Modica v. Wells Fargo Bank, N.A. et al
Judge Rya W. Zobel: Memorandum and ORDER entered granting 8 Motion to Dismiss for Failure to State a Claim; denying 16 Motion for Leave to File Document. Judgment may be entered dismissing the complaint. (Urso, Lisa)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 16-12565-RWZ
U.S. BANK, N.A., AS TRUSTEE FOR CITIGROUP
MORTGAGE LOAN TRUST 2006-WFHE2 ASSET-BACKED
PASS-THROUGH CERTIFICATES, SERIES 2006 WFHE2, and
WELLS FARGO BANK, N.A.
MEMORANDUM AND ORDER
August 29, 2017
Plaintiff Janice Modica, the mortgagor, brought this action in state court against
U.S. Bank, N.A. (“U.S. Bank”), as Trustee for Citigroup Mortgage Loan Trust 2006WFHE2 Asset-Backed Pass-Through Certificates, Series 2006 WFHE2 (the “Trust”)
and Wells Fargo Bank, N.A (collectively “defendants”). On December 21, 2016,
defendants removed the action to this court based on diversity jurisdiction. Docket # 1.
Plaintiff seeks a declaratory judgment that U.S. Bank, as trustee, did not have
the authority to exercise the statutory power of sale under Massachusetts General Law
chapter 244, section 14 to foreclose on plaintiff’s property (Count I). She also asserts
that Wells Fargo violated Massachusetts regulations, 209 C.M.R. 18.21A(2) and 209
C.M.R. 18.22 (Count II), and that U.S. Bank, as trustee, slandered the title of her
property (Count III). Docket # 1-1. Defendants have moved to dismiss the verified
complaint asserting that plaintiff lacks standing to challenge the validity of the mortgage
assignment and that the verified complaint fails to state a claim upon which relief can
be granted. Docket # 8.
The following facts come directly from plaintiff’s verified complaint as well as
documents, including official public records, referenced in, attached to, and central to
the complaint, which were provided by both parties. See Watterson v. Page, 987 F.2d
1, 4 (1st Cir. 1993).
Mortgage, Note, and Assignments
On May 24, 2006, plaintiff executed an adjustable rate promissory note and
mortgage in favor of Wells Fargo in the amount of $360,000 for a property located at
98-100 Lancaster Avenue, Revere, MA 02151 (the “Property”). On April 19, 2010,
Wells Fargo assigned the mortgage and note to U.S. Bank, as Trustee for Citigroup
Mortgage Loan Trust 2006-WFHE2, and on April 20, 2010, the assignment was
recorded in Suffolk County Registry of Deeds. Docket # 1-4, at 50. Wells Fargo filed a
corrective assignment on July 27, 2012, “to fix the scriveners error in the previously
recorded Assignment of Mortgage . . . as it relates to the assignee.” Docket # 1-4, at
44. The corrective assignment identified the assignee as U.S. Bank, N.A., as Trustee
for Citigroup Mortgage Loan Trust 2006-WFHE2, Asset-Backed Pass-Through
Certificates, Series 2006-WFHE2. Id. (emphasis added).
Pooling Service Agreement
The Trust is governed by its Pooling and Servicing Agreement (“PSA”), dated
August 1, 2006, executed among the depositor (Citigroup Mortgage Loan Trust Inc), the
servicer (Wells Fargo), the trust administrator (CitiBank, N.A.), and the trustee (U.S.
Bank). Docket # 1-3. The PSA authorizes the depositor (Citigroup Mortgage Loan
Trust Inc.) to transfer its mortgage loans to the trustee (U.S. Bank), on or before the
closing date of August 1, 2006, or within two years thereafter. Docket # 1-1, at ¶¶
Plaintiff defaulted on her loan beginning in May 2007, but for reasons that were
unexplained in the verified complaint, foreclosure proceedings did not begin until 2016.
See Docket # 1-4, at 2–5 (loan information report stating that foreclosure was referred
on May 17, 2007, and account had been past due for 3,189 days). On November 9,
2016, Wells Fargo’s counsel sent a notice letter to plaintiff, enclosing the Notice of
Mortgagee’s Sale of Real Estate and informing her that the Property was scheduled to
be sold at a public auction on December 14, 2016. Docket # 1-2, at 2–3. The letter
also included a “Certification Pursuant to Massachusetts 209 C.M.R. 18.21A(2)(c),”
which recited that the loan on the Property was in default. Id. at 4. The Certification
further identified the chain of title of the mortgage, reflecting the two mortgage
assignments, and identified U.S. Bank, as trustee for the Trust, as the current owner of
the note and assignee of the mortgage. Id. at 4–5.
About one month later, in December 2016, plaintiff filed a verified complaint in
the superior court against defendants asserting three counts related to U.S. Bank’s
foreclosure on the Property. Defendants removed the matter to federal court and now
seek to dismiss the verified complaint.
