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Rice v. Santander Bank, N.A.

United States District Court, D. Massachusetts

July 6, 2016

JOHN W. RICE, JR., individually and as personal representative of the estate of Helen Rice, Plaintiff,
SANTANDER BANK, N.A., Defendant.


          F. Dennis Saylor, IV United States District Judge.

         This case arises out of a mortgage executed in June 2007 by John W. Rice and Helen Rice, parents of plaintiff John W. Rice, Jr. Defendant Santander Bank, N.A., the mortgagee, initiated foreclosure proceedings in September 2015, although it has not scheduled a foreclosure sale. In response, Rice filed suit, contending that the mortgage is invalid. Among other things, Rice alleges that Santander induced his incapacitated parents into executing the mortgage to secure a home equity line of credit. Jurisdiction is based on diversity of citizenship.

         The complaint asserts five claims: (1) unlawful foreclosure in violation of Mass. Gen. Laws ch. 244, § 14; (2) misrepresentation, deceit, and fraud; (3) estoppel; (4) violation of Mass. Gen. Laws ch. 93A; and (5) declaratory judgment.[1] Rice appears to assert all five claims both individually and as the personal representative of his mother’s estate.

         Pursuant to Fed.R.Civ.P. 12(b)(6) and 9(b), Santander has moved to dismiss all five counts. Specifically, Santander contends that Counts Two and Four should be dismissed because they are barred by the relevant statutes of limitations and fail to plead facts with sufficient particularity. It further contends that Counts One and Three should be dismissed for failure to state a claim upon which relief can be granted, and that the dismissal of Counts One through Four warrants dismissal of the declaratory judgment claim in Count Five.

         Rice has opposed Santander’s motion and also moved for leave to amend the complaint under Fed.R.Civ.P. 15(a)(2).[2] Except for replacing Count Three, the estoppel claim, with a claim alleging slander of title, the two complaints appear to be identical. Ordinarily, a defendant’s motion to dismiss would be superseded by the filing of an amended complaint. However, because the amended complaint does not add to the original complaint’s factual allegations, and because Santander has contended in its reply that the additional slander of title claim should be dismissed for failure to state a claim, the Court will grant the motion to amend and deem the motion to dismiss to have been renewed. Accordingly, the Court will treat the amended complaint as asserting six claims collectively, and Santander’s original motion and reply collectively as a renewed motion to dismiss.

         For the following reasons, the motion to amend will be granted and the motion to dismiss will be granted in part and denied in part.

         I. Background

         Unless otherwise noted, the following facts are drawn from the complaint, documents referred to in the complaint, and official public records submitted by defendant.[3]

         A. Factual Background

         In 1959, John and Helen Rice purchased a property in Framingham, Massachusetts. (Compl. ¶ 3). By 2006, they had paid off the mortgage and owed no debt on the property. (Id. ¶ 4). On March 20, 2006, they executed durable powers of attorney and named two of their children, Jacqueline Foster and John W. Rice, Jr., as their attorneys in fact. (Id. ¶ 5). They listed their interest in the Framingham property in the power of attorney. (Id. ¶ 6; Pl. Ex. A (power of attorney record)). The parents also signed declarations of homestead in March 2006. (Compl. ¶ 7).

         By 2006, both parents had become incapacitated. (Id. ¶¶ 8-9). John suffered from a heart condition for several decades, which ultimately required major surgery and a rehabilitation stay in 2007. (Id. ¶ 8). He also spent several periods in nursing homes and hospitals. (Id.). According to the complaint, “[d]uring this period of time, ” John “was not mentally stable.” (Id.). Helen experienced the onset of dementia in the early 1990s. (Id. ¶ 9). At some point in time, her condition became “permanent, degenerative, [] progressive[, ] and of significant duration.” (Id.).

