Abate v. Fremont Investment & Loan , 470 Mass. 821 ( 2015 )

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SJC-11638
THOMAS C. ABATE vs. FREMONT INVESTMENT & LOAN & others.1
Suffolk. November 4, 2014. - March 9, 2015.
Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, &
Hines, JJ.
Real Property, Record title, Mortgage. Mortgage, Assignment,
Foreclosure. Jurisdiction, Land Court. Land Court,
Jurisdiction. Practice, Civil, Parties, Standing,
Dismissal.
Civil action commenced in the Land Court Department on May
25, 2012.
Motions to dismiss were heard by Robert B. Foster, J.
The Supreme Judicial Court on its own initiative
transferred the case from the Appeals Court.
Thomas B. Vawter for the petitioner.
James L. Rogal for Deutsche Bank National Trust Company &
another.
1
Mortgage Electronic Registration Systems, Inc. (MERS);
Deutsche Bank National Trust Company, as trustee for Carrington
Mortgage Loan Trust, Series 2005-FRE1, Asset Backed Pass-Through
Certificates (Deutsche Bank); and Carrington Mortgage Services,
LLC (Carrington).
2
Robert M. Brochin for Mortgage Electronic Registration
Systems, Inc.
James P. Long, pro se, amicus curiae, submitted a brief.
HINES, J. In this appeal, we determine whether a
respondent in a try title action brought pursuant to G. L.
c. 240, §§ 1-5, may test the substantive merits of a
petitioner's claims in the "first step" of such an action. The
issue arises because the try title statute, in keeping with its
purpose to allow a person holding record title to compel an
adverse claimant to prove the merits of the adverse claimant's
interest in the property, contemplates a two-step procedure in
which the substantive merits of the parties' claims are
determined at a trial. Under our interpretation of the statute,
the "first step" requires that the petitioner must satisfy the
jurisdictional elements2 of the statute and, if satisfied, the
"second step" requires the adverse claimant either to bring an
action to assert the claim to title, or to disclaim an interest
in the property. Bevilacqua v. Rodriguez, 460 Mass. 762, 766
(2011), citing G. L. c. 240, § 1. Recognizing the potential
2
The petitioner must satisfy these three jurisdictional
elements: (1) that he holds "record title" to the property; (2)
that he is a person "in possession"; and (3) the existence of an
actual or possible "adverse claim" clouding his record title.
Blanchard v. Lowell, 177 Mass. 501, 504-505 (1901). Standing
encompasses the first two elements: "record title" and
"possession." Bevilacqua v. Rodriguez, 460 Mass. 762, 766-767 &
n.5 (2011).
3
conflict between jurisdictional determinations and a
petitioner's right under the statute to compel an adverse
claimant to bring his or her own action to assert that claim, we
transferred the petitioner's appeal to this court on our own
motion. For the reasons explained below, we affirm the Land
Court judgment dismissing his petition.
Background. 1. Procedural history. The petitioner,
Thomas C. Abate, brought this action in the Land Court asserting
that a purported assignment of a mortgage was invalid and,
thereby, indirectly challenging a foreclosure by Deutsche Bank
National Trust Company, as trustee for Carrington Mortgage Loan
Trust, Series 2005-FRE1, Asset Backed Pass-Through Certificates
(Deutsche Bank). At the time of filing, Deutsche Bank as the
assignee of the mortgage already had foreclosed on Abate's
mortgage. The respondents filed motions to dismiss under Mass.
R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974), for failure to
state a claim on which relief could be granted.3 A Land Court
judge dismissed the petition after concluding that, as a matter
of law, none of the alleged grounds for invalidity of the
3
Fremont Investment & Loan (Fremont) did not file a motion
to dismiss; the claims against Fremont were dismissed without
prejudice by stipulation of the parties on January 9, 2013. For
purposes of this decision, reference to the respondents only
includes MERS, Deutsche Bank, and Carrington unless otherwise
noted.
4
assignment could be sustained and that the foreclosure left
Abate without record title.4
2. Facts. The following facts are taken from undisputed
facts in the record.5 On June 17, 2005, Abate granted a mortgage
to Mortgage Electronic Registration Systems, Inc. (MERS), as
nominee for Fremont Investment & Loan (Fremont). On that same
date, Abate took title to the property at 14 Owatonna Street,
Newton, through a quitclaim deed. The mortgage and quitclaim
deed were recorded in the Middlesex County registry of deeds.
An assignment of the mortgage, recorded on December 3, 2010,
purported to assign Abate's mortgage from MERS to Deutsche Bank
on November 16, 2010.
Abate has been in possession of the property since 2005.
He filed bankruptcy on October 29, 2010, and represented during
4
Although the respondents filed their motions to dismiss
under Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974), as
explained below, the argument advanced in the motion was in
essence a challenge to Thomas C. Abate's standing, a requirement
of subject matter jurisdiction which may be considered under
either rule 12 (b) (1) or 12 (b) (6).
