Carvalho v. JPMorgan Chase Bank N.A.

Filing 80

Chief Judge Patti B. Saris: MEMORANDUM AND ORDER:Chase's motion for summary judgment (Docket No. 61 ) is ALLOWED.SO ORDERED.(Lara, Miguel)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
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Plaintiff,
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v.
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JPMORGAN CHASE BANK, N.A.,
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Defendant.
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___________________________________)
MICHAEL CARVALHO,

Civil Action
No. 17-10723-PBS

MEMORANDUM AND ORDER
April 30, 2019
Saris, C.J.
INTRODUCTION
Plaintiff Michael Carvalho has sued Defendant JPMorgan
Chase Bank, N.A. (“Chase”) for claims arising out of a mortgage
on a property in Rehoboth, Massachusetts. Carvalho executed a
note and mortgage on the property in 2003 and received a loan
modification from Chase in April 2014. Since June 2014, he has
failed to make timely payments on his mortgage, and he stopped
making any payments in July 2015. In light of his default, Chase
foreclosed on the property in May 2018. Carvalho alleges Chase
(1) “cancelled” the loan modification; (2) induced him to make
mortgage payments in reliance on the loan modification; and
(3) lacked standing to foreclose on his home.

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After hearing, the Court ALLOWS Chase’s motion for summary
judgment (Docket No. 61).
BACKGROUND
The following facts are undisputed, except where otherwise
noted.
Carvalho purchased the property located at 279 Fairview
Avenue, Rehoboth, Massachusetts in 1999. On October 22, 2003, he
executed a note in the amount of $167,925 in favor of First
Horizon Home Loan Corporation (“First Horizon”). On the same
day, he granted First Horizon a mortgage on the property to
secure the note.
On February 28, 2009, First Horizon assigned the mortgage
to MetLife Home Loans (“MetLife”). MetLife subsequently assigned
the mortgage to Chase on March 13, 2013. In addition to holding
the mortgage, Chase states it services the note on behalf of the
Federal National Mortgage Association (“Fannie Mae”).
In October 2013, Carvalho submitted a request for mortgage
assistance to Chase. In response, Carvalho and Chase executed a
loan modification agreement in April 2014. The loan modification
provided Carvalho with a lower monthly payment and longer
amortization period. In exchange for these more favorable terms,
Carvalho promised to make monthly payments of principal and
interest beginning on May 1, 2014.

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Carvalho started to miss timely and full loan payments in
June 2014, a month after the loan modification went into effect.
He submitted another request for mortgage assistance on October
5, 2014, along with a letter two weeks later in which he asked
for another loan modification with a lower interest rate and
forgiveness for his delinquent payments. He continued to miss
payments and stopped paying altogether in July 2015. He alleges
that he received notice at some point between June 2014 and July
2015 that Chase had “cancelled” the 2014 loan modification.
Chase claims it has no record of cancelling the modification.
On June 1, 2016, Chase sent Carvalho notice of its intent
to foreclose. Chase held a foreclosure auction on May 29, 2018
after Carvalho failed to cure his default. Hanscom Federal
Credit Union purchased the property at the foreclosure sale for
$225,000.
On March 24, 2017, Carvalho sued Chase in state court. His
complaint includes five causes of action: (1) breach of contract
and breach of the covenant of good faith and fair dealing,
(2) promissory estoppel, (3) lack of standing to foreclose,
(4) quieting title, and (5) declaratory judgment and injunctive
relief. Chase removed this action to federal court on April 25,
2017. After discovery, Chase moves for summary judgment on all
Carvalho’s claims.

