Deutsche Bank Nat'l Trust v. Moynihan

• Decision Date: 19 September 2017
• Docket Number: CIVIL ACTION NO. 15–14155–MBB
• Citation: 270 F.Supp.3d 497
• Parties: DEUTSCHE BANK NATIONAL TRUST, as Trustee FOR IXIS 2006–HE3, Plaintiff, v. James P. MOYNIHAN, Defendant.
• Court: U.S. District Court — District of Massachusetts

270 F.Supp.3d 497

DEUTSCHE BANK NATIONAL TRUST, as Trustee FOR IXIS 2006–HE3, Plaintiff,

v.James P. MOYNIHAN, Defendant.

CIVIL ACTION NO. 15–14155–MBB

United States District Court, D. Massachusetts.

Signed September 19, 2017

John S. Mcnicholas, Korde & Associates PC, Lowell, MA, Samuel C. Bodurtha, Valerie N. Doble, Hinshaw & Culbertson LLP, Boston, MA, for Plaintiff.

Adam T. Sherwin, The Sherwin Law Firm, Somerville, MA, John L. McGowan, John L. McGowan, Attorney At Law, P.C, Sharon, MA, for Defendant.

MEMORANDUM AND ORDER RE: PLAINTIFF DEUTSCHE BANK NATIONAL TRUST COMPANY'S MOTION FOR SUMMARY JUDGMENT (DOCKET ENTRY # 63)

BOWLER, United States Magistrate Judge

Pending before this court is a motion for summary judgment filed by plaintiff Deutsche Bank National Trust Company, as Trustee for IXIS 2006–HE3 ("DBNTC"), seeking to enforce a lost promissory note. (Docket Entry # 63). Defendant James P. Moynihan ("defendant") opposes the motion. (Docket Entry # 73). After conducting a hearing on April 25, 2017, this court took the motion under advisement. (Docket Entry # 77).

PROCEDURAL BACKGROUND

The parties' dispute arises out of a promissory note executed by defendant and secured by a mortgage on property in Lowell, Massachusetts, where defendant resides ("the property"). (Docket Entry # 1). The complaint sets out two counts against defendant and former defendant Durham Commercial Capital Corporation ("Durham"). (Docket Entry # 1, p. 8). Count One requests a declaratory judgment in favor of DBNTC against defendant establishing that DBNTC rightfully owns the note and is "entitled to immediate physical possession of the original [of the note]." (Docket Entry # 1, ¶ 40). Count Two requests a declaratory judgment in favor of DBNTC against defendant establishing that DBNTC, under section one of Massachusetts General Laws chapter 231A and section 3 –301(iii) ("section 3–301") of Massachusetts General Laws chapter 106 ("chapter 106"), is entitled to enforce the terms of the note and the mortgage granting DBNTC a security interest in the property and may exercise the "default remedies provided for in the mortgage including exercise of the statutory power of sale." (Docket Entry # 1, ¶ 45). On August 22, 2016, DBNTC filed a notice voluntarily dismissing Durham from this action. (Docket Entry # 45).

On March 2, 2017, DBNTC moved for summary judgment under Fed.R.Civ.P. 56 (" Rule 56") based on three arguments.

(Docket Entry ## 63, 64). DBNTC contends that it is entitled to enforce the note under chapter 106, sections 3–301 and 3–309. (Docket Entry # 64, p. 5). DBNTC also maintains that declaratory relief is warranted because defendant is judicially and collaterally estopped from challenging DBNTC's enforcement of the note. (Docket Entry # 64, pp. 10, 13). Defendant submits that DBNTC's motion should be denied because there is a genuine issue of material fact as to whether DBNTC ever had possession of the promissory note and if the note was even lost. (Docket Entry # 73, pp. 1, 8). Defendant also counters the judicial and collateral estoppel arguments made by DBNTC. (Docket Entry # 73, pp. 10–13).

STANDARD OF REVIEW

Summary judgment is designed to " ‘pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required.’ " Tobin v. Federal Express Corp., 775 F.3d 448, 450 (1st Cir. 2014) (quoting Wynne v. Tufts University School of Medicine, 976 F.2d 791, 794 (1st Cir. 1992) ). It is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). It is inappropriate "if the record is sufficiently open-ended to permit a rational factfinder to resolve a material factual dispute in favor of either side." Pierce v. Cotuit Fire District, 741 F.3d 295, 301 (1st Cir. 2014) ; see also Ruiz–Rosa v. Rullan, 485 F.3d 150, 155 (1st Cir. 2007) (applying same legal standard applied by district court when reviewing summary judgment ruling).

