MARK A. LaRACE AND TAMMY L. LaRACE v. WELLS FARGO BANK, N.A., as TRUSTEE for ABFC 2005-OPT1 TRUST, ABFC ASSET-BACKED CERTIFICATES, SERIES 2005-OPT1 and the CERTIFICATE HOLDERS THEREOF, ET AL.

On May 17, 2017, I granted summary judgment dismissing the plaintiffs' multiple-count complaint making claims with respect to the validity of a mortgage on their property. I noted that two of the counts, for violation of G. L. c. 93A and for slander of title (counts IV and V) appeared to be virtually identical to two of three counts in an earlier Superior Court action between the same parties. The plaintiffs' claims in that case had been dismissed on statute of limitations grounds, and the dismissal had been affirmed by the Appeals Court. I ordered plaintiffs' counsel, Glenn F. Russell, to show cause why he should not be sanctioned for violation of Mass. R. Civ. P. 11. Attorney Russell, represented by his own counsel, appeared at a hearing before me on June 13, 2019, and filed a response to the order to show cause. Following the hearing, I took the matter under advisement. For the reasons stated below, I find and rule that Attorney Russell violated Rule 11 and is subject to appropriate sanctions.

FACTS

The facts material to the present matter are not in dispute. On January 4, 2014, in the third of four actions involving the plaintiffs' property, Attorney Russell filed on behalf of the plaintiffs, Mark LaRace and Tammy LaRace, a complaint in Superior Court in which the LaRaces sued the present defendant Wells Fargo Bank, N.A. ("Wells Fargo") and its loan servicer, Ocwen Loan Servicing, LLC, ("Ocwen"), seeking damages for wrongful foreclosure, violation of G. L. c. 93A, and slander of title. [Note 1] (the "Superior Court action") The LaRaces' three-count complaint was dismissed by the Superior Court on statute of limitations grounds. Attorney Russell appealed the dismissal on behalf of the LaRaces, and the dismissal was affirmed by the Appeals Court on February 5, 2018. LaRace v. Wells Fargo Bank, N.A., Trustee, 92 Mass. App. Ct. 1126 (2018) (Rule 1:28 Decision).

Following the February, 2018 affirmance of the dismissal of the Superior Court complaint, the LaRaces, again represented by Attorney Russell, filed the present complaint on June 29, 2018, making a series of claims relating to the invalidity of the assignments through which Wells Fargo claimed ownership of the mortgage on the Property, and also making G. L. c. 93A and slander of title claims. The G. L. c. 93A and slander of title claims were based on assertions that the LaRaces were damaged by Wells Fargo and Ocwen having proceeded with the original foreclosure in 2008, later determined to be invalid by the SJC in U.S. Bank National Association v. Ibanez, 458 Mass. 637 (2011). ("Ibanez") As I noted in the summary judgment decision, the counts in the present action asserting claims of violation of G. L. c. 93A and slander of title are nearly verbatim copies of the claims raised and dismissed in the Superior Court action. [Note 2] In the summary judgment decision, having determined that the G. L. c. 93A and slander of title counts were, for res judicata purposes, the same as the two counts dismissed in the Superior Court action, I dismissed those counts with prejudice.

DISCUSSION

Mass. R. Civ. P. 11 provides in relevant part as follows: "The signature of an attorney to a pleading constitutes a certificate by him that he has read the pleading; that to the best of his knowledge, information, and belief there is a good ground to support it; and that it is not interposed for delay... For a wilful violation of this rule an attorney may be subjected to appropriate disciplinary action." "'Good ground' requires that the pleadings be based on 'reasonable inquiry and an absence of bad faith.'" Doe v. Nutter, McClennan & Fish, 41 Mass. App. Ct. 137 , 142 (1996), quoting in part Bird v. Bird, 24 Mass. App. Ct. 362 , 368 (1987). It is within the proper exercise of the trial judge's discretion, "applying his sense of the entire case," to decide whether there has been "bad faith misuse of a court paper which could bring down sanctions." Id. at 369.

In my show cause order, I ordered counsel for the LaRaces to show cause why he should not be sanctioned for re-asserting the already-litigated Superior Court claims, and why he should not be sanctioned for failing to disclose to the court the existence of the earlier claims. For the reasons stated below, I find and rule that counsel did not fail to disclose the earlier claims, but he did violate Rule 11 by re-asserting the G. L. c. 93A and slander of title claims in the present action.

Failure to Disclose.

