M & T BANK v. LISARDO A. MURILLO, MATTHEW J. KIDD and U.S. BANK NATIONAL ASSOCIATION As Trustee for Wachovia Loan Trust Series 2006-AMN1.

On May 31, 2006, Lisardo Murillo took title to the property located at 79 Derby Street, Somerville, Massachusetts, and granted a mortgage on the property to American Mortgage Network. American Mortgage Network purportedly assigned that mortgage to Wachovia Mortgage Loan Trust, LLC, which in turn purportedly assigned it to U.S. Bank National Association as Trustee; no record of these assignments appears in the registry of deeds before 2008. U.S. Bank foreclosed on Mr. Murillo in 2007 and sold the property to Matthew J. Kidd, who then granted a mortgage to M&T on the property. The two banks have moved for summary judgment declaring that the title held by Mr. Kidd is valid, as is the mortgage held by M&T, and M&T has moved to dismiss Mr. Kidd’s amended counterclaim. Because the banks have presented evidence of off-record assignment sufficient to satisfy the requirements of U.S. Bank N.A., v. Ibanez, 458 Mass. 637 (2011), and the court lacks subject matter jurisdiction over the remaining counterclaims, the Joint Motion for Summary Judgment and the Motion to Dismiss are both ALLOWED.

Procedural History

Plaintiff M&T Bank (M&T) filed its complaint on November, 20, 2012, naming as defendants Lisardo A. Murillo (Murillo), Matthew J. Kidd (Kidd), and U.S. Bank National Association as Trustee for Wachovia Loan Trust, Series 2006-AMN1 (U.S. Bank). M&T filed its amended complaint on December 4, 2012. Count I of the amended complaint seeks a declaration that U.S. Bank held the defendant Murillo’s mortgage at the time of the foreclosure of the property located at 79 Derby Street, Somerville, Middlesex County, Massachusetts (the Property), and that the foreclosure and the subsequent sale of the Property to defendant Kidd were therefore proper. Count II requests a declaration that the recorded deeds operate as assignments of the mortgage, resulting in Kidd holding a mortgage on any interest in the Property remaining in Murillo. Count III seeks a declaration that Kidd granted a mortgage on the Property to M&T, who is the current holder of that mortgage. Count IV seeks a declaration that because Kidd is in default of that obligation, M&T has the right to foreclose on the property and a judgment ordering U.S. Bank to turn over to M&T the original promissory note and loan records.

A case management conference was held December 19, 2012. Kidd filed his answer to the complaint and his counterclaim on February 4, 2013. The defaults of defendants Murillo, Kidd, and U.S. Bank were entered on February 7, 2013. U.S. Bank’s default was removed on February 27, 2013, and its answer was filed on March 3, 2013. Kidd’s default was removed on March 8, 2013, and his amended counterclaim was filed on September 30, 2013. Count I of the amended counterclaim alleges a breach of contract by M&T. Count II is for unjust enrichment, alleging that M&T has been unjustly enriched by Kidd’s payments on a mortgage that M&T doesn’t hold. Count III alleges negligence on behalf of M&T with respect to its duty to properly research and examine Kidd’s title before accepting his mortgage. Count IV is for violation of G.L. c. 93A, §§ 2 and 9, alleging unfair and/or deceptive business practices on behalf of M&T in its dealings with Kidd. Count V is for violation of G.L. c. 93A §§ 2 and 11, alleging unfair and/or deceptive business practices on behalf of M&T in its dealings with Kidd acting in trade and commerce.

M&T and U.S. Bank filed a Joint Motion for Summary Judgment on October 11, 2013, along with a Statement of Material Facts in Support of the Motion, and an Appendix to the Motion. On October 15, 2013, M&T filed a Motion to Dismiss Kidd’s amended counterclaim and a Memorandum of Law in Support for the Motion. On November 14, 2013 Kidd filed his Opposition to the Plaintiff’s Motion to Dismiss, Opposition to the Joint Motion for Summary Judgment, and a Statement of Material Facts in Response to the Parties’ Statement of Facts in Support of the Motion for Summary Judgment. On the same day, Kidd also submitted an Appendix to his Opposition to the Motion for Summary Judgment and an Affidavit in Opposition to the Motion for Summary Judgment.

