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Proal v. J.P. Morgan Chase & Co.

United States District Court, D. Massachusetts

August 22, 2016

CAROL PROAL, Plaintiff,



         Carol Proal (Plaintiff) brings this lawsuit to challenge the foreclosure of her home, which occurred in January of 2010. She asserts a bevy of claims, seeking to show that an assignment of the mortgage was void and that JP Morgan Chase & Co. (JP Morgan) and Citibank, N.A. (Citibank) (collectively, Defendants) violated the Massachusetts consumer protection law. Defendants move to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons set forth below, Defendants’ motion (Docket No. 7) is granted.


         The following facts are taken from Plaintiff’s complaint. On or about March 28, 2007, Plaintiff purchased property located at 389 Ridge Road in Hardwick, Massachusetts (the property). She executed a promissory note (the note) in favor of Community Lending Incorporated (Community) for the purchase price of $528, 000 and granted a mortgage (the mortgage) to secure the note. On the same day, the mortgage was assigned to Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for Community. On or about March 29, 2007, EMC Mortgage Corporation (EMC) became the servicer of the mortgage. Plaintiff alleges that EMC is a subsidiary of JP Morgan.

         In late 2008 or early 2009, Plaintiff fell behind on her mortgage payments. On or about March 27, 2009, the mortgage was assigned from MERS to Citibank, as trustee for “Certificate Holders of Structured Asset Mortgage Investments II Inc., Bear Stearns ALT-A Trust, Mortgage Pass-Through Certificates Series 2007-3” (the trust). (Docket No. 1 at 5.) The assignment was signed by Liquenda Allotey, a vice president of MERS. The assignment was notarized and recorded. According to Plaintiff, under the trust’s pooling and servicing agreement (PSA), the closing date of the trust was April 30, 2007. Plaintiff contends that the trust is governed by New York law.

         Plaintiff asserts that the nomination and approval process for vice presidents of MERS was simple and “near instantaneous.” (Docket No. 1 at 4). Plaintiff references a news article that allegedly reported that Allotey’s signature was “a simple zigzag line” appearing on thousands of mortgage assignments, “raising questions about whether other individuals may have signed his name.” (Docket No. 1 at 6). Plaintiff further alleges that William Hultman, a “true vice president of MERS, ” testified in front of the Virginia legislature in 2011 that “there was no authority from MERS for the appointment by him of vice presidents and secretaries as certifying officers”; that “only the MERS board of directors had that authority”; and that “the board did not have the authority to delegate that authority to Mr. Hultman.” (Docket No. 1 at 4.) Plaintiff also asserts that Allotey was an employee of Lender Processing Services (LPS).

         Citibank foreclosed on the mortgage in January of 2010 and then purchased the property as the high bidder at the foreclosure sale. The foreclosure deed was recorded in March of 2010. Approximately two years later, in March of 2012, Plaintiff executed and recorded a purported quitclaim deed, attempting to transfer the property from herself to herself and Russell Proal, in exchange for $100. In March of 2013, new owners purchased the property. According to Plaintiff, in September of 2014 she “was notified by the Massachusetts Attorney General that she was eligible for a settlement regarding JP Morgan, and that the settlement had left the door open for individual mortgagors to sue on their own behalf.” (Docket No. 1 at 11.)

         On January 27, 2016, Plaintiff filed the instant lawsuit against JP Morgan and Citibank, asserting six counts: (1) “to void or cancel assignment of the mortgage”; (2) wrongful foreclosure; (3) violation of Mass. Gen. Laws ch. 93A; (4) unjust enrichment; (5) “to set aside Trustee’s sale”; and (6) “to void or cancel Trustee’s foreclosure deed.” Defendants move to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

         Standard of Review

         To survive a Rule 12(b)(6) motion to dismiss, a complaint must allege “a plausible entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007). Although detailed factual allegations are not necessary to survive a motion to dismiss, the standard “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555. “The relevant inquiry focuses on the reasonableness of the inference of liability that the plaintiff is asking the court to draw from the facts alleged in the complaint.” Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 13 (1st Cir. 2011). In evaluating a motion to dismiss, the court must accept all factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff’s favor. Langadinos v. American Airlines, Inc., 199 F.3d 68, 68 (1st Cir. 2000).

         It is a “context-specific task” to determine “whether a complaint states a plausible claim for relief, ” one that “requires the reviewing court to draw on its judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal citations omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’-that the pleader is entitled to relief.” Id. (quoting Fed.R.Civ.P. 8(a)(2)). On the other hand, a court may not disregard properly pled factual allegations, “even if it strikes a savvy judge that actual proof of those facts is improbable.” Twombly, 550 U.S. at 556


         1. Counts I, II, V, and VI: Validity of the Foreclosure

         Defendants argue that Plaintiff lacks standing to challenge the assignment of the mortgage from MERS to Citibank because the assignment was 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 (Mas. 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, ...

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