Dyer v. Wells Fargo Bank, N.A.

• Citation: 841 F.3d 550
• Decision Date: 14 November 2016
• Docket Number: No. 15–2421,15–2421
• Parties: Edythe L. Dyer, Plaintiff, Appellant, v. Wells Fargo Bank, N.A., d/b/a America's Servicing Company; U.S. Bank, N.A., as Trustee for CSFB Mortgage–Backed Pass–Through Certificates, Series 2005–2, Defendants, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

841 F.3d 550

Edythe L. Dyer, Plaintiff, Appellant,

v.Wells Fargo Bank, N.A., d/b/a America's Servicing Company; U.S. Bank, N.A., as Trustee for CSFB Mortgage–Backed Pass–Through Certificates, Series 2005–2, Defendants, Appellees.

No. 15–2421

United States Court of Appeals, First Circuit.

November 14, 2016

Glenn F. Russell, Jr. , with whom Glenn F. Russell Jr., & Associates, P.C. was on brief, for appellant.

David E. Fialkow , with whom Jeffrey S. Patterson , Michael R. Stanley , and K&L Gates LLP were on brief, for appellees.

Before Torruella, Kayatta, and Barron, Circuit Judges.

BARRON, Circuit Judge.

The plaintiff, Edythe Dyer, brought this suit against U.S. Bank, N.A. (“U.S. Bank”) and Wells Fargo Bank, N.A. (“Wells Fargo”), arising out of a foreclosure sale on her property. The suit was dismissed, and we now affirm.

I.

In 2004, Dyer executed a promissory note to Dreamhouse Mortgage Corporation (“Dreamhouse”) and granted a mortgage on her property at 41 Commonwealth Avenue, Unit #9, in Boston, Massachusetts (the “Property”). She granted the mortgage to Mortgage Electronic Registration Systems, Inc. (“MERS”) as the “nominee” for Dreamhouse and its successors and assigns. In 2008, MERS executed a document entitled “Assignment of Mortgage,” which transferred the mortgage to U.S. Bank, as trustee. The document was recorded with the Registry of Deeds for Suffolk County, Massachusetts. MERS also executed an assignment of the mortgage to U.S. Bank in 2011. In 2012, MERS published a “Confirmatory Assignment” confirming the 2008 assignment. That document explained that the 2011 assignment was a ity because, in 2011, MERS did not have standing to assign the mortgage, given that it had already transferred the mortgage to U.S. Bank in 2008. In 2013, Wells Fargo, U.S. Bank's servicer of the loan, recorded an affidavit in the registry of deeds attesting that, as of that time, U.S. Bank held the note secured by Dyer's mortgage.

In April 2015, U.S. Bank notified Dyer that it intended to foreclose on the Property by utilizing the statutory power of sale provided for in Massachusetts General Laws Chapter 183 § 21. That provision permits a proper party to execute a foreclosure sale without prior judicial authorization. Eaton v. Fed. Nat'l Mortg. Ass'n, 462 Mass. 569, 969 N.E.2d 1118, 1127 (2012). The requirements for exercising that statutory power of sale are laid out in Massachusetts General Laws Chapter 244 § 14. See Fed. Nat'l Mortg. Ass'n v. Rego, 474 Mass. 329, 50 N.E.3d 419, 422–23 (2016).

Dyer filed suit in Massachusetts state court on May 26, 2015. Dyer named U.S. Bank as one of the defendants. She sought a declaratory judgment that U.S. Bank is not a proper party under Section 14 to utilize the statutory power of sale, and she also sought damages against U.S. Bank for slander of title based on that same allegation about the status of U.S. Bank under Section 14. Dyer also named Wells Fargo, the servicer of the loan, as a defendant in the suit. In her claim against Wells Fargo, Dyer sought damages under Massachusetts' catch-all consumer protection statute, Massachusetts General Laws Chapter 93A.

The defendants removed the case to the United States District Court for the District of Massachusetts on the basis of diversity jurisdiction. In federal court, the parties consented to proceeding before a magistrate judge pursuant to 28 U.S.C. § 636(c). Dyer then filed a separate motion for a preliminary injunction to stop the foreclosure sale. The Magistrate Judge denied that motion. The defendants thereafter filed a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c).

After a full round of briefing, the Magistrate Judge granted the motion for judgment on the pleadings. In so doing, the Magistrate Judge dismissed all of Dyer's claims. Dyer now appeals.

II.

