Opinion
No. 19-P-1507
03-22-2021
Mark A. LARACE & another v. WELLS FARGO BANK, N.A., trustee, & another.
Glenn F. Russell, Jr., Fall River, for the plaintiffs. Marissa I. Delinks, Boston, for the defendants.
Glenn F. Russell, Jr., Fall River, for the plaintiffs.
Marissa I. Delinks, Boston, for the defendants.
Present: Wolohojian, Milkey, & Sullivan, JJ.
SULLIVAN, J.
This is the third in a series of lawsuits brought by Mark A. LaRace and Tammy L. LaRace challenging the validity of Wells Fargo Bank, N.A.’s (Wells Fargo), efforts to foreclose on the mortgage on the LaRaces’ home. On appeal the LaRaces contend, among other things, that the 2008 mortgage assignment upon which Wells Fargo relies is void because it merely confirms a prior invalid blank assignment. On the defendants’ motion for summary judgment, a judge of the Land Court concluded that the LaRaces’ claims were barred in part by res judicata and were also properly dismissed as a matter of law. On appeal, the LaRaces contend that the judge erred by concluding that: (1) res judicata barred their claims where the claims arose from a foreclosure commenced after the LaRaces’ prior actions were dismissed; and (2) Wells Fargo established that, at the time of foreclosure, it held and had the right to enforce both the mortgage and the note. The LaRaces also appeal from an order sanctioning their counsel under Mass. R. Civ. P. 11, as amended, 456 Mass. 1401 (2010). We affirm, albeit for reasons which differ in some respects from those of the motion judge.
A fourth lawsuit, brought by Wells Fargo against the LaRaces in connection with its first attempt to foreclose on the LaRace property in 2007, was one of several cases ultimately decided by the Supreme Judicial Court in U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637, 654, 941 N.E.2d 40 (2011).
Background. 1. Mortgage default and 2007 foreclosure. The LaRaces borrowed money from Option One Mortgage Corporation (Option One) in 2005. The debt was evidenced by an adjustable rate note and secured by a mortgage on their home in Springfield. The note was "due and payable on June 01, 2035." The mortgage referenced this maturity date. In 2005, Option One executed an assignment of the mortgage in blank, meaning that the assignment did not specify the assignee. The mortgage subsequently was pooled with others and securitized. Wells Fargo was designated in the pooling and servicing agreement as the trustee of a trust fund consisting of a pool of mortgages. Ocwen Loan Servicing, LLC (Ocwen), was the loan servicer and attorney-in-fact for Wells Fargo.
In August 2006, the LaRaces defaulted on their payment obligations. In 2007, Wells Fargo commenced a nonjudicial foreclosure sale of the property, which was completed on July 5, 2007. At the time it foreclosed, Wells Fargo did not hold the mortgage. It was not until May 7, 2008, that Option One executed an assignment of the mortgage to Wells Fargo. The assignment, which stated it was effective as of April 18, 2007, was recorded on May 12, 2008. The foreclosure deed was recorded on the same date.
Wells Fargo then brought a quiet title action in the Land Court in October of 2008. The judge entered judgment against Wells Fargo, holding that the 2007 foreclosure was invalid because Wells Fargo could not establish that it held the mortgage at the time of the foreclosure. The Supreme Judicial Court affirmed the judgment against Wells Fargo in one of three companion cases decided in U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637, 654, 941 N.E.2d 40 (2011) ( Ibanez ).
On March 7, 2012, Option One executed a confirmatory assignment of the mortgage to Wells Fargo. The confirmatory assignment stated it was "intended to clarify the assignor in the [2008 a]ssignment." The confirmatory assignment was recorded on March 14, 2012.
2. 2012 try title action. Wells Fargo issued a default notice to the LaRaces in 2012. The LaRaces responded by filing a try title action, see G. L. c. 240, §§ 1 - 6, in the Land Court against Wells Fargo, Option One, and a mortgage servicing company. The defendants removed the action to the United States District Court for the District of Massachusetts. A United States District Court judge dismissed the action pursuant to Fed. R. Civ. P. 12 (b) (6). The judge found that, although the LaRaces were in default on their mortgage, Wells Fargo had not made any attempts to foreclose since 2007. Because "[u]ncertainty as to who holds a valid mortgage does not provide the requisite adversity to cloud a mortgagor's claim of equitable title," the judge held that the LaRaces complaint had not alleged an essential element of a try title claim: an adverse claim clouding record title to the property (citation omitted). LaRace v. Wells Fargo Bank, N.A., 972 F. Supp. 2d 147, 153 (D. Mass. 2013). The action was therefore dismissed. Id. at 154.
