Conrad v. Caliber Home Loans, Inc. et al

Filing 37

Judge F. Dennis Saylor, IV: ORDER entered. Memorandum and Order on Motion for Summary Judgment. Defendants' motion for summary judgment is GRANTED. This matter, which now consists only of Court Six, is hereby REMANDED to the Essex County Superior Court.(Pezzarossi, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
_____________________________________
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CINDY COLBERT CONRAD,
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Plaintiff,
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v.
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CALIBER HOME LOANS, INC.;
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U.S. BANK TRUST, N.A., as trustee for )
LSF9 MASTER PARTICIPATION
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TRUST; and JONATHAN CODY,
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Defendants.
)
_____________________________________)

Civil Action No.
16-12524-FDS

MEMORANDUM AND ORDER ON MOTION FOR SUMMARY JUDGMENT
SAYLOR, J.
This is an action alleging unlawful foreclosure and destruction of property. In December
2013, plaintiff Cindy Colbert Conrad defaulted on a loan secured by a mortgage on her home. In
September 2016, the mortgagee, U.S. Bank Trust, N.A., as trustee for LSF9 Master Participation
Trust, (“U.S. Bank”) conducted a foreclosure sale. Conrad has brought five counts under state
and federal law against U.S. Bank and the loan servicer, Caliber Home Loans, Inc., alleging that
the foreclosure sale was unlawful and seeking to enjoin the transfer of the property. She has
brought a sixth count for destruction of property against Jonathan Cody, the ultimate purchaser
of the property.
Prior to any discovery taking place, defendants U.S. Bank and Caliber moved for
summary judgment. For the following reasons, the motion for summary judgment will be
granted, and the Court will remand the remaining claim against Cody sua sponte to state court.

I.

Background
On August 25, 2005, Cindy Colbert Conrad executed a mortgage for $350,000 on her

home located at 25 Curtis Road in Boxford, Massachusetts (“the property”). (Id. ¶ 4).1 The
mortgage secured a note to Monument Mortgage Company, Inc. (Def. SMF ¶ 1). U.S. Bank is
the current mortgagee. (Id. ¶ 2). Defendant Caliber Home Loans, Inc., is the servicer for the
mortgage loan. (Mansi Aff., Ex. G). According to the complaint, Jonathan Cody was the
ultimate potential purchaser following the foreclosure sale. (Compl. ¶ 17).
A.

Foreclosure Claims

The mortgage designated Cindy Conrad as the borrower; Monument Mortgage Company,
Inc. as the lender; and the Mortgage Electronic Registration Systems, Inc. (“MERS”) as the
mortgagee and nominee for Monument and its successors and assigns. (Mansi Aff., Ex. C at 1).
On January 17, 2013, MERS assigned the mortgage to Wells Fargo Bank, N.A. (Id. Ex. D). On
April 25, 2016, Wells Fargo assigned the mortgage to U.S. Bank. (Id. Ex. E).
The note includes an allonge dated August 25, 2005. (Id. Ex. B). The allonge endorses
the note from Monument to Ohio Savings Bank. Robert Diamond, an authorized agent of Ohio
Savings Bank, then endorsed the note in blank. (Id.). On August 25, 2015, U.S. Bank took
possession of the note through its document custodian, Wells Fargo. (Def. SMF ¶ 2). U.S. Bank
has continuously possessed the note since that date through its custodian. (Id.).
On December 1, 2013, Conrad defaulted on the loan. (Id. ¶ 7). On January 30, 2015,
Wells Fargo, the prior loan servicer, sent a 150-day right-to-cure notice to Conrad at the property
by certified and first-class mail. (Id. ¶ 8; Mansi Aff. ¶ 14, Ex. F). Conrad did not cure the
default. (Def. SMF ¶ 9).

