RETAINED REALTY, INC., a New York corporation v. DONEYN BOURKE and another [Note 1]

FINNERTY, P.J. This is an appeal by the defendants, Doneyn Bourke and William Hayward, Sr. ("B & H"), of a judgment for possession against them in a summary process brought by Retained Realty, Inc. ("RRI"). B & H bought real estate on Nantucket Island in 2008, financed in part by a $950,000 mortgage loan from Emigrant Mortgage Co., Inc. ("Emigrant"). B & H stopped paying the loan in January, 2009, and Emigrant issued a notice of default on March 31, 2009. [Note 3] On August 7, 2009, Emigrant caused its attorney to send B & H a letter purporting to supplement the March notice. [Note 4] On December 23, 2010, Emigrant notified B & H that the foreclosure sale would occur on January 27, 2011. Evidence at trial, and credited by the trial court, included the testimony of the foreclosure sale auctioneer that after several postponements of the sale, he made open and peaceable entry upon the mortgaged premises on March 21, 2011 and conducted the foreclosure auction sale. A certificate of entry was recorded in the Land Court on December 14, 2012, along with a foreclosure deed to RRI. Also on December 14, 2012, the Land Court canceled the certificate of title that had been issued to B & H, and issued a new transfer certificate of title to RRI. See note 5, infra. The auctioneer testified that Emigrant was the winning bidder and that he completed a memorandum of sale to that effect. No assignment of the winning bid from Emigrant to RRI was ever registered and recorded as required by Land Court

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Guideline No. 41. [Note 5] The memorandum of sale dated March 21, 2011 does not include any assignment language. The affidavit filed with the foreclosure deed from Emigrant to RRI and dated July 12, 2011 avers that RRI was the high bidder in the foreclosure auction. That affidavit is plainly erroneous, and was found to be so by the trial judge.

The certificate of entry, foreclosure deed, and affidavit of sale were recorded and registered on December 14, 2012.

On March 25, 2013, RRI brought this summary process action. B & H answered, and the parties engaged in discovery. During the pendency of the proceeding, cross motions for summary judgment were considered by the court and denied. On May 22, 2017, a bench trial began and was completed on June 20, 2017 and was taken under advisement. B & H's motion for reconsideration of the summary judgment motion was denied on November 27, 2017, and judgment for RRI for possession was entered. B & H's motion under Mass. R. Civ. P. 59(e) motion was denied, and this appeal followed.

B & H raised several issues at trial, which they argue here as well. They contend that RRI lacked standing to bring the summary process; that Emigrant's failure to comply strictly with the terms of the mortgage rendered the foreclosure void; that there was no entry to effect foreclosure of the mortgage; that the foreclosure sale was not conducted in a commercially reasonable manner; and that the judgment was against the weight of the evidence at trial and was based on errors of law.

Paragraph 22 and power of sale. Paragraph 22 of B & H's mortgage to Emigrant provided that prior to acceleration following the borrower's breach of the mortgage, Emigrant was required to give notice specifying: (a) the default; (b) the action required to cure the default; (c) a date not less than 30 days out by which the default must be cured; and (d) that failure to cure the defect within the time given may result in acceleration and sale. The notice was also required to inform the borrower of the right to bring a court action to assert the nonexistence of a default or any other defense to acceleration and sale. [Note 6]

On March 31, 2009, Emigrant sent notice, purportedly pursuant to paragraph 22, which included (a) the default; (b) the action required to cure; (c) a date (June 29, 2009) by which the default must be cured; and (d) that failure to cure the default within the time may result in acceleration and sale. The notice stated that B & H had "the right to assert in any lawsuit for foreclosure and sale the nonexistence of a default or any other defense you may have to acceleration and foreclosure and sale."

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That language is not compliant with the requirements of paragraph 22. See Pinti v. Emigrant Mtge. Co., 472 Mass. 226 (2015); Federal Nat'l Mtge. Ass'n v. Marroquin, 477 Mass. 82 (2017). Those cases held that such language did not comply with the requirement of paragraph 22 because there was no judicial proceeding to foreclose and the borrower must be informed that it must initiate a judicial proceeding to raise those issues.

On August 7, 2009, by a second notice, Emigrant advised B & H that the note had been accelerated and that they may have the right to reinstate the mortgage notwithstanding the acceleration. That portion of the notice is consistent with the mortgage since paragraph 38 of B & H's mortgage provided the borrower could not reinstate as of right after acceleration. The mortgage here thus differs on that point from the one in Marroquin where the right to reinstate after acceleration remained valid. See note 6, supra. The August notice went on to advise B & H that they had "the right to bring a court action to assert the nonexistence of the default specified in the Letter or any other defense you might have to acceleration and sale."

