Strawbridge v. The Bank of New York Mellon ( 2017 )

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16-P-1244 Appeals Court
SANDRA M. STRAWBRIDGE vs. THE BANK OF NEW YORK MELLON.1
No. 16-P-1244.
Norfolk. May 1, 2017. - July 20, 2017.
Present: Agnes, Massing, & Lemire, JJ.
Mortgage, Foreclosure, Assignment. Real Property, Mortgage.
Notice, Foreclosure of mortgage. Assignment. Practice,
Civil, Motion to dismiss.
Civil action commenced in the Superior Court Department on
August 11, 2015.
A motion to dismiss was heard by Jeffrey A. Locke, J., and
a motion for reconsideration was considered by him.
Glenn F. Russell, Jr., for the plaintiff.
Anthony J. Coletti for the defendant.
AGNES, J. The plaintiff, Sandra M. Strawbridge, appeals
from a judgment of the Superior Court dismissing her verified
complaint for declaratory and injunctive relief, which
1
Formerly known as Bank of New York, as trustee for the
Certificateholders CWABS, Inc., Asset Backed Certificates Series
2007-10.
2
challenges the action of the defendant, Bank of New York Mellon
(Bank), as trustee for the Certificateholders CWABS, Inc., Asset
Backed Certificates Series 2007-10 (CWABS trust), to foreclose
on her property. She maintains that the judge erred in applying
G. L. c. 244, § 14, and some of our recent case law. As
Strawbridge has failed to state a plausible claim that the Bank,
at the time of foreclosure, did not hold both the mortgage and
the note, see Eaton v. Federal Natl. Mort. Assn., 462 Mass. 569,
583-589 (2012), and based on the sound reasoning in the judge's
thorough memorandum of decision, we affirm.
Background. The verified complaint, viewed in a light most
favorable to Strawbridge, contains the following facts. In
2007, Strawbridge received a $370,000 loan as part of a home
refinancing arrangement with Countrywide Home Loans, Inc.
(Countrywide). In exchange for the loan, Strawbridge executed a
promissory note payable to Countrywide, and granted a mortgage
on the subject property to secure payment for the note. The
mortgage identified Countrywide as the "Lender" and Strawbridge
as the "Borrower." The mortgage also designated Mortgage
Electronic Registration Systems, Inc. (MERS)2 as the mortgagee,
"acting solely as a nominee for Lender and Lender's successors
and assigns." Although MERS held the mortgage solely as a
2
For a discussion about MERS and its role in the
residential mortgage industry, see Eaton, 462 Mass. at 572 n.5.
3
nominee for Countrywide, the mortgage contained a provision
authorizing MERS to act on behalf of Countrywide in the event of
a default.3
In 2009, Strawbridge defaulted on her note by failing to
keep up with her mortgage payments. In February, 2010, MERS
assigned Strawbridge's mortgage to the Bank. A MERS "Assistant
Secretary and Vice President" executed the assignment, which was
notarized and recorded at the appropriate registry of deeds.
Later, in March, 2015, a "Second Assistant Vice President" at
the Bank's loan servicer executed an "Affidavit Regarding Note
Secured by Mortgage Being Foreclosed." That affidavit states
that the Bank is the holder of the note. In addition, in April,
2015, the Bank's loan servicer executed a "Certificate Relative
to Foreclosing Mortgagee's Right to Foreclose Pursuant to 209
C.M.R. 18.21A(2)(c),"4 which certified that the Bank is the
3
The mortgage stated that "Borrower understands and agrees
that MERS holds only legal title to the Interests granted by
Borrower in this Security Instrument, but, if necessary to
comply with law or custom, MERS (as nominee for Lender and
Lender's successors and assigns) has the right to exercise any
or all of those interests, including, but not limited to, the
right to foreclose and sell the Property; and to take any action
required of Lender."
4
209 Code Mass. Regs. § 18.00 et seq. (2013), entitled
"Conduct of the Business of Debt Collectors and Loan Servicers,"
was promulgated by the Massachusetts Division of Banks and Loan
Agencies. Section 18.21A(2)(c) provides:
"A third party loan servicer shall certify in writing
the basis for asserting that the foreclosing party has the
4
"holder of the Mortgage" and "the holder of the Note or is
authorized agent of the Note holder with the specific authority
to enforce payment and pursue foreclosure of the Mortgage on
behalf of such Note holder." Finally, in July, 2015, the Bank
sent Strawbridge a notice of foreclosure sale pursuant to G. L.
c. 244, § 14, informing her that a foreclosure sale would take
place in August.
