SANDY SCHAEFER-UNG v. U.S. BANK, AS TRUSTEE FOR TBW MORTGAGE-BACKED TRUST SERIES 2007-2, TBW MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-2, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., HOMEWARD RESIDENTIAL INC., DLJ MORTGAGE CAPITAL, INC., CREDIT SUISSE AG, F/K/A FIRST BOSTON MORTGAGE SECURITIES CORP., and GRETEL NORGOET.

Sandy Schaefer-Ung (Schaefer-Ung) filed her Petition to Try Title Pursuant to G.L. c. 240, §§ 1-5, on August 29, 2012. Defendants, U.S. National Association as Trustee for TBW Mortgage-Backed Trust Series 2007-2 (U.S. Bank), TBW Mortgage Pass-Through Certificates, Series 2007-2, and Homeward Residential, Inc. (Homeward), filed their Motion of Respondents, U.S. Bank, National Association as Trustee and Homeward Residential, Inc. to Dismiss Petition to Try Title on October 2, 2012.

Schaefer-Ung filed her First Amended Petition to Try Title Pursuant to G.L. c. 240, §§ 1-5 (complaint), on October 10, 2012. In the complaint, Schaefer-Ung alleges that she is the record owner of, and resides in, the property at 38 Tar Kiln Hill Road, Orleans, Massachusetts (Property), and calls for the defendants to appear and try their claim to superior title to the Property. Schaefer-Ung names the following defendants: U.S. Bank, as Trustee for TBW Mortgage-Backed Trust 2007-2; Homeward, as loan servicer; Mortgage Electronic Registration Systems, Inc. (MERS), as mortgagee; TBW Mortgage Pass-Through Certificates, Series 2007-2 (Trust), as the trust to which the Mortgage was assigned; DLJ Mortgage Capital, Inc., named as “seller” in the prospectus for the Trust, and Credit Suisse Ag, f/k/a First Boston Mortgage Securities Corp. (Credit Suisse), named as “depositor” in the prospectus for the Trust, and Gretel Norgoet, an individual who allegedly bought the Property at foreclosure auction. The Case Management Conference was held on November 11, 2012.

On November 28, 2012, U.S. Bank, TBW, Homeward, and MERS filed Defendants, U.S. Bank National Association, as Trustee for TBW Mortgage-Backed Trust Series, 2007-2, TBW Mortgage Pass-Through Certificates, Series 2007-2’s, Homeward Residential Inc.’s, and Mortgage Electronic Registration Systems, Inc.’s Motion to Dismiss (Motion to Dismiss) and the Memorandum of Law in Support of Defendants, U.S. Bank National Association, as Trustee for TBW Mortgage-Backed Trust Series 2007-2, TBW Mortgage Pass-Through Certificates, Series 2007-2’s, Homeward Residential Inc.’s, and Mortgage Electronic Registration Systems, Inc.’s Motion to Dismiss. This Motion to Dismiss is the subject of this Order.

Schaefer-Ung, on January 14, 2013, filed her Petitioner’s Opposition to Motion to Dismiss of U.S. Bank National Association, as Trustee for TBW Mortgage-Backed Trust Series 2007-2, TBW Mortgage Backed-Certificates, Series 2007-2, Homeward Residential, Inc., and Mortgage Electronic Registration Systems, Inc. And, on January 22, 2013, U.S. Bank, TBW, Homeward, and MERS filed Respondents, U.S. Bank National Association, as Trustee for TBW Mortgage-Backed Trust Series 2007-2, TBW Mortgage Pass-Through Certificates, Series 2007-2’s, Homeward Residential Inc.’s, and Mortgage Electronic Registration System, Inc.’s Reply Memorandum in Support of Their Motion to Dismiss. The Answer of Gretel Norgoet was filed on January 25, 2013.

The Motion to Dismiss was heard on January 29, 2013. In open court, Schaefer- Ung filed her Notice of Dismissal of Defendants Without Prejudice. Pursuant to Mass. R. Civ. P. 41(a)(1)(i), the claims against all the defendants other than Ms. Norgoet were dismissed without prejudice and the Motion to Dismiss was denied as moot. The only remaining Defendant was Gretel Norgoet.

On April 1, 2013, Gretel Norgoet filed her Motion to Dismiss and Reinstate Bank Defendants and Memorandum in Support of Defendant, Gretel Norgoet’s Motion to Dismiss and Reinstate Bank Defendants. On April 29, 2013, U.S. Bank, TBW, Homeward, and MERS filed their Motion to Intervene and for Costs and Fees (Motion to Intervene) and their Memorandum of Law in Support of Respondents, U.S. Bank National Association, as Trustee for TBW Mortgage-Backed Trust Series 2007-2, TBW Mortgages Pass-Through Certificates, Series 2007-2, Mortgage Electronic Registration Systems, Inc. and Homeward Residential Inc.’s Motion to Intervene and For Costs and Fees. On the same date, Schaefer-Ung filed Petitioner’s Opposition to Respondent Norgoet’s Motion to Dismiss and Reinstate Bank Defendants.

