CITIMORTGAGE, INC. v. EUGENE MATTERAZZO, JR., NANCY MATTERAZZO a/k/a NANCY MATTARAZZO, METROWEST COMMUNITY FEDERAL CREDIT UNION f/k/a Framingham Municipal Federal Credit Unioin, and the TOWN of FRAMINGHAM.

This began as an action for mortgage reformation, in which the plaintiff, Citimortgage, Inc. ("Citimortgage") claimed that one of the two parcels owned by the defendants, Eugene and Nancy Matterazzo (the "Matterazzos" or "defendants") was inadvertently not included in a mortgage description by mutual mistake. The inadvertently excluded parcel had been acquired by the Matterazzos from the town of Framingham (the "Town"), which deeded the parcel to the Matterazzos as a tax-foreclosed parcel. Citimortgage asked the court to reform the mortgage to include both of the parcels in the description of property encumbered by the mortgage. In the alternative, Citimortgage requested that its mortgage be equitably subrogated to an earlier mortgage that it held and caused to be discharged.

During the pendency of this action it was discovered that the deed description for the parcel of land that Citimortgage seeks to include by way of mortgage reformation is incorrect, as it had been incorrectly described in the deed from the Town to the Matterazzos, and describes a different property located elsewhere in the Town. Citimortgage now seeks, in addition to mortgage reformation, reformation of the deed to reflect the correct description of the parcel at issue. In the alternative, Citimortgage seeks equitable subrogation to its earlier mortgage.

For the reasons stated below, I find that Citimortgage has established, on the undisputed facts in the record, that the property description of the Matterazzos' second parcel was omitted from the mortgage for reasons cognizable under the doctrine of mutual mistake, and that reformation of the mortgage is appropriate. Were reformation not appropriate, I would find that Citimortgage has established that it is equitably subrogated to its earlier mortgage on the second parcel to the extent that its loan to the Matterazzos paid off the earlier mortgage loan.

Regarding Citimortgage's request for reformation of the deed description of the subject parcel of land, however, it appears that the Town cannot prove it ever held title to the property, and therefore the Matterazzos did not have a clear and marketable title upon which to grant a mortgage to Citimortgage. Accordingly, while summary judgment will enter for Citimortgage on its claim for deed reformation, the relief granted is effective between the parties to this action only, and does not determine title to the subject parcel of land as to any other persons, as it may be that another person or entity has title superior to that of the Matterazzos, the Town, and Citimortgage.

PROCEDURAL HISTORY

This case commenced on March 29, 2013, with Citimortgage's initial verified complaint seeking to reform a mortgage to include property located at 18 Chautauqua Avenue, Framingham ("18 Chautauqua Avenue" or "Parcel Two") in the mortgage description and seeking declaratory relief placing Citimortgage's mortgage prior in time and prior in right to a later mortgage Mr. Matterazzo granted to Metrowest Community Federal Credit Union ("Metrowest"), formerly known as Framingham Municipal Federal Credit Union, encumbering Parcel Two. [Note 1] Citimortgage moved for summary judgment on its claims on June 23, 2015.

On September 8, 2015, I denied Citimortgage's motion without prejudice, because the deed for Parcel Two does not describe Parcel Two, but instead, in an apparent mistake attributable to the Town in its earlier tax parcel deed to the Matterazzos, describes a different parcel of land located elsewhere in Framingham. On December 3, 2015, I allowed Citimortgage's motion to amend its complaint to join the Town as a defendant. Citimortgage's amended complaint added a claim seeking reformation of the deed to include the proper description of Parcel Two. [Note 2]

On January 23, 2017, Citimortgage renewed its motion for summary judgment. [Note 3] On that same date, pursuant to Land Court Rule 10, Citimortgage and the Town filed a Stipulation and Agreement for Judgment in which the Town assented to Citimortgage's request for relief as to the deed reformation only. I held a hearing on the renewed motion for summary judgment on June 13, 2017. Only Citimortgage and the Town availed themselves of the opportunity to appear at the hearing on the motion. At the hearing, the Town represented that despite the subsequent discovery that the chain of title for Parcel Two is broken and the Town likely never held title to Parcel Two, the Town intended to give the Matterazzos a deed with the correct description and still assents to Citimortgage's request for deed reformation.

