United States District Court, D. Massachusetts
KATHRYN K. CULLEY and CHRISTIAN P. CULLEY, Plaintiffs,
BANK OF AMERICA, N.A., FIRST AMERICAN TITLE INSURANCE COMPANY, WELLS FARGO BANK, N.A., and HARMON LAW OFFICES, P.C., Defendants.
H. Hennessy, United States Magistrate Judge.
Kathryn K. Culley and Christian P. Culley (together,
“Plaintiffs”) brought this action against Bank of
America, N.A. (“Bank of America”), Wells Fargo
Bank, N.A. (“Wells Fargo”), First American Title
Insurance Company (“First American”), and Harmon
Law Offices, P.C. (“Harmon, ” and together with
Bank of America, Wells Fargo, and First American, the
“Defendants”) seeking relief in relation to the
foreclosure of Plaintiffs' home. With their verified
complaint, Plaintiffs filed an emergency motion for a
preliminary injunction barring the current eviction
proceedings against them in Central Housing Court.
See dkt. no. 4 (motion for preliminary injunction);
see also Bank of Am., N.A. v. Culley, 18H85SP002517
(Mass. Hous. Ct. June 12, 2018). Bank of America and Wells
Fargo (together, the “Bank Defendants”) opposed
the preliminary injunction motion. Dkt. no. 25. All
Defendants have filed motions to dismiss Plaintiffs'
verified complaint. See dkt. no. 12 (Harmon motion);
dkt. no. 19 (First American motion); dkt. no. 22 (Bank
Defendants motion). Plaintiffs have opposed First
American's and the Bank Defendants' motions to
dismiss. See dkt. nos. 32, 40. Harmon's motion
to dismiss is unopposed.
Court heard the parties on Plaintiffs' motion for a
preliminary injunction and Defendants' dismissal motions
on July 26, August 24, and September 25, 2018. Dkt. nos. 33,
37, 43. At the Court's direction, the Bank Defendants and
Plaintiffs submitted further briefing. See dkt. nos.
44, 45. Having reviewed the parties' submissions and for
the reasons that follow, Harmon's motion to dismiss (dkt.
no. 12) is GRANTED; First American's motion to dismiss
(dkt. no. 19) is GRANTED; Bank Defendants' motion to
dismiss (dkt. no. 22) is GRANTED; and Plaintiffs' motion
for a preliminary injunction (dkt. no. 4) is DENIED.
The Note and Mortgage
September 30, 2005, Plaintiffs acquired the property known as
22A Lovers Lane in Southborough, Massachusetts (the
“Property”) by quitclaim deed. Dkt. no. 3
(“Complaint”), at p. 19 ¶ 25; dkt. no. 3-2, at
pp. 2-3 (copy of deed). The purchase price was $978, 500.
Dkt. no. 3-2, at pp. 2-3.
purchase the Property, Plaintiffs obtained a loan in the
amount of $550, 000 from non-party Gateway Funding
Diversified Mortgage Services, L.P. (“Gateway”).
Complaint, at p. 22 ¶ 39. The loan was evidenced by a
promissory note (the “Note”), dated September 30,
2005 in favor of Gateway. See id.; see also
dkt. no. 3-4, at pp. 23-25 (copy of Note). As security for
the Note, Plaintiffs executed a mortgage on the Property in
the principal amount of $550, 000 (the
“Mortgage”). Complaint at p. 21, ¶ 33; dkt.
no. 3-4, at p. 27 (copy of Mortgage). The Mortgage identified
Gateway as the lender and named Mortgage Electronic
Registration Systems, Inc. (“MERS”), as nominee
for Gateway, as the mortgagee of record. Dkt. no. 3-4, at p.
27. The Mortgage was recorded in the Worcester South Registry
of Deeds (the “Registry of Deeds”) on September
30, 2005. Id.
point in time, Gateway endorsed the Note in blank. Dkt. no.
3-5, at p. 15. At a later time, Gateway endorsed the Note to
Wells Fargo. Dkt. no. 3-2, at p. 17. Wells Fargo thereafter
endorsed the Note in blank. See dkt. no. 3-4, at p.
