Tucker v. U.S. Bank, N.A. et al
Filing
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Chief Judge Patti B. Saris: MEMORANDUM and ORDER entered. The Court ALLOWS Defendants'motion to dismiss Counts I-III (Docket No. 6 ) and REMANDS Count IV to the Dukes County Superior Court. (Geraldino-Karasek, Clarilde)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
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Plaintiff,
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v.
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U.S. BANK, N.A. AS TRUSTEE FOR
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CITIGROUP MORTGAGE LOAN TRUST,
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INC., 2006-HE3, ASSET BACKED PASS- )
THROUGH CERTIFICATES SERIES
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2006-HE3; WELLS FARGO BANK, N.A.; )
and SERVICELINK FIELD SERVICES,
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Defendants.
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______________________________
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JACQUELINE TUCKER,
Civil Action
No. 17-cv-11909-PBS
MEMORANDUM AND ORDER
February 16, 2018
Saris, C.J.
INTRODUCTION
This is a mortgage foreclosure case involving a summer home
on Martha’s Vineyard. Plaintiff Jacqueline Tucker brought this
action in state court challenging the foreclosure on multiple
grounds, most of which have been rejected multiple times by the
governing caselaw. Defendants are U.S. Bank, N.A., as Trustee
for Citigroup Mortgage Loan Trust, Inc., 2006-HE3, Asset Backed
Pass-Through Certificates, Series 2006-HE3 (“U.S. Bank, as
Trustee”); Wells Fargo Bank, N.A. (“Wells Fargo”); and
ServiceLink Field Services (“ServiceLink”).
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In Count I, Plaintiff seeks a declaratory judgment that
U.S. Bank, as Trustee does not have the authority to foreclose
on her property, pursuant to Mass. Gen. Laws ch. 244, § 14.
Compl. ¶¶ 103-18. In Count II, Plaintiff alleges that the
certification she received from her mortgage loan servicer,
Wells Fargo, failed to comply with 209 Mass. Code Regs.
18.21A(2)(c), constituting a violation of Mass. Gen. Laws ch.
93A. Compl. ¶¶ 119-29. In Count III, Plaintiff asserts that U.S.
Bank, as Trustee slandered the title of her property. Compl. ¶¶
130-38. In Count IV, Plaintiff alleges that agents of Wells
Fargo and ServiceLink trespassed onto and stole her property.
Compl. ¶¶ 139-52.
After an ex parte hearing, the state Superior Court issued
a preliminary injunction to prevent Defendants from executing a
foreclosure auction sale of Plaintiff’s property. Docket No. 14. Defendants U.S. Bank, as Trustee and Wells Fargo subsequently
removed the case to this Court on the basis of diversity
jurisdiction. They moved to dissolve the injunction and to
dismiss Counts I-III of the complaint under Fed. R. Civ. P.
12(b)(6). In its November 20, 2017 order (Docket No. 14), this
Court granted the motion to dissolve the injunction. The motion
to dismiss is now before the Court.
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After hearing, Defendants’ motion to dismiss Counts I-III
(Docket No. 6) is ALLOWED. Count IV is REMANDED to the state
court for lack of subject-matter jurisdiction.
FACTUAL BACKGROUND
The following facts are derived from the complaint, as well
as documents, including official public records, referenced in
and attached to the complaint. See Watterson v. Page, 987 F.2d
1, 3-4 (1st Cir. 1993) (holding that public records and other
essential documents submitted by plaintiffs may be considered as
part of the pleadings).
I.
The Note and Mortgage
On July 31, 2006, Plaintiff executed an adjustable rate
promissory note and mortgage in the amount of $564,000 on her
vacation home, located at 48 Narragansett Avenue, Oak Bluffs,
Martha’s Vineyard, Massachusetts. Compl. ¶¶ 1-2, 5-7. The
original holder of both the note and the mortgage was Flagstar
Bank, N.A. (“Flagstar”). Compl. ¶ 5.
The note was subsequently assigned to New Century Mortgage
Corp. (“New Century”), which, in turn, endorsed the note in
blank and without recourse. Compl. Ex. A, at 5. Both
endorsements are undated.
