Opinion
21-P-690
12-30-2022
DIPLOMAT PROPERTY MANAGER, LLC v. James A. LOZANO & another.
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The defendants, James A. Lozano and Crystal A. Himes, appeal from a judgment entered after a judge of the Housing Court allowed a motion for summary judgment granting possession of a condominium unit in Upton (unit) to the plaintiff, Diplomat Property Manager, LLC (Diplomat), and from an order denying their motion for reconsideration. In a published opinion issued this day, we address the defendants’ contentions that Diplomat lacked standing to bring a summary process action, the foreclosing entity lacked legal existence and authority to hold title and foreclose, and the judge erred in failing to allow their motion to dismiss due to a prior pending action. We refer to that opinion for the factual background. We consider the defendants’ remaining arguments here, which are meritless.
Discussion. 1. United Guaranty Residential Insurance Co. (UGRIC) defenses. Claiming to be the assignee of the defendants’ second mortgage securing a promissory note for $50,500, UGRIC brought a deficiency action in the Superior Court in Worcester County against the defendants which ultimately was settled by executing a "Settlement and Mutual Release" dated August 22, 2016 (2016 agreement). As a defense to this action for possession, the defendants contended that their entire debt under both their first and second mortgages had been satisfied by the 2016 agreement. At the same time, however, they contended that the Housing Court lacked jurisdiction to construe the 2016 agreement. The "jurisdictional" argument is easily disposed of. It is well settled that "[t]he Housing Court ha[s] jurisdiction to decide the validity of the [mortgagor's] defenses." Gold Star Homes, LLC v. Darbouze, 89 Mass. App. Ct. 374, 378 (2016). See Bank of N.Y. v. Bailey, 460 Mass. 327, 333–334 (2011). Here, the defendants defended the action for possession by asserting that the foreclosure was void because the 2016 agreement demonstrated that their debt had been paid. The Housing Court judge did not exceed that court's jurisdiction by construing the 2016 agreement.
Moreover, we discern no error in the judge's interpretation that the 2016 agreement applied to the second mortgage, but not to the first mortgage. The 2016 agreement stated no less than three times that it was relative to the $50,500 note secured by the unit. The $50,500 note was the second note, secured by a second mortgage on the unit. Although the 2016 agreement referenced the book and page where the first mortgage was recorded, instead of the second mortgage, that at most creates an ambiguity. "We may resolve [an] ambiguity on the summary judgment record before us as a matter of law; no party raises a genuine dispute of material fact ... that would warrant a trial." Hershman-Tcherepnin v. Tcherepnin, 452 Mass. 77, 87 (2008). We construe a settlement agreement, including any ambiguous language, "in light of the ‘contract as a whole, in a reasonable and practical way.’ " NSTAR Elec. Co. v. Department of Pub. Utils., 462 Mass. 381, 394 (2012), quoting MCI WorldCom Communications, Inc. v. Department of Telecomm. & Energy, 442 Mass. 102, 113 (2004). Reading the 2016 agreement as a whole leaves no doubt that UGRIC was releasing all claims as to the second note only. Moreover, only a discharge of the second mortgage was recorded, and as the judge noted, UGRIC had no interest in the first note and no power to release it or discharge the first mortgage. Indeed, there were no factual assertions in the 2016 agreement that UGRIC had been assigned or otherwise had acquired any rights under the first mortgage, and there are no allegations or evidence in this action that the defendants did, in fact, pay off the first note. We discern no error in the judge's interpretation of the 2016 agreement and no question of fact concerning it.
Counsel for the defendants indicated that he inserted the book and page number of the first mortgage; at oral argument, he was unable to recall whether he specifically told counsel for UGRIC that he did so.
The defendants argue that the judge should have allowed their motion to dismiss for failure to join necessary parties. See Mass. R. Civ. P. 19, 365 Mass. 765 (1974). Their contention that UGRIC is a necessary party is founded on their claim that the 2016 agreement involved the first mortgage and UGRIC owed them a duty to defend and indemnify them. Given the result we reach on the construction of the 2016 agreement, the argument lacks merit. In addition, even if UGRIC had duties to the defendants arising from the 2016 agreement, Mass. R. Civ. P. 14 (a), as amended, 385 Mass. 1216 (1982), "permits a defendant to bring in a third party ‘who is or may be liable to him for all or part of the plaintiff's claim against him,’ " and applies to summary process actions. Loring Towers Assocs. v. Furtick, 85 Mass. App. Ct. 142, 145 (2014), quoting rule 14 (a). The defendants could have impleaded UGRIC.
