McAllister et al v. Countrywide Home Loans, Inc. et al

Filing 64

Judge George A. O'Toole, Jr: OPINION AND ORDER entered granting 37 Motion to Dismiss; granting 42 Motion to Dismiss for Failure to State a Claim; adopting Report and Recommendations re 58 Report and Recommendations. (Halley, Taylor)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 16-10911-GAO
GREGG C. MCALLISTER and NATALIE M. MCALLISTER,
Plaintiffs,
v.
COUNTRYWIDE HOME LOANS, INC., BANK OF AMERICA, N.A., DITECH FINANCIAL
LLC F/K/A/ GREEN TREE SERVICING LLC, and MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.,
Defendants.
OPINION AND ORDER
March 29, 2017
O’TOOLE, D.J.
The magistrate judge to whom this matter was referred has filed a Report and
Recommendation (dkt. no. 58) (“R&R”) recommending that the motion by defendants
Countrywide Home Loans, Inc., Bank of America, N.A. (“BANA”), and Mortgage Electronic
Registration Systems, Inc. (“MERS”) to dismiss the Complaint (dkt. no. 42) be allowed as to
Counts One through Four, but not Count Five.1 The R&R also recommends allowing the motion
by defendant Ditech Financial LLC to dismiss the Complaint (dkt. no. 37) as to Count Four but
denying the motion as to Count Five. The defendants have filed objections to the R&R (dkt. nos.
60, 62). Ditech objects on the ground that the magistrate judge erroneously construed Counts Three
and Five of the Complaint, and the other defendants echo Ditech’s objection with respect to Count
Five. The plaintiffs have not made any objection to the R&R.

1

The R&R recommends that Count One be dismissed without prejudice.

The magistrate judge construed Count Three of the Complaint as having been brought
against all “defendants,” including Ditech, although no action or omission by it is mentioned in
that count. Because Ditech did not move to dismiss that count as the other defendants did, the
magistrate judge concluded that Count Three remains as against Ditech. The magistrate judge also
construed Count Five of the Complaint as a claim pursuant to Massachusetts General Laws
Chapter 93A. Because none of the defendants addressed the merits of that claim in their motions
to dismiss, the magistrate judge concluded that Count Five should not be dismissed against any of
the defendants.
I agree with the magistrate judge that the term “defendants” when used in a multi-defendant
case can ordinarily be understood to refer to all defendants, but there can be exceptions. In Count
Three, the only acts or omissions that are pled to support the legal theory of the claim are attributed
to defendants Countrywide, BANA, and MERS by name. (See Compl. ¶¶ 35–41 (dkt. no. 1).)
Unlike that specificity with respect to the other defendants, Count Three makes no specific
allegation against (or specific mention of) Ditech to support a conclusion that it should be held
liable for slander of title. The statements the plaintiffs rely on in support of their slander of title
claim are the “recording[s] of the purported ‘Assignments of Mortgage’ into the Official Records
of the Middlesex County Recorder’s Office,” (id. ¶ 41), and the Complaint alleges that it was
MERS and BANA that recorded the assignments on June 8, 2011 and July 19, 2013 respectively,
(id. ¶ 39). I therefore agree with Ditech’s objection that the reference to “defendants” in Count
Three is more reasonably understood to refer to the defendants whose acts are specifically alleged
in that count, and not to Ditech. If it were read to include Ditech, it would fail the plausibility test
established by Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

2

Finally, even if such a claim had been plausibly alleged against Ditech, the magistrate
judge’s well-developed reasoning with respect to Count Three’s failure to state a claim as alleged
against the other defendants would also apply to Ditech, and that claim would accordingly be
without merit as well.
With respect to Count Five, I agree with the magistrate judge that the Complaint, read
liberally, purports to allege a claim under Massachusetts General Laws Chapter 93A against all
defendants. However, as the R&R makes clear, the alleged conduct recited in the other counts on
which a Chapter 93A claim might conceivably be premised was, the magistrate judge rightly
concluded, not wrongful. No other particular basis for Chapter 93A liability is alleged. The
mention of Chapter 93A in Count Five may be adequate to identify a theory of liability the
plaintiffs were attempting to invoke, but without supporting factual allegations, it is inadequate to
state a plausible claim for Chapter 93A liability against any of the defendants.
Additionally, the defendants appear to be correct that the apparent absence of a pre-suit
“Chapter 93A letter” also dooms the Complaint’s attempted claim.
Accordingly, I approve and ADOPT the magistrate judge’s recommendations except as
described above. The defendants’ Motions to Dismiss (dkt. nos. 37, 42) are GRANTED in full.
Count One is dismissed without prejudice, and the remaining counts are dismissed with prejudice.
It is SO ORDERED.
/s/ George A. O’Toole, Jr.
United States District Judge

3

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
GREGG C. MCALLISTER and
NATALIE M. MCALLISTER,
Plaintiffs,
v.
COUNTRYWIDE HOME LOANS, INC.,
BANK OF AMERICA, N.A, DITECH
FINANCIAL LLC F/K/A GREEN TREE
SERVICING LLC, and MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC.,
Defendants.

CIVIL ACTION NO.
16-10911-GAO

REPORT AND RECOMMENDATION RE:
DEFENDANT DITECH FINANCIAL’S MOTION TO DISMISS
(DOCKET ENTRY # 37); DEFENDANTS COUNTRYWIDE HOME
LOANS, INC., BANK OF AMERICA, N.A. AND MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC.’S MOTION TO DISMISS
(DOCKET ENTRY # 42)
March 1, 2017

BOWLER, U.S.M.J.
Pending before this court is a motion to dismiss filed by
defendant Ditech Financial LLC f/k/a Green Tree Servicing LLC
(“Ditech”) and a motion to dismiss filed by defendants
Countrywide Home Loans, Inc. (“Countrywide”), Bank of America,
N.A. (“BANA”) and Mortgage Electronic Registration System, Inc.
(“MERS”).1

(Docket Entry ## 37 & 42).

Plaintiffs Gregg C.

McAllister (“Gregg McAllister”) and Natalie M. McAllister

1
Countrywide, BANA and MERS are collectively referred to as
“defendants.”

(“plaintiffs”) oppose both motions.

(Docket Entry ## 40 & 47).

After conducting a hearing on December 6, 2016, this court took
the motions (Docket Entry ## 37 & 42) under advisement.
PROCEDURAL BACKGROUND
On May 19, 2016, plaintiffs filed a complaint seeking to
prevent the foreclosure and sale of their residence at 31 Cutler
Drive in Ashland, Massachusetts (“the property”).
# 1).

(Docket Entry

The complaint sets out the following causes of action:

(1) fraud in the concealment (Count One); (2) unconscionable
contracts (Count Two); (3) slander of title (Count Three); (4)
wrongful foreclosure (Count Four); and (5) a temporary
restraining order and a preliminary injunction based on a
violation of Massachusetts General Laws chapter 93A (“chapter
93A”) (Count Five).

The captions of the counts do not identify

any particular defendant.

The body of counts one and two

depicts facts related to Countrywide and repeatedly refers to
Countrywide.

Counts one and two therefore raise claims only

against Countrywide.

The slander of title claim is based upon

concealing a transfer made by Countrywide and thereafter
recording assignments involving MERS, BAC and Green Tree
Servicing LCC (“Green Tree”), a company that subsequently merged
into Ditech.

Count Three references all “defendants.”

Entry # 1, ¶¶ 39, 40).
defendants.

As such, it is brought against all

Counts four and five are also brought against all
2

(Docket

“defendants.”

(Docket Entry # 1, ¶¶ 42-59).

seeks both declaratory and monetary relief.

The complaint
(Docket Entry # 1).