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STANDARD OF REVIEW
Summary judgment is appropriate when 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
dispute exists where the evidence “is such that a reasonable
jury could resolve the point in the favor of the non-moving
party.” Rivera-Rivera v. Medina & Medina, Inc., 898 F.3d 77, 87
(1st Cir. 2018) (quoting Cherkaoui v. City of Quincy, 877 F.3d
14, 23-24 (1st Cir. 2017)). A material fact is one with the
“potential of changing a case’s outcome.” Doe v. Trs. of Bos.
Coll., 892 F.3d 67, 79 (1st Cir. 2018). “The court must view the
facts in the light most favorable to the non-moving party and
draw all reasonable inferences in [his] favor.” Carlson v. Univ.
of New Eng., 899 F.3d 36, 43 (1st Cir. 2018).
The burden on a summary judgment motion first falls on the
movant to identify “the portions of the pleadings, depositions,
answers to interrogatories, admissions, and affidavits, if any,
that demonstrate the absence of any genuine issue of material
fact.” Irobe v. U.S. Dep’t of Agric., 890 F.3d 371, 377 (1st
Cir. 2018) (quoting Borges ex rel. S.M.B.W. v. Serrano-Isern,
605 F.3d 1, 5 (1st Cir. 2010)). The movant can meet this burden
“either by offering evidence to disprove an element of the
plaintiff’s case or by demonstrating an ‘absence of evidence to
support the non-moving party’s case.’” Rakes v. United States,
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352 F. Supp. 2d 47, 52 (D. Mass. 2005) (quoting Celotex Corp. v.
Catrett, 477 U.S. 317, 325 (1986))). If the movant meets this
“modest threshold,” the burden shifts to non-movant to “point to
materials of evidentiary quality” to demonstrate that the trier
of fact could reasonably resolve the issue in his favor. Irobe,
890 F.3d at 377. Summary judgment is inappropriate if the nonmovant identifies “’significantly probative’ evidence favoring
his position. Id. (quoting Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 249-50 (1986)).
DISCUSSION
I.

Breach of Contract and Breach of the Covenant of Good Faith
and Fair Dealing (Count I)
Carvalho alleges that Chase committed breach of contract by

“cancelling” the 2014 loan modification (Count I). A successful
breach of contract claim requires the plaintiff to show that
there was a valid contract between the parties, that he “was
ready, willing, and able to perform his . . . part of the
contract,” and that the defendant breached the contract and
caused him harm. Bulwer v. Mount Auburn Hosp., 46 N.E.3d 24, 39
(Mass. 2016). There is no dispute that the 2014 loan
modification was a valid contract.
Chase argues that the record is devoid of any evidence that
it cancelled the loan modification. According to an authorized
signer who reviewed Carvalho’s file, Chase has no record of ever

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doing so. For his part, Carvalho has provided inconsistent
accounts of how he knows that the modification was cancelled. He
has variously explained that he received a letter cancelling the
modification in July 2014, was told that Chase was cancelling
the modification by a Chase representative in July 2015, and was
informed by a loan officer that the loan no longer appeared on
his credit report.
Even if Chase did cancel the modification, however, the
undisputed facts demonstrate that Carvalho was not “ready,
willing, and able to perform his . . . part of the contract.”
Bulwer, 46 N.E.3d at 39. Carvalho stopped making complete and
timely payments on his loan in June 2014, before he alleges
Chase cancelled the modification. Carvalho’s nonpayment shows
that he was not “in a position to obtain the benefit of the
contract, but for the breach.” Frostar Corp. v. Malloy, 823
N.E.2d 417, 428 (Mass. App. Ct. 2005).
Carvalho’s claim that Chase breached the covenant of good
faith and fair dealing fails for the same reason. “The covenant
of good faith and fair dealing ‘requires that neither party
shall do anything that will have the effect of destroying or
injuring the right of the other party to the fruits of the
contract.’” Buffalo-Water 1, LLC v. Fid. Real Estate Co., 111
N.E.3d 266, 279 (Mass. 2018) (quoting T.W. Nickerson, Inc v.
Fleet Nat’l Bank, 924 N.E.2d 696, 704 (Mass. 2010)). Carvalho
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had no right to his lower monthly payments once he failed to
make complete and timely payments. Furthermore, Carvalho
provides no evidence to support his vague allegation in the
complaint that Chase representatives gave him faulty information
about the amount he owed on his loan. Chase is therefore
entitled to summary judgment on Count I.
II.

