Plaintiff JPMorgan Chase & Co., Inc. (JPMorgan) filed its unverified Complaint on April 3, 2007, seeking (1) a declaratory judgment pursuant to G. L. c. 231A as to a) the validity and enforceability of a mortgage and note (the Crosby Mortgage and the Crosby Note, as hereinafter defined) on property located at 39 Maxwell Avenue, Dorchester, Massachusetts (Locus), and b) equitable subrogation of the Crosby Mortgage to a mortgage on Locus which JPMorgan holds by assignment; and (2) to quiet title to Locus pursuant to G. L. c. 240, § 6. [Note 1] Defendant City of Boston (City) filed its Answer on May 22, 2007. [Note 2] Defendant Carlo Casarano, Trustee of the Ford Realty Trust (Casarano), filed his Answer and Jury Claim on May 29, 2007. [Note 3] On July 2, 2007, Defendant Mary Y. Odoms-Harris (Odoms-Harris) filed her Answer and Cross-Claim against Casarano, seeking declaratory judgment relative to the Crosby Mortgage and Crosby Note and quiet title relative to Locus, and alleging breach of contract, breach of implied covenant of good faith and fair dealing, infliction of emotional distress, and a violation of G. L. c. 93A. [Note 4] A case management conference was held on July 20, 2007. Casarano filed his Answer to Cross-Claim and Jury Demand on July 26, 2007.
Casarano filed his Motion for Partial Summary Judgment (relative to the issue of equitable subrogation) on March 16, 2009, together with supporting memorandum and Statement of Undisputed Material Facts. On the same day, Plaintiffs filed their Motion for Summary Judgment (relative to payment and negotiability of the Crosby Note, as hereinafter defined), together with supporting memorandum, Statement of Undisputed Material Facts, Appendix containing excerpts from the depositions of Odoms-Harris, Carlo Casarano, and David Fulmer, and Declaration of Robert E. McLaughlin. Jr. Casarano filed his Opposition to Plaintiffs Motion for Summary Judgment on April 16, 2009, together with supporting memorandum, Appendix, and Affidavits of Alan H. King, Esq. (King) and Carlo Casarano. On the same day Plaintiffs filed their Opposition to Casaranos Motion for Partial Summary Judgment, together with Statement of Additional Undisputed Material Facts, Supplemental Appendix, and Affidavit of Odoms-Harris. On April 30, 2009, Plaintiffs filed their Reply Brief and Motion to Strike Affidavit of Alan H. King, Esq. Casarano filed his Opposition to the Motion to Strike on September 17, 2009. A hearing was held on all motions on September 18, 2009, at which time all motions were taken under advisement. [Note 5]
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. Commr 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. By deed dated May 20, 1990, Mary E. Wells (now Odoms-Harris) purchased Locus from Kevin A. Crosby and Conny Y. Crosby (the Crosbys) for $140,000. The deed was recorded with the Suffolk County Registry of Deeds (the Registry) on March 26, 1991, at Book 16763, Page 39. [Note 6] Odoms-Harris granted a first mortgage (the First Eastern Mortgage) for $108,000 to First Eastern Mortgage Corporation by document dated March 21, 1991, and recorded with the Registry on March 26, 1991, at Book 16763, Page 40.
2. On March 21, 1991, Odoms-Harris granted a second mortgage (the Crosby Mortgage) to Kevin Crosby (Kevin) by document recorded with the Registry on July 22, 1991, at Book 16952, Page 68. [Note 7] The Crosby Mortgage stated that it secured a note (the Crosby Note) in the amount of $15,443.00 at ten percent interest, per year. Monthly payments of $100 were required under the Crosby Note. The Crosby Note is not a part of the summary judgment record.
3. On November 26, 1992, Kevin assigned the Crosby Mortgage to Casarano by document recorded with the Registry on January 11, 1993, at Book 17980, Page 44 (the Crosby Assignment). [Note 8], [Note 9] The Crosby Note was not referenced in the Crosby Assignment. David Fulmer (Fulmer), the attorney for Casarano, gave deposition testimony that he received the original of the Crosby Note as a part of the assignment. Some payments were made by Odoms-Harris to Casarano under the Crosby Note. [Note 10]
4. By document dated July 14, 1998, and recorded with the Registry at Book 22765, Page 326, Odoms-Harris granted a mortgage to Ameriquest Mortgage Company (the Ameriquest Mortgage) in the amount of $121,500. [Note 11] The proceeds of this financing were used to pay off and discharge the First Eastern Mortgage.
