CITIFINANCIAL SERVICING LLC [Note 1] v. MARGUERITE McLEOD and others [Note 2]

NESTOR, J. This postforeclosure summary process action is before us on the plaintiff's appeal. The record discloses that on January 14, 2008, defendant Marguerite McLeod ("McLeod") and her then husband, Sonny Lamery ("Lamery"), executed a mortgage on their home at 14 Rockwell Avenue, in Medford, securing a loan given by plaintiff CitiFinancial Services LLC ("CitiFinancial"). The mortgage was properly recorded on January 16, 2008. [Note 3]

On October 27, 2014, CitiFinancial sent McLeod and her then husband and co-borrower, Lamery, a notice of default by certified and first-class mail. On November 2, 2015, CitiFinancial foreclosed the mortgage by exercising the statutory power of sale and by entry, and on July 15, 2016, the foreclosure deed with affidavit of sale and the certificate of entry were recorded with the Middlesex South registry of deeds.

A jury-waived trial was held on July 13, 2017. Defendants Stanley O. Mathurin and Vincent F. Charmant resided at 14 Rockwell Avenue, but were not co-borrowers or mortgagors and are not related to this appeal. The trial judge found in favor of McLeod, ruling that the foreclosure was void for lack of compliance with Pinti v. Emigrant Mtge. Co., 472 Mass. 226 (2015).

The statutory power of sale in G.L. c. 183, § 21 requires upon default of the mortgage terms or condition, the mortgagee must "first comply[] with the terms of the mortgage and with the statutes relating to foreclosure of mortgages by the exercise of a power of sale." It is well settled that "the mortgagee, to effect a valid foreclosure sale, must strictly comply not only with the terms of the actual power of sale in the mortgage, but also with any conditions precedent to the exercise of the power that the mortgage might contain." Pinti, supra 233-234. "[S]trict compliance is required -- both as a matter of common law under this court's decisions and under § 21 -- [with] 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 236. A mortgagee's failure to strictly comply with the notice of default required in the mortgage renders the foreclosure sale void. Id. at 243.

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The Supreme Judicial Court made the Pinti requirements prospective only: "[I]t will apply to mortgage foreclosure sales of properties that are the subject of a mortgage containing paragraph 22 or its equivalent and for which the notice of default required by paragraph 22 is sent after the date of this opinion [July 17, 2015]." Id. at 243. The Court suggested that the mortgagee sign and record "an affidavit of compliance with the notice provisions of paragraph 22 that includes a copy of the notice that was sent to mortgagor pursuant to that paragraph." Id. at 244. The Court further refined the requirements of Pinti in Federal Nat'l Mtge. Ass'n v. Marroquin, 477 Mass. 82 (2017), stating that "the Pinti decision applies in any case where the issue was timely and fairly asserted in the trial court or an appeal before July 17, 2017."

Here, the mortgage had a notice of default provision in paragraph 17, which is equivalent to paragraph 22 in Pinti:

"17. Acceleration; Remedies Except as provided in paragraph 16 hereof, upon Borrower's breach of any covenant or agreement of Borrower in this Mortgage, including the covenants to pay when due any sums secured by this Mortgage, Lender prior to acceleration shall give notice to Borrower as provided in paragraph 12 hereof specifying: (1) the breach; (2) the action required to cure such breach; (3) a date, not less than 10 days from the date the notice is mailed to Borrower, by which such breach must be cured; and (4) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Mortgage and sale of 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 nonexistence of a default or any other defense of Borrower to acceleration and sale. If the breach is not cured on or before the date specified in the notice, lender, at Lender's option, may declare all of the sums secured by this Mortgage to be immediately due and payable 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 reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph 17, including, but not limited to, reasonable attorneys' fees.

"If Lender invokes the STATUTORY POWER OF SALE, Lender shall mail a copy of a notice of sale to Borrower, and to any other person required 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 Lender's designee may purchase the Property at any sale. The proceeds of the sale shall be applied in the following order: (a) to all reasonable costs and expenses of the sale, including reasonable attorneys' fees and costs of title evidence; (b) to all sums secured by this Mortgage; and (c) the excess, if any, to the person or persons legally entitled thereto."

