Home DEUTSCHE BANK NATIONAL TRUST, TRUSTEE FOR AMERIQUEST MORTGAGE SECURITIES, INC. vs. VICTORIA A. KELLEY and LEO A. KELLEY

SBQ 06-14792-12-001

January 4, 2010

Sands, J.

DECISION

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Plaintiff filed its unverified Petition on December 15, 2006, alleging clerical errors in, and seeking to amend, a mortgage (“Mortgage 3”) granted to it by Defendants Victoria A. Kelley (“Victoria”) and Leo A. Kelley (“Leo”) (together, “Defendants”). [Note 1] An Amended Petition was filed on April 17, 2007, correcting a misspelling of Victoria’s name. A Second Amended Petition was filed on October 2, 2007, adding a count for declaratory judgment as to the status of Mortgage 3. Defendants filed their Answer on August 16, 2007. [Note 2], [Note 3] A case management conference was held on November 29, 2007.

Plaintiff filed its Motion for Summary Judgment on January 30, 2008, together with supporting memorandum, Statement of Undisputed Material Facts, Appendix, and Affidavit of Tamara Price. [Note 4] On April 22, 2008, Defendants filed their Motion to Deny Summary Judgment. [Note 5] Defendants filed their Stipulated Undisputed Material Facts on November 4, 2008. Plaintiff filed its Response to Defendants’ Stipulated Undisputed Material Facts on November 18, 2008. Defendants filed their Motion to Dismiss on April 21, 2009, alleging predatory lending, fraud and malfeasance, and forgery. [Note 6] Plaintiff filed its Opposition to Defendants’ Motion to Dismiss on July 22, 2009. A hearing was held on all motions on September 14, 2009, at which time all motions were taken under advisement. [Note 7] On December 23, 2009, this court issued a Fifteen Day Nisi Order in which Plaintiff was required to provide proof of its interest in Mortgage 3 and the Note, as hereinafter defined. Plaintiff complied with this Nisi Order by providing this court with Plaintiff’s assignment (the “Assignment”) of Mortgage 3 and the Note on December 28, 2009, and by recording the Assignment with the Registry on December 31, 2009, at Book 38092, Page 3. [Note 8]

Summary judgment is appropriate where there are no genuine issues of material fact and where the summary judgment record entitles the moving party to judgment as a matter of law. See Cassesso v. Comm’r of Corr., 390 Mass. 419 , 422 (1983); Cmty. Nat=l Bank v. Dawes, 369 Mass. 550 , 553 (1976); Mass. R. Civ. P. 56(c).

This court finds that the following facts are not in dispute:

1. Victoria took title to property located at 35 Bay Farm Road, Kingston, Plymouth County, Massachusetts (a portion of which is “Locus”) by foreclosure deed of Citicorp Mortgage, Inc. This deed was registered as Document No. 367965 on Transfer Certificate of Title No. 86204 dated April 15, 1994, which is registered with the Plymouth County Registry District of the Land Court (the “Registry District”) at Book 431, Page 4. [Note 9] Locus is also shown as Lot 12 on Kingston Assessor’s Map 37. Locus has been the principal residence of Defendants since 1995 and contains approximately 1.52 acres.

2. On April 15, 1994, Victoria granted a mortgage on Locus to John R. Hamilton, Jr., Trustee of Kings Towne Realty Trust to secure a note of even date in the amount of $211,000. Since 1994, Locus has been the subject of numerous refinancings, each refinance being used to pay off the existing mortgage and sometimes taking out additional cash.

3. On April 25, 2003, Victoria granted Ameriquest Mortgage Company (“Ameriquest”) a mortgage (“Mortgage 1”) on Locus to secure a note of the same date in the amount of $322,700 (Loan No. 46671616). Mortgage 1 was executed by both Victoria and Leo, and had an Adjustable Rate Rider attached. [Note 10] Mortgage 1 was registered with the Registry District on May 8, 2003, as Document No. 535293.

4. By Quitclaim Deed dated May 24, 2003, Leo A. Kelley, Trustee of KFT Realty Trust, conveyed property located at 32 Crescent Street, Kingston, Massachusetts (the “Crescent Street Property”), to Leo and Victoria. [Note 11] This deed was recorded with the Registry on June 12, 2003, at Book 25421, Page 54. [Note 12] The Crescent Street Property has been used by Defendants as a rental property.

