WELLS FARGO BANK, N.A. v. JOHN J. GREEN, JR., PERSONAL REPRESENTATIVE OF THE ESTATE OF MILLICENT R. LINDQUIST and COMMONWEALTH OF MASSACHUSETTS EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES

INTRODUCTION

Plaintiff Wells Fargo Bank, N.A. ("the Bank") commenced this action on November 22, 2017 with the filing of a complaint in the Superior Court Department of the Trial Court. The matter was subsequently transferred to this court on January 11, 2019 pursuant to G.L. c. 212, §26A. Thereafter, the Bank was granted leave to file its First Amended Complaint For Declaratory Judgment ("the Amended Complaint") by order dated February 19, 2019. In the Amended Complaint, the Bank asserted claims against the defendants John J. Green, Jr., as personal representative of the Estate of Millicent R. Lindquist ("the PR" and "the Estate," respectively), and the Commonwealth of Massachusetts Executive Office of Health and Human Services ("EOHHS"), all seeking to address the alleged error in a mortgage granted by Robert A. Lindquist and Millicent R. Lindquist ("Mr. Lindquist" and "Ms. Lindquist," or, collectively, "the Lindquists") on January 10, 2010 ("the 2010 Mortgage"). The 2010 Mortgage provided a metes and bounds description, not of the Lindquists' home at 1532 North Brookfield Road, Oakham, Massachusetts and designated as Lot 110 by the Town of Oakham ("Lot 110" and "the Town," respectively), but adjacent vacant land also owned by the Lindquists and designated by the Town as Lot 109 ("Lot 109").

The PR was named as a defendant because Mr. Lindquist died in 2016 and his interest in Lot 110 and Lot 109 passed to Ms. Lindquist as the survivor, who died on October 27, 2018. EOHHS was named because it recorded two MassHealth liens against all property in Worcester County owned by Ms. Lindquist, including Lot 110 and Lot 109, on October 17, 2017 and December 26, 2017. The Bank asserted claims (1) to interpret the 2010 Mortgage as encumbering Lot 110 (Count I), (2) to reform the 2010 Mortgage so that it encumbers Lot 110 (Count II), (3) alternatively, to equitably subrogate the Bank to the position of the prior mortgagee whose mortgage on Lot 110 had been discharged by the loan that the 2010 Mortgage secured (Count III), (4) alternatively, to interpret the 2010 Mortgage as encumbering Lot 109 (designated Count V), (5) to require that EOHHS enforce its liens first against the unencumbered property, whichever parcel that is determined to be (designated Count VI), and (6) to find that the Estate would be unjustly enriched if the 2010 Mortgage is not found to encumber Lot 110 (designated Count VII).

The PR filed an answer and counterclaims on March 18, 2019 and then an amended answer and counterclaims on March 25, 2019. While not designated as such, it appears that the PR seeks a declaratory judgment as to the rights of the parties with respect to Lots 110 and 109. EOHHS filed its answer and counterclaim on March 19, 2019. The superior court having previously dismissed EOHHS' claim that it was entitled to recover on its lien upon the reformation of a mortgage, this court struck those claims from EOHHS' counterclaim. What remains is EOHHS' request for a declaratory judgment that it is an intervening lienholder without notice with priority over the Bank with respect to both Lot 110 and Lot 109 or, alternatively, that it is in second position behind the Bank and entitled to any surplus.

On or about October 18, 2019, the Bank filed motions for summary judgment against EOHHS and the PR. With respect to EOHHS, the Bank argues that EOHHS' lien became invalid upon Ms. Lindquist's death. Alternatively, the Bank contends (1) that EOHHS' lien, if still valid, is in second position behind the 2010 Mortgage as reformed because of EOHHS' actual or constructive notice of the 2010 Mortgage, (2) that the Bank is entitled to be equitably subrogated to the position of a prior mortgagee with the result that it has priority over the EOHHS liens, and (3) that EOHHS should be required to pursue the Estate's unencumbered assets first. With respect to the PR, the Bank argues that, on the undisputed facts, it has established that it is entitled to reformation of the 2010 Mortgage under applicable law or, alternatively, that it is entitled to be equitably subrogated to the position of the prior mortgagee. EOHHS both opposed the Bank's motion against it and filed its own cross-motion for summary judgment and the PR opposed the Bank's motion against it.

A hearing on the motions was held on March 10, 2020. For the reasons set forth below, the Bank's motion for summary judgment against EOHHS is allowed in part and denied in part, EOHHS' cross-motion is denied, and the Bank's motion against the PR is denied.

THE UNDISPUTED FACTS

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

1. By deed dated October 6, 1967 and recorded in the Worcester Registry of Deeds ("the Registry") at Book 4796, Page 435 ("the 1967 Deed"), Walter A. Woodis conveyed two tracts of land in the Town to the Lindquists as tenants by the entirety, Tract 1 being Lot 110 and Tract 2 being a vacant lot located across Brookfield Road from Lot 110 and designated as Lot 25 by the Town ("Lot 25"). Appendix Of Exhibits In Support Of Wells Fargo Bank, N.A.'s Motions For Summary Judgment ("Bank App.") at Ex. 1.C.; EOHHS' Response To Statement Of Material Facts By Wells Fargo Bank, N.A. and EOHHS' Additional Statement Of Material Facts ("EOHHS ASMF") at ¶¶ 7-8.

2. On the same date, the Lindquists granted a mortgage on Lot 110 and Lot 25 to Ware Savings Bank to secure the payment of $6,250, which mortgage was recorded in the Registry at Book 4796, Page 441. A marginal notation reflects that this mortgage was discharged by document recorded in the Registry at Book 10976, Page 222. Affidavit Of Michael Pill, Esq., Co-Counsel For Defendant John J. Green, Esq., Personal Representative Of Estate Of Millicent Lindquist, sworn to on December 6, 2019 ("Pill Aff."), Ex. 3.

3. On May 29, 1985, the Lindquists granted a mortgage on Lot 110 and Lot 25 to The First National Bank Of Boston to secure the payment of $42,000, which mortgage referenced the 1967 Deed, recited the metes and bounds description therefrom, and was recorded in the Registry at Book 8728, Page 263. A marginal notation reflects that this mortgage was discharged by document recorded at Book 21296, Page 282. Pill Aff. Ex. 3.

