ROUNDPOINT MORGAGE SERVICING CORPORATION v. DIRT ROAD REALTY, LLC, TRUSTEES OF THE ROSEWOOD ESTATES CONDOMINIUM TRUST, THE PERSONAL REPRESENTATIVE OF THE ESTATE OF STEPHEN F. ZIEMBA, THE PERSONAL REPRESENTATIVE OF THE ESTATE OF JANE M. ZIEMBA, and PAMELA KATSOUNAKIS.

INTRODUCTION

In this action, plaintiff Roundpoint Mortgage Servicing Corporation ("Roundpoint") seeks to rescind the foreclosure sale of a condominium unit, Unit D-8 of the Rosewood Estates Condominium ("the Unit" and "the Condominium," respectively), ordered by the District Court Department of the Trial Court, Westfield Division, Docket No. 1444CV412, pursuant to G.L. c. 183A, § 6 ("the Foreclosure Judgment And Order," "the District Court," and "the District Court Action," respectively), which had the effect of wiping out its first mortgage on the Unit. Alternatively, Roundpoint asks this court to declare that, despite the foreclosure sale, Roundpoint's mortgage remains a valid first mortgage encumbering the Unit. For the reasons set forth below, this court finds that Roundpoint's claims are barred.

PROCEDURAL HISTORY

This action was commenced with the filing of a complaint on August 7, 2017, in which Roundpoint named as defendants, among others, the trustees of the Condominium and the purchaser at the foreclosure sale, Dirt Road Realty, LLC ("the LLC"). Through the remainder of 2017, the LLC, among others, filed a motion and a revised motion for summary judgment; Roundpoint, with leave of the court (Piper, J.), filed a first amended complaint and then a second amended complaint; Roundpoint filed a cross-motion for summary judgment; and, acting upon Roundpoint's Rule 56(f) motion to allow for discovery prior to responding to the LLC's motion for summary judgment, the court (Piper, J.) established a discovery deadline of March 11, 2018. On motion by Roundpoint, the discovery deadline was subsequently extended to June 8, 2018.

After the close of discovery, Roundpoint filed a motion for summary judgment and the LLC filed a second revised motion for summary judgment. While Roundpoint's second amended complaint asserted six claims for relief, [Note 1] the summary judgment motion only argued the claims set forth in Count III, asserting that the Condominium had a duty to provide notice of the sale directly to legal counsel for the first mortgagee despite no statutory requirement that such notice be given, and Count VI, asserting that a Condominium did, or should by extension of existing law, owe a fiduciary duty to junior lienholders to conduct a commercially reasonable sale. The LLC argued that the Foreclosure Judgment And Order, being an in rem proceeding, could not be vacated by a later brought independent action; that Roundpoint took its assignment of the mortgage subject to the Condominium's lien where the complaint in the District Court Action was timely recorded, indexed and cross-referenced to the mortgage; that the Condominium has no legal obligation to provide more notice than that required by statute to a mortgage assignee like Roundpoint; that G.L. c. 184, § 17, was not applicable to the case at bar; and that responsibility for Roundpoint's predicament lay with it and its legal counsel because of their failure to conduct a title examination before accepting the assignment of the mortgage.

This court (Piper, J.) held a hearing on the parties' cross-motions for summary judgment on September 25, 2018. At the conclusion of that hearing and with the assent of the parties, the court held this matter in abeyance pending the results of Roundpoint's anticipated motion in the District Court Action seeking relief from the Foreclosure Judgment And Order pursuant to Rule 60(b), Mass. R. Civ. P. That motion was filed in the District Court Action on or about October 19, 2018. It was opposed by the Condominium. On December 10, 2018, the District Court issued an order denying Roundpoint's Rule 60(b) motion as follows:

Motion Denied. The court considered this as a Motion for Relief from Judgment pursuant to M.R.C.P. 60(b). Ct. finds that the alleged misconduct of Mr. Serduck occurred in April of 2016, 1½ years after Judgment entered. Court also finds that the filing of this motion 3 years after judgment entered is an unreasonable delay. (This court makes no finding as to whether or not Mr. Serduck's conduct relative to the sale in 4/16 warrants relief in the Land Court case that is pending) See Owens v. Mukendi 448 Mass. 66 (2006)

At a subsequent status conference in this proceeding in which counsel for Roundpoint, the Condominiuim and the LLC participated, the parties agreed that this court (Roberts, J.) could rule on their pending summary judgment motions without further briefing or argument. This memorandum follows.

UNDISPUTED FACTS

The following facts established in the record and pertinent to the motions for summary judgment are undisputed or are deemed admitted.