FACTS

The material undisputed facts pertinent to this motion for summary judgment are as follows:

1. The Matterazzos took title to property at 14 Chautauqua Avenue in Framingham as tenants by the entirety by a deed dated August 15, 2002, recorded with the Middlesex South District Registry of Deeds ("Registry") in Book 36168, Page 347. Mr. Matterazzo had acquired the property with his father by an earlier deed in 2001. The property acquired is a lot improved by a single-family dwelling, in which the Matterazzos reside, and which contains 6,300 square feet of land according to the "Plan of Montwait in Framingham, Mass., owned by E. C. Linn . . . recorded with [the Registry] as Plan No. 2365 of 1955" ("Plan No. 2365 of 1955") referenced in the 2001 deed, and 6,250 square feet of land according to the records of the Framingham assessor. This property is hereinafter referred to as 14 Chautauqua Avenue or as Parcel One.

The Matterazzos' Acquisition of Parcel Two

2. After the Matterazzos purchased Parcel One, they were surprised to learn that Parcel Two, located directly adjacent to Parcel One along Chautauqua Avenue, was not part of the land they had purchased. [Note 4] Parcel One had very little yard space and Parcel Two was a vacant lot. [Note 5] The ground conditions were such that Parcel One and Parcel Two appeared as one piece of property. [Note 6]

3. Mr. Matterazzo learned from a neighbor that the Town owned Parcel Two. Mr. Matterazzo went to Town Hall to inquire about purchasing Parcel Two. [Note 7]

4. The Matterazzos acquired title to Parcel Two from the Town by a deed dated April 3, 2003 (the "2003 Deed"), recorded with the Registry in Book 39533, Page 569.

5. The 2003 Deed describes Parcel Two by reference to an assessor's map, by a plan reference, by a metes and bounds description, and by reference to an earlier tax foreclosure judgment. The plan reference identifies "Lot 31 on a plan entitled 'Lake- View-Estate in Framingham conveyed by Frederick Mason to James W. Clark.'" The 2003 Deed provides that, according to the Lake-View-Estate plan, Lot 31 contains 11,438 square feet. The reference to the assessor's map describes Parcel Two as "Lot 83L on Assessor's Map 186, Block 7."

6. The 2003 Deed "more particularly" describes Parcel Two by a metes and bounds description that describes the property as bounded by Franklin Street and by land of the Boston and Albany Railroad. It further describes the property as having boundaries that measure 150 and 151 feet on two sides, and 76 feet on the other two sides.

7. The 2003 Deed describes the Town's title as deriving from a tax foreclosure judgment recorded with the Registry in Book 31211, Page 580. However, that recording leads to a deed for a parcel of land located at 294 Franklin Street, found in Book 18515, Page 241, which contains the plan reference and metes and bounds description that appear on the 2003 Deed. Notwithstanding the Town's apparent intent to deed Parcel Two to the Matterazzos, the parcel described in the 2003 Deed from the Town to the Matterazzos, purportedly deeding them Parcel Two, is not Parcel Two, but instead is a parcel located elsewhere in Framingham. The record in this case is devoid of any evidence of the Town's actual acquisition of Parcel Two by tax foreclosure pursuant to G. L. c. 60, §§ 60-70.

