United States District Court, D. Massachusetts
HSBC BANK USA, N.A.
DONALD LASSMAN, CHAPTER 7 TRUSTEE OF THE BANKRUPTCY ESTATE OF ANDREW AND MAUREEN DEMORE
HSBC Bank USA, N.A., Appellant: Christine E. Devine, LEAD
ATTORNEY, Mirick O'Connell Demallie & Lougee, Worcester,
MA; Jason A. Manekas, LEAD ATTORNEY, Bernkopf Goodman LLP,
Boston, MA; Sean R. Higgins, LEAD ATTORNEY, K & L Gates LLP -
MA, Boston, MA.
Donald Lassman, CHAPTER 7 TRUSTEE OF THE BANKRUPTCY ESTATE OF
ANDREW A. DEMORE, Appellee: Keri L. Wintle, LEAD ATTORNEY,
Duane Morris LLP, Boston, MA; Taruna Garg, LEAD ATTORNEY,
Murtha Cullina LLP, Boston, MA.
ANDREW A. DEMORE, Appellee: Gary W. Cruickshank, LEAD
ATTORNEY, Boston, MA.
MAUREEN A DEMORE, Appellee: Jason A. Manekas, LEAD ATTORNEY,
Bernkopf Goodman LLP, Boston, MA.
AND ORDER ON APPEAL FROM THE BANKRUPTCY COURT AND ON
APPELLANT'S MOTION TO CERTIFY
G. Stearns, UNITED STATES DISTRICT JUDGE.
Donald Lassman is the Trustee of the bankruptcy estates of
Andrew and Maureen DeMore (the DeMores). Appellant HSBC Bank,
USA, N.A. (HSBC) is the United States arm of an international
bank headquartered in London, England. HSBC appeals the
decision of the Bankruptcy Court granting summary judgment to
Lassman in two adversary proceedings involving a mortgage
note on real property located in North Attleboro,
February of 1994, the DeMores acquired a parcel of land in
North Attleboro. The deed transferring the property was
registered with the Land Court on March 19, 1994. In April of
2004, the DeMores executed Limited Powers of Attorney to John
G. Molloy. One week later, Molloy, ostensibly on behalf of
the DeMores, executed a promissory note in favor of HSBC
Mortgage Corporation, USA, in the amount of $244,900, secured
by a mortgage on the Attleboro property. HSBC Mortgage
Corporation, USA subsequently assigned the mortgage to HSBC.
Certificate of Acknowledgment appended to the mortgage read
as follows (handwritten portions italicized):
On this 27th day of April, 2004, before me, the
undersigned notary public personally appeared Andrew
DeMore and Maureen DeMore by their attorney-in-fact, John G.
Malloy under power of attorney recorded herewith proved
to me through satisfactory evidence of identification, which
were drivers licenses to be the person whose name is
signed on the proceeding attached document, and acknowledged
to me that he/she signed it voluntarily and for its stated
mortgage was executed less than three weeks prior to the
signing by Governor Romney of Revised Executive Order No. 455
(04-04), Standards of Conduct for Notary Publics
(May 14, 2004), which mandated that notaries use a standard
form Certificate of Acknowledgment that is virtually a
verbatim copy of the Certificate executed at the DeMores'
closing. Id. § 5(d). As with every page of the
mortgage, the Certificate was inscribed at the bottom of the
page with the initials " A.D. by JGM as AIF under POA
recorded in Bristol Bk pg . . . MD by JGM as AIF under POA
recorded in Bristol Bk pg ."
October of 2013, Andrew DeMore filed for bankruptcy under
Chapter 7 of the United States Bankruptcy Code, 11 U.S.C.
§ § 101 et seq. Two months later, in
December of 2013, Maureen DeMore also filed for Chapter 7
bankruptcy. On January 21, 2014, Lassman, in his capacity as
Trustee, began adversary proceedings against Mr. DeMore and
HSBC, and on the following day against Mrs. DeMore and
HSBC. Lassman sought to avoid the mortgage
pursuant to the " strong-arm powers" granted to
bankruptcy trustees by 11 U.S.C. § § 544(a)(3) and
551, based on an alleged notarization
defect: namely, that the Certificate of Acknowledgment
appended to the DeMores' North Attleboro mortgage failed
to " unequivocally and unambiguously identify who
appeared in front of the notary." Record App'x at
33. HSBC moved to dismiss the action, or alternatively, to
certify questions of state law to the Massachusetts Supreme
Judicial Court (SJC).
Bankruptcy Court rejected HSBC's motion to certify and
granted summary judgment to Lassman. The Bankruptcy Court
relied on a Bankruptcy Appellate Panel decision, In re
Kelley, 498 B.R. 392, 400-401 (B.A.P. 1st Cir. 2013).
Echoing Kelley, the Bankruptcy Court found the
mortgage to be materially defective
[b]ased upon the ambiguous language in the acknowledgment it
is unclear whether the Mortgage was signed 'voluntarily
and for its stated purpose' by Molloy, or by [Molloy]
under his power of attorney. Indeed, the language in the
acknowledgment is unclear as it is capable of two different