At a continued case management conference on May 9, 2014, Ms. Norgoet disclaimed all right and title adverse to the petitioner pursuant to G.L. c. 230, § 3, and the claims against Gretel Norgoet were dismissed and she was allowed to make application for costs. The court found that MERS and Homeward disclaimed all right and title adverse to the petitioner under G.L. c. 230, § 3, and granted MERS and Homeward leave to make an application for costs. The court allowed the Motion to Intervene with respect to U.S. Bank under Mass. R. Civ. P. 24(a)(2).

At the continued case management conference, U.S Bank renewed, and the court accepted, the Motion to Dismiss. On May 28, 2013, Schaefer-Ung filed Petitioner’s Supplemental Opposition to U.S. National Associations, as Trustee for TBW Mortgage- Backed Trust Series 2007-2, TBW Mortgage Backed-Certificates, Series 2007-2’s Motion to Dismiss.

The court heard arguments on the Motion to Dismiss on June 5, 2013, and took it under advisement. After the hearing on the Motion to Dismiss, the following filings were made: on June 14, 2013, Petitioners Memorandum on the New York Express Trust Entitled “TBW Mortgage-Backed Trust Series 2007-2,” Filed in Accordance With This Court’s June 5, 2013 Briefing Schedule, and Respondent, U.S. Bank National Association, as Trustee for TBW Mortgage-Backed Trust Series 2007-2, TBW Mortgage Pass-Through Certificates, Series 2007-2, Second Supplemental Memorandum in Support of its Motion to Dismiss ; on June 21, 2013, Petitioner’s Supplemental Opposition to U.S. Bank National Association, as Trustee for TBW Mortgage-Backed Trust Series 2007-2, TBW Mortgage Backed-Certificates, Series 2007-2’s Motion to Dismiss, and Respondent, U.S. Bank National Association, as Trustee for TBW Mortgage-Backed Trust Series 2007-2, TBW Mortgage Pass-Through Certificates, Series 2007-2’s Response to Petitioner’s Memorandum on the New York Express Trust Entitled “TBW Mortgage-Backed Trust Series 2007-2”; on July 5, 2013, Respondent, U.S. Bank National Association, as Trustee for TBW Mortgage-Backed Trust Series 2007-2, TBW Mortgage Pass-Through Certificates, Series 2007-2’s Notice of Supplemental Authority; on July 16, 2013, Respondent, U.S. Bank as Trustee’s Third Supplemental Memorandum in Support of its Motion to Dismiss (Leave of Court Granted on July 8, 2013); and on July 23, 2013, Petitioner’s Further Supplemental Opposition to U.S. Bank National Association, as Trustee for TBW Mortgage-Backed Trust Series 2007-2, TBW Mortgage Backed-Certificates, Series Trust 2007-2’s Motion to Dismiss.

On April 30, 2014, U.S. Bank filed Respondent, U.S. Bank as Trustee’s Motion for Leave to File a Fourth Supplemental Memorandum in Support of Its Motion to Dismiss to Address Recent Applicable Supreme Judicial Court Decision, which was allowed on May 2, 2014. U.S. Bank filed its Fourth Supplemental Memorandum on May 8, 2014, and Schaefer-Ung filed Petitioner’s Reply Memorandum on May 15, 2014.

Background

In considering a motion to dismiss for failure to state a claim, the court accepts as true well-pleaded factual allegations and reasonable inferences drawn therefrom, Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43 , 45 (2004), but does not accept “legal conclusions cast in the form of factual allegations.” Iannacchino v. Ford Motor Co., 451 Mass. 623 , 633 (2008), quoting Schaer v. Brandeis Univ., 432 Mass. 474 , 477 (2000). Generally, if matters outside the pleadings are presented to and not excluded by the court, the motion will be treated as a motion for summary judgment. Mass. R. Civ. P. 12(b), 12(c). The court may, however, take into account matters of public record and documents integral to, referred to, or explicitly relied on in the complaint, whether or not attached, without converting the motion to a motion for summary judgment. Marram, 442 Mass. at 45 n.4; Schaer, 432 Mass. at 477; Reliance Ins. Co. v. City of Boston, 71 Mass. App. Ct. 550 , 555 (2008); Shuel v. DeIeso, 16 LCR 329 , 329 n.2 (2008). Therefore, the court will accept as true the allegations of the complaint for the purposes of the Motion to Dismiss. The court will consider the various recorded instruments submitted with the complaint and the Motion to Dismiss, and other documents referred to in the complaint.

Based on the complaint and these documents, the court accepts as true the following facts. Schaefer-Ung resides in the Property as her primary residence. Schaefer-Ung acquired title to the Property by virtue of a quitclaim deed dated January 28, 1999, and recorded in the Barnstable County Registry of Deeds (registry) at Book 12045, Page 167, on November 5, 1999 (Deed). On March 30, 2007, Schaefer-Ung gave a mortgage on the Property to Mortgage Electronic Registration Systems, Inc. (MERS), which was recorded at the registry at Book 21915, Page 124, on April 5, 2007 (Mortgage). The Mortgage provides that it secures a note (Note), signed by Sandy Schaefer-Ung, as borrower, for a loan of $350,000 from Taylor, Bean and Whitaker Mortgage Corp. (TBW). The Mortgage states that the mortgagee, MERS, is acting solely as a nominee for TBW and its successors and assigns.