These motions were heard on December 5, 2013, and taken under advisement. This Decision follows.

Summary Judgment Standard

Summary judgment may be entered if the “pleadings, depositions, answers to interrogatories, and responses to requests for admission . . . together with affidavits . . . show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.” Mass. R. Civ. P. 56(c). In viewing the factual record presented as part of the motion, I am to draw “all logically permissible inferences” from the facts in favor of the non-moving party. Willitts v. Roman Catholic Archbishop of Boston, 411 Mass. 202 , 203 (1991). “Summary judgment is appropriate when, ‘viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law.’” Regis Coll. v. Town of Weston, 462 Mass. 280 , 284 (2012), quoting Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117 , 120 (1991). “The burden on the moving party may be discharged by showing that there is an absence of evidence to support the non-moving party’s case.” Kourouvacilis v. General Motors Corp., 410 Mass. 706 , 711 (1991).

Undisputed Facts

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

1. On or about May 31, 2006, Murillo acquired the Property and gave a mortgage on it to Mortgage Electronic Record Systems, Inc. (MERS,) as nominee for American Mortgage Network Inc., DBA American Mortgage Network of MA, a DE Corp, (American), dated May 31, 2006, and recorded in the Middlesex South Registry of Deeds (registry) at Book 47549, Page 338, on June 1, 2006 (Murillo Mortgage).

2. The Murillo Mortgage, as executed by Murillo, states that it was for $440,000 at an interest rate of 6.875%. The Mortgage was numbered 206-465599 on its face.

3. On June 29, 2006, American and Wachovia Mortgage Loan Trust, LLC (Wachovia) entered into a Mortgage Loan Purchase Agreement (MLPA).

4. The MLPA provides, in relevant part:

The Seller [American] does hereby sell, assign, set over, transfer, and otherwise convey to Purchaser [Wachovia] on the Closing Date, without recourse (except as expressly provided herein), all of its right, title and interest, in, to and under the following: (A) the Mortgage Loans including the related Mortgage Note and Mortgage, all monies due or to become due on the Mortgage Loans.

5. Accompanying the MLPA was an Excel spreadsheet entitled “2006 WACH- AMN1,” which identified the Murillo Mortgage at row 2334 by various details including the loan number, interest rate, and initial loan amount.

6. On or about June 29, 2006, Wachovia (as Depositor), U.S. Bank (as Trustee), and Wells Fargo Bank, N.A. (as Servicer) entered into and executed a Pooling and Servicing Agreement (PSA) for the Wachovia Loan Trust, Series 2006-AMN1.

7. Section 2.01 of the PSA, entitled “Conveyance of Mortgage Loans,” provides in relevant part:

The Depositor [Wachovia], does hereby convey, assign and set over to the Trustee [U.S. Bank] for the benefit of the Certificate holders its rights and interests under the Sale Agreement, including the Depositor’s right, title and interest in the representations and warranties contained in the Sale Agreement, and the benefit of the repurchase obligations and the obligations of the Seller [American] contained in the Sale Agreement to take, at the request of the Depositor or the Trustee, all action on its part which is reasonably necessary to ensure the enforceability of a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be entitled to exercise all rights of the Depositor under the Sale Agreement as if, for such purpose, it were the Depositor.

8. “Sale Agreement” is defined in the PSA as the “Mortgage Loan Purchase Agreement dated June 29, 2006 between the Depositor and the Seller,” i.e., the MLPA.

9. On or about September 13, 2007, September 20, 2007, and September 27, 2007, U.S. Bank published legal notice of its intent to foreclose on the Murillo Mortgage.

