DEUTSCHE BANK NATIONAL TRUST COMPANY, as TRUSTEE OF THE INDYMAC INDX MORTGAGE LOAN TRUST 2005-AR18, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-AR18 UNDER THE POOLING AND SERVICING AGREEMENT DATED SEPT. 1, 2005 vs. EROILDA P. CICCHELLI and RAY CICCHELLI

Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Loan Trust 2005-AR18, Mortgage Pass-Through Certificates, Series 2005-AR18 under the Pooling and Servicing Agreement dated Sept. 1, 2005 (“Deutsche”) filed its verified Complaint to Foreclose on the property of Eroilda P. Cicchelli (“E. Cicchelli”) and Ray Cicchelli (the “Cicchellis”)(10 MISC 423350) pursuant to the Servicemembers Civil Relief Act (the “Servicemembers Act”), along with Mortgagee’s Affidavit, on February 24, 2010, seeking a ruling that the Cicchellis are not in the military service. On September 23, 2010, Deutsche filed a Motion to Substitute Party, asking the court to strike Deutsche from its verified Complaint to Foreclose and substitute OneWest Bank, F.S.B. (“OneWest”), which this court (Scheier, C.J.) allowed. [Note 1], [Note 2]

On August 17, 2010, the Cicchellis filed their verified complaint against Deutsche and OneWest (10 MISC 436809), seeking a judgment that Deutsche and OneWest lack standing under the Servicemembers Act to obtain a judgment in that matter, and therefore could not conduct a valid foreclosure sale, as well as a preliminary and permanent injunction against the foreclosure sale. Along with their complaint, the Cicchellis filed an Application for Injunctive Relief, Emergency Motion for Temporary Restraining Order, supporting Affidavit of Counsel, Motion for Issuance of Memorandum of Lis Pendens, and Motion for Short Order of Notice. On August 24, 2010, there was a hearing on the Cicchellis’ Application for Preliminary Injunction, at which Deutsche and OneWest agreed to postpone the foreclosure sale until the Servicemembers Act case went to judgment. Because the issue involved in both OneWest’s Servicemembers Act case and the Cicchellis’ foreclosure case is the standing of OneWest to foreclose on the Cicchellis’ mortgage, this court consolidated 10 MISC. 423350 and 10 MISC 436809, per a Post Hearing Order issued on November 30, 2010.

On December 31, 2010, OneWest filed its Motion for Summary Judgment, along with Affidavit of Plaintiff. [Note 3], [Note 4] On January 20, 2011, the Cicchellis filed their Motion in Opposition to Summary Judgment. On February 22, 2011, OneWest filed its Response to Cicchellis’ Opposition to Summary Judgment. On March 25, 2011, the Cicchellis filed an Assented Motion to Allow the Cicchellis to File Response to OneWest’s Reply Brief, and on April 13, 2011, the Cicchellis filed their Response to OneWest’s Reply Brief. At that time the matter was taken under advisement.

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).

I find that the following material facts are not in dispute:

1. By deed recorded in Book 23635, page 239 at the Worcester County Registry of Deeds (the “Registry”), E. Cicchelli and Ray Cicchelli became owners of land at 32 Bancroft Avenue in Milford, Massachusetts (the “Locus”), with the buildings thereon situated on the Northerly side of Water Street and the Westerly side of Bancroft Avenue, bounded and described as follows:

EASTERLY by the Westerly side of Bancroft Avenue, 49.50 feet more or less;

NORTHERLY by land now or formerly of one Higgiston, 79.70 feet;

WESTERLY by land now or formerly of one Lee, 40.50 feet;

SOUTHERLY by the northerly side of said Water Street, 79 feet more or less. [Note 5]

2. On June 24, 2005, E. Cicchelli executed and delivered to IndyMac Bank, F.S.B. (“IndyMac”) a Promissory Note in the amount of $270, 501.00 (the “Note”).

3. In order to secure payment of the Note, the Cicchellis executed and delivered a Mortgage on Locus, dated June 24, 2005 and recorded at the Registry in Book 36722 at Page 316 (the “Mortgage”). The Mortgage states in part,

“Borrower” is Eroilda Paula Cicchelli and Ray Cicchelli … MERS is a separate corporation that is acting solely as a nominee for Lender and Lender’s successors and assigns. MERS is the mortgagee under this Security Instrument. ...

