Mitri v. Aurora Loan Services LLC et al

Filing 192

Judge Denise J. Casper: ORDER entered. MEMORANDUM AND ORDER - The Court ALLOWS the Defendants' motion for summary judgment as to Mitri's claims and Nationstar's counterclaims, D. 141. And ALLOWS IN PART Defendants' motion for use and occupancy, D. 160. The Court DENIES the remaining motions, D. 158, D. 175 as moot.(Hourihan, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
__________________________________________
)
)
JACQUES MITRI,
)
)
Plaintiff,
)
)
v.
)
No. 15-cv-14178-DJC
)
AURORA LOAN SERVICES, LLC,
)
NATIONSTAR MOTRGAGE, LLC
)
HOMECOMINGS FINANCIAL NETWORK, )
INC., and PRESIDENTIAL MORTGAGE
)
CORP.,
)
)
Defendants.
)
)
)
__________________________________________)

MEMORANDUM AND ORDER
CASPER, J.
I.

February 16, 2018

Introduction
Plaintiff Jacques Mitri (“Mitri”) brings claims against Aurora Loan Services (“Aurora”),

Nationstar

Mortgage,

LLC

(“Nationstar”),

Homecomings

Financial

Network,

Inc.

(“Homecomings”) and Presidential Mortgage Inc. arising out of a foreclosure of the Property. D.
1-2. The Court has previously dismissed Mitri’s claims against the latter three defendants. D.
109. Aurora and Nationstar also brought counterclaims against Mitri, Elie Mitri, Hala Mitri and/or
Roy Mitri. D. 6. Aurora and Nationstar (“Defendants”) now move for summary judgment,
requesting judgment in their favor on both Mitri’s claims and their counterclaims. D. 141. The
Defendants also move for a judgment of use and occupancy against Mitri and Hala Mitri. D. 160.
For the following reasons, the Court ALLOWS Aurora and Nationstar’s motion for summary
1

judgment, D. 141, and ALLOWS IN PART Defendants’ motion for use and occupancy. The Court
DENIES the remaining motions, D. 158,1 D. 175 as moot.
II.

Standard of Review
The Court grants summary judgment where there is no genuine dispute as to any material

fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter
of law. Fed. R. Civ. P. 56(a). “A dispute is genuine if ‘the evidence about the fact is such that a
reasonable jury could resolve the point in favor of the non-moving party.’” Johnson v. Univ. of
P.R., 714 F.3d 48, 52 (1st Cir. 2013) (citing Thompson v. Coca–Cola Co., 522 F.3d 168, 175 (1st
Cir. 2008)). “A fact is material if it has potential to determine the outcome of the litigation.” Id.
(quoting Maymí v. P.R. Ports Auth., 515 F.3d 20, 25 (1st Cir. 2008)). The movant “bears the
burden of demonstrating the absence of a genuine issue of material fact.” Carmona v. Toledo, 215
F.3d 124, 132 (1st Cir. 2000); see Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The Court
“view[s] the record in the light most favorable to the nonmovant, drawing reasonable inferences
in his favor.” Noonan v. Staples, Inc., 556 F.3d 20, 25 (1st Cir. 2009).
III.

Factual Background
The following uncontested facts are taken from the parties’ statements of facts. D. 143, D.

154. On or about October 6, 2005, Mitri granted a mortgage on a property located at 26 Noel
Drive, Holliston, Massachusetts (“the Property”) to Mortgage Electronic Registration Systems,
Inc. (“MERS”) as nominee for Homecomings. D. 143 ¶¶ 1, 15; D. 154 ¶¶ 1, 15. The mortgage

1

Defendants moved to strike portions of Plaintiffs’ response to their motion for summary
judgment, D. 158, on the grounds that the Plaintiffs’ statement of additional facts, D. 154, does
not conform to the requirements of Local Rule 56.1. Even considering the Plaintiffs’ statement of
additional facts and the attached documents, however, there is still no genuine dispute of material
fact regarding whether the Defendants are entitled to judgment and, therefore, the Court denies
this motion as moot.
2

