Elgin v. Aurora Loan Services, LLC

Filing 31

District Judge Timothy S Hillman: MEMORANDUM OF DECISION AND ORDER entered denying 26 Motion to Vacate. (Castles, Martin)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

GRANT ELGIN,
Plaintiff,
v.

AURORA LOAN SERVICES, LLC,
Defendant.

)
)
)
)
)
)
)
)
)
)
)
)

CIVIL ACTION
NO. 13-40062-TSH

MEMORANDUM OF DECISION ON PLAINTIFF'S MOTION TO VACATE
JUDGMENT (Docket No. 26)
May 16, 2014
HILLMAN, D.J.
Introduction
Plaintiff Grant Elgin ("Plaintiff") brought a complaint against Defendant Aurora Loan
Service's ("Defendant") alleging breach of contract, promissory estoppels, breach of duty of good
faith and reasonable diligence, violation of M.G.L. c. 93A and violation of M.G.L. c. 231A s. 1,
all stemming from Defendant's foreclosure of Plaintiff's property. On April 2, 2014 this Court
granted Defendant's Motion for Judgment on the Pleadings (Docket No. 19), no response having
been filed, for the reasons stated in the memorandum in support (Docket No. 20), and entered
judgment in favor of Defendant (Docket No. 25). On the same day, Plaintiff filed a motion to
vacate the judgment under Fed.R.Civ.P. 60(b), explaining that Plaintiff failed to respond to
Defendant's motion because new counsel had taken over. New counsel explained that she had
been unable to timely respond, but that she had been in contact with Defendant's counsel

1

regarding Plaintiff's intention to file an amended complaint. For the reasons set forth below,
Plaintiff's Motion to Vacate is denied.
Discussion
"The criteria for Rule 60(b) relief are well-established. A party seeking such relief must
demonstrate 'that his motion is timely; that exceptional circumstances exist, favoring
extraordinary relief; that if the judgment is set aside, he has the right stuff to mount a potentially
meritorious claim or defense; and that no unfair prejudice will accrue to the opposing parties
should the motion be granted.'" Nansamba v. N. Shore Med. Ctr., Inc., 727 F.3d 33, 37 (1st Cir.
2013) (quoting Fisher v. Kadant, Inc., 589 F.3d 505, 512 (1st Cir.2009)). Here, as Plaintiff filed
his motion to vacate the same day as judgment entered, there is no argument that it was not
timely.
Under Fed.R.Civ.P. 60(b), a court, on motion, may relieve a party from a final judgment
based one of six reasons delineated in the rule. Fed.R.Civ.P. 60(b)(1)-(6). At oral argument,
Plaintiff asserted that he sought relief based on Fed.R.Civ.P. 60(b)(1) "mistake, inadvertence,
surprise, or excusable neglect." For relief based on excusable neglect under Rule 60(b)(1), "[a]t
a bare minimum, a party…must offer a convincing explanation as to why the neglect was
excusable." Nansamba, 727 F.3d at 39 (quoting Cintrón–Lorenzo v. Departamento de Asuntos
del Consumidor, 312 F.3d 522, 527 (1st Cir.2002)). "Deciding what constitutes excusable
neglect is a case-specific exercise, which requires 'an equitable determination, taking into
account the entire facts and circumstances surrounding the party's omission.'" Rivera-Velazquez
v. Hartford Steam Boiler Inspection & Ins. Co., 2014 WL 1613686, *2 (1st Cir. 2014) (quoting
Dávila-́Alvarez v. Escuela de Medicina Universidad Central del Caribe, 257 F.3d 58, 64 (1st
Cir. 2001).

2

Here, Plaintiff has demonstrated excusable neglect. Attorney Uwe Benjamin, who had
previously represented Plaintiff, was the only Massachusetts licensed attorney at the Babcock
Law Offices. Attorney Benjamin left those offices in January of 2014. In late January, the
Babcock Law Offices approached Plaintiff's current counsel, Attorney Mindy Montecalvo, about
taking on the Massachusetts cases that Attorney Benjamin had left behind. Attorney Montecalvo
shares office space with the Babcock Law Offices, but is not an employee. In late February,
Attorney Montecalvo inherited all of the aforementioned cases, including Plaintiff's. Attorney
Montecalvo proceeded to review the cases and determined that Plaintiff's complaint was
insufficient. She prepared an amended complaint which she completed ten days before a
response to Defendant's motion for judgment on the pleadings was due. As the result of a
computer crash, this amended complaint was lost. The day before judgment was entered in this
case, Attorney Montecalvo had again completed the amended complaint, and notified opposing
counsel of her intention to file that complaint, or agree to a voluntary dismissal without prejudice
to re-file using the new complaint. Attorney Montecalvo also notified the Court of her intention
to enter an appearance, which she did on April 2, 2014, but she did not move for a continuance to
respond to Defendant's motion to vacate, nor for a voluntary dismissal without prejudice. This
Court then entered judgment for Defendant. Later that same day, Plaintiff filed his motion to
vacate.
This Court finds that the Plaintiff has demonstrated excusable neglect. This is not a
situation where counsel "remained silent for months in the face of several court orders,"
including a warning that further inaction would result in dismissal, and failed to respond to three
motions that were deemed unopposed. See, e.g., Rivera-Velazquez, 2014 WL 1613686, *1-2.
Instead, having received a number of new cases due to the departure of Attorney Benjamin,

