IN RE: ALVARO M. PEREIRA, Debtor.
DEBORA A. CASEY, Chapter 7 Trustee for Alvaro M. Pereira, Appellant BANK OF AMERICA, N.A., Appellee,
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. George A. O'Toole, Jr., U.S. District Judge.
Adam C. Ponte, with whom Mark S. Foss and Fletcher Tilton PC were on brief, for appellant.
Mark B. Johnson, with whom Kathleen M. Heyer and Johnson & Borenstein, LLC were on brief, for appellee.
Before Howard, Chief Judge, Lynch and Thompson, Circuit Judges.
LYNCH, Circuit Judge.
The outcome of this federal bankruptcy case turns on interpretations of two different state statutes, each of which concerns defects in real estate titles. In time, those interpretations may affect considerable numbers of Massachusetts foreclosure proceedings. In this case, those interpretations affect who will benefit from the estate's real property assets: a bank, or the debtor's other creditors as represented by a bankruptcy trustee. For the reasons stated below, we decide to certify two questions to the Supreme Judicial Court (SJC) of Massachusetts.
Debora Casey, a Chapter 7 bankruptcy trustee, filed this action to avoid a mortgage held by Bank of America. 11 U.S.C. § 544(a)(3). The parties both assume that the 2005 mortgage contains a material defect: the certificate of acknowledgement
does not include the names of the mortgagors. See Mortg. Elec. Registration Sys., Inc. v. Agin (In re Giroux), No. 09-CV-10988-PBS, 2009 WL 3834002, at *2 (D. Mass. Nov. 17, 2009) (applying Massachusetts law to conclude that the omission of the mortgagor's name in the certificate of acknowledgment rendered the mortgage materially defective). After the mortgage was recorded, the notary on the mortgage, presumably at the behest of the bank, executed an affidavit under Mass. Gen. Laws ch. 183, § 5B, later recorded, attesting that the debtors had signed the mortgage personally and voluntarily. The debtors went into bankruptcy later that year, in 2012.
The legal issues presented are whether, under Massachusetts state law, that § 5B affidavit can cure the defective acknowledgement, or otherwise provide constructive notice to a bona fide purchaser. If not, the bankruptcy trustee can avoid the mortgage under 11 U.S.C. § 544(a)(3).
The state law questions in this case are dispositive, and they are unresolved by the Massachusetts SJC. They also implicate " significant policy concerns better suited for resolution by the" SJC. Easthampton Sav. Bank v. City of Springfield, 736 F.3d 46, 48 (1st Cir. 2013). Accordingly, we certify the questions for resolution by that court. See Mass. S.J.C. R. 1:03.
On December 27, 2005, Alvaro and Lisa Pereira refinanced their property in New Bedford, Massachusetts, by granting a mortgage to Bank of America in the principal amount of $240,000. The Pereiras executed the mortgage document, initialing each page. The document's certificate of acknowledgement, which affirms that the mortgagors actually executed the documents for the mortgage " voluntarily for its stated purpose," omitted their names. That document was recorded the next day.
On January 19, 2012, the attorney who notarized the mortgage documents recorded an affidavit purportedly executed pursuant to Mass. Gen. Laws ch. 183, § 5B. That statute permits recording of affidavits that " will be of benefit and assistance in clarifying the chain of title" to certain land. Id. The affidavit, dated January 11, 2012, states that the attorney had witnessed the Pereiras' signatures to the mortgage, and that they signed it voluntarily. The attorney stated ...