WILMINGTON SAVINGS FUND SOCIETY, FSB, doing business as Cristiana Trust, not individually but as Trustee for Pretium Mortgage Acquisition Trust v. JERI LEE GRAY, et al.

On July 5, 2019, plaintiff Wilmington Savings Fund Society, as Trustee for Pretium Mortgage Acquisition Trust (the "Trustee"), filed as a "Miscellaneous" action in this Court a two-count Verified Complaint. It named as defendants Jeri Lee Gray, John V. Rotondi-Gray, and ING Financial Holdings Corporation, Inc. On August 1, 2019, the Trustee amended its complaint to replace ING with its alleged successor in interest, defendant Capital One Financial Corporation ("Capital One").

The Trustee served Ms. Gray, Mr. Rotondi-Gray, and Capital One. None of them appeared or answered the Trustee's complaint or its amended complaint. The Court thus entered their defaults by early October 2019. The Trustee then moved for entry of a default judgment under Rule 55(b), Mass. R. Civ. P. That motion prompted the Court to take a closer look at what the Trustee sought in this proceeding. The Court subsequently ordered the Trustee to show cause why this case should not be dismissed. Having reviewed the Trustee's response, the Court concludes that it may (subject to further hearing) grant some, but not all, of the relief the Trustee seeks. Any additional relief requires the filing of a subsequent-to-registration petition (sometimes called an "S Petition," other times called a "subsequent" or "supplemental" case or petition) under M.G.L. c. 185, §114. The Court issues this Decision and Order to explain the differences between "Miscellaneous" and "Subsequent" actions, and to highlight when the latter are mandatory.

The Trustee alleges that in 1996, Ms. Gray and Mr. Rotondi-Gray acquired a property at 15 Roosevelt Avenue in Hamilton, Massachusetts. Online records from the Southern Essex District Registry of Deeds (the "District Registry") show that 15 Roosevelt Avenue is comprised of two parcels, one that's recorded land and one that's registered land. For that reason, the 1996 Gray/Rotondi-Gray deed (the "1996 Deed") was simultaneously (a) recorded at the District Registry, so that it could appear in the chain of title for 15 Roosevelt Avenue's "recorded" parcel; and (b) filed with the Southern Essex Registry District of the Land Court (the "Land Court Registry") for registration and the issuance of a "transfer" certificate of title for 15 Roosevelt Avenue's "registered" parcel. The resulting certificate was (and still is) Transfer Certificate No. 79827. Since the District Registry and the Land Court Registry are in the same building, colloquially the process described in the preceding sentence is sometimes called "recording things on both sides of the Registry." But that expression masks several important differences between recorded and registered land, differences that affect the outcome of this Miscellaneous case.

The Trustee alleges that in July 2000, Ms. Gray and Mr. Rotondi-Gray granted a mortgage encumbering the entirety of 15 Roosevelt Avenue ("Mortgage #1"). Like the 1996 Deed, Mortgage #1 was recorded at the District Registry and was filed with the Land Court Registry, in order to be noted on the memorandum of encumbrances for Transfer Certificate No. 79827. The Trustee further alleges that in December 2000, Gray and Rotondi-Gray granted another mortgage encumbering 15 Roosevelt Avenue ("Mortgage #2"). Like Mortgage #1, Mortgage #2 was recorded at the District Registry and filed with the Land Court Registry. In 2001, Mortgages #1 and #2 were assigned to RBMG, Inc., Capital One's predecessor in interest to Mortgages #1 and #2. Assignments for each mortgage were timely recorded at the District Registry and filed with the Land Court Registry.

According to the Trustee, several problems with 15 Roosevelt Avenue's title started cropping up in March 2001:

Error #1: In March 2001, a discharge of Mortgage #1, signed by RBMG, was timely recorded at the District Registry, but the discharge wasn't filed with the Land Court Registry. Mortgage #1 thus continues to appear on the memorandum of encumbrances for Transfer Certificate No. 79827, the current certificate of title for 15 Roosevelt Avenue's registered parcel.

