Opinion
21-P-972
01-20-2023
H. CHRISTOPHER STARKEY & another[1] v. DEUTSCHE BANK NATIONAL TRUST COMPANY, trustee[2], & others.[3]
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as 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 23.0 or 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 23.0
The plaintiffs, H. Christopher Starkey and Louisa H. Starkey, commenced this action in 2009 alleging, inter alia, that the defendants committed various wrongdoings in connection with a mortgage loan the Starkeys obtained in 2005, and that none of the defendants had standing to foreclose. Following two prior appeals, one to the full Appeals Court and one to a single justice, Louisa now appeals from a summary judgment in favor of defendants Deutsche Bank National Trust Company (Deutsche Bank), as trustee for WaMu Mortgage Pass Through Certificates Series 2006-AR1 Trust, and JPMorgan Chase Bank, N.A. (JPMorgan Chase).She argues that genuine issues of material fact existed as to which entity held the mortgage and note, that she was entitled to additional discovery regarding that factual dispute, and that the summary judgment judge erroneously dismissed several of the Starkeys' claims under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub. L. 101-73, 103 Stat. 183. We affirm.
Of the WaMu Mortgage Pass Through Certificates Series 2006-AR1 Trust.
Background. On November 22, 2005, the Starkeys entered into a mortgage loan transaction in which they executed a promissory note in favor of Washington Mutual Bank, FA (Washington Mutual), and gave Washington Mutual a mortgage on their residential property in South Yarmouth. The mortgage was transferred to Deutsche Bank via the following two-step process: (1) from Washington Mutual to an affiliated entity named WaMu Asset Acceptance Corp. (WAAC) through a "Mortgage Loan Purchase and Sale Agreement" in 2005 and (2) from WAAC to Deutsche Bank through a "Pooling and Servicing Agreement" in 2006. Around that time, the note was endorsed directly to Deutsche Bank.
JPMorgan Chase Bank, N.A.; Chase Home Finance, LLC; Washington Mutual, Inc.; Washington Mutual Bank, FA; Washington Mutual Mortgage Securities Corporation; Washington Mutual Mortgage Service Corporation; and ATM Corporation.
In 2008, Washington Mutual was declared insolvent and placed into receivership of the Federal Deposit Insurance Corporation (FDIC). The same day, certain of Washington Mutual's assets, including all loans and servicing rights, were sold to JPMorgan Chase.
Where the Starkeys share a surname, we refer to H. Christopher Starkey as Christopher and Louisa H. Starkey as Louisa.
On May 11, 2009, after the Starkeys fell behind on their mortgage payments, JPMorgan Chase assigned the Starkeys' mortgage to Deutsche Bank. Three days later, Deutsche Bank brought a complaint to foreclose the mortgage against the Starkeys. On June 10 and 15, 2009, the Starkeys responded by sending notices of rescission to Deutsche Bank. When the Starkeys did not receive a response, they filed the underlying complaint against Deutsche Bank, JPMorgan Chase, and others. The Starkeys alleged that the defendants did not have enforceable rights with respect to the mortgage and note, and therefore did not have standing to foreclose (count 1 --standing), that the mortgage and note were obtained without disclosures mandated by G. L. c. 140D (count 2 -- rescission), that the Starkeys were fraudulently induced to sign the mortgage and note (count 3 -- fraud), and that the defendants breached their contract with the Starkeys by refusing to allow them to rescind (count 4 -- breach of contract). The Starkeys also asserted violations of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617 (count 5), violations of G. L. c. 93A (count 6), and violations of the Borrower's Interest Act, G. L. c. 183, § 28C (a) (count 7).
The Superior Court ordered the dismissal of all but one claim as barred by FIRREA, and the Starkeys appealed. In that prior appeal, the Appeals Court explained that "FIRREA sets forth a claims procedure that requires creditors of failed banks to file claims with the FDIC, and divests courts of jurisdiction to hear these claims against these banks, or the FDIC as receiver, until administrative remedies with the FDIC have been exhausted." Starkey v. Deutsche Bank Nat'l Trust Co., 94 Mass.App.Ct. 1, 4 (2018). The Appeals Court concluded that FIRREA did not bar the Starkeys' claims "[e]xcept to the extent, if any, that the [Starkeys] [sought] money damages from Washington Mutual, or arguably JPMorgan Chase as the bank that assumed [Washington Mutual's] rights and/or liabilities from the FDIC." Id. at 9-10. The Appeals Court further stated that, to the extent there existed any dispute regarding the ownership of the Starkeys' mortgage or note when Washington Mutual went into receivership, and thus whether the Starkeys' mortgage and note were among the rights and liabilities JPMorgan Chase assumed from the FDIC, the Starkeys were entitled to further discovery on remand. See id. at 10.