secured a promissory note payable to Homecomings in the amount of $603,900. D. 143 ¶ 15; D.
154 ¶ 15. MERS assigned that mortgage to Aurora by an assignment dated April 7, 2009, which
was recorded on or about May 20, 2009. D. 143 ¶ 17; D. 154 ¶ 17.
In or around early 2009, Aurora told Mitri that he was behind on his payments and send
Mitri information regarding loss mitigation options. D. 143 ¶ 25; D. 154 ¶ 25. In February 2010,
Aurora offered Mitri a Special Forbearance Agreement (“2010 Forbearance Agreement”), under
which Mitri would be obligated to provide a series of payments, a completed loan modification
application, and financial documents verifying the financial information in the loan modification
application. D. 143 ¶ 26; D. 154 ¶ 26.
Mitri made the required payments, but failed to provide documents verifying his income
in a timely manner as required by the 2010 Forbearance Agreement. D. 143 ¶ 28; D. 154 ¶ 28.
The loan modification application indicated that Mitri’s monthly gross wages were $11,320. D.
143 ¶ 30; D. 154 ¶ 30. Mitri’s tax return for 2008, however, indicated that his total gross wages
for the year were $14,040. D. 143 ¶ 34; D. 154 ¶ 34. There were also disparities between Mitri’s
reported income on the loan modification application and on Mitri’s tax returns for 2009 and 2010.
D. 143 ¶ 35; D. 154 ¶ 35. Mitri contends that these disparities were due to the fact that Mitri shares
a bank account with his brother related to a company, Holliston Gulf, Inc. (“Holliston”), which
owned and operated a gas station and Mitri did not realize that he was required to report the income
related to Holliston on his tax return. D. 154 ¶ 34. Mitri contends that the income related to
Holliston should have been included by Aurora in its evaluation of his income. D. 154 ¶¶ 34, 36.
Mitri’s brother, however, was the sole owner and shareholder of the company that owned the gas
station at all relevant times. D. 143 ¶¶ 41-44; D. 154 ¶¶ 41-44. On or about June 27, 2011, Aurora

3

informed Mitri that it was unable to offer Mitri a loan modification because the income that Mitri
had provided on his loan application could not be verified. D. 143 ¶ 45; D. 154 ¶ 45.
On August 12, 2011, Aurora conducted a public auction of the Property, and it purchased
the Property in the auction. D. 143 ¶ 22; D. 154 ¶ 22; D. 146-11 at 3. On or about April 19, 2012,
Aurora conveyed title to the Property to Nationstar via a quitclaim deed that was recorded in the
Registry of Deeds. D. 143 ¶ 23, D. 154 ¶ 23.
On or about April 26, 2013, Mitri received a check from Aurora in the amount of $6,000.
D. 143 ¶ 53; D. 154 ¶ 53. This check was written pursuant to a consent agreement that Aurora had
entered in with the Office of the Comptroller of the Currency (“OCC”) and the Office of Thrift
Supervision (“OTS”) related to Aurora’s foreclosure practices. D. 143 ¶¶ 51-52; D. 154 ¶¶ 51-52.
The payment did not constitute an admission of wrongdoing by Aurora and did not constitute a
waiver of claims against Aurora by Mitri. D. 143 ¶¶ 52-53; D. 154 ¶¶ 52-53.
On July 14, 2014, Aurora filed a summary process action against Mitri in state court to
evict Mitri from the Property. D. 143 ¶ 2; D. 154 ¶ 2. That action resulted in a verdict of possession
for Aurora, but the court subsequently granted Mitri relief from judgment because it ruled that
Aurora did not have standing at the time to pursue the action, since Aurora had already transferred
title to Nationstar. D. 143 ¶¶ 5, 12; D. 154 ¶¶ 5, 12. On or about March 27, 2017, Mitri filed
amended tax returns for 2007, 2008, and 2010. D. 143 ¶ 49; D. 154 ¶ 49. During a prior
proceeding, the parties had stipulated that the fair market rental of the Property was $3,500 per
month from August 2011 through December 2014. D. 143 ¶ 55. An expert hired by Nationstar to
assess the fair market rental rate of the Property in 2017 determined that the fair market rental rate
was now $2,400 a month. D. 143 ¶ 56. Nationstar paid $89,042.45 in real estate taxes, including

4

assessments for water and trash usage, from August 2010 to August 2017. D. 143 ¶ 57. Of that
amount, approximately $4,335.38 was related to water and trash usage. D. 146-31.
Mitri continues to reside at the Property. D. 160 at 2.
IV.

Procedural History
Mitri filed a complaint in Middlesex Superior Court on November 24, 2015. D. 1-2 at 24.

On December 18, 2015, Aurora and Nationstar removed the case to federal court. D. 1. On April
14, 2017, this Court entered an order granting the Defendants’ motion to dismiss with respect to
certain counts asserted in the complaint. D. 109. On September 29, 2017, Nationstar and Aurora
filed a motion for summary judgment on the remaining counts and their counterclaims. D. 141.
On November 8, 2017, Nationstar filed a motion for use and occupancy. D. 160. On January 10,
2018, the Court heard argument on the motion for summary judgment, D. 141, the motion to strike,
D. 158, and the motion for use and occupancy, D. 160, and took these matters under advisement.
D. 187.
V.

