Deutsche Bank National Trust Company v. Moynihan et al

Filing 80

Magistrate Judge Marianne B. Bowler: ORDER entered. MEMORANDUM AND ORDER Re: Plaintiff Deutsche Bank National Trust Company's Motion for Summary Judgment (Docket Entry # 63 ). The motion for summary judgment (Docket Entry # 63 ) is ALLOWED as to counts one and two. DBNTC is directed to file a proposed final judgment within seven days of the date of this opinion. (Patton, Christine)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

DEUTSCHE BANK NATIONAL TRUST,
AS TRUSTEE FOR IXIS 2006-HE3,
Plaintiff,
v.

CIVIL ACTION NO.
15-14155-MBB

JAMES P. MOYNIHAN,
Defendant.

MEMORANDUM AND ORDER RE:
PLAINTIFF DEUTSCHE BANK NATIONAL TRUST COMPANY’S MOTION FOR
SUMMARY JUDGMENT
(DOCKET ENTRY # 63)

September 19, 2017
BOWLER, U.S.M.J.
Pending before this court is a motion for summary judgment
filed by plaintiff Deutsche Bank National Trust Company, as
Trustee for IXIS 2006-HE3 (“DBNTC”), seeking to enforce a lost
promissory note.

(Docket Entry # 63).

Defendant James P.

Moynihan (“defendant”) opposes the motion.

(Docket Entry # 73).

After conducting a hearing on April 25, 2017, this court took the
motion under advisement.

(Docket Entry # 77).

PROCEDURAL BACKGROUND
The parties’ dispute arises out of a promissory note
executed by defendant and secured by a mortgage on property in
Lowell, Massachusetts, where defendant resides (“the property”).
(Docket Entry # 1).

The complaint sets out two counts against

defendant and former defendant Durham Commercial Capital
Corporation (“Durham”).

(Docket Entry # 1, p. 8).

Count One

requests a declaratory judgment in favor of DBNTC against
defendant establishing that DBNTC rightfully owns the note and is
“entitled to immediate physical possession of the original [of
the note].”

(Docket Entry # 1, ¶ 40).

Count Two requests a

declaratory judgment in favor of DBNTC against defendant
establishing that DBNTC, under section one of Massachusetts
General Laws chapter 231A and section 3-301(iii) (“section 3301”) of Massachusetts General Laws chapter 106 (“chapter 106”),
is entitled to enforce the terms of the note and the mortgage
granting DBNTC a security interest in the property and may
exercise the “default remedies provided for in the mortgage
including exercise of the statutory power of sale.”
Entry # 1, ¶ 45).

(Docket

On August 22, 2016, DBNTC filed a notice

voluntarily dismissing Durham from this action.

(Docket Entry #

45).
On March 2, 2017, DBNTC moved for summary judgment under
Fed.R.Civ.P. 56 (“Rule 56”) based on three arguments.
Entry ## 63, 64).

DBNTC contends that it is entitled to enforce

the note under chapter 106, sections 3-301 and 3-309.
Entry # 64, p. 5).

(Docket

(Docket

DBNTC also maintains that declaratory relief

is warranted because defendant is judicially and collaterally
estopped from challenging DBNTC’s enforcement of the note.
2

(Docket Entry # 64, pp. 10, 13).

Defendant submits that DBNTC’s

motion should be denied because there is a genuine issue of
material fact as to whether DBNTC ever had possession of the
promissory note and if the note was even lost.
73, pp. 1, 8).

(Docket Entry #

Defendant also counters the judicial and

collateral estoppel arguments made by DBNTC.

(Docket Entry #

73, pp. 10-13).
STANDARD OF REVIEW
Summary judgment is designed to “‘pierce the boilerplate of
the pleadings and assay the parties’ proof in order to determine
whether trial is actually required.’”

Tobin v. Federal Express

Corp., 775 F.3d 448, 450 (1st Cir. 2014) (quoting Wynne v. Tufts
University School of Medicine, 976 F.2d 791, 794 (1st Cir.
1992)).

It is appropriate “if the movant shows that there is no

genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”

Fed.R.Civ.P. 56(a).

It is inappropriate “if the record is sufficiently open-ended to
permit a rational factfinder to resolve a material factual
dispute in favor of either side.”

Pierce v. Cotuit Fire

District, 741 F.3d 295, 301 (1st Cir. 2014); see also Ruiz-Rosa
v. Rullan, 485 F.3d 150, 155 (1st Cir. 2007) (applying same
legal standard applied by district court when reviewing summary
judgment ruling).
“Genuine issues of fact are those that a factfinder could
3

resolve in favor of the nonmovant, while material facts are
those whose ‘existence or nonexistence has the potential to
change the outcome of the suit.’”

Green Mountain Realty Corp.

v. Leonard, 750 F.3d 30, 38 (1st Cir. 2014) (quoting Tropigas de
Puerto Rico, Inc. v. Certain Underwriters at Lloyd’s of London,
673 F.3d 53, 56 (1st Cir. 2011)).

The evidence is viewed “in

the light most favorable to the non-moving party” and “all
reasonable inferences” are drawn in his favor.
Johnson, 752 F.3d 490, 495 (1st Cir. 2014).

Ahmed v.

In reviewing a

summary judgment motion, a court may examine “all of the record
materials on file,” Geshke v. Crocs, Inc., 740 F.3d 74, 77 (1st
Cir. 2014), “including depositions, documents, electronically
stored information, affidavits or declarations . . . or other
materials.”
F.3d at 495.

Fed.R.Civ.P. 56(c)(1); see Ahmed v. Johnson, 752
“Unsupported allegations and speculation,”

however, “do not demonstrate either entitlement to summary
judgment or the existence of a genuine issue of material fact
sufficient to defeat summary judgment.”

Rivera-Colon v. Mills,

635 F.3d 9, 12 (1st Cir. 2011); see Serra v. Quantum Servicing,
Corp., 747 F.3d 37, 39-40 (1st Cir. 2014) (“allegations of a
merely speculative or conclusory nature are rightly
disregarded”).

Adhering to this framework, the record sets out

the following facts.
FACTUAL BACKGROUND
4

In a quitclaim deed dated August 28, 2003 and recorded at

the Middlesex North Registry of Deeds, defendant acquired the
property located at 619-621 Stevens Street in Lowell,
Massachusetts.

(Docket Entry # 65-2).

Defendant, as borrower,

executed the promissory note dated May 1, 2006 in favor of New
Century Mortgage Corporation (“New Century”), as lender, in the
original principal amount of $360,000.

(Docket Entry # 65-3).

The note was payable “to the order of, without recourse New
Century Mortgage Corporation.”

(Docket Entry # 65-3, p. 7).1

Above the printed name “New Century Mortgage Corporation” was a
blank signature line.

(Docket Entry # 65-3, p. 7).

was the only borrower on the note.

Defendant

(Docket Entry # 65-3, p. 6).

The note expressly allows “the Lender” to transfer the note and
states that, “The Lender or anyone who takes [the note] by
transfer and who is entitled to receive payments under [the note]
is called the ‘Note Holder.’”

(Docket Entry # 65-3, p. 2).

Defendant agreed to make monthly payments of $2,703.90 on
the first day of each month starting on June 1, 2006.
Entry # 65-3, pp. 2-3).

The note dictated that the monthly

payments applied to interest before principal.
65-3, p. 2).

(Docket

(Docket Entry #

The note further contained a flexible, index-based

interest rate that adjusted every six months after the first day

Page numbers refer to the page as docketed as opposed to the
page number of the document itself.
5

1

of May 2008.

(Docket Entry # 65-3).

The interest rate on the

principal would range between 9.013% and 10.513% at the first
adjustment date and would not drop below 9.013% nor exceed
16.013%.

(Docket Entry # 65-3, p. 4).

The note also stated that

defendant would default if he failed to make the monthly payments
in full.

(Docket Entry # 65-3, p. 5).