         On June 14, 2007, John and Helen executed a home equity line of credit mortgage on their home in Framingham with Santander Bank. (Id. ¶ 10; Def. Ex. A (mortgage)).[4] According to the complaint, neither of the two children who were attorneys-in-fact was aware of the execution of the loan documents. (Compl. ¶ 10). The note granted Santander a mortgage on the property in exchange for a $200, 000 revolving line of credit. (Def. Ex. A). It appears that the entire amount, or at least a large portion of it, was borrowed, and that the loan is in default. Who actually took out the money, and what happened to it, is not set forth in the complaint.

         The complaint alleges that neither John nor Helen could have traveled to the bank to sign the mortgage note on that date because they were physically and mentally impaired. (Compl. ¶ 11). It further alleges that neither parent “would have had the required contractual capacity” to sign the note at that time, due to their mental and physical incapacity. (Id. ¶ 12).

         Soon after granting the mortgage to defendant, John and Helen Rice conveyed the deed to the property to another son, Christopher Rice, on August 16, 2007. (Def. Ex. B (quitclaim deed)). The deed was recorded with the registry of deeds on September 7, 2007. (Id.). The same day that his parents conveyed the title to him, Christopher Rice transferred the property to himself and his brother, John, Jr., as joint tenants with the right of survivorship. (Def. Ex. C (quitclaim deed)). That deed was recorded on October 1, 2007. (Id.)

         John Rice died on June 21, 2009, and Helen Rice died intestate on September 9, 2011. (Compl. ¶¶ 13-14). After Helen’s death, John, Jr. began to “inquir[e] about the status of [her] estate.” (Id.). According to the complaint, John, Jr. “was unaware of the 2007 mortgage until after the death of his mother.” (Id.). However, he executed and recorded a declaration of homestead on the property on October 3, 2011. That declaration noted “[f]or my title see Deed dated August 16, 2007 and recorded in Middlesex South District Registry of Deeds in Book 50172 Page 069.” (Def. Ex. D (declaration of homestead)). His brother Christopher, who lived in the house on the property, died on June 1, 2012. (Compl. ¶ 15). After his death, John, Jr. “again began inquiring about the status of his mother’s estate.” (Id.).

         The complaint does not allege what specific inquiries were made, or when or how John, Jr. became aware of the existence of the 2007 mortgage. According to the complaint, on June 25, 2012, he began attempting to contact Santander “about the alleged loan of which he had no previous knowledge.” (Id. ¶ 16). Also on June 25, 2012, counsel for John, Jr. sent a letter to Santander, informing the bank that John Rice, Sr., had passed away and that there had not been a mortgage on the house as of June 13, 2007. (Id. ¶ 18; Pl. Ex. E (letter)). In that letter, he requested copies of his parents’ bank records. (Compl. ¶ 19). John, Jr. did not receive a response from Santander. (Id. ¶ 20). He sent another letter to Santander on August 10, 2012, again requesting copies of his parents’ bank records. (Id. ¶¶ 21-22). He again did not receive a response. (Id. ¶ 23).

         On December 15, 2013, John, Jr. sent a demand letter to Santander. (Id. ¶ 17, Pl. Ex. C). On August 14, 2014, he received a mortgage default letter from Santander concerning the 2007 mortgage on the property. (Compl. ¶ 24). On September 19, 2014, he sent another letter to Santander’s representative, both pursuant to Mass. Gen. Laws ch. 93A, § 9. (Id. ¶ 17; Pl. Ex. D).

         Santander began foreclosure proceedings on September 22, 2015. (Compl. ¶ 28). It filed a complaint for foreclosure on September 29, 2015. (Am. Compl. ¶ 37). It has not yet foreclosed on the property or scheduled a foreclosure sale.

         John, Jr. was not appointed as the personal representative for his mother’s estate until December 15, 2015. (Compl. ¶ 1; Def. Ex. E (probate court record)). There is nothing in the record indicating whether he is the representative for his father’s estate.

         B. Procedural Background

         Plaintiff filed suit in state court on February 9, 2016. Santander removed to this Court on March 8, 2016. Santander has moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) and 9(b). Plaintiff has opposed that motion and moved for leave to amend pursuant to Fed.R.Civ.P. 15(a)(2).[5]

         II. L ...

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