Discussion
A.

Unlawful Foreclosure

Defendants contend that they are entitled to summary judgment on the unlawful foreclosure
claim because Aurora was legally entitled to execute the foreclosure sale as it had a proper
assignment of the mortgage from the valid record holder of the mortgage. D. 142 at 4. Mitri
contends that Aurora did not prove that it possessed the promissory note, as it was required to do,
prior to conducting the foreclosure. D. 153 at 13. In support of this argument, Mitri cites Eaton
v. Federal Nat. Mortg. Ass’n, 462 Mass. 569 (2012). D. 153 at 15. Eaton established that a
mortgagee must show that it “also hold[s] the note or act on behalf of the note holder in order to
effect a valid foreclosure by sale.” Eaton, 462 Mass. at 588. Eaton, however, expressly provided
that its decision “apply only to mortgage foreclosure sales for which the mandatory notice of sale
5

has been given after the date of this opinion.” Id. at 589. The foreclosure sale at issue was
completed in 2011, prior to the date of the Eaton opinion. Thus, under Massachusetts law, Mitri
may not challenge the validity of that foreclosure sale on the basis of the rule announced in Eaton.
To the extent that Mitri argues that U.S. Bank v. Nat Ass’n v. Ibanez, 458 Mass. 637 (2011)
requires a different conclusion, that argument was rejected in Eaton. Eaton, 462 Mass. at 585 n.24.
Mitri makes no other argument in his brief challenging Aurora’s entitlement to execute the
foreclosure sale. D. 153 at 13-16. At the hearing, Mitri contended that, due to the Defendants’
inequitable conduct, the Defendants should be required to meet the Eaton standard,
notwithstanding the ruling in Eaton that it would not apply retroactively. Mitri provides no
support, however, for the proposition that inequitable conduct can, under Massachusetts law, alter
the prospective application of Eaton. Thus, there is no genuine dispute of material fact regarding
the unlawful foreclosure claim and the Court ALLOWS the Defendants’ motion for summary
judgment as to this claim.
B.

Breach of Contract

The Defendants contend that they are entitled to summary judgment on the breach of
contract claim because the undisputed record shows that, even if the 2010 Forbearance Agreement
constituted a contract obliging Aurora to extend a modification to Mitri under certain conditions,
those conditions were not met because Mitri was unable to provide acceptable proof of the income
he provided in the loan modification application. D. 142 at 9-10. Mitri responds that he was
“never advised that his modification was denied because he had engaged in tax fraud in 2010.” D.
153 at 16. Even if that is true, however, there still is no genuine dispute of material fact regarding
the breach of contract claim because it is undisputed that Mitri failed to meet the conditions set
forth by the 2010 Forbearance Agreement for him to qualify for a loan modification. Specifically,
it is undisputed that he failed to provide documents to support the financial information he had
6

submitted in his loan modification, as was required by the terms of the 210 Forbearance
Agreement. Mitri also contends that Aurora breached the consent order that it made with the OCC
and OTS related to its foreclosure practices. D. 153 at 16. Mitri, however, does not plead any
facts to support his contention that Aurora breached any particular provision of that consent order
or that Mitri has the standing to enforce same. To the extent Mitri now requests leave to amend
his complaint to add further allegations regarding the breach of contract claim, such an amendment
would be untimely given the late stage of the litigation. See Hagerty ex rel. United States v.
Cyberonics, Inc., 844 F.3d 26, 34 (1st Cir. 2016) (holding that undue delay is a proper basis for
denying leave to amend a complaint). For all of these reasons, there is no genuine dispute of fact
regarding the breach of contract claim and the Court ALLOWS Defendants’ motion as to this
claim.
C.

Declaratory Judgment

Mitri also sought in his complaint a declaratory judgment that the Property remains in
Mitri’s possession and that the “mortgages, notes and assignments” related to the Property “be
declared void or voidable or rescinded and that title returned to Mitri.” D. 1-2 at 22. The parties
agree that the declaratory judgment count rises or falls with the other two counts. D. 153 at 17; D.
142 at 17. For the same reasons that summary judgment is appropriate with respect to the other
two counts, it is appropriate with respect to the declaratory judgment count. Thus, the Court
ALLOWS Defendants’ summary judgment motion as to the declaratory judgment count.
D.

Counterclaims

Nationstar also seeks summary judgment on its counterclaims for possession, use and
occupancy, and unjust enrichment. D. 141 at 1. Although the counterclaims were initially brought
against all four of Mitri, Hala Mitri, Elie Mitri and Roy Mitri, Nationstar has waived the
counterclaims with respect to Elie Mitri and Roy Mitri.
7

1.