4. By deed dated June 20, 1985 and recorded in the Registry at Book 8768, Page 79 ("the 1985 Deed"), Aubrey D. and Dorothea M. March deeded Lot 109 to the Lindquists as tenants by the entirety for recited consideration of $40,000. Bank App. at Ex. 1.D.; EOHHS ASMF ¶ 9.

5. The assessors' records for Lot 109 describe it having the following map reference: M: 4090 B: 0000 L: 01090. Bank App. Ex. 1.L.

6. On February 25, 1999, the Lindquists granted a mortgage on Lot 109 to Aames Funding Corporation d/b/a Aames Home Loan to secure the payment of $73,000, which mortgage recited the metes and bounds description from the 1985 Deed, and was recorded in the Registry at Book 21104, Page 244. Pill Aff. Ex. 3.

7. On May 21, 2002, the Lindquists granted a mortgage on Lot 110 and Lot 25 to Homecomings Financial Network to secure the payment of $77,000, which mortgage referenced the 1967 Deed, recited the metes and bounds description therefrom, and was recorded in the Registry at Book 26628, Page 343. The property address is stated to be 1532 North Brookfield Road. Pill Aff. Ex. 3.

8. On September 9, 2003, the Lindquists granted a mortgage on Lot 109, identified by reference to the 1985 Deed, to Fleet National Bank to secure a revolving loan agreement in the maximum principal sum of $10,000, which mortgage was recorded in the Registry at Book 32096, Page 232. The property address is stated to be 1532 North Brookfield Road. Pill Aff. Ex. 3.

9. On November 23, 2004, the Lindquists granted a mortgage on Lot 109, identified by reference to the 1985 Deed, to Fleet National Bank to secure a home equity line of credit agreement in the maximum principal amount of $20,000, which mortgage was recorded in the Registry at Book 35375, Page 366. The property address is stated to be 1532 North Brookfield Road. Pill Aff. Ex. 3.

10. On August 31, 2005, the Lindquists granted a mortgage to the Town on Lot 110 and Lot 25, identified by reference to the 1967 Deed and reciting the metes and bounds description therefrom, to secure the payment of $8,125, which mortgage was recorded in the Registry at Book 37412, Page 209. The property address is stated to be 1532 North Brookfield Road. Pill Aff. Ex. 3.

11. On November 19, 2005, the Lindquists granted a mortgage on Lot 109, identified by reference to the 1985 Deed, to Bank of America, N.A. to secure a line of credit in the maximum amount of $30,000, which mortgage was recorded at the Registry at Book 37970, Page 304. The property address is stated to be 1532 North Brookfield Road. Pill Aff. Ex. 3.

12. On October 10, 2006, the Lindquists granted a mortgage on Lot 110 and Lot 25, identified by reference to the 1967 Deed, to Shamrock Financial Corporation to secure the payment of $112,000, which mortgage was recorded in the Registry at Book 39935, Page 243. The property address is stated to be 1532 North Brookfield Road. Pill Aff. Ex. 3.

13. On October 25, 2007, the Lindquists granted a mortgage on Lot 110 and Lot 25, identified by reference to the 1967 Deed and reciting the metes and bounds description therefrom, to Shamrock Financial Corporation to secure the payment of $129,500 ("the 2007 Mortgage"), which mortgage was recorded in the Registry at Book 42006, Page 360. Bank App. Ex. 1.B.

14. The 2007 Mortgage recites the address of the security as 1532 North Brookfield Road and attaches a legal description as Exhibit A that is taken from the 1967 Deed. Id.

15. The 2010 Mortgage, given to secure a loan in the amount of $137,500 by Carnegie Mortgage LLC, was recorded in the Registry at Book 45426, Page 55. Bank App. Ex. 1.A.

16. The 2010 Mortgage recites the address of the security as 1532 North Brookfield Road, "A.P.N. 4090000001100," and attaches a legal description as Exhibit A that also recites the address as 1532 North Brookfield Road, references "tax ID # 4090 000 01100," but provides the metes and bounds description of Lot 109 from the 1985 Deed and references the 1985 Deed with its recording information as the description's source. Bank App. Ex. 1.A.

17. The loan file for the 2010 Mortgage contains the following documents:

a. A Uniform Residential Appraisal Report signed by the appraiser on January 13, 2010 that states that the property address is 1532 North Brookfield Road, that the legal description is "Book 4796, Page 4335," that the assessor's parcel number is Map 4090, Lot 01100, that it is owner-occupied with a cape-style house built in 1920 with an effective age of 20 years, valued at $135,000 based on comparable sales, Bank App. Ex. 2.C.;

b. A Uniform Residential Loan Application signed by the Lindquists on January 24, 2010 that states that the amount of the loan is $137,500; states that the subject property is 1532 North Brookfield Road, consisting of one unit, that is encumbered by a lien in the amount of $126,976; lists two properties on the schedule of real estate: 1532 North Brookfield Road, with a market value of $190,500 and mortgages and liens totaling $126,976, and another property located at 88 East Hill Road with a market value of $166,200 and no liens; and states that the Lindquists intend to occupy the property as their primary residence, Bank App. Ex. 2.E.;

c. An Occupancy And Financial Status Affidavit signed under oath by the Lindquists on January 24, 2010 in which they state that they "either currently occup[y] and use[] the Property as the Borrower's principal residence, or Borrower will occupy and use the Property as Borrower's principal residence within 60 days after Borrower signs the Security Instrument," Bank App. Ex. 2.F.;

d. A Home Valuation Code Of Conduct (HVCC) Appraisal Acknowledgement signed by the Lindquists on January 24, 2010 in which they acknowledge that, if they proceed with the closing, their signatures on the loan documents will acknowledge either that they received the appraisal report at least three business days before the closing or that they previously waived their right to review the appraisal report at least three business days prior to the closing, Bank App. Ex. 2.G.;

e. A HUD Settlement Statement in which the property location is stated to be 1532 North Brookfield Road and a payoff to Bank of America in the amount of $127,088.76 is reflected, Bank Ex. 2.H.;

f. A Note dated January 24, 2010 and signed by the Lindquists identifying the property address as 1532 North Brookfield Road and providing for notice to the Lindquists at that address; and

g. A Mortgage Assistance Application signed by Ms. Lindquist and dated October 28, 2016, in which Ms. Lindquist stated that her property was her primary residence and that it had the same address as her mailing address: 1532 North Brookfield Road. Bank App. Ex. 2.K.

