United States District Court, D. Massachusetts
U.S. BANK TRUST N.A. AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, Plaintiff,
ROBERT G. BEDARD & CYNTHIA L. BEDARD, Defendants.
REPORT AND RECOMMENDATION REGARDING U.S. BANK TRUST
N.A.'S MOTION FOR ENTRY OF DEFAULT JUDGMENT (DKT. NO.
KATHERINE A. ROBERTSON U.S. MAGISTRATE JUDGE
U.S. Bank Trust N.A. as Trustee for LSF9 Master Participation
Trust ("U.S. Bank") moves pursuant to Fed.R.Civ.P.
55(b)(1) for a default judgment on its complaint against
Robert G. Bedard and Cynthia L. Bedard
("Defendants") for the foreclosure and sale of
their property at 55 Fox Road, West Springfield,
Massachusetts ("Property") (Dkt. No. 11). U.S.
Bank's verified complaint asserts claims against
Defendants to quiet title (Count I) and for breach of
contract (Count II). U.S. Bank asks the court: to certify
that Defendants are not beneficiaries of the Servicemembers
Civil Relief Act, 50 U.S.C. § 501 et seq.
(Count III); to enter a conditional judgment (Count IV); to
permit foreclosure by exercise of the power of sale (Count
V); to enter judgment of possession and to issue a writ of
assistance if U.S. Bank is the successful bidder at the
foreclosure sale (Count VI); and to enter a deficiency
judgment (Count VII). U.S. Bank's Default Motion was
referred to the undersigned for a report and recommendation
by presiding District Judge Mark G. Mastroianni (Dkt. No.
14). See 28 U.S.C. § 636(b)(1)(B). The court
held a hearing on the motion on October 1, 2018. Defendants
did not appear at the hearing. Having reviewed U.S.
Bank's verified complaint and motion, the court
recommends granting so much of the motion as seeks to quiet
title by assigning Defendants' mortgage to U.S. Bank and
denying the remainder of the motion without prejudice.
Relevant Factual and Procedural Background
September 11, 1978, the Property was conveyed to Defendants
by quitclaim deed, which was recorded in the Hampden County
Registry of Deeds (Dkt. No. 1 ¶ 9; Dkt. No. 12 ¶
11(a)). On February 3, 2006, Defendants executed and
delivered to Financial Resources, Inc. ("FRI") a
promissory note ("Note") in the amount of $115, 000
(Dkt. No. 1 ¶ 10; Dkt. No. 12 ¶ 11(b)). The Note
was endorsed to J.P. Morgan Chase Bank, N.A. by J.P. Morgan
Chase Bank, N.A. ("J.P. Morgan Chase"), the
attorney-in-fact for FRI (Dkt. No. 1 ¶ 11; Dkt. No. 12
¶11(c)). J.P. Morgan Chase further endorsed the Note in
blank (Dkt. No. 1 ¶ 12; Dkt. No. 12 ¶ 11(d)). U.S.
Bank currently holds and owns the Note (Dkt. No. 1 ¶ 13;
Dkt. No. 12 ¶ 11(e)).
February 3, 2006, the date Defendants executed the promissory
Note, they executed a mortgage ("Mortgage") on the
Property to FRI as security for repayment of the Note (Dkt.
No. 1 ¶ 14; Dkt. No. 12 ¶ 11(f)). The Mortgage was
recorded in the Hampden County Registry of Deeds
(id.). On December 12, 2013, J.P. Morgan Chase
assigned the Mortgage to Bayview Loan Servicing LLC
("Bayview"), which assignment was recorded in the
registry of deeds (Dkt. No. 1 ¶ 15; Dkt. No. 12 ¶
Bank alleges that Defendants failed to make the payment on
the mortgage loan that was due on June 1, 2011 and failed to
make any payments thereafter (Dkt. No. 1 ¶ 20; Dkt. No.
12 ¶ 11(k)). On January 6, 2016, M & T Bank, the
loan servicer for Bayview, sent Defendants a 150-Day Notice
of Right to Cure and a Notice of Right to Request a Modified
Mortgage Loan, in accordance with Mass. Gen. Laws ch. 244,
§§ 35A & 35B, along with the terms of the
Mortgage contract (Dkt. No. 1 ¶ 21; Dkt. No. 12 ¶
11(l)). Defendants failed to cure the default by the
expiration date of the 150-Day Notice, June 4, 2016 (Dkt. No.
1 ¶ 22; Dkt. No. 12 ¶ 11(m)). Caliber began
servicing the Mortgage on October 25, 2016 and referred the
matter for foreclosure on or about June 16, 2017 (Dkt. No. 1
¶¶ 19, 23; Dkt. No. 12 ¶ 11(n)). On June 30,
2017, Bayview assigned the Mortgage to U.S. Bank and the
assignment was recorded in the registry of deeds on July 6,
2017 (Dkt. No. 1 ¶ 16; Dkt. No. 12 ¶ 11(h)).
