George et al v. Stonebridge Mortgage Company LLC et al
Filing
32
Judge F. Dennis Saylor, IV: MEMORANDUM AND ORDER entered. The defendants' motions ( 3 and 17 ) to dismiss are GRANTED. The 25 motion of defendants Freddie Mac, Chase, and MERS to strike is DENIED as moot. (Cicolini, Pietro)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
_______________________________________
)
PAUL L. GEORGE, JR. and TAMI L.
)
GEORGE,
)
)
Plaintiffs,
)
)
v.
)
)
STONEBRIDGE MORTGAGE COMPANY, )
LLC; AMERICAN MORTGAGE
)
NETWORK, INC.; JPMORGAN CHASE
)
BANK, N.A.; MORTGAGE ELECTRONIC )
REGISTRATION SYSTEMS, INC.; and
)
FEDERAL HOME LOAN MORTGAGE
)
CORPORATION,
)
)
)
Defendants.
)
_______________________________________)
Civil No.
13-11884-FDS
MEMORANDUM AND ORDER ON DEFENDANTS’ MOTIONS TO DISMISS
SAYLOR, J.
This is an action arising from a home mortgage foreclosure. Plaintiffs Paul and Tami
George have brought suit against various mortgage company defendants, contending that the
foreclosure on of one of their properties was illegal. The named defendants are Stonebridge
Mortgage Company, LLC; American Mortgage Network, Inc.; JPMorgan Chase Bank, N.A.
(“Chase”); Mortgage Electronic Registration Systems, Inc. (“MERS”); and Federal Home Loan
Mortgage Corporation (“Freddie Mac”).
Defendant American Mortgage filed a motion to dismiss on August 7, 2013. Defendants
Freddie Mac, Chase, and MERS filed a motion to dismiss on August 22, 2013. For the following
reasons, the motions will be granted.1
I.
Background
The facts are set forth as alleged in the complaint unless otherwise noted.2
Plaintiffs Paul and Tami George own real property located at 96 Elm Street East in
Raynham, Massachusetts (“the Raynham Property”). They also owned real property located at
10 Maple Avenue in Taunton, Massachusetts (“the Taunton Property”).
On November 15, 2005, the Georges entered into a mortgage on the Raynham Property
with defendant Stonebridge Mortgage Company, LLC.3 Under the mortgage, Stonebridge made
a loan of $397,000 to the Georges, who were obligated to repay the loan over thirty years. The
Georges’ monthly income at the time was $4,981.50; their monthly mortgage payments to
Stonebridge were $2,850.13.
The Georges allege that “[a]s a result of” this loan, they entered into a mortgage with
defendant American Mortgage Network, Inc., on the Taunton Property on June 30, 2006.
(Compl. ¶ 16).4 Their monthly mortgage payment to American Mortgage was $1,573.15. The
Georges also allege that Stonebridge and American Mortgage lent them the money without a
reasonable belief in their ability to repay the loans.
1
Defendants Freddie Mac, Chase, and MERS also moved to strike the affidavit of Tami George on
September 12, 2013. Plaintiffs did not respond. Because the allegations proffered in that affidavit do not affect the
outcome of defendants’ motions to dismiss, the motion to strike will be denied as moot.
2
On motions to dismiss, courts can properly take into account documents attached to or incorporated into
the complaint, facts susceptible of judicial notice, concessions in a plaintiff’s response to the motion to dismiss, and
official public records. Newman v. Krintzman, 723 F.3d 308, 309 (1st. Cir. 2013); Watterson v. Page, 987 F.2d 1, 3
(1st Cir. 1993). Any facts considered by the Court that were not alleged in the complaint fall under one or more of
these categories.
3
According to state records, Stonebridge was dissolved in June 2008. (Notice of Removal, Ex. C).
4
The complaint also alleges that the Georges “used the proceeds from the Raynham Property to mortgage
the Taunton Property with American Mortgage.” (Compl. ¶ 15). It is unclear what is meant by this.
2
In January 2010, the Georges attempted to modify their mortgage agreement on the
Taunton Property.5 They allege they were denied a good-faith opportunity to do so.
On July 31, 2012, defendant MERS assigned the mortgage on the Taunton Property to
defendant Chase. The Georges allege this assignment failed because MERS lacked the legal
authority and standing to assign the mortgage.
On April 26, 2013, Chase issued a notice of foreclosure sale on the Taunton Property.