18. The closing file for the 2010 Mortgage, maintained by Alan H. Segal, Esq. since the 2010 closing, contains the following documents:

a. The Uniform Underwriting and Transmittal Summary, signed by the Lindquists, which states that the property address is 1532 North Brookfield Road, and that it is their primary residence, Bank App. Ex. 3.A.; b. An Owner's Affidavit, executed by the Lindquists under oath on January 24, 2010, which states, among other things, that they are the owners of and reside at 1532 North Brookfield Road, and that they executed the affidavit for the express purpose of inducing the title insurance company to insure the title to 1532 North Brookfield Road, Bank App. Ex. 3.B.; and

c. A Tax Record Information Sheet that states that the borrowers are the Lindquists, that the loan is a refinance, that the property address is 1532 North Brookfield Road, and that the parcel/property id/TMS # is 4090000001100. Bank App. Ex. 3.D.

19. A discharge of the 2007 Mortgage, dated February 1, 2010, was recorded in the Registry at Book 45458, Page 305. Bank App. ¶ 1.E. and Ex. 1.E.

20. The 2010 Mortgage was subsequently assigned by Mortgage Electronic Registration Systems, Inc., as nominee for Carnegie Mortgage Limited Liability Company, to the Bank, by assignment dated July 30, 2012 and recorded in the Registry at Book 49378, Page 259. Bank App. Ex. 1.F.

21. By letter dated October 16, 2013, Emily S. Starr, Esq. ("Ms. Starr"), who then represented Ms. Lindquist with respect to preparing MassHealth applications and estate planning, submitted a response to certain verification requests made by MassHealth regarding Mr. Lindquist, including information that the real estate at 1532 North Brookfield Road was refinanced on January 24, 2010 and the funds applied to pay off a former loan. Bank App. Ex. 4.A.

22. Mr. Lindquist died on July 18, 2016. Statement Of Material Facts By Wells Fargo Bank, N.A. In Support Of Motion For Summary Judgment Against John J. Green, Jr., Personal Representative Of The Estate Of Millicent R. Lindquist ("Bank SOMF Re PR") ¶ 4.

23. By letter dated June 13, 2017, Ms. Starr responded on behalf of Ms. Lindquist to a MassHealth denial notice and verification request, including information regarding "three parcels of property on North Brookfield Road. Land adjacent to the home that is subject to a mortgage (#109), the home (1532 North Brookfield Road, Oakham) which is the personal residence (#110), and land across the street (#25). See the enclosed assessor's map and deeds." Bank App. Ex 4.B.

24. In her June 13, 2017 letter, Ms. Starr also reported that, prior to the representation made on "Supplement A," Ms. Lindquist did in fact intend to return home to Lot 110 and included an "Amendment To MassHealth application re Intent to Return Home." Id.

25. On October 18, 2017, EOHHS recorded a MassHealth lien "against all property and rights to all property in Worcester County, including the property more fully described below," standing in the name of Millicent R. Lindquist, and more specifically referencing 1532 North Brookfield Road and the recording information for the 1967 Deed. Bank App. Ex. 1.G.

26. EOHHS did not review the title to the property prior to recording its lien, did not order or receive any title examination of the property prior to recording its lien, and had no knowledge or information regarding any mortgages on the real estate owned by Ms. Lindquist. Bank App. Ex. 12.

27. The Bank commenced the present action in the Worcester County Superior Court on November 22, 2017, Wells Fargo Bank, N.A. v. Millicent Lindquist and Executive Office Of Human Services (MassHealth), Civil Action No. 1785CV01888 (the "2017 Superior Court Action"). Response Of Defendant John J. Green, Jr., Esq., Personal Representative Of The Estate Of Millicent R. Lindquist ("Lindquist Estate") To Plaintiff Wells Fargo's Statement Of Material Facts, With Additional Material Facts ("PR SOMF"), ¶ 9; Pill Aff. Ex. 2.

28. EOHHS was not served with process in the 2017 Superior Court Action until December 8, 2017. EOHHS ASMF ¶ 51.

29. On December 26, 2017, EOHHS recorded a MassHealth lien "against all property and rights to all property in Worcester County, including the property more fully described below," standing in the name of Millicent R. Lindquist, and more specifically referencing North Brookfield Road, with no street number, and the recording information for the 1985 Deed. Bank App. Ex. 1.H.

30. Ms. Lindquist died on October 27, 2018. Bank SOMF Re PR ¶ 5.

31. The Bank filed suit against the PR on October 23, 2019 in Worcester County Superior Court (Civil Action No. 19CV1550C) to collect on the promissory note secured by the 2010 Mortgage. PR SOMF ¶ 6; Pill Aff. Ex. 1.

DISCUSSION

The Bank has requested that summary judgment issue in its favor against EOHHS declaring that EOHHS' lien against Lot 110 became a nullity upon Ms. Lindquist's death. Presumably, although it is not stated, such a result would give the 2010 Mortgage, assuming that it is reformed in the manner requested by the Bank, priority over EOHHS' claim. [Note 1] EOHHS requests that summary judgment instead issue in its favor, declaring that its "properly recorded liens run with the land and remain valid and enforceable after a member's death against the property until satisfied pursuant to the provisions of 42 U.S.C. 1396(p) and G.L. c. 118E, §34." Defendant, Executive Office Of Health & Human Services', Opposition To Wells Fargo's Motion For Summary Judgment And Cross Motion For Summary Judgment ("the Cross- Motion"). That result would leave the Bank and EOHHS vying for priority with respect to the proceeds from the sale of Lot 110 or Lot 109, whichever the 2010 Mortgage is found to encumber, both sides having claimed a first position in their summary judgment motions. Alternatively, the Bank contends (1) that the 2010 Mortgage, as reformed, has priority over EOHHS' liens because of EOHHS' actual or constructive knowledge that the 2010 Mortgage was intended to encumber Lot 110, or (2) that the Bank is entitled to be equitably subrogated to the superior position of a prior mortgagee even if the 2010 Mortgage is not reformed. In response to those claims, EOHHS denies that the Bank is entitled to reformation of the 2010 Mortgage, denies that the 2010 Mortgage as reformed would have priority over its liens, and denies that equitable subrogation is appropriate here.