5
The record before the judge included the petition and
other materials from court filings and the Middlesex County
registry of deeds. Although the judge did not explicitly cite
rule 12 (b) (1), we consider his disposition of this case to be
a better fit under rule 12 (b) (1) than under rule 12 (b) (6).
The judge was properly allowed to review materials outside of
the petition in deciding subject matter jurisdiction. "A judge,
and logically a reviewing court, may consider documents and
other materials outside the pleadings when ruling on a rule 12
(b) (1) motion." Audoire v. Clients' Sec. Bd., 450 Mass. 388,
390 n.4 (2008).
5
bankruptcy proceedings that he intended to surrender the
property.6 On December 9, 2010, the bankruptcy court ordered
that Deutsche Bank be released from an automatic stay so that it
could exercise its rights pursuant to the mortgage. On March
28, 2012, Deutsche Bank conducted a nonjudicial foreclosure
auction in accordance with the statutory power of sale provision
in the mortgage and the nonjudicial foreclosure process set
forth in G. L. c. 244, §§ 11-17C.7 The foreclosure deed
conveying title from Deutsche Bank to itself was recorded on
October 5, 2012.8
In May, 2012, Abate filed a petition to try title, pursuant
to G. L. c. 240, §§ 1-5, in the Land Court, claiming to hold
record title and to be in possession of the property. The
petition named four possible adverse claimants: (1) Fremont;
(2) MERS; (3) Deutsche Bank; and (4) Carrington Mortgage
6
Abate's Chapter 7 individual debtor's statement of
intention showed the creditor for the property as Carrington and
that Abate intended to surrender the property.
7
Deutsche Bank recorded a certificate of entry on October
5, 2012, pursuant to the statute governing foreclosure by entry
and possession, G. L. c. 244, §§ 1-2, asserting that Deutsche
Bank, through its agent, had made an open, peaceable, and
unopposed entry on the property on March 28, 2012.
8
At a September, 2012, hearing on the motion to dismiss
filed by Deutsche Bank and Carrington, Deutsche Bank explained
that the foreclosure deed had not been previously recorded
because the high bidder at the auction, a third party, did not
proceed when the contract expired because of this try title
action.
6
Services, LLC (Carrington). Abate claimed to have record title
"by virtue of a quitclaim deed dated June 17, 2005." Abate
asserted that he had granted a mortgage to Fremont, as the
lender, and MERS, as the mortgagee, and that MERS had purported
to assign the mortgage to Deutsche Bank. Abate asserted that
the defendants were potentially adverse claimants because the
assignment from MERS to Deutsche Bank was "fraudulent, invalid,
void and/or legally inoperative" for a variety of reasons.
Abate did not acknowledge in his petition that Deutsche Bank had
already foreclosed on the mortgage.
On July 31, 2012, Deutsche Bank and Carrington filed a
motion to dismiss pursuant to rule 12 (b) (6). The motion
asserted that the try title petition did not demonstrate a
plausible entitlement to the relief sought because Abate failed
to allege facts sufficient to prove that the assignment was
invalid.9 Abate contested the filing on procedural grounds,
arguing that a motion to dismiss for failure to state a claim is
not a proper response to a try title action and that once he
satisfied the threshold jurisdictional requirements for
9
In a supplemental memorandum in support of their motion to
dismiss, Deutsche Bank and Carrington also argued that Abate is
judicially estopped from proceeding with the try title action
because of the "contrary" assertion made in Abate's bankruptcy
case, where Abate indicated that he intended to surrender the
property. Like the Land Court judge, we decline to resolve this
claim because the petition against the defendants was properly
dismissed on other grounds.
7
maintaining the action, the judge should have compelled Deutsche
Bank and Carrington either to disclaim their interests in the
property or to bring an action to try title. Abate did not
offer a rebuttal to the substantive merits of the defendants'
motion to dismiss.
After a hearing, and with the benefit of additional
briefing, the judge allowed the motion on December 10, 2012
(Deutsche Bank/Carrington Order), agreeing with the argument of
Deutsche Bank and Carrington that Abate failed to state a claim
on which relief can be granted. Addressing separately each of
the claimed defects in the assignment, the judge ruled that
Abate's petition failed to sufficiently allege effective record
title because none of the allegations established any ground on
which the assignment could be found void or invalid.