Standard of review
“To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. For purposes of a motion to
dismiss, the court accepts all well-pleaded factual allegations as true and draws all
reasonable inferences in the plaintiff’s favor. See Rodriguez-Reyes v. MolinaRodriguez, 711 F.3d 49, 52--53 (1st Cir. 2013).
Count 1 – Declaratory Judgment
Plaintiff alleges that U.S. Bank, as trustee, “has not established that it has met all
statutory necessary condition precedents to invoke [the power of sale] under G.L. c.
244, § 14 against Plaintiff.” Docket # 1-1, at ¶ 19(2). She challenges compliance of the
transfer of the mortgage and note into the Trust with the “controlling terms of its
Governing Instrument PSA, in order to be among the held corpus assets,” id. at ¶ 21;
see also id. at ¶ 62 (alleging that failure by U.S. Bank to establish that the note and
mortgage were “legally conveyed to [U.S. Bank] under the terms of the Defendant
trust’s Governing Instrument undeniably precludes [U.S. Bank] from claiming as a
proper statutory party to invoke the remedy under G.L. c. 244, § 14.”).
It appears that plaintiff has put forth two primary arguments in support of her
claim. First, she alleges that in order for U.S. Bank, as trustee, to have authority to
enforce plaintiff’s note and mortgage as a “legally held corpus asset” for the Trust, the
Trust must first have held plaintiff’s note and mortgage in order to convey it to U.S.
Bank per the terms of the PSA. Id. at ¶¶ 23–27, 61–63; see also id. at ¶ 109 (arguing
that “[t]here is no document that establishes that the Plaintiff’s note, or mortgage, was
ever a legally held asset of the Defendant Trust’s corpus assets”). Second, she alleges
that the two assignments in 2010 and 2012 “indisputably contravene the terms of the
[PSA],” because “they both indisputably recite that such transfer[s] occurred more than
two (2) years after the ‘Closing Date’ of August 1, 2006, and also after the August 01,
2008 date to be a ‘Qualified Substitute Mortgage Loan.” Id. at ¶ 50. Thus, she claims,
the “recorded assignments that the Defendants purport to rely upon; [sic] indisputably
contravene the terms of the [PSA] for any legal transfer of the ‘power of sale’ in
Plaintiff’s mortgage to be a current legally held corpus asset.” Id. at ¶ 55.
Central to plaintiff’s claim are allegations that the assignments fail to comply with
the terms of the PSA. Defendants argue that plaintiff lacks standing as a mortgagor to
challenge the validity of the assignments.1 They are correct. “[A] mortgagor has
standing to challenge a mortgage assignment as invalid, ineffective, or void . . . .”
Culhane v. Aurora Loan Services of Nebraska, 708 F.3d 282, 291 (1st Cir. 2013).
However, “[u]nder Massachusetts law, it is clear that claims alleging disregard of a
trust’s PSA are considered voidable, not void,” Butler v. Deutsche Bank Trust Co.
Plaintiff seeks to distinguish the facts and allegations of her case, see e.g., Docket # 1-1,
at ¶¶ 64–70, from a long line of cases in this circuit and Massachusetts state courts that have held that
m ortgagors lack standing to challenge the validity of assignm ents based on alleged non-com pliance with
the PSA, and disputes defendants’ characterization of her allegation as a “breach of contract” theory.
Docket # 10, at 2. But plaintiff’s claim — even packaged under a “trust law principal” theory— is no
different. She explicitly acknowledges that defendants’ failure to “com port with the express term s of the
[PSA] . . . creates the foundational legal basis for the plausibility of Plaintiff’s claim for relief under
Massachusetts Law as alleged within Count I.” Docket # 10, at 8. Although plaintiff devotes m uch paper
to escape this conclusion, the attem pt is of no avail. See Rosenberg v. W ells Fargo Bank N.A., 207
F.Supp.3d 112, 114 (D. Mass. 2016) (“In all probability, the opaqueness of [plaintiff’s] factual assertions
and the befuddling legal argum ents propounded in support of her claim s are nothing m ore than a futile
attem pt to m ask the reality that her case is not distinguishable.”).
Americas, 748 F.3d 28, 37 (1st Cir. 2014) (citations omitted). Accordingly, plaintiff lacks
standing to challenge the validity of the assignments because her allegations, even if
taken as true, would leave the assignments only voidable, not void.2 Id. (affirming lower
court’s dismissal of mortgagor’s claim for lack of standing to challenge an assignment
that was voidable, not void).
Count II – Violation of 209 C.M.R. 18.21A(2) and 209 C.M.R. 18.22
Plaintiff next alleges that Wells Fargo, as servicer of the loan, violated
Massachusetts regulations 209 C.M.R. 18.21A(2) and 209 C.M.R. 18.22. 209 C.M.R.