As stated in the note,

the “Note Holder may enforce its rights under this [n]ote against
each [borrower] individually or against all of [the borrowers]
together.”

(Docket Entry # 65-3, p. 5).

The note was “governed

by federal law and the law of the jurisdiction in which the
property encumbered by the Security Instrument . . . is
located[,]” i.e., Massachusetts.2

(Docket Entry # 65-3, p. 6).

On May 1, 2006, to secure the repayment and other
obligations contained in the note, defendant granted a mortgage
encumbering the property to New Century.

(Docket Entry # 65-4).

Like the quitclaim deed, the mortgage is recorded at the
Middlesex North Registry of Deeds.

(Docket Entry # 65-4).

The

mortgage provides notice to defendant that “one or more changes
of the Loan Servicer [might occur] unrelated to a sale of the
[note]” during the life of the mortgage.
pp. 11-12).

(Docket Entry # 65-4,

Under the terms of the mortgage, defendant conveyed

and granted New Century and its “successors and assigns” the

2

The parties do not dispute the terms of the note.
6

“power of sale.”

(Docket Entry # 65-4, pp. 3, 13).

Separately, New Century entered into a Mortgage Loan
Purchase and Servicing Agreement (“MLPSA”) with NC Capital
Corporation (“NC Capital”) dated December 1, 1998.
# 65-7).

(Docket Entry

The MLPSA allowed New Century to sell NC Capital pools

of mortgage loans determined by the parties to the agreement.
(Docket Entry # 65-7, p. 5).

The MLPSA also contained a mortgage

loan document delivery procedure:

“[T]he Company shall . . ., at

least four (4) Business Days prior to the Closing Date, deliver
and release to the Custodian those Mortgage Loan Documents as
required by the Custodial Agreement with respect to each Mortgage
Loan . . ..

The Custodian shall certify receipt of all such

Mortgage Loan Documents . . ..”

(Docket Entry # 65-7, p. 20).

In 2006, NC Capital entered into a Third Amended and
Restated Mortgage Loan Purchase and Warranties Agreement with
IXIS Real Estate Capital, Inc. (“IXIS”) dated April 1, 2006.
(Docket Entry # 65-8).

IXIS entered into an Unaffiliated

Seller’s Agreement (“USA”) with Morgan Stanley ABS Capital I Inc.
(“Morgan Stanley”) as depositor on September 1, 2006, effective
September 29, 2006.

(Docket Entry # 65-9).

The USA vested

ownership of each mortgage loan and each related note in Morgan
Stanley upon the sale of the mortgage loans.
65-9, pp. 6-7).

(Docket Entry #

The USA also provided that:

The contents of any Mortgage File in the possession of the
7

Unaffiliated Seller [IXIS] at any time after such sale,
and any principal and interest due . . . and received by
or on behalf of the Unaffiliated Seller, shall be held in
trust by the Unaffiliated Seller for the benefit of the
Depositor [Morgan Stanley] . . ..
(Docket Entry # 65-9, p. 7).
Meanwhile, Morgan Stanley entered into a Pooling and Service
Agreement (“the PSA”) on September 1, 2006 with IXIS, as
unaffiliated seller, and DBNTC, as trustee and custodian,
establishing IXIS Real Estate Capital Trust 2006-HE3 (“Trust
2006-HE3”) effective September 29, 2006.
pp. 1, 31).

(Docket Entry # 65-10,

The PSA also identified Saxon Mortgage Services,

Inc. (“Saxon”) as a loan servicer.

(Docket Entry # 65-10).

Section 2.01(a) of the PSA conveyed all of Morgan Stanley’s
rights, title, and interest in the “Trust Fund,” which the PSA
defines as the “Mortgage Loans” in the “Mortgage Loan Schedule,”
to DBNTC as trustee.

(Docket Entry # 65-10, pp. 54, 73, 74).

The “Moynihan” loan on the property at “619-621 Stevens Street”
was one of the loans included in the Mortgage Loan Schedule.
(Docket Entry 65-1, ¶ 11) (Docket Entry # 65-12).

As stated in

the PSA, upon the sale of the “Mortgage Loans” to DBNTC, it
obtained ownership and possession of the note or of the note held
“in trust” for the benefit of DBNTC.3

(Docket Entry # 65-9, §

3

The relevant language reads as follows:
Upon the sale of such Mortgage Loans, the ownership of each
related Mortgage Note . . . shall immediately vest in . . .
8

2.01(b).

Section 2.01(b) further states that, “In connection

with the transfer and assignment of each Mortgage Loan, the
Unaffiliated Seller has delivered or caused to be delivered to
the Custodian . . . the original Mortgage Note bearing all
intervening endorsements evidencing a complete chain of
assignment from the originator to the related Originator . . ..”
(Docket Entry # 65-10, pp. 74-75).

DBNTC therefore obtained

possession of the original note from Morgan Stanley pursuant to
the PSA and attached schedule, which included the Moynihan loan.
(Docket Entry # 65-1, ¶¶ 10, 11) (Docket Entry # 65-10, pp. 54,
73, 74) (Docket Entry # 65-12).

Pursuant to section 2.08(h) of

the PSA, Morgan Stanley warranted that it had good title and sole
ownership of the mortgage loans, free of any interest of any
other person.

(Docket Entry # 65-10, p. 89).

According to the note possession history record, DBNTC
received the collateral file4 containing the original promissory

[DBNTC] and the ownership of all related records and
documents with respect to each Mortgage Loan prepared by or
which come into the possession of . . . [Morgan Stanley]
shall immediately vest in . . . [DBNTC]. The contents of
any Mortgage File . . . shall be held in trust by . . .
[Morgan Stanley] for the benefit of . . . [DBNTC] as the
owner thereof, and shall be promptly delivered by . . .
[Morgan Stanley] to or upon the order of . . . [DBNTC].
(Docket Entry # 65-9, pp. 6-7).
4
DBNTC does not list all of the materials contained in the
collateral file, but does state that the collateral file
included the original note. (Docket Entry # 1, ¶ 21). DBNTC
and defendant agree that the so-called collateral file initially
9

note on May 12, 2006.

(Docket Entry # 65-17).

DBNTC therefore

had possession of the note endorsed in blank as of May 12, 2006.
(Docket Entry # 65-17).

(Docket Entry # 65-1, ¶ 13).

Any

discrepancy between the date DBNTC acquired possession of the
note as evidenced by the note possession history (May 12, 2006)
or as evidenced by the PSA and Mortgage Loan Schedule (September
29, 2006) does not create an issue of material fact because
under either scenario, DBNTC had possession of the original note
no later than September 29, 2006, prior to the time of loss.
(Docket Entry # 65-1, ¶¶ 10, 11) (Docket Entry # 65-10, pp. 31,
54, 74) (Docket Entry # 65-12) (Docket Entry # 65-17).
Before January 1, 2008, defendant defaulted on his monthly
payments.

(Docket Entry # 24-2).

By affidavit, defendant states

that after granting the mortgage to New Century in 2006, he made
a number of monthly mortgage payments to New Century “[f]rom
2006 to 2008.”5

(Docket Entry # 73-4, p. 1).

On June 19, 2008,

defendant filed for bankruptcy in the United States Bankruptcy
Court for the District of Massachusetts (“the bankruptcy court”).
(Docket Entry # 65-14).

In the voluntary bankruptcy petition,

defendant expressly stated that he intended to surrender the
property to the creditor, Saxon.

(Docket Entry # 65-14, p. 36).

included the original note.
5
    Defendant does not identify the month or the months that he
made the payments to New Century in 2006. 
10

On October 7, 2008, the bankruptcy court granted defendant a
chapter seven discharge from his legal obligation to pay the
property debt.

(Docket Entry # 65-15).

In an assignment dated November 11, 2008 and effective May
7, 2008, New Century transferred the mortgage to DBNTC, as
trustee, in care of Saxon as servicer.
2).

(Docket Entry # 1-5, p.

