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Louis v. Bank of America, N.A.

United States District Court, D. Massachusetts

March 30, 2017



          WOLF, D.J.

         In an October 21, 2016 Report and Recommendation, the Magistrate Judge recommended that defendants' motion for judgment on the pleadings be denied as to plaintiff's claim for quiet title (Count I), and allowed as to plaintiffs' claims for inaccurate credit reporting in violation of the Fair Credit Reporting Act ("FCRA") (Count II), defamation (Count III), and invasion of privacy (Count IV) . The Magistrate Judge also recommended that plaintiff Marie Macdala Louis ("Marie Louis") be dismissed for lack of standing. The defendants, Bank of New York Mellon ("BNY Mellon") and Specialized Loan Servicing LLC ("SLS"), filed an objection concerning Count I to the Report and Recommendation and submitted new evidence concerning that objection. Plaintiffs Carole and Marie Louis made no objection to the Report and Recommendation.

         The court has reviewed de novo the issues to which a proper objection has been made. See Fed.R.Civ.P. 72(b)(3). For the reasons explained below, the court is adopting the Report and Recommendation in part as to Counts II, III, and IV, remanding the Report and Recommendation in part to the Magistrate Judge as to Count I, and dismissing plaintiff Marie Louis for lack of standing.

         The parties have not made any objection to the Report and Recommendation regarding Counts II, III, and IV, and the issue of Marie Louis' Article III standing. The court, therefore, need not review these issues de novo. Waiver of de novo review by failing to file proper objections does not entitle a party to "some lesser standard" of review. Thomas v. Arn, 474 U.S. 140, 149-50 (1985); see also Costa v. Hall, No. 00-12213-MLW, 2010 WL 5018159, at *17 (D.Mass. Dec. 2, 2010) ("Absent objections, the court may adopt the report and recommendation of the magistrate judge."). However, review by the court in such circumstances is not prohibited, and some level of oversight, even if not de novo, is encouraged. See Henderson v. Carlson, 812 F.2d 874, 878 (3rd Cir. 1987). The court has reviewed the Report and Recommendation and finds it to be thorough and persuasive as to Counts II, III, and IV, and the matter of Marie Louis' standing. It is, therefore, being adopted with regard to those Counts.

         As to Count I, plaintiffs argue for quiet title and rescission of the 2015 foreclosure under the theory that defendants failed to provide the plaintiffs a notice of the foreclosure sale, which is required under Mass. Gen. Laws c. 244 §14. The Magistrate Judge recommended that the motion for judgment on the pleadings be denied as to Count I because the defendants did not present sufficient evidence to prove that they met the notice requirements of §14. Section 14 requires that the mortgagee must provide notice to the mortgagor by registered mail. The defendants, in their answer, provided only a compilation of notices with certified article numbers stamped on them. See Ex. A to Answer (Docket No. 10-1). The Magistrate Judge found that such evidence is insufficient to prove notice was sent. In their objection to the Report and Recommendation, defendants submitted additional evidence, including certified mail receipts and returned envelopes of the notices they sent, which are the type of evidence that the Magistrate Judge suggested would be sufficient. See R&R at 6-7.

         In view of the additional evidence presented by the defendants, the court finds that it is appropriate to have the Magistrate Judge reconsider Count I. See 28 U.S.C. §636(b)(1). Ordinarily, evidence not attached to a Complaint should not be considered. However, on a motion for judgment on the pleadings, the court may consider "'documents the authenticity of which are not disputed by the parties; . . . documents central to plaintiffs' claim; [and] documents sufficiently referred to in the complaint.'" Curran v. Cousins, 509 F.3d 36, 44 (1st Cir. 2007) (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993)); see also Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 17 (1st Cir. 1998) ("[T]he court need not accept a complaint's 'bald assertions' ... [and the] inquiry into the viability of [plaintiff's] allegations should not be hamstrung simply because the plaintiff fails to append to the complaint the very document upon which by her own admission the allegations rest."). The evidence submitted for the first time to this court may or may not be within this exception. The Complaint alleges not that notice was never received by the plaintiffs but that it was "never sent to [them]." Compl. ¶18. Therefore, the Complaint's factual allegations appear to be expressly linked to the returned envelopes and certified mail receipts submitted by the defendants. See Beddall, 137 F.3d at 17. The court does not know if their authenticity is disputed.

         The defendants had the opportunity to present this evidence to the Magistrate Judge and did not do so. Usually, the "[p]arties must take before the magistrate, not only their best shot but all of their shots." Borden v. Sec'y of Health & Human Servs., 836 F.2d 4, 6 (1st Cir. 1987) (internal quotations omitted). The reviewing court may consider evidence and arguments not presented to the Magistrate Judge only "in the most compelling circumstances." Id. The rule promotes judicial efficiency. It also serves the interest of fairness by assuring that a matter will not be decided based on evidence or arguments that an opposing party has not had the opportunity to address.