On May 26, 2016, plaintiffs filed a motion for a temporary
restraining order (“TRO”) seeking to stop a pending foreclosure
on the property.

(Docket Entry # 14).

The court allowed the

motion in part and set a hearing on the motion for a preliminary
injunction.

On June 16, 2016, the court denied the motion for a

preliminary injunction and dissolved the prior Order allowing
the TRO.

The court determined that plaintiffs failed to show a

likelihood of success on the merits of their claims.
Entry # 38).

(Docket

The substance of the Order denied the preliminary

injunction relief that plaintiffs seek in Count Five but did not
address the merits of the chapter 93A claim.
STANDARD OF REVIEW
To survive a Fed.R.Civ.P. 12(b)(6) (“Rule 12(b)(6)”) motion
to dismiss, the complaint “must contain ‘enough facts to state a
claim to relief that is plausible on its face’” even if actual
proof of the facts is improbable.

Bell Atlantic v. Twombly, 550

U.S. 544, 556, 570 (2007); Miller v. Town of Wenham
Massachusetts, 833 F.3d 46, 51 (1st Cir. 2016).

The “standard is

‘not akin to a “probability requirement,” but it’” requires
“‘more than a sheer possibility that a defendant has acted
unlawfully.’”

Saldivar v. Racine, 818 F.3d 14, 18 (1st Cir.

2016); Feliciano-Hernández v. Pereira-Castillo, 663 F.3d 527,
3

533 (1st Cir. 2011).
the pleader’s favor.”
(1st Cir. 2016).

“[A]ll reasonable inferences” are drawn “in
Sanders v. Phoenix Ins. Co., 843 F.3d 37

Legal conclusions in the complaint are not part

of the Rule 12(b)(6) record.

See In re Ariad Pharmacy, Inc.

Securities Litigation, 842 F.3d 744, 750 (1st Cir. 2016).
Facts are confined to those in the complaint supplemented
by matters of public record and facts susceptible to judicial
notice, such as the bankruptcy filings (Docket Entry # 10-1).
See Butler v. Balolia, 736 F.3d 609, 611 (1st Cir. 2013)
(supplementing facts in complaint “by examining ‘documents
incorporated by reference into the complaint, matters of public
record, and facts susceptible to judicial notice’”).

“Exhibits

attached to the complaint are” also “properly considered part of
the pleading ‘for all purposes,’ including Rule 12(b)(6).”
Trans-Spec Truck Service, Inc. v. Caterpillar Inc., 524 F.3d
315, 321 (1st Cir. 2008).

In the case at bar, the exhibits

attached to the complaint include a deed; mortgage; promissory
note; two assignments of the mortgage; an affidavit by Joseph R.
Esquivel, Jr. (“Esquivel”); an affidavit of compliance with
Massachusetts General Laws chapter 244, sections 35B and 35C;
and notices pertaining to a foreclosure sale.

4

Accordingly,

these exhibits, filed by plaintiffs as part of the complaint,
are part of the Rule 12(b)(6) record.2
The court may consider the seven documents that Ditech
relied upon in its motion.

(Docket Entry # 37).

The promissory

note, the mortgage, various assignments, the statutory affidavit
and the letter dated May 10, 2016 are attached to the complaint
and, as such, are already part of the Rule 12(b)(6) record.
(Docket Entry # 1).

Additionally, the certificate of amendment

of a foreign limited liability company with a certificate of
merger reflecting a merger between Ditech and a predecessor
corporation filed with the Massachusetts Secretary of State’s
office is a public record and therefore part of the Rule
12(b)(6) record.

(Docket Entry # 37-4).

The final document

that Ditech relies on is a Federal Deposit Insurance Corporation
(“FDIC”) Merger Decisions 2011.

The document, located at

https://www.fdic.gov/bank/individual/merger/2011/2011.pdf (“FDIC
website”), evidences the merger between BAC and BANA and is
subject to judicial notice.

See Rice v. Wells Fargo Bank, N.A.,

2 F.Supp.3d 25, 28, n.7 (D.Mass. 2014) (taking judicial notice
of merger and name change of bank as lender in mortgage loan).

2
Plaintiffs’ argue, in part, that a number of the same
documents filed by one or more defendants are not subject to
judicial notice and not properly authenticated or verified as
original documents. (Docket Entry ## 40, 47). The argument is
moot to the extent it objects to the consideration of the above
noted documents that are part of the complaint.
5

Because the referenced documents were attached to the complaint,
are public records, or are susceptible to judicial notice, they
constitute part of the Rule 12(b)(6) record.
FACTUAL BACKGROUND
On March 27, 2006, plaintiffs refinanced a mortgage on
their property and Gregg McAllister signed the promissory note
in the amount of $242,000 payable to Countrywide.

Plaintiffs

signed the mortgage, secured by the $242,000 loan, with MERS
designated as the mortgagee and as nominee for Countrywide, the
lender, and its successors and assigns.
pp. 10-24).

(Docket Entry # 1-2,

“Shortly after plaintiff signed” the mortgage,

Countrywide, the lender as opposed to the mortgagee, sold its
interest in the mortgage and the promissory “[n]ote to Fannie
Mae REMIC Trust 2006-37.”

(Docket Entry # 1, ¶ 13) (Docket

Entry # 1-2, p. 3, ¶¶ 12-13).

Thereafter, the mortgage was

assigned on two occasions.
First, MERS assigned the mortgage “without recourse” to BAC
Home Loans Servicing, LP (“BAC”) on April 21, 2011.
Entry # 1-2, p. 27).

(Docket

The assignment is notarized, signed by

MERS’ Assistant Secretary and filed at the Middlesex South
Registry of Deeds (“the registry”) in Book 56963, page 381.
More specifically, Ilona Dawidowicz (“Dawidowicz”), in her
capacity as assistant secretary for MERS, signed the assignment,

6

which also includes MERS’ corporate seal.

(Docket Entry # 1-2,

p. 27).
“MERS Procedures Manual, Release 19.0, dated June 14, 2010”
states that, “‘Although MERS tracks changes in ownership of the
beneficial rights for loans registered on the MERS System, MERS
cannot transfer the beneficial rights to the debt.

The debt can

only be transferred by properly endorsing the promissory note to
the transferee.’”
omitted).

(Docket Entry # 1-2, pp. 4-5) (emphasis

On June 24, 2011, BAC merged into BANA, as reflected

in the FDIC website.
A second assignment took place on June 18, 2013.
Specifically, BANA assigned the mortgage to Green Tree.
Entry # 1-2, p. 29).

(Docket

This assignment was signed by Allison M.

Hallas, assistant vice president for BANA, and notarized as
evidenced by the signature and seal of a notary.
# 1-2, p. 29).

(Docket Entry

Like the first assignment, the second assignment

was properly recorded.

(Docket Entry # 1-2, pp. 27, 29).

As stated in the June 18, 2013 assignment, BANA “grant[ed],
s[old], assign[ed], transfer[red] and convey[ed]” to Ditech “all
beneficial interest under” the mortgage “together with the
note(s) and obligations therein described and the money due to
become due thereon with interest and all rights accrued or to
accrue under said Mortgage.”

(Docket Entry # 1-2, p. 29).

In

August 2015, two additional entities merged into Green Tree and,
7

consequently, Green Tree changed its registered name in
Massachusetts to “Ditech Financial LLC.”
p. 2).

(Docket Entry # 37-4,

Ditech filed an affidavit with the registry that states

that it is “the authorized agent of the holder of said
promissory note for purposes, inter alia, of foreclosing said
mortgage on behalf of said note holder.”
pp. 31-34).

(Docket Entry # 1-2,

Paragraph 20 of the uniform covenants of the

mortgage provides that, “The Note or a partial interest in the
Note (together with this Security Instrument3 can be sold one or
more times without prior notice to Borrower.”