Christopher died in 2018, while this case was pending in this court on a prior appeal. Neither a suggestion of death nor a substitution of parties has been filed. However, the Starkeys' counsel represented at oral argument that our decision in this appeal would resolve the case as to all parties, including Christopher's estate.
The "Mortgage Loan Purchase and Sale Agreement" was a flow agreement that allowed Washington Mutual to sell mortgage loans to WAAC after the date of the agreement.
The Superior Court received the rescript remanding the case on January 30, 2019. On March 8, 2019, a Superior Court judge held a scheduling conference and ordered that discovery be completed by February 28, 2020. On February 26, 2020, the discovery deadline was extended to May 29, 2020. The Starkeys' counsel did not serve discovery requests until April 5, 2020. Deutsche Bank and JPMorgan Chase provided initial responses on July 31, 2020, and supplemental responses on August 28, 2020, after the Starkeys' counsel claimed that the initial responses were unresponsive and evasive. In total, Deutsche Bank and JPMorgan Chase provided approximately four hundred pages of documents. During this time, the discovery deadline was further extended to September 8, 2020. On that deadline, Louisa filed six motions to compel, and Deutsche Bank and JPMorgan Chase filed a motion for a protective order. A Superior Court judge denied the motions to compel and allowed the motion for a protective order.
On September 18, 2020, after discovery had closed, Deutsche Bank and JPMorgan Chase provided Louisa with a newer version of the note, on which the endorsement to Deutsche Bank was canceled and replaced by an endorsement in blank. According to an affidavit signed by someone familiar with JPMorgan Chase's business records, a vice president of JPMorgan Chase canceled the endorsement to Deutsche Bank and affixed the endorsement in blank on August 16, 2017, pursuant to a power of attorney that permitted JPMorgan Chase to act on Deutsche Bank's behalf. The attorney who compiled documents in response to Louisa's discovery requests attested in an affidavit that she relied on an older version of the note that was "scanned into the system." Only after responding to discovery did counsel realize that the original wet signature note, which was stored at counsel's law firm, included the subsequent cancellation and endorsement in blank. On realizing her mistake, counsel immediately produced a copy of the newer version of the note.
On October 7, 2020, Louisa filed a motion to delay summary judgment and to allow additional discovery. Another Superior Court judge denied the motion, and Louisa petitioned a single justice of this court for relief from that denial. The single justice requested that the judge make additional findings. The judge issued findings and an order describing the history of the case, including the discovery that had occurred. The judge concluded that the motion was a "stalling tactic" where (1) Louisa had a full and fair opportunity to obtain discovery and (2) Louisa already possessed all the materials relevant to the issues on summary judgment. As to the newer version of the note, the judge stated that Louisa could argue that it raised genuine issues of material fact when opposing summary judgment. On receipt of the judge's additional findings, the single justice described them as "thoughtful and well-reasoned" and denied Louisa's petition.
Prior to being declared insolvent, Washington Mutual Bank, FA, became Washington Mutual Bank. We treat these entities as the same herein for simplicity.
The case proceeded to summary judgment, where yet another Superior Court judge allowed summary judgment. In a thoughtful and comprehensive decision the summary judgment judge concluded that Louisa failed to raise a genuine issue of material fact regarding Deutsche Bank's ownership of the mortgage and note, and that the Starkeys' other claims against Deutsche Bank and JPMorgan Chase were barred by FIRREA or, alternatively, failed on the merits. Louisa again appealed.
Discussion. 1. Procedural matters. Usually, where "a case involves multiple claims and multiple parties, a judgment dismissing fewer than all of the claims or parties is interlocutory" and "not immediately appealable absent a 'determination [by a judge in the trial court] that there is no just reason for delay and upon an express direction for the entry of [final] judgment.'" Harrison v. Roncone, 447 Mass. 1001, 1001-1002 (2006), quoting Mass. R. Civ. P. 54 (b), 365 Mass. 820 (1974). Here, summary judgment entered in favor of Deutsche Bank and JPMorgan Chase only, and the summary judgment was not designated a separate and final judgment. We therefore asked the parties to address whether Louisa's appeal was properly before the court. The Starkeys' attorney represented to this court that the judgment in favor of Deutsche Bank and JPMorgan Chase effectively resolved all of the Starkeys' claims. Given counsel's representation and the fact that this case has been pending since 2009 and has been the subject of two prior appeals, little would be gained by requiring the parties to request a separate and final judgment only to engage in the same appeal. Therefore, we exercise our discretion to address the issues on the merits. See, e.g., Lombardi v. Lombardi, 68 Mass.App.Ct. 407, 410-411 & n.10 (2007).
The Superior Court did not dismiss the Starkeys' claim against JPMorgan Chase for violation of the Real Estate Settlement Procedures Act. Before the Starkeys appealed, that claim "was resolved by mutual agreement and dismissed by separate judgment." See Starkey v. Deutsche Bank Nat'l Trust Co. 94 Mass.App.Ct. 1, 3 (2018).