The assignment states that, “New Century Mortgage

Corporation . . . FOR GOOD AND VALUABLE CONSIDERATION RECEIVED,
hereby grants, assigns and transfers to Deutsche Bank National
Trust Company, as Trustee for IXIS 2006-HE3 . . . All of the
right, title, and interest that said New Century Mortgage
Corporation has . . ..”

(Docket Entry # 1-5, p. 2).

The

assignment was recorded at the Middlesex North Registry of Deeds.
(Docket Entry # 1-5, p. 2).

Sometime in 2008 after the transfer

of the mortgage, defendant contacted Saxon by telephone and
spoke to an unidentified individual.

(Docket Entry # 73-4).

Defendant asked the individual for a copy of the promissory
note.

(Docket Entry # 73-4).

The Saxon official was unable to

locate a copy and did not know who held the note.6

(Docket Entry

# 73-4).

Defendant’s recitation of the Saxon official’s statements is
not considered for the truth of the matter asserted, i.e., that
the official did not know who held the note. Rather, it is
considered to show possession of the note at and around the time
period of the 2008 conversation. See Tuli v. Brigham & Women’s
Hosp., 656 F.3d 33, 41 (1st Cir. 2011).
11
6

Effective April 16, 2010, Ocwen Loan Servicing, LLC (“Ocwen”)
obtained the servicing rights for the loan from Saxon.
Entry # 65-6).

(Docket

Ocwen’s obligations as DBNTC’s servicer included:

sending statements or coupons to the borrower to facilitate
payment, collecting payments from the borrower and making
scheduled disbursements of principal and interest accounts
making disbursements from such account[s] to pay real
estate taxes and or hazard insurance premiums due in
connection with the [p]roperty and to perform other usual
and customary residential loan servicing functions.

(Docket Entry # 24, ¶ 3).

In a document dated May 21, 2010,

DBNTC granted a limited power of attorney (“the LPOA”) to Ocwen.
(Docket Entry # 65-13).
North Registry of Deeds.

The LPOA was recorded at the Middlesex
(Docket Entry # 65-13).

The LPOA

authorized Ocwen to execute various documents on behalf of DBNTC
regarding foreclosure proceedings for loans held by DBNTC.

In

relevant part, the LPOA states that:
Deutsche Bank National Trust Company . . . hereby
constitutes and appoints Ocwen Loan Servicing LLC. As
Servicer . . . the Trustee’s true and lawful Attorney-inFact, in the Trustee’s name, place and stead and for the
Trustee’s benefit, in connection with all mortgage loans
serviced by the Servicer pursuant to the Agreements solely
for the purpose of performing such acts and executing such
documents in the name of the Trustee necessary and
appropriate to effectuate the following enumerated
transactions in respect of any of the mortgages or deeds of
trust . . . and promissory notes secured thereby (the
“Mortgage Notes”) for which the undersigned is acting as
Trustee for various certificate holders . . ..
(Docket Entry # 65-13, p. 2)

(emphasis added).

The LPOA

enumerated transactions Ocwen was allowed to carry out on behalf
of DBNTC, including, “With respect to a Mortgage or Deed of
12

Trust, the foreclosure, the taking of a deed in lieu of
foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any
such foreclosure . . ..”

(Docket Entry # 65-13, p. 3).

On August 16, 2010, defendant filed a complaint in the
Massachusetts Land Court Department of the Trial Court (“the land
court”) seeking a determination that DBNTC did not hold the
mortgage encumbering the property.

(Docket Entry # 1-6).

During

this proceeding, Ablitt Scofield, P.C. (“Ablitt”), a law firm
located in Woburn, Massachusetts, represented DBNTC.

(Docket

Entry ## 65-16, 65-19).
On or about July 20, 2011, DBNTC released the collateral
file containing the note to Ocwen.
(Docket Entry # 65-17).7

(Docket Entry # 65-1, ¶ 13)

On or about August 16, 2011, Ocwen

returned the file, which contained the original of the note to
DBNTC.

(Docket Entry # 65-17).

On October 18, 2011, DBNTC again

gave the file containing the original of the note to Ocwen.
Ocwen received the file on November 3, 2011.

(Docket Entry #

65-1, ¶ 13) (Docket Entry # 65-17) (Docket Entry # 65-20, pp. 13, 13).

On or about November 21, 2011, Ocwen, DBNTC’s servicer,

By affidavit, DBNTC authenticates a screenshot of the note
possession history (Docket Entry # 65-17) evidencing it both
received the collateral file with the original note on May 12,
2006 and released it on July 20, 2011. (Docket Entry # 65-1, ¶¶
13, 14) (Docket Entry # 65-20). Defendant seeks to strike the
screenshot as hearsay.
13
7

gave the original of the note to Ablitt as an attachment to an
attorney bailee letter in order to commence and proceed with
foreclosure of the property.

(Docket Entry # 65-1, ¶¶ 13, 14)

(Docket Entry ## 65-17, 65-18) (Docket Entry # 65-20, pp. 1-3,
14-15).

The attorney bailee letter states that, “By signing this

letter agreement below where indicated, you [Ablitt] confirm that
you are currently holding Documents on behalf of the Servicer
[Ocwen] and the Owner [DBNTC], and shall only act in accordance
with either the Servicer’s or the Owner’s instructions with
regard to the Documents.”

(Docket Entry # 65-20, p. 17).

On December 30, 2011, the land court entered a judgment that,
“by virtue of the assignment of the mortgage dated November 11,
2008, . . . DBNTC is the current record holder of the Mortgage,
entitled to exercise the power of sale contained in the
Mortgage.”

(Docket Entry # 1-6, p. 3).

The judgment also

declared that DBNTC “may exercise the power of sale contained in
the Mortgage to foreclose it without regard to whether or not
DBNTC is the current holder of the Note.”

(Docket Entry # 1-6,

p. 3).
Sometime in 2011, Ablitt began having cash-flow issues.
(Docket Entry # 73-1, p. 22).

On or about November 7, 2012,

Ablitt entered into a factoring agreement entitled “Nonrecourse
Receivables Purchase Contract and Security Agreement” (“the
factoring agreement”) with a previous lender, Durham.
14

(Docket

Entry # 73-1, pp. 22, 25).

Under the factoring agreement, Durham

agreed to purchase certain receivables of Ablitt’s “in full
amount of advances . . . not exceed[ing] $1,200,000.”
Entry # 73-1, p. 26).

(Docket

In the factoring agreement, Ablitt also

gave Durham a security interest in Ablitt’s accounts,
“‘promissory notes, chattel paper’ . . . [and] ‘general
intangibles.’”

(Docket Entry # 73-1, p. 27).

DBNTC alleged in

its complaint that the security interest included “custody and
control over [Ablitt]’s assets, files, records, electronically
stored data, hard drives and/or case management systems, not
otherwise identified and retrieved by [Ablitt]’s former clients.”
(Docket Entry # 1, ¶ 35).

The complaint also alleges that Durham

“obtained and retained” the note.8

(Docket Entry # 1, ¶ 36).

Ablitt continued to deteriorate in 2013 and early 2014.
Entry # 73-1, p. 23).

(Docket

As a result, Durham began to exert a level

of managerial control over Ablitt’s affairs, culminating in a
firm name change to Connolly, Geaney, Ablitt and Willard, P.C.
(“CGAW”).

(Docket Entry # 65-19) (Docket Entry # 73-1, p. 26).

Sometime in late July or August 2014, CGAW ceased operations.
(Docket Entry # 73-1, p. 23).

Defendant seeks to include these two statements from the
complaint as part of the summary judgment record. The two
statements by DBNTC regarding Durham made in the complaint
constitute judicial admissions solely for purposes of resolving
the summary judgment motion. See Schott Motorcycle Supply, Inc.
v. American Honda Motor Co., 976 F.2d 58, 61 (1st Cir. 1992).
15
8

On or about September 3, 2014, three or more creditors of
CGAW filed on CGAW’s behalf an involuntary chapter seven
bankruptcy petition in the bankruptcy court (“CGAW bankruptcy
proceeding”).