Subsequently, on January 16, 2013, MERS filed a motion to
dismiss the petition pursuant to rule 12 (b) (6), arguing that
the Deutsche Bank/Carrington Order rendered Abate's petition
moot and further asserting that MERS does not have a present
interest in the property because it validly assigned the
mortgage to Deutsche Bank. Abate filed an opposition to MERS's
motion and a motion for reconsideration of the Deutsche
Bank/Carrington Order. The judge allowed MERS's motion to
dismiss on the ground that the reasons supporting dismissal
against Deutsche Bank and Carrington also apply to MERS and that
8
MERS no longer claims any title interest in the property. The
judge denied Abate's motion for reconsideration.
A judgment entered dismissing the petition against Deutsche
Bank, Carrington, and MERS with prejudice.10 Abate timely
appealed the judgment of dismissal.
While the appeal was pending, Abate filed a motion for
relief from judgment pursuant to Mass. R. Civ. P. 60 (b) (1),
(5), and (6), 365 Mass. 828 (1974), arguing that the judge erred
in allowing the motions to dismiss and that a subsequent Land
Court decision, which denied a motion to dismiss and held that a
try title action properly may lie before a foreclosure, rendered
the judgment inequitable.11 The judge denied Abate's motion,
reasoning that the subsequent decision was not binding precedent
and the ruling allowing a try title action to be brought before
a mortgage foreclosure had no bearing on the issues before him.
It was undisputed that Abate's try title action was brought
10
Earlier in the litigation, MERS and Deutsche Bank were
defaulted pursuant to Mass. R. Civ. P. 55 (a), 365 Mass. 828(1974). The judge did not abuse his "sound discretion" in
removing the defaults. Burger Chef Sys., Inc. v. Servfast of
Brockton, Inc., 393 Mass. 287, 289 (1984), quoting Silkey v. New
England Tel. & Tel. Co., 9 Mass. App. Ct. 816, 816 (1980).
11
Unlike the respondents in this case, the respondents in
Varian vs. Bank of N.Y. Mellon, Mass. Land Court, No. 12-MISC-
462971 (Aug. 23, 2013), did not attack the merits of the
petitioners' arguments claiming that the assignment of their
mortgage was invalid and thus the judge in that case did not
consider the motion to dismiss on that ground.
9
after foreclosure, and in any event, the decision would not have
changed the outcome in Abate's case where the complaint was
dismissed for failure to state a claim, a ground independent of
the timing of the foreclosure.
Discussion. In this appeal, Abate argues that in allowing
the respondents to bring a motion to dismiss under rule 12 (b)
(6), the judge vitiated his right under the statute to compel
the respondents to "disclaim all right and title adverse to the
petitioner" or "show cause why they should not bring an action
to try such claim." G. L. c. 240, §§ 1, 3. In particular,
Abate argues that in considering and allowing the motions, the
judge erroneously obliterated the distinction between
jurisdiction and the merits of a try title action. We disagree.
The judge properly considered the substantive merits of Abate's
claim that the assignment was invalid because the issue was
determinative of Abate's standing to bring a try title action
and ultimately the Land Court's subject matter jurisdiction.
Therefore, we affirm the decision of the Land Court allowing the
motions to dismiss. In doing so, we also resolve a conflict in
Land Court decisions by concluding that a petitioner claiming a
defect in the legal title of a purported mortgagee may only meet
10
the jurisdictional element of "adverse claim" after that
mortgagee has foreclosed.12
1. Statutory background. A try title action is one of
several judicial avenues available to a property owner who seeks
to challenge a claimed adverse property interest.13 See e.g.,
G. L. c. 231A, §§ 1-9 (declaratory judgment); G. L. c. 240,
§§ 1-5 (try title action); G. L. c. 240, §§ 6-10 (action to
12
Compare Varian vs. Bank of N.Y. Mellon, Mass. Land Court,
No. 12-MISC-462971 (Aug. 23, 2013) ("uncertainty as to the
holder of a mortgage" provides required adversity for mortgagor
to bring try title action prior to foreclosure), with Abate vs.
Freemont Inv. & Loan, Mass. Land Court, No. 12-MISC-464855 (Dec.
10, 2012) ("try title act may be used to challenge a party's
claim to hold a mortgage only after that party has foreclosed,
because it is only after foreclosure that the mortgagee has a
claim of superior title"). See Mitchell vs. United States Bank
Nat'l Ass'n, Mass. Land Court, No. 12-MISC-473427 (Mar. 21,
2014) (following Abate decision analysis); Stephens-Martin vs.
Bank of N.Y. Mellon Trust Co., N.A., Mass. Land Court, No. 12-
MISC-465277 (Oct. 1, 2013) (following Abate decision analysis).
Federal court decisions addressing the try title statute have
noted the disparity in our Land Court decisions. See, e.g.,
Lemelson v. U.S. Bank Nat'l Ass'n, 721 F.3d 18, 23-24 (1st Cir.