25. On April 2, 2011, MERS, as nominee for Gateway, assigned
the Mortgage to Bank of America (the “Assignment of
Mortgage”). Dkt. no. 23-2, at p. 2. The Assignment of
Mortgage was recorded in the Registry of Deeds on August 1,
Property Defects and Other Litigation
after Plaintiffs acquired the Property, they learned that it
lacked both regulatory septic system approval and a
certificate of occupancy. Significant structural defects and
other issues surfaced as well. In response, Plaintiffs filed
various grievances. For example, Plaintiffs lodged complaints
against the builder/vendor involved in the Property's
construction, as well as the engineer. Both had their
licenses revoked. See dkt. no. 18-1, at p. 20 n.3;
dkt. no. 3-2, at pp. 50-54. In 2009, Plaintiffs also filed a
claim with their title insurer, First American. See
dkt. no. 3-2, at pp. 32-33. First American denied
Plaintiffs' claim because the Property's structural
and regulatory issues were unrelated to its title.
See dkt. no. 3-5, at pp. 80-82 (“The refusal
of a third party to purchase your Property due to other
reasons, such as code violations, structural defects, or
other physical aspects of your Property is not an
unmarketability of title matter that would be
covered under your Policy.”).
also took legal action separate from the instant case. In
2006, they sued the sellers and contractors of the Property.
See Culley, 2016 WL 6235754, at *1. That litigation
spanned ten years and two trials. See id. First, in
2010 a jury awarded Plaintiffs $1, 093, 487 in damages.
Id. at *2. However, the trial judge deemed the
verdict excessive and ordered a new trial unless Plaintiffs
accepted a remittitur to $140, 518. Id. Plaintiffs
did not accept, and during the second trial declined to offer
evidence of the damages they had won at the first
trial. Id. The case proceeded as a bench
trial, and the judge ultimately awarded Plaintiffs $25 in
nominal damages, and about $259, 000 in attorneys' fees
and costs. Id. at *3. The judgment was affirmed on
appeal. Id. at *6.
Default, Foreclosure, and Subsequent Conduct
April 2010, Wells Fargo advised Plaintiffs that their loan
was in default after they had stopped making payments in
February 2010. See dkt. no. 3-4 at 15 (letter to
Plaintiffs from Harmon). Plaintiffs apparently informed Wells
Fargo that they were in litigation against the seller and
builder; in a letter dated August 13, 2010, Wells Fargo
agreed to suspend debt collection and foreclosure activities
through December 31, 2010, “to allow time for a ruling
to be made on the current ongoing litigation regarding [the
Property].” Dkt. no. 3-3, at p. 5. In a subsequent
letter dated March 8, 2011, Wells Fargo again agreed to
suspend foreclosure activities, writing: “At this time,
[Wells Fargo] does not anticipate any further foreclosure
action until the litigation issues involving this property
have been resolved.” Dkt. no. 3-3, at p. 20. The letter
further noted that a Wells Fargo employee would
“continue to monitor [the] mortgage loan and provide
[Plaintiffs] with periodic status updates.”
2012, Wells Fargo filed a Servicemembers Civil Relief Act
(“SCRA”) complaint against Plaintiffs in
Massachusetts Land Court. See id. at 24. In August
2012, the Land Court entered a judgment, concluding that
Plaintiffs were not entitled to the benefits of the SCRA.
Id. at 27. On August 31, 2016, Wells Fargo mailed
Plaintiffs a letter notifying them that they had ninety days
to cure their default on the loan. Id. at 58. Wells
Fargo retained Harmon to handle foreclosure proceedings.
See id. at 68. After fairly extensive correspondence
among Plaintiffs, Wells Fargo, and Harmon, foreclosure
proceedings were initiated. See id. at 88.
foreclosure sale was scheduled for October 18, 2017.
See dkt. no. 3-5, at 24. The sale ultimately was
postponed to January 3, 2018. Id. at 29. On January
3, 2018, Bank of America purchased the Property at the
foreclosure sale for $522, 000 after two other bidders failed
to perform. Id. at 62. Bank of America is the
current owner of record. Id. at 46; see also
id. at 59- 61 (foreclosure deed).
23, 2018, Harmon, on behalf of Bank of America, initiated
eviction proceedings by mailing Plaintiffs a “72 hour
notice to quit and vacate premises.” Id. at
69-70. On June 1, 2018, a summary process eviction proceeding
was initiated in Central Housing Court. See id. at
72. Facing eviction, Plaintiffs filed the instant action on
June 11, 2018, alleging that the foreclosure sale was void
and moving to enjoin the eviction proceedings. See
dkt. nos. 1, 3, 4.
