Lemelson v. U.S. Bank National Association

United States Court of Appeals
For the First Circuit
No. 12-2275
REV. FR. EMMANUEL LEMELSON, f/k/a
Gregory M. Lemelson; ANJEZA LEMELSON,
Plaintiffs, Appellants,
v.
U.S. BANK NATIONAL ASSOCIATION, Trustee,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
Lynch, Chief Judge,
Howard and Kayatta, Circuit Judges.
James T. Ranney for appellants.
Peter Francis Carr, II, with whom Eckert Seamans Cherin &
Mellott, LLC, was on brief, for appellee.
July 1, 2013
LYNCH, Chief Judge. Petitioners Gregory and Anjeza
Lemelson filed this action under the Massachusetts try title
statute, Mass. Gen. Laws ch. 240, §§ 1-5, seeking an order
invalidating a March 2011 assignment of the mortgage loan on their
Southborough, Massachusetts home to defendant U.S. Bank National
Association ("U.S. Bank"), and enjoining U.S. Bank from commencing
foreclosure proceedings pursuant to that assignment. The Lemelsons
have not made a mortgage payment since April 2010.
After removing the action to federal court, U.S. Bank
moved to dismiss the complaint, pursuant to Fed. R. Civ. P.
12(b)(6), for failure to state a claim under the try title statute,
which the district court granted. The dismissal was without
prejudice. See Lemelson v. U.S. Bank Nat'l Ass'n, Civ. No. 12-
10677-PBS, 2012 WL 4527527, at *2 (D. Mass. Sept. 28, 2012).
Relying primarily on the decision of the Supreme Judicial Court of
Massachusetts ("SJC") in Bevilacqua v. Rodriguez, 955 N.E.2d 884(Mass. 2011), the district court held that: (i) to state a claim
under the Massachusetts try title statute, a petitioner must
allege, inter alia, that an adverse claim clouds his record title,
Lemelson, 2012 WL 4527527, at *1; and (ii) U.S. Bank's mere efforts
to foreclose on the Lemelsons' home did not amount to an adverse
claim under Massachusetts law, id. at *2.
The Lemelsons now appeal, saying that both determinations
were made in error. We affirm.
-2-
I.
On March 28, 2012, the Lemelsons jointly filed this try
title action in the Commonwealth of Massachusetts Land Court,
challenging the authority of U.S. Bank to foreclose on their home
pursuant to the March 2011 assignment.1 A try title petition is a
specialized form of action that seeks to compel an adverse claimant
to bring an action trying its title to the disputed property. See
Mass. Gen. Laws ch. 240, §§ 1-5. In relevant part, section 1 of
the try title statute provides:
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 . . . 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.
1
This was the second action filed by the Lemelsons seeking to
invalidate the March 2011 assignment. Previously, on November 7,
2011, Gregory Lemelson filed a different type of action, a quiet
title action, against U.S. Bank in the Massachusetts Land Court,
see Mass. Gen. Laws ch. 240, § 6, which was removed on the basis of
diversity jurisdiction, 28 U.S.C. § 1332. See Lemelson v. U.S.
Bank Nat'l Ass'n, Civ. No. 1:11-cv-12050-PBS (D. Mass. filed Nov.
18, 2011). On March 7, 2012, a magistrate judge determined that
Lemelson lacked standing to pursue a quiet title action in federal
court, and recommended that the case be remanded to the Land Court.
Before the district court could rule on the magistrate judge's
recommendation, Lemelson voluntarily dismissed the quiet title
complaint. One week later, the Lemelsons commenced this action.
See Lemelson v. U.S. Bank Nat'l Ass'n, Civ. No. 12-10677-PBS, 2012
WL 4527527, at *1 (D. Mass. Sept. 28, 2012).
-3-
Id. Additionally, if an adverse claimant is notified of the
petition and fails to file an action asserting its claims to the
property, the Land Court is authorized to "forever bar[] [the
defendant] from having or enforcing any such claim adversely to the
petitioner." Id. § 2; see 28 Mass. Prac., Real Estate Law § 31A.4.
Try title actions are subject to a number of limitations, see,
e.g., Bevilacqua, 955 N.E.2d at 888-91, which we take up later.