1. Jane M. Ziemba and Stephen F. Ziemba (the "Ziembas") purchased the Unit by deed recorded in the Hampden County Registry of Deeds (the "Registry") on April 2, 2007 at Book 16599, Page 380 (Plaintiffs' Statement of Materials Facts, ¶ 1; Defendants' Statement of Materials Facts, ¶ 1; Exh. A to the Complaint [Note 2] ).

2. The Unit is a part of the Condominium, which is governed by the defendant Trustees of the Rosewood Estates Condominium Trust ("the Trust") (Exh. A to the Complaint).

3. On the same date, the Ziembas granted a mortgage to Morgan Stanley Credit Corporation ("Morgan Stanley"), which was recorded in the Registry at Book 16599, Page 402 (Plaintiff's Statement of Materials Facts, ¶ 3; Defendants' Statement of Material Facts, ¶ 2; Exh. C to the Complaint).

4. On April 30, 2012, the Condominium filed a complaint in the District Court, Docket No. 1244CV174, to foreclose a condominium lien for unpaid common expenses against the Unit (Plaintiff's Statement of Material Facts, ¶ 7; Exh. G to the Complaint).

5. On October 30, 2012, the Condominium filed a second complaint in the District Court, Docket No. 1244CV428, to foreclose a condominium lien for unpaid common expenses against the Unit (Plaintiff's Statement of Material Facts, ¶ 8; Exh. H to the Complaint).

6. On March 28, 2013, Morgan Stanley assigned the mortgage to PHH Mortgage Corporation ("PHH"). The assignment was recorded in the Registry on April 9, 2013 at Book 19766, Page 3 (Plaintiff's Statement of Materials Facts, ¶ 4; Defendants' Statement of Materials Facts, ¶ 4; Exh. D to the Complaint). [Note 3]

7. After accepting assignment of the mortgage, PHH, through its counsel Korde & Associates ("Korde"), sent a letter to the Condominium's attorney, Michael J. Serduck, Esq. ("Serduck"), requesting a statement of amounts due pursuant to G.L. c. 183, § 6(c). In this letter, Korde also requested that the Condominium send advance notice of any sale of the Unit [Note 4] (Plaintiff's Statement of Material Facts, ¶¶ 9-10; Affidavit of Kaleena Machado In Support Of Plaintiff's Motion For Summary Judgment ("Machado Aff."), Exh. 3).

8. PHH paid the outstanding common assessments, and Docket Nos. 1244CV174 and 1244CV428 were voluntarily dismissed (Plaintiff's Statement of Material Facts, ¶¶ 14, 17; Exh. J to the Complaint). [Note 5]

9. In September 2013, and again in May 2014, the Condominium filed further complaints in the District Court to foreclose liens against the Unit for unpaid common expenses, docketed as Nos. 1344CV330 and 1444CV160 (Plaintiff's Statement of Material Facts, ¶¶ 19, 27; Exh. K, M to the Complaint).

10. In response to each complaint, PHH again sent a letter requesting a statement of amounts due, and included the same language asking the Condominium to inform it in advance of any sale of the Unit (Plaintiff's Statement of Material Facts, ¶¶ 21, 29; Machado Aff., Exh. 9, 14).

11. Following the Condominium's confirmation of amounts due, PHH paid the outstanding expenses, and the Condominium voluntarily dismissed each action (Plaintiff's Statement of Material Facts, ¶¶ 22, 26, 33-34; Exh. L, N to the Complaint).

12. On December 29, 2014, the Condominium filed its fifth complaint in the District Court to foreclose a lien for unpaid common assessments, the above-referenced District Court Action, Docket No. 1444CV412 (Plaintiff's Statement of Material Facts, ¶ 36; Defendant's Statement of Material Facts, ¶ 10; Exh. O to the Complaint).

13. The complaint in the District Court Action named PHH as a party and was properly served on PHH. [Note 6] (Affidavit of Michael Pill Authenticating Public Records ("Pill Aff."), Exh. 10; Machado Aff., Exh. 23).

14. The complaint in the District Court Action was recorded in the Registry on the same day, at Book 20549, Page 376 (Plaintiff's Statement of Material Facts, ¶ 36; Defendants' Statement of Material Facts, ¶ 6; Exh. O to the Complaint).

15. The recorded complaint was cross-referenced in the Registry to the mortgage on the Property, and indexed under the name of "PHH Mortgage Corp." (Defendants' Statement of Material Facts, ¶¶ 7-8; Pill Aff., Exh. 6-7).