5. On May 24, 2003, Leo and Victoria granted Ameriquest a mortgage (“Mortgage 2”) on the Crescent Street Property to secure a note of the same date in the amount of $127,500 (Loan No. 47660394). Mortgage 2 was executed by both Leo and Victoria, and had an Adjustable Rate Rider and a 1-4 Family Rider attached. [Note 13] Mortgage 2 was recorded with the Registry on June 12, 2003, at Book 25421, Page 57.

6. Victoria and Leo executed an Adjustable Rate Note dated May 13, 2004 (the “Note”) in the amount of $395,000 in favor of Ameriquest (Loan No. 78826203). In connection with the execution of the Note, Victoria and Leo executed an Affidavit of Title for Locus, which stated that they would live there. [Note 14] In addition, Leo and Victoria executed a HUD-1A Settlement Statement indicating that Ameriquest had been paid $325,825.13 from the closing proceeds. [Note 15]

7. On May 14, 2004, Victoria granted Ameriquest a mortgage (Mortgage 3) on Locus. [Note 16] Mortgage 3 secured the Note, and had an Adjustable Rate Rider attached, which referenced Locus as the mortgaged property. Mortgage 3 was recorded with the Registry on June 15, 2004, at Book 28443, Page 20.

8. By Release of Mortgage dated June 22, 2004 (the “Release”), Ameriquest released Mortgage 1. The Release was registered with the Registry District on July 26, 2004, as Document No. 569832.

9. By Assignment of Mortgage dated March 24, 2005, Ameriquest assigned Mortgage 2 securing the Crescent Street Property to WM Specialty Mortgage LLC. This Assignment was recorded with the Registry on June 21, 2005, at Book 30754, Page 70.

10. WM Specialty Mortgage LLC sold the Crescent Street Property by Foreclosure Deed for consideration of $370,000 dated May 24, 2005, and recorded with the Registry on June 21, 2005, in Book 30754, Page 76. [Note 17]

11. By Corporation Assignment of Deed of Trust/Mortgage dated December 24, 2009, Ameriquest assigned Mortgage 3 and the Note to Plaintiff. This Assignment was recorded with the Registry on December 31, 2009, at Book 38092, Page 3. [Note 18]

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Plaintiff seeks reformation of Mortgage 3 to replace the legal description of the Crescent Street Property with Locus on Exhibit A. Defendants argue that Mortgage 3 was intended to cover the Crescent Street Property. A review of the surrounding facts clarifies these issues.

Victoria purchased Locus in 1994 and owns it individually. Locus is registered land. Victoria has refinanced Locus a number of times since she purchased it, each time paying off the prior mortgage with the proceeds of the refinance. On April 25, 2003 Victoria refinanced Locus with Mortgage 1 in the amount of $322,700, paying off a mortgage to Champion Mortgage Co., Inc. memorialized by Discharge of Mortgage dated June 9, 2003, and registered with the Registry District on June 23, 2003. Mortgage 1, similar to the other mortgages on Locus, was registered with the Registry District. On May 24, 2004, Victoria refinanced Locus with Mortgage 3 in the amount of $395,000, paying off Mortgage 1. The Note secured by Mortgage 3 referenced Locus as the mortgaged property. The HUD Settlement Statement for the refinance reflects a payment of $325,825.13 to Ameriquest (for Mortgage 1). Mortgage 1 was discharged by instrument dated June 22, 2004, and registered with the Registry District. Unfortunately, there were two significant errors relative to Mortgage 3: (1) Mortgage 3 was recorded with the Registry, not the Registry District; and (2) Exhibit A contained a legal description for the Crescent Street Property.

Leo, as Trustee, purchased the Crescent Street Property in the mid-1990s. The Crescent Street Property is not registered land. As Trustee, Leo then deeded the Crescent Street Property to himself and Victoria by deed dated May 24, 2003. As a part of that conveyance, Defendants refinanced the Crescent Street Property with Ameriquest (via Mortgage 2) in the amount of $127,500, and this mortgage was recorded with the Registry. Thereafter, Defendants defaulted in payments on Mortgage 2, Ameriquest foreclosed on that property, and the Crescent Street Property was sold by foreclosure deed dated May 24, 2005. That foreclosure has not been challenged by Defendants.

