THOMAS C. PAPPAS v. 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.

In this action, Plaintiff Thomas C. Pappas (“Pappas” or “Plaintiff”) challenges the Defendant’s 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 Plaintiff’s 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 Plaintiff’s Verified Complaint fails to state a claim upon which relief can be granted. Accordingly, Deutsche Bank Trustee’s Motion to Dismiss is ALLOWED.

DISCUSSION

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 Plaintiff’s numerous allegations, consisting primarily of legal conclusions, characterizations, and irrelevant information, the court has gleaned the following facts from the Plaintiff’s 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 Murray’s 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.

Pappas’s 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 mortgagee’s 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 Nat’l Mortg. Ass’n, 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] mortgagor’s 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]

CONCLUSION

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 Trustee’s Motion to Dismiss is ALLOWED and judgment shall enter dismissing Pappas’s Verified Complaint.