2013) (citing Abate decision favorably, "efforts to foreclose"
prior to foreclosure not "adverse claim" sufficient to
demonstrate subject matter jurisdiction over try title action);
Jepson v. Deutsche Bank Nat'l Trust Co., 969 F. Supp. 2d 202,
207 (D. Mass. 2013) (dismissing preforeclosure try title action
in accordance with Lemelson, while noting as persuasive
conflicting conclusion reached in Varian decision).
13
As noted in Bevilacqua, 460 Mass. at 766 n.3, the "try
title statute may now be something of an anachronism" when
considered in light of modern statutes that allow a landowner to
bring various actions to determine title. The statute is still
in effect, however, and we therefore analyze the contours of a
try title action in light of the subsequently enacted
Massachusetts Rules of Civil Procedure.
11
quiet title). A try title action is an action at law14 brought
by a person in possession of property and who claims to hold
"record title" clouded by an actual or possible adverse claim.15
Bevilacqua, 460 Mass. at 766, 767 n.5. The Land Court has
exclusive original jurisdiction over try title actions, which,
as we have noted, involve two steps. G. L. c. 185, § 1 (d). A
petitioner must establish three jurisdictional elements in the
"first step" of a try title action: (1) that he holds "record
title" to the property; (2) that he is a person "in possession";
and (3) the existence of an actual or possible "adverse claim"
14
In comparison, an action to quiet title, G. L. c. 240,
§ 10, is an in rem action brought under the court's equity
jurisdiction. See Bevilacqua, 460 Mass. at 767 n.5, citing
G. L. c. 185, § 1 (k). See also First Baptist Church of Sharon
v. Harper, 191 Mass. 196, 209 (1906). The try title action, in
contrast, is based in law instead of equity and allows a
petitioner to defeat a potentially adverse claim through default
or by showing title that is merely superior to that of the
respondent. Bevilacqua, supra. A try title action, where the
petitioner sets forth a sufficient petition, places the burden
on the respondent either to bring an action to try title or to
disclaim his interest in the property. G. L. c. 240, § 3.
15
The relevant portion of G. L. c. 240, § 1, is as follows:
"If the record title of land is clouded by an adverse
claim, or by the possibility thereof, a person in
possession of such land claiming an estate of freehold
therein or an unexpired term of not less than ten years,
and a person who by force of the covenants in a deed or
otherwise may be liable in damages, if such claim should be
sustained, may file a petition in the land court stating
his interest, describing the land, the claims and the
possible adverse claimants so far as known to him, and
praying that such claimants may be summoned to show cause
why they should not bring an action to try such claim."
12
clouding the plaintiff's record title.16 Blanchard v. Lowell,
177 Mass. 501, 504 (1901) (jurisdictional facts are "[the
petitioner's] interest, a description of the premises, the
claims and the possible adverse claimants, so far as known").
The failure to satisfy all of the elements of G. L. c. 240,
§§ 1-5, nullifies the court's subject matter jurisdiction.
Bevilacqua, supra at 766, citing Riverbank Improvement Co. v.
Chapman, 224 Mass. 424, 425 (1916). Standing is based on the
first two jurisdictional elements. See Bevilacqua, supra. If
these requirements are satisfied, the "second step" requires the
adverse claimant either to "disclaim the relevant interest in
the property or to bring an action to assert the claim in
question." Id., citing G. L. c. 240, § 1.
2. Motions to dismiss in try title actions. Abate's main
contention in this appeal flows from our prior case law
explaining the two steps of a try title action and noting that
the question who "has a better title . . . does not arise, and
is not to be determined in [the first step], but in the actions
which the respondents may be ordered to bring." Blanchard, 177
Mass. at 504-505. The rule that "better title" is to be
16
Abate's argument that only the first two elements are
required for jurisdiction is unavailing in light of the language
of the try title statute and our prior case law that also
requires an "adverse claim." See G. L. c. 240, § 1 (action may
be brought "[i]f the record title of land is clouded by an
adverse claim"); Blanchard, 177 Mass. at 504-505.
13
determined in the second step, however, does not preclude
consideration of the issue presented in the defendants' motions
to dismiss. At issue in the defendants' motions to dismiss was
the threshold question of jurisdiction, or more specifically
Abate's standing to bring the try title action. Where, as here,
the determination of standing, and ultimately jurisdiction,
necessarily reaches and effectively negates the merits of a
petitioner's claim, the two-step procedure is not abrogated.
Indeed, dismissal of a try title petition for lack of standing
on a motion to dismiss is a procedural disposition we expressly
approved in Bevilacqua, 460 Mass. at 763-764.17 Standing may be
considered under either rule 12 (b) (1) or rule 12 (b) (6).