Chain of Title to Parcel Two

8. A deed dated October 5, 1927, and recorded on November 2, 1927, with the Registry in Book 5162, Page 278 (the "1927 Deed"), reflects that Edgar C. Linn conveyed a parcel of land in Framingham to Montwait Community Club, Inc. ("Montwait"). The 1927 Deed describes the property by plan reference and by a metes and bounds description. The plan reference describes the property as "lot 83, on 'Plan of Montwait in Framingham, Mass. Owned by Edgar C. Linn, Trustee'" and also as "lot 331 on a Plan of 'Lots of the Trustees of the Chautauqua Association at South Framingham, Mass.' . . . recorded with said Deeds, Plan Book 143, Plan 21." The 1927 Deed further sets forth that the parcel contains 5,250 square feet and has boundaries measuring 105 feet on two sides and 50 feet on the other two sides.

9. Plan No. 2365 of 1955 shows that Parcel One is lot 84 and Parcel Two is lot 83. Plan Book 143, Plan 21 shows Parcel One as lot 330 containing 6,300 square feet and Parcel Two as lot 331 containing 5,250 square feet. [Note 8]

10. The correct legal description of Parcel Two is:

"The following real property situated in the town of Framingham, County of Middlesex, Commonwealth of Massachusetts, to wit:

Lot 83 on 'Plan of Montwait in Framingham, Mass. Owned by Edgar C. Lin, Trustee,' Sept. 1923 by R.F. Smith, C.E., and being lot 331 on a Plan of 'Lots of the Trustees of the Chautauqua Association at South Framingham, Mass., surveyed by E.S. Smilie, Surv., Newton,' dated May 1, 1903, and recorded with the Middlesex South Registry of Deeds, Plan Book 143, Plan 21. Said parcel is bounded on said last named plan as follows:

EASTERLY by East Avenue, fifty (50) feet;

SOUTHERLY by lot 330 on said Smilie Plan, one hundred five (105) feet;

WESTERLY by lot 321 on said Smilie Plan, fifty (50) feet; and NORTHERLY by lot 322 on said Smilie Plan, one hundred five (105) feet. Containing 5,250 square feet." [Note 9]

11. The 1927 Deed conveying Parcel Two to Montwait is the last deed of record for Parcel Two, except for the 2003 Deed purporting to convey Parcel Two from the Town to the Matterazzos.

12. Montwait was incorporated on October 18, 1927, as a "social, civic, and charitable" corporation serving the public in Framingham. It was dissolved on August 12, 1963 pursuant to G. L. c. 180, § 26A. [Note 10]

13. On April 30, 1957, the Town's Fire Chief and Building Inspector sent a letter to the Board of Selectmen recommending that a dilapidated structure on Parcel Two known as Fletcher Hall be either repaired or demolished because it posed a public safety hazard. On June 3, 1957, a demolition permit was granted. [Note 11]

14. According to the Town assessor's office, Parcel Two has been listed as Town-owned property since at least 1993, but the Town has not been able to determine how or if it actually acquired title to Parcel Two. [Note 12]

The 2004 Mortgage

15. After acquiring Parcel Two, or at least believing they had acquired Parcel Two pursuant to the 2003 Deed, the Matterazzos made improvements to Parcel Two, including the installation of an in-ground pool, landscaping, the construction of a perimeter fence, and the construction of a shed. [Note 13] The perimeter fence seals off Parcel Two from the street and the only way to gain access to Parcel Two is through a gate in the fence or by walking through the house located on Parcel One. [Note 14]

16. On March 18, 2004, the Matterazzos granted a mortgage to Citimortgage in the amount of $212,600.00, recorded with the Registry in Book 43065, Page 65 (the "2004 Mortgage"). Attached to the 2004 Mortgage is a "Legal Addendum" that contains a description of the mortgaged property, which includes the deed descriptions of both Parcel One and Parcel Two (collectively, the "Property").

17. On June 12, 2004, the Matterazzos granted a mortgage on Parcel One to Metrowest for a revolving line of credit up to $70,000.00, recorded with the Registry in Book 43073, Page 574 ("Revolving Credit Mortgage").

