On May 20, 2008, James B. Nutter & Company (JBNC) made a loan secured by a reverse mortgage on property now owned by the Estate of Alan A. Motta (Estate) located at 2 Mount Fair Circle in Swansea, Massachusetts (Property), JBNC's reverse mortgages use a standard form. Paragraph 20 of its standard form does not explicitly incorporate the statutory power of sale, G.L. c. 183, § 21. JBNC seeks to foreclose on many of its mortgages and brought several cases in the Land Court, including this case, seeking to determine its rights to foreclose under the form mortgage. The Massachusetts Department of Revenue having disclaimed its interet and the defaults of the remaining defendants having been entered, JBNC now seeks entry of a default judgment. As set forth in the court's August 1, 2016 Memorandum and Order in three parallel cases brought by JBNC, [Note 1] this court found that the language of paragraph 20 that "Lender may invoke the power of sale and any other remedies permitted by applicable law'' is sufficient to incorporate the statutory power of sale by reference, even though the language of paragraph 20 is not substantially equivalent to that of the statute, and JBNC seeks judgment to that effect. JBNC also requests a further declaration that the Estate is in default of the terms of the mortgage and that this default permits JBNC to foreclose the mortgage pursuant to the power of sale. For the reasons set forth below, default judgment shall enter only declaring that the subject mortgage incorporates the statutory power of sale by reference.
JBNC filed the complaint (Compl.) on January 14, 2016. A case management conference was held on February 29, 2016. On March 9, 2016, the Massachusetts Department of Revenue filed a Disclaimer of Interest. On April 4, 2016, a case management conference was held with all the cases brought by JBNC involving the paragraph 20 issue. The parties in the case were ordered to complete service and await the outcome of the Motion for Partial Judgment on the Pleadings in James B. Nutter & Co. v. Estate of Murphy.
On November 15, 2016, JBNC filed Request for Default pursuant to Mass. R. Civ. P. 55(a) for Defendants Jonathan B. Motta, Melissa A. Mills, Internal Revenue Service, Citibank (SD) NA, Secretary of Housing & Urban Development, Estate of Alan A. Motta also known as Alan Anthony Motta, and the court defaulted all Defendants. This same day, JBNC also filed Military Affidavits, Motion for Entry of Judgment and Order of Sale, and Plaintiff, James B. Nutter & Company Memorandum in Support of its Motion for Entry of Judgment and Order of Sale. On December 19, 2016, JBNC filed a Memorandum regarding entitlement to the relief it is seeking. The motion was taken under advisement. This Memorandum and Order follows.
Based on the verified complaint, the court accepts the following facts as true.
1. On or about November 28, 1984, Bruce Almeida and Jo-Ann Almeida conveyed property located at 2 Mount Fair Circle, Swansea, Massachusetts (Property) to Alan A. Motta and Rose Marie Motta by deed recorded with the Bristol County (Fall River District) Registry of Deeds (registry) at Book 1538, Page 97. Compl., ¶ 11, Exh. A.
2. Alan A. Motta executed a reverse mortgage to JBNC on May 20, 2008 (Mortgage), relating to the Property. The Mortgage was recorded with the registry at Book 6952, Page 33. Compl. ¶¶ 18-19, Exh. F.
3. The Mortgage provides that it secures a note of the same date signed by Alan A. Motta, as borrower, in the principal amount of $474,525.00 from JBNC (Note). The Note was endorsed in blank by JBNC. Compl. ¶¶ 15-16, Exh. E.
4. Also on May 20, 2008, the Secretary of Housing and Urban Development recorded a junior mortgage from Alan A. Motta with the registry at Book 6952, Page 43. Compl. ¶ 22, Exh. H.
5. On August 1, 2011, Citibank (SD), N.A. recorded an execution in the amount of $4,057.97 as a lienholder of Alan A. Motta with the registry at Book 7723, Page 145. Compl. ¶ 22, Exh. H.