(Docket Entry #

1-2, p. 21).
On May 10, 2016, plaintiffs were sent a notice of a
mortgage foreclosure sale from Harmon Law Offices, P.C.
Entry # 1-2, p. 37).

(Docket

The notice informed plaintiffs that a

foreclosure sale of the property was scheduled for June 9, 2016.
(Docket Entry # 1-2, p. 41).

A “Certification Pursuant to

Massachusetts 209 CMR 18.21A(2)” date stamped April 4, 2016
states that Ditech had the “right to foreclose because it is . .
. the holder of the mortgage and authorized agent of the owner
of the Note, which is Fannie Mae.”

(Docket Entry # 1-2, p. 38).

DISCUSSION

3
The term “Security Instrument” refers to the mortgage.
(Docket Entry # 1-2, p. 13).
8

Defendants move to dismiss counts one through four in the
complaint.

With respect to Count One, defendants maintain that,

due to a three-year statute of limitations applicable to fraud
in Massachusetts, the claim is time barred.

They additionally

assert that, even if the claim is not time barred, plaintiffs
fail to meet the heightened pleading requirements to state a
claim for fraud under Fed.R.Civ.P. 9(b) (“Rule 9(b)”) as well as
show any actual damage.

With respect to the latter argument,

defendants correctly point out that plaintiffs signed the
mortgage, which disclosed the transferability of the mortgage
and the promissory note.

As to Count Two, defendants maintain

that, due to a six-year statute of limitations, the contract
claim is time barred.

In addition, they contend that plaintiffs

fail to state a claim that the mortgage was an unconscionable
contract.
With respect to Count Three, defendants submit that
“[p]laintiffs fail to assert any actual wrongful conduct by
[d]efendants” and maintain that “[p]laintiffs do not have
standing to challenge an assignment from MERS to any other
party.”

(Docket Entry # 43, p. 9).

two assignments were valid because:

Defendants contend that the
the mortgage expressly

authorized the 2011 and 2013 assignments; the assignments
complied with Massachusetts General Laws chapter 183, section
54B (“section 54B”); and MERS had the authority to assign the
9

mortgage.

Defendants additionally submit that plaintiffs fail

to plead special damages.
With respect to Count Four, defendants argue that the claim
is predicated on the erroneous assumption that Ditech has no
right, title or interest in the property.

Ditech also moves to

dismiss Count Four because MERS had the authority to assign the
mortgage both due to its status as an equitable trustee for the
note holder and under the terms of the mortgage.

Interpreting

Count Five consistent with its caption as a TRO application to
show cause for a preliminary injunction, Ditech seeks to dismiss
Count Five because a claim for injunctive relief is a remedy and
not a cause of action.
I.

Fraudulent Concealment Claim
In Count One, the complaint alleges that Countrywide

concealed that fact that it was not a depository bank.
Entry # 1, ¶ 18).

(Docket

Countrywide also gave plaintiffs

consideration for entering into the mortgage and the promissory
note by lending them the $242,000 but “concealed a third party
Securitizer” and the terms of “Securitization Agreements,”
including financial incentives with the Federal National
Mortgage Association (“Fannie Mae”).

(Docket Entry # 1, ¶ 18).

As stated in the complaint, Countrywide’s failure to disclose
“the true character of the loan” by concealing the foregoing
precluded any “meeting of the minds between” plaintiffs and
10

Countrywide and plaintiffs reasonably relied on Countrywide’s
misrepresentations or nondisclosures to their detriment.4
(Docket Entry # 1, ¶¶ 19, 22).
At the outset, it is worth recognizing that, although
plaintiffs caption the count as “Fraud in the Concealment,”
there is no such cause of action.

See Harry v. Countrywide Home

Loans Inc., 2016 WL 7013451, at *5 (D.Mass. Nov. 30, 2016); see
also Epstein v. C.R. Bard, Inc., 460 F.3d 183, 189 (1st Cir.
2006) (“[f]raudulent concealment is a tolling doctrine codified
in Mass. Gen. Laws. ch. 260, § 12”).

“[F]raud in the

concealment . . . does not provide an independent cause of
action.

Rather, it tolls the statute of limitations if ‘the

wrongdoer concealed the existence of a cause of action through
some affirmative act done with intent to deceive.’”

Harry v.

Countrywide Home Loans Inc., 2016 WL 7013451, at *5 (quoting
Abdallah v. Bain Capital LLC, 752 F.3d 114, 119-20 (1st Cir.
2014), with brackets and ellipses omitted); see Mass. Gen. Laws
ch. 260, § 12.

Consequently, liberally construing the

complaint, Count One sets out a cause of action for fraud and/or

4
Legal conclusions, such as the above sentence, are not part of
the facts in the complaint. See Soto-Torres v. Fraticelli, 654
F.3d 153, 157 n.2 (1st Cir. 2011) (“complaint’s allegations that
Soto–Torres was ‘illegally and unreasonabl[y] detained’ and that
‘excessive force’ was used in pushing him to the floor are legal
conclusions that are not to be credited”); Dixon v. Shamrock
Financial Corp., 522 F.3d 76, 79 (1st Cir. 2008).
11

a basis to toll a statute of limitations under the fraudulent
concealment doctrine.
Defendants assert that the claim is untimely and,
alternatively, fails to meet the heightened pleading standard of
Rule 9(b).

Turning to the latter argument, Rule 9(b) dictates

that, “In all averments of fraud or mistake, the circumstances
constituting fraud or mistake shall be stated with
particularity.”

Fed.R.Civ.P. 9(b).

With respect to fraud, the

particularity requirements “mandat[e] ‘specifics about the time,
place, and content of the alleged false representations.’”
Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 358 (1st Cir.
2013) (quoting Juárez v. Select Portfolio Servicing, Inc., 708
F.3d 269, 279–80 (1st Cir. 2013)).

The First Circuit in Woods

considered a complaint insufficient because, although it
“include[d] a basic recitation of the elements of fraud, [Woods
did] not indicate when, where, and how often the allegedly false
statements were made or what, specifically, was stated.”

Id.

The complaint was also “wholly silent on the issue of her actual
reliance.”

Id.

Here too, the complaint, other than general statements that
Countrywide “concealed a third party Securitizer” and “the terms
of the Securitization,” does not identify the time, the place
and the content or specifics of the securitization agreement and
the financial incentives Fannie Mae provided Countrywide.
12

The

complaint makes only a blanket statement that plaintiffs
reasonably relied on Countrywide’s misrepresentations to their
detriment.

(Docket Entry # 1, ¶ 22).

The complaint also fails

to identify the time, place or how often Countrywide concealed
the fact that it was not a depository bank.

There are no facts

that show that Countrywide concealed any cause of action.

See

Abdallah, 752 F.3d at 121 (“fraudulent concealment requires, at
least, concealment of facts necessary to bring a cause of
action”).
The First Circuit in Epstein rejected a complaint under
Rule 9(b) which simply stated:
that Bard concealed and suppressed “material facts” as to
1) Bard’s “notification to the Food and Drug Administration
pertaining to the BUD Soft Tip Catheter”; 2) Bard’s “filing
a Master Design History for their internal records”; 3)
Bard’s “resubmitting the 510k to the FDA to substantiate
additional claims like radiopacity and tip strength”; 4)
Bard’s “dissemination to third parties of Plaintiff’s
technology, intellectual property and trade secrets”; 5)
Bard’s “use of Plaintiff’s technology, intellectual
property and trade secrets” without permission; and 6)
Bard’s “use of Plaintiff’s technology, intellectual
property, and trade secrets to apply for a Patent.”
Epstein v. C.R. Bard, Inc., 460 F.3d at 189.

