2017 Mass. App. Div. 41

October 16, 2015 - February 16, 2017

Appellate Division Southern District

Court Below: District Court, Nantucket Division

Present: Welch, Finnerty & Finigan, JJ.

James L. Rogal and David J. Rhein for the plaintiff.

Thomas B. Vawter and James T. Ranney for the defendants.

FINIGAN, J. The appellants in this matter, William James Bartleman and Kate E. Bartleman (together, the "Bartlemans"), appeal the court's award of possession to the plaintiff in this postforeclosure residential summary process action. The matter was tried before a judge in the Nantucket Division of the District Court. The appeal comes before us on the record of the proceedings pursuant to Dist./Mun. Cts. R. A. D. A., Rule 8C. In support of their appeal, the Bartlemans assert two claims of error, namely that the trial judge (1) failed to grant their motion for involuntary dismissal at the close of the plaintiffs case, and (2) failed to make findings of fact and rulings of law as requested by the Bartlemans. For the reasons set forth below, we reverse the trial court's denial of the motion for involuntary dismissal and the decision to award possession to the plaintiff.

1. Procedural history. Claiming superior title, Federal Home Loan Mortgage Corporation ("Freddie Mac") sought to obtain possession of a residential Nantucket property occupied by the Bartlemans, along with damages for use and occupancy. To that end, Freddie Mac served the Bartlemans with a notice to quit, followed by a summary process summons and complaint containing a trial date of August 6, 2012. After a series of court dates concerning discovery, scheduling, and other matters not relevant to this appeal, the parties appeared for a bench trial on October 9, 2013. At trial, Freddie Mac called four witnesses: a keeper of records from the original lender, an auctioneer, a constable, and a local real estate broker. Freddie Mac also offered a number of documents as exhibits, including a notice to quit to each of the Bartlemans, the summary process summons and complaint, and the foreclosure deed. Notably, the court allowed the admission of the foreclosure deed but excluded the attached affidavit of sale, for reasons discussed further below.

At the close of Freddie Mac's case, counsel for the Bartlemans indicated his intention to file a motion for involuntary dismissal. [Note 2] Before receiving the court's ruling on that motion, the Bartlemans rested without calling any witnesses or offering any

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evidence. Neither party filed written requests for findings of fact or rulings of law before closing argument, but the court granted both sides two weeks to file additional papers. The Bartlemans did file proposed findings of fact and rulings of law by the deadline. On February 19, 2014, the court, without making written findings, issued its decision in favor of Freddie Mac for possession and awarded zero damages. This appeal followed.

2. Denial of motion for involuntary dismissal. The standard of review of the denial of a Mass. R. Civ. P., Rule 41(b) (2), motion for involuntary dismissal is whether "anywhere in the evidence, from whatever source derived, any combination of circumstances could be found from which a reasonable inference could be drawn in favor of the plaintiff." Sonogram of New England, Inc. v. Metropolitan Prop. & Cas. Ins. Co., 2002 Mass. App. Div. 68, 70-71, quoting Raunela v. Hertz Corp., 361 Mass. 341, 343 (1972). We summarize the relevant evidence taken from the record in the light most favorable to the plaintiff. Estate of Marie Bryant v. Bryant, 2010 Mass. App. Div. 160, 162.

The Bartlemans acquired a residential condominium known as 5A Park Circle, Nantucket, Massachusetts (the "Property") by virtue of a deed dated August 5, 2007. The Bartlemans financed their purchase of the Property in part by means of a promissory note given to Provident Funding Associates, Inc. ("Provident Funding Inc."). The note was secured by a mortgage given to Mortgage Electronic Registration Systems, Inc. ("MERS"). Not long after the closing, Provident Funding Inc. endorsed the note to its affiliate, Provident Funding Associates, L.P. ("Provident Funding LP."), which soon after endorsed the note in blank to Freddie Mac. [Note 3] Provident Funding L.P. remained as servicer of the loan.