3. 2014 Superior Court action. In 2014, the LaRaces filed an action in Hampden County Superior Court against Wells Fargo, Ocwen, and other entities for wrongful foreclosure, violation of G. L. c. 93A, and slander of title. All three claims arose from the failed 2007 foreclosure; they alleged that Wells Fargo and Ocwen made false statements and engaged in deceptive practices between 2007 and 2014 by representing they had the right to foreclose based upon the 2008 assignment, an assignment the LaRaces contended was void. The judge granted the defendants’ motion to dismiss on the grounds that the claims were barred by the statute of limitations. The judge's decision was affirmed in an unpublished decision on appeal. See LaRace v. Wells Fargo Bank, N.A., 92 Mass. App. Ct. 1126, 102 N.E.3d 1030 (2018).
4. 2018 foreclosure. On or about February 17, 2017, Ocwen mailed the LaRaces another default notice. Thereafter, Wells Fargo again took the first steps in the nonjudicial foreclosure process.
On August 23, 2017, Ocwen executed an affidavit regarding compliance with G. L. c. 244, § 35B, and an affidavit regarding the note, pursuant to G. L. c. 244, § 35C. Both affidavits were later recorded. On or about June 5, 2018, Wells Fargo sent the LaRaces notice of its intent to foreclose. A foreclosure by power of sale and by entry was conducted on July 3, 2018. Wells Fargo purchased the property and a foreclosure deed was recorded.
After the sale, Ocwen recorded an affidavit certifying that Wells Fargo was the holder of the note and mortgage at the time of the foreclosure, and an affidavit certifying that the contents of the notice of default strictly complied with the notice provisions of the mortgage.
5. This action. On June 29, 2018, before the foreclosure sale, the LaRaces filed this action in the Land Court against Wells Fargo, Ocwen, and others. The LaRaces alleged seven causes of action against Wells Fargo or Ocwen: (1) count I, seeking a declaratory judgment that Wells Fargo and Ocwen did not have the right to foreclose because the 2008 assignment was void; (2) count II, seeking a declaratory judgment that Wells Fargo and Ocwen violated G. L. c. 244, § 35C, by failing to certify a chain of title for the note; (3) count III, against Wells Fargo, seeking a declaratory judgment that the mortgage was obsolete pursuant to G. L. c. 260, § 33 ; (4) count IV, alleging that Wells Fargo violated G. L. c. 93A by initiating foreclosure in 2007 and 2018, allegedly because the 2008 assignment was not valid; (5) count V, alleging that Wells Fargo's publication of the 2008 mortgage assignment, foreclosure deeds, and other foreclosure documents constituted slander of title because there was no valid assignment of the mortgage; (6) count VI, seeking a declaratory judgment that Wells Fargo did not have the legal right to enforce the note; and (7) count VII to quiet title under G. L. c. 240, §§ 6 - 10, on the grounds that the 2008 assignment was void.
The claims against the other defendants were dismissed for lack of service; those defendants are not parties to this appeal.
The complaint included a second count labeled "count VI." The second count VI was pleaded against one of the defendants who was not served. The LaRaces do not appeal from its dismissal.
Initially, the judge declined to take jurisdiction over counts IV and V for violation of G. L. c. 93A and slander of title and dismissed those counts without prejudice. Wells Fargo and Ocwen moved for summary judgment on the remaining counts.
After oral argument, a judge allowed the defendants’ motion for summary judgment. The judge held that the doctrines of claim preclusion and issue preclusion barred all of the LaRaces’ claims in this action -- including counts IV and V, over which he had previously declined jurisdiction -- because the same issues and claims were, or could have been, adjudicated in the 2012 try title action and the 2014 Superior Court action. The judge also ruled that (1) the 2008 assignment "demonstrate[d] the successful transfer of the mortgage to Wells Fargo"; (2) Wells Fargo was not required to establish a chain of title for the note; and (3) acceleration of the note when the LaRaces defaulted on their payment obligations did not accelerate the maturity date of the mortgage for purposes of the obsolete mortgage statute, G. L. c. 260, § 33.
The judge also issued an order to show cause why the LaRaces’ attorney should not be sanctioned under Mass. R. Civ. P. 11 for filing slander of title and wrongful foreclosure claims arising from the 2007 foreclosure when those claims had already been adjudicated in the 2014 Hampden County Superior Court action. Following briefing and oral argument, the judge ordered counsel to pay the attorney's fees in the amount of $3,768.45 that Wells Fargo and Ocwen incurred to defend counts IV and V through the initial dismissal. The LaRaces appealed from both the judgment and the decision on the order to show cause. Discussion. "We review a grant of summary judgment de novo to determine ‘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.’ " Pinti v. Emigrant Mtge. Co., 472 Mass. 226, 231, 33 N.E.3d 1213 (2015), quoting Juliano v. Simpson, 461 Mass. 527, 529–530, 962 N.E.2d 175 (2012). Here, for the reasons discussed below, Wells Fargo and Ocwen were entitled to judgment as a matter of law on all claims, either on the grounds of res judicata or on the merits.
