Tucker v. U.S. Bank, N.A.

292 F.Supp.3d 546

Jacqueline TUCKER, Plaintiff,

v.U.S. BANK, N.A. as Trustee FOR CITIGROUP MORTGAGE LOAN TRUST, INC., 2006-HE3, ASSET BACKED PASS-THROUGH CERTIFICATES SERIES 2006-HE3; Wells Fargo Bank, N.A.; and Servicelink Field Services, Defendants.

Civil Action No. 17-cv-11909-PBS

United States District Court, D. Massachusetts.

Signed February 16, 2018

Glenn F. Russell, Jr., Law Office of Glenn F. Russell Jr., Fall River, MA, for Plaintiff.

David E. Fialkow, Edward James Mikolinski, K & L Gates LLP, Jeffrey B. Loeb, Professional Corporation, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

Hon. Patti B. Saris, Chief U.S. District Judge

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").

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. 1-4. 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.

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 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. 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 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (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, 129 S.Ct. 1937. This plausibility standard requires something substantially less than a showing of probability. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ("[A] well-pleaded 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, 127 S.Ct. 1955.

DISCUSSION

In Massachusetts, a title theory state, a mortgage is "a transfer of legal title in a property to secure a debt." U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637, 941 N.E.2d 40, 51 (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., 29 Mass.App.Ct. 88, 557 N.E.2d 756, 757 (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, 462 Mass. 569, 969 N.E.2d 1118, 1121 n.2 (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.

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 *7-10 (D. Mass. Sept. 11, 2013). The First Circuit has rejected the argument that MERS must hold...