In September of 2010, the Bartlemans defaulted on the note. On June 27, 2011, MERS assigned the mortgage to Provident Funding LP., and Provident Funding L.P. instituted foreclosure proceedings. By that point in time, all documentation relating to the Bartlemans' loan had been imaged and was available electronically to certain employees of Provident Funding L.P. at their offices in Cypress, California. Notices of default were generated by a "foreclosure specialist" working in the foreclosure department of Provident Funding L.P. On January 6, 2012, Provident Funding L.P. conducted a foreclosure sale by engaging the services of a duly licensed local auctioneer. At the appointed hour, the auctioneer arrived at the property and explained to the small crowd gathered the mechanics of the bidding process. The Bartlemans were not at the foreclosure sale, but a family member appeared. Provident Funding L.P. was the sole and, consequently, high bidder. [Note 4] On March 13, 2012, Provident Funding L.P. assigned its bid and all of its rights, title, and interest to the Property to Freddie Mac.

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On June 26, 2012, Freddie Mac served the Bartlemans with a three-day notice to quit, requesting the Bartlemans vacate the Property. The notices to quit were served by a local constable appointed by the town of Nantucket; both were given in hand to Kate Bartleman. After the Bartlemans failed to leave, Freddie Mac served a summary process summons and complaint, seeking possession and damages for use and occupancy. After trial, the court awarded possession to Freddie Mac, with zero damages for use and occupancy. [Note 5]

Ordinarily, a tenant cannot challenge a landlord's title in a summary process action. Connors v. Wick, 317 Mass. 628, 630 (1945). An exception lies where, as here, the summary process action is for eviction where the property was purchased at a foreclosure sale. New England Mut. Life Ins. Co. v. Wing, 191 Mass. 192, 195 (1906). 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). Nevertheless, a defendant in such an action may challenge legal title and require proof that the plaintiff's acquisition of the subject property strictly complied with the power of sale in the mortgage. Id. at 642; Bank of N.Y. v. Bailey, 460 Mass. 327, 332-334 (2011). See U.S. Bank Nat'l Ass'n v. Schumacher, 467 Mass. 421, 432-433 (2014) (Gants, J., concurring) (any violation of statutes relating to foreclosure by exercise of power of sale will void foreclosure sale).

In order to make a prima facie case for possession of foreclosed-upon property by nonjudicial sale, there must be proof of compliance with the notice provisions of G.L.c. 244, §14. [Note 6] Hendricks, supra at 637-638. Section 15 of G.L.c. 244 provides the mechanism for proof of compliance with §14 by requiring an affidavit of the sale of the foreclosed property to be recorded in the local registry of deeds. The statute requires that the affidavit must describe the particular acts of the affiant, and "[i]f the affidavit shows that the requirements of the power of sale and the law have been complied with in all respects, the affidavit or a certified copy of the record thereof, shall be admitted as evidence that the power of sale was duly executed." Id.

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The form of the affidavit required by G.L.c. 244, §15 is satisfied by the statutory form set out in the Appendix to G.L. c. 183 (Form 12). [Note 7] Hendricks, supra at 641. In this case, the affidavit of sale was largely in the statutory form and duly recorded in the registry of deeds together with the foreclosure deed. When offered by Freddie Mac at trial, the affidavit drew an objection from the Bartlemans as not being made on personal knowledge. The offending language, as argued by the Bartlemans and accepted by the trial judge, was that the affiant averred she "had caused" and "was aware" of the required publication and notices. For that reason, the trial judge originally took the foreclosure deed de bene, and later excluded so much of the foreclosure deed that contained the affidavit. While the wisdom of that decision is not before us, its exclusion was not fatal to Freddie Mac's case - the effect was simply that Freddie Mac needed to prove satisfaction of the publication and notice requirements of §14 by other means. Hendricks, supra at 637, citing Burns v. Thayer, 115 Mass. 89, 93 (1874).

The publication and notice provisions of §14 are not onerous - the statute requires publication in a newspaper of local circulation, along with advance notice to the property owner and junior mortgagees. Difficulty can arise, however, when the mortgage is held by an out-of-state mortgagee who exercises the power of sale. Once the affidavit of sale was excluded, it fell upon Freddie Mac to prove publication and notice in some other fashion. This was not done. Of the four witnesses presented, only the keeper of the records testified regarding publication and notice, and only in passing. The required notice was not offered at trial, nor was evidence of the newspaper publication. This omission is fatal. See U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637, 647-648 (2011), and cases cited.