1. Subject matter jurisdiction. As a preliminary matter, the judge's initial conclusion that he lacked jurisdiction over counts IV and V, the G. L. c. 93A and slander of title claims, was correct. See G. L. c. 185, § 1 (k ) (Land Court jurisdiction includes jurisdiction over "[a]ll cases and matters cognizable under the general principles of equity jurisprudence where any right, title or interest in land is involved"); G. L. c. 93A, § 9 (Superior Court and Housing Court have exclusive jurisdiction over G. L. c. 93A claims). See also Isakson v. Vincequere, 33 Mass. App. Ct. 281, 285, 598 N.E.2d 1140 (1992) (court of limited jurisdiction could not "acquire" subject matter jurisdiction over claims outside delineated jurisdiction). Before changing course and reaching the merits of the claims, the judge could have requested a transfer to the Superior Court and designation as a Superior Court judge. Alternatively, the judge could have sought reassignment of the matter to a trial court department that had subject matter jurisdiction. See G. L. c. 211B, § 9 ; St. Joseph's Polish Nat'l Catholic Church v. Lawn Care Assocs., Inc., 414 Mass. 1003, 1004, 608 N.E.2d 722 (1993). In circumstances like this, we would ordinarily remand so that the judge could cure the subject matter jurisdiction issue by, for example, seeking an appropriate cross-departmental assignment. See Sullivan v. Lawlis, 93 Mass. App. Ct. 409, 416 & n.13, 105 N.E.3d 274 (2018) (remanding with instructions that judge seek "cross-departmental" assignment of case because certain claims were in exclusive jurisdiction of Land Court, while others were within Superior Court's jurisdiction). See also Patry v. Liberty Mobilhome Sales, Inc., 15 Mass. App. Ct. 701, 703, 448 N.E.2d 405 (1983) (nunc pro tunc transfer of case or judge to department with jurisdiction is permitted). However, remand would not further the interests that reassignment of a case ordinarily serves. See Lowery v. Resca, 75 Mass. App. Ct. 726, 728, 916 N.E.2d 419 (2009) (transfer of case to proper trial court department allows claims to relate back to date complaint was initially filed in incorrect department for statute of limitations purposes). See also Konstantopoulos v. Whately, 384 Mass. 123, 129, 424 N.E.2d 210 (1981) (statutory provisions authorizing transfer of case or judge to different trial court department are based on legislative intent to "promote the orderly and efficient administration of the judicial system" [citation omitted]). As discussed infra; a trial court judge with jurisdiction over counts IV and V would be constrained to dismiss the claims once they were transferred. In the interest of judicial economy, we therefore affirm the judge's dismissal of counts IV and V.
2. Res judicata. With the exception of count II, the LaRaces’ claims bear many of the earmarks of serial litigation barred by the doctrine of res judicata. " ‘Res judicata’ is the generic term for various doctrines by which a judgment in one action has a binding effect in another. It comprises ‘claim preclusion’ and ‘issue preclusion’ " (citation omitted). Duross v. Scudder Bay Capital, LLC, 96 Mass. App. Ct. 833, 836, 139 N.E.3d 1202 (2020). We address each in turn.
a. Issue preclusion. Counts IV and V, alleging violations of G. L. c. 93A and slander of title, are barred by the doctrine of issue preclusion. "The doctrine of issue preclusion provides that when an issue has been ‘actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties whether on the same or different claim.’ " Jarosz v. Palmer, 436 Mass. 526, 530–531, 766 N.E.2d 482 (2002), quoting Cousineau v. Laramee, 388 Mass. 859, 863 n.4, 448 N.E.2d 756 (1983). Issue preclusion requires that "(1) there was a final judgment on the merits in the prior adjudication; (2) the party against whom preclusion is asserted was a party (or in privity with a party) to the prior adjudication; (3) the issue in the prior adjudication was identical to the issue in the current adjudication"; and (4) "the issue decided in the prior adjudication must have been essential to the earlier judgment" (citations omitted). Duross, 96 Mass. App. Ct. at 836–837, 139 N.E.3d 1202.