An assignment of mortgage (Assignment) was recorded at the registry at Book 25744, Page 119, on October 11, 2011, purporting to assign the Mortgage from MERS to U.S. Bank National Association, as Trustee for TBW Mortgage Backed Trust Series 2007-2, TBW Mortgage Pass-Through Certificates, Series 2007-2 (Trust). The Assignment was executed by April King, as Assistant Secretary of MERS, and her signature was notarized before a notary public in Duval County, Florida. The assignee is a New York common law trust supposedly consisting—as of its “cut-off date” of May 1, 2007—of 3,425 fixed-rate mortgage loans with an aggregate principal balance of approximately $648,509,965 secured by first liens on one-to-four-family residential properties. The prospectus for the Trust identifies TBW as the “sponsor,” “originator,” and “servicer,” Credit Suisse as the “depositor,” the Trust as the “issuing identity,” DLJ Mortgage Capital, Inc. as the “seller,” Wells Fargo Bank, N.A., as the “Master Servicer,” and “U.S. Bank, National Association” as the “Trustee.” Pursuant to the prospectus, the Trust “closed” on March 30, 2007, four years before the Assignment was recorded.

At some point Schaefer-Ung fell behind on her mortgage payments and was not delivered a valid right to cure notice pursuant to G.L. c. 244, § 35A. On March 13, 2012, she filed for Chapter 7 bankruptcy protection indicating that she would attempt to retain her home and pay the mortgage. On April 2, 2012, U.S. Bank filed a Motion for Relief from the Automatic Stay to foreclose on the Property. Schaefer-Ung states in her complaint, on information and belief, that between March 13, 2012, and August 28, 2012, U.S. Bank made no reasonable efforts to work with Schaefer-Ung to avoid foreclosure. On June 7, 2012, Schaefer-Ung obtained a Chapter 7 discharge. On or about August 28, 2012, [Note 1] Homeward, by and through its attorneys, purported to conduct a non-judicial foreclosure sale of the Property. At the foreclosure sale, the property was purportedly sold to Defendant Gretel Norgoet.

Discussion

To survive the Motion to Dismiss, the complaint must set forth factual allegations which, if true, plausibly suggest that Schaefer-Ung is entitled to the relief she seeks. Iannacchino, 451 Mass. at 636. Schaefer-Ung’s complaint sets forth a variety of factual allegations and legal grounds which, she argues, state a claim under the try title statute, G.L. c. 240, §§ 1-5, and require U.S. Bank to appear and try its title. Specifically, Schaefer-Ung alleges that she has title to the Property by virtue of the Deed and the fact that she resides in the Property as her primary residence. Schaefer-Ung argues that U.S. Bank cannot establish that it has complied with the terms of the Mortgage, that the Mortgage was lawfully assigned to the Trust, or that U.S. Bank had a right to foreclose on her equitable right of redemption. In the Motion to Dismiss, U.S. Bank, along with other defendants subsequently dismissed, argues that the various grounds on which Schaefer-Ung challenges the Assignment and foreclosure do not, as a matter of law, state a claim that the Assignment and foreclosure is invalid.

Many of the claims set forth in Schaefer-Ung’s complaint and the arguments in the Motion to Dismiss, Schaefer-Ung’s opposition, and related filings, have been addressed in prior decisions of this Court. See Mitchell v. U.S. Bank Nat’l Assoc., 22 LCR 120 (2014); Abate v. Freemont Inv. & Loan, 20 LCR 630 (2012), appeal pending, No. SJC-11638. The first issue is whether a motion to dismiss under Mass. R. Civ. P. 12(b)(6) may be brought by the defendant in an action under the Try Title Statute, G.L. c. 240, §§ 1-5. This issue was addressed in Mitchell and Abate, and that analysis need not be repeated here. Mitchell, 22 LCR at 122-123; Abate, 20 LCR at 631-633. The Motion to Dismiss is properly before the court.

The Motion to Dismiss is prefaced with an argument that Schaefer-Ung lacks standing to challenge the validity of the Assignment. This argument raises two issues. First, U.S. Bank argues that Schaefer-Ung’s title and U.S. Bank’s title are complementary, not adverse, because this action was filed before the foreclosure sale. See id. at 632. Schaefer-Ung alleges that the foreclosure sale occurred shortly before or at the same time that this action was filed. That allegation is sufficient to justify an inference that U.S. Bank had purported to foreclose Schaefer-Ung’s equity of redemption, thereby claiming a superior title adverse to Schaefer-Ung’s title and giving rise to a try title action. G.L. c. 240, § 1; Abate, 20 LCR at 632. The second question is whether a mortgagor like Schaefer-Ung has standing to file a try title action challenging the validity of a foreclosure sale after the sale has been conducted. It is by now established that a mortgagor may challenge the validity of a foreclosure, after the fact, if the infirmity the mortgagor alleges would render the title of the foreclosing entity void, not merely voidable (unless the mortgagor was the one with the authority to void it). Sullivan v. Kondaur Capital Corp., 85 Mass. App. Ct. 202 , 205-206 (2014); Mitchell, 22 LCR at 128-129; Abate, at 20 LCR at 633-634; see Wilson v. HSBC Mtge. Servs., Inc., 744 F.3d 1, 8-12 (1st Cir. 2014); Woods v. Wells Fargo Bank, N.A., 733 F.3d 344, 354-355 (1st Cir. 2013); Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 289-292 (1st Cir. 2013). Each claim of the complaint must be addressed individually under the standard for Mass. R. Civ. P. 12(b)(6) to determine whether it states a claim that the alleged defect would render the Assignment or the foreclosure void or that Schaefer-Ung has the authority to void either one. What is required at the pleading stage are factual allegations plausibly suggesting (not merely consistent with) an entitlement to relief, in order to reflect the threshold requirement of Mass. R. Civ. P. 8(a)(2) that the plain statement possess enough heft to show that the pleader is entitled to relief. Iannacchino, 451 Mass. at 636. Schaefer-Ung’s individual claims are addressed below in turn.