10. On or about October 9, 2007, U.S. Bank conducted a foreclosure sale of the Property.

11. On or about February 11, 2008, MERS executed an assignment of the Murillo Mortgage to U.S. Bank that was recorded at the registry at Book 50734, Page 354, on February 19, 2008 (Assignment).

12. On or about June 11, 2008, U.S. Bank gave Kidd a quitclaim deed, recorded at the registry at Book 51328, Page 184, on June 19, 2008, conveying the Property.

13. On or about June 16, 2008 Kidd purported to grant a mortgage on the Property to Mortgage Electronic Registrations Systems, Inc. (MERS) as nominee for M&T that was recorded at the registry at Book 51328, Page 186, on June 19, 2008.

14. On or about March 21, 2012, Kidd’s mortgage to M&T was purportedly assigned from MERS to M&T pursuant to the terms of an assignment of mortgage recorded in the registry, Book 58811, Page 95, on April 2, 2012.

Discussion

If a mortgage contains the statutory power of sale, G.L. c.183 § 21, then, in the event of default on a mortgage, the statutory power of sale may be exercised by a foreclosure sale, provided that the entity foreclosing the mortgage holds the mortgage as original mortgagee or an assignee. G.L. c. 244, § 14. After notice of the foreclosure sale has been published for three successive weeks in a public newspaper with general circulation in the location of the property, a public auction may be held. Id. After a foreclosure sale, a foreclosure deed conveys the property to the purchaser, who retains the property in fee simple. G. L. c. 183, § 21; G.L. c. 244, § 14. If the foreclosure is conducted by parties not legally authorized to do so, the foreclosure is void. Ibanez, 458 Mass. at 647.

In Ibanez, the SJC held that, in order to be authorized to conduct a valid foreclosure sale, a foreclosing entity must hold the mortgage at the time of the notice of foreclosure and the foreclosure sale. “Where a plaintiff files a complaint asking for a declaration of clear title after a mortgage foreclosure, a judge is entitled to ask for proof that the foreclosing entity was the mortgage holder at the time of the notice of sale and foreclosure, or was one of the parties authorized to foreclose under G. L. c. 183, § 21, and G. L. c. 244, § 14.” Id. at 650-651. Here, the foreclosing entity, U.S. Bank, must have held the Murillo Mortgage by assignment at the time of the foreclosure. Otherwise, the foreclosure and subsequent foreclosure sale to Kidd by U.S. Bank is void. Bevilacqua v. Rodriquez, 460 Mass. 762 , 772 (2011).

U.S. Bank did not hold the Murillo Mortgage by a recorded assignment in September, 2007, when it published notice of the foreclosure, or in October, 2007, when it conducted the foreclosure. The assignment of the Murillo Mortgage to U.S. Bank was only recorded in 2008. The record chain of title shows that U.S. Bank did not hold the mortgage at the time of notice or sale. The parties cannot rely on recorded assignments to show that U.S. Bank held the Murillo Mortgage at the time of notice and foreclosure.

In Ibanez, the SJC held that an assignment of a mortgage does not need to be recorded before the publication dates, so long as an agreement effectuating an assignment is properly executed before publication and foreclosure. Ibanez, 458 Mass. at 651. In the absence of a pre-foreclosure recorded assignment, documents may be used to show an assignment existed if they are “produced in the form they existed in at the time the foreclosure sale was noticed and conducted.” Id. at 640. These documents must show with particularity that the assignment was made from the original mortgagee to the current holder, creating a chain of title. They must use language of present assignment that expresses an intent of current, not future, conveyance. Id. at 650.

Any off-record assignments must distinguish or identify the mortgages to be sold. If an agreement refers to a mortgage loan schedule as identification for the mortgages to be sold, the schedule must be provided. Id. The loan schedule must identify the loans with specific details including loan numbers, property addresses, or mortgagor names. Id. Zip code, payment history, and loan amount alone are insufficient. Id. If it does not include properly identifying characteristics, a loan schedule cannot be used to show that a specific mortgage is among those assigned in an agreement. Id.

