BAYVIEW LOAN SERVICING, LLC, vs. JOSEPH JEUDY, CECILIA JEUDY, JEANETTE BYRON, JEAN-CLAUDE CHARLES, G2 PARTNERS CAPITAL, INC., J&M REALTY TRUST, MARJEM MORTGAGE CORP., TELESTAR FINANCIAL CORP., and JEFFERY TEMKIN D/B/A HEMCO WHOLESALE.
MISC 14-484926
July 15, 2015
SANDS, J.
DECISION
This action involves a dispute with respect to the validity of two assignments (defined, infra, as Mortgage Assignment 1" and Mortgage Assignment 2") of a Mortgage (defined, infra, as the Mortgage) upon property located at 1098-1106 Blue Hill Avenue, Dorchester, MA (Locus) and one assignment of the leases and rents for Locus (defined, infra, as the Bayview Rent Assignment). Plaintiff Bayview Loan Servicing, LLC (Plaintiff) filed its unverified Complaint on July 18, 2014, by which it sought (a) to quiet title, pursuant to G. L. c. 240, §§ 6-10 (the Quiet Title Statute), to Locus (as assignee of the Mortgage), and (b) a declaratory judgment, pursuant to G. L. c. 231A (the Declaratory Judgment Statute), declaring Mortgage Assignment 1, Mortgage Assignment 2, and the Bayview Rent Assignment to be valid.
Plaintiff effected proper service upon all Defendants except for Defendants G2 Partners Capital, Inc. (G2") and Jean-Claude Charles (Charles). As such, publication of notice, pursuant to G. L. c. 240, § 7, for G2 and Charles was made on October 10, 2014. On October 16, 2014, Defendant Telestar Finacial Corp. (Telestar) filed its Answer and Affirmative Defenses; however, Telestar subsequently filed a Consent to the Complaint on March 2, 2015. Additionally, Plaintiff filed a Motion to Voluntarily Dismiss this action as against Defendant Marjem Mortgage Corporation pursuant to Mass. R. Civ. P. 41(a)(1)(i), which was allowed on December 5, 2014. Defendants Joseph Jeudy (Joseph), Jeanette Byron (Byron) and Cecilia Jeudy (Cecilia) each filed their individual Answers and Affirmative Defenses on January 8, 2015.
Plaintiff filed a Request for Default, pursuant to Mass. R. Civ. P. 55(a), with respect to Defendants G2, J&M Realty Trust, Jeffrey Temkin D/B/A Hemco Wholesale and Charles, which was allowed on December 15, 2014. Charles subsequently filed his Answer on December 17, as well as a Motion to Vacate Default on January 30, 2015, which was allowed on February 23, 2015. As such, the only remaining Defendants in the case are Charles, Joseph, Byron and Cecilia.
Plaintiff, together with Joseph, Byron and Cecilia (together, the Movants) filed a Joint Motion for Summary Judgment on March 23, 2015, together with a supporting memorandum, an appendix of exhibits, and an affidavit of Plaintiffs counsel, Franziskus Lepionka (the Lepionka Affidavit). Charles, the other remaining Defendant, did not join in or file opposition to this motion.
Based upon the evidence in the summary judgment record, I find that the following material facts are not in dispute:
1. Locus consists partly of recorded land and partly of registered land. On March 9, 2004, Byron and Cecilia, for consideration of $1.00, conveyed Locus to Joseph via quitclaim deed, which was recorded in the Suffolk County Registry of Deeds (the Registry) at Book 33998, Page 107, and was registered as Document #677202 on Certificate of Title #120527 on March 12, 2004. [Note 1]
2. Also on March 9, 2004, Joseph granted G2 a mortgage upon Locus (the Mortgage), which was recorded in the Registry at Book 33998, Page 109 and registered on March 12, 2004 as Document #677203 on Certificate of Title #120528. The Mortgage secured an associated promissory note (the Note) in the sum of $800,000.00. [Note 2] An allonge endorses the Note in blank. As further security for the Note, on the same date, Joseph executed an assignment of the leases and rents for Locus to G2 (the G2 Rent Assignment), [Note 3] which was recorded in the Registry at Book 33998, Page 144 and registered on March 12, 2004 as Document #677204 on Certificate of Title #120528.