The relevant facts as alleged in the Lemelsons' petition
to try title were as follows. On August 10, 2006, Gregory Lemelson
purchased a home, located at 4 Wyndemere Drive in Southborough,
Massachusetts, where he and his wife currently reside (the
"Property"). To finance that purchase, Lemelson executed a
mortgage loan, composed of a promissory note and a mortgage, in the
principal amount of $1.6 million.
Initially, the mortgage was held by Mortgage Electronic
Registration Systems, Inc. ("MERS"), the promissory note was
payable to Mortgage Master, Inc., and the mortgage loan servicer
was Thornburg Mortgage, Inc. At some time after origination, the
promissory note and mortgage were sold.2 Additionally, on May 1,
2
In their petition to try title, and at various points
throughout the district court proceedings, the Lemelsons disclaimed
knowledge of to whom their mortgage loan was sold following
origination. However, it appears from U.S. Bank's submissions to
the district court, several of which the Lemelsons possessed before
filing this action, that the mortgage loan was conveyed to the
Thornburg Mortgage Securities Trust 2006-6 Mortgage Loan Pass-
Through Certificates, Series 2006-6, pursuant to a November 1, 2006
Pooling and Servicing Agreement. See, e.g., Culhane v. Aurora Loan
-4-
2009, Thornburg's parent company filed for bankruptcy and the
mortgage loan servicer changed twice, first to Censlar, FSB, and
then, in June 2010, to Select Portfolio Servicing, Inc.
The Lemelsons stopped making payments on their mortgage
loan in April 2010, and shortly thereafter, in November 2010, they
received a Notice of Default letter from Select Portfolio. On
March 11, 2011, MERS filed a Corporate Assignment of Mortgage in
the Worcester County Registry of Deeds (the "March 2011
assignment"), which purported to assign both the promissory note
and the mortgage to U.S. Bank.
The petition to try title asserted that, by way of the
March 2011 assignment, U.S. Bank possessed a claim to the Property
adverse to the Lemelsons' record title. Moreover, it alleged a
host of deficiencies in the execution and notarization of the March
2011 assignment, which were said to render it "fraudulent, invalid,
void and/or legally inoperative."3 As relief, the petition sought
Servs. of Neb., 708 F.3d 282, 286-88 (1st Cir. 2013) (describing
bundling and securitization practices for residential mortgage
loans). In any event, we need not resolve the issue, as the
identity of the prior owner of the Lemelsons' mortgage loan does
not affect our disposition.
3
The petition alleged, inter alia, that the signatory to the
assignment had not appeared before a notary, as required under
Mass. Gen. Laws ch. 183, § 30, and that the corporate seal affixed
to the assignment was for a MERS entity that did not exist in March
2011. But the petition's core allegation was that, due to the
supposed uncertainty surrounding the initial post-origination sale
of the mortgage loan, see note 2 above, U.S. Bank could not
establish "a complete and unbroken chain of title . . . which would
give [it] the lawful authority to assert any rights under the
-5-
an order compelling U.S. Bank to bring a try title action,
expunging the March 2011 assignment from the land records, and
enjoining any party from proceeding with foreclosure during the
pendency of litigation.
After removing the case to federal court, on May 11,
2012, U.S. Bank filed a motion to dismiss the petition under Fed.
R. Civ. P. 12(b)(6), which the Lemelsons opposed. In addition, the
Lemelsons filed a motion seeking leave to serve additional parties
and to amend their petition accordingly. On September 28, 2012,
the district court issued a memorandum and order granting U.S.
Bank's motion to dismiss without prejudice and denying the
Lemelsons' motion to amend. Lemelson, 2012 WL 4527527, at *2.
Judgment of dismissal without prejudice was entered on
October 1, 2012, and this timely appeal followed.
II.
We review an order of dismissal for failure to state a
claim de novo, Artuso v. Vertex Pharm., Inc., 637 F.3d 1, 5 (1st
Cir. 2011), and may affirm on any basis apparent in the record,
Freeman v. Town of Hudson, 714 F.3d 29, 35 (1st Cir. 2013). In
conducting this review, we disregard "statements in the complaint
that merely offer 'legal conclusion[s] couched as . . . fact[ ]' or
'[t]hreadbare recitals of the elements of a cause of action.'"
mortgage or to enforce [the] note."