In addition to deficiencies in the §14 notice requirements, the Bartlemans challenged Freddie Mac's title due to Provident Funding L.P.'s failure to comply with the notice requirements of §35A of G.L.c. 244 and, raised for the first time in its posttrial request for rulings of law, paragraph 22 of the mortgage given to MERS and later assigned to Provident Funding L.P. A deficiency in the notice required by §35A would not, standing alone, cloud Freddie Mac's title. In U.S. Bank Nat'l Ass'n v. Schumacher, the Supreme Judicial Court held that G.L.c. 244, §35A "is not one of the statutes 'relating to the foreclosure of mortgages by the exercise of a power of sale.. " Id. at 431, quoting G.L.c. 183, §21. Thus, it is not part of a plaintiff's prima facie case in summary

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process. A defendant may still defeat the summary process claim by proving that the violation of §35A "rendered the foreclosure so fundamentally unfair that she is entitled to affirmative equitable relief, specifically the setting aside of the foreclosure sale 'for reasons other than failure to comply strictly with the power of sale provided in the mortgage,'" but there is no evidence of fundamental unfairness before us. Id. at 433 (Gants, J., concurring), quoting Bank of Am., NA. v. Rosa, 466 Mass. 613, 624 (2013). See Bank of N.Y. Mellon Corp. v. Wain, 85 Mass. App. Ct. 498, 501 (2014).

Whether Freddie Mac's predecessor, Provident Funding L.P., satisfied the notice requirements of paragraph 22 raises a separate issue. The mortgage given by the Bartlemans, marked as an exhibit at trial, contained the familiar paragraph 22 of the Massachusetts - Single Family - Fannie Mae/Freddie Mac Uniform Instruction, Form 3022. [Note 8] The Supreme Judicial Court recently considered whether a mortgagee must strictly comply with the provisions of paragraph 22 in order to exercise the power of sale. Pinti v. Emigrant Mtge. Co., 472 Mass. 226 (2015). The Pinti Court held that while a mortgagee need not demonstrate "punctilious performance" of every single mortgage term to effectuate a valid exercise of a power of sale contained in a mortgage, strict compliance is required as to "(1) terms directly concerned with

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the foreclosure sale authorized by the power of sale in the mortgage, and (2) those prescribing actions the mortgagee must take in connection with the foreclosure sale - whether before or after the sale takes place." Id. at 235.

As noted in Pinti, the sending of the prescribed notice of default is essentially a prerequisite to use of the mortgagee's power of sale, because the power of sale may be invoked only if the default is not cured within the time specified in the notice of default. Per the Pinti Court, the "terms of the mortgage" with which strict compliance is required - both as a matter of common law under the Court's decisions and under the statutory power of sale found in G.L.c. 183, §21 - include not only the provisions in paragraph 22 relating to the foreclosure sale itself, but also the provisions requiring and prescribing the preforeclosure notice of default. Id. at 235-236, citing Foster, Hall & Adams Co. v. Sayles, 213 Mass. 319, 322-324 (1913).

At the trial of this matter, the only witness competent to testify as to the paragraph 22 notice was the keeper of records, since the remaining three witnesses played no role in the servicing of the Bartlemans' loan. That witness, however, was not the affiant of the affidavit of sale. As "custodian of records," the witness testified that it was the practice of Provident Funding L.P. to "send written correspondence, delinquency letters ... the breach acceleration letter" as part of the foreclosure process after a borrower defaults, but he did not have any firsthand knowledge of what transpired with respect to the Bartlemans' loan prior to the foreclosure sale. The form and timing of the notice, cure rights, etc. were not described, nor was the notice itself offered as an exhibit. Freddie Mac therefore failed to establish that the mortgagee complied with paragraph 22. [Note 9]

3. Failure to issue findings of fact and rulings of law. Rule 52(c) of the Massachusetts Rules of Civil Procedure provides that in all actions tried without a jury, "the court shall find the facts specially and state separately its conclusions of law thereon, provided that any party submits before the beginning of any closing arguments proposed findings of fact and rulings of law" (emphasis added). The requirement of findings and rulings under Rule 52(c) applies to all District Court cases "traditionally considered tort, contract, replevin or equity actions, except small claims actions." Rule 81(a)(2). While summary process trials do not fall within the aforementioned list, Rule 1 of the Uniform Summary Process Rules adopts the Massachusetts Rules of Civil Procedure, "insofar as the latter are not inconsistent with" the Uniform Summary Process Rules. The obligation of the court to make findings of fact and rulings of law following a timely request is then made applicable to summary process cases. See 2008 Reporter's Notes to Mass. R. Civ. P. 52.

