Abate v. Fremont Inv. & Loan

• Decision Date: 09 March 2015
• Docket Number: SJC–11638.
• Citation: 470 Mass. 821,26 N.E.3d 695
• Parties: Thomas C. ABATE v. FREMONT INVESTMENT & LOAN & others.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

470 Mass. 821

26 N.E.3d 695

Thomas C. ABATE

v.FREMONT INVESTMENT & LOAN & others.¹

SJC–11638.

Supreme Judicial Court of Massachusetts, Suffolk.

Submitted Nov. 4, 2014.

Decided March 9, 2015.

Thomas B. Vawter for the petitioner.

James L. Rogal, Woburn, for Deutsche Bank National Trust Company & another.

Robert M. Brochin for Mortgage Electronic Registration Systems, Inc.

James P. Long, pro se, amicus curiae, submitted a brief.

Present: GANTS, C.J., SPINA, CORDY, BOTSFORD, DUFFLY, LENK, & HINES, JJ.

Opinion

HINES

, J.

In this appeal, we determine whether a respondent in a try title action brought pursuant to G.L. c. 240, §§ 1

–5, may test the substantive merits of a petitioner's claims in the “first step” of such an action. The issue arises because the try title statute, in keeping with its purpose to allow a person holding record title to compel an adverse claimant to prove the merits of the adverse claimant's interest in the property, contemplates a two-step procedure in which the substantive merits of the parties' claims are determined at a trial. Under our interpretation of the statute, the “first step” requires that the petitioner must satisfy the jurisdictional elements ² of the statute and, if satisfied, the “second step” requires the adverse claimant either to bring an action to assert the claim to title, or to disclaim an interest in the property. Bevilacqua v. Rodriguez, 460 Mass. 762, 766, 955 N.E.2d 884 (2011)

, citing G.L. c. 240, § 1. Recognizing the potential conflict between jurisdictional determinations and a petitioner's right under the statute to compel an adverse claimant to bring his or her own action to assert that claim, we transferred the petitioner's appeal to this court on our own motion. For the reasons explained below, we affirm the Land Court judgment dismissing his petition.

Background. 1. Procedural history. The petitioner, Thomas C. Abate, brought this action in the Land Court asserting that a purported assignment of a mortgage was invalid and, thereby, indirectly challenging a foreclosure by Deutsche Bank National Trust Company, as trustee for Carrington Mortgage Loan Trust, Series 2005–FRE1, Asset Backed Pass–Through Certificates (Deutsche Bank). At the time of filing, Deutsche Bank as the assignee of the mortgage already had foreclosed on Abate's mortgage. The respondents filed motions to dismiss under Mass. R. Civ. P. 12(b)(6)

, 365 Mass. 754 (1974), for failure to state a

claim on which relief could be granted.³ A Land Court judge dismissed the petition after concluding that, as a matter of law, none of the alleged grounds for invalidity of the assignment could be sustained and that the foreclosure left Abate without record title.⁴

2. Facts. The following facts are taken from undisputed facts in the record.⁵ On June 17, 2005, Abate granted a mortgage to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Fremont Investment & Loan (Fremont). On that same date, Abate took title to the property at 14 Owatonna Street, Newton, through a quitclaim deed. The mortgage and quitclaim deed were recorded in the Middlesex County registry of deeds. An assignment of the mortgage, recorded on December 3, 2010, purported to assign Abate's mortgage from MERS to Deutsche Bank on November 16, 2010.

Abate has been in possession of the property since 2005. He filed bankruptcy on October 29, 2010, and represented during bankruptcy proceedings that he intended to surrender the property.⁶ On December 9, 2010, the bankruptcy court ordered that Deutsche Bank be released from an automatic stay so that it could exercise its rights pursuant to the mortgage. On March 28, 2012, Deutsche Bank conducted a nonjudicial foreclosure auction in accordance with the statutory power of sale provision in the mortgage and the nonjudicial foreclosure process set forth in

G.L. c. 244, §§ 11

–17C.⁷ The foreclosure deed conveying title from Deutsche Bank to itself was recorded on October 5, 2012.⁸

In May, 2012, Abate filed a petition to try title, pursuant to G.L. c. 240, §§ 1

–5, in the Land Court, claiming to hold record title and to be in possession of the property. The petition named four possible adverse claimants: (1) Fremont; (2) MERS; (3) Deutsche Bank; and (4) Carrington Mortgage Services, LLC (Carrington). Abate claimed to have record title “by virtue of a quitclaim deed dated June 17, 2005.” Abate asserted that he had granted a mortgage to Fremont, as the lender, and MERS, as the mortgagee, and that MERS had purported to assign the mortgage to Deutsche Bank. Abate asserted that the defendants were potentially adverse claimants because the assignment from MERS to Deutsche Bank was “fraudulent, invalid, void and/or legally inoperative” for a variety of reasons. Abate did not acknowledge in his petition that Deutsche Bank had already foreclosed on the mortgage.