Each of these elements is met here. The 2018 case involved the same parties as the 2014 action. The 2014 Superior Court action was dismissed on statute of limitations grounds and resulted in a final judgment, and the dismissal was upheld by this court on appeal. Whether the LaRaces’ G. L. c. 93A and slander of title claims were barred by the statute of limitations was not only essential to the 2014 action, it was dispositive. See Jarosz, 436 Mass. at 532–534, 766 N.E.2d 482. The LaRaces contend that the issues litigated in the 2014 Superior Court action do not have preclusive effect because they have revised their G. L. c. 93A and slander of title claims in this action to include reference to the 2018 foreclosure. However, as the judge noted when he sanctioned the LaRaces’ attorney, both counts IV and V of the present complaint make claims for damages based solely on the 2008 assignment and the 2007 foreclosure, and "thus are an attempt to re-litigate claims already fully adjudicated in the [2014] Superior Court action." The reference to the 2018 foreclosure added nothing to the issue already litigated - that is, when the statute of limitations began to run. The judge permissibly concluded that the LaRaces had attempted to litigate anew claims that they were barred from relitigating. Cf. Fidler v. E.M. Parker Co., 394 Mass. 534, 546, 476 N.E.2d 595 (1985).
The LaRaces alleged that Wells Fargo and Ocwen made false statements and engaged in deceptive practices by representing that the 2008 assignment gave them the right to foreclose on the LaRaces’ home. The judge ruled that the LaRaces were on notice of these claims when the Land Court judge issued his ruling, and that the claims were therefore untimely.
b. Claim preclusion. Wells Fargo and Ocwen further contend that the doctrine of claim preclusion bars all of the remaining claims save count II, because these claims could have been litigated in the 2014 case. Claim preclusion "makes a valid, final judgment conclusive on the parties and their privies, and bars further litigation of all matters that were or should have been adjudicated in the action" (emphasis added). Duross, 96 Mass. App. Ct. at 836, 139 N.E.3d 1202, quoting Heacock v. Heacock, 402 Mass. 21, 23, 520 N.E.2d 151 (1988). "The invocation of claim preclusion requires three elements: (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." Santos v. U.S. Bank Nat'l Ass'n, 89 Mass. App. Ct. 687, 692, 54 N.E.3d 548 (2016), quoting Kobrin v. Board of Registration in Med., 444 Mass. 837, 843, 832 N.E.2d 628 (2005).
The defendants also argue that the 2012 try title action bars this action. The try title action was dismissed for failure to state a claim, perhaps because the judge viewed standing as nonjurisdictional in Federal court. LaRace, 972 F. Supp. 2d at 154. In State court a dismissal for lack of standing is often described as jurisdictional, see Abate v. Fremont Inv. & Loan, 470 Mass. 821, 836, 26 N.E.3d 695 (2015), and a dismissal for lack of jurisdiction does not necessarily result in claim preclusion, see Mass. R. Civ. P. 41 (b) (3), as amended, 454 Mass. 1403 (2009) ("a dismissal ... other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19, or for improper amount of damages ... operates as an adjudication upon the merits" [emphasis added]); Kobrin v. Board of Registration in Med., 444 Mass. 837, 843, 832 N.E.2d 628 (2005) (claim preclusion requires "prior final judgment on the merits"). We need not consider whether such a dismissal might result in issue preclusion because the judge who dismissed the try title action did so on the grounds that there was not an "adverse claim" clouding the LaRaces’ record title in 2013. LaRace, supra at 153. The question whether there was an adverse claim clouding record title in 2013 is not an issue in this action, so any issue preclusive effect the judgment in the try title action might have does not impact our analysis. Cf. Abate, supra (judge "considered the merits of [plaintiffs’] claims as a necessary step in determining the absence of ... record title").
Here again, the parties in the 2014 Superior Court action and this action are the same and the 2014 Superior Court action resulted in a final judgment on the merits. See TLT Constr. Corp. v. A. Anthony Tappe & Assocs., 48 Mass. App. Ct. 1, 10 n.8, 716 N.E.2d 1044 (1999) ("dismissal of an action on the basis of ... statute of limitations ... [has] been considered sufficiently on the merits to bar a subsequent suit under the doctrine of claim preclusion"). See also Massaro v. Walsh, 71 Mass. App. Ct. 562, 565, 884 N.E.2d 986 (2008), quoting Bagley v. Moxley, 407 Mass. 633, 637, 555 N.E.2d 229 (1990) (dismissal with prejudice is dismissal on merits for purposes of claim preclusion). The question remains whether there was a prior final judgment on the merits. Causes of action are the same for the purposes of res judicata when they "grow[ ] out of the same transaction, act, or agreement, and seek[ ] redress for the same wrong." Fassas v. First Bank & Trust Co. of Chelmsford, 353 Mass. 628, 629, 233 N.E.2d 924 (1968), quoting Mackintosh v. Chambers, 285 Mass. 594, 596, 190 N.E. 38 (1934). "[S]eeking an alternative remedy or ... raising the claim from a different posture or in a different procedural form" does not allow a party to avoid the doctrine of claim preclusion and get a proverbial second bite at the apple. Wright Mach. Corp. v. Seaman-Andwall Corp., 364 Mass. 683, 688, 307 N.E.2d 826 (1974).