The 2006 Mortgage

18. At some time in 2006, Mr. Matterazzo submitted a loan application to Citimortgage to refinance existing debt and withdraw equity. [Note 15] On the loan application, Mr. Matterazzo identified 14 Chautauqua Avenue as his only real estate holding. The loan application also identified, as a liability, the 2004 Mortgage to Citimortgage.

19. On September 27, 2006, Lodovico Uriati prepared an appraisal for Citimortgage in connection to Mr. Matterazzo's loan application. [Note 16] As part of the appraisal process, Mr. Uriati reviewed a recently canceled property listing for 14 Chautauqua Avenue. The listing described the lot size as 11,500 square feet and in the "Remarks" section stated "[i]t also features a huge backyard, an inground pool (fenced and gated) w/ all the equipment, & a storage shed."

20. Mr. Uriati visited the Property as part of the appraisal and Mrs. Matterazzo gave him access to the interior of the home. Mr. Uriati took photographs of the interior of the home, and also took photographs of the exterior of the Property, including the swimming pool. Mr. Uriati did not see any ground conditions indicating that Parcel One and Parcel Two were separate pieces of property. Mrs. Matterazzo did not tell Mr. Uriati to disregard Parcel Two when he conducted the appraisal. [Note 17]

21. The final appraisal report describes the Property and provides an address of 14 Chautauqua Avenue. It describes the area as 11,500 square feet and references the in- ground pool and fence.

22. On October 23, 2006, the Matterazzos granted a mortgage to Mortgage Electronic Registration Systems, Inc. ("MERS"), as nominee for Citimortgage, recorded with the Registry in Book 48438, Page 457 (the "2006 Mortgage"). The 2006 Mortgage secured a promissory note from Mr. Matterazzo to Citimortgage in the amount of $322,000.00.

23. The proceeds from the 2006 Mortgage loan paid the 2004 Mortgage on the Property in full, which was discharged of record with the Registry in Book 48571, Page 175. The proceeds from the 2006 Mortgage also paid the Revolving Credit Mortgage in full. The Matterazzos received the remainder of the proceeds in cash.

24. The 2006 Mortgage only includes a description of Parcel One as the encumbered property.

25. MERS assigned the 2006 Mortgage to Citimortgage on July 15, 2011, as recorded in Book 57152, Page 335.

The 2007 Mortgage

26. On February 8, 2007, Mr. Matterazzo granted a mortgage on Parcel Two to Metrowest, recorded with the Registry in Book 49025, Page 101 (the "2007 Mortgage"). The 2007 Mortgage contains a description of Parcel Two only, using the incorrect description from the 2003 Deed. The 2007 Mortgage describes the property address as 14 Chautauqua Avenue.

27. The 2007 Mortgage, on its face, is described as a "Second Mortgage." The mortgage loan application that Mr. Matterazzo submitted to Metrowest for the 2007 Mortgage identifies Citimortgage's 2006 Mortgage as the "First Mortgage."

DISCUSSION

STANDARD OF REVIEW

"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." Ng Bros., supra, 436 Mass. 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., 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).

1. Mutual Mistake

"It is well established that legal instruments, including deeds, may be reformed on the ground of mutual mistake." America's Wholesale Lender v. Gurinian, 18 LCR 522 , 524 (2010) (Misc. Case. No. 351481) (Piper, J.), quoting Lhu v. Dignoti, 431 Mass. 292 , 294 (2000). "[M]utual mistake supporting reformation is a mistake common to all parties." Apfel v. Miller, 85 Mass. App. Ct. 450 , 455 (2014). "As a general rule, reformation of an instrument may be warranted not only by fraud or by mutual mistake, but also by mistake of one party which is known to the other party" and "if the party knowing of the mistake fails to make it known to the mistaken party." Torrao v. Cox, 26 Mass. App. Ct. 247 , 250 (1988). "To be entitled to reformation, a party must present full, clear and decisive proof of mistake." Polaroid Corp. v. Travelers Indem. Co., 414 Mass. 747 , 756 (1993).

