Hayden, et al v. HSBC Bank USA, N.A., et al

Filing

OPINION issued by Sandra L. Lynch, Appellate Judge; William J. Kayatta , Jr., Appellate Judge and David J. Barron, Appellate Judge. Published. [16-2274]

Case: 16-2274

Document: 00117186764

Page: 1

Date Filed: 08/08/2017

Entry ID: 6111413

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

Case: 16-2274

Document: 00117186764

Page: 2

LYNCH, Circuit Judge.
and

Denine

Murphy

("the

Date Filed: 08/08/2017

Entry ID: 6111413

In March 2007, Christopher Hayden

Haydens")

borrowed

$800,000

from

GN

Mortgage, LLC ("the lender") to purchase a property in Rehoboth,
Massachusetts.
memorializing

The
the

Haydens

loan

and

a

executed
mortgage

a

promissory

identifying

note

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.
filed

several

bankruptcy

petitions

and

requested

relief, thereby delaying foreclosure until 2016.

They then
injunctive
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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Case: 16-2274

Document: 00117186764

Page: 3

Date Filed: 08/08/2017

Entry ID: 6111413

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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Entry ID: 6111413

the district court issued its decision in this case, provides
further support for this finding.
holding

that

a

mortgage

contract

Dyer reaffirmed Culhane's
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

appropriate registry of deeds . . . .").

an

affidavit

in

the

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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Document: 00117186764

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Date Filed: 08/08/2017

Entry ID: 6111413

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

affirm.

court's

See 1st Cir. R. 27.0(c).
So ordered.

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opinion,

we

summarily