The pertinent language of FIRREA provides as follows: "Except as provided in this subsection, no court shall have jurisdiction over -- (i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any depository institution for which the Corporation [i.e., the FDIC] has been appointed receiver, including assets which the Corporation may acquire from itself as such receiver; or (ii) any claim relating to any act or omission of such institution or the Corporation as receiver." 12 U.S.C. § 1821(d) (13) (D) .
2. The mortgage and note. Turning to the merits, we first address whether the summary judgment judge properly concluded that Louisa failed to raise a genuine issue of material fact regarding Deutsche Bank's ownership of the mortgage and note. We are guided by the following principles. If the foreclosing party did not originate the mortgage, it must show that it was assigned the mortgage "by a party that itself held the mortgage." United States Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637, 651 (2011). The foreclosing party may do so by providing "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." Id. "Where a pool of mortgages is assigned to a securitized trust, the executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder." Id. The foreclosing party "must also demonstrate that it holds the note (or acts as authorized agent for the note holder)," Sullivan v. Kondaur Capital Corp., 85 Mass.App.Ct. 202, 210 (2014), but need not show an unbroken chain of assignments of the note, see LaRace v. Wells Fargo Bank, N.A., 99 Mass.App.Ct. 316, 328-329 (2021).
Here, the summary judgment record includes the necessary documentary support to show that Deutsche Bank held the mortgage and note when it commenced the foreclosure proceedings. A flow agreement, term sheet, and loan schedule document the 2005 transfer of the mortgage from Washington Mutual to WAAC, and a pooling and servicing agreement and loan schedule document the 2006 transfer of the mortgage from WAAC to Deutsche Bank. See Ibanez, 458 Mass. at 651. In addition, the copy of the note endorsed in blank was sufficient to show that Deutsche Bank held the note. See, e.g., LaRace, 99 Mass.App.Ct. at 328-329; Sullivan, 85 Mass.App.Ct. at 210 & n.16.
Louisa did not appeal the ruling.
Despite this evidence, Louisa argues that there were genuine issues of material fact where (1) JPMorgan Chase, as Washington Mutual's successor in interest, assigned the mortgage to Deutsche Bank in 2009 and (2) the endorsement of the note to Deutsche Bank was canceled and replaced by an endorsement in blank. We disagree. The 2009 assignment from JPMorgan Chase to Deutsche Bank was confirmatory of the prior transfer to Deutsche Bank and buttresses Deutsche Bank's position that it held the mortgage. While it is unfortunate that the newer version of the note was not produced sooner, the mere fact that the endorsement to Deutsche Bank was canceled and replaced by an endorsement in blank does not raise a genuine issue of material fact. See Cesso v. Todd, 92 Mass.App.Ct. 131, 139 (2017) (speculation insufficient to defeat summary judgment). On this record, the summary judgment judge properly concluded that there were no genuine issues of material fact regarding Deutsche Bank's ownership of the mortgage and note.
The Starkeys' claims against defendants Washington Mutual, Inc., Washington Mutual Bank, FA, and Washington Mutual Mortgage Securities Corporation were previously dismissed, leaving the Starkeys' claims against defendants Chase Home Finance, LLC, Washington Mutual Mortgage Service Corporation, and ATM Corporation.
3. Discovery. Louisa further argues that the Superior Court judges abused their discretion in denying her various discovery motions and allowing the motion of Deutsche Bank and JPMorgan Chase for a protective order, which "knee-capped" her ability to raise a genuine issue of material fact in light of their evasive and nonresponsive answers to discovery requests. See Alphas Co. v. Kilduff, 72 Mass.App.Ct. 104, 107 (2008) (reviewing decision to allow summary judgment without permitting additional discovery for abuse of discretion); Ayash v. Dana-Farber Cancer Inst., 46 Mass.App.Ct. 384, 387 (1999) (reviewing rulings on motions to compel and for protective order for abuse of discretion). The argument is unavailing. The record shows that Louisa's discovery requests were not served until over a year after this case was remanded to the Superior Court, and that Deutsche Bank and JPMorgan Chase provided approximately four hundred pages of initial and supplemental responses during two extensions of the discovery deadline. Two different Superior Court judges and a single justice of this court reviewed Louisa's subsequent discovery motions and agreed that Louisa was not entitled to further discovery. We discern no abuse of discretion given Louisa's delay in seeking discovery, the extensive amount of discovery that she received during two extensions of the discovery deadline, and the fact that she has not articulated how any of the additional requested discovery could have raised a genuine issue of material fact regarding Deutsche Bank's ownership of the mortgage and note.See Alphas Co., supra at 107-113 (considering authoritativeness, timeliness, good cause, utility, and materiality in addressing whether judge abused discretion in allowing summary judgment without permitting additional discovery); Mass. R. Civ. P. 26 (c), as amended, 474 Mass. 1401 (2016) (setting forth factors to consider in deciding motion for protective order).