Emigrant argues that the second notice cured any defect in the March 31, 2009 notice. However, paragraph 22 required the notice, including this and all of the provisions previously outlined, be given "prior to acceleration." We agree with B & H that the notice of August 7, 2009 was given after acceleration and does not remedy the defective notice sent in March. In accordance with the court's ruling in Marroquin, "the strict compliance with paragraph 22" holding of Pinti is applicable to this case, as the issues had been raised by B & H in the trial court prior to July 17, 2015 (the date of the Pinti decision). We note that in ruling on B & H's motion for summary judgment, the trial judge did not have the benefit of the Marroquin holding.

The foreclosure under the power of sale was therefore void. Because of that holding, we need not address the remaining issues raised by B & H with respect to the conduct of the foreclosure sale itself.

Foreclosure by entry. It is not unusual for a mortgagee to pursue different types of foreclosure concurrently. Chamberlain Garages, Inc. v. New England Bond & Mtge. Co., 267 Mass. 453 (1929). Sections 1 and 2 of G.L. c. 244 provide that a mortgagee may, after breach of the condition of a mortgage of land, recover possession by an open and peaceable entry thereon and if possession is continued peaceably for three years from the date of recording of the certificate of entry. On March 21, 2011, such a certificate of entry was prepared to memorialize the open and peaceable entry by Emigrant, as testified to at trial and found credible by the trial court. That certificate was recorded on December 14, 2012, which started the clock on the three years of possession required to foreclose B & H's right of redemption. [Note 7] B & H argue that the trial court should not have credited the testimony that there was an entry and that the trial court's finding of an entry was against the weight of the evidence.

An appellate court will set aside findings only if they are unsupported by the trial

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evidence or tainted by error of law. Such findings must be clearly erroneous and regard must be given to the opportunity of the trial judge to judge the credibility of the witnesses. So long as the judge's account is plausible in light of the entire record, an appellate court should decline to reverse it. Advanced Spine Ctrs., Inc. v. Enterprise Rental-A-Car Co. of Boston, 2012 Mass. App. Div. 117, 118. "Findings are clearly erroneous when, 'although there is evidence to support [them], the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.' The judge, with a 'firsthand view of the presentation of evidence, is in the best position to judge the weight and credibility of the evidence. . . .' 'If the [trial] court's account of the evidence is plausible in light of the record viewed in its entirety, the [appellate court] may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous'" (citations omitted). LFS Group, Inc. v. Gutzler, 2011 Mass. App. Div. 83, 87 n.7. Such is the case here, despite the appellants' insistence that the trial judge's findings of fact were erroneous.

Because we hold that RRI is not the beneficiary of a valid foreclosure sale, we consider whether the foreclosure by entry made summary process available to RRI following the deed from Emigrant to RRI. Section 1 of G.L. c. 239 sets forth those persons entitled to summary process. The summary process at issue was commenced within the three-year statutory period set forth in G.L. c. 244, § 1, which means that B & H's right of redemption had not yet been foreclosed. "[S]ummary process remains inapplicable before a foreclosure is complete, unless there has been an actual possession in the plaintiff and a forcible entry upon or a forcible detainer against that possession." Dayton v. Brannelly, 255 Mass. 551, 553 (1926), citing Covell v. Matthews, 245 Mass. 135 (1923). At the time of the filing of the summary process, B & H's estate had not ended and they had been in quiet possession of the land for the three years preceding. See G.L. c. 239, § 8; Dayton, supra at 552. After the recording of that certificate, B & H became tenants at sufferance of Emigrant and their possession was Emigrant's until the completion of the foreclosure. See Singh v. 207-211 Main St., LLC, 78 Mass. App. Ct. 901, 902 (2010). Even if the defective foreclosure deed that Emigrant provided to RRI may have operated to assign the mortgage to RRI, [Note 8] the foreclosure deed could not convey the right to commence summary process because the equity of redemption had not been extinguished. See Santiago v. Balboa Mgt., Inc., 77 Mass. App. Ct. 46 (2010). Therefore, neither Emigrant nor RRI had standing to obtain summary process.

By the time of the trial, four and a half years had passed since the recording of the certificate of entry, past the time for the equity of redemption to have been extinguished. However, summary process is purely a statutory procedure and can be maintained only in the instances specifically provided for in the statute. See E.G. Daher & H. Chopp, Landlord and Tenant Law § 16.30, at 337 (3d ed. 2000). The Supreme Judicial Court has emphasized the strict construction of the summary process statute in Rental Prop. Mgt. Servs. v. Hatcher, 479 Mass. 542 (2018). "And where the plaintiff lacks standing to bring an action, the court lacks jurisdiction of the subject matter and must therefore dismiss the action." Id. at 546-547. Where the complaint is dismissed for lack of subject matter jurisdiction, the plaintiff cannot file a new summary process complaint against the tenant unless it subsequently becomes

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the owner or lessor of the property. Id. at 547. RRI lacked standing to obtain summary process against B & H at the time it filed this action, and the passage of time did not cure its failure to be in strict compliance with the requirements of G.L. c. 239.

The judgment of the trial court is vacated, and RRI's complaint for summary process is dismissed.

So ordered.