-6-
Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011)
(alterations in original) (quoting Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009)) (internal quotation marks omitted). The complaint's
"remaining, non-conclusory allegations are entitled to a
presumption of truth, and we draw all reasonable inferences
therefrom in the pleader's favor." Rodríguez-Ramos v.
Hernández-Gregorat, 685 F.3d 34, 40 (1st Cir. 2012) (citing
Ocasio-Hernández, 640 F.3d at 12).
Dismissal for failure to state a claim is appropriate "if
the complaint does not set forth 'factual allegations, either
direct or inferential, respecting each material element necessary
to sustain recovery under some actionable legal theory.'" United
States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377,
384 (1st Cir. 2011), cert. denied, 132 S. Ct. 815 (2011) (quoting
Gagliardi v. Sullivan, 513 F.3d 301, 305 (1st Cir. 2008)). In
other words, "[t]o survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to 'state a
claim to relief that is plausible on its face.'" Iqbal, 556 U.S.
at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).
III.
The Lemelsons raise two challenges on appeal to the
district court's order granting U.S. Bank's motion to dismiss.
First, they argue that the district court erred in holding that an
-7-
adverse claim is a necessary element in a cause of action under the
Massachusetts try title statute. In the alternative, petitioners
argue that even if the district court's construction of the statute
was correct, it erred in concluding that the petition's allegations
concerning U.S. Bank's efforts to foreclose were insufficient to
show an adverse claim under Massachusetts law. We consider and
reject these challenges in turn.
A.
We begin by disposing of the Lemelsons' contention that
the district court erred in construing the Massachusetts try title
statute to require the pleading of an adverse claim to survive a
motion to dismiss. See Lemelson, 2012 WL 4527527, at *1.
Specifically, the Lemelsons argue that the SJC's decision in
Bevilacqua, 955 N.E.2d 884, establishes that a try title petitioner
need only allege "two jurisdictional facts at the pleading stage:
(1) possession; and (2) a record title." And where, as here, these
facts have been conceded, see Lemelson, 2012 WL 4527527, at *2, the
petitioners argue that the burden shifts to the respondent (i.e.,
U.S. Bank) either to disclaim the interest alleged in the petition
or to bring an action asserting that interest against the
petitioners. See, e.g., Mass. Gen. Laws ch. 240, § 3 (providing
that respondents in a try title action may "appear and disclaim all
right and title adverse to the petitioner," or, "[i]f they claim
-8-
title, . . . show why they should not be required to bring an
action to try such title"); Bevilacqua, 955 N.E.2d at 889.
This argument rests on a mischaracterization of the SJC's
holding in Bevilacqua, which concerned the factual allegations
necessary to establish standing under the Massachusetts try title
statute. In Bevilacqua, the petitioner was granted a quitclaim
deed to the respondent's home following an invalid foreclosure sale
and sought to compel the respondent to try his title to the
property. 955 N.E.2d at 886-88. The Land Court dismissed the
petition sua sponte, apparently under Mass. R. Civ. P. 12(h)(3),
which authorizes dismissal "[w]henever it appears . . . that the
court lacks jurisdiction of the subject matter" (emphasis added),
finding that the petitioner "holds no title to the property . . .
and thus lacks standing to bring a try title action." Bevilacqua,
955 N.E.2d at 887; see Bevilacqua v. Rodriguez, No. 10 MISC 427157
KCL, 2010 WL 3351481, at *1-2 (Mass. Land Ct. Aug. 26, 2010), aff'd
& remanded, 955 N.E.2d 884 (Mass. 2011). In affirming that
determination on appeal, the SJC clarified that in order "to
establish standing under G.L. c. 240, § 1," a petitioner must show
that she is both "in possession of" and "hold[s] a record title to"
the disputed property. 955 N.E.2d at 889 (emphasis added) (quoting
-9-
Mass. Gen. Laws ch. 240, § 1) (internal quotation marks omitted);
see Blanchard v. Lowell, 59 N.E. 114, 114-15 (Mass. 1901).4
The trouble for the Lemelsons, of course, is that the
district court dismissed their petition for failure to state a
claim, not for lack of standing. Lemelson, 2012 WL 4527527, at *2.