1. U.S. Bank is not the trustee of the Trust.

Paragraph six of the complaint alleges that U.S. Bank has not provided evidence that it is the trustee of the Trust. When a mortgagee forecloses on the mortgagor’s equitable right of redemption, the mortgagor is subjected to the mortgagee’s legal interest in the real estate. See U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637 , 652-653 (2011). Schaefer-Ung was subjected to the Trust’s purported legal interest in the Property when U.S. Bank, acting as trustee for the Trust, purported to foreclose on her equitable interest in the Property. If, however, U.S. Bank was not the trustee of the Trust, then it had no legal power to act on behalf of the Trust, and the purported foreclosure is void. Where Schaefer-Ung alleges that U.S. Bank has not provided evidence that it is the Trustee of the Trust, she has made a “factual ‘allegation[] plausibly suggesting (not merely consistent with)’ an entitlement to relief.” Ianacchino, 451 Mass. at 635, quoting Twombly, 550 U.S. at 557. Paragraph six survives the Motion to Dismiss.

2. MERS never held any interest in the Note.

Paragraph eight of the complaint alleges that MERS never held any interest in the Note. Paragraph thirty-four of the complaint alleges that the chain of title of the Note and Mortgage is invalid and U.S. Bank cannot be shown to have legal standing as the owner of the Note or to have lawfully foreclosed under Massachusetts law. Paragraphs eight and thirty-four of the complaint state a claim upon which relief can be granted. In Eaton v. Federal Nat’l Mtge. Ass’n, 462 Mass. 569 (2012), the SJC held that in order to foreclose, the mortgagee must hold the mortgage and either hold the note, or act on behalf on the note holder. Id. at 584-586. The Eaton decision was given prospective effect, applying only to mortgage foreclosure sales for which the mandatory notice of sale was given after the date of the opinion, June 22, 2012. Id. at 588-589. While the date of the mandatory notice of sale to Schaefer-Ung has not been provided, the foreclosure sale of the Property was held on or about August 28, 2012. Since all inferences must be drawn in Schaefer- Ung’s favor, it must be inferred that the notice of sale was given after June 22, 2012. Therefore, for the purposes of the Motion to Dismiss, the holding in Eaton applies to U.S. Bank. The Mortgage identifies TBW as the lender, but the Assignment of the Mortgage from MERS to the Trust purports to convey the Note as well. Schaefer-Ung alleges that MERS never held any interest in the Note to convey, and that therefore the chain of title of the Note is invalid and U.S. Bank cannot be shown to have legal standing as the owner of the Note or to have lawfully foreclosed. Paragraphs eight and thirty-four of the complaint possess enough heft to show that Schaefer-Ung may be entitled to relief and survive the motion to dismiss.

3. The Note and Mortgage were held in separate legal ownership between origination and September 30, 2011.

Paragraph 26 of the complaint alleges that the Note and Mortgage were held in separate legal ownership between origination and September 30, 2011, the date of the Assignment. It is established law that “in Massachusetts a mortgage and the underlying note can be split.” Eaton, 462 Mass. at 576; see Lamson & Co. v. Abrams, 305 Mass. 238 , 245 (1940). There is no requirement that the Note and the Mortgage travel together, as long as they come together in the hand of the mortgagee at the time of foreclosure. Eaton, 462 Mass. at 576. Paragraph 26 is dismissed for failure to state a claim.

4. Paragraph 20 of the Mortgage required the Note and the Mortgage to be transferred together.

Paragraph 27 of the complaint alleges that paragraph 20 of the mortgage requires the Note and the Mortgage to be transferred together. Paragraphs 28 and 29 of the complaint allege that the Assignment and foreclosure sale were invalid because MERS and the Trust breached the mortgage contract by splitting the interests in the Note and the Mortgage. This exact claim was made and dismissed in Abate, 20 LCR at 637, and Mitchell, 22 LCR at 123-124. For the reasons set forth in Abate and Mitchell, paragraph 20 of the Mortgage does not require the Note and Mortgage to be conveyed together, and paragraphs 27, 28, and 29, of the complaint are dismissed for failure to state a claim.