16. PHH did not file an answer or otherwise appear in the District Court Action (Pill Aff., Exh. 10).

17. Answers were filed in February and April, 2015 on behalf of defendants Executive Office Of Health And Human Services, Estate Recovery Unit, and Jane Ziemba, the record owner of the Unit (Pill Aff., Exh. 10)

18. On July 23, 2015, PHH was defaulted in the District Court Action (Pill Aff., Exh. 10).

19. On the same day, PHH assigned its mortgage on the Unit to Roundpoint. The assignment was recorded in the Registry some six weeks later, on September 4, 2015 at Book 20859, Page 422 (Plaintiff's Statement of Material Facts, ¶ 37; Defendants' Statement of Material Facts, ¶ 9; Exh. P to the Complaint).

20. Roundpoint did not conduct a title search or rundown prior to accepting the assignment of the mortgage (Supplemental Affidavit of Michael Pill Authenticating Documents ("Supp. Pill Aff.") ¶¶ 2-7, Exh. 4).

21. PHH never moved to substitute Roundpoint as a party in the foreclosure action, and Roundpoint never moved to intervene (Defendants' Statement of Material Facts, ¶¶ 16- 17; Pill Aff., Exh. 10).

22. Roundpoint did not send its name and mailing address to the Condominium pursuant toG.L. c. 183A, § 6(c) (Defendant's Statement of Material Facts, ¶ 22).

23. On September 23, 2015, the Condominium filed a motion for summary judgment and entry of judgment in the District Court Action (Pill Aff., Exh. 10).

24. On October 15, 2015, the District Court issued the Foreclosure Judgment and Order (Plaintiff's Statement of Material Facts, ¶ 38; Exh. Q to the Complaint).

25. The Foreclosure Judgment And Order authorized the Condominium to sell the Unit "pursuant to G.L. c. 254 § 5A free and clear of the mortgage of Defendant PHH Mortgage Corporation…" It also stated that the District Court "shall retain jurisdiction of this matter to settle any issues relating to the sale ordered in Count I including but not limited to disbursement of funds from the sale" (Exh. Q to the Complaint).

26. The Condominium published a Notice of Sale in the Westfield News on October 30, November 6, and November 13, 2015. The Condominium also sent a notice of sale to PHH directly at its address in Mt. Laurel, New Jersey, but did not send notice to PHH's counsel, Korde, with whom Serduck had previously communicated concerning the Condominium's prior lien actions against the Unit (Plaintiff's Statement of Material Facts, ¶ 60; Defendants' Statement of Material Facts ¶ 20; Machado Aff., Exh. 23).

27. On November 24, 2015, a public auction for the sale of the Unit took place, at which Jeffrey Gurney ("Gurney") was the successful bidder with a bid of $13,000. Gurney assigned his bid to the LLC (Plaintiff's Statement of Material Facts ¶¶ 62-64; Machado Aff., Exh. 23).

28. Pursuant to the Memorandum of Sale, the closing was to be held on December 15, 2015 at Serduck's office (Plaintiff's Statement of Material Facts ¶ 51; Machado Aff., Exh. 23).

29. Gurney is the President, Treasurer, Clerk, and Director of Atrium Properties, the entity which provides property management services to the Condominium (Plaintiff's Statement of Material Facts, ¶ 59).

30. On March 30, 2016, Roundpoint notified the Condominium that it intended to foreclose on its mortgage and conduct a sale of the Unit (Plaintiff's Statement of Material Facts, ¶ 40; Machado Aff. ¶ 40).

31. On April 6, 2016, the Condominium, through Serduck, informed Roundpoint that the Unit had already been sold pursuant to G.L. c. 254, § 5, and that any foreclosure sale Roundpoint attempted to conduct would be invalid (Plaintiff's Statement of Material Facts, ¶ 41; Exh. T to the Complaint).

32. On April 15, 2016, the Condominium conveyed the Unit to the LLC pursuant to a deed recorded in the Registry at Book 21141, Page 67 (Defendant's Statement of Material Facts, ¶ 19; Machado Aff., Exh. 24).

STANDARD OF REVIEW

Generally, summary judgment may be entered if the "pleadings, depositions, answers to interrogatories, and responses to requests for admission … together with the affidavits … show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Mass. R. Civ. P. 56(c). In viewing the factual record presented as part of the motion, the court draws "all logically permissible inferences" from the facts in favor of the non-moving party. Willitts v. Roman Catholic Archbishop of Boston, 411 Mass. 202 , 203 (1991). "Summary judgment is appropriate when, 'viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law.'" Regis College v. Town of Weston, 462 Mass. 280 , 284 (2012), quoting Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117 , 120 (1991).