“Lender” is IndyMac Bank, F.S.B., a federally chartered savings bank … Borrower does hereby mortgage, grant and convey to MERS (solely as nominee for Lender and Lender’s successors and assigns) and to the successors and assigns of MERS, with power of sale, the following described property located in the County of Worcester … which currently has the address of 32 Bancroft Avenue Milford, Massachusetts … Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but … MERS (as nominee for Lender and Lender’s successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.” (emphasis in original).

4. On September 8, 2005, Deutsche acquired the Note as part of a securitized pool of accounts, specifically the IndyMac INDX Mortgage Loan Trust 2005-AR18, Mortgage Pass-Through Certificates, Series 2005-AR18, governed by a Pooling and Servicing Agreement dated September 1, 2005 (the “PSA”). The PSA defines IndyMac as the Seller and Master Servicer, IndyMac MBS, Inc. as the Depositor, and Deutsche as the Trustee. The PSA states, in relevant part,

The Seller, concurrently with the execution and delivery of this Agreement, hereby transfers to the Depositor, without recourse, all the interest of the Seller in each Mortgage Loan [Note 6] …

The Depositor, concurrently with the execution and delivery of this Agreement hereby … transfers to the Trustee for the benefit of the Certificateholders and the Certificate Insurer, without recourse, all the interest of the Depositor in the Trust Fund …

In connection with the transfer and assignment of each Mortgage Loan, the Depositor has delivered … the following documents or instruments with respect to each Mortgage Loan so assigned: (i) The original Mortgage Note, endorsed by manual or facsimile signature in blank …

As promptly as practicable after any transfer of a Mortgage Loan under this Agreement, and in any event within thirty days after the transfer, the Trustee shall … affix the Trustee’s name to each assignment of Mortgage, as its assignee [Note 7] …

The Trustee acknowledges receipt of the documents identified in the Initial Certification in the form of Exhibit G-1, [Note 8] and declares that it holds and will hold such documents … and that it holds or will hold such other assets as are included in the Trust Fund, in trust for the exclusive use and benefit of all present and future Certificateholders. The Trustee acknowledges that it will maintain possession of the related Mortgage Notes in the State of California, unless otherwise permitted by the Rating Agencies.

5. On July 11, 2008, IndyMac was closed by the Office of Thrift Supervision, and its assets were transferred to IndyMac Federal Bank with the FDIC as Conservator.

6. On April 6, 2009, Deutsche and OneWest signed a Limited Power of Attorney, which states in part that Deutsche

Pursuant to each of those certain agreements referenced on Exhibit A (the “Agreement”) hereby constitutes and appoints OneWest Bank, FSB as successor to Indymac Bank, B.S.B. in its capacity as servicer under each of the Agreements (the “Servicer”) … This Appointment shall apply only to the following enumerated transactions … 8. With respect to a Mortgage or Deed of Trust, the foreclosure ... cancellation or rescission of any such foreclosure, including, without limitation, any and all of the following acts: … f. the preparation and execution of such other documents and performance of such other actions as maybe necessary under the terms of the Mortgage, Deed of Trust or state law to expeditiously complete said transactions … .

Exhibit A of this Limited Power of Attorney lists the PSA.

7. By an Assignment of Mortgage dated May 14, 2009, MERS, as nominee for IndyMac, assigned the Mortgage to Deutsche and its successors and assigns (the “Deutsche Assignment”). [Note 9]

8. By an Assignment of Mortgage dated September 15, 2009, Deutsche assigned the Mortgage and the Note to OneWest and its successors and assigns (the “OneWest Assignment”). [Note 10]

9. On August 15, 2010, OneWest served the Cicchellis Notice of Intent to Foreclose and Notice of Deficiency. A foreclosure sale was scheduled for August 30, 2010. At the hearing for the Cicchellis’ Application for Preliminary Injunction, on August 24, 2010, OneWest agreed to postpone the foreclosure sale until the Servicemembers Act case went to judgment.

