United States District Court, D. Massachusetts
CHRISTOPHER HAYDEN and DENINE L. MURPHY a/k/a DENINE L. HAYDEN, Plaintiffs,
HSBC BANK USA, N.A., AS TRUSTEE FOR WELLS FARGO ASSET SECURITIES CORPORATION MORTGAGE ASSET-BACKED PASS THROUGH CERTIFICATES SERIES 2007-PA3, and WELLS FARGO BANK, N.A., Defendants.
MEMORANDUM AND ORDER
Christopher Hayden and Denine L. Hayden (collectively
“Haydens”) bring claims against Defendants HSBC
Bank USA, N.A., as Trustee on behalf of Wells Fargo Asset
Securities Corporation Mortgage Asset-Backed Pass Through
Certificates, Series 2007-PA3, (“HSBC”), and
Wells Fargo Bank, N.A. (“Wells Fargo”)
(collectively “Defendants”), relating to the
foreclosure of the Haydens' residence located at 128 Peck
Street, Rehoboth, Massachusetts (the “Property”).
D. 5 at 7. The Haydens seek a preliminary injunction
enjoining Defendants from conducting the foreclosure sale of
the Property, now scheduled for October 4, 2016, until this
matter is adjudicated on the merits. D. 18. Defendants have
filed a motion to dismiss, D. 13. For the reasons stated
below, the Haydens' motion is DENIED and Defendants'
motion is ALLOWED.
merit a preliminary injunction, plaintiffs must show: (1) a
reasonable likelihood of success on the merits; (2) that they
will likely suffer irreparable harm in the absence of the
injunction; (3) that the balance of equities tips in their
favor; and (4) that an injunction is in the public interest.
Bruns v. Mayhew, 750 F.3d 61, 65 (1st Cir. 2014).
Although there are four factors, likelihood of success on the
merits is the foremost consideration. Esso Standard Oil
Co. (Puerto Rico) v. Monroig-Zayas, 445 F.3d 13, 18 (1st
Cir. 2006). When a complaint is subject to dismissal for
failure to state a claim, a plaintiff obviously cannot
demonstrate likelihood of success and a preliminary
injunction will not issue. See, e.g., Hicks v.
Ryan, No. 13-cv-10709-RGS, 2013 WL 1992679, at *15 (D.
Mass. May 9, 2013).
motion to dismiss based upon Rule 12(b)(6), the Court will
dismiss a complaint that fails to allege adequate facts
“to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). The Court accepts non-conclusory factual
allegations in the complaint as true,
Ocasio-Hernández v. Fortuño-Burset,
640 F.3d 1, 12 (1st Cir. 2011), and “draw[s] all
reasonable inferences” in favor of the plaintiff,
Gargano v. Liberty Int'l Underwriters, Inc., 572
F.3d 45, 48 (1st Cir. 2009). In reviewing the complaint, the
Court can consider documents attached to or fairly
incorporated into the complaint and facts susceptible to
judicial notice. Schatz v. Republican State Leadership
Comm., 669 F.3d 50, 55 (1st Cir. 2012).
Motion to Dismiss
Haydens allege three claims in this case. D. 1-1. They seek
declaratory judgment that HSBC may not foreclose on the
Property under Mass. Gen. L. c. 244, § 14 (Count I),
assert that Wells Fargo violated Mass. Gen. L. c. 93A for
failing to comply with 209 C.M.R. § 18.17 and §
18.21 (Count II), and seek declaratory judgment that the
mortgage is obsolete by operation of Mass. Gen. L. c. 260,
§ 33 (Count III). D. 1-1 at 12-17.
Declaratory Judgment Pursuant to Mass. Gen. L. c. 244 §
14 (Count I)
Count I, the Haydens contend that the Mortgage Electronic
Registration System, Inc. (“MERS”) lacked
authority to transfer their mortgage because MERS was never a
mortgagee, did not hold title to the property and lacked the
power of sale, thus invalidating the mortgage assignment to
HSBC. D. 1-1 at 12-14. The Court disagrees. First, the
express language of the mortgage, attached and incorporated
into the complaint, provides that MERS was properly the
mortgagee and had power of sale. The Mortgage authorizes MERS
to assign the Mortgage and additionally provides that the
“[b]orrower understands and agrees that . . . MERS (as
nominee for Lender and Lender's successors and assigns)
has the right: to exercise any or all of those interests,
including, but not limited to, the right to foreclose and
sell the Property . . . .” D. 1-1 (mortgage) at 25, 27.