5. No valid notice of default/right to cure was sent to Schaefer-Ung pursuant to G.L. c. 244, § 35A.

Paragraph 31 of the complaint alleges that, when she fell behind in her mortgage payments, Schaefer-Ung was not delivered a valid right to cure notice pursuant to G.L. c. 244, § 35A. Section 35A is not one of the statutes “relating to foreclosure of mortgages by the exercise of a power of sale.” Schumacher v. U.S. Bank Nat’l Ass’n, 467 Mass. 421 , 430 (2014), quoting G.L. c. 183, § 21. Therefore, failure to comply with G.L. c. 244, § 35A, does not render a foreclosure invalid. Id. If, on the other hand, “the violation of §35A rendered the foreclosure so fundamentally unfair that [the mortgagor] is entitled to affirmative equitable relief,” then the mortgagor may seek equitable relief in the Land Court under G.L. c. 185, § 1(k), or any other court of competent jurisdiction. Schumacher, 467 Mass. at 433 (Gants, J., concurring); Mitchell, 22 LCR at 126. Because failure to deliver valid notice of right to cure under § 35A alone would not invalidate the foreclosure sale and render the title arising from the foreclosure void, paragraph 31 fails to state a claim. Schumacher v. U.S. Bank Nat’l Ass’n was decided while this case was pending, and serves to clarify treatment of § 35A in relation to G.L. c. 183, § 21. Therefore, paragraph 31 is dismissed without prejudice, and Schaefer-Ung is given fifteen days to file an amended complaint including a claim that the mortgagee’s violation of § 35A rendered the foreclosure so fundamentally unfair that Schaefer-Ung “is entitled to affirmative equitable relief, specifically the setting aside of the foreclosure sale for reasons other than failure to comply strictly with the power of sale provided in the mortgage.” Schumacher, 467 Mass. at 433 (Gants, J., concurring). [Note 2]

6. The Assignment purports to have assigned the Note and Mortgage into the Trust almost four years after the Trust closed.

Paragraph 37 of the complaint alleges that the Assignment and foreclosure are void because the Assignment purports to have assigned the Note and Mortgage into the Trust almost four years after the Trust closed, against IRS REMIC rules, bankruptcy rules, and New York law. Schaefer-Ung’s argument tracks closely the arguments successfully set forth in Wells Fargo Bank, N.A. v. Erobobo, 972 N.Y.S.2d 147, 2013 WL 1831799 (N.Y. Sup. Ct. Apr. 29, 2013). In that case, Erobobo argued that the foreclosing bank was “not in fact the owner or holder of the note because it obtained the note and mortgage after the trust had closed in violation of the PSA, and therefore acquisition of the note and mortgage [was] void.” Id, at *2. Erobobo looked to the pooling and service agreement (PSA) and pointed out that its terms required that the trust not operate or take any action that would jeopardize its REMIC status. Id. at *8. This requirement is logical given that a REMIC trust’s investors receive significant tax benefits contingent upon the trust’s compliance with U.S. treasury regulations. See id. at *7, citing 26 U.S.C. § 860-D-1.

The Erobobo PSA also included a closing date by which all mortgage note interests were to be conveyed into the trust unless an opinion letter from counsel was received, indicating that late acceptance of the asset would not affect the REMIC’s status. Id. The Internal Revenue Code defines a qualified mortgage, for REMIC purposes, as:

(A) any obligation (including any participation or certificate of beneficial ownership therein) which is principally secured by an interest in real property and which—

(i) is transferred to the REMIC on the startup day in exchange for regular or residual interests in the REMIC, [or]

(ii) is purchased by the REMIC within the 3-month period beginning on the startup day if, except as provided in regulations, such purchase is pursuant to a fixed-price contract in effect on the startup day.

26 U.S.C. § 860G (a)(i, ii).

The Erobobo PSA also required that “the Depositor deliver and deposit with the Trustee the original note, the original mortgage and an original assignment.” Erobobo, 2013 WL 1831799, at *8. Because the Erobobo note and mortgage had been assigned into the Trust after the closing date, with no letter from counsel, and by an entity other than the “Depositor,” the New York Supreme Court held that the trustee had violated the terms of the trust. Relying on Section 7-2.4 of New York’s Estates, Power and Trusts Law, the Erobobo court held that the assignment of the note and mortgage into the trust was void and denied the banks’ motion for summary judgment. Id. at *8-*9.

A split of opinion has developed over whether Erobobo was correctly decided, and because of the nationwide nature of mortgage securitization, the split of opinion has involved multiple jurisdictions. See Glaski v. Bank of America, 218 Cal. App. 4th 1079 (2013) (holding that, under Erobobo, post-closing date attempts to transfer a deed of trust into the WaMu Securitized Trust were sufficient to state a basis for concluding the attempted transfers were void); Saldivar v. JPMorgan Chase Bank, N.A. (In re Saldivar), Bk. No. 11-10689, 2013 WL 2452699, slip. op. (Bankr. S.D. Tex. June 5, 2013) (holding that “[b]ased on the Erobobo decision and the plain language of N.Y. Est. Powers & Trusts Law § 7–2.4, . . . under New York law, assignment of the . . . Note after the start up day [was] void ab initio”); U.S. Bank Nat’l Ass’n v. Hoynoski, Mass. Housing Ct., No. 11-SP-3965 (Nov. 8, 2012) (allowing discovery on whether assignment of mortgage at issue was void ab initio under EPTL § 7-2.4); contra Anh Nguyet Tran v. Bank of New York, No 13 Civ. 580, 2014 WL 1225575 (S.D.N.Y. Mar. 24, 2014) (holding that “after-the-deadline transactions [in violation of the terms of the PSA] would merely be voidable at the election of one or more of the parties—not void”); Koufos v. U.S. Bank, 939 F.Supp.2d 40 (D. Mass. 2013) (holding that assignments made after the Trust’s closing date are voidable, rather than void), Calderon v. Bank of America, 941 F.Supp.2d 753 (W.D. Tex. 2013) (holding that “New York case law . . . makes clear that section 7–2.4 is not applied literally in New York”); Bank of America Nat’l Ass’n v. Bassman FBT, L.L.C., 2012 IL App (2d) 110729 (2012) (citing “numerous cases, including several that specifically reference section 7–2.4 . . . indicat[ing] that under various circumstances a trustee’s ultra vires acts are not void”).