The undisputed facts establish that American, the original mortgagee, conveyed the Murillo Mortgage to Wachovia by the MLPA. The MLPA uses language of present assignment (“does hereby sell, assign”) and attaches loan schedules. Under Ibanez, these documents are evidence of an assignment if they are produced to the Court in the form they existed at the time of foreclosure notice and sale. The affidavit of Angela Frye, submitted with the Joint Motion for Summary Judgment, attested that the loan schedules were contained in an Excel spreadsheet (provided by U.S. Bank) accompanying the MLPA as identification of the loans to be sold. On row 2334 of the spreadsheet, the Murillo Mortgage is identified by loan number 206-465599 in column ‘G’, interest rate of 6.875% in column ‘N’, and initial loan amount of $440,000 in column ‘R’. These match the loan number, interest rate, and loan amount set forth on the face of the Murillo Mortgage. The entire spreadsheet is also identified as Pool Number “WACH 2006-AMN1.”

This information is sufficient to show that the MLPA assigned the Murillo Mortgage from American to Wachovia. While zip code and payment history, together with the loan amount, are not sufficiently identifying characteristics in a loan schedule to show an assignment, Ibanez, 458 Mass. at 650, unique information like a loan number is sufficient. Unlike loan amount or zip code, which could apply to a number of different mortgagers, the loan number refers to an individual loan and accompanying mortgage. The information in the loan schedules that accompanied the MLPA is therefore adequate for identifying the Murillo Mortgage as one assigned to Wachovia.

The undisputed facts further establish that the PSA conveyed the Murillo Mortgage from Wachovia to U.S. Bank as Trustee. The PSA, dated June 26, 2009, specifically identifies the MLPA between American and Wachovia. Using present assignment language (“does hereby convey, assign”), the PSA conveys all mortgages contained in the “Sale Agreement,” from Wachovia to U.S. Bank. The “Sale Agreement” is defined in the PSA as “Mortgage Loan Purchase Agreement dated as of June 29, 2006 between the Depositor and the Seller,” that is, the MLPA. “Depositor” and “Seller” are defined as “Wachovia Mortgage Loan Trust, LLC” and “American National Mortgage, Inc.” respectfully. Because the PSA specifically defines what it conveys as including the MLPA between American and Wachovia, what was properly identified in the Series 2006 WACH- AMN1 schedules of the MLPA as the Murillo Mortgage was assigned by the PSA to U.S. Bank. M&T and U.S. Bank have demonstrated a chain of assignments of the Murillo Mortgage from American to Wachovia to U.S. Bank as Trustee by June 29, 2006, before the September, 2007, publication and October, 2007, foreclosure of the Mortgage.

In his opposition, Kidd argues that these documents are insufficient to show the assignment because they are not originals. He also argues that the affidavit of Angela Frye is nothing more than a parroting of the moving parties’ assertions and that the Excel spreadsheet of loan schedules, identifying the Murillo Mortgage, was not originally attached to the MLPA. He asks the court to set aside the MLPA and the PSA as fabrications because the affidavit is not made with “personal knowledge” and does not state where records are kept. These arguments fail.

Documents such as these can be used to show an assignment. In Deutsche Bank Nat’l Trust Co. v, Jepson, 20 LCR 78 (2012), the court held that loan agreements and instruments of sale, authenticated with affidavits, may be sufficient to show an executed assignment. In a case filed under the Servicemembers Civil Relief Act, the defendant Jepson alleged that the plaintiff Deutsche Bank did not actually hold the disputed mortgage through assignment. Deutsche Bank provided documents to the court that it claimed showed an assignment of Jepson’s mortgage to Deutsche Bank.