5. By document dated June 28, 1999, Odoms-Harris granted a mortgage to Contimortgage Corporation (the Contimortgage Mortgage) in the amount of $136,850, which was recorded with the Registry at Book 23952, Page 306. The proceeds of this financing were used to pay off and discharge the Ameriquest Mortgage.
6. By document dated September 26, 2000, Odoms-Harris granted a mortgage to Equicredit (the Equicredit Mortgage) in the amount of $191,000, which was recorded with the Registry at Book 25417, Page 116. The proceeds of this financing were used to pay off and discharge the Contimortgage Mortgage.
7. By document dated December 19, 2001, Odoms-Harris granted a mortgage to Household Finance Corporation (the Household Finance Mortgage) in the amount of $266,629, which was recorded with the Registry at Book 27705, Page 104. The proceeds of this financing were used to pay off and discharge the Equicredit Mortgage.
8. By document dated September 5, 2002, Odoms-Harris granted a mortgage to Mortgage Amenities Corp. (the Mortgage Amenities Mortgage) in the amount of $292,500.00, which was recorded with the Registry on September 10, 2002, at Book 29320, Page 36. The proceeds of this financing were used to pay off and discharge the Household Finance Mortgage.
9. On September 24, 2004, Odoms-Harris granted a mortgage (the Fremont Mortgage) to Mortgage Electronic Registration Systems, Inc. as nominee for Fremont Investment & Loan (Fremont) in the amount of $323,000 which was recorded with the Registry on October 1, 2004, at Book 35596, Page 3. The proceeds of this financing were used to pay off and discharge the Mortgage Amenities Mortgage. A discharge of the Mortgage Amenities Mortgage, dated April 12, 2005, was recorded with the Registry on April 21, 2006, at Book 36901, Page 244.
10. By document dated May 21, 2008, the Fremont Mortgage was assigned to JPMorgan, and the assignment was recorded with the Registry on July 9, 2008, at Book 43779, Page 284.
11. By document dated May 21, 2008, JPMorgan assigned the Fremont Mortgage to Wells Fargo, and the assignment was recorded with the Registry on July 9, 2008, at Book 43779, Page 285. [Note 12]
I must first address Plaintiffs Motion to Strike the Affidavit of Alan H. King, Esq. Plaintiffs argue that the Affidavit, relating to the sale of Locus by the Crosbys to Odoms-Harris, is not on personal knowledge and is speculative. King, however, was the attorney for Kevin in the sale of Locus and had personal knowledge of the events, set forth facts that would be admissible, and was competent to testify as to the events. Moreover, the Affidavit of King was corroborated by the Affidavit of Carlo Casarano, which has not been challenged, and the deposition testimony of Carlo Casarano, as to the fact that the Crosby Note has not been paid off. As a result of the foregoing, Plaintiffs Motion to Strike the Affidavit of Alan H. King, Esq. is DENIED.
Plaintiffs argue that the Fremont Mortgage has priority over the Crosby Mortgage because the Crosby Note has been paid off, because the Crosby Note is not a negotiable instrument, and because of the doctrine of equitable subrogation based on unjust enrichment. Casarano argues that the Crosby Note has not been paid off, that there is no need for the Crosby Note to be a negotiable instrument, and that equitable subrogation is not applicable. I shall examine each of these arguments in turn.
I. Equitable Subrogation.
Plaintiffs primary argument is that the Fremont Mortgage has priority over the Crosby Mortgage. In such context, Plaintiffs argue that, assuming the Crosby Note is valid and enforceable, the Crosby Mortgage is subordinate to the Fremont Mortgage, as they are protected by the doctrine of equitable subrogation, which provides that the new mortgage given by a mortgagor, who used the proceeds of the new mortgage to extinguish an earlier mortgage, may receive the same priority once given to the earlier mortgage. East Boston Savings v. Ogan, 428 Mass. 327 , 330 (1998). [Note 13] In Ogan, the SJC explains the basis for equitable subrogation as follows:
The question whether to apply subrogation depends on a balance of the interests of the competing mortgagees because [t]he right to subrogation rests upon equity. The court guards against the unjust enrichment of either party by granting to the later mortgagee the priority status intended by the parties to that transaction, only so long as the interests of the intervening mortgagee are not prejudiced (citations omitted).