A mortgagor has standing to challenge a foreclosure on the basis that an assignment—which the mortgagor was neither a party to nor an intended beneficiary of— is void, but not on the basis that such an assignment is merely voidable, unless the mortgagor has the contractual or other right to void the transaction. Sullivan, 85 Mass. App. Ct. at 206 n.7; Abate, 20 LCR at 634; see Wilson, 744 F.3d at 9. Erobobo and its progeny rely on the wording of Section 7-2.4 of New York’s Estates, Power and Trusts Law for the mortgagor’s post-foreclosure standing to challenge an assignment in violation of the PSA. The New York statute provides: “If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void.” N.Y. E.P.T.L. § 7-2.4 McKinney (2014). “Under New York Trust Law,” Erobobo holds, “every sale, conveyance or other act of the trustee in contravention of the trust is void. EPTL § 7-2.4.” Erobobo, 2013 WL 1831799, at *8.

In Anh Nguyet Tran v. Bank of New York, the United States District Court for the Southern District of New York rejected the Erobobo decision and stated that it ran “counter to better-reasoned cases, which apply the rule that a beneficiary can ratify a trustee’s ultra vires act.” Anh Nguyet Tran, 2014 WL 1225575, at *5, citing Mooney v. Madden, 597 N.Y.S.2d 775, 776 (N.Y. App. Div. 1993). The court in Anh Nguyet Tran held that, under New York law, an assignment in violation of the PSA of a REMIC trust only renders the assignment voidable, not void, because, under common law principals, the trusts’ beneficiaries can later ratify the assignment. Id., citing Omrazeti v. Aurora Bank FSB, No. SA: 12-CV-00730-DAE, 2013 WL 3242520, at * 7 (W.D. Tex. June 25, 2013) (“even if it is true that the Notes were transferred to the trust in violation of the trust’s terms [after the closing date of the trust], that transaction could be ratified by the beneficiaries of the trust and is therefore merely voidable.”); see also Bassman, 2012 IL App (2d) 110729 at ¶19.

This court finds the reasoning in Anh Nguyet Tran v. Bank of New York persuasive. An assignment into a New York express trust, in violation of a PSA agreement, renders the assignment merely voidable, not void. In her Memorandum on the New York Express Trust, Schaefer-Ung quotes the Trust’s PSA at length and alleges that the Assignment violated the PSA in the same ways alleged in Erobobo, 2013 WWL 1831799, at *8-*9. Schaefer-Ung alleges that the Assignment of the Mortgage and the Note into the Trust is void because it was made almost four years after the closing date set forth in the PSA, and because the Assignment was made by an entity other than the depositor named in the PSA, Credit Suisse. While the named violations of the PSA make the Assignment voidable, particularly because the violations adversely affect the REMIC nature of the Trust, it is only the parties to the Assignment or the beneficiaries of the trust who have the power to void the Assignment. Schaefer-Ung has no standing to contest the violations because she is neither a party to the Assignment nor an intended beneficiary of it. Because Schaefer-Ung has no standing to contest the Assignment’s alleged violations of the PSA, paragraph 37 of the complaint is dismissed for failure to state a claim.

7. The Assignment was made after TBW’s bankruptcy.

Paragraph 38 of the complaint alleges that the Assignment is invalid because it was made after TBW declared bankruptcy. Paragraph 40(j) of the complaint alleges that the assignment was invalid because MERS had no authority to act for TBW—a bankrupt company—whose assets had been sold prior to the date of the Assignment. According to Schaefer-Ung, after collapsing under the weight of defaults on the subprime loans it originated, TBW, a Florida corporation which in just a few years was able to become the largest non-bank lender in the U.S., filed for bankruptcy on August 24, 2009, in the United States Bankruptcy Court for the Middle District of Florida. MERS’s Assignment of the Note and Mortgage is dated September 30, 2011.

The question is whether the mortgagee, MERS, as nominee for TBW and TBW’s successors and assigns could lawfully assign the Note and Mortgage two years after TBW had filed for bankruptcy. In its memorandum in support of the Motion to Dismiss, U.S. Bank argues that Schaefer-Ung’s bankruptcy-related claims are foreclosed by the holding in Kiah v. Aurora Loan Services, LLC, 2011 WL 841282 (D. Mass. Mar. 4, 2011). Like Schaefer-Ung, Kia gave a mortgage to MERS as mortgagee acting solely as nominee for the lender and the lender’s successors and assigns, a lender that subsequently entered bankruptcy. Id. at *1-*2. Kia is not quite on point. In that case, it was undisputed that the foreclosing entity possessed the note, and had the right to enforce the note at the time of foreclosure. Id. While the Kia court held that “the dissolution of [the lender] would not and could not prevent [the foreclosing entity] from obtaining an assignment of the mortgage from MERS both as a matter of law and according to the arrangement that existed between MERS and [the foreclosing entity] as a ‘successor and assign’ of [the lender],” id. at *4, it qualified its holding by stating that Kia’s failure to challenge the validity of the assignment of the note to the foreclosing entity was fatal to his claim. Id. Schaefer-Ung alleges that U.S. Bank did not hold the Note at the time of foreclosure. Because Schaefer-Ung has challenged the Note’s chain of title and the issue of whether U.S. Bank held the Note at the time of foreclosure is validly pled, the holding in Kia does not apply and paragraphs 38 and 40 (j) of the complaint state a claim for which relief can be granted.

