In this action, Plaintiff Thomas C. Pappas (Pappas or Plaintiff) challenges the Defendants title to certain registered land located at 10 Foretop Road, Bourne, Massachusetts (the Property), following a foreclosure sale in 2012. The Defendant is Deutsche Bank National Trust Company as Trustee of the IndyMac INDX Mortgage Loan Trust 2007-FLX5 under the Pooling and Servicing Agreement dated June 1, 2007 (Deutsche Bank Trustee). [Note 1] Claiming to hold the Pappas mortgage on the Property through assignment, Deutsche Bank Trustee held a foreclosure sale on December 12, 2012, at which it bought the Property for itself. [Note 2] Based on a G.L. c. 244, § 15 affidavit and the foreclosure deed from Deutsche Bank Trustee to itself, Deutsche Bank Trustee was issued a certificate of title for the Property. Via a single-count Verified Complaint filed as a so-called S-Petition [Note 3] on March 4, 2014, Pappas challenges the validity of the foreclosure sale. He asks the court to declare the foreclosure sale void ab initio and restore Pappas as the registered title-holder to the Property.
On March 26, 2014, Deutsche Bank Trustee moved to dismiss Plaintiffs Verified Complaint pursuant to Mass. R. Civ. P. 12(b)(6). Pappas timely opposed, and the court also accepted supplemental briefing from both parties. A motion hearing was held on July 22, 2014, at which time the court took the Motion under advisement.
Now, for the reasons discussed below, I find that Plaintiffs Verified Complaint fails to state a claim upon which relief can be granted. Accordingly, Deutsche Bank Trustees Motion to Dismiss is ALLOWED.
To survive a motion to dismiss under Mass. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief may be granted, a complaint must set forth factual allegations which, if true, plausibly suggest that the plaintiff is entitled to the requested relief. Iannacchino v. Ford Motor Co., 451 Mass. 623 , 636 (2008) (What is required at the pleading stage are factual allegations plausibly suggesting (not merely consistent with) an entitlement to relief (Internal citations omitted)). For purposes of a motion to dismiss, the court accepts all well-pleaded facts in the complaint as true, as well as any reasonable inferences that can be drawn therefrom. Galiastro v. Mortgage Elec. Registration Sys., Inc., 467 Mass. 160 , 164 (2014).
After parsing through Plaintiffs numerous allegations, consisting primarily of legal conclusions, characterizations, and irrelevant information, the court has gleaned the following facts from the Plaintiffs Verified Complaint and documents attached thereto, which are accepted as true for purposes of this motion: [Note 4]
1. On May 9, 2007, Pappas borrowed $1,154,700.00 from Lakeside Bank. As security for this loan, Pappas granted a mortgage on the Property to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Lakeside Bank and its successors and assigns (the Mortgage).
2. The Mortgage was registered in the Barnstable Land Court Registry (the Registry) on May 16, 2007 as Document No. 1,064,228.
3. On November 23, 2010, an Assignment of Mortgage dated November 10, 2010 was registered with the Registry as Document No. 1,154,013 (the Assignment).
4. The Assignment, which purports to assign the Mortgage from MERS, as Nominee for Lakeside Bank, to Defendant, Deutsche Bank Trustee, was signed by Suchan Murray as Assistant Vice President of MERS. Stacey F. Jones, a Notary Public commissioned by the State of Texas, notarized Murrays signature.
5. IndyMac was not a MERS member (per the MERS Rules of Membership). [Note 5]
Pappas claims that the Assignment of his Mortgage into the Trust contravened the terms of the PSA, because the Mortgage was not accompanied by the underlying note, and because IndyMac was not a MERS member. On the basis of these allegations, according to Pappas, Deutsche Bank Trustee could not have been a valid holder of the Mortgage when it commenced foreclosure proceedings, and so it could not have validly exercised the power of sale to foreclose on the Property.
Pappass factual allegations, supplemented by the documents referenced in or attached to the Verified Complaint, do not set forth a plausible claim for relief. While a mortgagor may bring a post-foreclosure challenge to the validity of the foreclosure sale based upon the mortgagees lack of authority to conduct it, the facts alleged by Pappas do not plausibly support a claim that the foreclosure sale was invalid, or that Pappas has standing to have it invalidated on the grounds claimed.
With respect to the claim that MERS lacked authority to assign the Mortgage to Deutsche Bank Trustee, it is settled Massachusetts law that MERS, acting as a nominee of the lender or its assigns or successors, may validly assign a mortgage it holds as such nominee. Shea v. Federal Natl Mortg. Assn, 87 Mass. App. Ct. 901 , 903 (2015) ([A]bsent a provision in the mortgage instrument restricting transfer[,] . . . a mortgagee may assign its mortgage to another party. (quoting Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 292 (1st Cir. 2013))); Sullivan v. Kondaur Capital Corp., 85 Mass. App. Ct. 202 , 209-10 (2014).
