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Penney v. Deutsche Bank National Trust Co.

United States District Court, D. Massachusetts

July 31, 2018




         Plaintiffs Gerard M. Penney and Donna Penney initiated this lawsuit against Deutsche Bank National Trust Company as trustee of the Soundview Home Loan Trust 2005-OPT3 (“Deutsche Bank”) and Ocwen Loan Servicing, LLC (“Ocwen”) to stop a foreclosure on their home. On March 15, 2017, the Court dismissed all of the Plaintiffs' claims in the Amended Complaint [ECF No. 21], except for the request in Count I for a declaratory judgment that the mortgage at issue is unenforceable against Donna and therefore a foreclosure cannot proceed. [ECF No. 39]. Deutsche Bank then filed counterclaims for fraud (Count I against Gerard), negligent misrepresentation (Count II against Donna), equitable subrogation (Count III against the Plaintiffs), and declaratory judgment (Count IV against the Plaintiffs). [ECF No. 55].

         Currently pending before the Court are Ocwen's motion for summary judgment on Count I of the Amended Complaint [ECF No. 57], and Deutsche Bank's motion for partial summary judgment on Counts III and IV of the counterclaims [ECF No. 60].[1] For the reasons stated below, Ocwen's motion is DENIED and Deutsche Bank's motion is GRANTED in part and DENIED in part.

         I. BACKGROUND

         The undisputed facts are as follows. On March 27, 1997, Plaintiffs, who are married, acquired title as tenants in the entirety to 34 Anchor Drive, Sandwich, Massachusetts (the “Property”). [ECF No. 59 ¶ 1] (“Ocwen Facts”); [ECF No. 62 ¶ 1] (“Deutsche Bank Facts”); [ECF No. 62-1]. As relevant to this case, on or about September 15, 2004, Plaintiffs granted a mortgage (the “Ameriquest Mortgage”) on the Property to Ameriquest Mortgage Company (“Ameriquest”) to secure a loan of $315, 000. Deutsche Bank Facts ¶ 2. The Ameriquest Mortgage bears Gerard and Donna's notarized signatures as the borrowers. Id. On or about July 25, 2005, Gerard executed a promissory note (the “H&R Note”) in the principal amount of $405, 000 in exchange for a mortgage (the “H&R Mortgage”) on the Property from H&R Block Mortgage Corporation (“H&R Block”). Ocwen Facts ¶¶ 6-7; Deutsche Bank Facts ¶ 3. $334, 805.63 of the proceeds from the H&R Mortgage loan were paid to Ameriquest to satisfy the Ameriquest Mortgage, which was then discharged. Deutsche Bank Facts ¶ 5. On October 21, 2005, H&R Block assigned the H&R Mortgage to Option One Mortgage Corporation (“Option One”). Id. ¶ 10. On or about August 1, 2006, Option One assigned the H&R Mortgage to Deutsche Bank. Id. ¶ 11. H&R Block endorsed the H&R Note to Option One, who endorsed it to Deutsche Bank. Id. ¶ 12. Deutsche Bank is the holder of the H&R Note and the H&R Mortgage, and Ocwen is the servicer of the H&R Mortgage. Id. ¶ 13-14.

         Although it is undisputed that Gerard alone signed the H&R Note, a core factual dispute concerns whether Gerard individually, or the Plaintiffs collectively, executed the H&R Mortgage. The H&R Mortgage identifies Gerard and Donna as the “Borrower.” [ECF No. 59-4 at 2]. Each page of the H&R Mortgage is initialed “GmP” and “DP.” Id. at 2-11. The signature pages of the mortgage and of an attached adjustable rate rider contain Gerard's signature on his own behalf, and also contain his signature “for Donna Penney under [Power of Attorney] dated 3/20/03.” Id. at 7, 11.[2] The H&R Mortgage was also acknowledged by a notary public who states on the signature page:

On this 25th day of July, before me, the undersigned notary public, personally appeared Gerard M. Penney [and] Donna Penney (under [Power of Attorney]) proved to me through satisfactory evidence of identification, which was/were [Massachusetts Driver's License] to be the person(s) whose name(s) is signed on the preceding document, and acknowledged to me that he/she/they signed it voluntarily for its stated purpose.

Id. at 7. As discussed in more detail below, the parties disagree as to whether the Power of Attorney dated March 20, 2003 (“2003 POA”) existed and whether it authorized Gerard to execute the H&R Mortgage on Donna's behalf. The 2003 POA itself has not been produced in discovery or otherwise located.


         Summary judgment is appropriate “only if, after appraising all of the evidence in the light most favorable to the nonmovant and drawing all reasonable inferences to [his or] her behoof, the record discloses no genuine issue of material fact and indicates that the movant is entitled to judgment as a matter of law.” Potvin v. Speedway LLC, 891 F.3d 410, 413 (1st Cir. 2018); see Fed. R. Civ. P. 56(a). “A fact is material if its resolution might affect the outcome of the case under the controlling law.” Cochran v. Quest Software, Inc., 328 F.3d 1, 6 (1st Cir. 2003) (citation omitted). “A genuine issue exists as to such a fact if there is evidence from which a reasonable trier could decide the fact either way.” Id. (citation omitted).

