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Lewis v. Bank of New York Mellon Trust Co., N.A.

United States District Court, D. Massachusetts

August 31, 2016

JOHN N. LEWIS and SUSAN A. LEWIS, Plaintiffs,
v.
BANK OF NEW YORK MELLON TRUST COMPANY, N.A.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and WELLS FARGO BANK, N.A., Defendants.

          MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO DISMISS

          F. DENNIS SAYLOR, IV UNITED STATES DISTRICT JUDGE

         This action arises from a home mortgage foreclosure. Jurisdiction is based on diversity of citizenship. Plaintiffs John N. Lewis and Susan A. Lewis have brought suit against defendants Bank of New York Mellon Trust Company, N.A. (“BNYM”), Mortgage Electronic Registration Systems, Inc. (“MERS”), and Wells Fargo Bank, N.A (“WFB”) for alleged violations of law stemming from proceedings to foreclose on their home.[1] The complaint asserts claims for declaratory and injunctive relief, conversion, and violation of Mass. Gen. Laws ch. 93A. Plaintiffs essentially seek a two-prong declaration that MERS, the mortgagee, did not have authority to assign the mortgage to the purported note holder BNYM, and that BNYM is not the holder of the promissory note that plaintiffs granted to their original lender, Peoples Mortgage Corporation (“PMC”).

         Defendants have moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. For the reasons set forth below, defendants' motion will be denied.

         I. Background

         Unless otherwise noted, all facts are stated as alleged in the complaint and its accompanying exhibits.

         A. Factual Background

         In December 2004, plaintiffs purchased a home at 22 Cutler Road, Needham, Massachusetts. (Compl. ¶ 5). To finance their purchase, plaintiffs executed a $1.2 million promissory note in favor of PMC, their lender. (Id. ¶ 6; Compl. Ex. 1).[2] The note was secured by a mortgage on the property. (Compl. ¶ 6).

         The mortgage designates plaintiffs as the borrowers, PMC as the lender, and MERS as the mortgagee. (Compl. Ex. 2 at 1). According to the mortgage, MERS “is a separate corporation that is acting solely as a nominee for lender and lender's successors and assigns.” (Id.). Plaintiffs agreed to “hereby mortgage, grant and convey to MERS (solely as nominee for lender and lender's successors and assigns) and to the successors and assigns of MERS, with power of sale the [Cutler Road property].” (Id. at 2). MERS promptly recorded the mortgage in the Norfolk County Registry of Deeds. (Compl. ¶ 7).

         In November 2008, PMC was voluntarily dissolved. (Id. ¶ 9).[3] In October 2014, plaintiffs stopped paying their mortgage. (Id. ¶ 10). According to plaintiffs, they did so “upon a coincidental review of their title which revealed that PMC had been dissolved and that there was no record of any assignment of the mortgage in the Land Court or Norfolk Registry of Deeds or that the note had been sold, transferred or assigned to a subsequent holder.” (Id.). At that time, MERS still owned the legal title to the mortgaged premises in trust for the note holder (the successors and assigns of PMC).

         In December 2014, MERS assigned the mortgage to BNYM, who defendants contend was the note holder at the time of default. (Id. ¶ 11; Compl. Ex. 4 at 1). The assignment, which was prepared by WFB, was signed by an assistant secretary of MERS, “as nominee for [PMC], its successors and assigns.” (Compl. Ex. 4 at 2). The assignment was recorded in January 2015. (Id.). At all times relevant to this action, WFB has been acting as the servicer for plaintiffs' loan on behalf of BNYM. (Id.; Compl. Ex. 6).

         In July 2015, BNYM initiated foreclosure proceedings by filing a Servicemembers Civil Relief Act case in the Massachusetts Land Court. (Compl. ¶ 14). In May 2016, WFB recorded an affidavit with the Registry of Deeds pursuant to Mass. Gen. Laws ch. 244, §§ 35B and 35C. (Id. ¶ 13). The affidavit identifies both the Cutler Road property and the original mortgage, which was granted to MERS “as nominee for [PMC], its successors and assigns.” (Def. Ex. 1).[4]The affidavit is signed by a vice president of loan documentation for WFB and states that “the mortgage was assigned to [BNYM], as successor-in-interest to all permitted successors and assigns of JPMorgan Chase Bank, N.A., as Trustee, for certificate holders of Nomura Asset Acceptance Corporation Mortgage Pass-Through Certificates, Series 2005-AR2 on December 23, 2014.” (Id.). It further states that BNYM is “the holder of the promissory note secured by the above mortgage.” (Id.).

         B. Procedural Background

         Plaintiffs filed suit in the Massachusetts Land Court in May 2016, seeking to prevent BNYM from exercising the power of sale and conducting a foreclosure. The complaint asserts claims for (1) declaratory judgment, (2) injunctive relief, (3) conversion, and (4) violation of Mass. Gen. Laws ch. 93A. It alleges that “the assignment from [MERS] to [BNYM] is fraudulent and void, ” and that “[BNYM] is not the holder of the . . . promissory note given by [plaintiffs] to [PMC].” (Compl. ¶ 15). It also alleges conversion against WFB for wrongfully collecting $784, 500 in plaintiffs' monthly mortgage payments from 2008 to 2014. (Id. ¶¶ 20-23). Finally, it alleges that MERS, WFB, and BNYM violated Chapter 93A by “conspir[ing] to deceive [plaintiffs] . . . into believing that [BNYM] was the owner of the mortgage for the purpose of foreclosing on the Cutler Road property and exercising the mortgage's power of sale, knowing that [PMC] did not exist at the time of the assignment and therefore MERS did not have legal title or authority to make the assignment and further filing a false affidavit claiming that BNYM was the holder of the note.” (Id. ¶ 25). The complaint seeks declaratory and injunctive relief from the foreclosure proceedings and money damages.

         Defendants removed the case to this Court in June 2016. They have moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to ...


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