JEANNETTE L. BLAKE and MAXWELL A. BLAKE v. BAY STATE HOME LOAN GROUP, LLC, f/k/a Bay State Realty Solutions, LLC

Petitioners Jeannette and Maxwell Blake (the “Blakes”) brought a try title claim pursuant to G. L. c. 240, §§ 1-5, challenging the validity of respondent Bay State Home Group, LLC’s (“Bay State”) status as mortgagee authorized to foreclose on their property, known as 42 Edson Street in the Dorchester neighborhood of Boston (the “Property”). The Blakes claimed in their try title action that the chain of assignments of the mortgage and note is defective, due to a lack of evidence in the record, including missing off-record assignments. Bay State asserts that the chain is clear, determinable, and unbroken. Bay State brought a counterclaim seeking a declaratory judgment to affirm its status as mortgagee with the power of sale. Because the Blakes brought their try title action prior to the initiation of a foreclosure, the claim was dismissed as not ripe. Bay State’s counterclaim is all that remains and is the sole focus of this motion for summary judgment.

PROCEDURAL HISTORY

On January 13, 2014, the Blakes filed their Complaint against Bay State as a try title action relating to a mortgage on the Property, which they had granted in 2006. On August 7, 2014, Bay State filed and served its Answer, Affirmative Defenses, and Counterclaim requesting a declaratory judgment confirming its status and rights as a mortgagee with the power of sale. The Blakes neither filed nor served an answer responding to Bay State’s counterclaim. Instead, on August 4, 2015, the Blakes filed a Motion for Voluntary Dismissal under Mass. R. Civ. P. 41. In light of the decision in Abate v. Fremont Inv. & Loan, 470 Mass. 821 (2015), the Blakes argued they could not maintain their pre-foreclosure action to try title and sought dismissal of the entire action. On September 1, 2015, Bay State filed a Memorandum in Opposition to Plaintiffs’ Motion for Voluntary Dismissal.

On September 8, 2015, a hearing on the Motion for Voluntary Dismissal was held and the court (Speicher, J.) granted the motion in part, dismissing the Blakes’ try title claim but retaining jurisdiction over Bay State’s counterclaim for declaratory judgment, citing Mass. R. Civ. P. 41(a)(2) (“If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiff’s motion to dismiss, the action shall not be dismissed against the defendant’s objection unless the counterclaim can remain pending for independent adjudication by the court.”). The Blakes contended that the Rules of Civil Procedure did not apply to try title actions, arguing that the word “petition” instead of “complaint” in G. L. c. 240 indicated that Mass. R. Civ. P. 41 was inapplicable. However, the court found this position was plainly contradicted by not only Rule 41, but also Bevilacqua v. Rodriguez, 460 Mass. 762 (2001) and Abate v. Freemont Inv. & Loan, 470 Mass. 821 (2015), “which at length analyze actions to try title under rule 12.” In permitting the action to continue on only the counterclaim, the court relied on precedent that “[a] counterclaim in an answer constitutes a separate and distinct cause of action. Thus, a defendant is entitled to a determination of his counterclaim even though there is a dismissal or a discontinuance of the original bill of complaint [or petition].” New England Merchants Nat’l Bank of Boston v. Kann, 363 Mass. 425 , 428 n. 2 (1973).

Accordingly, the only issue remaining to be disposed of is Bay State’s counterclaim. Bay State served Requests for Admissions on the Blakes on February 12, 2016, but the Blakes neither objected nor responded to the requests within the time permitted, or at all. On April 27, 2016, Bay State filed an Affidavit of Counsel, a Motion for Summary Judgment on its Counterclaim, Brief in Support of Bay State’s Motion for Summary Judgment on its Counterclaim, Statement of Undisputed Facts in support of its Motion for Summary Judgment, and an Appendix. On May 31, 2016, the Blakes filed their Opposition to Bay State’s Motion for Summary Judgment on its Counterclaim and their Responses to Bay State’s Statement of Undisputed Facts. On June 20, 2016, Bay State filed its Reply Brief in Further Support of Bay State’s Motion for Summary Judgment on its Counterclaim, Second Affidavit of Counsel, and a Supplement to the Appendix.

The summary judgment motion was heard on July 14, 2016, and taken under advisement. [Note 1] Because the Blakes failed to file an answer to Bay State’s counterclaim and did not respond to Bay State’s request for admissions served on February 12, 2016, those facts are deemed to be admitted. [Note 2] For the reasons stated below, summary judgment will enter for Bay State, and against the Blakes, permitting Bay State to move forward with foreclosure of the Property.

