Opinion
No. 2010-3158.
March 31, 2011. April 8, 2011.
MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTION TO DISMISS
Plaintiff seeks various remedies and damages for alleged unlawful foreclosure on his property in Hopkinton, Massachusetts. He sues Federal National Mortgage Association ("FNMA") Washington Mutual Bank ("WMB") and J.P. Morgan Chase Bank, N.A. ("Chase") as parties involved in the foreclosure, including a proceeding in the district court to evict him from the property. Plaintiff also sues Harmon Law Offices, P.C. ("Harmon") for actions taken as legal counsel to the foreclosure defendants. FNMA, Chase and Harmon now move to dismiss the complaint pursuant to Mass. R. Civ. P. 12(b)(6) for failure to state a claim. For the reasons stated below, defendants' motions are ALLOWED.
As described in the complaint, in September 2008, WMB was put into receivership. The Federal Deposit Insurance Corporation ("FDIC") was appointed receiver. FDIC is not a party to this lawsuit.
FACTS
The following are the relevant facts from the complaint. Plaintiff purchased in 1989 the subject property at 75 West Elm Street, Hopkinton as his home. (Complaint ¶ 52). In January 2006, he refinanced the property by executing a note in the amount of $370,000 in favor of American Mortgage Network, Inc. ("AMN") and a mortgage in favor of Mortgage Electronic Registration Systems, Inc. ("MERS") acting solely as nominee for AMN and AMN's successors and assigns. (Complaint ¶¶ 53, 54, Exs. B and C). At some point, the note was endorsed in blank by AMN "pay to the order of" but no name of the transferee was inserted. (Complaint, Ex. B). In March, 2006, plaintiff received correspondence from AMN notifying him that "the servicing of your mortgage loan, that is the right to collect payments from you is being assigned, sold, or transferred from [AMN] to Washington Mutual Bank ["WMB"] effective May 1, 2006." (Complaint ¶ 62, Ex. F). On May 31, 2008, MERS executed an assignment of the "mortgage and the note and claim secured thereby" to WMB with an "effective date" noted as September 10, 2007. (Complaint, Ex. W).
The complaint starts with a paragraph numbered 44 and ends at paragraph 152. Plaintiff, in his opposition papers, notes this mis-numbering as a typographical error.
In late 2006 and early 2007, plaintiff defaulted on the loan. (Complaint ¶ 63). On September 17, 2007, Harmon wrote to plaintiff indicating it had been engaged by WMB to foreclose on the mortgage "currently held" by WMB. (Complaint ¶ 65, Ex. H). On the same date, Harmon filed a complaint to foreclose mortgage in the Land Court on behalf of WMB. (Complaint ¶ 66, Ex. I). Thereafter, on May 22, 2008, Harmon provided plaintiff with an order of notice that WMB, as holder of the mortgage, had filed the complaint with the Land Court, and on June 17, 2008, plaintiff was notified of a mortgage foreclosure sale on July 17, 2008. (Complaint ¶¶ 69, 70, Exs. J. and K).
In July 2008, plaintiff filed a bankruptcy petition and the foreclosure sale was cancelled. (Complaint ¶¶ 74, 75). In September 2008, WMB was put into receivership with the FDIC taking over as receiver. (Complaint ¶ 76, Ex. M). On September 25, 2008, the FDIC entered into a Purchase and Assumption Agreement with Chase whereby Chase purchased "all of the assets" of WMB. (Complaint ¶ 77, Ex. N). On October 10, 2008, Chase notified plaintiff that it would be servicing the loan. (Complaint ¶ 81). On January 29, 2009, Chase filed a Motion for Relief From Stay in plaintiff's bankruptcy proceeding asserting that (a) it was the holder of the mortgage, (b) the debtor (plaintiff) was not current on post-petition payments to Chase, and (c) the loan was in default. Chase sought the right to proceed to foreclosure. The bankruptcy court allowed the motion. (Complaint ¶ 88, Exs. Q and R).
In June, 2009, Chase, represented by Harmon, proceeded to execute the foreclosure. A Notice of Foreclosure Sale was sent on June 18, 2009, (Complaint ¶ 89, Ex. S) and another such Notice on January 7, 2010. (Complaint ¶ 96, Ex. V). The foreclosure sale occurred on February 4, 2010. (Complaint ¶ 99).
The foreclosure sale was a public auction. Chase, the holder of the mortgage, submitted the highest bid and purchased the property. Chase then assigned the bid to FNMA and, by deed, transferred the property to FNMA. (Complaint ¶ 101, Ex. X (Affidavit of D. Arnold), Ex. Y). FNMA, represented by Harmon, proceeded to file a summary process complaint against plaintiff seeking eviction. (Complaint ¶ 105).
STANDARD ON MOTION TO DISMISS
A court evaluating a motion to dismiss under Mass. R. Civ. P. 12(b)(6) must determine whether the factual allegations in the complaint plausibly suggest an entitlement to relief. Iannachino v. Ford Motor Company, 451 Mass. 623, 636 (2008). The factual allegations need not be detailed but the complaint requires more than labels and conclusions to state a viable claim. The factual allegations in the complaint, which are assumed to be true, must be "enough to raise the right to obtain relief beyond the speculative level." Id., quoting Bell Atlantic Corp. v.Twombly, 550 U.S. 544, 555 (2007). Moreover, when allegations in a complaint made "upon information and belief" are speculative or conclusory, unsupported by facts, they are not entitled to deference from the Court. Eggert v. The Merrimac Paper Company, Inc., 311 F. Supp.2d 245, 257-258 (D. Mass. 2004).