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On July 21, 2017, CitiFinancial filed a motion under Mass. R. Civ. P. 59(a) to open the judgment, take additional testimony, amend findings of fact and conclusions of law and to enter a new judgment. Rule 59(a) provides: "On a motion for a new trial in an action tried without a jury, the court may open the judgment if one has entered, take additional testimony, amend findings of fact and conclusions of law or make new findings and conclusions, and direct entry of a new judgment."

The trial judge in a written decision denied the plaintiff's Rule 59 motion based on his view that the Pinti requirements are part of CitiFinancial's prima facie case. The trial judge reasoned that in Hughes v. Williams, 229 Mass. 467 (1918), the Supreme Judicial Court discussed the difference between the burden of proof and an affirmative defense:

"The statement of the legal principle where the burden of proof rests is plain. The party who makes and is required to make an assertion of a fact in order to set forth a case as matter of law entitling him to prevail, and whose case requires the proof of that fact, has at all times the burden of proving such fact. But where the party upon whom the burden of proof is cast offers competent proof of the fact, and his adversary instead of producing proof to negative that same fact proposes to show another and a distinct fact which avoids the effect of the first fact, then the burden of proof rests upon the party proposing to show the latter fact. This is an affirmative defense, the burden of proving which rests upon the party asserting it."

Id. at 470.

The trial judge concluded that plaintiff "did not establish a prima facie case for possession without admissible and credible evidence of strict compliance with paragraph 17 prior to the foreclosure sale pursuant to Pinti." He added, "Although the Supreme Judicial Court has not firmly pronounced that strict compliance with the notice of default provision must be affirmatively pled by the defendant or must be proven by the plaintiff as part of the prima facie case to establish legal title to the premises, it appears that strict compliance with the notice of default provision would be a fact to be proven by the plaintiff in order to show legal title to prevail." The trial judge further reasoned, "The plaintiff knew it had to prove a default and compliance with ¶ 17 of the Mortgage as a prerequisite to invoke the statutory power of sale pursuant to M.G.L.Ch. 183, Section 21."

"Legal title is established in summary process by proof that the title was acquired strictly according to the power of sale provided in the mortgage; and that alone is subject to challenge." Wayne Inv. Corp. v. Abbott, 350 Mass. 775 (1966), citing New England Mut. Life Ins. Co. v. Wing, 191 Mass. 192, 195, 196 (1906). "[O]ne who sells under a power [of sale] must follow strictly its terms. If he fails to do so there is no valid execution of the power of sale, and the sale is wholly void." U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637, 646 (2011), quoting Moore v. Dick, 187 Mass. 207, 211 (1905). The mortgagor's equitable title or an equity of redemption in the mortgaged property can be exercised to redeem the mortgaged property, until the right of redemption is foreclosed by the mortgagee. Bevilacqua v. Rodriguez, 460 Mass. 762, 774-775 (2011). After foreclosure, the mortgagee owns both the legal and equitable title, and the mortgage no longer exists. Bevilacqua, supra at 775.

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"[B]y structure and content, the notice of default required to be given under paragraph 22 is integrally connected, and operates as a prerequisite, to the proper exercise of the mortgage instrument's power of sale." Pinti, supra at 243.

CitiFinancial was not required in its case in chief to show compliance with the requirements of Pinti. In 2011, in Bank of N.Y. v. Bailey, 460 Mass. 327 (2011), the Supreme Judicial Court stated that "[i]n a summary process action for possession after foreclosure by sale, 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, citing Lewis v. Jackson, 165 Mass. 481, 486-487 (1896), and G.L. c. 244, § 15.

