Opinion
21-P-383
05-06-2022
AMY WRIGHT SHEA[1] v. BANK OF NEW YORK MELLON [2] & another.[3]
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass.App.Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
At issue in this appeal is whether the defendants were entitled to summary judgment on the issue of whether they had violated the requirements of G. L. c. 244, § 35B, and whether they were entitled to summary judgment on the plaintiffs' claim under G. L. c. 93A. We affirm.
Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and responses to requests for admission under Rule 36, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002). When a motion for summary judgment is made and properly supported, "an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided . . ., must set forth specific facts showing that there is a genuine issue for trial." Mass. R. Civ. P. 56 (e), 365 Mass. 824 (1974). A dispute about a material fact is "genuine" when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party" and a fact is "material" when "it 'might affect the outcome of the suit under the governing law.'" Dennis v. Kaskel, 79 Mass.App.Ct. 736, 740-741 (2011), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Where, as here, the party moving for summary judgment would not have the burden of proof at trial, the movant is "entitled to summary judgment if he demonstrates, by reference to material described in Mass. R. Civ. P. 56 (c), unmet by countervailing materials, that the party opposing the motion has no reasonable expectation of proving an essential element of that party's case." Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716 (1991).
"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), citing Mass. R. Civ. P. 56 (c), 365 Mass. 824 (1974). "The allowance of a motion for summary judgment is reviewed de novo." Brown v. Kalicki, 90 Mass.App.Ct. 534, 535 n.5 (2016), quoting White v. Hartigan, 464 Mass. 400, 406 (2013). "We may consider any ground supporting the judgment." Augat Inc., supra, citing Champagne v. Commissioner of Correction, 395 Mass. 382, 386 (1985) .
Count I of the complaint sought a declaration that the defendants violated the provisions of G. L. c. 244, § 35B, which provides that "[a] creditor shall not cause publication of notice of a foreclosure sale, as required by [G. L. c. 244, § 14], upon certain mortgage loans unless it has first taken reasonable steps and made a good faith effort to avoid foreclosure." G. L. c. 244, § 35B (b). "Certain mortgage loan" is defined by the statute as "a loan to a natural person made primarily for personal, family or household purposes secured wholly or partially by a mortgage on an owner-occupied residential property" with at least one of seven specified features which we have set out in the margin. G. L. c. 244, § 35B (a.) . The summary judgment record did not raise a triable issue of fact with respect to any of the seven features of the loan. Specifically, the plaintiffs agreed in the joint statement of undisputed facts that their mortgage did not have an introductory interest rate, did not at any time require interest-only payments, and did not offer a payment option in which the payment would be less than the principal and interest fully amortized over the life of the mortgage. It was also undisputed that the mortgage required full documentation of the plaintiffs' income and assets. It was also undisputed that the mortgage did not feature prepayment penalties that violated Massachusetts law. Finally, it was undisputed that the mortgage was underwritten with a loan-to-value ratio that was less than ninety percent. Accordingly, "the plaintiff[s were] not entitled by law either to the notice or the modification process set forth in § 35B." Barrett v. Mortgage Elec. Registration Sys., 25 LCR 773, 775 (Mass. Land Ct. 2017), quoting Enfield v. Rockland Trust Co., 87 Mass.App.Ct. 1103 (2015) (summary disposition pursuant to Rule 1:28, of the Appeals Court, predecessor to Rule 23.0 of the Appeals Court, as appearing in 97 Mass.App.Ct. 1017 [2020]).
Under § 35B, "for certain mortgage loans, the creditor shall send notice, concurrently with the notice required by [G. L. c. 244, § 35A (c), of the borrower's ninety-day right to cure a default], of the borrower's rights to pursue a modified mortgage loan." G. L. c. 244, § 35B (c). See generally M. Pill, Real Estate Law § 9:43, at 1027-1028 (4th ed. 2021) (discussing the statutory scheme). If the mortgage at issue is a "certain mortgage loan" then "[a] creditor shall be presumed to have acted in good faith and to have complied with [the statute], if, prior to causing publication of notice of a foreclosure sale, as required by [G. L. c. 244, § 14], the creditor:
"(i) determines a borrower's current ability to make an affordable monthly payment;
"(ii) identifies a modified mortgage loan that achieves the borrower's affordable monthly payment, which may include 1 or more of the following: reduction in principal, reduction in interest rate or an increase in amortization period; provided, however, that the amortization period shall not be more than a 15-year increase; provided, further, that no modified mortgage loan shall have an amortization period that exceeds 45 years; " (iii) conducts a compliant analysis comparing the net present value of the modified mortgage loan and the creditor's anticipated net recovery that would result from foreclosure . . .; " (iv) either (A) in all circumstances where the net present value of the modified mortgage loan exceeds the anticipated net recovery at foreclosure, agrees to modify the loan in a manner that provides for the affordable monthly payment; or (B) in circumstances where the net present value of the modified mortgage loan is less than the anticipated net recovery of the foreclosure, or does not meet the borrower's affordable monthly payment, notifies the borrower that no modified mortgage loan will be offered and provides a written summary of the creditor's net present value analysis and the borrower's current ability to make monthly payments, after which the creditor may proceed with the foreclosure process in conformity with this chapter."G. L. c. 244, § 35B (b) (2). "[T]he lender satisfies its duty [to make a good faith effort to avoid foreclosure] by doing the necessary work to determine whether the holders of the mortgage note would be better off with a modified loan than with a foreclosure and acting accordingly." Bank of New York Mellon v. Morin, 96 Mass.App.Ct. 503, 510-511 (2019), citing Easthampton Sav. Bank v. Springfield, 470 Mass. 284, 291 (2014).
