Matt v. HSBC Bank, USA N.A.

United States Court of Appeals
For the First Circuit
No. 13-2209
JODI B. MATT,
Plaintiff, Appellant,
v.
HSBC BANK USA, N.A., ON BEHALF OF THE TRUST FUND AND
FOR THE BENEFIT OF ACE SECURITIES CORP. HOME EQUITY LOAN
TRUST SERIES 2005-HE4 ASSET BACKED PASS THROUGH CERTIFICATES,
WELLS FARGO BANK, N.A., COUNTRYWIDE SECURITIES
CORPORATION, BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO
BAC HOME LOANS SERVICING, LP, FORMERLY KNOWN AS
COUNTRYWIDE HOME LOANS SERVICING, LP, HSBC BANK USA, N.A.
and ACE SECURITIES CORP.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
Torruella, Howard, and Kayatta,
Circuit Judges.
Glenn F. Russell, Jr., with whom Glenn F. Russell, Jr., &
Associates, P.C., was on brief, for appellant.
Courtney L. Benson, with whom James W. McGarry, Chad W.
Higgins and Goodwin Procter LLP, were on brief, for appellees.
April 15, 2015
TORRUELLA, Circuit Judge. In an attempt to avert
foreclosure proceedings in state court, Plaintiff-Appellant Jodi B.
Matt ("Matt") filed this federal case in the District of
Massachusetts against Defendants-Appellees HSBC Bank USA, National
Association on Behalf of the Trust Fund ("HSBC as Trustee") and for
the Benefit of ACE Securities Corp. Home Equity Loan Trust Series
2005-HE4 Asset [Backed] Pass Through Certificates ("Trust"), and
several other defendants (other creditors and servicers that have
previously held rights over the loan). In her complaint, Matt
asserts multiple claims arising from the purportedly invalid
transfer and assignment of a mortgage granted over her home in
Canton, Massachusetts.
While this appeal was pending, Matt and Select Portfolio
Servicing, Inc. ("SPS"), a servicer acting on behalf of HSBC as
Trustee, entered into a Home Affordable Modification Agreement (the
"Loan Modification Agreement"). Pursuant to the Loan Modification
Agreement, Matt renegotiated the terms of her existing mortgage
loan, and, as a result, her mortgage loan is current and she is no
longer subject to any actual or threatened foreclosure proceedings.
Consequently, we dismiss this appeal as moot.
I. Background
The material facts in this case are undisputed. On
April 6, 2005, Matt obtained a mortgage loan secured by her
property (the "Mortgage") from Northeast Mortgage Corporation
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("Northeast"), and executed a promissory note (the "Note") for
$200,000 in favor of Northeast. On the same day, Northeast
assigned the Mortgage to New Century Mortgage Corporation ("New
Century"). This assignment of the Mortgage to New Century was
recorded in the Norfolk County Registry of Deeds on December 19,
2006. New Century subsequently assigned the Mortgage to HSBC as
Trustee on November 6, 2007. This subsequent assignment was
recorded in the Norfolk County Registry of Deeds on or about
November 16, 2007.
As of today, HSBC as Trustee is the mortgagee of record.
The Note pertaining to the Mortgage followed a different track, but
was later conveyed to the Trust. HSBC as Trustee initiated the
foreclosure action on behalf of the Trust in state court to which
Matt responded with the instant case. We explain the facts in more
detail in an attempt to unravel Matt's claims.
A. The Mortgage and Note
As stated, Northeast assigned the Mortgage and endorsed
the Note to New Century. Thereafter, New Century endorsed the Note
in blank so that it became payable to the bearer rather than to a
named payee. The Note was then sold and conveyed by New Century
into the Trust at some point before September 27, 2005. Then, New
Century, which had remained the mortgagee of record, filed for
bankruptcy and entered into a bankruptcy court-approved stipulation
with Countrywide Home Loans, Inc. ("Countrywide") and several
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Countrywide affiliates. The stipulation stated that "Countrywide
has serviced and is servicing loans currently pursuant to
contractual agreement," and that "Countrywide was appointed as New
Century Mortgage's true and lawful attorney-in-fact and granted the
ability to exercise the Power on behalf of New Century Mortgage."
This "power" included the ability to "execute and file assignments,
mortgages, . . . [and] endorsements . . . relating to . . .