FACTS

The following material facts are found in the record for purposes of Mass. R. Civ. P. 56, and are undisputed (or are otherwise conclusively established by reason of the plaintiffs’ failure to deny the specific allegations in the counterclaim or respond to the request for admissions) for the purposes of the motion for summary judgment:

1. The Blakes, formerly married, own property together at 42 Edson Street in Dorchester by deed from Leo Brown, recorded on January 24, 2003 with the Suffolk County Registry of Deeds (the “Registry”) in Book 30414, Page 83. Jeannette Blake still resides at the Property, but Maxwell does not. [Note 3]

2. On December 18, 2006, the Blakes refinanced the Property with a mortgage (“Mortgage”) granted to Argent Mortgage Company, LLC (“Argent”), recorded on December 22, 2006 with the Registry as Instrument Number 2006-00147569 in Book 40986, Page 158. A loan number ending in 9602 is also referenced on the Mortgage. The Blakes signed the Mortgage under seal and before a notary. [Note 4]

3. Per the terms of the Mortgage, and as evidenced by the Blakes’ signatures, the Blakes understood and acknowledged that the obligations, terms, conditions, and covenants of the Mortgage were as written in the Mortgage. [Note 5]

4. Only Jeannette Blake signed the promissory note in the amount of $472,000.00 (“Note”), to Argent, on December 18, 2006, secured the Mortgage on the Property. The Property was described in the Note, and the loan number ending in “9602” was referenced, the same number as on the Mortgage. [Note 6]

5. The Blakes used the $472,500.00 loan from Argent to pay off a prior mortgage the Blakes had previously granted to New Century Mortgage Corporation (“New Century”). The obligation to pay off the prior mortgage was fulfilled and that mortgage was discharged. The discharge of the prior mortgage was recorded on January 11, 2007 with the Registry in Book 41110, Page 2. [Note 7]

6. Pursuant to the Mortgage and the Note, the Blakes promised to repay the debt in regular periodic payments and to pay it in full no later than January 1, 2037. The first payment under the Note was due on February 1, 2007 and successive payments were due the first day of each month. Initial monthly payments were $3,499.86. [Note 8]

7. The terms of the Mortgage included the Blakes’ promise to mortgage, grant, and to convey to Argent and Argent’s successors and assigns, with power of sale, the Property. Upon default of the Blakes’ obligation to repay the Note, and if the default was not cured in a timely manner, Argent was entitled to “invoke the STATUTORY POWER OF SALE and any other remedies permitted by Applicable Law.” There were no restrictions on the sale, assignment or transfer of Argent’s interest in the Mortgage or Note and the Blakes agreed that “[t]he Note or a partial interest in the Note can be sold one or more times without prior notice to” them. [Note 9]

8. On or about June 6, 2007, Litton Loan Servicing (“Litton”) sent a notice letter to the Blakes at the Property. The letter welcomed the Blakes to Litton and notified them that the “servicing of [their] mortgage loan [was] transferring to [Litton].” Litton continued to service the Mortgage loan until a transfer in servicing in January 2011. [Note 10]

9. By September 2007, the Blakes had missed at least one loan payment and, therefore, were in default. [Note 11]

10. On or about September 20, 2007, Litton sent a letter to the Blakes notifying them that the September 1, 2007 loan payment was past due and that a late charge had been assessed. [Note 12]

11. By February 2008, the Blakes were still in default of their repayment obligations, and around February 5, 2008 Litton sent the Blakes a “NOTICE OF DEFAULT AND INTENT TO ACCELERATE”. The notice stated that “[t]o cure this default, you must pay all amounts due under the terms of your Note and Deed of Trust/Mortgage. As of 2/5/2008, the total amount necessary to bring your loan current is $11,168.52,” and “[i]f you have not cured the default within forty-five (45) days of this notice, Litton will accelerate the maturity date of the Note and declare all outstanding amounts under the Note immediately due and payable.” The notice also stated that unless the default was cured, the Property “that is collateral for the Note may then be scheduled for foreclosure in accordance with the terms of the Deed of Trust/Mortgage.” [Note 13]

12. The Blakes were aware of the notice from Litton and their default and attempted to work out a loan modification or some resolution with Litton to cure the default. Their efforts to cure the default continued well into 2010. No loan modification or other resolution has ever been reached to cure the default. [Note 14]

13. Although the Blakes made some payments on the mortgage loan after February 2008, the default was never cured. The Blakes’ last payment was made in 2009 or 2010. It has been more than six years since the Blakes’ last payment, putting the Blakes in default of the Mortgage in an amount roughly equating to 60 to 72 monthly payments. [Note 15]