The complaint in

the case at bar is even more generalized as to Countrywide.
With respect to BANA and MERS, the complaint does not articulate
any factual allegations that either entity engaged in fraud.
Accordingly, the foregoing allegations in Count One are subject

13

to a Rule 12(b)(6) dismissal without prejudice for failure to
comply with Rule 9(b).5
To the extent the fraud or the fraudulent concealment
doctrine in Count One relates to the movement or transfers of
the mortgage and the promissory note (Docket Entry # 38, p. 9),
the count is likewise deficient under Rule 9(b).

The complaint

does not set out any additional factual basis for the fraud
based on the movement and transfers of the mortgage and
promissory note.

Indeed, the mortgage provides that, “The Note

or a partial interest in the Note (together with this Security
Instrument) can be sold one or more times without prior notice
to Borrower.”

(Docket Entry # 1-2, p. 21, ¶ 20).

The

promissory note similarly states that, “I understand that the
Lender may transfer this Note.”
II.

(Docket Entry # 1-2, p. 10).

Unconscionable Contracts Claim
In Count Two, the complaint alleges that the mortgage

and/or the promissory note was an unconscionable contract.
According to the complaint, Countrywide did not clarify that it
was not the party giving the funds for the loan.
# 1, ¶ 32).

(Docket Entry

Rather, Countrywide concealed its financial benefit

of bargaining with a third party and “using a warehouse line of
credit from [the] Federal National Mortgage Association[,]

5
It is therefore not necessary to address defendants’ remaining
arguments.
14

‘Fannie Mae’” to provide the funds for the promissory note.
(Docket Entry # 1, ¶ 32).
Defendants move to dismiss the claim as untimely and
because it fails to state a plausible claim for relief.

In

Massachusetts, contract claims are subject to a six-year statute
of limitations.

See Mass. Gen. Laws ch. 260, § 2; Callahan v.

Wells Fargo & Co., 747 F.Supp.2d 247, 252 (D.Mass. 2010).

With

respect to a statute of limitations defense, a Rule 12(b)(6)
dismissal is appropriate if the complaint and any other properly
considered document “‘fail[] to “sketch a factual predicate”
that would’ provide a basis for tolling the statute of
limitations.”

Abdallah v. Bain Capital LLC, 752 F.3d at 119.

It is true that the discovery rule operates “to toll a
limitations period until a prospective plaintiff learns or
should have learned that he has been injured.”
Clifford, 67 N.E.2d 42, 49 (Mass. 2002).
arise in three circumstances:

Albrecht v.

Its application “may

where a misrepresentation

concerns a fact that was ‘inherently unknowable’ to the injured
party, where a wrongdoer breached some duty of disclosure, or
where a wrongdoer concealed the existence of a cause of action
through some affirmative act done with the intent to deceive.”
Id.; accord Creative Playthings Franchising, Corp. v. Reiser,
978 N.E.2d 765, 770 (Mass. 2012).

Under the discovery rule, “a

cause of action accrues when the plaintiff discovers or with
15

reasonable diligence should have discovered6 that (1) he has
suffered harm; (2) his harm was caused by the conduct of
another; and (3) the defendant is the person who caused that
harm.”

Harrington v. Costello, 7 N.E.3d 449, 455 (Mass. 2014).

Here, however, the record does not give rise to a basis for
tolling under the discovery rule.
mortgage in March 2006.

Plaintiffs executed the

The promissory note sets out Gregg

McAllister’s receipt of $242,000 and his promise to repay the
loan at a 6.75% interest rate over a 30-year period with monthly
payments of $1,569.61.

(Docket Entry # 1-2, p. 10).

The

mortgage reflects that it is a “Massachusetts - Single Family –
Fannie Mae/Freddie Mac Uniform Instrument with MERS.”

(Docket

Entry # 1-2, p. 13) (capitalization and bolding omitted).

The

mortgage thus disclosed a direct connection between Fannie Mae
and MERS, Countrywide’s nominee.

(Docket Entry # 1-2, p. 13).

Plaintiffs did not file this action until May 2016, more than
ten years after Gregg McAllister signed the promissory note and
plaintiffs signed the mortgage.

Plaintiffs’ general statement

that Countrywide concealed the financial benefit it obtained at
the March 2006 loan closing does not provide a factual basis for
tolling.

Fannie Mae’s involvement and the injury to plaintiffs

6
   Plaintiffs’ assertion that their actual knowledge via the
Esquivel affidavit cures the untimeliness overlooks that, with
reasonable diligence, they could have discovered the injury
sooner.  
16

was not inherently unknowable.

In light of the disclosed

relationship between Fannie Mae and MERS, Countrywide’s nominee,
plaintiffs could and should have discovered the relationship
between Fannie Mae and Countrywide simply by logging onto Fannie
Mae’s website which, in turn, would have uncovered the injury,
if any, to plaintiffs caused by the financial benefit given to
Countrywide.

In fact, the 2014 Esquivel affidavit plaintiffs

attach to the complaint references Fannie Mae’s website as
confirming that Fannie Mae acquired an interest in the “Loan
Instrument.”

(Docket Entry # 1-2, p. 3, ¶ 13).

Esquivel’s

further research determined that the “Mortgage Loan Instrument
was sold sometime shortly after March 27, 2006 to multiple
classes of the Fannie Mae REMIC Trust 2006-37.”
1-2, p. 3, ¶ 12).

(Docket Entry #

Hence, plaintiffs could and should have

discovered the financial benefit and purported injury during the
four year time period after they signed the mortgage.7
Consequently, exercising reasonable diligence, plaintiffs could
and should have discovered the harm, caused by Countrywide in
obtaining the financial benefit from Fannie Mae.
Fraudulent concealment also fails to provide a basis for
tolling.

The doctrine tolls the six-year period if defendants

7
A timely filing of the May 19, 2016 complaint would require an
accrual of the six-year limitations period on or after May 19,
2010.
17

fraudulently concealed the cause of action.

See Crocker v.

Townsend Oil Co., Inc., 979 N.E.2d 1077, 1083 (Mass. 2012).
Where, as here, there is no fiduciary relationship or special
duty between plaintiffs and defendants, “‘active fraud is
ordinarily required to prove fraudulent concealment.’”
1084.

Id. at

An affirmative act on the part of Countrywide with an

intent to deceive is therefore ordinarily required.

See Epstein

v. C.R. Bard, Inc., 460 F.3d at 189 (“in the absence of a
fiduciary relationship, the statute of limitations may be tolled
under this doctrine ‘if the wrongdoer concealed the existence of
a cause of action through some affirmative act done with intent
to deceive’”) (quoting Puritan Med. Ctr., Inc. v. Cashman, 596
N.E.2d 1004, 1010 (Mass. 1992), with internal ellipses omitted);
accord Crocker v. Townsend Oil Co., Inc., 979 N.E.2d at 1083.
Plaintiffs fail to identify and the record does not
disclose any affirmative steps taken by Countrywide to conceal
the cause of action or its financial benefit with Fannie Mae.
See Crocker v. Townsend Oil Co., Inc., 979 N.E.2d at 1084
(rejecting fraudulent concealment doctrine due to absence of
“facts alleged to support the plaintiffs’ contention that
Townsend actively concealed or misrepresented any of the
circumstances regarding the plaintiffs’ employment”).

The

unconscionable contracts claim in Count Two is therefore time
barred.
18

In the alternative as to the mortgage constituting an
unconscionable contract, defendants argue that plaintiffs fail
to state a claim that the mortgage was an unconscionable
contract or that the terms of the loan in the promissory note
were grossly unfair.

(Docket Entry # 43).