A third party loan servicer shall certify in writing the basis for asserting that
the foreclosing party has the right to foreclose, including but not limited to,
certification of the chain of title and ownership of the note and mortgage
from the date of the recording of the mortgage being foreclosed upon. The
third party loan servicer shall provide such certification to the borrower
with the notice of foreclosure, provided pursuant to M.G.L. c. 244, § 14
and shall also include a copy of the note with all required endorsements.
209 C.M.R. 18.22 provides that a violation of 209 C.M.R. 18.21A(2) constitutes a
violation of Chapter 93A. Plaintiff, however, does not bring a Chapter 93A claim
against Wells Fargo in Count II of her complaint. See Docket # 1-1, at 16 (cause of
action titled, “Count II - Violation of 209 C.M.R. 18.21(A)(2); 209 C.M.R. 18.22").
Plaintiff also seeks to challenge the assignm ents under New York law, specifically arguing
that under New York Estates, Powers and Trusts Law, section 7-2.4, “any act by a Trustee in
contravention of the term s of a trust represents a void transaction.” Docket # 1-1, at ¶ 54. First, plaintiff
fails to provide any legal analysis to support her contention that New York law should govern whether the
assignm ents were void. Cf. U.S. Bank Nat’l Assoc. v. Bolling, 57 N.E.3d 1033, 1035 (Mass. 2016)
(“Massachusetts applies its own law to claim s and defenses involving real property located within its
borders.”). Regardless, the outcom e of standing would be the sam e under New York law, see Rajam in v.
Deutsche Bank Nat. Trust Co., 757 F.3d 79, 88 (2d Cir. 2014) (holding that “under New York law, only the
intended beneficiary of a private trust m ay enforce the term s of the trust”), as would the finding that any
failure to com ply with the term s of the PSA would not render the assignm ent void but voidable because
“[u]nder New York law, unauthorized acts by trustees are generally subject to ratification by the trust
beneficiaries,” id. (citations om itted).
In any event, Wells Fargo, as servicer of the loan, complied with the terms of 209
C.M.R. 18.21A(2)(c). In the Certification that Wells Fargo’s counsel sent to plaintiff, it
provided the chain of title and ownership of the mortgage and note, along with the
notice of foreclosure. See Docket # 1-2. Plaintiff alleges, however, that Wells Fargo
failed to identify the “entire chain,” Docket # 1-1, at ¶ 121, of title because it failed to
identify “all intermediary entities claiming to have ‘purchased’ Plaintiff’s Mortgage Loan,
to the foreclosing claimant Trustee.” Id. at ¶ 123. The premise of this argument
appears to be based on plaintiff’s construction of Exhibit D to the PSA (Form of
Assignment and Recognition Agreement), which she alleges reflects that on March 1,
2006, “after the ‘origination’ of Plaintiff’s Mortgage Loan, [Wells Fargo] immediately sold
the ownership of the Plaintiff’s Note, Mortgage, and right to enforce the power of sale to
Citigroup Global Markets Realty Corp.,” Docket # 1-1, at ¶ 25, who would assign the
mortgage loans to the depositor (Citigroup Mortgage Loan Trust Inc.), who would then
transfer the mortgage loans to the trustee (U.S. Bank). It is unclear how Wells Fargo
could have sold plaintiff’s note and mortgage to Citigroup Global Markets Realty Corp.
on March 1, 2006, nearly two months prior to the loan origination date. Nonetheless,
plaintiff does not contest that Wells Fargo was the original mortgagee of plaintiff’s note
and mortgage, and thus, had authority to assign the mortgage instruments directly to
U.S. Bank as trustee of the Trust. See Docket # 1-1, at ¶ 63 (acknowledging Wells
Fargo as the original mortgagee). Thus, “[i]f intermediate transfers did occur, but were
not recorded, Plaintiff still has no claim. He received a certification with a chain of title
showing the foreclosing party's basis for asserting the right to foreclose.” Johnson v.
Wilmington Trust, N.A., No. 16-cv-10422-IT, 2016 WL 5109510, at * 5 (D. Mass. Sept.
20, 2016); see also In re Samuels, 415 B.R. 8, 22 (Bankr. D. Mass. 2009) (“Even if this
direct assignment [from Wells Fargo to U.S. Bank, as trustee of the Trust] were
somehow violative of the PSA, giving rise to unfavorable . . . contractual . . .
consequences, neither the PSA nor those consequences would render the assignment
itself invalid.”). Accordingly, Count II must be dismissed.
Count III – Slander of Title
Plaintiff concedes that her slander of title claim is wholly derivative of her claim
discussed in Count I. Docket # 10, at 20. As stated above, Count I fails and thus
Count III fails as a matter of law.
For the reasons stated above, Defendants’ Motion to Dismiss the Verified
Complaint (Docket # 8) is ALLOWED.
Plaintiff’s Motion for Leave to File Sur-Reply (Docket # 16) is DENIED.
Judgment may be entered dismissing the complaint.
August 29, 2017
/s/Rya W. Zobel
RYA W . ZOBEL
SENIOR UNITED STATES DISTRICT JUDGE
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