Ogan requires that the follow factors be present for equitable subrogation:
Before equitable subrogation applies, a court must determine: (1) the subrogee made the payment to protect his or her interest, (2) the subrogee did not act as a volunteer, (3) the subrogee was not primarily liable for the debt paid, (4) the subrogee paid off the entire encumbrance, and (5) subrogation would not work any injustice to the rights of the junior lienholder.
428 Mass. at 330. See also Wells Fargo Bank N.A. v. National Lumber Co., 76 Mass. App. Ct. 1 , 5-7 (2009).
Casarano argues that Massachusetts is a race notice state and that the first holder of an interest of record without actual or constructive notice of a superior title claim prevails over subsequent recordings. Casarano points out that the First Eastern Mortgage was paid off in 1998, leaving the Crosby Mortgage as a prior lien of record. He appears to argue that if there is refinancing, the concept of equitable subrogation does not apply. Plaintiffs, however, point out that Ogan clearly states that [e]quitable subrogation is an exception to the basic principle that determines priority among mortgages, first in time is first in right. 428 Mass. at 329. Plaintiffs argue that the Crosby Mortgage was clearly a second mortgage and that each time the first mortgage was paid off and refinanced by a new first mortgage, all parties knew that the Crosby Mortgage remained a second mortgage. Without equitable subrogation, Plaintiffs contend, the second mortgagee receives a windfall and the first mortgagee is unfairly prejudiced by its loss of priority. Plaintiffs also claim that this equitable concept holds irrespective of the fact that there is more than one refinance in the chain of title.
The factors discussed in Ogen are present in the case at bar. Fremont paid off the Mortgage Amenities Mortgage to protect its own interest in its mortgage, Fremont did not act as a volunteer (i.e. they had an interest of their own to protect), Fremont was not primarily liable for the Mortgage Amenities Mortgage, Fremont paid off the entire Mortgage Amenities Mortgage, and subrogation would not work an injustice to the holder of the Crosby Mortgage because at the time of the assignment to Casarano, the First Eastern Mortgage was the first mortgage of record. In addition, there is no basis for Casaranos argument of unnecessary delay in bringing this action, because the delay did not induce a change in the position of Casarano. Finally, this court is not convinced that the fact that Odoms-Harris refinanced several times between the Ameriquest Mortgage and the Fremont Mortgage destroys Plaintiffs claim for subrogation. After all, equitable subrogation is but one right held by courts as part of their broad power over mortgages. Ogan, 428 Mass. at 328. It is a general rule, grounded in equity, that has been applied to mortgages given as part of a refinancing, Provident Coop. Bank v. James Talcott, Inc., 358 Mass. 180 , 188 (1970), as well as mortgages given as part of a sale. Ogan, 428 Mass. at 329. [Note 14] However, Plaintiffs subrogation is limited to the rights, remedies, or security enjoyed by the original creditor, . . . National Lumber Co., 76 Mass. App. at 5 (citing Ogan, 428 Mass. at 328-29). In the case at bar, the rights of the original creditor, whose priority Plaintiffs seek, are found in the First Eastern Mortgage. It would be against the interests of equity to subrogate Plaintiffs to first priority in the full amount of the Mortgage Amenities Mortgage given that the Mortgage Amenities Mortgage was recorded well after the Crosby Mortgage. As such, Plaintiffs right to first priority extends only to the amount of the First Eastern Mortgage that was paid off by the Ameriquest Mortgages proceeds.
As a result, I find that in the event that the Crosby Note and the Crosby Mortgage remain valid and enforceable against Odoms-Harris, the Fremont Mortgage would be subrogated to the position previously occupied by the First Eastern Mortgage Corporation (as such rights are defined in the First Eastern Mortgage) to the extent of the amount of the First Eastern Mortgage that was paid off by the Ameriquest Mortgage. [Note 15]
II. Whether the Crosby Mortgage and the Crosby Note Remain Enforceable.
A. Whether the Crosby Note is a Negotiable Instrument.
Plaintiffs argue that Casarano, as an assignee, cannot enforce the Crosby Note because the Crosby Note is not a negotiable instrument pursuant to G. L. c. 106, § 3-101, et. seq. [Note 16] Casarano argues that the Crosby Note need not be a negotiable instrument because it is a valid contract enforceable according to its terms. As such, this court must first address whether the Crosby Note is a negotiable instrument under the Uniform Commercial Code (the UCC). See G. L. c. 106.
