proper party to exercise the statutory power of
sale because the notice of sale that Section 14 required U.S. Bank
to publish did not comply with the statutory requirements. See
Mass. Gen. Laws ch. 244, § 14 (stating that "in the event a
mortgagee holds a mortgage pursuant to an assignment, no notice
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under this section shall be valid unless (i) at the time such
notice is mailed, an assignment, or a chain of assignments,
evidencing the assignment of the mortgage to the foreclosing
mortgagee has been duly recorded in the registry of deeds for the
county or district where the land lies and (ii) the recording
information for all recorded assignments is referenced in the
notice of sale required in this section"). Specifically, she
contends that the notice failed to refer to what Dyer identifies
as various "intermediate transfers."
Dyer's complaint is less than clear as to what she
contends was being assigned in these "intermediate transfers," and
her briefing does not do much to help clarify matters. The premise
of this argument appears to be that MERS, as the nominee of
Dreamhouse, never properly held the mortgage. From this premise,
she contends that the notice published by U.S. Bank had to set
forth a chain of title that ran from Dreamhouse, the original
lender, to the various parties the complaint identifies as being
involved in "intermediate transfers" to U.S. Bank.
The problem with this argument stems from its mistaken
premise. As we have explained, per our decision in Culhane, MERS's
status as nominee did not bar it from holding the mortgage. See
Culhane, 708 F.3d at 291-92. Thus, MERS was the record holder of
the mortgage as nominee for Dreamhouse in 2004, and Dyer does not
allege that MERS subsequently assigned the mortgage back to
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Dreamhouse or to any other entity prior to MERS's 2008 assignment
of the mortgage to U.S. Bank.
Thus, even accepting as we must the factual allegations
in Dyer's complaint that there were what she calls "intermediate
transfers," she provides no basis for concluding that MERS did not
remain the sole record holder of the mortgage up until the time it
assigned that mortgage to U.S. Bank in 2008. In fact, because
MERS continued to hold the mortgage all along, in keeping with the
way the MERS system operates, it appears that the intermediate
transfers Dyer identifies in her complaint were merely transfers
of the "beneficial ownership interest[]" in the mortgage among
MERS members. Eaton, 969 N.E.2d at 1121 n.5.4
Against this background, the notice published by U.S.
Bank complied with Section 14 for a simple reason. The notice
referenced the assignment (in 2008) from the record holder of the
mortgage, MERS, to U.S. Bank. The notice thus did just what it
needed to do: it referenced "an assignment of the mortgage to the
foreclosing mortgagee" that "has been duly recorded in the registry
of deeds for the county or district where the land lies" and for
4 The SJC explained that MERS is the "mortgagee of record for
mortgage loans registered on the MERS electronic registration
system, which tracks servicing rights and beneficial ownership
interests in those loans; the system allows these servicing rights
and beneficial ownership interests to be traded electronically
between members without the need to record publicly each mortgage
assignment." Eaton, 969 N.E.2d at 1121 n.5.
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which "the recording information . . . [was] referenced in the
notice of sale required in this section." Mass. Gen. Laws ch.
244, § 14; cf. U.S. Bank Nat'l Ass'n v. Ibanez, 941 N.E.2d 40, 53
(Mass. 2011) ("A foreclosing entity may provide a complete chain
of assignments linking it to the record holder of the mortgage, or
a single assignment from the record holder of the mortgage.").
In sum, none of Dyer's arguments as to why U.S. Bank was
not authorized to exercise the statutory power of sale under
Section 14 have merit.
III.
Dyer also brought a claim for damages against Wells Fargo
under Chapter 93A, which prohibits "unfair or deceptive acts or
practices in the conduct of any trade or commerce." Mass. Gen.
Laws ch. 93A, § 2(a). The statute requires that, thirty days
before filing a claim under Chapter 93A, a claimant must, as a
general matter, send a "written demand for relief" to the
defendant, outlining the unfair or deceptive act or practice and
the injury suffered. Id. § 9(3).
Dyer alleged in her complaint that the suit itself served
as the demand letter required by Chapter 93A. The magistrate judge
rightly held that the suit could not serve to fulfill the demand
letter requirement, because the demand letter must be sent prior
to filing suit. See id.; Rodi v. S. New Eng. Sch. of Law, 389
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F.3d 5, 19 (1st Cir. 2004). Accordingly, the magistrate judge
ruled that the claim must be dismissed.
On appeal, Dyer contends for the first time that she was
not required to send a demand letter at all. She relies on the
exception to the demand letter requirement set forth in Section
9(3) of Chapter 93A. The exception provides that "[t]he demand
requirements of this paragraph shall not apply if . . . the
prospective respondent does not maintain a place of business or
does not keep assets within the [C]ommonwealth." Mass. Gen. Laws
ch. 93A, § 9(3).
Dyer contends that Moronta v. Nationstar Mortgage, LLC,
41 N.E.3d 311, 315 n.11 (Mass. App. Ct. 2015), makes clear that
this exception applies so long as the putative defendant does not
maintain both a place of business and assets within the
Commonwealth. She contends that Wells Fargo has no assets in the
Commonwealth. The defendants counter that Moronta describes the
exception's disjunctive nature only in dicta, and they contend
that the dicta conflicts with our decision in McKenna v. Wells
Fargo Bank, N.A., 693 F.3d 207, 218 (1st Cir. 2012).
We decline to engage with this debate. Because Dyer did
not argue in the district court that the demand letter requirement
was inapplicable, she waived the argument. See Malave v. Carney
Hosp., 170 F.3d 217, 222 (1st Cir. 1999) ("[E]xcept in the most
extraordinary circumstances (not present here), matters not raised
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in the trial court cannot be hawked for the first time on
appeal."). And, given that Dyer does not dispute that her
complaint failed to plead that she had sent a demand letter prior
to filing suit, we affirm the order dismissing Dyer's Chapter 93A
claim.
IV.
For the foregoing reasons, we affirm the dismissal of
Dyer's claims. So ordered.
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