2. Christiana Trust as a necessary party. The defendants’ argument that Christiana Trust, which so far as the record reveals does not currently claim to be entitled to possession, was a necessary party to this action is likewise unavailing. "[A] plaintiff in a postforeclosure summary process case may make a prima facie showing of its right to possession by producing an attested copy of the recorded foreclosure deed and affidavit of sale under G. L. c. 244, § 15." Federal Nat'l Mtge. Ass'n v. Hendricks, 463 Mass. 635, 637 (2012) (Hendricks ). "If a plaintiff makes a prima facie case, it is then incumbent on a defendant to counter with his own affidavit or acceptable alternative demonstrating at least the existence of a genuine issue of material fact to avoid summary judgment against him." Id. at 642. There is no suggestion that a postforeclosure plaintiff is required to join prior owners or assignees, or even the foreclosing entity, as a necessary party to a summary process action for possession.
3. Chain of assignments. The defendants contend that Diplomat failed to demonstrate an unbroken chain of mortgage assignments to Christiana Trust and, for that reason, Christiana Trust's foreclosure sale is void. They surmise, without supporting documentation or other evidence, that there must have been additional transfers because one of the transfers was to a securitized trust. It appears that this argument was made for the first time in the defendants’ motion for reconsideration; a new legal theory raised for the first time in a motion for reconsideration is waived. See AA & D Masonry, LLC v. South St. Business Park, 93 Mass. App. Ct. 693, 698 (2018). Nonetheless, we comment briefly. Diplomat was required to "provide a complete chain of assignments linking [Christiana Trust] to the record holder of the mortgage, or a single assignment from the recordholder of the mortgage.’ " Strawbridge v. Bank of N.Y. Mellon, 91 Mass. App. Ct. 827, 831-832 (2017), quoting U.S. Bank Nat'l Ass'n. v. Ibanez, 458 Mass. 637, 651 (2011) (Ibanez ). Diplomat presented an unbroken chain of recorded assignments beginning with the defendants’ mortgage to MERS as nominee for Mortgage Master, Inc. and concluding with the assignment from Citibank, N.A., as trustee for the benefit of SWDNSI Trust Series 20010-2 to Christiana Trust on January 14, 2016, copies of which are contained in the record. Unlike Ibanez, supra at 641-642, relied on by the defendants, there was no "reliance on mortgage pooling documents as a substitute for a written assignment." LaRace v. Wells Fargo Bank, N.A., 99 Mass. App. Ct. 316, 327 (2021). The defendants have provided nothing to create a genuine issue of material fact with respect to whether there had been additional, off-record assignments of their mortgage. See Cullen Enters., Inc. v. Massachusetts Prop. Ins. Underwriting Ass'n, 399 Mass. 886, 890 (1987) ("Conclusory statements, general denials, and factual allegations not based on personal knowledge [are] insufficient to avoid summary judgment" [citation omitted]). See also Community Nat'l Bank v. Dawes, 369 Mass. 550, 559-560 (1976) (bare assertions of inferences without alleging specific facts will not defeat summary judgment motion).
The defendants fail to support with any authority their contention that the relevant notices of default and right to cure expired prior to the foreclosure sale. We do not consider it. See Mass. R. A. P. 16 (a) (9) (A), as appearing in 481 Mass 1628 (2019).
4. Good faith foreclosure sale. The defendants argue that Christiana Trust violated its duty to exercise good faith and reasonable diligence in conducting the foreclosure sale where it sold the unit to itself for $301,000, purportedly a fraction of its actual value. We need go no further than to note that the defendants do not point to any evidence in the record of the actual value of the unit; indeed, in their opposition to Diplomat's motion for summary judgment, they asserted without record support in the form of a valuation that the unit had a value of $400,000. On appeal, the defendants assert the home was worth $450,000. Leaving that inconsistency aside, the bare assertion of value is not enough to defeat summary judgment. See Cullen Enters., Inc., 399 Mass. at 890. Moreover, they have not shown that any such violation would give them superior title. See Property Acquisition Group, LLC v. Ivester, 95 Mass. App. Ct. 170, 179-180 (2019).
The affidavit of Crystal Himes is not in the record appendix; we viewed it via the Housing Court docket. It did not bear on value. Moreover, the defendants’ statement of disputed facts did not state or raise an issue about the value of the unit.