In its summary judgment motion with respect to its claims against the Estate, the Bank contends (1) that it is entitled to reformation of the 2010 Mortgage on the undisputed facts applying the law of mistake, or alternatively, (2) that it is entitled to be equitably subrogated to the position of the mortgagee of the 2007 Mortgage. In response, the Estate has asserted a barrage of theories as to why the Bank is not entitled to the relief that it seeks: (1) that the 2010 Mortgage cannot be reformed because to do so would require drawing inferences from the evidence in favor of the Bank, because evidence of intent cannot be resolved on summary judgment, because the Bank has failed to meet its burden of proof on each of the elements of mutual mistake, and because the Bank is barred by laches; (2) that equitable subrogation is unavailable because there is no intervening mortgage over which the Bank seeks to establish priority, because the Bank had constructive notice of the defects in the 2010 Mortgage, and because it would be inequitable to grant the Bank priority over MassHealth's recorded liens; (3) that the Bank is barred from obtaining equitable relief because of its unclean hands, the Bank's counsel and Ms. Lindquist's prior counsel having, according to the Estate, involved in a "fraudulent scheme" to "concoct" an agreement for judgment, and because the 2010 Mortgage was "apparently" not prepared by a Massachusetts lawyer and recorded in violation of the Massachusetts good funds statute, G.L. c. 183, §63B; and (4) that the Bank has an adequate remedy at law in the action that it is presently pursuing in the superior court to collect on the promissory note that the 2010 Mortgage secures.

No party has considered the outcome reached by the court here: that EOHHS' recorded liens are invalid, but that EOHHS has the benefit of the statutory priority granted to it by G.L. c. 190B, §3-805(a), and that the effect of that priority cannot be determined until the Bank's claim for reformation, and EOHHS' actual or constructive notice of that claim, is resolved after trial. In addition, for the reasons further discussed below, the Bank's claim to equitable subrogation cannot be resolved on this record.

The Validity Of The EOHHS Lien

The resolution of the parties' competing positions regarding the validity of EOHHS' recorded liens requires a review of federal and state Medicaid statutes and regulations, recently and aptly described by the Supreme Judicial Court as a "labyrinth." Daley v. Secretary of the Executive Office of Health and Human Services, 477 Mass. 188 , 189 (2017). In conducting that review, rules of construction apply. The description of those rules set forth in Water Dep't of Fairhaven v. Dep't of Envtl. Prot., 455 Mass. 740 , 744-745 (2010) provides useful guidance here:

Our primary duty in interpreting a statute is "to effectuate the intent of the Legislature in enacting it." International Org. of Masters v. Woods Hole, Martha's Vineyard & Nantucket S.S. Auth., 392 Mass. 811 , 813, 467 N.E.2d 1331 (1984). We begin with the language of the statute, as "the principal source of insight into legislative intent." Providence & Worcester R.R. v. Energy Facilities Siting Bd., quoting New Bedford v. Energy Facilities Siting Council, 413 Mass. 482 , 485, 597 N.E.2d 1032 (1992), S.C., 419 Mass. 1003 , 644 N.E.2d 963 (1995). Where the words are "plain and unambiguous" in their meaning, we review them as "conclusive as to legislative intent." Sterlite Corp. v. Continental Cas. Co., 397 Mass. 837 , 839, 494 N.E.2d 1008 (1986). Where the meaning of a statute is not plain from its language, we consider "the cause of the enactment, the mischief or imperfection to be remedied and the main object to be accomplished, to the end that the purpose of its framers may be effectuated." DiFiore v. American Airlines, Inc., 454 Mass. 486 , 490, 910 N.E.2d 889 (2009), quoting Industrial Fin. Corp. v. State Tax Comm'r, 367 Mass. 360 , 364, 326 N.E.2d 1 (1975). See Oxford v. Oxford Water Co., 391 Mass. 581 , 588, 463 N.E.2d 330 (1984), quoting Commonwealth v. Welosky, 276 Mass. 398 , 401-402, 177 N.E. 656 (1931), cert. denied, 284 U.S. 684, 52 S. Ct. 201, 76 L. Ed. 578 (1932) ("Statutes are to be interpreted . . . in connection with their development, their progression through the legislative body, the history of the times . . ."). "Where possible, we construe the various provisions of a statute in harmony with one another, recognizing that the Legislature did not intend internal contradiction." DiFiore v. American Airlines, Inc., supra at 491.

An analysis of Medicaid statutes and regulations starts with a history of the medical assistance program, which has been outlined in a number of Supreme Judicial Court decisions. See e.g. Atlanticare Med. Ctr. v. Comm'r of the Div. of Med. Assistance, 439 Mass. 1 , 3 (2003); Tarin v. Comm'r of the Div. of Med. Assistance, 424 Mass. 743 , 746 (1997); Cohen v. Comm'r of the Div. of Med. Assistance, 423 Mass. 399 , 401 (1996); Cruz v. Comm'r of Public Welfare, 395 Mass. 107 , 112 (1985); Haley v. Comm'r of Public Welfare, 394 Mass. 466 , 467 (1985). Most recently, in Daley, that history was described as follows:

The [Federal Medicaid A]ct, enacted in 1965 as Title XIX of the Social Security Act, 42 U.S.C. §§1396 et seq., created a cooperative State and Federal program to provide medical assistance to individuals who cannot afford to pay for their own medical costs. See Arkansas Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275, 126 S. Ct. 1752, 164 L. Ed. 2d 459 (2006). The general administration of Medicaid is entrusted to the United States Secretary of Health and Human Services, who in turn exercises authority through the Centers for Medicare and Medicaid Services (CMS). Id. Although the Medicaid program is voluntary for States, participating States must comply with certain requirements imposed by the act and regulations promulgated by the Secretary through CMS. See Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 110 S. Ct. 2510, 110 L. Ed. 2d 455 (1990). Massachusetts has opted to participate in Medicaid via the establishment of a State Medicaid program known as MassHealth. See G.L. c. 118E, §9 (establishing program of medical assistance "pursuant to and in conformity with the provisions of Title XIX").