Meanwhile, the mortgage was assigned by Flagstar to
Mortgage Electronic Registration Systems, Inc. (“MERS”), on
August 17, 2006. Compl. ¶ 10. On October 31, 2011, MERS, styling
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itself “as nominee for Flagstar Bank, its successors and
assigns,” assigned the mortgage to U.S. Bank, as Trustee. Compl.
Ex. E.
On June 19, 2013, MERS executed a Confirmatory Assignment
of Mortgage to U.S. Bank, as Trustee. Compl. Ex. F. The
Confirmatory Assignment avers that it “is being recorded to
amend that Assignment dated 10/31/2011 . . . as that Assignment
incorrectly shows the Assignor’s name to be Mortgage Electronic
Registration Systems, Inc., as nominee for Flagstar Bank, its
successors and assigns, whereas it should show Mortgage
Electronic Registration Systems, Inc.” Compl. Ex. F.
II.
The Pooling and Servicing Agreement
U.S. Bank, as trustee for the Citigroup Mortgage Loan
Trust, Inc., 2006-HE3, Asset Backed Pass-Through Certificates,
Series 2006-HE3 (the “Trust”), was assigned Plaintiff’s mortgage
by MERS. The Trust is governed by a Pooling and Servicing
Agreement (“PSA”).1 Compl. ¶ 52. The parties to the PSA are 1)
Citigroup Mortgage Loan Trust, Inc., as Depositor; 2) U.S. Bank,
as Trustee; 3) four different banks, including Wells Fargo, as
Servicers; and 4) Citibank, N.A., as Trust Administrator. Compl.
“PSAs are securitized trust agreements,” Dyer v. U.S. Bank,
N.A., 141 F. Supp. 3d 149, 154 (D. Mass. 2015), that establish
terms, pursuant to which mortgage loans are pooled together into
a trust to create mortgage-backed securities and subsequently
managed, see BlackRock Fin. Mgmt. Inc. v. Segregated Account of
AMBAC Assur. Corp., 673 F.3d 169, 173 (2d Cir. 2012).
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Ex. G, at 4. The PSA was executed in 2006, five years before
Plaintiff’s mortgage was assigned to U.S. Bank, as Trustee.
Compl. Ex. G, at 8. U.S. Bank, as Trustee holds the note.
III. Foreclosure
Plaintiff began to miss mortgage payments in 2010, entering
into a “Loan Modification Agreement” on November 29 of that
year. Compl. ¶ 13. In August 2014, Defendants notified Plaintiff
of their intention to foreclose on her property, though it
appears that no action was immediately taken. Compl. ¶ 21. In
2015, Plaintiff filed for bankruptcy, a matter which was later
dismissed. Compl. ¶¶ 22-23.
On August 14, 2017, Wells Fargo sent Plaintiff a Notice of
Intention to Foreclose. Compl. Ex. D. The notice informed
Plaintiff that her property would be sold on or after September
15, 2017. Attached to the letter were a copy of the endorsed
note and a “Certification Pursuant to [209 Mass. Code Regs.
18.21A(2)(c)].” The certification recited that the loan was in
default and provided a chart showing the chain of title of each
recorded assignment.
IV.
Trespass
Beginning in 2010, Plaintiff alleges that agents of Wells
Fargo and ServiceLink repeatedly broke into her property. Compl.
¶ 140. On March 10, 2010, the local police “detained and
question [sic] one such intruder.” Compl. ¶¶ 66, 142. During the
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course of these break-ins, Plaintiff’s personal belongings were
damaged or stolen, amounting to an estimated $30,286.40 loss.
Compl. ¶ 148; Docket No. 15 ¶ 5.
LEGAL STANDARD
In analyzing a Rule 12(b)(6) motion to dismiss for “failure
to state a claim upon which relief can be granted,” the Court
accepts all well-pleaded facts in the complaint as true and
draws reasonable inferences in favor of the plaintiffs. Gargano
v. Liberty Int’l Underwriters, Inc., 572 F.3d 45, 48 (1st Cir.
2009). However, the Court does not presume the truth of
conclusory allegations or “bare assertions” of law. Ashcroft v.
Iqbal, 556 U.S. 662, 681 (2009).