Chain of Assignments of the Mortgage

14. There are three assignments of record of the Mortgage. By an assignment dated December 21, 2006 and recorded on July 20, 2011 with the Registry in Book 48163, Page 226, Argent assigned the Mortgage and the Note to Kondaur Capital Corporation. With respect to the Note, the assignment provides that “the Note and the claim secured thereby” are assigned as well as the Mortgage. No recorded assignment predated the assignment recorded by Kondaur Capital Corporation. [Note 16]

15. By an assignment dated December 3, 2012, and recorded on December 20, 2012 with the Registry in Book 50689, Page 324, Kondaur Capital Corporation assigned the Mortgage and the Note to Conquest Capital Partners, LLC (“Conquest”). With respect to the Note, the assignment was made, “Together with the note or notes therein described or referred to, the money due and to become due thereon with interest, and all rights accrued or to accrue under said Mortgage.” [Note 17]

16. By an assignment dated December 31, 2012, and recorded on the same day with the Registry in Book 50689, Page 50754, Page 274, Conquest assigned the Mortgage and the Note to Bay State. The assignment provides that in addition to assigning the Mortgage, it assigns “the Note and the claim secured thereby to Bay State Home Group, LLC.” [Note 18]

17. There are no subsequent assignments of record of the Mortgage, or of the Note. [Note 19]

18. Bay State is the present holder of both the Mortgage and the Note. [Note 20]

19. On or about January 5, 2011, Litton sent a letter to the Blakes notifying them that “[t]he servicing of your mortgage loan is transferring from Litton . . . to Kondaur Capital Corporation” on January 20, 2011. [Note 21]

20. On or about January 6, 2011, Kondaur Capital Corporation also sent a letter to the Blakes notifying them that the servicing of their mortgage loan was being transferred from Litton to Kondaur Capital Corporation as of January 20, 2011. [Note 22]

21. On August 15, 2011, in connection with its intent to later foreclose on the mortgage, Kondaur Capital Corporation filed a Complaint to Determine Military Status, naming the Blakes as defendants. On November 15, 2011, judgment entered for Kondaur Capital Corporation. [Note 23]

Bankruptcy Proceedings

22. On December 28, 2011, Jeannette Blake initiated bankruptcy proceedings in the District of Massachusetts Bankruptcy Court by filing a “Chapter 13 Voluntary Petition with deficiencies” in Bankruptcy Petition # 11-21930. In filing various information that summarized her debts and liabilities, Jeannette Blake acknowledged that Kondaur Capital Corporation was the holder of the debt represented by the Note and secured by the Mortgage on the Property. Kondaur Capital Corporation asserted that Jeannette Blake was indebted to it by filing a Proof of Claim on May 8, 2012. The Proof of Claim asserted that Kondaur Capital Corporation held the Note that secured the Mortgage on the Property. [Note 24]

23. During the Bankruptcy Court proceedings, Kondaur Capital Corporation filed a Motion for Relief from Stay, which was granted. In that motion, Kondaur Capital Corporation again asserted its status as a secured creditor entitled to foreclose on the Property. It intended to foreclose because “[a]s of June 11, 2012, approximately $638,465.77 in principal, interest, late fees and other charges was due with regard to the note and mortgage.” [Note 25]

24. On November 15, 2012, an officer of Kondaur Capital Corporation completed and signed an affidavit stating that it held the Note secured by the Mortgage to be foreclosed. The affidavit properly identifies the Property address and the Mortgage to be foreclosed as the Blakes’. The affidavit was recorded with the Registry in Book 50542, Page 44. [Note 26]

25. On December 19, 2012, Jeannette Blake initiated a second bankruptcy proceeding in the District of Massachusetts Bankruptcy Court by filing a “Chapter 13 Voluntary Petition with deficiencies” in Bankruptcy Petition #12-19814. [Note 27]

26. An officer of Bay State, like Kondaur Capital Corporation before it, completed and signed an affidavit regarding the Note secured by the Mortgage to be foreclosed on January 16, 2013. The affidavit properly identifies the Property address and the Mortgage to be foreclosed as the Blakes’, as well as attests that Bay State is the holder of the promissory Note secured by the Mortgage. The affidavit was recorded with the Registry in Book 50854, Page 217. Bay State affirmed that Jeannette was indebted to it by filing a Proof of Claim on June 17, 2013. Bay State again confirmed that it held the Note that secured the Mortgage on the Property, including a copy of the Note, endorsed “[p]ay to the order of: Bay State Home Group, LLC” with the Proof of Claim. [Note 28]