(Docket Entry # 73-1, p. 5).

CGAW never returned

the original of the note to DBNTC or Ocwen.

(Docket Entry # 65-

17) (Docket Entry # 65-20, ¶ 6).

In a separate suit initiated by

Ocwen against CGAW and Durham in the United States District
Court for the Southern District of Florida, West Palm Beach
Division, Durham filed a crossclaim on September 15, 2014
against Ablitt for breach of the factoring agreement and a
counterclaim against Ocwen for failure to pay accounts.
Entry # 73-2, pp. 1-13).

(Docket

On August 7, 2015, Ocwen renewed a

motion for contempt against Durham for not furnishing documents
related to receivable accounts in the CGAW bankruptcy
proceeding.

(Docket Entry # 73-1, pp. 2-21).

On September 12, 2016, Ocwen, as servicer of DBNTC,
executed a lost note affidavit.

(Docket Entry # 65-20).

Therein, M. Johnson, Ocwen’s authorized signer, attests that,
based on his personal knowledge and servicing records kept in
the course of Ocwen’s regularly conducted business, DBNTC had
possession of the note when the loss of possession occurred.
(Docket Entry # 65-20, ¶¶ 1-2, 5).

The affidavit further states

that, despite a diligent search on April 1, 2016, “the original
Note could not be located and” DBNTC “cannot reasonably obtain
16

possession of the original Note.”

(Docket Entry # 65-20, ¶ 6).

The affidavit also states that, “The original Note has been
inadvertently lost, misplaced, or destroyed, or is in the
wrongful possession of an unknown person that cannot be found or
is not amenable to service of process.”

(Docket Entry # 65-20, ¶

7).
In November 2014, Ocwen obtained an estimated fair market
valuation of the property of $264,000.
13) (Docket Entry # 24-3).

(Docket Entry # 24, ¶

In December 2015, Ocwen obtained an

estimated fair market valuation of the property of $268,000.
(Docket Entry # 24, ¶ 14) (Docket Entry # 24-4).

As of February

25, 2016, the property had an assessed valuation of $282,900.
(Docket Entry # 10-3).
The “mortgage account with Ocwen is now due for the January
1, 2008 payment together with all subsequently accrued but unpaid
installments.”

(Docket Entry # 24, ¶ 11) (Docket Entry # 24-2).

The principal balance is $359,944.32.
(Docket Entry # 24-2).

(Docket Entry # 24, ¶ 12)

This amount does not include “accrued

interest, late charges, escrow advances, attorney’s fees and
other charges assessed to the account in accordance with the
terms and conditions of the [note] and [mortgage].”

(Docket

Entry # 24, ¶ 12) (Docket Entry # 24-2).
DISCUSSION
DBNTC moves for summary judgment based on three arguments.
17

First, DBNTC contends it is entitled to enforce the note as
trustee because it was in possession of the note and entitled to
enforce it when loss of the note occurred.
p. 5).

(Docket Entry # 64,

Second, DBNTC argues that defendant is judicially

estopped from challenging DBNTC’s enforcement of the note
because defendant surrendered the property through the chapter
seven bankruptcy proceeding.

(Docket Entry # 64, p. 10).

Third, DBNTC contends that defendant is collaterally estopped
from challenging DBNTC’s enforcement of the note because the
land court ruled in favor of DBNTC’s right to foreclose on the
property in Monynihan v. Deutsche Bank National Trust Company,
10-MISC-436699.

(Docket Entry # 64, p. 13).

Defendant counters that there is a genuine issue of
material fact as to whether DBNTC ever had possession of the
note and if the note was even lost.
8).

(Docket Entry # 73, pp. 1,

In addition, defendant maintains that this court cannot

consider records DBNTC introduced under the business records
exception to the hearsay rule because the supporting affidavits
are conclusory and lack trustworthiness.
pp. 5-8).

(Docket Entry # 73,

Finally, defendant opposes the judicial and

collateral estoppel arguments made by DBNTC.

(Docket Entry #

73, pp. 10-13).
A.

Enforcement of Note
DBNTC maintains it is entitled to enforce the lost note
18

under chapter 106, section 3-309(b) (“section 3-309”) because:
DBNTC was entitled to enforce the note at the time the note was
lost; and DBNTC was in possession of the note when its agent and
attorney, Ablitt, lost the note.

(Docket Entry # 64).

DBNTC

further asserts that it did not transfer the note to Ocwen or
Ablitt for the purpose of giving either entity an independent
right to enforce the note.

Defendant contends that DBNTC fails

to provide direct evidence showing it had physical possession or
that the note was ever lost.

Defendant argues that the 2008

conversation with the Saxon official and defendant’s 2006 to 2008
mortgage payments to New Century create a disputed issue of fact
regarding DBNTC’s possession.

Defendant also submits that this

court cannot consider Ocwen’s business records as an exception to
the hearsay rule.

(Docket Entry # 73).

As set out in this court’s prior Memorandum and Order on
defendant’s motions to dismiss, the note is governed by
Massachusetts law.9
65-3, p. 6).

(Docket Entry # 41, p. 28) (Docket Entry #

In Massachusetts, a person may enforce a note if

the person is:

“(i) the holder of the [note], (ii) a nonholder

in possession of the [note] who has the rights of a holder, or
(iii) a person not in possession of the [note] who is entitled to

For ease of reference, this court summarizes the law set out
previously (Docket Entry # 41) in order to place the parties’
current arguments in context.
19
9

enforce the [note] pursuant to . . . 3-309.”
106, § 3-301.

Mass. Gen. Laws ch.

DBNTC relies on section 3-301(iii) as the basis to

enforce the note.
In accordance with the language of section 3-301(iii),
section 3-309 governs the enforceability of a lost note under
Massachusetts law.

See In re Harborhouse of Gloucester, LLC, 505

B.R. 365, 370 (Bankr.D.Mass. 2014).

Section 3-309(a) provides

that:
A person not in possession of an instrument is entitled to
enforce the instrument if (i) the person was in possession
of the instrument and entitled to enforce it when loss of
possession occurred, (ii) the loss of possession was not the
result of a transfer by the person or a lawful seizure, and
(iii) the person cannot reasonably obtain possession of the
instrument because the instrument was destroyed, its
whereabouts cannot be determined, or it is in the wrongful
possession of an unknown person or a person that cannot be
found or is not amenable to service of process.
Mass. Gen. Laws ch. 106, § 3-309(a) (emphasis added).

Section 3-

309(b) further requires that a person not in possession of an
instrument and:
seeking enforcement of an instrument . . . must prove the
terms of the instrument10 and the person’s right to enforce
the instrument. If that proof is made, section 3-308
applies to the case as if the person seeking enforcement had
produced the instrument. The court may not enter judgment
in favor of the person seeking enforcement unless it finds
that the person required to pay the instrument is adequately
protected against loss that might occur by reason of a claim
by another person to enforce the instrument. Adequate
protection may be provided by any reasonable means.

10

See footnote two and related text.
20

Mass. Gen. Laws ch. 106, § 3-309(b).

Overall, the plain language

of section 3-309 entitles “[a] person not in possession of an
instrument” to enforce it “if . . . the person was in possession
of the instrument and entitled to enforce it when loss of
possession occurred.”

Mass. Gen. Laws ch. 106, § 3-309(a).

(1) Entitlement When Loss of Note Occurred
DBNTC initially argues that, once it obtained possession of
the note on May 12, 2006, it became entitled to enforce the note.
Defendant counters that DBNTC was not entitled to enforce the
note when the note was lost because it has not provided evidence
showing that the originator of the note, i.e., New Century,
transferred the wet ink note to DBNTC, as stated in the MLPSA
between New Century and NC Capital.
3).