Specifically, counsel represented that (1) defendant Chase Home Finance, LLC, was merged into JPMorgan Chase in or around May 2011 and that the final judgment against JPMorgan Chase also encompassed Chase Home Finance, LLC, and (2) the references in the complaint to defendants Washington Mutual Mortgage Service Corporation and ATM Corporation were drafting errors.
These documents were submitted as attachments to two affidavits signed by someone familiar with JPMorgan Chase's business records. Louisa filed a motion to strike the first affidavit, arguing that it was not based on personal knowledge. Louisa's motion to strike was never ruled on, which, she argues, was reversible error. However, the motion to strike was implicitly denied where the motion for summary judgment was allowed. See Boston Redev. Auth. v. Pham, 88 Mass.App.Ct. 713, 715 n.4 (2015). Moreover, where the affiant set forth the basis of her knowledge -- that she was an authorized signer at JPMorgan Chase who had regular access to JPMorgan's business records and was therefore familiar with them -- there was no merit to the motion to strike. See Eaton v. Federal Nat'l Mtge. Ass'n, 93 Mass.App.Ct. 216, 220 (2018).
4. Claims for rescission, fraud, breach of contract, and violations of G. L. c. 93A. Finally, Louisa argues that the Starkeys' claims for rescission, fraud, breach of contract, and violations of G. L. c. 93A were erroneously dismissed "sua sponte" as barred by FIRREA. This argument overlooks the fact that the summary judgment judge provided alternative bases for dismissing most of the above-mentioned claims, which are not addressed by Louisa on appeal, and that the FIRREA ruling only applied to JPMorgan Chase. In any event, Louisa's due process argument lacks a factual basis given the history of this case and the prior appeal to the full Appeals Court, which made FIRREA a focus of the case, and we therefore do not address the argument further. And, to the extent the summary judgment judge did rely solely on FIRREA, we discern no error.
The Starkeys' claim for fraud was based on allegations that the "[d]efendants" fraudulently induced the Starkeys to refinance and created various false appearances when originating the mortgage loan and thereafter. The summary judgment judge ruled that the Starkeys lacked standing to challenge the alleged failure to abide by the terms of the pooling and servicing agreement; to the extent the Starkeys sought to hold Deutsche Bank and JPMorgan Chase liable for their own conduct, the Starkeys' claim for fraud failed because their allegations pertained to misrepresentations and acts committed by Washington Mutual, not Deutsche Bank or JPMorgan Chase; and given these defendants' standing to foreclose, the Starkeys could not establish that Deutsche Bank or JP Morgan Chase misrepresented their ownership of the mortgage. The summary judgment judge also ruled that, to the extent the Starkeys sought to hold JPMorgan Chase liable for Washington Mutual's conduct as the bank that assumed Washington Mutual's liabilities from the FDIC, the claim fell within this court's previous pronouncement on what was barred by FIRREA. We agree entirely with the judge's reasoning, see Starkey, 94 Mass.App.Ct. at 9-10, and discern no ground for disturbing the judgment on the fraud claim.
To the extent Louisa argues that Deutsche Bank has taken inconsistent positions over time regarding how it came to hold the mortgage, we disagree. In the prior appeal to the full court, Deutsche Bank argued that the Starkeys "pled themselves out of court" by alleging that the mortgage was assigned to Deutsche Bank in 2009. Starkey, 94 Mass.App.Ct. at 5. In this appeal, Deutsche Bank relies on evidence in the summary judgment record showing that the mortgage was transferred to Deutsche Bank in 2006, and that a confirmatory assignment to Deutsche Bank was made in 2009. Those two positions are not inconsistent.
We are mindful of the fact that the Starkeys' counsel represented at oral argument that the delay was caused, at least in part, by a serious illness in the family, and we emphasize that our decision does not turn on that aspect of the delay.
Judgment affirmed.
By the Court Neyman, Desmond & Grant, JJ.
For example, Louisa argues that Deutsche Bank did not produce anything from Washington Mutual's books and records to show whether Washington Mutual held the mortgage when Washington Mutual went into receivership. Louisa's arguments on this point arise out of this court's decision in Starkey, 94 Mass.App.Ct. at 10-11, in which this court stated that the Starkeys were entitled to further discovery to the extent there existed a dispute about the ownership of the mortgage on the date Washington Mutual went into receivership. On remand, Deutsche Bank and JPMorgan Chase did provide discovery showing that the mortgage was transferred to Deutsche Bank in 2006. That notwithstanding, any remaining dispute is immaterial. Even assuming Washington Mutual still held the mortgage when it entered into receivership, the mortgage was transferred to Deutsche Bank in 2009.