Hayden v. HSBC Bank USA, National Ass'n

United States Court of Appeals
For the First Circuit
No. 16-2274
CHRISTOPHER HAYDEN; DENINE L. MURPHY, a/k/a Denine L. Hayden,
Plaintiffs, Appellants,
v.
HSBC BANK USA, NATIONAL ASSOCIATION, as Trustee for Wells Fargo
Asset Securities Corporation Mortgage Asset-Backed Pass Through
Certificates Series 2007-PA3; WELLS FARGO BANK, N.A.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Denise J. Casper, U.S. District Judge]
Before
Lynch, Kayatta, and Barron,
Circuit Judges.
Glenn F. Russell, Jr. and Glenn F. Russell, Jr., & Associates,
P.C. on brief for appellants.
Sean R. Higgins, Y. Frank Ren, and K&L Gates LLP on brief for
appellees.
August 8, 2017
LYNCH, Circuit Judge. In March 2007, Christopher Hayden
and Denine Murphy ("the Haydens") borrowed $800,000 from GN
Mortgage, LLC ("the lender") to purchase a property in Rehoboth,
Massachusetts. The Haydens executed a promissory note
memorializing the loan and a mortgage identifying Mortgage
Electronic Registration Systems, Inc. ("MERS") as the mortgagee,
acting "solely as a nominee" for the lender and the lender's
successors and assigns. The mortgage also granted MERS, and its
successors and assigns, power of sale over the property. In
January 2008, MERS assigned the mortgage to HSBC Bank USA, N.A.
("HSBC") as trustee for WFALT 2007-PA03. In February 2010, HSBC
reassigned the mortgage to itself as trustee for Wells Fargo Asset
Securities Corporation, Mortgage Asset-Backed Pass Through
Certificates, Series 2007-PA3.
The Haydens defaulted on their loan in 2008. They then
filed several bankruptcy petitions and requested injunctive
relief, thereby delaying foreclosure until 2016. After HSBC
provided notice of a foreclosure sale in June 2016, the Haydens
sued HSBC and Wells Fargo Bank, N.A. ("Wells Fargo"), the mortgage
servicer, to enjoin the sale. They now appeal the district court's
decision to deny their request for a preliminary injunction and to
grant HSBC's and Wells Fargo's motion to dismiss under Federal
Rule of Civil Procedure 12(b)(6). Specifically, the Haydens
challenge the district court's dismissal of their claims that (1)
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HSBC cannot foreclose on their property under Mass. Gen. Laws ch.
244, § 14, and (2) the mortgage is obsolete by operation of Mass.
Gen. Laws ch. 260, § 33.1
We review the district court's order of dismissal for
failure to state a claim de novo. Lemelson v. U.S. Bank Nat'l
Ass'n, 721 F.3d 18, 21 (1st Cir. 2013) (citing Artuso v. Vertex
Pharm., Inc., 637 F.3d 1, 5 (1st Cir. 2011)). The district court
properly dismissed the Haydens' claim that HSBC cannot foreclose
on the property on their view that MERS's assignment of the
mortgage to HSBC was invalid. As the district court found, this
claim is foreclosed by precedent, which holds that MERS can validly
assign a mortgage without holding beneficial title to the
underlying property, see Culhane v. Aurora Loan Servs. of Neb.,
708 F.3d 282, 291-93 (1st Cir. 2013), and that borrowers do not
have standing to challenge a mortgage assignment based on an
alleged violation of a trust's pooling and servicing agreement,
see Butler v. Deutsche Bank Tr. Co. Ams., 748 F.3d 28, 37 (1st
Cir. 2014) (citing Woods v. Wells Fargo Bank, N.A., 733 F.3d 349,
354 (1st Cir. 2013)).
Our decision in Dyer v. Wells Fargo Bank, N.A., 841 F.3d
550 (1st Cir. 2016), which was issued approximately six weeks after
1 The Haydens do not challenge the district court's
dismissal of their claim that Wells Fargo violated Mass. Gen. Laws
ch. 93A by failing to comply with 209 C.M.R. § 18.17 and § 18.21.
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the district court issued its decision in this case, provides
further support for this finding. Dyer reaffirmed Culhane's
holding that a mortgage contract can validly make MERS the
mortgagee and authorize it to assign the mortgage on behalf of the
lender to the lender's successors and assigns. Id. at 553. Dyer
also disposed of the claim that the Massachusetts Supreme Judicial
Court's ("SJC") decision in Eaton v. Federal National Mortgage
Association, 969 N.E.2d 1118 (Mass. 2012), renders Culhane
noncontrolling where, as here, the foreclosing party holds both
the note and the mortgage. See Dyer, 841 F.3d at 553-54 & n.2;
see also Eaton, 969 N.E.2d at 1133 n.28 ("[A] foreclosing mortgage
holder such as [the nominee's assignee] may establish that it
either held the note or acted on behalf of the note holder at the
time of a foreclosure sale by filing an affidavit in the
appropriate registry of deeds . . . ."). In fact, many of the
arguments advanced by the Haydens' counsel, who also represented
the borrower in Dyer, mirror the arguments that we rejected in
Dyer.
The district court also properly dismissed the Haydens'
obsolete mortgage claim, which has no basis in the plain text of
the statute or in precedent. Under Massachusetts's obsolete
mortgage statute, Mass. Gen. Laws ch. 260, § 33, a mortgage becomes
obsolete and is automatically discharged five years after the
expiration of the stated term or maturity date of the mortgage.
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Nothing in the text of the statute supports the Haydens' assertion
that the acceleration of the maturity date of a note affects the
five-year limitations period for the related mortgage. Their
citation to the SJC's decision in Deutsche Bank National Trust Co.
v. Fitchburg Capital, LLC, 28 N.E.3d 416 (Mass. 2015), is
inapposite because the decision makes no mention of the impact of
an accelerated note on the obsolete mortgage statute's limitations
period.
We agree that the Haydens failed to state a claim,
substantially for the reasons articulated by the district court.
Without adopting the district court's opinion, we summarily
affirm. See 1st Cir. R. 27.0(c).
So ordered.
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