In Massachusetts, a

plaintiff “bears a ‘heavy burden’ of showing ‘both substantive
unconscionability (that the terms are oppressive to one party)
and procedural unconscionability (that the circumstances
surrounding the formation of the contract show that the
aggrieved party had no meaningful choice and was subject to
unfair surprise[)].’”

Chesterton Capital LLC v. Legacy Point

Capital LLC, 2016 WL 7155735, at *6 (D.Mass. Dec. 7, 2016)
(quoting Bekele v. Lyft, Inc., 2016 WL 4203412 (D.Mass. Aug. 9,
2016)).

“‘Procedural unconscionability evaluates the

circumstances under which the contract was executed to determine
if it is the product of unfair surprise.’”

Williams v. American

Honda Finance Corp., 2014 WL 11090919, at *9 (D.Mass. July 3,
2014) (quoting In re Sullivan, 346 B.R. 4, 25 (Bankr.D.Mass.
2006)).

“‘Substantive unconscionability evaluates the actual

terms of the contract to determine if they are substantively
unfair.

If the sum total of the provisions of a contract drive

too hard a bargain, a court of conscience will not assist its
enforcement.’”

Id.

19

Plaintiffs fail to demonstrate that the mortgage was
procedurally or substantively unconscionable.

Plaintiffs signed

the mortgage and the terms were not oppressive.

Plaintiffs

received a 30-year fixed rate mortgage at 6.75% which fails to
equate to an unconscionable contract.

The purported concealment

of Countrywide’s “financial benefit” by using the warehouse
credit line from Fannie Mae did not make the actual terms of the
mortgage unfair or otherwise unconscionable.
In sum, given the absence of any plausible basis that the
mortgage was unconscionable, Count Two fails to state a claim
for relief as to the mortgage.

Alternatively, the claim is time

barred in its entirety.
III.

Slander of Title Claim8
In Count Three, plaintiffs challenge MERS’ authority to

assign the mortgage because MERS did not possess the promissory
note.

(Docket Entry # 1, ¶¶ 35-41) (Docket Entry # 47).

As

noted in the complaint, MERS was also “without rights” to assign
the mortgage because of the unrecorded sale of the mortgage and
the promissory note to Fannie Mae REMIC Trust 2006-37 shortly
after the parties executed these documents.
¶¶ 13, 14, 40).

(Docket Entry # 1,

Accordingly, plaintiffs assert that “MERS did

8
This section also addresses, inter alia, a number of arguments
relevant to the wrongful foreclosure claim.
20

not have the authority to execute” the assignments.9
Entry # 47).

(Docket

In addition, they maintain that Dawidowicz was not

an employee of MERS even though she represented herself as an
assistant secretary of MERS in the 2011 assignment.

(Docket

Entry # 47).10
Defendants seek to dismiss the slander of title claim based
on a number of arguments including that MERS had the authority
to assign the mortgage, the 2011 and 2013 assignments were
proper and complied with section 54B, and plaintiffs lack
standing.

In the context of the wrongful foreclosure claim,

defendants raise the same argument that MERS was entitled to
assign the mortgage both as an equitable trustee and as the
mortgagee.

(Docket Entry # 43).

In seeking to dismiss the

wrongful foreclosure claim, Ditech similarly argues that MERS
had the authority to assign the mortgage both due to its status
as an equitable trustee for the note holder and under the terms
of the mortgage.11

(Docket Entry # 37).

9
MERS was not a party to the 2013 assignment.
10
As part of a factual summary, plaintiffs state that
defendants do not have the “Original ‘Wet-Ink’ Note,” which “is
unaccounted for.” (Docket Entry # 47). Because plaintiffs do
not make a legal argument regarding this “fact,” it does not
avoid dismissal.
11
In seeking to dismiss the complaint, Ditech only addresses
the wrongful disclosure and chapter 93A claims, i.e., counts
four and five. Count Three is brought against all defendants
and therefore remains in this action against Ditech at this
juncture.
21

The general legal principles are well established.

In

Massachusetts, “[T]he mortgage and the note are separate
instruments; when held by separate parties, the mortgagee holds
bare legal interest and the note holder enjoys beneficial
interest.”

Culhane v. Auroa Loan Services of Nebraska, 708 F.3d

282, 293 (1st Cir. 2013).

Furthermore, under Massachusetts

mortgage law the note and the mortgage may be split.

See Eaton

v. Fed. Nat. Mortg. Ass’n, 969 N.E.2d 1118, 1124-1126 (Mass.
2012).

They need only unite at the time of the foreclosure, at

which time the foreclosing entity must have legal title to the
mortgage and “either hold the note or establish it is servicing
the loan on behalf of the note holder.”

Id. at 1128-1130.

Indeed, “‘Nothing in Massachusetts law requires a foreclosing
mortgagee to demonstrate that prior holders of record legal
interest in the mortgage also held the note at the time each
assigned its interest in the mortgage to the next holder in the
chain.’”

Shea v. Federal National Mortgage Association, 31

N.E.3d 1122, 1124 (Mass.App.Ct. 2015) (quoting Sullivan v.
Kondaur Capital Corp., 7 N.E.3d 1113, 1119 (Mass.App.Ct. 2014))
(internal brackets omitted), review denied, 36 N.E.3d 31 (Mass.
2015).

Simply stated, “MERS’s interest as mortgagee [is] not

‘inherently invalid because it was separated from ownership of
the underlying debt.’”

Id. (quoting Sullivan v. Kondaur Capital

Corp., 7 N.E.3d at 1119).

Accordingly, contrary to plaintiffs’
22

argument (Docket Entry # 47, p. 2), there was nothing improper
in separating the promissory note from the mortgage.

MERS was

not required to have possession of or a beneficial interest in
the promissory note in order to assign the mortgage to BAC in
2011.

See Rosa v. Mortgage Electronic Systems, Inc., 821

F.Supp. 423, 432 (D.Mass. 2011); Kiah v. Aurora Loan Services,
LLC, 2011 WL 841282, at *8 (D.Mass. March 4, 2011).
MERS was named in the mortgage as the mortgagee and
Countywide identified as the lender.

Under “the MERS framework,

in which the mortgage and note are held by separate entities
from the outset,” the law implies an “equitable trust in which
the mortgagee ‘holds bare legal title to the mortgaged premises
in trust for the noteholder’ and ‘[t]he noteholder possesses an
equitable right to demand and obtain an assignment of the
mortgage.’”12

Mills v. U.S. Bank, NA, 753 F.3d 47, 50-51 (1st

Cir. 2014) (quoting Culhane, 708 F.3d at 292) (emphasis added);

12
To briefly explain the MERS system, members of MERS, such as
banks and loan servicers, “contractually agree to appoint MERS
to act as their common agent on all mortgages they register in
the MERS system.” Culhane, 708 F.3d at 287. MERS maintains an
electronic database tracking “the identities of the noteholders
and loan servicers of underlying loans.” Id. To facilitate the
transfer of notes, MERS members “agree to name MERS as ‘the
mortgagee of record in the mortgage so that beneficial ownership
and servicing rights of the note may be transferred among MERS
members without the need to publicly record such assignment;
instead assignments of the note are tracked by MERS’ electronic
system.’” Lindsay v. Wells Fargo Bank, N.A., 2013 WL 5010977,
at *7 (D.Mass. Sept. 11, 2013) (quoting Rosa v. Mortg. Elec.
Sys., Inc., 821 F.Supp.2d at 429).
23

Culhane, 708 F.3d at 292 (when, at inception of loan, “mortgage
and note are held by separate entities, an equitable trust is
implied by law”).

As indicated above, the “entity that holds

[the] mortgage but not the associated promissory note,” i.e.,
the mortgagee, “holds that mortgage in an equitable trust for
the benefit of the noteholder.”
N.A., 733 F.3d at 355.