Plaintiff filed its response to the order to show cause, including affidavits and accompanying copies, including: of loan documents, among which are copies of instruments recorded with the Nantucket Registry of Deeds; of documents filed in or relating to litigation in several courts; and of notices of default. The review made by the court of Plaintiff's submission establishes that Plaintiff holds of record the subject mortgage… which was duly assigned.

Id. at 79 (emphasis supplied).

M&T and U.S. Bank submitted copies of the PSA and the MLPA filed with the Securities and Exchange Commission (SEC). These documents may be used as evidence of the assignments. In Ibanez, the court made a passing reference that unsigned, downloaded SEC forms were suspect as evidence of an assignment. Ibanez, 458 Mass. at 646. Here, the documents are copies of electronic filings from the SEC website that are signed by electronic signature. The electronic signature is sufficient evidence that these are fully executed documents, especially as the SEC requires that all parties with the authority to electronically sign and file forms must keep a manual signature page authenticating their typed signature. 17 CFR 232.302(b). The signature page must be made by the person at or before the time an electronic signature is made, and retained for at least five years so as to be available for the SEC upon request. Id.

The MLPA and the PSA were also authenticated by the affidavit provided by Angela Frye. She attests that these documents are authentic based on her “personal review of [the] business records kept” in relation to the Murillo Mortgage as Vice President of Loan Documentation. The testimony of a witness with knowledge is sufficient to authenticate a document. Massachusetts Guide to Evidence § 901(b)(1) (2013 ed.) There is nothing in the affidavit of Angela Frye that is inconsistent with the other evidence here, or calls into question her credibility. The Court must take the affidavit’s assertions as true that the provided mortgage schedules accompanied the MPLA between American and Wachovia as exhibits to the agreement, and therefore identified the Murillo Mortgage. Here, U.S. Bank and M&T have been able to provide all the executing agreements of the assignments with evidence identifying the Murillo Mortgage.

The arguments by Kidd that the affidavit must show where the records are kept and explain a basis for “personal knowledge” do not create an issue of fact foreclosing summary judgment. “[A]n adverse party may not rest upon the mere allegations or denials of his pleading, but… must set forth specific facts showing that there is a genuine issue for trial.” Mass. R. Civ. P. 56(e). Mr. Kidd has presented no evidence to question Ms. Frye’s statement in her affidavit or the authenticity of the MLPA or the PSA. Questioning the affidavit and documents, without any supporting affidavit or other evidence, is insufficient to create a disputed issue of material fact. Ng Bros. Constr., Inc. v. Cranney, 436 Mass. 638 , 648 (2002); Community Nat’l Bank v. Dawes, 369 Mass. 550 , 559 (1976).

The records provided by U.S. Bank show that a series of assignments made U.S. Bank the holder of the Murillo Mortgage before the foreclosure of the Property. U.S. Bank had the authority to publish the foreclosure notice and conduct the foreclosure sale. The sale to Kidd by U.S. Bank was therefore proper and the mortgage later granted on the Property by Kidd to M&T is valid. For the foregoing reasons, the Plaintiff’s Motion for Summary Judgment is ALLOWED.

Standard for Motion to Dismiss

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 (2004); Schaer v. Brandeis Univ., 432 Mass. 474 , 477 (2000); Reliance Ins. Co. v. City of Boston, 71 Mass. App. Ct. 550 , 555 (2008); Shuel v. DeIeso, 16 LCR 329 , 329 (2008). Therefore, the court will accept as true the allegations of the amended counterclaim for the purposes of the Motion to Dismiss, and various recorded instruments and documents referred to in the amended counterclaim.

Count II of Kidd’s amended counterclaim, alleging that M&T has been unjustly enriched by Kidd’s mortgage payments, is really the flipside of the claims in the complaint. Kidd alleges that the foreclosure is void because U.S. Bank did not have a valid assignment of the Murillo Mortgage. The motion to dismiss with respect to Count II is converted to a summary judgment motion, and Count II is dismissed for the reasons set forth above.