The Crosby Note could be considered a negotiable instrument, meaning that it is an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order if it:
(1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, . . .
G. L. c.106, § 3-104(a).
It is undisputed that the Crosby Note is now lost. [Note 17] It is also undisputed that not all of the terms of the Crosby Note are known. The summary judgment record indicates that the principal amount of the Crosby Note was $15,443, that interest was at the rate of ten percent per annum, and that some payments of $100 per month were made. Significantly, the summary judgment record does not indicate the term of the Crosby Note. All parties with any knowledge of the Crosby Note could not remember whether it was a demand note or a note for a specific term. As such, it is unlikely that it meets the requirements of G. L. c.106, § 3-104, which requires, among other things, that a negotiable instrument must be payable on demand or at a definite time. As such, I find that the Crosby Note is not a negotiable instrument as such term is defined in G. L. c.106, § 3-104(a).
B. Whether Casarano May Attempt to Enforce the Crosby Note as a Contract. [Note 18]
Regardless of the Crosby Notes status under the UCC, Casarano argues that he can enforce the Crosby Note as an assigned contract right, and for support of such proposition cites Sibley v. Phelps, 6 Cush. 172 (1850), Blye Intl Ltd. v. Robinson, 59 Mass. App. Dec. 50 (1976), and Duxbury v. Roberts, 388 Mass. 385 (1983). Plaintiffs assert that Casarano cannot look to contract principals to enforce the Crosby Note as an assignee, and note that the cases relied upon by Casarano do not involve an assignee of a promissory note. As such, this court must address whether Casarano may enforce the a promissory note as an assignee under a contract theory given that such note is not a negotiable instrument under the UCC.
In support of their position, Plaintiffs assert that Casarano offers no material case law for his position that the Crosby Note is an enforceable contract. Instead, Plaintiffs claim that Casaranos legal support is mere dicta that is inapposite to the case at bar. Given this position, it is noteworthy that Plaintiffs fail to supply this court with any case law in support of their own argument in this regard. While it is true that most of the cases cited by Casarano involve the original holders of notes (versus an assignee as is the case in the instant matter), Plaintiffs fail to distinguish the Supreme Judicial Courts (the SJC) statement in Sibley that [n]egotiability is not an essential quality of a promissory note. 60 Mass. at 173. Additionally, a promissory note is a claim for money due under a contract in writing. Redfield v. Abbott Shoe Co., 335 Mass. 208 , 209 (1957). Moreover, the SJC has specifically addressed the validity of a non-negotiable promissory note in context of a contract theory. See McDonald v. Hanahan, 328 Mass. 539 , 540 (1952) (interpreting an instrument as a non-negotiable promissory note). See also Beal Bank v. Eurich, Middlesex Superior Court, Civil Action No. 98-848 (Oct. 23, 2000) (Botsford, J.), affd on other grounds 444 Mass. 813 (2005) (stating that the non-negotiable note at issue constitutes a contract and noting that [a] non-negotiable assignment places a newcomer to the note in exactly the same position as the party from whom it was acquired, as he stands in the shoes of the assignor and has no greater or lessor rights against the debtor than did the assignor.). In light of the above, this court is not convinced that a promissory note is only enforceable by an assignee if it is a negotiable instrument. In other words, Casarano may look to contract principals in his attempt to establish the validity and enforceability of the Crosby Note.
C. Whether Kevin Assigned the Crosby Note to Casarano.
That said, Casarano may not enforce the Crosby Note as a contract unless he is the holder of such rights. Whether Casarano holds the Crosby Note, and whether he may enforce under its terms, depends on whether it was assigned from Kevin. Unless assignment is expressly forbidden, a contractual right can be assigned. Beaconsfield Townhouse Condo. Trust v. Zussman, 49 Mass. App. Ct. 757 , 762 n. 14 (2000). When determining whether an assignment occurred, [t]he important thing is the act and the evidence of intent; formalities are not material. Kagan v. Wattendorf & Co., Inc., 294 Mass. 588 , 596 (1936). A valid assignment may be made by any words or acts which fairly indicate an intention to make the assignee the owner of a claim. Id.