We start with the aspect of this appeal that concerns U.S. Bank. Dyer does not challenge the Magistrate Judge's ruling that Dyer's slander of title claim rests on the same contention as her request for a declaratory judgment: that U.S. Bank was not authorized to exercise the statutory power of sale. Thus, we fully resolve the U.S. Bank-related portion of Dyer's appeal so long as we conclude that U.S. Bank was authorized to exercise the statutory power of sale.¹

In contending that U.S. Bank was not authorized to exercise the statutory power of sale, Dyer chiefly argues that U.S. Bank was not the holder of the mortgage when it purported to exercise the statutory power of sale and that, in consequence of the decision of the Supreme Judicial Court (“SJC”) in Eaton, U.S. Bank was not entitled to exercise that power. See Eaton, 969 N.E.2d at 1131 (holding that, in order to foreclose under Section 14, an entity must both hold the mortgage and either hold the note or act as an agent of the noteholder). In so contending, Dyer acknowledges that there was a purported 2008 assignment of the mortgage from MERS to U.S. Bank. Dyer acknowledges as well that U.S. Bank referenced this assignment in the statutorily required notice. See Mass. Gen. Laws ch. 244 § 14. But, Dyer contends, that 2008 assignment was void for a number of reasons. We do not agree.

Dyer first argues that the assignment was void because MERS, when it made the 2008 assignment, was neither the noteholder nor the agent of the noteholder. Instead, MERS held the mortgage only as a “nominee” for the lender, Dreamhouse, and its successors and assigns. But we held in Culhane v. Aurora Loan Services of Nebraska, 708 F.3d 282 (1st Cir. 2013), that a mortgage contract that names “MERS ... as nominee for [Lender] and [Lender's] successors and assigns” does suffice to make MERS the mortgage holder and then authorize MERS to assign the mortgage on behalf of the lender to the lender's successors and assigns. Id. at 293. And here, Dyer's 2004 mortgage contract contains the same language regarding MERS, and its status as nominee (in this case for Dreamhouse), as the one that we addressed in Culhane.

Dyer responds that Culhane is not controlling. She contends that Culhane relied on a construction of Section 14 that pre-dated the SJC's decision in Eaton and that Eaton renders that construction impermissible. While Eaton did expressly reserve the question of whether a “nominee” is an “agent” of the noteholder, it did so only in connection with its discussion of whether MERS's status as a “nominee” of the lender empowered it to execute the statutory power of sale. See Eaton, 969 N.E.2d at 1134 n.29. Eaton in no way suggested that MERS's status as a nominee was insufficient to permit it to hold or assign a mortgage to a successor or assign of the lender. And, in Culhane, in which we expressly applied Eaton,Culhane, 708 F.3d at 288 n.4, we concluded that MERS's status as a nominee was sufficient to permit it to hold a mortgage and to make such an assignment. Id. at 293. Thus, Dyer's first ground for contending that the 2008 assignment is void is without merit in consequence of the language of the 2004 contract naming MERS as Dreamhouse's nominee.²

Moving past the terms of the 2004 mortgage contract, Dyer goes on to contend that the 2008 assignment from MERS to U.S. Bank is void for an independent reason. She contends that MERS assigned the mortgage to U.S. Bank in violation of a trust agreement between U.S. Bank and the investors in the loan, which empowered U.S. Bank to act on behalf of the investors, and that the breach of the trust agreement rendered the assignment void. But in Butler v. Deutsche Bank Trust Co. Americas, 748 F.3d 28, 37 (1st Cir. 2014), we held that an assignment made in contravention of such a trust agreement is at most voidable at the option of the parties to the trust agreement, not void as a matter of law. Therefore, the alleged violation of the trust agreement does not void the 2008 assignment and thereby strip U.S. Bank of its status as a holder of the mortgage. Thus, this argument, too, fails.

Dyer next argues that the 2008 assignment is void for yet another reason: the 2012 Confirmatory Assignment states that MERS lacked “standing” to assign the mortgage. That document, however, makes clear that MERS lacked “standing” to assign the mortgage in 2011, because MERS had validly assigned the mortgage to U.S. Bank in 2008. The Confirmatory Assignment thus hardly casts doubt on the validity of the 2008 assignment to U.S. Bank; in fact, it appears to confirm it. We therefore reject this argument as well.

Finally, we reject Dyer's separate argument that U.S. Bank was not a proper party to exercise the statutory power of sale because the notice of sale that Section 14 required U.S. Bank to publish did not comply with Section 14's requirements. See Mass. Gen. Laws ch. 244 § 14 (stating that “in the event a mortgagee holds a mortgage pursuant to an assignment, no notice under this section shall be valid unless (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 this section.”). Specifically, she contends that notice failed to refer to what Dyer identifies as various “intermediate transfers.”

Dyer's complaint is less than clear as to precisely what she contends was being assigned in these “intermediate transfers,” and her briefing does not do much to help clarify matters. The premise of this argument appears to be, however, that MERS, as the nominee of Dreamhouse, never properly held the mortgage. From this premise, she contends that the notice published by U.S. Bank had to set forth a chain of title that ran from Dreamhouse, the original lender, to the various parties the complaint identifies as being involved in “intermediate transfers” to U.S. Bank.

The problem with this argument stems from its...