Later, in 2012, in Federal Nat'l Mtge. Ass'n v. Hendricks, 463 Mass. 635 (2012), the Supreme Judicial Court stated that "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." Id. at 637. "[W]e hold that in a summary process action a foreclosure deed and statutory form constitute prima facie evidence of the right of possession." Id. at 642. See also U.S. Bank Nat'l Ass'n v. Schumacher, 467 Mass. 421, 428 (2014), citing Lewis, supra at 486-487 (to make prima facie showing of title, mortgagee only needs to prove that it obtained deed to property at issue, and that deed and affidavit of sale, showing compliance with power of sale, were duly recorded).

The Appeals Court relied on the Supreme Judicial Court's holding in Hendricks in Mendell Way, LLC v. Gordon, No. 16-P-312 (Mass. App. Ct. May 26, 2017) (unpublished Rule 1:28 decision) (explaining that plaintiff in a postforeclosure summary process action may make a prima facie showing of right to possession by producing attested copy of recorded foreclosure deed and affidavit, but that defendant may challenge plaintiff's title). Similarly, the Appeals Court followed the Supreme Judicial Court's holding in Bailey, supra at 334, in Federal Nat'l Mtge. Ass'n v. Brown, No. 16-P-298 (Mass. App. Ct. May 16, 2017) (unpublished Rule 1:28 decision) ("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.'"). [Note 4]

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Here, CitiFinancial produced certified copies of the foreclosure deed and the affidavit of sale. Pinti is an affirmative defense that must be raised in a timely and fair manner by the foreclosed party facing eviction. "[T]he omission of an affirmative defense from an answer generally constitutes a waiver of that defense." Aronovitz v. Fafard, 78 Mass. App. Ct. 1, 8 (2010), quoting Sharon v. City of Newton, 437 Mass. 99, 102 (2002).

In Federal Nat'l Mtge. Ass'n v. Marroquin, supra, the Supreme Judicial Court noted the following:

"[W]e now consider whether the homeowner defendants in this case timely and fairly raised a Pinti defense before the issuance of our Pinti decision. The judge found that they had, and we concluded that he was not clearly erroneous in so finding.

"We recognize that the defendants did not specifically allege that the mortgagee's notice for default failed to strictly comply with the terms of paragraph 22 of the mortgage until they filed their cross motion for summary judgment on September 23, 2015, more than two months after the issuance of our opinion in Pinti. But more than three years before that opinion, in June, 2012, they filed an answer as self-represented litigants where they checked the box proffering as a defense to the eviction that the plaintiff did not have 'superior right to possession of the premises.' We need not consider whether the assertion of this affirmative defense alone was sufficient to give fair notice of a Pinti defense, because it is apparent from the plaintiff's memorandum in support of its motion for summary judgement, which was filed one month before the issuance of our Pinti decision, that the plaintiff recognized that the defendants had alleged that the notice of default failed to comply with the terms of paragraph 22 of the mortgage. In that memorandum, the plaintiff argued that it had complied with the requirements of paragraph 22 and that it would be 'irrational and fundamentally unfair' to declare the foreclosure proceeding void because of the purported minor differences between the language of the notice of default and that of the mortgage. Where the plaintiff recognized that the defendants had raised the Pinti issue as a defense before our Pinti decision,

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the judge did not err in finding that the defendants fairly and timely raised the issue and therefore were entitled to the benefit of the Pinti decision."

Id. at 88-89.

McLeod's defense in this case rested on the belief that she and her then husband had purchased mortgage life insurance, and as a result, the mortgage note should have been paid upon her co-borrower's death. McLeod testified to her belief that mortgage life insurance had been purchased but indicated that her co-borrower had taken all documentation after their divorce. Regardless, this defense cannot be construed as an assertion of a defense under Pinti. McLeod did not assert a Pinti defense, and the trial judge erroneously concluded that she had and that CitiFinancial was required to prove compliance with Pinti as part of its prima facie case. The court erred in denying the plaintiff's Rule 59 motion.

The order denying the plaintiff's motion for a new trial is reversed, the judgment is vacated, and this case is returned for a new trial.

So ordered.