On May 28, 2013, defendant Freddie Mac purchased the Taunton Property at the foreclosure
sale. The Georges allege that there was no authority for this foreclosure because the mortgage
was illegally assigned.
II.
Standard of Review
On a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), the Court “must assume the
truth of all well-plead[ed] facts and give plaintiff the benefit of all reasonable inferences
therefrom.” Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d 1, 5 (1st Cir. 2007) (citing
Rogan v. Menino, 175 F.3d 75, 77 (1st Cir.1999)). To survive a motion to dismiss, the complaint
must state a claim that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). That is, “[f]actual allegations must be enough to raise a right to relief above the
speculative level, . . . on the assumption that all the allegations in the complaint are true (even if
doubtful in fact).” Id. at 555 (citations omitted). “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556).
5
The complaint alleges that the Georges tried to engage Chase in discussions to modify the Taunton
Property mortgage in 2010. The complaint also, however, alleges that Chase was not assigned the mortgage until
July 2012.
3
Dismissal is appropriate if plaintiff’s well-pleaded facts do not “possess enough heft to show that
plaintiff is entitled to relief.” Ruiz Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 84 (1st Cir. 2008)
(quotations and original alterations omitted).
III.
Analysis
Plaintiffs make four claims against defendants. First, they contend that Chase illegally
foreclosed on their home without giving them a notice to cure as required by Mass. Gen. Laws
ch. 244 § 35A. Second, they contend that Stonebridge and American Mortgage funded high-cost
loans to them in violation of the Massachusetts Predatory Home Loan Practices Act, Mass. Gen.
Laws ch. 183C (“PHLPA”). Third, plaintiffs contend that defendants breached the implied
covenant of good faith and fair dealing as to (apparently) both mortgage contracts. Finally, they
contend that their mortgages are void because they were made in violation of 940 CMR 8.00
(“the Regulations”), which address unfair or deceptive mortgages.
Defendant American Mortgage filed a motion to dismiss, contending (1) that the PHLPA
claim is barred by the statute of limitations and the PHLPA does not cover the mortgage on the
Taunton Property, (2) that the complaint does not properly allege a breach of the implied
covenant of good faith and fair dealing, and (3) that the Taunton Property’s mortgage is not
subject to the Regulations.
Defendants Chase, MERS, and Freddie Mac also filed a motion to dismiss, contending
(1) that the assignment of the mortgage from MERS to Freddie Mac was valid, (2) that the
complaint fails to allege sufficient facts for breach of the implied covenant of good faith and fair
dealing, (3) that the claim for failing to give a notice to cure is preempted by federal law, (4) that
the PHLPA claim is barred by the statute of limitations, and (5) that private parties cannot bring
4
claims under the Regulations, the claim is time-barred, and the Regulations were not meant to
apply retroactively.
A.
Claim for Failure to Give Notice to Cure
The complaint alleges that defendants failed to comply with Massachusetts law
forbidding mortgagees from accelerating a mortgage loan before giving the mortgagor a written
notice of their right to cure. Mass. Gen. Laws ch. 244 § 35A(g). A mortgagee is only allowed to
accelerate a loan 150 days after it gives written notice. Id. Mortgagees seeking to foreclose
must comply strictly with the requirements of § 35A. See Silva v. Deutsche Bank Nat’l Trust
Co., 30 Mass. L. Rptr. 369, at *3 (Nov. 14, 2012).
1.
Non-Foreclosing Defendants
Defendant American Mortgage contends that plaintiffs’ claims against it should be
dismissed because it did not foreclose on the Taunton Property. Plaintiffs have not responded to
that argument. The complaint alleges that Chase was illegally assigned the mortgage and that
Chase subsequently foreclosed on the Taunton Property. American Mortgage is not alleged to
have foreclosed on the property or accelerated plaintiffs’ loan. Therefore, it has not violated §
35A and those claims against it will be dismissed.
Likewise, defendants Stonebridge, Freddie Mac, and MERS are not alleged to have
foreclosed on the Taunton Property or accelerated plaintiffs’ mortgage loan. Because the statute
only governs the actions of mortgagees who accelerate loans, the § 35A claims against those
defendants will be dismissed.
2.
Defendant Chase
The complaint does allege that Chase foreclosed on the Taunton Property. Chase
5
contends, however, that § 35A is preempted by regulations promulgated under the National Bank
Act, 12 U.S.C. § 1 (“NBA”). Plaintiffs have not responded to that argument.
