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Clockedile v. U.S. Bank Trust, N.A.

United States District Court, D. Massachusetts

May 25, 2016

LAWRENCE R. CLOCKEDILE, JR. and CHARLENE BYRNES-CLOCKEDILE, Plaintiffs,
v.
U.S. BANK TRUST, N.A. AS TRUSTEE FOR LSF8 MASTER PARTICIPATION TRUST and CALIBER HOME LOANS, INC., Defendants.

          MEMORANDUM AND ORDER ON DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT (Docket No. 16)

          TIMOTHY S. HILLMAN DISTRICT JUDGE

         Lawrence R. Clockedile, Jr. and Charlene Byrnes-Clockedile (Plaintiffs) filed this action to challenge the foreclosure of their home. They assert ten counts against the foreclosing bank, U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust (U.S. Bank), and its servicer, Caliber Home Loans, Inc. (Caliber) (collectively, Defendants). Defendants move for summary judgment. For the reasons set forth below, Defendants’ motion (Docket No. 16) is granted.

         Background

         In March of 2007, Plaintiffs executed a mortgage and loan agreement in favor of Household Finance Corporation II (Household Finance) in the amount of $275, 497.98. The mortgage encumbered property located on Clark Street in Rochdale, Massachusetts. Plaintiffs have been in default since April of 2010.

         On July 31, 2014, Household Finance assigned the mortgage to U.S. Bank. Caliber, which was Household Finance’s servicer, executed the assignment on Household Finance’s behalf. The assignment referenced a power of attorney (POA), which was granted by Household Finance to Caliber, dated June 3, 2013 and recorded in December of 2013. This POA was expired at the time of the assignment. However, Household Finance had issued another POA to Caliber, dated December 20, 2013, valid for one year, which was in effect on the date of the assignment. This POA was not referenced in the assignment document, and it is unclear whether it had been recorded at the time of the assignment. The assignment itself was recorded on August 5, 2014. In the fall of 2015, Caliber-which is now the servicer for U.S. Bank-began initiating foreclosure proceedings. Around the same time, Plaintiffs contacted Caliber and requested a loan modification. The foreclosure sale was initially scheduled for December of 2015 but has since been postponed.

         Plaintiffs brought this suit against U.S. Bank and Caliber in December of 2015. They request a temporary restraining order (count I) and a preliminary injunction (count II) to prevent Defendants from foreclosing on the mortgage.[1] Plaintiffs further allege: breach of the covenant of good faith and fair dealing (counts IV & V); violation of Mass. Gen. Laws ch. 93A (counts VI & VII); intentional infliction of emotional distress (counts VIII & IX); negligence (count IX [sic]); and breach of contract (count X). Defendants move for summary judgment on all counts.

         Standard of Review

         Rule 56 of the Federal Rules of Civil Procedure provides that the court shall grant summary judgment if the moving party shows, based on the materials in the record, “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” A factual dispute precludes summary judgment if it is both “genuine” and “material.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, (1986). An issue is “genuine” when the evidence is such that a reasonable factfinder could resolve the point in favor of the nonmoving party. Morris v. Gov’t Dev. Bank of Puerto Rico, 27 F.3d 746, 748 (1st Cir. 1994). A fact is “material” when it might affect the outcome of the suit under the applicable law. Id.

         When considering a motion for summary judgment, the Court construes the record in the light most favorable to the nonmoving party and makes all reasonable inferences in favor thereof. Sensing v. Outback Steakhouse of Florida, LLC, 575 F.3d 145, 153 (1st Cir. 2009). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact within the record. Id. at 152. “Once the moving party has pointed to the absence of adequate evidence supporting the nonmoving party’s case, the nonmoving party must come forward with facts that show a genuine issue for trial.” Id. (quoting Carroll v. Xerox Corp., 294 F.3d 231, 236 (1st Cir. 2002)).

         Discussion

         A. Counts I & II

         Plaintiffs’ claims for injunctive relief are based on the alleged invalidity of the assignment from Household Finance to U.S. Bank. Plaintiffs argue that this assignment was invalid because it referenced an expired POA and that, because the assignment was invalid, U.S. Bank is not the mortgagee and cannot foreclose. Defendants argue that the assignment was valid because Caliber was operating under a valid POA, albeit not the one that was referenced in the assignment document.

         Plaintiffs do not have standing to challenge the foreclosure on this basis, because an assignment that contains a scrivener’s error is not void. Under Massachusetts law, a mortgagor has standing to challenge the validity of a foreclosure by reason of the mortgagee’s lack of legal authority to conduct it. Bank of New York Mellon Corp. v. Wain, 11 N.E.3d 633, 638 (Mass. App. Ct. 2014) (citing Sullivan v. Kondaur Capital Corp., 7 N.E.3d 1113, 1116 (Mass. App. Ct. 2014)). However, when challenging the validity of an assignment, the mortgagor’s standing is “limited to claims that a defect in the assignment rendered it void, not merely voidable.” Id. (citing Sullivan, 7 N.E.3d at 1116 n.7). “A deficiency in an assignment that makes it merely voidable at the election of one party or the other would not automatically invalidate the title of a foreclosing mortgagee, and accordingly would not render void a foreclosure sale conducted by the assignee or its successors in interest.” Sullivan, 7 N.E.3d at 1116 n.7; see Culhane v. Aurora Loan Servs. of Nebraska, 708 F.3d 282, 291 (1st Cir. 2013) (homeowner had standing to challenge mortgage assignment as “invalid, ineffective, or void, ” but lacked standing to argue that assignment was “merely voidable at the election of one party but otherwise effective to pass legal title”).

         Thus, the issue is whether the assignment from Household Finance to U.S. Bank was rendered void because it referenced the wrong POA. Under Massachusetts law, a scrivener’s error will not invalidate an assignment if there is evidence that the assignment is otherwise valid. See Sullivan, 7 N.E.3d at 1121. Here, the assignment was otherwise valid because Caliber was operating under a valid POA. Accordingly, U.S. Bank holds the mortgage, and Plaintiffs have “no legally cognizable stake in whether there otherwise might be latent defects in the assignment process.” Wain, 11 N.E.3d at 638. It is also immaterial to the foreclosure that the POA may not have been recorded at the time of the assignment. Under Massachusetts law, “a power of ...


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