27. Bay State also filed a Motion for Relief from Stay. In that motion, Bay State again affirmed its status as a secured creditor entitled to foreclose on the Property. It intended to foreclose because “[a]s of June 30, 2013, approximately $691,725.34 in principal, interest, late fees and other charges was due with regard to the note and mortgage.” [Note 29]

28. On November 5, 2013, the Bankruptcy Court dismissed Blake’s Petition, rendering Bay State’s Motion for Relief moot. On February 10, 2014, the Bankruptcy Court closed the proceedings related to Blake’s Petition. [Note 30]

29. Bay State scheduled a foreclosure sale of the Property on January 15, 2014. Two days before the scheduled sale, the Blakes filed their try title complaint in this action. [Note 31]

DISCUSSION

“Summary judgment is granted where there are no issues of genuine material fact, and the moving party is entitled to judgment as a matter of law.” Ng Bros. Constr. v. Cranney, 436 Mass. 638 , 643-44 (2002); Mass. R. Civ. P. 56(c). “The moving party bears the burden of affirmatively showing that there is no triable issue of fact.” Id. at 644. In determining whether genuine issues of fact exist, the court must draw all inferences from the underlying facts in the light most favorable to the party opposing the motion. See Attorney Gen. v. Bailey, 386 Mass. 367 , 371, cert. denied, 459 U.S. 970 (1982). Whether a fact is material or not is determined by the substantive law, and “an adverse party may not manufacture disputes by conclusory factual assertions.” See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Ng Bros. Constr., supra, 436 Mass. at 648. When appropriate, summary judgment may be entered against the moving party and may be limited to certain issues. Community Nat'l Bank v. Dawes, 369 Mass. 550 , 553 (1976); Mass. R. Civ. P. 56(c).

Bay State has moved for summary judgment seeking a declaration that it is the owner of the Mortgage and holder of the Note secured by the Mortgage, meaning that Bay State is the mortgagee pursuant to G. L. c. 244, §14 and is authorized to foreclose on the Mortgage for the Property. In the Blakes’ opposition to the motion for summary judgment, they continue to argue that the court is without jurisdiction to assert jurisdiction over the counterclaim. Having already addressed this argument in the September 8, 2015 Order, in which I ruled that the court properly retained jurisdiction over the counterclaim, citing Bevilacqua v. Rodriguez, 460 Mass. 762 (2001) and Abate v. Freemont Inv. & Loan, 470 Mass. 821 (2015), this contention will not be addressed further in this decision, other than to note that, as the Abate court held, a try title action is not the only, and is not even the preferred, way to resolve this sort of dispute over the validity of a mortgage. Besides a try title action, “a property owner has other, and perhaps more suitable, remedies available to him or her.” Abate, supra, 470 Mass. at 835.

As to the merits, the Blakes assert that Bay State is not entitled to a declaration that it is the holder of the Mortgage and the Note because it has failed to proffer sufficient evidence that it holds the Mortgage and Note since its purported chain of assignments is incomplete.

“If a mortgage contains the statutory power of sale, G. L. c. 183, § 21, then in the event of a 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.” M & T Bank v. Murillo, 22 LCR 31 , 33 (2014); G. L. c. 244, § 14. In order to conduct a valid foreclosure, the foreclosing entity must hold the mortgage and the promissory note at the time of the notice of foreclosure and sale in order to secure the mortgagee’s interest in the unpaid debt. Eaton v. Fed. Nat'l Mtge. Ass'n, 462 Mass. 569 , 571, 576-577 (2012). In Massachusetts, ownership of the mortgage and the underlying note can be split and need not be assigned together, but they must be reunited under common control at the time of foreclosure. Id. “[N]othing in Massachusetts law requires a foreclosing mortgagee to demonstrate that prior holders of the record legal interest in the mortgage also held the note at the time each assigned its interest in the mortgage to the next holder in the chain.” Sullivan v. Kondaur Capital Corp., 85 Mass. App. Ct. 202 , 210 (2014).

The facts alleged in Bay State’s counterclaim and requests for admissions, which were deemed admitted due to the Blakes’ failure to respond, show that the chain of assignments for the Mortgage and the Note was unbroken. Nevertheless, even if those facts were not deemed admitted, the evidence in the record supports Bay State’s position that the chain of assignments to Bay State is clear and complete.