Nevertheless, the Lemelsons offer no authority, either from
Bevilacqua or from any other Massachusetts case, to support their
contention that a mere showing of possession and record title in a
try title action is enough to defeat a motion to dismiss for
failure to state a claim under Mass. R. Civ. P. 12(b)(6), which
imposes the same burden on a plaintiff as does Fed. R. Civ. P.
12(b)(6). See Iannacchino v. Ford Motor Co., 888 N.E.2d 879, 890
(Mass. 2008).
In contrast, the district court's construction is
consistent with the plain language of the Massachusetts try title
statute. See Mass. Gen. Laws ch. 240, § 1 (providing that "[i]f
the record title of land is clouded by an adverse claim, or by the
possibility thereof, a person in possession of such land" may file
a petition to try title (emphasis added)). The construction is
also supported by the remainder of the SJC's decision in
Bevilacqua, see 955 N.E.2d at 891-92, for reasons we soon describe,
4
The SJC's much earlier decision in Blanchard v. Lowell, 59
N.E. 114 (Mass. 1901), is entirely consistent with Bevilacqua v.
Rodriguez, 955 N.E.2d 884 (Mass. 2011), and for that reason,
petitioners' reliance on Blanchard is similarly misguided.
-10-
and by the Massachusetts Land Court decisions interpreting and
applying the try title statute, see, e.g., Abate v. Freemont Inv.
& Loan, No. 12 MISC 464855(RBF), 2012 WL 6115613, at *12 (Mass.
Land Ct. Dec. 10, 2012) ("To state a claim under the try title
statute against [respondents] upon which relief can be granted,
[petitioner] was required to allege that he has possession of and
effective record title in the Property and that [respondents] are
claiming superior title." (emphasis added)); Seamen's Sav. Bank v.
Rogers, No. 175583, 1992 WL 12153317, at *2 (Mass. Land Ct. Dec. 1,
1992) ("Defendants' assertion of title to the disputed [property]
is the 'adverse claim' necessary under G.L. c. 240 § 1." (emphasis
added)); see also Bevilacqua, 2010 WL 3351481, at *2 ("By its
express terms, [the try title statute] only applies 'if the record
title of land is clouded by an adverse claim.'" (quoting Mass. Gen.
Laws ch. 240, § 1) (first emphasis added)).
B.
Having determined that the petitioners were required to
allege an adverse claim to withstand U.S. Bank's motion to dismiss,
we turn to assessing whether the allegations in the petition
satisfied the Rule 12(b)(6) standard. Like the district court, we
conclude that they did not.
The only adverse claim alleged in the petition to cloud
the Lemelsons' record title to the Property was "U.S. Bank's
-11-
purported legal title" as its mortgagee.5 The petition made no
mention of any actions taken by U.S. Bank. Additionally, even when
the Lemelsons sought to amend, they did not plead or argue any
theory that a completed foreclosure would entitle them to proceed
with a try title claim, and we do not reach that issue. Simply
put, as pled in the complaint, U.S. Bank's interest in the Property
as mortgagee was not adverse to the Lemelsons' interest as
mortgagor under Massachusetts law.
It is beyond dispute that Massachusetts subscribes to the
"title theory" of mortgage law. See, e.g., U.S. Bank Nat'l Ass'n
v. Ibanez, 941 N.E.2d 40, 51 (Mass. 2011); Faneuil Investors Grp.
v. Bd. of Selectmen of Dennis, 933 N.E.2d 918, 922 (Mass. 2010).
As the SJC explained in Bevilacqua, this means that in
Massachusetts a "mortgage splits the title [to a property] in two
parts: the legal title, which becomes the mortgagee's" and secures
the underlying debt, "and the equitable title, which the mortgagor
retains." 955 N.E.2d at 894 (quoting Maglione v. BancBoston Mortg.
Corp., 557 N.E.2d 756, 757 (Mass. App. Ct. 1990)) (internal
quotation marks omitted); see Eaton v. Fed. Nat'l Mortg. Ass'n, 969
5
According to the petitioners' brief, "U.S. Bank conducted a
purported foreclosure sale on the Lemelsons' home" on April 30,
2012. Because the petitioners have not argued that the purported
foreclosure alters or affects the argument made in their petition
to try title -- namely, that U.S. Bank's efforts to foreclose on
the Property were sufficient to bring a try title claim -- this
allegation does not bear on our analysis.