On July 31, 2012, Deutsche Bank and Carrington filed a motion to dismiss pursuant to rule 12(b)(6)

. The motion asserted that the try title petition did not demonstrate a plausible entitlement to the relief sought because Abate failed to allege facts sufficient to prove that the assignment was invalid.⁹ Abate contested the filing on procedural grounds, arguing that a motion to dismiss for failure to state a claim is not a proper response to a try title action and that once he satisfied the threshold jurisdictional requirements for maintaining the action, the judge should have compelled Deutsche Bank and Carrington either to disclaim their interests in the property or to bring an action to try title. Abate did not offer a rebuttal to the substantive merits of the defendants'

motion to dismiss.

After a hearing, and with the benefit of additional briefing, the judge allowed the motion on December 10, 2012 (Deutsche Bank/Carrington Order), agreeing with the argument of Deutsche Bank and Carrington that Abate failed to state a claim on which relief can be granted. Addressing separately each of the claimed defects in the assignment, the judge ruled that Abate's petition failed to sufficiently allege effective record title because none of the allegations established any ground on which the assignment could be found void or invalid.

Subsequently, on January 16, 2013, MERS filed a motion to dismiss the petition pursuant to rule 12(b)(6)

, arguing that the Deutsche Bank/Carrington Order rendered Abate's petition moot and further asserting that MERS does not have a present interest in the property because it validly assigned the mortgage to Deutsche Bank. Abate filed an opposition to MERS's motion and a motion for reconsideration of the Deutsche Bank/Carrington Order. The judge allowed MERS's motion to dismiss on the ground that the reasons supporting dismissal against Deutsche Bank and Carrington also apply to MERS and that MERS no longer claims any title interest in the property. The judge denied Abate's motion for reconsideration.

A judgment entered dismissing the petition against Deutsche Bank, Carrington, and MERS with prejudice.¹⁰ Abate timely appealed the judgment of dismissal.

While the appeal was pending, Abate filed a motion for relief from judgment pursuant to Mass. R. Civ. P. 60(b)(1), (5), and (6)

, 365 Mass. 828 (1974), arguing that the judge erred in allowing the motions to dismiss and that a subsequent Land Court decision, which denied a motion to dismiss and held that a try title action properly may lie before a foreclosure, rendered the judgment inequitable.¹¹ The judge denied Abate's motion, reasoning that the subsequent decision was not binding precedent and the

ruling allowing a try title action to be brought before a mortgage foreclosure had no bearing on the issues before him. It was undisputed that Abate's try title action was brought after foreclosure, and in any event, the decision would not have changed the outcome in Abate's case where the complaint was dismissed for failure to state a claim, a ground independent of the timing of the foreclosure.

Discussion. In this appeal, Abate argues that in allowing the respondents to bring a motion to dismiss under rule 12(b)(6)

, the judge vitiated his right under the statute to compel the respondents to “disclaim all right and title adverse to the petitioner” or “show cause why they should not bring an action to try such claim.” G.L. c. 240, §§ 1, 3. In particular, Abate argues that in considering and allowing the motions, the judge erroneously obliterated the distinction between jurisdiction and the merits of a try title action. We disagree. The judge properly considered the substantive merits of Abate's claim that the assignment was invalid because the issue was determinative of Abate's standing to bring a try title action and ultimately the Land Court's subject matter jurisdiction. Therefore, we affirm the decision of the Land Court allowing the motions to dismiss.

In doing so, we also resolve a conflict in Land Court decisions by concluding that a petitioner claiming a defect in the legal title of a purported mortgagee may only meet the jurisdictional element of “adverse claim” after that mortgagee has foreclosed.¹²

1. Statutory background. A try title action is one of several

judicial avenues available to a property owner who seeks to challenge a claimed adverse property interest.¹³ See e.g., G.L. c. 231A, §§ 1

–9 (declaratory judgment); G.L. c. 240, §§ 1 –5 (try title action); G.L. c. 240, §§ 6 –10 (action to quiet title). A try title action is an action at law¹⁴ brought by a person in possession of property and who claims to hold “record title” clouded by an actual or possible adverse claim.¹⁵

Bevilacqua, 460 Mass. at 766, 767 n. 5, 955 N.E.2d 884. The Land Court has exclusive original jurisdiction over try title actions, which, as we have noted, involve two steps. G.L. c. 185, § 1 (d ). A petitioner must establish three jurisdictional elements in the “first step” of a try title action: (1) that he holds “record title” to the property; (2) that he is a person “in possession”; and (3)...