477 Mass. at 189-190 (footnote omitted). The just-quoted language by the Daley court from G.L. c. 118E, §9 "clearly indicates that the Legislature intended the [medicaid] benefits program to comply with the Federal statutory and regulatory scheme. Haley v. Commissioner of Pub. Welfare, supra at 472. When there is a conflict between the State and Federal regulations, the Legislature intended that the Department comply with the Federal rule." Cruz, 395 Mass. at 112 (alterations in original).

The Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA") is of particular concern here. [Note 2] That act created a mechanism by which a lien, like the lien imposed by EOHHS here, could be imposed on the property of a recipient of medical assistance prior to his or her death. As presently codified at 42 U.S.C. §1396p, the provisions relating to liens provide in pertinent part:

(a) Imposition of lien against the property of an individual on account of medical assistance rendered to him under a State plan.

(1) No lien may be imposed against the property of an individual prior to his death on account of medical assistance paid or to be paid on his behalf under a State plan, except -

(A) pursuant to the judgment of a court on account of benefits incorrectly paid on behalf of such individual, or

(B) in the case of real property of an individual -

(i) who is an inpatient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution, if such individual is required, as a condition of receiving services in such institution under the State plan, to spend for costs of medical care all but a minimal amount of his income required for personal needs, and

(ii) with respect to whom the State determines, after notice and opportunity for a hearing (in accordance with procedures established by the State), that he cannot reasonably be expected to be discharged from the medical institution and return home.

. . .

(3) Any lien imposed with respect to an individual pursuant to paragraph (1)(B) shall dissolve upon that individual's discharge from the medical institution and return home.

(b) Adjustment or recovery of medical assistance correctly paid under a State plan.

(1) No adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan may be made, except that the State shall seek adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan in the case of the following individuals:

(A) In the case of an individual described in subsection (a)(1)(B), the State shall seek adjustment or recovery from the individual's estate or upon sale of the property subject to a lien imposed on account of medical assistance paid on behalf of the individual (emphasis added).

The State Medicaid Manual ("SMM"), which is published by the Centers for Medicare and Medicaid Services ("CMS"), describes itself as providing instructions that "are official interpretations of the law and regulations, and, as such, are binding on Medicaid State agencies." SMM Forward at B.1. In Daley, the Supreme Judicial Court said that "[t]he transmittals contained in the Manual do not carry the force of regulations and are not entitled to the deference that we give to regulations that reflect an agency's interpretation of a statute that it is obliged to enforce. However, we consider such guidance carefully for its persuasive power." 477 Mass. at 200 (citations omitted).

With respect to Medicaid estate recoveries, found at §3810, the SMM identifies five categories of recovery, all but the first of which are from the estates of deceased beneficiaries: recovery from permanently institutionalized individuals, §3810.A.1; recovery from the estates of individuals age 55 or older, §3810.A.2; recovery from the estates of individuals eligible for some Medicare benefits as well as Medicaid benefits, §3810.A.3; recovery from the estates of individuals with long term care insurance policies, §3810.A.4; and recovery from the estates of individuals enrolled in managed care organizations, §3810.A.6. The first category, recovery from permanently institutionalized individuals, is implicated here and states:

All states that impose the Tax Equity Fiscal Responsibility Act (TEFRA) liens are required to determine if an individual is permanently institutionalized. TEFRA liens are pre-death liens that are placed on the home of living beneficiaries who have been determined (after notice and opportunity for a hearing) to be permanently institutionalized. These liens must follow rules set out in the TEFRA of 1982. In the case of permanently institutionalized individuals who the State determines cannot reasonably be expected to be discharged and return home, including individuals of any age, you must seek adjustment or recovery from the individual's estate or upon the sale of the property subject to a lien, at a minimum, of amounts spent by Medicaid on the person's behalf for services provided in a nursing facility, ICF/MR, or other medical institution . . . Recoveries must be made from the individual's estate (after death) or from the proceeds of the sale of the property on which the lien has been placed (emphasis added).

In addition to the SMM, the United States Department of Health & Human Services ("DHHS") has published two policy briefs relevant here, one addressing Medicaid liens generally, Medicaid Liens, Policy Brief #4, DHHS Office of Assistant Secretary for Policy & Evaluation, April 2005, and one addressing Massachusetts Medicaid liens in particular, Medicaid Liens And Estate Recovery In Massachusetts, Policy Brief #5, DHHS Office of Assistant Secretary for Policy & Evaluation, April 2005. These, too, can be considered for their persuasive power. Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627 (2013) (interpretations contained in policy statements, agency manuals, and enforcement guidelines lack force of regulations and "do not warrant Chevron-style deference," but are "'entitled to respect' in proportion to their 'power to persuade,'" [citations omitted]), cited with approval in Daley, 477 Mass. at 200 (alterations in original).

According to Policy Brief #4, Medicaid liens on real property of deceased persons have been permitted since the inception of the Medicaid program, while liens "have also been authorized in limited circumstances on real property of living recipients since 1982," with the enactment of TEFRA. Policy Brief #4 at 2. "There are two kinds of Medicaid liens – pre-death or TEFRA liens and post-death or estate recovery liens." Id. at 5. "Since passage of the Tax Equity and Fiscal Responsibility Act (TEFRA 1982), states have had the option to use liens to prevent Medicaid long-term care recipients from giving away assets - specifically a home in which they no longer reside - before they are used to offset long-term care expenses paid by Medicaid on their behalf." Id. "If the property is sold voluntarily, Medicaid's claim must be settled first. Its priority relative to the claims of others, such as mortgage lien holders, is established by state law." Id. at 6. As an example, where a recipient has insufficient funds to pay the basic expenses of a home, he or she may be forced to sell the property and the equity in it "becomes a countable asset and triggers Medicaid recovery." Id. at 7. However, "[i]f the home owner dies with a TEFRA lien still on the property, Medicaid recovery occurs as part of the estate settlement process." Id. "States may file post-death liens against the real and personal property of persons who were permanently institutionalized. . . ." Id. at 8.