Strawbridge responded by filing a complaint in the Superior
Court, claiming slander of title and seeking a declaration that
the Bank could not utilize the statutory power of sale remedy
under G. L. c. 244, § 14, because it had failed to comply with
the strict statutory requirements. Strawbridge also sought, and
was granted, an ex parte restraining order enjoining the Bank
from foreclosing. After a hearing, a judge vacated the
restraining order and denied Strawbridge's request for a
preliminary injunction. The Bank then filed a motion to dismiss
all counts of Strawbridge's complaint pursuant to Mass.R.Civ.P.
12(b)(6), 365 Mass. 754 (1974), which a different judge granted.
right to foreclose, including but not limited to,
certification of the chain of title and ownership of the
note and mortgage from the date of the recording of the
mortgage being foreclosed upon. The third party loan
servicer shall provide such certification to the borrower
with the notice of foreclosure, provided pursuant to M.G.L.
c. 244, § 14, and shall also include a copy of the note
with all required endorsements."
5
Discussion. Our review of the allowance of a motion to
dismiss a complaint for failing to state a claim upon which
relief may be granted under Mass.R.Civ.P. 12(b)(6) is de novo.
Galiastro v. Mortgage Electronic Registration Sys., Inc., 467
Mass. 160, 164 (2014). The allegations of the complaint are
taken to be true along with any reasonable inferences that may
be drawn in the plaintiff's favor. Golchin v. Liberty Mut. Ins.
Co., 460 Mass. 222, 223 (2011), S.C., 466 Mass. 156 (2013),
quoting from Marram v. Kobrick Offshore Fund, Ltd., 442 Mass.
43, 45 (2004). See Curtis v. Herb Chambers I-95, Inc., 458
Mass. 674, 676 (2011). "What is required at the pleading stage
are factual 'allegations plausibly suggesting (not merely
consistent with)' an entitlement to relief." Golchin, supra,
quoting from Iannacchino v. Ford Motor Co., 451 Mass. 623, 636
(2008).
While Strawbridge raised a variety of issues in her
complaint, her principal contention is that the Bank lacks
standing to exercise the power of sale in her mortgage because
the Bank did not comply with the requirements of G. L. c. 244,
§ 14, as construed by the Supreme Judicial Court in Eaton, 462
Mass. at 583-589. Strawbridge also claims that MERS's
assignment of her mortgage to the Bank was void because the
6
assignment occurred after a date established in the pooling
service agreement (PSA) of the CWABS trust.5
The record in this case does not support these claims.
Included as an exhibit to Strawbridge's complaint is an
assignment of Strawbridge's mortgage from MERS to the Bank. The
record also contains an affidavit from the Bank's loan servicer,
in which the affiant avers that the Bank holds the note as
trustee of the CWABS trust. In Eaton, the Supreme Judicial
Court stated that "a foreclosing mortgage holder . . . may
establish that it either held the note or acted on behalf of the
note holder at the time of the foreclosure sale by filing an
affidavit in the appropriate registry of deeds pursuant to G. L.
c. 183, § 54B."6 462 Mass. at 589 n.28. The record before us
5
"PSAs are securitized trust agreements that operate[] as
the governing document for the Trust." Dyer v. U.S. Bank, N.A.,
141 F. Supp. 3d 149, 154 (D. Mass. 2015) (quotation omitted).
Under the PSA in this case, MERS was obliged to transfer certain
mortgage loans and their supporting documentation to the Bank no
later than thirty days after June 29, 2007.
6
General Laws c. 183, § 54B, as amended by St. 2012,
c. 282, § 2, reads as follows: " Notwithstanding any law to the
contrary, (1) a discharge of mortgage; (2) a release, partial
release or assignment of mortgage; (3) an instrument of
subordination, non-disturbance, recognition, or attornment by
the holder of a mortgage; (4) any instrument for the purpose of
foreclosing a mortgage and conveying the title resulting
therefrom, including but not limited to notices, deeds,
affidavits, certificates, votes, assignments of bids,
confirmatory instruments and agreements of sale; or (5) a power
of attorney given for that purpose or for the purpose of
servicing a mortgage, and in either case, any instrument
executed by the attorney-in-fact pursuant to such power, if
7
indicates that the Bank has complied with § 54B.7 Although an
assignment from MERS to the Bank cannot convey greater powers
than MERS held, the mortgage in this case expressly granted MERS
the power to foreclose and to sell the property, notwithstanding
its status as a "nominee for the Lender."8 MERS's nominee status
executed before a notary public, justice of the peace or other
officer entitled by law to acknowledge instruments, whether
executed within or without the commonwealth, by a person
purporting to hold the position of president, vice president,
treasurer, clerk, secretary, cashier, loan representative,
principal, investment, mortgage or other officer, agent, asset
manager, or other similar office or position, including
assistant to any such office or position, of the entity holding
such mortgage, or otherwise purporting to be an authorized
signatory for such entity, or acting under such power of
attorney on behalf of such entity, acting in its own capacity or
as a general partner or co-venturer of the entity holding such
mortgage, shall be binding upon such entity and shall be
entitled to be recorded, and no vote of the entity affirming
such authority shall be required to permit recording."