As a national bank, Chase is subject to regulation by the Office of the Comptroller of the
Currency (“OCC”) as authorized by the NBA. 12 U.S.C. § 93a.6 The Supreme Court has
“repeatedly made clear that federal control shields national banking from unduly burdensome
and duplicative state regulation.” Watters v. Wachovia Bank, N.A., 550 U.S. 1, 11 (2007).
“[W]hen state prescriptions significantly impair the exercise of authority, enumerated or
incidental under the NBA, the State’s regulations must give way.” Id. at 12 (citing Barnett Bank
of Marion Cty., N.A. v. Nelson, 517 U.S. 25, 32-34 (1996)).
The question, then, is whether § 35A is preempted by federal law. Chase contends the
requirements of § 35A are preempted by OCC regulation 12 C.F.R. § 34.4(a)(4). That regulation
states:
A national bank may make real estate loans under 12 U.S.C. § 371 . . . without regard to
state law limitations concerning . . . [t]he terms of credit, including amortization of loans,
balance, payments due, minimum payments, or term to maturity of the loan, including the
circumstances under which a loan may be called due and payable upon the passage of
time or a specified event external to the loan.
12 C.F.R. § 34.4.(a)(4).
In Sloane v. JPMorgan Chase Bank, N.A., 2012 WL 7806163 (D. Mass. Mar. 27, 2012),
the court found that § 35A limits “the circumstances under which a loan may be called due” and
regulates the “term to maturity of the loan” by imposing requirements applicable to acceleration
of mortgage loans. 2012 WL 7806163, at *1 (citing Mass. Gen. Laws ch. 244 §§ 35A(b), (g)).
6
“Courts may take judicial notice that a bank is a national bank if the bank is described by name as a
‘national’ bank.” In re Hollingworth, 453 B.R. 32, 35 (Bankr. D. Mass. 2011) (citing United States v. Harris, 530
F.2d 576, 578 (4th Cir. 1976); United States v. Thomas, 610 F.2d 1166, 1171 (3d Cir. 1979); United States v. Mauro,
501 F.2d 45, 49-50 (2d Cir. 1974)).
6
Accordingly, the court held that the OCC regulation preempted Section 35A in that case. Id.
The Court agrees with the reasoning in Sloane. The OCC regulation states that national
banks may make real estate loans without regard to state limitations regarding “term to maturity
of the loan” and the “circumstances under which a loan may be called due.” 12 C.F.R. §
34.4.(a)(4). Section 35A clearly puts limitations on the term to maturity of real estate loans, and
the circumstances under which they can be accelerated, by imposing a written notice requirement
on national bank mortgagees attempting to foreclose. Mass. Gen. Laws ch. 244 § 35A(g)-(h).
Section 35A is therefore preempted by the OCC regulation.7
Here, the complaint alleges that Chase was assigned the mortgage on July 31, 2012.
Chase is not alleged to have foreclosed on the Taunton Property in its role as a trustee.
Therefore, the OCC regulations promulgated under the NBA apply and preempt the requirements
of § 35A. Accordingly, the § 35A claim against Chase will be dismissed.
7
In Ross v. Deutsche Bank Nat. Trust Co., 933 F. Supp. 2d 225, 233 (D. Mass. 2013), the court determined
that the same regulation did not preclude a Section 35A claim, given the circumstances of that case. Specifically, the
court analyzed whether Deutsche Bank had made or purchased a real-estate loan within the meaning of 12 C.F.R. §
34.4(a)(4) and 12 U.S.C. § 371. Id. The bank in that case was foreclosing on a mortgage in its role as the trustee of
a mortgage company in bankruptcy. Id. at 228-29. Relying on a 2005 OCC Interpretive Letter, the court concluded
that the bank had “neither originated the loan, funded the loan at inception, nor purchased the loans as part of any
real estate lending program comprehended by the regulation” because it was acting as a trustee. Id. at 233 (internal
quotations and alterations omitted). Accordingly, it determined that the bank did not fall within the aegis of the
OCC regulations when acting on that particular mortgage and had to comply with § 35A. Id.