Error #2: In October 2001, a discharge of Mortgage #2, again signed by RBMG, was recorded at the District Registry, but the discharge likewise wasn't filed with the Land Court Registry. Thus, like Mortgage #1, Mortgage #2 continues to appear on the memorandum of encumbrances for Transfer Certificate No. 79827.

Error #3: In March 2004, Ms. Gray and Mr. Rotondi-Gray granted another mortgage ("Mortgage #3"), this one to the Trustee's alleged predecessor in interest. Unlike Mortgages #1 and #2, Mortgage #3 was only recorded at the District Registry. No one filed Mortgage #3 for registration with the Land Court Registry. Mortgage #3 thus does not appear on the memorandum of encumbrances for Transfer Certificate No. 79827.

Error #4: Compounding Error #3, the as-recorded version of Mortgage #3 identifies "Book 13181" as the book, at the District Registry, in which the 1996 Deed is recorded. That's incorrect: the 1996 Deed was recorded in Book 13781.

Error #5: Proving the adage that trouble comes in threes, the description of the mortgaged property in the as-recorded version of Mortgage #3 omits entirely a description of 15 Roosevelt Avenue's registered parcel. (It's safe to assume that whoever drafted Mortgage #3 was unaware that 15 Roosevelt Avenue contained a registered parcel, the common thread in Errors #3 and #5.)

The Trustee has moved for entry of a default judgment, in this Miscellaneous action, to fix all five of these errors. There's a steady stream of cases through this Court that are like this one: suits filed by financial institutions, usually ones that didn't participate in the original mortgage transaction, to fix scrivener's errors and other alleged oversights in mortgages, assignments, discharges and other recordable instruments. Most of these cases are filed as Miscellaneous actions, and a sizeable majority of those end in default judgments. Sometimes that's because the errors are obvious even to the named defendants. Other times, the defendants are out of business; if a party shows that it has diligently searched for and tried to serve process on someone who can speak for the defunct enterprise, but still that defendant doesn't appear, the Court often will grant relief via a default judgment, provided that the plaintiff is legally entitled to relief.

Errors #4 and #5 fall into the category of things this Court sometimes corrects within a Miscellaneous action. Strictly speaking, Errors #4 and #5 affect the title of recorded land only, and not 15 Roosevelt Avenue's registered parcel. Correcting Errors #4 and #5 would appear to affect the interests of only the Trustee and defendants Gray and Rotondi-Gray, the latter two of whom received notice of this action and had an opportunity to appear. So, having received no objections from Gray or Rotondi-Gray, the Court is inclined to fix Errors #4 and #5. (While the Court has defaulted Gray and Rotondi-Gray, the Court will give them one last chance to contest the Trustee's case. The Court thus ORDERS the parties to appear for a hearing on April 3, 2020, at 12:15 p.m., on the Trustee's motion for entry of a default judgment. The Court further ORDERS the Trustee to serve this Decision and Order on Gray and Rotondi-Gray by March 27, 2020, and to provide at the April 3, 2020 hearing proof of that service.)

The Trustee's requested corrections of Errors ##1-3 stand on a different footing. Each proposed correction requires the Court to change the memorandum of encumbrances on Transfer Certificate No. 79827, the certificate of title for 15 Roosevelt Avenue's registered parcel. There's a statute, c. 185, §114, that governs that process. Section 114 provides:

No erasure, alteration or amendment shall be made upon the registration book after the entry of a certificate of title or of a memorandum thereon and the attestation of the same by the recorder or an assistant recorder, except by order of the [Land Court]. A registered owner or other person in interest may apply by motion to the court upon the ground that registered interests of any description . . . have terminated and ceased; or that new interests not appearing upon the certificate have arisen or been created; or that any error or omission was made in entering a certificate or any memorandum thereon; or that the name of any person on the certificate has been changed; or that the registered owner has married, or if registered as married, that the marriage has been terminated; or that a corporation which owned registered land and has been dissolved has not conveyed the same within three years after its dissolution; or upon any other reasonable ground; and the court may hear and determine the motion after notice to all parties in interest, and may order the entry of a new certificate, the entry or cancellation of a memorandum upon a certificate, or grant any other relief upon such terms, requiring security if necessary, as it may consider proper . . . .