3. Thereafter, also on March 9, 2004, Joseph, for consideration of $1.00, re-conveyed Locus to himself, Byron and Cecilia, as joint tenants, by quitclaim deed, which was recorded in the Registry at Book 33998, Page 158 and registered on March 12, 2004 as Document #677205 on Certificate of Title #120528.
4. Also on March 9, 2004, G2 granted an assignment of the Mortgage (Mortgage Assignment 1") to Bayview Financial Trading Group, LP (Bayview Financial) [Note 4], which was recorded in the Registry at Book 35495, Page 186 on September 17, 2004, but was never registered. [Note 5]
5. Also on March 9, 2004, G2 granted an assignment of the leases and rents for Locus to Bayview Financial (the Bayview Rent Assignment), which was recorded in the Registry at Book 35495, Page 188 on September 17, 2004, but was never registered. [Note 6] There is no evidence in the record that the Bayview Rent Assignment was subsequently ever assigned from Bayview Financial to Plaintiff.
6. On January 3, 2007, Bayview Financial granted an assignment of the Mortgage (Mortgage Assignment 2") [Note 7] to Plaintiff, which states that FOR VALUE RECEIVED, [Bayview Financial] hereby grants, conveys, assigns to [Plaintiff] all beneficial interest under [the Mortgage], and references both the recording and registration information for the Mortgage.
7. On July 1, 2010, Charles recorded an execution (the Execution) relative to a portion of Locus as against Joseph (both individually and in his capacity doing business as J&J Auto Sales & Body Shop), which was recorded in the Registry at Book 46605, Page 220, but was not registered.
8. G2 is, today, a dissolved corporate entity. As such, Plaintiff is unable to obtain from G2 confirmatory assignments of Mortgage Assignment 1 and/or the Bayview Rent Assignment for purposes of registering same. In addition, on August 9, 2011, Bayview Financial withdrew as an operating corporate entity in Massachusetts, and thus operated only outside of the Commonwealth.
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The Movants now seek summary judgment as to both counts of Plaintiffs Complaint. The Movants argue that Mortgage Assignment 1, Mortgage Assignment 2, and the Bayview Rent Assignment are all legally valid assignments of all rights, title, and interest granted pursuant to the Mortgage and the G2 Rent Assignment, despite the facts that (a) neither Mortgage Assignment 1 nor the Bayview Rent Assignment references the registration information for Locus [Note 8], (b) none of these documents was ever registered, and (c) Mortgage Assignment 2 was never recorded.
Summary judgment is appropriate where there are no genuine issues of material fact and where the summary judgment record entitles the moving party to judgment as a matter of law. See Cassesso v. Commr of Corr., 390 Mass. 419 , 422 (1983); Cmty. Natl Bank v. Dawes, 369 Mass. 550 , 553 (1976); Mass. R. Civ. P. 56(c).
With respect to Plaintiffs quiet title claim, it appears, to this court, that there is some confusion between trial court and appellate court decisions as to whether the well-settled dual requirements of (a) actual possession and (b) record title applicable in actions under G. L. c. 240, §§ 1-5 (the Try Title Statute) also apply in actions under the Quiet Title Statute (G. L. c. 240, §§ 6- 10). [Note 9] However, this issue does not need to be determined here because Plaintiffs two causes of action seek essentially the same relief under the Quiet Title Statute and the Declaratory Judgment Statute, and thus are duplicative of each other. Thus, this matter can be resolved by ruling on Plaintiffs request for declaratory judgment under G. L. c. 231A. [Note 10]
The purpose of a declaratory judgment is to remove, and to afford relief from, uncertainty and insecurity with respect to rights, duties, status and other legal relations, and declaratory relief is to be liberally construed and administered. G. L. c. 231A, § 9. The court may issue declaratory judgments only if it is clear that there is an actual controversy caused by the assertion by one party of a legal relation or status or right in which he has a definite interest and the denial of such assertion by the other party, where the circumstances . . . indicate that, unless a determination is had, subsequent litigation as to the identical subject matter will ensue. Hogan v. Hogan, 320 Mass. 658 , 662 (1947); see also G. L. c. 231A, § 1.