There is no argument or evidence in the record that the Crosby Note forbade assignment. However, the assignment of the Crosby Mortgage did not specifically reference the Crosby Note. Whether Kevin actually assigned the Crosby Note is complicated given that the Crosby Note was lost. However, Casarano claims that the Crosby Note was assigned to Casarano as evidenced by Casarano and/or his attorneys (Fulmer) physical possession of the Crosby Note and as indicated by the Affidavits of both King and Casarano, as well as the depositions of Fulmer and Casarano. Furthermore, payments were made by Odoms-Harris to Casarano in 1993 relative to the Crosby Note, supporting its assignment. As evidenced above, the summary judgment record indicates that Kevin intended to assign the Crosby Note to Casarano. Finally, a finding that the Crosby Note was assigned to Casarano is consistent with Kevins assignment of the Crosby Mortgage to Casarano, the consideration for which is stated to be the discharge of Casaranos claims against Kevin. As such I find that the Crosby Note was assigned from Kevin to Casarano.
D. Whether the Crosby Note is a Valid and Enforceable Contract.
As Casarano seeks to enforce the Crosby Note as a contract, he is encumbered with the burden to prove the validity of the agreement. See Canney v. New England Tel. & Tel. Co., 353 Mass. 158 , 164 (1967) (Where the [legal] existence of a contract is in issue, the burden is on the [party seeking performance].). Casaranos burden in this regard consists of demonstrating all components of a valid contract, including an offer, acceptance, consideration, and terms setting forth the rights and obligations of the parties. Haverhill v. George Brox, Inc., 47 Mass. App. Ct. 717 , 720 (1999).
The fact that the Crosby Note is missing is not necessarily fatal to Casaranos cause, as
the original of a written instrument need not be produced if a judge is satisfied that it is lost other than through the serious fault of its proponent. Once a judge is so satisfied, secondary evidence of any sort can be admitted to prove the contents of the lost instrument. This rule is applicable to all lost instruments, including those which may fall within the ambit of the Statute of Frauds.
Capital Bank & Trust Co. v. Richman, 19 Mass. App. Ct. 515 , 520-21 (1985) (citations omitted). There is nothing in the record to indicate that the Crosby Notes absence is due to the serious fault of Casarano. As such, this court may look to secondary evidence to establish the Crosby Notes provisions. The Crosby Mortgage refers to the Crosby Notes principal ($15,443) and interest rate (ten percent per year), and monthly payments in the amount of $100 were paid on the Crosby Note. However, as the summary judgment record does not reveal the Crosby Notes term, the question remains whether such provision is essential in determining the rights and obligations of the parties.
Whether the failure of the Crosby Note to include a term is material is a task for this court, as the interpretation of a contract is a matter of law. See Suffolk Constr. Co. v. Lanco Scaffolding Co., 47 Mass. App. Ct. 726 , 729 (1999). The Crosby Note is not invalid simply because the absence of a term muddles the parties obligations. See Letts-Parker Grocer Co. v. W. R. Marshall & Co. Inc., 232 Mass. 504 , 505-506 (1919). Rather, the Crosby Note can be enforced unless it is wholly unintelligible. Id. Under the facts in the case at bar, Odoms-Harris obligations remain reasonably the same regardless of whether the Crosby Note was payable on demand or payable after a certain term. The summary judgment record indicates the Crosby Notes principal and yearly interest. Moreover, the record reflects that Harris-Odoms has not made a payment toward the Crosby Note since at least 1993, when she made two payments that totaled $300. Given this information, it is reasonable to conclude that the amount Odoms-Harris owes on the note may be calculated.