Woods v. Wells Fargo Bank,

At its inception, the mortgage in the

case at bar gave MERS, as mortgagee and nominee for Countrywide,
legal title to the mortgage and gave Countrywide, as note holder
and lender, the equitable right to demand and obtain an
assignment of the mortgage.
In addition, the contractual language of the mortgage gave
MERS, as mortgagee and nominee of Countrywide, the authority to
assign the mortgage.

See Culhane, 708 F.3d at 293.

The

mortgage states that, “MERS is the mortgagee” under the mortgage
and “is acting solely as a nominee for Lender and Lender’s
successors and assigns.”

(Docket Entry # 1-2, pp. 13-14).

It

also states that, “Borrower understands and agrees that MERS
holds only legal title to the interests granted by Borrower in
this Security Instrument, but . . . MERS (as nominee for Lender
and Lender’s successors and assigns) has the right:

to exercise

any and all of those interests, including, but not limited to,
the right to foreclose and sell the Property.”
1-2, p. 15).

No tably, the mortgage provides that it “can
24

(Docket Entry #

be sold one or more times without prior notice to
Borrower.”

( Docket Entry # 1-2, p. 21).

Initially turning to defendants’ argument regarding
standing, “a mortgagor has standing to challenge a mortgage
assignment as invalid, ineffective, or void,” such as when “the
assignor has nothing to assign or had no authority to make an
assignment to a particular assignee.”

Culhane, 708 F.3d at 291;

accord Sullivan v. Kondaur Capital Corp., 7 N.E.3d at 1116
(mortgagor may challenge mortgage assignment as void on basis
that foreclosing entity lacked legal authority to conduct
foreclosure).

More specifically, a mortgagor has standing to

challenge an assignment by MERS to a foreclosing mortgagee
“premised on the notion that MERS never properly held the
mortgage and, thus, had no interest to assign.”
F.3d at 291.

Culhane, 708

This authority, in turn, may allow the mortgagor

to challenge “the validity of an assignment that purports to
transfer the mortgage to a successor mortgagee.”

Culhane, 708

F.3d at 291; see Dyer v. U.S. Bank, N.A., 141 F.Supp.3d 149, 155
(D.Mass. 2015), aff’d sub nom., Dyer v. Wells Fargo Bank, N.A.,
841 F.3d 550 (1st Cir. 2016); see Bank of New York Mellon Corp.
v. Wain, 11 N.E.3d 633, 638 (Mass.App.Ct. 2014) (discussing
Sullivan v. Kondaur Capital Corp., 7 N.E.3d at 1119).

If, at

the time of the 2011 assignment, MERS had no interest in the
mortgage to assign, then the assignment to BAC would be void.
25

See Culhane, 708 F.3d at 291 (if “MERS never properly held the
mortgage and, thus, had no interest to assign[,] . . .
assignment would be void (not merely voidable)” and “plaintiff
has standing to challenge the validity of the assignment”); see
also Barcelos v. Deutsche Bank National

Trust Co., 2014 WL

2974891, at *2 (Mass.App.Ct. July 3, 2014) (assignment of
mortgage void “if the assignor did not hold the mortgage at the
time of assignment”) (unpublished); Ibanez, 941 N.2d at 53
(discussing “pool of mortgages assigned to a securitized trust”
and stating, “there must be proof that the assignment was made
by a party that itself held the mortgage”).
In the case at bar, plaintiffs challenge the 2011
assignment by MERS because Countrywide previously sold the
mortgage (along with the promissory note) to Fannie Mae REMIC
Trust 2006-37.

(Docket Entry # 1, ¶¶ 13-14).

As such, MERS

“was without rights” and had nothing to assign BAC due to the
previous transfer of the mortgage to Fannie Mae REMIC Trust
2006-37, according to plaintiffs.
44-45).13

(Docket Entry # 1, ¶¶ 13-14,

Under Culhane and contrary to defendants’ argument,

13
Plaintiffs raise this argument primarily as a basis to
support the wrongful foreclosure claim as opposed to the slander
of title claim. The latter claim is grounded upon the
unrecorded and concealed sale of the mortgage and the promissory
note by Countrywide to Fannie Mae REMIC Trust 2006-37 and the
false representations of recording the 2011 and 2013
assignments. (Docket Entry # 1, ¶¶ 13, 14, 37-41).
26

plaintiffs have standing to lodge this challenge.

See Culhane,

708 F.3d at 291; Shea v. Federal National Mortgage Association,
31 N.E.3d at 1124 n.9 (“mortgagor had standing to raise claim
‘premised on the notion that MERS never properly held the
mortgage and, thus, had no interest to assign’”) (quoting
Culhane, 708 F.3d at 291, in parenthetical).
Examining plaintiffs’ argument that MERS had no authority
to assign the mortgage and defendants’ contrary argument that
MERS had such authority, MERS, as mortgagee and equitable
trustee, had the contractual and the equitable authority to
transfer legal title to the mortgage to BAC, as previously
explained.

See Culhane, 708 F.3d at 293.

Furthermore, “Culhane

made clear that MERS’s status as an equitable trustee does not
circumscribe the transferability of its legal interest.”

Woods

v. Wells Fargo Bank, N.A., 733 F.3d at 355 (emphasis added); see
also Serra v. Quantum Servicing, Corp., 747 F.3d 37, 40 (1st Cir.
2014) (“In Culhane, we ruled unequivocally that MERS may validly
possess and assign a legal interest in a mortgage.”).

Thus,

when “the note and mortgage are split, the mortgagee retains and
may transfer its bare legal interest in the underlying
mortgage.”

Woods v. Wells Fargo Bank, N.A., 733 F.3d at 355

(paraphrasing Culhane, 708 F.3d at 292, in parenthetical)
(emphasis added).

Legal title to the mortgage is vested in MERS

as the mortgagee and not in the note holder.
27

See Mills v. U.S.

Bank, N.A., 753 F.3d 37, 53 (1st Cir. 2014) (dicta noting, albeit
in context of mortgage that did not change hands, that “mortgage
remained vested in MERS and not in the noteholder”); Rosa v.
Mortgage Electronic Systems, Inc., 821 F.Supp.2d at 430 (“[a]s
mortgagee, MERS held title to the Mortgage”).

The note holder’s

“beneficial interest” is distinct from the mortgagee’s legal
interest in the mortgage and the former amounts to “a ‘right or
expectancy in something (such as a trust or estate), as opposed
to legal title to that thing.’”

Culhane, 708 F.3d at 292

(quoting Black’s Law Dictionary 885 (9th ed. 2009)).

Thus,

despite an original lender’s “right (as note holder) to demand
and obtain an assignment of the mortgage in order to enforce its
security interest and collect the debt, MERS (as mortgagee)
retained the right to assign the mortgage unilaterally absent
any restriction in the mortgage document.”

Shea v. Fed.

National Mortgage Association, 31 N.E.3d at 1125; see generally
Ibanez, 941 N.E.2d at 54 (Mass. Gen. L. ch. 183, § 21, grants
statutory power of sale to mortgagee “but not to a party that is
the equitable beneficiary of a mortgage held by another”).
Here, the complaint states that “Countrywide sold its
intangible interest in the Mortgage and Note to Fannie Mae REMIC
Trust 2006-37” shortly after plaintiffs signed the mortgage
contract.

(Docket Entry # 1, ¶ 13).

As the note holder and not

the mortgagee, Countrywide had the “equitable right to demand
28

and obtain an assignment of the mortgage,” Culhane, 708 F.3d at
292, but there are no facts or reasonable inferences that
Countrywide exercised that right prior to selling its intangible
right to the mortgage to Fannie Mae REMIC Trust 2006-37.
Consequently, the most it transferred to Fannie Mae REMIC Trust
2006-37 was its intangible right to demand an assignment of the
mortgage as opposed to an assignment of legal title to the
mortgage itself.

