Bank of Am., N.A. v. Rosa

• Decision Date: 18 December 2013
• Docket Number: SJC–11330.
• Citation: 999 N.E.2d 1080,466 Mass. 613
• Parties: BANK OF AMERICA, N.A. v. Ceferino S. ROSA (and three consolidated cases).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

466 Mass. 613

999 N.E.2d 1080

BANK OF AMERICA, N.A.

v.Ceferino S. ROSA (and three consolidated cases¹ ).

SJC–11330.

Supreme Judicial Court of Massachusetts, Essex.

Submitted Sept. 9, 2013.

Decided Dec. 18, 2013.

Phoebe N. Coddington, of North Carolina (Jennifer E. Greaney & Stephen C. Reilly, Boston, with her) for Bank of America, N.A., & another.

Thomas J. Santolucito, Newton, (Rachel B. Meisterman, Boston, with him) for Federal Home Loan Mortgage Corporation.

Richard M.W. Bauer, Boston, (Eloise P. Lawrence with him) for Ceferino S. Rosa & others.

Marylyn E. Flores (David S. Flores with her) for Gerard J. Cioffi.

Benjamin O. Adeyinka, for Real Estate Bar Association of Massachusetts, Inc., & another, amici curiae, submitted a brief.

Arielle Cohen & Charles Delbaum, Boston, for National Consumer Law Center, amicus curiae, submitted a brief.

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

Opinion

SPINA, J.

In each of these consolidated appeals the plaintiff bank brought a summary process action against the former homeowner-mortgagor in the Housing Court after foreclosure. Each former homeowner raised various defenses and counterclaims in his or her answer to the complaint that challenged the bank's right to both possession and title as derived through foreclosure sale, as well as other defenses and counterclaims. In each case the bank filed a motion to strike the affirmative defenses and to dismiss the counterclaims on grounds that the only defenses and counterclaims available in summary process are (1) those allowed by G.L. c. 239, § 8A, which does not apply here because there was no landlord-tenant relationship between the parties; and (2) a challenge to title (and thereby possession) based only on a failure to comply strictly with the power of sale provided in the mortgage. See Wayne Inv. Corp. v. Abbott, 350 Mass. 775, 775, 215 N.E.2d 795 (1966) ; New England Mut. Life Ins. Co. v. Wing, 191 Mass. 192, 195, 77 N.E. 376 (1906). A judge in the Housing Court acted on these motions after our decision in Bank of N.Y. v. Bailey, 460 Mass. 327, 334, 951 N.E.2d 331 (2011), where we said that the Housing Court has jurisdiction to consider an affirmative defense or a counterclaim raising the question of strict compliance with the power of sale in a mortgage as it relates to the title of a postforeclosure summary process plaintiff. On August 31, 2012, after deciding a similar motion in a case² that he intended would serve as a guide for about two dozen other cases, the judge granted the motions of each bank as to landlord-tenant related defenses and counterclaims. He denied the motions as to the other defenses and counterclaims, concluding that the former homeowners were not limited to challenging title solely on the basis of strict compliance with the power of sale in the mortgage. The banks sought interlocutory review by a single justice of the Appeals Court. The single justice denied relief, but authorized an interlocutory appeal to a panel of the Appeals Court. See CUNA Mut. Ins. Soc'y v. Attorney Gen., 380 Mass. 539, 540, 404 N.E.2d 1219 (1980). We granted the former homeowners' application for direct appellate review. We affirm the decision of the Housing Court judge, and now hold that the Housing Court has jurisdiction to hear defenses and counterclaims that challenge the title of a plaintiff in a postforeclosure summary process action, which previously only could have been the subject of an independent equity action in the Superior Court, and that the Housing Court has authority to award damages in conjunction with such counterclaims.³

1. Background. The defendant former homeowners' mortgages were foreclosed by exercise of the power of sale in their respective mortgages. Each plaintiff bank acquired title to a defendant's home by foreclosure deed following a public foreclosure sale of the mortgaged premises. The banks then commenced these summary process actions in the Housing Court. Each complaint alleged that the former homeowner was holding over and occupying the “premises following a public foreclosure auction and beyond the time provided in the [n]otice to [q]uit.” No party alleges the existence of, or bases any claim, defense, or counterclaim on the existence of, a landlord-tenant relationship.

