Opinion
16-P-298
05-16-2017
FEDERAL NATIONAL MORTGAGE ASSOCIATION v. Debra M. BROWN.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
In this postforeclosure summary process action, the defendant, Debra M. Brown, appeals from the Northeast Housing Court's entry of judgment in favor of the Federal National Mortgage Association (Fannie Mae) on Fannie Mae's motion for summary judgment. On appeal, Brown contends that (1) the underlying foreclosure sale was void and the Housing Court judge erred in applying the principle of res judicata to the case; (2) Fannie Mae lacked standing to bring the summary process action, and thus the Housing Court lacked subject matter jurisdiction to hear the case; and (3) there were genuine issues of material fact. We affirm.
Background. During the summer of 2008, Brown fell behind on her mortgage payments. On August 18, 2008, Countrywide Home Loans Servicing, LP (Countrywide), the loan servicer at the time, sent Brown a "Notice of Intent to Foreclose." On May 10, 2010, BAC Home Loans Servicing, LP (BAC), conducted a mortgage sale, at which it was the highest bidder. Bank of America, BAC's successor (see note 1, supra ), subsequently assigned its winning bid to Fannie Mae. Shortly afterwards, on May 27, 2010, Brown filed an action in Superior Court against Bank of America and Fannie Mae to stop the enforcement of the sale, and the defendants removed the case to the Federal District Court based on diversity jurisdiction. The Federal judge granted Fannie Mae's Fed.R.Civ.P. 12(b)(6) motion and dismissed the suit. Brown appealed, and the First Circuit Court of Appeals affirmed the District Court ruling; the United States Supreme Court declined certiorari.
The original lender was Countrywide Home Loans, Inc., and the original mortgagee was Mortgage Electronic Registration Systems, Inc. (MERS). MERS later assigned the mortgage to BAC Home Loans Servicing, LP, which merged with Bank of America.
Fannie Mae subsequently brought a summary process action for possession in the Northeast Housing Court. Brown filed a counterclaim, raising a number of defenses, including that the sale failed to strictly comply with the requirements of par. 22 of Brown's mortgage, and that Fannie Mae's "predecessor(s) in title lacked standing to foreclose under the non-judicial power of sale in the mortgage, under G. L. c. 244, § 14, or otherwise, [and] therefore such foreclosure was unlawful, invalid and void." On the basis of the preclusive effect of the Federal judgment, the Housing Court judge found that there were no genuine issues of material fact and that Fannie Mae was entitled to judgment as a matter of law. This appeal followed.
Discussion. "The standard of review of a grant of summary judgment is whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law." Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991). "Whether a previous decision is to be given preclusive effect presents a question of law appropriate for resolution on summary judgment." Alicea v. Commonwealth, 466 Mass. 228, 234 (2013).
1. Res judicata. Claim preclusion prevents a party from relitigating a claim that has already been, or could have been adjudicated in another court proceeding and where there is a valid final judgment. Santos v. U.S. Bank Natl. Assn., 89 Mass. App. Ct. 687, 692 (2016). "For claim preclusion [to apply], three elements are required: (1) the identity or privity of the parties to the present and prior actions; (2) identity of the cause of action; and (3) prior final judgment on the merits." Gloucester Marine Rys. Corp. v. Charles Parisi, Inc., 36 Mass. App. Ct. 386, 390 (1994). All three elements of claim preclusion are met here.
Because identity of the parties is not at issue, we turn to the remaining elements. In determining identity of the cause of action, we look to whether "it is derived from the same transaction or series of connected transactions." Saint Louis v. Baystate Med. Center, Inc., 30 Mass. App. Ct. 393, 399 (1991). In the summary process action, Brown argued, as she did in Federal Court, that the foreclosure was void because Bank of America failed to comply with the terms of the mortgage and with the requirements under G. L. c. 244. Her claims are identical. See Fassas v. First Bank & Trust Co. of Chelmsford, 353 Mass. 628, 629 (1968) (res judicata applied where all facts relating to validity of foreclosures were known to plaintiffs during their prior action alleging fraud and duress in issuance of note and mortgages).