A few years after the Blakes acquired the Property, on December 18, 2006, they borrowed $472,500.00 from Argent, as mortgagee, to refinance their mortgage, paying off a prior mortgage loan from New Century and granting a new mortgage to secure their promise to repay the amount borrowed. Jeannette Blake signed the Note and the Blakes granted the Mortgage on the Property to secure her promise to repay the Note. It was not long thereafter that the Blakes defaulted on the Note and the Mortgage, and despite unsuccessful efforts to negotiate a modification, they have remained in default for over six years.

The record chain of assignments of the Mortgage and the Note is unambiguous and uninterrupted. Argent assigned the Note and the Mortgage to Kondaur Capital Corporation by a 2006 assignment that was recorded on July 20, 2011. On December 20, 2012, Kondaur Capital Corporation assigned the Mortgage and the Note to Conquest. On December 31, 2012, the Mortgage and the Note were lastly assigned from Conquest to Bay State. Although Kondaur Capital Corporation was not yet incorporated on the date of execution of the assignment of the Mortgage and Note to it by Argent, it was incorporated and in existence prior to the date the assignment to it was recorded. There is no evidence in the record concerning the date of Kondaur Capital Corporation’s acceptance of the delivery of the assignment, but I find and rule that Kondaur’s acceptance of delivery of the assignment occurred at some point after its incorporation, as evidenced by its conduct in servicing and subsequently assigning the Mortgage to Conquest. “[I]t is settled that ‘manual delivery of a recorded deed is not required to work a transfer, and that acts of the grantee when coupled with a purpose of the grantor to treat the deed as delivered are sufficient to pass the title.’” Bianco v. Lay, 313 Mass. 444 , 448 (1943), quoting Sullivan v. Hudgins, 303 Mass. 442 , 446 (1939).

The Blakes argue as well that Bay State failed to explain discrepancies in the chain of assignments, pointing to several off-record assignments that they contend contradict the recorded assignments. Documents in the Appendix to Bay State’s Motion for Summary Judgment on Counterclaim suggest that Selene Finance LP (“Selene”) may have acquired the Mortgage from a pool of loans from Whole Loan Trust 2010 (“Whole Loan”) on or about December 16, 2010, and then transferred the Mortgage to Kondaur Ventures on December 30, 2010. However, nothing in the record supports a conclusion that these transactions actually occurred or shows that Whole Loan or Selene ever legally had possession of the Mortgage or Note. I have ruled that notwithstanding the unobjected-to requests for admissions that mention, but do not document these purported off-record assignments, there is nothing in the record to support a finding that they actually occurred. Whether there were valid off-record assignments or not, the first record assignment of the Mortgage and Note occurred before the first purported off-record assignment, and the chain of record assignments is unbroken and ends with Bay State holding the Mortgage and the Note. [Note 32]

On January 16, 2013, an officer of Bay State also completed and signed an affidavit attesting that Bay State is the holder of the Note secured by the Mortgage. See Dyer v. U.S. Bank, Nat’l Ass’n., 141 F. Supp. 3d 149, 156 (D. Mass. 2015) (evidence that U.S. Bank was the holder of the note included “a copy of an affidavit that was filed with the [registry] stating that . . . U.S. Bank was in possession of the promissory note.”). Bay State’s affidavit was recorded. In the second Bankruptcy Petition # 12-19814, Bay State filed a Proof of Claim on June 17, 2013 in which, for the second time it confirmed that it held the Note that secured the Mortgage on the Property, and included a copy of the Note. Bay State also filed a Motion for Relief from Stay and yet again affirmed its status as the mortgagee entitled to foreclose on the Property.

The chain of recorded assignments to Bay State is clean. There have been no further assignments of the Mortgage following the recording of the assignment to Bay State, which remains the current holder of the Mortgage and the Note. Each recorded assignment explicitly references either the original loan number (ending in 9602) on both the Mortgage and the Note or the Mortgage’s Instrument Number (2006-00147569). Neither the Note nor the Mortgage contain any restrictions on the ability to transfer or assign the rights of the original lender under the Note to successors. It has been more than six years since the Blakes’ last payment, putting the Blakes in default of the Mortgage. Where Bay State holds both the Mortgage and the Note, it is the mortgagee as defined pursuant to G. L. c. 244, § 14, and thus, it is authorized to foreclose on the Mortgage granted by the Blakes. In light of the record before the court, including the facts deemed admitted, summary judgment on the counterclaim in favor of Bay State is appropriate.

CONCLUSION

For the reasons set forth above, Bay State’s motion for summary judgment on its counterclaim is ALLOWED. Summary judgment will enter in favor of Bay State, and against the Blakes.

Judgment will enter in accordance with this decision.