"Genuine issues of fact are those that a factfinder could resolve in favor of the nonmovant, while material facts are those whose ‘existence or nonexistence has the potential to change the outcome of the suit.’ " Green Mountain Realty Corp. v. Leonard, 750 F.3d 30, 38 (1st Cir. 2014) (quoting Tropigas de Puerto Rico, Inc. v. Certain Underwriters at Lloyd's of London, 637 F.3d 53, 56 (1st Cir. 2011) ). The evidence is viewed "in the light most favorable to the non-moving party" and "all reasonable inferences" are drawn in his favor. Ahmed v. Johnson, 752 F.3d 490, 495 (1st Cir. 2014). In reviewing a summary judgment motion, a court may examine "all of the record materials on file," Geshke v. Crocs, Inc., 740 F.3d 74, 77 (1st Cir. 2014), "including depositions, documents, electronically stored information, affidavits or declarations ... or other materials." Fed.R.Civ.P. 56(c)(1) ; see Ahmed v. Johnson, 752 F.3d at 495. "Unsupported allegations and speculation," however, "do not demonstrate either entitlement to summary judgment or the existence of a genuine issue of material fact sufficient to defeat summary judgment." Rivera–Colon v. Mills, 635 F.3d 9, 12 (1st Cir. 2011) ; see Serra v. Quantum Servicing, Corp., 747 F.3d 37, 39–40 (1st Cir. 2014) ("allegations of a merely speculative or conclusory nature are rightly disregarded"). Adhering to this framework, the record sets out the following facts.

FACTUAL BACKGROUND

In a quitclaim deed dated August 28, 2003 and recorded at the Middlesex North Registry of Deeds, defendant acquired the property located at 619–621 Stevens Street in Lowell, Massachusetts. (Docket Entry # 65–2). Defendant, as borrower, executed the promissory note dated May 1, 2006 in favor of New Century Mortgage Corporation ("New Century"), as lender, in the original principal amount of $360,000. (Docket Entry # 65–3). The note was payable "to the order of, without recourse New Century Mortgage Corporation."

(Docket Entry # 65–3, p. 7).¹ Above the printed name "New Century Mortgage Corporation" was a blank signature line. (Docket Entry # 65–3, p. 7). Defendant was the only borrower on the note. (Docket Entry # 65–3, p. 6). The note expressly allows "the Lender" to transfer the note and states that, "The Lender or anyone who takes [the note] by transfer and who is entitled to receive payments under [the note] is called the ‘Note Holder.’ " (Docket Entry # 65–3, p. 2).

Defendant agreed to make monthly payments of $2,703.90 on the first day of each month starting on June 1, 2006. (Docket Entry # 65–3, pp. 2–3). The note dictated that the monthly payments applied to interest before principal. (Docket Entry # 65–3, p. 2). The note further contained a flexible, index-based interest rate that adjusted every six months after the first day of May 2008. (Docket Entry # 65–3). The interest rate on the principal would range between 9.013% and 10.513% at the first adjustment date and would not drop below 9.013% nor exceed 16.013%. (Docket Entry # 65–3, p. 4). The note also stated that defendant would default if he failed to make the monthly payments in full. (Docket Entry # 65–3, p. 5). As stated in the note, the "Note Holder may enforce its rights under this [n]ote against each [borrower] individually or against all of [the borrowers] together." (Docket Entry # 65–3, p. 5). The note was "governed by federal law and the law of the jurisdiction in which the property encumbered by the Security Instrument ... is located[,]" i.e., Massachusetts.² (Docket Entry # 65–3, p. 6).

On May 1, 2006, to secure the repayment and other obligations contained in the note, defendant granted a mortgage encumbering the property to New Century. (Docket Entry # 65–4). Like the quitclaim deed, the mortgage is recorded at the Middlesex North Registry of Deeds. (Docket Entry # 65–4). The mortgage provides notice to defendant that "one or more changes of the Loan Servicer [might occur] unrelated to a sale of the [note]" during the life of the mortgage. (Docket Entry # 65–4, pp. 11–12). Under the terms of the mortgage, defendant conveyed and granted New Century and its "successors and assigns" the "power of sale." (Docket Entry # 65–4, pp. 3, 13).

Separately, New Century entered into a Mortgage Loan Purchase and Servicing Agreement ("MLPSA") with NC Capital Corporation ("NC Capital") dated December 1, 1998. (Docket Entry # 65–7). The MLPSA allowed New Century to sell NC Capital pools of mortgage loans determined by the parties to the agreement. (Docket Entry # 65–7, p. 5). The MLPSA also contained a mortgage loan document delivery procedure: "[T]he Company shall ..., at least four (4) Business Days prior to the Closing Date, deliver and release to the Custodian those Mortgage Loan Documents as required by the Custodial Agreement with respect to each Mortgage Loan .... The Custodian shall certify receipt of all such Mortgage Loan Documents ...." (Docket Entry # 65–7, p. 20).

In 2006, NC Capital entered into a Third Amended and Restated Mortgage Loan Purchase and Warranties Agreement with IXIS Real Estate Capital, Inc. ("IXIS") dated April 1, 2006. (Docket Entry # 65–8). IXIS entered into an Unaffiliated Seller's Agreement ("USA") with Morgan Stanley ABS Capital I Inc. ("Morgan Stanley") as depositor on September 1, 2006, effective September 29, 2006. (Docket Entry # 65–9). The USA vested ownership of each mortgage loan and each related note in Morgan Stanley upon the sale of the mortgage loans. (Docket Entry # 65–9, pp. 6–7). The USA also provided that:

The contents of any Mortgage File in the possession of the Unaffiliated Seller [IXIS] at any time after such sale, and any principal and interest due ... and received by or on behalf of the Unaffiliated Seller, shall be held in trust by the Unaffiliated Seller for the benefit of the Depositor [Morgan Stanley] ....

(Docket Entry # 65–9, p. 7).

Meanwhile, Morgan Stanley entered into a Pooling and Service Agreement ("the PSA") on September...