The absence of the Crosby Notes term, however, is also relevant in context of a statute of limitations discussion. While neither party briefed this issue, at oral argument Plaintiffs suggested that Casaranos enforcement of the Note as a contract subjects it to a six-year statute of limitations, an argument to which Casarano responded by claiming that the appropriate standard was the twenty-year statute of limitations applicable to contracts executed under seal. Casarano suggests that the twenty-year limitations period found in G. L. c. 260, § 1 applies to the Crosby Note because of the Crosby Mortgages purported status as a contract under seal. [Note 19], [Note 20] Compare G. L. c. 260, § 1 (providing for a twenty-year statute of limitations on sealed contracts), with G. L. c. 260, § 2 (providing for a six-year statute of limitations on contracts not under seal). It goes without saying that whether the Crosby Note was signed under seal is unknown because the instrument has been lost. Moreover, Casarano supplies this court with no case law or persuasive rationale justifying a conclusion that a sealed mortgage instrument may impute such statute to the underlying note. As such, this court is not persuaded that the Crosby Note may be considered a sealed instrument (and thus, subject to a twenty-year statute of limitations). In light of the above, I find that Casaranos contract rights under the Crosby Note are governed by the six-year statute of limitations pursuant to G. L. c. 260, § 2.
Irrespective of the above, regardless of whether the first or second section of G. L. c. 260 applies, both periods are triggered when the cause of action accrues. While the Legislature has established a time limit within which tort actions must be brought, it has left for judicial determination the time when the cause of action accrues. Cannon v. Sears, Roebuck & Co., 374 Mass. 739 , 740 (1978). Important to the case at bar is the fact that the Crosby Note called for monthly payments, as [i]f an obligation is payable in installments, the statute of limitations begins to run against the recovery of each installment from the time it becomes due. Berezin v. Regency Savings Bank, 234 F.3d 68, 73 (1st Cir. 2000) (citing Clark v. Trumble, 44 Mass. App. Ct. 438 , 445 (1998) (concluding that a promissory note is an installment contract). Thus, the Crosby Notes contractual statute of limitations began to run at such time as it was due. However, this time cannot be ascertained in the case at bar because the record fails to include the Crosby Notes term. As Casarano has failed to establish when the Crosby Note was due, which is essential in determining the parties rights in context of the statute of limitations, he fails in his burden to prove the terms setting forth the rights and obligations of the parties. [Note 21] In light of the above, I find that the Crosby Notes failure to include its term is material, without which the Crosby Note is wholly unintelligible, and, thus, invalid. [Note 22]
Given that the Crosby Note is unenforceable due to its lack of a material term, I find that Casarano cannot enforce the Crosby Note against Odoms-Harris. As the Crosby Mortgage secures the underlying Crosby Note, and as the Crosby Note is unenforceable, I hereby discharge the Crosby Mortgage. [Note 23]
In light of all the above, I ALLOW Plaintiffs Motion for Summary Judgment and DENY Defendants Motion for Partial Summary Judgment.
Judgment to enter accordingly.
Alexander H. Sands, III
Dated: September 16, 2010
[Note 1] JPMorgan filed its First Amended Complaint on February 29, 2008, replacing Kathy Casarano with Carlo Casarano as Trustee of Defendant Ford Realty Trust. JPMorgan filed its Second Amended Complaint on September 29, 2008, replacing JPMorgan with Wells Fargo Bank National Association (Wells Fargo) as Plaintiff. JPMorgan filed its Third Amended Complaint on January 6, 2009, adding both JPMorgan and Wells Fargo as Plaintiffs (Plaintiffs).
The Third Amended Complaint asserts that Odoms-Harris (as hereinafter defined) is a debtor-in-possession under a Chapter 13 bankruptcy proceeding pending before the U.S. Bankruptcy Court, Eastern Division (Boston). The Third Amended Complaint also notes that by Order dated September 11, 2008, the Bankruptcy Court granted Wells Fargos Motion For Relief From the Automatic Stay.
[Note 2] City filed its Answer to First Amended Complaint on May 9, 2008. City filed its Answer to Second Amended Complaint on December 19, 2008. City filed its Answer to Third Amended Complaint on February 10, 2009. City is named as a Defendant because it recorded an Instrument of Taking against Locus dated December 13, 2005.
[Note 3] Casarano filed his Answer and Jury Demand to First Amended Complaint on March 19, 2008. On January 30, 2009, Casarano filed his Answer and Jury Demand to Third Amended Complaint, and Counterclaims against JPMorgan, alleging negligent misrepresentation and frivolous and unsubstantiated claims. Casarano filed his Motion to Dismiss Counterclaims on February 27, 2009, which was allowed on March 4, 2009.