6. Rose Marie Motta died on July 29, 1991 and Alan A. Motta died on November 30, 2013. Following Alan Motta's death, JBNC accelerated the debt and declared the loan secured by the reverse mortgage to be in default. Compl. ¶¶ 11-12, Exhs. B, C.
7. Jonathan B. Motta and Melissa A. Mills are the purported heirs of Alan A. Motta with the current interest in the Property. Compl. ¶ 14.
8. JBNC alleges it is the current holder of the Mortgage and the Note. Compl. ¶¶ 17, 20.
The court having already determined in other cases brought by JBNC that paragraph 20 of the Mortgage is sufficient to incorporate the statutory power of sale by reference, JBNC has moved for additional relief in the form of a declaration that the Estate is in default of the terms and conditions of the Mortgage and that such default permits JBNC to foreclose on the Mortgage, in full or partial satisfaction of the Estate's obligations in connection with the Note and Mortgage, pursuant to the power of sale. Whether this relief can be granted raises a question of this court's subject matter jurisdiction.
The Land Court Department of the Trial Court is a court of limited jurisdiction; its jurisdiction is set forth in G.L. c. 185, § 1. Relevant to this action, the Land Court has jurisdiction over "[a]ll cases and matters cognizable under the general principles of equity jurisprudence where any right, title, or interest in land is involved." G.L. c. 185, § 1(k). Since Massachusetts is a title theory state, a mortgage is an interest in the property that secures the mortgage debt, and the mortgagee therefore has a "right, title, or interest" in that property. Id; Eaton v. Federal Nat'l Mtge. Ass'n, 462 Mass. 569 n. 4 (2012); Fenmore Assoc., LLC v. Brough, 18 LCR 459 , 463. (2010). Under G.L. c. 244, §§ l l-17C, Massachusetts mortgage foreclosures are nonjudicial under a statutory power of sale, and a mortgagee may foreclose without prior judicial intervention. US. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637 , 645-646 (2011); Abate v. Fremont Inv. & Loan, 470 Mass. 821 , 835 (2015). While regulated by statute, nonjudicial foreclosure is a private procedure involving private parties, occurring pursuant to a private power of sale contained in the mortgage. Therefore, absent some controversy over title or interest in the mortgaged real property, this court lacks jurisdiction to consider other aspects of an action involving the ability to foreclose.
JBNC contends that a mortgagee's request to make declarations with respect to its right to foreclose its mortgage and the mortgagee's compliance with the statutory power of sale postforeclosure is substantially similar to a mortgagee's request for a declaration of its contractual right to proceed to foreclosure in accordance with the statutory power of sale. These situations are not substantially similar. The first scenario involves an adverse claim to rights in real estate--a mortgagor contesting a mortgagee's rights under the mortgage (an interest in property) or it's claim to title after the foreclosure. In the second scenario--the situation in this matter-there is no controversy involving a right, title, or interest in land. The question that JBNC asks the court to resolve is whether there was a breach of the terms of the Note and Mortgage permitting JBNC to foreclose. While the court has jurisdiction to enter declaratory judgment regarding its interpretation of the terms in the Mortgage, the jurisdiction does not extend to the situation in which a party is asking for a declaration that someone is in breach of the loan and that it therefore has the power to foreclose. This is an entirely contractual issue. See Onewest Bank, FSB v. Heirs, Devisees, Legal Representatives of Viirre, 23 LCR 413 , 414 (2015) (deciding only that paragraph 20 is the functional equivalent of the statutory power of sale found in G.L. c. 183, §21); M&T Bank v. Murillo, 22 LCR 31 , 35 (2014) (rejecting independent contract claims as being outside the subject matter jurisdiction of the Land Court). Questions about whether a mortgagor has defaulted on its loan are outside the jurisdiction of the Land Court absent a challenge to a claim of some right, title or interest in land. See Abate v. Freemont Inv. & Loan, 20 LCR 630 , 631-633 (2012); Mitchell v. US. Bank Nat'l Ass'n 22 LCR 120 , 122-123 (2014); Barrasso v. New Century Mtge. Corp., 23 LCR 247 , 249 (2015).
