CRJB, LLC v. MARIE R. MILLIEN, FREMONT INVESTMENT & LOAN, and U.S. BANK, N.A., f/k/a MERCANTILE BANK

Introduction

Plaintiff CRJB LLC (“CRJB”) is a recent (April 4, 2007) assignee of a promissory note from Charles and Lisa Olsson to Dream House Mortgage Corporation dated November 17, 1995, secured by a junior mortgage on the property at 101 Warren Street in Randolph. [Note 1] Complaint at ¶ 1 (July 3, 2007); Amended Complaint at ¶ 1 (Dec. 27, 2007). The mortgage was duly recorded at the Norfolk County Registry of Deeds. Complaint at ¶ 1; Amended Complaint at ¶ 1. The senior mortgage, also duly recorded, was held by the predecessors of defendant U.S. Bank N.A. [Note 2] Amended Complaint at ¶¶ 6-10, 12. The Olssons filed a Chapter 7 bankruptcy petition on July 15, 1998 and received a discharge on October 22nd. Complaint at ¶¶ 10, 13; Amended Complaint at ¶¶ 17, 20. U.S. Bank’s predecessor, Mercantile Bank, began foreclosure proceedings shortly thereafter and, on July 23, 1999, recorded (1) an affidavit pursuant to G.L. c. 244, § 15, certifying its compliance with the requirements for foreclosure by sale (G.L. c. 244, § 14), Amended Complaint at ¶ 26, and (2) a certificate of entry, signed by two witnesses and notarized, certifying that a representative of the bank had “made an open, peaceable, and unopposed entry on the premises described in [the] mortgage, for the purpose, by him declared, of foreclosing said mortgage for breach of the condition thereof,” Certificate of Entry (June 7, 1999). [Note 3] U.S. Bank then conveyed the property to the United States of America, Secretary of Housing and Urban Development (“HUD”) by deed dated August 9, 1999. [Note 4] The property has since been conveyed several times and is currently titled in the name of defendant Marie R. Millien, a purchaser for value. Complaint at ¶¶ 19-20.

Neither CRJB’s complaint nor its amended complaint gives any indication of how (if at all) defendant Fremont Investment & Loan fits in to these events (A lender perhaps? To whom? When?), nor articulates any facts or legal theory as to why Fremont has been named as a defendant in the case. So far as the record shows, Fremont has never been served.

All of CRJB’s claims, against all of the defendants, depend upon a single, central premise: that U.S. Bank’s predecessor (Mercantile Bank) never validly foreclosed on the property and thus never extinguished CRJB’s junior lien. [Note 5] CRJB concedes that Mercantile foreclosed both by sale and by entry. CRJB’s Memorandum of Law in Support of Plaintiff’s Motion in Opposition to Motion to Dismiss Plaintiff’s Compalint [sic] at 5 (May 30, 2008) (hereinafter, “CRJB’s Opposition”). If either foreclosure was valid, CRJB’s mortgage was extinguished. See Palmer v. Fowley, 71 Mass. 545 , 548-49 (1856) (foreclosing mortgagee, even if foreclosure is by entry, receives “the exact title conveyed to him by his mortgagor,” extinguishing all subsequent mortgages). CRJB argues that neither of Mercantile’s foreclosures was valid because, it alleges, Mercantile never gave CRJB’s predecessor Remodelers Funding (the holder of the CRJB note and mortgage at the time of the foreclosures) personal notice of the foreclosures. [Note 6] Id. at 5-8. For purposes of this motion, U.S. Bank assumes that such personal notice was not given. [Note 7] It thus concedes, for purposes of this motion, that the foreclosure by sale was ineffective against CRJB. G.L. c. 244, § 14. The issue the motion thus presents is whether personal notice was required for foreclosure by entry.

CRJB concedes that Mercantile’s foreclosure by entry took place in accordance with the stated statutory requirements (open and peaceable entry by the holder of the mortgage, with at least two witnesses who thereafter certified the entry, under oath, in a signed and notarized certificate filed and recorded at the registry of deeds, and peaceable possession of the premises for three years after the date of recording (G.L. c. 244, §§ 1, 2)). Statement of counsel at oral argument; see also CRJB’s Opposition at 5. Unlike G.L. c. 244, § 14 (foreclosure by sale), the statutory language of G.L. c. 244, §§ 1 and 2 contains no requirement of personal notice to the owner or other lien holders. CRJB contends, however, that allowing foreclosure by entry without actual notice to junior lien holders would be “unjust and unfair within the meaning of the Massachusetts General Laws and the intent of the Massachusetts legislature.” CRJB’s Opposition at 5. U.S. Bank has now moved to dismiss CRJB’s claims under Mass. R. Civ. P. 12(b)(6), contending that personal notice is not required for foreclosure by entry. I agree. As more fully set forth below, the motion to dismiss is ALLOWED and CRJB’s claims against all defendants are dismissed in their entirety, with prejudice.