8. Whether the recording of the Assignment is fraudulent.

Paragraph 39 of the complaint alleges that representation on the public land records that the Assignment validly transferred the Notes and Mortgage from MERS as nominee of TBW to the Trust represents a “fraud on various courts of the Commonwealth and of the United States to which such representations have been made.” To survive a motion to dismiss for failure to state a claim, the complaint must allege a specific harm to the named plaintiff. See Doe v. Governor, 381 Mass. 702 , 705 (1980) (holding that the plaintiffs’ amended complaint was defective in its failure to allege injury in fact to a specific, aggrieved individual). Furthermore, the circumstances constituting fraud must be pled with particularity. Mass. R. Civ. P. 9(b). Schaefer-Ung has failed to plead with particularity how recordation of the Assignment constitutes fraud. In any event, paragraph 39 of the complaint fails to state a claim because Schaefer-Ung lacks standing to file suit against U.S. Bank for “fraud on various courts of the Commonwealth and of the United States.”

9. Multiple claims against the validity of the MERS Assignment.

Paragraph 40 of the complaint sets forth multiple claims, all alleging that the Assignment is invalid. Each claim is addressed below in turn.

Paragraph 40(a) alleges that the Assignment is invalid because it gives no address for MERS as required by G.L. c. 183, § 6C. General Laws c. 183, § 6C provides:

Every mortgage and assignment of a mortgage presented for record shall contain or have endorsed upon it the residence and post office address of the mortgagee or assignee if said mortgagee or assignee is a natural person, or a business address, mail address or post office address of the mortgagee or assignee if the mortgagee or assignee is not a natural person. Such endorsement shall be recorded as part of the mortgage or assignment of a mortgage. Failure to comply with this section shall not affect the validity of any mortgage or assignment of a mortgage or the recording thereof. No register of deeds shall accept a mortgage or assignment of a mortgage for recording unless it is in compliance with the requirements of this section. (Emphasis added).

Section 6C expressly states that non-compliance does not affect the validity of any assignment. The claim that non-compliance with § 6C affects the validity of the Assignment, thereby invalidating U.S. Bank’s status as mortgage holder at the time of the foreclosure, therefore fails.

Paragraph 40(b) of the complaint alleges that the Assignment is invalid because there is no evidence that April King, the purported signer of the Assignment was duly authorized to execute the Assignment on behalf of MERS. The argument set forth in paragraph 40(b) is dismissed for failure to state a claim, pursuant to G.L. c. 183, § 54B, for the same reason this court dismissed the same argument in Abate, 20 LCR at 636, and Mitchell, 22 LCR at 127.

Paragraph 40(c) of the complaint alleges that the Assignment is invalid because it is impossible to determine whether April King was working out of Florida or Texas when she appeared before a notary to execute the Assignment as required by G.L. c. 183, § 30. General Laws c. 183, § 29, provides that “[n]o deed shall be recorded unless a certificate of its acknowledgment or of the proof of its due execution . . . is endorsed upon or annexed to it.” General Laws c. 183, § 30, provides that:

Such acknowledgment may be made—(a) If within the commonwealth, before a justice of the peace or notary public. (b) If without the commonwealth, in any state, territory, district or dependency of the United States, before a justice of the peace, notary public, magistrate or commissioner appointed therefor by the governor of this commonwealth, or, if a certificate of authority in the form prescribed by section thirty- three is attached thereto, before any other officer therein authorized to take acknowledgments of deeds. [Note 3]

G.L. c. 183, § 30. The basis of the claim set forth in paragraph 40(c) is not clear to the court. Clearly there is no requirement in G.L. c. 183, § 30, or its related statutes, that any individual acting on behalf of a party to an assignment reveal the particular office at which she is working at the time she executes the assignment. Paragraph 40(c) of the complaint is dismissed for failure to state a claim.

Paragraph 40(d) of the complaint alleges three reasons why the notarization of the Assignment rendered it invalid. First, it alleges that the Assignment was not properly notarized under G.L. c. 183, § 30, in that the notary acknowledgement fails to comply with the requirements of Executive Order 455 issued by Massachusetts Governor Mitt Romney. Executive Order 455 is wholly inapplicable to the Florida notary acknowledgment of the Assignment. A deed may be recorded in Massachusetts if acknowledged by a notary public of another state. G.L. c. 183, §§ 29, 30. A notary public of a state or commonwealth other than Massachusetts, acting outside of Massachusetts, is not subject to Executive Order 455. The allegation that the Assignment is invalid because Florida notary public Watson Dixon failed to comply with Executive Order 455 is dismissed for failure to state a claim. [Note 4]

Second, paragraph 40(d) of the complaint alleges that the acknowledgment bears indicia of fraud because the notary could not determine the gender or number of signers. The notary block of Florida notary public Dixon is in a format where, it appears, the notary public can manually circle the appropriate pronoun to denote the number and gender of the signers before him. No such manual adjustments have been made to the notary block. It must be inferred that Schaefer-Ung’s allegations of fraud stem from this fact. In Massachusetts the circumstances constituting fraud must be pled with particularity. Mass. R. Civ. P. 9(b). Schaefer-Ung fails to plead specifically how the omission of marks on the notary block denoting the gender and number of signers indicates an act of fraud. As far as paragraph 40(d) of the complaint alleges that the acknowledgment bears indicia of fraud because the notary could not determine the gender or number of signers, it is dismissed for failure to state a claim.