Plaintiff has not filed a response to defendants’ statement of material facts. Under Local Rule 56.1, any
unopposed statement made in a statement of material facts is “deemed for purposes of the motion to be admitted.”
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On June 14, 2016, Caliber, acting pursuant to a limited power of attorney, recorded an
affidavit certifying compliance with Mass. Gen. Laws. ch. 244, §§ 35B and 35C in the Southern
Essex County Registry of Deeds. (Mansi Aff., Ex. G). The power of attorney authorized Caliber
to, among other things, “[d]emand, sue for, recover, collect and receive each and every sum of
money, debt, account and interest . . . belonging to or claimed by [U.S. Bank], and to use or take
any lawful means for recovery by legal process or otherwise.” (Id. Ex. A).
The complaint alleges that on September 12, 2016, Harmon Law Offices conducted a
foreclosure sale of the property on behalf of U.S. Bank. (Compl. ¶ 14). It further alleges that a
“Memorandum of Terms and Conditions of Sale” was executed in favor of Siddharth Gehlot for
a purchase price of $382,000. (Id. ¶ 15). According to the complaint, Gehlot’s bid was
ultimately assigned to defendant Jonathan Cody. (Id. ¶¶ 16–17).
B.

Destruction of Property Claim

The complaint alleges that on October 17, 2016, Cody requested that Conrad allow
workers onto the property to “do some ‘yard work.’” (Compl. ¶ 56). Conrad consented to allow
workers to trim the grass and shrubs. (Id. ¶ 57). She was away from home while the work was
being conducted and returned later to discover that the workers had removed “all of her
shrubbery.” (Id. ¶ 58). She contends that the workers’ actions exceeded her authorization and
seeks monetary damages for destruction of property. (Id. ¶ 60).
C.

Procedural Background

On November 22, 2016, plaintiff filed this action in Essex County Superior Court. The
complaint alleges six counts. Counts One through Five are brought against U.S. Bank and
Caliber. In substance, those counts allege that U.S. Bank and Caliber failed to follow proper
procedures in foreclosing on the property. Counts One, Two, Four, and Five allege various state-

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law claims. Count Three alleges a violation of the federal Fair Debt Collection Practices Act
(“FDCPA”).
On December 14, 2016, U.S. Bank and Caliber removed the action to this Court, with
Cody’s assent. The notice of removal asserts federal jurisdiction pursuant to 28 U.S.C. § 1331,
as the complaint alleges a claim arising under the FDCPA. It does not provide any jurisdictional
allegation concerning the state-law claims at issue in the case.
On February 8, 2017, prior to any discovery taking place, defendants U.S. Bank and
Caliber moved for summary judgment as to Counts One through Five. On April 12, 2017, a
hearing was held concerning the motion for summary judgment. At the hearing, plaintiff
voluntarily dismissed Counts Two through Five, including the FDCPA claim. On April 13,
2017, the Court entered an order dismissing those counts. The remaining counts, One and Six,
allege claims arising under state law.
II.

Analysis
A.

Jurisdiction
1.

General Principles

Before proceeding to the merits of the motion for summary judgment, the Court must
first address the issue of subject-matter jurisdiction. Federal courts are courts of limited
jurisdiction. “They possess only those powers granted by [the] Constitution and statute,” and
cannot adjudicate claims absent such power. See, e.g., Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 377 (1994). Accordingly, “[t]he existence of subject-matter jurisdiction is
never presumed.” Fafel v. DiPaola, 399 F.3d 403, 410 (1st Cir. 2005) (quotations omitted). A
federal court has an independent obligation to inquire, sua sponte, into its own subject-matter
jurisdiction and to dismiss a claim if it finds that such jurisdiction is lacking. Fed. R. Civ. P.

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12(h)(3); McCulloch v. Velez, 364 F.3d 1, 5 (1st Cir. 2004).
Such an inquiry is warranted here with respect to both remaining claims. Upon removal,
defendants alleged that jurisdiction over this action is proper pursuant to 28 U.S.C. § 1331,
which provides for jurisdiction over claims arising under federal law. The federal claim has now
been dismissed. Under 28 U.S.C. § 1367, a federal court may exercise supplemental jurisdiction
over a state-law claim that is “so related” to a federal claim that the two claims “form part of the
same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367.
The claims constitute part of the same “constitutional case” if they “derive from a common
nucleus of operative fact” and the plaintiff “would ordinarily be expected to try them [both] in
one judicial proceeding.” United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966); see
also Pejepscot Indus. Park, Inc. v. Maine Cent. R. Co., 215 F.3d 195, 206 (1st Cir. 2000)
(applying United Mine Workers to the context of 28 U.S.C. § 1367).
2.