This court need not address Casaranos jury demand in light of the fact that this decision disposes of all of the legal issues before this court. In other words, there are no material questions of fact that require a jury. Moreover, Judges of the Land Court sit without juries. G L. c. 185, § 25 (stating that the Land Court shall hold no trials by jury.). While Casarano included a jury demand in his Answer to Plaintiffs Third Amended Complaint, he neither requested nor supplied this court with a statement of jury issues to be framed in the Land Court. See Senior Housing Properties Trust v. HealthSouth Corp., 447 Mass. 259 , 266 (2006) (describing the two-step procedure required to perfect a timely demand for a jury trial, consisting of (1) making a jury demand consistent with Mass. R. Civ. P. 38(b), and (2) the jury issues shall be framed in the Land Court). See also G. L. c. 185, § 15. Finally, as a practical matter Casaranos failure to press his jury demand during the Case Management Conference or the subsequent status conferences (which were numerous) effectively waives such demand.
[Note 4] Odoms-Harris filed her Answer and Cross-Claim to the First Amended Complaint on May 16, 2008. Odoms-Harris filed her Answer and Cross-Claim to Third Amended Complaint on March 18, 2009. It is clear that this court has jurisdiction over Odoms-Harris Cross-Claims seeking declaratory judgment and quiet title. However, that is not the case with her remaining Cross-Claims, which seek damages and sound of contract and tort. As such, this court hereby dismisses, without prejudice, Odoms-Harris allegations of breach of contract, breach of implied covenant of good faith and fair dealing, infliction of emotional distress, and a violation of G. L. c. 93A.
[Note 5] Both Odoms-Harris and the City appeared at the summary judgment hearing, but did not file any documentation or argue relative to the summary judgment hearing.
[Note 6] Mary E. Wells deeded Locus to herself (Odoms-Harris) by deed dated September 5, 2002, and recorded with the Registry at Book 29320, Page 34.
[Note 7] Odoms-Harris signature follows the following language contained within the Crosby Mortgage: Witness my hand and seal this 21st day of March 1991.
[Note 8] The assignment went to Kathy F. Casarano, Trustee of the Ford Realty Trust. She was subsequently replaced as Trustee in 2004 by her husband, Carlo Casarano.
[Note 9] The Crosbys, sellers of Locus, agreed to pay all of Odoms-Harris closing costs as a part of the sale. Odoms-Harris owed Casarano the sum of $3,037.69 for closing costs related to obtaining financing. As a result, Kevin assigned the Crosby Mortgage to Casarano in payment of this debt.
[Note 10] The summary judgment record is unclear as to the full extent of Odoms-Harris payments on the Crosby Note. In her Cross-Claim, Odoms-Harris asserts that she made at most two payments on the Crosby Mortgage and no payments since 1993. Casarano denies this allegation. The summary judgment record includes copies of two money orders (one in the amount of $200 and the other for $100) purchased by M. Wells of 39 Maxwell St. payable to Ford Realty Trust/Casarano, and dated March 29, 1993.
[Note 11] While the summary judgment record includes a copy of this mortgage, much of the document including the date of recording is unreadable. (It appears to be recorded sometime in August 1998.) The Affidavit of Odoms-Harris, which is uncontested, states that all refinancings were used to pay off and discharge the prior first mortgages. However, the exact amount of the Ameriquest Mortgage that was used to pay off the remaining portion of the First Eastern Mortgage is unknown. Copies of most of the mortgage discharges are also absent from the summary judgment record.
[Note 12] The assignment was made to Wells Fargo, as Trustee for Fremont Investment & Loan SABR 2005-FR1.
[Note 13] See also Restatement (Third) of Property (Mortgages) § 7.6(a)(1997), which states:
One who fully performs an obligation of another, secured by a mortgage, becomes by subrogation the owner of the obligation and the mortgage to the extent necessary to prevent unjust enrichment. Even though the performance would otherwise discharge the obligation and the mortgage, they are preserved and the mortgage retains its priority in the hands of the subrogee.
[Note 14] In a footnote in Ogan, the SJC distinguished mortgages in context of refinancing and sales transactions and noted that [i]n theory, the refinancing mortgagee should obtain priority more easily [than sales mortgagee] because replacement mortgages are given priority unless the junior mortgagee suffers material prejudice, while subrogation is allowed only to the extent necessary to avoid unjust enrichment. 428 Mass. at 329 n. 3.