Analysis

The standard of review under Mass. R. Civ. P. 12(b)(6) is well settled and requires me to accept as true any well-pleaded factual allegations in the complaint and amended complaint and any inferences favorable to the plaintiff that can reasonably be drawn from those allegations. Fairneny v. Savogran Co., 422 Mass. 469 , 470 (1996); Eyal v. Helen Broadcasting Corp., 411 Mass. 426 , 429 (1991). Characterizations and conclusions of law, however, warrant no such consideration and may be disregarded. See, e.g., Schaer v. Brandeis Univ., 432 Mass. 474 , 477-478 (2000); Boston & Maine R.R. Co. v. County Comm’rs of Middlesex County, 239 Mass. 127 , 131 (1921). I may also consider matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint and amended complaint. Schaer, 432 Mass. at 477-78; see also Jarosz v. Palmer, 436 Mass. 526 , 529-30 (2002); Jackson v. Longcope, 394 Mass. 577 , 580 n.2 (1985). Moreover, the evaluation properly can include the entirety of documents integral to, referenced in, or explicitly relied upon in the complaint and amended complaint, even though not attached to those pleadings. See, e.g., Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43 , 45 n.4 (2004) (“Where, as here, the plaintiff had notice of . . . documents and relied on them in framing the complaint, the attachment of such documents to a motion to dismiss does not convert the motion to one for summary judgment.”); Shaw v. Digital Equipment Corp., 82 F.3d 1194, 1220 (1st Cir. 1996); Romani v. Shearson Lehman Hutton, 929 F.2d 875, 879 n.3 (1st Cir. 1991). Where those documents differ from the plaintiff’s allegations, the documents control. A party’s characterization of documents cannot contradict the documents themselves. See Ng Bros. Constr. Inc. v. Cranney, 436 Mass. 638 , 647-48 (2002). Lastly, I may consider stipulations of counsel. See Rutland v. Fife, 11 Mass. App. Ct. 341 , 345 (1981), rev’d on other grounds, 385 Mass. 1010 (1982).

Foreclosure by entry is governed by G.L. c. 244, §§ 1 and 2. G. L. c. 244, § 1 states,

[a] mortgagee may, after breach of condition of a mortgage of land, recover possession of the land mortgaged by an open and peaceable entry thereon, if not opposed by the mortgagor or other person claiming it, or by action under this chapter; and possession so obtained, if continued peaceably for three years from the date of recording of the memorandum or certificate as provided in section two, shall forever foreclose the right of redemption.

G. L. c. 244, § 2 states, in relevant part,

[i]f an entry for breach of condition is made without a judgment, a memorandum of the entry shall be made on the mortgage deed and signed by the mortgagor or person claiming under him, or a certificate, under oath, of two competent witnesses to prove the entry shall be made. Such memorandum or certificate shall after the entry . . . be recorded in the registry of deeds for the county or district where the land lies, with a note of reference, if the mortgage is recorded in the same registry, from each record to the other. Unless such record is made, the entry shall not be effectual for the purposes mentioned in the preceding section.

Mercantile Bank complied with all the stated criteria in both statutory sections. First, the Olssons breached the conditions of their mortgage when they stopped making payments. Second, Mercantile Bank made an open and peaceable entry on June 7, 1999. Third, Mercantile Bank recorded a memorandum of the entry in the form of a Certificate of Entry on July 23, 1999. The memorandum was signed by two competent witnesses, pursuant to G.L. c. 244, § 2. Fourth, Mercantile Bank and its successors have peaceably possessed the property from July 23, 1999 (the date of the certificate’s recording) to this date. Fifth and finally, the three year period in § 1 has expired and the right of redemption has therefore been foreclosed. See Goff v. White, 37 Mass. App. Ct. 128 , 131 (1994); Palmer v. Fowley, 71 Mass. 545 , 548-49 (1856).

CRJB argues that U.S. Bank did not satisfy the requirements of G.L. c. 244, §§ 1 and 2 because it did not provide CRJB’s predecessor, Remodelers National Funding (the holder of the CRJB mortgage at the time), with personal notice of the foreclosure. That same argument was made and rejected by the Appeals Court in the recent case of Pellegrini v. Silva. Case No. 06-P-865, 70 Mass. App. Ct. 1110 , 2007 WL 3333247 at *2 (2007) (Memorandum and Order Pursuant to Rule 1:28), further appellate review denied 450 Mass. 1109 (2008). As the Appeals Court held in Pellegrini,

the Silvas [the mortgagors, who challenged the foreclosure by entry] have pointed to no authority for the proposition that actual notice of open and peaceable entry is required under the peaceable foreclosure statute. To the contrary, “the recorded certificate of entry required by G.L. c. 244, §§ 1, 2, is ample notice of the mortgagee’s intent to foreclose by entry and possession.” Wornat Dev. Corp. v. Vakalis, 403 Mass. 340 , 346 (1988), citing Beaton v. Land Court, 367 Mass. 385 , 393 (1975).

