Agin v. Green Tree Servicing, LLC (In re Shubert)

• Decision Date: 19 August 2015
• Docket Number: Case No. 14–14739–JNF,Adv. P. No. 14–1220
• Citation: 535 B.R. 488
• Parties: In re Lisa J. Shubert, Debtor Warren E. Agin, Chapter 7 Trustee, Plaintiff v. Green Tree Servicing, LLC, Eastern Bank, Citimortgage, Inc., Federal National Mortgage Association, and Lisa J. Shubert, Defendants
• Court: U.S. Bankruptcy Court — District of Massachusetts

535 B.R. 488

In re Lisa J. Shubert, DebtorWarren E. Agin, Chapter 7 Trustee, Plaintiff

v.Green Tree Servicing, LLC, Eastern Bank, Citimortgage, Inc., Federal National Mortgage Association, and Lisa J. Shubert, Defendants

Case No. 14–14739–JNF

Adv. P. No. 14–1220

United States Bankruptcy Court, D. Massachusetts.

Signed August 19, 2015

Warren E. Agin, Swiggart & Agin, LLC, Boston, MA, for Plaintiff.

Richard E. Briansky, McCarter & English, LLP, Boston, MA, Lawson Williams, Korde & Associates, P.C., Chelmsford, MA, Charles Michael Landry, III, Landry & Landry, P.C., Raynham, MA, Jeffrey W. Shub, Law Offices of Jeffrey W. Shub, Salem, MA, for Defendants.

Eastern Bank, pro se.

MEMORANDUM

Joan N. Feeney, United States Bankruptcy Judge

I. INTRODUCTION

This adversary proceeding presents a question of whether a certificate of acknowledgment of a mortgage granted by Lisa J. Shubert (the “Debtor”) complied with the requirements of Massachusetts law and, thus, provides constructive notice of the mortgage. If the certificate of acknowledgment does not comply with Massachusetts law, it may be avoided by the Debtor's bankruptcy trustee pursuant to 11 U.S.C. § 544. The question presented arises in the context of the “Plaintiff's Motion for Summary Judgment and Default Judgment” pursuant to which the Chapter 7 Trustee of the Debtor's bankruptcy estate seeks summary judgment against the defendants, Green Tree Servicing, LLC (“Green Tree”), Eastern Bank, CitiMortgage, Inc. (“Citimortgage”), and Federal National Mortgage Association (“FNMA”) (collectively, the “Mortgage Defendants”) with respect to Counts I–III of his Complaint and against the Debtor on Count III only.¹ In addition to filing a Motion to Dismiss, FNMA and Green Tree filed a joint Opposition and a Cross–Motion for Summary Judgment to the Trustee's Motion, although they have not filed an Answer to the Complaint.² Eastern Bank did not file an Answer or a response to the Complaint or to the Trustee's Motion for Summary Judgment. The Trustee, however, assented to its request to extend time to respond to the Complaint for twenty days following the later of this Court's decision with respect to the Motion for Summary Judgment or the Motions to Dismiss filed jointly by Green Tree and FNMA and by CitiMortgage.

The Trustee filed a Complaint against the Mortgage Defendants and the Debtor on November 19, 2014. In his Complaint, he set forth four counts as follows: Count I (Lien Avoidance, § 544 ), Count II (Recovery, §§ 550(a), 551), Count III (Declaratory Relief), and Count IV (Award of Costs). CitiMortgage, Green Tree and FNMA moved to dismiss the Trustee's Complaint. The Debtor failed to answer the Complaint and the Court entered a default against her on March 18, 2015. The Court heard the Cross–Motions for Summary Judgment on May 27, 2015, as well as CitiMortgage's Motion to Dismiss and the Motion to Dismiss filed jointly by FNMA and Green Tree. At the hearing, the Court denied CitiMortgage's Motion to Dismiss and took the Cross–Motions for Summary Judgment under advisement. FNMA and Green Tree withdrew their Motion to Dismiss in open court.

The specific issue presented is whether the Trustee may avoid the mortgage executed by the Debtor pursuant to his avoiding powers under 11 U.S.C. § 544(a)(3) due to the absence of a proper certificate of acknowledgment in accordance with Mass. Gen. Laws ch. 183, § 29. The material facts necessary to resolve the Cross–Motions are not in dispute, and the matter is ripe for summary judgment. This Court has jurisdiction and authority to resolve the dispute as the matter arises under title 11, see 28 U.S.C. § 1334(b) and is a core proceeding under 28 U.S.C. § 157(b)(1) and (b)(2)(K). See Henderson v. Bank of Am., N.A. (In re Simmons), 510 B.R. 76, 88 (Bankr.S.D.Miss.2014). Moreover, no party has objected to the Court's entry of a final order, and thus they have consented to entry of a final order. See Wellness Internat'l Network, L td. v. Sharif, ––– U.S. ––––, 135 S.Ct. 1932, 191 L.Ed.2d 911 (2015).

