Hayden v. HSBC Bank USA, N.A.

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
Howard, Chief Judge,
Lipez and Thompson, 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.
April 17, 2020
Per Curiam.1 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
1
An opinion first issued in this appeal in August 2017. In
June 2018, that opinion was withdrawn, the judgment was vacated,
and the case was reassigned to the current, entirely different
panel. See Hayden v. HSBC Bank USA, N.A., 867 F.3d 222 (1st Cir.
2017), withdrawn, 2018 WL 3017468 (1st Cir. June 14, 2018). Having
reviewed the record and relevant precedent, we now conclude that
the withdrawn opinion properly resolved the issues on appeal.
Accordingly, we reiterate here, in substantial part, the analysis
contained in the earlier opinion.
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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)
HSBC cannot foreclose on their property under Massachusetts
General Laws Chapter 244, § 14, and (2) the mortgage is obsolete
by operation of Massachusetts General Laws Chapter 260, § 33.2
We review the district court's order of dismissal for
failure to state a claim de novo. Harry v. Countrywide Home Loans,
Inc., 902 F.3d 16, 18 (1st Cir. 2018). 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
2 The Haydens do not challenge the district court's
dismissal of their claim that Wells Fargo violated Massachusetts
General Laws Chapter 93A by failing to comply with 209 Mass. Code
Regs. 18.17 and 18.21.
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a trust's pooling and servicing agreement, see Butler v. Deutsche
Bank Tr. Co. Ams., 748 F.3d 28, 37 (1st Cir. 2014).
Our decision in Dyer v. Wells Fargo Bank, N.A., also
issued today, reaffirms 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. See Dyer, No. 15-2421, slip op. at 5-6 (1st Cir. April
17, 2020). Dyer also disposes of the assertion 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,
slip op. at 6 n.3; 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 . . . .").
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, a mortgage becomes obsolete and is automatically
discharged five years after the expiration of the stated term or
maturity date of the mortgage. See Mass. Gen. Laws ch. 260, § 33.
Nothing in the text of the statute supports the Haydens' assertion
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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 rejected this same argument in Harry v. Countrywide
Home Loans, 902 F.3d at 19, and our view was recently noted and
adopted by the Massachusetts Appeals Court, see Nims v. Bank of
N.Y. Mellon, [-- N.E. 3d --], 97 Mass. App. Ct. 123, at *4 & n.14
(March 3, 2020). The Massachusetts court observed that neither
the statute's language nor its "purpose and design" support the
interpretation espoused by the Haydens. See id. at *4; see also
id. at *3 (discussing the statute's legislative history).
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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