Second, the First Circuit has held both that a note and a
mortgage need not be held by the same entity and that MERS
can validly transfer or assign a mortgage without holding
title to the property. See, e.g., Culhane v.
Aurora Loan Servs. of Nebraska, 708 F.3d 282, 293 (1st
Cir. 2013) (noting that “MERS's role as mortgagee
of record and custodian of the bare legal interest as nominee
for the member-noteholder, and the member-noteholder's
role as owner of the beneficial interest in the loan, fit
comfortably with each other and fit comfortably within the
structure of Massachusetts mortgage law”); Serra v.
Quantum Servicing, Corp., 747 F.3d 37, 40-41 (1st Cir.
2014) (reinforcing Culhane); Jepson v. HSBC Bank
USA, Nat'l Ass'n, No. 12-cv-12179-LTS, 2013 WL
639184, at *4 (D. Mass. Feb. 20, 2013), aff'd
No. 13-1364, 2014 U.S. App. LEXIS 24246 (1st Cir. June 23,
2014). Both under the language of the mortgage and First
Circuit precedent, MERS had the requisite legal authority.
For support the Haydens cite to Eaton v. Fed. Nat'l
Mortg. Ass'n, 462 Mass. 569 (2012).
Eaton, however, does not diminish the ability of
MERS to make such an assignment. Id. at 576-77, 589
n.28; see also Culhane, 708 F.3d at 292-93 (citing
Eaton, 462 Mass. at 575-77).
Count I, the Haydens also allege that HSBC cannot foreclose
because the transfer of the mortgage into the applicable
trust did not comply with the terms of the Pooling and
Servicing Agreement (“PSA”). D. 1-1 at 12-14. The
Haydens first assert that violating the terms of the PSA
contravenes New York law in which the breaching mortgage
assignments would be voided. D. 1-1 at 12-14. New York law,
however, is inapplicable here where “Massachusetts
applies its own law to claims and defenses involving real
property located within its borders.” U.S. Bank
Nat'l Ass'n v. Bolling, 90 Mass.App.Ct. 154, 154
(2016) (citations omitted).
Massachusetts law, the Haydens do not have standing to
challenge a mortgage assignment based upon the PSA terms even
as pled in this specific case. D. 1-1 ¶¶ 32-36,
43-47, 49-52, 85-86, 93. This is because “infirmities
in the assignment of a mortgage, such as failure to abide by
the terms of a governing trust agreement are barred for
lack of standing.” Butler v. Deutsche Bank Trust
Co. Americas, 748 F.3d 28, 37 (1st Cir. 2014) (quoting
Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 354
(1st Cir. 2013)); Jepson, 2013 WL 639184, at *4.
Indeed “a mortgagor does not have standing to challenge
shortcomings in an assignment that render it merely voidable
at the election of one party.” Whitehead v. HMC
Assets, LLC, No. 14-cv-13408-IT, 2014 WL 5112111, at *5
(D. Mass. Oct. 10, 2014) (internal quotation mark and
citation omitted). The Haydens' allegations that the
assignment of the mortgage violated the PSA would render the
assignment voidable by the parties of the PSA; thus they do
not have standing. In re Sheedy, 801 F.3d 12, 24-25
(1st Cir. 2015); Butler, 748 F.3d at 37;
Bolling, 90 Mass.App.Ct. at 154. Even if the
assignment to HSBC lacked certain intermediary sales, as the
Haydens contend, D. 1-1 ¶¶ 43-51, 98, the Haydens
would still lack standing to challenge those assignments,
see Butler, 748 F.3d at 34-35, 37, even as
the allegations are pled here. Thus, the Court dismisses
Violation of Mass. Gen. ...