Third, paragraph 40(d) of the complaint alleges that the Assignment is invalid because “the acknowledgement purports to state that the signer appeared personally or presented identification in the alternative without properly delineating which actually occurred.” Compl. ¶ 40(d). The acknowledgment states “before me, the undersigned notary public personally appeared April King of [MERS] . . . personally known to me (proved to me on the basis of satisfactory evidence).” Put another way, this simply means that April King of MERS appeared before the notary public and that her identity was confirmed either by the notary public’s personal knowledge, or by other evidence, such as a driver’s license. This wording presents no infirmities to the validity of the Assignment. Paragraph 40(d) of the complaint is dismissed in its entirety.

Paragraph 40(f) of the complaint alleges that the Assignment is invalid because it fails to list consideration in violation of G.L. c. 183, § 6. For the same reasons that this claim failed in Abate, 20 LCR at 635, and in Mitchell, 22 LCR at 128, paragraph 40(f) of the complaint is dismissed for failure to state a claim.

Paragraph 40(g) of the complaint alleges that the Assignment is invalid because MERS cannot have assigned the Note, as MERS maintains no beneficial interests in promissory notes and “an assignment of a note and mortgage cannot be considered valid for one purpose (to assign the mortgage) and invalid for the other (to assign the note).” Compl. ¶ 40(g). “[C]rucial to MERS’s business model is its ability to remain mortgagee of record, possessing a legal interest in a homeowner’s mortgage, while the beneficial interest in that accompanying note is transferred among MERS’s member institutions.” Butler v. Deutsche Bank Trust Co. Americas, 748 F.3d 28, 33 (1st Cir. 2014). The fact that MERS’s Assignment of Schaefer-Ung’s mortgage purports also to convey to the Trust “the note or notes therein described or referred to” does not call the Assignment’s validity into question. Schaefer-Ung offers no legal basis for her suggestion that “an assignment of a note and mortgage cannot be considered valid for one purpose (to assign the mortgage) and invalid for the other (to assign the note).” Paragraph 40(g) of the complaint is accordingly dismissed for failure to state a claim.

Paragraph 40(h) of the complaint alleges that the Assignment is invalid because April King worked for Homeward, but executed the Assignment on behalf of MERS. This claim fails for the same reason that it failed in Abate, 20 LCR at 636, and in Mitchell, 22 LCR at 127. Paragraph 40(h) of the complaint in dismissed for failure to state a claim.

Paragraph 40(i) of the complaint alleges that the Assignment fails to comply with G.L. c. 183, § 6D, by failing to list the mortgage broker or originator. This same claim was made and dismissed in Abate, 20 LCR at 635, and in Mitchell, 22 LCR at 128. Likewise, paragraph 40(i) is here dismissed for failure to state a claim.

In paragraph 55 of the complaint Schaefer-Ung denies that U.S. Bank or any other respondent can establish a lawful and valid chain of title to any mortgage, note, or any other interests in the premises that may have been originally granted by Schaefer-Ung. The Mortgage instrument and the Assignment filed with the complaint establish an unbroken chain of title of the Mortgage from Schaefer-Ung to MERS, and from MERS to U.S. Bank, as Trustee for the Trust. Therefore, the complaint fails to state a claim that U.S. Bank, as Trustee, cannot establish lawful title of the Mortgage, except for paragraph six, which alleges that no evidence has ever been provided to support the contention that U.S. Bank is Trustee of the Trust. The court credits, as it must on a motion to dismiss, Schaefer-Ung’s claims that there is a gap in the chain of title of Note. Therefore, paragraph eight, which alleges that MERS never held the Note, paragraph thirty-four, which alleges that the Note’s chain of title is defective, and the bankruptcy-related claims in paragraphs 38 and 40(j), so far as they relate to the Note, all survive the Motion to dismiss.

Conclusion

For the foregoing reasons, U.S. Bank’s Motion to Dismiss is hereby DENIED IN PART and ALLOWED IN PART as follows. U.S. Bank’s Motion to Dismiss is DENIED with respect to the claims set forth in paragraphs 6, 8, 34, 38, and 40(j) of the complaint. The claim set forth in paragraph 31 of the complaint is DISMISSED WITHOUT PREJUDICE. Sandy Schaefer-Ung is hereby given leave to file an amended complaint appropriately addressing the claim set forth in paragraph 31 consistent with this Order. If Sandy Schaefer-Ung does not file such an amended complaint within fourteen days of the date of this Order, then a Judgment will issue dismissing this claim with prejudice. The remaining claims set forth in the complaint are DISMISSED WITH PREJUDICE.

A status conference in this action is set down for June 30, 2014 at 10:30 am. SO ORDERED