II. FACTS

The following material facts are undisputed. On October 7, 2014, the Debtor filed a voluntary petition seeking relief under Chapter 7 of the Bankruptcy Code. On Schedule A–Real Property, the Debtor listed real property located at 2 Marisa Drive, West Bridgewater, Massachusetts (the “Real Property”) with a fair market value of $295,000.00. On Schedule C–Property Claimed as Exempt, the Debtor claimed the Real Property as exempt in the sum of $13,033.00.³ On Schedule D–Creditors Holding Secured Claims, the Debtor listed “Citimortgage” as the holder of a claim secured by the Real Property in the sum of $281,967.00. On the Chapter 7 Individual Debtor's Statement of Intention, the Debtor indicated her intention to reaffirm the debt which she believed was owed to CitiMortgage. See 11 U.S.C. § 521(a)(2). The Debtor, however, did not file a reaffirmation agreement with the Court. The Court entered the order of discharge on January 14, 2015.

The Debtor acquired the Real Property on November 29, 2004 by deed from Barbara A. Carr, Deborah A. Carr, Nancy I. Berquist and Kenneth A. Carr. The deed was recorded with the Plymouth County Registry of Deeds on November 29, 2004, at Book 29557, Page 120. On November 29, 2004, the Debtor granted Plymouth Savings Bank a mortgage on the Real Property which was recorded with the Plymouth County Registry of Deeds on November 29, 2004, at Book 29557, Page 124 (the “Mortgage”). The Mortgage secured a note of the same date in the original principal amount of $310,400.00, which as of October 7, 2014, secured a debt in the amount of $281,592.13.

The notarization at the end of the Mortgage provides the following:

On this 29th day of November 2004, before me, the undersigned notary public, personally appeared Lisa J. Shubert, proved to me through satisfactory evidence of identification, which were, MA Driv LIC to be the person whose name is signed on the preceding or attached document in my presence.

On June 1, 2006, Eastern Bank, as successor by merger to Plymouth Savings Bank, assigned the Mortgage to ABN Amro Mortgage Group, Inc. Approximately eight years later, on September 17, 2014, CitiMortgage, successor by merger to ABN Amro Mortgage Group, Inc., assigned the Mortgage to Green Tree. Green Tree holds the Mortgage as agent for FNMA.

III. DISCUSSION

A. Summary Judgment Standard

The United States Court of Appeals for the First Circuit has articulated the well-established standard for summary judgment in Desmond v. Varrasso (In re Varrasso), 37 F.3d 760, 763 (1st Cir.1994). It stated:

It is apodictic that summary judgment should be bestowed only when no genuine issue of material fact exists and the movant has successfully demonstrated an entitlement to judgment as a matter of law. See Fed.R.Civ.P. 56(c). As to issues on which the movant, at trial, would be obliged to carry the burden of proof, he initially must proffer materials of evidentiary or quasi—evidentiary quality-say, affidavits or depositions—that support his position. When the summary judgment record is complete, all reasonable inferences from the facts must be drawn in the manner most favorable to the nonmovant. This means, of course, that summary judgment is inappropriate if inferences are necessary for the judgment and those inferences are not mandated by the record....

Id. at 763 (1st Cir.1994) (citations omitted, footnote omitted).⁴ As noted above, the material facts necessary to resolve the Trustee's Complaint are not in dispute. Resolution of the issue requires interpretation of Mass. Gen. Laws ch. 183, § 29, which provides in pertinent part the following:

No deed shall be recorded unless a certificate of its acknowledgment or of the proof of its due execution, made as hereinafter provided, is endorsed upon or annexed to it, and such certificate shall be recorded at length with the deed to which it relates; but this section shall not apply to conveyances from the United States.

Mass. Gen. Laws ch. 183, § 29. Other provisions of Chapter 183 and case law relating to acknowledgments also inform the Court's resolution of this dispute.

B. Positions of the Parties

1. The Trustee

The Trustee argues that the Mortgage was not recordable and does not provide constructive notice because it was materially defective owing to the absence of language of voluntariness on the part of the mortgagor, reflecting that execution of the mortgage was his “free act and deed,” or similar language in the notary clause. He maintains that in Massachusetts a mortgage must be acknowledged by the signatory and must include a certificate of acknowledgment to be recorded. According to the Trustee, a clause that merely certifies that the person appeared before the notary, produced identification, and signed the document is insufficient to certify that the person acknowledged the document. Thus, he maintains, an unrecordable mortgage is treated as an unrecorded mortgage for purposes of 11 U.S.C. § 544(a), and may be avoided by a Chapter 7 trustee.

Noting that a mortgage is considered a form of “deed” for purposes of the recording requirements, see In re Giroux, No. 08–14708–JNF, Adv. No. 08–1261, 2009 WL 1458173 (Bankr.D.Mass.2009), aff'd No. 09–CV–10988–PBS, 2009 WL 3834002 (D.Mass.2009), the Trustee contends that the acknowledgment of the execution of a deed or mortgage must be made by or on behalf of one or more of the grantors pursuant to Mass. Gen. Laws ch. 183, § 30.⁵ Citing, inter alia, Weiss v. Wells Fargo Bank, N.A. (In re Kelley), 498 B.R. 392, 397–98 (1st Cir. BAP 2013), McOuatt v. McOuatt, 320 Mass. 410, 69 N.E.2d 806, 810 (1946), and Allen v. Allen, No. 10 MISC 420492 GHP, 2013 WL 139318, at *10 (Mass.Land Ct. Jan. 10, 2013), he further contends that “in an acknowledgment ‘[n]o particular words are necessary as long as they amount to an admission that [the grantor] has voluntarily and freely executed the instrument.’ ” In re Kelley, 498 B.R. at 398 (quoting McOuatt, 320 Mass. at 415, 69...