The pleading that starts a §114 proceeding is the previously mentioned S Petition. The Trustee didn't file an S Petition – the Trustee filed only a Miscellaneous action. [Note 1] The Trustee argues it didn't have to submit an S Petition: the Trustee contends that changes to certificates of title "or of a memorandum thereon" require under §114 only an "order" of this Court, and that the procedures set forth in §114 describe only one way to get such an order. In the Trustee's view, S Petitions are entirely optional.

The Trustee rests its argument on two things. The first is c. 185, §1(k), the statute that gives this Court subject-matter jurisdiction over "[a]ll cases and matters cognizable under the general principles of equity jurisprudence where any right, title or interest in land is involved," along with several cases construing the Court's equitable powers under §1(k). Those cases are to the effect that this Court, "acting under general principles of equity jurisprudence[,] has broad power to reform, rescind, or cancel written instruments, including mortgages, on grounds such as fraud, mistake, accident, or illegality." Beaton v. Land Court, 367 Mass. 385 , 392 (1975).

The Trustee's first argument overlooks the fact that a property's certificate of title and its memorandum of encumbrances are no mere "written instruments," prepared and exchanged privately. This Court, and only this Court, issues certificates of title. [Note 2] Certificates of title arise from a judgment of this Court, issued at the conclusion of a registration proceeding. See id. at §48. Certificates of title are thus statutorily authorized judicial decrees. And since another of c. 185's provisions, §114, provides a process for correcting a statutorily authorized certificate of title and its memorandum of encumbrances, persons who seek corrections of those documents are obliged to use §114's specific statutory remedy. Other statutes don't provide relief. See St. George's Ebenezer Primitive Methodist Church v. Primitive Methodist Church, 315 Mass. 202 , 204 (1943) (construing c. 185, §112; "One who has neglected to the take the necessary and essential steps provided by a statute creating a remedy has no right to the remedy."). St. George's rejects the view that §114 and §1(k) are to be read as independent of each other: instead, St. George's holds that the two statutes, appearing in the same chapter, are to be construed together. See St. George's, 315 Mass. at 206. Thus, as a statutory matter, §114 provides the exclusive means for correcting a certificate of title and its memorandum of encumbrances.

The Trustee's second argument relies on six orders or judgments entered by justices of this Court, including the justice who's endorsed this Decision and Order, all affecting certificates of title and all entered in Miscellaneous cases. The Trustee claims that the orders support the view that §114's procedures are optional. The Trustee is correct that none of the six orders required the plaintiff to file an S Petition. But the reason wasn't because the justices in those cases ruled that S Petitions are optional – indeed, there's no indication in any of the orders that anyone considered the issue. There's also a common theme in all of the orders: the plaintiff sought relief that wouldn't prejudice anyone's interest in registered property. Had those plaintiffs filed S Petitions, it's likely that the Chief Title Examiner would have recommended granting each summarily. That could have been the result here. Had the Trustee sought to fix (along with Error #4) only Errors #1 and #2, it's likely that the Court would have treated the Trustee's Miscellaneous complaint as containing an "implied" S Petition and dealt with all three errors summarily. After all, the Trustee served Capital One, the only party besides the Trustee and defendants Gray and Rotondi-Gray who has a stake in whether Mortgages #1 and #2 are discharged. Capital One chose not to contest this action.

The wrinkle in this case, a complication that prevents the Trustee from obtaining the relief it seeks without filing an S Petition, is the Trustee's requested remedy for Error #3. The Trustee wants the Court to order that Mortgage #3 (presumably in its corrected form) has "nunc pro tunc" effect. That means pretending that (corrected) Mortgage #3 was filed for registration in March 2004. The problem with that remedy is this: according to the memorandum of encumbrances for Transfer Certificate No. 79827, in 2014 an entity known as CACH, LLC, filed for registration a $10,000 execution against Ms. Gray's interest in 15 Roosevelt Avenue's registered parcel. The Trustee's amended complaint in this Miscellaneous action didn't name CACH as a defendant. In fact, the Trustee confesses it didn't even know about CACH or its execution prior to receiving this Court's October 20, 2019 show-cause order.