Moreover, there is nothing on the face of the Assignment to suggest that the instrument itself is defective. Pursuant to G.L. c. 183 § 54B, an assignment of mortgage shall be binding upon such [assigning] entity and shall be entitled to be recorded if it is executed before a notary public, . . . whether executed within or without the commonwealth, by a person purporting to hold the position of . . . vice president, . . . or other similar office or position, including assistant to any such office or position, of the entity holding such mortgage . . . . Here, the Assignment from MERS to Deutsche Bank Trustee satisfies the requirements of this statute because it was signed by Suchan Murray, as Assistant Vice President of MERS, before a Notary Public. It thus was otherwise effective to pass legal title and cannot be shown to be void. Bank of New York Mellon Corp. v. Wain, 85 Mass. App. Ct. 498 , 503 (2014) (quoting Sullivan, 85 Mass. App. Ct. at 212).
Although Pappas, through his Verified Complaint, seeks to assert defects in this Assignment into the Trust by virtue of noncompliance with the terms of the PSA or the MERS Rules of Membership, Pappas, as the mortgagor in default[,] has no legally cognizable stake in whether there otherwise might be latent defects in the assignment process. Wain, 85 Mass. App. Ct. at 502. At most, such hidden problems that Pappas seeks to raise might provide a basis for a third party to claim that the assignment was potentially voidable, but Pappas himself has no right to raise such issues. Id. at 504. [A] mortgagors standing [is] limited to claims that a defect in the assignment rendered it void, not merely voidable. Id. (citing Sullivan, 85 Mass. App. Ct. at 206, n.7). [Note 6]
Because the Assignment of Mortgage from MERS to Deutsche Bank Trustee facially complies in all respects with G.L. c. 183 § 54B and is consequently effective to pass legal title, and Pappas has alleged no facts to support his standing to assert latent defects in the Assignment that might render it voidable, but not void, the Verified Complaint alleges no claim upon which the requested relief can be granted. Accordingly, Deutsche Bank Trustees Motion to Dismiss is ALLOWED and judgment shall enter dismissing Pappass Verified Complaint.
[Note 1] The full name of the legal entity at issue, as set forth in the documents referenced and attached to the Verified Complaint, is Deutsche Bank National Trust Company as Trustee of the IndyMac INDX Mortgage Trust 2007- FLX5, Mortgage Pass-Through Certificates Series 2007-FLX5 under the Pooling and Servicing Agreement dated June 1, 2007. The Pooling and Servicing Agreement dated June 1, 2007 is hereinafter referred to as the PSA.
[Note 2] According to the Foreclosure Deed, the Property was originally sold at auction to Paula Perini-Miller for $749,000. However, when Paula Perini-Miller failed to tender the balance of the purchase price on or before January 18, 2013, pursuant to the Memorandum of Sale governing the auction sale, the Property was then sold to Deutsche Bank Trustee for $748,848.07, as the second highest bidder at the auction. Plaintiff did not attach a certified copy of the Foreclosure Deed to the Verified Complaint; however, Plaintiff references it and quotes directly from the Foreclosure Deed in several paragraphs of the Verified Complaint. Documents that are referenced in the Verified Complaint and upon which the allegations in the Verified Complaint were framed may be considered in a Motion to Dismiss without requiring conversion of the motion to one for summary judgment. See Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43 , 45 n.4 (2004). The Court takes judicial notice of its own Registration records. Hickey v. Pathways Ass'n, Inc., 472 Mass. 735 , 762 n.34 (2015).
[Note 3] An S-Petition refers to a petition filed subsequent to land registration to amend or correct a certificate of title on registered land.
[Note 4] The Verified Complaint contains many more allegations, which are not factual allegations. Instead, they consist of either conclusions of law or characterizations of documents and facts, which are not taken as true for the purposes of deciding this Motion. Notably, the Complaint does not contain any factual allegations referencing Plaintiffs certificate of title or the applicable registration case number.
[Note 5] Plaintiffs allegation that, therefore, MERS had no authority to assign the Mortgage to Deutsche Bank Trustee is a legal conclusion that need not be accepted as true.
[Note 6] Via supplemental briefing, Deutsche Bank Trustee also argues that pursuant to G.L. c. 185 § 70, Pappas is barred from bringing this equitable action to challenge a foreclosure proceeding affecting registered land, after the entry of a new certificate of title on the Property, which occurred a few months before the filing of Plaintiffs Verified Complaint. In Sullivan, the Appeals Court expressly rejected a foreclosing banks suggestion that G.L. c. 185 § 70, implicitly requires any such challenge to be brought before issuance of a new certificate of title following foreclosure. 85 Mass. App. Ct. at 208 n.11.