26, 2018, the Court granted Bank of America's oral motion
to continue the preliminary injunction hearing in order
resolve all pending motions at the same time, based on Bank
of America's representation that it would not act on the
Central Housing Court eviction proceeding until the motions
were resolved. Dkt. no. 34.
survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a plaintiff must “state a claim to
relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). That is,
“[f]actual allegations must be enough to raise a right
to relief above the speculative level . . . on the assumption
that all the allegations in the complaint are true (even if
doubtful in fact).” Id. at 555 (internal
citations omitted). “The plausibility standard is not
akin to a ‘probability requirement,' but it asks
for more than a sheer possibility that a defendant has acted
unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Twombly, 550 U.S. at 556).
Indeed, plausible “means something more than merely
possible, and gauging a pleaded situation's plausibility
is a ‘context-specific' job that compels [the
Court] ‘to draw on [its] judicial experience and common
sense.'” Schatz v. Republican State Leadership
Comm., 669 F.3d 50, 55 (1st Cir. 2012) (quoting
Iqbal, 556 U.S. at 679).
this generous standard, “Rule 12(b)(6) is not entirely
a toothless tiger . . . . The threshold for stating a claim
may be low, but it is real.” Dartmouth Review v.
Dartmouth Coll., 889 F.2d 13, 16 (1st Cir. 1989)
(quotation omitted). The complaint must therefore
“allege a factual predicate concrete enough to
warrant further proceedings.” DM Research, Inc. v.
Coll. of Am. Pathologists, 170 F.3d 53, 55 (1st Cir.
1999) (emphasis in original). “A pleading that offers
‘labels and conclusions' or ‘a formulaic
recitation of the elements of a cause of action will not
do.'” Iqbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 555). Dismissal is appropriate
if a plaintiff's well-pleaded facts do not “possess
enough heft to show that [the] plaintiff is entitled to
relief.” Ruiz Rivera v. Pfizer Pharm., LLC,
521 F.3d 76, 84 (1st Cir. 2008) (quotations and original
court “must assume the truth of all well-plead[ed]
facts and give the plaintiff the benefit of all reasonable
inferences therefrom.” Ruiz v. Bally Total Fitness
Holding Corp., 496 F.3d 1, 5 (1st Cir. 2007) (citing
Rogan v. Menino, 175 F.3d 75, 77 (1st Cir. 1999)).
“Under Rule 12(b)(6), the district court may properly
consider only facts and documents that are part of or
incorporated into the complaint; if matters outside the
pleadings are considered, the motion must be decided under
the more stringent standards applicable to a Rule 56 motion
for summary judgment.” Rivera v. Centro
Médico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir.
2009) (quoting Trans-Spec Truck Serv., Inc. v.
Caterpillar, Inc., 524 F.3d 315, 321 (1st Cir. 2008)).
There lies an exception to this rule “for documents the
authenticity of which [is] not disputed by the parties; for
official public records; for documents central to [a
plaintiff's] claim; or for documents sufficiently
referred to in the complaint.” Rivera, 575
F.3d at 15 (quoting Alt. Energy, Inc. v. St. Paul Fire
& Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001)).
the above, the Court must apply a liberal standard where, as
here, the Plaintiffs' complaint was filed pro
se. Sergentakis v. Channell, 272 F.Supp.3d 221,
224 (D. Mass. 2017) (citing Gibbs v. SLM Corp., 336
F.Supp.2d 1, 5 (D. Mass. 2004)). A liberal construction of
pro se pleadings is necessary “to avoid
inappropriately stringent rules and unnecessary
dismissals.” Sergentakis, 272 F.Supp.3d at 224
ANALYSIS RESPECTING MOTIONS TO DISMISS
analysis presents the Court's attempt to delineate
Plaintiffs' causes of action and complained-of conduct.
Foreclosure Notice and Process
best reading of Plaintiffs' complaint reveals several
allegations that the Bank Defendants and Harmon unlawfully
and improperly commenced and completed foreclosure
proceedings. Specifically, the complaint alleges that: (i)
the published notice of foreclosure was deficient; (ii) the
Assignment of Mortgage to Bank of America was legally
ineffective; (iii) Bank of America lacked authority to
enforce the Note and foreclose; (iv) the Bank Defendants
failed to make a public proclamation continuing the
foreclosure sale, and thus the sale was not properly noticed;
and (v) the Bank Defendants failed to comply with
pre-foreclosure notice requirements. I address each
contention in turn.
