Opinion
14-P-517
04-06-2015
CHAR L. HOYT & another. v. BAC HOME LOAN SERVICING, L.P. & others.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiffs, Char L. Hoyt and Donald R. Parron, appeal from a Land Court judgment decreeing that U.S. Bank, National Association, as trustee for the certificate holders of the MLMI trust mortgage loan asset-backed certificates, series HE-3 2007 (U.S. Bank), is the "present holder of both the mortgage and promissory note," and dismissing the plaintiffs' complaint. The plaintiffs had challenged U.S. Bank's authority to foreclose upon their property. We affirm.
Background. On November 21, 2006, the plaintiffs executed a note in the amount of $157,700 (note), secured by a mortgage on their home in Pittsfield (mortgage). Aegis Lending Corporation (Aegis) was the lender, and BAC Home Loan Servicing, L.P. (BAC) was the loan servicer. The note allows for transfer, and provides that "[t]he Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the 'Note Holder.'" The mortgage states that Mortgage Electronic Registration Systems (MERS) "is acting solely as a nominee for Lender and Lender's successors and assigns," and that MERS "is the mortgagee under this Security Instrument."
Aegis went bankrupt in 2007. In 2008, the plaintiffs defaulted under the terms of the mortgage and note. Although they made numerous attempts over the course of the next two years to modify their loan, the plaintiffs were notified, on March 8, 2010, of BAC's intention to foreclose. In January, 2011, U.S. Bank became custodian of a trust the corpus of which included the note. The file containing the original note is currently in U.S. Bank's possession. On May 3, 2011, MERS assigned the mortgage to U.S. Bank. The assignment was recorded in the Berkshire County Registry of Deeds on July 6, 2011.
On March 1, 2012, the plaintiffs received notice that a foreclosure sale would take place on April 3, 2012. The plaintiffs filed the instant action, and the judge stayed the foreclosure to allow the parties time to negotiate a loan modification. When no agreement was reached, the judge required the plaintiffs to "specifically identify all their claims and the factual and legal basis of those claims[.]" After the judge deemed the defendants' response to the plaintiffs' statement of issues to be a motion for judgment on the pleadings, the plaintiffs cross-moved for judgment on the pleadings. The judge dismissed Count IV of the plaintiffs' verified complaint without prejudice, and, "after verification by the court and stipulation of the parties . . . that U.S. Bank, N.A. has physical possession of the original promissory note, indorsed in blank," dismissed the remaining counts with prejudice. The judge also found that the mortgage assignment from MERS to U.S. Bank was valid.
The judge determined that Count IV, which alleged that the defendants breached an obligation to modify the terms of the plaintiffs' loan, was outside of the Land Court's subject matter jurisdiction.
Discussion. Because "[n]o material facts are at issue" in a motion for judgment on the pleadings, we review de novo the judge's conclusions of law. Professional Fire Fighters v. Commonwealth, 72 Mass. App. Ct. 66, 73 (2008). Here, the judge correctly determined as a matter of law that U.S. Bank had the right to foreclose on the plaintiffs' property. The plaintiffs received notice of the foreclosure on March 1, 2012, before the Supreme Judicial Court's decision in Eaton v. Federal Natl. Mort. Assn., 462 Mass. 569 (2012). Accordingly, there was no requirement that the foreclosing entity hold both the mortgage and the note. See id. at 588-589 (new interpretation of the term "mortgagee" applies prospectively); Galiastro v. Mortgage Electronic Registration Sys., Inc., 467 Mass. 160, 167, 167 n.14 (2014) (interpretation announced in Eaton applicable to cases pending on appeal as of June 22, 2012); Sullivan v. Kondaur Capital Corp., 85 Mass. App. Ct. 202, 209 (2014) (Sullivan) (same). In any event, U.S. Bank held both the mortgage and the note as of March 1, 2012.
The plaintiffs' claim of error on the basis that the Land Court judge failed to examine the meaning of the term nominee "is without merit." Ibid. "[T]he legal interest in a mortgage permissibly may be separated from the beneficial or equitable interest in the debt it secures[, and] in such instances the party holding the bare legal title to the mortgage holds it in trust for the party owning the debt." Id. at 210. See U.S. Bank Natl. Assn. v. Ibanez, 458 Mass. 637, 652-653 (2011) (Ibanez). "It is accordingly of no moment that [Aegis] may not have held any ownership interest in the note or mortgage at the time MERS assigned the mortgage to [U.S. Bank], because MERS at the time of the . . . assignment still held the record legal interest in the mortgage." Sullivan, supra at 210. See also Ibanez, supra at 649.
There was no error in the judge's holding that the assignment was valid; MERS was the record holder of the mortgage when it assigned it to U.S. Bank and "[a] foreclosing entity may provide a complete chain of assignments linking it to the record holder of the mortgage, or a single assignment from the record holder of the mortgage." Ibanez, supra at 651. Nor did the judge err in ruling that the plaintiffs lack standing to challenge the validity of the assignment from MERS to U.S. Bank. See Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 354 (1st Cir. 2013) (holding that "claims that merely assert procedural infirmities in the assignment of a mortgage, such as a failure to abide by the terms of a governing trust agreement, are barred for lack of standing"). The plaintiffs do not allege that MERS never had legal title to the mortgage, and the judge correctly noted that MERS's assignment was effective to pass legal title because it complied with G. L. c. 183, § 54B, as appearing in St. 2010, c. 282, § 2. Bank of N.Y. Mellon Corp. v. Wain, 85 Mass. App. Ct. 498, 503 (2014). Because "a mortgagor does not have standing to challenge shortcomings in an assignment that render it merely voidable at the election of one party but otherwise effective to pass legal title[,]" Culhane v. Aurora Loan Servs., 708 F.3d 282, 291 (1st Cir. 2013) (applying Massachusetts law), the judge properly concluded that the plaintiffs' complaint failed to state a claim. See Iannacchino v. Ford Motor Co., 451 Mass. 623, 625 n.7 (2008), quoting from Jarosz v. Palmer, 436 Mass. 526, 529 (2002) (motion for judgment on the pleadings is actually a motion to dismiss on the basis that the complaint fails to state a claim upon which relief can be granted). We have considered the plaintiffs' remaining arguments and find them to be without merit.
Judgment affirmed.
By the Court (Cypher, Kantrowitz & Carhart, JJ.),
The panelists are listed in order of seniority.
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Clerk Entered: April 6, 2015.