While the Massachusetts authority on this issue is limited, we note that a majority of jurisdictions that have considered whether a statute of limitations dismissal is on the merits for res judicata purposes have concluded that such a dismissal has res judicata effect. See, e.g., Clothier v. Counseling, Inc., 875 So. 2d 1198, 1200 (Ala. Civ. App. 2003) ; Hall v. Gulaid, 165 Conn. App. 857, 864, 140 A.3d 396 (2016) ; Carnival Corp. v. Middleton, 941 So. 2d 421, 424 (Fla. 3rd Dist. Ct. App. 2006), citing Allie v. Ionata, 503 So. 2d 1237, 1242 (Fla. 1987) ; Montague v. Godfrey, 289 Ga. App. 552, 557, 657 S.E.2d 630 (2008) ; Greenfield v. Ray Stamm, Inc., 242 Ill. App. 3d 320, 327, 182 Ill.Dec. 694, 610 N.E.2d 118 (1993) ; Creech v. Walkerton, Ind., 472 N.E.2d 226, 228–229 (Ind. Ct. App. 1984) ; Penn v. Iowa State Bd. of Regents, 577 N.W.2d 393, 399 (Iowa 1998) ; Dennis v. Fiscal Court of Bullitt County, 784 S.W.2d 608, 609 (Ky. Ct. App. 1990) ; Beegan v. Schmidt, 451 A.2d 642, 644 (Me. 1982) ; North Am. Specialty Ins. Co. v. Boston Med. Group, 170 Md.App. 128, 906 A.2d 1042, 1052 (2006) ; Washington v. Sinai Hosp. of Greater Detroit, 478 Mich. 412, 419, 733 N.W.2d 755 (2007) ; Nitz v. Nitz, 456 N.W.2d 450, 452 (Minn. Ct. App. 1990) ; Jordan v. Kansas City, Mo., 929 S.W.2d 882, 886 (Mo. Ct. App. 1996) ; Schweitzer v. Whitefish, 385 Mont. 142, 146, 383 P.3d 735 (2016) ; Hill v. AMMC, Inc., 300 Neb. 412, 420–421, 915 N.W.2d 29 (2018) ; Opinion of the Justices, 131 N.H. 573, 580, 558 A.2d 454 (1989) ; Webb v. Greater N.Y. Auto. Dealers Ass'n, 144 A.D.3d 1134, 42 N.Y.S.3d 324, 326 (2016) ; LaBarbera v. Batsch, 10 Ohio St. 2d 106, 116, 227 N.E.2d 55 (1967) ; Campbell v. Fernandez, 14 Wash. App. 2d 769, 777, 473 P.3d 675 (2020) ; Gillespie v. Johnson, 157 W. Va. 904, 909, 209 S.E.2d 143 (1974). Just a handful of jurisdictions have come to the opposite conclusion. See Boyd v. Freeman, 18 Cal. App. 5th 847, 856, 227 Cal.Rptr.3d 164 (2017) ; Weinar v. Lex, 176 A.3d 907, 916 (Pa. Super. Ct. 2017). See also Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 499, 121 S.Ct. 1021, 149 L.Ed.2d 32 (2001) (to deter forum shopping, in diversity cases, Federal courts will apply rule of forum State on this issue).
The claims in the 2014 Superior Court action sought redress for the improper 2007 foreclosure, but at the heart of the claims was the contention that the 2008 assignment was "void." Accordingly, Wells Fargo and Ocwen maintain, to avoid impermissible claim splitting, the LaRaces should have raised all claims challenging the validity of the 2008 assignment in the action that they chose to bring in 2014. See Santos, 89 Mass. App. Ct. at 693, 54 N.E.3d 548, quoting Bagley, 407 Mass. at 638, 555 N.E.2d 229 ("res judicata principles prohibit parties from proceeding by way of ‘piecemeal litigation, offering one legal theory to the court while holding others in reserve for future litigation should the first theory prove unsuccessful’ "). The LaRaces’ claims in this action, other than count II, rely upon the theory that Wells Fargo lacks standing to foreclose because the 2008 assignment is a void "confirmatory" assignment. The defendants therefore submit that the claims should have been brought in the 2014 Superior Court action.