Deficient Notice of Foreclosure
Massachusetts choice of law principles, claims arising in
connection with foreclosures of real property are . . .
governed by the law of the state in which the land is
located.” Pearson v. United States, 905
F.Supp.2d 400, 403 (D. Mass. 2012) (citing United Guar.
Residential Ins. Co. v. O'Neil, No. 933004D, 1994 WL
879614, at *1 (Mass. Super. Ct. June 27, 1994) (stating
“[t]he mechanics of foreclosure, including what notice
ha[s] to be given, ” are determined by the law of the
situs)). In Massachusetts, “[a] foreclosure sale
conducted pursuant to a power of sale in a mortgage must
comply with all applicable statutory provisions, including in
particular . . . [Massachusetts General Laws ch.] 244, §
14.” Eaton v. Fed. Nat'l Mortg. Ass'n,
969 N.E.2d 1118, 1121 (Mass. 2012). Section 14 prescribes the
form and method of publication of notice of a foreclosure
sale. Prior to foreclosure under a power of sale, the statute
requires a mortgagee to publish notice of the sale in a local
newspaper “once in each of three successive weeks, the
first publication to be not less than twenty-one days before
the day of sale, ” and that the notice be sent by
registered mail to the owner of record. Mass. Gen. Laws ch.
244, § 14. Registered mail, for purposes of sending
notice, includes certified mail. Mass. Gen. Laws ch. 4,
§ 7. Section 14 further provides that when a mortgagee
holds a mortgage pursuant to an assignment, the notice of
foreclosure is valid only if:
(i) at the time such notice is mailed, an assignment, or a
chain of assignments, evidencing the assignment of the
mortgage to the foreclosing mortgagee has been duly recorded
in the registry of deeds for the county or district where the
land lies and (ii) the recording information for all recorded
assignments is referenced in the notice of sale required in
Mass. Gen. Laws ch. 244, § 14.
Plaintiffs' last monthly loan payment was received in
February 2010. See dkt. no.
p. 5 (“As of the date of this letter your loan is
showing due for the March 2010 payment.”); id.
at 58 (containing 90-day cure letter and noting Plaintiffs
did not make the monthly payment due March 2010 or any other
payment due thereafter). On August 31, 2016, Wells Fargo, as
the loan servicer, issued a 90-day right to cure letter to
Plaintiffs. Id. at 58-64. Harmon, on behalf of
mortgagee Bank of America and servicer Wells Fargo, caused a
notice of sale for October 18, 2017 to be published in the
Worcester Telegram & Gazette, once a week for three
successive weeks, beginning September 22, 2017. See
dkt. no. 3-5, at pp. 62-64 (containing copy of Affidavit of
compliance with sale procedures and copy of sale notice). The
sale notice was sent to Plaintiffs via certified mail on
September 19, 2017. Id. at 6. At the time the notice
was mailed and published, the Assignment of Mortgage to Bank
of America had been recorded in the Registry of Deeds. Dkt.
no. 23-2, at p. 2. Recording information was referenced in
the notice of sale. Dkt. no. 3-5, at p. 7. Plaintiff's
conclusory allegations fail to controvert the record evidence
of compliance with Mass. Gen. Laws ch. 244, § 14, or to
make Plaintiffs' claim plausible on its face.
Assignment of Mortgage to Bank of America
next allege that the Assignment of Mortgage from MERS to Bank
of America is invalid because Wells Fargo was the real owner
of the Mortgage at the time MERS assigned the Mortgage to
Bank of America. This claim simply lacks plausibility. The
predicate for Plaintiffs' claim is a thin reed: the
original loan number associated with the mortgage loan bears
a reference to Wells Fargo. See, e.g., dkt. no. 3-2,
at p. 5. In other words, the original mortgage loan given to
Plaintiffs by Gateway contained an identification number for
a Wells Fargo loan. This isolated reference does not remotely
evidence an ownership interest of Wells Fargo in the mortgage
loan. Rather, the record establishes ownership interests in
Gateway and Bank of America only. Indeed, the Registry of
Deeds provides the full chain of title: the Mortgage
identifying Gateway as lender and MERS as nominee was
recorded in the Registry of Deeds on September 30, 2005. Dkt.