In the show cause order, I required counsel to show cause why he should not be sanctioned for failing to disclose to the court that the G. L. c. 93A and slander of title counts in the present action had been the subject of previous litigation. This order was based on the fact that at the case management conference, at which these counts were discussed, but only with respect to the court's subject matter jurisdiction over them, counsel did not disclose the previous litigation. However, counsel has pointed out in response to the show cause order, that the Superior Court action was disclosed by reference to it in paragraph 85 of the present complaint, and by inclusion of a copy of the Superior Court complaint as part of Exhibit W to the present complaint. I note that an oblique reference to "litigation solely related to damages" in paragraph 85 of a 293 paragraph complaint is hardly a forthright disclosure of the identical claims in the previous action. I further note that burying a copy of the Superior Court complaint as the fifth of five other documents collectively labelled as "Exhibit W," and following hundreds of other pages of un-indexed exhibits, without mentioning their significance at a case management conference, is also, at best, a technical disclosure.

Like counsel's verbose writing style, his over-inclusion of hundreds of exhibits appears intended more to obfuscate than to elucidate the claims in his complaint. Nevertheless, as the Superior Court complaint was at least technically disclosed, it would not be appropriate to base a finding of violation of Rule 11 on a failure to disclose the earlier complaint or the claims. In this circumstance, counsel may have violated the spirit of Rule 11, but he has avoided a violation of the letter of the rule.

Identity of the Claims in the Superior Court Action and the Present Action

I have already determined, in the summary judgment decision, that Counts IV and V in the present case, making claims pursuant to G. L. c/ 93A and for slander of title, are identical claims for res judicata purposes to the claims dismissed in the Superior Court action. I have also pointed out that they are not just the same claims, but that they are nearly verbatim copies of the earlier claims, including the same misspellings. As I pointed out in the order to show cause, the common thread running through the claims in both of these actions, as well as in the try title action dismissed by the United States District Court, (the second action involving these parties) is the LaRaces' claim that Wells Fargo did not hold the mortgage to the LaRaces' property because of claimed defects in the chain of title of assignments of the mortgage. In the Superior Court action, the LaRaces based their G. L. c. 93A claim and their slander of title claims on this failure of Wells Fargo to hold the mortgage at the time of the 2008 foreclosure of their property, later ruled invalid in the Ibanez decision.

Attorney Russell argues that he did not repeat these claims in the present action, notwithstanding the nearly verbatim repetition of almost every paragraph from two counts of the Superior Court complaint. Rather, he argues that in the present action, the G. L. c. 93A count and the slander of title count purported to make claims for damages based on Wells Fargo's intended 2018 foreclosure, and not for damages resulting from the 2008 foreclosure. However, while the new complaint may have added some factual allegations relating to Wells Fargo's intended 2018 foreclosure, both counts IV and V of the present complaint plainly make claims for damages based on facts relating to the 2008 foreclosure, and thus are an attempt to re-litigate claims already fully adjudicated in the Superior Court action.

Even a cursory examination of the present complaint belies counsel's argument that the present complaint does not repeat the fully adjudicated claims with respect to the 2008 foreclosure:

Paragraph 215 of the present complaint: "Defendants have violated G. L. c. 93A and its implementing regulations by making intentionally unfair and deceptive statements related to the assertion of being a proper party to act under statute, at the time of the publication of June 2007 mandatory publication…"

Paragraph 218: "Defendants have violated G. L. c. 93A and its implementing regulations by Defendants(s) intentional, unfair, and deceptive; assertions to Plaintiffs (and the world), that it/they were and are the unquestioned defeasible fee title holder to the Premises, at the time of the void purported June 2007 publication(s) of foreclosure auction…" (emphasis and grammatical errors in original)

Paragraph 219: "Defendants have violated G. L. c. 93A and its implementing regulations by Defendants(s) intentional, unfair, and deceptive; assertions to Plaintiffs (and the world), that it was the unquestioned fee title holder to the Premises, at the completion of the purported July 05, 2008 void foreclosure auction sale."

Paragraph 220: "Defendants have further violated G. L. c. 93A and its implementing regulations by Defendants(s) repeated intentionally deceptive asservations [sic] to the Land Court, Appeals Court, and SJC that it was the unquestioned fee title holder to the Premises, at the completion of the purported July 05, 2008 foreclosure auction sale, and which foreclosure deed remains encumbering the title to Plaintiffs' real property."

Paragraph 228: "Defendants have further violated G. L. c. 93A and its implementing regulations by Defendants(s) intentionally failing to fully research the historical ratio decidendi related to the purported 2008 exercise of the power of sale under statute…"

Paragraph 232: "Defendants have violated G. L. c. 93A and its implementing regulations by Defendants(s) Defendants(s) [sic] intentional and continued wrongful possession, dominion, and/or control over the Premises from the time the Plaintiffs' [sic] vacated the Premises in June of 2007, until Plaintiffs returned to the same in January 2010, solely upon their own initiative." (emphasis in original)

Paragraph 237: "Plaintiffs further relied upon Defendant(s) deceptive assertions to their detriment where Plaintiffs were thereafter unnecessarily forced to hire present counsel to defend the Plaintiffs' right(s) in Defendant(s) 2008 wrongful action to "Quiet Title" to the Premises, in the Land Court."