The LaRaces reply that they could not have challenged Wells Fargo's ownership of the mortgage and note in 2014 because their claims did not ripen until Wells Fargo initiated foreclosure proceedings in 2018, and that claim preclusion therefore does not apply. But while it is true that the LaRaces’ efforts in 2012 to bring a try title action were dismissed as premature in Federal court, other methods of challenging the validity of the 2008 assignment were available to them in 2014. See Abate v. Fremont Inv. & Loan, 470 Mass. 821, 835, 26 N.E.3d 695 (2015) ("property owner seeking to prevent the obvious harm that may result when a foreclosure proceeds without challenge [cannot bring try title claim before foreclosure, but] has other, and perhaps more suitable, remedies available to him or her," including quiet title action, or seeking declaratory judgment or injunction). Indeed, the judge who dismissed the try title action in 2013 noted the availability of a declaratory judgment action at that time. LaRace, 972 F. Supp. 2d at 154 n.3. Further, with the exception of count II, none of the LaRaces’ claims point to any alleged misconduct during the 2018 foreclosure process. Instead, the LaRaces’ only theory is that the 2018 foreclosure was wrongful because Wells Fargo relied upon the 2008 assignment to establish its standing to foreclose -- the very same claim of the invalidity of the 2008 assignment made in the now dismissed 2014 Superior Court action.
Count II alleges that Ocwen violated G. L. c. 244, § 35C, by failing to certify a chain of title for the note in its 2017 affidavits setting out Wells Fargo's authority to foreclose. Because this claim depends upon conduct that occurred after 2014, it is not barred by res judicata. However, the judge properly dismissed the claim on the merits, as discussed infra.
Nonetheless, it is indisputably true that the 2018 foreclosure was a new foreclosure, and that the issue of the validity of the 2008 assignment was not decided in the prior actions. We are also mindful of the fact that applying the doctrine of claim preclusion in the context of serial foreclosures would present a trap for the unwary for the scores of pro se litigants who crowd the Housing Court docket. While we caution counsel to approach this kind of serial litigation sparingly, if ever, we need not ultimately rely on claim preclusion to resolve this case. We turn instead to the merits of the remaining claims and rest the remainder of our decision on that basis.
Because the claims based on the 2008 assignment were not decided on the merits, issue preclusion does not apply. See Kobrin, 444 Mass. at 844, 832 N.E.2d 628.
3. Validity of 2008 assignment. There are no facts in dispute as to the validity of the 2008 mortgage assignment, and summary judgment was properly granted as to counts I, III, VI, and VII as a matter of law. To exercise the mortgage's power of sale, Wells Fargo needed to hold the mortgage and the note (or demonstrate that it was acting on behalf of the note holder) "at the time of the notice of sale and the subsequent foreclosure." Ibanez, 458 Mass. at 648, 941 N.E.2d 40. See G. L. c. 244, § 35C ; Eaton v. Federal Nat'l Mtge. Ass'n, 462 Mass. 569, 571, 969 N.E.2d 1118 (2012). To establish that it held the mortgage at the relevant times, Wells Fargo could either "provide a complete chain of assignments linking it to the record holder of the mortgage, or a single assignment from the record holder of the mortgage." Ibanez, supra at 651, 941 N.E.2d 40. It did the latter. The 2008 assignment and 2012 confirmatory assignment, both of which were recorded, evidence a single assignment from Option One -- the record holder of the mortgage -- to Wells Fargo. The LaRaces argue that the 2008 assignment is invalid because it is "confirmatory" of the 2005 assignment in blank held invalid in Ibanez. Neither the record, nor Ibanez support this argument. First, the 2008 assignment neither states that it is "confirmatory," nor refers to the 2005 assignment in blank. This in and of itself is reason to deem the 2008 assignment a new assignment. The LaRaces appear to argue, however, that the 2008 assignment was tainted by the invalid 2005 assignment. For this proposition the LaRaces rely on Ibanez. This reliance is misplaced. In Ibanez, the court explained that the 2008 assignment was not confirmatory. Ibanez, 458 Mass. at 654, 941 N.E.2d 40. For an assignment to be "confirmatory," it must confirm a "validly made earlier" assignment, and there was no such prior valid assignment for the 2008 assignment to "confirm." Id. Accordingly, the 2008 assignment is a new assignment that did not become effective until its May 7, 2008 execution date. Id.
The same reasoning is equally applicable to counts IV and V.