DISCUSSION

Whatever the merits of Roundpoint's claims regarding lack of notice to it of the foreclosure sale or the Condominium's duty to conduct a commercially reasonable sale of the Unit, claims on which this court takes no position, at bottom, Roundpoint is asking this court to set aside another court's order. And, whatever other impediments may exist to that request, the in rem nature of a sale under G.L. c. 254 bars all the world from thereafter challenging the validity of the Foreclosure Judgment And Order issued pursuant to G.L. c. 183A, § 6. This includes Roundpoint's challenge in the present proceeding. Accordingly, summary judgment shall enter declaring that, on the undisputed facts and as a matter of law, Roundpoint is bound by the Foreclosure Judgment And Order, and the sale of the Unit pursuant to the Foreclosure Judgment And Order was free of Roundpoint's mortgage.

While G.L. c. 183A, § 6(b), makes a unit owner "personally liable for all sums assessed for his share of the common expenses," G.L. c. 183A, § 6(a), creates a lien to secure unpaid condominium common area assessments: "The organization of unit owners shall have a lien on a unit for any common expense assessment levied against that unit from the time the assessment becomes due." As noted in Residences at Cape Ann Heights Condo. Ass'n v. Halupowski, 83 Mass. App. Ct. 332 , 333 (2013), "[t]he Legislature has thus provided two routes by which a condominium association can recoup unpaid common expenses: an action in rem against the unit itself, or an action in personam against the unit owner."

The effect of an action in rem is to bind not just the parties, but the world. In Farrell v. O'Brien, 199 U.S. 89, 103 (1905), quoting In re Broderick's Will, 88 U.S. 503, 504 (1874) in the context of an action to set aside the probate of a will, the United States Supreme Court stated that the "succession of a deceased person's estate partakes, in some degree, of the nature of a proceeding in rem, in which all persons in the world who have any interest are deemed parties, and are concluded as upon res judicata by the decision of the court having jurisdiction." Similarly, in Old Dominion Copper Mining & Smelting Co. v. Bigelow, 203 Mass. 159 , 206 (1909), the Supreme Judicial Court stated that, "[e]xcept in proceedings in rem, there is no such thing known to the law as an adjudication of a cause of action, which can be availed of as res judicata by any others than the parties and their privies." And, more recently, in In Re Met-L-Wood Corp., 861 F.2d 1012, 1017 (7th Cir. 1988), the court observed that an action brought on behalf of nonparties to a bankruptcy proceeding was "not barred by res judicata. But it is barred. A proceeding under 363 is an in rem proceeding. It transfers property rights, and property rights are rights good against the world, not just against parties to a judgment or persons with notice of the proceeding." See also Restatement (Second) of Judgments, § 30 (1982) ("A valid and final judgment in an action based only on jurisdiction to determine interests in a thing: (1) is conclusive as to those interests with regard to all persons, if the judgment purports to have that effect (traditionally described as 'in rem') …").

General Laws c. 183A, § 6(c), sets forth the procedure by which the organization of unit owners may enforce, in rem, a lien against the unit. Of note to the instant controversy, the statute provides for notice of the amount of delinquency to be sent to the unit owner and to the first mortgagee, "provided, that the first mortgagee has informed the organization of unit owners of its name and mailing address." Id. The statute further provides that, thirty days prior to filing an action to enforce its lien, the organization of unit owners "shall send a notice stating its intention to file said action to the first mortgagee by certified and first class mail, provided that the first mortgagee has informed the organization of unit owners of its name and mailing address." Id.

Section 6(c) states that "a lien under this section shall be enforced in the manner provided in sections five and five A of chapter two hundred and fifty-four." Id. Pursuant to G.L. c. 254, § 5, a lien established under G.L. c. 183A, § 6,

shall be enforced by a civil action brought in the … district court in the judicial district where such land lies. The plaintiff shall bring his action in his own behalf and in behalf of all other persons in interest who shall become parties. An attested copy of the complaint, which shall contain a brief description of the property sufficient to identify it, and a statement of the amount due, shall be filed in the registry of deeds and recorded as provided in section nine within thirty days of the commencement of the action, or such lien shall be dissolved. All other parties in interest may appear and have their rights determined in such action, and at any time before entry of final judgment, upon the suggestion of any party in interest that any other person is or may be interest in the action, or of its own motion, the court may summon such person to appear in such cause on or before a day certain or be forever barred from any rights thereunder. The court may in its discretion provide for notice to absent parties in interest. The terms "party in interest" and "person in interest," as used in this chapter, shall include mortgages and attaching creditors.