See generally Kiah v. Aurora Loan Services,

LLC, 2011 WL 841282, at *4 (“transfer of the note automatically
transfers an equitable interest in the underlying mortgage, even
without a formal assignment”).

In the meantime, the foregoing

caselaw interpreting mortgages with language similar to
plaintiffs’ mortgage establishes that MERS retained its ability
to transfer the mortgage, which it validly exercised in 2011.
Defendants are therefore correct that MERS had the authority to
transfer the mortgage to BAC in 2011.
Plaintiffs also argue that Dawidowicz was not an employee
of MERS but rather an employee of BAC.
47).

(Docket Entry ## 40,

Defendants and Ditech submit that the assignments comport

with section 54B.
p. 11).

(Docket Entry # 37, p. 7) (Docket Entry # 43,

The 2011 assignment, made under oath before a notary

public, states that Dawidowicz is an assistant secretary of
MERS.

Defendants and Ditech are therefore correct that the

assignment complied with section 54B.
29

See Culhane, 708 F.3d at

294 (rejecting similar argument).

An assignment of a mortgage

in Massachusetts “is effective without the need to independently
establish the authority of the assignor to make the assignment.”
In re Marron, 455 B.R. 1, 8 (Bankr.D.Mass. 2011) (citing Kiah,
2011 WL 841282, at *7, and section 54B).

As long as the

assignment comported with the requirements of section 54B, “it
was ‘otherwise effective to pass legal title.’” Bank of New York
Mellon Corp. v. Wain, 11 N.E.3d at 638; accord ClearVue
Opportunity XV, LLC v. Sheehan, 2015 WL 5098658, at *6
(Mass.App.Div. Aug. 24, 2015) (quoting Bank of New York Mellon
Corp. v. Wain, 11 N.E.3d at 638).
Turning to the specifics of the slander of title count, the
claim asserts that defendants concealed the unrecorded
assignment of the mortgage from Countrywide to Fannie Mae REMIC
Trust 2006-37 and misrepresented the assignment by recording the
2011 and 2013 assignments.

(Docket Entry # 1, ¶¶ 37-40).

Count

Three alleges that the act of recording the 2011 and 2013
assignments was purportedly a “false statement” that slandered
plaintiffs’ title.

(Docket Entry # 1, ¶¶ 40-41).

“To prove slander of title, a plaintiff must show that ‘(1)
the defendant made a false statement, (2) which was published
with malice, and (3) caused injury to the plaintiff.’”

Dumeus

v. CitiMortgage, Inc., 2015 WL 404611, at *2 (D.Mass. Jan. 29,
2015).

The tort “is ‘essentially a claim of defamation where
30

the false statement focuses on the plaintiffs’ rights in
property,” such as a “defamatory recording.”

RFF Family

Partnership, LP v. Ross, 814 F.3d 520, 531 (1st Cir. 2016).
Plaintiffs’ allegations are similar to those made in Johnson v.
Wilmington Trust, N.A., 2016 WL 5109510, at *5 (D.Mass. Sept.
20, 2016) (allowing motion to dismiss slander of title claim),
and are equally deficient.

As stated in Johnson:

Plaintiff argues that Wilmington’s recording that it has
current legal ownership of Plaintiff’s residence is a false
statement. Here, however, Wilmington made no false
statement because the mortgage assignments were valid. A
conclusion that the assignments of the mortgage were valid
“means that the statements about which Plaintiff complains
were true. Neither the recording of the valid assignment
nor the publication of a notice of foreclosure sale
accurately identifying Wilmington as the holder of the
mortgage at that time could constitute slander.”
Johnson v. Wilmington Trust, N.A., 2016 WL 5109510, at *5
(quoting Jepson v. HSBC Bank USA National Association, 2013 WL
639184, at *6 (D.Mass. Feb. 20, 2013)) (internal brackets
omitted).

As explained above, the 2011 assignment was valid, it

complied with section 54B and the 2013 assignment likewise
complied with section 54B.

As mortgagee, MERS retained the

right to assign the mortgage after “Countrywide sold its
intangible interest in the Mortgage and Note” because
Countrywide only possessed the intangible right to demand and
obtain an assignment of the mortgage.

31

See Shea v. Federal

National Mortgage Association, 31 N.E.3d at 1125; see also
Culhane, 708 F.3d at 292.
Defendants’ arguments to dismiss Count Three because MERS
had the authority to make the assignments and the assignment
complied with section 54B (Docket Entry # 43, § II(D)) are
therefore well taken.

Defendants did not engage in wrongful

conduct in recording the 2011 and 2013 assignments and the
recordings were neither misrepresentations nor false statements
in light of MERS’ authority to make the 2011 assignment, BANA’s
downstream authority to make the 2013 assignment and the
assignments’ compliance with section 54B.14

Finally, although

recording a mortgage assignment “is likely the better practice”
than not recording the assignment, Massachusetts law does not
require that the assignment “be in recordable form at the time
of the sale or the subsequent foreclosure sale.”
N.E.2d at 53.

Ibanez, 941

Defendants are therefore entitled to a dismissal

of Count Three.
IV.

Wrongful Foreclosure
In Count Four, plaintiffs assert that MERS did not have the

authority to assign the mortgage in 2011 because Countrywide
previously sold the mortgage to Fannie Mae REMIC Trust 2006-37.
Because Fannie Mae held the mortgage, plaintiffs argue that MERS

14
It is therefore not necessary to address defendants’
remaining arguments relative to dismissing Count Three.
32

had nothing to assign BAC.

(Docket Entry # 1, ¶¶ 13-14, 44-45)

(Docket Entry # 40, p. 4) (Docket Entry # 47, pp. 5-6).
Defendants maintain that MERS had the authority to assign the
mortgage to BAC in 2011.

(Docket Entry # 43).

Ditech similarly

contends that Countrywide sold the promissory note to Fannie Mae
REMIC Trust 2006-37 and thereby only transferred its beneficial
interest in the mortgage to Fannie Mae REMIC Trust 2006-37 and
that MERS retained the authority to transfer the mortgage.
(Docket Entry # 37).

For reasons explained in Roman numeral

III, defendants and Ditech are correct.
Citing Massachusetts General Laws chapter 103, section 3203, plaintiffs further assert that the promissory note was not
indorsed and properly negotiated.

(Docket Entry # 1, ¶ 46).

The Order denying the preliminary injunction motion rejected
this assertion.

(Docket Entry # 38, p. 7).

The subsection in

section 3-203 applicable to indorsement and negotiation “applies
only if the instrument is payable to order or specially indorsed
to the transferor.”

Mass. Gen. Laws ch. 183, § 3-203, cmt. 3.

Here, the promissory note set out a “Pay to the Order”
designation to a blank line.

(Docket Entry # 1-2, p. 11).

Like

the promissory note in Deutsche Bank National Trust Co. v.
Lefebvre, 57 N.E.3d 1065 (Mass.App.Ct. 2016) (“note was made
payable to a blank line” and, “after IndyMac indorsed the note
in blank, it became enforceable by whomever next received it
33

from IndyMac-in this case, Deutsche Bank”) (unpublished), it was
therefore indorsed in blank and payable to whoever held it.
(Docket Entry # 38, p. 7); Mass. Gen. Laws ch. 106, § 3-205(b).
In seeking to dismiss the wrongful foreclosure claim,
Ditech argues that the section 35B and section 35C affidavit
filed at the Middlesex South Registry of Deeds establishes its
authority and standing to foreclose.

It also points out that

the certification under Regulation 18.21A(2) advised plaintiffs
that Ditech was the authorized agent of the note holder, Fannie
Mae.