The LaRaces also argue that the 2008 assignment does not establish a complete chain of title for the mortgage. They base this argument on Wells Fargo's failed attempt in Ibanez to use mortgage securitization documents to establish it held the LaRaces’ mortgage in 2007. Because Wells Fargo contended at that time that the mortgage passed from Option One to two other entities before arriving at Wells Fargo, the LaRaces argue that Wells Fargo must now document all of the assignments in this chain. This argument is inconsistent with Ibanez, where the court stated that a foreclosing entity may establish that it holds a mortgage via "a single assignment from the record holder of the mortgage." Ibanez, 458 Mass. at 651, 941 N.E.2d 40. That is precisely what Wells Fargo has done here. Rather than relying on mortgage pooling documents as a substitute for a written assignment as it attempted to do in Ibanez, Wells Fargo relies on a recorded assignment directly from the original mortgagee. "As such, it does not have to provide a ‘chain of assignments linking it to the record holder’ of [the LaRaces’] mortgage, because such a ‘chain’ contains only one link" (citation omitted). Strawbridge v. Bank of N.Y. Mellon, 91 Mass. App. Ct. 827, 832, 79 N.E.3d 1103 (2017). In short, the 2008 assignment is sufficient to document Wells Fargo's ownership of the mortgage at the time of the 2018 foreclosure, and counts I, III, VI, and VII fail.
To the extent that the LaRaces are arguing that a direct transfer from Option One to Wells Fargo violates the terms of the pooling and services agreement, they lack standing to raise such an argument. See Bank of N.Y. Mellon Corp. v. Wain, 85 Mass. App. Ct. 498, 502, 11 N.E.3d 633 (2014).
The court rejected Wells Fargo's argument because Wells Fargo could not produce assignments establishing a chain of title that matched the transfers Wells Fargo contended had taken place. Ibanez, 458 Mass. at 644, 941 N.E.2d 40.
4. Chain of title for note. Count II alleges that Ocwen failed to comply with G. L. c. 244, § 35C, because it did not certify a chain of title for the note, a certification that the LaRaces argue 209 Code Mass. Regs. § 18.21A requires. Title 209 Code Mass. Regs. § 18.21A(2)(c) states: "A third party loan servicer shall certify in writing the basis for asserting that the foreclosing party has the right to foreclose, including but not limited to, certification of the chain of title and ownership of the note and mortgage from the date of the recording of the mortgage being foreclosed upon." For the reasons stated below, we construe this language, consistent with the regulation's stated purpose and with Massachusetts foreclosure law, to require certification of an unbroken chain of title for the mortgage and that the foreclosing party held the note (or acted as authorized agent for the note holder) at the time it commenced foreclosure.
The LaRaces also argue that the § 35C affidavit is insufficient because it states that it is based on Ocwen's review of Wells Fargo's "business records" without specific reference to the note. The affidavit language is consistent with G. L. c. 244, § 35C, which provides that a servicer shall "certify compliance with this subsection in an affidavit based upon a review of the creditor's business records." Moreover, the LaRaces concede that they received a copy of the note from Wells Fargo and were offered the opportunity to inspect the original note. They have therefore provided us with no basis to question the representation in the affidavit that Wells Fargo possessed the original note.
The text of the regulation states that its purpose is to provide a borrower "the [servicer's] basis for asserting that the foreclosing party has the right to foreclose." 209 Code Mass. Regs. § 18.21A(2)(c). Under Massachusetts foreclosure law, a "mortgagee must demonstrate an unbroken chain of assignments [of the mortgage] in order to foreclose a mortgage, and ... must also demonstrate that it holds the note (or acts as authorized agent for the note holder) at the time it commences foreclosure" (citation omitted). Sullivan v. Kondaur Capital Corp., 85 Mass. App. Ct. 202, 210, 7 N.E.3d 1113 (2014). See Ibanez, 458 Mass. at 651, 941 N.E.2d 40. There is no case holding that a foreclosing party must demonstrate an unbroken chain of assignments of the mortgage note. Indeed, such a requirement would be inconsistent with the proposition that "[w]hen indorsed in blank, [a note] becomes payable to bearer and may be negotiated by transfer of possession alone." G. L. c. 106, § 3-205 (b ). "[N]othing in Massachusetts law requires a foreclosing mortgagee to demonstrate that prior holders of the record legal interest in the mortgage also held the note at the time each assigned its interest in the mortgage to the next holder in the chain." Sullivan, supra. The judge properly dismissed count II on the merits.