Defaulted Loans [. . .] ." Acting under said power of attorney on
behalf of New Century, Countrywide -- which at that point only held
bare record title because the loan itself had been conveyed to the
Trust -- assigned Matt's Mortgage to HSBC as Trustee. HSBC then
became the mortgagee of record.
B. The Loan's Servicing and the Filing of the Instant Case
Bank of America, N.A., successor by merger to BAC Home
Loans Servicing, LP, formerly known as Countrywide Home Loans
Servicing, LP ("Bank of America") serviced the mortgage loan until
October 1, 2012, when the servicing rights were transferred to SPS.
Matt initially defaulted on the mortgage loan in October 2005, when
she failed to make her monthly payments. After bringing her loan
current several times, she defaulted on her payment obligations in
August 2008, and had made no further payments until the
modification. Bank of America sent Matt a "Notice of Intention to
Foreclose" on September 14, 2009, which provided Matt with the
opportunity to cure her default. Matt did not cure the default.
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On January 27, 2010, HSBC as Trustee filed a complaint in the
Massachusetts Land Court as a preliminary step to foreclose on the
house. On September 23, 2010, Matt filed the instant case. The
district court granted summary judgment in favor of Defendants-
Appellees and this appeal ensued.
C. The Appeal
Matt reiterates her claims on appeal. She argues (1)
that she only granted the power of sale of her property to
Northeast, not to any other assignee of the Mortgage and Note; (2)
that HSBC as Trustee has only proffered a sworn statement by its
agent showing that the loan was conveyed to the Trust; (3) that the
Mortgage was assigned to the Trust after the date established by
the Pooling Service Agreement of the Trust for depositing assets
into it, thus never becoming an asset of Trust; (4) that an
"Acquisition Memo" showed that the loan had been acquired by the
"HE-2" trust rather than the "HE-4" trust, i.e.,the Trust, that was
now seeking foreclosure through its Trustee, and thus it must be
another trust that holds the assets; (5) that somehow New Century
was impeded from transferring its claim in the loan for reason of
being in bankruptcy, even though the transfers were done under the
supervision and with approval of the bankruptcy court; (6) and, in
sum, that "[a]ll [Matt] ever wanted was to glean who it is,
precisely, that owns the legal claim to the [Mortgage] to her real
property, and precisely who it is that has the legal right and
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authority to accept her monthly principal and interest payments,"
but that each of those issues invalidates the transfer of the
Mortgage and Note from Northeast to HSBC as Trustee.
Matt stresses throughout her opening brief that every
argument made referring to the alleged errors committed by the
district court is relevant because it affects the district court's
conclusion that HSBC as Trustee is the party with "proper
jurisdiction and authority to act under the strict requirements of
[Mass. Gen. Laws ch.] 244, § 14, to utilize the harsh Massachusetts
non judicial foreclosure statue." That is, every argument advanced
by Matt concludes that any right HSBC as Trustee may have to act
under Mass. Gen. Laws ch. 244, § 14 is void. That section refers
to "foreclosure under the power of sale" and provides the
procedural and formal requirements to mortgagees seeking such
remedies. Finally, Matt perfunctorily reiterates her request for
retrospective relief in the form of damages for unjust enrichment,
civil conspiracy, and other common law claims, which derive
directly from her contention that HSBC as Trustee is not her
creditor because each of the aforementioned transfers of the
Mortgage and Note are void.
D. Recent Developments
At oral argument, this Court was blindsided by the fact
that the parties had reached some kind of workout agreement many
months before and that the loan was current as a result of
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settlement negotiations to avoid foreclosure. We requested the
parties to submit a joint stipulation detailing the new agreement
and explaining whether this case is moot as a result of this
agreement. The parties could not agree and opted for filing
separate statements. Matt conceded that she had executed the Loan
Modification Agreement with SPS after a process in which, on
August 30, 2013, "SPS on behalf of HSBC," had received her
application for the modification. HSBC as Trustee included a copy
of the Loan Modification Agreement with their statement and argued
that Matt's loan has been permanently modified by SPS under the
federal Home Affordable Modification Program ("HAMP").1 The Loan
Modification Agreement defines SPS as the "Lender" and provides
that it is intended to modify Matt's existing contractual
agreements. It also: (1) establishes a new principal balance for
the mortgage loan, a new maturity date, and a payment and escrow
schedule; (2) states that all the original loan documents of the
Mortgage are modified by it and that said loan documents are "duly
valid, binding agreements, enforceable in accordance with their
1
HAMP was established by the Secretary of the Treasury under a
section of the Troubled Asset Relief Program that "requires the
Secretary to 'implement a plan that seeks to maximize assistance
for homeowners and . . . encourage the servicers of the underlying
mortgages . . . to take advantage of . . . available programs to
minimize foreclosures.'" Markle v. HSBC Mortgage Corp. (USA), 844
F. Supp. 2d 172, 176 (D. Mass 2011) (quoting 12 U.S.C. § 5219(a));
see id. at 176-177 (explaining the eligibility and approval process
required under HAMP). See also In re JPMorgan Chase Mortg.