Ginther v. Commissioner of Ins., 427 Mass. 319, 322 (1998). As
a component of subject matter jurisdiction, a party may
challenge, or a judge may consider, sua sponte, standing under
rule 12 (b) (1) at any time. See Mass. R. Civ. P. 12 (h) (3),
17
To the extent that Abate argues that the rules of civil
procedure do not apply to a try title action, we decline to
adopt that view. A try title action, like any other civil
action, is subject to the rules of civil procedure. See Mass.
R. Civ. P. 1, as amended, 450 Mass. 1403 (2008) (rules of civil
procedure apply to proceedings in Land Court); Mass. R. Civ. P.
81 (a) (1), as amended, 450 Mass. 1405 (2008) (rules applicable
to all proceedings not specifically excluded). See also G. L.
c. 185M, § 1 (d) (granting exclusive jurisdiction of try title
actions to Land Court). Although the try title action predates
the rules of civil procedure, we have never recognized an
exception for try title actions. Nor have we encountered a case
where a party claims such an exception.
14
365 Mass. 754 (1974); Maxwell v. AIG Domestic Claims, Inc., 460
Mass. 91, 99-100 (2011).
In Bevilacqua, 460 Mass. at 764, the judge was compelled to
act where he correctly perceived legal impediments to subject
matter jurisdiction and the respondent had not appeared to
challenge the issue. Here, because standing is a requirement of
subject matter jurisdiction, that issue was properly considered
by the Land Court judge even though not expressly cited by the
respondents in their motions to dismiss. As we indicated in
Bevilacqua, to the extent that subject matter jurisdiction
generally, or standing in particular, is raised by a respondent,
the judge may consider the issue by way of a motion to dismiss
under either rule 12 (b) (1) or rule 12 (b) (6).
a. Standard of review of a motion to dismiss in the "first
step" of a try title action. In a typical case, a plaintiff is
required to prove jurisdictional facts if those facts are
challenged by an opposing party through evidence accompanying a
motion to dismiss. Callahan v. First Congregational Church of
Haverhill, 441 Mass. 699, 710-711 (2004) ("factual challenge" to
subject matter jurisdiction, made through presentation of
extrapleadings material, "gives no presumptive weight to the
averments in the plaintiff's complaint, and requires the court
to address the merits of the jurisdictional claim by resolving
the factual disputes between the plaintiff and the defendants").
15
In Bevilacqua, 460 Mass. at 764 n.2, we recognized some of the
difficulties of applying the procedure and standards of rule 12
(b) (1) or rule 12 (b) (6) to try title actions. We noted, for
example, that it may be appropriate in try title actions to
place the burden on the petitioner to prove jurisdictional facts
even where the potentially adverse party does not challenge
jurisdictional facts because a property owner who has not
received notice of the action may "be forever barred from having
or enforcing any such [title] claim" after a default. Id.,quoting G. L. c. 240, § 2. We recognized, on the other hand,
that requiring the petitioner to prove all jurisdictional facts
by a preponderance of the evidence standard might result in the
two steps of a try title petition being collapsed into one.18
Id. We then observed that "it may be necessary to adopt a
unique standard of review in future try title actions." Id.
We now set forth the standard applicable to the
consideration of a motion to dismiss brought in the first step
of a try title action. As previously discussed, a petitioner
18
The preponderance of the evidence standard is used in
other jurisdictional challenges. See Miller v. Miller, 448
Mass. 320, 328 (2007) ("in deciding motion to dismiss for lack
of personal jurisdiction, court has discretion to determine
personal jurisdiction by preponderance of evidence without
waiting for trial on merits"). See also McNutt v. General
Motors Acceptance Corp., 298 U.S. 178, 189 (1936) (preponderance
of evidence standard appropriate for contested facts in subject
matter jurisdiction).
16
must allege three jurisdictional elements in the first step of a
try title claim: (1) record title, (2) possession, and (3) an
actual or possible adverse claim. The jurisdictional facts
required for standing -- record title and possession -- are
subject to challenge through the introduction of other evidence
negating the petitioner's claim. If the jurisdictional facts
required for standing are factually challenged by an adverse
party or by the court, the petitioner bears the burden to prove
those facts by a preponderance of the evidence. Conversely,
allegations regarding the third jurisdictional fact, adverse
claim, are entitled to a presumption of truth regardless of a
factual challenge because determining the merits of an adverse
claim in the first step would compress the two-step structure of
the try title statute. In this way, we harmonize the two-step
try title procedure with the traditional use of the rules of
civil procedure as a device for raising jurisdictional issues
before a court.
This approach is also consistent with that taken in try
title actions before the rules of civil procedure were adopted.
This court has historically reviewed the factual accuracy of a
petitioner's claimed jurisdictional facts required for standing,
i.e., record title and possession -- but not necessarily the
third nonstanding jurisdictional fact, i.e., adverse claim, in
the first step of a try title action. See Arnold v. Reed, 162
17
Mass. 438, 440 (1894) (determining record title in first step of
try title action based on "examination of the records of the
Probate Court"), cited with approval in Bevilacqua, 460 Mass. at769 n.6. See also Blanchard, 177 Mass. at 505 (determining
possession in first step of try title action after review of
petitioner's testimony and respondents' competing arguments).