5. Affidavits. The defendants claim that affidavits submitted by Diplomat lack "credibility" because the affiants submitted inaccurate affidavits in past proceedings. To the extent this argument relies on the contention that Christiana Trust was not authorized to hold title or conduct the sale, we have rejected this argument as a matter of law. The defendants did not include the allegedly inaccurate affidavits in the record either here or in the Housing Court, however, and it is not our obligation to search the records of earlier cases. See Chokel v. Genzyme Corp., 449 Mass. 272, 279 (2007) ("When a party fails to include a document in the record appendix, an appellate court is not required to look beyond that appendix to consider the missing document"). Cf. Godfrey v. Globe Newspaper Co., 457 Mass. 113, 122 (2010) (discussing "anti-ferreting rule" in connection with motion for summary judgment). Moreover, even accepting that Diplomat in past proceedings submitted an inaccurate affidavit regarding the chain of title, there is no allegation that the affidavits Diplomat relied on in this proceeding suffered from the same defects. Faced with an affidavit that complied with Mass. R. Civ. P. 56, 365 Mass. 824 (1974), and made a prima facie case, it was the defendants’ burden to submit "[their] own affidavit or acceptable alternative demonstrating at least the existence of a genuine issue of material fact to avoid summary judgment." Hendricks, 463 Mass. at 642.
The defendants suggest that the "insufficiencies" in the affidavit of sale issued pursuant to G. L. c. 244, § 15, by Christiana Trust's attorney raised questions of fact as to strict compliance with the power of sale. Their appellate brief does not identify either the "insufficiencies" or any lack of compliance with the power of sale, but does make a passing reference to their motion to strike the affidavit, which the judge had denied. Their motion to strike focused on whether the affidavit complied with Mass. R. Civ. P. 56 (e). However, it is well settled that an affidavit of sale that complies with the "statutory form" is "evidence that the power of sale was duly executed," and, together with the foreclosure deed "constitute[s] prima facie evidence of the right of possession" (citations omitted). Federal Nat'l Mtge. Ass'n v. Hendricks, 463 Mass. 635, 641-642 (2012). Here, the affidavit largely tracked the statutory form, set forth the attorney's "acts," was notarized, and affirmed for the notary that the contents were truthful and accurate to the best of the attorney's knowledge. The defendants failed to then come forward with admissible evidence that would place the affidavit of sale in dispute. See Sea Breeze Estates, LLC v. Jarema, 94 Mass. App. Ct. 210, 215 (2018). There was no error in the denial of the motion to strike.
6. Loan modification. To be sure, there was an error when the servicer denied the defendants’ initial request for a loan modification on the grounds that the debt had been paid. Where the defendants presumably were aware that they had not paid off the first mortgage, and several years passed between the initial loan modification denial and the foreclosure, during which time loan servicers made repeated efforts to contact the defendants to discuss loan modification options, including eight letters informing them of options, we agree with the judge that the loan servicers did not engage in loan modification practices that rendered the foreclosure "so fundamentally unfair that [the defendants are] entitled to affirmative equitable relief" against Diplomat. See Bank of N.Y. Mellon v. Morin, 96 Mass. App. Ct. 503, 513 (2019). Moreover, unlike Morin, the defendants do not assert that they ever were in a position to avoid foreclosure.
7. Acceleration of the note. The defendants’ argument that the acceleration of the note secured by the mortgage accelerated the maturity date of the mortgage was rejected by Nims v. Bank of N.Y. Mellon, 97 Mass. App. Ct. 123, 124 (2020). "Because the acceleration of the note after ... [default] ... did not accelerate the maturity date of the mortgage ..., the obsolete mortgage has no bearing on" the mortgagee's ability to enforce the mortgage. LaRace, 99 Mass. App. Ct. at 329. We decline the defendants’ invitation to revisit Nims.
Conclusion. We need not address the defendants’ remaining arguments as they either were (i) not raised in a timely manner in the Housing Court; (ii) are unsupported by relevant authority; or (iii) are resolved by our prior discussions. While we are not insensitive to Diplomat's counsel's concerns about the line between zealous advocacy and dishonorable tactics, particularly as to the tenor of the defendants’ reply brief and the repeated unsupported allegations of misconduct lodged against Diplomat's counsel by the defendants’ attorney, we decline Diplomat's request for attorney's fees pursuant to Mass. R. A. P. 25, 481 Mass. 1654 (2019), at this time. The defendants’ request for sanctions and attorney's fees is denied.
The disposition of this case is stated in Diplomat Property Manager, LLC v. Lozano, 102 Mass. App. Ct. (December 30, 2022).
So ordered.
affirmed