-12-
N.E.2d 1118, 1124 (Mass. 2012). Moreover, the legal title vested
in the mortgagee is defeasible, and the "mortgagor can redeem or
reacquire legal title by paying the debt which the mortgage
secures." Abate, 2012 WL 6115613, at *4 (citing Eaton, 969 N.E.2d
at 1124-25). This right to redeem, or the mortgagor's "equity of
redemption," see Restatement (Third) of Property: Mortgages, ch. 3,
intro. note, "endures so long as the mortgage continues in
existence," Bevilacqua, 955 N.E.2d at 894.
The upshot of this arrangement is that, in the
circumstances pled, the parties' "estates" (or interests) in the
mortgaged property "are prima facie consistent with each other."
Dewey v. Bulkley, 67 Mass. (1 Gray) 416, 417 (1854); see Eaton, 969
N.E.2d at 1124-25 (collecting cases). Quoting again from
Bevilacqua, "[t]he crucial point," for present purposes, "is that
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." 955 N.E.2d at 895
(emphasis added).
Consequently, because Lemelson concedes that he conveyed
all legal title to the property,6 he cannot now commence a try
6
The district court did not improperly credit as true U.S.
Bank's contention that it was a valid mortgagee to the Property.
In fact, the district court merely acknowledged that "U.S. Bank
claims to be the mortgagee in possession of legal title."
Lemelson, 2012 WL 4527527, at *2 (emphasis added). That claim was
the basis alleged in the Lemelsons' petition for bringing this try
title action, R. App. at 11 ("U.S. Bank's purported legal title to
-13-
title action against one asserting ownership of only that legal
title.7 Indeed, the SJC in Bevilacqua considered and rejected a
similar argument when raised by a mortgagee to establish standing
under the Massachusetts try title statute:
To assert that he holds legal title as
mortgagee, Bevilacqua must necessarily accept
that Rodriguez has a complementary claim to
either equitable title (if there has been no
default) or an equity of redemption (if
default has occurred). In either case, and
although their economic interests may diverge,
Bevilacqua cannot be heard to argue that
Rodriguez's claim is adverse to his own.
955 N.E.2d at 895 (emphasis added); see also Bevilacqua, 2010 WL
3351481, at *2 (granting respondent's motion to dismiss petition on
the ground that, "[b]y its express terms, G.L. c. 240, § 1 et seq.
only applies 'if the record title of land is clouded by an adverse
the premises . . . represents a claim of title adverse to that of
[the petitioners]." (emphasis added)), and in their oral argument
during the district court's motion hearing, see, e.g., R. App. at
48 ("[T]here is an adverse party, we claim, U.S. Bank through this
MERS assignment, claiming legal title to this property, so we
brought a try title action." (emphasis added)).
7
This is precisely the conclusion reached recently by the
Massachusetts Land Court in Abate v. Freemont Investment & Loan,
No. 12 MISC 464855 (RBF), 2012 WL 6115613 (Mass. Land Ct. Dec. 10,
2012). There the court stated that "[i]f all [the petitioner] was
alleging in the complaint was that there is uncertainty over who
holds the Mortgage, he would not have a try title claim." Id. at
*4; see Bevilacqua, 955 N.E.2d at 894-95. Uncertainty as to who
holds a valid mortgage does not provide the requisite adversity to
cloud a mortgagor's claim of equitable title.
-14-
claim,'" and "[h]ere, there is no cloud" (quoting Mass. Gen. Laws
ch. 240, § 1)).8
Because the petitioners alleged only that they may
maintain this try title action on the basis of U.S. Bank's efforts
to foreclose, we defer to the reasoning in Bevilacqua and Abate and
affirm the district court's dismissal of the petition to try title.
IV.
The order granting the respondent's motion to dismiss is
affirmed.
So ordered.
8
We are aware that the district court's opinion in Jepson v.
Deutsche Bank National Trust Co., Civ. No. 12-11226-WGY, 2012 WL
4341061 (D. Mass. Sept. 20, 2012), could be read as reaching a
different outcome. It is of course subject to this opinion.
-15-