Modification Litig., 880 F. Supp. 2d 220, 225-28 (D. Mass 2012).
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terms and are hereby reaffirmed;" (3) establishes that all the
terms of the original loan documents remain in full force and that
"[Matt] will be bound by and will comply with, all the terms and
conditions of the loan documents;" and (4) provides that "[Matt]
will cooperate fully with [SPS] in obtaining any title
endorsement(s), or similar title insurance product(s), and/or
subordination agreement(s), that are necessary or required by
[SPS's] procedures to ensure that the modified mortgage loan is in
first lien position and/or is fully enforceable upon modification
. . . ."
Despite reaffirming her loan documents and negotiating a
Loan Modification Agreement with SPS, Matt continues to reject that
HSBC as Trustee is her valid creditor. In light of the conflicting
statements, we ordered the district court to hold an evidentiary
hearing to clarify whether: (1) SPS was acting on behalf of HSBC as
Trustee when it executed Matt's Loan Modification Agreement, (2)
this Loan Modification Agreement applied specifically to the
Mortgage and Loan in controversy in the instant case, and (3) Matt
is no longer subject to any actual or threatened foreclosure.
The district court held a hearing and found that, while
Matt continues to dispute the validity of the transfers and
assignments of the Mortgage and Note to HSBC as Trustee, SPS did
act on behalf of HSBC as Trustee when it executed the Loan
Modification Agreement, that said agreement in fact pertains to the
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Mortgage in controversy in the instant case, and that Matt is no
longer subject to any actual or threatened foreclosure. Matt does
not dispute these findings.
Faced with this new scenario, we decide this case on
mootness grounds and do not reach the merits. Our examination of
this controversy is limited to the arguments presented in Matt's
opening brief, which are directed at the district court's purported
errors in finding that HSBC as Trustee was in a position to
exercise foreclosure -- a remedy no longer sought.
II. Discussion
A. Lack of jurisdiction
Mootness is a jurisdictional matter. Horizon Bank &
Trust v. Massachusetts, 391 F.3d 48, 53 (1st Cir. 2004).
Consequently, it can be raised by a federal court sua sponte. See
North Carolina v. Rice, 404 U.S. 244, 246 (1971) (per curiam). The
reason for this rule is that an actual controversy must exist at
all stages of proceedings, both at the trial and appellate levels.
Ramírez v. Sánchez Ramos, 438 F.3d 92, 97 (1st Cir. 2006); United
States Parole Comm'n v. Geraghty, 445 U.S. 388, 396-97 (1980). "A
case becomes moot -- and therefore no longer a 'Case' and
'Controversy' for purposes of Article III -- when the issues
presented are no longer 'live' or the parties lack a legally
cognizable interest in the outcome." Already, LLC v. Nike, Inc.,
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133 S. Ct. 721, 726 (2013) (per curiam) (quoting Murphy v. Hunt,
455 U.S. 478, 481 (1982)) (some internal quotation marks omitted).
In other words, if a court may not provide "any
'effectual relief' to the potentially prevailing party," the case
is moot. Horizon Bank & Trust, 391 F.3d at 53 (quoting Church of
Scientology of Cal. v. United States, 506 U.S. 9, 12 (1992)); see
also Pallazola v. Rucker, 797 F.2d 1116, 1128 (1st Cir. 1986)
("[F]ederal courts are without power to decide questions that
cannot affect the rights of litigants in the case before them.")
(quoting Rice, 404 U.S. at 246) (internal quotation marks omitted).
When a case is moot, "dismissal of the action is compulsory."
Overseas Military Sales Corp. v. Giralt-Armada, 503 F.3d 12, 17
(1st Cir. 2007) (quoting Cruz v. Farquharson, 252 F.3d 530, 533
(1st Cir. 2001)).