Ross does not suggest a different result should be required here. In Ross, Deutsche Bank was holding the
mortgage in question as a trustee of a separate bankrupt company. 933 F. Supp. 2d at 228-29. According to the
OCC Interpretive Letter relied on by the court, 12 U.S.C. § 371 and 12 C.F.R. § 34.4 do not apply to banks
foreclosing on mortgages as trustees because they are not making, selling, or purchasing those loans within the
meaning of the statute. OCC Interpretive Letter 1016, at *3 (Jan. 14, 2005). Instead, banks are authorized to act as
trustees by 12 U.S.C. § 92(a), which “does not insulate the assets the [b]anks hold in trust for the benefit of investors
from state law requirements otherwise applicable to those assets.” Id. Accordingly, Ross held that 12 C.F.R. § 34.4
did not apply to the mortgage in the case. 933 F. Supp. 2d at 233. The court did not hold that the OCC regulation
would not preempt § 35A if it did apply.
7
B.
Claim for Predatory Lending Practices
The Massachusetts PHLPA states that “[a] lender shall not make a high-cost home
mortgage loan unless the lender reasonably believes at the time the loan is consummated that 1
or more of the obligors, will be able to make the scheduled payments to repay the home loan . . .
.” Mass. Gen. Laws ch. 183 § 4. A high-cost home mortgage loan is defined as one “securing
the borrower’s principal dwelling and that either exceeds by more than eight percentage points
(for a first mortgage) the yield on Treasury securities with a comparable maturity period, or
features total points and fees the greater of five per cent of the total loan or $400.”
Commonwealth v. Fremont Investment & Loan, 452 Mass. 733, 748 n.24 (2008) (citing Mass.
Gen. Laws ch. 183C § 2). Plaintiffs contend that the PHLPA makes the mortgage on the
Taunton Property illegal. Defendants contend the Taunton Property mortgage is not a “high-cost
home mortgage loan” as defined by the statute.
Plaintiffs have not provided any comparison with the yield on Treasury securities or
presented any allegations that they incurred points and fees greater than five percent of the total
loan, or $10,440. (Notice of Removal, Ex. D).8 They have alleged no facts that would support
the conclusion that the loan on the Taunton Property was a high-cost home mortgage loan.
Furthermore, a mortgage counts as a “high-cost home mortgage loan” as defined by the
statute only if the mortgage is on the person’s principal dwelling. Plaintiffs, however, claimed
the Raynham Property as their principal dwelling under the Homestead Act, Mass. Gen. Laws
8
Plaintiffs’ proffered affidavit from Tami George states that Chase gave her a good-faith estimate for a
settlement charge of $6,659.25 to modify the Taunton Property mortgage and avoid foreclosure. (Mem. in Opp. to
Mot. to Dismiss for Failure to State a Claim, Dkt. No. 24, Ex. 1). That affidavit is the subject of a motion to strike.
Even assuming the $6,659.25 would count towards a calculation of fees, it would still not qualify the Taunton
Property mortgage as a high-cost home mortgage loan.
8
ch. 188, on June 2, 2013. (Blase Decl. Ex. B).9 They have made no allegations as to which
property was their principal dwelling at the time the mortgages were executed. They also failed,
in their opposition, to respond to defendants’ arguments. Plaintiffs have therefore failed to
allege that the mortgage on the Taunton Property is a “high-cost home mortgage loan” under the
PHLPA. Accordingly, those claims will be dismissed.10
C.
Claim for Breach of the Implied Covenant of Good Faith and Fair Dealing
Plaintiffs contend that defendants breached the implied covenant of good faith and fair
dealing between them as parties to either or both mortgage contracts. In Massachusetts, “[t]he
covenant of good faith and fair dealing is implied in every contract.” Uno Restaurants, Inc. v.
Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004). “Such a covenant requires ‘that
neither party shall do anything that will have the effect of destroying or injuring the right of the
other party to receive the fruits of the contract.’” Blank v. Chelmsford OB/GYN, P.C., 420 Mass.
404, 407 (1995) (quoting Anthony’s Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 471-72
(1991)). The covenant cannot, however, “create rights and duties not otherwise provided for in
the existing contractual relationship, as the purpose of the covenant is to guarantee that the
parties remain faithful to the intended and agreed expectations of the parties in their
performance.” T.W. Nickerson, Inc. v. Fleet Nat. Bank, 456 Mass. 562, 570 (2010) (quoting Uno
9
The Taunton Property had already been foreclosed on by the time plaintiffs filed their Homestead Act
declaration. Plaintiffs conceivably could have had their principal dwelling at the Taunton Property before
foreclosure and moved to the Raynham Property afterward. In their opposition, however, plaintiffs did not respond
to defendants’ arguments that the PHLPA does not cover the Taunton Property mortgage because the property was
not their primary dwelling.