Count One

Count One alleges a claim for wrongful foreclosure against U.S. Bank and Caliber arising
under state law. The Court has supplemental jurisdiction over Count One because it derives
from the same “common nucleus of operative fact” as the FDCPA claim, and therefore forms
part of the same case or controversy.
However, as noted, the FDCPA claim was dismissed at the hearing concerning this
motion. The dismissal of the lone federal claim in this case does not divest the court of
jurisdiction to hear related state-law claims, but instead “sets the stage for an exercise of the
court's informed discretion.” Roche v. John Hancock Mut. Life Ins. Co., 81 F.3d 249, 257 (1st
Cir. 1996). In determining whether to retain jurisdiction over a state-law claim after all federal
claims have been dismissed, courts consider “concerns of comity, judicial economy,

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convenience, fairness, and the like.” Id.
Here, those concerns point in somewhat different directions. On the one hand, dismissal
of the federal claim occurred relatively early, prior to any discovery being taken, suggesting that
the state court should dispose of the state-law claims. On the other hand, the foreclosure issues
have been fully briefed and argued before this court, and it is relatively clear that plaintiff’s
claim lacks merit. Under the circumstances, remanding the remaining state-law claim would
cause undue delay and would needlessly tax judicial resources. See Sholley v. Town of Holliston,
49 F. Supp. 2d 14, 22 (D. Mass. 1999) (“Where it is clear . . . that Plaintiff's state law claim
would fail before the Massachusetts courts, judicial economy is well served by disposing of the
claim on its merits.”). Accordingly, the Court will exercise its discretion to retain jurisdiction
over the claims brought by Count One of the complaint.
3.

Count Six

Count Six alleges a claim for destruction of property under state law by a Massachusetts
citizen against a Massachusetts citizen. That claim is wholly distinct from the FDCPA claim.
The FDCPA claim alleges that a lender and loan servicer failed to provide plaintiff with proper
notices and a loss-mitigation option prior to foreclosing. By contrast, Count Six alleges that
Cody damaged plaintiff’s property by removing shrubbery. The only connection between the
two claims is that Cody is the potential purchaser of the foreclosed property. That connection is
nearly, if not wholly, irrelevant to the facts that would need to be proved to succeed on either
claim. The discovery needed to investigate and prove each claim is entirely different, and the
outcome of each has no bearing on the outcome of the other. Count Six would not ordinarily be
tried in the same proceeding as the FDCPA claim, because it concerns distinct facts, distinct
parties, and distinct legal theories. Therefore, the two claims do not form part of the same

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constitutional case.
Accordingly, the Court declines to exercise jurisdiction over Count Six, which will be
remanded to state court. Because summary judgment will be granted as to Count One, severance
of Count Six prior to remand will not be necessary.
A.

Motion for Summary Judgment
1.

Standard of Review

The role of summary judgment is to “pierce the pleadings and to assess the proof in order
to see whether there is a genuine need for trial.” Mesnick v. General Elec. Co., 950 F.2d 816,
822 (1st Cir. 1991) (quoting Garside v. Osco Drug, Inc., 895 F.2d 46, 50 (1st Cir. 1990)).
Summary judgment is appropriate when the moving party 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). A genuine issue is “one that must be decided at trial because the evidence,
viewed in the light most flattering to the nonmovant, would permit a rational fact finder to
resolve the issue in favor of either party.” Medina-Munoz v. R.J. Reynolds Tobacco Co., 896
F.2d 5, 8 (1st Cir. 1990) (citation omitted). In evaluating a summary judgment motion, the court
indulges all reasonable inferences in favor of the nonmoving party. See O'Connor v. Steeves,
994 F.2d 905, 907 (1st Cir. 1993). When “a properly supported motion for summary judgment is
made, the adverse party must set forth specific facts showing that there is a genuine issue for
trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (quotations omitted). The nonmoving party may not simply “rest upon mere allegation or denials of his pleading,” but instead
must “present affirmative evidence.” Id. at 256–57.
2.

Count One

Count One alleges a claim for wrongful foreclosure and seeks to set aside the foreclosure

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sale on three grounds: (1) because U.S. Bank and Caliber failed to provide plaintiff with a rightto-cure notice as required by Mass. Gen. Laws ch. 244, § 35A; (2) because Caliber was not
authorized to execute the recorded affidavit certifying compliance with Mass. Gen. Laws ch.
244, §§ 35B and 35C; (3) because there is “no evidence” that U.S. Bank is the holder of the
promissory note.2
a.