The former homeowners filed answers to the complaints in which they raised various defenses and counterclaims.⁴ Matters raised only by way of affirmative defense include (1) allegations that the bank did not acquire title strictly according to the power of sale provided in the mortgage, see Wayne Inv. Corp. v. Abbott, supra;New England Mut. Life Ins. Co. v. Wing, supra ; and (2) allegations of discrimination based on a failure to make the requested accommodation of a handicap.⁵ Matters raised only by way of counterclaim include (1) allegations of improper foreclosure and violations of G.L. c. 93A for which reinstatement of the mortgage is sought; and (2) allegations of improper foreclosure and violations of G.L. c. 93A for which damages for negligent and intentional infliction of emotional distress are sought. Matters raised by way of both affirmative defense and counterclaim include (1) allegations that a bank improperly failed to modify the mortgage loan pursuant to the Federal Home Affordable Modification Program, 12 U.S.C. §§ 5219, 5219a (2012), and that such failure constitutes a violation of G.L. c. 93A for which damages and reinstatement of the mortgage are sought; (2) allegations of discrimination based on national origin;⁶ (3) allegations that a bank violated G.L. c. 93A by offering to lease the house to the former homeowner but then never responded to the former homeowner's attempts to pursue the bank's offer; and (4) allegations of violations of the implied warranty of habitability, and breach of the covenant of quiet enjoyment.

The judge dismissed in general language the defendants' affirmative defenses and counterclaims that were based on violations of the implied warranty of habitability, breach of the covenant of quiet enjoyment, theories of rent withholding, and other landlord tenant laws. He did not specify precisely which other defenses and counterclaims were included. He reasoned that those defenses and counterclaims did not apply in these cases because the former homeowners never claimed they had rented or leased the premises. No party challenges the correctness of this ruling.

The judge next addressed affirmative defenses and counterclaims arising out of the banks' assertions of title through foreclosure sale. In a lengthy and comprehensive decision in the case of Wells Fargo Bank v. Amero, Northeast Hous. Ct., No. 12–SP–0870, 2012 WL 8613260 (Aug. 31, 2012), that he made applicable to these cases by reference, the judge reasoned that a series of legislative enactments since 1974 that added and expanded the equitable jurisdiction of the District, Municipal, and Housing Courts in summary process cases, together with the adoption of the Massachusetts Rules of Civil Procedure in 1974 that produced a unified procedural system for legal and equitable causes of action, allow those courts to hear challenges to title of a postforeclosure summary process plaintiff on grounds other than strict compliance with the terms of the power of sale, as had been the law under Wayne Inv. Corp. v. Abbott, supra, and New England Mut. Life Ins. Co. v. Wing, supra. He concluded that such challenges may now be raised in affirmative defenses and counterclaims for affirmative relief in a postforeclosure summary process action, and that a separate action in equity to set aside a foreclosure is no longer necessary.

2. Discussion. The banks argue that the sole authority for raising defenses and counterclaims in actions for summary process is found in G.L. c. 239, § 8A, and that § 8A expressly limits the use of defenses and counterclaims in summary process actions to those seeking “to recover possession of ... premises rented or leased for dwelling purposes” (emphases added). Section 8A clearly governs summary process actions that arise out of a landlord-tenant relationship involving a dwelling. We have held that the absence of any reference to commercial tenancies in § 8A suggests a legislative intent to preclude the use of counterclaims in cases involving commercial tenancies. See Fafard v. Lincoln Pharmacy of Milford, Inc., 439 Mass. 512, 515, 789 N.E.2d 147 (2003). We have never had occasion to decide whether § 8A precludes defenses and counterclaims in other types of summary process actions, of which there are at least six, including postforeclosure summary process actions. G.L. c. 239, § 1.⁷

The banks rely on Cummings v. Wajda, 325 Mass. 242, 243, 90 N.E.2d 337 (1950), where the court said “[s]ummary process is a purely statutory procedure and can be maintained only in the instances specifically provided for in the statute,” and on Fafard v. Lincoln Pharmacy of Milford, Inc., supra, quoting Commonwealth v. McLeod, 437 Mass. 286, 294, 771 N.E.2d 142 (2002), where we said that a court may “not add words to [the] statute that the Legislature did not put there, either by inadvertent omission or by design.” They argue that the Housing Court judge impermissibly rewrote § 8A to effectively state that it applies in summary process actions “to recover possession of any premises rented or leased [or mortgaged ] for dwelling purposes.”

Cummings , supra , does not exactly support the position of the banks. The issue in that case was whether a summary process action could even be instituted by the lessee of one joint owner of premises against the other joint owner, who was in possession of the premises. Id. at 243, 90 N.E.2d 337. The court held that because the circumstances did not reflect any of the enumerated instances for which summary process has been authorized by G.L. c. 239, § 1, the summary process action could not be maintained. Id. The case did not address defenses and counterclaims, or § 8A, whose...