         In this case, because new evidence was presented to this court in the objections to the Report and Recommendation, rather than to the Magistrate Judge in connection with a motion for reconsideration, plaintiffs have not had an opportunity to dispute their authenticity, contend that they should not be considered on the pending motion, or argue the implications of them. However, if the new evidence is considered it may justify judgment for defendants in Count I. Therefore, the court concludes that it is most appropriate to deny the motion for judgment on Count I without prejudice to the issue being reconsidered by the Magistrate Judge, to whom this question is being referred for a second Report and Recommendation.

         In view of the foregoing, it is hereby ORDERED that:

1. The attached Report and Recommendation (Docket No. 29) is ADOPTED in part and REMANDED in part, as described in this Memorandum and Order, pursuant to 28 U.S.C. §636(b)(1).
2. Defendant's Motion for Judgment on the Pleadings (Docket No. 14) concerning Counts II, III, and IV is ALLOWED.
3. Defendant's Motion for Judgment on the Pleadings (Docket No. 14) on Count I is DENIED without prejudice, and REMANDED to the Magistrate Judge for further proceedings and another Report and Recommendation.
4. Plaintiff Marie Louis is DISMISSED for lack of standing.



         I. Introduction.

         Plaintiffs Carole Louis and Marie Macdala Louis filed an action in the Superior Court of the Commonwealth of Massachusetts, Plymouth County against Bank of America, N.A. (BANA), Specialized Loan Servicing, LLC (SLS), and Bank of New York Mellon (BNY Mellon) to quiet title, Count I, for inaccurate credit reporting in violation of the Fair Credit Reporting Act (FCRA), Count II, defamation, Count III, and invasion of privacy, Count IV.[1](##1, 1-1.) BANA removed the matter to this court. (#1.) On August 9, 2016, BANA was dismissed from the case. (See #21 Joint Stipulation of Dismissal with Prejudice.) Thereafter, remaining defendants, SLS and BNY Mellon, filed a motion to dismiss (#14); plaintiffs responded in opposition (#25); and defendants filed a reply (#28). At this juncture the motion to dismiss stands ready for decision.

         II. The Facts.

         The facts as set forth in the complaint are as follows. On November 13, 2006, plaintiffs purchased the property at 56 Clarence Street in Brockton, Massachusetts (the Property). (#1-1 ¶ 7.) Plaintiff Carole Louis granted a mortgage to Mortgage Electronic Registration Systems Inc. (MERS), as nominee for American Wholesale Lenders Network (AWLN). Id; (#10 ¶ 7.) BANA, through its predecessor Countrywide, serviced the loan from 2007 to 2012. (#1-1 ¶¶ 8, 16.) SLS took over as the servicer of the loan in 2012 and remained as such until the debt was released via foreclosure in 2015. Id. at ¶¶ 16, 24. BNY Mellon was the mortgagee on the Property from October 20, 2011 through the 2015 foreclosure. Id. at ¶¶ 15, 20.

         Around 2007, plaintiff Carole Louis, the sole mortgagor for the Property, defaulted on the loan.[2] Id. ¶ 8. According to plaintiff, in May 2009, the Property was sold via short sale[3] to a bona fide third-party purchaser. Id. ¶¶ 9, 10. At the time of sale, the outstanding balance on the mortgage was $320, 000.00, which was to be offset by the $200, 000.00 sale price, leaving a deficiency of $120, 000.00. Id. ¶ 10. BANA, as the then servicer of the loan, failed to record the short sale deed and continued to represent to the Commonwealth, credit bureaus, and the federal government that plaintiff was the mortgagor, even though the mortgage had allegedly been satisfied with the discount sale price from the 2009 short sale.[4]-[5] Id. ¶ 11. BANA also allegedly failed to report the forgivable deficiency to the Internal Revenue Service (IRS). Id. ¶ 14. BANA's failures caused plaintiffs credit to decrease dramatically and resulted in her inability to obtain desired employment. Id. ¶ 12.

         On October 20, 2011, the mortgage was assigned by MERS, as nominee for AWLN, to BNY Mellon. Id. at ¶ 15. Around 2012, BANA transferred its loan servicing duties to SLS. Id. at ¶ 16. SLS reported to various credit bureaus that plaintiff was in a state of foreclosure[6] on the mortgage from the time it took over as servicer through the 2015 foreclosure. Id. ΒΆΒΆ 42, 52. In like manner to her allegations against BANA, plaintiff ...

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