The undisputed record reflects that Citimortgage mistakenly did not include a description of Parcel Two on the 2006 Mortgage. Both Citimortgage and the Matterazzos treated Parcel One and Parcel Two as one property. There is no dispute that the 2004 Mortgage the Matterazzos granted to Citimortgage encumbered both parcels of land (at least to the extent that the Matterazzos had title, considering the defective chain of title to Parcel Two). Further, when Mr. Uriati conducted the appraisal of the Property in connection to Mr. Matterazzo's 2006 loan application, he reasonably believed, based on the ground conditions at the Property, that Parcel One and Parcel Two were one property. The Matterazzos admitted that Parcel Two did not have a separate mailbox, nor did it have any type of sign or marker indicating its address of 18 Chautauqua Avenue. [Note 18] Additionally, aside from a gate in the fence enclosing Parcel Two, the only way to access Parcel Two is through a door of the Matterazzos' home on Parcel One. The Matterazzos never declared to either Mr. Uriati, during his appraisal, or to Citimortgage after granting it the 2004 Mortgage, that Parcel Two was a separate parcel. Citimortgage relied on Mr. Uriati's appraisal of the Property when determining the amount of money to loan to Mr. Matterazzo. [Note 19]

Further bolstering Citimortgage's contention that the Matterazzos treated Parcel One and Parcel Two as one property, when Mr. Matterazzo applied for the 2006 loan with Citimortgage he identified 14 Chautauqua as his only real estate holding. Additionally, he supplied 14 Chautauqua Avenue as the address for Parcel Two when he applied for a loan with Metrowest in 2007. Indeed, the 2007 Mortgage that the Matterazzos granted to Metrowest provides the 2003 deed description for Parcel Two, but shows the property address for Parcel One. Mr. Matterazzo admitted at his deposition that the two parcels were treated as one property. [Note 20]

Under the doctrine of mutual mistake, the 2006 Mortgage must be reformed to reflect that it encumbers Parcel One and the Matterazzos' interest in Parcel Two. The Matterazzos knew that because the 2006 Mortgage mistakenly described only Parcel One, Citimortgage did not receive a full mortgage security backing up its decision to lend them $322,000.00, and that granting a loan on only part of the Matterazzos' property was not Citimortgage's intention. See Torrao v. Cox, supra, 26 Mass. App. Ct. at 250. Citimortgage has met its burden of proving that it is entitled to reformation of the 2006 Mortgage because it mistakenly did not include the description of Parcel Two, and the Matterazzos knew that Citimortgage intended to acquire a mortgage on both parcels, and essentially took advantage of Citimortgage's mistake. See Polaroid Corp. v. Travelers Indem. Co., 414 Mass. at 756.

2. Equitable Subrogation

The doctrine of equitable subrogation provides that "[o]ne who fully performs an obligation of another, secured by a mortgage, becomes by subrogation the owner of the obligation and the mortgage to the extent necessary to prevent unjust enrichment." E. Bos. Sav. Bank v. Ogan, 428 Mass. 327 , 330 (1998), quoting Restatement (Third) of Property (Mortgages) § 7.6(a). Within the context of a typical case involving multiple mortgages, the effect of the doctrine is that a "new mortgage given by a mortgagor, who used the proceeds of the new mortgage to extinguish an earlier mortgage, may receive the same priority once given to the earlier mortgage." Id. The party bringing a claim for equitable subrogation must prove that "(1) the subrogee made the payment to protect his or her own interest, (2) the subrogee did not act as a volunteer, (3) the subrogee was not primarily liable for the debt paid, (4) the subrogee paid off the entire encumbrance, and (5) subrogation would not work any injustice to the rights of the junior lienholder." Id., quoting Mort v. United States, 86 F.3d 890, 894 (9th Cir. 1996). Equitable subrogation is "a broad equitable remedy and, depending on the individual case, it may apply even where one or more of these factors is absent." Id. at 330.