In addition, our case law requires the plaintiff to bear
the burden of establishing sufficient facts on which
jurisdiction can be found. See Droukas v. Divers Training
Academy, Inc., 375 Mass. 149, 151 (1978) (personal
jurisdiction). See also Williams v. Episcopal Diocese of Mass.,
436 Mass. 574, 577 n.2 (2002) (subject matter jurisdiction). In
Cepeda v. Kass, 62 Mass. App. Ct. 732, 736-738 (2004), the
Appeals Court held that a reviewing court shall accept as true
all prima facie evidence of personal jurisdiction unless
contradictory evidence is introduced, in which case the
plaintiff must "establish jurisdiction by a preponderance of the
evidence at an evidentiary hearing or at trial." As with
personal jurisdiction, a judge has discretion to hold a hearing
prior to trial to determine subject matter jurisdiction. Mass.
R. Civ. P. 12 (d), as amended, 451 Mass. 1401 (2008).
Similarly, there is no impediment to a judge holding a hearing
to determine the accuracy of alleged jurisdictional facts in the
first step of a try title action. If a judge holds a hearing to
18
determine the facts necessary for the petitioner to establish
record title and possession in the first step of a try title
action, the petitioner is required to establish those elements
by a preponderance of the evidence standard.19
Although the judge's decision ostensibly resolved the
respondents' claim that the petition failed to state a claim
under rule 12 (b) (6), the issue before the judge was
essentially a challenge to subject matter jurisdiction or, more
specifically, Abate's standing. The respondents' challenge to
Abate's record title, based on their argument that the
assignment was indeed valid, was in effect a challenge to
Abate's standing. We now address the judge's disposition of the
matter insofar as it rested on a determination that Abate failed
to demonstrate record title, which in turn resulted in a lack of
standing.
b. Abate's standing.20 Abate asserted that he held record
title and acknowledged his grant of a mortgage to MERS and the
19
Requiring the petitioner to establish record title and
possession by a preponderance of the evidence satisfies the
"Brooklyn Bridge" problem identified in Bevilacqua, 460 Mass. at
770-771.
20
The respondents do not dispute that Abate is in fact in
possession of the property. There is therefore no dispute that
he satisfies the second requirement of standing to maintain a
try title action, i.e., that he be a "person in possession."
G. L. c. 240, § 1.
19
purported assignment of that mortgage to Deutsche Bank. Without
acknowledging in his petition that Deutsche Bank had already
foreclosed on the mortgage, Abate merely claimed that the
assignment was invalid. Deutsche Bank responded in its motion
to dismiss that it had foreclosed on Abate's equity of
redemption under the mortgage, thus challenging Abate's claim of
record title. Abate did not dispute that Deutsche Bank
purported to foreclose on Abate's equity of redemption prior to
Abate filing his try title action.21 The judge concluded that
Abate lacked record title based on the absence of any viable
claim that the mortgage assignment, and by extension the
subsequent foreclosure, was invalid.
Although it is correct that "better title" is typically
determined in the second step of a try title action if the
petitioner sufficiently alleges all jurisdictional facts, a try
title action brought by a mortgagor against a foreclosing
mortgagee may sometimes require a determination of better title
21
Although the foreclosure deed was not recorded before
Abate filed his try title action, it was recorded before the
judge issued the order dismissing Abate's complaint. The
foreclosure deed was not produced as part of the record, but we
may take judicial notice of the deed where Abate did not contest
the occurrence of the foreclosure auction. See Mass. G. Evid.
§ 201(b)(2) (2014). Judicial notice may be taken by a trial
court or an appellate court. Commonwealth v. Grinkley, 44 Mass.
App. Ct. 62, 69 n.9 (1997). The foreclosure deed was not a
necessary requirement to finding the absence of record title,
but its presence on record prior to disposition of this case
further supports the conclusion that Abate lacked record title.
20
in the first step. In circumstances such as this, where the
mortgagor's claim of record title is predicated on a
determination that a foreclosure auction held by a mortgagee was
void because of a flaw in the mortgagee's chain of title, the
petitioner must demonstrate "better title" than the mortgagee in
order to show that the foreclosure was invalid and, thus, that
the mortgagor retained title after the foreclosure auction
occurred. If a valid foreclosure did not occur, the mortgagor
and mortgagee have complementary claims to title; however, a
valid foreclosure terminates a mortgagor's claim of title.22
Bevilacqua, 460 Mass. at 775 ("a mortgage, by its nature,
necessarily implies the simultaneous existence of two separate
but complementary claims to the property that do not survive the
mortgage or each other"). See Blanchard, 177 Mass. at 504-505.