In order to survive dismissal, the plaintiff must have
pleaded sufficient facts so as to make his claim for relief
plausible. Id. at 678. This plausibility standard requires
something substantially less than a showing of probability. See
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)(“[A] wellpleaded complaint may proceed even if it strikes a savvy judge
that actual proof of those facts is improbable . . . .”).
Plaintiffs must, however, show something more than that their
claim is merely conceivable. See id. at 570.
DISCUSSION
In Massachusetts, a title theory state, a mortgage is “a
transfer of legal title in a property to secure a debt.” U.S.
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Bank Nat’l Ass’n v. Ibanez, 941 N.E.2d 40, 51 (Mass. 2011).
“Therefore, when a person borrows money to purchase a home and
gives the bank a mortgage, the homeowner-mortgagor retains only
equitable title in the home; the legal title is held by the
mortgagee.” Id. Upon payment of the note by the mortgagor, the
mortgagee’s interest in the property ends. Maglione v.
BancBoston Mortg. Corp., 557 N.E.2d 756, 757 (Mass. App. Ct.
1990). A mortgage note refers to “the promissory note or other
form of debt or obligation for which the mortgage provides
security.” Eaton v. Fed. Nat’l Mortg. Ass’n, 969 N.E.2d 1118,
1121 n.2 (Mass. 2012). A mortgage and its underlying note can be
held by different persons. See id. at 1124. When the mortgage
and note are separated, “the holder of the mortgage holds the
mortgage in trust for the purchaser of the note, who has an
equitable right to obtain an assignment of the mortgage, which
may be accomplished by filing an action in court and obtaining
an equitable order of assignment.” Ibanez, 941 N.E.2d at 54.
A “mortgagee” can lawfully foreclose by power of sale in
Massachusetts. Mass. Gen. Laws ch. 183, § 21; ch. 244, § 14. To
do so, the “mortgagee” must hold both the mortgage and the
“mortgage note,” or act as the authorized agent of the note
holder. Eaton, 969 N.E.2d at 1131.
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I.
Count I – Declaratory Judgment
A.
MERS
Because Plaintiff’s brief is rambling and frequently
unintelligible, the Court relies on the complaint to understand
the core claims. Plaintiff argues that the defendant, U.S. Bank,
as Trustee, did not have the statutory power of sale pursuant to
Mass. Gen. Laws ch. 244, § 14. The complaint and exhibits
indicate that the Trustee held both the mortgage and the
mortgage note prior to the notice of foreclosure.
Plaintiff appears to argue that MERS lacked authority to
assign the mortgage to U.S. Bank, as Trustee, and therefore the
assignment is void. MERS has the legal authority to hold and
transfer title in Massachusetts. See Serra v. Quantum Servicing,
Corp., 747 F.3d 37, 40 (1st Cir. 2014); Perreira v. Bank of N.Y.
Mellon, No. 16-cv-11467, 2016 WL 6963032, at *2 (D. Mass. Nov.
28, 2016); Johnson v. Wilmington Trust, N.A., No. 16-cv-10422,
2016 WL 5109510, at *4 (D. Mass. Sept. 20, 2016); Lindsay v.
Wells Fargo Bank, N.A., No. 12-cv-11714, 2013 WL 5010977, at *710 (D. Mass. Sept. 11, 2013). The First Circuit has rejected the
argument that MERS must hold the beneficial interest in the loan
to transfer the mortgage. See Hayden v. HSBC Bank USA, N.A., 867
F.3d 222, 223-24 (1st Cir. 2017) (citing Dyer v. Wells Fargo
Bank, N.A., 841 F.3d 550, 553-54, 554 n.2 (1st Cir. 2016));
Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 291-94 (1st
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Cir. 2013). The mortgage and the note can and frequently do
travel independently. See Culhane, 708 F.3d at 292 (“[T]he note
and the mortgage . . . exist on separate planes . . . .”).
Plaintiff may be arguing that the 2013 Confirmatory
Assignment of the mortgage from MERS to U.S. Bank, as Trustee
was invalid because it purported to confirm the 2011 assignment
from MERS as “nominee” to U.S. Bank, as Trustee, which was
itself invalid. Compl. ¶¶ 17-20. This argument fails. “Where the
earlier assignment is not in recordable form or bears some
defect, a written assignment . . . that confirms the earlier
assignment may be properly recorded.” Ibanez, 941 N.E.2d at 55.
