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RI Property Wire, LLC v. Linnell

United States District Court, D. Massachusetts

August 30, 2019

RI PROPERTY WIRE, LLC, Plaintiff,
v.
SCOTT A. LINNELL, THERESA L. LINNELL, Defendants, BANK OF AMERICA, N.A. SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP F/K/A COUNTRYWIDE HOME LOANS SERVICING, LP, Crossclaim Defendant.

          ORDER ON MOTION TO DISMISS (DOC. NO. 8)

          Leo T. Sorokin United States District Judge.

         Plaintiff RI Property Wire, LLC (“RIPW”) filed a summary process action in Barnstable County District Court against defendants Scott A. Linnell and Theresa L. Linnell (collectively, “the Linnells”) for possession of the property located at 29 Chopteague Lane, Marstons Mills, Massachusetts (“the Property”). Doc. No. 10-4 at 83. In response, the Linnells moved to dismiss the action, alleging that the foreclosure of the Property was void. Id. at 96-100.

         Following the Linnells' motion to dismiss, RIPW moved to add Bank of America, N.A. (“BANA”) as a third-party defendant. Doc. No. 1-1 at 329. RIPW then filed crossclaims against BANA alleging breach of contract, indemnification, and unfair and deceptive practices in violation of Mass. Gen. Laws ch. 93A. Id. at 364-65. BANA removed the case to this Court under its diversity jurisdiction. Doc. No. 1 at 1. BANA now moves to dismiss the crossclaim for failure to state a claim under Rule 12 (b)(6). Doc. No. 8. For the following reasons, the motion to dismiss is ALLOWED.

         I. BACKGROUND[1]

         A. Facts

         RIPW is a limited liability company with a principal office in Providence, Rhode Island. Doc. No. 1-1 at 362 ¶ 1. The Linnells bought the Property on March 16, 2006. Id. ¶ 3. BANA is successor by merger to BAC Home Loans Servicing, LP f/k/a Countrywide Home Loans Servicing, LP, a national bank with a principal office in Charlotte, North Carolina. Id. ¶ 2.

         On March 16, 2006, the Linnells executed an adjustable rate note (“the Note”) in favor of Patriot Funding, LLC (“Patriot”) for a loan of $296, 400. Doc. No. 10-3 at 92. Patriot endorsed the Note to Countrywide Bank, N.A., who endorsed it in blank. Id. at 97. To secure the Note, the Linnells granted a mortgage (“the Mortgage”) on the Property to Mortgage Electronic Registration Systems, Inc. (“MERS”) and recorded it in the Barnstable County Registry of Deeds. Id. at 100-07. Around March 1, 2007, eleven months after the Mortgage was recorded, the Linnells stopped making payments, and defaulted on their loan. Doc. No. 10-5 at 3 ¶ 9. On October 2, 2007, Countrywide filed a Servicemembers Complaint with the Massachusetts Land Court, and proceeded to foreclose nonjudicially, but then aborted the adverse action. Id. ¶ 10. On July 7, 2008, Countrywide sent the Linnells a “Notice of Intention to Foreclose” which stated, “[i]f the default is not cured on or before October 5, 2008, the mortgage payments will be accelerated with the full amount remaining accelerated and becoming due and payable in full, and foreclosure proceedings will be initiated at that time, ” and that “the failure to cure may result in the foreclosure and sale of your property.” Id. ¶ 11.

         On September 8, 2011, and again on September 23, 2011, MERS assigned the Note and Mortgage to BANA, recording the assignments in the Barnstable Country Registry of Deeds on September 20, 2011 and October 4, 2011, respectively. Id. ¶ 12. On November 25, 2015, BANA sent the Linnells a pre-foreclosure “Notice of Intent to Accelerate, ” informing them that to cure the default, they had to pay $217, 094.81 on or before January 4, 2016. Id. ¶ 13. The notice also stated that the Linnells had a “right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense to acceleration and sale” as required by Paragraph 22 of the Mortgage. Id. On January 3, 2018, BANA conducted a foreclosure by auction and was the highest bidder, purchasing the Property for $254, 150. Doc. No. 1-1 at 132-33, 363 ¶ 8-9. On January 10, 2018, BANA received the Property's title via a Foreclosure Deed and recorded it along with an “Affidavit of Sale under Power of Sale in Mortgage” (“Affidavit of Sale”) in the Barnstable County Registry of Deeds. Id. at 134-36. The Affidavit of Sale states “that the requirements of the power of sale included in the mortgage and of the law have been complied with in all respects.” Id. at 134.