Policy Brief #5, which is specific to Massachusetts, states that, "[i]n Massachusetts, TEFRA liens are referred to as 'living liens' because they cannot be placed on the property of a MassHealth member once he or she has died. They give the State authority to recover Medicaid payments for a member's long-term care expenses if his or her property is sold while the member is alive . . . . The lien gives the State authority to recover Medicaid payments that have been made if the property is sold while the member is alive." Policy Brief #5 at 3. Policy Brief #5 further states:

It is important to note that, although Medicaid gives states authority to place post-death liens, in Massachusetts a lien is only filed while the member is still alive. A lien is never placed on any kind of property - real or personal - once the member has died. After the member's death, the Estate Recovery Unit will recover MassHealth costs from the member's probate estate. A probate estate includes property that a person possesses at the time of death and that descends to the heirs (with or without a will) subject to the payment of debts and claims. However, the lien is no longer valid after the member's death and must be released upon request of the administrator (emphasis added).

Policy Brief #5 at 7. In the same vein, Policy Brief #5 states that, "[i]f an attorney representing the member's estate requests release of the lien prior to settlement of the estate, the Estate Recovery Unit releases it, since a living lien is no longer valid when the member is deceased." Id. at 13.

Turning to the relevant State statute, G.L. c. 118E, §31, governs the recovery of medical assistance that was correctly paid. In pertinent part, that statute provides:

(b) . . . There shall be no adjustments or recovery of medical assistance correctly paid except as follows:

(1) Recovery from the Permanently Institutionalized: From the estate of an individual, regardless of age, who was an inpatient in a nursing facility or other medical institution when he or she received such assistance. . . .

(2) Recovery from Persons Age 65 and over for Post-October 1, 1993 Medicaid: From the estate of an individual who was sixty-five years of age or older when he or she received such assistance.

(3) Recovery from Persons Age 55 and Over for Post-October 1, 1993 Medicaid: From the estate of an individual who was fifty-five years of age or older when he or she received such assistance, where such assistance was for services provided on or after October first, nineteen hundred and ninety-three.

. . .

(c) For purposes of this section, "estate" shall mean all real and personal property and other assets includable in the decedent's probate estate under the General Laws.

(d) The division is also authorized during an individual's lifetime to recover all assistance correctly provided . . . if the property against which the division has a lien or encumbrance under section 34 is sold (emphasis added).

The cognate regulation, 130 CMR § 515.012 (emphasis added), provides:

If property against which the MassHealth agency has placed a lien under 130 CMR 515.012(A) is sold during the member's lifetime, the MassHealth agency may recover all payments for services provided on or after April 1, 1995. This provision does not limit the MassHealth agency's ability to recover from the member's estate in accordance with 130 CMR 515.011 (emphasis added).

There is no ambiguity in the just quoted State statute or regulations. G.L. c. 118E, §31 is explicit: "The division is authorized during an individual's lifetime to recover all assistance correctly provided . . . if the property against which the division has a lien or encumbrance under section 34 is sold" (emphasis added). 130 CMR §515.012 is similarly direct. The same can be said for the policy briefs issued by DHHS. But, as EOHHS argues, 42 U.S.C. §1396p expressly addresses when liens dissolve, and that provision does not include dissolution upon the death of a recipient. Instead, it provides for dissolution "upon the individual's discharge from the medical institution and return home." 42 U.S.C. §1396p (a)(3). And, as EOHHS further argues, §1396p(b)(1)(A) does not limit recovery on liens to sales made prior to the recipient's death. Instead, it provides in the case of permanently institutionalized recipients that "the State shall seek adjustment or recovery from the individual's estate or upon the sale of the property subject to a lien imposed on account of medical assistance paid on behalf of the individual." As a result, EOHHS concludes that MassHealth liens remain in full force and effect after death. [Note 3] This court concludes otherwise.

Section 1396p also includes provisions protecting a recipient's spouse, a recipient's child who is under the age of 21, blind, or permanently and totally disabled, and a recipient's sibling if that sibling has an equity interest in the home and has resided there for at least one year prior to the recipient's institutionalization. 42 U.S.C. §1396p(a)(2) [Note 4] precludes the imposition of a lien if any of those individuals is lawfully residing at the home. 42 U.S.C. §1396p(b)(2) [Note 5] precludes the enforcement of a lien until after the death of the recipient's surviving spouse, and even then, only when the recipient has no surviving child who is under the age of 21, blind, or permanently and totally disabled, and in the case of a lien on the recipient's home under subsection (a)(1)(B), only when no sibling and no son or daughter of the recipient who has lived in the home for a specified time is residing at the home. Those express protections for family members residing in the home may preclude the enforcement of a lien for a period of time after the death of the recipient. As a result of that fact, the death of the recipient could not be included in § 1396p(a)(3) as an event that always triggers dissolution of the lien without impairing the State's ability to enforce its lien after a recipient's death and once the protected family members were no longer lawfully residing at the home. For the same reason, expressly providing for recovery upon the sale of property "during the lifetime of the recipient" could not be included in § 1396p(b)(1)(A) without impairing the State's ability to enforce a lien extended after the recipient's death by the presence of protected family members in the home. The same rationale applies to the language used in the SMM, which does not specify recovery upon sale during the lifetime of the recipient: "Recoveries must be made from the individual's estate (after death) or from the proceeds of the sale of the property on which the lien has been placed." A reading of the Federal statute that limits the enforcement of a TEFRA lien to a sale of property during the recipient's lifetime, with the statutorily mandated exceptions for protected family members, is consistent with the interpretation given to the statute by DHHS, and consistent with G.L. c. 118E and with the Code of Massachusetts Regulations. While not determinative, such a reading is also consistent with the interpretation given by practitioners with experience in the field.