Although Citimortgage is entitled to reformation of the 2006 Mortgage under the doctrine of mutual mistake, if it were not entitled to such relief I would find that the undisputed record establishes that Citimortgage is entitled to equitable subrogation. First, there is no dispute that Citimortgage loaned Mr. Matterazzo $322,000.00 in a mortgage refinance transaction in 2006, and that $204,001.53 of the funds paid off the balance of the 2004 loan. Citimortgage paid off the earlier mortgage to protect its interests and did not make the payment gratuitously. The record further reflects that Citimortgage's payment in 2006 satisfied the entire encumbrance and, in fact, the 2004 Mortgage was discharged.

Finally, as to the fifth factor, that "subrogation would not work any injustice to the rights of the junior lienholder," absent reformation to Citimortgage's 2006 Mortgage, Metrowest is not a junior lienholder. Mort v. United States, supra, 86 F.3d at 894. Because Citimortgage's 2006 Mortgage did not include a description of Parcel Two, if Citimortgage did not prevail on its claim for mortgage reformation, Metrowest's 2007 Mortgage on Parcel Two would have priority. [Note 21] Citimortgage thus seeks first priority, to the extent that it paid off the 2004 Mortgage. In any event, Metrowest has never answered or appeared in this litigation and prejudice to Metrowest is thus irrelevant to the equitable subrogation analysis. As such, if Citimortgage had not shown that it is entitled to mortgage reformation to include Parcel Two's description on the 2006 Mortgage, the undisputed record would have supported granting Citimortgage alternative relief in the form of equitable subrogation.

3. Deed Reformation

If a deed does not convey the land the parties intended to convey, reformation is appropriate "to express the real intention of the parties." Gulick v. Heirs of Phoebe Cummings Burtt, 20 LCR 595 , 597 (2012) (Misc. Case No. 02 MISC 356078) (Cutler, J.), quoting Ward v. Ward, 70 Mass. App. Ct. 366 , 369 n.5 (2007).

The Town plainly intended to convey Parcel Two to the Matterazzos, and the Matterazzos intended to purchase Parcel Two, located directly adjacent to their residence, from the Town. [Note 22] Citimortgage and the Town have stipulated and agreed that the Town intended to deed Parcel Two to the Matterazzos. Citimortgage and the Town have further stipulated and agreed to reformation of the 2003 deed to correctly describe Parcel Two as follows:

"a certain parcel of land situated in the town of Framingham, County of Middlesex, Commonwealth of Massachusetts, to wit:

Lot 83 on 'Plan of Montwait in Framingham, Mass. owned by Edgar C. Lin, Trustee', Sept. 1923 by R.F. Smith, C.E., and being lot 331 on a Plan of 'Lots of the Trustees of the Chautauqua Association at South Framingham, Mass., surveyed by E.S. Smilie, Surv., Newton,' dated May 1, 1903, and recorded with the Middlesex South Registry of Deeds, Plan Book 143, Plan 21. Said parcel is bounded on said last named plan as follows:

EASTERLY: by East Avenue, fifty (50) feet;

SOUTHERLY: by lot 330 on said Smilie Plan, one hundred five (105) feet;

WESTERLY: by lot 321 on said Smilie Plan, fifty (50) feet; and

NORTHERLY: by lot 332 on said Smilie Plan, one hundred five (105) feet. Containing 5,250 square feet."

However, because the Town cannot show that it ever held title to Parcel Two in the first place, the deed reformation is limited to the parties in this case and does not constitute an in rem decree as to the state of ownership to 18 Chautauqua Avenue.

CONCLUSION

For the reasons stated above, the plaintiff's renewed motion for summary judgment is ALLOWED.

Judgment will enter in accordance with this Decision.