Why does this create an S Petition issue? Because if the Court were to order the registration of (corrected) Mortgage #3 as of March 2004, CACH's 2014 execution would fall behind Mortgage #3 in priority of lien. That's what sets the Trustee's complaint apart from the six Miscellaneous cases upon which the Trustee relies: the Trustee's seeking to disadvantage a party that has an interest in registered land, not only without that party's assent, but without having given any notice to that party whatsoever.

The Trustee's omission of CACH from the Trustee's Miscellaneous complaint highlights a substantive problem associated with trying to change a certificate of title or its memorandum of encumbrances outside of the S-Petition process. Had the Trustee filed an S Petition, the Court likely would have required the Trustee to pay for an examination of 15 Roosevelt Avenue's current title, before the Court reached the merits of the Trustee's petition. The Court usually orders such examinations in S Petition cases, as the examinations allow the Court to provide, in §114's words, "notice to all parties in interest" before the Court does something that affects a registered parcel's title. Section 144 requires such notice because whatever the Court orders in a case affecting title to registered land is in rem, "bind[ing] the land and quiet[ing] the title thereto," a result that is "conclusive upon and against all persons, including the commonwealth. . . ." Chapter 185, §45. By contrast, orders in Miscellaneous cases typically affect only the parties named and served with process in such cases.

An examination of 15 Roosevelt Avenue's title would have turned up the CACH execution pretty quickly – the reference to it is as clear as day on Transfer Certificate No. 79827's memorandum of encumbrances. Once the CACH execution came to light, the Court likely would have told the Trustee that, for the reasons explained above, the Court rarely, if ever, gives nunc pro tunc effect to any document affecting registered land absent the affirmative assent of all parties having an interest in the registered parcel. If the Trustee insisted on going forward despite that advice, the Court would have required service of process on CACH, and would have given CACH the opportunity to object to the Trustee's requested relief.

By filing a Miscellaneous case, the Trustee bypassed §114's notice requirements. The Trustee also increased the chances of introducing new errors into the parcel's chain of title. That's because the §114 process results in standardized orders and decrees that are familiar to personnel in the Registry Districts of the Land Court. Using such instruments improves the chances that they will be properly handled for registration. Orders issued outside of the §114 process, including those issued in Miscellaneous cases, don't have those advantages. They can be misfiled, or noted on the incorrect certificate, or not accepted for registration.

The Trustee mentions that it chose to file a Miscellaneous case for expediency. The Trustee's counsel says he knows of at least one S Petition case in which the petitioner has been waiting almost a year for the Court to issue a "citation," the form of official notice of the filing of an S Petition that is sent to all persons having an interest in the land that's the subject of the petition. The Court regrets the delays associated with S Petition cases, delays that often are the fault of the parties, but equally often are the result of a lack of Court examiner resources. The Court has benefited from recent new hires of examiners and expects the pace of handling S Petitions to improve. But nothing in §114 allows parties to circumvent unilaterally its statutory processes, even when a party thinks it's entitled to expedited treatment. (To put it another way: regardless of whether the Court in the past has used Miscellaneous cases to change or alter certificates of title or memoranda of encumbrances, going forward the Court will insist that parties follow §114.) If parties need faster handling of their S Petitions, or believe that they are experiencing inordinate delay, they should move the Court, within the S-Petition process, for relief.

For these reasons, while the Court will consider the Trustee's motion to enter a default judgment so as to correct Errors #4 and #5, the Court DENIES the Trustee's motion to have that judgment correct Errors ##1-3. Instead, if no one appears to oppose the Trustee's motion for a default judgment, the Court will enter a judgment in this Miscellaneous case that limits its relief to Errors #4 and #5, and dismisses the remainder of Trustee's Amended Verified Complaint without prejudice. Should the Trustee choose to refile the dismissed portions of its Miscellaneous case as an S Petition, the Court ORDERS the Trustee to alert the Chief Title Examiner to this Miscellaneous case so that she can assign the petition to an examiner who is familiar with this dispute.

SO ORDERED.