In this case, the plaintiff Select Portfolio Servicing, Inc. is agent for U.S. Bank National Association (SPS), the mortgagee by assignment of a mortgage on the property at 19 Radcliffe Road, Belmont, Massachusetts, owned by the defendants Nancy M. Needel and Peter Needel as tenants by the entirety. The mortgage lacks the signature of defendant Peter Needel. SPS brought this action to reform the mortgage or, in the alternative, to subrogate the mortgage to a prior mortgage executed by both Needels.
This case commenced on June 21, 2007 with the filing of the verified complaint by SPS. SPS asserted three grounds for relief in the verified complaint. Count I requested that this Court declare that defendant Peter Needel ratified the mortgage and is liable under the mortgage. Count II requested reformation of the mortgage such that the mortgage encumbers the interests of both Nancy and Peter Needel. Count III requested, in the alternative, that this Court declare that the plaintiff is equitably subrogated to a pre-existing mortgage, which was discharged by payment of funds from the proceeds of plaintiffs mortgage. The prior mortgage was granted by both Nancy and Peter Needel and encumbered both their interests in the property.
The Needels filed their answer and counterclaim on July 16, 2007. Count I of the counterclaim claimed a violation of G. L. c. 209, § 1. Count II alleged that SPSs actions related to attempting to publish notice to foreclose on the defendants property violated the covenant of good faith and fair dealing. Count III alleged that the Needels suffered emotional distress as a result of SPSs attempt to foreclose on the property. Count IV asserted violations of Mass. R. Civ. P. 11 and G.L. c. 231 § 6F, stating that the plaintiffs pleadings are frivolous.
On November 4, 2008, SPS submitted Plaintiffs Motion for Partial Summary Judgment for Count III of its complaint. Defendants filed their opposition and cross-motion for summary judgment on January 2, 2009. On April 22, 2009, the Court issued its Decision Allowing-In-Part and Denying-In-Part Plaintiffs Motion for Partial Summary Judgment and Denying Defendants Cross-Motion for Summary Judgment (the Summary Judgment Order). In the Summary Judgment Order, the Court denied the Needels motion for summary judgment against SPS. The Court allowed SPSs motion for partial summary judgment in part. It dismissed with prejudice Counts I, II, and III of the Needels counterclaim, and dismissed Count IV of the counterclaim without prejudice. The Court allowed SPSs motion for partial summary judgment under Count III of its complaint in part. The Court held that the mortgage held by SPSs principal is subrogated to the previous mortgage in the amount paid to discharge the previous mortgage, $443,392.04, and that SPS as agent shall enjoy the full rights and remedies of that mortgage, as to the interests of both defendants in the property, to recover that amount. The Court found, however, that the record was insufficient to determine the amount of interest secured by that mortgage based on the mortgage amount of $443,392.04, and other charges (including payments of insurance premiums and real estate taxes made to protect the lenders security). That was an issue of fact to be determined at trial. Counts I and II of the verified complaint remained open.
On November 6, 2009, the Needels filed their Suggestion of Bankruptcy. On November 17, 2011, the Needels bankruptcy proceeding was dismissed.
The case was tried to the Court in Boston on March 6, 2012. A court reporter, Elena Mercurio, was sworn to transcribe the testimony and proceedings. Counsel for the plaintiff agreed to dismiss Counts I and II of the verified complaint. The only issue remaining to be determined at trial was the amount of interest and other charges secured by the mortgage based on the mortgage amount of $443,392.04. Exhibits 1 through 9 were agreed and introduced into evidence. Undisputed facts numbers 1 through 7, as found by the Court in the Summary Judgment Order to be without substantial controversy, Mass. R. Civ. P. 56(d), were read into the record. Counsel for the defendants stipulated that the total amount secured under the subrogated mortgage is $937,529.36, representing $443,392.04 in principal, $398,593.18 in interest, and $95,544.14 in escrow advances. The case was taken under advisement.
