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Cranmore v. Wells Fargo Bank, N.A.

United States District Court, D. Massachusetts

October 18, 2019

DENISE D. CRANMORE, Plaintiff,
v.
WELLS FARGO BANK, N.A., d/b/a AMERICAN'S SERVICING CO. a/k/a BERKSHIRE HATHAWAY INC. & U.S. BANK, N.A., AS TRUSTEE FOR RESIDENTIAL ASSET SECURITIES CORP. a/k/a HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES, SERIES 2006-EMX9, Defendants.

          MEMORANDUM OF DECISION

          WILLIAM G. YOUNG DISTRICT JUDGE.

         I. INTRODUCTION

         This matter came before this Court as a case stated, see United Paperworkers Int'l Union, Local 14 v. International Paper Co., 64 F.3d 28, 31 (1st Cir. 1995) (citing Equal Employment Opportunity Comm'n v. Steamship Clerks Union 1066, 48 F.3d 594, 603 (1st Cir. 1995)), to resolve the one count remaining after another session of the court twice denied summary judgment. See ECF Nos. 26 (denying summary judgment on all counts), 60 (denying summary judgment on part of count III). The plaintiff Denise Cranmore (“Cranmore”) contends that Wells Fargo Bank, National Association (“Wells Fargo”) and U.S. Bank, National Association, as Trustee for Residential Asset Securities Corporation, Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2006-EMX9 (“U.S. Bank as Trustee for Series 2006-EMX9”) violated chapter 93A of Massachusetts General Laws by initiating foreclosure proceedings on her property without possession of both the note and the mortgage as required by Massachusetts law. The Defendants argue, among other things, that Cranmore cannot prove that the holder of the mortgage did not hold the note when it noticed foreclosure or that they met the scienter requirement of her chapter 93A claim.

         A. Stipulated Facts[1]

         Cranmore borrowed $331, 500 from Mortgage Lenders Network USA, Inc. (“Mortgage Lenders Network”) on June 29, 2006 to purchase a property in Milton, Massachusetts (“the Property”). See Stipulated Facts ¶ 1. Cranmore's promissory note on this debt was secured by a mortgage on the Property and listed Mortgage Lenders Network as the lender. See id. & Ex. A, Adjustable Rate Balloon Note (“Note”) 2, ECF No. 74-1.[2] The mortgage designated Mortgage Electronic Registration Systems, Inc. (“MERS”) as the nominee for the lender. See Stipulated Facts ¶ 5 & Ex. B, Mortgage 10, ECF No. 74-1.

         On October 17, 2011, MERS assigned the Mortgage to U.S. Bank, National Association, as Trustee for RASC 2006-EMX9 (“U.S. Bank as Trustee for RASC 2006-EMX9”). Stipulated Facts ¶ 6 & Ex. C, Corporate Assignment Mortgage (“First Assignment”) 35, ECF No. 74-1. On February 17, 2015, U.S. Bank Trustee RASC 2006-EMX9 assigned the mortgage to U.S. Bank as Trustee for Series 2006-EMX9. Stipulated Facts ¶ 7 & Ex. D, Corporate Assignment Mortgage (“Second Assignment”) 38, ECF No. 74-1.

         Wells Fargo has been the servicer of the mortgage loan on behalf of U.S. Bank since at least 2009.[3] See Stipulated Facts ¶ 8; Statement Material Facts Supp. Defs.' Mot. Summ. J. (“Statement Facts Defs.' First Mot. Summ. J.”), Ex. E, Special Forbearance Plan, ECF No. 10-5.

         The Note was endorsed multiple times since 2006. See Stipulated Facts ¶¶ 2-4. As explicated in Judge Wolf's memorandum and order:

The Note contains three undated assignments: (a) from “Mortgage Lenders Network USA” to “EMAX Financial Group, LLC”; (b) from “EMAX Financial Group, LLC” to “Residential Funding Company, LLC”; and (c) from “Residential Funding Company LLC” to “U.S. Bank National Association as Trustee.” The last assignment does not specify the trust for which U.S. Bank acts as trustee. Moreover, the last assignment is crossed-out in handwriting, next to a handwritten date of January 26, 2016. Finally, the Note also contains an Allonge, which purports to assign the note from “Residential Funding Company, LLC” to U.S. Bank, as Trustee for Series 2006-EMX9.

         Mem. & Order (“Wolf Mem. & Order”) 9, ECF No. 60 (internal citations omitted).

         Cranmore defaulted on the loan in 2008. Stipulated Facts ¶ 9. She and Wells Fargo attempted unsuccessfully to modify her loan between 2008 and 2016. Id. ¶ 10.

         A January 20, 2016 letter notified Cranmore that U.S. Bank as Trustee for Series 2006-EMX9 intended to conduct a foreclosure sale of the Property on February 19, 2016. Id. ¶ 11 & Ex. E, Notice of Intention to Foreclose and of Deficiency After Foreclosure of Mortgage (“Notice of Foreclosure”) 42-44, ECF No. 74-1.

