Galvin v. EMC Mortg. Corp.
| Decision Date | 25 September 2014 |
| Docket Number | No. 12–cv–320–JL.,12–cv–320–JL. |
| Citation | 50 F.Supp.3d 70 |
| Parties | Mark B. GALVIN and Jenny Galvin, v. EMC MORTGAGE CORPORATION, et al. |
| Court | U.S. District Court — District of New Hampshire |
Jamie Ranney, Jamie Ranney, PC, Nantucket, MA, Timothy Laurent Chevalier, Chevalier Legal Services PLLC, Concord, NH, for Mark B. Galvin and Jenny Galvin.
Peter G. Callaghan, Preti Flaherty Beliveau Pachios LLP, Concord, NH, for EMC Mortgage Corporation, et al.
CORRECTED MEMORANDUM ORDER
This case poses a question of statutory interpretation: what is the meaning of the term “mortgagee” in N.H.Rev.Stat. Ann. § 479:25, which allows “the mortgagee or his assignee” to conduct a foreclosure under the power of sale? Plaintiffs Mark and Jenny Galvin argue that “mortgagee” means the entity that “owns and holds both the borrower's note and mortgage interests.” First Am. Petition (document no. 29) ¶ 85. They assert that none of the defendants—various entities who, at various times, held or claimed to hold (or claimed to represent the holder of) their mortgage and/or associated promissory note—is capable of showing that it presently holds either document, and accordingly seek an order enjoining any of them from foreclosing. The defendants, for their part, argue that a “mortgagee” is, simply, a party that holds the mortgage, and assert that, in any event, defendant Bank of New York Mellon (“Mellon”), in its capacity as Trustee for the holders of shares in a pool of securitized mortgages, holds both the mortgage and the note.
This court has jurisdiction over this matter under 28 U.S.C. § 1332 (diversity) because the Galvins are citizens of New Hampshire, the defendants are citizens of other states, and the amount in controversy exceeds $75,000.1 The defendants have moved, and the Galvins have cross-moved, for summary judgment on the Galvins' claim to enjoin foreclosure and their accompanying claim under the New Hampshire Consumer Protection Act (“CPA”), N.H.Rev.Stat. Ann. § 358–A. Both motions are denied.
The evidence reveals that Mellon does, in fact, hold the Galvins' mortgage, by virtue of an assignment from the original mortgagee. The court cannot, however, conclude that Mellon also holds the note which that mortgage secures. The defendants have proffered a version of the note indorsed to “JPMorgan Chase Bank, as Trustee.” They claim that this indorsement transferred the note to JPMorgan Chase Bank in its capacity as Trustee for the selfsame trust for which Mellon now serves as Trustee. If the defendants' claim is true, this would permit Mellon to enforce the note, as discussed in more detail infra. The defendants have not presented admissible evidence substantiating their claim, however; nor have the Galvins presented any evidence that conclusively contradicts it. So, on the current record, there is a genuine dispute of fact as to whether Mellon holds the note.
If the court is to grant summary judgment, then, it can only do so by adopting the defendants' construction of the statutory term “mortgagee,” which would not require possession of the note to foreclose. The New Hampshire Supreme Court has not yet had occasion to address the meaning of that term. When confronted with such a state of affairs, this court must “make an informed prophecy of what [that] court would do in the same situation.” Bartlett v. Mut. Pharm. Co., Inc., 731 F.Supp.2d 135, 154–55 (D.N.H.2010), aff'd, 678 F.3d 30 (1st Cir.2012), rev'd on other grounds, ––– U.S. ––––, 133 S.Ct. 2466, 186 L.Ed.2d 607 (2013). After careful consideration, it appears that the New Hampshire Supreme Court could plausibly adopt either side's construction. Rather than choosing between the two constructions, or certifying the question to that court—both unappealing alternatives—the court instead elects to try the case,2 giving the parties an opportunity to present evidence as to whether Mellon does, in fact, hold the note. If Mellon is the note holder, then it will satisfy both parties' definition of the term “mortgagee,” and there will be no reason to construe that term. Construction of the statute will become necessary only if Mellon does not hold the note.