As noted in Residences at Cape Ann Heights Condo. Ass'n, supra at 333, "[t]he outcome of such a suit, if successful, is an order for the sale of the unit, subject to the procedures outlined in G.L. c. 254, § 5A."

General Laws c. 254, § 5A, provides that, once the amount of the lien has been established by the court, "the court shall enter an order authorizing the sale of the real estate to satisfy such lien." The statute further states that "[t]he lienor may do all acts authorized by such order, but no sale pursuant to such order shall be effectual unless, previous to such sale, notice thereof has been published once in each of three successive weeks, the first publication to appear not less than twenty-one days before the date of such sale …" Id. The statute sets forth the form of the notice by publication and further states that notice of sale "in the above form, published in accordance with the provisions of this section, together with such other further notice, if any, required by the court, shall be deemed a sufficient notice of the sale and the premises shall be deemed to have been sold, and the deed thereunder shall convey the premises, subject to," among other things, "first mortgages recorded prior to the recording of the complaint." Id. However, the statute instead provides for a sale free of a first mortgage or any right of redemption "if as of the date of such sale there are unpaid common expense assessments, costs, or reasonable attorney's fees the lien for which is given priority over said first mortgages in subsection (c) of section six of chapter one hundred and eighty-three A. Any sale pursuant to this section shall convey the premises free of any right of redemption." Id.

In the instant action, the mortgagee of record at the time the complaint was filed in the District Court Action was named as a party and served. The complaint was properly recorded in the Registry. The resulting lien for unpaid common expenses was one which took priority over the first mortgage pursuant to G.L. c. 183A, § 6(c). The Foreclosure Judgment And Order issued after hearing by the District Court on October 15, 2015 stated in pertinent part (1) that "[p]laintiffs are hereby authorized to sell said unit pursuant to G.L. c. 254 § 5A free and clear of the mortgage of Defendant PHH Mortgage Corporation … and the lien of Defendant Executive Office of Human Services, Estate Recovery Unit …; and (2) that "[t]he Court shall retain jurisdiction of this matter to settle any issues relating to the sale ordered in Count I including (but not limited to) disbursement of funds from the sale. The proceeds of sale (after approval by the Court) shall be paid first to the Plaintiff and then to Defendant Estate Recovery Unit and any balance thereafter to Defendant PHH Mortgage."

Having issued pursuant to the procedures set forth in G.L. c. 183A, § 6(a) and 6(c), the Foreclosure Judgment And Order was a judgment in rem. Roundpoint is bound by it. The relief sought in its complaint and in its summary judgment materials—rescission of the foreclosure sale, a declaration that the foreclosure deed is null and void, the return the Unit to its pre-foreclosure status or, alternatively, a declaration that the Foreclosure Judgment And Order is not valid against Roundpoint, that the Unit was sold subject to Roundpoint's mortgage, and that Roundpoint's mortgage is a valid first mortgage on the Unit—directly contradicts the relief awarded by the Foreclosure Judgment And Order. Roundpoint thus seeks to relitigate claims which have already been decided. It is bound by the Court's judgment thereon, and is barred from bringing its present claims. [Note 7]

While this result may seem harsh, Roundpoint bears some responsibility for its current dilemma: it is undisputed that Roundpoint did not review the title to the Unit before accepting the assignment of the mortgage on July 23, 2015, which review would have revealed the recorded complaint in the District Court Action; did not avail itself of the notice provisions of G.L. c. 183A by providing the Condominium with its name and mailing address after accepting the assignment of the mortgage or at any time prior to the public auction of the Unit on November 24, 2015; and did not seek relief from the Foreclosure Judgment And Order in the District Court until some three years later, in October, 2018, when it filed its Rule 60(b) motion for relief from judgment.

CONCLUSION

Based on the undisputed facts and for the foregoing reasons, the Plaintiff's Motion for Summary Judgment is DENIED and the Second Revised Motion For Summary Judgment By Defendant Dirt Road Realty, LLC, in which the Condominium joined, is ALLOWED. Judgment shall enter dismissing Counts II, III, IV, V and VI of the Complaint with prejudice. On Count I on the Complaint and on the counterclaim for declaratory relief asserted by the Condominium, judgment shall enter declaring that Roundpoint is bound by the Foreclosure Judgment And Order and that the sale of the Unit pursuant to the Foreclosure Judgment And Order was free of Roundpoint's mortgage.