If MERS’s erroneous identification of itself as “nominee” in
2011 is defective, the second assignment would constitute a
valid correction of the first. See id. at 54-55. Even if the
2011 assignment from MERS “as nominee” rendered it void (rather
than voidable), the title would have been effectively
transferred to the assignee bank according to the terms of the
2013 confirmatory assignment. See Butler v. Deutsche Bank Trust
Co. Ams., No. 12-cv-10337, 2012 WL 3518560, at *9 (D. Mass. Aug.
14, 2012), aff’d, 748 F.3d 28 (1st Cir. 2014).
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B.
Violations of the Pooling and Servicing Agreement 2
Plaintiff asserts in conclusory fashion that the
assignments of her mortgage are somehow at odds with the terms
of the PSA, an agreement to which she is not a party. Compl. ¶¶
52-56. She has no standing to pursue it. A mortgagor in
Massachusetts has standing to challenge a mortgage assignment
that is void. Culhane, 708 F.3d at 291. She has no standing to
challenge an assignment that is “merely voidable at the election
of one party but otherwise effective to pass legal title.” Id.
Assignments that “disregard [the] trust’s PSA” are voidable by a
party to the PSA, but are not void ab initio. Butler v. Deutsche
Bank Trust Co. Ams., 748 F.3d 28, 37 (1st Cir. 2014) (citing
Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 354 (1st Cir.
2013)); accord Jepson v. HSBC Bank USA, N.A., No. 13-1364, 2014
U.S. App. LEXIS 24246, at *1-2 (1st Cir. June 23, 2014);
Rosenberg v. Wells Fargo Bank N.A., 207 F. Supp. 3d 112, 114 (D.
Mass. 2016).
C.
New Century’s Bankruptcy
Lastly, Plaintiff alleges that New Century’s bankruptcy
disrupted the chain of ownership of the note. Compl. ¶¶ 26-33.
Plaintiff asserts that the PSA is a Trust document, not a
contract, and it is governed by New York state common law.
Compl. ¶¶ 48-49. However, she does not develop that argument,
and I do not understand it. See Butler, 748 F.3d at 36
(referring to a similar argument’s “marked lack of coherence”).
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This argument has no merit and has been rejected previously. See
Lindsay, 2013 WL 5010977, at *13. New Century endorsed the note
in blank. Compl. Ex. A, at 5. Under Massachusetts law, “[w]hen
indorsed in blank, an instrument becomes payable to bearer and
may be negotiated by transfer of possession alone until
specially indorsed.” Mass. Gen. Laws ch. 106, § 3-205(b). There
is no dispute that U.S. Bank, as Trustee now bears the note,
which makes it a legal asset of the Trust. See Sampson v. U.S.
Bank N.A., 115 F. Supp. 3d 191, 193-94 (D. Mass. 2015) (drawing
the same conclusion where Washington Mutual endorsed a note in
blank prior to its own receivership and bankruptcy).
II.
Count II – Violations of Certification Regulations
Count II alleges that the “Certification Pursuant to [209
Mass. Code Regs. 18.21A(2)(c)],” attached by Wells Fargo to the
Notice of Intention to Foreclose, was inadequate. Compl. ¶¶ 11929. Violations of Chapter 18 of Title 209 of the Code of
Massachusetts Regulations are actionable as unfair or deceptive
acts under Mass. Gen. Laws ch. 93A. 209 Mass. Code Regs.
18.22(1).
Plaintiff’s claim is predicated on the alleged existence of
intermediate, unrecorded assignments of the mortgage to Fannie
Mae and New Century, which were not included in the
certification. Compl. ¶¶ 121-22. Identical arguments have been
rejected. Modica v. U.S. Bank, N.A., No. 16-cv-12565, 2017 WL
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3725976, at *3 (D. Mass. Aug. 29, 2017) (holding that even if
intermediate transfers did occur but were not recorded,
plaintiff had no claim under the regulation); Johnson, 2016 WL
5109510, at *5. The applicable regulation, 209 Mass. Code Regs.