Notwithstanding the fact that Mortgage 2 was outstanding in May 2004, Defendants argue that Mortgage 3 was intended as a second mortgage securing the Crescent Street Property and not Locus. The effect of what Defendants assert would be that Locus would have been unsecured by a mortgage as of June 22, 2004. [Note 19] This argument, however, is illogical. Mortgage 3 was a first mortgage and there is no evidence that Mortgage 2, also a first mortgage, was intended to be discharged, and in fact it was not discharged. Moreover, Mortgage 1 was discharged as a result of the execution of Mortgage 3. Furthermore, an officer of Ameriquest has given an Affidavit as to the fact that Mortgage 3 was intended to cover Locus, [Note 20] It should be noted that the copy of the check from Ameriquest given by Defendants was not attached to an affidavit and was not sworn. Also, Defendants had numerous opportunities to depose Tamara Price but never chose to do so. Moreover, the affidavit of Tamara Price is immaterial to the case at bar as this check had nothing to do with Mortgage 3; Defendants are still liable to Plaintiff for the Note, and the Note is secured by Mortgage 3 with a lien on Locus. There is nothing in the summary judgment record to lend any credence to the claim that Ameriquest intentionally switched the description of the Crescent Street Property for Locus on Exhibit A. and Defendants fail to provide any affidavit evidence in this case whatsoever. [Note 21] Even though Exhibit A contained a legal description for the Crescent Street Property, the address listed in the body of both Mortgage 3 and the attached Adjustable Rate Rider was the address for Locus.

In their Motion to Dismiss, Defendants argue unjust enrichment and the Statute of Frauds. They allege forged signatures and undue coercion by Ameriquest relative to the closing on Mortgage 3. As previously discussed, there is no evidence in the summary judgment record to support these allegations, and Defendants’ hypotheses are speculative at best. Defendants have not presented any affidavit testimony at all. Moreover, a focus on the documents discloses, in the final analysis, that all parties intended Mortgage 3 to be a lien on Locus, Mortgage 3 secured the Note for $395,000, the proceeds of the Note were disbursed to pay off Mortgage 1, and the balance of the funds were distributed to Defendants. Even if Defendants were correct in their analysis that Ameriquest switched the legal description in Mortgage 3, thereby resulting in a lien on the Crescent Street Property, the Note continues to obligate Defendants to pay Ameriquest $395,000. Mortgage 3 merely gave collateral to secure the payment of the Note.

As a result of the foregoing, I find that Mortgage 3 was intended to encumber Locus. Exhibit A of Mortgage 3 shall be amended to reflect the correct legal description of Locus, and Mortgage 3 and the Assignment shall be recorded on the registered side of the Registry. As such, I ALLOW Plaintiff’s Motion for Summary Judgment and DENY Defendants’ Motion to Dismiss.

Judgment to enter accordingly.

Alexander H. Sands, III

Justice

Dated: January 4, 2010

FOOTNOTES

[Note 1] The clerical errors alleged in the Petition were : (1) recording Mortgage 3 on the recorded (versus the registered) side of the Plymouth County Registry of Deeds (the “Registry”); and (2) omitting the address from the margin of Mortgage 3 and including the wrong legal description of the property on Exhibit A of Mortgage 3.

[Note 2] Defendants filed their Answer to Second Amended Petition on December 21, 2007.

[Note 3] Defendants were initially represented by Brenda Golden Hallisey, Esq. Attorney Hallisey filed a Motion to Withdraw as Counsel, which was allowed on March 7, 2008. Since that time Defendants have represented themselves pro se.

[Note 4] Plaintiff filed its Revised Motion for Summary Judgment on September 15, 2008, together with Revised Statement of Undisputed Material Facts, Appendix, and Supplemental Affidavit of Tamara Price.

[Note 5] Defendants filed their Opposition to Revised Motion for Summary Judgment on September 9, 2009, together with supporting memorandum.

[Note 6] Defendants filed a second Motion to Dismiss on June 24, 2009.

[Note 7] Defendants’ Motions to Dismiss do not refer this court to a particular authorizing rule of civil procedure or statutory provision. Further confusing matters is that Defendants’ second Motion to Dismiss refers to Plaintiff’s Motion for Summary Judgment. However, aware of Defendants’ pro se status and this court’s duty pursuant to Mass. R. Civ. P. 8(f) to interpret “[a]ll pleadings . . . as to do substantial justice,” I will address the merits of Defendants’ Motions to Dismiss, infra.

[Note 8] Plaintiff reported that the Registry would not accept the Assignment on the registered side because Mortgage 3 is recorded and not registered. As discussed, infra, the Assignment shall be moved to the registered side along with Mortgage 3.