EOHHS also cites to Constantino v. Lonardo, 2019 Mass. App. Unpub. LEXIS 534 * (2019), rev. denied 483 Mass. 1104 (2019), for the proposition that "MassHealth liens recorded on members' real property prior to death run with the land and remain valid and enforceable after death against the member's estate and subsequent owners." Cross-Motion at p. 10. Constantino was an appeal from a superior court decision in which the superior court concluded that an earlier probate court decision ruling on the validity of a MassHealth lien was "law of the case." Id. at *10. In its unpublished decision, the Appeals Court determined that the superior court had correctly applied the law of the case doctrine, not that the superior court had undertaken its own examination of the lien under applicable law and properly found it to be valid. Id. The probate court decision, provided by the Bank as an attachment to its reply memorandum, [Note 6] addressed whether a MassHealth lien that misspelled the street address for the property at issue but properly spelled the recipient's name, properly referenced the book and page at which the recipient's interest was recorded at the Registry, and was properly indexed against the recipient's name, was valid. It does not appear that the probate court was asked to consider whether the lien survived the recipient's death under the law analyzed above, and the probate court did not do so. Under the circumstances, this court does not find Constantino relevant or persuasive.

Accordingly, this court concludes that the MassHealth lien imposed on Ms. Lindquist's real estate during her life expired upon her death, there being no protected family members residing at the property at that time. EOHHS' avenue of recovery is through a claim against Ms. Lindquist's estate pursuant to G.L. c. 118E, §32, with the priority accorded to it by G.L. c. 190B, §3-805. Whether that claim has priority over the Bank's 2010 Mortgage depends, in part, on whether the 2010 Mortgage is reformed to encumber Lot 110 based on the doctrine of mutual mistake, discussed below.

The Bank's Claim For Reformation

Relying largely on two land court decisions reforming mortgages to address errors in property descriptions, Deutsche Bank v. Kelley, 13 MISC 478330 (JCC) and CitiMortgage, Inc. v. Matterazzo, 13 MISC 477438 (HPS), the Bank argues that it is entitled to reformation of the 2010 Mortgage on the grounds of mutual mistake based on the undisputed facts in the record. There does not appear to be any dispute as to the relevant law. "It is well established that legal instruments, including deeds, may be reformed on the ground of mutual mistake. Mickelson v. Barnet, 390 Mass. 786 , 791 (1984), and cases cited." Lhu v. Dignoti, 431 Mass. 292 , 294 (2000). Entitlement to relief must be proved by clear and convincing evidence. O'Connell v. Deutsche Bank Nat'l Trust Co., 2015 Mass. App. Unpub. LEXIS 1006, *1-2 ("We may assume without deciding that a clear and unambiguous description of property owned by a mortgagor contained in a mortgage may be reformed on grounds of either mutual mistake, or mistake by one party that is known by the other. In order to succeed in such a claim, a plaintiff would be required to prove his case by clear and convincing evidence, rather than a mere preponderance. See Covich v. Chambers, 8 Mass. App. Ct. 740 , 747, 397 N.E.2d 1115 (1979)."). Given the posture of this case, the appropriate standard for assessing a motion for summary judgment is also relevant: "In considering a motion for summary judgment, we review the evidence and draw all reasonable inferences in the light most favorable to the nonmoving party." Drakopoulos v. United States Bank Nat'l Ass'n, 465 Mass. 775 , 777 (2013), quoting Premier Capital, LLC v. KMZ, Inc., 464 Mass. 467 , 474-475 (2013). Doing so here requires that the Bank's motions for summary judgment seeking reformation of the 2010 Mortgage be denied.

The Bank contends that the 2010 Mortgage was intended to encumber Lot 110 but mistakenly provided the property description for Lot 109. The language used in the 2010 Mortgage does not support this contention. The 2010 Mortgage recites a property address of 1532 North Brookfield Road. That is of little assistance in determining what property was intended to be encumbered, because, as the seven other mortgages in the record encumbering either Lot 110 and Lot 25 or Lot 109 and reciting a property address reveal, that address was used with respect to all three lots. The 2010 Mortgage also recites a tax identification number of "4090 000 01100," which is the number for Lot 110. However, the 2010 Mortgage recites the deed description of Lot 109 from the 1985 Deed and references the recording information for the 1985 Deed. On these facts, no inference can be drawn from the language of the 2010 Mortgage as to whether Lot 110 or Lot 109 was intended to be encumbered.

The record also contains a number of documents from the loan file for the 2010 Mortgage. To the extent that those documents identify the encumbered property by the street address, that is of no assistance for the reason stated above. There are two documents, though, that do provide evidence of the Lindquists' intent, as they were signed by the Lindquists: a Uniform Residential Loan Application that identifies the encumbered property as consisting of one unit; and an Occupancy And Financial Status Affidavit in which the Lindquists state that they are or will shortly be occupying the encumbered property as their principal residence. Since the Lindquists' house was located on Lot 110 and Lot 109 is vacant land, one could reasonably infer that the Lindquists understood that Lot 110 was the property that was intended to be encumbered. None of the other documents in the loan file both clearly indicate that Lot 110 was the subject of the loan and show that they were reviewed by the Lindquists.

The record also includes four documents from the closing file for the 2010 Mortgage maintained by the closing attorney. Two of those documents, the Uniform Underwriting and Transmittal Summary and the Owner's Affidavit, indicate that the property to be encumbered is the Lindquists' primary residence or that they reside there. Both documents are executed by the Lindquists. As a result, one could reasonably infer from these documents that the Lindquists knew that Lot 110 was the property that was intended to be encumbered.

