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Buba v. Deutsche Bank National Trust Co. Americas

United States District Court, D. Massachusetts

May 6, 2016

RICHARD J. BUBA, et al., Plaintiffs,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY AMERICAS, et al., Defendants.

MEMORANDUM AND ORDER

Patti B. Saris Chief United States District Judge

INTRODUCTION

Plaintiffs Richard and Eugenia Buba (“Bubas”) sued Defendants Nationstar Mortgage, LLC (“Nationstar”), and Deutsche Bank National Trust Company Americas, as Trustee for Mortgage Asset-Backed Pass-Through Certificates, Series 2007-QH4 (“Deutsche Bank”), alleging four counts: (1) wrongful foreclosure, (2) breach of contract, (3) negligence, and (4) wrongful foreclosure in violation of M.G.L. ch. 244, §§ 14-17 & 35A and M.G.L. ch. 183, § 21. Defendants moved to dismiss the second amended complaint on the ground that the issues are precluded by an earlier adverse ruling in state court. After hearing, the Court ALLOWS the defendants’ Motion to Dismiss (Docket No. 5).

FACTUAL BACKGROUND

Allegations in the second amended complaint, and the attachments, are taken as true for purposes of this motion to dismiss. The Court also takes judicial notice of prior court proceedings, public records, and documents referenced in the complaint.

The plaintiffs are former owners and residents of the property at 358 Salem Street, Andover, Massachusetts. The Bubas purchased the property in December 1986. On February 16, 2007, the Bubas executed a mortgage on the property in exchange for $725, 000. GN Mortgage, LLC, was the lender and Mortgage Electronic Registration Systems, Inc. (“MERS”), served as the lender’s nominee. On February 5, 2011, MERS assigned the mortgage to Aurora Bank FSB (“Aurora”).

On October 20, 2011, Aurora sent the Bubas a notice via certified mail that the loan was in default due to an overdue balance. Docket No. 6, Ex. 1 at 1-3. The letter informed the plaintiffs of their right to cure the default within 150 days and the amount required to cure-the overdue balance of $10, 531.68.

On June 28, 2012, Aurora assigned the mortgage to defendant Nationstar. Nationstar assigned the mortgage to Deutsche Bank. On September 5, 2013, Nationstar, as servicer on behalf of Deutsche Bank, sent a second default notice to the Bubas. Docket No. 6, Ex. 2 at 1-3. This letter informed the Bubas that their overdue balance had ballooned to $99, 769.64.

After both Aurora and Nationstar filed complaints to determine the military status the Bubas, on July 17, 2014, the Land Court entered judgment permitting Nationstar to commence with the sale of the property. On December 5, 2014, Nationstar recorded an affidavit certifying that it had taken reasonable steps and made a good faith effort to avoid foreclosure-as required by M.G.L. ch. 244, § 35B-and that it was the authorized agent of the holder of the promissory note secured by the mortgage-as required by M.G.L. ch. 244, § 35C. Thereafter, Nationstar published a notice of sale in the Lawrence Eagle-Tribune. Docket No. 6, Ex. 4 at 5. This notice ran weekly for three consecutive weeks, beginning with the December 30, 2014 issue. Id. On January 20, 2015, Nationstar held a public auction and sold the property to itself as the highest bidder for $791, 296.50. Docket No. 6, Ex. 4 at 4. As the servicer for the note held by Deutsche Bank, Nationstar then assigned its successful bid to Deutsche Bank. Deutsche Bank then sold the property on or about May 4, 2015, to Roger Bourk and Anita Santos (“Bourk and Santos”) for $630, 000.

The Bubas did not vacate the property. Subsequently, Bourk and Santos filed a summary process action against the Bubas in the Lawrence District Court seeking possession of the property and damages for use and occupancy. On June 29, 2015, the Bubas filed an answer and counterclaimed, alleging that Nationstar was not the noteholder of record at the time of the foreclosure and did not have the right to foreclose, and that Nationstar failed to properly review the Bubas for a loan modification to avoid foreclosure.

Specifically, the Bubas alleged in their answer that the foreclosure was void and brought additional counterclaims: wrongful foreclosure, void foreclosure because of M.G.L. ch. 93A violations by Nationstar, and intentional infliction of emotional distress, which the Bubas asserted resulted after Bourk and Santos purportedly attempted to self-evict the Bubas. On August 14, 2015, the Bubas filed an amended answer alleging that Nationstar was neither the holder nor the agent of the holder at the time of the foreclosure, and that for this reason, the foreclosure was invalid. On September 18, 2015, for the first time, the Bubas challenged the adequacy of the default notice, alleging that it did not strictly comply with paragraph 22 of the mortgage as required by the Massachusetts Supreme Judicial Court in the recent case of Pinti v. Emigrant Mortg. Co., Inc., 33 N.E.3d 1213 (Mass. 2015).

Bourk and Santos filed a motion for summary judgment. They argued, among other things, that Massachusetts bars the Bubas’ counterclaims against third party purchasers for value. See M.G.L. ch. 244, § 35B(f).[1] Summary judgment was granted in favor of Bourk and Santos on December 1, 2015, by the Honorable Mark A. Sullivan of the Lawrence District Court. With respect to the default notice, the court found that “Nationstar complied with the requirements of M.G.L. ch. 244, § 35A.” Docket No. 6, Ex. 9 at 4-5. As to the claim that the defendants had not properly reviewed the Bubas for a loan modification, the court rejected the Bubas’ argument, stating that under M.G.L. ch. 244, § 35B(f) “plaintiffs cannot be liable for any alleged noncompliance by Nationstar” on this issue. Id. at 5. With regard to the adequacy of the default notice provisions in paragraph 22, the court declined to retroactively apply Pinti, which found that failure to strictly comply with the terms in paragraph 22 rendered a foreclosure invalid. Id. at 5-6.

The Bubas moved for reconsideration of this decision on January 25, 2016. Docket No. 6, Ex. 6 at 5. On February 1, 2016, Judge Sullivan denied this motion. Id. The Bubas filed an appeal on February 10, 2016. Id. The appeal was dismissed on March 1, 2016. Id. at 6. On August 10, 2015, the Bubas filed a complaint in the Massachusetts Superior Court, Essex County.[2] On February 29, 2016, the ...


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