Promissory Estoppel (Count II)
In Count II, Carvalho seeks to recover via promissory

estoppel, alleging that Chase’s offer of the 2014 loan
modification induced him to make monthly payments. Because
Carvalho and Chase entered into an enforceable contract, he does
not have a cognizable claim for promissory estoppel. See Malden
Police Patrolman’s Ass’n v. Malden, 82 N.E.3d 1055, 1064 (Mass.
App. Ct. 2017). Furthermore, a claim for promissory estoppel
requires “an act or omission . . . in reasonable reliance on the
representation.” Anzalone v. Admin. Office of Trial Court, 932
N.E.2d 774, 786 (Mass. 2010) (quotation omitted). Carvalho did
not act in reliance on Chase’s promise of a loan modification.
Instead, he almost immediately stopped paying his loan payments
in full and on time. Accordingly, the Court grants Chase summary
judgment on Count II.
III. Lack of Standing to Foreclose (Count III)
In Count III, Carvalho claims Chase lacked standing to
foreclose on his property. A valid foreclosure by power of sale
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requires that the foreclosing party hold the mortgage and also
either own the note or act on behalf of the owner of the note.
Galiastro v. Mortg. Elec. Registration Sys., Inc., 4 N.E.3d 270,
275 (Mass. 2014). There is no dispute Chase holds the mortgage
via an assignment from MetLife, who received the mortgage via
assignment from First Horizon. Carvalho alleges in his complaint
that the 2013 assignment is void because a power of attorney was
not recorded prior to assignment. There is no such requirement,
and Carvalho’s citation to Ramos v. Jones, No. 13 MISC
479025(AHS), 2015 WL 653260 (Mass. Land Ct. Feb. 12, 2015), is
inapposite.
Carvalho also alleges in his complaint that the foreclosure
was invalid because Fannie Mae, not Chase, owns the note. Since
Massachusetts law allows a mortgagee to foreclose as long as it
has authorization from the owner of the note, see Galiastro, 4
N.E.3d at 275, he opposes summary judgment by arguing instead
that Chase has failed to put forth sufficient evidence to
demonstrate that Fannie Mae owns the note and has authorized
Chase to foreclose on the property.
In support of its motion for summary judgment, Chase
submitted an affidavit from a vice president that was filed with
the registry of deeds and indicates that Chase was authorized by
the owner of the note to foreclose. Such an affidavit is one way
for a foreclosing mortgage holder to prove it is acting on
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behalf of the owner of the note. See Rice v. Wells Fargo Bank,
N.A., 2 F. Supp. 3d 25, 33 (D. Mass. 2014); Eaton v. Fed. Nat’l
Mortg. Ass’n, 969 N.E.2d 1118, 1133 n.28 (Mass. 2012). Chase
also produced an affidavit from an authorized signer based on
his review of Carvalho’s file that states that Chase services
the note on behalf of Fannie Mae, the owner of the note.
Carvalho assails this latter affidavit for lacking the
underlying documentation, but “no evidentiary rule prohibits a
witness from testifying to a fact simply because the fact can be
supported by written documentation.” Rodríguez v. Señor Frog’s
de la Isla, Inc., 642 F.3d 28, 34 (1st Cir. 2011) (cleaned up).
Finally, Carvalho admitted in the complaint that Fannie Mae owns
the note and at his deposition that Chase has serviced his
mortgage loan. Chase’s evidence of Fannie Mae’s ownership of the
note is sufficient to meet its initial burden on summary
judgment.
Carvalho tries to create a genuine dispute of material fact
by pointing to inconsistencies in the record about Fannie Mae’s
relationship to the note. Chase has variously described Fannie
Mae as the note’s “owner,” “holder,” and “investor,” but
Carvalho gives no reason to believe these terms have different
meanings in this context. See Eaton, 969 N.E.2d at 1121 n.2
(using “the term ‘note holder’ . . . to refer to a person or
entity owning the ‘mortgage note’”). Although Chase’s documents
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sometimes refer to the owner as “FNMA MBS Express,” this entity
is indisputably part of Fannie Mae. The 2009 assignment of the
mortgage to MetLife purports to assign the note as well, even
though Fannie Mae told Carvalho it acquired the note on November
1, 2003. The 2009 assignment appears to be on a form document,
however, and does not specifically refer to Carvalho’s note.
Finally, Chase’s failure to respond to discovery requests about
Fannie Mae and ownership of the note does not raise a genuine
dispute. If Carvalho was displeased with Chase’s response, he
should have moved to compel. In sum, Carvalho puts forth only
“unsupported speculation” that Fannie Mae does not own his note,
which is insufficient to create a genuine dispute of fact.
Velázquez-Pérez v. Developers Diversified Realty Corp., 753 F.3d
265, 270 (1st Cir. 2014) (quoting Triangle Trading Co. v. Robroy
Indus., Inc., 200 F.3d 1, 2 (1st Cir. 1999)).
Because there is no genuine dispute that Fannie Mae owns
the note and that Chase holds the mortgage and is authorized to
service the loan on Fannie Mae’s behalf, Chase is entitled to
summary judgment on Count III.
IV.