On the undisputed facts, exhibits, and stipulations, as well as the Summary Judgment Order, I now decide the case, making the following findings of fact and rulings of law.
1. Select Portfolio Servicing, Inc., formerly known as Fairbanks Capital Corp., is the servicing agent of U.S. Bank National Association for the mortgage and note at issue in this action (SPS).
2. U.S. Bank National Association is the successor-in-interest to New Century Mortgage Association, the previous holder of the mortgage and note at issue in this action.
3. Nancy and Peter Needel own the property, known as and numbered 19 Radcliffe Road, Belmont, Massachusetts, as tenants by the entirety (Property). As referenced in the Full Spectrum Mortgage and the New Century mortgage (see infra), the Needels deed to the Property is recorded in the Middlesex South Registry of Deeds (Registry) at Book 15444, Page 414.
4. On or about December 5, 2000, the Needels executed a mortgage of the Property, granted to Full Spectrum Lending, Inc. and securing repayment of a promissory note in the original principal amount of $440,000 (Full Spectrum Mortgage). That mortgage is recorded in the Registry at Book 32129, Page 168.
5. On or about November 5, 2001, Nancy Needel executed a new mortgage of the Property, granted to New Century Mortgage Corporation (New Century) and securing repayment of a promissory note in the original principal amount of $485,000 (New Century Mortgage). That mortgage is recorded in the Registry at Book 34063, Page 154.
6. As part of the New Century Mortgage loan agreement and refinancing transaction, New Century dispersed $443,392.04 to Full Spectrum Lending, Inc., to satisfy and discharge the Full Spectrum Mortgage in full.
7. No payments have been made on the loan secured by the New Century Mortgage since September 12, 2003.
8. The amount of interest accrued under the terms of the Full Spectrum Mortgage, based on the payoff amount of $443,392.04, is $398,593.18.
9. SPS has advanced the amount of $95,544.14 to pay real estate taxes and insurance on the Property (the escrow advances). Paragraph 9 of the Full Spectrum Mortgage provides that Lender may do and pay for whatever is reasonable or appropriate to protect Lenders interest in the Property and rights under this Security Agreement, and that [a]ny amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Agreement. Pursuant to Paragraph 9 of the Full Spectrum Mortgage, the amount of escrow advances constituting additional debt secured by the equitably subrogated mortgage is therefore $95,544.14.
10. The total amount secured by the equitably subrogated mortgage is $937,529.36.
DISCUSSION AND RULINGS OF LAW
The Summary Judgment Order remains effective and is adopted herein. As ordered by and for the reasons set forth in the Summary Judgment Order, the New Century Mortgage is subrogated to the Full Spectrum Mortgage in the amount of $443,392.04, the full balance secured at payoff by the Full Spectrum Mortgage which was discharged by proceeds from the New Century Mortgage. The parties have agreed, and I rule, that the amount of interest accrued on the subrogated amount of the Full Spectrum Mortgage is $398,593.18, and the amount of escrow advances made by SPS and included in the subrogated amount is $95,544.14. Judgment shall enter in favor of SPS on its claim for equitable subrogation under Count III of the verified complaint, that SPS is equitably subrogated to the Full Spectrum Mortgage in the total amount of $937,529.36, which amount is secured by the mortgagees title, as to the interests of both defendants, of the Full Spectrum Mortgage.
Counts I and II of the amended complaint are dismissed with prejudice. Counts I, II, and III of the Needels counterclaim are dismissed with prejudice. The Summary Judgment Order dismissed Count IV of the counterclaim without prejudice, on the grounds that the defendants had raised it prematurely. Count IV is a claim for violation of G.L. c. 231, § 6F and Mass. R. Civ. P. 11. As the plaintiff SPS has prevailed in this case and the defendants claims have been dismissed, there are no grounds upon which I could determine that SPSs claims were wholly insubstantial, frivolous and not advanced in good faith. G.L. c. 231, § 6F. Count IV is dismissed with prejudice.