         Attached to the Notice of Foreclosure was a document, dated December 8, 2015, entitled “Certification Pursuant to Massachusetts 209 C.M.R. 18.21A(2)(c).” See Pl.'s Opp'n Defs.' Mot. Summ. J. (“Opp'n Defs.' First Mot. Summ. J.”) 5-6, ECF No. 13; Stipulated Facts, Ex. E, Certification Massachusetts 209 C.M.R. 18.21A(2)(c) (“Certification”) 51-52, ECF No. 74-1. The Certification -- written and signed by Deitrice Hemphill, Vice President of Loan Documentation at Wells Fargo, “pursuant to [her] review of the relevant business records, the records of the county recorder where the subject property is located, the title report, and/or information obtained from a title insurer or agent” -- purports to document the chain of title for the mortgage on the Property and its promissory note. The Certification indicates that an assignment from U.S. Bank as Trustee for RASC 2006-EMX9 to U.S. Bank as Trustee for Series 2006-EMX9 was recorded on February 25, 2015. Certification ¶ 8. Further, the Certification attests that U.S. Bank as Trustee for Series 2006-EMX9 “is the owner of the Promissory Note [].” Id. ¶ 4. Indeed, Deitrice Hemphill's signature indicates her affiliation with “Wells Fargo Bank, N.A., DBA America's Servicing Company as sub servicer agent for U.S. Bank National Association, as trustee, for residential asset securities corporation, Home Equity Mortgage Asset-backed pass-through certificates, series 2006-EMX9.” Certification 52.

         On the date this Certification was completed, the Note itself indicated that it had been endorsed to “U.S. Bank as Trustee, ” but did not specify a trust. See Wolf Mem. & Order 9, 12; Note 7.

         After a state court enjoined this foreclosure on February 17, 2016, see Wolf Mem. & Order 2; State Court Record 132, ECF No. 6, no foreclosure has occurred nor is one presently scheduled.

         On September 29, 2017, Cranmore served a chapter 93A demand letter on the Defendants, to which they responded on October 25, 2017. Stipulated Facts ¶¶ 13-14.

         B. Procedural History

         On February 17, 2016, very soon after receiving the January 2016 notice of foreclosure, Cranmore obtained a preliminary injunction in state court that prevented the Defendants from foreclosing on the Property. See Wolf Mem. & Order 2; Stipulated Facts ¶ 15; State Court Record 132.

         In addition to seeking an injunction, Cranmore alleged that (1) U.S. Bank as Trustee for Series 2006-EMX9 did not hold the note at the time it initiated foreclosure proceedings and (2) Wells Fargo failed to make a good faith attempt to consider loan modifications. See Pl.'s Opening Br. Trial Case Stated (“Cranmore's Br.”) 3-4, ECF No. 75.

         Wells Fargo and U.S. Bank as Trustee for Series 2006-EMX9 removed the case to the District Court for the District of Massachusetts on the basis of diversity jurisdiction. See Wolf Mem. & Order 2. Judge Wolf denied the Defendants' first motion for summary judgment in September 2017, allowing Cranmore to amend her complaint and the parties to develop the record further. See id.

         Cranmore's second amended complaint sought an injunction of the foreclosure (count I), a judgment declaring that the Defendants could not foreclose on the Property (count II), and damages for alleged violations of chapter 93A of Massachusetts General Laws (“Chapter 93A”). See id. Cranmore alleged that U.S. Bank as Trustee for Series 2006-EMX9 did not possess the Note at the time it initiated foreclosure proceedings and Wells Fargo communicated in a confusing and misleading manner and failed appropriately to consider loan modifications. See id. at 2-3.

         On March 29, 2019, Judge Wolf granted summary judgment for the Defendants on counts I and II, ruling those claims “not ripe for judicial determination” as they “concern[ed] a hypothetical, future foreclosure that defendants ha[d] not yet noticed.” Id. at 3. Judge Wolf also granted partial relief to the Defendants on count III, holding that Cranmore had failed to demonstrate a genuine dispute of material fact as to her claims regarding Wells Fargo's communications and loan modification efforts. See id. at 3-4.

         The case, then consisting only of the remaining Chapter 93A claim, was transferred to this session of the Court pursuant to Local Rule 40.1(i) on July 5, 2019. Electronic Clerk's Notes, ECF No. 67. The parties agreed to proceed as a case stated, Electronic Clerk's Notes, ECF Nos. 71-72, and filed stipulated facts, trial briefs, and responses. See Stipulated Facts; Cranmore's Br.; Defs.' Opening Br. Supp. Defs.' Mot. J. Case Stated (“Defs.' Br.”), ECF No. 77; Pl.'s Resp. Defs.' Opening Br. Trial Case Stated ...


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