The Court takes into consideration the allegations in the complaint "although matters of public record, orders, items appearing in the record of the case and exhibits attached to the complaint, also may be taken into account." Schaer v.Brandeis University, 432 Mass. 474, 477 (2000) citing, 5A C.A. Wright A.R. Miller, Federal Practice and Procedure § 1357, at 299 (1990). Conclusory allegations in the complaint that contradict the facts as demonstrated in the exhibits attached to the complaint may be disregarded. Clorox Co. Puerto Rico v. Proctor Gamble Commercial Co., 228 F.3d 24, 32 (1st Cir. 2000), citing,Northern Indiana Gun Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 454 (7th Cir. 1998).
DISCUSSION
The gist of plaintiff's claims is that the foreclosure on his property was unlawful because WMB, and later, Chase, the parties who initiated and executed the foreclosure, did not actually own the mortgage. Moreover, plaintiff asserts "upon information and belief" that, in fact, FNMA was the holder of the mortgage from the start of the foreclosure proceedings. (Complaint ¶¶ 60, 103). From that premise, plaintiff asserts, upon information and belief, that WMB, Chase and Harmon knew that WMB and Chase were not entitled to foreclose and their representations to the contrary in the foreclosure documents were false. (Complaint ¶¶ 64, 83, 84, 86). At the same time, however, plaintiff admits that at all times from the date of the loan to the foreclosure sale, he "does not have any direct or personal knowledge as to any Assignments of Mortgages and/or sale/transfer of the Note that relate to his January 27, 2006 refinancing." (Complaint ¶ 59).
Directly contrary to plaintiff's conclusory statements made "upon information and belief" are the exhibits attached to the Complaint. Those documents, and plaintiff's admission of no personal knowledge (Complaint ¶ 59), demonstrate that plaintiff's allegations are not based upon "information" but instead, upon only speculative "belief."
As described above in the recitation of facts, the exhibits to the complaint demonstrate a chain of title to the mortgage that is consistent with the right of defendants to conduct the mortgage sale and the representations made in connection therewith. The original note and mortgage were assigned by MERS to WMB. WMB initiated a foreclosure. When WMB failed, the FDIC took over as receiver. Pursuant to 12 U.S.C. § 1821(d)(2)(A)(i), the FDIC, as a matter of law, succeeded to the assets of WMB and was authorized by § 1821(d)(2)(G)(i)(II) to transfer any asset of WMB without any approval, assignment, or consent with respect to such transfer. Accordingly, the FDIC sold the assets of WMB to Chase pursuant to a Purchase and Assumption Agreement that provided in Section 3.1 that Chase purchased the interest of FDIC "in and to all of the assets" of WMB. (Complaint Ex. N). Chase initiated and completed the foreclosure procedure. Chase held the mortgage at the time of the notice and sale of the Property. See U.S. Bank National Association v. Ibanez, 458 Mass. 637, 651 (2011). These facts, evidenced from the complaint and its exhibits, completely undermine the conclusions in plaintiff's complaint.
Count II, alleging a violation of M.G.L. c. 244, § 14, is based entirely on the theory that the foreclosure was prosecuted and accomplished by a bank that did not hold the mortgage. Likewise, Count III (breach of contract), Count IV (violation of M.G.L. c. 93, § 49), Count VI (violation of RESPA), Count VII (failure of holder in due course), Count VIII (fraud and misrepresentation), Count IX (conspiracy) and Count X (conversion) are based solely on this theory. Accordingly, because the true facts alleged in the complaint do not describe or support plaintiff's theories, the claims must be dismissed.
Count I of the Complaint seeks a preliminary injunction based upon the substantive counts of the Complaint. The preliminary injunction was denied by this Court (Curran, J.) on the ground that plaintiff's claims were unlikely to succeed.
Defendants advance additional arguments as to why the complaint fails to state a claim such as no private right of action (Count IV and VI), no claim regarding holder in due course (Count VII) and no claim for conversion when matter involves real property (Count X). In addition, FNMA points out that it could not be liable under Count II, III, IV, VI, VII and VIII because it did not conduct the foreclosure, have a contract with plaintiff or engage in collection activities. Because the complaint is dismissed for the reasons described above, the Court does not reach these alternative grounds. Defendant Harmon raises an additional ground for dismissal; namely, the litigation privilege asserted as counsel in a litigation matter. The Court does not, at this stage, rule on the applicability of the litigation privilege.
Finally, in Count V, plaintiff alleges that defendants failed during the foreclosure process to comply with M.G.L. c. 244, § 35A. Specifically, plaintiff alleges that WMB's acceleration of the loan in September 2007 was done in violation of the statute requiring a 90 day right to cure. (Complaint ¶¶ 65, 67, 125-127). As previously found by this Court in connection with the motion for preliminary injunction, G.L. c. 244, § 35A does not apply because it became effective in 2008, after plaintiff's loan was accelerated.
CONCLUSION
For the reasons stated above, defendants motions to dismiss plaintiff's complaint pursuant to Rule 12(b)(6) is ALLOWED .