Bank filed the verified complaint on February 27, 2018 (Dkt.
No. 1). According to the complaint, the chain of title is
flawed because FRI had not assigned the Mortgage to J.P.
Morgan Chase before J.P. Morgan Chase executed the assignment
of the Mortgage to Bayview (Dkt. No. 1 ¶ 17; Dkt. No. 12
¶ 11(i)). Therefore, Bayview did not hold the Mortgage
that it purportedly assigned to U.S. Bank (id.).
U.S. Bank says that it is unable to obtain an assignment of
the Mortgage from FRI and seeks an equitable assignment from
the court (Dkt. No. 1 ¶¶ 18, 25-28; Dkt. No. 12
March 19, 2018, U.S. Bank filed proof that the summonses were
served on Defendants by leaving them at their last and usual
place of abode in East Longmeadow, Massachusetts (Dkt. No.
5). On April 3, 2018, U.S. Bank requested a notice of
default, which the clerk's office entered as to Defendant
Robert Bedard on June 14, 2018 because no answer or
responsive pleading was filed (Dkt. Nos. 6, 7). The copy of
the notice of default, which was mailed to Defendant Robert
Bedard on June 14, 2018, was returned as undeliverable on
June 28, 2018 (Dkt. Nos. 9, 10). On July 10, 2018, U.S. Bank
filed the instant motion for default judgment, supporting
affidavit, and proposed default judgment (Dkt. Nos. 11, 12,
13). It seeks the following: a declaratory judgment nunc
pro tunc to June 30, 2017 (the date Bayview executed the
assignment of the Mortgage to U.S. Bank) quieting title to
the Property to reflect U.S. Bank as the true and lawful
assignee/mortgagee of record of the Mortgage; certification
that Defendants are not beneficiaries of the Servicemembers
Civil Relief Act; a conditional judgment and order
authorizing the foreclosure sale of the Property pursuant to
Mass. Gen. Laws ch. 182, § 21; Mass. Gen. Laws ch. 244,
§§ 3, 11; and leave to file a supplemental
affidavit after the foreclosure sale in support of its claims
for a deficiency judgment and a judgment for possession of
the Property (Dkt. No. 12 ¶¶ (p)-(t)).
Standard Governing Motion for Default Judgment
a court should accept as true the well-pleaded factual
allegations in the complaint when considering a motion for
entry of default judgment, the court 'need not accept the
moving party's legal conclusions or factual allegations
relating to the amount of damages.'" F.L.
Roberts & Co. v. Land-Air Express of New England,
Ltd., No. 16-CV-12062-MAP, 2017 WL 4820381, at *2 (D.
Mass. Oct. 3, 2017), report and recommendation adopted in
part C.A. No. 16-CV-12062-MAP, 2017 WL 4817847 (D. Mass.
Oct. 24, 2017) (quoting Virgin Records Am., Inc. v.
Bagan, Civ. No. 08-4694 (WHW), 2009 WL 2170153, at *2
(D.N.J. July 21, 2009)).
Request for Declaratory Judgment to Quiet Title
is a nonjudicial foreclosure state, so banks generally
foreclose by exercising the statutory power of sale."
Galvin v. U.S. Bank, N.A., 852 F.3d 146, 156 (1st
Cir. 2017) (citing Mass. Gen. Laws ch. 183, § 21; Mass.
Gen. Laws ch. 244, §§ 11-17C). "In order to
exercise this statutory power of sale, the bank must satisfy
a number of requirements." Id. As relevant
here, "the foreclosing bank must hold both the note and
the mortgage in order to have standing to sell the property
at a foreclosure sale." Id. (citing Eaton
v. Fed. Nat'l Mortg. Ass'n,969 N.E.2d 1118,
1125, 1129-30 (Mass. 2012); U.S. Bank Nat'l Ass'n
v. Ibanez, 941 N.E.2d 40, 50 (Mass. 2011)). See
Mass. Gen. Laws ch. 244, § 14 ("The
mortgagee . . . may, upon breach of condition and
without action, perform all acts authorized or required by
the power of sale") (emphasis added). "Under
Massachusetts law, the note and the mortgage are separate
legal instruments and, under the common law, they can travel
separately." Id. at 155 (citing Eaton,
969 N.E.2d at 1124). That was the case here. According to the
complaint, FRI assigned the Note, but not the Mortgage, to
J.P. Morgan Chase, which, in turn, assigned the Note to U.S.
Bank. The Mortgage remained with FRI and, according to U.S.
Bank, it cannot now obtain an assignment of the Mortgage from
FRI. "[W]here a note has been assigned but there is no
written assignment of the mortgage underlying the note . . .
the holder of the mortgage holds the mortgage in trust for
the purchaser of the note, who has an equitable right to
obtain an assignment of the mortgage, ...