5. Applicability of obsolete mortgage statute. Count III seeks a judgment declaring that the obsolete mortgage statute, G. L. c. 260, § 33, rendered the LaRaces’ mortgage unenforceable because the 2007 acceleration of the note secured by the mortgage accelerated the maturity date of the mortgage. This precise argument was considered and rejected in Nims v. Bank of N.Y. Mellon, 97 Mass. App. Ct. 123, 124, 142 N.E.3d 1124 (2020), which this court decided after the LaRaces filed their appeal. "The obsolete mortgage statute sets time periods after which a ‘mortgage shall be considered discharged for all purposes without the necessity of further action by the owner of the equity of redemption or any other persons having an interest in the mortgaged property.’ " Nims, 97 Mass. App. Ct. at 126, 142 N.E.3d 1124, quoting G. L. c. 260, § 33. If a mortgage has a maturity date, the lender generally must exercise its power of sale within five years of that maturity date. Id. In Nims, we explained that where, as here, a mortgage does not state its maturity date, but does refer on its face to the note, and states the date by which the obligation must be paid in full, "the term or maturity date of the underlying obligation (i.e., the note) is considered the term or maturity date of the mortgage." Nims, supra at 128, 142 N.E.3d 1124. Thus, the maturity date of the LaRaces’ mortgage is June 1, 2035. Because the acceleration of the note after the LaRaces defaulted on their payment obligation did not accelerate the maturity date of the mortgage, id., the obsolete mortgage statute has no bearing on Wells Fargo's ability to enforce the mortgage.
6. Rule 11 sanctions. The LaRaces also appeal from the judge's decision finding that their attorney violated Mass. R. Civ. P. 11 (a) by raising two claims in this action that were "nearly verbatim" recitations of claims dismissed on statute of limitations grounds in the 2014 Superior Court action. On appeal, counsel concedes that he was aware of the judgment in the 2014 Superior Court action when he filed the complaint in this action, but argues that the judge erred in finding that he acted in bad faith when he had "nothing but the best intentions of making the allegations in the 2018 complaint in good faith." We review the imposition of rule 11 sanctions for an abuse of discretion. Worcester v. AME Realty Corp., 77 Mass. App. Ct. 64, 72, 928 N.E.2d 656 (2010).
Counsel also argues that the judge improperly found that he had intentionally failed to disclose the 2014 Superior Court action. In fact, the judge found that counsel did disclose the earlier claims, but that he nonetheless violated rule 11.
Under rule 11, counsel's signature on the complaint was a "certificate ... that to the best of his knowledge, information, and belief there [was] a good ground to support it." Mass. R. Civ. P. 11 (a). "Good ground" for pleading under rule 11 "requires that the pleadings be based on ‘reasonable inquiry and an absence of bad faith’ " on counsel's part. Doe v. Nutter, McClennen & Fish, 41 Mass. App. Ct. 137, 142, 668 N.E.2d 1329 (1996), quoting Bird v. Bird, 24 Mass. App. Ct. 362, 368, 509 N.E.2d 289 (1987). This is a subjective standard. However, "[i]t is up to the judge to decide whether to credit the attorney's profession of good faith," Psy-Ed Corp. v. Klein, 62 Mass. App. Ct. 110, 114, 815 N.E.2d 247 (2004), taking into account "the circumstances of [the attorney's] performance," Worcester, 77 Mass. App. Ct. at 72, 928 N.E.2d 656.
Here, we discern no abuse of discretion in the judge's decision that counsel acted in bad faith by intentionally reasserting claims that had already been dismissed on statute of limitations grounds - a matter which had been fully and finally adjudicated. See Kobrin, 444 Mass. at 843, 832 N.E.2d 628. The complaint contained a near verbatim recitation of the allegations in the 2014 complaint. The addition of the words "and 2018" in reference to the most recent attempt to foreclose added nothing to change the statute of limitations analysis.
Indeed, the judge identified nine paragraphs in counts IV and V that not only related solely to the 2007 foreclosure, but appeared, based upon the presence of identical typographical errors in the two documents, to have been cut and pasted from the complaint in the 2014 Superior Court action.
The judge awarded $3,768.45 in fees for the defense of counts IV and V. The fees requested were modest, and counsel did not seek fees after the point that the counts were dismissed. While it is true that the judge did not follow the prescribed procedure for obtaining jurisdiction over counts IV and V, counts IV and V of the LaRaces’ complaint were in fact barred, and the judge's analysis of the lack of good faith was fully supported. The judge was not required to credit counsel's profession of good faith where the circumstances of his performance -- including knowingly reasserting claims that had been dismissed in a prior action -- were indicative of a lack of good faith.
Judgment affirmed.
Decision on order to show cause affirmed.