The Silvas argue that a single sentence in Beaton places a “gloss” on G.L. c. 244, §§ 1, 2, which requires personal notice to the mortgagor. See Beaton, supra (“It does not appear possible in this Commonwealth that a foreclosure could ever be made without the mortgagor’s having first received some form of notice of the proposed foreclosure and an opportunity to oppose it”). However, Beaton specifically cites the recording requirement of G.L. c. 244, §§ 1, 2 as a “form of notice” sufficient in the context of open and peaceable entry. Ibid. For more than 150 years, courts in the Commonwealth have repeatedly affirmed that a duly recorded entry is sufficient notice under this statute. See, e.g., Bennett v. Conant, 10 Cush. 163 , 167 (1852) (statute provides “full and authoritative notice, to all persons”); Lennon v. Porter, 5 Gray 318 , 319 (1855); Hawkes, 16 Gray at 565 (certificate of entry gives notice to “all persons concerned”); Ellis v. Drake, 8 Allen 161 , 163-164 (1863); Joyner v. Lenox Sav. Bank, 322 Mass. 46 , 53 (1947).

The Silvas further contend that their due process rights were violated as a result of Pellegrini’s [the foreclosing mortgagee] failure to provide them with personal notice of the foreclosure. We conclude, as did the court in Beaton, that because Pellegrini satisfied the notice requirements of the statute, this case presents no “occasion to determine whether the due process clause even has any applicability to nonjudicial mortgage foreclosures.” Beaton, supra at 393.

Finally, we turn to the Silvas’ argument that Pellegrini’s claim [for a declaration that she had title free and clear of any claim by the Silvas] should be estopped because she “deliberately waited” three years after her entry to give the [Silvas] actual notice of her actions. This argument must fail. As the motion judge ruled, the Silvas, as landowners, had a duty to monitor their title. Pellegrini had no duty to provide notice beyond that required by the governing statute. See Wornat Dev. Corp. v. Vakalis, 403 Mass. at 346.

Id. at *2-3.

Pelligrini and the cases it cites are thus dispositive of CRJB’s arguments. [Note 8] As Pelligrini noted, the statutory language does not require personal notice to anyone, and the commonwealth’s courts have consistently held that “a duly recorded entry is sufficient notice under this statute.” Id. at *2. Statutes are to be interpreted and applied as they are written, Martha’s Vineyard Land Bank Comm’n v. Bd. of Assessors of West Tisbury, 62 Mass. App. Ct. 25 , 27-28 (2004), and the legislature has clearly deemed “a duly recorded entry” adequate and proper notice to the world. Joyner v. Lenox Savings Bank, 322 Mass. 46 , 53 (1947).

There is nothing “unfair” in this, nor is there any due process violation. The certificate of entry was openly recorded at the registry of deeds, available to anyone who checked the records. The statute gives a three year period from the date the certificate is first recorded until the foreclosure becomes final. It is neither onerous nor burdensome for a mortgagor or junior mortgagee to be required to check those records during those three years. Surely the mortgagee will know that its note is not being paid. It is hardly unreasonable for the legislature to expect that the mortgagee will, at the least, send periodic reminders of the debt to the mortgagor’s address, and a returned envelope, marked “addressee no longer at this address” or “addressee unknown” is an indication to the mortgagee that it should conduct follow-up inquiries, including a visit to the registry. CRJB and its predecessors have no excuse for failing to make such timely inquiries. They were aware that the mortgagor had filed for bankruptcy and received a discharge. Amended Complaint at ¶¶ 17, 20. They were aware that there was a mortgage senior to their mortgage. Id. at ¶ 19. CRJB acquired the junior mortgage at issue by assignment a little over a year ago, nearly eight years after U.S. Bank’s certificate of entry was recorded. Even the merest “due diligence” effort on its part (checking the title at the registry) would have revealed the foreclosure by entry. CRJB thus has no credible claim that it reasonably sustained any loss, and thus no credible claim to standing to assert a due process violation on U.S. Bank’s part.

Conclusion

As noted above, all of CRJB’s claims, against all of the defendants, depend upon its contention that the lack of personal notice to its predecessor, Remodelers Funding, invalidated U.S. Bank’s foreclosure by entry. For the reasons set forth above, that contention has no merit. U.S. Bank’s motion to dismiss is therefore ALLOWED and CRJB’s claims against all defendants are dismissed in their entirety, with prejudice. Judgment shall enter accordingly.

SO ORDERED.

By the court (Long, J.)

Attest:

Deborah J. Patterson, Recorder

Date: 29 July 2008