10. The Cicchellis are not members of the military service.

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OneWest argues that OneWest is entitled to summary judgment under the Servicemembers Act because, as holder of the Note and Mortgage, and as servicer for Deutsche, OneWest is entitled to commence action to foreclose; furthermore, OneWest points out that the Cicchellis are not entitled to the protections of the Servicemembers Act. The Cicchellis contend that OneWest lacks standing to foreclose because it does not have a valid interest in the Mortgage, and therefore is not entitled to judgment under the Servicemembers Act. The Cicchellis argue that any assignment of the Mortgage from MERS to Deutsche was invalid because MERS lacks the authority to issue assignments and because IndyMac had already failed when MERS, acting as nominee for IndyMac, assigned the Mortgage to Deutsche. [Note 11] OneWest counter argues that MERS was the mortgagee of record, and therefore entitled to assign the mortgage to Deutsche, and that any assertion that MERS per se lacks the authority to assign mortgages is false.

The Servicemembers Act “simply establishes procedures whereby mortgagees … can make certain that there will be no cloud on title following the foreclosure as a result of an interested party having been in, or just released from, military service and thus under the protective umbrella of the [Servicemembers Act].” Beaton v. Land Court, 367 Mass. 385 , 390 (1975). As such, the threshold for standing in Servicemembers Act cases is relatively low, and is satisfied “by the plaintiff having some interest in the subject mortgage, the mortgaged premises, and the title to them.” Randle v. GMAC Mortgage, LLC, 18 LCR 546 , 550 (2010). In order to establish such an interest, “a foreclosing entity may provide a complete chain of assignments linking it to the record holder of the mortgage, or a single assignment from the record holder of the mortgage.” U.S. Bank National Association v. Ibanez, 458 Mass. 637 , 651 (2011).

In the case at bar, there is a clear chain of title, from MERS through Deutsche to OneWest, that establishes OneWest as the mortgagee, thereby conferring standing to OneWest for a Servicemembers Act action. The Mortgage plainly identifies MERS as the Cicchellis’ mortgagee. The Deutsche Assignment and the OneWest Assignment also clearly document the Mortgage’s chain of title from MERS to Deutsche and, in turn, from Deutsche to OneWest. As the mortgagee of record at the commencement of this action, then, OneWest has standing to bring a Servicemembers Act case and to initiate foreclosure proceedings.

The Cicchellis’ argument that OneWest lacks standing rests on the Cicchellis’ assertion that the transfer of the Mortgage from MERS to Deutsche – and therefore the transfer of the Mortgage from Deutsche to OneWest – was invalid. The Cicchellis’ argument that MERS was unable to assign the Mortgage to Deutsche because MERS lacks the capability to assign mortgages must fail. The Cicchellis rely on several out-of-state cases in an attempt to prove that MERS inherently lacks the authority to assign mortgages, none of which are binding upon this court, and cites no binding authority to support this contention. Moreover, the cases cited by the Cicchellis, along with the MERS Rules of Membership, also cited by the Cicchellis, state that when acting as a lender’s nominee, MERS may only act with the lender or note-holder’s authorization. This does not help the Cicchellis’ case, because, as discussed below, MERS was in fact acting pursuant to the interests of the assignee of the lender and the Note-holder, Deutsche. In addition, Massachusetts case law leads to the conclusion that MERS generally may assign mortgages for which MERS is the mortgagee. Kiah v. Aurora Loan Services, LLC, No. 10-40161-FDS, 2010 U.S. Dist. LEXIS 121252, *11-14 (D. Mass. November 16, 2010)(assignment from MERS conveyed title to mortgage); Randle, 18 LCR at 550 (assignment of mortgage from MERS, acting as nominee for GMAC Bank, to defendant-mortgagee was valid); In re Lopez, 446 B.R. 12, 18-9 (2011)(“[t]hough MERS never held the Note, it could, by virtue of its nominee status, transfer the Mortgage on behalf of the Note holder.”).