(Docket Entry # 73, pp. 2-

Defendant maintains that an issue of fact exists as to

whether DBNTC ever had possession of the note from New Century
because defendant made mortgage payments directly to New Century
from 2006 to 2008.
Under chapter 106, section 3-205(b) (“section 3-205(b)”),
“When indorsed in blank, an instrument becomes payable to bearer
and may be negotiated by transfer of possession alone until
specially indorsed.”

Mass. Gen. Laws ch. 106, § 3-205(b).

Comment two of section 3-205(b) makes clear the requirements for
an instrument to be a blank endorsement:
An indorsement made by the holder is either a special or
21

blank indorsement. If the indorsement is made by a holder
and is not a special indorsement, it is a blank
indorsement. For example, the holder of an instrument,
intending to make a special indorsement, writes the words
“Pay to the order of” without completing the indorsement by
writing the name of the indorsee. The holder’s signature
appears under the quoted words. The indorsement is not a
special indorsement because it does not identify a person
to whom it makes the instrument payable. Since it is not a
special indorsement it is a blank indorsement and the
instrument is payable to bearer . . .. A blank indorsement
is usually the signature of the indorser on the back of the
instrument without other words.
Mass. Gen. Laws ch. 106, § 3-205(b), cmt. 2.

Accordingly,

“‛Under the UCC, one who possesses a note endorsed in blank is
the bearer of the note.’”

Dyer v. U.S. Bank, N.A., 141 F.Supp.

3d 149, 156 (D. Mass. 2015) (“Dyer”) (citing chapter 106, section
3-205(b)), aff’d sub nom. Dyer v. Wells Fargo Bank, N.A., 841
F.3d 550 (1st Cir. 2016).

The court in Dyer found that defendant

U.S. Bank showed it held a homeowner’s note at the time it
started foreclosure proceedings because the bank produced copies
of the promissory note endorsed in blank and affidavits showing
the bank was in possession of the note.

Id.

In the case at bar, the note states it is “Pay[able] to the
order of, without recourse New Century Mortgage Company,” with a
blank line above New Century’s name.

DBNTC also provided a copy

of the original note, affidavits from Ocwen officials averring to
DBNTC’s possession of the note, and a note possession history
exhibit showing DBNTC either received the collateral file
containing the original note on May 12, 2006 or, pursuant to the
22

PSA and Mortgage Loan Schedule, on September 29, 2006.

DBNTC

additionally provided evidence through DBNTC’s business records
that DBNTC temporarily released the original note to Ocwen, its
servicer, for the purpose of commencing foreclosure proceedings
on behalf of DBNTC.
In arguing that DBNTC must provide direct evidence of where,
when, and how it acquired the note from New Century, defendant
cites In re Gavin for the principle that a court cannot
reasonably infer whether a gap in the chain of title of a note
can be filled in with circumstantial evidence.

In re Gavin, 319

B.R. 27, 32-33 (B.A.P. 1st Cir. 2004) (“Gavin”).

In Gavin, the

appellant bank, Premier, produced the original promissory note
for a line of credit signed by the debtor and payable to an
identifiable entity, the loan originator Fleet Bank (“Fleet”).
Id. at 31-32.

Premier also produced the assignment of the note

from an intermediate creditor, Sovereign Bank (“Sovereign”), but
failed to produce evidence of an assignment from Fleet to
Sovereign.

Id. at 32.

The court held that, absent direct

evidence such as affidavits showing transfer of possession and
endorsement of the note from Fleet to Sovereign, “Premier has
failed to establish title to the Note . . ..”

Id.

The court

reasoned that direct evidence is necessary to bridge a gap in
the chain of title so that “the Debtor will not sustain a loss
from another party claiming to own the Note.”
23

Id. at 32-33.

In the present case, the note was endorsed in blank and not
payable to an identified entity.

The PSA agreement between

Morgan Stanley and DBNTC stated that Morgan Stanley “has
delivered or caused to be delivered to the Custodian [DBNTC]”
the original blank endorsed note, “evidencing a complete chain
of assignment.”

(Docket Entry # 65-10, pp. 74-75).

Further, as

evidenced by the note possession history, DBNTC had possession
of the original note as of May 12, 2006 or, as evidenced by the
PSA and Mortgage Loan Schedule, no later than September 29,
2006.11

(Docket Entry # 65-17).

DBNTC therefore had possession

of the note no later than September 29, 2006.

Indeed, the note

possession history reflects that DBNTC “received the collateral
file including the original note” on May 12, 2006.

(Docket Entry

# 65-17) (emphasis added).
It is true that the MLPSA between New Century and NC
Capital sets out that NC Capital needed to certify receipt of
all mortgage loan documents from New Century.
65-10, pp. 74-75).

(Docket Entry #

Defendant references this custodial

As explained in the prior Memorandum and Order, section 3-309
does not displace principles of agency law. (Docket Entry # 41,
pp. 28-38). Hence, the fact that Morgan Stanley may have
initially held the note in trust for the benefit of DBNTC and
subject to DBNTC’s order to deliver the note still leads to the
conclusion that such constructive possession by DBNTC
constitutes possession for purposes of section 3-309(a). In any
event, the note possession history coupled with the lost note
affidavit establish as a matter of law that DBNTC had possession
of the original note when the loss occurred.
24
11

agreement to argue that, because DBNTC did not present custodial
receipt documents from NC Capital, DBNTC has not shown direct
evidence that the note was ever physically transferred between
parties.

The Massachusetts Bankruptcy and Bankruptcy Appellate

courts have addressed debtors’ rights to question the validity of
foreclosures when the terms of PSAs are violated by creditors:
The Debtors asked the bankruptcy court to declare the
mortgage assignment invalid based upon non-compliance with
the provisions of the PSA — a contract to which they were
not a party — and to declare the state court foreclosure
invalid on that basis. As noted above, the Debtors are not
parties, nor have they demonstrated that they were thirdparty beneficiaries of the PSA’s terms. We therefore agree
with Judge Feeney’s observation in In re Almeida where she,
faced with a similar case, wrote: “[The Party] is not a
third party beneficiary of the PSA, and, ironically, he
would appear to lack standing to object to any breaches of
the terms of the PSA. It would appear to this Court that
the investors who bought securities based upon the pooled
mortgages would be the parties with standing to object to
any defects in those mortgages resulting from any failure
to abide by the express provisions of the PSA.”
Correia v. Deutsche Bank Nat’l Trust Co., 452 B.R. 319, 324
(B.A.P. 1st Cir. 2011) (quoting In re Almeida, 417 B.R. 140, 149
n.4 (Bankr.D.Mass. 2009)).

Accordingly, defendant lacks

standing to challenge violations of the MLPSA between New
Century and NC Capital because defendant was not a party to the
PSA agreement.
As previously discussed, the evidence shows that DBNTC had
possession of the blank note as of May 12, 2006, or as of
September 29, 2006 at the latest.
25

Further, Morgan Stanley

entered into the PSA with DBNTC as Trust 2006-HE3 trustee and
custodian on September 1, 2006.

(Docket Entry # 65-10).

The PSA

conveyed Morgan Stanley’s rights, title, and interest in the
mortgage loans listed in the Mortgage Loan Schedule to DBNTC and
acknowledged a “complete chain of assignment” from Morgan Stanley
to DBNTC.
17).

(Docket Entry # 65-10, pp. 74-75) (Docket Entry # 65-

Defendant’s note was one of the mortgage loans listed in

the Mortgage Loan Schedule and therefore transferred to DBNTC.
(Docket Entry # 65-1, ¶ 11) (Docket Entry # 65-12).
Defendant further maintains that DBNTC did not have
possession of the note because defendant made mortgage payments
to New Century from 2006 to 2008.

As evidenced above, however,

the documentary evidence establishes that DBNTC had possession of
the endorsed-in-blank note no later than September 29, 2006.

The

fact that defendant made mortgage payments to New Century until
2008 does not alter the fact that DBNTC had possession of the
note in 2006 and thereafter throughout the time defendant made
the aforementioned mortgage payments to New Century.