Here, neither party submitted proposed findings or rulings before closing arguments. Throughout the course of the trial, the parties and the trial judge discussed the applicability of recent case law to the matter at hand, and the judge invited both

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sides to "file a request for rulings." In light of our decision regarding the motion for involuntary dismissal, we need not decide whether the judge's invitation amounted to an extension of the deadline set forth in Rule 52, and if so, whether the judge's failure to issue finding and rulings in connection with his decision would amount to reversible error.

The denial of the Bartlemans' motion for involuntary dismissal is reversed, and possession is awarded to the Bartlemans.


[Note 1] Kate E. Bartleman.

[Note 2] The written motion is not included in the record appendix.

[Note 3] Provident Funding Associates, Inc. is the General Partner of Provident Funding Associates, L.P.

[Note 4] At the time of the foreclosure sale, Freddie Mac still held the note, endorsed in blank. To effect a valid foreclosure, the foreclosing mortgage holder must also hold the underlying note or be acting on behalf of the note holder. Eaton v. Federal Nat'l Mtge. Ass'n, 462 Mass. 569, 571 (2012). While the record does not establish by what authority Provident Funding L.P. acted on Freddie Mac's behalf, the rule established by Eaton applies only to foreclosures for which the notice of foreclosure was given after the date of that decision, June 22, 2012, not the case here. Id. at 588.589; Khalsa v. Sovereign Bank, NA., 88 Mass. App. Ct. 824, 827 n.5 (2016).

[Note 5] At trial, a local real estate broker testified as to the fair market rental value of the Property. In light of our decision, we need not summarize those facts here.

[Note 6] General Laws c. 244, §14, provides that "no sale under [the power of sale in a mortgage] shall be effectual to foreclose a mortgage, unless, previous to such sale, [1] notice of the sale has been published once in each of 3 successive weeks, the first publication of which shall not be less than 21 days before the day of sale, in a newspaper published in the city or town where the land lies or in a newspaper with general circulation in the city or town where the land lies and [2] notice of the sale has been sent by registered mail to the owner or owners of record of the equity of redemption as of 30 days prior to the date of sale, said notice to be mailed by registered mail at least 14 days prior to the date of sale to said owner or owners ... and unless [3] a copy of said notice of sale has been sent by registered mail to all persons of record as of 30 days prior to the date of sale holding an interest in the property junior to the mortgage being foreclosed, said notice to be mailed at least 14 days prior to the date of sale to each such person."

[Note 7] Form 12 provides as follows:

"__ named in the foregoing deed, make oath and say that the principal___ interest___ obligation___ mentioned in the mortgage above referred to was not paid or tendered or performed when due or prior to the sale, and that I published on the __ day of __, 19 _, in the ___, a newspaper published or by its title page purporting to be published in aforesaid and having a circulation therein, a notice of which the following is a true copy. (INSERT ADVERTISEMENT)

"Pursuant to said notice at the time and placetherein appointed, I sold the mortgaged premises at__ public auction by___, an auctioneer, to____ above named, for ___dollars, bid by him, being the highest bid made therefor at said auction.

Sworn to by the said __, 19 __, before me ___.

[Note 8] Paragraph 22 of the mortgage provides in full:

"Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant or agreement in this Security Instrument .... The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than [thirty] days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale. If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the STATUTORY POWER OF SALE and any other remedies permitted by Applicable Law. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to, reasonable attorneys' fees and costs of title evidence.

"If Lender invokes the STATUTORY POWER OF SALE, Lender shall mail a copy of a notice of sale to Borrower, and to other persons prescribed by Applicable Law, in the manner provided by Applicable Law. Lender shall publish the notice of sale, and the Property shall be sold in the manner prescribed by Applicable Law. Lender or its designee may purchase the Property at any sale. The proceeds of the sale shall be applied in the following order: (a) to all expenses of the sale, including, but not limited to, reasonable attorneys' fees; (b) to all sums secured by this Security Instrument; and (c) any excess to the person or persons legally entitled to it."

[Note 9] The Pinti decision applies to foreclosure sales of properties subject to mortgages containing paragraph 22 or its equivalent and for which notice of default required by paragraph 22 was sent out after the date of the decision: July 17, 2015. Id. at 243. Pinti left open the question of whether the decision applies to cases, such as this, which were pending on appeal on that date. Id. at 243 n.25. That question was answered in the affirmative by Aurora Loan Servs., LLC v. Murphy, 88 Mass. App. Ct. 726, 731 (2015).