The Cicchellis also argue that MERS was unable to transfer the Mortgage to Deutsche because MERS was acting as nominee for IndyMac, and IndyMac had already failed at the time of the Deutsche Assignment. However, MERS was acting as nominee for “Lender and Lender’s successors and assigns,” IndyMac being the “Lender.” Deutsche effectively became one of IndyMac’s assigns upon the execution of the PSA, [Note 12] whereby IndyMac assigned the Note to Deutsche. As such, MERS, serving in its capacity as nominee for IndyMac and IndyMac’s successors and assigns, was entitled to transfer the Mortgage on behalf of Deutsche, as one of IndyMac’s assignees. [Note 13] A similar situation occurred in Kiah, where the plaintiff took out a loan, secured by a mortgage, with First Magnus Financial Corporation (“First Magnus”); MERS, acting as nominee for First Magnus and its successors and assigns, was listed as the mortgagee. [Note 14] First Magnus then assigned the plaintiff’s note to Aurora Loan Services (“Aurora”). Several months later, First Magnus filed bankruptcy. The court in Kiah found that a transfer of the plaintiff’s mortgage from MERS to Aurora was valid, stating, “MERS had the power to act as the agent of any valid note holder under the terms of the mortgage documents…First Magnus’ dissolution would not prevent its successors and assigns, including Aurora, from seeking transfer of the mortgage from MERS.” Kiah, 2010 U.S. Dist. LEXIS 121252, at *13. Likewise, MERS had the authority to transfer the Mortgage to Deutsche, as IndyMac’s assignee and the Note-holder at that time, pursuant to the PSA, despite IndyMac’s dissolution in the time between the assignment of the Note to Deutsche and MERS’ transfer of the Mortgage to Deutsche.

MERS also had a fiduciary duty to assign or foreclose the Mortgage in Deutsche’s interest since Deutsche was the Note-holder at the time of the Deutsche Assignment. [Note 15] When a mortgage and relevant promissory note are held by two different entities in Massachusetts, “the holder of the mortgage holds the mortgage in trust for the purchaser of the note… .” Ibanez, 448 Mass. at 652; See also Barnes v. Boardman, 149 Mass. 106 , 114 (1889) (“In some jurisdictions it is held that the mere transfer of the debt, without any assignment or even mention of the mortgage, carries the mortgage with it … This doctrine has not prevailed in Massachusetts, and the tendency of the decisions here has been that in such cases the mortgagee would hold the legal title in trust for the purchaser of the debt … .”). Accordingly, MERS, as the record mortgagee retained legal title to the Mortgage, along with a fiduciary duty to the holder of the Note. See In re Marron, No. 10-45395-MSH at 8-9 (Bankr. D. Mass. June 29, 2011)(“In Massachusetts, when a mortgage and applicable note are owned by different entities … the mortgagee retains legal title to the mortgage, albeit with a fiduciary duty to act on behalf of the owner of the note which holds a beneficial interest in the mortgage. The mortgagee has a fiduciary duty as trustee to act on behalf of the note owner, but retains title to the mortgage and the right to assign the mortgage with that duty. This analysis does not change just because MERS, as nominee, is the mortgagee.”). By the time of the Deutsche Assignment, Deutsche held the Note, and therefore, MERS had a duty to act in Deutsche’s interests, which it did by assigning the Mortgage to Deutsche. [Note 16]

Based on these facts I find that OneWest, as the Mortgage holder, has standing to bring an action against the Cicchellis under the Servicemembers Act. [Note 17] Furthermore, because there is no evidence that the Cicchellis are currently in the military or recently released from military service – and the Cicchellis have not alleged that they are – I find that OneWest is entitled to judgment in OneWest’s favor under the Servicemembers Act.

With regards to the Cicchellis’ case (10 MISC 436809), the Cicchellis’ claim that OneWest lacks standing to foreclose the Mortgage is based on the Cicchellis’ assertion that the transfers of the Mortgage were invalid and the lack of judgment under the Servicemembers Act. As discussed above, the transfer of the Mortgage from MERS through Deutsche to OneWest was in fact valid. Because I am also issuing a judgment under the Servicemembers Act, I find that the Cicchellis are not entitled to an injunction against OneWest’s foreclosure on the Mortgage.

As a result of the forgoing, I ALLOW OneWest’s Motion for Summary Judgment.

Judgment to enter accordingly.