Plaintiff seeks a declaratory judgment that Mortgage Assignment 1, Mortgage Assignment 2, and the Bayview Rent Assignment are valid. Charles, in his Answer, specifically challenged the validity of each of these documents, and he has not joined the Movants in their Joint Motion for Summary Judgment. Thus, although Joseph, Byron, and Cecilia now have apparentlywithdrawntheir objection to the requested relief (as evidenced by their joining in Plaintiffs Motion for Summary Judgment), and Telestar now consents to the Complaint, the parties pleadings, on their face, evidence an actual controversy with respect to Plaintiffs rights under Mortgage Assignment 1, Mortgage Assignment 2, and the Bayview Rent Assignment.
Additionally, because Mortgage Assignment 1, Mortgage Assignment 2, and the Bayview Rent Assignment were not registered, there is an actual controversy concerning who holds title to the registered portion of Locus by means of the Mortgage, and as to who may collect the leases and rents on the registered portion of Locus. This indicates that litigation as to who holds the Mortgage to the registered portion of Locus, and as to who may receive the leases and rents from the registered portion of Locus is likely to ensue. Moreover, Charles still contests Plaintiffs request for declaratory relief. As a result of the foregoing, I find that an actual controversy has arisen for the purposes of G.L. c. 231A, § 1.
In the case at bar, the Movants agree that Mortgage Assignment 1 effected a valid assignment of the Mortgage to both the registered and recorded portion of Locus. The Movants also agree that the Bayview Rent Assignment is a valid assignment of the leases and rents for both the registered and recorded portions of Locus. The Movants attached relevant documents to their Joint Motion For Summary Judgment in order to show: (a) that Bayview Financial obtained a valid mortgage interest in both the registered and recorded portions of Locus via Mortgage Assignment 1; (b) that Bayview Financial made a valid assignment of the Mortgage to the registered and recorded portions of Locus to Plaintiff via Mortgage Assignment 2; and (c) that G2 effectively assigned to Bayview Financial the rents and leases to both the recorded and registered portions of Locus from G2 via the Bayview Rent Assignment.
Declaratory judgments may be used to determine questions regarding the construction and validity of written contracts. See G. L. c. 231A, § 2. And, courts acting in equity have broad power to reform written instruments. E.g., Beaton v. Land Court, 367 Mass. 385 , 392 (1975). To that end, a contract may be reformed so that it comports with the mutual understanding of the parties who entered into the contract. E.g., Fireman's Fund Ins. Co. v. Shapiro, 286 Mass. 577 , 582 (1934).
A. Mortgage Assignment 1
G2 recorded the Mortgage in the Registry at Book 33998, Page 109, and registered the Mortgage as Document #677203 on Certificate of Title #120528. Mortgage Assignment 1 states that G2 sells, assigns, transfers and conveys to: [Bayview Financial] all of its right, title, [and] interest to a certain Mortgage and Security Agreement executed by [Joseph]. While Mortgage Assignment 1 does not specifically refer to the registered portion of Locus, it clearly assigns all of the rights and title associated with the Mortgage to Bayview Financial. This indicates that G2 intended to assign to Bayview Financial the Mortgage with relation to both the registered and recorded portion of Locus, since G2 held the Mortgage with respect to both the registered and recorded portion of Locus. This assessment as to the intent of G2 in making the assignment has been agreed to by all of the remaining Defendants in this action, with the exception of Charles, who failed to submit an Opposition to the Movants Joint Motion for Summary Judgment. [Note 11]
In view of the foregoing, I find that Mortgage Assignment 1 is a valid assignment of the Mortgage to Bayview Financial with respect to both the registered portion of Locus and the recorded portion of Locus, despite the fact that it is not registered. [Note 12] Further, I find that Bayview Financial held the Mortgage to both the registered and recorded portion of Locus prior to Mortgage Assignment 2. [Note 13]
B. Mortgage Assignment 2 [Note 14]
Mortgage Assignment 2 states that Bayview Financial assigns all of their interests under the Mortgage to Plaintiff. The document references both the registered and recorded portions of Locus. The Movants agree that this is a valid assignment of the Mortgage to Plaintiff, and Charles has not submitted an Opposition to the Movants Joint Motion for Summary Judgment. Although Mortgage Assignment 2 has not been recorded, the Summary Judgment record includes a copy of Mortgage Assignment 2, which is authenticated in the Lepionka Affidavit.