10
Defendants also contend that plaintiffs’ predatory lending claims are barred by the five-year statute of
limitations. See Mass. Gen. Laws ch. 183C § 15(b)(1). Plaintiffs contend that they can bring such a claim at any
time after foreclosure under Mass. Gen. Laws ch. 183C § 15(b)(2). No cases appear to have addressed the issue of
whether that provision of the statute establishes an indefinite limitations period with respect to an action to enjoin a
foreclosure. See Martins v. U.S. Bank, N.A., 2011 WL 4459135, at *1 n.5 (D. Mass. Sept. 26, 2011). The Court
does not reach the merits of that issue.
9
Restarants, 441 Mass. at 385). Defendants contend that the complaint does not allege any injury
to the rights of plaintiffs under the mortgage contracts. Plaintiffs did not respond to that
argument in their opposition.
The only fact alleged in the complaint that could conceivably give rise to a breach of the
covenant of good faith and fair dealing is the allegation that Chase denied plaintiffs a good-faith
opportunity to modify the mortgage on the Taunton Property. Plaintiffs do not, however, allege
that Chase or any other defendant was under an obligation to modify the mortgage or negotiate a
modification. See Adamson v. Mortgage Electronic Registration Systems, Inc., 2011 WL
4985490, at *4 (Mass. Super. Ct. Oct. 19, 2011) (dismissing good faith and fair dealing claims
because defendant “was under no legal obligation to modify [plaintiff’s] mortgage or to negotiate
a modification”). Because the complaint does not allege facts that plausibly suggest that
defendants failed to perform under the terms of any contract or that they injured plaintiffs’ rights
under a contract, the complaint fails to state a claim for breach of the implied covenant of good
faith and fair dealing.
D.
Claim for Unfair or Deceptive Mortgage Practices
Plaintiffs also allege defendants violated the Massachusetts regulations governing
mortgage brokers and lenders. See 940 CMR 8.00. Defendants contend that the Regulations do
not give plaintiffs a private right of action to enforce their requirements. Plaintiffs did not
respond to this argument.
Defendants correctly point out that the Regulations do not provide a private right of
action. See Corcoran v. Saxon Mortg. Services, Inc., 2010 WL 2106179, at *4 (D. Mass. May
24, 2010) (regulations “do not, however, provide the plaintiff with a private cause of action”).
10
However, a claimed violation of the Regulations could be asserted in connection with a claim
under Mass. Gen. Laws ch. 93A, the Massachusetts consumer-protection law. See Rondeau v.
Marathon Structured Asset Solutions Trust, 2010 WL 3327691, at *3 (Mass. Super. Ct. Jul. 7,
2010) (treating alleged violations of 940 CMR 8.01 as Chapter 93A violations); Thelemaque v.
Fremont Inv. & Loan, 28 Mass. L. Rptr. 430, at *6 (Mar. 23, 2011) (the same).
Even if plaintiffs were to bring their claims under Chapter 93A, such claims would be
time-barred. The limitations period for claims under Chapter 93A is four years. Mass. Gen.
Laws ch. 260 § 5A.
The general rule is that a cause of action under Chapter 93A accrues “when the plaintiff
knew or should have known of the appreciable harm resulting from the defendant’s [actions].”
Schwartz v. Travelers Indem. Co., 50 Mass. App. Ct. 672, 678 (2001). This discovery rule
delays accrual beyond the time of injury if the plaintiff does not know and could not reasonably
know that he or she “may have been harmed by the conduct of another.” Prescott v. Morton
Intern., Inc., 769 F. Supp. 404, 408 (D. Mass. 1990). The discovery rule is narrow, generally
applying only where the harm itself is “inherently unknowable.” Saenger Org., Inc. v.
Nationwide Ins. Licensing Assoc., Inc., 119 F.3d 55, 65 (1st Cir. 1997); see also Catrone v.
Thoroughbred Racing Ass’n of N. Am., Inc., 929 F.2d 881, 886 (1st Cir. 1991).
“A violation involving issuance of a loan begins to accrue from the moment the parties
entered into the loan.” Da Silva v. U.S. Bank, N.A., 885 F. Supp. 2d 500, 504 (D. Mass. 2012);
see also Maldonado v. AMS Servicing LLC, 2012 WL 220249, at *5 (D. Mass. Jan. 24, 2012)
(cause of action accrued when loan was made because any violation of Chapter 93A would not
have been “inherently unknowable”). Plaintiffs allege that defendants acted unfairly,
11
deceptively, and unreasonably at the time the mortgage loans were made. Those loans were
allegedly made on November 15, 2005 and June 30, 2006. Therefore, the limitations period on
any claims arising from those loans expired on November 15, 2009 and June 30, 2010,
respectively. This action was filed on July 17, 2013, long after the statue of limitations period
had expired. Accordingly, plaintiffs’ claims under the Massachusetts regulations will be
dismissed.11
E.