[Note 15] The summary judgment record does not indicate the amount of the First Eastern Mortgage that was paid off by the Ameriquest Mortgage.
[Note 16] Plaintiffs also argue that Casarano is not the holder of the Crosby Note as it was not properly negotiated pursuant to the terms of G. L. c. 106, § 3-201 (Negotiation), which states:
(a) Negotiation means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.
(b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.
Plaintiffs reason that Crosbys failure to indorse the Crosby Note results in Casarano lacking status as holder of the instrument. Whether the Crosby Note was appropriately negotiated is irrelevant given this courts finding, infra, with respect to the Crosby Notes status as a negotiable instrument.
[Note 17] During her deposition, Odoms-Harris admitted that Kevin loaned her $15,000. At the same time, however, she stated that she never signed a promissory note regarding her obligation to pay Kevin back. As discussed, supra at note 10, the summary judgment record indicates that Odoms-Harris made at least two payments to Casarano regarding the loan from Kevin.
[Note 18] In one portion of his Opposition, Casarano asserts that he may enforce the Crosby Note as an assigned contractual right. In a separate portion of the Opposition, Casarano claims that he can enforce the Crosby Mortgage as a separate written agreement. However, the validity of the Crosby Mortgage itself is not at issue.
In Massachusetts (a title theory state), a mortgage conveys and vests legal title in the mortgagee to the land placed as security for the underlying debt. Faneuil Investors Group, L.P. v. Bd. of Selectmen of Dennis, 75 Mass. App. Ct. 260 , 265 (2009) (quoting Maglione v. BancBoston Mort. Corp., 29 Mass. App. Ct. 88 , 90 (1990)). However, the extent of such legal title is not unlimited. See id. at 265-66, and cases cited (noting the distinction between legal and equitable title). To be clear, a mortgage is incidental to its underlying debt. Geffen v. Paletz, 312 Mass. 48 , 54 (1942) (noting that a mortgage conveys a title as as collateral security for the mortgage debt.). As such, [i]f the debt itself was not in existence, the assignee could take, under any circumstances, at most a naked legal title to the mortgage. Id. It follows then, that in order to enforce the Crosby Mortgage, Casarano must demonstrate to this court that the Casarano Note remains valid and enforceable.
[Note 19] In general, a contract under seal is a formal contract that requires no consideration and has the seal of the signer attached. BLACKS LAW DICTIONARY 320 (7th ed. 1999).
For a helpful background on the genesis and evolution of sealed instruments in Massachusetts (which is in the minority in placing significance on sealed contracts), see Knott v. Racicot, 442 Mass. 314 , 319-21 (2004) (describing a contract under seal as one in which each party impressed on the physical document a wax seal or other mark bearing his individual sign of identification), see also Nalbandian v. Hanson Restaurant & Lounge, Inc., 369 Mass. 150 , 154-56 (1975).
[Note 20] G. L. c. 4, § 9A states:
In any written instrument, a recital that such instrument is . . . given under the hand and seal of the person signing the same, . . . shall be sufficient to give such instrument the legal effect of a sealed instrument without the addition of any seal of wax, paper or other substance or any semblance of a seal by scroll, impression or otherwise; . . .
[Note 21] In light of this courts finding with respect to the statute of limitations, even if Casarano could enforce the Crosby Note, he could only reach the portion of the debt that came due within six years of the filing of the Complaint.
[Note 22] As Casarano has failed to establish that the Crosby Note is a valid contract, there is no need to address whether such obligation has been satisfied. A trial would have been necessary to determine whether Odoms-Harris satisfied her obligation under Crosby Note given that this issue involves a material factual dispute. Odoms-Harris stated at her deposition that she paid off the Crosby Note to King. King stated, in his Affidavit, that he had not received payment from Odoms-Harris. Casarano gave deposition testimony that the Crosby Note had not been paid off as well.
[Note 23] Given this finding, there is no need to determine the exact amount to which the Fremont Mortgage is subrogated. In other words, a trial is not needed to determine the amount of the First Eastern Mortgage that was paid off by the Ameriquest Mortgage. See supra note 15.