As a result, I find that Mortgage Assignment 2 is a valid assignment of the Mortgage from Bayview Financial to Plaintiff with respect to both the registered and recorded portions of Locus. I find that Plaintiff holds the Mortgage to both the registered and recorded portion of Locus.
C. The Bayview Rent Assignment
It is undisputed that the Bayview Rent Assignment, which was executed by Joseph, purports to assign to Bayview Financial the leases and rents with respect to both the registered portion and the recorded portion of Locus. The language of the Bayview Rent Assignment clearly indicates that G2's intent was to assign all of its rights and title to the leases and rents to Bayview Financial. [Note 15] As such, I find that the Bayview Rent Assignment, despite not being registered [Note 16], is a legally valid transfer of the leases and rents of the registered and recorded portion of Locus to Bayview Financial. [Note 17]
D. Conclusion and Holding
Per the foregoing discussion, I find that Mortgage Assignment 1, Mortgage Assignment 2 and the Bayview Rent Assignment are entitled to be registered at the Registry and noted on Certificate of Title #120528. The Movants Joint Motion for Summary Judgment is hereby ALLOWED.
Judgment to enter accordingly.
FOOTNOTES
[Note 1] This recording and registration information was not included in the Moving Parties Joint Statement of Material Facts. This deed was included on Certificate of Title #120527, but was neither included on nor transferred to Certificate of Title #120528 (discussed, infra), which was later issued when Joseph conveyed Locus to himself, Byron and Cecilia as joint tenants via a quitclaim deed dated March 9, 2004. See discussion, infra.
[Note 2] The Complaint alleges that Plaintiff is the holder of the Note, but this allegation is not found in the parties Joint Statement of Material Facts. It is unclear from the summary judgment record how Plaintiff came to hold the Note -- a copy of which was included in the parties appendix.
[Note 3] The Complaint and respective Answers of the Movants indicate that Joseph, Byron, and Cecilia do not reside at Locus. This fact, in addition to the Rent Assignment, suggests that Locus is leased to tenants -- although this is not explicitly alleged by the Movants.
[Note 4] Bayview Financial is a separate legal entity from Plaintiff, and is not a party to this action. On June 11, 2004, Bayview Financial changed its name to Bayview Financial, LP. Bayview Financial nolonger operates in Massachusetts, having filed a certificate of withdrawal with the Massachusetts Corporations Division on August 9, 2011.
[Note 5] Mortgage Assignment 1 provides, in relevant part, that, FOR VALUE RECEIVED, [G2] . . . hereby sells, assigns, transfers and conveys to: [Bayview Financial] . . . all of its right, title, [and] interest to [the Mortgage] . . . . Mortgage Assignment 1 references the recording information for the Mortgage, but not its registration information.
[Note 6] The Bayview Rent Assignment states that FOR VALUE RECEIVED, [G2] . . . hereby sells, assigns, transfers and conveys to: [Bayview Financial] . . . all of its right, title, [and] interest to [the G2 Rent Assignment] . . . . The Bayview Rent Assignment references the recording information for the G2 Rent Assignment, but not its registration information.