Allegations of Unlawful Assignment
In the statement of facts, the complaint alleges that MERS illegally assigned the Taunton
Property mortgage to Chase, and that therefore Chase did not have the authority to foreclose.
Specifically, the complaint alleges the following:
22.
[MERS] lacked the required legal authority and standing to assign the
mortgage on Plaintiffs’ Taunton Home. This alleged assignment of
mortgage is void. [MERS] failed to legally assign the mortgage and note
on Plaintiffs’ Taunton Home. [Chase] lacked the required legal authority
and standing in Plaintiffs’ Taunton Home to legally foreclose.
23.
On April 26, 2013, [Chase] issued a notice of mortgage foreclosure sale
on Plaintiffs’ Taunton Home for a foreclosure scheduled on May 28, 2013,
at which time, Freddie Mac purchased Plaintiffs’ Home. This foreclosure
notice issued by [Chase] is void. [Chase] lacked the legal authority and
standing to issue said notice of mortgage foreclosure sale concerning
Plaintiffs’ Taunton Home.
(Compl. ¶¶ 22-23).
The statutory power of sale is set out in Mass. Gen. Laws ch. 183 § 21. For a foreclosure
sale pursuant to the power to be valid, the mortgagee must “first comply[] with the terms of the
mortgage and with the statutes relating to the foreclosure of mortgages by the exercise of a
11
Defendants also moved to dismiss plaintiffs’ claims under the regulations because the regulations are not
retroactive. See 940 CMR 8.08 (“The amendments to 940 CMR 8.00 shall be effective on January 2, 2008.”). The
Court does not reach that issue.
12
power of sale.” Mass. Gen. Laws ch. 183 § 21. Those laws are codified at Mass. Gen. Laws ch.
244 §§ 11-17C. Eaton v. Federal Nat. Mortg. Ass’n, 462 Mass. 569, 581 (2012).
Eaton held that a foreclosing mortgagee must hold the mortgage and the mortgage note to
lawfully foreclose on a property. 462 Mass. at 583-86. However, an entity that is the authorized
agent of the note holder may stand in the shoes of the mortgagee and foreclose on a property. Id.
at 586.
Here, defendants contend that under Culhane v. Aurora Loan Services of Nebraska, 708
F.3d 282 (1st Cir. 2013), MERS had the authority to assign the Taunton Property mortgage to
Chase. In Culhane, the First Circuit found that MERS could validly assign its interest in a
mortgage to another entity, even if it did not hold the mortgage note. Id. at 292. Accordingly,
MERS was able to assign whatever interest it had in the Taunton Property mortgage in this case.
Culhane, 708 F.3d at 291-94.
According to the Taunton Property mortgage document, American Mortgage held the
mortgage note and MERS held the mortgage itself. (Notice of Removal, Ex. D).12 If the
assignment of either the mortgage note or the mortgage was invalid, Chase’s foreclosure on the
Taunton Property may have been illegal. Eaton, 462 Mass. at 583-86; U.S. Bank Nat. Ass’n v.
Ibanez, 458 Mass. 637, 648 (2011).
However, the complaint here alleges as a factual matter that the assignment was invalid
or improper, but fails to allege any legal theory upon which plaintiff might recover as a result.
None of the four counts of the complaint allege any type of claim for unlawful foreclosure,
whether cast as a claim under a state or federal statute or a common-law theory of recovery.
12
Plaintiffs’ complaint incorporates the Taunton Property mortgage document by reference.
13
Certainly such a claim is not included in plaintiffs’ § 35A, PHLPA, breach-of-implied-covenant,
or Chapter 93A theories. Accordingly, and notwithstanding the factual allegations of paragraphs
22 and 23, the complaint fails to state a claim based on a theory of unlawful foreclosure based on
a lack of standing or interest in the property.
VI.
Conclusion
For the foregoing reasons, defendants’ motions to dismiss are GRANTED. The motion
of defendants Freddie Mac, Chase, and MERS to strike will be DENIED as moot.
So Ordered.
/s/ F. Dennis Saylor
F. Dennis Saylor IV
United States District Judge
Dated: November 19, 2013
14
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