         “To succeed in showing that there is no genuine dispute of material fact, ” the moving party must point to “specific evidence in the record that would be admissible at trial.” Ocasio-Hernandez v. Fortuño-Burset, 777 F.3d 1, 4 (1st Cir. 2015). “That is, it must ‘affirmatively produce evidence that negates an essential element of the non-moving party's claim,' or, using ‘evidentiary materials already on file . . . demonstrate that the non-moving party will be unable to carry its burden of persuasion at trial.'” Id. at 4-5 (quoting Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000)). “One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses . . . .” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Once the movant takes the position that the record fails to make out any trial-worthy question of material fact, “it is the burden of the nonmoving party to proffer facts sufficient to rebut the movant's assertions.” Nansamba v. N. Shore Med. Ctr., Inc., 727 F.3d 33, 40 (1st Cir. 2013) (citation omitted).

         “The court need consider only the cited materials, but it may consider other materials in the record.” Fed.R.Civ.P. 56(c)(3). In reviewing the record, however, the Court “must take the evidence in the light most flattering to the party opposing summary judgment, indulging all reasonable inferences in that party's favor.” Cochran, 328 F.3d at 6 (citation omitted). The First Circuit has noted this standard “is favorable to the nonmoving party, but it does not give him [or her] a free pass to trial.” Hannon v. Beard, 645 F.3d 45, 48 (1st Cir. 2011). “The factual conflicts upon which [he or she] relies must be both genuine and material, ” Gomez v. Stop & Shop Supermarket Co., 670 F.3d 395, 397 (1st Cir. 2012), and the Court may discount “conclusory allegations, improbable inferences, and unsupported speculation.” Cochran, 328 F.3d at 6 (quoting Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990)). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Medina-Munoz, 896 F.2d at 8 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986)). At summary judgment, “‘the judge's function is not himself [or herself] to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.'” Burns v. Johnson, 829 F.3d 1, 8 (1st Cir. 2016) (alteration in original) (quoting Anderson, 477 U.S. at 249).


         Following the Court's issuance of the Memorandum and Order on March 15, 2017 [ECF No. 39], only Count I of the Amended Complaint remains pending, to the extent that it seeks a declaratory judgment that Gerard, but not Donna, is obligated on the H&R Mortgage. “An action for declaratory judgment ‘enable[s] litigants to clarify legal rights and obligations before acting upon them.'” Riva v. Ashland, Inc., No. 09-cv-12074-DJC, 2013 WL 1222393, at *7 (D. Mass. Mar. 26, 2013), on reconsideration in part sub nom. Savini v. Ashland, Inc., No. 11-cv-12277-DJC, 2013 WL 5218194 (D. Mass. Sept. 16, 2013) (quoting Ernst & Young v. Depositors Econ. Prot. Corp., 45 F.3d 530, 534 (1st Cir. 1995)). Under the Declaratory Judgment Act, “[i]n a case of actual controversy . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201. “Judgment is appropriate where ‘the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.'” Riva, 2013 WL 1222393, at *7 (quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). The Court has “substantial discretion in deciding whether to declare the rights of litigants.” MedImmune, Inc., 549 U.S. at 136; see also El Dia, Inc. v. Hernandez Colon, 963 F.2d 488, 493 (1st Cir. 1992) (“[D]eclaratory relief, both by its very nature and under the plain language of 28 U.S.C. § 2201, is discretionary.”).

         A. Power of Attorney[3]

         Although the 2003 POA itself has not been located, Ocwen asserts that summary judgment is appropriate on Count I because Gerard's deposition testimony, and the face of the H&R Mortgage agreement and other documents that Gerard executed on Donna's behalf, establish that there is no genuine dispute that he signed the H&R Mortgage as an individual and as Donna's agent pursuant to a valid power of attorney.

         First, Ocwen relies on the notary public's certificate of acknowledgment in the H&R Mortgage as proof that the H&R Mortgage was properly executed by both Gerard and Donna. “The identity of [a party] as the person who appeared before the notary public is established by the statement in the record [in this case] that, ” Davis v. Meenan, 169 N.E. 145, 145 (Mass. 1930):

“On this [day], before me, the undersigned notary public, personally appeared [Plaintiff] proved to me through satisfactory evidence of identification, which was M[assachusetts] D[river's] L[icense], to be the person(s) whose name(s) is signed on the preceding document, and acknowledged to me that he signed it voluntarily for its stated purpose.”

Edgeston v. Ameriquest Mortg. Co., 14 N.E.3d 968, 2014 WL 4251155, at *2 (Mass. App. Ct. Aug. 29, 2014) (alterations in original). Absent “any countervailing materials from the plaintiff, ” this certificate of acknowledgment may be “sufficient to satisfy the [moving party's] burden on summary judgment” as to the identity of the signatory. Id. The ‚Äúsignatory's denial alone is [generally not] sufficient to overcome the presumption ...

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