All other counts of the amended counterclaim are dismissed without prejudice for lack of subject matter jurisdiction. Mass. Civ. 12(h)(3). Those claims do not fall within the subject matter jurisdiction of the Land Court set forth G.L. c. 185, § 1. In particular, they do not constitute “cases and matters cognizable under the general principles of equity jurisprudence where any right, title or interest in land is involved, including actions for specific performance of contracts.” G.L. c. 185, § 1(k).

Kidd argues that his claims, while not involving a claim to right, title, or interest in land, are ancillary to the present action, giving the court ancillary jurisdiction. This argument has been made and rejected before. In Sullivan v. Kondaur Capital Corp., 10 MISC 434162 (HSG), 2013 Mass. LCR LEXIS 14 (Mass. Land Ct. Jan. 25, 2013), an action brought in Superior Court and transferred to the Land Court, the plaintiffs challenged the foreclosure of their mortgage by the defendant. The plaintiff filed a motion to further amend their complaint and add additional claims. The motion was denied by the court because the claims were deemed futile as they were outside the subject matter jurisdiction of the Land Court. Id. at *6. In denying the claims of breach of the covenant of good faith and fair dealing and breach of contract, the court cited G.L. c. 185 § 1, stating that “[a]lthough the Land Court may address damage requests that are ancillary to an underlying real property dispute, these proposed counts are independent contract claims of the sort that lie beyond the subject matter jurisdiction of the Land Court… [and] must therefore be denied.” Sullivan, 2013 Mass. LCR LEXIS 14, at *9 (footnotes omitted). The court went on also to deny the plaintiff’s claim for unfair debt collection and practices, holding that “[g]iven the Land Court’s limited jurisdiction, none of the claims listed above fall within this court's subject matter jurisdiction. See G.L. c. 185, § 1.” Id. Because the claims were independent to the action, the plaintiff’s motion to further amend was denied.

Kidd cites Ritter v. Bergmann, 72 Mass. App. Ct. 296 (2008), as a basis for the Land Court’s jurisdiction over his claims in his amended counterclaim. In Ritter, the plaintiff brought an action for trespass to trees against the defendant for damage to trees on the plaintiff’s land. The plaintiff also asked for declaratory and injunctive relief and requested damages for all claims. The court awarded the damages, and the defendants appealed, claiming that the Land Court did not have jurisdiction to the grant damages or adjudicate the claim under G. L. c. 242, § 7. The Appeals Court held that in the interest of uniformity and efficiency, “[w]here the parties have been brought before a court of competent jurisdiction, their controversy so far as practicable ought to be completely and finally disposed of.” Ritter, Mass. 72 App. Ct. at 302, quoting Thayer v. Shorey, 287 Mass. 76 , 80 (1934). Because the Land Court had jurisdiction over the trespass claim and the claim for declaratory relief, the court had jurisdiction to grant damages in order to fully dispose of the claims. As the Appeals Court held, the damages claims were ancillary to the action.

Here, Kidd’s claims of breach of contract, violations of G.L. c. 93A, and negligence are not ancillary to the declaratory relief sought in this court. Unlike in Ritter, Kidd’s claims are independent of the issues of the status of the Murillo Mortgage and whether or not the sale of the Property to Kidd was valid. The plaintiffs in Ritter requested damages as a consequence to the claim of trespass over which the Land Court had jurisdiction. Here, on the other hand, Kidd’s claims do not necessarily flow from the cause of action in this case over which the court has jurisdiction, namely, the validity of the assignment and foreclosure. Kidd’s claim for negligence is based on M&T’s alleged breach of a duty in connection with giving him a loan, and any damages that may have arisen can be adjudicated independently of a judgment in this case. The same is true for the breach of contract claim and c. 93A violations, which do not depend on the whether or not the sale of the Property to Kidd was legal. The court has no subject matter jurisdiction over these claims. For the foregoing reasons, the Plaintiff’s Motion to Dismiss is ALLOWED.

Judgment accordingly,