[Note 9] This property was comprised of the following three lots: (1) Lot 18 on registration plan 14792-Q, drawn by Delano & Keith, Surveyors, dated January 29, 1958, and filed with Certificate of Title No. 27296; (2) Lot 20 on registration plan 14792-S, drawn by Delano & Keith, Surveyors, dated July 14, 1960, and filed with Certificate of Title No. 29921; and (3) Lot 23 on registration plan 14792-V, drawn by Delano & Keith, Surveyors, dated November 29, 1962, and filed with Certificate of Title No. 34845. Lot 23 was sold by Victoria to P. Tracy Morrison and Susan A. Morrison by Quitclaim Deed dated September 25, 1995, and registered with the Registry District on September 25, 1995, as Document No. 387192. The remaining land (Lots 18 and 20) is referred to as Locus.

[Note 10] It is unclear why Leo executed Mortgage 1. Mortgage 1 paid off a prior mortgage to Champion Mortgage Co., Inc., which was memorialized by Discharge of Mortgage dated June 9, 2003, and registered with the Registry District on June 23, 2003.

[Note 11] The Crescent Street Property was shown as Lot 71 on the Kingston Assessor’s Map 67. It is also known as Lot 31B on plan titled “Plot plan of land in Kingston Massachusetts, prepared for Louise G. Schilling” dated November 3, 1975, and prepared by Francis M. Russell Design Associates.

[Note 12] This deed referenced the prior deed into Leo, Trustee, as being recorded with the Registry in Book 12263, Page 80. Such deed is not a part of the summary judgment record.

[Note 13] Leo and Victoria executed an Occupancy Agreement on May 24, 2003, indicating that they intended to reside at the Crescent Street Property.

[Note 14] This was confirmed by an Occupancy Agreement dated May 14, 2004, and executed by both Leo and Victoria, stating that they intended to occupy Locus as their primary residence.

[Note 15] The HUD Settlement Statement supplied by Plaintiff and executed by Defendants has an estimated settlement date of May 30, 2004. The HUD Settlement Statement also shows that $60,280.95 was disbursed at closing to Defendants. Defendants have supplied a separate HUD Settlement Statement also executed by Defendants with an estimated settlement date of May 30, 2004. This HUD Settlement Statement shows that $52,443.45 was disbursed at closing to Defendants. This discrepancy is immaterial to the case at bar.

[Note 16] Mortgage 3 listed “Victoria A. Kelley, married to Leo A. Kelley” as the Borrower, but was executed by both Victoria and Leo. The address of the encumbered property listed in the body of Mortgage 3 was Parcel 67-71 at 35 Bay Farm Road in Kingston. Exhibit A to Mortgage 3 (“Exhibit A”), which contained the legal description of the property, described the Crescent Street Property.

[Note 17] As a part of that transaction, Ameriquest issued a Cancellation of Debt Form 1099-C dated May 18, 2005, cancelling the remaining balance owed on Mortgage 2 relative to the Crescent Street Property.

[Note 18] Throughout almost all of the litigation in the case at bar, as evidence of their interest in Mortgage 3 and the Note, Plaintiff relied on a Limited Power of Attorney dated December 27, 2005, and recorded with the Registry on February 10, 2006, at Book 32198, Page 219.

[Note 19] Leo testified at his deposition that Mortgage 3 was originally intended to cover Locus but that these documents were changed by Ameriquest later to add the legal description to the Crescent Street Property, as the Crescent Street Property was listed as the primary residence of Defendants. The Occupancy Agreement dated May 24, 2003, did in fact state this. There is no evidence in the summary judgment record to indicate such change by Ameriquest. There is also no explanation of how changing the legal description on Exhibit A from Locus to the Crescent Street Property would change Defendants’ obligation to pay the Note once the Crescent Street Property was foreclosed.

[Note 20] In her Supplemental Affidavit, Tamara Price represented that a check stub from Ameriquest indicating a payment to Defendants of $16,422.29, was a check for surplus funds remaining from the foreclosure on the Crescent Street Property. Defendants, in one of their memoranda, point out that the check related to the stub was dated June 23, 2004, a year before the foreclosure sale of the Crescent Street Property, and that the check referenced the loan number for Mortgage 3. Defendants argue that, based on this error, Tamara Price’s affidavit was fraudulent. However, there is nothing in the summary judgment record to support an inference of fraudulent activity on the part of Tamara Price. In fact, the summary judgment record includes nothing linking Tamara Price to the foreclosure sale of the Crescent Street Property.

[Note 21] Even though they give no affidavit testimony, Defendants attempt to challenge the Tamara Price affidavit as fraudulent because of a discrepancy in dates within the affidavit. See supra note 19.