Although

New Century retained the mortgage until the transfer to DBNTC
effective on May 7, 2008, Massachusetts is a “title theory” state
in which a mortgage, the transfer of legal title, is distinct and
need not follow the note, the underlying security interest in a
property.

See In re Marron, 455 B.R. 1, 6 (Bankr.D.Mass. 2011);

United States Bank Nat’l Ass’n v. Ibanez, 941 N.E.3d 40, 55-56
26

(Mass. 2011).

During all or part of the time defendant made

mortgage payments to New Century, DBNTC, the note holder, had “an
equitable right to obtain an assignment of the mortgage.”
Ibanez, 941 N.E.3d at 54.

Thus, even if defendant made mortgage

payments to New Century, the mortgage holder or mortgagee, until
2008, DBNTC possessed the note before New Century assigned the
mortgage to DBNTC in 2008 and had an equitable right to obtain an
assignment of the mortgage during the time defendant made the
payments.

Id.

More notably and in any event, defendant’s mortgage payments
to New Century do not create a genuinely disputed issue of
material fact regarding DBNTC’s possession of the note at the
time of loss.

Rather, even considering the fact that defendant

made mortgage payments to New Century, no reasonable finder of
fact would find that DBTNC thereby lacked possession of the note
or lacked entitlement to enforce the note given the overwhelming
documentary evidence to the contrary.
DBNTC next submits that it did not transfer the note to
Ocwen, its loan servicer, or Ablitt, its attorney, for the
purpose of giving them an independent right to enforce the note.
(Docket Entry # 64, pp. 6-7).

Further, DBNTC contends that

defendant was discharged of any personal liability on the note by
the bankruptcy court and any transfer was for the purpose of
prosecuting the foreclosure of the mortgage as opposed to
27

enforcing the note against defendant.

(Docket Entry # 64, pp. 9-

10).
Section 3-309(a)(ii) allows a person to enforce a lost
instrument if “the loss of possession was not the result of a
transfer by the person.”

Mass. Gen. Laws ch. 106, § 3-309(a).

Under chapter 106, section 3-203 (“section 3-203”), “[a]n
instrument is transferred when it is delivered by a person other
than its issuer for the purpose of giving to the person receiving
delivery the right to enforce the instrument.”

Mass. Gen. Laws

ch. 106, § 3-203(a); see In re Gavin, 319 B.R. at 31 (“instrument
is ‘transferred’ when it is delivered by the holder for the
purpose of giving the recipient the right to enforce the
instrument”).
As previously set out in this court’s Memorandum and Order
(Docket Entry # 41, pp. 39-41), to show DBNTC transferred the
enforcement rights to either Ocwen or Ablitt, the record must
show “first, that physical delivery of the Note was made [to that
party], and second, that the intent of the transferor was to give
[that] party ‘the right to enforce the instrument.’”

Zea v. JP

Morgan Chase Bank, 2012 WL 996767, at *5 (D. Mass. Mar. 22, 2012)
(“Zea”).

Here, the summary judgment record establishes that

DBNTC intended to give the note to Ocwen, as its agent, for a
purpose other than enforcing the note by Ocwen for Ocwen’s own
behalf.

Cf. In re Neals, 459 B.R. 612, 618 (Bankr.D.S.C. 2011);
28

In re Miller, 2014 WL 2860985, at *4 (Bankr.D.Vt. June 23, 2014)
(unpublished); see generally In re Montagne, 421 B.R. 65, 77
(Bankr.D.Vt. 2009).

For reasons fully explained in the prior

opinion, section 3-309 does not displace common law principles
of agency.

(Docket Entry # 41, pp. 30, 36-38).

Although

releasing or transferring a note with the intent of initiating
foreclosure proceedings would generally show that enforcement
rights have been transferred in accordance with Zea, “principles
of agency allow the foreclosing party to foreclose ‘as the agent
of the note holder.’”

HMC Assets, LLC v. Conley, 2016 WL 4443152

at *49-50 (D. Mass. Aug. 22, 2016) (“HMC”) (quoting Eaton v. Fed.
Nat’l Mortg. Ass’n, 969 N.E.2d at 1129 n.20, 1131 (Mass. 2012)).
The LPOA agreement between Ocwen and DBNTC gave Ocwen authority
“in the Trustee’s [DBNTC] name, place and stead and for the
Trustee’s benefit . . . for the purpose of performing such acts
and executing such documents in the name of the Trustee . . ..”
Docket Entry # 65-13, p. 2) (emphasis added).

The lost note

affidavit submitted by Ocwen as servicer for DBNTC contains and
references records of transactional documents relating to
defendant’s mortgage loan.

(Docket Entry # 65-20, pp. 5-25).

The lost note affidavit contains:

a copy of the note endorsed

in blank to New Century; the PSA agreement between Morgan
Stanley and DBNTC dated September 1, 2006; archived materials
showing that Ocwen received the collateral file containing the
29

note on November 3, 2011 and released the collateral file to
Ablitt on November 21, 2011; the attorney bailee letter; and
statements from an Ocwen employee that, despite diligent search
efforts, the note has been lost.

In light of the foregoing,

DBNTC did not intend to give Ocwen and Ablitt independent
enforcement rights in the note.

The summary judgment facts

provide insufficient evidence to establish a genuine dispute to
the contrary.

Adhering to principles of agency (Docket

Entry # 41, pp. 28-38) and as evidenced by DBNTC’s possession of
the note before releasing it to Ocwen to act on behalf of DBNTC
and thereafter to Ablitt, DBNTC’s attorney, DBNTC was entitled
to enforce the note when loss of the note occurred and DBNTC did
not transfer independent enforcement rights to Ocwen, its
servicer, or Ablitt, its attorney, as a matter of law.
(2) Possession When Loss of Note Occurred
DBNTC argues that it was still in possession of the note
when its agent and attorney, Ablitt, lost the note.

Citing this

court’s adjudication of defendant’s motion to dismiss for failure
to state a claim (Docket Entry # 11), DBNTC maintains it released
the note to Ocwen, which then released the note to Ablitt in
order to commence foreclosure proceedings against defendant on
DBNTC’s behalf.
This court’s analysis of two bankruptcy court cases in this
district, In re Harborhouse of Gloucester, LLC, 505 B.R. at 373
30

(“Desmond”), and Marks v. Braunstein, 439 B.R. 248, 251 (D. Mass.
2010) (“Marks”), as well as Dennis Joslin Co., LLC v. Robinson
Broad. Corp., 977 F.Supp. 491, 495 (D.D.C. 1997) (“Joslin”)), as
applied to constructive possession of a promissory note need not
be repeated at length.

(Docket Entry # 41, pp. 31-35).

As

previously explained, Desmond, Marks, and Joslin are
distinguishable because the parties seeking to enforce a lost
note never had possession of the note at the required time, i.e.,
“when loss of possession occurred.”
3-309.

Mass. Gen. Laws ch. 106, §

Here, DBNTC is the entity which had actual, physical

possession of the note, gave the note to its agent (Ocwen), and
Ocwen gave it to Ablitt (now CGAW), DBNTC’s agent and attorney.
Thus, “when loss of possession occurred” of the note, Mass. Gen.
Laws ch. 106, § 3-309, DBNTC’s agent had actual possession.
DBNTC did not transfer ownership of the note to another entity
but rather released the note to Ocwen with a limited power of
attorney under the LPOA to conduct a foreclosure against
defendant on DBNTC’s behalf.

(Docket Entry # 65-13, p. 3).

As

previously noted, the LPOA granted Ocwen the ability to carry out
on behalf of DBNTC “the foreclosure, the taking of a deed in lieu
of foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any
such foreclosure . . ..”

(Docket Entry # 65-13, p. 3).

In

short, Ocwen, as agent, and Ablitt, as DBNTC’s attorney, held the
31

note on behalf of DBNTC with DBNTC retaining enforcement rights
associated with the note.
As previously explained in this court’s Memorandum and Order
(Docket Entry # 41, pp. 28-31), the provisions of section 3-309
do not displace the principles of agency.12

Likewise, the

discussion of agency under Massachusetts common law is addressed
in this court’s previous Memorandum and Order (Docket Entry # 41,
pp. 28-38) and, accordingly, need not be repeated.

