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Olabode v. Caliber Home Loans Inc.

United States District Court, D. Massachusetts

August 17, 2016




         Plaintiffs Omolare R. Olabode and Gerald Kelly (“Plaintiffs”) challenge an attempted mortgage foreclosure on a residence in Dorchester, Massachusetts (the “Property”). Plaintiffs originally filed their Complaint in the Massachusetts Superior Court for Suffolk County. Defendant, Caliber Home Loans, Inc. (“Caliber”) removed the action to this Court on January 21, 2015, based on diversity jurisdiction. See 28 U.S.C. § 1332. Presently before the Court is Caliber’s Motion for Summary Judgment [ECF No. 53]. For the reasons that follow, Caliber’s Motion is ALLOWED, and judgment shall enter for the Defendant.

         I. BACKGROUND

         On December 31, 2014, Plaintiffs filed their Complaint in Suffolk Superior Court, see State Court Record [ECF No. 11], pp. 3-83 (“Compl.”), seeking a declaratory judgment that Caliber lacks standing to foreclose on the Property pursuant to Mass. Gen. Laws c. 244, § 14.[1] More specifically, Plaintiffs allege that Caliber has failed to establish that it is a “mortgagee” as the term is used in § 14. Compl. ¶ 57. In Eaton v. Federal National Mortgage Association, the Massachusetts Supreme Judicial Court held that to qualify as a “mortgagee” for purposes of a Section 14 foreclosure, the foreclosing entity must be both (1) the mortgagee of record, and (2) the holder of the underlying promissory note (or the note holder’s authorized agent). 462 Mass. 569, 584 (2012). Here, Plaintiffs claim that while Caliber may be the servicer on the loan, Caliber is not the current note holder.

         In support of this contention, Plaintiffs attached to their Complaint an “Affidavit Regarding Note Secured by a Mortgage to Be Foreclosed, ” dated April 10th, 2014, which Caliber recorded with the Suffolk County Registry of Deeds prior to its attempted foreclosure on the Property. See Compl. Ex. E. (“McClelland Affidavit”). In the Affidavit, a Caliber Default Service Officer named Daniel McClelland certified that Caliber was “the authorized agent of the holder” of the promissory note secured by the mortgage to be foreclosed. Id. (emphasis added). Notably, McClelland did not select the other box on the form, which gave the option of certifying that Caliber was the “holder of the promissory note secured by the above mortgage.” See id. (emphasis added).[2]

         Shortly after the Complaint was filed, Caliber removed the action to federal District Court and filed a Motion to Dismiss for failure to state a claim on which relief may be granted. [ECF No. 12]. Caliber argued that the factual basis for Plaintiffs’ claims (i.e., that Caliber is not the current note holder) was negated by the documents attached to Plaintiffs’ Complaint. Those documents, Caliber argued, demonstrated that both the Note and the Mortgage had been validly assigned to Vericrest Financial, Inc., which later changed its name to Caliber.

         Plaintiffs filed an Opposition to Caliber’s Motion to Dismiss [ECF No. 15], and the Court scheduled the Motion for a hearing. Prior to the hearing, the Court notified the parties that it would consider converting Caliber’s Motion to Dismiss into a Motion for Summary Judgment. The Court invited the parties to submit supplemental materials and ordered Caliber to produce the original Note for inspection at the time of the hearing. [ECF No. 27].

         In advance of the hearing, Caliber filed an Affidavit of Jesse Mendez, another Caliber Default Servicing Officer, in further support of Caliber’s Motion to Dismiss. See [ECF No. 32] (“Mendez Aff.”). The Mendez Affidavit asserted, inter alia, that Caliber is both the owner and the holder of the underlying promissory note, as well as the mortgagee of record. Id. ¶¶ 5-6. Mendez further explained that “Caliber is in the business of both owning and servicing mortgage loans, ” but that in this particular case, Caliber is the holder, owner, and servicer of the Note in question. Id. ¶ 7.

         At the hearing on May 14, 2015, Caliber produced the original Note. See Transcript of Proceedings, ECF No. 38 pp. 29-33. After reviewing the Note, Plaintiffs’ counsel pointed out that although the Note was accompanied by two “Allonges, ” the first of which purported to indorse the Note to Vericrest, and the second of which purported to indorse the note in blank, the Allonges were not firmly “affixed” to the original Note, as required by Mass. Gen. Laws c. 106, § 3-204(a). Plaintiffs’ counsel suggested that the failure to affix the Allonges could compromise their enforceability. Id. pp. 16-17.