Summary judgment is appropriate where “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). A dispute is “genuine” if it could reasonably be resolved in either party's favor at trial. See Estrada v. Rhode Island, 594 F.3d 56, 62 (1st Cir.2010) (citing Meuser v. Fed. Express Corp., 564 F.3d 507, 515 (1st Cir.2009) ). A fact is “material” if it could sway the outcome under applicable law. Id. (citing Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir.2008) ). In analyzing a summary judgment motion, the court “views all facts and draws all reasonable inferences in the light most favorable to the non-moving party.” Id. On cross-motions for summary judgment, the court applies this standard to each party's motion separately. See, e.g., Am. Home Assurance Co. v. AGM Marine Contractors, Inc., 467 F.3d 810, 812 (1st Cir.2006).
Mr. Galvin initially stopped making payments on the note in mid–2009. In an effort to cure this default, the Galvins resumed making monthly payments to their loan servicer, defendant EMC Mortgage Corporation, later that year. At some point, however, the Galvins again stopped making payments, and, in March 2010, EMC sent them an acceleration warning and notice of intent to foreclose, asserting that Mr. Galvin had “failed to pay the required monthly installments commencing with the payment due” for October 2009 and was nearly $90,000 in arrears. Not long thereafter, Harmon Law Offices wrote Mr. Galvin to advise him that EMC had retained it to foreclose on the mortgage. Harmon scheduled a foreclosure auction for June 2010, but this auction was postponed while the Galvins discussed a loan modification or forbearance with EMC.
Ultimately, these discussions were not fruitful, and in June 2012, Harmon sent the Galvins another letter informing them that it had scheduled another foreclosure sale for August 1, 2012, on behalf of defendant Bank of New York Mellon as Trustee for the Certificateholders of Structured Asset Mortgage Investments II Trust 2005–AR7 Mortgage Pass–Through Certificates, Series 2006–AR7 (“Mellon”). By an instrument dated May 5, 2010, and recorded in the Rockingham County Registry of Deeds two weeks later, MERS assigned the Galvins' mortgage to Mellon. The assignment recites that Mellon is “successor trustee to JPMorgan Chase Bank, N.A.”
Harmon's letter prompted the Galvins to file this action in Rockingham County Superior Court. The defendants removed to this court, see 28 U.S.C. § 1441, and moved to dismiss, see Fed.R.Civ.P. 12(b)(6). In a lengthy order, the court dismissed fourteen of the fifteen counts of the Galvins' original complaint, including their claim that Mellon lacked “standing” to foreclose because, among other things, it did not possess the Galvins' note. See Galvin v. EMC Mortg. Corp., 2013 DNH 053, 2013 WL 1386614. The Galvins later moved the court to vacate this order and to amend the complaint; the court denied the request to vacate as both untimely and meritless, Order of May 14, 2013, but permitted the Galvins to amend the complaint to assert claims for (as is pertinent here) a declaratory judgment that the defendants may not foreclose and violation of the CPA, Order of June 10, 2013. Following discovery, the parties filed the cross-motions for summary judgment now pending.4
As mentioned at the outset, the Galvins' primary theory of relief in this action is that none of the defendants is entitled to exercise the power of sale included in the mortgage under N.H.Rev.Stat. Ann. § 479:25. That provision permits “the mortgagee or his assignee” to “give such notices and do all such acts as are authorized or required by the power.” The statute does not define the term “mortgagee,” and, as discussed, the Galvins take the position that it means “the entity that ... owns and holds both the borrower's note and mortgage interests.” First Am. Petition (document no. 29) ¶ 85. The defendants, for their part, say that a “mortgagee” need hold only the mortgage.
Each party, relying upon its construction of the term, asks the court to grant summary judgment in its favor. The parties' arguments in favor of summary judgment do not, however, depend solely upon their respective views of the law's requirements. The defendants argue that even if the plaintiffs have correctly interpreted § 479:25, Mellon can still foreclose because it holds both the note and mortgage, while the plaintiffs say that even if the defendants are right, Mellon may not...
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