JBNC additionally alleges that the court has jurisdiction under G.L. c. 185, § 1(g). Section 1(g) gives the Land Court jurisdiction over complaints under G.L. c.240, § 27, "to establish power or authority to transfer an interest in real estate." Pursuant to G.L. c. 240, § 27, the Land Court has jurisdiction over "[a]ny person having . . . power or authority created by any written instrument to sell, convey, mortgage or otherwise transfer any interest in real estate." Section 1(g) is also inapplicable to this case. Though JBNC has an interest in the Mortgage and seeks to convey the Property by a foreclosure sale, there is no interest in real estate to be transferred at this time. Foreclosure proceedings have not yet been initiated; no notice of sale has been sent. At this time, JBNC is only seeking a declaration regarding its contractual rights.
JBNC argues that given the number of post-foreclosure cases brought before the Land Court, judicial economy dictates that such a claim for a pre-foreclosure declaration while the matter is pending before the court is appropriate. The equitable principle of judicial economy "seeks to avoid forcing parties into duplicative efforts." See Miller v. Cotter, 448 Mass. 671 , 684 (2007); Bank of Am., N.A. v. Rosa, 466 Mass. 613 , 626 (2013) (finding that principles of judicial economy supported granting Housing Court jurisdiction to hear defenses and counterclaims that challenge the title of a post-foreclosure summary process plaintiff); Diversified Mtge. Investors v. Viking Gen. Corp., 16 Mass. App. Ct. 142 , 151 (1983) (combining related claims in one action in the interest of judicial economy must be balanced against accomplishing a just result). Judicial economy, nevertheless, must be balanced against the subject matter jurisdiction of the court. See O'Toole v. Rogers, No. 09-P-535, 2010 WL 980432 at *1 (Mass. App. Ct. March 19, 2010) (despite interests of judicial economy, where the subject matter lies squarely within the jurisdiction of the Land Court such interdepartmental assignments to the Superior Court are not suitable); Crapser v. Bondsville Partners, Inc., No. 300634, 2006 WL 2237667; at *10 (Mass. Land Ct. Aug. 4, 2006) ("Plaintiffs' view that judicial economy would be served by this court hearing their claim for breach of fiduciary duty is not a ground for subject matter jurisdiction."); but see Possehl v. Ossino, 28 Mass. App. Ct. 918 , 919 (1989) ("Principles of finality and judicial economy to that degree supplant the doctrine that parties may not confer jurisdiction on a court which the court does not have.").
In this pre-foreclosure action, JBNC is requesting a declaration that the Estate is in default. This is not ancillary to any adverse claim involving a right, title, or interest in land. See generally Ritter v. Bergmann, 72 Mass. App. Ct. 296 , 299-300 (2008). Though the Estate may come forward at a later time to challenge the default or foreclosure procedings, this would not be duplicative to JBNC's present action regarding the statutory power of sale. Thus, it does not serve principles of judicial economy to decide this additional declaratory judgment claim in this proceeding where a lack of subject matier jurisdiction is apparent. To the contrary, allowing JBNC to seek a declaratory judgment that the mortgagor is in default and that it can foreclose pursuant to the statutory power of sale would permit an end-run around the nonjudicial foreclosure process set forth in G.L. c. 244, §§ 11-17C, and convert Massachusetts into a judicial foreclosure state.
For the foregoing reasons, the Plaintiff s Motion for Entry of Judgment and Order of Sale is ALLOWED IN PART AND DENIED IN PART. Judgment shall enter declaring that the Mortgage incorporates the statutory power of sale by reference.
[Note 1] James B. Nutter & Co. v. Estate of Murphy, 24 LCR 467 (2016); James B. Nutter & Co, v. Cassidy, No. 15 MISC 000458, 2016 WL 4091145 (Mass. Land Ct. Aug. 1, 2016); James B. Nutter & Co. v. Estate of Jamieson, No. 16 MISC 000053, 2016 WL 4091159 (Mass. Land Ct. Aug. l, 2016).