[Note 7] A copy of Mortgage Assignment 2 was included in the Movants appendix, and the Lepionka Affidavit attests that said copy is true and accurate. However, the Movants failed to provide the recording information for Mortgage Assignment 2 in their Joint Statement of Material Facts. Upon the courts independent research of the Registry, it appears that Mortgage Assignment 2 was never recorded with the Registry.
[Note 8] As discussed, infra, this technical defect does not affect the validity of the documents themselves, but it would serve as an impediment to having them registered. Mortgage Assignment 2 does reference the registration for Locus, but was neither recorded nor registered.
[Note 9] The Quiet Title Statute enable parties to to quiet or establish the title to land situated in the commonwealth or to remove a cloud from the title thereto. G. L. c. 240, § 6 (emphasis added). It requires the petitioner to come forward with a claim of right, title, and/or interest in property and to establish that claim as superior to any other claim as may be held by any other party -- with notice to any such party. The Try Title Statute and the Quiet Title Statute serve similar purposes, but, on their face, have markedly different requirements. Most notably, while the Try Title Statute clearly requires both possession and record title, the Quiet Title Statute specifies no such requirements.
A recent Supreme Judicial Court (SJC) decision interpreting the Try Title Statute (Bevilacqua v. Rodriguez, 460 Mass. 762 , 767 n. 5 (2011)) brings into focus the apparent confusion surrounding the applicable standard in quiet title actions. In Bevilacqua, despite affirming the Land Courts dismissal of the try title petition for lack of jurisdiction, the SJC noted (in a footnote) that the Land Court had improperly cited Daley v. Daley, 300 Mass. 17 , 21 (1938) (a quiet title case in which the SJC held that a quiet title claim cannot be maintained unless both actual possession and the legal title are united in the plaintiff), because Daley was not a try title action, but rather a quiet title action. See Bevilacqua, 460 Mass. at 767, n. 5. The SJC went on to describe quiet title actions as actions brought under this courts equity jurisdiction, and, citing First Baptist Church of Sharon v. Harper, 191 Mass. 196 , 209 (1906) (another quiet title case), found that in equity the general doctrine is well settled that a bill to remove a cloud from the land affected cannot be maintained unless both actual possession and the legal title are united in the plaintiff. Bevilacqua, 460 Mass. at 767 n. 5. By doing so, the SJC clearly intended to emphasize the difference between the two statutes. However, the Bevilacqua SJC ultimately concluded that the same two requirements (i.e., possession and record title) that were applied in Daley also apply in try title cases; the SJC did not consider whether Daley had properly applied the correct standard for quiet title cases.
The conclusion reached in Bevilacqua that possession and legal title were necessary showings in try title cases was further buttressed by Abate v. Fremont Inv. & Loan, 470 Mass. 821 , 830 (2015), another try title action. Bevilacqua and Abate clarify the requirements of try title cases, but they provide no guidance whatsoever as to the requirements of the Quiet Title Statute. This is problematic because, as Bevilacqua implicitly recognizes, it appears that, over the years, the legal standards applicable to the Quiet Title Statute and the Try Title Statute have come to be applied in a way that is more or less interchangeable -- even when, as in Bevilacqua, the courts endeavor to distinguish the two statutes.
The potential problems generated by this confusion can be demonstrated by a few examples. First, if the possession requirement of the Try Title Statute were strictly applied in quiet title actions -- as was, in effect, done in Daley -- this would seem to entail that an owner who leases to a tenant would be unable to bring a quiet title action without first dispossessing the tenant, since leases transfer legal possession to the tenant. E.g., Baseball Pub. Co. v. Bruton, 302 Mass. 54 , 55 (1938) (lease conveys an interest in land and transfers possession); French v. Fuller, 40 Mass. 104 , 107 (1839) (tenant has legal possession of leased premises, so landlords action of trespass would not lie for failure to prove landlords possession). This problem would appear to affect both quiet title and try title actions. It would also have the perverse result that the possession of a tenant could not be relied upon by a holder of record title, but could be relied upon by an adverse possessor occupying property without any right to do so. E.g., Shoer v. Daffe, 337 Mass. 420 , 423- 24 (1958) (adverse possessor may rely on the possession of his tenants). Likewise, as is routinely found in federal cases, based upon the split title theory of mortgages applied by courts of the Commonwealth, mortgagors would be unable to file quiet title actions until they have paid off their mortgage. E.g., Orellana v. Deutsche Bank Natl Tr. Co., No. 12-11982 (D. Mass. Aug. 30, 2013). Again, this problem would appear to affect both quiet title and try title actions-- at least in federal jurisprudence.