3

counsel diligently worked to keep Plaintiff's case alive. She kept opposing counsel informed of
the situation and her intentions to move forward on an amended complaint. Though technical
issues and the volume of work prevented counsel from timely responding to Defendant's motion
for judgment on the pleadings, given the situation and her efforts, both before and after this
lapse, such failure can be considered excusable.
A showing of excusable neglect, however, is not the only requirement for relief under
Rule 60(b). Plaintiff must also show that that "if the judgment is set aside, he has the right stuff
to mount a potentially meritorious claim or defense." Nansamba, 727 F.3d at 37-38; Gonzalez
Rucci v. U.S. I.N.S., 405 F.3d 45, 48 (1st Cir. 2005) ("a district court should only grant Rule
60(b) relief if the moving party demonstrates that the underlying claims have a reasonable
chance of success on the merits"). Plaintiff does not meet this burden. In the proposed amended
complaint, Plaintiff sets forth several of the same claims from his prior complaint, yet Plaintiff
conceded at oral argument that this Court correctly granted judgment in favor of Defendants on
these claims. As for the new claims, Plaintiff has not shown he has a reasonable chance of
success on the merits. The proposed complaint seeks to bring four new substantive claims, as
well as a claim for "further equitable relief."
The first new claim (Count I) seeks a declaratory judgment that Defendant was not
entitled to enforce the power of sale because the assignment of Plaintiff's mortgage from
Mortgage Electronic Registration System, Inc. ("MERS") to Defendant was flawed due to "robosigning" and a lack of authenticated "tracking information" regarding the promissory note
underlying Plaintiff's mortgage. The First Circuit has squarely dealt with the former contention,
holding that an allegation that an assignment from MERS is void because it was "robo-signed" is
"of no moment." Wilson v. HSBC Mortgage Servs., Inc., 744 F.3d 1, 13 (1st Cir. 2014); see also

4

Butler v. Deutsche Bank Trust Co. Americas, 2014 WL 1328296, *4 (1st Cir. 2014). Wilson also
rejects Plaintiff's contention that the assignment is void because it was executed by Theodore
Schultz, a Vice President of both MERS and Defendant, among other, noting that M.G.L. c. 183
s. 54 provides that "[an] assignment of [a] mortgage ... if executed before a notary public ... by a
person purporting to hold the position of ... vice president ... of the entity holding such mortgage
... shall be binding upon such entity," and concluding that an assignment was not void merely
because it was executed by one who was both an officer of MERS and an employee of the
assignee. 744 F.3d at 11-12.
Plaintiff also asserts as part of Count I that Defendant has no authenticated evidence that
Plaintiff's note was transferred to Defendant. As Plaintiff alleges in his complaint, an assignment
recorded in the Worcester County Registry of Deeds shows that MERS assigned Plaintiff's
mortgage to Defendant. The First Circuit has rejected the argument that "MERS only 'tracks' the
assignment of mortgage notes, but does not undertake assignments of the accompanying
mortgages," noting that "that MERS separately tracks the transfer of promissory notes does not
call into question the sufficiency of written assignments duly recorded in a county registry of
deeds." Butler, 2014 WL 1328296 at *3. Defendant need not provide evidence that it held the
underlying note to show it could validly foreclose, as long as the mortgage was validly assigned,
as it appears to be here. Culhane v. Aurora Loan Servs. of Nebraska, 708 F.3d 282, 293 (1st Cir.
2013) ("In the assignment, MERS transferred to Aurora what it held: bare legal title to the
mortgaged property. That transfer was valid. It follows that Aurora properly held the mortgage
and thus possessed the authority to foreclose.").
As far as any other general claims under Count I Plaintiff attempts to make regarding
MERS not holding the mortgage, or lacking the authority to assign the mortgage, the First