no. 3-4, at p. 27. MERS, on behalf of Gateway, assigned the
Mortgage to Bank of America on April 2, 2011. Dkt. no. 23-2,
at p. 2. The Assignment of Mortgage was recorded in the
Registry of Deeds on August 1, 2011 and is the only recorded
assignment respecting the Mortgage. Id. Bank of
America therefore was the mortgagee of record when
nonjudicial foreclosure proceedings commenced. In addition,
Plaintiffs' claim overlooks the fact that mortgagees may
predetermine securitization and servicing information for
mortgage loans prior to lending. As such, Plaintiffs'
allegation is not plausible. Twombly, 550 U.S. at
Authority to Enforce the Note
further allege that Bank of America was not entitled to
foreclose because it did not have the authority to enforce
the Note at the time foreclosure proceedings were commenced.
This allegation is unsupportable and fails. To be valid,
“a foreclosure effected through the statutory power of
sale, as governed by and set forth in [Mass. Gen. Laws ch.]
183, § 21, and [ch.] 244, §§ 11-17C, requires
the mortgagee to hold the note or to act on behalf of the
note holder.” Galiastro v. Mortg. Elec.
Registration Sys., Inc., 4 N.E.3d 270, 276 (Mass. 2014)
(citing Eaton, 969 N.E.2d at 1131). Massachusetts
law permits one who, although not the noteholder himself,
acts as the agent of the noteholder and stands “in the
shoes” of the mortgagee to effectuate a foreclosure.
Eaton, 969 N.E.2d at 1131. Massachusetts law thus
requires that an affidavit pursuant to Mass. Gen. Laws ch.
183, § 54B be recorded in the Registry of Deeds, whereby
the affiant attests that it either holds the mortgage and
note or is acting on behalf of the party entitled to
foreclose. Id. at 1133 n.28 (“[The law] allows
for the filing of an affidavit that is ‘relevant to the
title to certain land and will be of benefit and assistance
in clarifying the chain of title.' Such an affidavit may
state that the mortgagee either held the note or acted on
behalf of the note holder at the time of the foreclosure
sale.” (quoting Mass. Gen. Laws ch. 183, § 5B)).
foreclosure proceedings commenced in September 2017 when the
notice of sale was first published. Dkt. no. 3-5, at pp.
62-64. The February 1, 2018 affidavit of Kishia Givens of
Wells Fargo attests that Bank of America was “the
holder of the promissory note” when nonjudicial
foreclosure proceedings commenced. Id. at 67. This
affidavit was recorded in the Registry of Deeds pursuant to
§ 54B. Id. at 66. It serves as sufficient proof
that Bank of America held the Note at the time the notice of
sale was published, and through the foreclosure sale.
review of the record reveals three copies of the Note. One
copy shows the Note endorsed by Gateway in blank. A second
copy shows “Wells Fargo Bank, N.A.” stamped into
the blank endorsee field of the previous endorsement, which
reflects a transfer from Gateway to Wells Fargo. Third, the
last (and most recent) copy of the Note reflects a third
endorsement, from Wells Fargo in blank. The effect of an
endorsement in blank is that a note is enforceable by proof
of possession alone. See U.C.C. § 3-205(b) (Am.
Law Inst. & Unif. Law Comm'n 1977) (“If an
indorsement is made by the holder of an instrument and it is
not a special indorsement, it is a ‘blank
indorsement.' When indorsed in blank, an instrument
becomes payable to bearer and may be negotiated by transfer
of possession alone until specially indorsed.”);
Id. § 3-301 (stating that the party entitled to
enforce an instrument means “(i) the holder of the
instrument, (ii) a nonholder in possession of the instrument
who has the rights of a holder, or (iii) a person not in
possession of the instrument who is entitled to enforce the
instrument” under other sections of the Code); see
also Courtney v. U.S. Bank, N.A., 922 F.Supp.2d 171, 174
(D. Mass. 2013). Because the Note is endorsed in blank, its
holder is entitled to enforce it. In this case, that is Bank
these reasons, Plaintiffs' conclusory and unsupported
claim that Bank of America lacked authority to enforce the
Note at the time the foreclosure was noticed is ...