Quieting Title (Count IV)
In Count IV, Carvalho seeks to quiet title on the basis

that the assignment of the mortgage to Chase and the subsequent
foreclosure were invalid. A plaintiff must have “both actual
possession and the legal title” to maintain a quiet title
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action. Rezende v. Ocwen Loan Servicing, LLC, 869 F.3d 40, 43
(1st Cir. 2017) (quoting Daley v. Daley, 14 N.E.2d 113, 116
(Mass. 1938)). Under Massachusetts law, “when a person borrows
money to purchase a home and gives the lender a mortgage, the
homeowner-mortgagor retains only equitable title in the home.”
U.S. Bank Nat’l Ass’n v. Ibanez, 941 N.E.2d 40, 51 (Mass. 2011).
Legal title to the property rests with the mortgagee. Id.
Accordingly, “a quiet title action is not an avenue open to a
mortgagor whose debt is in arrears.” Flores v. OneWest Bank,
F.S.B., 172 F. Supp. 3d 391, 396 (D. Mass. 2016) (quoting Oum v.
Wells Fargo, N.A., 842 F. Supp. 2d 407, 412 (D. Mass. 2012)). It
is undisputed Carvalho has not paid off his mortgage and stopped
making his monthly payments in 2014. He does not have legal
title to the property and cannot maintain a quiet title action.
Carvalho’s argument that a mortgagor actually does has
standing to bring a quiet title claim is without merit. He cites
to Barrasso v. New Century Mortgage Corp. for the proposition
that “there is no jurisdictional requirement to plead record
title” in a quiet title claim. No. 12 MISC 461715(HPS), 2015 WL
1880559, at *4 (Mass. Land Ct. Apr. 14, 2015), aff’d in part and
vacated in part, 69 N.E.3d 1010 (Mass. App. Ct. 2017). This
discussion in Barrasso concerned the requirements for
jurisdiction over a defendant in a quiet title action, not the

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standard for a plaintiff’s standing. Id. Chase is therefore
entitled to summary judgment on Count IV.
V.

Declaratory Judgment and Injunctive Relief (Count V)
Carvalho’s final claim seeks a declaratory judgment and

injunctive relief (Count V). He does not claim any substantive
basis for this request other than the claims set forth in Counts
I through IV. Declaratory and injunctive relief are remedies,
not independent causes of actions. See, e.g., Mass. State Police
Commissioned Officers Ass’n v. Commonwealth, 967 N.E.2d 626, 631
n.9 (Mass. 2012) (noting that Massachusetts Rule of Civil
Procedure 65 “establishes a procedure for seeking an injunction
that requires a separate legal basis”). Accordingly, Chase is
entitled to summary judgment on Count V.
ORDER
Chase’s motion for summary judgment (Docket No. 61) is
ALLOWED.
SO ORDERED.

/s/ PATTI B. SARIS
Patti B. Saris
Chief United States District Judge

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