7
The "Certificate Relative to Foreclosing Mortgagee's Right
to Foreclose Pursuant to 209 C.M.R. 18.21A(2)(c)," executed by
the Bank's loan servicer, is further evidence of the Bank's
possession of both the mortgage and the note, and thus, its
status as a mortgagee with the power of sale. See Sullivan v.
Kondaur Capital Corp., 85 Mass. App. Ct. 202, 210 (2014).
8
Strawbridge correctly points out that the Supreme Judicial
Court has stated that, in the context of a mortgage, the meaning
of the word "nominee" is not clear. See Eaton, supra at 590
n.29. However, any lack of precision about the use of "nominee"
does not call into question MERS's capacity to assign a mortgage
as to which it is the named mortgagee. See Haskin v. Deutsche
Bank Natl. Trust Co., 86 Mass. App. Ct. 632, 642 (2014). In
fact, Eaton implicitly recognized such a capacity,
notwithstanding the "nominee" designation. 462 Mass. at 581-
584. Strawbridge appears to suggest that the lack of a
definition of "nominee" means that MERS cannot assign a
mortgage. We disagree. The court merely stated that while the
8
does not preclude it from validly assigning the mortgage, nor
does it limit MERS's power to exercise a right of sale. See
Haskins v. Deutsche Bank Natl. Trust Co., 86 Mass. App. Ct. 632,
642 (2014). The plain language of the instruments and
affidavits described above demonstrates that MERS and the Bank
complied with the statutory requirements for the acquisition and
assignment of the mortgage and note, and in the foreclosure of
Strawbridge's property.
Strawbridge also argues that the Bank should be held to the
same burden applicable to the foreclosing mortgagees in U.S.
Bank Natl. Assn. v. Ibanez, 458 Mass. 637 (2011). There, the
Supreme Judicial Court held that a foreclosing entity must
provide proof that it was the mortgage holder at the time of the
notice of sale and foreclosure. Id. at 651. However, this case
is distinguishable from Ibanez for two reasons. First, unlike
the mortgagees in Ibanez, the Bank possessed an assignment of
the mortgage from MERS that predates the foreclosure notice sent
to Strawbridge. Second, Ibanez stated that because "there must
be proof that the assignment was made by a party that itself
held the mortgage . . . [, 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
meaning of "nominee" was unclear, "the use of the word may have
some bearing on" the issue of agency. Eaton, supra at 590 n.29.
9
the mortgage." Ibid. Here, the Bank possesses an assignment
directly from MERS, the last holder of record. As such, it does
not have to provide a "chain of assignments linking it to the
record holder," ibid., of Strawbridge's mortgage, because such a
"chain" contains only one link.9
Nor is Strawbridge assisted by her claim that the Bank
lacked the power of sale because the assignment from MERS
occurred after the date established in the PSA. As noted by the
judge, Strawbridge lacks standing to assert such a violation.
See Sullivan v. Kondaur Capital Corp., 85 Mass. App. Ct. 202,
205-206 (2014) (mortgagor has no standing to challenge
assignment that renders assignment voidable; its standing is
limited to "void" assignment). What rendered the assignment in
Sullivan void was the failure to comply with the provisions of
G. L. c. 183, § 54B. Id. at 211-213. Those requirements were
met in this case. Here, an "Assistant Secretary and Vice
President" of MERS executed and recorded a notarized assignment
in full compliance with the requirements of § 54B and thus
effectively passed title to the Bank. The failure to assign the
mortgage before the date noted in the PSA would, at most, only
make the assignment voidable between the parties to the
9
Furthermore, because the mortgagees in Ibanez were the
plaintiffs in those cases, they bore the burden of proof. In
this case, Strawbridge, responding to a rule 12(b)(6) motion to
dismiss, bears the burden of showing she has advanced a
plausible claim.
10
transaction, not void as a matter of law. See Bank of N.Y.
Mellon Corp. v. Wain, 85 Mass. App. Ct. 498, 502 (2014) ("where
the foreclosing entity has established that it validly holds the
mortgage, a mortgagor in default has no legally cognizable stake
in whether there otherwise might be latent defects in the
assignment process").10
Despite Strawbridge's protestations to the contrary, she
asks this court to do precisely what previous plaintiffs have
asked: declare that the Bank, as a mortgagee in valid
possession of the mortgage and note, lacks the power of sale
granted to it in the mortgage instrument due to the fact that
the foreclosure occurred after the decision in Eaton.