Nothing in

section 3-309 precludes an entity from enforcing a lost note
when, at the time the loss occurred:

the entity had constructive

possession, through its agent, of the note; was entitled to
enforce the note at that time; and is now seeking to enforce it
without having transferred or assigned the note to another person
or entity downstream.

In such circumstances, the provisions of

section 3-309 do not displace principles of agency.

Adhering to

these principles, DBNTC possessed the note at the time of loss
because DBNTC did not transfer its rights to enforce the note to
Ocwen or Ablitt.

Simply stated, the loss of the note was not the

result of a transfer by DBNTC.
Defendant, however, maintains that a genuine issue of
material fact exists as to whether the note was lost.

Defendant

argues that DBNTC fails to satisfy section 3-309(a)(iii) because

12

It is therefore not necessary to repeat the analysis here.
32

DBNTC is unable to show that it cannot reasonably obtain
possession of the note.

Defendant reasons that because DBNTC

stated in the complaint that Durham took possession of Ablitt’s
assets in 2014 and had control over promissory notes, Durham
might still have possession of the note.

Defendant also

references the factoring agreement between Ablitt and Durham and
the bankruptcy docket of the CGAW bankruptcy proceeding to
suggest that Durham had possession of promissory notes and other
papers associated with some of Ablitt’s accounts.
Section 3-309(a) provides that, “A person not in possession
of an instrument is entitled to enforce the instrument if . . .
the person cannot reasonably obtain possession of the instrument
because the instrument was destroyed, its whereabouts cannot be
determined, or it is in the wrongful possession of an unknown
person . . ..”

Mass. Gen. Laws ch. 106, § 3-309(a)(iii).

The

lost note affidavit establishes that, prior to executing the
lost note affidavit, Ocwen undertook a diligent search for the
original note on April 1, 2016.

(Docket Entry # 65-20, ¶ 6).

The search did not establish location of the note, leading an
Ocwen employee to file a lost note affidavit on September 12,
2016 because DBNTC could not reasonably obtain possession of the
note.

(Docket Entry # 65-20, ¶¶ 1, 6).

According to the note

possession history, Ocwen released the original collateral file
containing the note to Ablitt on November 21, 2011.
33

(Docket

Entry # 65-17).

Ablitt did not return the original note and its

location cannot be determined.

(Docket Entry # 65-17).

DBNTC

therefore establishes that it “cannot reasonably obtain
possession.”

Mass. Gen. Laws ch. 106, § 3-309(a)(iii).

It is true that DBNTC, in its complaint, stated that Durham
had control over defendant’s note.13

(Docket Entry # 1, ¶¶ 35-

36). In addition, the factoring agreement between Ablitt and
Durham granted Durham a security interest in Ablitt’s accounts
and promissory notes.

(Docket Entry # 73-1, pp. 22, 25).

First,

however, Ablitt, DBNTC’s attorney, did not own the note.
Rather, it only held the note on behalf of DBNTC.
Second, “a diligent search for the [n]ote was conducted” on
April 1, 2016.

(Docket Entry # 65-20, ¶ 6).

not be located.”

The “[n]ote could

(Docket Entry # 65-20, ¶ 6).

note possession history tracks:

Moreover, the

the original note, including

the release of the collateral file to Ocwen; Ocwen’s delivery of
the note to Ablitt, DBNTC’s attorney; and the inability to
determine the current location of the original note.
Entry # 65-17).

(Docket

Here again, in light of the foregoing, DBNTC

Defendant seeks to use the above statement as part of the
summary judgment record. (Docket Entry # 73, pp. 8-10). For
the purposes of reviewing a motion for summary judgment, “‛A
party’s assertion of fact in a pleading is a judicial admission
by which it normally is bound throughout the course of the
proceeding.’” Schott Motorcycle Supply, Inc. v. American Honda
Motor Co., 976 F.2d at 61 (quoting Bellefonte Re Insurance Co.
v. Argonaut Insurance Co., 757 F.2d 523, 528 (2d Cir. 1985)).
34
13

“cannot reasonably obtain possession of the note.”

Mass. Gen.

Laws ch. 106, § 3-309(a)(iii).
Defendant’s reliance on Ocwen’s renewed motion for an order
of contempt against Durham in August 201514 and the factoring
agreement to suggest that Durham had possession of promissory
notes and other papers associated with some of Ablitt’s accounts
is misplaced.

It was the following year that Ocwen executed the

lost note affidavit.

(Docket Entry # 65-20).

The lost note

affidavit states that a diligent search for the note took place
but the note could not be located.

(Docket Entry # 65-20, ¶ 6).

The note possession history provides that DBNTC received the
collateral file with the original note on May 12, 2016 and,
through principles of agency, had possession of the note at the
time of loss.

As discussed further infra, the lost note

affidavit also indemnifies defendant against any loss that might
occur through any other claims against the property.
Entry # 65-20, ¶ 10).

(Docket

DBNTC thus established that it cannot

reasonably find the note and, even if the note is later found in
Durham’s possession, DBNTC will indemnify defendant against any
loss.

As discussed previously, DBNTC released the note for

foreclosure proceeding purposes only to its servicer and

Ordinarily, an assertion in a motion or brief does not
constitute a fact for purposes of summary judgment. See Kelly
v. United States, 924 F.2d 355, 357 (1st Cir. 1991).
35
14

thereafter its attorney to act on behalf of DBNTC.

For reasons

also set out by DBNTC (Docket Entry # 76, pp. 8-9), defendant’s
argument based on Durham’s purported possession of the note does
not create a genuinely disputed material fact that DBNTC cannot
reasonably obtain possession of the note.

Rather, the summary

judgment record establishes that DBNTC cannot reasonably obtain
possession of the note as a matter of law.
(3) Business Records Exception
Defendant submits that this court cannot consider Ocwen’s
business records as an exception to the hearsay rule under
Fed.R.Evid. 803(6)(A) (“Rule 803(6)”).

Defendant maintains that

Ocwen’s affidavits (Docket Entry ## 65-1, 65-20) are conclusory,
do not sufficiently “explain the basis of the information used to
make these records,” and are not trustworthy.
73, pp. 5-8) (capitalization omitted).

(Docket Entry #

DBNTC asserts that its

business records satisfy the exception because the affidavits are
not conclusory, clearly state how the business records were made,
and are trustworthy.

(Docket Entry # 76, pp. 4-9).

As stated in Rule 56(c)(4), “An affidavit or declaration
used to support or oppose a [summary judgment] motion must be
made on personal knowledge, set out facts that would be
admissible in evidence, and show that the affiant or declarant is
competent to testify on matters stated.”

To fall within the

reach of the business records exception, a party must show that,
36

“the record was made at or near the time by—or from information
transmitted by—someone with knowledge.”

Fed.R.Evid. 803(6)(A).

Defendant argues that both affidavits from Ocwen employees
are inadmissible because Ocwen was not the servicer at the time
defendant signed the promissory note and therefore employees of
Ocwen did not have personal knowledge of how DBNTC acquired the
note from New Century.

(Docket Entry # 73, pp. 6-7).

Defendant

also argues that the affidavits are conclusory because Ocwen did
not provide enough information about how it learned about the
note possession history.

“An affiant,” however, “is only

required to have some familiarity and ability to explain how the
business records were handled to satisfy Rule 803(6), especially
when there is no indication for a lack of trustworthiness.”

HMC

Assets, LLC v. Conley, 2016 WL 4443152 at *16 (citing Wallace
Motor Sales, Inc. v. American Motors Sales Corp., 780 F.2d 1049,
1061 (1st Cir. 1985) (“Wallace”)).

Furthermore, “As for the

requirement that the record-keeping process be attested to by a
qualified witness, it is well established that the witness need
not be the person who actually prepared the record.”