(Docket Entry # 37).

Plaintiffs, in turn, contest that

Ditech is the note holder.

(Docket Entry # 40, p. 3) (Docket

Entry # 1, ¶ 50).
The section 35B and section 35C affidavit recorded at the
Middlesex South Registry of Deeds states that Ditech is the
authorized agent of the holder of the promissory note for
purposes of” foreclosing the “mortgage on behalf of” the note
holder.

(Docket Entry # 1-2, p. 34).

As posited by Ditech,

this evidence is sufficient to establish that it properly holds
the promissory note and has the authority to foreclose.

See

Eaton, 969 N.E.2d at 1133 n.28 (“foreclosing mortgage holder . .
. may establish that it either held the note or acted on behalf
of the note holder at the time of a foreclosure sale by filing
an affidavit in the appropriate registry of deeds”); Lamson v.
Chase Home Finance, LLC, 24 N.E.3d 1060 (Mass.App.Ct. 2015)
34

(rejecting argument that “defendant is not the holder of the
note and has not shown that it was authorized by the holder of
the note to commence foreclosure proceedings” in light of
section 35C affidavit “that it holds the note as custodian for”
Fannie Mae “and that Fannie Mae authorized the foreclosure
proceedings,” which mortgagor failed to refute) (unpublished);
Foregger v. Residential Credit Solutions, Inc., 2013 WL 3208596,
at *11 (D. Mass. June 21, 2013) (“Eaton suggests that
“uncontested sworn statement by a mortgagee that it has the
authority to act on behalf of a note holder is sufficient” to
establish standing to foreclose).

Plaintiffs’ conclusory

statements that they “stipulate that Ditech . . . does not hold
the note” (Docket Entry # 1, ¶ 50) and contest that Ditech is
the note holder (Docket Entry # 40, p. 3) are unavailing in
light of the section 35B and 35C affidavit.
In the context of the wrongful foreclosure claim,
defendants and Ditech additionally argue that the mortgage and
the promissory note can be split.

(Docket Entry ## 37, 43).

Plaintiffs, in turn, assert that BANA did not assign the
mortgage and the promissory note to Green Tree because BANA did
not hold the note at the time of the assignment.
# 1, ¶¶ 48, 51).

(Docket Entry

As a factual matter, MERS only assigned the

mortgage to BAC in 2011, as opposed to the mortgage and the
promissory note, and BANA thus assigned only the mortgage to
35

Green Tree in 2013.

For reasons stated in Roman numeral III,

defendants and Ditech are correct.

As accurately stated by

Ditech, Massachusetts law only requires that the foreclosing
entity hold the mortgage and be authorized by the note holder to
foreclose.

(Docket Entry # 37); Eaton, 969 N.E.2d at 1128-1131;

Shea v. Federal National Mortgage Association, 31 N.E.3d at
1124.

Consequently, the fact that BANA did not hold the

promissory note when it assigned the mortgage to Green Tree in
2013 does not render the mortgage assignment void or voidable.
In addition, the section 35B and section 35C affidavit establish
that Ditech is the authorized agent of the note holder.

See

Eaton, 969 N.E.2d at 1131 (agency principles allow foreclosing
mortgagee to act as agent of the note holder).
As a final matter, Ditech argues that the foreclosure has
not occurred.

As a result, plaintiffs cannot maintain a

wrongful foreclosure claim, according to Ditech.
# 37, n.4).

(Docket Entry

Where, as here, there has been no foreclosure, the

wrongful foreclosure claim is subject to dismissal.

See Rice v.

Santander Bank, N.A., 196 F.Supp.3d 146, 152 (D.Mass. 2016)
(dismissing unlawful foreclosure claim partly “because Santander
has not foreclosed on the property”); In re Jackson, 545 B.R.
62, 72 (Bankr.D.Mass. 2016) (“[t]here can be no wrongful
foreclosure claim because there was never a foreclosure sale”).

36

The argument therefore provides an alternative basis to dismiss
the wrongful foreclosure claim against Ditech.
In short, plaintiffs fail to set out a plausible wrongful
foreclosure claim.

As argued by defendants and Ditech, the 2011

and 2013 recorded mortgage assignments comply with section 54B,
they provide a chain of title to the mortgage and the promissory
note and mortgage can be split prior to the foreclosure notice
and foreclosure sale.

As explained, the unrecorded sale of the

mortgage to Fannie Mae REMIC Trust 2006-37 prior to the 2011
recorded assignment by MERS does not destroy this chain of
title.

Ditech also holds the promissory note, indorsed in

blank, on behalf of Fannie Mae, the holder.

Count Four is

subject to a Rule 12(b)(6) dismissal.
V.

Chapter 93A Claim
Defendants do not address the merits of Count Five because

the court denied the preliminary injunction motion.
Entry # 43, n.5).

(Docket

Accordingly, the chapter 93A claim against

defendants in Count Five remains in this action.

Construing

Count Five as a claim for injunctive relief, Ditech argues that
it is subject to a Rule 12(b)(6) dismissal because “‘[a]n
injunction is not a cause of action, but a remedy.’” (Docket
Entry # 37, p. 9) (quoting Matt v. HSBC Bank, 968 F.Supp.2d 351,
356 (D.Mass. 2013)).

37

Ditech is correct that “injunctive relief is not a standalone cause of action under Massachusetts or federal law.”
Payton v. Wells Fargo Bank, N.A., 2013 WL 782601, at *6 (D.Mass.
Feb. 28, 2013).

That said, Ditech overlooks the chapter 93A

claim pleaded in Count Five.

The complaint is filed pro se and

therefore liberally construed.

See Haines v. Kerner, 404 U.S.

519, 520-521 (1972); accord Erickson v. Pardus, 551 U.S. 89, 94
(2007) (“‘a pro se complaint, however inartfully pleaded, must
be held to less stringent standards than formal pleadings
drafted by lawyers’”).

It is true that the caption of the count

depicts Count Five as an “application for Temporary Restraining
Order and Order to Show Cause Re[:]

Preliminary Injunction.”

(Docket Entry # 1, p. 13) (capitalization and bolding omitted).
One of the six paragraphs in the complaint that is specific to
Count Five, however, states, “This application is made pursuant
to the provisions of M.G.L.c 93A [sic] on the grounds that
Defendants are engaging in deceptive business practices with
respect to Mortgage loan servicing, assignments of note and
mortgage, and attempting to deceptively sell Plaintiffs
property.”

(Docket Entry # 1, ¶ 58).

Liberally construing the

complaint, Count Five therefore raises a chapter 93A claim.
Ditech does not address the claim and, accordingly, it remains
in this action at the present time.
CONCLUSION
38

In accordance with the foregoing discussion, this court
RECOMMENDS15 that defendants’ motion to dismiss (Docket Entry #
42) is ALLOWED as to counts one, two, three and four.16

It is

further RECOMMENDED17 that Ditech’s motion to dismiss (Docket
Entry # 37) Count Four is ALLOWED and Count Five is DENIED
inasmuch as the latter count sets out a chapter 93A claim.
Count Three remains in this action against Ditech18 and Count
Five remains against defendants as explained in Roman numeral V.

_/s/ Marianne B. Bowler_
MARIANNE B. BOWLER
United States Magistrate Judge

15
Any objections to this Report and Recommendation must be
filed with the Clerk of Court within 14 days of receipt of the
Report and Recommendation to which objection is made and the
basis for such objection should be included. See Fed.R.Civ.P.
72(b). Any party may respond to another party’s objections
within 14 days after service of the objections. Failure to file
objections within the specified time waives the right to appeal
the order.
16
The recommended dismissal of Count One is without prejudice.
17
See footnote 15.
18
See footnote 11.
39