On a related note, if the record title requirement of the Try Title Statute were strictly applied in quiet title actions, this would entail that a party seeking to establish title by adverse possession could not file suit under the Quiet Title Statute -- effectively rendering meaningless the phrase or establish from the Quiet Title Statute. Notably, the Try Title Statute cannot be used to establish title by adverse possessors because parties claiming adverse possession obviously lack record title. Thus, if record title is also a strict requirement of quiet title cases, the only way to establish an adverse possession claim would be by declaratoryjudgment (which would be binding only against the parties to that case), and an adverse possessor could be forced to defend a title awarded by declaratory judgment from challenges of outside parties not bound thereby. This state of affairs would also push the issue of adverse possession outside of the exclusive jurisdiction of the Land Court -- a forum that is particularly well-suited to adjudicate that issue.
The foregoing dilemmas do not appear to have been adequately addressed in any appellate case law.
[Note 10] In other words, the Quiet Title Statute and the Try Title Statute can, under certain circumstances, be circumvented altogether by resolving disputes via declaratoryjudgment. That has the benefit of expediency here, but, as noted, supra, could have the effect of eroding the exclusive jurisdiction of the Land Court.
[Note 11] It should be noted that Charless rights under the Execution will not be affected by declaring that Mortgage Assignment 1 transferred both the registered and recorded portions of Locus, as the Execution is only recorded and not registered, and Mortgage Assignment 1 is already recorded at the Registry. Additionally, the summary judgment record indicates that the Execution is effective only on as to a portion of the recorded portion of Locus, since the Execution is effective against Joseph only. Cecilia and Byron also have interests in Locus, and are not subject to the Execution.
[Note 12] Mortgage Assignment 1 has the additional technical defect of not referencing the registration information for Locus, which does not affect the validity of the document itself, but it would serve as an impediment to having it registered. Per the courts within holdings (see infra), this defect is now moot.
[Note 13] It should be noted that, pursuant to G.L. c. 231A, § 8, [w]hen declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding. Here, Bayview Financial is not a party to this action, and thus is not bound by this Decision. However, Bayview Financial need not have been named as a party to this case because it no longer has any interest that would be affected by the declaratory judgment to be issued pursuant to this Decision, having divested itself of its interest in the Mortgage by assigning same to Plaintiff, as discussed, infra.
[Note 14] The Movants, in their Joint Motion for Summary Judgment, did not specifically request that this court declare Mortgage Assignment 2 to be valid. Nonetheless, the court will rule on this issue because Plaintiff, in its Complaint, requested that its rights concerning the Mortgage be adjudicated.
[Note 15] As discussed, supra, Bayview Financial has not assigned its interest under the Bayview Rent Assignment to Plaintiff, so Plaintiff presently has no interest in the leases and rents of Locus.
[Note 16] Like Mortgage Assignment 1, the Bayview Rent Assignment has the additional technical defect of not referencing the registration information for Locus, which does not affect the validity of the document itself, but it would serve as an impediment to having it registered. Per the courts within holdings (see infra), this defect is now moot.
[Note 17] As noted, supra, the necessarypartyrequirement of G.L. c. 231A, § 8, does not require that Bayview Financial have been made a party to this case because its rights will not be prejudiced by the decision. Moreover, this decision will be of benefit to Bayview Financial, because it will now be able to register the Bayview Rent Assignment.