Here, "there is literally no controversy left for the
court to decide -- the case is no longer 'live.'" ACLU of Mass. v.
U.S. Conference of Catholic Bishops, 705 F.3d 44, 53 (1st Cir.
2013) (citing Powell v. McCormack, 395 U.S. 486, 496 (1969)).
B. There is no Live Controversy
Matt admits that she brought this claim to avoid
foreclosure. The eleven counts included in her complaint aimed at
establishing that HSBC as Trustee lacked standing to proceed under
the Massachusetts power of sale provision contained in Mass. Gen.
Laws ch. 244, § 14, and the legality of HSBC's demands for
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payments. Additionally, Matt's opening brief is premised on her
desire to avert foreclosure by having us reverse the district
court's finding that HSBC as Trustee had standing to pursue such
remedy.2
Here, foreclosure is no longer sought because of Matt's
own actions in pursing and executing the Loan Modification
Agreement. Matt reaffirmed her debt with HSBC's servicer and
brought her loan current. The validity of the Loan Modification
Agreement is not questioned by the parties. Therefore, because
"federal courts are not in the business of pronouncing that past
actions which have no demonstrable continuing effect were right or
wrong," we decline to issue any injunctive or declaratory relief
and resolve this case on mootness grounds. ACLU of Mass., 705 F.3d
at 53 (quoting Spencer v. Kenma, 523 U.S. 1, 18 (1998)). Since the
circumstances have evolved in a way that this Court cannot provide
2
"The failure of [HSBC] to provide these particulars, would
clearly leave [HSBC], on behalf of the . . . Trust, beyond the
ability to claim sufficient interest in [Matt's] mortgage to
legally enforce the power of sale . . . ." Appellant's Br. at 23.
"[T]herefore, [HSBC] would not be a proper party with jurisdiction
and authority under the specific wording of the Massachusetts state
statute at issue, to utilize the harsh and draconian non judicial
foreclosure process." Id. Matt then goes on to conclude each of
her arguments with a similar statement. "[U]nlike the Magistrate
Judge's inference that the Defendants are not required to prove
their standing to foreclose judicially, under the Massachusetts
non-judicial statutory construct, [HSBC] must establish its
'jurisdiction and authority' . . . to carry out the Massachusetts
non-foreclosure of [Matt's] residence under the state statute
. . . ." Id. at 30. For other similar statements see also id. at
34-35, 43, 47, 49, and 51-52.
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effectual relief to the parties, there is no longer a live case or
controversy and we lack jurisdiction to issue an advisory opinion
as to the parties' rights and Matt's attempt to avoid foreclosure.
Finally, in order for a court to issue declaratory
relief, as Matt is now seeking -- having realized that injunctive
relief against a non-existent risk of foreclosure is unavailable --
"the facts alleged must show that there is a substantial
controversy . . . of sufficient immediacy and reality to warrant
the issuance of a declaratory judgment." Id. at 53-54 (citing
Preiser v. Newkirk, 422 U.S. 395, 402 (1975)) (alteration in
original) (internal quotation marks omitted). We find no such
showing of a substantial controversy of sufficient immediacy in
light of the parties' adherence to the Loan Modification Agreement.
Therefore, we decline to consider declaratory relief on the merits.
C. Other Common Law Claims
Matt mentions in passing that the district court erred in
ruling that her claims for civil conspiracy and unjust enrichment
were disallowed by the fact that HSBC had established its status as
mortgagee. To support this argument on appeal, Matt simply states
that "the Magistrate Judge erred under a Rule 56 analysis, and
therefore there remain issues in dispute." That is the entire
extent of her argument. To say the least, these challenges are
presented in a perfunctory and undeveloped manner, and thus, are
considered waived. Rodríguez v. Municipality of San Juan, 659 F.3d
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168, 175 (1st Cir. 2011); United States v. Zannino, 895 F.2d 1, 17
(1st Cir. 1990). These issues are stated "in the most skeletal
way, leaving the court to do counsel's work, create the ossature
for the argument, and put flesh on its bones." Zannino, 895 F.2d at
17. This we will not do. Id. Therefore, Matt's bare mentioning
of these potential issues does not change our conclusion on
mootness.
III. Conclusion
This appeal is dismissed as moot. Costs are taxed
against Matt.
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