Paragraph 249: "(a) Publication of false statement. Here it is unquestioned that the Defendant has caused a false publication by way of a legally invalid 'assignment of mortgage', 'foreclosure deed' and 'certificate of entry' to remain publicly recorded upon the Hampden County Registry of Deeds where Defendant(s) remain subject to the Law of the Case as stated in Ibanez. Defendant has also recorded two legally inoperative documents upon the title to the Plaintiffs' real property which wrongfully assert Defendant's defeasible fee interest in said title."

Paragraph 250: "(b) Harm to Plaintiff. It is unquestioned that Defendant(s) [sic] publication of the false assertion that it was the current defeasible fee title holder of the Plaintiff's residence, and conducted a proper auction under statute, caused significant financial, and devastating emotional harm to the Plaintiffs, through their reliance upon these materially false asservations." [sic]

The paragraphs quoted above are not only verbatim copies of paragraphs in the Superior Court complaint, but they all constitute explicit assertions that the LaRaces have suffered damages as a result of Wells Fargo's improper publication of notice of the 2008 foreclosure sale, its conduct of the 2008 foreclosure auction, and its recording of the foreclosure deed resulting from the 2008 foreclosure auction. These are the claims that the Superior Court and the Appeals Court have already ruled are barred by the statute of limitations. The allegations in the quoted paragraphs do not even arguably make claims with respect to the 2018 foreclosure. These paragraphs explicitly refer to and make claims of damages resulting from Wells Fargo's alleged improper conduct in 2007 and 2008. Paragraphs 249 and 250 rely on Wells Fargo's alleged tortious recording of a foreclosure deed, which can only mean the foreclosure deed resulting from the 2008 foreclosure auction. At the time the present complaint was filed in 2018, there had been no other foreclosure deed, as the 2018 foreclosure auction had not yet taken place.

Other paragraphs in Counts IV and V also repeat the LaRaces' claims made in the earlier Superior Court action, but the paragraphs quoted above make it explicitly clear that Attorney Russell was attempting in the present action to recover damages for his clients on the basis of claims that he knew had been dismissed by the Superior Court, and that had been affirmed as properly dismissed by the Appeals Court. The same counsel knowingly asserting identical claims against the same defendants after a full and final adjudication had resulted in the final dismissal of those claims is a violation of Rule 11. The intentional re-assertion of claims that had already been fully adjudicated constituted a violation of the requirement that an attorney, by signing his name to a pleading, certifies that he believes there is "a good ground to support it…" Mr. Russell, whom this court has witnessed repeatedly make the same legally dubious claims, but on behalf of different clients in different actions, crossed a line when he made the same claims for a second time on behalf of the same clients against the same defendants.

Sanctions

I find and rule that Attorney Russell did not have a subjective good faith belief that Counts IV and V of the complaint in the present action were properly asserted, as he was the attorney of record for the LaRaces in the Superior Court action, he represented them both in the Superior Court and at the Appeals Court on appeal of the dismissal of the Superior Court action, and as he intentionally re-asserted in the present action claims, largely verbatim, that the Appeals Court had upheld the dismissal of only a few months earlier. Attorney Russell has not offered any facts, by affidavit or otherwise, that would lead me to conclude other than that he has acted with an absence of good faith in asserting the present claims. See City of Worcester, v. AME Realty Corp., 77 Mass. App. Ct. 64 , 71-72 (2010).

Upon a finding of a violation of Mass. R. Civ. P. 11, a court is authorized to impose an award of attorneys' fees against counsel committing the violation. Tilman v. Brink, 74 Mass. 845 , 851 (2009). See also, Van Christo Advertising, Inc v. M/A-COM/LCS, 426 Mass. 410 , 416 (1998) (Rule 11 authorizes the court "to impose attorney's fees and costs where an attorney has failed to show a subjective good faith belief that the pleading was supported in both fact and law.").

Accordingly, the court hereby ORDERS Attorney Russell to pay attorneys' fees, in an amount to be determined by the court, to the defendants Wells Fargo and Ocwen.

The court further ORDERS the defendants Wells Fargo and Ocwen to submit affidavits supported by contemporaneous detailed billing records concerning attorneys' fees incurred in responding to Counts IV and V of the complaint in the present action, with every effort to be made, to the extent possible, to isolate time spent with respect to those two counts of the complaint. Such affidavits and any supporting material are to be filed no later than July 10, 2019, and any opposition or response is to be filed no later than July 17, 2019. The court will thereafter act on the papers submitted without further hearing, unless otherwise ordered.