Strawbridge's claim ultimately reduces to whether the Bank
validly held both the mortgage and the note at the time of the
foreclosure, thus qualifying the Bank as a mortgagee authorized
10
Strawbridge attempts to frame her PSA argument as a trust
issue, claiming that because the assignment was not executed
prior to the date identified in the PSA, it was never validly
included as an asset of the CWABS trust and as such, the Bank,
in its capacity as trustee of the CWABS trust, has no authority
to foreclose. This argument is unavailing. Whether the PSA is
considered a contract or a trust document, Strawbridge is not a
party to that agreement or a third-party beneficiary thereof.
Consequently, where the assignment complies with the statutory
requirements, and there is no evidence to suggest the assignment
is void, Strawbridge does not have standing to challenge the
assignment. See Woods v. Wells Fargo Bank, N.A., 733 F.3d 349,
354 (1st Cir. 2013) ("[C]laims that merely assert procedural
infirmities in the assignment of a mortgage, such as a failure
to abide by the terms of a governing trust agreement, are barred
for lack of standing").
11
to exercise the power of sale for purposes of G. L. c. 244,
§ 14. See Eaton, 462 Mass. at 584. Strawbridge alleges that
there are gaps in the documentation that the Bank relies on to
establish its standing as a mortgagee. However, this does not
detract from the fact that the Bank held the mortgage and the
note at the time it exercised the power of sale and commenced
the foreclosure.
Finally, we address an overarching contention by
Strawbridge that this case is not governed by prior precedents
because it is a "post-Eaton fact pattern." We disagree.
Strawbridge argues that appellate decisions addressing whether
an entity qualified as a "mortgagee" prior to the date of the
Eaton decision no longer have precedential value. Strawbridge
reads the court's decision in Eaton as standing for the
proposition that the "conveyance of a mortgage no longer
automatically conveys the power of sale, . . . there must be a
nexus to an identified (MERS Member) note owner," and suggests
further, as a result, that any transfer of a mortgage also must
be accompanied by a transfer of the corresponding note to that
same party in order to retain the power of sale. This argument
rests on an incorrect reading of Eaton. Eaton clarified the
term "mortgagee" to mean the holder of a mortgage "who also
holds the underlying mortgage note." Ibid. The mortgagee need
not have physical possession of the note, but need only "act[]
12
as the authorized agent of the note holder, to stand in the
shoes of the mortgagee." Id. at 586. Here, at the time of
foreclosure, the Bank possessed both the mortgage and the note,
thus complying with the requirements of Eaton and G. L. c. 244,
§ 14.11
To the extent that the other arguments made by Strawbridge
have not been addressed here, "they have not been overlooked.
We find nothing in them that requires discussion." Department
of Rev. v. Ryan R., 62 Mass. App. Ct. 380, 389 (2004) (quotation
omitted).
Conclusion. In this case, Strawbridge fails to advance any
factual basis for her claim12 that the Bank lacks the authority
11
There is no language in either Eaton or G. L. c. 244,
§ 14, that supports Strawbridge's arguments. Nowhere in Eaton
does it say that prior cases in which the actions of a mortgagee
were analyzed under the "previous statutory construction" of
G. L. c. 244, § 14, are no longer applicable. The cases decided
since Eaton have applied the full weight of Eaton's prospective
holding when analyzing foreclosure actions by a mortgagee,
including the requirement that the mortgagee demonstrate that it
was in possession of the mortgage and the underlying note at the
time of the foreclosure, and have not limited their reliance to
the pre-Eaton understanding of a mortgagee, as Strawbridge
argues.
12
While the Supreme Judicial Court has not yet addressed
whether, in an action such as this one, the plaintiff-mortgagor
or the defendant-mortgagee bears the burden of proof, "because
the facts concerning the relationship between the mortgagee and
the note holder are far more readily available to them, and
because the statutory requirements governing nonjudicial
foreclosures must be strictly adhered to . . . , it can be
argued that once the mortgagor makes a plausible showing that
the mortgagee does not hold the note and is not acting on behalf
13
to exercise the power of sale, which was explicitly conferred on
it by the terms of the mortgage. The record contains no
evidence that, if true, would demonstrate the Bank's failure to
comply with the requirements of a valid foreclosure. As such,
the judge's allowance of the Bank's rule 12(b)(6) motion was not
error.13
Judgment affirmed.
of the note holder, the mortgagee should carry the burden of
proving that the foreclosure is valid under Eaton." Khalsa v.
Sovereign Bank, N.A., 88 Mass. App. Ct. 824, 829 n.7 (2016).
13
The Bank requests that we award it attorney's fees and
costs pursuant to G. L. c. 211A, § 15, and Mass.R.A.P. 25, as
appearing in 376 Mass. 949 (1979). Because we have addressed at
least some of the issues raised by Strawbridge only in
unpublished opinions, we cannot say that her claims are "without
merit." Beaton v. Land Ct., 367 Mass. 385, 394 (1975).
Accordingly, the Bank's request for attorney's fees and costs is
denied.