5

Circuit in Culhane clearly determined "that MERS, as nominee and mortgagee of record,
possesses the ability to transfer its interest in a mortgage." Id. at *3 (citing Culhane, 708 F.3d at
291–93); see also Serra v. Quantum Servicing, Corp., 2014 WL 1280260 (1st Cir. 2014) ("In
Culhane, we ruled unequivocally that MERS may validly possess and assign a legal interest in a
mortgage."); Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 355 (1st Cir.2013) ("Culhane
made clear that MERS's status as an equitable trustee does not circumscribe the transferability of
its legal interest."). Nothing in Plaintiff's proposed complaint suggests Culhane should not apply
in this case. Plaintiff has failed to show that he is likely to succeed in showing that Defendant
was not a proper assignee and holder of Plaintiff's mortgage, and that therefore the any sale of
the property would be void.
Plaintiff next proposes to bring a claim for slander of title (Count II) based on the
assertion that Defendant caused a false publication to be publically recorded, namely the
recording in the Worcester County Registry of Deeds that Defendant has absolute ownership of
the property in question. To make a claim for slander of title, a plaintiff must show the defendant
"intends for publication of [a] statement to result in harm to the interests of [another] having a
pecuniary value, or either recognizes or should recognize that it is likely to do so, and…knows
that the statement is false or acts in reckless disregard of its truth or falsity." Dulgarian v. Stone,
420 Mass. 843, 852, 652 N.E.2d 603, 609 (1995). There is nothing in the proposed amended
complaint that suggests Defendant knew the recording was false or acted in reckless disregard of
its truth, or even that the recording was false. See, e.g. Rosa v. Mortgage Elec. Sys., Inc., 821 F.
Supp. 2d 423, 434 (D. Mass. 2011) ("Plaintiffs' claims for slander of title fail because the
statements made by Defendants were true. The assignment was valid and therefore [the] act of
recording the assignment could not constitute slander."). As explained above, Plaintiff has not

6

demonstrated that anything about the assignment from MERS to Defendant makes that
assignment, and by extension Defendant's right to enforce the power of sale or take ownership of
the property, void.
Plaintiff's proposed claim for a violation of M.G.L. c. 244 s. 35A (Count III) similarly
does not show a reasonable likelihood of success in this case. In U.S. Bank Nat. Ass'n v.
Schumacher, the Supreme Judicial Court declared that the "proper avenue by which a
homeowner can challenge a mortgagee's compliance with s. 35A" is by "asserting counterclaims
pertaining to s. 35A in response to the mortgagee's postforeclosure summary process action in
the Housing Court." 467 Mass. 421, 422 n. 4 (2014). Plaintiff failed to raise this or any other
counterclaims during the summary process proceeding that Defendant successfully brought in
the Worcester Housing Court, and is now barred from doing so under the principles of res
judicata. Charlette v. Charlette Bros. Foundry, Inc., 59 Mass. App. Ct. 34, 33 (2003) ("claim
preclusion forecloses the litigation of all matters that could have or should have been litigated in
a prior action.").
Finally, Plaintiff seeks to bring a claim for declaratory judgment that M.G.L. c. 183 s.
54B is unconstitutional (Count VII) because it violates Plaintiff's right to equal protection. As in
Culhane, this constitutional challenge is based on the assertion that s. 54B violated Plaintiff's
procedural and substantive due process rights and his right to equal protection by denying him
the opportunity to expose the fact that the assignment of his mortgage was not on behalf of any
person with an enforceable interest in his mortgage and by "arbitrarily including [him] in a class
of mortgagors whose mortgages were assigned by the actual holder." 708 F.3d at 294-95. The
Court in Culhane, having concluded that MERS did validly hold the mortgage at the time of its
assignment to Aurora found that these constitutional claims "necessarily fail." Id. at 295. The

7

same is true here; as discussed above, Plaintiff has not successfully pled that MERS did not
validly hold Plaintiff's mortgage at the time of the assignment.
As Plaintiff has failed to demonstrate that the claims in his proposed amended complaint
have "a reasonable chance of success on the merits," he has not met his burden of demonstrating
he is entitled to the "extraordinary relief" available under Rule 60(b). Gonzalez Rucci, 405 F.3d
at 48.
Conclusion
For the reasons stated above, Plaintiff's Motion to Vacate (Docket No. 26) is denied.

SO ORDERED.

/s/ Timothy S. Hillman
TIMOTHY S. HILLMAN
DISTRICT JUDGE

8