Under Massachusetts law, which subscribes to the "title theory"
for mortgages, the title interests are split between the
mortgagor and mortgagee. The legal "'title' to the mortgaged
real estate remains in the mortgagee until the mortgage is
satisfied or foreclosed." Faneuil Investors Group, Ltd.
Partnership v. Selectmen of Dennis, 458 Mass. 1, 6 (2010),
22
A petitioner may hold record title without having good
title or may have good title without record title. See Arnold
v. Reed, 162 Mass. 438, 440 (1894) (noting that forged deed
creates record title but not good title and that adverse
possession and deed executed through unrecorded power of
attorney create good title, but not record title).
21
quoting Restatement (Third) of Property (Mortgages) § 4.1
comment a (1997). Equitable title remains in the mortgagor.
Bevilacqua, supra at 774. See Eaton v. Federal Nat'l Mtge.
Ass'n, 462 Mass. 569, 575-576 (2012) (collecting cases and
discussing common-law roots of separation of legal and equitable
title between mortgagor and mortgagee); U.S. Bank Nat'l Ass'n v.
Ibanez, 458 Mass. 637, 649 (2011).
Because Abate asserted that he granted a mortgage to MERS
and did not dispute that Deutsche Bank, MERS's purported
assignee, foreclosed Abate's equitable title under the mortgage,
the judge was required to determine whether the assignment, and
thus the foreclosure auction, was valid in order to determine
whether Abate had the record title necessary to survive the
first step of a try title action. In so doing, the judge
reviewed the merits of each legal argument alleged by Abate to
support his claim that the assignment to Deutsche Bank was
invalid or void.23 As previously mentioned, Abate had the burden
23
Abate pleaded the following allegations in support of his
claim that the assignment was void or invalid: (1) the
assignment "fails to identify the principal that MERS was
purportedly acting for"; (2) MERS had no lawful authority from
Fremont to assign the mortgage; (3) lack of consideration; (4)
noncompliance with G. L. c. 183, § 6D, because the mortgage
broker and originator were not listed; (5) lack of MERS's
corporate seal; (6) the assignment violated the terms of the
Carrington trust; (7) the assignment was not lawfully executed
because the signatory allegedly did not sign in the presence of
the notary; (8) the signatory was not "duly authorized" to
22
to prove record title after that jurisdictional fact was
challenged, and Abate failed to demonstrate that the assignment
was invalid for any of the reasons asserted in his petition.
Consequently, the judge determined that Abate failed to
demonstrate the record title required to maintain the action
because none of the alleged defects in the assignment could
withstand review under rule 12 (b) (1) and negate the validity
of the foreclosure. The judge, therefore, dismissed the
petition against Deutsche Bank, Carrington, and MERS.
Apart from his contention that the judge could not test the
sufficiency of his claims under rule 12 (b) (6), Abate does not
argue error in the judge's rulings on the merits of the
respondents' claims. Abate's failure to address this issue on
appeal waives his right to appellate review of the judge's
ruling on the merits of the motions. See Mass. R. A. P. 16 (a)
(4), as amended, 367 Mass. 921 (1975). See also Galiastro v.
Mortgage Elec. Registration Sys., 467 Mass. 160, 174 (2014)
(claim waived where appellant made no appellate argument
concerning improper dismissal under rule 12 [b] [6]).
Accordingly, we need not, and therefore do not, decide whether
the judge properly concluded that none of the claimed
execute the assignment; (9) the signatory was an employee of
Carrington, not MERS; and (10) the assignment fraudulently
attempts to conceal the actual date of securitization.
23
infirmities in the assignment plausibly sets forth any basis on
which the assignment could be found to be void or invalid.
c. The adverse claim element of jurisdiction. Where we
have characterized the judge's decision as being premised on
Abate's lack of standing based on the lack of record title, the
remaining jurisdictional fact, adverse claim, has no bearing on
the outcome of this appeal. It is undisputed that Abate filed
his try title petition after the foreclosure occurred, which
conclusively establishes the existence of an adverse claim.
Nonetheless, because the issue may arise in future try title
actions between a mortgagor and a mortgagee, we take this
opportunity to resolve the conflict in the Land Court try title
decisions on the adverse claim element of subject matter
jurisdiction.24 We conclude that where a mortgagor challenges
the right of the mortgagee to foreclose, the "adverse claim"
element of a try title action is sufficiently alleged only if
the foreclosure already has occurred.
Our view that an adverse claim arises only after
foreclosure is dictated by application of well-settled mortgage
law principles to the jurisdictional requirement of an adverse
claim. In this regard, the analysis in Bevilacqua, 460 Mass. at
776, where we held that "a necessary element of [a] try title
24
See note 12, supra.