         On April 13, 2018, RIPW agreed to purchase the Property from BANA and executed an Auction and Retail Contract (the “Contract”) that contained certain limitations on BANA's liability and waiver of RIPW's rights. Doc. No. 10-1 at 61. Section 1, “Limitation of Liability, ” states, “Buyer understands and acknowledges that seller has or may have acquired the property through foreclosure . . . Buyer agrees that Seller shall not be liable to Buyer under any circumstances for an[y] special, consequential, or punitive damages whatsoever, whether in contract, tort . . . or any other legal or equitable principle.” Id. at 61-62 ¶ 1(B), 1(E). Finally, Section 14, “Title, ” states, “Buyer acknowledges that Seller's title to the Property may be subject to court approval of foreclosure or to a mortgagor's right of redemption.” Id. at 71.

         In addition to the Contract, RIPW also executed a document titled “Real Estate Purchase Addendum - Auction” (“the Addendum”). Id. at 55. The Addendum's Section 2, “Occupancy Status of Property, ” states, “Buyer understand and acknowledges that the property may be subject to leasehold interests or other rights or claims of various Occupants or Claimants . . . At Closing, Buyer will assume all responsibility and liability for or with respect to any Occupants or Claimants of the Property.” Id. at 55 ¶ A. Section 3, “Eviction Proceedings; Relocation Costs, ” of the Addendum further states, “After Closing, Buyer may elect to bring, at his/her/its sole cost and risk, such unlawful detainer, eviction or similar proceedings as Buyer may desire. Buyer acknowledges that Seller has made no representations or warranties that Buyer may bring such proceeding or that any such proceeding will be successful…” Id. at 56-57. Section 7, “Indemnification, ” states, “The Buyer hereby indemnifies, defends and holds harmless Seller . . . from and against any and all claims, causes of action . . . arising from, in connections with, or in any way relating to the existence or claims of any occupant or Claimant, any violations of . . . federal, state or local statutes or regulations.” Id. at 57. On May 22, 2018, in accordance with the Contract and the Addendum, BANA conveyed the Property to RIPW via a quitclaim deed for $205, 801.05 and recorded it on May 31, 2018. Doc. No. 1-1 at 137.

         B. Procedural Posture

         On June 4, 2018, RIPW sent the Linnells a letter stating, “[p]lease vacate the property no later than Sunday, June 10, 2018, or we may bring a court action to evict you.” Doc. No. 10-4 at 49. After the Linnells failed to vacate, RIPW filed a summary process complaint in the Barnstable County District Court to remove the Linnells from the Property. Id. at 83-84. On June 29, 2018, the Linnells transferred the action to the Southeast County Housing Court. Id. at 37.

         The Linnells' answer to RIPW's summary process complaint denied RIPW's right to take possession of the Property, asserted that the foreclosure of the Property was invalid, and claimed that their initial Mortgage was unconscionable and presumptively unfair. Id. at 91, 93-94. The Linnells also filed a motion to dismiss RIPW's claim for possession which asserted non-compliance with Paragraph 22 of the Mortgage, expiration of the statute of limitations to enforce the Note and exercise the Power of Sale, an unconscionable underlying mortgage, and legally insufficient notice to quit. Id. at 96-100.

         On September 26, 2018, RIPW filed a motion to join BANA as a crossclaim defendant, which the Southeast Housing Court granted. Doc. No. 10 at 155. RIPW then served BANA with a crossclaim complaint alleging (1) breach of contract, (2) indemnification, and (3) unfair and deceptive practices in violation of Mass. Gen. Laws ch. 93A. Id. at 166-67. BANA timely removed the case under this Court's diversity jurisdiction. Doc. No. 1. The Court held a status conference at which ...


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