Wallace

Motor Sales, Inc. v. American Motors Sales Corp., 780 F.2d at
1061.

Moreover, the business records exception “‛does not

require testimony by some witness associated with the predecessor
entity when the records become part of the records of a successor
entity.’”

HMC Assets, LLC v. Conley, 2016 WL 4443152 at *7.
37

Here, the lost note affidavit and the Ocwen employee
affidavit both attest to the personal knowledge and
qualifications of the affiants in their regular job duties.

Both

affidavits state that the records were made at or near the time
by persons with knowledge of the transaction or activity
reflected in the particular record.
in the normal course of business.
(Docket Entry # 65-20, ¶ 2).

The records were also kept
(Docket Entry # 65-1, ¶ 2)

In addition, the lost note

affidavit contains the actual records submitted as exhibits from
which the Ocwen employee bases his personal knowledge.

Ocwen

acted as the servicer for DBNTC and therefore would have handled
DBNTC’s business records in addition to using this information to
create its own records.

These affidavits are not conclusory or

allegations based on unfounded beliefs of the affiants because
Ocwen’s employees in the course of their job duties reviewed the
loan servicing history to make the informed statements of fact.
Although the affiants would not themselves have prepared the
original records upon which they rely, Wallace allows these
employees to be qualified witnesses under the circumstances at
issue here.

In addition, because Rule 803(6) allows employees of

successor entities, which have incorporated a previous entity’s
business records into their own, to provide testimony about those
records, Phillips v. Mortg. Elec. Registration Systems, Inc.,
2013 WL 1498956, *3 (N.D.Ala. Apr. 5, 2013), both affidavits from
38

Ocwen employees are permissible.
Defendant also maintains that both affidavits lack
trustworthiness and are therefore inadmissible.

Defendant

asserts that Ocwen cannot prove that the referenced note in both
affidavits was the original note signed by defendant and the
records relied upon are unidentified and undocumented.

Under the

business records exception, the court may refuse to admit records
unless, “the opponent does not show that the source of
information or the method or circumstances of preparation
indicate a lack of trustworthiness.”

Fed.R.Evid. 803(6)(E).

“The determination of whether a foundation has been properly
laid for application of Federal Rules of Evidence 803(6) and
whether the circumstances indicate lack of trustworthiness is
within the discretion of the district court.”

United States v.

Patterson, 644 F.2d 890, 900-01 (1st Cir. 1981).

Defendant

relies on Gavin to assert that DBNTC would have to provide a
direct source of where, when, and how it acquired defendant’s
note which “establishes the terms of the loan, ownership of the
loan, and adequate protection that the Debtor will not sustain a
loss from another party claiming to own the Note.”
319 B.R. at 32-33.

In Re Gavin,

The court in Gavin held that, although

Premier showed evidence of an assignment of a promissory note
from a previous creditor, Sovereign, to Premier and produced the
original note from the first creditor in the chain of title,
39

Fleet, Premier did not present sufficient evidence showing an
assignment of the note from Fleet to Sovereign.

Id.

The court

further reasoned that Premier’s argument for using a reasonable
inference from the circumstantial evidence presented to
circumvent the break in the chain of title was unwarranted
because direct evidence was needed.

Id.

“Mere possession of a note payable to another does not
suffice to show ownership.”

NCNB Texas Nat. Bank v. Johnson, 11

F.3d 1260, 1265 (5th Cir. 1994).

“It is also true that,

standing alone, a purchase agreement covering unspecified assets
does not establish ownership.”

Id.

“Generally, however, the

affidavit of a custodian of records is sufficient proof, unless
the defendant points to evidence in the record supporting a
legitimate fear that the plaintiff is not the owner and holder
of the note, and that some other party will later appear and
demand payment.”

Id.

Ocwen, as custodian for DBNTC’s mortgage

files, has shown proof through its records that it was acting in
a servicing capacity for DBNTC and that DBNTC held the original
note before releasing the note for foreclosure proceeding
purposes.

DBNTC further proves, for reasons that will be

explained below, that defendant’s chapter seven bankruptcy
discharge protects against multiple claims of the note by any
other third party.

The indemnity provision in the lost note

affidavit provides additional protection.
40

(4) Enforcement of Note under Section 3-309(b)
DBNTC contends that it not only possessed the note and was
entitled to enforce the note at the time it was lost, but that it
also satisfies the provisions of section 3-309(b).

As stated

above:
The court may not enter judgment in favor of the person
seeking enforcement unless it finds that the person required
to pay the instrument is adequately protected against loss
that might occur by reason of a claim by another person to
enforce the instrument. Adequate protection may be provided
by any reasonable means.
Mass. Gen. Laws ch. 106, § 3-309(b).
As explained by the court in Gavin, a creditor must
demonstrate that there is “adequate protection that the Debtor
will not sustain a loss from another party claiming to own the
Note.”

In re Gavin, 319 B.R. at 33.

Here, DBNTC established

that defendant is adequately protected against multiple claims in
light of defendant’s chapter seven bankruptcy discharge.

A

discharge order “operates as an injunction against the
commencement or continuation of an action . . . to collect,
recover, or offset any such debt as a personal liability of the
debtor . . . .”

11 U.S.C. § 524(a)(2).

“Even after the debtor’s

personal obligations have been extinguished, the mortgage holder
still retains a ‘right to payment’ in the form of its right to
the proceeds from the sale of the debtor’s property.”

Johnson

v. Home State Bank, 501 U.S. 78, 84 (1991); see also Arruda v.
41

Sears, Roebuck & Co., 310 F.3d 13, 21 (1st Cir. 2002).

DBNTC

and all other parties cannot pursue a cause of action against
defendant for the note amount because of the bankruptcy
discharge, but the discharge does allow DBNTC to institute a
foreclosure proceeding against the property.
Home State Bank, 501 U.S. at 84.

See Johnson v.

Furthermore, DBNTC agreed to

indemnify defendant against any loss that might occur through
multiple conflicting claims against the property.
# 65-20, ¶ 10).

(Docket Entry

Accordingly, because defendant is adequately

protected against any possible loss by claims from other
parties, DBNTC satisfied the provisions of section 3-309(b).
Because DBNTC satisfied the requirements of sections 3-301 and 3309, summary judgment vis-à-vis the declaratory relief in counts
one and two is warranted in DBNTC’s favor.15

As requested in

Count One, DBNTC is the lawful owner of the note and is entitled
to immediate physical possession of the note.

As requested in

Count Two, despite a diligent search, DBNTC has been unable to
find the original note; the terms of the note are set forth in
the copy of the note attached to the complaint; and DBNTC is a
party entitled to enforce the note under section 3-301(iii) and
the holder of the mortgage entitled to exercise the power of sale

In light of the above, it is not necessary to address DBNTC’s
alternative arguments for summary judgment, namely, judicial
estoppel and collateral estoppel.
42
15

in the mortgage.
As a final matter, pursuant to Fed.R.C.P. 56(d), defendant
requests an opportunity to delay adjudication of the summary
judgment motion because he needs information from outstanding
interrogatories served on DBNTC on March 13, 2017.
Entry # 73, p. 10).

(Docket

The interrogatories seek information

concerning DBNTC’s physical possession of the note and efforts
it made to locate the note from Ablitt and Durham.
Entry # 73-3).

(Docket

In an April 14, 2017 reply brief, DBNTC

represents that it responded to the interrogatories.

In the

months following this representation, defendant has not filed a
motion to compel or disputed DBNTC’s representation by seeking
leave to file a sur-reply.

The request is therefore denied as

moot.
CONCLUSION
In accordance with the foregoing discussion, the motion for
summary judgment (Docket Entry # 63) is ALLOWED as to counts one
and two.

DBNTC is directed to file a proposed final judgment

within seven days of the date of this opinion.

/s/ Marianne B. Bowler
MARIANNE B. BOWLER
United States Magistrate Judge

43