24
action [is] the existence of an adverse claim" is instructive.
As between a mortgagor and a mortgagee, the title interests are
not, as a matter of law, adverse. Because a mortgagor and
mortgagee hold complementary claims of title, the law fashions a
relationship that is in equipoise, which stands until either the
mortgagor satisfies the debt or the mortgagee forecloses. See
Bevilacqua, supra at 775, citing Negron v. Gordon, 373 Mass.
199, 205 n.4 (1977). Following the logic of Bevilacqua, neither
is superior or inferior to the other.25
Our conclusion that the requisite adverse claim does not
exist where a mortgagor challenges an impending foreclosure does
not, however, preclude a try title action in circumstances where
the very existence of a mortgage is called into question. In
this regard, we recognize the continuing vitality of our holding
in Brewster v. Seeger, 173 Mass. 281, 282 (1899), where we
recognized the petitioner's right, under the try title statute,
to challenge an imminent foreclosure. The petitioner alleged
record title, possession, and an adverse claim by the respondent
having entered to foreclose. Id. We reviewed the merits of the
25
Although the judge insisted that Abate demonstrate "a
claim of superior title," we do not interpret the statute to
require such a showing. A property owner need only show record
title to establish standing under the try title statute. As
discussed supra, however, in certain actions between a mortgagor
and purported mortgagee, a showing of record title may require a
determination of superior title.
25
case and determined that the respondent had no legal right to
enter to foreclose. Id. at 282-283. Our holding in Brewster,
however, does not govern this case. The result in Brewster is
explained by the fact that the petitioner's claim did not arise
from the mortgagor-mortgagee relationship. To the contrary, the
petitioner claimed that the mortgage had been discharged and
that, therefore, it no longer existed. Thus, the adverse claim
element alleged in Brewster rested on a completely different and
legally sustainable footing. The rules regarding separate but
complementary title interests did not in that case preclude the
necessary showing of an adverse claim. Where a try title action
is, as in Brewster, based on facts consistent with an adverse
claim as we have defined it here, or otherwise recognized in our
law, we leave it to the judge to determine the sufficiency of
the adverse claim allegation.26
Fidelity to the requirement of an adverse claim does not
place unreasonable or unnecessary limits on the remedies
available to a property owner seeking to prevent the obvious
harm that may result when a foreclosure proceeds without
challenge. We are mindful that in Massachusetts, a nonjudicial
foreclosure State, a mortgagee may foreclose without prior
26
We do not think that the facts in the Varian case, see
note 12, supra, meet this test inasmuch as the existence of the
mortgage was not in dispute. The petitioners argued only that
the respondents did not hold the mortgage.
26
judicial intervention. As we have noted, however, a property
owner has other, and perhaps more suitable, remedies available
to him or her. See, e.g., G. L. c. 231A, §§ 1-9 (declaratory
judgment); G. L. c. 240, §§ 6-10 (action to quiet title); Mass.
R. Civ. P. 65, 365 Mass. 832 (1974) (injunction as remedy). In
addition, a property owner in a foreclosure is protected by our
requirement of strict adherence to the law in each of the
nonjudicial foreclosure procedures available to a mortgagee.
See, e.g., Eaton, 462 Mass. at 571 (foreclosure sale conducted
pursuant to power of sale must comply with all applicable
statutory provisions); U.S. Bank Nat'l Ass'n, 458 Mass. at 646-
647 (failure to comply strictly with power of sale renders
foreclosure sale void). We discern no prejudice to a party's
rights under this interpretation of the try title statute.27
3. Dismissal with prejudice. The Land Court judge
dismissed Abate's complaint against Deutsche Bank, Carrington,
and MERS with prejudice. As noted supra, the judge's dismissal
was essentially based on Abate's failure to meet one of three
threshold jurisdictional requirements for a try title action,
namely, the standing requirement of record title. Mass. R. Civ.
27
We are cognizant of the concerns expressed by the court
in Jepson, 969 F. Supp. 2d at 207. However, as we have already
said, a petitioner challenging a mortgage foreclosure may seek
the available and adequate remedies available in other
procedures.
27
P. 12 (h) (3). Dismissals for lack of subject matter
jurisdiction are ordinarily without prejudice because dismissal
for lack of jurisdiction is typically not an adjudication on the
merits. See Bevilacqua, 460 Mass. at 780, citing Mass. R. Civ.
P. 41 (b) (3), as amended, 454 Mass. 1403 (2009). In this case,
however, as we have explained, the judge correctly considered
the merits of Abate's claims as a necessary step in determining
the absence of his record title. Accordingly, dismissal with
prejudice was proper.
Conclusion. The judgment dismissing Abate's petition
against Deutsche Bank, Carrington, and MERS with prejudice is
affirmed.
So ordered.