These features include the following: "(i) an introductory interest rate granted for a period of 3 years or less and such introductory rate is at least 2 per cent lower than the fully indexed rate; (ii) interest-only payments for any period of time, except in the case where the mortgage loan is an open-end home equity line of credit or is a construction loan; (iii) a payment option feature, where any 1 of the payment options is less than principal and interest fully amortized over the life of the loan; (iv) the loan did not require full documentation of income or assets; (v) prepayment penalties that exceed [G. L. c. 183, § 56] or applicable [F]ederal law; (vi) the loan was underwritten with a loan-to-value ratio at or above 90 per cent and the ratio of the borrower's debt, including all housing-related and recurring monthly debt, to the borrower's income exceeded 38 per cent; or (vii) the loan was underwritten as a component of a loan transaction, in which the combined loan-to-value ratio exceeded 95 per cent. . ." G. L. c. 244, § 35B (a).
The plaintiffs argue that, because G. L. c. 244, § 35B, provides that a mortgage "shall be a certain mortgage loan if, after the performance of reasonable due diligence, a creditor is unable to determine whether" the mortgage has one or more of the features listed in the statute, the protections of G. L. c. 244, § 35B, should apply "because [defendant Select Portfolio Servicing (SPS)] kept openly adhering to the requirements of § 35B, [and] SPS's own actions at all times signaled that it believed that § 35B applied." The plaintiffs cite no legal authority for this proposition, and it is not persuasive. As the motion judge pointed out, "[t]his is not a case where the servicer had any difficulty determining the features of the loan. The relevant loan documents were not missing." Indeed, the mortgage itself was included in the summary judgment record. And the defendants submitted an affidavit in which an employee of a previous loan servicer with personal knowledge of the plaintiffs' mortgage averred that G. L. c. 244, § 35B, did not apply to the plaintiffs' loan.
What remains is the plaintiffs' claim under G. L. c. 93A. To the extent the c. 93A claim rests on the alleged failure to comply with the provisions of § 35B, it was properly dismissed for the same reasons we have set out above. To the extent the c. 93A claim rests on the fact that the defendants did not offer the plaintiffs a loan modification a second time, it fails for other reasons. To begin with, the plaintiffs have failed to show that the defendants' reason for declining the modification (namely, that the plaintiffs did not qualify for it) was not true. Moreover, the plaintiffs failed to show any fundamental unfairness.
Conduct is unfair or deceptive if it falls "within any recognized or established common law or statutory concept of unfairness." VMark Software v. EMC Corp., 37 Mass.App.Ct. 610, 620 (1994). Actionable conduct under the statute encompasses "[a]ctions involving fraudulent representations in knowing disregard of the truth," Datacomm Interface, Inc. v. Computerworld, Inc., 396 Mass. 760, 780 (1986), and "conduct 'in disregard of known contractual arrangements' and intended to secure benefits for the breaching party." Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 474 (1991), quoting Wang Lab., Inc. v. Business Incentives, Inc., 398 Mass. 854, 857 (1986). "It is not enough in the context of Chapter 93A for [the plaintiffs] to allege that defendants foreclosed on [their] property in violation of Massachusetts foreclosure law. Something more is required for [the plaintiffs] to establish that the violation 'has an extortionate quality that gives it the rancid flavor[] of unfairness [and deceptiveness]'" (quotation omitted). Juarez v. Select Portfolio Servicing, Inc., 708 F.3d 269, 281 (1st Cir. 2013), quoting Arthur D. Little, Inc. v. Dooyang Corp., 147 F.3d 47, 55 (1st Cir. 1998). See Atkinson v. Rosenthal, 33 Mass.App.Ct. 219, 226 (1992). Here, it was undisputed that the plaintiffs have been in default of the mortgage payment obligations since January 2011, that they were offered a loan modification in September 2017, that they rejected that modification, that they were again invited to apply for a loan modification in December 2017, and that, although they were rejected for this modification, they were nonetheless offered a structured repayment plan that could have allowed them to avoid foreclosure. There is nothing unfair or deceptive in any of this, and the defendants were entitled to judgment as a matter of law.
Judgment affirmed.
Meade, Wolohojian & Lemire, JJ.
The panelists are listed in order of seniority