Failure to Provide Notice

The complaint alleges that defendants failed to provide plaintiff with a right-to-cure
notice required by Mass. Gen. Laws ch. 244, § 35A. Defendants have submitted uncontroverted
evidence that a 150-day right-to-cure notice was sent by certified and first-class mail on January
30, 2015. (Mansi Aff. ¶ 14, Ex. F). At oral argument concerning this motion, counsel for
plaintiff represented that the notice was never received. However, plaintiff has not submitted an
affidavit, verified complaint, or other relevant evidence in opposition to defendants’ motion for
summary judgment. Counsel’s unsupported statement does not constitute “affirmative evidence”
sufficient to resist a motion for summary judgment. See Anderson, 477 U.S. at 257.
Accordingly, the motion for summary judgment will be granted with respect to the claim
that defendants failed to provide a right-to-cure notice.
b.

Power of Attorney

The complaint further alleges that Caliber executed an affidavit pursuant to Mass. Gen.
Laws ch. 244, §§ 35B and 35C without authority. Plaintiff contends that in executing the
affidavit, Caliber was acting pursuant to a limited power of attorney “attached to the recorded

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In addition to the claims alleged in the complaint, plaintiff advanced additional claims in response to the
motion for summary judgment and at oral argument concerning that motion, including claims that defendants have
failed to show that the notice of sale was published and failed to produce evidence of the § 35B notice sent to
plaintiff. The proper method for raising new allegations is by a motion to amend the complaint, not in response to a
motion for summary judgment. That is particularly true where, as here, plaintiff has provided no evidence to
substantiate any of the claims raised in the complaint or new claims raised in opposition to the motion for summary
judgment. The Court will not, under the circumstances, consider those unpleaded claims.

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affidavit.” Although it is not entirely clear, it appears that plaintiff is referring to a limited power
of attorney from Wells Fargo to Caliber attached to the complaint as “Exhibit E” (“Wells Fargo
POA”). In addition to the Wells Fargo POA, Exhibit E to the complaint includes the affidavit
executed by Caliber pursuant to Mass. Gen. Laws ch. 244, §§ 35B and 35C. If, as the complaint
obliquely suggests, the Wells Fargo POA was attached to the recorded affidavit, it is not clear
why. The affidavit states that Wells Fargo assigned its interest in the mortgage to U.S. Bank, so
at the time the affidavit was recorded, Wells Fargo had no interest in the property. It also states
that Caliber was acting on behalf of U.S. Bank—not Wells Fargo—as the loan servicer.
Therefore, any power of attorney granted by Wells Fargo to Caliber is irrelevant to the affidavit.
In support of their motion for summary judgment, defendants have submitted a copy of a
limited power of attorney from U.S. Bank to Caliber (“U.S. Bank POA”) dated August 5, 2014,
authorizing Caliber to “take any lawful means for recovery by legal process or otherwise.”
(Mansi Aff., Ex. A). The U.S. Bank POA, not the Wells Fargo POA, is the operative power of
attorney concerning the §§ 35B and 35C affidavit. The U.S. Bank POA grants Caliber broad
authority to take actions necessary to recover plaintiff’s mortgage loan. That authority plainly
encompasses the filing of the affidavit. Accordingly, the motion for summary judgment will be
granted with respect to that claim.
c.

Possession of the Note

Finally, the complaint alleges that the foreclosure sale should be set aside because there is
“no evidence” that U.S. Bank is the holder of the promissory note. Under Eaton v. Federal
National Mortgage Association, 462 Mass. 569, 584–86 (2012), a mortgagee seeking to effect a
valid foreclosure by sale under Mass. Gen. Laws ch. 244, § 14, must hold the underlying note or
be an authorized agent of the note holder. U.S. Bank has provided uncontroverted evidence that

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it has held the original note with an allonge, endorsed in blank, since at least August 25, 2015.
Plaintiff did not submit evidence or argument in opposition to defendants’ motion for summary
judgment concerning the allegation that there is “no evidence” that U.S. Bank is the note-holder.
Accordingly, the motion for summary judgment will be granted with respect to that claim.
III.

Conclusion
For the foregoing reasons, defendants’ motion for summary judgment is GRANTED.

This matter, which now consists only of Court Six, is hereby REMANDED to the Essex County
Superior Court.
So Ordered.

/s/ F. Dennis Saylor
F. Dennis Saylor IV
United States District Judge

Dated: April 25, 2017

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