Possession

Nationstar moves for summary judgment with respect to its counterclaim for possession of
the Property. D. 142 at 19. The undisputed record (including an affidavit of compliance with the
statutory requirements and recorded foreclosure deed) establishes that Aurora held a foreclosure
auction on August 12, 2011 at which it purchased the Property, and that Aurora subsequently
transferred the Property to Nationstar. D. 143 ¶¶ 22-23; D. 154 ¶¶ 22-23; D. 146-11 at 3. This is
sufficient for a prima facie showing of its right to possession. Fed. Nat. Mortg. Ass’n v. Hendricks,
463 Mass. 635, 637 (2012) (explaining that “a plaintiff in a postforeclosure summary process case
may make a prima facie showing of its right to possession by producing an attested copy of the
recorded foreclosure deed and affidavit of sale under” the statute). For the reasons explained
above, Mitri’s arguments that this foreclosure sale was invalid fail. Thus, the Court ALLOWS the
Nationstar’s motion for summary judgment with respect to the possession counterclaim.
2.

Use and Occupancy

Under Massachusetts law, a “tenant at sufferance is liable for the reasonable worth of its
use and occupancy and/or detention of the premises.” Dale v. H.B. Smith Co., 136 F.3d 843, 850
(1st Cir. 1998). “After a foreclosure, the mortgagor becomes a tenant at sufferance of the
mortgagee.” Santander Bank, N.A. v. O’Connor, 2015 Mass. App. Div. 185, 2015 WL 9597921,
at *2 (Dist. Ct. 2015). Nationstar contends that, if it succeeds in showing that the 2011 foreclosure
was lawful, then it is entitled to summary judgment on its counterclaim for use and occupancy
payments from Mitri. D. 142 at 23. It further contends that, in the prior proceedings, the parties
had stipulated to a use and occupancy amount of $3500 for the period from August 2011 to
December 2014, and that, based on an expert opinion, the fair use and occupancy amount would
be $2,400 per month for the remaining period. D. 160 at 3. Nationstar thus seeks $229,200.00 in

8

use and occupancy for the period from August 2011 and September 2017. D. 142 at 26. Also, in
a motion filed in November 2017, Nationstar also seeks use and occupancy payments on an
ongoing basis while this action remains pending. D. 160. Mitri makes two responses to
Nationstar’s motion. First, Mitri asserts the viability of his challenge to the 2011 foreclosure, D.
181 at 2, which the Court has rejected for the reasons described above. Second, Mitri contends
that he has made certain payments, such as insurance payments, which should be deducted from
the amount owed in use and occupancy. D. 181 at 3. Mitri has not provided any documents
supporting his claim that he made insurance payments related to the Property. The Court
ALLOWS Nationstar’s motion for summary judgment with respect to its counterclaim for use and
occupancy, D. 141, in the amount of $229,200. Since, with the entry of this Memorandum &
Order, the Court will also be entering judgment for Defendants in this case, the Court ALLOWS
in part Nationstar’s motion for use and occupancy payments during the further pendency of the
case, D. 160, to the extent that it seeks use and occupancy payments through today, the date of
judgment, but otherwise DENIES D. 160 as moot.
3.

Unjust Enrichment

Nationstar also moves for summary judgment with respect to its claim for unjust
enrichment, relating to the property tax payments, water service payments, and trash collection
payments that it paid and Mitri benefitted from post-foreclosure. D. 142 at 24. Nationstar seeks
$89,042.45, of which $4,335.38 was related to water and trash usage. D. 142 at 25; D. 146-31.
Mitri does not contest Nationstar’s claim for unjust enrichment except to challenge the lawfulness
of the underlying foreclosure, D. 153 at 3, which the Court has already rejected. Because
Nationstar is receiving use and occupancy payments reflecting a fair market rent, however,
Nationstar is not entitled to receive property tax payments – which a renter would not have paid

9

because it would be the landlord’s responsibility. See, e.g., Combs v. Whittle, No. 08 MISC.
383090 KCL, 2011 WL 2112614, at *5 (Mass. Land Ct. May 27, 2011). Nationstar is, however,
entitled to receive compensation for utility payments such as water and trash. Id. Thus, the Court
ALLOWS Nationstar’s motion for summary judgment for unjust enrichment in the amount of
$4,335.58.
VI.

Conclusion
For the foregoing reasons, the Court ALLOWS the Defendants’ motion for summary

judgment as to Mitri’s claims and Nationstar’s counterclaims, D. 141. And ALLOWS IN PART
Defendants’ motion for use and occupancy, D. 160. The Court DENIES the remaining motions,
D. 158, D. 175 as moot.
So Ordered.
/s/ Denise J. Casper
United States District Judge

10