         Also at the hearing, counsel for Caliber represented that, to the best of his knowledge, there was no other entity or third party with an ownership interest in the promissory note or mortgage in question. Id. p. 24. Several days later, however, Caliber’s counsel filed a letter with the Court clarifying his prior statement [ECF No. 37]. Counsel explained that after making further inquiries, he learned that the Federal Home Loan Mortgage Corporation (“Freddie Mac”) was the “investor” on the loan secured by the mortgage in this case. Id. Counsel further advised that, as the investor, Freddie Mac “may (but will not necessarily) take ownership of the property after the subject property has been sold at a foreclosure sale.” Id.. In his letter, counsel for Caliber argued that this fact “does not change the legal issue or analysis before the Court, ” because Freddie Mac’s “eventual ownership of the property is distinct from the current ownership of the Note and Mortgage.” Id.

         In an Order dated July 8, 2015, the Court denied Caliber’s Motion to Dismiss. [ECF No. 43]. Although the Court acknowledged that the alleged facts supporting Plaintiffs’ theory were “exceedingly thin, ” Plaintiffs had plausibly alleged that Caliber was not the “mortgagee” and therefore not entitled to foreclose under Mass. Gen. Laws c. 244, § 14. The Court further declined to convert Caliber’s Motion to Dismiss into a motion for summary judgment, in light of lingering ambiguities created by (1) the McClelland Affidavit, (2) the Note’s Allonges; and (3) Caliber’s counsel’s reference to Freddie Mac as a third party “investor.”

         The Court further held that while Plaintiffs were entitled to conduct some discovery on these issues, the Court was “not inclined to allow broad discovery.” Id. Thus, the Court set an abbreviated discovery schedule, which was aimed at determining whether or not Caliber was indeed the current mortgagee and note holder for purposes of Mass. Gen. Laws, c. 244, § 14. Id. The Scheduling Order required the parties to exchange initial disclosures; permitted Plaintiffs to serve up to ten (10) interrogatories; and further allowed Plaintiffs to take Caliber’s deposition pursuant to Fed.R.Civ.P. 30(b)(6). The Court ordered that “[a]ll discovery shall be completed by September 25, 2015, and no additional discovery will be permitted without leave of court.” Id. The Court also set a deadline for filing summary judgment motions, which was later extended to October 23, 2015. See id.; see also [ECF No. 51].

         Although the Court issued the Scheduling Order on July 8, 2015, Plaintiffs waited two full months to pursue any discovery. They finally served interrogatories on Caliber on September 8, 2015. [ECF No. 57-1]. On October 7, 2015, Caliber responded to Plaintiffs’ interrogatories with objections and responses. See id. Plaintiffs did not immediately respond.

         On October 22, 2015, Caliber’s counsel contacted Plaintiffs’ counsel in an attempt to confer and “narrow the issues” that Caliber intended to raise in its summary judgment motion, which was due to be filed the next day. See Declaration of Glen F. Russell, Jr. [ECF No. 57-4] (“Russell Decl.”), ¶ 11. Plaintiffs’ counsel responded, asserting - for the first time - that several of Caliber’s interrogatory responses were deficient. See id. The following day, counsel conferred by telephone in an attempt to clarify some of Caliber’s interrogatory responses. Id. ¶ 13. On November 16, 2015, Caliber served supplemental responses to certain interrogatories. Id. ¶ 14.

         Although Plaintiffs now complain that Caliber’s interrogatory responses are still deficient, Plaintiffs never filed a motion to compel. Further, Plaintiffs did not attempt to notice a deposition of Caliber’s corporate representative, as permitted by the Court’s July 8, 2015 Order.

         In accordance with the scheduling deadlines, Caliber filed its Motion for Summary Judgment on October 23, 2016, along with a Memorandum in Support, a Statement of Undisputed Material Facts pursuant to Local Rule 56.1, and an Affidavit. [ECF Nos. 53, 54, 55, 56]. On November 16, 2015, Plaintiffs filed a Motion for Extension of Time to Complete Discovery, pursuant to Fed.R.Civ.P. 56(d). [ECF No. 57]. Plaintiffs argue that the “extremely truncated discovery timeline” set by the Court, coupled with Caliber’s “vague and evasive” interrogatory responses, resulted in Plaintiffs being unable to timely respond to Caliber’s Motion for Summary Judgment. In the alternative, ...

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