The Estate argues that boilerplate language in forms prepared by the mortgagee may shed light on the mortgagee's intent, but it does not support any inference regarding the intent of the Lindquists. However, having signed the documents, the Lindquists are bound by them in the absence of fraud or undue influence. Hull v. Attleboro Sav. Bank, 33 Mass. App. Ct. 18 , 24 (1992) ("One who signs a writing that is designed to serve as a legal document, as this and its enclosure were, is presumed to know its contents. See Connecticut Jr. Republic v. Doherty, 20 Mass. App. Ct. 107 , 110 (1985), and cases cited; Mayflower Seafoods, Inc. v. Integrity Credit Corp., 25 Mass. App. Ct. 453 , 459 (1988)."). Bruno v. Bruno, 10 Mass. App. Ct. 918 , 918 (1980) ("One who signs a writing that is obviously a legal document is presumed to be fully aware of its terms, unless it can be proved that he was induced to sign it by fraud or undue influence. Dobija v. Hopey, 353 Mass. 600 (1968). Markell v. Sidney B. Pfeifer Foundation, Inc., 9 Mass. App. Ct. 412 , 440 (1980)."). And, while EOHHS contends that the documents are ambiguous as to intent, neither EOHHS nor the Estate suggest any contrary inference that might reasonably be drawn from these particular documents.

That being said, in both cases relied upon by the Bank for the proposition that summary judgment can issue reforming a mortgage, Kelley and Matterazzo, the plaintiff mortgagee's summary judgment motion was unopposed. That is not the case here. Moreover, the issue here is one of the parties' intent. That intent must be proved by clear and convincing evidence and the evidence and inferences to be drawn therefrom must be drawn in favor of EOHHS and the Estate in the context of these summary judgment motions. See O'Connell, 2015 Mass. App. Unpub. LEXIS 1006 at *1-2. Accordingly, and perhaps in an overabundance of caution, the court declines to issue summary judgment in favor of the Bank allowing reformation of the 2010 Mortgage on the grounds of mutual mistake. As a result, a determination as to whether the Bank or EOHHS has priority under G.L. c. 190B, §3-805 cannot yet be made. If the 2010 Mortgage is reformed retroactively to the date of its execution to encumber Lot 110, then the Bank will have priority over EOHHS' claim; if not, then EOHHS will have priority.

The Bank's Claim For Equitable Subrogation

As an alternative, the Bank claims that it is entitled to be equitably subrogated to the position of Shamrock Financial Corporation, the lender identified in the 2007 Mortgage that the Bank asserts was discharged with funds provided by the Bank's predecessor, Carnegie Mortgage LLC. For the reasons set forth below, that argument also fails.

In E. Boston Sav. Bank v. Ogan, 428 Mass. 327 , 334 (1998), the Supreme Judicial Court described the doctrine of equitable subrogation as follows:

Equitable subrogation is an exception to the basic principle that determines priority among mortgages, "first in time is first in right." Where equitable subrogation applies:

"One 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. Even though the performance would otherwise discharge the obligation and the mortgage, they are preserved and the mortgage retains its priority in the hands of the subrogee."

Restatement (Third) of Property (Mortgages) §7.6(a) (1997). In other words, the 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.

The doctrine is "typically applied to determine the order of priority among various mortgagees." Fin. Freedom Acquisition, LLC v. Laroche, 2016 Mass. App. Unpub. LEXIS 857 *14. "Subrogation to a mortgage is usually of importance only when a subordinate lien or other junior interest exists on the real estate. If no such interest existed, the subrogee could simply sue on the obligation, obtain a judgment lien against the real estate, and execute on it." Wells Fargo Bank, N.A. v. Comeau, 92 Mass. App. Ct. 462 , 467 (2017), quoting Restatement (Third) of Property (Mortgages) §7.6 comment a, at 509.

The Ogan court embraced a five-factor test in assessing whether equitable subrogation is appropriate, [Note 7] but also noted that "[t]he subrogee's behavior is an important consideration that the court must balance in its equitable analysis of the interests of both mortgagees." 428 Mass. at 332. In that regard, the Appeals Court's decision in Comeau is instructive. There, a husband and wife were co-signatories on the original mortgage, but only the husband signed the note. Comeau, 92 Mass. App. Ct. at 463. Two years later, the husband refinanced the original loan, used some of the proceeds to satisfy the original mortgage, and was the sole signatory on the new mortgage and note granted to Wells Fargo's predecessor. Id. After the husband's death, Wells Fargo brought an action seeking to be equitably subrogated to the position of the original mortgagee in order to encumber the wife's interest in the property. Id. at 462-463. The trial court denied Wells Fargo's motion for summary judgment. Id. at 464. Of particular interest here, the Appeals Court determined that Wells Fargo's predecessor's "expectation of what interest it was receiving is a valid consideration," and that the documents in the record indicated that Wells Fargo's predecessor expected to receive what it got: a mortgage on the husband's interest in the property, subject to his wife's right of survivorship. Id. at 467. For that reason, among others, the Appeals Court affirmed the trial court's decision. Id. at 468.

Applying these legal principles here leads to the conclusion that summary judgment cannot be awarded on the Bank's equitable subrogation claim. First, there is nothing in the record to tie the 2007 Mortgage, granted to Shamrock Financial Corporation, to the 2010 payoff to Bank of America in the amount of $127,088.76. Assuming that failure of proof can be remedied by the submission of assignments of the 2007 Mortgage ending with Bank of America, equitable subrogation also fails unless and until a decision is rendered regarding the Bank's reformation claim (whether the 2010 Mortgage intended to encumber Lot 110 or Lot 109) because, under Comeau, it cannot yet be said whether the Bank's predecessor in title received the security it was looking for, or not. The parties also dispute whether the Bank had actual or constructive knowledge of the defects in the 2010 Mortgage such that its claims are barred by laches. Finally, while not briefed by the parties, the question also remains whether equitable subrogation applies in the context of a request for priority over a claim with priority established by a statutory grant, here G.L. c. 190B, §3-805.

CONCLUSION

For the reasons set forth above, Wells Fargo Bank, N.A.'s Motion For Summary Judgment Against Commonwealth Of Massachusetts Executive Office Of Health And Human Services is ALLOWED IN PART and DENIED IN PART, EOHHS' Cross-Motion is DENIED, and Wells Fargo Bank, N.A.'s Motion For Summary Judgment Against John J. Green, Jr., Personal Representative of the Estate of Millicent R. Lindquist is DENIED. The matter will be scheduled for a status conference once the court is re-opened, at which the parties will be expected to address whether the case should be submitted for resolution on a case stated basis or whether a trial should be scheduled. To the extent any issue raised by any party is not addressed herein, it is reserved for trial.