18.21A(2)(c), requires only that a mortgagor have “received a
certification with a chain of title showing the foreclosing
party’s basis for asserting the right to foreclose.” Johnson,
2016 WL 5109510, at *5. The chain of recorded assignments
provided to Plaintiff here was sufficient. See id.
III. Count III – Slander of Title
Plaintiff next argues that U.S. Bank, as Trustee slandered
her title by recording false assignments of the mortgage with
the Registry of Deeds. Compl. ¶ 133. A slander of title claim
requires the defendant to have maliciously made a false
statement that causes some injury to the plaintiff. Rice v.
Santander Bank, N.A., 196 F. Supp. 3d 146, 156 (D. Mass. 2016).
Where, as here, the defendant holds a mortgage through a series
of valid assignments, that defendant makes no false statement by
recording title. See Modica, 2017 WL 3725976, at *4 (dismissing
slander of title claim as “wholly derivative” of failed
declaratory judgment claim); Cullen v. U.S. Bank Trust, N.A.,
No. 16-cv-12641, 2017 WL 3634089, at *3 (D. Mass. July 12,
2017); Johnson, 2016 WL 5109510, at *5.
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Even if the 2011 assignment that erroneously listed MERS
“as nominee” is seen to be a false statement, there is nothing
in the complaint to suggest that it was recorded with malice.
Indeed, the error was acknowledged and corrected in 2013.
IV.
Count IV – Trespass and Theft of Personal Property
Plaintiff avers that the amount in controversy under Count
IV is $30,286.40. Docket No. 15 ¶ 5. This alone is insufficient
to sustain subject-matter jurisdiction under 28 U.S.C. § 1332.
In light of the dismissal of all other counts, the Court remands
the matter to Dukes County, from which it was removed, pursuant
to 28 U.S.C. § 1447(c).
V.
Sanctions
It is a bedrock principle of our legal system that
attorneys may in good faith argue that previous cases were
decided incorrectly. There comes a time, however, when “legal
contentions” no longer constitute “nonfrivolous argument[s] for
extending, modifying, or reversing existing law.” Fed. R. Civ. P
11(b)(2). Mr. Russell, that time has come.
The convoluted complaint and equally tortuous brief in
opposition to the motion to dismiss rehash arguments that have
been consistently rejected by this Court and the First Circuit.
Mr. Russell has served as counsel of record on fifteen cases,
cited throughout this opinion, in which he advanced one or more
of the same theories now before the Court and lost. Despite
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this, Plaintiff’s counsel moved for an emergency injunction to
prevent foreclosure in Dukes County only four days before the
auction was set to take place, and without providing reasonable
notice to the adverse party. He also did not inform the state
court judge of the adverse caselaw.
Mr. Russell has been repeatedly admonished for his
frivolous arguments. See Hayden, 867 F.3d at 224 (“[M]any of the
arguments advanced by the Haydens’ counsel, who also represented
the borrower in Dyer, mirror the arguments that we rejected in
Dyer.”); Serra, 747 F.3d at 40 (“This argument willfully
disregards our holding in Culhane . . . .”); Rosenberg, 207 F.
Supp. 3d at 114 (“[T]he opaqueness of Rosenberg’s factual
assertions and the befuddling legal arguments propounded in
support of her claims are nothing more than a futile attempt to
mask the reality that her case is not distinguishable.”);
Perreira, 2016 WL 6963032, at *2 (“The First Circuit has chided
Plaintiffs’ attorney for this argument in the past.” (citing
Serra, 747 F.3d at 40)).
Mr. Russell’s efforts waste not only his own clients’
resources, but also those of opposing parties and the Court,
which must try to make sense of the incomprehensible arguments.
If he chooses to push these theories up the bluff again, he does
so at the risk of Rule 11 sanctions and referral to the Board of
Bar Overseers.
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ORDER
The Court ALLOWS Defendants’ motion to dismiss Counts I-III
(Docket No. 6) and REMANDS Count IV to the Dukes County Superior
Court.
SO ORDERED.
/s/ PATTI B. SARIS
Hon. Patti B. Saris
Chief U.S. District Judge
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