Last, the dismissal in Federal Court is a prior final judgment on the merits and satisfies the third element. Stewart v. U.S. Bancorp, 297 F.3d 953, 957 (9th Cir. 2002). "When a State court is faced with the issue of determining the preclusive effect of a Federal court's judgment, it is the Federal law of res judicata which must be examined." Anderson v. Phoenix Inv. Counsel of Boston, Inc., 387 Mass. 444, 449 (1982). A dismissal under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief may be granted constitutes a "judgment on the merits to which res judicata applies." Stewart v. U.S. Bancorp, supra (quotation omitted).
Brown contends nevertheless that an affirmative defense is not a claim or cause of action and thus res judicata does not apply. However, a party cannot avoid preclusion by relitigating a claim "from a different posture or in a different procedural form." Wright Mach. Corp. v. Seaman-Andwall Corp., 364 Mass. 683, 688 (1974). Where Brown already had an opportunity to challenge whether the mortgagee complied with the notice requirements in her mortgage or in G. L. c. 244, § 35A, her defenses in Housing Court are precluded. "[T]he proper avenue by which a homeowner can challenge a mortgagee's compliance with G. L. c. 244, § 35A, is either filing an independent equity action in the Superior Court, or asserting counterclaims pertaining to § 35A in response to the mortgagee's postforeclosure summary process action in the Housing Court." U.S. Bank Natl. Assn. v. Schumacher, 467 Mass. 421, 422 n.4 (2014).
2. Standing. "The Housing Court may hear summary process actions brought by those who acquire ownership of property via foreclosure by sale." Bank of N.Y. v. Bailey, 460 Mass. 327, 331 (2011). In postforeclosure summary process cases, "the plaintiff is required to make a prima facie showing that it obtained a deed to the property at issue and that the deed and affidavit of sale, showing compliance with statutory foreclosure requirements, were recorded." Id. at 334. In what is essentially a reformulation of her claim that Bank of America has failed to strictly comply with the requirements of her mortgage and of G. L. c. 244, Brown contends that Fannie Mae failed to make this showing, and, thus, lacked standing to bring the summary process action.
While a litigant may raise the issue of lack of subject matter jurisdiction at any point in the litigation, this principle "applies only when the jurisdictional issue has not been previously addressed and when it is first raised, at whatever stage of litigation, by either the parties or the trial or appellate court on its own motion." Conservation Commn. of Falmouth v. Pacheco, 49 Mass. App. Ct. 737, 739 (2000) (quotation omitted). Brown raised the issue of standing in her motion to dismiss and, for the reasons previously discussed, the Housing Court judge properly denied her motion.
According to the judge's final memorandum and order: "The defendant cross moves to dismiss or for summary judgment. After hearing, and after considering the summary judgment record, I deny the motion by the defendant and I allow the plaintiff's motion."
3. Genuine issues of material fact. Brown argues that the judge erred in granting summary judgment because there are genuine issues of material fact. Viewing the evidence in the light most favorable to Brown, we see no material facts in dispute. Brown was at least one month behind on mortgage payments on August 18, 2008, when Countrywide sent her a notice of intent to foreclose. Brown's other arguments also relate to her ultimate claim that the foreclosure was void because of Bank of America and Fannie Mae's failure to comply with the law. As such, for the reasons previously discussed, these additional arguments also are precluded by res judicata. , We see no error in the judge's allowance of Fannie Mae's motion for summary judgment.
The notice of intent's failure to identify the lender also does not make the foreclosure void. See Haskins v. Deutsche Bank Natl. Trust Co., 86 Mass. App. Ct. 632, 641 (2014) ("[N]othing in the statutory objective appears to be furthered by furnishing the mortgagor with the name and address of the mortgagee in circumstances where the loan is serviced by a different entity").
Even assuming that the notice of intent to foreclose was defective because its language did not strictly comply with the requirements of par. 22 of the mortgage, the Supreme Judicial Court held in Pinti v. Emigrant Mort. Co., 472 Mass. 226, 243 (2015), that failure to comply with par. 22 would only void foreclosures prospectively. We note that "the res judicata consequences of a final ... judgment on the merits [is not] altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled in another case." Federated Dept. Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981). The defendant cannot now claim the benefit of Pinti.
To the extent that we have not addressed Brown's other contentions, they "have not been overlooked. [Rather, w]e find nothing in them that requires discussion." Commonwealth v. Domanski, 332 Mass. 66, 78 (1954). We decline Brown's invitation to adopt a rule contrary to our holding in Shea v. Federal Natl. Mort. Assn., 87 Mass. App. Ct. 901 (2015).
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Judgment affirmed.