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Skarzynski v. U.S. Bank N.A.

United States District Court, D. Massachusetts

May 16, 2018




         I. Introduction

         Presently before the court is a motion for a preliminary injunction filed by Gary and Joyce Skarzynski (“Plaintiffs”) in which they seek to enjoin the foreclosure sale of the real property located at 27 Clark Wright Road in Middlefield, Massachusetts (the “Property”). Plaintiffs filed their five-count complaint, alleging violations of federal and state law in connection with the origination and subsequent modification and assignment of a 2004 loan secured by the mortgage on the Property, on April 4, 2018 in Massachusetts Superior Court, shortly before a foreclosure auction that had been scheduled for April 10, 2018. (State Court Record, Dkt. No. 25 at 5.) Also on April 4, 2018, Plaintiffs filed a motion for preliminary injunction. (Id.) A hearing was set for April 9, 2018, but was not held at the request of Defendants, who removed the action to this court that same day. (Id.) On April 11, 2018, Plaintiff filed the pending Motion for Preliminary Injunction in this court.

         Defendants continued the foreclosure sale until April 24, 2018 and then continued it further after this court scheduled a hearing on the Motion for Preliminary Injunction. The hearing was held on May 9, 2018. While the court is troubled by many of Plaintiffs' allegations, having carefully considered the timing of the underlying conduct, the court is compelled to find Plaintiffs have failed to demonstrate a substantial likelihood of success of the merits of their underlying claims because their allegations relate to actions occurring well outside the statute of limitations period.

         II. Background[1]

         Plaintiffs obtained a mortgage on the property in 2004. Within a few years, Plaintiffs experienced difficulties with their mortgage servicer, Defendant EMC Mortgage Corp. (“EMC”). These difficulties included failure to properly process payments which lead to additional charges being added to Plaintiffs' mortgage and failures of EMC to properly reduce the interest rate on their mortgage as market interest rates declined, as required under the terms of the mortgage. During 2007, the mortgage was modified. Plaintiffs assert the modification was fraudulent and their signatures on relevant documents were forged.

         Around the same time, in September of 2007, the holder of Plaintiff's mortgage filed an action in Massachusetts Land Court, pursuant to the Massachusetts procedure for complying with the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. app. §§ 3901 et seq., as part of an effort to foreclose on the Property. In 2012 the Land Court dismissed the action, finding timing errors and other irregularities in instruments related to the mortgage prevented the plaintiff financial institution from having standing to bring the suit. (Notice of Docket Entry, Dkt. No. 9-1 at 7.) No. later than 2010, while the Land Court action was still pending, Plaintiffs stopped making payments on their mortgage. They have not made any payments since, but have continued to live in the Property. U.S. Bank filed a new action in the Massachusetts Land Court on July 23, 2017. Due to procedural changes, Plaintiffs, who had participated in the previous Land Court action, were unable to participate in the 2017 action. U.S. Bank subsequently notified Plaintiffs in March of 2018 that a foreclosure sale of the Property would take place on April 10, 2018. Plaintiffs responded by filing this action.

         III. Discussion

         “To obtain a preliminary injunction, the plaintiffs bear the burden of demonstrating (1) a substantial likelihood of success on the merits, (2) a significant risk of irreparable harm if the injunction is withheld, (3) a favorable balance of hardships, and (4) a fit (or lack of friction) between the injunction and the public interest.” Nieves-Márquez v. Puerto Rico, 353 F.3d 108, 120 (1st Cir. 2003). The court begins by considering Plaintiffs' likelihood of success on the merits as to each claim set out in the Complaint.

         Count I - Truth in Lending Act

         Plaintiffs' allege all Defendants violated the Truth in Lending Act (TILA), 15 U.S.C. §§ 1601 et seq., by failing to “provide good faith estimates and other required documentation.” TILA allows consumers to obtain information about the terms of loans secured by the consumer's principal dwelling. In re Sheedy, 801 F.3d 12, 19 (1st Cir. 2015). When a lender does not provide the forms and disclosures required under TILA, a consumer can seek rescission of the loan for up to three years from the date of the transaction or, if earlier, until the property is sold. Id.; 15 U.S.C. § 1635(f). Plaintiffs' rights to obtain relief under TILA thus expired in 2007 with respect to the 2004 mortgage and in 2010 with respect to the 2007 modification. As this action was not filed until 2018, Plaintiffs' TILA is clearly time-barred.

         Count II - Violation of Massachusetts Law Regarding Forgery

         The second claim advanced by Plaintiffs is that Defendant, Town and Country Credit Corp., violated Mass. Gen. Laws c. 267, § 1 by causing the forgery of the Plaintiffs' notarized signatures on documents executed in connection with the 2007 modification. The law cited by Plaintiffs in their complaint is a criminal statute. Civil litigants cannot prosecute cases under criminal statutes, but they can bring actions in which they allege fraud. See, e.g., Smith v. Jenkins, 732 F.3d 51, 62 (1st Cir. 2013). However, the statute of limitations requires that actions alleging fraud be brought within “three years next after the cause of action accrues.” Mass. Gen. Laws c. 260, § 2A. “Generally, ‘causes of action in tort ... accrue ... at the time the plaintiff is injured, '” which, in this case, would have been when the modification was executed, meaning any suit would have had to be filed no later than 2010. Chalifoux v. Chalifoux, 701 Fed.Appx. 17, 21 (1st Cir. 2017) (quoting Joseph A. Fortin Const., Inc. v. Mass. Hous. Fin. Agency, 466 N.E.2d 514, 516 (MA 1984)). The limitations period may be extended, pursuant to the “discovery rule” which operates to toll the limitations period until such time as “a plaintiff knows or reasonably should know that she may have been harmed by a defendant's conduct, even if the harm actually occurred earlier.” RTR Techs., Inc. v. Helming, 707 F.3d 84, 89 (1st Cir. 2013). However, since Plaintiffs were aware of the alleged forgery by the end of 2010, the limitations period expired well before this case was filed in 2018. (Letter from Chase re: Allegations of Forged Documents, Dkt. No. 9-3 at 6.)

         Count III - Massachusetts ...

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